(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) |
Title of each class | Trading Symbols | Name of each exchange on which registered |
Common Stock, par value $0.01 per share | ALL | New York Stock Exchange Chicago Stock Exchange |
☒ | Accelerated filer | ☐ | |
Non-accelerated filer | ☐ | Smaller reporting company | |
Emerging growth company |
Part I | Page | |||
• Overview | ||||
• Strategy and Segment Information | ||||
• Website | ||||
Part II | ||||
Part III | ||||
Part IV | ||||
Reportable segments | ||
Allstate Protection (1) | Includes the Allstate, Encompass and Esurance brands and Answer Financial. Offers private passenger auto, homeowners, other personal lines and commercial insurance through agencies, contact centers and online. Esurance will be integrated into the Allstate brand in 2020 as we are repositioning the Allstate brand for broader customer access. | |
Service Businesses | Includes Allstate Protection Plans, Allstate Dealer Services, Allstate Roadside Services, Arity and Allstate Identity Protection, which offer a broad range of products and services that expand and enhance our customer value propositions. | |
Allstate Life | Offers traditional, interest-sensitive and variable life insurance products primarily through Allstate exclusive agents and exclusive financial specialists. | |
Allstate Benefits | Offers voluntary benefits products, including life, accident, critical illness, short-term disability and other health insurance products sold through independent agents, benefits brokers and Allstate exclusive agents. | |
Allstate Annuities | Consists of deferred fixed annuities and immediate fixed annuities (including standard and sub-standard structured settlements) in run-off. | |
Discontinued Lines and Coverages (1) | Relates to property and casualty insurance policies written during the 1960's through the mid-1980's with exposure to asbestos, environmental and other claims in run-off. | |
Corporate and Other | Includes holding company activities and certain non-insurance operations. |
(1) | Allstate Protection and Discontinued Lines and Coverages segments comprise Property-Liability. |
Available | Competitive | Simple | Connected | |||
Provide products and services that protect what matters most | Offer products that make good use of our customers’ hard-earned money | Easy to interact with | Know our customers and proactively interact in value-added ways | |||
Innovative and integrated distribution system that provides consumers with broad points of presence across all channels and offers a comprehensive product portfolio | Improve price competitiveness through advancing sophistication and reducing our expenses | Provide easy, seamless and unified customer experience with open access across all touchpoints | Digitally connected with customers, enabling continual interactions that deepen relationships and provide value |
• | Agents receive a monthly base commission payment as a percentage of their total eligible written premium. |
• | Variable compensation rewards agents for acquiring new customers by exceeding a base production goal. |
• | Bonus compensation is based on a percentage of premiums and can be earned by agents who are meeting certain sales goals and selling additional policies to meet customer needs profitably. |
• | For auto insurance, risk evaluation factors can include, but are not limited to: vehicle make, model and year; driver age and marital status; territory; years licensed; loss history; years insured with prior carrier; prior liability limits; prior lapse in coverage; and insurance scoring utilizing telematics data and other consumer information. |
• | For property insurance, risk evaluation factors can include, but are not limited to: the amount of insurance purchased; geographic location of the property; loss history; age, condition and construction characteristics of the property; and characteristics of the insured including insurance scoring utilizing other consumer information. |
Products | ||||
Insurance products (1) | ![]() | Auto | ||
![]() | Homeowners | |||
![]() | Specialty auto (motorcycle, trailer, motor home and off-road vehicle) | |||
![]() | Other personal lines (renters, condominium, landlord, boat, umbrella, manufactured home and stand-alone scheduled personal property) | |||
![]() | Commercial lines | |||
Answer Financial | ![]() | Comparison quotes and sales of non-proprietary auto, homeowners and other personal lines (condominium, renters, motorcycle, recreational vehicle and boat) |
(1) | Insurance products are offered by the Allstate, Esurance and Encompass brands. |
Distribution channels | |
Allstate brand | In the U.S., we offer products through 10,800 Allstate exclusive agencies operating in 10,700 locations, supported by 27,100 licensed sales professionals, and 1,000 exclusive financial specialists. We also offer products through 3,400 independent agencies, contact centers and online. In Canada, we offer Allstate brand products through 1,000 employee producers. |
Esurance brand | Sold to customers online and through contact centers. (Esurance will be integrated into the Allstate brand in 2020.) |
Encompass brand | Distributed through 2,800 independent agencies. |
Answer Financial | Comparison quotes and sales offered to customers online or through contact centers. |
Innovative product offerings and features | |||
Market-leading solutions | |||
Allstate brand | Your Choice Auto® | Qualified customers choose from a variety of options, such as Accident Forgiveness, Deductible Rewards®, Safe Driving Bonus® and New Car Replacement. | |
Allstate House and Home® | Featured options include Claim RateGuard®, Claim-Free Bonus, Deductible RewardsSM and flexibility in options and coverages, including graduated roof coverage and pricing based on roof type and age for damage related to wind and hail events. | ||
Claim Satisfaction Guarantee® | Promised return of premium to standard auto insurance customers dissatisfied with their claims experience. | ||
Bundling Benefits | Auto customers with a qualifying property policy are provided an auto renewal guarantee and a deductible waiver (when the same event, with the same covered cause of loss, damages both auto and property). Offered in 39 states as of December 31, 2019. | ||
New Car Replacement Protection | Replaces a qualifying customer’s vehicle (two model years old or less) involved in a total loss accident with a vehicle of the same or similar make and model. Offered in 39 states as of December 31, 2019. | ||
Encompass brand | EncompassOne® Policy | Packaged insurance product with one premium, one bill, one policy deductible and one renewal date. Broad coverage options include customizable features such as enhanced accident forgiveness, new-car replacement coverage, walk-away home coverage option should the insured decide not to rebuild, flexible additional living expense coverage, water-sewer backup coverage options and roadside assistance. This product is offered in 36 states and the District of Columbia (“D.C.”) as of December 31, 2019. | |
Surround Solutions by Encompass® | Offers auto (6-months), homeowner and specialty lines products, pricing, services and support designed to provide flexibility and be customized based on consumer needs. Offered exclusively in four states for Encompass as of December 31, 2019. | ||
Telematics offerings | |||
Allstate brand | Drivewise® | Telematics-based program, available in 50 states and the District of Columbia as of December 31, 2019, that uses a mobile application or an in-car device to capture driving behaviors and encourage safe driving. It provides customers with information and tools, incentives and driving challenges. For example, in most states, Allstate Rewards® provides reward points for safe driving. | |
Milewise® | Usage-based insurance product, available in 14 states as of December 31, 2019, that gives customers flexibility to customize their insurance and pay based on the number of miles they drive. | ||
Esurance brand | DriveSense® | Telematics-based insurance program, available in 37 states as of December 31, 2019, that primarily uses a mobile application to capture driving behaviors and reward customers for safe driving. | |
Encompass brand | Route ReportSM | Telematics application, available in 16 states as of December 31, 2019, used to capture driving behaviors and reward customer participation. | |
Shared economy solutions | |||
Allstate brand | Transportation Network Company Commercial Auto | Commercial coverage of transportation networking company independent drivers during various phases of the ride sharing service. | |
Allstate Ride for Hire®/ HostAdvantage® | Supplemental personal insurance coverage for those using their vehicle to drive for a transportation network company or their house for peer-to-peer property sharing. |
AllstateSM Protection Plans | Expand distribution of consumer protection plan and technical support products through new and existing retail and mobile operator accounts while increasing profitability and returns. | |
Allstate Dealer Services® | Expand distribution of Allstate branded finance and insurance products and services to auto dealerships, while pursuing additional distribution through strategic partnerships. | |
Allstate Roadside Services® | Modernize the roadside assistance business through technology and enhance capabilities to deliver a superior customer experience while improving efficiency and returns. | |
Arity® | Leverage analytics and deep understanding of driver risk to create a strategic platform. The platform will be used by those industries affected most by the changing face of transportation, including insurance companies, shared mobility companies and the automotive ecosystem. | |
AllstateSM Identity Protection | Create a leading position in the identity protection market, offering full identity protection monitoring with proactive alerts, digital exposure reporting and identity theft reimbursement as well as expanding into other distribution channels. |
Products and services | ||
Allstate Protection Plans | Provides consumer protection plans and related technical support for mobile phones, consumer electronics and appliances which provide customers protection from mechanical or electrical failure, and in certain cases, accidental damage from handling. | |
Allstate Dealer Services | Offers finance and insurance products, including vehicle service contracts, guaranteed asset protection waivers, road hazard tire and wheel protection, and paintless dent repair protection. | |
Allstate Roadside Services | Offers towing, jump-start, lockout, fuel delivery and tire change services to retail customers and customers of our wholesale partners. Good Hands Rescue® is a pay-per-use mobile application service that connects users to a select countrywide network of third-party providers and a proprietary crowdsourced network to assist with emergencies. | |
Arity | Provides data and analytics solutions with the Arity platform using automotive telematics information. Customers receive value from our solutions either by using web-based software tools, white labeled mobile applications or through embedding our technology in their mobile applications. | |
Allstate Identity Protection | Provides identity protection services including monitoring, alerts, remediation and a proprietary indicator of identity health. |
Distribution channels | ||
Allstate Protection Plans | Major retailers in the U.S. and mobile operators in Europe. | |
Allstate Dealer Services | Independent agencies and brokers through auto dealerships in the U.S. in conjunction with the purchase of a new or used vehicle. | |
Allstate Roadside Services | Allstate exclusive agencies, wholesale partners, affinity groups and a mobile application. | |
Arity | Sells directly to affiliate and non-affiliate customers and through strategic partners. | |
Allstate Identity Protection | Primarily through workplace benefit programs. |
Insurance products | ||
Term life | Interest-sensitive life | |
Whole life | Variable life |
Distribution channel |
Allstate exclusive agencies and exclusive financial specialists. |
Voluntary benefits products | ||
Life | Short-term disability | |
Accident | Other health | |
Critical illness |
Distribution channels |
4,960 workplace enrolling independent agents and benefits brokers. |
Allstate exclusive agencies, focusing on small employers. |
• | Prior approval — Regulators must approve a rate before the insurer may use it |
• | File-and-use — Insurers do not have to wait for the regulator’s approval to use a rate, but the rate must be filed with the regulatory authority prior to being used |
• | Use-and-file — Requires an insurer to file rates within a certain period of time after the insurer begins using them |
• | No approval — One state, representing less than 1% of 2019 statutory direct written premiums, does not impose a rate filing requirement |
• | On May 17, 2018, member companies of the MCCA were notified of the ratification of amendments to the MCCA’s Plan of Operation. The amendments were designed to clarify the MCCA’s preapproval requirements for certain actions and activities involving benefits provided to covered claimants, including the preapproval of any agreement that sets attendant care rates or residential care facility |
• | On May 30, 2019, the Governor of Michigan signed new legislation to reform Michigan’s no-fault auto insurance system. The reform includes: |
– | Allowing insureds to choose levels of personal injury protection coverage, including the option to opt-out of personal injury protection coverage in certain circumstances. |
– | Implementing mandated rate reductions that correspond to the level of personal injury protection coverage chosen by insureds, which go into effect July 2, 2020. |
– | Setting fee schedules for personal injury protection claims at 200% of Medicare rates in 2021, declining to 195% in 2022 and 190% in 2023, for any providers other than certain unique categories of providers and applying to treatment on existing and new claims beginning after July 1, 2021. |
– | Implementing or creating new processes for reviewing claims, assessing allowable expenses and setting limits on certain allowable expenses. |
• | Other legislative proposals to change the MCCA operation in the future are put forth periodically. |
• | As of December 31, 2019, Allstate had approximately 45,780 full-time employees and 510 part-time employees. |
• | Allstate’s seven reportable segments use shared services, including human resources, investment, finance, information technology and legal services, provided by Allstate Insurance Company and other affiliates. |
• | Although the insurance business generally is not seasonal, claims and claims expense for the Allstate Protection segment tend to be higher for periods of severe or inclement weather. |
• | “Allstate®” is a very well-recognized brand name in the United States. We use the “Allstate®,” “Esurance®,” “Encompass®” and “Answer Financial®” brands extensively in our business. We also provide additional protection products and services through “AllstateSM Protection Plans”, “Allstate Dealer Services®”, “Allstate Roadside Services®”, “Arity®”, “AllstateSM Identity Protection” and “Allstate Benefits®”. These brands, products and services are supported with the related service marks, logos, and slogans. Our rights in the United States to these names, service marks, logos and slogans continue as long as we continue to use them in commerce. Many service marks used by Allstate are the subject of renewable U.S. and/or foreign service mark registrations. We believe that these service marks are important to our business and we intend to maintain our rights to them. |
Name | Age | Position with Allstate and Business Experience | Year First Elected Officer | |||
Thomas J. Wilson | 62 | Chair of the Board (May 2008 to present), President (June 2005 to January 2015 and February 2018 to present), and Chief Executive Officer (January 2007 to present) of The Allstate Corporation and AIC. | 1995 | |||
Carolyn D. Blair | 51 | Executive Vice President and Chief Human Resources Officer of AIC (October 2019 to present); President of Tartan Advisory Group, Inc. (November 2018 to October 2019); Executive Vice President, Chief Human Resources & Communications Officer of Sun Life Financial (April 2014 to June 2018). | 2019 | |||
Elizabeth A. Brady | 55 | Executive Vice President and Chief Marketing, Customer and Communications Officer of AIC (January 2020 to present); Executive Vice President and Chief Marketing, Innovation and Corporate Relations Officer of AIC (August 2018 to January 2020); Senior Vice President, Global Brand Management of Kohler Co. (November 2013 to July 2018). | 2018 | |||
Don Civgin | 58 | Chief Executive Officer, Protection Products and Services of AIC (January 2020 to present); President, Service Businesses of AIC (January 2018 to January 2020); President, Emerging Businesses of AIC (February 2015 to January 2018); President and Chief Executive Officer, Allstate Financial of AIC (March 2012 to February 2015). | 2008 | |||
John E. Dugenske | 53 | President, Investments and Financial Products of AIC (January 2020 to present); Executive Vice President and Chief Investment and Corporate Strategy Officer of AIC (January 2018 to January 2020); Executive Vice President and Chief Investment Officer of AIC (March 2017 to January 2018); Group Managing Director and Global Head of Fixed Income at UBS Global Asset Management (December 2008 to February 2017). | 2017 | |||
Mary Jane Fortin | 55 | President, Financial Products of AIC (January 2020 to present); President, Allstate Financial Businesses of AIC (February 2017 to January 2020); President, Allstate Life and Retirement of AIC (October 2015 to February 2017); Executive Vice President and Chief Financial Officer, Global Consumer Insurance of AIG (April 2012 to September 2015). | 2015 | |||
Suren Gupta | 58 | Executive Vice President, Chief Information Technology and Enterprise Services Officer of AIC (January 2020 to present); Executive Vice President, Enterprise Technology and Strategic Ventures of AIC (February 2015 to January 2020); Executive Vice President, Allstate Technology and Operations of AIC (April 2011 to February 2015). | 2011 | |||
Susan L. Lees | 62 | Executive Vice President, Chief Legal Officer, General Counsel, and Secretary of The Allstate Corporation and AIC (January 2020 to present); Executive Vice President, General Counsel, and Secretary of The Allstate Corporation (May 2013 to January 2020) and of AIC (June 2013 to January 2020); Executive Vice President and General Counsel of The Allstate Corporation (June 2012 to May 2013) and of AIC (June 2012 to June 2013). | 2008 | |||
Jesse E. Merten | 45 | Executive Vice President and Chief Risk Officer of AIC (December 2017 to present); Treasurer of The Allstate Corporation (January 2015 to April 2019) and of AIC (February 2015 to May 2019); Senior Vice President and Chief Financial Officer, Allstate Financial of AIC (January 2012 to February 2015). | 2012 | |||
John C. Pintozzi | 54 | Senior Vice President, Controller, and Chief Accounting Officer of The Allstate Corporation (August 2019 to present) and of AIC (September 2019 to present); Senior Vice President and Chief Financial Officer, Allstate Investments (May 2012 to August 2019) | 2005 | |||
Mario Rizzo | 53 | Executive Vice President and Chief Financial Officer of The Allstate Corporation and AIC (January 2018 to present); Senior Vice President and Chief Financial Officer, Allstate Personal Lines of AIC (February 2015 to January 2018); Senior Vice President and Treasurer of The Allstate Corporation (November 2010 to January 2015) and of AIC (November 2010 to February 2015). | 2010 | |||
Glenn T. Shapiro | 54 | President, Personal Property-Liability of AIC (January 2020 to present); President, Allstate Personal Lines of AIC (January 2018 to January 2020); Executive Vice President, Claims of AIC (April 2016 to January 2018); Executive Vice President and Chief Claims Officer of Liberty Mutual Commercial Insurance (May 2011 to March 2016). | 2016 | |||
Steven E. Shebik | 63 | Vice Chair of The Allstate Corporation and AIC (January 2018 to present); Executive Vice President and Chief Financial Officer of The Allstate Corporation (February 2012 to January 2018) and of AIC (March 2012 to January 2018). | 1999 |
![]() | Insurance and financial services | ![]() | Business, strategy and operations | ![]() | Macro, regulatory and risk environment | ||
Risks that are unique to the insurance and financial services industries | Risks that are unique to Allstate’s business and operating model | Risks that impact most companies | |||||
• Claim frequency and severity volatility • Catastrophes and severe weather • Loss cost estimates are complex and losses are unknown at the time policies are sold • Investment results are subject to volatility and valuation judgments • Large-scale pandemic events | • Highly competitive industry, impacted by new and changing technologies • Operating model effectiveness in light of changing customer preferences • Ability to maintain catastrophe reinsurance programs and limits • Fluctuations in financial strength and ratings | • Adverse changes in economic and capital market conditions • Cybersecurity controls and privacy • Regulatory and political changes • Loss of key business relationships • Ability to attract, develop and retain talent |
![]() | Insurance and financial services |
• | Bodily injury — inflation in medical costs, litigation trends and precedents and regulation |
• | Vehicle property damage — inflation in repair costs, including parts and labor rates, mix of total losses declared, costs associated with repairing sophisticated newer vehicles, model year and used-car values |
• | Homeowners — inflation in the construction industry, building materials and home furnishings, changes in the mix of loss type, and other economic and environmental factors, including short-term supply imbalances for services and supplies in areas affected by catastrophes |
• | Those experienced in prior years |
• | The average expected level used in pricing |
• | Current reinsurance coverage limits |
• | Loss estimates from hurricane and earthquake models at various levels of probability |
• | Estimating claim reserves is an inherently uncertain and complex process as expected losses are unknown at the time policies are sold. We continually refine our best estimates of losses after considering known facts and interpretations of the circumstances. |
• | Our reserving methodology may be impacted by the following: |
• | Models that rely on the assumption that past loss development patterns will persist into the future |
• | Internal factors including experience with similar cases, actual claims paid, historical trends involving claim payment patterns, pending levels of unpaid claims, loss management programs, product mix, contractual terms and changes in claim reporting and settlement practices |
• | External factors such as inflation, court decisions, changes in law or litigation imposing unintended coverage, regulatory requirements and economic conditions |
• | The ultimate cost of losses may vary materially from recorded reserves and such variance may adversely affect our results of operations and financial condition as the reserves and amounts due from reinsurers are reestimated. |
• | General weakening of the economy, which is typically reflected through higher credit spreads and lower equity valuations |
• | Declines in credit quality |
• | Declines in market interest rates, credit spreads or sustained low interest rates could lead to further declines in portfolio yields and investment income |
• | Increases in market interest rates, credit spreads or a decrease in liquidity could have an adverse effect on the value of our fixed income securities that form a substantial majority of our investment portfolios |
• | Weak performance of general partners and underlying investments unrelated to general market or economic conditions could lead to declines in investment income and cause realized losses in our limited partnership interests |
• | Concentration in any particular issuer, industry, collateral type, group of related industries, geographic sector or risk type |
• | Market observable information is less readily available |
• | The use of different valuation assumptions may have a material effect on the assets’ fair values |
• | Changing market conditions could materially affect the fair value of investments |
• | Changes in the financial profile of one of our insurance companies |
• | Changes in a rating agency’s determination of the amount of capital required to maintain a particular rating |
• | Increases in the perceived risk of our investment portfolio, a reduced confidence in management or our business strategy, as well as other considerations that may or may not be under our control |
![]() | Business, strategy and operations |
• | Whether reinsurers, their affiliates or certain indemnitors have the financial capacity and willingness to make payments under the terms of a reinsurance treaty or contract |
• | Whether insured losses meet the qualifying conditions of the reinsurance contract |
![]() | Macro, regulatory and risk environment |
• | Low or negative economic growth |
• | Sustained low interest rates |
• | Rising inflation increasing claims and claims expense |
• | Substantial increases in delinquencies or defaults on debt |
• | Significant downturns in the market value or liquidity of our investment portfolio |
• | Reduced consumer spending and business investment |
• | Confidentiality — protecting our data from disclosure to unauthorized parties |
• | Integrity — ensuring data is not changed accidentally or without authorization and is accurate |
• | Availability — ensuring our data and systems are accessible to meet our business needs |
• | Market declines, changes in business strategies or other events impacting the fair value of goodwill or purchased intangible assets could result in an impairment charge to income |
• | Pending changes to accounting for long-duration insurance contracts such as traditional life, life-contingent immediate annuities and certain voluntary accident and health insurance products will have a material effect on reserves and could adversely impact financial strength ratings |
• | Realization of our deferred tax assets assumes that we can fully utilize the deductions recognized for tax purposes; we may recognize additional tax expense if these assets are not fully utilized |
• | New tax legislative initiatives may be enacted that may impact our effective tax rate and could adversely affect our tax positions or tax liabilities |
• | Claim adjustment or call center services |
• | Human resource benefits management |
• | Information technology support |
• | Investment management services |
• | Compensation and benefits |
• | Training and re-skilling programs |
• | Reputation as a successful business with a culture of fair hiring, and of training and promoting qualified employees |
• | Recognize and respond to changing trends and other circumstances that affect employees |
• | Fraud against the company, its employees and its customers through illegal or prohibited activities |
• | Unauthorized acts or representations, unauthorized use or disclosure of personal or proprietary information, deception, and misappropriation of funds or other benefits |
Value at each year-end of $100 initial investment made on December 31, 2014 | ||||||||||||||||||||||||
12/31/2014 | 12/31/2015 | 12/31/2016 | 12/31/2017 | 12/31/2018 | 12/31/2019 | |||||||||||||||||||
Allstate | $ | 100.00 | $ | 90.04 | $ | 109.58 | $ | 157.38 | $ | 126.66 | $ | 175.82 | ||||||||||||
S&P P/C | $ | 100.00 | $ | 109.53 | $ | 126.73 | $ | 155.10 | $ | 147.83 | $ | 186.07 | ||||||||||||
S&P 500 | $ | 100.00 | $ | 101.37 | $ | 113.49 | $ | 138.26 | $ | 132.19 | $ | 173.80 |
Period | Total number of shares (or units) purchased (1) | Average price paid per share (or unit) | Total number of shares (or units) purchased as part of publicly announced plans or programs (3) | Maximum number (or approximate dollar value) of shares (or units) that may yet be purchased under the plans or programs (4) | ||||||||||
October 1, 2019 - October 31, 2019 | ||||||||||||||
Open Market Purchases | 2,479,268 | $ | 107.41 | 2,472,623 | ||||||||||
November 1, 2019 - November 30, 2019 | ||||||||||||||
Open Market Purchases | 122,866 | $ | 106.19 | 112,930 | ||||||||||
ASR Agreement (2) | 4,013,220 | — | 4,013,220 | |||||||||||
December 1, 2019 - December 31, 2019 | ||||||||||||||
Open Market Purchases | 54 | $ | 110.14 | — | ||||||||||
Total | 6,615,408 | 6,598,773 | $ | 259 | million |
(1) | In accordance with the terms of its equity compensation plans, Allstate acquired the following shares in connection with the vesting of restricted stock units and performance stock awards and the exercise of stock options held by employees and/or directors. The shares were acquired in satisfaction of withholding taxes due upon exercise or vesting and in payment of the exercise price of the options. |
(2) | On November 1, 2019, Allstate entered into an accelerated share repurchase agreement (“ASR agreement”) with Goldman Sachs & Co. LLC (“Goldman Sachs”) to purchase $500 million of our outstanding common stock. In exchange for an upfront payment of $500 million, Goldman Sachs initially delivered 4.01 million shares to Allstate. The ASR agreement settled on January 8, 2020, and we repurchased a total of 4.6 million shares at an average price of $109.51. |
(3) | From time to time, repurchases under our programs are executed under the terms of a pre-set trading plan meeting the requirements of Rule 10b5-1(c) of the Securities Exchange Act of 1934. |
(4) | On October 31, 2018, we announced the approval of a common share repurchase program for $3 billion, which was completed in January 2020. |
5-year summary of selected financial data | ||||||||||||||||||||
($ in millions, except per share data) | 2019 | 2018 | 2017 | 2016 | 2015 | |||||||||||||||
Consolidated Operating Results | ||||||||||||||||||||
Insurance premiums and contract charges | $ | 38,577 | $ | 36,513 | $ | 34,678 | $ | 33,582 | $ | 32,467 | ||||||||||
Other revenue | 1,054 | 939 | 883 | 865 | 863 | |||||||||||||||
Net investment income | 3,159 | 3,240 | 3,401 | 3,042 | 3,156 | |||||||||||||||
Realized capital gains and losses (1) | 1,885 | (877 | ) | 445 | (90 | ) | 30 | |||||||||||||
Total revenues | 44,675 | 39,815 | 39,407 | 37,399 | 36,516 | |||||||||||||||
Net income applicable to common shareholders | 4,678 | 2,012 | 3,438 | 1,692 | 2,138 | |||||||||||||||
Net income applicable to common shareholders per common share: | ||||||||||||||||||||
Net income applicable to common shareholders per common share - Basic | 14.25 | 5.78 | 9.50 | 4.54 | 5.33 | |||||||||||||||
Net income applicable to common shareholders per common share - Diluted | 14.03 | 5.70 | 9.35 | 4.48 | 5.26 | |||||||||||||||
Cash dividends declared per common share | 2.00 | 1.84 | 1.48 | 1.32 | 1.20 | |||||||||||||||
Consolidated Financial Position | ||||||||||||||||||||
Investments | $ | 88,362 | $ | 81,260 | $ | 82,803 | $ | 81,799 | $ | 77,758 | ||||||||||
Total assets | 119,950 | 112,249 | 112,422 | 108,610 | 104,656 | |||||||||||||||
Reserves for claims and claims expense, life-contingent contract benefits and contractholder funds | 57,704 | 58,002 | 58,308 | 57,749 | 57,411 | |||||||||||||||
Long-term debt | 6,631 | 6,451 | 6,350 | 6,347 | 5,124 | |||||||||||||||
Shareholders’ equity | 25,998 | 21,312 | 22,551 | 20,569 | 20,020 | |||||||||||||||
Shareholders’ equity per diluted common share | 73.12 | 57.56 | 57.58 | 50.76 | 47.33 |
(1) | Due to the adoption of a new accounting standard for the recognition and measurement of financial assets and financial liabilities, the periodic change in fair value of equity investments is recognized within realized capital gains and losses on the Consolidated Statements of Operations effective January 1, 2018. As a result, 2019 and 2018 net realized capital gains and losses are not comparable to other periods presented. |
Page | |||
2019 Highlights | |||
Property-Liability Operations | |||
– Allstate brand | |||
– Esurance brand | |||
– Encompass brand | |||
Service Businesses | |||
Claims and Claims Expense Reserves | |||
Allstate Life | |||
Allstate Benefits | |||
Allstate Annuities | |||
Application of Critical Accounting Estimates | |||
• | Allstate Protection: premium, policies in force (“PIF”), new business sales, policy retention, price changes, claim frequency and severity, catastrophes, loss ratio, expenses, underwriting results, and relative competitive position. |
• | Service Businesses: revenues, premium written, PIF, adjusted net income and net income. |
• | Allstate Life: premiums and contract charges, new business sales, PIF, benefit spread, investment spread, expenses, adjusted net income and net income. |
• | Allstate Benefits: premiums, new business sales, PIF, benefit ratio, expenses, adjusted net income and net income. |
• | Allstate Annuities: investment spread, asset-liability matching, contract benefits, expenses, adjusted net income, net income and invested assets. |
• | Investments: exposure to market risk, asset allocation, credit quality/experience, total return, net investment income, cash flows, realized capital gains and losses, unrealized capital gains and losses, stability of long-term returns, and asset and liability duration. |
• | Financial condition: liquidity, parent holding company deployable assets, financial strength ratings, operating leverage, debt levels, book value per share and return on equity. |
• 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 deferred sales inducement costs (“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 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 |
Allstate Delivered on 2019 Operating Priorities (1) | |||||
Better Serve Customers | Enterprise Net Promoter Score increased with improvement at most businesses | ||||
Grow Customer Base | Total policies in force reached 145.9 million, a 27.7% increase from prior year | ||||
Property-Liability policies increased 1.3% from prior year to 33.7 million | |||||
Achieve Target Returns on Capital | Strong results in Property-Liability insurance with a combined ratio of 92.0 | ||||
21.7% return on average common shareholders’ equity in 2019 | |||||
Proactively Manage Investments | Net investment income of $3.2 billion in 2019 reflects higher market-based portfolio yields | ||||
Performance-based results were below expectations, but long-term returns have been strong | |||||
Total return of 9.2% on $88.4 billion investment portfolio in 2019 | |||||
Build Long-Term Growth Platforms | Accelerating Transformative Growth Plan | ||||
Arity continued to expand telematics usage and capabilities | |||||
Expanding Allstate Identity Protection |
(1) | 2020 operating priorities will remain consistent with the 2019 priorities. |
Consolidated Net Income | ||||
($ in millions) |
Consolidated net income applicable to common shareholders increased $2.67 billion in 2019 compared to 2018, primarily due to net realized capital gains in 2019 compared to losses in 2018 from increased valuations on equity investments and higher underwriting income in Allstate Protection. |
Total Revenue | ||||
($ in millions) |
Total revenue increased 12.2% in 2019 compared to 2018, driven by net realized capital gains in 2019 compared to losses in 2018 and a 5.7% increase in insurance premiums and contract charges. Insurance premiums increased in the following segments: Allstate Protection (Allstate and Esurance brands), Service Businesses (Allstate Protection Plans and Allstate Dealer Services), Allstate Life and Allstate Benefits. |
Net Investment Income | ||||
($ in millions) |
Net investment income decreased 2.5% in 2019 compared to 2018, primarily due to lower income from performance-based investment results, partially offset by higher income from the market-based portfolio. |
Years Ended December 31, | ||||||||||||
($ in millions) | 2019 | 2018 | 2017 | |||||||||
Revenues | ||||||||||||
Property and casualty insurance premiums | $ | 36,076 | $ | 34,048 | $ | 32,300 | ||||||
Life premiums and contract charges | 2,501 | 2,465 | 2,378 | |||||||||
Other revenue | 1,054 | 939 | 883 | |||||||||
Net investment income | 3,159 | 3,240 | 3,401 | |||||||||
Realized capital gains and losses | 1,885 | (877 | ) | 445 | ||||||||
Total revenues | 44,675 | 39,815 | 39,407 | |||||||||
Costs and expenses | ||||||||||||
Property and casualty insurance claims and claims expense | (23,976 | ) | (22,778 | ) | (21,847 | ) | ||||||
Life contract benefits and interest credited to contractholder funds | (2,679 | ) | (2,627 | ) | (2,613 | ) | ||||||
Amortization of deferred policy acquisition costs | (5,533 | ) | (5,222 | ) | (4,784 | ) | ||||||
Operating, restructuring and interest expenses | (6,058 | ) | (5,993 | ) | (5,627 | ) | ||||||
Pension and other postretirement remeasurement gains and losses | (114 | ) | (468 | ) | 217 | |||||||
Amortization of purchased intangibles | (126 | ) | (105 | ) | (99 | ) | ||||||
