19. Reporting Segments

Allstate management is organized around products and services, and this structure is considered in the identification of its four reportable segments. These segments and their respective operations are as follows:

Allstate Protection principally sells private passenger auto and homeowners insurance in the United States and Canada. Revenues from external customers generated outside the United States were $992 million, $892 million and $741 million in 2012, 2011 and 2010, respectively. The Company evaluates the results of this segment based upon underwriting results.

Discontinued Lines and Coverages consists of business no longer written by Allstate, including results from asbestos, environmental and other discontinued lines claims, and certain commercial and other businesses in run-off. This segment also includes the historical results of the commercial and reinsurance businesses sold in 1996. The Company evaluates the results of this segment based upon underwriting results.

Allstate Financial sells life insurance, voluntary accident and health insurance and retirement and investment products. The principal individual products are interest-sensitive, traditional and variable life insurance; voluntary accident and health insurance; and fixed annuities including deferred and immediate. The institutional product line, which the Company most recently offered in 2008, consists primarily of funding agreements sold to unaffiliated trusts that use them to back medium-term notes issued to institutional and individual investors. Allstate Financial had no revenues from external customers generated outside the United States in 2012, 2011 or 2010. The Company evaluates the results of this segment based upon operating income.

Corporate and Other comprises holding company activities and certain non-insurance operations.

Allstate Protection and Discontinued Lines and Coverages comprise Property-Liability. The Company does not allocate Property-Liability investment income, realized capital gains and losses, or assets to the Allstate Protection and Discontinued Lines and Coverages segments. Management reviews assets at the Property-Liability, Allstate Financial, and Corporate and Other levels for decision-making purposes.

The accounting policies of the reportable segments are the same as those described in Note 2. The effects of certain inter-segment transactions are excluded from segment performance evaluation and therefore are eliminated in the segment results.

Measuring segment profit or loss

The measure of segment profit or loss used by Allstate's management in evaluating performance is underwriting income (loss) for the Allstate Protection and Discontinued Lines and Coverages segments and operating income for the Allstate Financial and Corporate and Other segments. A reconciliation of these measures to net income (loss) is provided below.

Underwriting income (loss) is calculated as premiums earned, less claims and claims expenses ("losses"), amortization of DAC, operating costs and expenses, and restructuring and related charges as determined using GAAP.

Operating income (loss) is net income (loss) excluding:

•: realized capital gains and losses, after-tax, except for periodic settlements and accruals on non-hedge derivative instruments, which are reported with realized capital gains and losses but included in operating income (loss),
•: valuation changes on embedded derivatives that are not hedged, after-tax,
•: amortization of DAC and DSI, to the extent they resulted from the recognition of certain realized capital gains and losses or valuation changes on embedded derivatives that are not hedged, after-tax,
•: business combination expenses and the amortization of purchased intangible assets, after-tax,
•: gain (loss) on disposition of operations, after-tax, and
•: adjustments for other significant non-recurring, infrequent or unusual items, when (a) the nature of the charge or gain is such that it is reasonably unlikely to recur within two years, or (b) there has been no similar charge or gain within the prior two years.

Summarized revenue data for each of the Company's reportable segments for the years ended December 31 are as follows:

($ in millions)	2012			2011			2010

Revenues
Property-Liability
Property-liability insurance premiums
Standard auto	$	17,213		$	16,500		$	16,530
Non-standard auto		715			799			905

Total auto		17,928			17,299			17,435
Homeowners		6,359			6,200			6,078
Other personal lines		2,450			2,443			2,442

Allstate Protection		26,737			25,942			25,955
Discontinued Lines and Coverages		—			—			2

Total property-liability insurance premiums		26,737			25,942			25,957
Net investment income		1,326			1,201			1,189
Realized capital gains and losses		335			85			(321	)

Total Property-Liability		28,398			27,228			26,825
Allstate Financial
Life and annuity premiums and contract charges
Traditional life insurance		470			441			420
Immediate annuities with life contingencies		45			106			97
Accident and health insurance		653			643			621

Total life and annuity premiums		1,168			1,190			1,138
Interest-sensitive life insurance		1,055			1,015			991
Fixed annuities		18			33			39

Total contract charges		1,073			1,048			1,030

Total life and annuity premiums and contract charges		2,241			2,238			2,168
Net investment income		2,647			2,716			2,853
Realized capital gains and losses		(13	)		388			(517	)

Total Allstate Financial		4,875			5,342			4,504
Corporate and Other
Service fees		4			7			11
Net investment income		37			54			60
Realized capital gains and losses		5			30			11

Total Corporate and Other before reclassification of service fees		46			91			82
Reclassification of service fees ⁽¹⁾		(4	)		(7	)		(11	)

Total Corporate and Other		42			84			71

Consolidated revenues	$	33,315		$	32,654		$	31,400

(1): For presentation in the Consolidated Statements of Operations, service fees of the Corporate and Other segment are reclassified to operating costs and expenses.

