ý
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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36-3871531
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(State or Other Jurisdiction of Incorporation or Organization)
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(I.R.S. Employer Identification No.)
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Title of each class
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Name of each exchange on which registered
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Common Stock, par value $0.01 per share
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New York Stock Exchange
Chicago Stock Exchange
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5.10% Fixed-to-Floating Rate Subordinated Debentures due 2053
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New York Stock Exchange
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Depositary Shares each representing a 1/1,000
th
interest in a share of Fixed Rate Noncumulative Perpetual Preferred Stock, Series A
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New York Stock Exchange
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Depositary Shares each representing a 1/1,000
th
interest in a share of Fixed Rate Noncumulative Perpetual Preferred Stock, Series C
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New York Stock Exchange
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Depositary Shares each representing a 1/1,000
th
interest in a share of Fixed Rate Noncumulative Perpetual Preferred Stock, Series D
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New York Stock Exchange
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Depositary Shares each representing a 1/1,000
th
interest in a share of Fixed Rate Noncumulative Perpetual Preferred Stock, Series E
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New York Stock Exchange
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Depositary Shares each representing a 1/1,000
th
interest in a share of Fixed Rate Noncumulative Perpetual Preferred Stock, Series F
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New York Stock Exchange
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Large accelerated filer
X
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Accelerated filer
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Non-accelerated filer
(Do not check if a smaller reporting company)
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Smaller reporting company
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Part I
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Page
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Segment Information
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–
Allstate A
nnuities
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–
Other Business Segments
and Additional Information
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Website
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Part II
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Part III
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Part IV
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•
Better serve our customers
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•
Achieve target economic returns on capital
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•
Grow customer base
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•
Proactively manage investments
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•
Build long-term growth platforms
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Reportable segments
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Allstate Protection
(1)
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Includes the Allstate, Encompass and Esurance brands and Answer Financial. Offers private passenger auto, homeowners, other personal lines and small commercial insurance products through agencies and directly through contact centers and the internet.
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Service Businesses
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Includes SquareTrade, Arity, Allstate Roadside Services and Allstate Dealer Services, which offer a broad range of products and services that expand and enhance our customer value propositions.
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Allstate Life
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Offers traditional, interest-sensitive and variable life insurance products through Allstate exclusive agencies and exclusive financial specialists.
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Allstate Benefits
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Offers voluntary benefits products, including life, accident, critical illness, short-term disability and other health products sold through workplace enrolling independent agents and Allstate exclusive agencies.
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Allstate Annuities
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Consists of deferred fixed annuities and immediate fixed annuities (including standard and sub-standard structured settlements) in run-off. We exited the sale of annuities over an eight year period from 2006 to 2014. In 2006, we disposed of substantially all of the variable annuity business through reinsurance agreements.
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Discontinued Lines and Coverages
(1)
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Relates to property and casualty insurance policies primarily written during the 1960s through the mid-1980s. Our exposure to asbestos, environmental and other discontinued lines claims arises from direct excess commercial insurance, assumed reinsurance coverage, direct primary commercial insurance and other businesses in run-off.
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Corporate and Other
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Includes holding company activities and certain non-insurance operations.
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(1)
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Allstate Protection and Discontinued Lines and Coverages segments comprise Property-Liability.
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Have a local presence that instills confidence
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•
Know their customers and understand the unique needs of their households
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Help our customers assess the potential risks they face
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Provide local expertise and personalized guidance on how to protect what matters most to customers by offering customized solutions
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Support customers when they have changes in their lives and during their times of need
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Variable compensation includes factors such as customer satisfaction and life insurance and retirement policies sold relative to the size of the agency.
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Bonus compensation is based on a percentage of premiums and can be earned by agents who are meeting certain sales goals and selling additional policies to meet customer needs profitably.
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•
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Improve our core operations is focused on enhanced loss cost management, expense control and customer experience. To achieve this, we are continuing to modernize our operating platform (including enhanced digital capabilities), improving estimating accuracy and optimizing vendor relationships.
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Invest in our foundation is focused on leveraging operational efficiency, mitigating risk, quality assurance and a continued pursuit to automate and simplify processes. To achieve this, we are investing in long-term growth platforms, leveraging continuous improvement, enabling consistent data and metrics, and modernizing claims handling through digitization.
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•
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Lead into our future is focused on leveraging emerging technologies and predictive analytics to simplify the customer experience and expedite the claims process. To achieve this, we have opened several Digital Operating Centers to handle auto claims countrywide utilizing our virtual estimation capabilities, which includes estimating damage through photos and video with the use of
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Offer a seamless online and mobile experience.
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Provide hassle-free purchases and claims processing using regionalized call centers and intuitive tools.
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Offer a broad suite of protection products and solutions to our customers.
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Offer innovative product options and features.
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For auto insurance, risk evaluation factors can include, but are not limited to, vehicle make, model and year; driver age and marital status; territory;
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For property insurance, risk evaluation factors can include, but are not limited to, the amount of insurance purchased; geographic location of the property; loss history; age, condition and construction characteristics of the property; and characteristics of the insured including insurance scoring utilizing certain consumer report information.