Impairment of goodwill and purchased intangibles | (106 | ) | — | (125 | ) | |||||||
Total costs and expenses | (38,592 | ) | (37,193 | ) | (34,878 | ) | ||||||
Gain on disposition of operations | 6 | 6 | 20 | |||||||||
Income tax expense | (1,242 | ) | (468 | ) | (995 | ) | ||||||
Net income | 4,847 | 2,160 | 3,554 | |||||||||
Preferred stock dividends | (169 | ) | (148 | ) | (116 | ) | ||||||
Net income applicable to common shareholders | $ | 4,678 | $ | 2,012 | $ | 3,438 |
• | Loss ratio: the ratio of claims and claims expense to premiums earned. Loss ratios include the impact of catastrophe losses. |
• | Expense ratio: the ratio of amortization of DAC, operating costs and expenses, amortization or impairment of purchased intangibles and restructuring and related charges, less other revenue to premiums earned. |
• | Combined ratio: is the sum of the loss ratio and the expense ratio. The difference between 100% and the combined ratio represents underwriting income as a percentage of premiums earned, or underwriting margin. |
• | Effect of catastrophe losses on combined ratio: the ratio of catastrophe losses included in claims and claims expense to premiums earned. This ratio includes prior year reserve reestimates of catastrophe losses. |
• | Effect of prior year reserve reestimates on combined ratio: the ratio of prior year reserve reestimates included in claims and claims expense to premiums earned. This ratio includes prior year reserve reestimates of catastrophe losses. |
• | Effect of amortization of purchased intangibles on combined ratio: the ratio of amortization of purchased intangibles to premiums earned. |
• | Effect of impairment of purchased intangibles on combined ratio: the ratio of impairment of purchased intangibles to premiums earned. |
• | Effect of restructuring and related charges on combined ratio: the ratio of restructuring and related charges to premiums earned. |
• | Effect of Discontinued Lines and Coverages on combined ratio: the ratio of claims and claims expense and operating costs and expenses in the Discontinued Lines and Coverages segment to Property-Liability premiums earned. The sum of the effect of Discontinued Lines and Coverages on the combined ratio and the Allstate Protection combined ratio is equal to the Property-Liability combined ratio. |
Summarized financial data | ||||||||||||
($ in millions, except ratios) | 2019 | 2018 | 2017 | |||||||||
Premiums written | $ | 35,419 | $ | 33,555 | $ | 31,648 | ||||||
Revenues | ||||||||||||
Premiums earned | $ | 34,843 | $ | 32,950 | $ | 31,433 | ||||||
Other revenue | 741 | 738 | 703 | |||||||||
Net investment income | 1,533 | 1,464 | 1,478 | |||||||||
Realized capital gains and losses | 1,470 | (639 | ) | 401 | ||||||||
Total revenues | 38,587 | 34,513 | 34,015 | |||||||||
Costs and expenses | ||||||||||||
Claims and claims expense | (23,622 | ) | (22,435 | ) | (21,484 | ) | ||||||
Amortization of DAC | (4,649 | ) | (4,475 | ) | (4,205 | ) | ||||||
Operating costs and expenses | (4,420 | ) | (4,465 | ) | (4,164 | ) | ||||||
Restructuring and related charges | (38 | ) | (60 | ) | (78 | ) | ||||||
Impairment of purchased intangibles (1) | (51 | ) | — | — | ||||||||
Total costs and expenses | (32,780 | ) | (31,435 | ) | (29,931 | ) | ||||||
Gain on disposition of operations | — | — | 14 | |||||||||
Income tax expense | (1,196 | ) | (613 | ) | (1,285 | ) | ||||||
Net income applicable to common shareholders | $ | 4,611 | $ | 2,465 | $ | 2,813 | ||||||
Underwriting income | $ | 2,804 | $ | 2,253 | $ | 2,205 | ||||||
Net investment income | 1,533 | 1,464 | 1,478 | |||||||||
Income tax expense on operations | (887 | ) | (747 | ) | (1,187 | ) | ||||||
Realized capital gains and losses, after-tax | 1,161 | (500 | ) | 272 | ||||||||
Gain on disposition of operations, after-tax | — | — | 9 | |||||||||
Tax Legislation (expense) benefit | — | (5 | ) | 36 | ||||||||
Net income applicable to common shareholders | $ | 4,611 | $ | 2,465 | $ | 2,813 | ||||||
Catastrophe losses | ||||||||||||
Catastrophe losses, excluding reserve reestimates | $ | 2,509 | $ | 2,830 | $ | 3,246 | ||||||
Catastrophe reserve reestimates (2) | 48 | 25 | (18 | ) | ||||||||
Total catastrophe losses | $ | 2,557 | $ | 2,855 | $ | 3,228 | ||||||
Non-catastrophe reserve reestimates (2) | (176 | ) | (278 | ) | (487 | ) | ||||||
Prior year reserve reestimates (2) | (128 | ) | (253 | ) | (505 | ) | ||||||
GAAP operating ratios | ||||||||||||
Loss ratio | 67.8 | 68.1 | 68.4 | |||||||||
Expense ratio (3) | 24.2 | 25.1 | 24.6 | |||||||||
Combined ratio | 92.0 | 93.2 | 93.0 | |||||||||
Effect of catastrophe losses on combined ratio | 7.3 | 8.7 | 10.3 | |||||||||
Effect of prior year reserve reestimates on combined ratio | (0.3 | ) | (0.7 | ) | (1.6 | ) | ||||||
Effect of catastrophe losses included in prior year reserve reestimates on combined ratio | 0.1 | 0.1 | (0.1 | ) | ||||||||
Effect of restructuring and related charges on combined ratio | 0.1 | 0.2 | 0.2 | |||||||||
Effect of impairment of purchased intangibles (1) | 0.1 | — | — | |||||||||
Effect of Discontinued Lines and Coverages on combined ratio | 0.4 | 0.3 | 0.3 |
(1) | Our Transformative Growth Plan included a decision to reposition the Allstate brand for broader customer access, resulting in a $51 million impairment for the Esurance brand trade name. See the Esurance section of this Item for further details. |
(2) | Favorable reserve reestimates are shown in parentheses. |
(3) | Other revenue is deducted from operating costs and expenses in the expense ratio calculation. |
Net investment income | ||||||||||||
For the years ended December 31, | ||||||||||||
($ in millions) | 2019 | 2018 | 2017 | |||||||||
Fixed income securities | $ | 1,066 | $ | 943 | $ | 909 | ||||||
Equity securities | 155 | 121 | 122 | |||||||||
Mortgage loans | 17 | 17 | 12 | |||||||||
Limited partnership interests | 296 | 378 | 432 | |||||||||
Short-term investments | 56 | 40 | 17 | |||||||||
Other | 107 | 123 | 100 | |||||||||
Investment income, before expense | 1,697 | 1,622 | 1,592 | |||||||||
Investment expense (1) (2) | (164 | ) | (158 | ) | (114 | ) | ||||||
Net investment income | $ | 1,533 | $ | 1,464 | $ | 1,478 |
(1) | Investment expense includes $51 million and $45 million of investee level expenses in 2019 and 2018, respectively. Investee level expenses include depreciation and asset level operating expenses on directly held real estate and other consolidated investments. |
(2) | Investment expense includes $27 million and $18 million related to the portion of reinvestment income on securities lending collateral paid to the counterparties in 2019 and 2018, respectively. |
Realized capital gains and losses | ||||||||||||
For the years ended December 31, | ||||||||||||
($ in millions) | 2019 | 2018 | 2017 | |||||||||
Impairment write-downs | $ | (26 | ) | $ | (5 | ) | $ | (56 | ) | |||
Change in intent write-downs | — | — | (44 | ) | ||||||||
Net OTTI losses recognized in earnings | (26 | ) | (5 | ) | (100 | ) | ||||||
Sales | 498 | (148 | ) | 531 | ||||||||
Valuation of equity investments | 1,024 | (522 | ) | — | ||||||||
Valuation and settlements of derivative instruments | (26 | ) | 36 | (30 | ) | |||||||
Realized capital gains and losses, pre-tax | 1,470 | (639 | ) | 401 | ||||||||
Income tax (expense) benefit | (309 | ) | 139 | (129 | ) | |||||||
Realized capital gains and losses, after-tax | $ | 1,161 | $ | (500 | ) | $ | 272 |
Underwriting results | ||||||||||||
For the years ended December 31, | ||||||||||||
($ in millions) | 2019 | 2018 | 2017 | |||||||||
Premiums written | $ | 35,419 | $ | 33,555 | $ | 31,648 | ||||||
Premiums earned | $ | 34,843 | $ | 32,950 | $ | 31,433 | ||||||
Other revenue | 741 | 738 | 703 | |||||||||
Claims and claims expense | (23,517 | ) | (22,348 | ) | (21,388 | ) | ||||||
Amortization of DAC | (4,649 | ) | (4,475 | ) | (4,205 | ) | ||||||
Other costs and expenses | (4,417 | ) | (4,462 | ) | (4,161 | ) | ||||||
Restructuring and related charges | (38 | ) | (60 | ) | (78 | ) | ||||||
Impairment of purchased intangibles | (51 | ) | — | — | ||||||||
Underwriting income | $ | 2,912 | $ | 2,343 | $ | 2,304 | ||||||
Catastrophe losses | $ | 2,557 | $ | 2,855 | $ | 3,228 | ||||||
Underwriting income (loss) by line of business | ||||||||||||
Auto | $ | 1,688 | $ | 1,791 | $ | 1,437 | ||||||
Homeowners | 914 | 483 | 689 | |||||||||
Other personal lines (1) | 224 | 110 | 141 | |||||||||
Commercial lines | 14 | (83 | ) | (13 | ) | |||||||
Other business lines (2) | 75 | 49 | 51 | |||||||||
Answer Financial | (3 | ) | (7 | ) | (1 | ) | ||||||
Underwriting income | $ | 2,912 | $ | 2,343 | $ | 2,304 |
(1) | Other personal lines include renters, condominium, landlord and other personal lines products. |
(2) | Other business lines primarily represent Ivantage, a general agency for Allstate exclusive agencies. Ivantage provides agencies a solution for their customers when coverage through Allstate brand underwritten products is not available. |
Changes in underwriting results from prior year by component and by line of business (1) | ||||||||||||||||||||||||||||||||||||||||
For the year ended December 31, | ||||||||||||||||||||||||||||||||||||||||
Auto | Homeowners | Other personal lines | Commercial lines | Allstate Protection (2) | ||||||||||||||||||||||||||||||||||||
($ in millions) | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | ||||||||||||||||||||||||||||||
Underwriting income (loss) - prior year | $ | 1,791 | $ | 1,437 | $ | 483 | $ | 689 | $ | 110 | $ | 141 | $ | (83 | ) | $ | (13 | ) | $ | 2,343 | $ | 2,304 | ||||||||||||||||||
Changes in underwriting income (loss) from: | ||||||||||||||||||||||||||||||||||||||||
Increase (decrease) premiums earned | 1,218 | 1,092 | 395 | 207 | 53 | 58 | 227 | 160 | 1,893 | 1,517 | ||||||||||||||||||||||||||||||
Increase (decrease) other revenue | 1 | 30 | — | 3 | (1 | ) | 4 | — | (2 | ) | 3 | 35 | ||||||||||||||||||||||||||||
(Increase) decrease incurred claims and claims expense (“losses”): | ||||||||||||||||||||||||||||||||||||||||
Incurred losses, excluding catastrophe losses and reserve reestimates | (1,002 | ) | (642 | ) | (183 | ) | (263 | ) | 21 | (72 | ) | (219 | ) | (138 | ) | (1,383 | ) | (1,115 | ) | |||||||||||||||||||||
Catastrophe losses, excluding reserve reestimates | (33 | ) | 336 | 294 | 92 | 51 | (13 | ) | 9 | 1 | 321 | 416 | ||||||||||||||||||||||||||||
Catastrophe reserve reestimates | (22 | ) | 24 | (1 | ) | (72 | ) | (1 | ) | 4 | 1 | 1 | (23 | ) | (43 | ) | ||||||||||||||||||||||||
Non-catastrophe reserve reestimates | (110 | ) | (59 | ) | (50 | ) | (73 | ) | (14 | ) | 4 | 90 | (90 | ) | (84 | ) | (218 | ) | ||||||||||||||||||||||
Losses subtotal | (1,167 | ) | (341 | ) | 60 | (316 | ) | 57 | (77 | ) | (119 | ) | (226 | ) | (1,169 | ) | (960 | ) | ||||||||||||||||||||||
(Increase) decrease expenses | (155 | ) | (427 | ) | (24 | ) | (100 | ) | 5 | (16 | ) | (11 | ) | (2 | ) | (158 | ) | (553 | ) | |||||||||||||||||||||
Underwriting income (loss) | $ | 1,688 | $ | 1,791 | $ | 914 | $ | 483 | $ | 224 | $ | 110 | $ | 14 | $ | (83 | ) | $ | 2,912 | $ | 2,343 |
(1) | The 2019 column presents changes in 2019 compared to 2018. The 2018 column presents changes in 2018 compared to 2017. |
(2) | Includes other business lines underwriting income of $75 million and $49 million in 2019 and 2018, respectively, and Answer Financial underwriting loss of $3 million and $7 million in 2019 and 2018, respectively. |
Premiums written and earned by line of business | ||||||||||||
For the years ended December 31, | ||||||||||||
($ in millions) | 2019 | 2018 | 2017 | |||||||||
Premiums written | ||||||||||||
Auto | $ | 24,462 | $ | 23,367 | $ | 22,042 | ||||||
Homeowners | 8,165 | 7,698 | 7,350 | |||||||||
Other personal lines | 1,890 | 1,831 | 1,768 | |||||||||
Subtotal – Personal lines | 34,517 | 32,896 | 31,160 | |||||||||
Commercial lines | 902 | 659 | 488 | |||||||||
Total premiums written | $ | 35,419 | $ | 33,555 | $ | 31,648 | ||||||
Reconciliation of premiums written to premiums earned: | ||||||||||||
Increase in unearned premiums | (614 | ) | (544 | ) | (258 | ) | ||||||
Other | 38 | (61 | ) | 43 | ||||||||
Total premiums earned | $ | 34,843 | $ | 32,950 | $ | 31,433 | ||||||
Auto | $ | 24,188 | $ | 22,970 | $ | 21,878 | ||||||
Homeowners | 7,912 | 7,517 | 7,310 | |||||||||
Other personal lines | 1,861 | 1,808 | 1,750 | |||||||||
Subtotal – Personal lines | 33,961 | 32,295 | 30,938 | |||||||||
Commercial lines | 882 | 655 | 495 | |||||||||
Total premiums earned | $ | 34,843 | $ | 32,950 | $ | 31,433 |
Unearned premium balance and the time frame in which we expect to recognize these premiums as earned | ||||||||||||||||||||
($ in millions) | As of December 31, | % earned after | ||||||||||||||||||
2019 | 2018 | Three months | Six months | Nine months | Twelve months | |||||||||||||||
Allstate brand: | ||||||||||||||||||||
Auto | $ | 5,916 | $ | 5,635 | 70.9 | % | 96.4 | % | 99.1 | % | 100.0 | % | ||||||||
Homeowners | 4,158 | 3,908 | 43.3 | % | 75.5 | % | 94.2 | % | 100.0 | % | ||||||||||
Other personal lines | 950 | 917 | 43.5 | % | 75.5 | % | 94.1 | % | 100.0 | % | ||||||||||
Commercial lines | 270 | 250 | 43.4 | % | 74.7 | % | 93.7 | % | 100.0 | % | ||||||||||
Total Allstate brand | 11,294 | 10,710 | 58.0 | % | 86.6 | % | 96.8 | % | 100.0 | % | ||||||||||
Esurance brand: | ||||||||||||||||||||
Auto | 489 | 471 | 74.4 | % | 99.1 | % | 99.8 | % | 100.0 | % | ||||||||||
Homeowners | 62 | 53 | 43.4 | % | 75.6 | % | 94.2 | % | 100.0 | % | ||||||||||
Other personal lines | 2 | 2 | 43.6 | % | 75.5 | % | 94.2 | % | 100.0 | % | ||||||||||
Total Esurance brand | 553 | 526 | 70.8 | % | 96.3 | % | 99.1 | % | 100.0 | % | ||||||||||
Encompass brand: | ||||||||||||||||||||
Auto | 276 | 275 | 44.1 | % | 75.9 | % | 94.3 | % | 100.0 | % | ||||||||||
Homeowners | 214 | 212 | 43.9 | % | 75.8 | % | 94.3 | % | 100.0 | % | ||||||||||
Other personal lines | 41 | 42 | 44.2 | % | 76.0 | % | 94.3 | % | 100.0 | % | ||||||||||
Total Encompass brand | 531 | 529 | 44.0 | % | 75.9 | % | 94.3 | % | 100.0 | % | ||||||||||
Allstate Protection unearned premiums | $ | 12,378 | $ | 11,765 | 57.9 | % | 86.5 | % | 96.8 | % | 100.0 | % |
Combined ratios by line of business | |||||||||||||||||||||||||||
For the years ended December 31, | |||||||||||||||||||||||||||
Loss ratio | Expense ratio (1) | Combined ratio | |||||||||||||||||||||||||
2019 | 2018 | 2017 | 2019 | 2018 | 2017 | 2019 | 2018 | 2017 | |||||||||||||||||||
Auto | 68.2 | 66.8 | 68.5 | 24.8 | 25.4 | 24.9 | 93.0 | 92.2 | 93.4 | ||||||||||||||||||
Homeowners | 65.1 | 69.4 | 67.0 | 23.3 | 24.2 | 23.6 | 88.4 | 93.6 | 90.6 | ||||||||||||||||||
Other personal lines | 61.1 | 66.0 | 63.8 | 26.9 | 27.9 | 28.1 | 88.0 | 93.9 | 91.9 | ||||||||||||||||||
Commercial lines | 81.3 | 91.3 | 75.1 | 17.1 | 21.4 | 27.5 | 98.4 | 112.7 | 102.6 | ||||||||||||||||||
Total | 67.5 | 67.8 | 68.1 | 24.1 | 25.1 | 24.6 | 91.6 | 92.9 | 92.7 |
(1) | Other revenue is deducted from operating costs and expenses in the expense ratio calculation. |
Loss ratios by line of business | ||||||||||||||||||||||||||||||||||||
For the years ended December 31, | ||||||||||||||||||||||||||||||||||||
Loss ratio | Effect of catastrophe losses on combined ratio | Effect of prior year reserve reestimates on combined ratio | Effect of catastrophe losses included in prior year reserve reestimates on combined ratio | |||||||||||||||||||||||||||||||||
2019 | 2018 | 2017 | 2019 | 2018 | 2017 | 2019 | 2018 | 2017 | 2019 | 2018 | 2017 | |||||||||||||||||||||||||
Auto | 68.2 | 66.8 | 68.5 | 1.7 | 1.6 | 3.3 | (1.4 | ) | (2.0 | ) | (2.3 | ) | (0.1 | ) | (0.2 | ) | (0.1 | ) | ||||||||||||||||||
Homeowners | 65.1 | 69.4 | 67.0 | 24.8 | 30.0 | 31.1 | 0.8 | 0.2 | (1.7 | ) | 0.8 | 0.8 | (0.1 | ) | ||||||||||||||||||||||
Other personal lines | 61.1 | 66.0 | 63.8 | 9.0 | 12.1 | 11.9 | 0.5 | (0.4 | ) | 0.1 | — | — | 0.2 | |||||||||||||||||||||||
Commercial lines | 81.3 | 91.3 | 75.1 | 1.4 | 3.4 | 4.8 | 1.9 | 16.5 | 3.9 | (0.1 | ) | — | 0.2 | |||||||||||||||||||||||
Total | 67.5 | 67.8 | 68.1 | 7.3 | 8.7 | 10.3 | (0.7 | ) | (1.0 | ) | (1.9 | ) | 0.1 | 0.1 | (0.1 | ) |
Catastrophe losses in 2019 by the size of event | ||||||||||||||||||||
($ in millions) | Number of events | Claims and claims expense | Combined ratio impact | Average catastrophe loss per event | ||||||||||||||||
Size of catastrophe loss | ||||||||||||||||||||
Greater than $250 million | 1 | 1.0 | % | $ | 362 | 14.1 | % | 1.0 | $ | 362 | ||||||||||
$101 million to $250 million | 2 | 1.8 | 342 | 13.4 | 1.0 | 171 | ||||||||||||||
$50 million to $100 million | 9 | 8.2 | 662 | 25.9 | 1.9 | 74 | ||||||||||||||
Less than $50 million | 98 | 89.0 | 1,143 | 44.7 | 3.3 | 12 | ||||||||||||||
Total | 110 | 100.0 | % | 2,509 | 98.1 | 7.2 | 23 | |||||||||||||
Prior year reserve reestimates | 48 | 1.9 | 0.1 | |||||||||||||||||
Total catastrophe losses | $ | 2,557 | 100.0 | % | 7.3 |
Catastrophe losses by the type of event | |||||||||||||||||||||
For the years ended December 31, | |||||||||||||||||||||
($ in millions) | Number of events | 2019 | Number of events | 2018 | Number of events | 2017 | |||||||||||||||
Hurricanes/Tropical storms | 3 | $ | 86 | 3 | $ | 200 | 3 | $ | 613 | ||||||||||||
Tornadoes | 6 | 551 | 3 | 17 | 3 | 100 | |||||||||||||||
Wind/Hail | 91 | 1,721 | 99 | 1,752 | 93 | 1,973 | |||||||||||||||
Wildfires | 4 | 28 | 10 | 745 | 10 | 536 | |||||||||||||||
Other events | 6 | 123 | 2 | 116 | 2 | 24 | |||||||||||||||
Prior year reserve reestimates | 48 | 25 | (18 | ) | |||||||||||||||||
Total catastrophe losses | 110 | $ | 2,557 | 117 | $ | 2,855 | 111 | $ | 3,228 |
• | Continuing to limit or not offer new homeowners, manufactured home and landlord package policy business in certain coastal geographies. |
• | Increased capacity in our brokerage platform for customers not offered an Allstate policy. |
• | We began to write a limited number of homeowners policies in select areas of California in 2016, additionally we: |
– | Continue to renew current policyholders and allow replacement policies for existing customers who buy a new home or change their residence to rental property |
– | Have decreased our overall homeowner exposures in California by more than 50% since 2007 |
– | Write homeowners coverage through our excess and surplus lines carrier, North Light Specialty Insurance Company (“North Light”), which includes earthquake coverage (other than fire following earthquakes) that is currently ceded via quota share reinsurance. |
• | In certain states, we have been ceding wind exposure related to insured property located in wind pool eligible areas. |
• | Starting in the second quarter of 2017, we began writing a limited number of homeowners policies in select areas of Florida and continue to support existing customers who replace their currently-insured home with an acceptable property. Encompass withdrew from property lines in Florida in 2009. |
• | Tropical cyclone deductibles are generally higher than all peril deductibles and are in place for a large portion of coastal insured properties. |
• | Auto comprehensive damage coverage generally includes coverage for flood-related loss. We have additional catastrophe exposure, beyond the property lines, for auto customers who have purchased comprehensive damage coverage. |
• | We offer a homeowners policy available in 43 states, Allstate House and Home®, that provides options of coverage for roof damage, including graduated coverage and pricing based on roof type and age. In 2019, premiums written totaled $3.44 billion or 42.1% of homeowners premiums written compared to $2.84 billion or 36.9% in 2018. |
Impact of specific costs and expenses on the expense ratio | |||||||||
For the years ended December 31, | |||||||||
2019 | 2018 | 2017 | |||||||
Amortization of DAC | 13.4 | 13.6 | 13.4 | ||||||
Advertising expense | 2.4 | 2.5 | 2.2 | ||||||
Other costs and expenses | 8.1 | 8.8 | 8.8 | ||||||
Restructuring and related charges | 0.1 | 0.2 | 0.2 | ||||||
Impairment of purchased intangibles | 0.1 | — | — | ||||||
Total expense ratio | 24.1 | 25.1 | 24.6 |
DAC balance as of December 31 by product type | ||||||||
($ in millions) | 2019 | 2018 | ||||||
Auto | $ | 849 | $ | 845 | ||||
Homeowners | 600 | 599 | ||||||
Other personal lines | 141 | 141 | ||||||
Commercial lines | 34 | 33 | ||||||
Total DAC | $ | 1,624 | $ | 1,618 |
Premiums written, policies in force and underwriting income (loss) | |||||||||||||||||||||||||||||
($ in millions) | Allstate brand | Esurance brand | Encompass brand | Allstate Protection | |||||||||||||||||||||||||
Premiums written | Amount | Percent to total brand | Amount | Percent to total brand | Amount | Percent to total brand | Amount | Percent to total | |||||||||||||||||||||
Auto | $ | 21,936 | 67.9 | % | $ | 1,986 | 94.0 | % | $ | 540 | 52.9 | % | $ | 24,462 | 69.1 | % | |||||||||||||
Homeowners | 7,645 | 23.7 | 119 | 5.6 | 401 | 39.3 | 8,165 | 23.1 | |||||||||||||||||||||
Other personal lines | 1,803 | 5.6 | 8 | 0.4 | 79 | 7.8 | 1,890 | 5.3 | |||||||||||||||||||||
Commercial lines | 902 | 2.8 | — | — | — | — | 902 | 2.5 | |||||||||||||||||||||
Total | $ | 32,286 | 100.0 | % | $ | 2,113 | 100.0 | % | $ | 1,020 | 100.0 | % | $ | 35,419 | 100.0 | % | |||||||||||||
Percent to total Allstate Protection | 91.1 | % | 6.0 | % | 2.9 | % | 100.0 | % | |||||||||||||||||||||
PIF (thousands) | |||||||||||||||||||||||||||||
Auto | 20,398 | 65.4 | % | 1,515 | 90.9 | % | 493 | 61.4 | % | 22,406 | 66.5 | % | |||||||||||||||||
Homeowners | 6,254 | 20.0 | 105 | 6.3 | 234 | 29.1 | 6,593 | 19.6 | |||||||||||||||||||||
Other personal lines | 4,344 | 13.9 | 46 | 2.8 | 76 | 9.5 | 4,466 | 13.2 | |||||||||||||||||||||
Commercial lines | 227 | 0.7 | — | — | — | — | 227 | 0.7 | |||||||||||||||||||||
Total | 31,223 | 100.0 | % | 1,666 | 100.0 | % | 803 | 100.0 | % | 33,692 | 100.0 | % | |||||||||||||||||
Percent to total Allstate Protection | 92.7 | % | 4.9 | % | 2.4 | % | 100.0 | % | |||||||||||||||||||||
Underwriting income (loss) | |||||||||||||||||||||||||||||
Auto | $ | 1,727 | 58.5 | % | $ | (47 | ) | (1 | ) | 109.4 | % | $ | 8 | 114.3 | % | $ | 1,688 | 58.0 | % | ||||||||||
Homeowners | 910 | 30.9 | 2 | (4.7 | ) | 2 | 28.6 | 914 | 31.4 | ||||||||||||||||||||
Other personal lines | 225 | 7.6 | 2 | (4.7 | ) | (3 | ) | (42.9 | ) | 224 | 7.6 | ||||||||||||||||||
Commercial lines | 14 | 0.5 | — | — | — | — | 14 | 0.5 | |||||||||||||||||||||
Other business lines | 75 | 2.5 | — | — | — | — | 75 | 2.6 | |||||||||||||||||||||
Answer Financial | — | — | — | — | — | — | (3 | ) | (0.1 | ) | |||||||||||||||||||
Total | $ | 2,951 | 100.0 | % | $ | (43 | ) | 100.0 | % | $ | 7 | 100.0 | % | $ | 2,912 | 100.0 | % |
(1) | Our Transformative Growth Plan included a decision to reposition the Allstate brand for broader customer access, resulting in a $51 million impairment for the Esurance brand trade name. See the Esurance section of this Item for further details. |
• | PIF: Policy counts are based on items rather than customers. A multi-car customer would generate multiple item (policy) counts, even if all cars were insured under one policy while Commercial lines PIF counts for shared economy agreements typically reflect contracts that cover multiple rather than individual drivers. |
• | New issued applications: Item counts of automobile or homeowner insurance applications for insurance policies that were issued during the period, regardless of whether the customer was previously insured by another Allstate Protection brand. Allstate brand includes automobiles added by existing customers when they exceed the number allowed (currently 10) on a policy. |
• | Average premium-gross written (“average premium”): Gross premiums written divided by issued item count. Gross premiums written include the impacts from discounts, surcharges and ceded reinsurance premiums and exclude the impacts from mid-term premium adjustments and premium refund accruals. Average premiums represent the appropriate policy term for each line. Allstate and Esurance brand policy terms are 6 |
• | Renewal ratio: Renewal policy item counts issued during the period, based on contract effective dates, divided by the total policy item counts issued 6 months prior for auto (generally 12 months prior for Encompass brand) or 12 months prior for homeowners. |
• | Approved rate changes: Based on historical premiums written in locations where the brands operate, not including rate plan enhancements (such as the introduction of discounts and surcharges that result in no change in the overall rate level) and initial rates filed for insurance subsidiaries initially writing business in a location. Includes rate changes approved based on our net cost of reinsurance. The rate change percentages are calculated using approved rate changes during the period as a percentage of: |
– | Total brand premiums written |
– | Premiums written in respective locations with rate changes |
Underwriting results | ||||||||||||
For the years ended December 31, | ||||||||||||
($ in millions) | 2019 | 2018 | 2017 | |||||||||
Premiums written | $ | 32,286 | $ | 30,591 | $ | 28,885 | ||||||
Premiums earned | $ | 31,738 | $ | 30,058 | $ | 28,631 | ||||||
Other revenue | 583 | 582 | 559 | |||||||||
Claims and claims expense | (21,178 | ) | (20,237 | ) | (19,273 | ) | ||||||
Amortization of DAC | (4,411 | ) | (4,242 | ) | (3,963 | ) | ||||||
Other costs and expenses | (3,748 | ) | (3,752 | ) | (3,497 | ) | ||||||
Restructuring and related charges | (33 | ) | (52 | ) | (70 | ) | ||||||
Underwriting income | $ | 2,951 | $ | 2,357 | $ | 2,387 | ||||||
Catastrophe losses | $ | 2,391 | $ | 2,701 | $ | 2,985 | ||||||
Underwriting income (loss) by line of business | ||||||||||||
Auto | $ | 1,727 | $ | 1,788 | $ | 1,465 | ||||||
Homeowners | 910 | 496 | 754 | |||||||||
Other personal lines (1) | 225 | 107 | 130 | |||||||||
Commercial lines | 14 | (83 | ) | (13 | ) | |||||||
Other business lines (2) | 75 | 49 | 51 | |||||||||
Underwriting income | $ | 2,951 | $ | 2,357 | $ | 2,387 |
(1) | Other personal lines include renters, condominium, landlord and other personal lines products. |
(2) | Other business lines represent Ivantage. |
Changes in underwriting results from prior year by component (1) | ||||||||
For the years ended December 31, | ||||||||
($ in millions) | 2019 | 2018 | ||||||
Underwriting income - prior year | $ | 2,357 | $ | 2,387 | ||||
Changes in underwriting income (loss) from: | ||||||||
Increase (decrease) premiums earned | 1,680 | 1,427 | ||||||
Increase (decrease) other revenue | 1 | 23 | ||||||
(Increase) decrease incurred claims and claims expense (“losses”): | ||||||||
Incurred losses, excluding catastrophe losses and reserve reestimates | (1,185 | ) | (1,022 | ) | ||||
Catastrophe losses, excluding reserve reestimates | 337 | 311 | ||||||
Catastrophe reserve reestimates | (27 | ) | (27 | ) | ||||
Non-catastrophe reserve reestimates | (66 | ) | (226 | ) | ||||
Losses subtotal | (941 | ) | (964 | ) | ||||
(Increase) decrease expenses | (146 | ) | (516 | ) | ||||
Underwriting income | $ | 2,951 | $ | 2,357 |
Premiums written and earned by line of business | ||||||||||||
For the years ended December 31, | ||||||||||||
($ in millions) | 2019 | 2018 | 2017 | |||||||||
Premiums written | ||||||||||||
Auto | $ | 21,936 | $ | 20,991 | $ | 19,859 | ||||||
Homeowners (1) | 7,645 | 7,199 | 6,865 | |||||||||
Other personal lines | 1,803 | 1,742 | 1,673 | |||||||||
Subtotal – Personal lines | 31,384 | 29,932 | 28,397 | |||||||||
Commercial lines | 902 | 659 | 488 | |||||||||
Total | $ | 32,286 | $ | 30,591 | $ | 28,885 | ||||||
Premiums earned | ||||||||||||
Auto | $ | 21,680 | $ | 20,662 | $ | 19,676 | ||||||
Homeowners | 7,403 | 7,025 | 6,811 | |||||||||
Other personal lines | 1,773 | 1,716 | 1,649 | |||||||||
Subtotal – Personal lines | 30,856 | 29,403 | 28,136 | |||||||||
Commercial lines | 882 | 655 | 495 | |||||||||
Total | $ | 31,738 | $ | 30,058 | $ | 28,631 |
(1) | The cost of our catastrophe reinsurance program increased $22 million to $286 million in 2019 from $264 million in 2018. Catastrophe placement premiums are recorded primarily in the Allstate brand and are a reduction of premium. For a more detailed discussion on reinsurance, see the Claims and Claims Expense Reserves section of the MD&A and Note 10 of the consolidated financial statements. |
Auto premium measures and statistics | ||||||||||||||||||||
2019 | 2018 | 2017 | 2019 vs. 2018 | 2018 vs. 2017 | ||||||||||||||||
PIF (thousands) | 20,398 | 20,104 | 19,580 | 1.5 | % | 2.7 | % | |||||||||||||
New issued applications (thousands) | 2,942 | 2,933 | 2,520 | 0.3 | % | 16.4 | % | |||||||||||||
Average premium | $ | 586 | $ | 570 | $ | 550 | 2.8 | % | 3.6 | % | ||||||||||
Renewal ratio (%) | 88.6 | 88.5 | 87.6 | 0.1 | 0.9 | |||||||||||||||
Approved rate changes: | ||||||||||||||||||||
Impact of rate changes ($ in millions) | $ | 574 | $ | 215 | $ | 773 | $ | 359 | $ | (558 | ) | |||||||||
# of locations (1) | 47 | 47 | 49 | — | (2 | ) | ||||||||||||||
Total brand (%) | 2.7 | 1.1 | 4.0 | 1.6 | (2.9 | ) | ||||||||||||||
Location specific (%) | 4.6 | 2.9 | 6.0 | 1.7 | (3.1 | ) |
(1) | Allstate brand operates in 50 states, D.C. and 5 Canadian provinces. |
Homeowners premium measures and statistics | ||||||||||||||||||||
2019 | 2018 | 2017 | 2019 vs. 2018 | 2018 vs. 2017 | ||||||||||||||||
PIF (thousands) | 6,254 | 6,186 | 6,088 | 1.1 | % | 1.6 | % | |||||||||||||
New issued applications (thousands) | 848 | 826 | 733 | 2.7 | % | 12.7 | % | |||||||||||||
Average premium | $ | 1,295 | $ | 1,231 | $ | 1,197 | 5.2 | % | 2.8 | % | ||||||||||
Renewal ratio (%) | 88.3 | 88.0 | 87.3 | 0.3 | 0.7 | |||||||||||||||
Approved rate changes: | ||||||||||||||||||||
Impact of rate changes ($ in millions) | $ | 239 | $ | 189 | $ | 122 | $ | 50 | $ | 67 | ||||||||||
# of locations (1) | 39 | 40 | 30 | (1 | ) | 10 | ||||||||||||||
Total brand (%) | 3.2 | 2.7 | 1.8 | 0.5 | 0.9 | |||||||||||||||
Location specific (%) | 5.1 | 4.3 | 3.7 | 0.8 | 0.6 |
(1) | Allstate brand operates in 50 states, D.C., and 5 Canadian provinces. |
Combined ratios by line of business | |||||||||||||||||||||||||||
For the years ended December 31, | |||||||||||||||||||||||||||
Loss ratio | Expense ratio (1) | Combined ratio | |||||||||||||||||||||||||
2019 | 2018 | 2017 | 2019 | 2018 | 2017 | 2019 | 2018 | 2017 | |||||||||||||||||||
Auto | 67.3 | 65.9 | 67.9 | 24.7 | 25.4 | 24.7 | 92.0 | 91.3 | 92.6 | ||||||||||||||||||
Homeowners | 64.9 | 69.3 | 66.0 | 22.8 | 23.6 | 22.9 | 87.7 | 92.9 | 88.9 | ||||||||||||||||||
Other personal lines | 60.6 | 66.3 | 64.1 | 26.7 | 27.5 | 28.0 | 87.3 | 93.8 | 92.1 | ||||||||||||||||||
Commercial lines | 81.3 | 91.3 | 75.1 | 17.1 | 21.4 | 27.5 | 98.4 | 112.7 | 102.6 | ||||||||||||||||||
Total | 66.7 | 67.3 | 67.3 | 24.0 | 24.9 | 24.4 | 90.7 | 92.2 | 91.7 |
(1) | Other revenue is deducted from operating costs and expenses in the expense ratio calculation. |
Loss ratios by line of business | ||||||||||||||||||||||||||||||||||||
For the years ended December 31, | ||||||||||||||||||||||||||||||||||||
Loss ratio | Effect of catastrophe losses | Effect of prior year reserve reestimates | Effect of catastrophe losses included in prior year reserve reestimates | |||||||||||||||||||||||||||||||||
2019 | 2018 | 2017 | 2019 | 2018 | 2017 | 2019 | 2018 | 2017 | 2019 | 2018 | 2017 | |||||||||||||||||||||||||
Auto | 67.3 | 65.9 | 67.9 | 1.7 | 1.6 | 3.4 | (1.5 | ) | (2.2 | ) | (2.4 | ) | (0.1 | ) | (0.2 | ) | (0.1 | ) | ||||||||||||||||||
Homeowners | 64.9 | 69.3 | 66.0 | 24.8 | 30.5 | 30.7 | 0.7 | — | (2.0 | ) | 0.8 | 0.8 | (0.1 | ) | ||||||||||||||||||||||
Other personal lines | 60.6 | 66.3 | 64.1 | 9.2 | 12.3 | 12.2 | 0.6 | 0.5 | 0.7 | 0.1 | (0.1 | ) | 0.2 | |||||||||||||||||||||||
Commercial lines | 81.3 | 91.3 | 75.1 | 1.4 | 3.4 | 4.8 | 1.9 | 16.5 | 3.9 | (0.1 | ) | — | 0.2 | |||||||||||||||||||||||
Total | 66.7 | 67.3 | 67.3 | 7.5 | 9.0 | 10.4 | (0.7 | ) | (1.1 | ) | (2.0 | ) | 0.1 | — | (0.1 | ) |
• Paid claim frequency (1) is calculated as annualized notice counts closed with payment in the period divided by the average of PIF with the applicable coverage during the period. |
• Gross claim frequency (1) is calculated as annualized notice counts received in the period divided by the average of PIF with the applicable coverage during the period. Gross claim frequency includes all actual notice counts, regardless of their current status (open or closed) or their ultimate disposition (closed with a payment or closed without payment). |
• Paid claim severity is calculated by dividing the sum of paid losses and loss expenses by claims closed with a payment during the period. |
• Percent change in frequency or severity statistics is calculated as the amount of increase or decrease in the paid or gross claim frequency or severity in the current period compared to the same period in the prior year divided by the prior year paid or gross claim frequency or severity. |
(1) | Frequency statistics exclude counts associated with catastrophe events. |
Impact of specific costs and expenses on the expense ratio | |||||||||
For the years ended December 31, | |||||||||
2019 | 2018 | 2017 | |||||||
Amortization of DAC | 13.9 | 14.1 | 13.8 | ||||||
Advertising expense | 2.2 | 2.2 | 2.0 | ||||||
Other costs and expenses | 7.8 | 8.4 | 8.4 | ||||||
Restructuring and related charges | 0.1 | 0.2 | 0.2 | ||||||
Total expense ratio | 24.0 | 24.9 | 24.4 |
Underwriting results | ||||||||||||
For the years ended December 31, | ||||||||||||
($ in millions) | 2019 | 2018 | 2017 | |||||||||
Premiums written | $ | 2,113 | $ | 1,948 | $ | 1,728 | ||||||
Premiums earned | $ | 2,087 | $ | 1,869 | $ | 1,712 | ||||||
Other revenue | 83 | 80 | 67 | |||||||||
Claims and claims expense | (1,650 | ) | (1,443 | ) | (1,329 | ) | ||||||
Amortization of DAC | (46 | ) | (43 | ) | (41 | ) | ||||||
Other costs and expenses | (465 | ) | (487 | ) | (462 | ) | ||||||
Restructuring and related charges | (1 | ) | (1 | ) | (3 | ) | ||||||
Impairment of purchased intangibles | (51 | ) | — | — | ||||||||
Underwriting loss | $ | (43 | ) | $ | (25 | ) | $ | (56 | ) | |||
Catastrophe losses | $ | 51 | $ | 52 | $ | 50 | ||||||
Underwriting income (loss) by line of business | ||||||||||||
Auto | $ | (47 | ) | $ | (11 | ) | $ | (37 | ) | |||
Homeowners | 2 | (14 | ) | (20 | ) | |||||||
Other personal lines | 2 | — | 1 | |||||||||
Underwriting loss | $ | (43 | ) | $ | (25 | ) | $ | (56 | ) |
Changes in underwriting results from prior year by component (1) | ||||||||
For the years ended December 31, | ||||||||
($ in millions) | 2019 | 2018 | ||||||
Underwriting income (loss) - prior year | $ | (25 | ) | $ | (56 | ) | ||
Changes in underwriting income (loss) from: | ||||||||
Increase (decrease) premiums earned | 218 | 157 | ||||||
Increase (decrease) other revenue | 3 | 13 | ||||||
(Increase) decrease incurred claims and claims expense (“losses”): | ||||||||
Incurred losses, excluding catastrophe losses and reserve reestimates | (207 | ) | (110 | ) | ||||
Catastrophe losses, excluding reserve reestimates | — | 1 | ||||||
Catastrophe reserve reestimates | 1 | (3 | ) | |||||
Non-catastrophe reserve reestimates | (1 | ) | (2 | ) | ||||
Losses subtotal | (207 | ) | (114 | ) | ||||
(Increase) decrease expenses: | ||||||||
Expenses, excluding impairment of purchased intangibles | 19 | (25 | ) | |||||
Impairment of purchased intangibles | (51 | ) | — | |||||
Expenses subtotal | (32 | ) | (25 | ) | ||||
Underwriting loss | $ | (43 | ) | $ | (25 | ) |
Premiums written and earned by line of business | ||||||||||||
For the years ended December 31, | ||||||||||||
($ in millions) | 2019 | 2018 | 2017 | |||||||||
Premiums written | ||||||||||||
Auto | $ | 1,986 | $ | 1,839 | $ | 1,641 | ||||||
Homeowners | 119 | 101 | 79 | |||||||||
Other personal lines | 8 | 8 | 8 | |||||||||
Total | $ | 2,113 | $ | 1,948 | $ | 1,728 | ||||||
Premiums earned | ||||||||||||
Auto | $ | 1,969 | $ | 1,771 | $ | 1,636 | ||||||
Homeowners | 110 | 90 | 68 | |||||||||
Other personal lines | 8 | 8 | 8 | |||||||||
Total | $ | 2,087 | $ | 1,869 | $ | 1,712 |
Auto premium measures and statistics | ||||||||||||||||||||
2019 | 2018 | 2017 | 2019 vs. 2018 | 2018 vs. 2017 | ||||||||||||||||
PIF (thousands) | 1,515 | 1,488 | 1,352 | 1.8 | % | 10.1 | % | |||||||||||||
New issued applications (thousands) | 593 | 633 | 484 | (6.3 | )% | 30.8 | % | |||||||||||||
Average premium | $ | 620 | $ | 605 | $ | 574 | 2.5 | % | 5.4 | % | ||||||||||
Renewal ratio (%) | 82.8 | 83.3 | 81.5 | (0.5 | ) | 1.8 | ||||||||||||||
Approved rate changes: | ||||||||||||||||||||
Impact of rate changes ($ in millions) | $ | 92 | $ | 28 | $ | 78 | $ | 64 | $ | (50 | ) | |||||||||
# of locations (1) | 30 | 30 | 39 | — | (9 | ) | ||||||||||||||
Total brand (%) | 5.0 | 1.8 | 4.8 | 3.2 | (3.0 | ) | ||||||||||||||
Location specific (%) | 5.7 | 2.7 | 5.5 | 3.0 | (2.8 | ) |
(1) | Esurance brand operates in 43 states. |
Homeowners premium measures and statistics | ||||||||||||||||||||
2019 | 2018 | 2017 | 2019 vs. 2018 | 2018 vs. 2017 | ||||||||||||||||
PIF (thousands) | 105 | 95 | 79 | 10.5 | % | 20.3 | % | |||||||||||||
New issued applications (thousands) | 29 | 32 | 34 | (9.4 | )% | (5.9 | )% | |||||||||||||
Average premium | $ | 1,055 | $ | 982 | $ | 917 | 7.4 | % | 7.1 | % | ||||||||||
Renewal ratio (%) (1) | 84.5 | 85.3 | 85.5 | (0.8 | ) | (0.2 | ) | |||||||||||||
