10-Q 1 a14-19924_110q.htm 10-Q

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

 

Washington, D.C. 20549

 

FORM 10-Q

 

/X/  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2014

 

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.)

 

 

 

2775 Sanders Road, Northbrook, Illinois

60062

 

 

(Address of principal executive offices)

(Zip Code)

 

 

(847) 402-5000

(Registrant’s telephone number, including area code)

 

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   X  

No ___

 

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).

 

 

Yes   X  

No ___

 

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,”  “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

  X  

Accelerated filer

____

 

 

 

 

Non-accelerated filer

        (Do not check if a smaller reporting company)

Smaller reporting company

____

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

 

 

Yes        

No   X  

 

 

As of October 15, 2014, the registrant had 419,433,284 common shares, $.01 par value, outstanding.

 



 

THE ALLSTATE CORPORATION

INDEX TO QUARTERLY REPORT ON FORM 10-Q

September 30, 2014

 

PART I

FINANCIAL INFORMATION

PAGE

 

 

 

Item 1.

Financial Statements

 

 

 

 

 

Condensed Consolidated Statements of Operations for the Three-Month and Nine-Month Periods Ended September 30, 2014 and 2013 (unaudited)

1

 

 

 

 

Condensed Consolidated Statements of Comprehensive Income for the Three-Month and Nine-Month Periods Ended September 30, 2014 and 2013 (unaudited)

2

 

 

 

 

Condensed Consolidated Statements of Financial Position as of September 30, 2014 (unaudited) and December 31, 2013

3

 

 

 

 

Condensed Consolidated Statements of Shareholders’ Equity for the Nine-Month Periods Ended September 30, 2014 and 2013 (unaudited)

4

 

 

 

 

Condensed Consolidated Statements of Cash Flows for the Nine-Month Periods Ended September 30, 2014 and 2013 (unaudited)

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

 

  Consolidated Net Income

51

 

  Property-Liability Highlights

52

 

  Allstate Protection Segment

55

 

  Discontinued Lines and Coverages Segment

66

 

  Property-Liability Investment Results

68

 

  Allstate Financial Highlights

69

 

  Allstate Financial Segment

70

 

  Investments Highlights

78

 

  Investments

78

 

  Capital Resources and Liquidity Highlights

85

 

  Capital Resources and Liquidity

85

 

 

 

Item 4.

Controls and Procedures

89

 

 

 

PART II

OTHER INFORMATION

 

 

 

 

Item 1.

Legal Proceedings

90

 

 

 

Item 1A.

Risk Factors

90

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

91

 

 

 

Item 6.

Exhibits

91

 



 

PART I.  FINANCIAL INFORMATION

 

ITEM I.  FINANCIAL INFORMATION

 

THE ALLSTATE CORPORATION AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

($ in millions, except per share data)

 

Three months ended

September 30,

 

Nine months ended

September 30,

 

 

2014

 

2013

 

2014

 

2013

 

 

 

 

 

 

 

 

 

 

 

(unaudited)

 

(unaudited)

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

Property-liability insurance premiums

$

7,307

 

$

6,972

 

$

21,575

 

$

20,604

 

Life and annuity premiums and contract charges

 

512

 

 

584

 

 

1,637

 

 

1,742

 

Net investment income

 

823

 

 

950

 

 

2,680

 

 

2,917

 

Realized capital gains and losses:

 

 

 

 

 

 

 

 

 

 

 

 

Total other-than-temporary impairment losses

 

(53

)

 

(96

)

 

(177

)

 

(178

)

Portion of loss recognized in other comprehensive income

 

--

 

 

8

 

 

(2

)

 

(7

)

Net other-than-temporary impairment losses recognized in earnings

 

(53

)

 

(88

)

 

(179

)

 

(185

)

Sales and other realized capital gains and losses

 

347

 

 

47

 

 

767

 

 

637

 

Total realized capital gains and losses

 

294

 

 

(41

)

 

588

 

 

452

 

 

 

8,936

 

 

8,465

 

 

26,480

 

 

25,715

 

Costs and expenses

 

 

 

 

 

 

 

 

 

 

 

 

Property-liability insurance claims and claims expense

 

4,909

 

 

4,427

 

 

14,810

 

 

13,628

 

Life and annuity contract benefits

 

433

 

 

498

 

 

1,334

 

 

1,427

 

Interest credited to contractholder funds

 

198

 

 

317

 

 

717

 

 

973

 

Amortization of deferred policy acquisition costs

 

1,030

 

 

1,026

 

 

3,100

 

 

2,933

 

Operating costs and expenses

 

1,068

 

 

937

 

 

3,185

 

 

3,129

 

Restructuring and related charges

 

3

 

 

13

 

 

13

 

 

59

 

Loss on extinguishment of debt

 

--

 

 

9

 

 

1

 

 

489

 

Interest expense

 

78

 

 

83

 

 

249

 

 

280

 

 

 

7,719

 

 

7,310

 

 

23,409

 

 

22,918

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss on disposition of operations

 

(27

)

 

(646

)

 

(77

)

 

(644

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations before income tax expense

 

1,190

 

 

509

 

 

2,994

 

 

2,153

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

409

 

 

193

 

 

968

 

 

694

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

781

 

 

316

 

 

2,026

 

 

1,459

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred stock dividends

 

31

 

 

6

 

 

75

 

 

6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income available to common shareholders

$

750

 

$

310

 

$

1,951

 

$

1,453

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income available to common shareholders per common share - Basic

$

1.77

 

$

0.67

 

$

4.49

 

$

3.10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares - Basic

 

424.5

 

 

461.1

 

 

435.0

 

 

468.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income available to common shareholders per common share - Diluted

$

1.74

 

$

0.66

 

$

4.42

 

$

3.07

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares - Diluted

 

431.2

 

 

467.1

 

 

441.6

 

 

473.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends declared per common share

$

0.28

 

$

0.25

 

$

0.84

 

$

0.75

 

 

See notes to condensed consolidated financial statements.

