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, 2023

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.)

 

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
Depositary Shares represent 1/1,000th of a share of 7.375% Noncumulative Preferred Stock, Series J	ALL PR J	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 17, 2023, the registrant had 261,573,754 common shares, $.01 par value, outstanding.

The Allstate Corporation

Index to Quarterly Report on Form 10-Q

June 30, 2023

Part I Financial Information		Page
Item 1. Financial Statements (unaudited) as of June 30, 2023 and December 31, 2022 and for the Three Month and Six Month Periods Ended June 30, 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	49
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Highlights	50
	Property-Liability Operations	54
	Segment results
	Allstate Protection	56
	Run-off Property-Liability	65
	Protection Services	67
	Allstate Health and Benefits	69
	Investments	71
	Capital Resources and Liquidity	78
	Forward-Looking Statements	81
Item 4. Controls and Procedures		81
Part II Other Information
Item 1. Legal Proceedings		82
Item 1A. Risk Factors		82
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		82
Item 5. Other Information		82
Item 6. Exhibits		83

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,
	2023		2022		2023		2022
Revenues
Property and casualty insurance premiums	$	12,470	$	11,362	$	24,643	$	22,343
Accident and health insurance premiums and contract charges	453		465		916		933
Other revenue	597		563		1,158		1,123
Net investment income	610		562		1,185		1,156
Net gains (losses) on investments and derivatives	(151)		(733)		(137)		(1,000)
Total revenues	13,979		12,219		27,765		24,555
Costs and expenses
Property and casualty insurance claims and claims expense	11,727		9,367		22,053		17,189
Accident, health and other policy benefits	258		265		523		533
Amortization of deferred policy acquisition costs	1,789		1,618		3,533		3,226
Operating costs and expenses	1,786		1,850		3,502		3,752
Pension and other postretirement remeasurement (gains) losses	(40)		259		(93)		12
Restructuring and related charges	27		1		54		13
Amortization of purchased intangibles	82		87		163		174
Interest expense	98		83		184		166
Total costs and expenses	15,727		13,530		29,919		25,065
Loss from operations before income tax expense	(1,748)		(1,311)		(2,154)		(510)
Income tax benefit	(373)		(289)		(458)		(138)
Net loss	(1,375)		(1,022)		(1,696)		(372)
Less: Net loss attributable to noncontrolling interest	(23)		(9)		(24)		(19)
Net loss attributable to Allstate	(1,352)		(1,013)		(1,672)		(353)
Less: Preferred stock dividends	37		27		63		53
Net loss applicable to common shareholders	$	(1,389)	$	(1,040)	$	(1,735)	$	(406)
Earnings per common share:
Net loss applicable to common shareholders per common share - Basic	$	(5.29)	$	(3.80)	$	(6.59)	$	(1.47)
Weighted average common shares - Basic	262.6		273.8		263.1		275.9
Net loss applicable to common shareholders per common share - Diluted	$	(5.29)	$	(3.80)	$	(6.59)	$	(1.47)
Weighted average common shares - Diluted	262.6		273.8		263.1		275.9

See notes to condensed consolidated financial statements.

Second 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 June 30,				Six months ended June 30,
	2023		2022		2023		2022
Net loss	$	(1,375)	$	(1,022)	$	(1,696)	$	(372)
Other comprehensive (loss) income, after-tax
Changes in:
Unrealized net capital gains and losses	(272)		(1,144)		410		(2,738)
Unrealized foreign currency translation adjustments	28		(47)		78		(47)
Unamortized pension and other postretirement prior service credit	(5)		(15)		(9)		(30)
Discount rate for reserve for future policy benefits	8		85		(1)		180
Other comprehensive (loss) income, after-tax	(241)		(1,121)		478		(2,635)
Comprehensive loss	(1,616)		(2,143)		(1,218)		(3,007)
Less: Comprehensive loss attributable to noncontrolling interest	(24)		(17)		(20)		(39)
Comprehensive loss attributable to Allstate	$	(1,592)	$	(2,126)	$	(1,198)	$	(2,968)

 

