Reinsurance and Indemnification

12 Months Ended

Dec. 31, 2024


Note 12			Reinsurance and Indemnification


Effects of reinsurance and indemnification programs on property and casualty premiums written and earned and accident and health insurance premiums and contract charges
	For the years ended December 31,
($ in millions)	2024		2023		2022
Property and casualty insurance premiums written
Direct	$	60,574	$	54,632	$	50,065
Assumed	352		396		245
Ceded	(2,203)		(2,018)		(1,824)
Property and casualty insurance premiums written, net of recoverables	$	58,723	$	53,010	$	48,486

Property and casualty insurance premiums earned
Direct	$	58,221	$	52,301	$	47,552
Assumed	377		358		221
Ceded	(2,210)		(1,989)		(1,869)
Property and casualty insurance premiums earned, net of recoverables	$	56,388	$	50,670	$	45,904

Accident and health insurance premiums and contract charges
Direct	$	1,945	$	1,865	$	1,838
Assumed	26		28		31
Ceded	(50)		(47)		(37)
Accident and health insurance premiums and contract charges, net of recoverables	$	1,921	$	1,846	$	1,832


Effects of reinsurance ceded and indemnification programs on property and casualty insurance claims and claims expense and accident, health and other policy benefits
($ in millions)	For the years ended December 31,
	2024		2023		2022
Property and casualty insurance claims and claims expense	$	(1,716)	$	(633)	$	(1,600)
Accident, health and other policy benefits	(36)		(44)		15


Reinsurance and indemnification recoverables, net
	As of December 31,
($ in millions)	2024		2023
Property and casualty
Paid and due from reinsurers and indemnitors	$	285	$	254
Unpaid losses estimated (including IBNR)	8,602		8,396
Total property and casualty	$	8,887	$	8,650
Accident and health insurance	37		159
Total	$	8,924	$	8,809


Rollforward of credit loss allowance for reinsurance recoverables
	For the years ended December 31,
($ in millions)	2024		2023
Property and casualty (1) (2)
Beginning balance	$	(62)	$	(62)
Increase in the provision for credit losses	(1)		(1)
Write-offs	—		1
Ending balance	$	(63)	$	(62)

Accident and health insurance
Beginning balance	$	(3)	$	(3)

Decrease in the provision for credit losses	2		—
Write-offs	—		—
Reinsurance recoverables allowance reclassified to held for sale	1		—
Ending Balance	$	—	$	(3)

(1)Primarily related to Run-off Property-Liability reinsurance ceded.

(2)Indemnification recoverables are considered collectible based on the industry pool and facility enabling legislation.

Property and casualty reinsurance and indemnifications recoverables

Property and casualty programs are grouped by the following characteristics:

1.Indemnification programs - industry pools, facilities or associations that are governed by state insurance statutes or regulations or the federal government.

2.Catastrophe reinsurance programs - reinsurance protection for catastrophe exposure nationwide and by specific states, as applicable.

3.Other reinsurance programs - reinsurance protection for asbestos, environmental and other liability exposures as well as commercial lines, including the shared economy program currently in run-off.

Property and casualty reinsurance is in place for the Allstate Protection, Run-off Property-Liability and Protection Services segments. The Company purchases reinsurance after evaluating the financial condition of the reinsurer as well as the terms and price of coverage.

Indemnification programs The Company participates in state-based industry pools or facilities mandating participation by insurers offering certain coverage in their state, including the Michigan Catastrophic Claims Association (“MCCA”), the New Jersey Property-Liability Insurance Guaranty Association (“PLIGA”), the North Carolina Reinsurance Facility (“NCRF”) and the Florida Hurricane Catastrophe Fund (“FHCF”). When the Company pays qualifying claims under the coverage indemnified by a state’s pool or facility, the Company is reimbursed for the qualifying claim losses and expenses. Each state pool or facility may assess participating companies to collect sufficient amounts to meet its total indemnification requirements. The enabling legislation for each state’s pool or facility compels the pool or facility only to indemnify participating companies for qualifying claim losses and expenses; the state pool or facility does not underwrite the coverage or take on the ultimate risk of the indemnified business. As a pass through, these pools or facilities manage the receipt of assessments paid by participating companies and payment of indemnified amounts for covered claims presented by participating companies. The Company has not had any credit losses related to these indemnification programs.