 

1



 

 

THE ALLSTATE CORPORATION AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

 

($ in millions)

 

Three months ended
September 30,

 

Nine months ended
September 30,

 

 

2014

 

2013

 

2014

 

2013

 

 

 

(unaudited)

 

 

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

$

781

 

$

316

 

$

2,026

 

$

1,459

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income (loss), after-tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Changes in:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized net capital gains and losses

 

(323

)

 

63

 

 

181

 

 

(1,120

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized foreign currency translation adjustments

 

(17

)

 

13

 

 

(20

)

 

(20

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrecognized pension and other postretirement benefit cost

 

12

 

 

684

 

 

31

 

 

775

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income (loss), after-tax

 

(328

)

 

760

 

 

192

 

 

(365

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income

$

453

 

$

1,076

 

$

2,218

 

$

1,094

 

 

See notes to condensed consolidated financial statements.

 

2



 

THE ALLSTATE CORPORATION AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

 

($ in millions, except par value data)

 

September 30,
2014

 

December 31,
2013

 

 

 

 

 

 

Assets

 

(unaudited)

 

 

 

Investments

 

 

 

 

 

 

Fixed income securities, at fair value (amortized cost $59,616 and $59,008)

$

62,313

 

$

60,910

 

Equity securities, at fair value (cost $3,877 and $4,473)

 

4,335

 

 

5,097

 

Mortgage loans

 

4,143

 

 

4,721

 

Limited partnership interests

 

4,348

 

 

4,967

 

Short-term, at fair value (amortized cost $2,463 and $2,393)

 

2,463

 

 

2,393

 

Other

 

3,119

 

 

3,067

 

Total investments

 

80,721

 

 

81,155

 

Cash

 

885

 

 

675

 

Premium installment receivables, net

 

5,604

 

 

5,237

 

Deferred policy acquisition costs

 

3,516

 

 

3,372

 

Reinsurance recoverables, net

 

7,555

 

 

7,621

 

Accrued investment income

 

595

 

 

624

 

Property and equipment, net

 

1,012

 

 

1,024

 

Goodwill

 

1,219

 

 

1,243

 

Other assets

 

2,682

 

 

1,937

 

Separate Accounts

 

4,521

 

 

5,039

 

Assets held for sale

 

--

 

 

15,593

 

Total assets

$

108,310

 

$

123,520

 

Liabilities

 

 

 

 

 

 

Reserve for property-liability insurance claims and claims expense

$

22,350

 

$

21,857

 

Reserve for life-contingent contract benefits

 

12,482

 

 

12,386

 

Contractholder funds

 

22,848

 

 

24,304

 

Unearned premiums

 

11,728

 

 

10,932

 

Claim payments outstanding

 

814

 

 

631

 

Deferred income taxes

 

1,076

 

 

635

 

Other liabilities and accrued expenses

 

4,967

 

 

5,156

 

Long-term debt

 

5,195

 

 

6,201

 

Separate Accounts

 

4,521

 

 

5,039

 

Liabilities held for sale

 

--

 

 

14,899

 

Total liabilities

 

85,981

 

 

102,040

 

Commitments and Contingent Liabilities (Note 12)

 

 

 

 

 

 

Equity

 

 

 

 

 

 

Preferred stock and additional capital paid-in, $1 par value, 25 million shares authorized, 72.2 thousand and 32.3 thousand shares issued and outstanding, $1,805 and $807.5 aggregate liquidation preference

 

1,746

 

 

780

 

Common stock, $.01 par value, 2.0 billion shares authorized and 900 million issued, 419 million and 449 million shares outstanding

 

9

 

 

9

 

Additional capital paid-in

 

3,059

 

 

3,143

 

Retained income

 

37,164

 

 

35,580

 

Deferred ESOP expense

 

(31

)

 

(31

)

Treasury stock, at cost (481 million and 451 million shares)

 

(20,856

)

 

(19,047

)

Accumulated other comprehensive income:

 

 

 

 

 

 

Unrealized net capital gains and losses:

 

 

 

 

 

 

Unrealized net capital gains and losses on fixed income securities with OTTI

 

70

 

 

50

 

Other unrealized net capital gains and losses

 

1,970

 

 

1,698

 

Unrealized adjustment to DAC, DSI and insurance reserves

 

(213

)

 

(102

)

Total unrealized net capital gains and losses

 

1,827

 

 

1,646

 

Unrealized foreign currency translation adjustments

 

18

 

 

38

 

Unrecognized pension and other postretirement benefit cost

 

(607

)

 

(638

)

Total accumulated other comprehensive income

 

1,238

 

 

1,046

 

Total shareholders’ equity

 

22,329

 

 

21,480

 

Total liabilities and shareholders’ equity

$

108,310

 

$

123,520

 

 

See notes to condensed consolidated financial statements.

