Reportable Segments

6 Months Ended

Jun. 30, 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 condensed 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 intangibles 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 or impairment of purchased intangibles, 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 June 30,						Six months ended June 30,
	2019			2018			2019			2018
Property-Liability
Insurance premiums
Auto	$	6,035		$	5,705		$	11,965		$	11,296
Homeowners	1,958			1,864			3,893			3,712
Other personal lines	462			455			921			899
Commercial lines	226			165			409			301
Allstate Protection	8,681			8,189			17,188			16,208
Discontinued Lines and Coverages	—			—			—			—
Total property-liability insurance premiums	8,681			8,189			17,188			16,208
Other revenue	190			184			366			358
Net investment income	471			353			762			690
Realized capital gains and losses	256			(15		)	753			(110		)
Total Property-Liability	9,598			8,711			19,069			17,146

Service Businesses
Consumer product protection plans	153			121			298			244
Roadside assistance	63			68			126			132
Finance and insurance products	89			82			176			162
Intersegment premiums and service fees ⁽¹⁾	33			29			66			58
Other revenue	48			16			95			32
Net investment income	10			6			19			11
Realized capital gains and losses	9			(2		)	17			(6		)
Total Service Businesses	405			320			797			633

Allstate Life
Traditional life insurance premiums	156			148			310			294
Accident and health insurance premiums	1			1			1			1
Interest-sensitive life insurance contract charges	176			177			359			358
Other revenue	33			28			60			54
Net investment income	125			130			252			252
Realized capital gains and losses	1			(3		)	(4		)	(6		)
Total Allstate Life	492			481			978			953

Allstate Benefits
Traditional life insurance premiums	10			10			19			19
Accident and health insurance premiums	246			245			496			493
Interest-sensitive life insurance contract charges	28			28			57			57
Net investment income	21			19			40			38
Realized capital gains and losses	2			—			6			(2		)
Total Allstate Benefits	307			302			618			605

Allstate Annuities
Fixed annuities contract charges	4			3			7			6
Net investment income	296			293			486			583
Realized capital gains and losses	48			6			204			(23		)
Total Allstate Annuities	348			302			697			566

Corporate and Other
Net investment income	19			23			31			36
Realized capital gains and losses	8			(11		)	10			(12		)
Total Corporate and Other	27			12			41			24

Intersegment eliminations ⁽¹⁾	(33		)	(29		)	(66		)	(58		)
Consolidated revenues	$	11,144		$	10,099		$	22,134		$	19,869

⁽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 June 30,						Six months ended June 30,
($ in millions)	2019			2018			2019			2018
Property-Liability
Allstate Protection	$	370		$	458		$	1,073		$	1,466
Discontinued Lines and Coverages	(3		)	(3		)	(6		)	(6		)
Total underwriting income	367			455			1,067			1,460
Net investment income	471			353			762			690
Income tax expense on operations	(179		)	(166		)	(381		)	(443		)
Realized capital gains and losses, after-tax	204			(12		)	597			(87		)
Property-Liability net income applicable to common shareholders	863			630			2,045			1,620

Service Businesses
Adjusted net income (loss)	16			2			27			(1		)
Realized capital gains and losses, after-tax	6			(1		)	13			(4		)
Amortization of purchased intangibles, after-tax	(25		)	(16		)	(49		)	(32		)
Impairment of purchased intangibles, after-tax	(43		)	—			(43		)	—
Service Businesses net loss applicable to common shareholders	(46		)	(15		)	(52		)	(37		)

Allstate Life
Adjusted net income	68			80			141			151
Realized capital gains and losses, after-tax	—			(2		)	(4		)	(4		)
DAC and DSI amortization related to realized capital gains and losses, after-tax	(1		)	(3		)	(3		)	(5		)
Allstate Life net income applicable to common shareholders	67			75			134			142

Allstate Benefits
Adjusted net income	37			36			68			65
Realized capital gains and losses, after-tax	2			—			5			(2		)
Allstate Benefits net income applicable to common shareholders	39			36			73			63

Allstate Annuities
Adjusted net income	52			44			27			79
Realized capital gains and losses, after-tax	37			5			161			(18		)
Valuation changes on embedded derivatives not hedged, after-tax	(2		)	—			(5		)	4
Gain on disposition of operations, after-tax	1			1			2			2
Allstate Annuities net income applicable to common shareholders	88			50			185			67

Corporate and Other
Adjusted net loss	(98		)	(95		)	(201		)	(185		)
Realized capital gains and losses, after-tax	7			(9		)	8			(10		)
Pension and other postretirement remeasurement gains and losses, after-tax	(99		)	6			(110		)	(5		)
Corporate and Other net loss applicable to common shareholders	(190		)	(98		)	(303		)	(200		)

Consolidated net income applicable to common shareholders	$	821		$	678		$	2,082		$	1,655