all-20220930

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 September 30, 2022

☐ 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.)

3100 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 October 17, 2022, the registrant had 265,209,574 common shares, $.01 par value, outstanding.

The Allstate Corporation

Index to Quarterly Report on Form 10-Q

September 30, 2022


Part I Financial Information		Page

Item 1. Financial Statements (unaudited) as of September 30, 2022 and December 31, 2021 and for the Three Month and Nine Month Periods Ended September 30, 2022 and 2021

	Condensed Consolidated Statements of Operations	1
	Condensed Consolidated Statements of Comprehensive Income (Loss)	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	45

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

	Highlights	46
	Property-Liability Operations	51
	Segment results
	Allstate Protection	53
	Run-off Property-Liability	62
	Protection Services	65
	Allstate Health and Benefits	67
	Investments	69
	Capital Resources and Liquidity	77
	Recent Developments	79
	Forward-Looking Statements	80

Item 4. Controls and Procedures		80

Part II Other Information
Item 1. Legal Proceedings		81
Item 1A. Risk Factors		81
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		81

Item 6. Exhibits		82

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 September 30,				Nine months ended September 30,
	2022		2021		2022		2021
Revenues
Property and casualty insurance premiums	$	11,661	$	10,615	$	34,004	$	31,366
Accident and health insurance premiums and contract charges	463		460		1,398		1,362
Other revenue	561		536		1,684		1,585
Net investment income	690		764		1,846		2,446
Net gains (losses) on investments and derivatives	(167)		105		(1,167)		818
Total revenues	13,208		12,480		37,765		37,577

Costs and expenses
Property and casualty insurance claims and claims expense	10,073		8,264		27,262		21,514
Shelter-in-Place Payback expense	—		—		—		29
Accident, health and other policy benefits	263		277		801		771
Amortization of deferred policy acquisition costs	1,682		1,582		4,913		4,650
Operating costs and expenses	1,842		1,890		5,594		5,304
Pension and other postretirement remeasurement (gains) losses	79		40		91		(404)
Restructuring and related charges	14		23		27		145
Amortization of purchased intangibles	90		109		264		267


Interest expense	85		69		251		246
Total costs and expenses	14,128		12,254		39,203		32,522

(Loss) income from operations before income tax expense	(920)		226		(1,438)		5,055

Income tax (benefit) expense	(237)		20		(377)		1,008

Net (loss) income from continuing operations	(683)		206		(1,061)		4,047

Income (loss) from discontinued operations, net of tax	—		325		—		(3,272)

Net (loss) income	(683)		531		(1,061)		775

Less: Net loss attributable to noncontrolling interest	(15)		(7)		(34)		(7)

Net (loss) income attributable to Allstate	(668)		538		(1,027)		782

Less: Preferred stock dividends	26		30		79		87

Net (loss) income applicable to common shareholders	$	(694)	$	508	$	(1,106)	$	695

Earnings per common share applicable to common shareholders
Basic
Continuing operations	$	(2.58)	$	0.62	$	(4.04)	$	13.31
Discontinued operations	—		1.11		—		(10.98)
Total	$	(2.58)	$	1.73	$	(4.04)	$	2.33

Diluted
Continuing operations	$	(2.58)	$	0.62	$	(4.04)	$	13.11
Discontinued operations	—		1.09		—		(10.81)
Total	$	(2.58)	$	1.71	$	(4.04)	$	2.30

Weighted average common shares - Basic	268.7		293.1		273.5		298.1
Weighted average common shares - Diluted	268.7		297.9		273.5		302.6

See notes to condensed consolidated financial statements.

Third Quarter 2022 Form 10-Q 1

Condensed Consolidated Financial Statements

The Allstate Corporation and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income (Loss) (unaudited)


($ in millions)	Three months ended September 30,				Nine months ended September 30,
	2022		2021		2022		2021
Net (loss) income	$	(683)	$	531	$	(1,061)	$	775

Other comprehensive loss, after-tax
Changes in:
Unrealized net capital gains and losses	(789)		(336)		(3,525)		(1,352)
Unrealized foreign currency translation adjustments	(88)		(21)		(135)		10
Unamortized pension and other postretirement prior service credit	(8)		(15)		(38)		(44)
Other comprehensive loss, after-tax	(885)		(372)		(3,698)		(1,386)

Comprehensive (loss) income	(1,568)		159		(4,759)		(611)
Less: Comprehensive loss attributable to noncontrolling interest	(21)		(7)		(60)		(8)
Comprehensive (loss) income attributable to Allstate	$	(1,547)	$	166	$	(4,699)	$	(603)

