General (Tables)

3 Months Ended

Mar. 31, 2023


After-tax cumulative effect of change in accounting principle on transition date

($ in millions)	January 1, 2021

Decrease in retained income	$	21
Decrease in accumulated other comprehensive income (“AOCI”)	277
Total decrease in equity	$	298


Consolidated Statements of Operations
	Three months ended March 31, 2022
($ in millions, except per share data)	As reported		Impact of change		As adjusted
Revenues
Accident and health insurance premiums and contract charges	$	469	$	(1)	$	468
Total revenues	12,337		(1)		12,336

Costs and expenses
Accident, health and other policy benefits	269		(1)		268
Amortization of deferred policy acquisition costs	1,612		(4)		1,608

Total costs and expenses	11,540		(5)		11,535

Income from operations before income tax expense	797		4		801
Income tax expense	151		—		151
Net income	646		4		650

Net income attributable to Allstate	656		4		660

Net income applicable to common shareholders	$	630	$	4	$	634

Earnings per common share:
Net income applicable to common shareholders per common share - Basic	$	2.27	$	0.01	$	2.28
Net income applicable to common shareholders per common share - Diluted	$	2.24	$	0.01	$	2.25


Condensed Consolidated Statements of Comprehensive Income (unaudited)
	Three months ended March 31, 2022
($ in millions)	As reported		Impact of change		As adjusted
Net income	$	646	$	4	$	650

Other comprehensive income (loss), after-tax
Changes in:
Unrealized net capital gains and losses	(1,593)		(1)		(1,594)
Discount rate for reserve for future policy benefits	—		95		95
Other comprehensive loss, after-tax	(1,608)		94		(1,514)

Comprehensive loss	(962)		98		(864)
Comprehensive loss attributable to Allstate	$	(940)	$	98	$	(842)














Condensed Consolidated Statements of Financial Position (unaudited)
	December 31, 2022
($ in millions)	As reported		Impact of change		As adjusted
Assets
Deferred policy acquisition costs	$	5,418	$	24	$	5,442
Reinsurance and indemnification recoverables, net	9,606		13		9,619
Deferred income taxes	386		(4)		382
Other assets, net	5,905		(1)		5,904
Total assets	97,957		32		97,989
Liabilities
Reserve for future policy benefits	1,273		49		1,322
Contractholder funds	897		(18)		879
Unearned premiums	22,311		(12)		22,299

Total liabilities	80,607		19		80,626
Equity
Retained income	50,954		16		50,970
Accumulated other comprehensive income:
Unrealized net capital gains and losses	(2,253)		(2)		(2,255)
Discount rate for reserve for future policy benefits	—		(1)		(1)
Total AOCI	(2,389)		(3)		(2,392)
Total Allstate shareholders’ equity	17,475		13		17,488
Total equity	17,350		13		17,363
Total liabilities and equity	$	97,957	$	32	$	97,989


Condensed Consolidated Statements of Shareholders’ Equity (unaudited)
	Three months ended March 31, 2022
($ in millions)	As reported		Impact of change		As adjusted
















Retained income
Balance, beginning of period	$	53,294	$	(6)	$	53,288

Net income	656		4		660



Balance, end of period	53,688		(2)		53,686












Accumulated other comprehensive income (loss)
Balance, beginning of period	655		(229)		426

Change in unrealized net capital gains and losses	(1,593)		(1)		(1,594)


Change in discount rate for reserve for future policy benefits	—		95		95
Balance, end of period	(953)		(135)		(1,088)

Total Allstate shareholders’ equity	23,212		(137)		23,075
Total equity	$	23,138	$	(137)	$	23,001


Condensed Consolidated Statements of Cash Flows (unaudited)
	Three months ended March 31, 2022
($ in millions)	As reported		Impact of change		As adjusted
Cash flows from operating activities
Net income	$	646	$	4	$	650
Adjustments to reconcile net income to net cash provided by operating activities:







Changes in:
Policy benefits and other insurance reserves	(113)		2		(111)
Unearned premiums	392		(2)		390
Deferred policy acquisition costs	(99)		(4)		(103)
Reinsurance recoverables, net	334		(1)		333
Income taxes	92		1		93
Other operating assets and liabilities	(574)		—		(574)
Net cash provided by operating activities	$	432	$	—	$	432

Schedule of impact of adoption for reserve for future policy benefits

The following tables summarize the balance of and changes in the reserve for future policy benefits and DAC on January 1, 2021 upon the adoption of the guidance.


Impact of adoption for reserve for future policy benefits
( $ in millions)	Accident and health		Traditional life		Total
Pre-adoption 12/31/2020 balance (1)	$	728	$	311	$	1,039

Adjustments:
Effect of the remeasurement of the reserve at upper-medium grade fixed income-based rate (2)	232		153		385

Adjustments for contracts with net premiums in excess of gross premiums (3)	77		—		77
Total adjustments	309		153		462
Post-adoption 1/1/2021 balance	1,037		464		1,501
Less: reinsurance recoverables (4)	159		3		162
Post-adoption 1/1/2021 balance, after reinsurance recoverables	$	878	$	461	$	1,339

(1)Traditional life includes $11 million in reserves related to riders of traditional life insurance products reclassified from contractholder funds.

(2)Adjustment reflected with a corresponding decrease to AOCI.

(3)Adjustment reflected with a corresponding decrease to retained income.

(4)Represents post-adoption January 1, 2021 balance of reinsurance recoverables. Adjustments to reinsurance recoverables for accident and health products increased January 1, 2021 AOCI by $33 million due to the remeasurement of the reserve at upper-medium grade fixed income based rate and increased January 1, 2021 retained income by $51 million due to adjustments for contracts with net premiums in excess of gross premiums.