 

3



 

THE ALLSTATE CORPORATION AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

 

($ in millions)

 

Nine months ended
September 30,

 

 

2014

 

2013

Preferred stock par value

 

(unaudited)

Balance, beginning of period

$

--

 

$

--

 

Preferred stock issuance

 

--

 

 

--

 

Balance, end of period

 

--

 

 

--

 

 

 

 

 

 

 

 

Preferred stock additional capital paid-in

 

 

 

 

 

 

Balance, beginning of period

 

780

 

 

--

 

Preferred stock issuance

 

966

 

 

650

 

Balance, end of period

 

1,746

 

 

650

 

 

 

 

 

 

 

 

Common stock

 

9

 

 

9

 

 

 

 

 

 

 

 

Additional capital paid-in

 

 

 

 

 

 

Balance, beginning of period

 

3,143

 

 

3,162

 

Forward contract on accelerated share repurchase agreement

 

(113

)

 

--

 

Equity incentive plans activity

 

29

 

 

(35

)

Balance, end of period

 

3,059

 

 

3,127

 

 

 

 

 

 

 

 

Retained income

 

 

 

 

 

 

Balance, beginning of period

 

35,580

 

 

33,783

 

Net income

 

2,026

 

 

1,459

 

Dividends on common stock

 

(367

)

 

(351

)

Dividends on preferred stock

 

(75

)

 

(6

)

Balance, end of period

 

37,164

 

 

34,885

 

 

 

 

 

 

 

 

Deferred ESOP expense

 

 

 

 

 

 

Balance, beginning of period

 

(31

)

 

(41

)

Payments

 

--

 

 

2

 

Balance, end of period

 

(31

)

 

(39

)

 

 

 

 

 

 

 

Treasury stock

 

 

 

 

 

 

Balance, beginning of period

 

(19,047

)

 

(17,508

)

Shares acquired

 

(2,054

)

 

(1,395

)

Shares reissued under equity incentive plans, net

 

245

 

 

241

 

Balance, end of period

 

(20,856

)

 

(18,662

)

 

 

 

 

 

 

 

Accumulated other comprehensive income

 

 

 

 

 

 

Balance, beginning of period

 

1,046

 

 

1,175

 

Change in unrealized net capital gains and losses

 

181

 

 

(1,120

)

Change in unrealized foreign currency translation adjustments

 

(20

)

 

(20

)

Change in unrecognized pension and other postretirement benefit cost

 

31

 

 

775

 

Balance, end of period

 

1,238

 

 

810

 

Total shareholders’ equity

$

22,329

 

$

20,780

 

 

See notes to condensed consolidated financial statements.

 

4



 

THE ALLSTATE CORPORATION AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

($ in millions)

 

Nine months ended
September 30,

 

 

2014

 

2013

Cash flows from operating activities

 

(unaudited)

Net income

$

2,026

 

$

1,459

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation, amortization and other non-cash items

 

277

 

 

246

 

Realized capital gains and losses

 

(588

)

 

(452

)

Loss on extinguishment of debt

 

1

 

 

489

 

Loss on disposition of operations

 

77

 

 

644

 

Interest credited to contractholder funds

 

717

 

 

973

 

Changes in:

 

 

 

 

 

 

Policy benefits and other insurance reserves

 

50

 

 

(787

)

Unearned premiums

 

822

 

 

670

 

Deferred policy acquisition costs

 

(189

)

 

(208

)

Premium installment receivables, net

 

(386

)

 

(300

)

Reinsurance recoverables, net

 

(110

)

 

294

 

Income taxes

 

175

 

 

455

 

Other operating assets and liabilities

 

(307

)

 

(412

)

Net cash provided by operating activities

 

2,565

 

 

3,071

 

Cash flows from investing activities

 

 

 

 

 

 

Proceeds from sales

 

 

 

 

 

 

Fixed income securities

 

27,648

 

 

15,354

 

Equity securities

 

5,263

 

 

2,231

 

Limited partnership interests

 

1,084

 

 

676

 

Mortgage loans

 

10

 

 

20

 

Other investments

 

292

 

 

93

 

Investment collections

 

 

 

 

 

 

Fixed income securities

 

2,787

 

 

4,879

 

Mortgage loans

 

868

 

 

783

 

Other investments

 

158

 

 

213

 

Investment purchases

 

 

 

 

 

 

Fixed income securities

 

(30,650

)

 

(16,645

)

Equity securities

 

(4,208

)

 

(2,565

)

Limited partnership interests

 

(892

)

 

(911

)

Mortgage loans

 

(218

)

 

(423

)

Other investments

 

(652

)

 

(880

)

Change in short-term investments, net

 

265

 

 

(544

)

Change in other investments, net

 

58

 

 

92

 

Purchases of property and equipment, net

 

(207

)

 

(116

)

Disposition (acquisition) of operations

 

378

 

 

(24

)

Net cash provided by investing activities

 

1,984

 

 

2,233

 

Cash flows from financing activities

 

 

 

 

 

 

Proceeds from issuance of long-term debt

 

--

 

 

2,267

 

Repayments of long-term debt

 

(1,006

)

 

(2,605

)

Proceeds from issuance of preferred stock

 

965

 

 

651

 

Contractholder fund deposits

 

926

 

 

1,608

 

Contractholder fund withdrawals

 

(2,831

)

 

(5,458

)

Dividends paid on common stock

 

(360

)

 

(237

)

Dividends paid on preferred stock

 

(56

)

 

--

 

Treasury stock purchases

 

(2,189

)

 

(1,385

)

Shares reissued under equity incentive plans, net

 

204

 

 

108

 

Excess tax benefits on share-based payment arrangements

 

22

 

 

33

 

Other

 

(14

)

 

(10

)

Net cash used in financing activities

 

(4,339

)

 

(5,028

)

Cash classified as held for sale

 

--

 

 

(13

)

Net increase in cash

 

210

 

 

263

 

Cash at beginning of period

 

675

 

 

806

 

Cash at end of period

$

885

 

$

1,069

 

 

See notes to condensed consolidated financial statements.

 

5



 

THE ALLSTATE CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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-liability insurance company with various property-liability and life and investment subsidiaries, including Allstate Life Insurance Company (“ALIC”) (collectively referred to as the “Company” or “Allstate”).

 

The condensed consolidated financial statements and notes as of September 30, 2014 and for the three-month and nine-month periods ended September 30, 2014 and 2013 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, 2013.  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.