State-based industry pools or facilities

Michigan Catastrophic Claims Association The MCCA is a statutory indemnification mechanism for member insurers’ qualifying Personal Injury Protection (“PIP”) claims paid for the unlimited lifetime medical benefits above the applicable retention level for qualifying injuries from automobile, motorcycle and commercial vehicle accidents. Indemnification recoverables on paid and unpaid claims, including IBNR, as of December 31, 2024 and 2023 include $6.48 billion and $6.42 billion, respectively, from the MCCA for its indemnification obligation.

The MCCA is funded by annually assessing participating member companies actively writing motor vehicle coverage in Michigan on a per vehicle basis. The MCCA’s calculation of the annual assessment is based upon the total of members’ actuarially determined present value of expected payments on lifetime claims by all persons expected to be catastrophically injured in that year and ultimately qualify for MCCA reimbursement, its operating expenses, and adjustments for the amount of excesses or deficiencies in prior assessments. The assessment is incurred by the Company as policies are written and recovered as a component of premiums from the Company’s customers.

The MCCA indemnifies qualifying claims of all current and former member companies (whether or not actively writing motor vehicle coverage in Michigan) for qualifying claims and claims expenses incurred while the member companies were actively writing the mandatory PIP coverage in Michigan. Member companies actively writing automobile coverage in Michigan include the MCCA annual assessments in determining the level of premiums to charge insureds in the state.

As required for member companies by the MCCA, the Company reports covered paid and unpaid claims to the MCCA when estimates of loss for a reported claim are expected to exceed the retention level, the claims involve certain types of severe injuries, or there are litigation demands received suggesting the claim value exceeds certain thresholds. The retention level is adjusted upward every other MCCA fiscal year by the lesser of 6% or the increase in the consumer price index. The retention level is $635 thousand per claim for the fiscal two-years ending June 30, 2025 compared to $600 thousand per claim for the fiscal two-years ending June 30, 2023.

The MCCA is obligated to fund the ultimate liability of member companies’ qualifying claims and claim expenses. The MCCA does not underwrite the insurance coverage or hold any underwriting risk.

The MCCA indemnifies members as qualifying claims are paid and billed by members to the MCCA. Unlimited lifetime covered losses result in significant levels of ultimate incurred claim reserves being recorded by member companies along with offsetting indemnification recoverables. Disputes with claimants over coverage on certain reported claims can result in additional losses, which may be recoverable from the MCCA, excluding litigation expenses.

The MCCA annual assessments fund current operations, member company reimbursements and any deficit. The MCCA prepares statutory-basis financial statements in conformity with accounting practices prescribed or permitted by the State of Michigan Department of Insurance and Financial Services (“MI DOI”). The MI DOI has granted the MCCA a statutory permitted practice that expires on June 30, 2025 to discount its liabilities for loss and loss adjustment expense. As of June 30, 2024, the date of its most recent annual financial report, the MCCA had cash and invested assets of $22.37 billion and an

accumulated deficit of $2.10 billion. The permitted practice reduced the accumulated deficit by $47.30 billion.

New Jersey Property-Liability Insurance Guaranty Association PLIGA serves as the statutory administrator of the Unsatisfied Claim and Judgment Fund (“UCJF”), Workers’ Compensation Security Fund and the New Jersey Surplus Lines Insurance Guaranty Fund.

In addition to its insolvency protection responsibilities, PLIGA reimburses insurers for unlimited excess medical benefits (“EMBs”) paid in connection with PIP claims in excess of $75,000 for policies issued or renewed prior to January 1, 1991, and limited EMB claims in excess of $75,000 and capped at $250,000 for policies issued or renewed on or after January 1, 1991, to December 31, 2003.

