Variable Interest Entities

3 Months Ended

Mar. 31, 2025

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Variable Interest Entities

Note 8 Variable Interest Entities

Consolidated VIEs primarily include Adirondack, a New York reciprocal insurer, and Skylands, a New Jersey reciprocal insurer. The Reciprocal Exchanges are insurance carriers organized as unincorporated associations. The Company does not own the equity of the Reciprocal Exchanges, which is owned by their respective policyholders.

The results of the Reciprocal Exchanges are included in the Allstate Protection segment as the Company manages the business operations of the Reciprocal Exchanges and has the power to direct their activities that most significantly impact their economic performance.

Due to ongoing operating losses, the Company recorded a loss related to variable interests held in the Reciprocal Exchanges of $67 million in the first quarter of 2025 and $123 million in the first quarter of 2024. These losses have been reflected as capital transactions attributable to noncontrolling interest as the Company expects 100% of its interests in surplus notes and lines of credit to absorb expected losses of the Reciprocal Exchanges.

Adirondack has withdrawn and stopped writing new business and Skylands has withdrawn substantially all business and stopped writing new business. As the reciprocal insurers are dissolved, policyholders will share any residual unassigned surplus but are not subject to assessment for any deficit in unassigned surplus of the Reciprocal Exchanges. The assets of the Reciprocal Exchanges

can be used only to settle the obligations of the Reciprocal Exchanges and general creditors have no recourse to the Company.

The New York State Department of Financial Services approved the withdrawal plan for Adirondack to non-renew or cancel all policies effective as of December 31, 2024. Additionally, the Company waived all fees payable by Adirondack after July 1, 2024, excluding Loss Adjustment Expenses associated with individual claims.

The New Jersey Department of Banking and Insurance acknowledged the withdrawal plan filed on behalf of Skylands to withdraw from providing personal lines insurance, except dwelling fire and watercraft policies, beginning December 14, 2024. Skylands has a 100% quota share reinsurance agreement to cede all of Skylands’ business to the Company. Claims and claims expense ceded to the Company were $1 million and $12 million for the three months ended March 31, 2025 and 2024, respectively.

The Company received a management fee for the services provided to the Reciprocal Exchanges totaling zero and $10 million for the three months ended March 31, 2025 and 2024, respectively. The Reciprocal Exchanges generated $1 million and $61 million of earned premiums for the three months ended March 31, 2025 and 2024, respectively. Total costs and expenses were $2 million and $87 million for the three months ended March 31, 2025 and 2024, respectively.

Assets and liabilities of Reciprocal Exchanges
($ in millions)	March 31, 2025		December 31, 2024
Assets
Fixed income securities	$	3	$	47
Short-term investments	105		112
Premium installment and other receivables, net	1		9
Reinsurance recoverables, net	40		76
Other assets	11		25
Total assets	160		269
Liabilities
Reserve for property and casualty insurance claims and claims expense	159		214
Unearned premiums	1		22
Other liabilities and expenses	197		235
Total liabilities	$	357	$	471