 

Pending accounting standards

 

Accounting for Investments in Qualified Affordable Housing Projects

 

In January 2014, the Financial Accounting Standards Board (“FASB”) issued guidance which allows entities that invest in certain qualified affordable housing projects through limited liability entities the option to account for these investments using the proportional amortization method if certain conditions are met.  Under the proportional amortization method, the entity amortizes the initial cost of the investment in proportion to the tax credits and other tax benefits received and recognizes the net investment performance in the income statement as a component of income tax expense or benefit.  The guidance is effective for reporting periods beginning after December 15, 2014 and is to be applied retrospectively.  The impact of adoption is not expected to be material to the Company’s results of operations and financial position.

 

Revenue from Contracts with Customers

 

In May 2014, the FASB issued guidance which revises the criteria for revenue recognition.  Insurance contracts are excluded from the scope of the new guidance.  Under the guidance, the transaction price is attributed to underlying performance obligations in the contract and revenue is recognized as the entity satisfies the performance obligations and transfers control of a good or service to the customer.  Incremental costs of obtaining a contract may be capitalized to the extent the entity expects to recover those costs.  The guidance is effective for reporting periods beginning after December 15, 2016 and is to be applied retrospectively.  The Company is in the process of evaluating the impact of adoption, which is not expected to be material to the Company’s results of operations and financial position.

 

Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period

 

In June 2014, the FASB issued guidance which clarifies that a performance target that affects vesting and could be achieved after the requisite service period should be treated as a performance condition and should not be reflected in estimating the grant-date fair value of the award.  Compensation costs should reflect the amount attributable to the periods for which the requisite service has been rendered.  Total compensation expense recognized during and after the requisite service period (which may differ from the vesting period) should reflect the number of awards that are expected to vest and should be adjusted to reflect the number of awards that ultimately vest.  The guidance is effective for reporting periods beginning after December 15, 2015 and may be applied either prospectively or retrospectively.  The Company’s existing accounting policy for performance targets that affect the vesting of share-based payment awards is consistent with the proposed guidance and as such the impact of adoption is not expected to affect the Company’s results of operations or financial position.

 

6



 

2.  Earnings per Common Share

 

Basic earnings per common share is computed using the weighted average number of common shares outstanding, including unvested participating restricted stock units.  Diluted earnings per common share is computed using the weighted average number of common and dilutive potential common shares outstanding.  For the Company, dilutive potential common shares consist of outstanding stock options and unvested non-participating restricted stock units and contingently issuable performance stock awards.

 

The computation of basic and diluted earnings per common share is presented in the following table.

 

($ in millions, except per share data)

 

Three months ended
September 30,

 

Nine months ended
September 30,

 

 

2014

 

2013

 

2014

 

2013

Numerator:

 

 

 

 

 

 

 

 

Net income

$

781

$

316

$

2,026

$

1,459

Less: Preferred stock dividends

 

31

 

6

 

75

 

6

Net income available to common shareholders

$

750

$

310

$

1,951

$

1,453

 

 

 

 

 

 

 

 

 

Denominator:

 

 

 

 

 

 

 

 

Weighted average common shares outstanding

 

424.5

 

461.1

 

435.0

 

468.2

Effect of dilutive potential common shares:

 

 

 

 

 

 

 

 

Stock options

 

4.8

 

4.2

 

4.7

 

3.9

Restricted stock units (non-participating) and performance stock awards

 

1.9

 

1.8

 

1.9

 

1.7

Weighted average common and dilutive potential common shares outstanding

 

431.2

 

467.1

 

441.6

 

473.8

 

 

 

 

 

 

 

 

 

Earnings per common share - Basic

$

1.77

$

0.67

$

4.49

$

3.10

Earnings per common share - Diluted

$

1.74

$

0.66

$

4.42

$

3.07

 

The effect of dilutive potential common shares does not include the effect of options with an anti-dilutive effect on earnings per common share because their exercise prices exceed the average market price of Allstate common shares during the period or for which the unrecognized compensation cost would have an anti-dilutive effect.  Options to purchase 3.3 million and 8.4 million Allstate common shares, with exercise prices ranging from $49.96 to $62.42 and $41.16 to $62.42, were outstanding for the three-month periods ended September 30, 2014 and 2013, respectively, but were not included in the computation of diluted earnings per common share in those periods.  Options to purchase 4.5 million and 13.0 million Allstate common shares, with exercise prices ranging from $45.61 to $62.42 and $39.05 to $62.42, were outstanding for the nine-month periods ended September 30, 2014 and 2013, respectively, but were not included in the computation of diluted earnings per common share in those periods.

 

7



 

3.  Disposition

 

On April 1, 2014, the Company completed the sale of Lincoln Benefit Life Company (“LBL”), LBL’s life insurance business generated through independent master brokerage agencies, and all of LBL’s deferred fixed annuity and long-term care insurance business to Resolution Life Holdings, Inc.  The gross sale price was $797 million, representing $596 million of cash and the retention of tax benefits.  The loss on disposition increased by $28 million, pre-tax, ($29 million, after-tax) and $100 million, pre-tax, ($60 million, after-tax) in the three months and nine months ended September 30, 2014, respectively.  The loss on disposition in the three months ended September 30, 2014 included the finalization of certain tax balances and other adjustments.  The loss on disposition in the nine months ended September 30, 2014 included a $22 million, pre-tax, reduction in goodwill.

 

In conjunction with the sale, the Company was required to establish a trust relating to the business that LBL continues to cede to ALIC.  This trust is required to have assets greater than or equal to the statutory reserves ceded by LBL to ALIC, measured on a monthly basis.  As of September 30, 2014, the trust holds $5.08 billion of investments, which are reported in the statement of financial position.