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, 2023		December 31, 2022
Assets
Investments
Fixed income securities, at fair value (amortized cost, net $47,904 and $45,370)	$	45,550	$	42,485
Equity securities, at fair value (cost $2,231 and $4,253)	2,290		4,567
Mortgage loans, net	823		762
Limited partnership interests	8,150		8,114
Short-term, at fair value (amortized cost $5,138 and $4,174)	5,137		4,173
Other investments, net	1,718		1,728
Total investments	63,668		61,829
Cash	699		736
Premium installment receivables, net	9,713		9,165
Deferred policy acquisition costs	5,607		5,442
Reinsurance and indemnification recoverables, net	9,151		9,619
Accrued investment income	471		423
Deferred income taxes	480		382
Property and equipment, net	945		987
Goodwill	3,502		3,502
Other assets, net	6,278		5,904
Total assets	100,514		97,989
Liabilities
Reserve for property and casualty insurance claims and claims expense	40,531		37,541
Reserve for future policy benefits	1,339		1,322
Contractholder funds	881		879
Unearned premiums	23,355		22,299
Claim payments outstanding	1,387		1,268
Other liabilities and accrued expenses	9,700		9,353
Debt	7,949		7,964
Total liabilities	85,142		80,626
Commitments and Contingent Liabilities (Note 14)
Equity
Preferred stock and additional capital paid-in, $1 par value, 25 million shares authorized, 82.0 thousand and 81.0 thousand shares issued and outstanding, $2,050 and $2,025 aggregate liquidation preference	2,001		1,970
Common stock, $.01 par value, 2.0 billion shares authorized and 900 million issued, 262 million and 263 million shares outstanding	9		9
Additional capital paid-in	3,786		3,788
Retained income	48,766		50,970
Treasury stock, at cost (638 million and 637 million shares)	(37,131)		(36,857)
Accumulated other comprehensive income (loss):
Unrealized net capital gains and losses	(1,845)		(2,255)
Unrealized foreign currency translation adjustments	(87)		(165)
Unamortized pension and other postretirement prior service credit	20		29
Discount rate for reserve for future policy benefits	(2)		(1)
Total accumulated other comprehensive income	(1,914)		(2,392)
Total Allstate shareholders’ equity	15,517		17,488
Noncontrolling interest	(145)		(125)
Total equity	15,372		17,363
Total liabilities and equity	$	100,514	$	97,989

    

See notes to condensed consolidated financial statements.

Second 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 June 30,				Six months ended June 30,
	2023		2022		2023		2022
Preferred stock par value	$	—	$	—	$	—	$	—
Preferred stock additional capital paid-in
Balance, beginning of period	1,970		1,970		1,970		1,970
Preferred stock issuance, net of issuance costs	587		—		587		—
Preferred stock redemption	(556)		—		(556)		—
Balance, end of period	2,001		1,970		2,001		1,970
Common stock par value	9		9		9		9
Common stock additional capital paid-in
Balance, beginning of period	3,780		3,706		3,788		3,722
Equity incentive plans activity	6		34		(2)		18
Balance, end of period	3,786		3,740		3,786		3,740
Retained income
Balance, beginning of period	50,388		53,686		50,970		53,288
Net loss	(1,352)		(1,013)		(1,672)		(353)
Dividends on common stock (declared per share of $0.89, $0.85, $1.78 and $1.70)	(233)		(234)		(469)		(470)
Dividends on preferred stock	(37)		(27)		(63)		(53)
Balance, end of period	48,766		52,412		48,766		52,412
Treasury stock
Balance, beginning of period	(36,980)		(35,208)		(36,857)		(34,471)
Shares acquired	(154)		(683)		(307)		(1,477)
Shares reissued under equity incentive plans, net	3		33		33		90
Balance, end of period	(37,131)		(35,858)		(37,131)		(35,858)
Accumulated other comprehensive income (loss)
Balance, beginning of period	(1,673)		(1,088)		(2,392)		426
Change in unrealized net capital gains and losses	(272)		(1,144)		410		(2,738)
Change in unrealized foreign currency translation adjustments	28		(47)		78		(47)
Change in unamortized pension and other postretirement prior service credit	(5)		(15)		(9)		(30)
Change in discount rate for reserve for future policy benefits	8		85		(1)		180
Balance, end of period	(1,914)		(2,209)		(1,914)		(2,209)
Total Allstate shareholders’ equity	15,517		20,064		15,517		20,064
Noncontrolling interest
Balance, beginning of period	(121)		(74)		(125)		(52)
Change in unrealized net capital gains and losses	(1)		(8)		4		(20)
Noncontrolling loss	(23)		(9)		(24)		(19)
Balance, end of period	(145)		(91)		(145)		(91)
Total equity	$	15,372	$	19,973	$	15,372	$	19,973