Assessments paid to PLIGA for the EMB program totaled $8 million in 2024. The amounts of paid and unpaid recoverables as of December 31, 2024 and 2023 were $370 million and $326 million, respectively.

PLIGA annually assesses all admitted property and casualty insurers writing covered lines in New Jersey for PLIGA indemnification and expenses. PLIGA assessments may be recouped as a surcharge on premiums collected. PLIGA does not ultimately retain underwriting risk as it assesses member companies for their expected qualifying losses to provide funding for payment of its indemnification obligation to member companies for their actual losses. As a pass through, PLIGA facilitates these transactions of receipt of assessments paid by member companies and payment to member companies for covered claims presented by them for indemnification. As of December 31, 2023, the date of its most recent annual financial report, PLIGA had a fund balance of $301 million.

As statutory administrator of the UCJF, PLIGA provides compensation to qualified claimants for PIP, bodily injury, or death caused by private passenger automobiles operated by uninsured or “hit and run” drivers. The UCJF also provides private passenger pedestrian PIP benefits when no other coverage is available.

PLIGA annually collects a UCJF assessment from all admitted property and casualty insurers writing motor vehicle liability insurance in New Jersey for UCJF indemnification and expenses. UCJF assessments can be expensed as losses recoverable in rates as appropriate. As of December 31, 2023, the date of its most recent annual financial report, the UCJF fund had a balance of $69 million.

North Carolina Reinsurance Facility The NCRF provides automobile liability insurance to drivers that private market insurers are not otherwise willing to insure. All insurers licensed to write automobile insurance in North Carolina are members of the NCRF. Premiums, losses and expenses are assigned to the NCRF. North Carolina law allows the NCRF to recoup operating losses for certain insureds through a surcharge to policyholders. As of September 30, 2024, the NCRF reported $52 million in members’ equity. The

NCRF implemented a recoupment surcharge on all private passenger and commercial fleet policies effective October 1, 2024, through September 30, 2025. The NCRF results are shared by the member companies in proportion to their respective North Carolina automobile liability writings. As of December 31, 2024, our NCRF recoverables on paid claims was $97 million and recoverables on unpaid claims was $359 million. Paid recoverable balances, if covered, are typically settled within sixty days of monthly filing.

Florida Hurricane Catastrophe Fund Allstate subsidiaries Castle Key Insurance Company (“CKIC”) and Castle Key Indemnity Company (together with CKIC, “Castle Key”), Integon National Insurance Company and Century-National Insurance Company participate in the mandatory coverage provided by the FHCF and therefore have access to reimbursement for certain qualifying Florida hurricane losses from the FHCF. The companies have exposure to assessments and pay annual premiums to the FHCF for this reimbursement protection. The FHCF has the authority to issue bonds to pay its obligations to participating insurers in excess of its capital balances. Payment of these bonds is funded by emergency assessments on all property and casualty premiums in the state, except workers’ compensation, medical malpractice, accident and health insurance and policies written under the National Flood Insurance Program (“NFIP”). The FHCF emergency assessments are limited to 6% of premiums per year beginning the first year in which reimbursements require the issuance of a revenue bond, and up to a total of 10% of premiums per year for assessments in the second and subsequent years, if required to fund additional bonds. The FHCF has not issued an emergency assessment since 2015.

Annual premiums earned and paid to the FHCF were $23 million, $28 million and $24 million in 2024, 2023 and 2022, respectively. Qualifying losses were $(1) million in 2024 including final settlements related to Hurricane Michael recoveries, $(6) million in 2023 including final settlements related to Hurricane Irma recoveries and $74 million in 2022. The Company has access to reimbursement provided by the FHCF for 90% of qualifying personal property losses that exceed its current retention of $98 million for the two largest hurricanes and $33 million for other hurricanes, up to a maximum total of $205 million, effective from June 1, 2024 to May 31, 2025. The amounts recoverable from the FHCF totaled $73 million and $82 million as of December 31, 2024 and 2023, respectively.

