Reportable Segments

9 Months Ended

Sep. 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 September 30,						Nine months ended September 30,
	2019			2018			2019			2018
Property-Liability
Insurance premiums
Auto	$	6,080		$	5,798		$	18,045		$	17,094
Homeowners	1,997			1,891			5,890			5,603
Other personal lines	469			455			1,390			1,354
Commercial lines	236			176			645			477
Allstate Protection	8,782			8,320			25,970			24,528
Discontinued Lines and Coverages	—			—			—			—
Total Property-Liability insurance premiums	8,782			8,320			25,970			24,528
Other revenue	195			192			561			550
Net investment income	448			410			1,210			1,100
Realized capital gains and losses	163			126			916			16
Total Property-Liability	9,588			9,048			28,657			26,194

Service Businesses
Consumer product protection plans	163			125			461			369
Roadside assistance	57			66			183			198
Finance and insurance products	92			84			268			246
Intersegment premiums and service fees ⁽¹⁾	44			31			110			89
Other revenue	47			16			142			48
Net investment income	11			7			30			18
Realized capital gains and losses	4			—			21			(6		)
Total Service Businesses	418			329			1,215			962

Allstate Life
Traditional life insurance premiums	155			149			465			443
Accident and health insurance premiums	—			—			1			1
Interest-sensitive life insurance contract charges	176			173			535			531
Other revenue	31			30			91			84
Net investment income	128			128			380			380
Realized capital gains and losses	5			(3		)	1			(9		)
Total Allstate Life	495			477			1,473			1,430

Allstate Benefits
Traditional life insurance premiums	12			13			31			32
Accident and health insurance premiums	250			246			746			739
Interest-sensitive life insurance contract charges	29			26			86			83
Net investment income	21			19			61			57
Realized capital gains and losses	2			2			8			—
Total Allstate Benefits	314			306			932			911

Allstate Annuities
Fixed annuities contract charges	3			5			10			11
Net investment income	251			260			737			843
Realized capital gains and losses	20			51			224			28
Total Allstate Annuities	274			316			971			882

Corporate and Other
Net investment income	21			20			52			56
Realized capital gains and losses	3			—			13			(12		)
Total Corporate and Other	24			20			65			44

Intersegment eliminations ⁽¹⁾	(44		)	(31		)	(110		)	(89		)
Consolidated revenues	$	11,069		$	10,465		$	33,203		$	30,334


⁽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 September 30,						Nine months ended September 30,
($ in millions)	2019			2018			2019			2018
Property-Liability
Allstate Protection	$	836		$	587		$	1,909		$	2,053
Discontinued Lines and Coverages	(99		)	(80		)	(105		)	(86		)
Total underwriting income	737			507			1,804			1,967
Net investment income	448			410			1,210			1,100
Income tax expense on operations	(236		)	(185		)	(617		)	(628		)
Realized capital gains and losses, after-tax	127			103			724			16
Tax Legislation expense	—			(3		)	—			(3		)
Property-Liability net income applicable to common shareholders	1,076			832			3,121			2,452

Service Businesses
Adjusted net income	8			1			35			—
Realized capital gains and losses, after-tax	4			(1		)	17			(5		)
Amortization of purchased intangibles, after-tax	(25		)	(16		)	(74		)	(48		)
Impairment of purchased intangibles, after-tax	—			—			(43		)	—
Tax Legislation expense	—			(4		)	—			(4		)
Service Businesses net loss applicable to common shareholders	(13		)	(20		)	(65		)	(57		)

Allstate Life
Adjusted net income	44			75			185			226
Realized capital gains and losses, after-tax	4			(3		)	—			(7		)
Valuation changes on embedded derivatives not hedged, after-tax	(9		)	—			(9		)	—
DAC and DSI amortization related to realized capital gains and losses, after-tax	1			(1		)	(2		)	(6		)
Tax Legislation expense	—			(16		)	—			(16		)
Allstate Life net income applicable to common shareholders	40			55			174			197

Allstate Benefits
Adjusted net income	31			33			99			98
Realized capital gains and losses, after-tax	2			2			7			—
Allstate Benefits net income applicable to common shareholders	33			35			106			98

Allstate Annuities
Adjusted net income	16			20			43			99
Realized capital gains and losses, after-tax	16			40			177			22
Valuation changes on embedded derivatives not hedged, after-tax	(1		)	1			(6		)	5
Gain on disposition of operations, after-tax	—			1			2			3
Tax Legislation benefit	—			69			—			69
Allstate Annuities net income applicable to common shareholders	31			131			216			198

Corporate and Other
Adjusted net loss	(101		)	(106		)	(302		)	(291		)
Realized capital gains and losses, after-tax	2			—			10			(10		)
Pension and other postretirement remeasurement gains and losses, after-tax	(179		)	30			(289		)	25
Tax Legislation expense	—			(15		)	—			(15		)
Consolidated and Other net loss applicable to common shareholders	(278		)	(91		)	(581		)	(291		)

Consolidated net income applicable to common shareholders	$	889		$	942		$	2,971		$	2,597