Approved rate changes: | ||||||||||||||||||||
Impact of rate changes ($ in millions) | $ | 5 | $ | 2 | $ | 3 | $ | 3 | $ | (1 | ) | |||||||||
# of locations (2) | 5 | 6 | 3 | (1 | ) | 3 | ||||||||||||||
Total brand (%) | 4.7 | 2.1 | 4.5 | 2.6 | (2.4 | ) | ||||||||||||||
Location specific (%) | 17.1 | 6.9 | 18.5 | 10.2 | (11.6 | ) |
(1) | Esurance’s renewal ratios exclude the impact of risk related cancellations. Customers can enter into a policy without a physical inspection. During the underwriting review period, a number of policies may be canceled if upon inspection the condition is unsatisfactory. |
(2) | Esurance brand operates in 31 states. |
Combined ratios by line of business | |||||||||||||||||||||||||||
For the years ended December 31, | |||||||||||||||||||||||||||
Loss ratio | Expense ratio (1) | Combined ratio | |||||||||||||||||||||||||
2019 | 2018 | 2017 | 2019 | 2018 | 2017 | 2019 | 2018 | 2017 | |||||||||||||||||||
Auto | 79.4 | 77.0 | 77.5 | 23.0 | 23.6 | 24.8 | 102.4 | 100.6 | 102.3 | ||||||||||||||||||
Homeowners | 74.6 | 83.4 | 83.8 | 23.6 | 32.2 | 45.6 | 98.2 | 115.6 | 129.4 | ||||||||||||||||||
Total | 79.1 | 77.2 | 77.6 | 23.0 | 24.1 | 25.7 | 102.1 | 101.3 | 103.3 |
(1) | Other revenue is deducted from operating costs and expenses in the expense ratio calculation. |
Loss ratios by line of business | ||||||||||||||||||||||||||||||||||||
For the years ended December 31, | ||||||||||||||||||||||||||||||||||||
Loss ratio | Effect of catastrophe losses | Effect of prior year reserve reestimates | Effect of catastrophe losses included in prior year reserve reestimates | |||||||||||||||||||||||||||||||||
2019 | 2018 | 2017 | 2019 | 2018 | 2017 | 2019 | 2018 | 2017 | 2019 | 2018 | 2017 | |||||||||||||||||||||||||
Auto | 79.4 | 77.0 | 77.5 | 1.2 | 1.5 | 2.1 | 0.1 | 0.1 | 0.1 | — | — | — | ||||||||||||||||||||||||
Homeowners | 74.6 | 83.4 | 83.8 | 24.6 | 27.8 | 23.5 | 0.9 | 2.2 | (3.0 | ) | 0.9 | 2.2 | (1.5 | ) | ||||||||||||||||||||||
Total | 79.1 | 77.2 | 77.6 | 2.4 | 2.8 | 2.9 | 0.1 | 0.2 | (0.1 | ) | — | 0.1 | (0.1 | ) |
Impact of specific costs and expenses on the expense ratio | |||||||||
For the years ended December 31, | |||||||||
2019 | 2018 | 2017 | |||||||
Amortization of DAC | 2.2 | 2.3 | 2.4 | ||||||
Advertising expense | 7.0 | 8.7 | 8.3 | ||||||
Amortization of purchased intangibles | 0.1 | 0.1 | 0.2 | ||||||
Other costs and expenses | 11.2 | 12.9 | 14.6 | ||||||
Restructuring and related charges | — | 0.1 | 0.2 | ||||||
Impairment of purchased intangibles | 2.5 | — | — | ||||||
Total expense ratio | 23.0 | 24.1 | 25.7 |
Underwriting results | ||||||||||||
For the years ended December 31, | ||||||||||||
($ in millions) | 2019 | 2018 | 2017 | |||||||||
Premiums written | $ | 1,020 | $ | 1,016 | $ | 1,035 | ||||||
Premiums earned | $ | 1,018 | $ | 1,023 | $ | 1,090 | ||||||
Other revenue | 5 | 5 | 6 | |||||||||
Claims and claims expense | (689 | ) | (668 | ) | (786 | ) | ||||||
Amortization of DAC | (192 | ) | (190 | ) | (201 | ) | ||||||
Other costs and expenses | (131 | ) | (145 | ) | (130 | ) | ||||||
Restructuring and related charges | (4 | ) | (7 | ) | (5 | ) | ||||||
Underwriting income (loss) | $ | 7 | $ | 18 | $ | (26 | ) | |||||
Catastrophe losses | $ | 115 | $ | 102 | $ | 193 | ||||||
Underwriting income (loss) by line of business | ||||||||||||
Auto | $ | 8 | $ | 14 | $ | 9 | ||||||
Homeowners | 2 | 1 | (45 | ) | ||||||||
Other personal lines | (3 | ) | 3 | 10 | ||||||||
Underwriting income (loss) | $ | 7 | $ | 18 | $ | (26 | ) |
Changes in underwriting results from prior year by component (1) | ||||||||
For the years ended December 31, | ||||||||
($ in millions) | 2019 | 2018 | ||||||
Underwriting income (loss) - prior year | $ | 18 | $ | (26 | ) | |||
Changes in underwriting income (loss) from: | ||||||||
Increase (decrease) premiums earned | (5 | ) | (67 | ) | ||||
Increase (decrease) other revenue | — | (1 | ) | |||||
(Increase) decrease incurred claims and claims expense (“losses”): | ||||||||
Incurred losses, excluding catastrophe losses and reserve reestimates | 9 | 17 | ||||||
Catastrophe losses, excluding reserve reestimates | (16 | ) | 104 | |||||
Catastrophes reserve reestimates | 3 | (13 | ) | |||||
Non-catastrophe reserve reestimates | (17 | ) | 10 | |||||
Losses subtotal | (21 | ) | 118 | |||||
(Increase) decrease expenses | 15 | (6 | ) | |||||
Underwriting income | $ | 7 | $ | 18 |
Premiums written and earned by line of business | ||||||||||||
For the years ended December 31, | ||||||||||||
($ in millions) | 2019 | 2018 | 2017 | |||||||||
Premiums written | ||||||||||||
Auto | $ | 540 | $ | 537 | $ | 542 | ||||||
Homeowners | 401 | 398 | 406 | |||||||||
Other personal lines | 79 | 81 | 87 | |||||||||
Total | $ | 1,020 | $ | 1,016 | $ | 1,035 | ||||||
Premiums earned | ||||||||||||
Auto | $ | 539 | $ | 537 | $ | 566 | ||||||
Homeowners | 399 | 402 | 431 | |||||||||
Other personal lines | 80 | 84 | 93 | |||||||||
Total | $ | 1,018 | $ | 1,023 | $ | 1,090 |
Auto premium measures and statistics | ||||||||||||||||||||
2019 | 2018 | 2017 | 2019 vs. 2018 | 2018 vs. 2017 | ||||||||||||||||
PIF (thousands) | 493 | 502 | 530 | (1.8 | )% | (5.3 | )% | |||||||||||||
New issued applications (thousands) | 82 | 76 | 52 | 7.9 | % | 46.2 | % | |||||||||||||
Average premium | $ | 1,134 | $ | 1,118 | $ | 1,079 | 1.4 | % | 3.6 | % | ||||||||||
Renewal ratio (%) (1) | 78.1 | 74.9 | 73.4 | 3.2 | 1.5 | |||||||||||||||
Approved rate changes: | ||||||||||||||||||||
Impact of rate changes ($ in millions) | $ | 8 | $ | 13 | $ | 37 | $ | (5 | ) | $ | (24 | ) | ||||||||
# of locations (2) | 17 | 17 | 27 | — | (10 | ) | ||||||||||||||
Total brand (%) | 1.5 | 2.4 | 6.2 | (0.9 | ) | (3.8 | ) | |||||||||||||
Location specific (%) | 4.1 | 4.8 | 7.8 | (0.7 | ) | (3.0 | ) |
(1) | Encompass announced a plan to exit business in Massachusetts in the second quarter of 2017 and previously announced a plan to exit business in North Carolina in the first half of 2016, which impacted the renewal ratio. Excluding Massachusetts and North Carolina, the renewal ratios were 76.5 points in 2018 compared to 74.5 points in 2017. |
(2) | Encompass brand operates in 40 states and D.C. |
Homeowners premium measure and statistics | ||||||||||||||||||||
2019 | 2018 | 2017 | 2019 vs. 2018 | 2018 vs. 2017 | ||||||||||||||||
PIF (thousands) | 234 | 239 | 254 | (2.1 | )% | (5.9 | )% | |||||||||||||
New issued applications (thousands) | 42 | 37 | 30 | 13.5 | % | 23.3 | % | |||||||||||||
Average premium | $ | 1,795 | $ | 1,724 | $ | 1,684 | 4.1 | % | 2.4 | % | ||||||||||
Renewal ratio (%) (1) | 82.5 | 80.0 | 78.5 | 2.5 | 1.5 | |||||||||||||||
Approved rate changes: | ||||||||||||||||||||
Impact of rate changes ($ in millions) | $ | 38 | $ | 20 | $ | 23 | $ | 18 | $ | (3 | ) | |||||||||
# of locations (2) | 27 | 20 | 21 | 7 | (1 | ) | ||||||||||||||
Total brand (%) | 9.2 | 4.7 | 4.8 | 4.5 | (0.1 | ) | ||||||||||||||
Location specific (%) | 10.9 | 8.1 | 8.4 | 2.8 | (0.3 | ) |
(1) | Encompass announced a plan to exit business in Massachusetts in the second quarter of 2017 and previously announced a plan to exit business in North Carolina in the first half of 2016, which has impacted the renewal ratio. Excluding Massachusetts and North Carolina, the renewal ratios were 80.8 points in 2018 compared to 79.0 points in 2017. |
(2) | Encompass brand operates in 40 states and D.C. |
Combined ratios by line of business | |||||||||||||||||||||||||||
For the years ended December 31, | |||||||||||||||||||||||||||
Loss ratio | Expense ratio (1) | Combined ratio | |||||||||||||||||||||||||
2019 | 2018 | 2017 | 2019 | 2018 | 2017 | 2019 | 2018 | 2017 | |||||||||||||||||||
Auto | 66.8 | 65.0 | 68.0 | 31.7 | 32.4 | 30.4 | 98.5 | 97.4 | 98.4 | ||||||||||||||||||
Homeowners | 68.2 | 66.7 | 80.3 | 31.3 | 33.1 | 30.1 | 99.5 | 99.8 | 110.4 | ||||||||||||||||||
Other personal lines | 71.3 | 60.7 | 59.1 | 32.5 | 35.7 | 30.1 | 103.8 | 96.4 | 89.2 | ||||||||||||||||||
Total | 67.7 | 65.3 | 72.1 | 31.6 | 32.9 | 30.3 | 99.3 | 98.2 | 102.4 |
(1) | Other revenue is deducted from operating costs and expenses in the expense ratio calculation. |
Loss ratios by line of business | ||||||||||||||||||||||||||||||||||||
For the years ended December 31, | ||||||||||||||||||||||||||||||||||||
Loss ratio | Effect of catastrophe losses | Effect of prior year reserve reestimates | Effect of catastrophe losses included in prior year reserve reestimates | |||||||||||||||||||||||||||||||||
2019 | 2018 | 2017 | 2019 | 2018 | 2017 | 2019 | 2018 | 2017 | 2019 | 2018 | 2017 | |||||||||||||||||||||||||
Auto | 66.8 | 65.0 | 68.0 | 1.9 | 1.1 | 2.1 | (1.9 | ) | (1.9 | ) | (1.1 | ) | — | (0.2 | ) | (0.2 | ) | |||||||||||||||||||
Homeowners | 68.2 | 66.7 | 80.3 | 25.1 | 22.1 | 40.1 | 3.7 | 3.3 | 0.5 | 2.5 | 3.0 | — | ||||||||||||||||||||||||
Other personal lines | 71.3 | 60.7 | 59.1 | 6.3 | 8.3 | 8.6 | (2.5 | ) | (16.7 | ) | (10.8 | ) | (1.2 | ) | 1.2 | — | ||||||||||||||||||||
Total | 67.7 | 65.3 | 72.1 | 11.3 | 10.0 | 17.7 | 0.3 | (1.1 | ) | (1.3 | ) | 0.9 | 1.2 | (0.1 | ) |
Impact of specific costs and expenses on the expense ratio | |||||||||
For the years ended December 31, | |||||||||
2019 | 2018 | 2017 | |||||||
Amortization of DAC | 18.8 | 18.5 | 18.3 | ||||||
Advertising expense | 0.2 | 0.2 | 0.2 | ||||||
Other costs and expenses | 12.2 | 13.5 | 11.3 | ||||||
Restructuring and related charges | 0.4 | 0.7 | 0.5 | ||||||
Total expense ratio | 31.6 | 32.9 | 30.3 |
Underwriting results | ||||||||||||
For the years ended December 31, | ||||||||||||
($ in millions) | 2019 | 2018 | 2017 | |||||||||
Claims and claims expense (1) | $ | (105 | ) | $ | (87 | ) | $ | (96 | ) | |||
Operating costs and expenses | (3 | ) | (3 | ) | (3 | ) | ||||||
Underwriting loss | $ | (108 | ) | $ | (90 | ) | $ | (99 | ) |
Reserves for asbestos, environmental and other discontinued lines claims before and after the effects of reinsurance | ||||||||
($ in millions) | December 31, 2019 | December 31, 2018 | ||||||
Asbestos claims | ||||||||
Gross reserves | $ | 1,172 | $ | 1,266 | ||||
Reinsurance | (362 | ) | (400 | ) | ||||
Net reserves | 810 | 866 | ||||||
Environmental claims | ||||||||
Gross reserves | 219 | 209 | ||||||
Reinsurance | (40 | ) | (39 | ) | ||||
Net reserves | 179 | 170 | ||||||
Other discontinued lines | ||||||||
Gross reserves | 427 | 389 | ||||||
Reinsurance | (51 | ) | (34 | ) | ||||
Net reserves | 376 | 355 | ||||||
Total | ||||||||
Gross reserves | 1,818 | 1,864 | ||||||
Reinsurance | (453 | ) | (473 | ) | ||||
Net reserves | $ | 1,365 | $ | 1,391 |
Reserves by type of exposure before and after the effects of reinsurance | ||||||||
($ in millions) | December 31, 2019 | December 31, 2018 | ||||||
Direct excess commercial insurance | ||||||||
Gross reserves (1) | $ | 948 | $ | 973 | ||||
Reinsurance (2) | (332 | ) | (355 | ) | ||||
Net reserves | 616 | 618 | ||||||
Assumed reinsurance coverage | ||||||||
Gross reserves (3) | 606 | 625 | ||||||
Reinsurance (4) | (53 | ) | (53 | ) | ||||
Net reserves | 553 | 572 | ||||||
Direct primary commercial insurance | ||||||||
Gross reserves (5) | 169 | 171 | ||||||
Reinsurance (6) | (54 | ) | (48 | ) | ||||
Net reserves | 115 | 123 | ||||||
Other run-off business | ||||||||
Gross reserves | 15 | 19 | ||||||
Reinsurance | (13 | ) | (16 | ) | ||||
Net reserves | 2 | 3 | ||||||
Unallocated loss adjustment expenses | ||||||||
Gross reserves | 80 | 76 | ||||||
Reinsurance | (1 | ) | (1 | ) | ||||
Net reserves | 79 | 75 | ||||||
Total | ||||||||
Gross reserves | 1,818 | 1,864 | ||||||
Reinsurance | (453 | ) | (473 | ) | ||||
Net reserves | $ | 1,365 | $ | 1,391 |
Summarized financial information | ||||||||||||
For the years ended December 31, | ||||||||||||
($ in millions) | 2019 | 2018 | 2017 | |||||||||
Premiums written | $ | 1,535 | $ | 1,431 | $ | 1,094 | ||||||
Revenues | ||||||||||||
Premiums | $ | 1,233 | $ | 1,098 | $ | 867 | ||||||
Other revenue | 188 | 82 | 66 | |||||||||
Intersegment insurance premiums and service fees (1) | 154 | 122 | 110 | |||||||||
Net investment income | 42 | 27 | 16 | |||||||||
Realized capital gains and losses | 32 | (11 | ) | — | ||||||||
Total revenues | 1,649 | 1,318 | 1,059 | |||||||||
Costs and expenses | ||||||||||||
Claims and claims expense | (363 | ) | (350 | ) | (369 | ) | ||||||
Amortization of DAC | (543 | ) | (463 | ) | (296 | ) | ||||||
Operating costs and expenses | (661 | ) | (505 | ) | (460 | ) | ||||||
Restructuring and related charges (2) | — | (4 | ) | (13 | ) | |||||||
Amortization of purchased intangibles | (122 | ) | (94 | ) | (92 | ) | ||||||
Impairment of purchased intangibles | (55 | ) | — | — | ||||||||
Total costs and expenses | (1,744 | ) | (1,416 | ) | (1,230 | ) | ||||||
Income tax benefit | 18 | 19 | 194 | |||||||||
Net (loss) income applicable to common shareholders | $ | (77 | ) | $ | (79 | ) | $ | 23 | ||||
Adjusted net income (loss) | $ | 38 | $ | 8 | $ | (54 | ) | |||||
Realized capital gains and losses, after-tax | 25 | (9 | ) | — | ||||||||
Amortization of purchased intangibles, after-tax | (97 | ) | (74 | ) | (60 | ) | ||||||
Impairment of purchased intangibles, after-tax | (43 | ) | — | — | ||||||||
Tax Legislation (expense) benefit | — | (4 | ) | 137 | ||||||||
Net (loss) income applicable to common shareholders | $ | (77 | ) | $ | (79 | ) | $ | 23 | ||||
Allstate Protection Plans (3) | $ | 60 | $ | 23 | $ | (22 | ) | |||||
Allstate Dealer Services | 26 | 15 | (1 | ) | ||||||||
Allstate Roadside Services | (15 | ) | (20 | ) | (17 | ) | ||||||
Arity | (7 | ) | (11 | ) | (14 | ) | ||||||
Allstate Identity Protection (4) | (26 | ) | 1 | — | ||||||||
Adjusted net income (loss) | $ | 38 | $ | 8 | $ | (54 | ) | |||||
Allstate Protection Plans | 99,632 | 68,588 | 38,719 | |||||||||
Allstate Dealer Services | 4,205 | 4,338 | 4,088 | |||||||||
Allstate Roadside Services | 599 | 663 | 699 | |||||||||
Allstate Identity Protection | 1,511 | 1,040 | — | |||||||||
Policies in force as of December 31 (in thousands) | 105,947 | 74,629 | 43,506 |
(1) | Primarily related to Arity and Allstate Roadside Services and are eliminated in our consolidated financial statements. |
(2) | 2018 related to organizational changes at Allstate Roadside Services and 2017 related to a one-time vendor contract termination. |
(3) | SquareTrade, which sells consumer protection plans using the Allstate Protection Plans name in the U.S., acquired PlumChoice on November 30, 2018 and iCracked on February 12, 2019. |
(4) | InfoArmor, which sells identity protection plans using the Allstate Identity Protection name was acquired on October 5, 2018. |
Total reserves, net of recoverables (“net reserves”), as of December 31, by line of business | ||||||||||||
($ in millions) | 2019 | 2018 | 2017 | |||||||||
Allstate brand | $ | 17,809 | $ | 17,272 | $ | 16,826 | ||||||
Esurance brand | 941 | 862 | 777 | |||||||||
Encompass brand | 646 | 691 | 758 | |||||||||
Total Allstate Protection | 19,396 | 18,825 | 18,361 | |||||||||
Discontinued Lines and Coverages | 1,365 | 1,391 | 1,407 | |||||||||
Total Property-Liability | 20,761 | 20,216 | 19,768 | |||||||||
Service Businesses | 39 | 52 | 86 | |||||||||
Total net reserves | $ | 20,800 | $ | 20,268 | $ | 19,854 |
Net reserves | ||||||||||||
January 1 reserves | ||||||||||||
($ in millions) | 2019 | 2018 | 2017 | |||||||||
Allstate brand | $ | 17,272 | $ | 16,826 | $ | 16,108 | ||||||
Esurance brand | 862 | 777 | 740 | |||||||||
Encompass brand | 691 | 758 | 749 | |||||||||
Total Allstate Protection | 18,825 | 18,361 | 17,597 | |||||||||
Discontinued Lines and Coverages | 1,391 | 1,407 | 1,445 | |||||||||
Total Property-Liability | 20,216 | 19,768 | 19,042 | |||||||||
Service Businesses | 52 | 86 | 24 | |||||||||
Total net reserves | $ | 20,268 | $ | 19,854 | $ | 19,066 |
Impact of reserve reestimates by brand on combined ratio and net income applicable to common shareholders(1) (2) | |||||||||||||||||||||
2019 | 2018 | 2017 | |||||||||||||||||||
($ in millions, except ratios) | Reserve reestimate | Effect on combined ratio | Reserve reestimate | Effect on combined ratio | Reserve reestimate | Effect on combined ratio | |||||||||||||||
Allstate brand | $ | (239 | ) | (0.7 | ) | $ | (332 | ) | (1.0 | ) | $ | (585 | ) | (1.8 | ) | ||||||
Esurance brand | 3 | — | 3 | — | (2 | ) | — | ||||||||||||||
Encompass brand | 3 | — | (11 | ) | — | (14 | ) | (0.1 | ) | ||||||||||||
Total Allstate Protection | (233 | ) | (0.7 | ) | (340 | ) | (1.0 | ) | (601 | ) | (1.9 | ) | |||||||||
Discontinued Lines and Coverages | 105 | 0.4 | 87 | 0.3 | 96 | 0.3 | |||||||||||||||
Total Property-Liability | (128 | ) | (0.3 | ) | (253 | ) | (0.7 | ) | (505 | ) | (1.6 | ) | |||||||||
Service Businesses | (2 | ) | — | (2 | ) | — | 2 | — | |||||||||||||
Total | $ | (130 | ) | $ | (255 | ) | $ | (503 | ) | ||||||||||||
Reserve reestimates, after-tax | $ | (103 | ) | $ | (201 | ) | $ | (327 | ) | ||||||||||||
Consolidated net income applicable to common shareholders | $ | 4,678 | $ | 2,012 | $ | 3,438 | |||||||||||||||
Reserve reestimates as a % impact on consolidated net income applicable to common shareholders | 2.2 | % | 10.0 | % | 9.5 | % | |||||||||||||||
Property-Liability prior year reserve reestimates included in catastrophe losses | $ | 48 | $ | 25 | $ | (18 | ) |
(1) | Favorable reserve reestimates are shown in parentheses. |
(2) | Ratios are calculated using property and casualty premiums earned. |
2019 prior year reserve reestimates | ||||||||||||||||||||||||
($ in millions) | 2014 & prior | 2015 | 2016 | 2017 | 2018 | Total | ||||||||||||||||||
Allstate brand | $ | (133 | ) | $ | (44 | ) | $ | (25 | ) | $ | (96 | ) | $ | 59 | $ | (239 | ) | |||||||
Esurance brand | (5 | ) | (2 | ) | (1 | ) | (3 | ) | 14 | 3 | ||||||||||||||
Encompass brand | (2 | ) | 2 | (2 | ) | 4 | 1 | 3 | ||||||||||||||||
Total Allstate Protection | (140 | ) | (44 | ) | (28 | ) | (95 | ) | 74 | (233 | ) | |||||||||||||
Discontinued Lines and Coverages | 105 | — | — | — | — | 105 | ||||||||||||||||||
Total Property-Liability | (35 | ) | (44 | ) | (28 | ) | (95 | ) | 74 | (128 | ) | |||||||||||||
Service Businesses | — | — | — | — | (2 | ) | (2 | ) | ||||||||||||||||
Total | $ | (35 | ) | $ | (44 | ) | $ | (28 | ) | $ | (95 | ) | $ | 72 | $ | (130 | ) |
2018 prior year reserve reestimates | ||||||||||||||||||||||||
($ in millions) | 2013 & prior | 2014 | 2015 | 2016 | 2017 | Total | ||||||||||||||||||
Allstate brand | $ | (61 | ) | $ | (50 | ) | $ | (25 | ) | $ | (146 | ) | $ | (50 | ) | $ | (332 | ) | ||||||
Esurance brand | (5 | ) | (6 | ) | 9 | 13 | (8 | ) | 3 | |||||||||||||||
Encompass brand | (12 | ) | (11 | ) | (15 | ) | 1 | 26 | (11 | ) | ||||||||||||||
Total Allstate Protection | (78 | ) | (67 | ) | (31 | ) | (132 | ) | (32 | ) | (340 | ) | ||||||||||||
Discontinued Lines and Coverages | 87 | — | — | — | — | 87 | ||||||||||||||||||
Total Property-Liability | 9 | (67 | ) | (31 | ) | (132 | ) | (32 | ) | (253 | ) | |||||||||||||
Service Businesses | — | — | — | — | (2 | ) | (2 | ) | ||||||||||||||||
Total | $ | 9 | $ | (67 | ) | $ | (31 | ) | $ | (132 | ) | $ | (34 | ) | $ | (255 | ) |
2017 prior year reserve reestimates | ||||||||||||||||||||||||
($ in millions) | 2012 & prior | 2013 | 2014 | 2015 | 2016 | Total | ||||||||||||||||||
Allstate brand | $ | 3 | $ | (99 | ) | $ | (103 | ) | $ | (121 | ) | $ | (265 | ) | $ | (585 | ) | |||||||
Esurance brand | (3 | ) | (1 | ) | (12 | ) | 1 | 13 | (2 | ) | ||||||||||||||
Encompass brand | (6 | ) | (1 | ) | (4 | ) | (1 | ) | (2 | ) | (14 | ) | ||||||||||||
Total Allstate Protection | (6 | ) | (101 | ) | (119 | ) | (121 | ) | (254 | ) | (601 | ) | ||||||||||||
Discontinued Lines and Coverages | 96 | — | — | — | — | 96 | ||||||||||||||||||
Total Property-Liability | 90 | (101 | ) | (119 | ) | (121 | ) | (254 | ) | (505 | ) | |||||||||||||
Service Businesses | — | — | — | — | 2 | 2 | ||||||||||||||||||
Total | $ | 90 | $ | (101 | ) | $ | (119 | ) | $ | (121 | ) | $ | (252 | ) | $ | (503 | ) |
Net reserves by line | ||||||||||||
January 1 reserves | ||||||||||||
($ in millions) | 2019 | 2018 | 2017 | |||||||||
Auto | $ | 14,378 | $ | 14,051 | $ | 13,530 | ||||||
Homeowners | 2,157 | 2,205 | 1,990 | |||||||||
Other personal lines | 1,489 | 1,489 | 1,456 | |||||||||
Commercial lines | 801 | 616 | 621 | |||||||||
Total Allstate Protection | $ | 18,825 | $ | 18,361 | $ | 17,597 |
Impact of reserve reestimates by line on combined ratio and underwriting income | |||||||||||||||||||||
2019 | 2018 | 2017 | |||||||||||||||||||
($ in millions, except ratios) | Reserve reestimate | Effect on combined ratio | Reserve reestimate | Effect on combined ratio | Reserve reestimate | Effect on combined ratio | |||||||||||||||
Auto | $ | (323 | ) | (0.9 | ) | $ | (455 | ) | (1.3 | ) | $ | (490 | ) | (1.6 | ) | ||||||
Homeowners | 65 | 0.2 | 14 | — | (131 | ) | (0.4 | ) | |||||||||||||
Other personal lines | 8 | — | (7 | ) | — | 1 | — | ||||||||||||||
Commercial lines | 17 | — | 108 | 0.3 | 19 | 0.1 | |||||||||||||||
Total Allstate Protection | $ | (233 | ) | (0.7 | ) | $ | (340 | ) | (1.0 | ) | $ | (601 | ) | (1.9 | ) | ||||||
Underwriting income | $ | 2,912 | $ | 2,343 | $ | 2,304 | |||||||||||||||
Reserve reestimates as a % impact on underwriting income | 8.0 | % | 14.5 | % | 26.1 | % |
Discontinued Lines and Coverages reserve reestimates | ||||||||||||||||||||||||
2019 | 2018 | 2017 | ||||||||||||||||||||||
($ in millions) | January 1 reserves | Reserve reestimate | January 1 reserves | Reserve reestimate | January 1 reserves | Reserve reestimate | ||||||||||||||||||
Asbestos claims | $ | 866 | $ | 28 | $ | 884 | $ | 44 | $ | 912 | $ | 61 | ||||||||||||
Environmental claims | 170 | 36 | 166 | 20 | 179 | 10 | ||||||||||||||||||
Other discontinued lines | 355 | 41 | 357 | 23 | 354 | 25 | ||||||||||||||||||
Total | $ | 1,391 | $ | 105 | $ | 1,407 | $ | 87 | $ | 1,445 | $ | 96 | ||||||||||||
Underwriting loss | $ | (108 | ) | $ | (90 | ) | $ | (99 | ) |
Reserves and claim activity before (Gross) and after (Net) the effects of reinsurance | ||||||||||||||||||||||||
2019 | 2018 | 2017 | ||||||||||||||||||||||
($ in millions, except ratios) | Gross | Net | Gross | Net | Gross | Net | ||||||||||||||||||
Asbestos claims | ||||||||||||||||||||||||
Beginning reserves | $ | 1,266 | $ | 866 | $ | 1,296 | $ | 884 | $ | 1,356 | $ | 912 | ||||||||||||
Incurred claims and claims expense | 39 | 28 | 89 | 44 | 79 | 61 | ||||||||||||||||||
Claims and claims expense paid | (133 | ) | (84 | ) | (119 | ) | (62 | ) | (139 | ) | (89 | ) | ||||||||||||
Ending reserves | $ | 1,172 | $ | 810 | $ | 1,266 | $ | 866 | $ | 1,296 | $ | 884 | ||||||||||||
Annual survival ratio | 8.8 | 9.6 | 10.6 | 14.0 | 9.3 | 9.9 | ||||||||||||||||||
3-year survival ratio | 9.0 | 10.3 | 9.1 | 9.7 | 9.2 | 8.9 | ||||||||||||||||||
Environmental claims | ||||||||||||||||||||||||
Beginning reserves | $ | 209 | $ | 170 | $ | 199 | $ | 166 | $ | 219 | $ | 179 | ||||||||||||
Incurred claims and claims expense | 42 | 36 | 30 | 20 | 9 | 10 | ||||||||||||||||||
Claims and claims expense paid | (32 | ) | (27 | ) | (20 | ) | (16 | ) | (29 | ) | (23 | ) | ||||||||||||
Ending reserves | $ | 219 | $ | 179 | $ | 209 | $ | 170 | $ | 199 | $ | 166 | ||||||||||||
Annual survival ratio | 6.8 | 6.6 | 10.5 | 10.6 | 6.9 | 7.2 | ||||||||||||||||||
3-year survival ratio | 8.1 | 8.1 | 8.4 | 8.2 | 6.9 | 6.9 | ||||||||||||||||||
Combined environmental and asbestos claims | ||||||||||||||||||||||||
Annual survival ratio | 8.4 | 8.9 | 10.6 | 13.3 | 8.9 | 9.4 | ||||||||||||||||||
3-year survival ratio | 8.8 | 9.9 | 9.0 | 9.5 | 8.8 | 8.5 | ||||||||||||||||||
Percentage of IBNR in ending reserves | 48.8 | % | 49.6 | % | 52.7 | % |
Net asbestos reserves by type of exposure and total reserve additions | ||||||||||||||||||||||||||||||
December 31, 2019 | December 31, 2018 | December 31, 2017 | ||||||||||||||||||||||||||||
($ in millions) | Active policy-holders | Net reserves | % of reserves | Active policy-holders | Net reserves | % of reserves | Active policy-holders | Net reserves | % of reserves | |||||||||||||||||||||
Direct policyholders: | ||||||||||||||||||||||||||||||
Primary | 58 | $ | 12 | 1 | % | 51 | $ | 12 | 1 | % | 48 | $ | 10 | 1 | % | |||||||||||||||
Excess | 299 | 292 | 36 | 295 | 309 | 36 | 296 | 308 | 35 | |||||||||||||||||||||
Total case reserves | 357 | 304 | 37 | 346 | 321 | 37 | 344 | 318 | 36 | |||||||||||||||||||||
Assumed reinsurance | 127 | 16 | 138 | 16 | 117 | 13 | ||||||||||||||||||||||||
IBNR | 379 | 47 | 407 | 47 | 449 | 51 | ||||||||||||||||||||||||
Total net reserves | $ | 810 | 100 | % | $ | 866 | 100 | % | $ | 884 | 100 | % | ||||||||||||||||||
Total reserve additions | $ | 28 | $ | 44 | $ | 61 |
• | Active policyholders increased by 11 in 2019, including 16 policyholders reporting asbestos claims for the first time and the closing of all claims for 5 policyholders. |
• | Active policyholders increased by 2 in 2018, including 13 policyholders reporting asbestos |
Claims counts for asbestos and environmental exposures | |||||||||
For the years ended December 31, | |||||||||
Number of claims | 2019 | 2018 | 2017 | ||||||
Asbestos | |||||||||
Pending, beginning of year | 6,440 | 6,659 | 6,883 | ||||||
New | 332 | 427 | 406 | ||||||
Closed | (551 | ) | (646 | ) | (630 | ) | |||
Pending, end of year | 6,221 | 6,440 | 6,659 | ||||||
Closed without payment | 392 | 446 | 377 | ||||||
Environmental | |||||||||
Pending, beginning of year | 3,229 | 3,351 | 3,399 | ||||||
New | 273 | 335 | 375 | ||||||
Closed | (323 | ) | (457 | ) | (423 | ) | |||
Pending, end of year | 3,179 | 3,229 | 3,351 | ||||||
Closed without payment | 197 | 320 | 299 |
Reinsurance and indemnification recoverables, net of the allowance established for uncollectible amounts | ||||||||||
S&P financial strength rating (1) | Reinsurance or indemnification recoverable on paid and unpaid claims, net | |||||||||
($ in millions) | 2019 | 2018 | ||||||||
Indemnification programs | ||||||||||
State-based industry pool or facility programs | ||||||||||
MCCA (2) | N/A | $ | 5,499 | $ | 5,400 | |||||
New Jersey Property-Liability Insurance Guaranty Association (“PLIGA”) | N/A | 446 | 461 | |||||||
North Carolina Reinsurance Facility | N/A | 78 | 86 | |||||||
Florida Hurricane Catastrophe Fund (“FHCF”) | N/A | 52 | 104 | |||||||
Other | 9 | 9 | ||||||||
Federal Government - NFIP | N/A | 25 | 31 | |||||||
Subtotal | 6,109 | 6,091 | ||||||||
Catastrophe reinsurance recoverables | ||||||||||
Renaissance Reinsurance Limited | A+ | 27 | 65 | |||||||
Swiss Reinsurance America Corporation | AA- | 15 | 39 | |||||||
Everest Reinsurance Company | A+ | 15 | 33 | |||||||
Other | 179 | 416 | ||||||||
Subtotal | 236 | 553 | ||||||||
Other reinsurance recoverables (3) | ||||||||||
Lloyd’s of London (“Lloyd’s”) (4) | A+ | 158 | 165 | |||||||
Aleka Insurance Inc. | N/A | 115 | 37 | |||||||
Westport Insurance Corporation | AA- | 55 | 60 | |||||||
TIG Insurance Company | N/A | 38 | 35 | |||||||
Other, including allowance for future uncollectible recoverables | 293 | 307 | ||||||||
Subtotal | 659 | 604 | ||||||||
Total Property-Liability | 7,004 | 7,248 | ||||||||
Service Businesses | 20 | 18 | ||||||||
Total | $ | 7,024 | $ | 7,266 |
(1) | N/A reflects no S&P Global Ratings (“S&P”) rating available. |
(2) | As of December 31, 2019 and 2018, MCCA includes $39 million and $30 million of reinsurance recoverable on paid claims, respectively, and $5.46 billion and $5.37 billion of reinsurance recoverable on unpaid claims, respectively. |
(3) | Other reinsurance recoverables primarily relate to asbestos, environmental and other liability exposures as well as commercial lines, including shared economy. |
(4) | As of December 31, 2019, case reserves for Lloyd’s were 68% of the reinsurance recoverable for unpaid claims. |
Effects of reinsurance ceded and indemnification programs on our premiums earned and claims and claims expense | |||||||||||||
For the years ended December 31, | |||||||||||||
($ in millions) | 2019 | 2018 | 2017 | ||||||||||
Allstate Protection - Premiums | |||||||||||||
Indemnification programs | |||||||||||||
State-based industry pool or facility programs | |||||||||||||
MCCA | $ | 89 | $ | 77 | $ | 73 | |||||||
PLIGA | 8 | 9 | 9 | ||||||||||
FHCF | 9 | 10 | 11 | ||||||||||
Other | 85 | 90 | 108 | ||||||||||
Federal Government - NFIP | 258 | 258 | 263 | ||||||||||
Catastrophe reinsurance | 377 | 344 | 344 | ||||||||||
Other reinsurance programs | 121 | 54 | — | ||||||||||
Total Allstate Protection | 947 | 842 | 808 | ||||||||||
Discontinued Lines and Coverages | — | — | — | ||||||||||
Total Property-Liability | 947 | 842 | 808 | ||||||||||
Service Businesses | 175 | 174 | 163 | ||||||||||
Total effect on premiums earned | $ | 1,122 | $ | 1,016 | $ | 971 | |||||||
Allstate Protection - Claims | |||||||||||||
Indemnification programs | |||||||||||||
State-based industry pool or facility programs | |||||||||||||
MCCA | $ | 208 | $ | 233 | $ | 410 | |||||||
PLIGA | 3 | (6 | ) | 3 | |||||||||
FHCF | 31 | 148 | 19 | ||||||||||
Other | 67 | 90 | 89 | ||||||||||
Federal Government - NFIP | 150 | 118 | 1,116 | ||||||||||
Catastrophe reinsurance | (166 | ) | (1 | ) | 604 | 46 | |||||||
Other reinsurance programs | 94 | 40 | — | ||||||||||
Total Allstate Protection | 387 | 1,227 | 1,683 | ||||||||||
Discontinued Lines and Coverages | 39 | 57 | 35 | ||||||||||
Total Property-Liability | 426 | 1,284 | 1,718 | ||||||||||
Service Businesses | 98 | 94 | 89 | ||||||||||
Total effect on claims and claims expense | $ | 524 | $ | 1,378 | $ | 1,807 |
(1) | Decline reflects reestimates in claims and claims expense related to the 2018 Camp Fire. |
Michigan personal injury protection reserve and claim activity before and after the effects of MCCA recoverables | ||||||||||||||||||||||||
For the years ended December 31, | ||||||||||||||||||||||||
2019 | 2018 | 2017 | ||||||||||||||||||||||
($ in millions) | Gross | Net | Gross | Net | Gross | Net | ||||||||||||||||||
Beginning reserves | $ | 5,975 | $ | 605 | $ | 5,799 | $ | 565 | $ | 5,443 | $ | 522 | ||||||||||||
Incurred claims and claims expense-current year | 446 | 202 | 449 | 189 | 513 | 195 | ||||||||||||||||||
Incurred claims and claims expense-prior years | (16 | ) | 20 | 9 | 35 | 117 | 25 | |||||||||||||||||
Claims and claims expense paid-current year (1) | (55 | ) | (53 | ) | (52 | ) | (51 | ) | (54 | ) | (53 | ) | ||||||||||||
Claims and claims expense paid-prior years (1) | (244 | ) | (127 | ) | (230 | ) | (133 | ) | (220 | ) | (124 | ) | ||||||||||||
Ending reserves (2) | $ | 6,106 | $ | 647 | $ | 5,975 | $ | 605 | $ | 5,799 | $ | 565 |
(1) | Paid claims and claims expenses reported in the table for the current and prior years, recovered from the MCCA totaled $119 million, $98 million and $97 million in 2019, 2018 and 2017, respectively. |
(2) | Gross reserves for the year ended December 31, 2019, comprise 85% case reserves and 15% IBNR. Gross reserves for the year ended December 31, 2018, comprise 88% case reserves and 12% IBNR. Gross reserves for the year ended December 31, 2017 comprise 87% case reserves and 13% IBNR. The MCCA does not require member companies to report ultimate case reserves. |
Pending, new and closed claims for Michigan personal injury protection exposures | |||||||||
For the years ended December 31, | |||||||||
Number of claims (1) | 2019 | 2018 | 2017 | ||||||
Pending, beginning of year | 4,812 | 4,983 | 5,388 | ||||||
New | 7,807 | 7,858 | 8,494 | ||||||
Closed | (7,677 | ) | (8,029 | ) | (8,899 | ) | |||
Pending, end of year | 4,942 | 4,812 | 4,983 |
(1) | Total claims includes those covered and not covered by the MCCA indemnification. |
Summarized financial information | ||||||||||||
For the years ended December 31, | ||||||||||||
($ in millions) | 2019 | 2018 | 2017 | |||||||||
Revenues | ||||||||||||
Premiums and contract charges | $ | 1,343 | $ | 1,315 | $ | 1,280 | ||||||
Other revenue | 125 | 119 | 114 | |||||||||
Net investment income | 514 | 505 | 489 | |||||||||
Realized capital gains and losses | 1 | (14 | ) | 5 | ||||||||
Total revenues | 1,983 | 1,925 | 1,888 | |||||||||
Costs and expenses | ||||||||||||
Contract benefits | (855 | ) | (809 | ) | (765 | ) | ||||||
Interest credited to contractholder funds | (299 | ) | (285 | ) | (282 | ) | ||||||
Amortization of DAC | (173 | ) | (132 | ) | (134 | ) | ||||||
Operating costs and expenses | (354 | ) | (361 | ) | (342 | ) | ||||||
Restructuring and related charges | (2 | ) | (3 | ) | (2 | ) | ||||||
Total costs and expenses | (1,683 | ) | (1,590 | ) | (1,525 | ) | ||||||
Income tax (expense) benefit | (53 | ) | (75 | ) | 226 | |||||||
Net income applicable to common shareholders | $ | 247 | $ | 260 | $ | 589 | ||||||
Adjusted net income | $ | 261 | $ | 295 | $ | 259 | ||||||
Realized capital gains and losses, after-tax | — | (11 | ) | 2 | ||||||||
Valuation changes on embedded derivatives not hedged, after-tax | (9 | ) | — | — | ||||||||
DAC and DSI amortization related to realized capital gains and losses and valuation changes on embedded derivatives not hedged, after-tax | (5 | ) | (8 | ) | (10 | ) | ||||||
Tax Legislation (expense) benefit | — | (16 | ) | 338 | ||||||||
Net income applicable to common shareholders | $ | 247 | $ | 260 | $ | 589 | ||||||
Reserve for life-contingent contract benefits as of December 31 | $ | 2,736 | $ | 2,677 | $ | 2,636 | ||||||
Contractholder funds as of December 31 | $ | 7,805 | $ | 7,656 | $ | 7,608 | ||||||
Policies in force as of December 31 by distribution channel (in thousands) | ||||||||||||
Allstate agencies | 1,816 | 1,831 | 1,822 | |||||||||
Closed channels | 107 | 114 | 123 | |||||||||
Total | 1,923 | 1,945 | 1,945 |
Premiums and contract charges by product | ||||||||||||
For the years ended December 31, | ||||||||||||
($ in millions) | 2019 | 2018 | 2017 | |||||||||
Traditional life insurance premiums | $ | 630 | $ | 600 | $ | 568 | ||||||
Accident and health insurance premiums | 2 | 2 | 2 | |||||||||
Interest-sensitive life insurance contract charges (1) | 711 | 713 | 710 | |||||||||
Premiums and contract charges | $ | 1,343 | $ | 1,315 | $ | 1,280 |
(1) | Contract charges related to the cost of insurance totaled $499 million, $493 million and $487 million in 2019, 2018 and 2017, respectively. |
Investment spread | ||||||||||||
For the years ended December 31, | ||||||||||||
($ in millions) | 2019 | 2018 | 2017 | |||||||||
Investment spread before valuation changes on embedded derivatives not hedged | $ | 226 | $ | 220 | $ | 207 | ||||||
Valuation changes on derivatives embedded in equity-indexed universal life contracts that are not hedged | (11 | ) | — | — | ||||||||
Total investment spread | $ | 215 | $ | 220 | $ | 207 |
Components of amortization of DAC | ||||||||||||
For the years ended December 31, | ||||||||||||
($ in millions) | 2019 | 2018 | 2017 | |||||||||
Amortization of DAC before amortization relating to realized capital gains and losses, valuation changes on embedded derivatives that are not hedged and changes in assumptions | $ | 109 | $ | 117 | $ | 134 | ||||||
Amortization relating to realized capital gains and losses (1) and valuation changes on embedded derivatives that are not hedged | 6 | 10 | 14 | |||||||||
Amortization acceleration (deceleration) for changes in assumptions (‘‘DAC unlocking’’) | 58 | 5 | (14 | ) | ||||||||
Total amortization of DAC | $ | 173 | $ | 132 | $ | 134 |
(1) | The impact of realized capital gains and losses on amortization of DAC is dependent upon the relationship between the assets that give rise to the gain or loss and the product liability supported by the assets. Fluctuations result from changes in the impact of realized capital gains and losses on actual and expected gross profits. |
Changes in DAC | ||||||||||||||||||||||||
($ in millions) | Traditional life and accident and health | Interest-sensitive life insurance | Total | |||||||||||||||||||||
For the years ended December 31, | ||||||||||||||||||||||||
2019 | 2018 | 2019 | 2018 | 2019 | 2018 | |||||||||||||||||||
Balance, beginning of year | $ | 489 | $ | 465 | $ | 811 | $ | 687 | $ | 1,300 | $ | 1,152 | ||||||||||||
Acquisition costs deferred | 63 | 65 | 60 | 65 | 123 | 130 | ||||||||||||||||||
Amortization of DAC before amortization relating to realized capital gains and losses, valuation changes on embedded derivatives that are not hedged and changes in assumptions (1) | (44 | ) | (41 | ) | (65 | ) | (76 | ) | (109 | ) | (117 | ) | ||||||||||||
Amortization relating to realized capital gains and losses (1) and valuation changes on embedded derivatives that are not hedged | — | — | (6 | ) | (10 | ) | (6 | ) | (10 | ) | ||||||||||||||
Amortization (acceleration) deceleration for changes in assumptions (“DAC unlocking”) (1) | — | — | (58 | ) | (5 | ) | (58 | ) | (5 | ) | ||||||||||||||
Effect of unrealized capital gains and losses (2) | — | — | (171 | ) | 150 | (171 | ) | 150 | ||||||||||||||||
Ending balance | $ | 508 | $ | 489 | $ | 571 | $ | 811 | $ | 1,079 | $ | 1,300 |
(1) | Included as a component of amortization of DAC on the Consolidated Statements of Operations. |
(2) | Represents the change in the DAC adjustment for unrealized capital gains and losses. The DAC adjustment represents the amount by which the amortization of DAC would increase or decrease if the unrealized gains and losses in the respective product portfolios were realized. |
Reserve for life-contingent contract benefits | ||||||||
