all-20230331

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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

For the quarterly period ended March 31, 2023

☐ 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 5.100% 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 April 17, 2023, the registrant had 262,851,915 common shares, $.01 par value, outstanding.

The Allstate Corporation

Index to Quarterly Report on Form 10-Q

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 March 31,
	2023		2022
Revenues
Property and casualty insurance premiums	$	12,173	$	10,981
Accident and health insurance premiums and contract charges	463		468
Other revenue	561		560
Net investment income	575		594
Net gains (losses) on investments and derivatives	14		(267)
Total revenues	13,786		12,336

Costs and expenses
Property and casualty insurance claims and claims expense	10,326		7,822

Accident, health and other policy benefits	265		268
Amortization of deferred policy acquisition costs	1,744		1,608
Operating costs and expenses	1,716		1,902
Pension and other postretirement remeasurement (gains) losses	(53)		(247)
Restructuring and related charges	27		12
Amortization of purchased intangibles	81		87

Interest expense	86		83
Total costs and expenses	14,192		11,535

(Loss) income from operations before income tax expense	(406)		801

Income tax (benefit) expense	(85)		151

Net (loss) income	(321)		650

Less: Net loss attributable to noncontrolling interest	(1)		(10)

Net (loss) income attributable to Allstate	(320)		660

Less: Preferred stock dividends	26		26

Net (loss) income applicable to common shareholders	$	(346)	$	634

Earnings per common share:
Net (loss) income applicable to common shareholders per common share - Basic	$	(1.31)	$	2.28
Weighted average common shares - Basic	263.5		278.1
Net (loss) income applicable to common shareholders per common share - Diluted	$	(1.31)	$	2.25
Weighted average common shares - Diluted	263.5		281.8

See notes to condensed consolidated financial statements.

First Quarter 2023 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 March 31,
	2023		2022
Net (loss) income	$	(321)	$	650

Other comprehensive income (loss), after-tax
Changes in:
Unrealized net capital gains and losses	682		(1,594)
Unrealized foreign currency translation adjustments	50		—
Unamortized pension and other postretirement prior service credit	(4)		(15)
Discount rate for reserve for future policy benefits	(9)		95
Other comprehensive income (loss), after-tax	719		(1,514)

Comprehensive income (loss)	398		(864)
Less: Comprehensive income (loss) attributable to noncontrolling interest	4		(22)
Comprehensive income (loss) attributable to Allstate	$	394	$	(842)

See notes to condensed consolidated financial statements.

Condensed Consolidated Financial Statements

The Allstate Corporation and Subsidiaries

Condensed Consolidated Statements of Financial Position (unaudited)


($ in millions, except par value data)	March 31, 2023		December 31, 2022
Assets
Investments
Fixed income securities, at fair value (amortized cost, net $46,120 and $45,370)	$	44,103	$	42,485
Equity securities, at fair value (cost $2,147 and $4,253)	2,174		4,567
Mortgage loans, net	781		762
Limited partnership interests	7,971		8,114
Short-term, at fair value (amortized cost $6,722 and $4,174)	6,722		4,173
Other investments, net	1,724		1,728
Total investments	63,475		61,829
Cash	662		736
Premium installment receivables, net	9,483		9,165
Deferred policy acquisition costs	5,471		5,442
Reinsurance and indemnification recoverables, net	9,528		9,619
Accrued investment income	436		423
Deferred income taxes	345		382
Property and equipment, net	971		987
Goodwill	3,502		3,502
Other assets, net	5,758		5,904
Total assets	99,631		97,989
Liabilities
Reserve for property and casualty insurance claims and claims expense	38,644		37,541
Reserve for future policy benefits	1,338		1,322
Contractholder funds	878		879
Unearned premiums	22,499		22,299
Claim payments outstanding	1,333		1,268

Other liabilities and accrued expenses	9,114		9,353
Debt	8,452		7,964
Total liabilities	82,258		80,626
Commitments and Contingent Liabilities (Note 14)
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, 263 million and 263 million shares outstanding	9		9
Additional capital paid-in	3,780		3,788
Retained income	50,388		50,970
Treasury stock, at cost (637 million and 637 million shares)	(36,980)		(36,857)
Accumulated other comprehensive income:
Unrealized net capital gains and losses	(1,573)		(2,255)
Unrealized foreign currency translation adjustments	(115)		(165)
Unamortized pension and other postretirement prior service credit	25		29
Discount rate for reserve for future policy benefits	(10)		(1)
Total accumulated other comprehensive income	(1,673)		(2,392)
Total Allstate shareholders’ equity	17,494		17,488
Noncontrolling interest	(121)		(125)
Total equity	17,373		17,363
Total liabilities and equity	$	99,631	$	97,989

See notes to condensed consolidated financial statements.

