UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022

OR

☐  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to ______

Commission file number 1-11840

THE ALLSTATE CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	36-3871531
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

 

2775 Sanders Road, Northbrook, Illinois    60062

(Address of principal executive offices)    (Zip Code)

Registrant’s telephone number, including area code: (847) 402-5000

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbols	Name of each exchange on which registered
Common Stock, par value $.01 per share	ALL	New York Stock Exchange Chicago Stock Exchange
5.100% Fixed-to-Floating Rate Subordinated Debentures due 2053	ALL.PR.B	New York Stock Exchange
Depositary Shares represent 1/1,000th of a share of 5.625% Noncumulative Preferred Stock, Series G	ALL PR G	New York Stock Exchange
Depositary Shares represent 1/1,000th of a share of 5.100% Noncumulative Preferred Stock, Series H	ALL PR H	New York Stock Exchange
Depositary Shares represent 1/1,000th of a share of 4.750% Noncumulative Preferred Stock, Series I	ALL PR I	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of July 18, 2022, the registrant had 270,295,588 common shares, $.01 par value, outstanding.

The Allstate Corporation

Index to Quarterly Report on Form 10-Q

June 30, 2022

Part I Financial Information		Page
Item 1. Financial Statements (unaudited) as of June 30, 2022 and December 31, 2021 and for the Three Month and Six Month Periods Ended June 30, 2022 and 2021
	Condensed Consolidated Statements of Operations	1
	Condensed Consolidated Statements of Comprehensive Income	2
	Condensed Consolidated Statements of Financial Position	3
	Condensed Consolidated Statements of Shareholders’ Equity	4
	Condensed Consolidated Statements of Cash Flows	5
	Notes to Condensed Consolidated Financial Statements (unaudited)	6
	Report of Independent Registered Public Accounting Firm	44
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Highlights	45
	Property-Liability Operations	50
	Segment results
	Allstate Protection	52
	Run-off Property-Liability	61
	Protection Services	63
	Allstate Health and Benefits	65
	Investments	67
	Capital Resources and Liquidity	75
	Recent Developments	77
	Forward-Looking Statements	78
Item 4. Controls and Procedures		78
Part II Other Information
Item 1. Legal Proceedings		79
Item 1A. Risk Factors		79
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		79
Item 6. Exhibits		80

Condensed Consolidated Financial Statements

Part I. Financial Information

Item 1. Financial Statements

The Allstate Corporation and Subsidiaries

Condensed Consolidated Statements of Operations (unaudited)

($ in millions, except per share data)	Three months ended June 30,				Six months ended June 30,
	2022		2021		2022		2021
Revenues
Property and casualty insurance premiums	$	11,362	$	10,444	$	22,343	$	20,751
Accident and health insurance premiums and contract charges	466		447		935		902
Other revenue	563		494		1,123		1,049
Net investment income	562		974		1,156		1,682
Net gains (losses) on investments and derivatives	(733)		287		(1,000)		713
Total revenues	12,220		12,646		24,557		25,097
Costs and expenses
Property and casualty insurance claims and claims expense	9,367		7,207		17,189		13,250
Shelter-in-Place Payback expense	—		29		—		29
Accident, health and other policy benefits	269		252		538		494
Amortization of deferred policy acquisition costs	1,619		1,545		3,231		3,068
Operating costs and expenses	1,850		1,683		3,752		3,414
Pension and other postretirement remeasurement (gains) losses	259		(134)		12		(444)
Restructuring and related charges	1		71		13		122
Amortization of purchased intangibles	87		105		174		158
Interest expense	83		91		166		177
Total costs and expenses	13,535		10,849		25,075		20,268
(Loss) income from operations before income tax expense	(1,315)		1,797		(518)		4,829
Income tax (benefit) expense	(291)		362		(140)		988
Net (loss) income from continuing operations	(1,024)		1,435		(378)		3,841
Income (loss) from discontinued operations, net of tax	—		196		—		(3,597)
Net (loss) income	(1,024)		1,631		(378)		244
Less: Net (loss) income attributable to noncontrolling interest	(9)		6		(19)		—
Net (loss) income attributable to Allstate	(1,015)		1,625		(359)		244
Less: Preferred stock dividends	27		30		53		57
Net (loss) income applicable to common shareholders	$	(1,042)	$	1,595	$	(412)	$	187
Earnings per common share applicable to common shareholders
Basic
Continuing operations	$	(3.81)	$	4.68	$	(1.49)	$	12.59
Discontinued operations	—		0.66		—		(11.97)
Total	$	(3.81)	$	5.34	$	(1.49)	$	0.62
Diluted
Continuing operations	$	(3.81)	$	4.61	$	(1.49)	$	12.41
Discontinued operations	—		0.65		—		(11.80)
Total	$	(3.81)	$	5.26	$	(1.49)	$	0.61
Weighted average common shares - Basic	273.8		298.8		275.9		300.6
Weighted average common shares - Diluted	273.8		303.3		275.9		304.9