For the years ended December 31, | ||||||||
($ in millions) | 2019 | 2018 | ||||||
Traditional life insurance | $ | 2,612 | $ | 2,539 | ||||
Accident and health insurance | 124 | 138 | ||||||
Reserve for life-contingent contract benefits | $ | 2,736 | $ | 2,677 |
Change in contractholder funds | ||||||||||||
For the years ended December 31, | ||||||||||||
($ in millions) | 2019 | 2018 | 2017 | |||||||||
Contractholder funds, beginning balance | $ | 7,656 | $ | 7,608 | $ | 7,464 | ||||||
Deposits | 949 | 965 | 973 | |||||||||
Interest credited | 298 | 284 | 282 | |||||||||
Benefits, withdrawals and other adjustments | ||||||||||||
Benefits | (233 | ) | (232 | ) | (241 | ) | ||||||
Surrenders and partial withdrawals | (261 | ) | (259 | ) | (254 | ) | ||||||
Contract charges | (702 | ) | (704 | ) | (704 | ) | ||||||
Net transfers from separate accounts | 10 | 6 | 4 | |||||||||
Other adjustments (1) | 88 | (12 | ) | 84 | ||||||||
Total benefits, withdrawals and other adjustments | (1,098 | ) | (1,201 | ) | (1,111 | ) | ||||||
Contractholder funds, ending balance | $ | 7,805 | $ | 7,656 | $ | 7,608 |
(1) | The table above illustrates the changes in contractholder funds, which are presented gross of reinsurance recoverables on the Consolidated Statements of Financial Position. The table above is intended to supplement our discussion and analysis of revenues, which are presented net of reinsurance on the Consolidated Statements of Operations. As a result, the net change in contractholder funds associated with products reinsured is reflected as a component of the other adjustments line. |
Reinsurance recoverables by reinsurer | ||||||||||
S&P financial strength rating (1) | Reinsurance recoverable on paid and unpaid benefits | |||||||||
For the years ended December 31, | ||||||||||
($ in millions) | 2019 | 2018 | ||||||||
RGA Reinsurance Company | AA- | $ | 197 | $ | 210 | |||||
Swiss Re Life and Health America, Inc. | AA- | 155 | 156 | |||||||
Munich American Reassurance | AA- | 80 | 87 | |||||||
Transamerica Life Group | AA- | 75 | 76 | |||||||
Scottish Re (U.S.), Inc. (2) | N/A | 70 | 66 | |||||||
John Hancock Life & Health Insurance Company | AA- | 50 | 53 | |||||||
Triton Insurance Company (3) | N/A | 43 | 45 | |||||||
American Health & Life Insurance Co. (3) | N/A | 32 | 34 | |||||||
Lincoln National Life Insurance | AA- | 27 | 25 | |||||||
Security Life of Denver | A+ | 23 | 24 | |||||||
SCOR Global Life | AA- | 14 | 14 | |||||||
American United Life Insurance Company | AA- | 11 | 13 | |||||||
Other (4) | 17 | 20 | ||||||||
Total | $ | 794 | $ | 823 |
(1) | N/A reflects no S&P rating available. |
(2) | In December 2018, the Delaware Insurance Commissioner placed Scottish Re (U.S.), Inc. under regulatory supervision and in March 2019, the reinsurer was placed in rehabilitation. We have been permitted to exercise certain setoff rights while the parties address any potential disputes. See Note 10 of the consolidated financial statements for further details. |
(3) | A.M. Best rating is B++. |
(4) | As of December 31, 2019 and 2018, the other category includes $12 million and $9 million, respectively, of recoverables due from reinsurers rated A- or better by S&P. |
Summarized financial information | ||||||||||||
For the years ended December 31, | ||||||||||||
($ in millions) | 2019 | 2018 | 2017 | |||||||||
Revenues | ||||||||||||
Premiums and contract charges | $ | 1,145 | $ | 1,135 | $ | 1,084 | ||||||
Net investment income | 83 | 77 | 72 | |||||||||
Realized capital gains and losses | 12 | (9 | ) | 1 | ||||||||
Total revenues | 1,240 | 1,203 | 1,157 | |||||||||
Costs and expenses | ||||||||||||
Contract benefits | (601 | ) | (595 | ) | (564 | ) | ||||||
Interest credited to contractholder funds | (34 | ) | (35 | ) | (35 | ) | ||||||
Amortization of DAC | (161 | ) | (145 | ) | (142 | ) | ||||||
Operating costs and expenses | (285 | ) | (278 | ) | (258 | ) | ||||||
Restructuring and related charges | — | — | (3 | ) | ||||||||
Total costs and expenses | (1,081 | ) | (1,053 | ) | (1,002 | ) | ||||||
Income tax expense | (35 | ) | (32 | ) | (1 | ) | ||||||
Net income applicable to common shareholders | $ | 124 | $ | 118 | $ | 154 | ||||||
Adjusted net income | $ | 115 | $ | 124 | $ | 100 | ||||||
Realized capital gains and losses, after-tax | 9 | (7 | ) | — | ||||||||
DAC and DSI amortization related to realized capital gains and losses, after-tax | — | 1 | — | |||||||||
Tax Legislation benefit | — | — | 54 | |||||||||
Net income applicable to common shareholders | $ | 124 | $ | 118 | $ | 154 | ||||||
Benefit ratio (1) | 52.5 | 52.4 | 52.0 | |||||||||
Operating expense ratio (2) | 24.9 | 24.5 | 23.8 | |||||||||
Reserve for life-contingent contract benefits as of December 31 | $ | 1,034 | $ | 1,007 | $ | 979 | ||||||
Contractholder funds as of December 31 | $ | 915 | $ | 898 | $ | 890 | ||||||
Policies in force as of December 31 (in thousands) | 4,183 | 4,208 | 4,033 |
(1) | Benefit ratio is calculated as contract benefits divided by premiums and contract charges. |
(2) | Operating expense ratio is calculated as operating costs and expenses divided by premiums and contract charges. |
Premiums and contract charges by product | ||||||||||||
For the years ended December 31, | ||||||||||||
($ in millions) | 2019 | 2018 | 2017 | |||||||||
Life | $ | 157 | $ | 155 | $ | 155 | ||||||
Accident | 298 | 297 | 280 | |||||||||
Critical illness | 479 | 476 | 468 | |||||||||
Short-term disability | 107 | 108 | 102 | |||||||||
Other health | 104 | 99 | 79 | |||||||||
Premiums and contract charges | $ | 1,145 | $ | 1,135 | $ | 1,084 |
Changes in DAC | ||||||||
For the years ended | ||||||||
($ in millions) | 2019 | 2018 | ||||||
Balance, beginning of year | $ | 549 | $ | 542 | ||||
Acquisition costs deferred | 142 | 150 | ||||||
Amortization of DAC before amortization relating to changes in assumptions (1) | (159 | ) | (150 | ) | ||||
Amortization relating to realized capital gains and losses (1) | — | 1 | ||||||
Amortization deceleration (acceleration) for changes in assumptions (“DAC unlocking”) (1) | (2 | ) | 4 | |||||
Effect of unrealized capital gains and losses (2) | (3 | ) | 2 | |||||
Ending balance | $ | 527 | $ | 549 |
(1) | Included as a component of amortization of DAC on the Consolidated Statements of Operations. |
(2) | Represents the change in the DAC adjustment for unrealized capital gains and losses. The DAC adjustment represents the amount by which the amortization of DAC would increase or decrease if the unrealized gains and losses in the respective product portfolios were realized. |
Operating costs and expenses | ||||||||||||
For the years ended December 31, | ||||||||||||
($ in millions) | 2019 | 2018 | 2017 | |||||||||
Non-deferrable commissions | $ | 104 | $ | 109 | $ | 98 | ||||||
General and administrative expenses | 181 | 169 | 160 | |||||||||
Total operating costs and expenses | $ | 285 | $ | 278 | $ | 258 |
Reserve for life-contingent contract benefits | ||||||||
For the years ended December 31, | ||||||||
($ in millions) | 2019 | 2018 | ||||||
Traditional life insurance | $ | 285 | $ | 269 | ||||
Accident and health insurance | 749 | 738 | ||||||
Reserve for life-contingent contract benefits | $ | 1,034 | $ | 1,007 |
Reinsurance recoverables by reinsurer | ||||||||||
S&P financial strength rating | Reinsurance recoverable on paid and unpaid benefits | |||||||||
For the years ended December 31, | ||||||||||
($ in millions) | 2019 | 2018 | ||||||||
Mutual of Omaha Insurance | AA- | $ | 64 | $ | 71 | |||||
General Re Life Corporation | AA+ | 18 | 19 | |||||||
Other (1) | 6 | 5 | ||||||||
Total | $ | 88 | $ | 95 |
(1) | As of both December 31, 2019 and 2018, the other category includes $4 million of recoverables due from reinsurers rated A- or better by S&P. |
Summarized financial information | ||||||||||||
For the years ended December 31, | ||||||||||||
($ in millions) | 2019 | 2018 | 2017 | |||||||||
Revenues | ||||||||||||
Contract charges | $ | 13 | $ | 15 | $ | 14 | ||||||
Net investment income | 917 | 1,096 | 1,305 | |||||||||
Realized capital gains and losses | 346 | (166 | ) | 44 | ||||||||
Total revenues | 1,276 | 945 | 1,363 | |||||||||
Costs and expenses | ||||||||||||
Contract benefits | (583 | ) | (569 | ) | (594 | ) | ||||||
Interest credited to contractholder funds | (307 | ) | (334 | ) | (373 | ) | ||||||
Amortization of DAC | (7 | ) | (7 | ) | (7 | ) | ||||||
Operating costs and expenses | (29 | ) | (31 | ) | (34 | ) | ||||||
Restructuring and related charges | (1 | ) | — | — | ||||||||
Total costs and expenses | (927 | ) | (941 | ) | (1,008 | ) | ||||||
Gain on disposition of operations | 6 | 6 | 6 | |||||||||
Income tax (expense) benefit | (73 | ) | 66 | 58 | ||||||||
Net income applicable to common shareholders | $ | 282 | $ | 76 | $ | 419 | ||||||
Adjusted net income | $ | 10 | $ | 131 | $ | 205 | ||||||
Realized capital gains and losses, after-tax | 274 | (131 | ) | 28 | ||||||||
Valuation changes on embedded derivatives not hedged, after-tax | (6 | ) | 3 | — | ||||||||
Gain on disposition of operations, after-tax | 4 | 4 | 4 | |||||||||
Tax Legislation benefit | — | 69 | 182 | |||||||||
Net income applicable to common shareholders | $ | 282 | $ | 76 | $ | 419 | ||||||
Reserve for life-contingent contract benefits as of December 31 | $ | 8,530 | $ | 8,524 | $ | 8,934 | ||||||
Contractholder funds as of December 31 | $ | 8,972 | $ | 9,817 | $ | 10,936 | ||||||
Policies in force as of December 31 (in thousands) | ||||||||||||
Deferred annuities | 114 | 127 | 142 | |||||||||
Immediate annuities | 78 | 84 | 89 | |||||||||
Total | 192 | 211 | 231 |
Investment spread | ||||||||||||
For the years ended December 31, | ||||||||||||
($ in millions) | 2019 | 2018 | 2017 | |||||||||
Investment spread before valuation changes on embedded derivatives not hedged | $ | 139 | $ | 267 | $ | 432 | ||||||
Valuation changes on derivatives embedded in equity-indexed annuity contracts that are not hedged | (8 | ) | 3 | (1 | ) | |||||||
Total investment spread | $ | 131 | $ | 270 | $ | 431 |
Analysis of investment spread | |||||||||||||||||||||||||||
Weighted average investment yield | Weighted average interest crediting rate | Weighted average investment spreads | |||||||||||||||||||||||||
2019 | 2018 | 2017 | 2019 | 2018 | 2017 | 2019 | 2018 | 2017 | |||||||||||||||||||
Deferred fixed annuities | 4.3 | % | 4.1 | % | 4.2 | % | 2.7 | % | 2.8 | % | 2.8 | % | 1.6 | % | 1.3 | % | 1.4 | % | |||||||||
Immediate fixed annuities with and without life contingencies | 5.0 | 6.4 | 8.0 | 5.9 | 6.0 | 6.0 | (0.9 | ) | 0.4 | 2.0 |
Weighted average guaranteed crediting rates and weighted average current crediting rates | ||||||||||
($ in millions) | Weighted average guaranteed crediting rates | Weighted average current crediting rates | Contractholder funds | |||||||
Annuities with annual crediting rate resets | 3.16 | % | 3.17 | % | $ | 4,220 | ||||
Annuities with multi-year rate guarantees (1): | ||||||||||
Resettable in next 12 months | 1.73 | 2.89 | 116 | |||||||
Resettable after 12 months | 2.22 | 2.63 | 518 |
(1) | These contracts include interest rate guarantee periods, the majority of which are 5 years. |
Product liabilities | ||||||||
For the years ended December 31, | ||||||||
($ in millions) | 2019 | 2018 | ||||||
Immediate fixed annuities with life contingencies | ||||||||
Sub-standard structured settlements and group pension terminations (1) | $ | 5,085 | $ | 4,990 | ||||
Standard structured settlements and SPIA (2) | 3,367 | 3,425 | ||||||
Other | 78 | 109 | ||||||
Reserve for life-contingent contract benefits | $ | 8,530 | $ | 8,524 | ||||
Deferred fixed annuities | $ | 6,499 | $ | 7,156 | ||||
Immediate fixed annuities without life contingencies | 2,346 | 2,525 | ||||||
Other | 127 | 136 | ||||||
Contractholder funds | $ | 8,972 | $ | 9,817 |
(1) | Comprises structured settlement annuities for annuitants with severe injuries or other health impairments which increased their expected mortality rate at the time the annuity was issued (“sub-standard structured settlements”) and group annuity contracts issued to sponsors of terminated pension plans. |
(2) | Comprises structured settlement annuities for annuitants with standard life expectancy (“standard structured settlements”) and single premium immediate annuities (“SPIA”) with life contingencies. |
Changes in contractholder funds | ||||||||||||
For the years ended December 31, | ||||||||||||
($ in millions) | 2019 | 2018 | 2017 | |||||||||
Contractholder funds, beginning balance | $ | 9,817 | $ | 10,936 | $ | 11,915 | ||||||
Deposits | 16 | 15 | 28 | |||||||||
Interest credited | 304 | 331 | 370 | |||||||||
Benefits, withdrawals and other adjustments | ||||||||||||
Benefits | (547 | ) | (587 | ) | (638 | ) | ||||||
Surrenders and partial withdrawals | (602 | ) | (854 | ) | (723 | ) | ||||||
Contract charges | (9 | ) | (9 | ) | (9 | ) | ||||||
Net transfers from separate accounts | — | — | 1 | |||||||||
Other adjustments (1) | (7 | ) | (15 | ) | (8 | ) | ||||||
Total benefits, withdrawals and other adjustments | (1,165 | ) | (1,465 | ) | (1,377 | ) | ||||||
Contractholder funds, ending balance | $ | 8,972 | $ | 9,817 | $ | 10,936 |
(1) | The table above illustrates the changes in contractholder funds, which are presented gross of reinsurance recoverables on the Consolidated Statements of Financial Position. The table above is intended to supplement our discussion and analysis of revenues, which are presented net of reinsurance on the Consolidated Statements of Operations. As a result, the net change in contractholder funds associated with products reinsured is reflected as a component of the other adjustments line. |
Contractual maturities and yields of fixed income securities and mortgage loans for the next three years | ||||||||||||||
Fixed income securities | Mortgage loans | |||||||||||||
($ in millions) | Carrying value | Investment yield | Carrying value | Investment yield | ||||||||||
2020 | $ | 3,239 | 3.6 | % | $ | 58 | 4.8 | % | ||||||
2021 | 5,877 | 3.4 | 446 | 4.8 | ||||||||||
2022 | 6,107 | 3.3 | 460 | 4.3 |
• | Enhance investment portfolio returns through use of a dynamic capital allocation framework and focus on tax efficiency. |
• | Leverage our broad capabilities to shift the portfolio mix to earn higher risk-adjusted returns on capital. |
• | Invest for the specific needs and characteristics of Allstate’s businesses, including its corresponding liability profile. |
Portfolio composition and strategy by reporting segment (1) | ||||||||||||||||||||||||||||
As of December 31, 2019 | ||||||||||||||||||||||||||||
($ in millions) | Property-Liability | Service Businesses | Allstate Life | Allstate Benefits | Allstate Annuities | Corporate and Other | Total | |||||||||||||||||||||
Fixed income securities (2) | $ | 33,299 | $ | 1,157 | $ | 8,061 | $ | 1,298 | $ | 13,984 | $ | 1,245 | $ | 59,044 | ||||||||||||||
Equity securities (3) | 5,919 | 311 | 210 | 80 | 1,300 | 342 | 8,162 | |||||||||||||||||||||
Mortgage loans | 538 | — | 1,861 | 209 | 2,209 | — | 4,817 | |||||||||||||||||||||
Limited partnership interests | 4,846 | — | — | — | 3,232 | — | 8,078 | |||||||||||||||||||||
Short-term investments (4) | 2,186 | 76 | 396 | 44 | 815 | 739 | 4,256 | |||||||||||||||||||||
Other | 1,626 | — | 1,386 | 310 | 681 | 2 | 4,005 | |||||||||||||||||||||
Total | $ | 48,414 | $ | 1,544 | $ | 11,914 | $ | 1,941 | $ | 22,221 | $ | 2,328 | $ | 88,362 | ||||||||||||||
Percent to total | 54.9 | % | 1.7 | % | 13.5 | % | 2.2 | % | 25.1 | % | 2.6 | % | 100.0 | % | ||||||||||||||
Market-based | $ | 43,256 | $ | 1,544 | $ | 11,914 | $ | 1,941 | $ | 18,672 | $ | 2,326 | $ | 79,653 | ||||||||||||||
Performance-based | 5,158 | — | — | — | 3,549 | 2 | 8,709 | |||||||||||||||||||||
Total | $ | 48,414 | $ | 1,544 | $ | 11,914 | $ | 1,941 | $ | 22,221 | $ | 2,328 | $ | 88,362 |
(1) | Balances reflect the elimination of related party investments between segments. |
(2) | Fixed income securities are carried at fair value. Amortized cost basis for these securities was $32.22 billion, $1.12 billion, $7.43 billion, $1.23 billion, $13.08 billion, $1.21 billion and $56.29 billion for Property-Liability, Service Businesses, Allstate Life, Allstate Benefits, Allstate Annuities, Corporate and Other, and in Total, respectively. |
(3) | Equity securities are carried at fair value. The fair value of equity securities, held as of December 31, 2019, was $1.59 billion in excess of cost. These net gains were primarily concentrated in the consumer goods and technology sectors and in domestic equity index funds. |
(4) | Short-term investments are carried at fair value. |
Portfolio composition by investment strategy | ||||||||||||
As of December 31, 2019 | ||||||||||||
($ in millions) | Market-based | Performance-based | Total | |||||||||
Fixed income securities | $ | 58,950 | $ | 94 | $ | 59,044 | ||||||
Equity securities | 7,822 | 340 | 8,162 | |||||||||
Mortgage loans | 4,817 | — | 4,817 | |||||||||
Limited partnership interests | 906 | 7,172 | 8,078 | |||||||||
Short-term investments | 4,256 | — | 4,256 | |||||||||
Other | 2,902 | 1,103 | 4,005 | |||||||||
Total | $ | 79,653 | $ | 8,709 | $ | 88,362 | ||||||
Percent to total | 90.1 | % | 9.9 | % | 100.0 | % | ||||||
Unrealized net capital gains and losses | ||||||||||||
Fixed income securities | $ | 2,751 | $ | — | $ | 2,751 | ||||||
Limited partnership interests | — | (4 | ) | (4 | ) | |||||||
Other | (3 | ) | — | (3 | ) | |||||||
Total | $ | 2,748 | $ | (4 | ) | $ | 2,744 |
Fixed income securities by type | ||||||||
Fair value as of December 31, | ||||||||
($ in millions) | 2019 | 2018 | ||||||
U.S. government and agencies | $ | 5,086 | $ | 5,517 | ||||
Municipal | 8,620 | 9,169 | ||||||
Corporate | 43,078 | 40,158 | ||||||
Foreign government | 979 | 747 | ||||||
Asset-backed securities (“ABS”) | 862 | 1,045 | ||||||
Mortgage-backed securities (“MBS”) | 419 | 534 | ||||||
Total fixed income securities | $ | 59,044 | $ | 57,170 |
Fair value and unrealized net capital gains (losses) for fixed income securities by credit quality | |||||||||||||||||||||||||||
As of December 31, 2019 | |||||||||||||||||||||||||||
Investment grade | Below investment grade | Total | |||||||||||||||||||||||||
($ in millions) | Fair value | Unrealized gain (loss) | Fair value | Unrealized gain (loss) | Fair value | Unrealized gain (loss) | Percent rated investment grade | ||||||||||||||||||||
U.S. government and agencies | $ | 5,086 | $ | 115 | $ | — | $ | — | $ | 5,086 | $ | 115 | 100.0 | % | |||||||||||||
Municipal | 8,569 | 546 | 51 | (6 | ) | 8,620 | 540 | 99.4 | |||||||||||||||||||
Corporate | |||||||||||||||||||||||||||
Public | 27,777 | 1,356 | 3,103 | 122 | 30,880 | 1,478 | 90.0 | ||||||||||||||||||||
Privately placed | 8,581 | 391 | 3,617 | 119 | 12,198 | 510 | 70.3 | ||||||||||||||||||||
Total Corporate | 36,358 | 1,747 | 6,720 | 241 | 43,078 | 1,988 | 84.4 | ||||||||||||||||||||
Foreign government | 972 | 11 | 7 | — | 979 | 11 | 99.3 | ||||||||||||||||||||
ABS | 791 | 1 | 71 | 1 | 862 | 2 | 91.8 | ||||||||||||||||||||
MBS | 123 | 3 | 296 | 92 | 419 | 95 | 29.4 | ||||||||||||||||||||
Total fixed income securities | $ | 51,899 | $ | 2,423 | $ | 7,145 | $ | 328 | $ | 59,044 | $ | 2,751 | 87.9 | % |
Unrealized net capital gains (losses) | ||||||||
As of December 31, | ||||||||
($ in millions) | 2019 | 2018 | ||||||
U.S. government and agencies | $ | 115 | $ | 131 | ||||
Municipal | 540 | 206 | ||||||
Corporate | 1,988 | (399 | ) | |||||
Foreign government | 11 | 8 | ||||||
ABS | 2 | (4 | ) | |||||
MBS | 95 | 94 | ||||||
Fixed income securities | 2,751 | 36 | ||||||
Derivatives | (3 | ) | (3 | ) | ||||
Equity method of accounting (“EMA”) limited partnerships | (4 | ) | — | |||||
Unrealized net capital gains and losses, pre-tax | $ | 2,744 | $ | 33 |
1) | Financial condition, near-term and long-term prospects of the issue or issuer, including relevant industry specific market conditions and trends, geographic location and implications of rating agency actions and offering prices |
2) | Specific reasons that a security is in an unrealized loss position, including overall market conditions which could affect liquidity |
3) | Length of time and extent to which the fair value has been less than amortized cost or cost. All investments in an unrealized loss position as of December 31, 2019 were included in our portfolio monitoring process for determining whether declines in value were other than temporary. |
Gross unrealized gains (losses) on fixed income securities | ||||||||
As of December 31, | ||||||||
($ in millions) | 2019 | 2018 | ||||||
Gross unrealized gains | $ | 2,847 | $ | 993 | ||||
Gross unrealized losses | (96 | ) | (957 | ) | ||||
Unrealized net capital gains and losses | $ | 2,751 | $ | 36 |
Gross unrealized gains (losses) on fixed income securities by type | ||||||||||||||||
As of December 31, 2019 | ||||||||||||||||
Amortized cost | Gross unrealized | Fair value | ||||||||||||||
($ in millions) | Gains | Losses | ||||||||||||||
Corporate | $ | 41,090 | $ | 2,035 | $ | (47 | ) | $ | 43,078 | |||||||
U.S. government and agencies | 4,971 | 141 | (26 | ) | 5,086 | |||||||||||
Municipal | 8,080 | 551 | (11 | ) | 8,620 | |||||||||||
Foreign government | 968 | 16 | (5 | ) | 979 | |||||||||||
ABS | 860 | 8 | (6 | ) | 862 | |||||||||||
MBS | 324 | 96 | (1 | ) | 419 | |||||||||||
Total fixed income securities | $ | 56,293 | $ | 2,847 | $ | (96 | ) | $ | 59,044 |
Net investment income | ||||||||||||
For the years ended December 31, | ||||||||||||
($ in millions) | 2019 | 2018 | 2017 | |||||||||
Fixed income securities | $ | 2,175 | $ | 2,077 | $ | 2,078 | ||||||
Equity securities | 206 | 170 | 174 | |||||||||
Mortgage loans | 220 | 217 | 206 | |||||||||
Limited partnership interests | 471 | 705 | 889 | |||||||||
Short-term investments | 102 | 73 | 30 | |||||||||
Other | 262 | 272 | 236 | |||||||||
Investment income, before expense | 3,436 | 3,514 | 3,613 | |||||||||
Investment expense (1) (2) | (277 | ) | (274 | ) | (212 | ) | ||||||
Net investment income | $ | 3,159 | $ | 3,240 | $ | 3,401 | ||||||
Market-based | $ | 2,893 | $ | 2,734 | $ | 2,661 | ||||||
Performance-based | 543 | 780 | 952 | |||||||||
Investment income, before expense | $ | 3,436 | $ | 3,514 | $ | 3,613 |
(1) | Investment expense includes $81 million, $71 million and $40 million of investee level expenses in 2019, 2018 and 2017, respectively, and has increased compared to prior year, primarily due to growth in real estate investments. Investee level expenses include depreciation and asset level operating expenses on directly held real estate and other consolidated investments. |
(2) | Investment expense includes $40 million, $28 million and $10 million related to the portion of reinvestment income on securities lending collateral paid to the counterparties in 2019, 2018 and 2017, respectively. |
Performance-based investment income | ||||||||||||
For the years ended December 31, | ||||||||||||
($ in millions) | 2019 | 2018 | 2017 | |||||||||
Limited partnerships | ||||||||||||
Private equity | $ | 330 | $ | 582 | $ | 725 | ||||||
Real estate | 138 | 123 | 164 | |||||||||
Performance-based - limited partnerships | 468 | 705 | 889 | |||||||||
Non-limited partnerships | ||||||||||||
Private equity | 9 | 9 | 19 | |||||||||
Real estate | 66 | 66 | 44 | |||||||||
Performance-based - non-limited partnerships | 75 | 75 | 63 | |||||||||
Total | ||||||||||||
Private equity | 339 | 591 | 744 | |||||||||
Real estate | 204 | 189 | 208 | |||||||||
Total performance-based | $ | 543 | $ | 780 | $ | 952 | ||||||
Investee level expenses (1) | $ | (74 | ) | $ | (64 | ) | $ | (35 | ) |
(1) | Investee level expenses include depreciation and asset level operating expenses reported in investment expense. |
Components of realized capital gains (losses) and the related tax effect | ||||||||||||
For the year December 31, | ||||||||||||
($ in millions) | 2019 | 2018 | 2017 | |||||||||
Impairment write-downs: | ||||||||||||
Fixed income securities | $ | (14 | ) | $ | (10 | ) | $ | (26 | ) | |||
Equity securities | — | — | (38 | ) | ||||||||
Mortgage loans | — | — | (1 | ) | ||||||||
Limited partnership interests | (6 | ) | (3 | ) | (32 | ) | ||||||
Other investments | (27 | ) | (1 | ) | (5 | ) | ||||||
Total impairment write-downs | (47 | ) | (14 | ) | (102 | ) | ||||||
Change in intent write-downs | — | — | (48 | ) | ||||||||
Net OTTI losses recognized in earnings | (47 | ) | (14 | ) | (150 | ) | ||||||
Sales | 575 | (215 | ) | 641 | ||||||||
Valuation of equity investments - appreciation (decline): | ||||||||||||
Equity securities | 1,210 | (594 | ) | — | ||||||||
Limited partnerships (1) | 162 | (97 | ) | — | ||||||||
Total valuation of equity investments | 1,372 | (691 | ) | — | ||||||||
Valuation and settlements of derivative instruments | (15 | ) | 43 | (46 | ) | |||||||
Realized capital gains and losses, pre-tax | 1,885 | (877 | ) | 445 | ||||||||
Income tax (expense) benefit | (397 | ) | 189 | (147 | ) | |||||||
Realized capital gains and losses, after-tax | $ | 1,488 | $ | (688 | ) | $ | 298 | |||||
Market-based | $ | 1,750 | $ | (946 | ) | $ | 486 | |||||
Performance-based | 135 | 69 | (41 | ) | ||||||||
Realized capital gains and losses, pre-tax | $ | 1,885 | $ | (877 | ) | $ | 445 |
(1) | Relates to limited partnerships where the underlying assets are predominately public equity securities. |
Realized capital gains (losses) for performance-based investments | ||||||||||||
For the years ended December 31, | ||||||||||||
($ in millions) | 2019 | 2018 | 2017 | |||||||||
Impairment write-downs | $ | (6 | ) | $ | (3 | ) | $ | (32 | ) | |||
Sales | 103 | 7 | 15 | |||||||||
Valuation of equity investments | 31 | 36 | — | |||||||||
Valuation and settlements of derivative instruments | 7 | 29 | (24 | ) | ||||||||
Total performance-based | $ | 135 | $ | 69 | $ | (41 | ) |
1) | Rebalancing existing asset or liability portfolios |
2) | Changing the type of investments purchased in the future |
3) | Using derivative instruments to modify the market risk characteristics of existing assets and liabilities or assets expected to be purchased |
• Duration, a measure of the price sensitivity of assets and liabilities to changes in interest rates |
• Value-at-risk, a statistical estimate of the probability that the change in fair value of a portfolio will exceed a certain amount over a given time horizon |
• Scenario analysis, an estimate of the potential changes in the fair value of a portfolio that could occur under hypothetical market conditions defined by changes to multiple market risk factors: interest rates, credit spreads, equity prices or currency exchange rates |
• Sensitivity analysis, an estimate of the potential changes in the fair value of a portfolio that could occur using hypothetical shocks to a market risk factor. The selection of measures used in our sensitivity analysis should not be construed as our prediction of future market events, but only as an illustration of the potential effect of such an event. |
Interest rate shock analysis (1) | ||||||||
As of December 31, | ||||||||
($ in millions) | 2019 | 2018 | ||||||
Increase in fair value of the assets net of liabilities (2) | $ | 1,209 | $ | 889 |
(1) | Represents an immediate, parallel increase of 100 basis points based on information and assumptions used in the duration calculations and market interest rates as of December 31, 2019. |
(2) | Estimate excludes traditional and interest-sensitive life insurance and accident and health insurance products that are not considered financial instruments. The assets supporting these products totaled $12.14 billion and $11.07 billion as of December 31, 2019 and 2018, respectively. Based on assumptions described above, these assets would decrease in value by $649 million as of December 31, 2019 compared to a decrease of $593 million as of December 31, 2018. |
Credit spread shock analysis (1) | ||||||||
As of December 31, | ||||||||
($ in millions) | 2019 | 2018 | ||||||
Decrease in net fair value of the assets (2) | $ | 2,877 | $ | 2,493 |
(1) | Represents an immediate, parallel increase of 100 basis points across all asset classes, industry sectors and credit ratings based on information and assumptions used in the spread duration calculations and market interest rates as of December 31, 2019. |
(2) | Reflects effects of tactical positions that include the use of credit default swaps to manage spread risk. |
Change in S&P 500 by 10% | ||||||||
As of December 31, | ||||||||
($ in millions) | 2019 | 2018 | ||||||
Change in net fair value of equity investments | $ | 742 | $ | 527 |
Change in private market valuations by 10% | ||||||||
As of December 31, | ||||||||
($ in millions) | 2019 | 2018 | ||||||
Change in net fair value of limited partnership interests | $ | 717 | $ | 686 |
Change in foreign currency exchange rates (1) | ||||||||
As of December 31, | ||||||||
($ in millions) | 2019 | 2018 | ||||||
Decrease in value of foreign currency denominated instruments | $ | 402 | $ | 306 |
(1) | Represents a 10% immediate unfavorable change in each of the foreign currency exchange rates to which we are exposed based on information and assumptions used, including the impact of foreign currency derivative contracts. |
Capital resources | ||||||||||||
As of December 31, | ||||||||||||
($ in millions) | 2019 | 2018 | 2017 | |||||||||
Preferred stock, common stock, treasury stock, retained income and other shareholders’ equity items | $ | 24,048 | $ | 21,194 | $ | 20,662 | ||||||
Accumulated other comprehensive (loss) income | 1,950 | 118 | 1,889 | |||||||||
Total shareholders’ equity | 25,998 | 21,312 | 22,551 | |||||||||
Debt | 6,631 | 6,451 | 6,350 | |||||||||
Total capital resources | $ | 32,629 | $ | 27,763 | $ | 28,901 | ||||||
Ratio of debt to shareholders’ equity | 25.5 | % | 30.3 | % | 28.2 | % | ||||||
Ratio of debt to capital resources | 20.3 | % | 23.2 | % | 22.0 | % |
Senior long-term debt, commercial paper and insurance financial strength ratings | ||||||
As of December 31, 2019 | ||||||
Moody’s | S&P Global Ratings | A.M. Best | ||||
The Allstate Corporation (debt) | A3 | A- | a | |||
The Allstate Corporation (short-term issuer) | P-2 | A-2 | AMB-1+ | |||
Allstate Insurance Company (insurance financial strength) | Aa3 | AA- | A+ | |||
Allstate Life Insurance Company (insurance financial strength) | A2 | A+ | A+ | |||
Allstate Assurance Company (insurance financial strength) | A2 | N/A | A+ |
Activities for potential sources of funds | ||||||||||||
Property- Liability | Service Businesses | Allstate Life | Allstate Benefits | Allstate Annuities | Corporate and Other | |||||||
Receipt of insurance premiums | ü | ü | ü | ü | ||||||||
Recurring service fees | ü | ü | ü | |||||||||
Contractholder fund deposits | ü | ü | ü | |||||||||
Reinsurance and indemnification program recoveries | ü | ü | ü | ü | ü | |||||||
Receipts of principal, interest and dividends on investments | ü | ü | ü | ü | ü | ü | ||||||
Sales of investments | ü | ü | ü | ü | ü | ü | ||||||
Funds from securities lending, commercial paper and line of credit agreements | ü | ü | ü | ü | ||||||||
Intercompany loans | ü | ü | ü | ü | ü | ü | ||||||
Capital contributions from parent | ü | ü | ü | ü | ü | ü | ||||||
Dividends or return of capital from subsidiaries | ü | ü | ü | ü | ü | ü | ||||||
Tax refunds/settlements | ü | ü | ü | ü | ü | ü | ||||||
Funds from periodic issuance of additional securities | ü | |||||||||||
Receipt of intercompany settlements related to employee benefit plans | ü |
Activities for potential uses of funds | ||||||||||||
Property- Liability | Service Businesses | Allstate Life | Allstate Benefits | Allstate Annuities | Corporate and Other | |||||||
Payment of claims and related expenses | ü | ü | ||||||||||
Payment of contract benefits, surrenders and withdrawals | ü | ü | ü | |||||||||
Reinsurance cessions and indemnification program payments | ü | ü | ü | ü | ü | |||||||
Operating costs and expenses | ü | ü | ü | ü | ü | ü | ||||||
Purchase of investments | ü | ü | ü | ü | ü | ü | ||||||
Repayment of securities lending, commercial paper and line of credit agreements | ü | ü | ü | ü | ||||||||
Payment or repayment of intercompany loans | ü | ü | ü | ü | ü | ü | ||||||
Capital contributions to subsidiaries | ü | ü | ü | ü | ü | ü | ||||||
Dividends or return of capital to shareholders/parent company | ü | ü | ü | ü | ü | ü | ||||||
Tax payments/settlements | ü | ü | ü | ü | ü | ü | ||||||
Common share repurchases | ü | |||||||||||
Debt service expenses and repayment | ü | ü | ||||||||||
Payments related to employee benefit plans | ü | ü | ü | ü | ü | ü | ||||||
Payments for acquisitions | ü | ü | ü | ü | ü | ü |
Intercompany dividends | ||||||||||||
($ in millions) | 2019 | 2018 | 2017 | |||||||||
AIC to AIH | $ | 2,732 | $ | 2,874 | $ | 1,555 | ||||||
AIH to the Corporation | 2,747 | 2,897 | 1,613 | |||||||||
ALIC to AIC | 75 | 250 | 600 | |||||||||
AHL to AFIHC | 80 | 55 | 70 | |||||||||
AFIHC to the Corporation | 50 | — | — |
• | The Corporation has access to a commercial paper facility with a borrowing limit of $1.00 billion to cover short-term cash needs. As of December 31, 2019, there were no balances outstanding and therefore the remaining borrowing capacity was $1.00 billion. |
• | The Corporation, AIC and ALIC have access to a $1.00 billion unsecured revolving credit facility that is available for short-term liquidity requirements. The maturity date of this facility is April 2021. The facility is fully subscribed among 11 lenders with the largest commitment being $115 million. The commitments of the lenders are several and no lender is responsible for any other lender’s commitment if such lender fails to make a loan |
• | The Corporation has access to a universal shelf registration statement with the Securities and Exchange Commission that expires in 2021. We can use this shelf registration to issue an unspecified amount of debt securities, common stock (including 581 million shares of treasury stock as of December 31, 2019), preferred stock, depositary shares, warrants, stock purchase contracts, stock purchase units and securities of trust subsidiaries. The specific terms of any securities we issue under this registration statement will be provided in the applicable prospectus supplements. |
Contractholder funds by contractual withdrawal provisions | |||||||
($ in millions) | December 31, 2019 | Percent to total | |||||
Not subject to discretionary withdrawal | $ | 2,718 | 15.4 | % | |||
Subject to discretionary withdrawal with adjustments: | |||||||
Specified surrender charges (1) | 4,760 | 26.9 | |||||
Market value adjustments (2) | 808 | 4.6 | |||||
Subject to discretionary withdrawal without adjustments (3) | 9,406 | 53.1 | |||||
Total contractholder funds (4) | $ | 17,692 | 100.0 | % |
(1) | Includes $1.46 billion of liabilities with a contractual surrender charge of less than 5% of the account balance. |
(2) | $369 million of the contracts with market value adjusted surrenders have a 30-45 day period at the end of their initial and subsequent interest rate guarantee periods (which are typically 1, 5, 7 or 10 years) during which there is no surrender charge or market value adjustment. $168 million of these contracts have their 30-45 day window period in 2020. |
(3) | 89% of these contracts have a minimum interest crediting rate guarantee of 3% or higher. |
(4) | Includes $698 million of contractholder funds on variable annuities reinsured to The Prudential Insurance Company of America, a subsidiary of Prudential Financial Inc., in 2006. |
Contractual obligations and payments due by period | ||||||||||||||||||||
As of December 31, 2019 | ||||||||||||||||||||
($ in millions) | Total | Less than 1 year | 1 to 3 years | Over 3 years to 5 years | Over 5 years | |||||||||||||||
Liabilities for collateral (1) | $ | 1,829 | $ | 1,829 | $ | — | $ | — | $ | — | ||||||||||
Contractholder funds (2) | 35,751 | 2,058 | 3,903 | 3,561 | 26,229 | |||||||||||||||
Reserve for life-contingent contract benefits (2) | 38,446 | 1,449 | 2,642 | 2,424 | 31,931 | |||||||||||||||
Long-term debt (3) | 13,869 | 316 | 872 | 1,335 | 11,346 | |||||||||||||||
Operating leases (4) | 644 | 133 | 223 | 151 | 137 | |||||||||||||||
Unconditional purchase obligations (4) | 590 | 192 | 239 | 109 | 50 | |||||||||||||||
Defined benefit pension plans and other postretirement benefit plans (4)(5) | 967 | 47 | 111 | 115 | 694 | |||||||||||||||
Reserve for property and casualty insurance claims and claims expense (6) | 27,712 | 12,317 | 8,707 | 3,085 | 3,603 | |||||||||||||||
Other liabilities and accrued expenses (7)(8) | 5,320 | 5,025 | 266 | 17 | 12 | |||||||||||||||
Net unrecognized tax benefits (9) | 70 | 58 | 12 | — | — | |||||||||||||||
Total contractual cash obligations | $ | 125,198 | $ | 23,424 | $ | 16,975 | $ | 10,797 | $ | 74,002 |
(1) | Liabilities for collateral are typically fully secured with cash or short-term investments. We manage our short-term liquidity position to ensure the availability of a sufficient amount of liquid assets to extinguish short-term liabilities as they come due in the normal course of business, including utilizing potential sources of liquidity as disclosed previously. |