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)	September 30, 2022		December 31, 2021
Assets
Investments
Fixed income securities, at fair value (amortized cost, net $45,468 and $41,376)	$	41,715	$	42,136
Equity securities, at fair value (cost $4,652 and $6,016)	4,723		7,061
Mortgage loans, net	833		821
Limited partnership interests	7,907		8,018
Short-term, at fair value (amortized cost $4,031 and $4,009)	4,030		4,009
Other investments, net	1,798		2,656
Total investments	61,006		64,701
Cash	786		763
Premium installment receivables, net	9,150		8,364
Deferred policy acquisition costs	5,273		4,722
Reinsurance and indemnification recoverables, net	9,961		10,024
Accrued investment income	389		339
Deferred income taxes	492		—
Property and equipment, net	1,008		939
Goodwill	3,502		3,502
Other assets, net	6,109		6,086


Total assets	97,676		99,440
Liabilities
Reserve for property and casualty insurance claims and claims expense	36,529		33,060
Reserve for future policy benefits	1,276		1,273
Contractholder funds	909		908
Unearned premiums	22,026		19,844
Claim payments outstanding	1,196		1,123
Deferred income taxes	—		833
Other liabilities and accrued expenses	10,212		9,296
Long-term debt	7,967		7,976


Total liabilities	80,115		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, 266 million and 281 million shares outstanding	9		9
Additional capital paid-in	3,765		3,722
Retained income	51,490		53,294

Treasury stock, at cost (634 million and 619 million shares)	(36,518)		(34,471)
Accumulated other comprehensive income:



Unrealized net capital gains and losses	(2,927)		598
Unrealized foreign currency translation adjustments	(150)		(15)
Unamortized pension and other postretirement prior service credit	34		72
Total accumulated other comprehensive income (“AOCI”)	(3,043)		655
Total Allstate shareholders’ equity	17,673		25,179
Noncontrolling interest	(112)		(52)
Total equity	17,561		25,127
Total liabilities and equity	$	97,676	$	99,440

See notes to condensed consolidated financial statements.

Third 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 September 30,				Nine months ended September 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	—		(200)		—		(450)
Balance, end of period	1,970		1,970		1,970		1,970

Common stock par value	9		9		9		9

Common stock additional capital paid-in
Balance, beginning of period	3,740		3,668		3,722		3,498
Forward contract on accelerated share repurchase agreement	—		—		—		113
Equity incentive plans activity	25		32		43		89
Balance, end of period	3,765		3,700		3,765		3,700

Retained income
Balance, beginning of period	52,412		52,464		53,294		52,767

Net (loss) income	(668)		538		(1,027)		782
Dividends on common stock (declared per share of $0.85, $0.81, $2.55 and $2.43)	(228)		(236)		(698)		(726)
Dividends on preferred stock	(26)		(30)		(79)		(87)


Balance, end of period	51,490		52,736		51,490		52,736






Treasury stock
Balance, beginning of period	(35,858)		(32,394)		(34,471)		(31,331)
Shares acquired	(665)		(1,227)		(2,142)		(2,390)
Shares reissued under equity incentive plans, net	5		17		95		117
Balance, end of period	(36,518)		(33,604)		(36,518)		(33,604)

Accumulated other comprehensive income
Balance, beginning of period	(2,158)		2,290		655		3,304

Change in unrealized net capital gains and losses	(789)		(336)		(3,525)		(1,352)
Change in unrealized foreign currency translation adjustments	(88)		(21)		(135)		10
Change in unamortized pension and other postretirement prior service credit	(8)		(15)		(38)		(44)


Balance, end of period	(3,043)		1,918		(3,043)		1,918
Total Allstate shareholders’ equity	17,673		26,729		17,673		26,729

Noncontrolling interest
Balance, beginning of period	(91)		(15)		(52)		—
Acquisition	—		—		—		(14)
Change in unrealized net capital gains and losses	(6)		—		(26)		(1)
Noncontrolling loss	(15)		(7)		(34)		(7)
Balance, end of period	(112)		(22)		(112)		(22)
Total equity	$	17,561	$	26,707	$	17,561	$	26,707

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)	Nine months ended September 30,
	2022		2021
Cash flows from operating activities
Net (loss) income	$	(1,061)	$	775

Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, amortization and other non-cash items	646		818
Net (gains) losses on investments and derivatives	1,167		(1,011)

Pension and other postretirement remeasurement (gains) losses	91		(404)
Amortization of deferred gain on reinsurance	—		(5)


Loss on disposition of operations, net of tax	—		3,754
Changes in:
Policy benefits and other insurance reserves	3,520		2,771
Unearned premiums	2,256