 

The following table summarizes the assets and liabilities classified as held for sale as of December 31, 2013.

 

($ in millions)

 

 

 

 

 

 

 

Assets

 

 

 

Investments

 

 

 

Fixed income securities

$

10,167

 

Mortgage loans

 

1,367

 

Short-term investments

 

160

 

Other investments

 

289

 

Total investments

 

11,983

 

Cash

 

--

 

Deferred policy acquisition costs

 

743

 

Reinsurance recoverables, net

 

1,660

 

Accrued investment income

 

109

 

Other assets

 

79

 

Separate Accounts

 

1,701

 

Assets held for sale

 

16,275

 

Less: Loss accrual

 

(682)

 

Total assets held for sale

$

15,593

 

Liabilities

 

 

 

Reserve for life-contingent contract benefits

$

1,894

 

Contractholder funds

 

10,945

 

Unearned premiums

 

12

 

Deferred income taxes

 

151

 

Other liabilities and accrued expenses

 

196

 

Separate Accounts

 

1,701

 

Total liabilities held for sale

$

14,899

 

 

Included in shareholders’ equity was $85 million of accumulated other comprehensive income related to assets held for sale as of December 31, 2013.

 

4.  Supplemental Cash Flow Information

 

Non-cash modifications of certain mortgage loans, fixed income securities, limited partnership interests and other investments, as well as mergers completed with equity securities, totaled $105 million and $271 million for the nine months ended September 30, 2014 and 2013, respectively.  Non-cash financing activities include $46 million and $93 million related to the issuance of Allstate common shares for vested restricted stock units for the nine months ended September 30, 2014 and 2013, respectively.

 

8



 

Liabilities for collateral received in conjunction with the Company’s securities lending program and over-the-counter (“OTC”) and cleared derivatives are reported in other liabilities and accrued expenses or other investments.  The accompanying cash flows are included in cash flows from operating activities in the Condensed Consolidated Statements of Cash Flows along with the activities resulting from management of the proceeds, which are as follows:

 

($ in millions)

 

Nine months ended September 30,

 

 

2014

 

2013

Net change in proceeds managed

 

 

 

 

 

Net change in short-term investments

$

(162)

$

156

 

Operating cash flow (used) provided

 

(162)

 

156

 

Net change in cash

 

7

 

(3)

 

Net change in proceeds managed

$

(155)

$

153

 

 

 

 

 

 

 

Net change in liabilities

 

 

 

 

 

Liabilities for collateral, beginning of period

$

(624)

$

(808)

 

Liabilities for collateral, end of period

 

(779)

 

(655)

 

Operating cash flow provided (used)

$

155

$

(153)

 

 

5.  Investments

 

Fair values

 

The amortized cost, gross unrealized gains and losses and fair value for fixed income securities are as follows:

 

($ in millions)

 

Amortized

 

Gross unrealized

 

Fair

 

 

cost

 

Gains

 

Losses

 

value

September 30, 2014

 

 

 

 

 

 

 

 

 

U.S. government and agencies

$

4,181

$

132

$

(4)

$

4,309

 

Municipal

 

7,978

 

580

 

(23)

 

8,535

 

Corporate

 

39,329

 

1,930

 

(188)

 

41,071

 

Foreign government

 

1,597

 

97

 

(1)

 

1,693

 

Asset-backed securities (“ABS”)

 

4,691

 

50

 

(32)

 

4,709

 

Residential mortgage-backed securities (“RMBS”)

 

1,185

 

118

 

(14)

 

1,289

 

Commercial mortgage-backed securities (“CMBS”)

 

633

 

51

 

(3)

 

681

 

Redeemable preferred stock

 

22

 

4

 

--

 

26

 

Total fixed income securities

$

59,616

$

2,962

$

(265)

$

62,313

 

 

 

 

 

 

 

 

 

 

 

December 31, 2013

 

 

 

 

 

 

 

 

 

U.S. government and agencies

$

2,791

$

129

$

(7)

$

2,913

 

Municipal

 

8,446

 

364

 

(87)

 

8,723

 

Corporate

 

39,331

 

1,659

 

(387)

 

40,603

 

Foreign government

 

1,736

 

99

 

(11)

 

1,824

 

ABS

 

4,491

 

71

 

(44)

 

4,518

 

RMBS

 

1,403

 

101

 

(30)

 

1,474

 

CMBS

 

788

 

48

 

(7)

 

829

 

Redeemable preferred stock

 

22

 

4

 

--

 

26

 

Total fixed income securities

$

59,008

$

2,475

$

(573)

$

60,910

 

 

9



 

Scheduled maturities

 

The scheduled maturities for fixed income securities are as follows as of September 30, 2014:

 

($ in millions)

 

Amortized
cost

 

Fair
value

 

Due in one year or less

$

3,440

$

3,482

 

Due after one year through five years

 

25,684

 

26,410

 

Due after five years through ten years

 

15,629

 

16,319

 

Due after ten years

 

8,354

 

9,423

 

 

 

53,107

 

55,634

 

ABS, RMBS and CMBS

 

6,509

 

6,679

 

Total

$

59,616

$

62,313

 

 

Actual maturities may differ from those scheduled as a result of calls and make-whole payments by the issuers.  ABS, RMBS and CMBS are shown separately because of the potential for prepayment of principal prior to contractual maturity dates.