Rollforward of reserve for future policy benefits (1)
	Three months ended March 31,
	Accident and health				Traditional life				Total
($ in millions)	2023		2022		2023		2022		2023		2022
Present value of expected net premiums
Beginning balance	$	1,464	$	1,785	$	238	$	254	$	1,702	$	2,039
Beginning balance at original discount rate	1,549		1,604		246		215		1,795		1,819
Effect of changes in cash flow assumptions	—		—		—		—		—		—
Effect of actual variances from expected experience	(42)		(49)		5		20		(37)		(29)
Adjusted beginning balance	1,507		1,555		251		235		1,758		1,790
Issuances	199		173		17		4		216		177
Interest accrual	12		12		3		2		15		14
Net premiums collected	(95)		(103)		(12)		(11)		(107)		(114)
Lapses and withdrawals	—		—		—		—		—		—
Ending balance at original discount rate	1,623		1,637		259		230		1,882		1,867
Effect of changes in discount rate assumptions	(62)		65		(5)		20		(67)		85
Ending balance	1,561		1,702		254		250		1,815		1,952

Present value of expected future policy benefits
Beginning balance	2,229		2,796		524		673		2,753		3,469
Beginning balance at original discount rate	2,316		2,426		534		511		2,850		2,937
Effect of changes in cash flow assumptions	—		—		—		—		—		—
Effect of actual variances from expected experience	(47)		(53)		4		19		(43)		(34)
Adjusted beginning balance	2,269		2,373		538		530		2,807		2,903
Issuances	199		172		16		4		215		176
Interest accrual	19		19		6		5		25		24
Benefit payments	(99)		(110)		(12)		(8)		(111)		(118)
Lapses and withdrawals	—		—		—		—		—		—
Ending balance at original discount rate	2,388		2,454		548		531		2,936		2,985
Effect of changes in discount rate assumptions	(53)		175		(1)		94		(54)		269
Ending balance	$	2,335	$	2,629	$	547	$	625	$	2,882	$	3,254

Net reserve for future policy benefits (1)	$	774	$	927	$	293	$	375	$	1,067	$	1,302
Less: reinsurance recoverables	76		139		2		2		78		141
Net reserve for future policy benefits, after reinsurance recoverables	$	698	$	788	$	291	$	373	$	989	$	1,161

(1)Excludes $271 million and $264 million of reserves related to short-duration and other contracts as of March 31, 2023 and 2022, respectively.


Revenue and interest recognized in the condensed consolidated statements of operations
($ in millions)	Three months ended March 31,
		2023		2022
Revenues (1)
Accident and health		$	225	$	253
Traditional life		25		22
Total		$	250	$	275

Interest expense (2)
Accident and health		$	7	$	7
Traditional life		3		3
Total		$	10	$	10

(1) Total revenues reflects gross premiums used in the calculation for reserve for future policy benefits. Revenues included in Accident and health insurance premiums and contract charges on the Condensed Consolidated Statements of Operations reflect premium revenue recognized for traditional life insurance and long-duration and short-duration accident and health insurance contracts.

(2) Total interest expense presented as part of Accident, health and other policy benefits on the Condensed Consolidated Statements of Operations.

The following table provides the amount of undiscounted and discounted expected gross premiums and expected future benefits and expenses for nonparticipating traditional and limited-payment contracts.


	As of March 31,
	2023				2022
($ in millions)	Undiscounted		Discounted		Undiscounted		Discounted
Accident and health
Expected future gross premiums	$	5,068	$	3,671	$	5,219	$	4,137
Expected future benefits and expenses	3,351		2,335		3,453		2,629
Traditional life
Expected future gross premiums	721		500		652		500
Expected future benefits and expenses	1,008		547		972		625


Key assumptions used in calculating the reserve for future policy benefits
	As of March 31,
	Accident and health				Traditional life
	2023		2022		2023		2022
Weighted-average duration (in years)	4.1		4.2		14.1		13.9
Weighted-average interest rates
Interest accretion rate (discount rate at contract issuance)	5.09	%	6.69	%	5.50	%	5.70	%
Current discount rate (upper-medium grade fixed income yield)	4.58		2.76		5.03		3.54

Schedule of impact of adoption for DAC


Impact of adoption for DAC
( $ in millions)	Accident and health		Traditional life		Interest- sensitive life		Total
Pre-adoption 12/31/2020 balance	$	343	$	32	$	95	$	470
Adjustment for removal of impact of unrealized gains or losses (1)	—		—		2		2

Post-adoption 1/1/2021 balance	$	343	$	32	$	97	$	472

(1)Adjustment reflected with a corresponding increase to AOCI.


Deferred policy acquisition costs activity
($ in millions)	Accident and health		Traditional life		Interest-sensitive life		Total













Three months ended March 31, 2023
Accident and health insurance
Long-duration contracts
Beginning balance	$	322	$	79	$	101	$	502

Acquisition costs deferred	13		6		4		23
Amortization charged to income	(9)		(3)		(4)		(16)

Experience adjustment	(9)		—		—		(9)
Total	$	317	$	82	$	101	500
Short-duration contracts							28
Property and casualty							4,943
Balance, end of year							$	5,471














Three months ended March 31, 2022
Accident and health insurance
Long-duration contracts
Balance, beginning of year	$	339	$	47	$	90	$	476

Acquisition costs deferred	12		11		8		31
Amortization charged to income	(7)		(2)		(3)		(12)

Experience adjustment	(14)		—		—		(14)
Total	$	330	$	56	$	95	481
Short-duration contracts							20
Property and casualty							4,342
Balance, end of year							$	4,843