(2) | Contractholder funds represent interest-bearing liabilities arising from the sale of products such as interest-sensitive life and fixed annuities, including immediate annuities without life contingencies. The reserve for life-contingent contract benefits relates primarily to traditional life insurance, immediate annuities with life contingencies and voluntary accident and health insurance. These amounts reflect the present value of estimated cash payments to be made to contractholders and policyholders. Certain of these contracts, such as immediate annuities without life contingencies, involve payment obligations where the amount and timing of the payment are essentially fixed and determinable. These amounts relate to (i) policies or contracts where we are currently making payments and will continue to do so and (ii) contracts where the timing of a portion or all of the payments has been determined by the contract. Other contracts, such as interest-sensitive life, fixed deferred annuities, traditional life insurance and voluntary accident and health insurance, involve payment obligations where a portion or all of the amount and timing of future payments is uncertain. For these contracts, we are not currently making payments and will not make payments until (i) the occurrence of an insurable event such as death or illness or (ii) the occurrence of a payment triggering event such as the surrender or partial withdrawal on a policy or deposit contract, which is outside of our control. For immediate annuities with life contingencies, the amount of future payments is uncertain since payments will continue as long as the annuitant lives. We have estimated the timing of payments related to these contracts based on historical experience and our expectation of future payment patterns. Uncertainties relating to these liabilities include mortality, morbidity, expenses, customer lapse and withdrawal activity, estimated additional deposits for interest-sensitive life contracts, and renewal premium for life policies, which may significantly impact both the timing and amount of future payments. Such cash outflows reflect adjustments for the estimated timing of mortality, retirement, and other appropriate factors, but are undiscounted with respect to interest. As a result, the sum of the cash outflows shown for all years in the table exceeds the corresponding liabilities of $17.69 billion for contractholder funds and $12.30 billion for reserve for life-contingent contract benefits as included in the Consolidated Statements of Financial Position as of December 31, 2019. The liability amount in the Consolidated Statements of Financial Position reflects the discounting for interest as well as adjustments for the timing of other factors as described above. Future premium collections are not included in the amounts presented in the table above. |
(3) | Amount differs from the balance presented on the Consolidated Statements of Financial Position as of December 31, 2019, because the long-term debt amount above includes interest and excludes debt issuance costs. |
(4) | Our payment obligations relating to operating leases, unconditional purchase obligations and pension and other postretirement benefits (“OPEB”) contributions are managed within the structure of our intermediate to long-term liquidity management program. |
(5) | The pension plans’ obligations in the next 12 months represent our planned contributions to certain unfunded non-qualified plans where the benefit obligation exceeds the assets, and the remaining years’ contributions are projected based on the average remaining service period using the current underfunded status of the plans. The OPEB plans’ obligations are estimated based on the expected benefits to be paid. These liabilities are discounted with respect to interest, and as a result the sum of the cash outflows shown for all years in the table exceeds the corresponding liability amount of $534 million included in other liabilities and accrued expenses on the Consolidated Statements of Financial Position. |
(6) | Reserve for property and casualty insurance claims and claims expense is an estimate of amounts necessary to settle all outstanding claims, including claims that have been IBNR as of the balance sheet date. We have estimated the timing of these payments based on our historical experience and our expectation of future payment patterns. However, the timing of these payments may vary significantly from the amounts shown above, especially for IBNR claims. The ultimate cost of losses may vary materially from recorded amounts that are our best estimates. |
(7) | Other liabilities primarily include accrued expenses and certain benefit obligations and claim payments and other checks outstanding. Certain of these long-term liabilities are discounted with respect to interest, as a result, the sum of the cash outflows shown for all years in the table may exceed the corresponding liability amount. |
(8) | Balance sheet liabilities not included in the table above include unearned and advance premiums of $16.13 billion and gross deferred tax liabilities of $2.35 billion. These items were excluded as they do not meet the definition of a contractual liability as we are not contractually obligated to pay these amounts to third parties. Rather, they represent an accounting mechanism that allows us to present our financial statements on an accrual basis. In addition, other liabilities of $280 million were not included in the table above because they did not represent a contractual obligation or the amount and timing of their eventual payment was sufficiently uncertain. |
(9) | Net unrecognized tax benefits represent our potential future obligation to the taxing authority for a tax position that was not recognized in the consolidated financial statements. We believe it is reasonably possible that a decrease of up to $58 million in unrecognized tax benefits may occur within the next twelve months due to IRS settlements. The resolution of this obligation may be for an amount different than what we have accrued. |
Contractual commitments and periods in which commitments expire | ||||||||||||||||||||
As of December 31, 2019 | ||||||||||||||||||||
($ in millions) | Total | Less than 1 year | 1 to 3 years | Over 3 years to 5 years | Over 5 years | |||||||||||||||
Other commitments – conditional | $ | 205 | $ | 91 | $ | 46 | $ | 8 | $ | 60 | ||||||||||
Other commitments – unconditional | 2,889 | 284 | 250 | 385 | 1,970 | |||||||||||||||
Total commitments | $ | 3,094 | $ | 375 | $ | 296 | $ | 393 | $ | 2,030 |
• | The Allstate Corporation Board of Directors (“Allstate Board”) has overall responsibility for oversight of Management’s design and implementation of ERRM. |
• | The Risk and Return Committee (“RRC”) of the Allstate Board oversees effectiveness of the ERRM program, governance structure and risk-related decision-making, while focusing on the Company’s overall risk profile. |
• | The Audit Committee oversees the effectiveness of internal controls over financial reporting, disclosure controls and procedures as well as management’s risk control framework and cybersecurity program. |
• | The ERRC, directs ERRM by establishing risk and return targets, determining economic capital levels and monitoring integrated strategies and actions from an enterprise risk and return perspective. |
• | Other key committees work with the ERRC to direct ERRM activities, including the Operating Committee, the Operational Risk Council, the Information Security Council, the Corporate Asset Liability Committee, liability governance committees, and investment committees. |
• | Stochastic methods: measures and monitors risks such as natural catastrophes and severe weather. We develop probabilistic estimates of risk based on our exposures, historical observed volatility and/or industry-recognized models in the case of catastrophe risk. |
• | Scenario analysis: measures and monitors risks and estimated losses due to extreme but plausible insurance-related events such as multiple hurricanes and/or wildfires. Scenarios evaluated include combined multiple event scenarios across risk categories and time periods, considering the effects of macroeconomic conditions. |
• | Sensitivity analysis: measures the impact from a unit change in a market risk input. |
• | Stochastic and probabilistic estimation of potential losses: combines portfolio risk exposures with historical or recent market volatilities and correlations to assess the potential range of future investment results. |
• | Scenario analysis: measures material adverse outcomes such as shock scenarios applied to credit, public and private equity markets. |
• | Fair value of financial assets |
• | Impairment of fixed income securities |
• | Deferred policy acquisition costs amortization |
• | Evaluation of goodwill for impairment |
• | Reserve for property and casualty insurance claims and claims expense estimation |
• | Reserve for life-contingent contract benefits estimation |
• | ![]() |
Fixed income, equity securities and short-term investments by source of fair value determination | |||||||
December 31, 2019 | |||||||
($ in millions) | Fair value | Percent to total | |||||
Fair value based on internal sources | $ | 2,611 | 3.7 | % | |||
Fair value based on external sources (1) | 68,851 | 96.3 | |||||
Total | $ | 71,462 | 100.0 | % |
(1) | Includes $373 million that are valued using broker quotes and $269 million that are valued using quoted prices or quoted net asset values from deal sponsors. |
Effect on DAC amortization of changes in assumptions relating to gross profit components | ||||||||
For the years ended December 31, | ||||||||
($ in millions) | 2019 | 2018 | ||||||
Investment margin | $ | 23 | $ | 10 | ||||
Benefit margin | 38 | (11 | ) | |||||
Expense margin | (1 | ) | 2 | |||||
Net acceleration | $ | 60 | $ | 1 |
($ in millions) | Increase/(reduction) | |||
Increase in future investment margins of 25 basis points | $ | 52 | ||
Decrease in future investment margins of 25 basis points | (57) | |||
Decrease in future life mortality by 1% | $ | 14 | ||
Increase in future life mortality by 1% | (14) |
Net claims and claims expense reserves by segment and line of business | ||||||||||||
As of December 31, | ||||||||||||
($ in millions) | 2019 | 2018 | 2017 | |||||||||
Allstate Protection | ||||||||||||
Auto | $ | 14,728 | $ | 14,378 | $ | 14,051 | ||||||
Homeowners | 2,138 | 2,157 | 2,205 | |||||||||
Other lines | 2,530 | 2,290 | 2,105 | |||||||||
Total Allstate Protection | 19,396 | 18,825 | 18,361 | |||||||||
Discontinued Lines and Coverages | ||||||||||||
Asbestos | 810 | 866 | 884 | |||||||||
Environmental | 179 | 170 | 166 | |||||||||
Other discontinued lines | 376 | 355 | 357 | |||||||||
Total Discontinued Lines and Coverages | 1,365 | 1,391 | 1,407 | |||||||||
Total Service Businesses | 39 | 52 | 86 | |||||||||
Total net claims and claims expense reserves | $ | 20,800 | $ | 20,268 | $ | 19,854 |
Reserves for other discontinued lines | ||||||||
As of December 31, | ||||||||
($ in millions) | 2019 | 2018 | ||||||
Other mass torts | $ | 177 | $ | 148 | ||||
Workers’ compensation | 66 | 69 | ||||||
Commercial and other | 133 | 138 | ||||||
Other discontinued lines | $ | 376 | $ | 355 |
($ in millions) | Increase/(reduction) in sufficiency | Change in sufficiency as a percentage of applicable reserves | ||
Increase in future investment yields of 25 basis points | $200 | 3% | ||
Decrease in future investment yields of 25 basis points | $(211) | (3)% |
Sensitivity of assumption changes included in the calculation of net cost as of December 31, 2019 | ||||||
($ in millions) | Basis/percentage point change | Increase (decrease) to net cost | ||||
Pension plans discount rate | +100 basis points | $ | (842 | ) | ||
-100 basis points | 1,045 | |||||
Expected long-term rate of return on assets | +100 basis points | (59 | ) | |||
-100 basis points | 59 | |||||
Postretirement plans assumed health care cost trend rate | +1% | 27 | ||||
-1% | (23 | ) |
Consolidated Financial Statements | Page | ||
Consolidated Statements of Shareholders’ Equity | |||
Note 1 | General | ||
Note 2 | Summary of Significant Accounting Policies | ||
Note 3 | Acquisitions | ||
Note 4 | Reportable Segments | ||
Note 5 | Investments | ||
Note 6 | Fair Value of Assets and Liabilities | ||
Note 7 | Derivative Financial Instruments and Off-balance Sheet Financial Instruments | ||
Note 8 | Reserve for Property and Casualty Insurance Claims and Claims Expense | ||
Note 9 | Reserve for Life-Contingent Contract Benefits and Contractholder Funds | ||
Note 10 | Reinsurance and Indemnification | ||
Note 11 | Deferred Policy Acquisition and Sales Inducement Costs | ||
Note 12 | Capital Structure | ||
Note 13 | Company Restructuring | ||
Note 14 | Commitments, Guarantees and Contingent Liabilities | ||
Note 15 | Income Taxes | ||
Note 16 | Statutory Financial Information and Dividend Limitations | ||
Note 17 | Benefit Plans | ||
Note 18 | Equity Incentive Plans | ||
Note 19 | Supplemental Cash Flow Information | ||
Note 20 | Other Comprehensive Income | ||
Note 21 | Quarterly Results (unaudited) | ||
Years Ended December 31, | ||||||||||||
($ in millions, except per share data) | 2019 | 2018 | 2017 | |||||||||
Revenues | ||||||||||||
Property and casualty insurance premiums (net of reinsurance ceded and indemnification programs of $1,122, $1,016 and $971) | $ | $ | $ | |||||||||
Life premiums and contract charges (net of reinsurance ceded of $285, $290 and $303) | ||||||||||||
Other revenue | ||||||||||||
Net investment income | ||||||||||||
Realized capital gains and losses: | ||||||||||||
Total other-than-temporary impairment (“OTTI”) losses | ( | ) | ( | ) | ( | ) | ||||||
OTTI losses reclassified to (from) other comprehensive income ("OCI") | ( | ) | ( | ) | ||||||||
Net OTTI losses recognized in earnings | ( | ) | ( | ) | ( | ) | ||||||
Sales and valuation changes on equity investments and derivatives | ( | ) | ||||||||||
Total realized capital gains and losses | ( | ) | ||||||||||
Total revenues | ||||||||||||
Costs and expenses | ||||||||||||
Property and casualty insurance claims and claims expense (net of reinsurance ceded and indemnification programs of $524, $1,378 and $1,807) | ||||||||||||
Life contract benefits (net of reinsurance ceded of $165, $240 and $179) | ||||||||||||
Interest credited to contractholder funds (net of reinsurance ceded of $20, $24 and $25) | ||||||||||||
Amortization of deferred policy acquisition costs | ||||||||||||
Operating costs and expenses | ||||||||||||
Pension and other postretirement remeasurement gains and losses | ( | ) | ||||||||||
Restructuring and related charges | ||||||||||||
Amortization of purchased intangibles | ||||||||||||
Impairment of goodwill and purchased intangibles | ||||||||||||
Interest expense | ||||||||||||
Total costs and expenses | ||||||||||||
Gain on disposition of operations | ||||||||||||
Income from operations before income tax expense | ||||||||||||
Income tax expense | ||||||||||||
Net income | ||||||||||||
Preferred stock dividends | ||||||||||||
Net income applicable to common shareholders | $ | $ | $ | |||||||||
Earnings per common share: | ||||||||||||
Net income applicable to common shareholders per common share - Basic | $ | $ | $ | |||||||||
Weighted average common shares - Basic | ||||||||||||
Net income applicable to common shareholders per common share - Diluted | $ | $ | $ | |||||||||
Weighted average common shares - Diluted |
Years Ended December 31, | ||||||||||||
($ in millions) | 2019 | 2018 | 2017 | |||||||||
Net income | $ | $ | $ | |||||||||
Other comprehensive income (loss), after-tax | ||||||||||||
Changes in: | ||||||||||||
Unrealized net capital gains and losses | ( | ) | ||||||||||
Unrealized foreign currency translation adjustments | ( | ) | ( | ) | ||||||||
Unamortized pension and other postretirement prior service credit | ( | ) | ( | ) | ( | ) | ||||||
Other comprehensive income (loss), after-tax | ( | ) | ||||||||||
Comprehensive income | $ | $ | $ |
December 31, | ||||||||
($ in millions, except par value data) | 2019 | 2018 | ||||||
Assets | ||||||||
Investments | ||||||||
Fixed income securities, at fair value (amortized cost $56,293 and $57,134) | $ | $ | ||||||
Equity securities, at fair value (cost $6,568 and $4,489) | ||||||||
Mortgage loans | ||||||||
Limited partnership interests | ||||||||
Short-term, at fair value (amortized cost $4,256 and $3,027) | ||||||||
Other | ||||||||
Total investments | ||||||||
Cash | ||||||||
Premium installment receivables, net | ||||||||
Deferred policy acquisition costs | ||||||||
Reinsurance and indemnification recoverables, net | ||||||||
Accrued investment income | ||||||||
Property and equipment, net | ||||||||
Goodwill | ||||||||
Other assets | ||||||||
Separate Accounts | ||||||||
Total assets | $ | $ | ||||||
Liabilities | ||||||||
Reserve for property and casualty insurance claims and claims expense | $ | $ | ||||||
Reserve for life-contingent contract benefits | ||||||||
Contractholder funds | ||||||||
Unearned premiums | ||||||||
Claim payments outstanding | ||||||||
Deferred income taxes | ||||||||
Other liabilities and accrued expenses | ||||||||
Long-term debt | ||||||||
Separate Accounts | ||||||||
Total liabilities | ||||||||
Commitments and Contingent Liabilities (Note 7, 8 and 14) | ||||||||
Shareholders’ equity | ||||||||
Preferred stock and additional capital paid-in, $1 par value, 25 million shares authorized, 92.5 thousand and 79.8 thousand shares issued and outstanding, $2,313 and $1,995 aggregate liquidation preference | ||||||||
Common stock, $.01 par value, 2.0 billion shares authorized and 900 million issued, 319 million and 332 million shares outstanding | ||||||||
Additional capital paid-in | ||||||||
Retained income | ||||||||
Deferred Employee Stock Ownership Plan (“ESOP”) expense | ( | ) | ||||||
Treasury stock, at cost (581 million and 568 million shares) | ( | ) | ( | ) | ||||
Accumulated other comprehensive income: | ||||||||
Unrealized net capital gains and losses: | ||||||||
Unrealized net capital gains and losses on fixed income securities with OTTI | ||||||||
Other unrealized net capital gains and losses | ( | ) | ||||||
Unrealized adjustment to DAC, DSI and insurance reserves | ( | ) | ( | ) | ||||
Total unrealized net capital gains and losses | ( | ) | ||||||
Unrealized foreign currency translation adjustments | ( | ) | ( | ) | ||||
Unamortized pension and other postretirement prior service credit | ||||||||
Total accumulated other comprehensive income ("AOCI") | ||||||||
Total shareholders’ equity | ||||||||
Total liabilities and shareholders’ equity | $ | $ |
Years Ended December 31, | ||||||||||||
($ in millions, except per share data) | 2019 | 2018 | 2017 | |||||||||
Preferred stock par value | $ | $ | $ | |||||||||
Preferred stock additional capital paid-in | ||||||||||||
Balance, beginning of year | ||||||||||||
Preferred stock issuance, net of issuance costs | ||||||||||||
Preferred stock redemption | ( | ) | ( | ) | ||||||||
Balance, end of year | ||||||||||||
Common stock par value | ||||||||||||
Common stock additional capital paid-in | ||||||||||||
Balance, beginning of year | ||||||||||||
Forward contract on accelerated share repurchase agreement | ( | ) | ( | ) | ||||||||
Equity incentive plans activity | ||||||||||||
Balance, end of year | ||||||||||||
Retained income | ||||||||||||
Balance, beginning of year | ||||||||||||
Cumulative effect of change in accounting principle | ||||||||||||
Net income | ||||||||||||
Dividends on common stock (declared per share of $2.00, $1.84 and $1.48) | ( | ) | ( | ) | ( | ) | ||||||
Dividends on preferred stock | ( | ) | ( | ) | ( | ) | ||||||
Reclassification of tax effects due to change in accounting principle | ( | ) | ||||||||||
Balance, end of year | ||||||||||||
Deferred ESOP expense | ||||||||||||
Balance, beginning of year | ( | ) | ( | ) | ( | ) | ||||||
Payments | ||||||||||||
Balance, end of year | ( | ) | ( | ) | ||||||||
Treasury stock | ||||||||||||
Balance, beginning of year | ( | ) | ( | ) | ( | ) | ||||||
Shares acquired | ( | ) | ( | ) | ( | ) | ||||||
Shares reissued under equity incentive plans, net | ||||||||||||
Balance, end of year | ( | ) | ( | ) | ( | ) | ||||||
Accumulated other comprehensive income (loss) | ||||||||||||
Balance, beginning of year | ||||||||||||
Cumulative effect of change in accounting principle | ( | ) | ||||||||||
Change in unrealized net capital gains and losses | ( | ) | ||||||||||
Change in unrealized foreign currency translation adjustments | ( | ) | ( | ) | ||||||||
Change in unamortized pension and other postretirement prior service credit | ( | ) | ( | ) | ( | ) | ||||||
Reclassification of tax effects due to change in accounting principle | ||||||||||||
Balance, end of year | ||||||||||||
Total shareholders’ equity | $ | $ | $ |
Years Ended December 31, | ||||||||||||
($ in millions) | 2019 | 2018 | 2017 | |||||||||
Cash flows from operating activities | ||||||||||||
Net income | $ | $ | $ | |||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
Depreciation, amortization and other non-cash items | ||||||||||||
Realized capital gains and losses | ( | ) | ( | ) | ||||||||
Pension and other postretirement remeasurement gains and losses | ( | ) | ||||||||||
Gain on disposition of operations | ( | ) | ( | ) | ( | ) | ||||||
Interest credited to contractholder funds | ||||||||||||
Impairment of goodwill and purchased intangibles | ||||||||||||
Changes in: | ||||||||||||
Policy benefits and other insurance reserves | ( | ) | ||||||||||
Unearned premiums | ||||||||||||
Deferred policy acquisition costs | ( | ) | ( | ) | ( | ) | ||||||
Premium installment receivables, net | ( | ) | ( | ) | ( | ) | ||||||
Reinsurance recoverables, net | ( | ) | ( | ) | ||||||||
Income taxes | ( | ) | ( | ) | ||||||||
Other operating assets and liabilities | ( | ) | ( | ) | ||||||||
Net cash provided by operating activities | ||||||||||||
Cash flows from investing activities | ||||||||||||
Proceeds from sales | ||||||||||||
Fixed income securities | ||||||||||||
Equity securities | ||||||||||||
Limited partnership interests | ||||||||||||
Other investments | ||||||||||||
Investment collections | ||||||||||||
Fixed income securities | ||||||||||||
Mortgage loans | ||||||||||||
Other investments | ||||||||||||
Investment purchases | ||||||||||||
Fixed income securities | ( | ) | ( | ) | ( | ) | ||||||
Equity securities | ( | ) | ( | ) | ( | ) | ||||||
Limited partnership interests | ( | ) | ( | ) | ( | ) | ||||||
Mortgage loans | ( | ) | ( | ) | ( | ) | ||||||
Other investments | ( | ) | ( | ) | ( | ) | ||||||
Change in short-term investments, net | ( | ) | ( | ) | ||||||||
Change in other investments, net | ( | ) | ( | ) | ||||||||
Purchases of property and equipment, net | ( | ) | ( | ) | ( | ) | ||||||
Acquisition of operations | ( | ) | ( | ) | ( | ) | ||||||
Net cash used in investing activities | ( | ) | ( | ) | ( | ) | ||||||
Cash flows from financing activities | ||||||||||||
Proceeds from issuance of long-term debt | ||||||||||||
Redemption and repayment of long-term debt | ( | ) | ( | ) | ||||||||
Proceeds from issuance of preferred stock | ||||||||||||
Redemption of preferred stock | ( | ) | ( | ) | ||||||||
Contractholder fund deposits | ||||||||||||
Contractholder fund withdrawals | ( | ) | ( | ) | ( | ) | ||||||
Dividends paid on common stock | ( | ) | ( | ) | ( | ) | ||||||
Dividends paid on preferred stock | ( | ) | ( | ) | ( | ) | ||||||
Treasury stock purchases | ( | ) | ( | ) | ( | ) | ||||||
Shares reissued under equity incentive plans, net | ||||||||||||
Other | ( | ) | ||||||||||
Net cash used in financing activities | ( | ) | ( | ) | ( | ) | ||||||
Net (decrease) increase in cash | ( | ) | ( | ) | ||||||||
Cash at beginning of year | ||||||||||||
Cash at end of year | $ | $ | $ |
Note 1 | General |
• | Wildfires — California, Colorado, Arizona and Texas |
• | Hurricanes — Major metropolitan centers in counties along the eastern and gulf coasts of the United States |
• | Wind/Hail, Rain and Tornado — Texas, Illinois, Colorado and Georgia |
• | Earthquakes and fires following earthquakes —Major metropolitan areas near fault lines in the states of California, Oregon, Washington, South Carolina, Missouri, Kentucky and Tennessee |
Note 2 | Summary of Significant Accounting Policies |
Goodwill by reporting unit | ||||||||
As of December 31, | ||||||||
($ in millions) | 2019 | 2018 | ||||||
Allstate Protection | $ | $ | ||||||
Service Businesses | ||||||||
Allstate Life | ||||||||
Allstate Benefits | ||||||||
Total | $ | $ |
Amortization expense of intangible assets for the next five years and thereafter | ||||
($ in millions) | ||||
2020 | $ | |||
2021 | ||||
2022 | ||||
2023 | ||||
2024 | ||||
Thereafter | ||||
Total amortization | $ |
Intangible assets by type | ||||||||
As of December 31, | ||||||||
($ in millions) | 2019 | 2018 | ||||||
Customers relationships | $ | $ | ||||||
Trade names and licenses | ||||||||
Technology and other | ||||||||
Total | $ | $ |
• Changes in the discount rate used to value pension and postretirement obligations as of the measurement date |
• Differences between the expected and the actual return on plan assets |
• Changes in demographic assumptions, including mortality and participant experience |
Other information related to operating leases | |||
As of December 31, 2019 | |||
Weighted average remaining lease term (years) | |||
Weighted average discount rate | % |
Maturity of lease liabilities | ||||
($ in millions) | Operating leases | |||
2020 | $ | |||
2021 | ||||
2022 | ||||
2023 | ||||
2024 | ||||
Thereafter | ||||
Total lease payments | $ | |||
Less: interest | ( | ) | ||
Present value of lease liabilities | $ |
Computation of basic and diluted earnings per common share | ||||||||||||
For the years ended December 31, | ||||||||||||
($ in millions, except per share data) | 2019 | 2018 | 2017 | |||||||||
Numerator: | ||||||||||||
Net income | $ | $ | $ | |||||||||
Less: Preferred stock dividends | ||||||||||||
Net income applicable to common shareholders (1) | $ | $ | $ | |||||||||
Denominator: | ||||||||||||
Weighted average common shares outstanding | ||||||||||||
Effect of dilutive potential common shares: | ||||||||||||
Stock options | ||||||||||||
Restricted stock units (non-participating) and performance stock awards | ||||||||||||
Weighted average common and dilutive potential common shares outstanding | ||||||||||||
Earnings per common share – Basic | $ | $ | $ | |||||||||
Earnings per common share – Diluted | $ | $ | $ | |||||||||
Anti-dilutive options excluded from diluted earnings per common share |
Consolidated Statements of Operations | ||||||||||||
Previous accounting principle | Impact of change (1) | As reported | ||||||||||
($ in millions, except per share data) | Year Ended December 31, 2019 | |||||||||||
Property and casualty insurance claims and claims expense | $ | $ | ( | ) | $ | |||||||
Operating costs and expenses | ( | ) | ||||||||||
Pension and other postretirement remeasurement gains and losses | ||||||||||||
Restructuring and related charges | ||||||||||||
Total costs and expenses | ( | ) | ||||||||||
Income from operations before income tax expense | ||||||||||||
Income tax expense | ||||||||||||
Net income | ||||||||||||
Net income applicable to common shareholders | $ | $ | $ | |||||||||
Earnings per common share: | ||||||||||||
Net income applicable to common shareholders per common share - Basic | $ | $ | $ | |||||||||
Net income applicable to common shareholders per common share - Diluted | $ | $ | $ |
Consolidated Statements of Operations | ||||||||||||
Previous accounting principle | Change in accounting principle | As adjusted | ||||||||||
Year Ended December 31, 2018 | ||||||||||||
Property and casualty insurance claims and claims expense | $ | $ | ( | ) | $ | |||||||
Operating costs and expenses | ( | ) | ||||||||||
Pension and other postretirement remeasurement gains and losses | ||||||||||||
Restructuring and related charges | ( | ) | ||||||||||
Total costs and expenses | ||||||||||||
Income from operations before income tax expense | ( | ) | ||||||||||
Income tax expense | ( | ) | ||||||||||
Net income | ( | ) | ||||||||||
Net income applicable to common shareholders | $ | $ | ( | ) | $ | |||||||
Earnings per common share: | ||||||||||||
Net income applicable to common shareholders per common share - Basic | $ | $ | ( | ) | $ | |||||||
Net income applicable to common shareholders per common share - Diluted | $ | $ | ( | ) | $ | |||||||
Year Ended December 31, 2017 | ||||||||||||
Property and casualty insurance claims and claims expense | $ | $ | ( | ) | $ | |||||||
Operating costs and expenses | ( | ) | ||||||||||
Pension and other postretirement remeasurement gains and losses | ( | ) | ( | ) | ||||||||
Restructuring and related charges | ( | ) | ||||||||||
Total costs and expenses | ( | ) | ||||||||||
Income from operations before income tax expense | ||||||||||||
Income tax expense | ||||||||||||
Net income | ||||||||||||
Net income applicable to common shareholders | $ | $ | $ | |||||||||
Earnings per common share: | ||||||||||||
Net income applicable to common shareholders per common share - Basic | $ | $ | $ | |||||||||
Net income applicable to common shareholders per common share - Diluted | $ | $ | $ |
Consolidated Statements of Comprehensive Income | ||||||||||||
Previous accounting principle | Impact of change | As reported | ||||||||||
($ in millions) | Year Ended December 31, 2019 | |||||||||||
Net income | $ | $ | $ | |||||||||
Other comprehensive income (loss), after-tax | ||||||||||||
Changes in: | ||||||||||||
Unrealized net capital gains and losses | ||||||||||||
Unrealized foreign currency translation adjustments | ( | ) | ( | ) | ( | ) | ||||||
Unrecognized pension and other postretirement benefit cost (1) | ( | ) | ( | ) | ||||||||
Other comprehensive income, after-tax | ( | ) | ||||||||||
Comprehensive income | ( | ) | ||||||||||
Year Ended December 31, 2018 | ||||||||||||
Net income | $ | $ | ( | ) | $ | |||||||
Other comprehensive income (loss), after-tax | ||||||||||||
Changes in: | ||||||||||||
Unrealized net capital gains and losses | ( | ) | ( | ) | ||||||||
Unrealized foreign currency translation adjustments | ( | ) | ( | ) | ||||||||
Unrecognized pension and other postretirement benefit cost (1) | ( | ) | ( | ) | ||||||||
Other comprehensive loss, after-tax | ( | ) | ( | ) | ||||||||
Comprehensive income | ||||||||||||
Year Ended December 31, 2017 | ||||||||||||
Net income | $ | $ | $ | |||||||||
Other comprehensive income (loss), after-tax | ||||||||||||
Changes in: | ||||||||||||
Unrealized net capital gains and losses | ||||||||||||
Unrealized foreign currency translation adjustments | ( | ) | ||||||||||
Unrecognized pension and other postretirement benefit cost (1) | ( | ) | ( | ) | ||||||||
Other comprehensive income, after-tax | ( | ) | ||||||||||
Comprehensive income |
Consolidated Statements of Financial Position | |||||||||
Previous accounting principle | Impact of change | As reported | |||||||
($ in millions) | December 31, 2019 | ||||||||
Retained income | ( | ) | |||||||
Unrealized foreign currency translation adjustments | ( | ) | ( | ) | |||||
Unrecognized pension and other postretirement benefit cost (1) | ( | ) | |||||||
Total AOCI | |||||||||
Total shareholders’ equity | ( | ) | |||||||
December 31, 2018 | |||||||||
Retained income | ( | ) | |||||||
Unrealized foreign currency translation adjustments | ( | ) | ( | ) | |||||
Unrecognized pension and other postretirement benefit cost (1) | ( | ) | |||||||
Total AOCI | ( | ) | |||||||
Total shareholders’ equity |
Consolidated Statements of Shareholders’ Equity | ||||||||||||
($ in millions) | Previous accounting principle | Impact of change | As reported | |||||||||
Year Ended December 31, 2019 | ||||||||||||
Retained income | ||||||||||||
Balance, beginning of year | $ | $ | ( | ) | $ | |||||||
Cumulative effect of change in accounting principle | ||||||||||||
Net income | ||||||||||||
Dividends on common stock (declared per share of $2.00) | ( | ) | ( | ) | ||||||||
Dividends on preferred stock | ( | ) | ( | ) | ||||||||
Balance, end of year | ( | ) | ||||||||||
Accumulated other comprehensive income (loss) | ||||||||||||
Balance, beginning of year | ( | ) | ||||||||||
Cumulative effect of change in accounting principle | ||||||||||||
Change in unrealized net capital gains and losses | ||||||||||||
Change in unrealized foreign currency translation adjustments | ( | ) | ( | ) | ( | ) | ||||||
Change in unrecognized pension and other postretirement benefit cost (1) | ( | ) | ( | ) | ||||||||
Balance, end of year | $ | $ | $ | |||||||||
Year Ended December 31, 2018 | ||||||||||||
Retained income | ||||||||||||
Balance, beginning of year | $ | $ | ( | ) | $ | |||||||
Cumulative effect of change in accounting principle | ||||||||||||
Net income | ( | ) | ||||||||||
Dividends on common stock (declared per share of $1.84) | ( | ) | ( | ) | ||||||||
Dividends on preferred stock | ( | ) | ( | ) | ||||||||
Balance, end of year | ( | ) | ||||||||||
Accumulated other comprehensive income (loss) | ||||||||||||
Balance, beginning of year | ||||||||||||
Cumulative effect of change in accounting principle | ( | ) | ( | ) | ||||||||
Change in unrealized net capital gains and losses | ( | ) | ( | ) | ||||||||
Change in unrealized foreign currency translation adjustments | ( | ) | ( | ) | ||||||||
Change in unrecognized pension and other postretirement benefit cost (1) | ( | ) | ( | ) | ||||||||
Balance, end of year | ( | ) | ||||||||||
Year Ended December 31, 2017 | ||||||||||||
Retained income | ||||||||||||
Balance, beginning of year | $ | $ | ( | ) | $ | |||||||
Net income | ||||||||||||
Dividends on common stock (declared per share of $1.48) | ( | ) | ( | ) | ||||||||
Dividends on preferred stock | ( | ) | ( | ) | ||||||||
Reclassification of tax effects due to change in accounting principle | ( | ) | ( | ) | ( | ) | ||||||
Balance, end of year | ( | ) | ||||||||||
Accumulated other comprehensive income (loss) | ||||||||||||
Balance, beginning of year | ( | ) | ||||||||||
Change in unrealized net capital gains and losses | ||||||||||||
Change in unrealized foreign currency translation adjustments | ( | ) | ||||||||||
Change in unrecognized pension and other postretirement benefit cost (1) | ( | ) | ( | ) | ||||||||
Reclassification of tax effects due to change in accounting principle | ||||||||||||
Balance, end of year |
Consolidated Statements of Cash Flows | ||||||||||||
Previous accounting principle | Impact of change | As reported | ||||||||||
($ in millions) | Year Ended December 31, 2019 | |||||||||||
Cash flows from operating activities | ||||||||||||
Net income | $ | $ | $ | |||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
Pension and other postretirement measurement gains and losses | ||||||||||||
Income taxes | ||||||||||||
Other operating assets and liabilities | ( | ) | ( | ) | ||||||||
Net cash provided by operating activities | $ | $ | $ | |||||||||
Year Ended December 31, 2018 | ||||||||||||
Cash flows from operating activities | ||||||||||||
Net income | $ | $ | ( | ) | $ | |||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
Pension and other postretirement measurement gains and losses | ||||||||||||
Income taxes | ( | ) | ( | ) | ( | ) | ||||||
Other operating assets and liabilities | ( | ) | ||||||||||
Net cash provided by operating activities | $ | $ | $ | |||||||||
Year Ended December 31, 2017 | ||||||||||||
Cash flows from operating activities | ||||||||||||
Net income | $ | $ | $ | |||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
Pension and other postretirement measurement gains and losses | ( | ) | ( | ) | ||||||||
Income taxes | ( | ) | ( | ) | ||||||||
Other operating assets and liabilities | ( | ) | ( | ) | ||||||||
Net cash provided by operating activities | $ | $ | $ |
Note 3 | Acquisitions |
Note 4 | Reportable Segments |
• 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 | ||||||||||||
For the years ended December 31, | ||||||||||||
($ in millions) | 2019 | 2018 | 2017 | |||||||||
Property-Liability | ||||||||||||
Insurance premiums | ||||||||||||
Auto | $ | $ | $ | |||||||||
Homeowners | ||||||||||||
Other personal lines | ||||||||||||
Commercial lines | ||||||||||||
Allstate Protection | ||||||||||||
Discontinued Lines and Coverages | ||||||||||||
Total Property-Liability insurance premiums | ||||||||||||
Other revenue | ||||||||||||
Net investment income | ||||||||||||
Realized capital gains and losses | ( | ) | ||||||||||
Total Property-Liability | ||||||||||||
Service Businesses | ||||||||||||
Consumer product protection plans | ||||||||||||
Roadside assistance | ||||||||||||
Finance and insurance products | ||||||||||||
Intersegment premiums and service fees (1) | ||||||||||||
Other revenue | ||||||||||||
Net investment income | ||||||||||||
Realized capital gains and losses | ( | ) | ||||||||||
Total Service Businesses | ||||||||||||
Allstate Life | ||||||||||||
Traditional life insurance premiums | ||||||||||||
Accident and health insurance premiums | ||||||||||||
Interest-sensitive life insurance contract charges | ||||||||||||
Other revenue | ||||||||||||
Net investment income | ||||||||||||
Realized capital gains and losses | ( | ) | ||||||||||
Total Allstate Life | ||||||||||||