First Quarter 2023 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 March 31,
	2023		2022




Preferred stock par value	$	—	$	—






Preferred stock additional capital paid-in	1,970		1,970

Common stock par value	9		9

Common stock additional capital paid-in
Balance, beginning of period	3,788		3,722

Equity incentive plans activity	(8)		(16)
Balance, end of period	3,780		3,706

Retained income
Balance, beginning of period	50,970		53,288

Net (loss) income	(320)		660
Dividends on common stock (declared per share of $0.89 and $0.85)	(236)		(236)
Dividends on preferred stock	(26)		(26)


Balance, end of period	50,388		53,686






Treasury stock
Balance, beginning of period	(36,857)		(34,471)
Shares acquired	(153)		(794)
Shares reissued under equity incentive plans, net	30		57
Balance, end of period	(36,980)		(35,208)

Accumulated other comprehensive income
Balance, beginning of period	(2,392)		426
Change in unrealized net capital gains and losses	682		(1,594)
Change in unrealized foreign currency translation adjustments	50		—
Change in unamortized pension and other postretirement prior service credit	(4)		(15)
Change in discount rate for reserve for future policy benefits	(9)		95
Balance, end of period	(1,673)		(1,088)
Total Allstate shareholders’ equity	17,494		23,075

Noncontrolling interest
Balance, beginning of period	(125)		(52)

Change in unrealized net capital gains and losses	5		(12)
Noncontrolling loss	(1)		(10)
Balance, end of period	(121)		(74)
Total equity	$	17,373	$	23,001

See notes to condensed consolidated financial statements.

Condensed Consolidated Financial Statements

The Allstate Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows (unaudited)


($ in millions)	Three months ended March 31,
	2023		2022
Cash flows from operating activities
Net (loss) income	$	(321)	$	650

Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, amortization and other non-cash items	177		236
Net (gains) losses on investments and derivatives	(14)		267

Pension and other postretirement remeasurement (gains) losses	(53)		(247)

Changes in:
Policy benefits and other insurance reserves	1,080		(111)
Unearned premiums	199		390
Deferred policy acquisition costs	(29)		(103)
Premium installment receivables, net	(317)		(502)
Reinsurance recoverables, net	91		333
Income taxes	(125)		93
Other operating assets and liabilities	(87)		(574)
Net cash provided by operating activities	601		432
Cash flows from investing activities
Proceeds from sales
Fixed income securities	7,008		12,400
Equity securities	3,739		5,216
Limited partnership interests	414		300

Other investments	55		208
Investment collections
Fixed income securities	646		104
Mortgage loans	22		3
Other investments	25		49
Investment purchases
Fixed income securities	(8,424)		(13,220)
Equity securities	(1,187)		(3,624)
Limited partnership interests	(226)		(216)
Mortgage loans	(41)		(37)
Other investments	(73)		(186)
Change in short-term and other investments, net	(2,675)		114
Purchases of property and equipment, net	(79)		(130)



Net cash (used in) provided by investing activities	(796)		981
Cash flows from financing activities
Proceeds from issuance of long-term debt	744		—
Redemption and repayment of debt	(250)		—


Contractholder fund deposits	33		34
Contractholder fund withdrawals	(9)		(9)
Dividends paid on common stock	(224)		(230)
Dividends paid on preferred stock	(26)		(26)
Treasury stock purchases	(153)		(802)
Shares reissued under equity incentive plans, net	6		17

Other	—		(30)
Net cash provided by (used in) financing activities	121		(1,046)
Net (decrease) increase in cash	(74)		367
Cash at beginning of period	736		763
Cash at end of period	$	662	$	1,130

See notes to condensed consolidated financial statements.