Federal Government - National Flood Insurance Program NFIP is a program administered by the Federal Emergency Management Agency (“FEMA”) whereby the Company sells and services NFIP flood insurance policies as an agent of FEMA and receives fees for its services. The Company is fully indemnified for claims and claim expenses and does not retain any ultimate risk for the indemnified business. The federal government is obligated to pay all claims and certain allocated loss adjustment expenses in accordance with the arrangement.

Congressional authorization for the NFIP is periodically evaluated and may be subjected to freezes, including when the federal government experiences a shutdown. FEMA has a NFIP reinsurance program to manage the future exposure of the NFIP through the transfer of risk to private reinsurance companies and capital market investors. Congress must periodically renew the funding of the program as well as consider reforms to the program that would be incorporated in legislation to reauthorize the NFIP. On December 21, 2024, the president signed legislation passed by Congress that extends the NFIP authorization until March 14, 2025. As of September 30, 2024, the NFIP owes $20.5 billion to the U.S. Treasury.

The amounts recoverable as of December 31, 2024 and 2023 were $279 million and $76 million, respectively. Annual premiums earned and paid to NFIP include $368 million, $327 million and $319 million in 2024, 2023 and 2022, respectively. Qualifying losses incurred that are ceded to NFIP include $618 million, $102 million and $435 million in 2024, 2023 and 2022, respectively.

Catastrophe reinsurance The Company’s reinsurance program is designed to provide reinsurance protection for catastrophes resulting from multiple perils including hurricanes, windstorms, hail, tornadoes, winter storms, wildfires, earthquakes and fires following earthquakes.

•The Company purchases reinsurance from traditional reinsurance companies as well as the insurance-linked securities (“ILS”) market.

•The majority of the Company’s program comprises multi-year contracts, primarily placed in the traditional reinsurance market, such that generally one-third of the program is renewed every year.

•Coverage is generally purchased on a broad geographic, product line and multiple peril loss basis.

•Florida personal lines property is covered by a separate agreement, as the risk of loss is different and the Company’s subsidiaries operating in this state are separately capitalized.

•When applicable, reinsurance reinstatement premiums are recognized in the same period as the loss event that gave rise to the reinstatement premium and are recorded in claims and claims expense in the Consolidated Statements of Operations.

The Company’s current catastrophe reinsurance program utilizes the Company’s risk and return framework which is intended to provide shareholders with an acceptable return on the risks assumed in the property business, and to reduce variability of earnings, while providing protection to customers. This framework incorporates the Company’s robust economic capital model and is informed by catastrophe risk models including hurricanes, earthquakes and wildfires. The Company monitors risk both in the aggregate and by peril, while also evaluating model performance relative to experience

and its expectations of catastrophe risk trends. As of December 31, 2024, the modeled 1-in-100 probable maximum loss for hurricane, earthquake and wildfire perils is approximately $3.5 billion, net of reinsurance. The Company continually reviews its aggregate risk appetite and the cost and availability of reinsurance to optimize the risk and return profile of this exposure. The following catastrophe reinsurance agreements are in effect as of December 31, 2024.

The Nationwide Excess Catastrophe Reinsurance Program (the “Nationwide Program”) provides coverage up to $7.90 billion of loss less retentions of $750 million to $1.00 billion for the first event of the program year and is subject to the percentage of reinsurance placed in each of its agreements. Multiple wildfires can be defined by the Nationwide Program as a single event occurrence based on a combination of when the events occur and their proximity to one another. Property business in the state of Florida is excluded from this program. Separate reinsurance agreements address the distinct needs of separately capitalized legal entities. The Nationwide Program includes reinsurance agreements with both the traditional and ILS markets as described below:

•Core traditional market per occurrence agreements provide limits totaling $5.09 billion for catastrophe losses arising out of multiple perils and are comprised of the following:

–Multi-year contracts providing combined $3.25 billion of placed limits exhausting at $4.25 billion, with a 5% co-participation and one annual reinstatement. One third of the contracts are structured with a $750 million retention for the first event and $500 million retention for subsequent events with remaining contracts attaching at a $1.00 billion retention.