Allstate Benefits | ||||||||||||
Traditional life insurance premiums | ||||||||||||
Accident and health insurance premiums | ||||||||||||
Interest-sensitive life insurance contract charges | ||||||||||||
Net investment income | ||||||||||||
Realized capital gains and losses | ( | ) | ||||||||||
Total Allstate Benefits | ||||||||||||
Allstate Annuities | ||||||||||||
Fixed annuities contract charges | ||||||||||||
Net investment income | ||||||||||||
Realized capital gains and losses | ( | ) | ||||||||||
Total Allstate Annuities | ||||||||||||
Corporate and Other | ||||||||||||
Net investment income | ||||||||||||
Realized capital gains and losses | ( | ) | ( | ) | ||||||||
Total Corporate and Other | ||||||||||||
Intersegment eliminations (1) | ( | ) | ( | ) | ( | ) | ||||||
Consolidated revenues | $ | $ | $ |
Reportable segments financial performance | ||||||||||||
For the years ended December 31, | ||||||||||||
($ in millions) | 2019 | 2018 | 2017 | |||||||||
Property-Liability | ||||||||||||
Allstate Protection | $ | $ | $ | |||||||||
Discontinued Lines and Coverages | ( | ) | ( | ) | ( | ) | ||||||
Total underwriting income | ||||||||||||
Net investment income | ||||||||||||
Income tax expense on operations | ( | ) | ( | ) | ( | ) | ||||||
Realized capital gains and losses, after-tax | ( | ) | ||||||||||
Gain on disposition of operations, after-tax | ||||||||||||
Tax Legislation (expense) benefit | ( | ) | ||||||||||
Property-Liability net income applicable to common shareholders | ||||||||||||
Service Businesses | ||||||||||||
Adjusted net income (loss) | ( | ) | ||||||||||
Realized capital gains and losses, after-tax | ( | ) | ||||||||||
Amortization of purchased intangibles, after-tax | ( | ) | ( | ) | ( | ) | ||||||
Impairment of purchased intangibles, after-tax | ( | ) | ||||||||||
Tax Legislation (expense) benefit | ( | ) | ||||||||||
Service Businesses net (loss) income applicable to common shareholders | ( | ) | ( | ) | ||||||||
Allstate Life | ||||||||||||
Adjusted net income | ||||||||||||
Realized capital gains and losses, after-tax | ( | ) | ||||||||||
Valuation changes on embedded derivatives not hedged, after-tax | ( | ) | ||||||||||
DAC and DSI amortization related to realized capital gains and losses and valuation changes on embedded derivatives not hedged, after-tax | ( | ) | ( | ) | ( | ) | ||||||
Tax Legislation (expense) benefit | ( | ) | ||||||||||
Allstate Life net income applicable to common shareholders | ||||||||||||
Allstate Benefits | ||||||||||||
Adjusted net income | ||||||||||||
Realized capital gains and losses, after-tax | ( | ) | ||||||||||
DAC and DSI amortization related to realized capital gains and losses, after-tax | ||||||||||||
Tax Legislation benefit | ||||||||||||
Allstate Benefits net income applicable to common shareholders | ||||||||||||
Allstate Annuities | ||||||||||||
Adjusted net income | ||||||||||||
Realized capital gains and losses, after-tax | ( | ) | ||||||||||
Valuation changes on embedded derivatives not hedged, after-tax | ( | ) | ||||||||||
Gain on disposition of operations, after-tax | ||||||||||||
Tax Legislation benefit | ||||||||||||
Allstate Annuities net income applicable to common shareholders | ||||||||||||
Corporate and Other | ||||||||||||
Adjusted net loss | ( | ) | ( | ) | ( | ) | ||||||
Realized capital gains and losses, after-tax | ( | ) | ( | ) | ||||||||
Pension and other postretirement remeasurement gains and losses, after-tax | ( | ) | ( | ) | ||||||||
Goodwill impairment | ( | ) | ||||||||||
Business combination expenses, after-tax | ( | ) | ( | ) | ||||||||
Tax Legislation expense | ( | ) | ( | ) | ||||||||
Consolidated and Other net loss applicable to common shareholders | ( | ) | ( | ) | ( | ) | ||||||
Consolidated net income applicable to common shareholders | $ | $ | $ |
Additional significant financial performance data | ||||||||||||
For the years ended December 31, | ||||||||||||
($ in millions) | 2019 | 2018 | 2017 | |||||||||
Amortization of DAC | ||||||||||||
Property-Liability | $ | $ | $ | |||||||||
Service Businesses | ||||||||||||
Allstate Life | ||||||||||||
Allstate Benefits | ||||||||||||
Allstate Annuities | ||||||||||||
Consolidated | $ | $ | $ | |||||||||
Income tax expense (benefit) | ||||||||||||
Property-Liability | $ | $ | $ | |||||||||
Service Businesses | ( | ) | ( | ) | ( | ) | ||||||
Allstate Life | ( | ) | ||||||||||
Allstate Benefits | ||||||||||||
Allstate Annuities | ( | ) | ( | ) | ||||||||
Corporate and Other | ( | ) | ( | ) | ||||||||
Consolidated | $ | $ | $ |
Reportable segment total assets and investments (1) | ||||||||
As of December 31, | ||||||||
($ in millions) | 2019 | 2018 | ||||||
Assets | ||||||||
Property-Liability | $ | $ | ||||||
Service Businesses | ||||||||
Allstate Life | ||||||||
Allstate Benefits | ||||||||
Allstate Annuities | ||||||||
Corporate and Other | ||||||||
Consolidated | $ | $ | ||||||
Investments | ||||||||
Property-Liability | $ | $ | ||||||
Service Businesses | ||||||||
Allstate Life | ||||||||
Allstate Benefits | ||||||||
Allstate Annuities | ||||||||
Corporate and Other | ||||||||
Consolidated | $ | $ |
(1) | The balances reflect the elimination of related party investments between segments. |
Note 5 | Investments |
Amortized cost, gross unrealized gains (losses) and fair value for fixed income securities | ||||||||||||||||
Amortized cost | Gross unrealized | Fair value | ||||||||||||||
($ in millions) | Gains | Losses | ||||||||||||||
December 31, 2019 | ||||||||||||||||
U.S. government and agencies | $ | $ | $ | ( | ) | $ | ||||||||||
Municipal | ( | ) | ||||||||||||||
Corporate | ( | ) | ||||||||||||||
Foreign government | ( | ) | ||||||||||||||
ABS | ( | ) | ||||||||||||||
MBS | ( | ) | ||||||||||||||
Total fixed income securities | $ | $ | $ | ( | ) | $ | ||||||||||
December 31, 2018 | ||||||||||||||||
U.S. government and agencies | $ | $ | $ | ( | ) | $ | ||||||||||
Municipal | ( | ) | ||||||||||||||
Corporate | ( | ) | ||||||||||||||
Foreign government | ( | ) | ||||||||||||||
ABS | ( | ) | ||||||||||||||
MBS | ( | ) | ||||||||||||||
Total fixed income securities | $ | $ | $ | ( | ) | $ |
Scheduled maturities for fixed income securities | ||||||||
As of December 31, 2019 | ||||||||
($ in millions) | Amortized cost | Fair value | ||||||
Due in one year or less | $ | $ | ||||||
Due after one year through five years | ||||||||
Due after five years through ten years | ||||||||
Due after ten years | ||||||||
ABS and MBS | ||||||||
Total | $ | $ |
Net investment income | ||||||||||||
For the years ended December 31, | ||||||||||||
($ in millions) | 2019 | 2018 | 2017 | |||||||||
Fixed income securities | $ | $ | $ | |||||||||
Equity securities | ||||||||||||
Mortgage loans | ||||||||||||
Limited partnership interests | ||||||||||||
Short-term investments | ||||||||||||
Other | ||||||||||||
Investment income, before expense | ||||||||||||
Investment expense | ( | ) | ( | ) | ( | ) | ||||||
Net investment income | $ | $ | $ |
Realized capital gains (losses) by asset type | ||||||||||||
For the years ended December 31, | ||||||||||||
($ in millions) | 2019 | 2018 | 2017 | |||||||||
Fixed income securities | $ | $ | ( | ) | $ | |||||||
Equity securities | ( | ) | ||||||||||
Mortgage loans | ||||||||||||
Limited partnership interests | ( | ) | ||||||||||
Derivatives | ( | ) | ( | ) | ||||||||
Other | ||||||||||||
Realized capital gains and losses | $ | $ | ( | ) | $ |
Realized capital gains (losses) by transaction type | ||||||||||||
For the years ended December 31, | ||||||||||||
($ in millions) | 2019 | 2018 | 2017 | |||||||||
Impairment write-downs | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
Change in intent write-downs | ( | ) | ||||||||||
Net OTTI losses recognized in earnings | ( | ) | ( | ) | ( | ) | ||||||
Sales | ( | ) | ||||||||||
Valuation of equity investments (1) | ( | ) | ||||||||||
Valuation and settlements of derivative instruments | ( | ) | ( | ) | ||||||||
Realized capital gains and losses | $ | $ | ( | ) | $ |
(1) | Includes valuation of equity securities and certain limited partnership interests where the underlying assets are predominately public equity securities. |
Net appreciation (decline) recognized in net income | ||||||||
For the years ended December 31, | ||||||||
($ in millions) | 2019 | 2018 | ||||||
Equity securities | $ | $ | ( | ) | ||||
Limited partnership interests carried at fair value | ||||||||
Total | $ | $ | ( | ) |
OTTI losses by asset type | ||||||||||||||||||||||||||||||||||||
For the years ended December 31, | ||||||||||||||||||||||||||||||||||||
($ in millions) | 2019 | 2018 | 2017 | |||||||||||||||||||||||||||||||||
Gross | Included in OCI | Net | Gross | Included in OCI | Net | Gross | Included in OCI | Net | ||||||||||||||||||||||||||||
Fixed income securities: | ||||||||||||||||||||||||||||||||||||
Municipal | $ | ( | ) | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
Corporate | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
ABS | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||
MBS | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||
Total fixed income securities | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||
Equity securities | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
Mortgage loans | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
Limited partnership interests | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||
Other | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||
OTTI losses | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) |
OTTI losses included in AOCI at the time of impairment for fixed income securities which were not included in earnings (1) | ||||||||
As of December 31, | ||||||||
($ in millions) | 2019 | 2018 | ||||||
Municipal | $ | ( | ) | $ | ( | ) | ||
Corporate | ( | ) | ||||||
ABS | ( | ) | ( | ) | ||||
MBS | ( | ) | ( | ) | ||||
Total | $ | ( | ) | $ | ( | ) |
(1) | The amounts exclude $ |
Rollforward of the cumulative credit losses recognized in earnings for fixed income securities held | ||||||||||||
As of December 31, | ||||||||||||
($ in millions) | 2019 | 2018 | 2017 | |||||||||
Beginning balance | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
Additional credit loss for securities previously other-than-temporarily impaired | ( | ) | ( | ) | ( | ) | ||||||
Additional credit loss for securities not previously other-than-temporarily impaired | ( | ) | ( | ) | ( | ) | ||||||
Reduction in credit loss for securities disposed or collected | ||||||||||||
Change in credit loss due to accretion of increase in cash flows | ||||||||||||
Ending balance | $ | ( | ) | $ | ( | ) | $ | ( | ) |
Unrealized net capital gains and losses included in AOCI | ||||||||||||||||
($ in millions) | Fair value | Gross unrealized | Unrealized net gains (losses) | |||||||||||||
December 31, 2019 | Gains | Losses | ||||||||||||||
Fixed income securities | $ | $ | $ | ( | ) | $ | ||||||||||
Short-term investments | ||||||||||||||||
Derivative instruments | ( | ) | ( | ) | ||||||||||||
EMA limited partnerships (1) | ( | ) | ||||||||||||||
Unrealized net capital gains and losses, pre-tax | ||||||||||||||||
Amounts recognized for: | ||||||||||||||||
Insurance reserves (2) | ( | ) | ||||||||||||||
DAC and DSI (3) | ( | ) | ||||||||||||||
Amounts recognized | ( | ) | ||||||||||||||
Deferred income taxes | ( | ) | ||||||||||||||
Unrealized net capital gains and losses, after-tax | $ | |||||||||||||||
December 31, 2018 | ||||||||||||||||
Fixed income securities | $ | $ | $ | ( | ) | $ | ||||||||||
Short-term investments | ||||||||||||||||
Derivative instruments | ( | ) | ( | ) | ||||||||||||
EMA limited partnerships | ||||||||||||||||
Unrealized net capital gains and losses, pre-tax | ||||||||||||||||
Amounts recognized for: | ||||||||||||||||
Insurance reserves | ||||||||||||||||
DAC and DSI | ( | ) | ||||||||||||||
Amounts recognized | ( | ) | ||||||||||||||
Deferred income taxes | ( | ) | ||||||||||||||
Unrealized net capital gains and losses, after-tax | $ | ( | ) |
(1) | Unrealized net capital gains and losses for limited partnership interests represent the Company’s share of EMA limited partnerships’ OCI. Fair value and gross unrealized gains and losses are not applicable. |
(2) | The insurance reserves adjustment represents the amount by which the reserve balance would increase if the net unrealized gains in the applicable product portfolios were realized and reinvested at lower interest rates, resulting in a premium deficiency. This adjustment primarily relates to structured settlement annuities with life contingencies (a type of immediate fixed annuities). |
(3) | The DAC and DSI adjustment balance represents the amount by which the amortization of DAC and DSI would increase or decrease if the unrealized gains or losses in the respective product portfolios were realized. |
Change in unrealized net capital gains (losses) | ||||||||||||
For the years ended December 31, | ||||||||||||
($ in millions) | 2019 | 2018 | 2017 | |||||||||
Fixed income securities | $ | $ | ( | ) | $ | |||||||
Equity securities (1) | ||||||||||||
Derivative instruments | ( | ) | ( | ) | ||||||||
EMA limited partnerships | ( | ) | ( | ) | ||||||||
Total | ( | ) | ||||||||||
Amounts recognized for: | ||||||||||||
Insurance reserves | ( | ) | ( | ) | ||||||||
DAC and DSI | ( | ) | ( | ) | ||||||||
Amounts recognized | ( | ) | ( | ) | ||||||||
Deferred income taxes | ( | ) | ||||||||||
Increase (decrease) in unrealized net capital gains and losses, after-tax | $ | $ | ( | ) | $ |
(1) | Upon adoption of the recognition and measurement accounting standard on January 1, 2018, $ |
Gross unrealized losses and fair value by type and length of time held in a continuous unrealized loss position | ||||||||||||||||||||||||||
Less than 12 months | 12 months or more | |||||||||||||||||||||||||
($ in millions) | Number of issues | Fair value | Unrealized losses | Number of issues | Fair value | Unrealized losses | Total unrealized losses | |||||||||||||||||||
December 31, 2019 | ||||||||||||||||||||||||||
Fixed income securities | ||||||||||||||||||||||||||
U.S. government and agencies | $ | $ | ( | ) | $ | $ | $ | ( | ) | |||||||||||||||||
Municipal | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||
Corporate | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||
Foreign government | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||
ABS | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||
MBS | ( | ) | ( | ) | ||||||||||||||||||||||
Total fixed income securities | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||
Investment grade fixed income securities | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||
Below investment grade fixed income securities | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||
Total fixed income securities | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||
December 31, 2018 | ||||||||||||||||||||||||||
Fixed income securities | ||||||||||||||||||||||||||
U.S. government and agencies | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||
Municipal | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||
Corporate | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||
Foreign government | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||
ABS | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||
MBS | ( | ) | ( | ) | ||||||||||||||||||||||
Total fixed income securities | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||
Investment grade fixed income securities | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||
Below investment grade fixed income securities | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||
Total fixed income securities | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) |
Gross unrealized losses by unrealized loss position and credit quality as of December 31, 2019 | ||||||||||||
($ in millions) | Investment grade | Below investment grade | Total | |||||||||
Fixed income securities with unrealized loss position less than 20% of amortized cost (1) (2) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
Fixed income securities with unrealized loss position greater than or equal to 20% of amortized cost (3) (4) | ( | ) | ( | ) | ( | ) | ||||||
Total unrealized losses | $ | ( | ) | $ | ( | ) | $ | ( | ) |
(1) | Below investment grade fixed income securities include $ |
(2) | Related to securities with an unrealized loss position less than 20% of amortized cost, the degree of which suggests that these securities do not pose a high risk of being other-than-temporarily impaired. |
(3) |
(4) | Evaluated based on factors such as discounted cash flows and the financial condition and near-term and long-term prospects of the issue or issuer and were determined to have adequate resources to fulfill contractual obligations. |
Principal geographic distribution of commercial real estate exceeding 5% of the mortgage loans portfolio | ||||||
As of December 31, | ||||||
(% of mortgage loan portfolio carrying value) | 2019 | 2018 | ||||
Texas | % | % | ||||
California | ||||||
Illinois | ||||||
Florida | ||||||
New Jersey | ||||||
North Carolina |
Types of properties collateralizing the mortgage loan portfolio | ||||||
As of December 31, | ||||||
(% of mortgage loan portfolio carrying value) | 2019 | 2018 | ||||
Apartment complex | % | % | ||||
Office buildings | ||||||
Warehouse | ||||||
Retail | ||||||
Other | ||||||
Total | % | % |
Contractual maturities of the mortgage loan portfolio | ||||||||||
As of December 31, 2019 | ||||||||||
($ in millions) | Number of loans | Carrying value | Percent | |||||||
2020 | $ | % | ||||||||
2021 | ||||||||||
2022 | ||||||||||
2023 | ||||||||||
Thereafter | ||||||||||
Total | $ | % |
Carrying value of non-impaired mortgage loans summarized by debt service coverage ratio distribution | ||||||||||||||||||||||||
As of December 31, | ||||||||||||||||||||||||
($ in millions) | 2019 | 2018 | ||||||||||||||||||||||
Debt Service Coverage Ratio Distribution | Fixed rate mortgage loans | Variable rate mortgage loans | Total | Fixed rate mortgage loans | Variable rate mortgage loans | Total | ||||||||||||||||||
Below 1.0 | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
1.0 - 1.25 | ||||||||||||||||||||||||
1.26 - 1.50 | ||||||||||||||||||||||||
Above 1.50 | ||||||||||||||||||||||||
Total non-impaired mortgage loans | $ | $ | $ | $ | $ | $ |
Net carrying value of impaired mortgage loans | ||||||||
As of December 31, | ||||||||
($ in millions) | 2019 | 2018 | ||||||
Impaired mortgage loans with a valuation allowance | $ | $ | ||||||
Impaired mortgage loans without a valuation allowance | ||||||||
Total impaired mortgage loans | $ | $ | ||||||
Valuation allowance on impaired mortgage loans | $ | $ |
Rollforward of the valuation allowance on impaired mortgage loans | ||||||||||||
For the years ended December 31, | ||||||||||||
($ in millions) | 2019 | 2018 | 2017 | |||||||||
Beginning balance | $ | $ | $ | |||||||||
Net increase in valuation allowance | ||||||||||||
Charge offs | ( | ) | ||||||||||
Ending balance | $ | $ | $ |
Principal geographic distribution of municipal bond issuers exceeding 5% of the portfolio | ||||||
As of December 31, | ||||||
(% of municipal bond portfolio carrying value) | 2019 | 2018 | ||||
Texas | % | % | ||||
California | ||||||
Colorado | ||||||
Washington | ||||||
New York |
Other investments by asset type | ||||||||
($ in millions) | December 31, 2019 | December 31, 2018 | ||||||
Bank loans | $ | $ | ||||||
Real estate | ||||||||
Policy loans | ||||||||
Agent loans | ||||||||
Derivatives and other | ||||||||
Total | $ | $ |
Note 6 | Fair Value of Assets and Liabilities |
(a) | Quoted prices for similar assets or liabilities in active markets; |
(b) | Quoted prices for identical or similar assets or liabilities in markets that are not active; or |
(c) | Valuation models whose inputs are observable, directly or indirectly, for substantially the full term of the asset or liability. |
(1) | Specific inputs significant to the fair value estimation models are not market observable. This primarily occurs in the Company’s use of broker quotes to value certain securities where the inputs have not been corroborated to be market observable, and the use of valuation models that use significant non-market observable inputs. |
(2) | Quotes continue to be received from independent third-party valuation service providers and all significant inputs are market observable; however, there has been a significant decrease in the volume and level of activity for the asset when compared to normal market activity such that the degree of market observability has declined to a point where categorization as a Level 3 measurement is considered appropriate. The indicators considered in determining whether a significant decrease in the volume and level of activity for a specific asset has occurred include the level of new issuances in the primary market, trading volume in the secondary market, the level of credit spreads over historical levels, applicable bid-ask spreads, and price consensus among market participants and other pricing sources. |
• | Fixed income securities: |
• | Equity securities: The primary inputs to the valuation include quoted prices or quoted net asset values for identical or similar assets in markets that are not active. |
• | Short-term: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields and credit spreads. |
• | Other investments: Free-standing exchange listed derivatives that are not actively traded are valued based on quoted prices for identical instruments in markets that are not active. |
• | Fixed income securities: |
• | Equity securities: The primary inputs to the valuation include quoted prices or quoted net asset values for identical or similar assets in markets that exhibit less liquidity relative to those markets supporting Level 2 fair value measurements. |
• | Short-term: For certain short-term investments, amortized cost is used as the best estimate of fair value. |
• | Other investments: Certain OTC derivatives, such as interest rate caps, certain credit default swaps and certain options (including swaptions), are valued using models that are widely accepted in the financial services industry. These are categorized as Level 3 as a result of the significance of non-market observable inputs such as volatility. Other primary inputs include interest rate yield curves and credit spreads. |
• | Contractholder funds: Derivatives embedded in certain life and annuity contracts are valued internally using models widely accepted in the financial services industry that determine a single best estimate of fair value for the embedded derivatives within a block of contractholder liabilities. The models primarily use stochastically determined cash flows based on the contractual elements of embedded derivatives, projected option cost and applicable market data, such as interest rate yield curves and equity index volatility assumptions. These are categorized as Level 3 as a result of the significance of non-market observable inputs. |
Assets and liabilities measured at fair value | ||||||||||||||||||||
As of December 31, 2019 | ||||||||||||||||||||
($ in millions) | Quoted prices in active markets for identical assets (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | Counterparty and cash collateral netting | Total | |||||||||||||||
Assets | ||||||||||||||||||||
Fixed income securities: | ||||||||||||||||||||
U.S. government and agencies | $ | $ | $ | $ | ||||||||||||||||
Municipal | ||||||||||||||||||||
Corporate - public | ||||||||||||||||||||
Corporate - privately placed | ||||||||||||||||||||
Foreign government | ||||||||||||||||||||
ABS | ||||||||||||||||||||
MBS | ||||||||||||||||||||
Total fixed income securities | ||||||||||||||||||||
Equity securities | ||||||||||||||||||||
Short-term investments | ||||||||||||||||||||
Other investments: Free-standing derivatives | ( | ) | ||||||||||||||||||
Separate account assets | ||||||||||||||||||||
Other assets | ||||||||||||||||||||
Total recurring basis assets | ( | ) | ||||||||||||||||||
Total assets at fair value | $ | $ | $ | $ | ( | ) | $ | |||||||||||||
% of total assets at fair value | % | % | % | ( | )% | % | ||||||||||||||
Investments reported at NAV | ||||||||||||||||||||
Total | $ | |||||||||||||||||||
Liabilities | ||||||||||||||||||||
Contractholder funds: Derivatives embedded in life and annuity contracts | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
Other liabilities: Free-standing derivatives | ( | ) | $ | ( | ) | |||||||||||||||
Total recurring basis liabilities | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | |||||||||
% of total liabilities at fair value | % | % | % | ( | )% | % |
Assets and liabilities measured at fair value | ||||||||||||||||||||
As of December 31, 2018 | ||||||||||||||||||||
($ in millions) | Quoted prices in active markets for identical assets (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | Counterparty and cash collateral netting | Total | |||||||||||||||
Assets | ||||||||||||||||||||
Fixed income securities: | ||||||||||||||||||||
U.S. government and agencies | $ | $ | $ | $ | ||||||||||||||||
Municipal | ||||||||||||||||||||
Corporate - public | ||||||||||||||||||||
Corporate - privately placed | ||||||||||||||||||||
Foreign government | ||||||||||||||||||||
ABS | ||||||||||||||||||||
MBS | ||||||||||||||||||||
Total fixed income securities | ||||||||||||||||||||
Equity securities | ||||||||||||||||||||
Short-term investments | ||||||||||||||||||||
Other investments: Free-standing derivatives | $ | ( | ) | |||||||||||||||||
Separate account assets | ||||||||||||||||||||
Other assets | ||||||||||||||||||||
Total recurring basis assets | $ | $ | $ | $ | ( | ) | $ | |||||||||||||
% of total assets at fair value | % | % | % | % | % | |||||||||||||||
Investments reported at NAV | ||||||||||||||||||||
Total | $ | |||||||||||||||||||
Liabilities | ||||||||||||||||||||
Contractholder funds: Derivatives embedded in life and annuity contracts | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
Other liabilities: Free-standing derivatives | ( | ) | ( | ) | $ | ( | ) | |||||||||||||
Total recurring basis liabilities | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | |||||||
% of total liabilities at fair value | % | % | % | ( | )% | % |
Quantitative information about the significant unobservable inputs used in Level 3 fair value measurements | ||||||||||||
($ in millions) | Fair value | Valuation technique | Unobservable input | Range | Weighted average | |||||||
December 31, 2019 | ||||||||||||
Derivatives embedded in life and annuity contracts – Equity-indexed and forward starting options | $ | ( | ) | Stochastic cash flow model | Projected option cost | 1.0 - 4.2% | ||||||
December 31, 2018 | ||||||||||||
Derivatives embedded in life and annuity contracts – Equity-indexed and forward starting options | $ | ( | ) | Stochastic cash flow model | Projected option cost | 1.0 - 2.2% |
Rollforward of Level 3 assets and liabilities held at fair value during the year ended December 31, 2019 | ||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2018 | Total gains (losses) included in: | Transfers | Balance as of December 31, 2019 | |||||||||||||||||||||||||||||||||||||
($ in millions) | Net income | OCI | Into Level 3 | Out of Level 3 | Purchases | Sales | Issues | Settlements | ||||||||||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||||||||||
Fixed income securities: | ||||||||||||||||||||||||||||||||||||||||
Municipal | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||||||
Corporate - public | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
Corporate - privately placed | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
ABS | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
MBS | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
Total fixed income securities | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
Equity securities | ( | ) | ||||||||||||||||||||||||||||||||||||||
Short-term investments | ( | ) | ||||||||||||||||||||||||||||||||||||||
Free-standing derivatives, net | ( | ) | ||||||||||||||||||||||||||||||||||||||
Total recurring Level 3 assets | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||||||||||
Contractholder funds: Derivatives embedded in life and annuity contracts | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
Total recurring Level 3 liabilities | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) |
Total Level 3 gains (losses) included in net income for the year ended December 31, 2019 | ||||||||||||||||||||
($ in millions) | Net investment income | Realized capital gains and losses | Life contract benefits | Interest credited to contractholder funds | Total | |||||||||||||||
Components of net income | $ | ( | ) | $ | $ | $ | ( | ) | $ | ( | ) |
Rollforward of Level 3 assets and liabilities held at fair value during the year ended December 31, 2018 | ||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2017 | Total gains (losses) included in: | Transfers | Balance as of December 31, 2018 | |||||||||||||||||||||||||||||||||||||
($ in millions) | Net income | OCI | Into Level 3 | Out of Level 3 | Purchases | Sales | Issues | Settlements | ||||||||||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||||||||||
Fixed income securities: | ||||||||||||||||||||||||||||||||||||||||
Municipal | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||||
Corporate - public | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
Corporate - privately placed | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
ABS | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
MBS | ( | ) | ||||||||||||||||||||||||||||||||||||||
Total fixed income securities | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
Equity securities | ( | ) | ||||||||||||||||||||||||||||||||||||||
Short-term investments | ( | ) | ||||||||||||||||||||||||||||||||||||||
Free-standing derivatives, net | ||||||||||||||||||||||||||||||||||||||||
Total recurring Level 3 assets | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||||||||||
Contractholder funds: Derivatives embedded in life and annuity contracts | $ | ( | ) | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||||||||
Total recurring Level 3 liabilities | $ | ( | ) | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) |
Total Level 3 gains (losses) included in net income for the year ended December 31, 2018 | ||||||||||||||||||||
($ in millions) | Net investment income | Realized capital gains and losses | Life contract benefits | Interest credited to contractholder funds | Total | |||||||||||||||
Components of net income | $ | $ | $ | ( | ) | $ | $ |
Rollforward of Level 3 assets and liabilities held at fair value during the year ended December 31, 2017 | ||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2016 | Total gains (losses) included in: | Transfers | Balance as of December 31, 2017 | |||||||||||||||||||||||||||||||||||||
($ in millions) | Net income | OCI | Into Level 3 | Out of Level 3 | Purchases | Sales | Issues | Settlements | ||||||||||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||||||||||
Fixed income securities: | ||||||||||||||||||||||||||||||||||||||||
Municipal | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||||
Corporate - public | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
Corporate - privately placed | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
ABS | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
MBS | ( | ) | ||||||||||||||||||||||||||||||||||||||
Total fixed income securities | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
Equity securities | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
Short-term investments | ( | ) | ||||||||||||||||||||||||||||||||||||||
Free-standing derivatives, net | ( | ) | ||||||||||||||||||||||||||||||||||||||
Other assets | ( | ) | ||||||||||||||||||||||||||||||||||||||
Total recurring Level 3 assets | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||||||||||
Contractholder funds: Derivatives embedded in life and annuity contracts | $ | ( | ) | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||||||||
Total recurring Level 3 liabilities | $ | ( | ) | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) |
Total Level 3 gains (losses) included in net income for the year ended December 31, 2017 | ||||||||||||||||||||
($ in millions) | Net investment income | Realized capital gains and losses | Life contract benefits | Interest credited to contractholder funds | Total | |||||||||||||||
Components of net income | $ | $ | $ | $ | ( | ) | $ |
Valuation changes included in net income for Level 3 assets and liabilities held as of | ||||||||||||
December 31, | ||||||||||||
($ in millions) | 2019 | 2018 | 2017 | |||||||||
Assets | ||||||||||||
Fixed income securities: | ||||||||||||
Municipal | $ | $ | $ | ( | ) | |||||||
Corporate | ||||||||||||
Total fixed income securities | ( | ) | ||||||||||
Equity securities | ||||||||||||
Free-standing derivatives, net | ( | ) | ||||||||||
Other assets | ( | ) | ||||||||||
Total recurring Level 3 assets | $ | $ | $ | |||||||||
Liabilities | ||||||||||||
Contractholder funds: Derivatives embedded in life and annuity contracts | $ | ( | ) | $ | $ | |||||||
Total recurring Level 3 liabilities | ( | ) | ||||||||||
Total included in net income | $ | ( | ) | $ | $ | |||||||
Components of net income | ||||||||||||
Net investment income | $ | ( | ) | $ | $ | |||||||
Realized capital gains and losses | ( | ) | ||||||||||
Life contract benefits | ( | ) | ||||||||||
Interest credited to contractholder funds | ( | ) | ( | ) | ||||||||
Total included in net income | $ | ( | ) | $ | $ |
Carrying values and fair value estimates of financial instruments not carried at fair value | ||||||||||||||||||
($ in millions) | December 31, 2019 | December 31, 2018 | ||||||||||||||||
Financial assets | Fair value level | Carrying value | Fair value | Carrying value | Fair value | |||||||||||||
Mortgage loans | Level 3 | $ | $ | $ | $ | |||||||||||||
Bank loans | Level 3 | |||||||||||||||||
Agent loans | Level 3 | |||||||||||||||||
Financial liabilities | ||||||||||||||||||
Contractholder funds on investment contracts | Level 3 | |||||||||||||||||
Long-term debt | Level 2 | |||||||||||||||||
Liability for collateral | Level 2 | $ | $ | $ | $ |
Note 7 | Derivative Financial Instruments and Off-balance Sheet Financial Instruments |
Summary of the volume and fair value positions of derivative instruments as of December 31, 2019 | ||||||||||||||||||||
Volume (1) | ||||||||||||||||||||
($ in millions, except number of contracts) | Balance sheet location | Notional amount | Number of contracts | Fair value, net | Gross asset | Gross liability | ||||||||||||||
Asset derivatives | ||||||||||||||||||||
Derivatives designated as fair value accounting hedging instruments | ||||||||||||||||||||
Other | Other assets | $ | n/a | $ | $ | $ | ||||||||||||||
Derivatives not designated as accounting hedging instruments | ||||||||||||||||||||
Interest rate contracts | ||||||||||||||||||||
Futures | Other assets | |||||||||||||||||||
Equity and index contracts | ||||||||||||||||||||
Options | Other investments | |||||||||||||||||||
Futures | Other assets | |||||||||||||||||||
Total return index contracts | ||||||||||||||||||||
Total return swap agreements - fixed income | Other investments | n/a | ||||||||||||||||||
Credit default contracts | ||||||||||||||||||||
Credit default swaps – buying protection | Other investments | n/a | ||||||||||||||||||
Subtotal | ||||||||||||||||||||
Total asset derivatives | $ | $ | $ | $ | ||||||||||||||||
Liability derivatives | ||||||||||||||||||||
Derivatives not designated as accounting hedging instruments | ||||||||||||||||||||
Interest rate contracts | ||||||||||||||||||||
Interest rate cap agreements | Other liabilities & accrued expenses | $ | n/a | $ | $ | $ | ||||||||||||||
Futures | Other liabilities & accrued expenses | |||||||||||||||||||
Equity and index contracts | ||||||||||||||||||||
Options | Other liabilities & accrued expenses | ( | ) | ( | ) | |||||||||||||||
Futures | Other liabilities & accrued expenses | |||||||||||||||||||
Total return index contracts | ||||||||||||||||||||
Total return swap agreements - fixed income | Other liabilities & accrued expenses | n/a | ||||||||||||||||||
Total return swap agreements - equity index | Other liabilities & accrued expenses | n/a | ||||||||||||||||||
Foreign currency contracts | ||||||||||||||||||||
Foreign currency forwards | Other liabilities & accrued expenses | n/a | ( | ) | ||||||||||||||||
Embedded derivative financial instruments | ||||||||||||||||||||
Guaranteed accumulation benefits | Contractholder funds | n/a | ( | ) | ( | ) | ||||||||||||||
Guaranteed withdrawal benefits | Contractholder funds | n/a | ( | ) | ( | ) | ||||||||||||||
Equity-indexed and forward starting options in life and annuity product contracts | Contractholder funds | n/a | ( | ) | ( | ) | ||||||||||||||
Credit default contracts | ||||||||||||||||||||
Credit default swaps – buying protection | Other liabilities & accrued expenses | n/a | ( | ) | ( | ) | ||||||||||||||
Credit default swaps – selling protection | Other liabilities & accrued expenses | n/a | ||||||||||||||||||
Total liability derivatives | ( | ) | $ | $ | ( | ) | ||||||||||||||