See notes to condensed consolidated financial statements.

Second Quarter 2022 Form 10-Q 1

Condensed Consolidated Financial Statements

The Allstate Corporation and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income (unaudited)

($ in millions)	Three months ended June 30,				Six months ended June 30,
	2022		2021		2022		2021
Net (loss) income	$	(1,024)	$	1,631	$	(378)	$	244
Other comprehensive (loss) income, after-tax
Changes in:
Unrealized net capital gains and losses	(1,143)		484		(2,736)		(1,016)
Unrealized foreign currency translation adjustments	(47)		(3)		(47)		31
Unamortized pension and other postretirement prior service credit	(15)		(14)		(30)		(29)
Other comprehensive (loss) income, after-tax	(1,205)		467		(2,813)		(1,014)
Comprehensive (loss) income	(2,229)		2,098		(3,191)		(770)
Less: Comprehensive (loss) income attributable to noncontrolling interest	(17)		5		(39)		(1)
Comprehensive (loss) income attributable to Allstate	$	(2,212)	$	2,093	$	(3,152)	$	(769)

 

See notes to condensed consolidated financial statements.

2 www.allstate.com

Condensed Consolidated Financial Statements

The Allstate Corporation and Subsidiaries

Condensed Consolidated Statements of Financial Position (unaudited)

($ in millions, except par value data)	June 30, 2022		December 31, 2021
Assets
Investments
Fixed income securities, at fair value (amortized cost, net $44,027 and $41,376)	$	41,282	$	42,136
Equity securities, at fair value (cost $4,410 and $6,016)	4,681		7,061
Mortgage loans, net	848		821
Limited partnership interests	7,943		8,018
Short-term, at fair value (amortized cost $4,384 and $4,009)	4,384		4,009
Other investments, net	1,917		2,656
Total investments	61,055		64,701
Cash	766		763
Premium installment receivables, net	8,824		8,364
Deferred policy acquisition costs	5,030		4,722
Reinsurance and indemnification recoverables, net	9,376		10,024
Accrued investment income	359		339
Deferred income taxes	118		—
Property and equipment, net	975		939
Goodwill	3,496		3,502
Other assets, net	6,351		6,086
Total assets	96,350		99,440
Liabilities
Reserve for property and casualty insurance claims and claims expense	34,276		33,060
Reserve for future policy benefits	1,295		1,273
Contractholder funds	908		908
Unearned premiums	21,026		19,844
Claim payments outstanding	1,216		1,123
Deferred income taxes	—		833
Other liabilities and accrued expenses	9,635		9,296
Long-term debt	7,970		7,976
Total liabilities	76,326		74,313
Commitments and Contingent Liabilities (Note 12)
Equity
Preferred stock and additional capital paid-in, $1 par value, 25 million shares authorized, 81.0 thousand shares issued and outstanding, $2,025 aggregate liquidation preference	1,970		1,970
Common stock, $.01 par value, 2.0 billion shares authorized and 900 million issued, 271 million and 281 million shares outstanding	9		9
Additional capital paid-in	3,740		3,722
Retained income	52,412		53,294
Treasury stock, at cost (629 million and 619 million shares)	(35,858)		(34,471)
Accumulated other comprehensive income:
Unrealized net capital gains and losses	(2,138)		598
Unrealized foreign currency translation adjustments	(62)		(15)
Unamortized pension and other postretirement prior service credit	42		72
Total accumulated other comprehensive income (“AOCI”)	(2,158)		655
Total Allstate shareholders’ equity	20,115		25,179
Noncontrolling interest	(91)		(52)
Total equity	20,024		25,127
Total liabilities and equity	$	96,350	$	99,440