 

Net investment income

 

Net investment income is as follows:

 

($ in millions)

 

Three months ended
September 30,

 

Nine months ended
September 30,

 

 

 

2014

 

2013

 

2014

 

2013

 

Fixed income securities

$

581

$

721

$

1,870

$

2,223

 

Equity securities

 

28

 

30

 

91

 

94

 

Mortgage loans

 

54

 

99

 

206

 

290

 

Limited partnership interests

 

162

 

106

 

499

 

339

 

Short-term investments

 

1

 

1

 

5

 

4

 

Other

 

41

 

44

 

127

 

120

 

Investment income, before expense

 

867

 

1,001

 

2,798

 

3,070

 

Investment expense

 

(44)

 

(51)

 

(118)

 

(153)

 

Net investment income

$

823

$

950

$

2,680

$

2,917

 

 

Realized capital gains and losses

 

Realized capital gains and losses by asset type are as follows:

 

($ in millions)

 

Three months ended
September 30,

 

Nine months ended
September 30,

 

 

 

2014

 

2013

 

2014

 

2013

 

Fixed income securities

$

23

$

24

$

121

$

175

 

Equity securities

 

213

 

(51)

 

474

 

261

 

Mortgage loans

 

2

 

(6)

 

3

 

19

 

Limited partnership interests

 

59

 

2

 

10

 

(1)

 

Derivatives

 

(8)

 

(12)

 

(27)

 

(2)

 

Other

 

5

 

2

 

7

 

--

 

Realized capital gains and losses

$

294

$

(41)

$

588

$

452

 

 

10



 

Realized capital gains and losses by transaction type are as follows:

 

($ in millions)

 

Three months ended
September 30,

 

Nine months ended
September 30,

 

 

 

2014

 

2013

 

2014

 

2013

 

Impairment write-downs

$

10

$

(18)

$

(12)

$

(61)

 

Change in intent write-downs

 

(63)

 

(70)

 

(167)

 

(124)

 

Net other-than-temporary impairment losses recognized in earnings

 

(53)

 

(88)

 

(179)

 

(185)

 

Sales

 

355

 

59

 

792

 

639

 

Valuation and settlements of derivative instruments

 

(8)

 

(12)

 

(25)

 

(2)

 

Realized capital gains and losses

$

294

$

(41)

$

588

$

452

 

 

Gross gains of $353 million and $109 million and gross losses of $48 million and $58 million were realized on sales of fixed income and equity securities during the three months ended September 30, 2014 and 2013, respectively.  Gross gains of $866 million and $760 million and gross losses of $111 million and $142 million were realized on sales of fixed income and equity securities during the nine months ended September 30, 2014 and 2013, respectively.

 

Other-than-temporary impairment losses by asset type are as follows:

 

($ in millions)

 

Three months ended
September 30, 2014

 

Nine months ended
September 30, 2014

 

 

 

Gross

 

Included
 in OCI

 

Net

 

Gross

 

Included
in OCI

 

Net

 

Fixed income securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Municipal

$

(3)

$

--

$

(3)

$

(9)

$

--

$

(9)

 

Corporate

 

(6)

 

1

 

(5)

 

(6)

 

1

 

(5)

 

ABS

 

--

 

--

 

--

 

(3)

 

--

 

(3)

 

RMBS

 

3

 

(1)

 

2

 

9

 

(3)

 

6

 

Total fixed income securities

 

(6)

 

--

 

(6)

 

(9)

 

(2)

 

(11)

 

Equity securities

 

(63)

 

--

 

(63)

 

(149)

 

--

 

(149)

 

Mortgage loans

 

2

 

--

 

2

 

6

 

--

 

6

 

Limited partnership interests

 

14

 

--

 

14

 

(25)

 

--

 

(25)

 

Other-than-temporary impairment losses

$

(53)

$

--

$

(53)

$

(177)

$

(2)

$

(179)

 

 

 

 

Three months ended
September 30, 2013

 

Nine months ended
September 30, 2013

 

 

 

Gross

 

Included
in OCI

 

Net

 

Gross

 

Included
in OCI

 

Net

 

Fixed income securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Municipal

$

(6)

$

--

$

(6)

$

(23)

$

(5)

$

(28)

 

ABS

 

--

 

--

 

--

 

--

 

(1)

 

(1)

 

RMBS

 

(4)

 

4

 

--

 

(5)

 

2

 

(3)

 

CMBS

 

(9)

 

4

 

(5)

 

(29)

 

(3)

 

(32)

 

Total fixed income securities

 

(19)

 

8

 

(11)

 

(57)

 

(7)

 

(64)

 

Equity securities

 

(67)

 

--

 

(67)

 

(118)

 

--

 

(118)

 

Mortgage loans

 

(6)

 

--

 

(6)

 

11

 

--

 

11

 

Limited partnership interests

 

(2)

 

--

 

(2)

 

(10)

 

--

 

(10)

 

Other

 

(2)

 

--

 

(2)

 

(4)

 

--

 

(4)

 

Other-than-temporary impairment losses

$

(96)

$

8

$

(88)

$

(178)

$

(7)

$

(185)

 

 

11



 

The total amount of other-than-temporary impairment losses included in accumulated other comprehensive income at the time of impairment for fixed income securities, which were not included in earnings, are presented in the following table.  The amounts exclude $239 million and $260 million as of September 30, 2014 and December 31, 2013, respectively, of net unrealized gains related to changes in valuation of the fixed income securities subsequent to the impairment measurement date.