First Quarter 2023 Form 10-Q 5

Notes to Condensed Consolidated Financial Statements

The Allstate Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Basis of presentation

The accompanying condensed consolidated financial statements include the accounts of The Allstate Corporation (the “Corporation”) and its wholly owned subsidiaries, primarily Allstate Insurance Company (“AIC”), a property and casualty insurance company (collectively referred to as the “Company” or “Allstate”) and variable interest entities (“VIEs”) in which the Company is considered a primary beneficiary. These condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

The condensed consolidated financial statements and notes as of March 31, 2023 and for the three month periods ended March 31, 2023 and 2022 are unaudited. The condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring accruals) which are, in the opinion of management, necessary for the fair presentation of the financial position, results of operations and cash flows for the interim periods.

These condensed consolidated financial statements and notes should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2022. The results of operations for the interim periods should not be considered indicative of results to be expected for the full year. All significant intercompany accounts and transactions have been eliminated.

To reflect the application of the new guidance to all in-scope long-duration insurance contracts, certain amounts in the condensed consolidated financial statements and notes for 2022 have been recast.

Macroeconomic impacts

The Novel Coronavirus Pandemic or COVID-19 (“Coronavirus”) and subsequent U.S. government fiscal and monetary policies have and may continue to effect economic activity through longer-term impacts such as supply chain disruptions, labor shortages and other macroeconomic factors that have increased inflation and affected our operations. These factors may continue to significantly affect results of operations, financial condition and liquidity. The impact from the pandemic and the ongoing effects should be considered when comparing the current period to prior periods.

Adopted accounting standard

Accounting for Long-Duration Insurance Contracts Effective January 1, 2023, the Company adopted the Financial Accounting Standards Board (”FASB”) guidance revising the accounting for certain long-duration insurance contracts using the modified retrospective approach to the transition date of January 1, 2021.

Under the new guidance, measurement assumptions, including those for mortality, morbidity and policy lapses, are required to be reviewed at least annually, and updated as appropriate. In addition, reserves under the new guidance are required to be discounted using an upper-medium grade fixed income instrument yield that is updated through other comprehensive income (“OCI”) at each reporting date. Additionally, deferred policy acquisition costs (“DAC”) for all long-duration products will be amortized on a simplified basis. Also, the Company’s reserve for future policy benefits and DAC will be subject to new disclosure guidance.

In addition, the Company met the conditions included in Accounting Standards Update No. 2022-05, Transition for Sold Contracts, and elected to not apply the new guidance for contracts that were part of the 2021 sales of Allstate Life Insurance Company (“ALIC”) and Allstate Life Insurance Company of New York (“ALNY”).


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

The decrease in AOCI is primarily attributable to a change in the discount rate used in measuring the reserve for future policy benefits for traditional life contracts and other long-term products with guaranteed terms from a portfolio-based rate at contract issuance to an upper-medium grade fixed income-based rate at the reporting date. The decrease in retained income primarily relates to certain cohorts of long-term contracts whose expected net premiums exceeded expected gross premiums which resulted in an increase in reserves and a decrease in retained income equal to the present value of expected future benefits less the present value of expected future premiums at the transition date.

Notes to Condensed Consolidated Financial Statements

Transition disclosures 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.


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.

Impacts of the adoption on the financial statements


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

First Quarter 2023 Form 10-Q 7

Notes to Condensed Consolidated Financial Statements


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)


Part I Financial Information		Page

Item 1. Financial Statements (unaudited) as of March 31, 2023 and December 31, 2022 and for the Three Month Periods Ended March 31, 2023 and 2022

	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	46

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

	Highlights	47
	Property-Liability Operations	51
	Segment results
	Allstate Protection	53
	Run-off Property-Liability	60
	Protection Services	62
	Allstate Health and Benefits	64
	Investments	66
	Capital Resources and Liquidity	74

	Forward-Looking Statements	76

Item 4. Controls and Procedures		76

Part II Other Information
Item 1. Legal Proceedings		77
Item 1A. Risk Factors		77
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		77

Item 6. Exhibits		78


Note 1			General