On January 4, 2021, the Company completed the acquisition of National General Holdings Corp. (“National General”), an insurance holding company serving customers predominantly through independent agents for property and casualty and accident and health products.

National General provides personal and commercial automobile, homeowners, umbrella, recreational vehicle, motorcycle, lender-placed, health and other niche insurance products. This acquisition will increase the Company’s market share in personal property-liability and enhance its independent agent distribution platform.


Assets and liabilities recognized in acquisition (1)
($ in millions)	January 4, 2021
Assets
Investments	$	4,957
Cash	402
Premiums and other receivables, net	1,545
Deferred acquisition costs (value of business acquired)	317
Reinsurance recoverables, net	1,219
Intangible assets	1,199
Other assets	734
Goodwill (2)	980
Total assets	11,353

Liabilities
Reserve for property and casualty insurance claims and claims expense	2,774
Reserve for future policy benefits	189
Unearned premiums	2,245
Reinsurance payable	364
Debt (3)	592
Deferred tax liabilities	177
Other liabilities	701
Total liabilities	$	7,042

(1)The amounts reflect preliminary allocation of assets acquired and liabilities assumed. The acquisition date fair values of assets and liabilities, including insurance reserves and intangible assets, as well as the related estimated useful lives of intangibles, are preliminary estimates and are subject to revisions within one year of acquisition date.

(2)$616 million, $29 million and $335 million of goodwill were allocated to the Allstate Protection, Protection Services and Allstate Health and Benefits segments, respectively, and is non-deductible for income tax purposes. Goodwill is primarily attributable to expected synergies and future growth opportunities.

(3)Subsequent to the acquisition, the Company repaid $100 million of 7.625% Subordinated Notes and $72 million of Subordinated Debentures on February 3, 2021 and March 15, 2021, respectively. The Company had principal balance remaining of $417 million 6.750% Senior Notes due 2024 as of March 31, 2021, including a purchase accounting fair value adjustment of $67 million.


Intangible assets by type
($ in millions)	January 4, 2021
Distribution and customer relationships	$	795
Trade names	102
Licenses	97
Technology and other	205
Total	$	1,199

Intangible assets (reported in other assets in the Condensed Consolidated Statements of Financial Position), consist of capitalized costs, primarily of the estimated fair value of distribution, and customer relationships, trade names and licenses, technology and other assets. The estimated useful lives of these assets generally range from 3 to 10 years.

The estimated fair value of distribution and customer relationship intangible assets was

determined using an income approach that considered cash flows and profits expected to be generated by the acquired relationships, a weighted-average cost of capital discount rate reflecting the relative risk of achieving the anticipated cash flows, profits, the time value of money, and other relevant inputs. Technology and trade names were valued using estimated useful lives and market licensing rates discounted at a weighted-average cost of capital. Licenses are primarily insurance licenses which were valued using the median value of market transactions executed over an extended observation period.

Licenses are considered to have an indefinite useful life and are reviewed for impairment at least annually or more frequently if circumstances arise that indicate an impairment may have occurred. An impairment is recognized if the carrying amount of the asset exceeds its estimated fair value.

Intangible assets are carried at cost less accumulated amortization. Amortization expense is primarily calculated using accelerated amortization methods. Amortization expense on intangible assets was $23 million for the first three months of 2021 and we expect to recognize $228 million of amortization expense for the remainder of 2021.


Estimated amortization expense of National General intangible assets for the next five years and thereafter
($ in millions)
2022	$	218
2023	185
2024	135
2025	103
2026	70
Thereafter	140
Total amortization	$	851

Value of business acquired (reported in DAC in the Condensed Consolidated Statements of Financial Position) recognized in connection with the acquisition of National General represents the value of future profits expected to be earned over the lives of the contracts acquired determined using a weighted-average cost of capital discount and other relevant assumptions. These costs are amortized over the policy term of the contracts in force at the acquisition date, generally over six or twelve months. The value of business acquired asset recognized in connection with the National General acquisition totaled $317 million; the most significant portion relates to insurance contracts in the Allstate Protection segment. Amortization expense of the value of business acquired was $134 million for the first three months of 2021 and we expect to record an additional $183 million in 2021.

Other fair value purchase accounting adjustments included an increase in reserves of $74 million, a $13 million reduction to investments that were not held at fair value, and a net increase in current and deferred tax liabilities of $98 million.