–Two eight-year term contracts providing combined $236 million of placed limits, both with a 5% co-participation and one reinstatement of limits over each contract’s term.

–Six single-year contracts providing combined $1.61 billion of placed limits filling capacity around the multi-year and ILS placements, with two contracts providing one reinstatement of limits.

•ILS placements provide $1.95 billion of placed limits, with no reinstatement of limits, and are comprised of the following:

–Six contracts providing occurrence coverage of $1.30 billion of placed limits, reinsuring losses in all states except Florida caused by named storms, earthquakes and fire following earthquakes, severe weather, wildfires, and other naturally occurring or man-made events determined to be a catastrophe by the Company.

–Two contracts providing occurrence and aggregate coverage of $325 million of placed

limits, also provide that for each annual period beginning April 1, Allstate declared catastrophes to personal lines property and automobile business can be aggregated to erode the aggregate retention and qualify for coverage under the aggregate limits. Recoveries are limited to the ultimate net loss from the reinsured event.

–Two contracts, providing aggregate coverage of $325 million of placed limits.

Florida program Our 2024 program provides coverage for property policies of CKIC and certain affiliate companies for Florida catastrophe events up to $890 million of losses less a $30 million retention. The Florida program includes reinsurance agreements placed in the traditional market, the FHCF and the ILS market as follows:

• Traditional market placements comprise reinsurance limits for losses to personal lines property in Florida arising out of multiple perils. One contract provides $235 million of reinsurance limit with reinstatement, and one contract provides $75 million of reinsurance limit for a second event. A portion of the traditional market placements provide coverage for perils not covered by the FHCF contracts, which only cover hurricanes.

•ILS placements provide $625 million of reinsurance limits for qualifying losses to personal lines property in Florida caused by a named storm event, a severe weather event, an earthquake event, a fire event, a volcanic eruption event, or a meteorite impact event.

•Inuring contracts include three mandatory FHCF contracts providing $206 million of limits for qualifying losses to personal lines property in Florida caused by storms the National Hurricane Center declares to be hurricanes. The three contracts are 90% placed.

National General Lender Services Standalone Program is placed in the traditional market and provides $265 million of coverage, subject to a $70 million retention, with one reinstatement of limits. Inuring contracts include the National General FHCF contract providing $71 million of limits in excess of a $36 million retention, 90% placed.

National General Reciprocal Excess Catastrophe Reinsurance Contracts are placed in the traditional market and provide $212 million of placed limits, subject to a $7 million retention, with one reinstatement of limits.

Kentucky Earthquake Excess Catastrophe Reinsurance Contract is placed in the traditional market and provides $27 million, subject to a $2 million retention with one reinstatement of limits.

Canada Catastrophe Excess of Loss Reinsurance Contract is placed in the traditional market and provides CAD 355 million of placed limits, subject to a CAD 75 million retention, with one reinstatement of limits.

The Company has not experienced credit losses on its catastrophe reinsurance programs. The total cost of the property catastrophe reinsurance program was $1.11 billion, $1.02 billion and $788 million in 2024, 2023 and 2022, respectively.

Other reinsurance programs The Company’s other reinsurance programs relate to commercial lines and asbestos, environmental and other liability exposures. The largest reinsurance recoverable balance the Company had outstanding was $175 million and $180 million from Lloyd’s of London as of December 31, 2024 and 2023, respectively. These programs also include reinsurance recoverables of $77 million and $67 million from Pacific Valley Insurance Company, Inc. as of December 31, 2024 and 2023, respectively.