 

($ in millions)

 

September 30,
2014

 

December 31,
2013

 

Municipal

$

(9)

$

(9)

 

Corporate

 

(1)

 

--

 

ABS

 

(6)

 

(10)

 

RMBS

 

(111)

 

(152)

 

CMBS

 

(5)

 

(12)

 

Total

$

(132)

$

(183)

 

 

Rollforwards of the cumulative credit losses recognized in earnings for fixed income securities held as of the end of the period are as follows:

 

($ in millions)

 

Three months ended
September 30,

 

Nine months ended
September 30,

 

 

 

2014

 

2013

 

2014

 

2013

 

Beginning balance

$

(424)

$

(564)

$

(513)

$

(617)

 

Additional credit loss for securities previously other-than-temporarily impaired

 

(1)

 

(6)

 

(2)

 

(30)

 

Additional credit loss for securities not previously other-than-temporarily impaired

 

(5)

 

(2)

 

(8)

 

(19)

 

Reduction in credit loss for securities disposed or collected

 

28

 

43

 

61

 

136

 

Reduction in credit loss for securities the Company has made the decision to sell or more likely than not will be required to sell

 

--

 

--

 

--

 

--

 

Change in credit loss due to accretion of increase in cash flows

 

1

 

--

 

2

 

1

 

Reduction in credit loss for securities sold in LBL disposition

 

--

 

--

 

59

 

--

 

Ending balance

$

(401)

$

(529)

$

(401)

$

(529)

 

 

The Company uses its best estimate of future cash flows expected to be collected from the fixed income security, discounted at the security’s original or current effective rate, as appropriate, to calculate a recovery value and determine whether a credit loss exists.  The determination of cash flow estimates is inherently subjective and methodologies may vary depending on facts and circumstances specific to the security.  All reasonably available information relevant to the collectability of the security, including past events, current conditions, and reasonable and supportable assumptions and forecasts, are considered when developing the estimate of cash flows expected to be collected.  That information generally includes, but is not limited to, the remaining payment terms of the security, prepayment speeds, foreign exchange rates, the financial condition and future earnings potential of the issue or issuer, expected defaults, expected recoveries, the value of underlying collateral, vintage, geographic concentration, available reserves or escrows, current subordination levels, third party guarantees and other credit enhancements.  Other information, such as industry analyst reports and forecasts, sector credit ratings, financial condition of the bond insurer for insured fixed income securities, and other market data relevant to the realizability of contractual cash flows, may also be considered.  The estimated fair value of collateral will be used to estimate recovery value if the Company determines that the security is dependent on the liquidation of collateral for ultimate settlement.  If the estimated recovery value is less than the amortized cost of the security, a credit loss exists and an other-than-temporary impairment for the difference between the estimated recovery value and amortized cost is recorded in earnings.  The portion of the unrealized loss related to factors other than credit remains classified in accumulated other comprehensive income.  If the Company determines that the fixed income security does not have sufficient cash flow or other information to estimate a recovery value for the security, the Company may conclude that the entire decline in fair value is deemed to be credit related and the loss is recorded in earnings.

 

12



 

Unrealized net capital gains and losses

 

Unrealized net capital gains and losses included in accumulated other comprehensive income are as follows:

 

($ in millions)

 

Fair

 

Gross unrealized

 

Unrealized net

 

September 30, 2014

 

value

 

Gains

 

Losses

 

gains (losses)

 

Fixed income securities

$

62,313

$

2,962

$

(265)

 

$

2,697

 

Equity securities

 

4,335

 

477

 

(19)

 

458

 

Short-term investments

 

2,463

 

--

 

--

 

--

 

Derivative instruments (1)

 

(4)

 

1

 

(9)

 

(8)

 

Equity method (“EMA”) limited partnerships (2)

 

 

 

 

 

 

 

 

(5)

 

Unrealized net capital gains and losses, pre-tax

 

 

 

 

 

 

 

 

3,142

 

Amounts recognized for:

 

 

 

 

 

 

 

 

 

Insurance reserves (3)

 

 

 

 

 

 

 

(169)

 

DAC and DSI (4)

 

 

 

 

 

 

 

 

(158)

 

Amounts recognized

 

 

 

 

 

 

 

 

(327)

 

Deferred income taxes

 

 

 

 

 

 

 

 

(988)

 

Unrealized net capital gains and losses, after-tax

 

 

 

 

 

 

 

$

1,827

 

 

 

 

 

(1)

Included in the fair value of derivative instruments are $1 million classified as assets and $5 million classified as liabilities.

(2)

Unrealized net capital gains and losses for limited partnership interests represent the Company’s share of EMA limited partnerships’ other comprehensive income. Fair value and gross unrealized gains and losses are not applicable.

(3)

The insurance reserves adjustment represents the amount by which the reserve balance would increase if the net unrealized gains in the applicable product portfolios were realized and reinvested at current lower interest rates, resulting in a premium deficiency. Although the Company evaluates premium deficiencies on the combined performance of life insurance and immediate annuities with life contingencies, the adjustment primarily relates to structured settlement annuities with life contingencies, in addition to annuity buy-outs and certain payout annuities with life contingencies.

(4)

The DAC and DSI adjustment balance represents the amount by which the amortization of DAC and DSI would increase or decrease if the unrealized gains or losses in the respective product portfolios were realized.

 

($ in millions)

 

Fair

 

Gross unrealized

 

Unrealized net

 

December 31, 2013

 

value

 

Gains

 

Losses

 

gains (losses)

 

Fixed income securities

$

60,910

$

2,475

$

(573)

 

$

1,902

 

Equity securities

 

5,097

 

658

 

(34)

 

624

 

Short-term investments

 

2,393

 

--

 

--

 

--

 

Derivative instruments (1)

 

(13)

 

1

 

(19)

 

(18)

 

EMA limited partnerships

 

 

 

 

 

 

 

(3)

 

Investments classified as held for sale

 

 

 

 

 

 

 

 

190

 

Unrealized net capital gains and losses, pre-tax

 

 

 

 

 

 

 

 

2,695

 

Amounts recognized for:

 

 

 

 

 

 

 

 

 

Insurance reserves

 

 

 

 

 

 

 

--

 

DAC and DSI

 

 

 

 

 

 

 

 

(158)

 

Amounts recognized

 

 

 

 

 

 

 

 

(158)

 

Deferred income taxes

 

 

 

 

 

 

 

(891)

 

Unrealized net capital gains and losses, after-tax

 

 

 

 

 

 

 

$

1,646

 

 

 

 

 

(1)

Included in the fair value of derivative instruments are $1 million classified as assets and $14 million classified as liabilities.