Preferred stock Subsequent to the acquisition, the Company redeemed all outstanding shares of 7.50% Non-Cumulative Preferred Stock, Series A, par value $0.01 per share, all outstanding Depositary shares,

representing 1/40th of a Share of 7.50% Non-Cumulative Preferred Stock, Series B, and the underlying shares of 7.50% Non-Cumulative Preferred Stock, Series B, par value $0.01 per share, and all outstanding shares of Fixed/Floating Rate Non-Cumulative Convertible Preferred Stock, Series D, par value $0.01 per share for a total redemption payment of $250 million.

Transactions costs (reported in operating costs and expenses in the Condensed Consolidated Statements of Operations) of $22 million related to the acquisition were expensed as incurred in the Corporate and Other segment.

Dispositions

On January 26, 2021, the Company entered into a Stock Purchase Agreement with Everlake US Holdings Company (formerly Antelope US Holdings Company), an affiliate of an investment fund associated with The Blackstone Group Inc. to sell Allstate Life Insurance Company and certain affiliates for approximately $2.8 billion in cash.

On March 29, 2021, the Company entered into a Stock Purchase Agreement with Wilton Reassurance Company to sell Allstate Life Insurance Company of New York for $220 million in cash.

A loss on disposition of approximately $4 billion, after-tax, was recorded in the first quarter of 2021 related to these transactions. The loss on disposition is related to the run-off annuity segment, whose returns have been low. The ultimate amount of the loss on sale will be impacted by purchase price adjustments associated with certain pre-close transactions specified in the stock purchase agreements, changes in statutory capital and surplus prior to the closing date and the closing date equity of the sold entities determined under GAAP, excluding unrealized gains and losses. The transactions are expected to close in the second half of 2021, subject to regulatory approvals and other customary closing conditions.

In the first quarter of 2021, the assets and liabilities of the business are reclassified as held for sale and results are presented as discontinued operations. This change was applied on a retrospective basis.


Financial results from discontinued operations
	Three months ended March 31,
($ in millions)	2021		2020
Revenues
Life premiums and contract charges	$	340	$	335

Net investment income	439		175
Realized capital gains (losses)	79		(300)
Total revenues	858		210

Costs and expenses
Life contract benefits	410		360
Interest credited to contractholder funds	85		123
Amortization of DAC	36		36
Operating costs and expenses	55		61
Restructuring and related charges	19		1
Total costs and expenses	605		581

Amortization of deferred gain on reinsurance	2		1

Income (loss) from discontinued operations before income tax expense	255		(370)

Income tax expense (benefit)	50		(82)

Income (loss) from discontinued operations, net of tax	205		(288)

Loss on disposition of operations	(4,418)		—
Income tax benefit	(420)		—
Loss on disposition, net of tax	(3,998)		—

Loss from discontinued operations, net of tax	$	(3,793)	$	(288)


Major classes of assets and liabilities to be transferred in transactions
($ in millions)	March 31, 2021		December 31, 2020
Assets
Investments
Fixed income securities, at fair value (amortized cost, net $23,511 and $21,417)	$	25,073	$	23,789
Equity securities, at fair value (cost $1,191 and $1,113)	1,643		1,542
Mortgage loans, net	3,062		3,329
Limited partnership interests	1,942		3,046
Short-term, at fair value (amortized cost $1,652 and $993)	1,652		993
Other, net	936		1,998
Total investments	34,308		34,697
Cash	89		66
Deferred policy acquisitions costs	1,039		925
Reinsurance recoverables, net	1,982		2,005
Accrued investment income	248		229
Other assets	236		865
Separate accounts	3,339		3,344
Assets held for sale	41,241		42,131
Less: loss accrual	4,412		—
Total assets held for sale	$	36,829	$	42,131

Liabilities
Reserve for future policy benefits	$	11,581	$	11,740
Contractholder funds	16,112		16,356

Deferred income taxes	857		973
Other liabilities and accrued expenses	1,494		912
Separate accounts	3,339		3,344
Total liabilities held for sale	$	33,383	$	33,325


Cash flows from discontinued operations
	Three months ended March 31,
($ in millions)	2021		2020
Net cash provided by operating activities from discontinued operations	$	64	$	111
Net cash provided by investing activities from discontinued operations	88		85