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Innovative product offerings and features
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Allstate brand
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Your Choice Auto
®
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Qualified customers choose from a variety of options, such as Accident Forgiveness, Deductible Rewards
®
, Safe Driving Bonus
®
and New Car Replacement.
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Allstate House and Home
®
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Featured options include Claim RateGuard
®
, Claim-Free Bonus and flexibility in options and coverages, including graduated roof coverage and pricing based on roof type and age for damage related to wind and hail events.
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Claim Satisfaction Guarantee
®
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Promised return of premium to standard auto insurance customers dissatisfied with their claims experience.
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Drivewise
®
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Telematics-based insurance program, available in 49 states and the District of Columbia as of December 31, 2017, that uses a mobile application or an in-car device to capture driving behaviors and encourage safe driving. It provides customers with information and tools, incentives and driving challenges. For example, Allstate Rewards
®
provides reward points for safe driving.
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Milewise
SM
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Usage-based insurance product, launched in 2016, currently available as a limited market test. It gives customers flexibility to customize their insurance and pay based on the number of miles they drive.
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Esurance brand
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DriveSense
®
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Telematics-based insurance program, available in 32 states as of December 31, 2017, that uses a mobile application or an in-car device to capture driving behaviors and reward customers for safe driving.
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Esurance Pay Per Mile
®
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Usage-based insurance product that gives customers flexibility to customize their insurance and pay based on the number of miles they drive, currently available to a limited market.
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Encompass brand
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EncompassOne Policy
®
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Packaged insurance product with one premium, one bill, one policy deductible and one renewal date. Broad coverage options include customizable features such as enhanced accident forgiveness, new-car replacement coverage, walk-away home coverage option should the insured decide not to rebuild, flexible additional living expense coverage, water-sewer backup coverage options and roadside assistance.
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Answer Financial
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StreetWise
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Telematics-based driving application available in all 50 states that uses location and motion settings to reward good drivers.
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(1)
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Based on 2017 information contained in statements filed
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(2)
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No other jurisdiction accounted for more than 5 percent.
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SquareTrade
®
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Rapidly grow new and existing domestic retail customer accounts and expand internationally while increasing profitability and returns.
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Arity
SM
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Build a strategic mobility platform that provides data and analytics solutions to insurance customers, consumers and other businesses (including government agencies) on a recurring basis.
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Allstate Roadside Services
®
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Digitize the roadside assistance business and enhance capabilities to deliver a superior customer experience while lowering costs in the customer assistance centers and optimizing the rescue network.
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Allstate Dealer Services
®
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Leverage relationships with auto dealerships while improving operational efficiency and profitability.
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Insurance products
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Term life
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Interest-sensitive life
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Whole life
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Variable life
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Distribution channel
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Allstate exclusive agencies and 1,100 exclusive financial specialists. The majority of life insurance business written involves exclusive financial specialists, including referrals from exclusive agencies and licensed sales professionals.
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(1)
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No other jurisdiction accounted for more than 5 percent.
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Distribution channels
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Our primary distribution channel continues to be through 6,000 workplace enrolling independent agents.
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We also distribute products using Allstate exclusive agencies, focusing on small employers.
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(1)
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No other jurisdiction accounted for more than 5 percent.
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•
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As of December 31, 2017, Allstate had approximately 42,460 full-time employees and 440 part-time employees.
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Information regarding revenues generated outside the United States is incorporated in this Part I, Item 1 by reference to Note 4 of the consolidated financial statements.
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Allstate’s seven reportable segments use shared services, including human resources, investment, finance, information technology and legal services, provided by Allstate Insurance Company and other affiliates.
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Although the insurance business generally is not seasonal, claims and claims expense for the Allstate Protection segment tend to be higher for periods of severe or inclement weather.
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“Allstate” is a very well-recognized brand name in the United States. We use the “Allstate,” “Esurance,” “Encompass” and “Answer Financial” brands extensively in our business. We also provide additional protection products and services through “SquareTrade,” “Arity,” “Allstate Roadside Services,
”
“Allstate Dealer Services” and “Allstate Benefits.” These brands, products and services are supported with the related service marks, logos, and slogans. Our rights in the United States to these names, service marks, logos and slogans continue as long as we continue to use them in commerce. Many service marks used by Allstate are the subject of renewable U.S. and/or foreign service mark registrations. We believe that these service marks are important to our business and we intend to maintain our rights to them.
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Name
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Age
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Position with Allstate and Business Experience
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Year First
Elected
Officer
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Thomas J. Wilson
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60
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Chair of the Board (May 2008 to present), President (June 2005 to January 2015 and February 2018 to present), and Chief Executive Officer (January 2007 to present) of The Allstate Corporation and AIC.
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1995
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Don Civgin
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56
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President, Service Businesses of AIC (January 2018 to present); President, Emerging Businesses of AIC (February 2015 to January 2018); President and Chief Executive Officer, Allstate Financial of AIC (March 2012 to February 2015).