Summarized financial performance data for each of the Company's reportable segments for the years ended December 31 are as follows:

($ in millions)	2012			2011			2010

Net income
Property-Liability
Underwriting income (loss)
Allstate Protection	$	1,253		$	(857	)	$	525
Discontinued Lines and Coverages		(53	)		(25	)		(31	)

Total underwriting income (loss)		1,200			(882	)		494
Net investment income		1,326			1,201			1,189
Income tax (expense) benefit on operations		(779	)		30			(426	)
Realized capital gains and losses, after-tax		221			54			(207	)
Gain on disposition of operations, after-tax		—			—			3

Property-Liability net income		1,968			403			1,053
Allstate Financial
Life and annuity premiums and contract charges		2,241			2,238			2,168
Net investment income		2,647			2,716			2,853
Periodic settlements and accruals on non-hedge derivative instruments		55			70			51
Contract benefits and interest credited to contractholder funds		(3,252	)		(3,378	)		(3,613	)
Operating costs and expenses and amortization of deferred policy acquisition costs		(926	)		(898	)		(804	)
Restructuring and related charges		—			(1	)		3
Income tax expense on operations		(236	)		(240	)		(214	)

Operating income		529			507			444
Realized capital gains and losses, after-tax		(8	)		250			(337	)
Valuation changes on embedded derivatives that are not hedged, after-tax		82			(12	)		—
DAC and DSI amortization related to realized capital gains and losses and valuation changes on embedded derivatives that are not hedged, after-tax		(42	)		(108	)		(29	)
DAC and DSI unlocking related to realized capital gains and losses, after-tax		4			3			(12	)
Reclassification of periodic settlements and accruals on non-hedge derivative instruments, after-tax		(36	)		(45	)		(33	)
Gain (loss) on disposition of operations, after-tax		12			(5	)		9

Allstate Financial net income		541			590			42
Corporate and Other
Service fees ⁽¹⁾		4			7			11
Net investment income		37			54			60
Operating costs and expenses ⁽¹⁾		(383	)		(403	)		(390	)
Income tax benefit on operations		136			126			128

Operating loss		(206	)		(216	)		(191	)
Realized capital gains and losses, after-tax		3			20			7
Business combination expenses, after-tax		—			(10	)		—

Corporate and Other net loss		(203	)		(206	)		(184	)

Consolidated net income	$	2,306		$	787		$	911

(1): For presentation in the Consolidated Statements of Operations, service fees of the Corporate and Other segment are reclassified to operating costs and expenses.

Additional significant financial performance data for each of the Company's reportable segments for the years ended December 31 are as follows:

($ in millions)	2012			2011			2010

Amortization of DAC
Property-Liability	$	3,483		$	3,477		$	3,517
Allstate Financial		401			494			290

Consolidated	$	3,884		$	3,971		$	3,807

Income tax expense
Property-Liability	$	893		$	1		$	314
Allstate Financial		241			289			(1	)
Corporate and Other		(134	)		(118	)		(124	)

Consolidated	$	1,000		$	172		$	189

Interest expense is primarily incurred in the Corporate and Other segment. Capital expenditures for long-lived assets are generally made in the Property-Liability segment. A portion of these long-lived assets are used by entities included in the Allstate Financial and Corporate and Other segments and, accordingly, are charged expenses in proportion to their use.

Summarized data for total assets and investments for each of the Company's reportable segments as of December 31 are as follows:

($ in millions)	2012		2011		2010

Assets
Property-Liability	$	52,201	$	49,791	$	47,536
Allstate Financial		72,368		72,526		78,732
Corporate and Other		2,378		2,876		4,232

Consolidated	$	126,947	$	125,193	$	130,500

Investments
Property-Liability	$	38,215	$	35,998	$	35,048
Allstate Financial		56,999		57,373		61,582
Corporate and Other		2,064		2,247		3,853

Consolidated	$	97,278	$	95,618	$	100,483

The balances above reflect the elimination of related party investments between segments.