 

13



 

Change in unrealized net capital gains and losses

 

The change in unrealized net capital gains and losses for the nine months ended September 30, 2014 is as follows:

 

($ in millions)

 

 

 

Fixed income securities

$

795

 

Equity securities

 

(166)

 

Derivative instruments

 

10

 

EMA limited partnerships

 

(2)

 

Investments classified as held for sale

 

(190)

 

Total

 

447

 

Amounts recognized for:

 

 

 

Insurance reserves

 

(169)

 

DAC and DSI

 

--

 

Amounts recognized

 

(169)

 

Deferred income taxes

 

(97)

 

Increase in unrealized net capital gains and losses, after-tax

$

181

 

 

Portfolio monitoring

 

The Company has a comprehensive portfolio monitoring process to identify and evaluate each fixed income and equity security whose carrying value may be other-than-temporarily impaired.

 

For each fixed income security in an unrealized loss position, the Company assesses whether management with the appropriate authority has made the decision to sell or whether it is more likely than not the Company will be required to sell the security before recovery of the amortized cost basis for reasons such as liquidity, contractual or regulatory purposes.  If a security meets either of these criteria, the security’s decline in fair value is considered other than temporary and is recorded in earnings.

 

If the Company has not made the decision to sell the fixed income security and it is not more likely than not the Company will be required to sell the fixed income security before recovery of its amortized cost basis, the Company evaluates whether it expects to receive cash flows sufficient to recover the entire amortized cost basis of the security.  The Company calculates the estimated recovery value by discounting the best estimate of future cash flows at the security’s original or current effective rate, as appropriate, and compares this to the amortized cost of the security.  If the Company does not expect to receive cash flows sufficient to recover the entire amortized cost basis of the fixed income security, the credit loss component of the impairment is recorded in earnings, with the remaining amount of the unrealized loss related to other factors recognized in other comprehensive income.

 

For equity securities, the Company considers various factors, including whether it has the intent and ability to hold the equity security for a period of time sufficient to recover its cost basis.  Where the Company lacks the intent and ability to hold to recovery, or believes the recovery period is extended, the equity security’s decline in fair value is considered other than temporary and is recorded in earnings.

 

For fixed income and equity securities managed by third parties, either the Company has contractually retained its decision making authority as it pertains to selling securities that are in an unrealized loss position or it recognizes any unrealized loss at the end of the period through a charge to earnings.

 

The Company’s portfolio monitoring process includes a quarterly review of all securities to identify instances where the fair value of a security compared to its amortized cost (for fixed income securities) or cost (for equity securities) is below established thresholds.  The process also includes the monitoring of other impairment indicators such as ratings, ratings downgrades and payment defaults.  The securities identified, in addition to other securities for which the Company may have a concern, are evaluated for potential other-than-temporary impairment using all reasonably available information relevant to the collectability or recovery of the security.  Inherent in the Company’s evaluation of other-than-temporary impairment for these fixed income and equity securities are assumptions and estimates about the financial condition and future earnings potential of the issue or issuer.  Some of the factors that may be considered in evaluating whether a decline in fair value is other than temporary are: 1) the financial condition, near-term and long-term prospects of the issue or issuer, including relevant industry specific market conditions and trends, geographic location and implications of rating agency actions and offering prices; 2)

 

14



 

the specific reasons that a security is in an unrealized loss position, including overall market conditions which could affect liquidity; and 3) the length of time and extent to which the fair value has been less than amortized cost or cost.

 

The following table summarizes the gross unrealized losses and fair value of fixed income and equity securities by the length of time that individual securities have been in a continuous unrealized loss position.

 

($ in millions)

 

Less than 12 months

 

12 months or more

 

Total

 

 

 

Number

 

Fair

 

Unrealized

 

Number

 

Fair

 

Unrealized

 

unrealized

 

 

 

of issues

 

value

 

losses

 

of issues

 

value

 

losses

 

losses

 

September 30, 2014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed income securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government and agencies

 

18

$

1,761

$

(4)

 

3

$

22

$

--

$

(4)

 

Municipal

 

86

 

359

 

(7)

 

38

 

227

 

(16)

 

(23)

 

Corporate

 

535

 

6,974

 

(89)

 

163

 

1,767

 

(99)

 

(188)

 

Foreign government

 

7

 

90

 

--

 

1

 

19

 

(1)

 

(1)

 

ABS

 

83

 

2,055

 

(9)

 

28

 

393

 

(23)

 

(32)

 

RMBS

 

68

 

53

 

(1)

 

200

 

189

 

(13)

 

(14)

 

CMBS

 

5

 

4

 

--

 

4

 

42

 

(3)

 

(3)

 

Total fixed income securities

 

802

 

11,296

 

(110)

 

437

 

2,659

 

(155)

 

(265)

 

Equity securities

 

353

 

932

 

(18)

 

1

 

12

 

(1)

 

(19)

 

Total fixed income and equity securities

 

1,155

$

12,228

$

(128)

 

438

$

2,671

$

(156)

$

(284)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment grade fixed income securities

 

532

$

9,199

$

(50)

 

353

$

2,219

$

(102)

$

(152)

 

Below investment grade fixed income securities

 

270

 

2,097

 

(60)

 

84

 

440

 

(53)

 

(113)

 

Total fixed income securities

 

802

$

11,296

$

(110)

 

437

$

2,659

$

(155)

$

(265)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2013

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed income securities