Reportable Segments

3 Months Ended

Mar. 31, 2019



Note 4	Reportable Segments

Change in accounting principle

As discussed in Note 1, the Company changed its accounting principle for recognizing actuarial gains and losses and expected return on plan assets for its pension and other postretirement plans to a more preferable policy under U.S. GAAP. Under the new principle, remeasurement of projected benefit obligation and plan assets are immediately recognized through earnings and are referred to as pension and other postretirement remeasurement gains and losses on the Condensed Consolidated Statements of Operations. This change has been applied on a retrospective basis. See Note 1 for further information regarding the impact of the change in accounting principle on the consolidated financial statements.

Measuring segment profit or loss

The measure of segment profit or loss used in evaluating performance is underwriting income for the Allstate Protection and Discontinued Lines and Coverages segments and adjusted net income for the Service Businesses, Allstate Life, Allstate Benefits, Allstate Annuities, and Corporate and Other segments. A reconciliation of these measures to net income applicable to common shareholders is provided below.

Underwriting income is calculated as premiums earned and other revenue, less claims and claims

expenses (“losses”), amortization of DAC, operating costs and expenses, amortization of purchased intangible assets and restructuring and related charges as determined using GAAP.

Adjusted net income is net income applicable to common shareholders, excluding:

• Realized capital gains and losses, after-tax, except for periodic settlements and accruals on non-hedge derivative instruments, which are reported with realized capital gains and losses but included in adjusted net income

• Pension and other postretirement remeasurement gains and losses, after-tax

• Valuation changes on embedded derivatives not hedged, after-tax

• Amortization of DAC and DSI, to the extent they resulted from the recognition of certain realized capital gains and losses or valuation changes on embedded derivatives not hedged, after-tax

• Business combination expenses and the amortization of purchased intangible assets, after-tax

• Gain (loss) on disposition of operations, after-tax

• Adjustments for other significant non-recurring, infrequent or unusual items, when (a) the nature of the charge or gain is such that it is reasonably unlikely to recur within two years, or (b) there has been no similar charge or gain within the prior two years



Reportable segments revenue information
($ in millions)	Three months ended March 31,
($ in millions)	2019			2018
Property-Liability
Insurance premiums
Auto	$	5,930		$	5,591
Homeowners	1,935			1,848
Other personal lines	459			444
Commercial lines	183			136
Allstate Protection	8,507			8,019
Discontinued Lines and Coverages	—			—
Total property-liability insurance premiums	8,507			8,019
Other revenue	176			174
Net investment income	291			337
Realized capital gains and losses	497			(95		)
Total Property-Liability	9,471			8,435

Service Businesses
Consumer product protection plans	145			123
Roadside assistance	63			64
Finance and insurance products	87			80
Intersegment premiums and service fees ⁽¹⁾	33			29
Other revenue	47			16
Net investment income	9			5
Realized capital gains and losses	8			(4		)
Total Service Businesses	392			313

Allstate Life
Traditional life insurance premiums	154			146
Interest-sensitive life insurance contract charges	183			181
Other revenue	27			26
Net investment income	127			122
Realized capital gains and losses	(5		)	(3		)
Total Allstate Life	486			472

Allstate Benefits
Traditional life insurance premiums	9			9
Accident and health insurance premiums	250			248
Interest-sensitive life insurance contract charges	29			29
Net investment income	19			19
Realized capital gains and losses	4			(2		)
Total Allstate Benefits	311			303

Allstate Annuities
Fixed annuities contract charges	3			3
Net investment income	190			290
Realized capital gains and losses	156			(29		)
Total Allstate Annuities	349			264

Corporate and Other
Net investment income	12			13
Realized capital gains and losses	2			(1		)
Total Corporate and Other	14			12

Intersegment eliminations ⁽¹⁾	(33		)	(29		)
Consolidated revenues	$	10,990		$	9,770

⁽¹⁾ Intersegment insurance premiums and service fees are primarily related to Arity and Allstate Roadside Services and are eliminated in the condensed consolidated financial statements.



Reportable segments financial performance
	Three months ended March 31,
($ in millions)	2019			2018
Property-Liability
Allstate Protection	$	703		$	1,008
Discontinued Lines and Coverages	(3		)	(3		)
Total underwriting income	700			1,005
Net investment income	291			337
Income tax expense on operations	(202		)	(277		)
Realized capital gains and losses, after-tax	393			(75		)
Property-Liability net income applicable to common shareholders	1,182			990

Service Businesses
Adjusted net income (loss)	11			(3		)
Realized capital gains and losses, after-tax	7			(3		)
Amortization of purchased intangible assets, after-tax	(24		)	(16		)
Service Businesses net loss applicable to common shareholders	(6		)	(22		)

Allstate Life
Adjusted net income	73			71
Realized capital gains and losses, after-tax	(4		)	(2		)
DAC and DSI amortization related to realized capital gains and losses, after-tax	(2		)	(2		)
Allstate Life net income applicable to common shareholders	67			67

Allstate Benefits
Adjusted net income	31			29
Realized capital gains and losses, after-tax	3			(2		)
Allstate Benefits net income applicable to common shareholders	34			27

Allstate Annuities
Adjusted net (loss) income	(25		)	35
Realized capital gains and losses, after-tax	124			(23		)
Valuation changes on embedded derivatives not hedged, after-tax	(3		)	4
Gain on disposition of operations, after-tax	1			1
Allstate Annuities net income applicable to common shareholders	97			17

Corporate and Other
Adjusted net loss	(103		)	(90		)
Realized capital gains and losses, after-tax	1			(1		)
Pension and other postretirement remeasurement gains and losses, after-tax	(11		)	(11		)
Corporate and Other net loss applicable to common shareholders	(113		)	(102		)

Consolidated net income applicable to common shareholders	$	1,261		$	977