Total derivatives | $ | $ | ( | ) |
(1) | Volume for OTC and cleared derivative contracts is represented by their notional amounts. Volume for exchange traded derivatives is represented by the number of contracts, which is the basis on which they are traded. (n/a = not applicable) |
Summary of the volume and fair value positions of derivative instruments as of December 31, 2018 | ||||||||||||||||||||
Volume | ||||||||||||||||||||
($ in millions, except number of contracts) | Balance sheet location | Notional amount | Number of contracts | Fair value, net | Gross asset | Gross liability | ||||||||||||||
Asset derivatives | ||||||||||||||||||||
Derivatives not designated as accounting hedging instruments | ||||||||||||||||||||
Interest rate contracts | ||||||||||||||||||||
Interest rate cap agreements | Other investments | $ | n/a | $ | $ | $ | ||||||||||||||
Futures | Other assets | |||||||||||||||||||
Equity and index contracts | ||||||||||||||||||||
Options | Other investments | |||||||||||||||||||
Futures | Other assets | |||||||||||||||||||
Total return index contracts | ||||||||||||||||||||
Total return swap agreements - fixed income | Other investments | n/a | ||||||||||||||||||
Total return swap agreements - equity index | Other investments | n/a | ( | ) | ( | ) | ||||||||||||||
Foreign currency contracts | ||||||||||||||||||||
Foreign currency forwards | Other investments | n/a | ( | ) | ||||||||||||||||
Credit default contracts | ||||||||||||||||||||
Credit default swaps – buying protection | Other investments | n/a | ( | ) | ( | ) | ||||||||||||||
Other contracts | ||||||||||||||||||||
Other | Other assets | n/a | ||||||||||||||||||
Total asset derivatives | $ | $ | $ | $ | ( | ) | ||||||||||||||
Liability derivatives | ||||||||||||||||||||
Derivatives not designated as accounting hedging instruments | ||||||||||||||||||||
Interest rate contracts | ||||||||||||||||||||
Interest rate cap agreements | Other liabilities & accrued expenses | $ | n/a | $ | $ | $ | ||||||||||||||
Futures | Other liabilities & accrued expenses | ( | ) | ( | ) | |||||||||||||||
Equity and index contracts | ||||||||||||||||||||
Options and futures | Other liabilities & accrued expenses | ( | ) | ( | ) | |||||||||||||||
Total return index contracts | ||||||||||||||||||||
Total return swap agreements - fixed income | Other liabilities & accrued expenses | n/a | ( | ) | ( | ) | ||||||||||||||
Total return swap agreements - equity index | Other liabilities & accrued expenses | n/a | ( | ) | ( | ) | ||||||||||||||
Foreign currency contracts | ||||||||||||||||||||
Foreign currency forwards | Other liabilities & accrued expenses | n/a | ( | ) | ||||||||||||||||
Embedded derivative financial instruments | ||||||||||||||||||||
Guaranteed accumulation benefits | Contractholder funds | n/a | ( | ) | ( | ) | ||||||||||||||
Guaranteed withdrawal benefits | Contractholder funds | n/a | ( | ) | ( | ) | ||||||||||||||
Equity-indexed and forward starting options in life and annuity product contracts | Contractholder funds | n/a | ( | ) | ( | ) | ||||||||||||||
Credit default contracts | ||||||||||||||||||||
Credit default swaps – buying protection | Other liabilities & accrued expenses | n/a | ||||||||||||||||||
Credit default swaps – selling protection | Other liabilities & accrued expenses | n/a | ||||||||||||||||||
Total liability derivatives | ( | ) | $ | $ | ( | ) | ||||||||||||||
Total derivatives | $ | $ | ( | ) |
Gross and net amounts for OTC derivatives (1) | ||||||||||||||||||||||||
Offsets | ||||||||||||||||||||||||
($ in millions) | Gross amount | Counter- party netting | Cash collateral (received) pledged | Net amount on balance sheet | Securities collateral (received) pledged | Net amount | ||||||||||||||||||
December 31, 2019 | ||||||||||||||||||||||||
Asset derivatives | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | ||||||||||||||
Liability derivatives | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
December 31, 2018 | ||||||||||||||||||||||||
Asset derivatives | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | ||||||||||||||
Liability derivatives | ( | ) | ( | ) | ( | ) | ( | ) |
(1) |
Gains (losses) from valuation and settlements reported on derivatives not designated as accounting hedges | ||||||||||||||||||||
($ in millions) | Realized capital gains (losses) | Life contract benefits | Interest credited to contractholder funds | Operating costs and expenses | Total gain (loss) recognized in net income on derivatives | |||||||||||||||
2019 | ||||||||||||||||||||
Interest rate contracts | $ | $ | $ | $ | $ | |||||||||||||||
Equity and index contracts | ( | ) | ( | ) | ||||||||||||||||
Embedded derivative financial instruments | ( | ) | ( | ) | ||||||||||||||||
Foreign currency contracts | ||||||||||||||||||||
Credit default contracts | ( | ) | ( | ) | ||||||||||||||||
Total return swaps - fixed income | ||||||||||||||||||||
Total return swaps - equity index | ||||||||||||||||||||
Total | $ | ( | ) | $ | $ | ( | ) | $ | $ | |||||||||||
2018 | ||||||||||||||||||||
Interest rate contracts | $ | ( | ) | $ | $ | $ | $ | ( | ) | |||||||||||
Equity and index contracts | ( | ) | ( | ) | ( | ) | ||||||||||||||
Embedded derivative financial instruments | ( | ) | ||||||||||||||||||
Foreign currency contracts | ( | ) | ||||||||||||||||||
Credit default contracts | ||||||||||||||||||||
Total return swaps - fixed income | ( | ) | ( | ) | ||||||||||||||||
Total return swaps - equity index | ( | ) | ( | ) | ||||||||||||||||
Total | $ | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||
2017 | ||||||||||||||||||||
Equity and index contracts | $ | ( | ) | $ | $ | $ | $ | |||||||||||||
Embedded derivative financial instruments | ( | ) | ||||||||||||||||||
Foreign currency contracts | ( | ) | ( | ) | ||||||||||||||||
Credit default contracts | ( | ) | ( | ) | ||||||||||||||||
Total | $ | ( | ) | $ | $ | $ | $ |
OTC derivatives counterparty credit exposure by counterparty credit rating | ||||||||||||||||||||||||||||||
($ in millions) | 2019 | 2018 | ||||||||||||||||||||||||||||
Rating (1) | Number of counter-parties | Notional amount (2) | Credit exposure (2) | Exposure, net of collateral (2) | Number of counter-parties | Notional amount (2) | Credit exposure (2) | Exposure, net of collateral (2) | ||||||||||||||||||||||
A+ | ||||||||||||||||||||||||||||||
A | ||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ |
(1) | Allstate uses the lower of S&P’s or Moody’s long-term debt issuer ratings. |
(2) | Only OTC derivatives with a net positive fair value are included for each counterparty. |
($ in millions) | 2019 | 2018 | ||||||
Gross liability fair value of contracts containing credit-risk-contingent features | $ | $ | ||||||
Gross asset fair value of contracts containing credit-risk-contingent features and subject to MNAs | ( | ) | ( | ) | ||||
Collateral posted under MNAs for contracts containing credit-risk-contingent features | ( | ) | ( | ) | ||||
Maximum amount of additional exposure for contracts with credit-risk-contingent features if all features were triggered concurrently | $ | $ |
Contractual amounts of off balance sheet financial instruments | ||||||||
As of December 31, | ||||||||
($ in millions) | 2019 | 2018 | ||||||
Commitments to invest in limited partnership interests | $ | $ | ||||||
Private placement commitments | ||||||||
Other loan commitments |
Note 8 | Reserve for Property and Casualty Insurance Claims and Claims Expense |
Rollforward of reserve for property and casualty insurance claims and claims expense | ||||||||||||
($ in millions) | 2019 | 2018 | 2017 | |||||||||
Balance as of January 1 | $ | $ | $ | |||||||||
Less recoverables (1) | ( | ) | ( | ) | ( | ) | ||||||
Net balance as of January 1 | ||||||||||||
SquareTrade acquisition as of January 3, 2017 | ||||||||||||
Incurred claims and claims expense related to: | ||||||||||||
Current year | ||||||||||||
Prior years | ( | ) | ( | ) | ( | ) | ||||||
Total incurred | ||||||||||||
Claims and claims expense paid related to: | ||||||||||||
Current year | ( | ) | ( | ) | ( | ) | ||||||
Prior years | ( | ) | ( | ) | ( | ) | ||||||
Total paid | ( | ) | ( | ) | ( | ) | ||||||
Net balance as of December 31 | ||||||||||||
Plus recoverables | ||||||||||||
Balance as of December 31 | $ | $ | $ |
Reconciliation of total claims and claims expense incurred and paid by coverage | December 31, 2019 | |||||||
($ in millions) | Incurred | Paid | ||||||
Allstate Protection | ||||||||
Auto insurance - liability coverage | $ | $ | ( | ) | ||||
Auto insurance - physical damage coverage | ( | ) | ||||||
Homeowners insurance | ( | ) | ||||||
Total auto and homeowners insurance | ( | ) | ||||||
Other personal lines | ( | ) | ||||||
Commercial lines | ( | ) | ||||||
Service Businesses | ( | ) | ||||||
Discontinued Lines and Coverages | ( | ) | ||||||
Unallocated loss adjustment expenses (“ULAE”) | ( | ) | ||||||
Claims incurred and paid from before 2015 | ( | ) | ( | ) | ||||
Other | ( | ) | ||||||
Total | $ | $ | ( | ) |
Prior year reserve reestimates included in claims and claims expense (1) | ||||||||||||||||||||||||||||||||||||
Twelve months ended December 31, | ||||||||||||||||||||||||||||||||||||
($ in millions) | Non-catastrophe losses | Catastrophe losses | Total | |||||||||||||||||||||||||||||||||
2019 | 2018 | 2017 | 2019 | 2018 | 2017 | 2019 | 2018 | 2017 | ||||||||||||||||||||||||||||
Auto (2) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||
Homeowners | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
Other personal lines | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
Commercial lines | ( | ) | ||||||||||||||||||||||||||||||||||
Discontinued Lines and Coverages (3) | ||||||||||||||||||||||||||||||||||||
Service Businesses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
Total prior year reserve reestimates | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) |
(1) | Favorable reserve reestimates are shown in parentheses. |
(2) | Non-catastrophe results related to continued favorable personal lines auto injury coverage development. |
(3) | The Company’s 2019 annual reserve review, using established industry and actuarial best practices, resulted in unfavorable reestimates of $ |
($ in millions, except number of reported claims) | Incurred claims and allocated claim adjustment expenses, net of recoverables | IBNR reserves plus expected development on reported claims | Cumulative number of reported claims | ||||||||||||||||||||||||||||
For the years ended December 31, | Prior year reserve reestimates | As of December 31, 2019 | |||||||||||||||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||||||||||||||||||||||
Accident year | 2015 | 2016 | 2017 | 2018 | 2019 | ||||||||||||||||||||||||||
2015 | $ | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||
2016 | — | ( | ) | ||||||||||||||||||||||||||||
2017 | — | — | ( | ) | |||||||||||||||||||||||||||
2018 | — | — | — | ( | ) | ||||||||||||||||||||||||||
2019 | — | — | — | — | |||||||||||||||||||||||||||
Total | $ | $ | ( | ) | |||||||||||||||||||||||||||
Reconciliation to total prior year reserve reestimates recognized by line | |||||||||||||||||||||||||||||||
Prior year reserve reestimates for pre-2015 accident years | ( | ) | |||||||||||||||||||||||||||||
Prior year reserve reestimates for ULAE | |||||||||||||||||||||||||||||||
Other | ( | ) | |||||||||||||||||||||||||||||
Total prior year reserve reestimates | $ | ( | ) | ||||||||||||||||||||||||||||
Cumulative paid claims and allocated claims adjustment expenses, net of recoverables | |||||||||||||||||||||||||||||||
For the years ended December 31, | |||||||||||||||||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||||||||||||||||||||||
Accident year | 2015 | 2016 | 2017 | 2018 | 2019 | ||||||||||||||||||||||||||
2015 | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||
2016 | — | ||||||||||||||||||||||||||||||
2017 | — | — | |||||||||||||||||||||||||||||
2018 | — | — | — | ||||||||||||||||||||||||||||
2019 | — | — | — | — | |||||||||||||||||||||||||||
Total | $ | ||||||||||||||||||||||||||||||
All outstanding liabilities before 2015, net of recoverables | |||||||||||||||||||||||||||||||
Liabilities for claims and claim adjustment expenses, net of recoverables | $ |
Average annual percentage payout of incurred claims by age, net of recoverables, as of December 31, 2019 | |||||||||||||||
1 year | 2 years | 3 years | 4 years | 5 years | |||||||||||
Auto insurance – liability coverage | % | % | % | % | % |
($ in millions, except number of reported claims) | Incurred claims and allocated claim adjustment expenses, net of recoverables | IBNR reserves plus expected development on reported claims | Cumulative number of reported claims | ||||||||||||||||||||||||||||
For the years ended December 31, | Prior year reserve reestimates | As of December 31, 2019 | |||||||||||||||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||||||||||||||||||||||
Accident year | 2015 | 2016 | 2017 | 2018 | 2019 | ||||||||||||||||||||||||||
2015 | $ | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||
2016 | — | ( | ) | ||||||||||||||||||||||||||||
2017 | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||
2018 | — | — | — | ( | ) | ||||||||||||||||||||||||||
2019 | — | — | — | — | |||||||||||||||||||||||||||
Total | $ | $ | ( | ) | |||||||||||||||||||||||||||
Reconciliation to total prior year reserve reestimates recognized by line | |||||||||||||||||||||||||||||||
Prior year reserve reestimates for pre-2015 accident years | ( | ) | |||||||||||||||||||||||||||||
Prior year reserve reestimates for ULAE | ( | ) | |||||||||||||||||||||||||||||
Other | |||||||||||||||||||||||||||||||
Total prior year reserve reestimates | $ | ( | ) | ||||||||||||||||||||||||||||
Cumulative paid claims and allocated claims adjustment expenses, net of recoverables | |||||||||||||||||||||||||||||||
For the years ended December 31, | |||||||||||||||||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||||||||||||||||||||||
Accident year | 2015 | 2016 | 2017 | 2018 | 2019 | ||||||||||||||||||||||||||
2015 | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||
2016 | — | ||||||||||||||||||||||||||||||
2017 | — | — | |||||||||||||||||||||||||||||
2018 | — | — | — | ||||||||||||||||||||||||||||
2019 | — | — | — | — | |||||||||||||||||||||||||||
Total | $ | ||||||||||||||||||||||||||||||
All outstanding liabilities before 2015, net of recoverables | |||||||||||||||||||||||||||||||
Liabilities for claims and claim adjustment expenses, net of recoverables | $ |
Average annual percentage payout of incurred claims by age, net of recoverables, as of December 31, 2019 | |||||||||||||||
1 year | 2 years | 3 years | 4 years | 5 years | |||||||||||
Auto insurance – physical damage coverage | % | % | ( | )% | % | % |
($ in millions, except number of reported claims) | Incurred claims and allocated claim adjustment expenses, net of recoverables | IBNR reserves plus expected development on reported claims | Cumulative number of reported claims | ||||||||||||||||||||||||||||
For the years ended December 31, | Prior year reserve reestimates | As of December 31, 2019 | |||||||||||||||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||||||||||||||||||||||
Accident year | 2015 | 2016 | 2017 | 2018 | 2019 | ||||||||||||||||||||||||||
2015 | $ | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||
2016 | — | ( | ) | ||||||||||||||||||||||||||||
2017 | — | — | ( | ) | |||||||||||||||||||||||||||
2018 | — | — | — | ||||||||||||||||||||||||||||
2019 | — | — | — | — | |||||||||||||||||||||||||||
Total | $ | $ | |||||||||||||||||||||||||||||
Reconciliation to total prior year reserve reestimates recognized by line | |||||||||||||||||||||||||||||||
Prior year reserve reestimates for pre-2015 accident years | ( | ) | |||||||||||||||||||||||||||||
Prior year reserve reestimates for ULAE | |||||||||||||||||||||||||||||||
Other | |||||||||||||||||||||||||||||||
Total prior year reserve reestimates | $ | ||||||||||||||||||||||||||||||
Cumulative paid claims and allocated claims adjustment expenses, net of recoverables | |||||||||||||||||||||||||||||||
For the years ended December 31, | |||||||||||||||||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||||||||||||||||||||||
Accident year | 2015 | 2016 | 2017 | 2018 | 2019 | ||||||||||||||||||||||||||
2015 | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||
2016 | — | ||||||||||||||||||||||||||||||
2017 | — | — | |||||||||||||||||||||||||||||
2018 | — | — | — | ||||||||||||||||||||||||||||
2019 | — | — | — | — | |||||||||||||||||||||||||||
Total | $ | ||||||||||||||||||||||||||||||
All outstanding liabilities before 2015, net of recoverables | |||||||||||||||||||||||||||||||
Liabilities for claims and claim adjustment expenses, net of recoverables | $ |
Average annual percentage payout of incurred claims by age, net of recoverables, as of December 31, 2019 | |||||||||||||||
1 year | 2 years | 3 years | 4 years | 5 years | |||||||||||
Homeowners insurance | % | % | % | % | % |
Reconciliation of the net incurred and paid claims development tables above to the reserve for property and casualty insurance claims and claims expense | ||||
($ in millions) | As of December 31, 2019 | |||
Net outstanding liabilities | ||||
Allstate Protection | ||||
Auto insurance - liability coverage | $ | |||
Auto insurance - physical damage coverage | ||||
Homeowners insurance | ||||
Other personal lines | ||||
Commercial lines | ||||
Service Businesses | ||||
Discontinued Lines and Coverages (1) | ||||
ULAE | ||||
Net reserve for property and casualty insurance claims and claims expense | ||||
Recoverables | ||||
Allstate Protection | ||||
Auto insurance - liability coverage | ||||
Auto insurance - physical damage coverage | ||||
Homeowners insurance | ||||
Other personal lines | ||||
Commercial lines | ||||
Service Businesses | ||||
Discontinued Lines and Coverages | ||||
ULAE | ||||
Total recoverables | ||||
Gross reserve for property and casualty insurance claims and claims expense | $ |
(1) | Discontinued Lines and Coverages includes business in run-off with most of the claims related to accident years more than 30 years ago. IBNR reserves represent $ |
Note 9 | Reserve for Life-Contingent Contract Benefits and Contractholder Funds |
Reserve for life-contingent contract benefits | ||||||||
As of December 31, | ||||||||
($ in millions) | 2019 | 2018 | ||||||
Immediate fixed annuities: | ||||||||
Structured settlement annuities | $ | $ | ||||||
Other immediate fixed annuities | ||||||||
Traditional life insurance | ||||||||
Accident and health insurance | ||||||||
Other | ||||||||
Total reserve for life-contingent contract benefits | $ | $ |
Key assumptions generally used in calculating the reserve for life-contingent contract benefits | ||||||
Product | Mortality | Interest rate | Estimation method | |||
Structured settlement annuities | U.S. population with projected calendar year improvements; mortality rates adjusted for each impaired life based on reduction in life expectancy | Interest rate assumptions range from 3.8% to 7.5% | Present value of contractually specified future benefits | |||
Other immediate fixed annuities | 1983 group annuity mortality table with internal modifications; 1983 individual annuity mortality table; Annuity 2000 mortality table with internal modifications; Annuity 2000 mortality table; 1983 individual annuity mortality table with internal modifications | Interest rate assumptions range from 0.3% to 9.0% | Present value of expected future benefits based on historical experience | |||
Traditional life insurance | Actual company experience plus loading | Interest rate assumptions range from 2.5% to 11.3% | Net level premium reserve method using the Company’s withdrawal experience rates; includes reserves for unpaid claims | |||
Accident and health insurance | Actual company experience plus loading | Interest rate assumptions range from 3.0% to 7.0% | Unearned premium; additional contract reserves for mortality risk and unpaid claims | |||
Other: Variable annuity guaranteed minimum death benefits (1) | Annuity 2012 mortality table with internal modifications | Interest rate assumptions range from 2.0% to 5.8% | Projected benefit ratio applied to cumulative assessments |
(1) | In 2006, the Company disposed of substantially all of its variable annuity business through reinsurance agreements with The Prudential Insurance Company of America, a subsidiary of Prudential Financial, Inc. (collectively “Prudential”). |
Contractholder funds | ||||||||
As of December 31, | ||||||||
($ in millions) | 2019 | 2018 | ||||||
Interest-sensitive life insurance | $ | $ | ||||||
Investment contracts: | ||||||||
Fixed annuities | ||||||||
Other investment contracts | ||||||||
Total contractholder funds | $ | $ |
Key contract provisions of contractholder funds | ||||
Product | Interest rate | Withdrawal/surrender charges | ||
Interest-sensitive life insurance | Interest rates credited range from 0.0% to 10.0% for equity-indexed life (whose returns are indexed to the S&P 500) and 1.0% to 6.0% for all other products | Either a percentage of account balance or dollar amount grading off generally over 20 years | ||
Fixed annuities | Interest rates credited range from 0.5% to 7.5% for immediate annuities; (8.0)% to 10.0% for equity-indexed annuities (whose returns are indexed to the S&P 500); and 0.1% to 6.0% for all other products | Either a declining or a level percentage charge generally over ten years or less. Additionally, approximately 12.0% of fixed annuities are subject to market value adjustment for discretionary withdrawals | ||
Other investment contracts: Guaranteed minimum income, accumulation and withdrawal benefits on variable (1) and fixed annuities and secondary guarantees on interest-sensitive life insurance and fixed annuities | Interest rates used in establishing reserves range from 1.7% to 10.3% | Withdrawal and surrender charges are based on the terms of the related interest-sensitive life insurance or fixed annuity contract |
(1) | In 2006, the Company disposed of substantially all of its variable annuity business through reinsurance agreements with Prudential. |
Contractholder funds activity | ||||||||||||
For the years ended December 31, | ||||||||||||
($ in millions) | 2019 | 2018 | 2017 | |||||||||
Balance, beginning of year | $ | $ | $ | |||||||||
Deposits | ||||||||||||
Interest credited | ||||||||||||
Benefits | ( | ) | ( | ) | ( | ) | ||||||
Surrenders and partial withdrawals | ( | ) | ( | ) | ( | ) | ||||||
Contract charges | ( | ) | ( | ) | ( | ) | ||||||
Net transfers from separate accounts | ||||||||||||
Other adjustments | ( | ) | ||||||||||
Balance, end of year | $ | $ | $ |
($ in millions) | As of December 31, | |||||||
2019 | 2018 | |||||||
In the event of death | ||||||||
Separate account value | $ | $ | ||||||
Net amount at risk (1) | $ | $ | ||||||
Average attained age of contractholders | ||||||||
At annuitization (includes income benefit guarantees) | ||||||||
Separate account value | $ | $ | ||||||
Net amount at risk (2) | $ | $ | ||||||
Weighted average waiting period until annuitization options available | None | None | ||||||
For cumulative periodic withdrawals | ||||||||
Separate account value | $ | $ | ||||||
Net amount at risk (3) | $ | $ | ||||||
Accumulation at specified dates | ||||||||
Separate account value | $ | $ | ||||||
Net amount at risk (4) | $ | $ | ||||||
Weighted average waiting period until guarantee date |
(1) | Defined as the estimated current guaranteed minimum death benefit in excess of the current account balance as of the balance sheet date. |
(2) | Defined as the estimated present value of the guaranteed minimum annuity payments in excess of the current account balance. |
(3) | Defined as the estimated current guaranteed minimum withdrawal balance (initial deposit) in excess of the current account balance as of the balance sheet date. |
(4) | Defined as the estimated present value of the guaranteed minimum accumulation balance in excess of the current account balance. |
Summary of liabilities for guarantees | ||||||||||||||||
($ in millions) | Liability for guarantees related to death benefits and interest-sensitive life products | Liability for guarantees related to income benefits | Liability for guarantees related to accumulation and withdrawal benefits | Total | ||||||||||||
Balance, December 31, 2018 (1) | $ | $ | $ | $ | ||||||||||||
Less reinsurance recoverables | ||||||||||||||||
Net balance as of December 31, 2018 | ||||||||||||||||
Incurred guarantee benefits | ||||||||||||||||
Paid guarantee benefits | ( | ) | ( | ) | ||||||||||||
Net change | ||||||||||||||||
Net balance as of December 31, 2019 | ||||||||||||||||
Plus reinsurance recoverables | ||||||||||||||||
Balance, December 31, 2019 (2) | $ | $ | $ | $ | ||||||||||||
Balance, December 31, 2017 (3) | $ | $ | $ | $ | ||||||||||||
Less reinsurance recoverables | ||||||||||||||||
Net balance as of December 31, 2017 | ||||||||||||||||
Incurred guarantee benefits | ||||||||||||||||
Paid guarantee benefits | ( | ) | ( | ) | ||||||||||||
Net change | ||||||||||||||||
Net balance as of December 31, 2018 | ||||||||||||||||
Plus reinsurance recoverables | ||||||||||||||||
Balance, December 31, 2018 (1) | $ | $ | $ | $ |
(1) | Included in the total liability balance as of December 31, 2018 are reserves for variable annuity death benefits of $ |
(2) | Included in the total liability balance as of December 31, 2019 are reserves for variable annuity death benefits of $ |
(3) | Included in the total liability balance as of December 31, 2017 are reserves for variable annuity death benefits of $ |
Note 10 | Reinsurance and Indemnification |
Effects of reinsurance and indemnification on property and casualty premiums written and earned and life premiums and contract charges | ||||||||||||
For the years ended December 31, | ||||||||||||
($ in millions) | 2019 | 2018 | 2017 | |||||||||
Property and casualty insurance premiums written | ||||||||||||
Direct | $ | $ | $ | |||||||||
Assumed | ||||||||||||
Ceded | ( | ) | ( | ) | ( | ) | ||||||
Property and casualty insurance premiums written, net of recoverables | $ | $ | $ | |||||||||
Property and casualty insurance premiums earned | ||||||||||||
Direct | $ | $ | $ | |||||||||
Assumed | ||||||||||||
Ceded | ( | ) | ( | ) | ( | ) | ||||||
Property and casualty insurance premiums earned, net of recoverables | $ | $ | $ | |||||||||
Life premiums and contract charges | ||||||||||||
Direct | $ | $ | $ | |||||||||
Assumed | ||||||||||||
Ceded | ( | ) | ( | ) | ( | ) | ||||||
Life premiums and contract charges, net of recoverables | $ | $ | $ |
1. | Indemnification programs - industry pools, facilities or associations that are governed by state insurance statutes or regulations or the federal government. |
2. | Catastrophe reinsurance programs - reinsurance protection for catastrophe exposure nationwide and by specific states, as applicable. |
3. | Other reinsurance programs - reinsurance protection for asbestos, environmental and other liability exposures as well as commercial lines, including shared economy. |
• | The majority of the Company’s program comprises multi-year contracts, primarily placed in the traditional reinsurance market, such that generally one-third of the program is renewed every year. |
• | Coverage is generally purchased on a broad geographic, product line and multiple peril loss basis. |
• | The Company purchases reinsurance from traditional reinsurance companies as well as the insurance linked securities market. |
• | Florida property and New Jersey property and auto are each covered by separate agreements, as the risk of loss is different and the Company’s subsidiaries operating in these states are separately capitalized. |
• | Seven-Year Term |
• | 2019-1 Excess Catastrophe Reinsurance |
• | Wrap Fill Excess Catastrophe Reinsurance |
• | 2017-1 Excess Catastrophe Reinsurance |
Retention limits by period of policy issuance | ||
Period | Retention limits | |
April 2015 through current | Single life: $2 million per life Joint life: no longer offered | |
April 2011 through March 2015 | Single life: $5 million per life, $3 million age 70 and over, and $10 million for contracts that meet specific criteria Joint life: $8 million per life, and $10 million for contracts that meet specific criteria | |
July 2007 through March 2011 | $5 million per life, $3 million age 70 and over, and $10 million for contracts that meet specific criteria | |
September 1998 through June 2007 | $2 million per life, in 2006 the limit was increased to $5 million for instances when specific criteria were met | |
August 1998 and prior | Up to $1 million per life |
Amounts ceded to Prudential | ||||||||||||
As of December 31, | ||||||||||||
($ in millions) | 2019 | 2018 | 2017 | |||||||||
Premiums and contract charges | $ | $ | $ | |||||||||
Contract benefits | ||||||||||||
Interest credited to contractholder funds | ||||||||||||
Operating costs and expenses |
Reinsurance recoverables on paid and unpaid benefits | ||||||||
As of December 31, | ||||||||
($ in millions) | 2019 | 2018 | ||||||
Annuities | $ | $ | ||||||
Life insurance | ||||||||
Other | ||||||||
Total | $ | $ |
Note 11 | Deferred Policy Acquisition and Sales Inducement Costs |
Deferred policy acquisition costs activity | ||||||||||||
For the years ended December 31, | ||||||||||||
($ in millions) | 2019 | 2018 | 2017 | |||||||||
Balance, beginning of year | $ | $ | $ | |||||||||
SquareTrade acquisition | ||||||||||||
Acquisition costs deferred | ||||||||||||
Amortization charged to income | ( | ) | ( | ) | ( | ) | ||||||
Effect of unrealized gains and losses | ( | ) | ( | ) | ||||||||
Balance, end of year | $ | $ | $ |
Deferred sales inducement costs activity (1) | ||||||||||||
For the years ended December 31, | ||||||||||||
($ in millions) | 2019 | 2018 | 2017 | |||||||||
Balance, beginning of year | $ | $ | $ | |||||||||
Amortization charged to income | ( | ) | ( | ) | ( | ) | ||||||
Effect of unrealized gains and losses | ( | ) | ||||||||||
Balance, end of year | $ | $ | $ |
(1) | Deferred sales inducement costs primarily relate to fixed annuities and interest-sensitive life contracts and are recorded as part of other assets on the Consolidated Statements of Financial Position. |
Note 12 | Capital Structure |
Total debt outstanding | ||||||||
As of December 31, | ||||||||
($ in millions) | 2019 | 2018 | ||||||
7.450% Senior Notes, due 2019 (1) | $ | $ | ||||||
Floating Rate Senior Notes, due 2021(1) | ||||||||
Floating Rate Senior Notes, due 2023 (1) | ||||||||
3.150% Senior Notes, due 2023 (1) | ||||||||
Due after one year through five years | ||||||||
3.280% Senior Notes, due 2026 (1) | ||||||||
Due after five years through ten years | ||||||||
6.125% Senior Notes, due 2032 (1) | ||||||||
5.350% Senior Notes due 2033 (1) | ||||||||
5.550% Senior Notes due 2035 (1) | ||||||||
5.950% Senior Notes, due 2036 (1) | ||||||||
6.900% Senior Debentures, due 2038 | ||||||||
5.200% Senior Notes, due 2042 (1) | ||||||||
4.500% Senior Notes, due 2043 (1) | ||||||||
4.200% Senior Notes, due 2046 (1) | ||||||||
3.850% Senior Notes, due 2049 | ||||||||
5.100% Subordinated Debentures, due 2053 | ||||||||
5.750% Subordinated Debentures, due 2053 | ||||||||
6.500% Junior Subordinated Debentures, due 2067 | ||||||||
Due after ten years | ||||||||
Long-term debt total principal | ||||||||
Debt issuance costs | ( | ) | ( | ) | ||||
Total long-term debt | ||||||||
Short-term debt (2) | ||||||||
Total debt | $ | $ |
(1) | Senior Notes, with the exception of Senior Floating Notes (as defined below), are subject to redemption at the Company’s option in whole or in part at any time at the greater of either |
(2) | The Company classifies any borrowings which have a maturity of twelve months or less at inception as short-term debt. |
Debt maturities for each of the next five years and thereafter | ||||
($ in millions) | ||||
2020 | $ | |||
2021 | ||||
2022 | ||||
2023 | ||||
2024 | ||||
Thereafter | ||||
Total long-term debt principal | $ |
Total preferred stock outstanding | |||||||||||||||||||||||||||||||||||||||||
As of December 31, | Aggregate liquidation preference ($ in millions) | Dividend per depository share (1) | Aggregate dividend payment ($ in millions) | ||||||||||||||||||||||||||||||||||||||
2019 | 2018 | 2019 | 2018 | Dividend rate | 2019 | 2018 | 2017 | 2019 | 2018 | 2017 | |||||||||||||||||||||||||||||||
Series A | $ | $ | % | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
Series C | % | (2) | |||||||||||||||||||||||||||||||||||||||
Series D | % | (2) | |||||||||||||||||||||||||||||||||||||||
Series E | % | (2) | |||||||||||||||||||||||||||||||||||||||
Series F | % | (2) | |||||||||||||||||||||||||||||||||||||||
Series G | % | ||||||||||||||||||||||||||||||||||||||||
Series H | % | ||||||||||||||||||||||||||||||||||||||||
Series I | % | ||||||||||||||||||||||||||||||||||||||||
Total | $ | $ | $ | (2) | $ | (2) | $ |
(1) | Each depositary share represents a 1/1,000th interest in a share of preferred stock. |
(2) | Excludes $ |
Note 13 | Company Restructuring |
• | Employee - severance and relocation benefits |
• | Exit - contract termination penalties |
Restructuring activity during the period | ||||||||||||
($ in millions) | Employee costs | Exit costs | Total liability | |||||||||
Restructuring liability as of December 31, 2018 | $ | $ | $ | |||||||||
Expense incurred | ||||||||||||
Adjustments to liability | ( | ) | ( | ) | ||||||||
Payments and non-cash pension settlements | ( | ) | ( | ) | ( | ) | ||||||
Restructuring liability as of December 31, 2019 | $ | $ | $ |
Note 14 | Commitments, Guarantees and Contingent Liabilities |
Note 15 | Income Taxes |
Reconciliation of the change in the amount of unrecognized tax benefits | ||||||||||||
For the years ended December 31, | ||||||||||||
($ in millions) | 2019 | 2018 | 2017 | |||||||||
Balance – beginning of year | $ | $ | $ | |||||||||
Increase for tax positions taken in a prior year | ||||||||||||
Increase for tax positions taken in the current year | ||||||||||||
Balance – end of year | $ | $ | $ |
Components of the deferred income tax assets and liabilities | ||||||||
As of December 31, | ||||||||
($ in millions) | 2019 | 2018 | ||||||
Deferred tax assets | ||||||||
Unearned premium reserves | $ | $ | ||||||
Pension | ||||||||
Accrued compensation | ||||||||
Discount on loss reserves | ||||||||
Other postretirement benefits | ||||||||
Net operating loss carryover | ||||||||
Other assets | ||||||||
Total deferred tax assets | ||||||||
Deferred tax liabilities | ||||||||
DAC | ( | ) | ( | ) | ||||
Unrealized net capital gains | ( | ) | ( | ) | ||||
Investments | ( | ) | ( | ) | ||||
Life and annuity reserves | ( | ) | ( | ) | ||||
Intangible assets | ( | ) | ( | ) | ||||
Other liabilities | ( | ) | ( | ) | ||||
Total deferred tax liabilities | ( | ) | ( | ) | ||||
Net deferred tax liability | $ | ( | ) | $ | ( | ) |
Components of the net operating loss carryforwards as of December 31, 2019 | ||||||||||||
($ in millions) | 20-Year Carryforward Expires in 2025-2037 | Indefinite Carryforward Period | Total | |||||||||
US Federal | $ | $ | $ | |||||||||
Foreign | ||||||||||||
Total | $ | $ | $ |
Components of income tax expense | ||||||||||||
For the years ended December 31, | ||||||||||||
($ in millions) | 2019 | 2018 | 2017 | |||||||||
Current | $ | $ | $ | |||||||||
Deferred | ( | ) | ( | ) | ||||||||
Total income tax expense | $ | $ | $ |
Reconciliation of the statutory federal income tax rate to the effective income tax rate | ||||||||||||||||||
For the years ended December 31, | ||||||||||||||||||
($ in millions) | 2019 | 2018 | 2017 | |||||||||||||||
Income before income taxes | $ | $ | $ | |||||||||||||||
Statutory federal income tax rate on income from operations | % | % | % | |||||||||||||||
Tax credits | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||
Share-based payments | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||
Tax-exempt income | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||
State income taxes | ||||||||||||||||||
Tax Legislation benefit | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
Non-deductible goodwill impairment | ||||||||||||||||||
Other | ( | ) | ( | ) | ||||||||||||||
Effective income tax rate on income from operations | $ | % | $ | % | $ | % |
Note 16 | Statutory Financial Information and Dividend Limitations |
Statutory net income (loss) and capital and surplus of Allstate’s domestic insurance subsidiaries | ||||||||||||||||||||
Net income (loss) | Capital and surplus | |||||||||||||||||||
($ in millions) | 2019 | 2018 | 2017 | 2019 | 2018 | |||||||||||||||
Amounts by major business type: | ||||||||||||||||||||
Property and casualty insurance | $ | $ | $ | $ | $ | |||||||||||||||
Life insurance, annuities and voluntary accident and health insurance | ||||||||||||||||||||
Amount per statutory accounting practices | $ | $ | $ | $ | $ |
Note 17 | Benefit Plans |
Change in projected benefit obligation, plan assets and funded status | ||||||||||||||||
As of December 31, | ||||||||||||||||
Pension benefits | Postretirement benefits | |||||||||||||||
($ in millions) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
Change in projected benefit obligation | ||||||||||||||||