See notes to condensed consolidated financial statements.

Second Quarter 2022 Form 10-Q 3

Condensed Consolidated Financial Statements

The Allstate Corporation and Subsidiaries

Condensed Consolidated Statements of Shareholders’ Equity (unaudited)

($ in millions, except per share data)	Three months ended June 30,				Six months ended June 30,
	2022		2021		2022		2021
Preferred stock par value	$	—	$	—	$	—	$	—
Preferred stock additional capital paid-in
Balance, beginning of period	1,970		2,170		1,970		1,970
Acquisition	—		—		—		450
Preferred stock redemption	—		—		—		(250)
Balance, end of period	1,970		2,170		1,970		2,170
Common stock par value	9		9		9		9
Common stock additional capital paid-in
Balance, beginning of period	3,706		3,596		3,722		3,498
Forward contract on accelerated share repurchase agreement	—		—		—		113
Equity incentive plans activity	34		72		18		57
Balance, end of period	3,740		3,668		3,740		3,668
Retained income
Balance, beginning of period	53,688		51,107		53,294		52,767
Net (loss) income	(1,015)		1,631		(359)		244
Dividends on common stock (declared per share of $0.85, $0.81, $1.70 and $1.62)	(234)		(244)		(470)		(490)
Dividends on preferred stock	(27)		(30)		(53)		(57)
Balance, end of period	52,412		52,464		52,412		52,464
Treasury stock
Balance, beginning of period	(35,208)		(31,886)		(34,471)		(31,331)
Shares acquired	(683)		(562)		(1,477)		(1,163)
Shares reissued under equity incentive plans, net	33		54		90		100
Balance, end of period	(35,858)		(32,394)		(35,858)		(32,394)
Accumulated other comprehensive income
Balance, beginning of period	(953)		1,823		655		3,304
Change in unrealized net capital gains and losses	(1,143)		484		(2,736)		(1,016)
Change in unrealized foreign currency translation adjustments	(47)		(3)		(47)		31
Change in unamortized pension and other postretirement prior service credit	(15)		(14)		(30)		(29)
Balance, end of period	(2,158)		2,290		(2,158)		2,290
Total Allstate shareholders’ equity	20,115		28,207		20,115		28,207
Noncontrolling interest
Balance, beginning of period	(74)		(27)		(52)		—
Acquisition	—		7		—		(14)
Change in unrealized net capital gains and losses	(8)		(1)		(20)		(1)
Noncontrolling (loss) income	(9)		6		(19)		—
Balance, end of period	(91)		(15)		(91)		(15)
Total equity	$	20,024	$	28,192	$	20,024	$	28,192

 See notes to condensed consolidated financial statements.

4 www.allstate.com

Condensed Consolidated Financial Statements

The Allstate Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows (unaudited)

($ in millions)	Six months ended June 30,
	2022		2021
Cash flows from operating activities
Net (loss) income	$	(378)	$	244
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and other non-cash items	452		571
Net (gains) losses on investments and derivatives	1,000		(902)
Pension and other postretirement remeasurement (gains) losses	12		(444)
Amortization of deferred gain on reinsurance