Schedule II — Condensed Financial Information of Registrant Statement of Operations



	Year Ended December 31,
($ in millions)	2017			2016			2015
Revenues
Investment income, less investment expense	$	10		$	11		$	8
Realized capital gains and losses	(2		)	2			—
Other income	36			55			66
	44			68			74

Expenses
Interest expense	334			295			292
Pension and other postretirement benefit expense	119			10			(15		)
Other operating expenses	50			28			34
	503			333			311

Loss from operations before income tax benefit and equity in net income of subsidiaries	(459		)	(265		)	(237		)

Income tax benefit	(92		)	(115		)	(108		)
Loss before equity in net income of subsidiaries	(367		)	(150		)	(129		)

Equity in net income of subsidiaries	3,556			2,027			2,300
Net income	3,189			1,877			2,171

Preferred stock dividends	116			116			116

Net income applicable to common shareholders	3,073			1,761			2,055

Other comprehensive income (loss), after-tax
Changes in:
Unrealized net capital gains and losses	319			433			(1,306		)
Unrealized foreign currency translation adjustments	47			10			(58		)
Unrecognized pension and other postretirement benefit cost	307			(104		)	48
Other comprehensive income (loss), after-tax	673			339			(1,316		)
Comprehensive income	$	3,862		$	2,216		$	855

See accompanying notes to condensed financial information and notes to consolidated financial statements.

The Allstate Corporation and Subsidiaries

Schedule II (Continued) — Condensed Financial Information of Registrant Statement of Financial Position



($ in millions, except par value data)	December 31,
	2017			2016
Assets
Investments in subsidiaries	$	29,126		$	26,929
Fixed income securities, at fair value (amortized cost $361 and $510)	362			513
Short-term investments, at fair value (amortized cost $171 and $219)	171			219
Cash	—			2
Receivable from subsidiaries	427			385
Deferred income taxes	124			348
Other assets	150			138
Total assets	$	30,360		$	28,534

Liabilities
Long-term debt	$	6,350		$	6,347
Pension and other postretirement benefit obligations	675			1,079
Deferred compensation	297			274
Notes due to subsidiaries	250			—
Dividends payable to shareholders	167			157
Other liabilities	70			104
Total liabilities	7,809			7,961

Shareholders’ equity
Preferred stock and additional capital paid-in, $1 par value, 25 million shares authorized, 72.2 thousand issued and outstanding, and $1,805 aggregate liquidation preference	1,746			1,746
Common stock, $.01 par value, 2.0 billion shares authorized and 900 million issued, 355 million and 366 million shares outstanding	9			9
Additional capital paid-in	3,313			3,303
Retained income	43,162			40,678
Deferred ESOP expense	(3		)	(6		)
Treasury stock, at cost (545 million and 534 million shares)	(25,982		)	(24,741		)
Accumulated other comprehensive income:
Unrealized net capital gains and losses	1,662			1,053
Unrealized foreign currency translation adjustments	(9		)	(50		)
Unrealized pension and other postretirement benefit cost	(1,347		)	(1,419		)
Total accumulated other comprehensive loss	306			(416		)
Total shareholders’ equity	22,551			20,573
Total liabilities and shareholders’ equity	$	30,360		$	28,534

See accompanying notes to condensed financial information and notes to consolidated financial statements.

The Allstate Corporation and Subsidiaries

Schedule II (Continued) — Condensed Financial Information of Registrant Statement of Cash Flows



($ in millions)	Years Ended December 31,
	2017			2016			2015
Cash flows from operating activities
Net income	$	3,189		$	1,877		$	2,171
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in net income of subsidiaries	(3,556		)	(2,027		)	(2,300		)
Dividends received from subsidiaries	1,671			1,874			2,300
Realized capital gains and losses	2			(2		)	—
Changes in:
Pension and other postretirement benefits	119			10			(15		)
Income taxes	35			13			77
Operating assets and liabilities	56			43			26
Net cash provided by operating activities	1,516			1,788			2,259

Cash flows from investing activities
Proceeds from sales of investments	880			389			399
Investment purchases	(748		)	(243		)	(4		)
Investment collections	13			60			—
Return of capital from subsidiaries	42			(1,500		)	50
Transfers to subsidiaries through intercompany loan agreement	—			(30		)	—
Change in short-term investments, net	48			58			397
Net cash provided (used in) by investing activities	235			(1,266		)	842

Cash flows from financing activities
Proceeds from borrowings from subsidiaries	300			—			—
Repayment of notes due to subsidiaries	(50		)	—			—
Proceeds from issuance of long-term debt	—			1,236			—
Repayment of long-term debt	—			(17		)	(20		)
Dividends paid on common stock	(525		)	(486		)	(483		)
Dividends paid on preferred stock	(116		)	(116		)	(116		)
Treasury stock purchases	(1,495		)	(1,337		)	(2,808		)
Shares reissued under equity incentive plans, net	135			164			130
Excess tax benefits on share-based payment arrangements	—			32			45
Other	(2		)	—			—
Net cash used in financing activities	(1,753		)	(524		)	(3,252		)

Net decrease in cash	(2		)	(2		)	(151		)
Cash at beginning of year	2			4			155
Cash at end of year	$	—		$	2		$	4

See accompanying notes to condensed financial information and notes to consolidated financial statements.

The Allstate Corporation and Subsidiaries

Schedule II (Continued) — Condensed Financial Information of Registrant

Notes to Condensed Financial Information

1. General

The financial statements of the Registrant should be read in conjunction with the consolidated financial statements and notes thereto included in Item 8. The long-term debt presented in Note 12 “Capital Structure” are direct obligations of the Registrant. A majority of the pension and other postretirement benefits plans presented in Note 17 “Benefit Plans” are direct obligations of the Registrant.

Participating subsidiaries fund the pension plans contributions under a master services cost sharing agreement. In addition, as a result of joint and several pension liability rules under the Internal Revenue Code and the Employee Retirement Income Security Act of 1974, as amended, many liabilities that arise in connection with pension plans are joint and several across all members of a controlled group of entities.

2. Notes due to subsidiaries

On December 11, 2017, the Registrant issued $125 million and $175 million notes, each with a rate of 1.59% and due on June 11, 2018, to its wholly owned subsidiaries Kennett Capital Inc. and Allstate Non-Insurance Holdings Inc (“ANIHI”), respectively. The proceeds of these issuances were used for cash management purposes. On December 20, 2017, the Registrant repaid $50 million to ANIHI.

3. Supplemental Disclosures of Cash Flow Information

The Registrant paid $331 million, $287 million and $289 million of interest on debt in 2017, 2016 and 2015, respectively.