Benefit obligation, beginning of year | $ | $ | $ | $ | ||||||||||||
Service cost | ||||||||||||||||
Interest cost | ||||||||||||||||
Participant contributions | ||||||||||||||||
Actuarial losses (gains) | ( | ) | ( | ) | ||||||||||||
Benefits paid | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Translation adjustment and other | ( | ) | ( | ) | ( | ) | ||||||||||
Benefit obligation, end of year | $ | $ | $ | $ | ||||||||||||
Change in plan assets | ||||||||||||||||
Fair value of plan assets, beginning of year | $ | $ | ||||||||||||||
Actual return on plan assets | ( | ) | ||||||||||||||
Employer contribution | ||||||||||||||||
Benefits paid | ( | ) | ( | ) | ||||||||||||
Translation adjustment and other | ( | ) | ( | ) | ||||||||||||
Fair value of plan assets, end of year | $ | $ | ||||||||||||||
Funded status (1) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
Amounts recognized in AOCI | ||||||||||||||||
Unamortized pension and other postretirement prior service credit | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) |
(1) | The funded status is recorded within other liabilities and accrued expenses on the Consolidated Statements of Financial Position. |
Changes in items not yet recognized as a component of net cost for pension and other postretirement plans | ||||||||
($ in millions) | Pension benefits | Postretirement benefits | ||||||
Items not yet recognized as a component of net cost – December 31, 2018 | $ | ( | ) | $ | ( | ) | ||
Prior service credit amortized to net cost | ||||||||
Items not yet recognized as a component of net cost – December 31, 2019 | $ | ( | ) | $ | ( | ) |
Components of net cost (benefit) for pension and other postretirement plans | ||||||||||||||||||||||||||||||||||||
For the years ended December 31, | ||||||||||||||||||||||||||||||||||||
Pension benefits | Postretirement benefits | Total Pension and Postretirement Benefits | ||||||||||||||||||||||||||||||||||
($ in millions) | 2019 | 2018 | 2017 | 2019 | 2018 | 2017 | 2019 | 2018 | 2017 | |||||||||||||||||||||||||||
Service cost | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Interest cost | ||||||||||||||||||||||||||||||||||||
Expected return on plan assets | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||
Amortization of prior service credit | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
Costs and expenses | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
Remeasurement of projected benefit obligation | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
Remeasurement of plan assets | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
Remeasurement gains and losses | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
Total net (benefit) cost | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | $ | $ | ( | ) |
Weighted average assumptions used to determine net pension cost and net postretirement benefit cost | ||||||||||||||||||
For the years ended December 31, | ||||||||||||||||||
Pension benefits | Postretirement benefits | |||||||||||||||||
($ in millions) | 2019 | 2018 | 2017 | 2019 | 2018 | 2017 | ||||||||||||
Discount rate | % | % | % | % | % | % | ||||||||||||
Expected long-term rate of return on plan assets | n/a | n/a | n/a |
Weighted average assumptions used to determine benefit obligations | ||||||||||||
For the years ended December 31, | ||||||||||||
Pension benefits | Postretirement benefits | |||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||
Discount rate | % | % | % | % |
Weighted average target asset allocation and actual percentage of plan assets by asset category | ||||||||
As of December 31, 2019 | ||||||||
Target asset allocation (1) | Actual percentage of plan assets | |||||||
Pension plan’s asset category | 2019 | 2019 | 2018 | |||||
Equity securities (2) | 37 - 55% | % | % | |||||
Fixed income securities | 37 - 48% | |||||||
Limited partnership interests | 1 - 15% | |||||||
Short-term investments and other | ||||||||
Total without securities lending (3) | % | % |
(1) | The target asset allocation considers risk-based exposure while the actual percentage of plan assets utilizes a financial reporting view excluding exposure provided through derivatives. |
(2) | The actual percentage of plan assets for equity securities includes |
(3) | Securities lending collateral reinvestment of $ |
Fair values of pension plan assets as of December 31, 2019 | ||||||||||||||||
($ in millions) | Quoted prices in active markets for identical assets (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | Balance as of December 31, 2019 | ||||||||||||
Equity securities | $ | $ | $ | $ | ||||||||||||
Fixed income securities: | ||||||||||||||||
U.S. government and agencies | ||||||||||||||||
Corporate | ||||||||||||||||
Short-term investments | ||||||||||||||||
Free-standing derivatives: | ||||||||||||||||
Assets | ||||||||||||||||
Liabilities | ( | ) | ( | ) | ( | ) | ||||||||||
Total plan assets at fair value | $ | $ | $ | |||||||||||||
% of total plan assets at fair value | % | % | % | % | ||||||||||||
Investments measured using the net asset value practical expedient | ||||||||||||||||
Securities lending obligation (1) | ( | ) | ||||||||||||||
Derivatives counterparty and cash collateral netting | ||||||||||||||||
Other net plan assets (2) | ||||||||||||||||
Total reported plan assets | $ |
(1) | The securities lending obligation represents the plan’s obligation to return securities lending collateral received under a securities lending program. The terms of the program allow both the plan and the counterparty the right and ability to redeem/return the securities loaned on short notice. Due to its relatively short-term nature, the outstanding balance of the obligation approximates fair value. |
(2) | Other net plan assets represent cash and cash equivalents, interest and dividends receivable and net receivables related to settlements of investment transactions, such as purchases and sales. |
Fair values of pension plan assets as of December 31, 2018 | ||||||||||||||||
($ in millions) | Quoted prices in active markets for identical assets (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | Balance as of December 31, 2018 | ||||||||||||
Equity securities | $ | $ | $ | $ | ||||||||||||
Fixed income securities: | ||||||||||||||||
U.S. government and agencies | ||||||||||||||||
Corporate | ||||||||||||||||
Short-term investments | ||||||||||||||||
Free-standing derivatives: | ||||||||||||||||
Assets | ||||||||||||||||
Liabilities | ( | ) | ( | ) | ||||||||||||
Total plan assets at fair value | $ | $ | $ | |||||||||||||
% of total plan assets at fair value | % | % | % | % | ||||||||||||
Investments measured using the net asset value practical expedient | ||||||||||||||||
Securities lending obligation | ( | ) | ||||||||||||||
Derivatives counterparty and cash collateral netting | ( | ) | ||||||||||||||
Other net plan assets | ||||||||||||||||
Total reported plan assets | $ |
Rollforward of Level 3 plan assets during December 31, 2019 | ||||||||||||||||||||||||
Actual return on plan assets: | ||||||||||||||||||||||||
($ in millions) | Balance as of December 31, 2018 | Relating to assets sold during the period | Relating to assets still held at the reporting date | Purchases, sales and settlements, net | Net transfers in and/or (out) of Level 3 | Balance as of December 31, 2019 | ||||||||||||||||||
Equity securities | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
Fixed income securities: | ||||||||||||||||||||||||
Corporate | ( | ) | ||||||||||||||||||||||
Total Level 3 plan assets | $ | $ | $ | $ | ( | ) | $ | $ |
Rollforward of Level 3 plan assets during December 31, 2018 | ||||||||||||||||||||||||
Actual return on plan assets: | ||||||||||||||||||||||||
($ in millions) | Balance as of December 31, 2017 | Relating to assets sold during the period | Relating to assets still held at the reporting date | Purchases, sales and settlements, net | Net transfers in and/or (out) of Level 3 | Balance as of December 31, 2018 | ||||||||||||||||||
Equity securities | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||
Fixed income securities: | ||||||||||||||||||||||||
Corporate | ( | ) | ||||||||||||||||||||||
Total Level 3 plan assets | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ |
Rollforward of Level 3 plan assets during December 31, 2017 | ||||||||||||||||||||||||
Actual return on plan assets: | ||||||||||||||||||||||||
($ in millions) | Balance as of December 31, 2016 | Relating to assets sold during the period | Relating to assets still held at the reporting date | Purchases, sales and settlements, net | Net transfers in and/or (out) of Level 3 | Balance as of December 31, 2017 | ||||||||||||||||||
Equity securities | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
Fixed income securities: | ||||||||||||||||||||||||
Corporate | ||||||||||||||||||||||||
Total Level 3 plan assets | $ | $ | $ | $ | $ | $ |
Estimated future benefit payments expected to be paid in the next 10 years | ||||||||
As of December 31, 2019 | ||||||||
($ in millions) | Pension benefits | Postretirement benefits | ||||||
2020 | $ | $ | ||||||
2021 | ||||||||
2022 | ||||||||
2023 | ||||||||
2024 | ||||||||
2025-2029 | ||||||||
Total benefit payments | $ | $ |
ESOP benefit | ||||||||||||
For the years December 31, | ||||||||||||
($ in millions) | 2019 | 2018 | 2017 | |||||||||
Interest expense recognized by ESOP | $ | $ | $ | |||||||||
Less: dividends accrued on ESOP shares | ( | ) | ( | ) | ( | ) | ||||||
Cost of shares allocated | ||||||||||||
Compensation expense | ( | ) | ||||||||||
Reduction of defined contribution due to ESOP | ||||||||||||
ESOP benefit | $ | ( | ) | $ | ( | ) | $ | ( | ) |
Note 18 | Equity Incentive Plans |
Option grant assumptions | |||||||||
2019 | 2018 | 2017 | |||||||
Weighted average expected term | |||||||||
Expected volatility | 15.6 - 28.9% | 15.6 - 30.7% | 15.7 - 32.7% | ||||||
Weighted average volatility | % | % | % | ||||||
Expected dividends | 1.9 - 2.2% | 1.5 - 2.2% | 1.4 - 1.9% | ||||||
Weighted average expected dividends | % | % | % | ||||||
Risk-free rate | 1.3 - 2.7% | 1.3 - 3.2% | 0.5 - 2.5% |
Summary of option activity | |||||||||||||
For the year ended December 31, 2019 | |||||||||||||
Number (in 000s) | Weighted average exercise price | Aggregate intrinsic value (in 000s) | Weighted average remaining contractual term (years) | ||||||||||
Outstanding as of January 1, 2019 | $ | ||||||||||||
Granted | |||||||||||||
Exercised | ( | ) | |||||||||||
Forfeited | ( | ) | |||||||||||
Expired | ( | ) | |||||||||||
Outstanding as of December 31, 2019 | $ | ||||||||||||
Outstanding, net of expected forfeitures | |||||||||||||
Outstanding, exercisable (“vested”) |
Changes in restricted stock units | |||||||
For the year ended December 31, 2019 | |||||||
Number (in 000s) | Weighted average grant date fair value | ||||||
Nonvested as of January 1, 2019 | $ | ||||||
Granted | |||||||
Vested | ( | ) | |||||
Forfeited | ( | ) | |||||
Nonvested as of December 31, 2019 |
Changes in performance stock awards | |||||||
For the year ended December 31, 2019 | |||||||
Number (in 000s) | Weighted average grant date fair value | ||||||
Nonvested as of January 1, 2019 | $ | ||||||
Granted | |||||||
Adjustment for performance achievement | |||||||
Vested | ( | ) | |||||
Forfeited | ( | ) | |||||
Nonvested as of December 31, 2019 |
Note 19 | Supplemental Cash Flow Information |
For the years ended December 31, | ||||||||||||
($ in millions) | 2019 | 2018 | 2017 | |||||||||
Net change in proceeds managed | ||||||||||||
Net change in fixed income securities | $ | $ | $ | |||||||||
Net change in short-term investments | ( | ) | ( | ) | ( | ) | ||||||
Operating cash flow (used) provided | ( | ) | ( | ) | ||||||||
Net change in cash | ||||||||||||
Net change in proceeds managed | $ | ( | ) | $ | ( | ) | $ | |||||
Net change in liabilities | ||||||||||||
Liabilities for collateral, beginning of year | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
Liabilities for collateral, end of year | ( | ) | ( | ) | ( | ) | ||||||
Operating cash flow provided (used) | $ | $ | $ | ( | ) |
Note 20 | Other Comprehensive Income |
Components of other comprehensive income (loss) on a pre-tax and after-tax basis | ||||||||||||||||||||||||||||||||||||
For the years ended December 31, | ||||||||||||||||||||||||||||||||||||
($ in millions) | 2019 | 2018 | 2017 | |||||||||||||||||||||||||||||||||
Pre-tax | Tax | After-tax | Pre-tax | Tax | After-tax | Pre-tax | Tax | After-tax | ||||||||||||||||||||||||||||
Unrealized net holding gains and losses arising during the period, net of related offsets | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||||||||||
Less: reclassification adjustment of realized capital gains and losses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
Unrealized net capital gains and losses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
Unrealized foreign currency translation adjustments | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
Unamortized pension and other postretirement prior service credit | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||
Other comprehensive income (loss) | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | $ |
Note 21 | Quarterly Results (unaudited) |
First Quarter | Second Quarter | Third Quarter | Fourth Quarter | |||||||||||||||||||||||||||||
($ in millions, except per share data) | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | ||||||||||||||||||||||||
Revenues | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Net income (loss) applicable to common shareholders | ( | ) | ||||||||||||||||||||||||||||||
Earnings per common share - Basic | ( | ) | ||||||||||||||||||||||||||||||
Earnings per common share - Diluted | ( | ) |
Impact of change | First Quarter | Second Quarter | Third Quarter | Fourth Quarter | ||||||||||||||||||||||||||||
($ in millions, except per share data) | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | ||||||||||||||||||||||||
Revenues | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Net income (loss) applicable to common shareholders | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
Earnings per common share - Basic | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
Earnings per common share - Diluted | ( | ) | ( | ) | ( | ) |
• | We tested the effectiveness of controls related to the reserve for property and casualty insurance claims and claims expense, including those over the Company’s estimates and projections. |
• | We evaluated the methods and assumptions used by the Company to estimate the reserve for property and casualty insurance claims and claims expense by: |
◦ | Testing the underlying data that served as the basis for the actuarial analysis, including historical claims, to test that the inputs to the actuarial estimate were complete and accurate. |
◦ | Comparing the Company’s prior year assumptions of expected development and ultimate loss to actual losses incurred during the year to assess the reasonableness of those assumptions, including consideration of potential bias, in the determination of the reserve for property and casualty claims and claims expense. |
◦ | With the assistance of our actuarial specialists, we developed independent estimates for the reserve for property and casualty insurance claims and claims expense, utilizing loss data and industry claim development factors, and compared our estimates to management’s estimates. |
• | We tested the effectiveness of controls over management’s premium deficiency reserve and GPV and PFBL analysis, including those over the Company’s selection of assumptions. |
• | With the assistance of our actuarial specialists, we evaluated the reasonableness of assumptions and their incorporation into the projection model used by the Company to perform its premium deficiency reserve analysis by: |
◦ | Testing the underlying data that served as the basis for the assumptions setting and the underlying data used in the projection model to ensure the inputs were complete and accurate. |
◦ | Comparing mortality assumptions selected to actual historical experience. |
◦ | Comparing projected investment yields selected to historical portfolio returns, evaluating for consistency with current investment portfolio yields and the Company’s long-term reinvestment strategy, and comparing to independently obtained market data. |
• | With the assistance of our actuarial specialists, we independently calculated the gross premium valuation reserves from the Company’s projection model for a sample of contracts and compared our estimates to management’s estimates. |
• | With the assistance of our actuarial specialists, we evaluated the aggregate cash flows generated through the Company’s premium deficiency reserve testing for evidence of potential PFBL scenarios that would require the accrual of additional reserves to cover such future losses. |
• | Corporate Governance – Director Compensation |
• | Executive Compensation |
• | Stock Ownership Information – Security Ownership of Directors and Executive Officers |
• | Stock Ownership Information – Security Ownership of Certain Beneficial Owners |
Equity compensation plan information | |||||||||||
The following table includes information as of December 31, 2019, with respect to The Allstate Corporation’s equity compensation plans: | |||||||||||
Plan Category | Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights | Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) | ||||||||
(a) | (b) | (c) | |||||||||
Equity Compensation Plans Approved by Security Holders (1) | 14,910,325 | (2) | $ | 73.40 | 21,472,103 | (3) | |||||
Total | 14,910,325 | (2) | $ | 73.40 | 21,472,103 | (3) |
(1) | Consists of the 2019 Equity Incentive Plan, which amended and restated the 2013 Equity Incentive Plan; the 2017 Equity Compensation Plan for Non-Employee Directors; the 2006 Equity Compensation Plan for Non-Employee Directors; and the Equity Incentive Plan for Non-Employee Directors (the equity plan for non-employee directors prior to 2006). The Corporation does not maintain any equity compensation plans not approved by stockholders. |
(2) | As of December 31, 2019, 877,151 restricted stock units (“RSUs”) and 2,362,608 performance stock awards (“PSAs”) were outstanding. The weighted-average exercise price of outstanding options, warrants, and rights does not take into account RSUs and PSAs, which have no exercise price. PSAs are reported at the maximum potential amount awarded for incomplete performance periods and the amount earned for the 2017 PSA grant, reduced for forfeitures. For incomplete performance periods, the actual number of shares earned may be less and are based upon measures achieved at the end of the three-year performance period for those PSAs granted in 2018 and 2019. |
(3) | Includes 21,121,308 shares that may be issued in the form of stock options, unrestricted stock, restricted stock, restricted stock units, stock appreciation rights, performance units, performance stock, and stock in lieu of cash under the 2019 Equity Incentive Plan; and 350,795 shares that may be issued in the form of stock options, unrestricted stock, restricted stock, restricted stock units, and stock in lieu of cash compensation under the 2017 Equity Compensation Plan for Non-Employee Directors. |
• | Consolidated Statements of Operations |
• | Consolidated Statements of Comprehensive Income |
• | Consolidated Statements of Financial Position |
• | Consolidated Statements of Shareholders’ Equity |
• | Consolidated Statements of Cash Flows |
• | Notes to the Consolidated Financial Statements |
• | Report of Independent Registered Public Accounting Firm |
The Allstate Corporation | Page | |||
Schedules required to be filed under the provisions of Regulation S-X Article 7: | ||||
Incorporated by Reference | ||||||
Exhibit Number | Exhibit Description | Form | File Number | Exhibit | Filing Date | Filed or Furnished Herewith |
3.1 | 8-K | 1-11840 | 3(i) | May 23, 2012 | ||
3.2 | 8-K | 1-11840 | 3.1 | November 19, 2015 | ||
3.3 | 8-K | 1-11840 | 3.1 | March 29, 2018 | ||
3.4 | 8-K | 1-11840 | 3.1 | August 5, 2019 | ||
3.5 | 8-K | 1-11840 | 3.1 | November 8, 2019 | ||
3.6 | X | |||||
4.1 | The Allstate Corporation hereby agrees to furnish to the Commission, upon request, the instruments defining the rights of holders of each issue of long-term debt of it and its consolidated subsidiaries | |||||
4.2 | X |
Incorporated by Reference | ||||||
Exhibit Number | Exhibit Description | Form | File Number | Exhibit | Filing Date | Filed or Furnished Herewith |
4.3 | 8-K | 1-11840 | 4.1 | March 29, 2018 | ||
4.4 | 8-K | 1-11840 | 4.2 | March 29, 2018 | ||
4.5 | Form of Depositary Receipt, Series G (included as Exhibit A to Exhibit 4.3 above) | 8-K | 1-11840 | 4.3 | March 29, 2018 | |
4.6 | 8-K | 1-11840 | 4.1 | August 8, 2019 | ||
4.7 | 8-K | 1-11840 | 4.2 | August 8, 2019 | ||
4.8 | Form of Depositary Receipt, Series H (included as Exhibit A to Exhibit 4.6 above) | 8-K | 1-11840 | 4.3 | August 8, 2019 | |
4.9 | 8-K | 1-11840 | 4.1 | November 8, 2019 | ||
4.10 | 8-K | 1-11840 | 4.2 | November 8, 2019 | ||
4.11 | Form of Depositary Receipt, Series I (included as Exhibit A to Exhibit 4.9 above) | 8-K | 1-11840 | 4.3 | November 8, 2019 | |
10.1 | 10-Q | 1-11840 | 10.6 | May 2, 2012 | ||
10.2 | 8-K | 1-11840 | 10.1 | April 29, 2014 | ||
10.3* | Proxy | 1-11840 | App. B | April 7, 2014 | ||
10.4* | S-8 | 1-11840 | 4 | November 20, 2018 | ||
10.5* | Proxy | 1-11840 | App. D | April 8, 2019 | ||
10.6*+ | 10-Q | 1-11840 | 10.2 | May 1, 2018 | ||
10.7*+ | 10-Q | 1-11840 | 10.4 | May 2, 2012 | ||
10.8*+ | 10-Q | 1-11840 | 10.3 | May 1, 2018 | ||
10.9*+ | 10-Q | 1-11840 | 10.3 | May 2, 2012 | ||
10.10*+ | 8-K | 1-11840 | 10.2 | December 28, 2011 | ||
10.11*+ | 10-Q | 1-11840 | 10.3 | April 27, 2011 | ||
10.12*+ | 8-K/A | 1-11840 | 10.3 | May 20, 2009 |
Incorporated by Reference | ||||||
Exhibit Number | Exhibit Description | Form | File Number | Exhibit | Filing Date | Filed or Furnished Herewith |
10.13*+ | 10-Q | 1-11840 | 10.2 | May 2, 2012 | ||
10.14*+ | 10-Q | 1-11840 | 10.4 | May 1, 2018 | ||
10.15* | 10-K | 1-11840 | 10.16 | February 15, 2019 | ||
10.16* | 8-K | 1-11840 | 10.1 | December 28, 2011 | ||
10.17* | 8-K | 1-11840 | 10.7 | September 19, 2008 | ||
10.18* | 8-K | 1-11840 | 10.5 | September 19, 2008 | ||
10.19* | 8-K | 1-11840 | 10.6 | September 19, 2008 | ||
10.20* | Proxy | 1-11840 | App. D | April 12, 2017 | ||
10.21* | 8-K | 1-11840 | 10.8 | September 19, 2008 | ||
10.22* | 8-K | 1-11840 | 10.9 | September 19, 2008 | ||
10.23* | 10-Q | 1-11840 | 10.2 | August 3, 2016 | ||
10.24* | 10-Q | 1-11840 | 10.2 | August 1, 2017 | ||
10.25* | 10-Q | 1-11840 | 10.2 | August 1, 2007 | ||
10.26* | 10-K | 1-11840 | 10.24 | February 17, 2017 | ||
10.27* | 10-K | 1-11840 | 10.29 | February 15, 2019 | ||
10.28 | 8-K | 1-11840 | 10.1 | April 7, 2014 | ||
10.29* | 10-Q | 1-11840 | 10.1 | May 1, 2018 | ||
10.30* | 10-Q | 1-11840 | 10.1 | May 1, 2019 | ||
21 | X | |||||
23 | X | |||||
31(i) | X | |||||
31(i) | X | |||||
32 | X | |||||
101.INS | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | X |
Incorporated by Reference | ||||||
Exhibit Number | Exhibit Description | Form | File Number | Exhibit | Filing Date | Filed or Furnished Herewith |
101.SCH | Inline XBRL Taxonomy Extension Schema | X | ||||
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase | X | ||||
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase | X | ||||
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase | X | ||||
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase | X | ||||
104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) | X |
The Allstate Corporation (Registrant) | ||
/s/ John C. Pintozzi | ||
By: John C. Pintozzi | ||
Senior Vice President, Controller, and Chief Accounting Officer | ||
(Principal Accounting Officer) | ||
February 21, 2020 |
Signature | Title | Date | ||
/s/ Thomas J. Wilson | Chairman of the Board, President, Chief Executive Officer and a Director (Principal Executive Officer) | February 21, 2020 | ||
Thomas J. Wilson | ||||
/s/ Mario Rizzo | Executive Vice President and Chief Financial Officer (Principal Financial Officer) | February 21, 2020 | ||
Mario Rizzo | ||||
/s/ John C. Pintozzi | Senior Vice President, Controller, and Chief Accounting Officer (Principal Accounting Officer) | February 21, 2020 | ||
John C. Pintozzi | ||||
/s/ Kermit R. Crawford | Director | February 21, 2020 | ||
Kermit R. Crawford | ||||
/s/ Michael L. Eskew | Director | February 21, 2020 | ||
Michael L. Eskew | ||||
/s/ Margaret M. Keane | Director | February 21, 2020 | ||
Margaret M. Keane | ||||
/s/ Siddharth N. Mehta | Director | February 21, 2020 | ||
Siddharth N. Mehta | ||||
/s/ Jacques P. Perold | Director | February 21, 2020 | ||
Jacques P. Perold | ||||
/s/ Andrea Redmond | Director | February 21, 2020 | ||
Andrea Redmond | ||||
/s/ Gregg M. Sherrill | Director | February 21, 2020 | ||
Gregg M. Sherrill | ||||
/s/ Judith A. Sprieser | Lead Director | February 21, 2020 | ||
Judith A. Sprieser | ||||
/s/ Perry M. Traquina | Director | February 21, 2020 | ||
Perry M. Traquina |
As of December 31, 2019 | ||||||||||||
($ in millions) | Cost/amortized cost | Fair value (if applicable) | Amount shown in the Balance Sheet | |||||||||
Type of investment | ||||||||||||
Fixed maturities: | ||||||||||||
Bonds: | ||||||||||||
United States government, government agencies and authorities | $ | $ | $ | |||||||||
States, municipalities and political subdivisions | ||||||||||||
Foreign governments | ||||||||||||
Public utilities | ||||||||||||
All other corporate bonds | ||||||||||||
Asset-backed securities | ||||||||||||
Mortgage-backed securities | ||||||||||||
Total fixed maturities | $ | |||||||||||
Equity securities: | ||||||||||||
Common stocks: | ||||||||||||
Public utilities | ||||||||||||
Banks, trusts and insurance companies | ||||||||||||
Industrial, miscellaneous and all other | ||||||||||||
Nonredeemable preferred stocks | ||||||||||||
Total equity securities | $ | |||||||||||
Mortgage loans on real estate | ||||||||||||
Real estate (none acquired in satisfaction of debt) | ||||||||||||
Policy loans | ||||||||||||
Derivative instruments | ||||||||||||
Limited partnership interests | ||||||||||||
Other long-term investments | ||||||||||||
Short-term investments | ||||||||||||
Total investments | $ | $ |
Year Ended December 31, | ||||||||||||
($ in millions) | 2019 | 2018 | 2017 | |||||||||
Revenues | ||||||||||||
Investment income, less investment expense | $ | $ | $ | |||||||||
Realized capital gains and losses | ( | ) | ( | ) | ||||||||
Other income | ||||||||||||
Expenses | ||||||||||||
Interest expense | ||||||||||||
Pension and other postretirement remeasurement gains and losses | ( | ) | ||||||||||
Pension and other postretirement benefit expense | ( | ) | ( | ) | ( | ) | ||||||
Other operating expenses | ||||||||||||
( | ) | |||||||||||
(Loss) gain from operations before income tax benefit and equity in net income of subsidiaries | ( | ) | ( | ) | ||||||||
Income tax (benefit) expense | ( | ) | ( | ) | ||||||||
Loss before equity in net income of subsidiaries | ( | ) | ( | ) | ( | ) | ||||||
Equity in net income of subsidiaries | ||||||||||||
Net income | ||||||||||||
Preferred stock dividends | ||||||||||||
Net income applicable to common shareholders | ||||||||||||
Other comprehensive income (loss), after-tax | ||||||||||||
Changes in: | ||||||||||||
Unrealized net capital gains and losses | ( | ) | ||||||||||
Unrealized foreign currency translation adjustments | ( | ) | ( | ) | ||||||||
Unamortized pension and other postretirement prior service credit | ( | ) | ( | ) | ( | ) | ||||||
Other comprehensive income (loss), after-tax | ( | ) | ||||||||||
Comprehensive income | $ | $ | $ |
($ in millions, except par value data) | December 31, | |||||||
2019 | 2018 | |||||||
Assets | ||||||||
Investments in subsidiaries | $ | $ | ||||||
Fixed income securities, at fair value (amortized cost $458 and $355) | ||||||||
Short-term investments, at fair value (amortized cost $702 and $285) | ||||||||
Cash | ||||||||
Receivable from subsidiaries | ||||||||
Deferred income taxes | ||||||||
Other assets | ||||||||
Total assets | $ | $ | ||||||
Liabilities | ||||||||
Long-term debt | $ | $ | ||||||
Pension and other postretirement benefit obligations | ||||||||
Deferred compensation | ||||||||
Payable to subsidiaries | ||||||||
Notes due to subsidiaries | ||||||||
Dividends payable to shareholders | ||||||||
Other liabilities | ||||||||
Total liabilities | ||||||||
Shareholders’ equity | ||||||||
Preferred stock and additional capital paid-in, $1 par value, 25 million shares authorized, 92.5 thousand and 79.8 thousand shares issued and outstanding, $2,313 and $1,995 aggregate liquidation preference | ||||||||
Common stock, $.01 par value, 2.0 billion shares authorized and 900 million issued, 319 million and 332 million shares outstanding | ||||||||
Additional capital paid-in | ||||||||
Retained income | ||||||||
Deferred ESOP expense | ( | ) | ||||||
Treasury stock, at cost (581 million and 568 million shares) | ( | ) | ( | ) | ||||
Accumulated other comprehensive income: | ||||||||
Unrealized net capital gains and losses | ( | ) | ||||||
Unrealized foreign currency translation adjustments | ( | ) | ( | ) | ||||
Unamortized pension and other postretirement prior service credit | ||||||||
Total accumulated other comprehensive income | ||||||||
Total shareholders’ equity | ||||||||
Total liabilities and shareholders’ equity | $ | $ |
($ in millions) | Years Ended December 31, | |||||||||||
2019 | 2018 | 2017 | ||||||||||
Cash flows from operating activities | ||||||||||||
Net income | $ | $ | $ | |||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
Equity in net income of subsidiaries | ( | ) | ( | ) | ( | ) | ||||||
Dividends received from subsidiaries | ||||||||||||
Realized capital gains and losses | ( | ) | ||||||||||
Pension and other postretirement remeasurement gains and losses | ( | ) | ||||||||||
Changes in: | ||||||||||||
Pension and other postretirement benefits | ( | ) | ( | ) | ( | ) | ||||||
Income taxes | ( | ) | ||||||||||
Operating assets and liabilities | ||||||||||||
Net cash provided by operating activities | ||||||||||||
Cash flows from investing activities | ||||||||||||
Proceeds from sales of investments | ||||||||||||
Proceeds from sales of investments to subsidiaries | ||||||||||||
Investment purchases | ( | ) | ( | ) | ( | ) | ||||||
Investment collections | ||||||||||||
Capital contribution or return of capital from subsidiaries | ( | ) | ||||||||||
Change in short-term investments, net | ( | ) | ( | ) | ||||||||
Net cash (used in) provided by investing activities | ( | ) | ( | ) | ||||||||
Cash flows from financing activities | ||||||||||||
Proceeds from borrowings from subsidiaries | ||||||||||||
Repayment of notes due to subsidiaries | ( | ) | ( | ) | ( | ) | ||||||
Proceeds from issuance of long-term debt | ||||||||||||
Redemption of preferred stock | ( | ) | ( | ) | ||||||||
Redemption and repayment of long-term debt | ( | ) | ( | ) | ||||||||
Proceeds from issuance of preferred stock | ||||||||||||
Dividends paid on common stock | ( | ) | ( | ) | ( | ) | ||||||
Dividends paid on preferred stock | ( | ) | ( | ) | ( | ) | ||||||
Treasury stock purchases | ( | ) | ( | ) | ( | ) | ||||||
Shares reissued under equity incentive plans, net | ||||||||||||
Other | ( | ) | ( | ) | ||||||||
Net cash used in financing activities | ( | ) | ( | ) | ( | ) | ||||||
Net increase (decrease) in cash | ( | ) | ||||||||||
Cash at beginning of year | ||||||||||||
Cash at end of year | $ | $ | $ |
($ in millions) | As of December 31, | For the years ended December 31, | ||||||||||||||||||||||||||||||||||
Segment | Deferred policy acquisition costs | Reserves for claims and claims expense, contract benefits and contractholder funds | Unearned premiums | Premium revenue and contract charges | Net investment income (1) | Claims and claims expense, contract benefits and interest credited to contractholders | Amortization of deferred policy acquisition costs | Other operating costs and expenses | Premiums written (excluding life) | |||||||||||||||||||||||||||
2019 | ||||||||||||||||||||||||||||||||||||
Property-Liability | ||||||||||||||||||||||||||||||||||||
Allstate Protection | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||
Discontinued Lines and Coverages | ||||||||||||||||||||||||||||||||||||
Total Property-Liability | $ | |||||||||||||||||||||||||||||||||||
Service Businesses (2) | ||||||||||||||||||||||||||||||||||||
Allstate Life | ||||||||||||||||||||||||||||||||||||
Allstate Benefits | ||||||||||||||||||||||||||||||||||||
Allstate Annuities | ||||||||||||||||||||||||||||||||||||
Corporate and Other | ||||||||||||||||||||||||||||||||||||
Intersegment Eliminations (2) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
2018 | ||||||||||||||||||||||||||||||||||||
Property-Liability | ||||||||||||||||||||||||||||||||||||
Allstate Protection | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||
Discontinued Lines and Coverages | ||||||||||||||||||||||||||||||||||||
Total Property-Liability | $ | |||||||||||||||||||||||||||||||||||
Service Businesses (2) | ||||||||||||||||||||||||||||||||||||
Allstate Life | ||||||||||||||||||||||||||||||||||||
Allstate Benefits | ||||||||||||||||||||||||||||||||||||
Allstate Annuities | ||||||||||||||||||||||||||||||||||||
Corporate and Other | ||||||||||||||||||||||||||||||||||||
Intersegment Eliminations (2) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
2017 | ||||||||||||||||||||||||||||||||||||
Property-Liability | ||||||||||||||||||||||||||||||||||||
Allstate Protection | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||
Discontinued Lines and Coverages | ||||||||||||||||||||||||||||||||||||
Total Property-Liability | $ | |||||||||||||||||||||||||||||||||||
Service Businesses (2) | ||||||||||||||||||||||||||||||||||||
Allstate Life | ||||||||||||||||||||||||||||||||||||
Allstate Benefits | ||||||||||||||||||||||||||||||||||||
Allstate Annuities | ||||||||||||||||||||||||||||||||||||
Corporate and Other | ||||||||||||||||||||||||||||||||||||
Intersegment Eliminations (2) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ | $ | $ | $ |
(1) | A single investment portfolio supports both Allstate Protection and Discontinued Lines and Coverages segments. |
(2) | Includes intersegment premiums and service fees and the related incurred losses and expenses that are eliminated in the consolidated financial statements. |
($ in millions) | Gross amount | Ceded to other companies (1) | Assumed from other companies | Net amount | Percentage of amount assumed to net | ||||||||||||||
Year ended December 31, 2019 | |||||||||||||||||||
Life insurance in force | $ | $ | $ | $ | % | ||||||||||||||
Premiums and contract charges: | |||||||||||||||||||
Life insurance | $ | $ | $ | $ | % | ||||||||||||||
Accident and health insurance | % | ||||||||||||||||||
Property and casualty insurance | % | ||||||||||||||||||
Total premiums and contract charges | $ | $ | $ | $ | % | ||||||||||||||
Year ended December 31, 2018 | |||||||||||||||||||
Life insurance in force | $ | $ | $ | $ | % | ||||||||||||||
Premiums and contract charges: | |||||||||||||||||||
Life insurance | $ | $ | $ | $ | % | ||||||||||||||
Accident and health insurance | % | ||||||||||||||||||
Property and casualty insurance | % | ||||||||||||||||||
Total premiums and contract charges | $ | $ | $ | $ | % | ||||||||||||||
Year ended December 31, 2017 | |||||||||||||||||||
Life insurance in force | $ | $ | $ | $ | % | ||||||||||||||
Premiums and contract charges: | |||||||||||||||||||
Life insurance | $ | $ | $ | $ | % | ||||||||||||||
Accident and health insurance | % | ||||||||||||||||||
Property and casualty insurance | % | ||||||||||||||||||
Total premiums and contract charges | $ | $ | $ | $ | % |
(1) |
($ in millions) | Additions | |||||||||||||||||||
Description | Balance as of beginning of period | Charged to costs and expenses | Other additions | Deductions | Balance as of end of period | |||||||||||||||
Year ended December 31, 2019 | ||||||||||||||||||||
Allowance for reinsurance recoverables | $ | $ | ( | ) | $ | $ | $ | |||||||||||||
Allowance for premium installment receivable | ||||||||||||||||||||
Allowance for deferred tax assets | ||||||||||||||||||||
Allowance for estimated losses on mortgage loans | ||||||||||||||||||||
Allowance for estimated losses on agent loans | ||||||||||||||||||||
Year ended December 31, 2018 | ||||||||||||||||||||
Allowance for reinsurance recoverables | $ | $ | ( | ) | $ | $ | $ | |||||||||||||
Allowance for premium installment receivable | ||||||||||||||||||||
Allowance for deferred tax assets | ||||||||||||||||||||
Allowance for estimated losses on mortgage loans | ||||||||||||||||||||
Allowance for estimated losses on agent loans | ||||||||||||||||||||
Year ended December 31, 2017 | ||||||||||||||||||||
Allowance for reinsurance recoverables | $ | $ | ( | ) | $ | $ | $ | |||||||||||||
Allowance for premium installment receivable | ||||||||||||||||||||
Allowance for deferred tax assets | ||||||||||||||||||||
Allowance for estimated losses on mortgage loans | ||||||||||||||||||||
Allowance for estimated losses on agent loans |