Reportable Segments

3 Months Ended

Mar. 31, 2020



Note 4	Reportable Segments

Measuring segment profit or loss

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

Underwriting income is calculated as premiums earned and other revenue, less claims and claims expenses (“losses”), Shelter-in-Place Payback expense, amortization of DAC, operating costs and expenses, amortization of purchased intangibles and restructuring and related charges as determined using GAAP.

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

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

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

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

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

• Business combination expenses and the amortization or impairment of purchased intangibles, after-tax

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

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



Reportable segments revenue information
($ in millions)	Three months ended March 31,
($ in millions)	2020			2019
Property-Liability
Insurance premiums
Auto	$	6,154		$	5,930
Homeowners	2,038			1,935
Other personal lines	471			459
Commercial lines	218			183
Allstate Protection	8,881			8,507
Discontinued Lines and Coverages	—			—
Total Property-Liability insurance premiums	8,881			8,507
Other revenue	181			176
Net investment income	202			291
Realized capital gains (losses)	(103		)	497
Total Property-Liability	9,161			9,471

Service Businesses
Consumer product protection plans	206			145
Roadside assistance	51			63
Finance and insurance products	97			87
Intersegment premiums and service fees ⁽¹⁾	38			33
Other revenue	52			47
Net investment income	10			9
Realized capital gains (losses)	(24		)	8
Total Service Businesses	430			392

Allstate Life
Traditional life insurance premiums	153			154
Interest-sensitive life insurance contract charges	180			183
Other revenue	32			27
Net investment income	128			127
Realized capital gains (losses)	(31		)	(5		)
Total Allstate Life	462			486

Allstate Benefits
Traditional life insurance premiums	9			9
Accident and health insurance premiums	244			250
Interest-sensitive life insurance contract charges	29			29
Net investment income	20			19
Realized capital gains (losses)	(14		)	4
Total Allstate Benefits	288			311

Allstate Annuities
Fixed annuities contract charges	2			3
Net investment income	47			190
Realized capital gains (losses)	(269		)	156
Total Allstate Annuities	(220		)	349

Corporate and Other
Net investment income	14			12
Realized capital gains (losses)	(21		)	2
Total Corporate and Other	(7		)	14

Intersegment eliminations ⁽¹⁾	(38		)	(33		)
Consolidated revenues	$	10,076		$	10,990


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



Reportable segments financial performance
	Three months ended March 31,
($ in millions)	2020			2019
Property-Liability
Allstate Protection ⁽¹⁾	$	1,348		$	703
Discontinued Lines and Coverages	(3		)	(3		)
Total underwriting income	1,345			700
Net investment income	202			291
Income tax expense on operations	(303		)	(202		)
Realized capital gains (losses), after-tax	(82		)	393
Property-Liability net income applicable to common shareholders	1,162			1,182

Service Businesses
Adjusted net income	37			11
Realized capital gains (losses), after-tax	(19		)	7
Amortization of purchased intangibles, after-tax	(21		)	(24		)
Service Businesses net loss applicable to common shareholders	(3		)	(6		)

Allstate Life
Adjusted net income	80			73
Realized capital gains (losses), after-tax	(25		)	(4		)
Valuation changes on embedded derivatives not hedged, after-tax	12			—
DAC and DSI amortization related to realized capital gains and losses, after-tax	(3		)	(2		)
Allstate Life net income applicable to common shareholders	64			67

Allstate Benefits
Adjusted net income	24			31
Realized capital gains (losses), after-tax	(10		)	3
Allstate Benefits net income applicable to common shareholders	14			34

Allstate Annuities
Adjusted net loss	(139		)	(25		)
Realized capital gains (losses), after-tax	(213		)	124
Valuation changes on embedded derivatives not hedged, after-tax	2			(3		)
Gain on disposition of operations, after-tax	1			1
Allstate Annuities net (loss) income applicable to common shareholders	(349		)	97

Corporate and Other
Adjusted net loss	(107		)	(103		)
Realized capital gains (losses), after-tax	(17		)	1
Pension and other postretirement remeasurement gains (losses), after-tax	(251		)	(11		)
Corporate and Other net loss applicable to common shareholders	(375		)	(113		)

Consolidated net income applicable to common shareholders	$	513		$	1,261

⁽¹⁾

During the first quarter of 2020, the Company announced a Shelter-in-Place Payback of over $600 million to customers, as the significant decline in the number of auto accidents contributed favorably to the underwriting results. $210 million of this cost was accrued in first quarter 2020 and the remainder will be recognized in second quarter 2020.