Company Restructuring

3 Months Ended

Mar. 31, 2013

Company Restructuring

Company Restructuring

9.  Company Restructuring

The Company undertakes various programs to reduce expenses.  These programs generally involve a reduction in staffing levels, and in certain cases, office closures.  Restructuring and related charges include employee termination and relocation benefits, and post-exit rent expenses in connection with these programs, and non-cash charges resulting from pension benefit payments made to agents in connection with the 1999 reorganization of Allstate’s multiple agency programs to a single exclusive agency program.  The expenses related to these activities are included in the Condensed Consolidated Statements of Operations as restructuring and related charges, and totaled $26 million and $6 million during the three months ended March 31, 2013 and 2012, respectively.  Restructuring and related charges in the first quarter of 2013 primarily related to the technology organization, which is fundamentally changing its organizational structure leveraging centralization, global sourcing, automation and changes to oversight to meet contemporary business needs.

The following table presents changes in the restructuring liability during the three months ended March 31, 2013.

($ in millions)		Employee costs		Exit costs		Total liability
Balance as of December 31, 2012	$	6	$	3	$	9
Expense incurred		22		--		22
Payments applied against liability		(2)		(1)		(3)
Balance as of March 31, 2013	$	26	$	2	$	28

The payments applied against the liability for employee costs primarily reflect severance costs, and the payments for exit costs generally consist of post-exit rent expenses and contract termination penalties.  As of March 31, 2013, the cumulative amount incurred to date for active programs totaled $93 million for employee costs and $49 million for exit costs.