 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,
	2023		2022
Cash flows from operating activities
Net loss	$	(1,696)	$	(372)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation, amortization and other non-cash items	363		452
Net (gains) losses on investments and derivatives	137		1,000
Pension and other postretirement remeasurement (gains) losses	(93)		12
Changes in:
Policy benefits and other insurance reserves	2,917		1,222
Unearned premiums	1,032		1,201
Deferred policy acquisition costs	(162)		(315)
Premium installment receivables, net	(532)		(664)
Reinsurance recoverables, net	468		645
Income taxes	(538)		(288)
Other operating assets and liabilities	(126)		(788)
Net cash provided by operating activities	1,770		2,105
Cash flows from investing activities
Proceeds from sales
Fixed income securities	12,454		19,928
Equity securities	4,183		7,622
Limited partnership interests	516		633
Other investments	81		926
Investment collections
Fixed income securities	992		259
Mortgage loans	36		60
Other investments	53		110
Investment purchases
Fixed income securities	(15,875)		(22,907)
Equity securities	(1,717)		(6,028)
Limited partnership interests	(424)		(590)
Mortgage loans	(100)		(89)
Other investments	(140)		(232)
Change in short-term and other investments, net	(986)		398
Purchases of property and equipment, net	(141)		(228)
Proceeds from sale of property and equipment	19		—
Net cash used in investing activities	(1,049)		(138)
Cash flows from financing activities
Proceeds from issuance of debt	743		—
Repayment of debt	(750)		—
Proceeds from issuance of preferred stock	587		—
Redemption of preferred stock	(575)		—
Contractholder fund deposits	66		69
Contractholder fund withdrawals	(16)		(21)
Dividends paid on common stock	(459)		(466)
Dividends paid on preferred stock	(53)		(53)
Treasury stock purchases	(307)		(1,485)
Shares reissued under equity incentive plans, net	10		55
Other	(4)		(63)
Net cash used in financing activities	(758)		(1,964)
Net (decrease) increase in cash	(37)		3
Cash at beginning of period	736		763
Cash at end of period	$	699	$	766

See notes to condensed consolidated financial statements.

Second Quarter 2023 Form 10-Q 5

Notes to Condensed Consolidated Financial Statements

The Allstate Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 1 General

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 June 30, 2023 and for the three and six month periods ended June 30, 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.

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 are amortized on a simplified basis. Also, the Company’s reserve for future policy benefits and DAC are 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 was 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 transition date. The decrease in retained income primarily related 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.

6 www.allstate.com

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.

Second Quarter 2023 Form 10-Q 7

Notes to Condensed Consolidated Financial Statements

Impacts of the adoption on the financial statements

Condensed Consolidated Statements of Operations
	As reported		Impact of change		As adjusted
($ in millions, except per share data)	Three months ended June 30, 2022
Revenues
Accident and health insurance premiums and contract charges	$	466	$	(1)	$	465
Total revenues	12,220		(1)		12,219
Costs and expenses
Accident, health and other policy benefits	269		(4)		265
Amortization of deferred policy acquisition costs	1,619		(1)		1,618
Total costs and expenses	13,535		(5)		13,530
Loss from operations before income tax expense	(1,315)		4		(1,311)
Income tax benefit	(291)		2		(289)
Net loss	(1,024)		2		(1,022)
Net loss attributable to Allstate	(1,015)		2		(1,013)
Net loss applicable to common shareholders	$	(1,042)	$	2	$	(1,040)
Earnings per common share:
Net loss applicable to common shareholders per common share - Basic	$	(3.81)	$	0.01	$	(3.80)
Net loss applicable to common shareholders per common share - Diluted	$	(3.81)	$	0.01	$	(3.80)
	Six months ended June 30, 2022
Revenues
Accident and health insurance premiums and contract charges	$	935	$	(2)	$	933
Total revenues	24,557		(2)		24,555
Costs and expenses
Accident, health and other policy benefits	538		(5)		533
Amortization of deferred policy acquisition costs	3,231		(5)		3,226
Total costs and expenses	25,075		(10)		25,065
Loss from operations before income tax expense	(518)		8		(510)
Income tax benefit	(140)		2		(138)
Net loss	(378)		6		(372)
Net loss attributable to Allstate	(359)		6		(353)
Net loss applicable to common shareholders	$	(412)	$	6	$	(406)
Earnings per common share:
Net loss applicable to common shareholders per common share - Basic	$	(1.49)	$	0.02	$