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2008
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John E. Dugenske
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51
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Executive Vice President and Chief Investment and Corporate Strategy Officer of AIC (January 2018 to present); Executive Vice President and Chief Investment Officer of AIC (March 2017 to January 2018); Group Managing Director and Global Head of Fixed Income at UBS Global Asset Management (December 2008 to February 2017).
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2017
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Eric K. Ferren
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44
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Senior Vice President, Controller, and Chief Accounting Officer of The Allstate Corporation (May 2017 to present) and of AIC (December 2017 to present); Senior Vice President of External Reporting and Corporate Accounting of AIC (April 2014 to December 2017); Chief Financial Officer of HSBC Bank USA, N.A. (January 2014 to April 2014); Chief Accounting Officer of HSBC North America Holdings Inc. (July 2010 to April 2014).
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2014
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Mary Jane Fortin
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53
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President, Allstate Financial of AIC (February 2017 to present); President, Allstate Life and Retirement of AIC (October 2015 to February 2017); Executive Vice President and Chief Financial Officer, Global Consumer Insurance of AIG (April 2012 to September 2015); President and Chief Executive Officer, American General Life Insurance Company (August 2009 to March 2012).
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2015
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Suren Gupta
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56
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Executive Vice President, Enterprise Technology and Strategic Ventures of AIC (February 2015 to present); Executive Vice President, Allstate Technology and Operations of AIC (April 2011 to February 2015).
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2011
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Harriet K. Harty
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51
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Executive Vice President, Human Resources of AIC (February 2015 to present); Senior Vice President of AIC (November 2012 to February 2015).
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2012
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Susan L. Lees
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60
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Executive Vice President, General Counsel, and Secretary of The Allstate Corporation (May 2013 to present) and of AIC (June 2013 to present); Executive Vice President and General Counsel of The Allstate Corporation (June 2012 to May 2013) and of AIC (June 2012 to June 2013).
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2008
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Jesse E. Merten
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43
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Executive Vice President and Chief Risk Officer of AIC (December 2017 to present) and Treasurer of The Allstate Corporation (January 2015 to present) and of AIC (February 2015 to present); Senior Vice President and Chief Financial Officer, Allstate Financial of AIC (January 2012 to February 2015).
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2012
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Mario Rizzo
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51
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Executive Vice President and Chief Financial Officer of The Allstate Corporation and AIC (January 2018 to present); Senior Vice President and Chief Financial Officer, Allstate Personal Lines of AIC (February 2015 to January 2018); Senior Vice President and Treasurer of The Allstate Corporation (November 2010 to January 2015) and of AIC (November 2010 to February 2015).
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2010
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Glenn T. Shapiro
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52
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President, Allstate Personal Lines of AIC (January 2018 to present); Executive Vice President, Claims of AIC (April 2016 to January 2018); Executive Vice President and Chief Claims Officer of Liberty Mutual Commercial Insurance (May 2011 to March 2016).
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2016
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Steven E. Shebik
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61
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Vice Chair of The Allstate Corporation and AIC (January 2018 to present); Executive Vice President and Chief Financial Officer of The Allstate Corporation (February 2012 to January 2018) and of AIC (March 2012 to January 2018).
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1999
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Period
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Total number of shares
(or units) purchased
(1)
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Average price
paid per share
(or unit)
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Total number of shares (or units) purchased as part of publicly announced plans or programs
(3)
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Maximum number (or approximate dollar value) of shares (or units) that may yet be purchased under the plans or programs
(4)
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October 1, 2017 -
October 31, 2017 |
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Open Market Purchases
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1,796,030
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$
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92.8883
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1,789,717
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November 1, 2017 -
November 30, 2017 |
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Open Market Purchases
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2,028,067
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99.3560
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1,512,700
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December 1, 2017 -
December 31, 2017 |
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ASR Agreement
(2)
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2,487,805
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—
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2,487,805
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Open Market Purchases
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473,424
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98.0832
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70,000
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Total
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6,785,326
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5,860,222
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$1.27 billion
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(1)
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In accordance with the terms of its equity compensation plans, Allstate acquired the following shares in connection with the vesting of restricted stock units and performance stock awards and the exercise of stock options held by employees and/or directors. The shares were acquired in satisfaction of withholding taxes due upon exercise or vesting and in payment of the exercise price of the options.
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(2)
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On December 8, 2017, Allstate entered into an accelerated share repurchase agreement (“ASR Agreement”) with Morgan Stanley & Co. LLC (“Morgan Stanley”), to purchase $300 million of our outstanding shares of common stock. In exchange for an upfront payment of $300 million, Morgan Stanley initially delivered 2,487,805 shares to Allstate. This ASR agreement settled on January 5, 2018, and we repurchased a total of 2.92 million shares at an average price of $102.8811.
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(3)
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From time to time, repurchases under our programs are executed under the terms of a pre-set trading plan meeting the requirements of Rule 10b5-1(c) of the Securities Exchange Act of 1934.
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(4)
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On May 4, 2016, we announced the approval of a common share repurchase program for $1.5 billion, which was completed on August 21, 2017. On August 1, 2017, we announced the approval of a new common share repurchase program for $2 billion, which is expected to be completed by February 2019.
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(1)
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As of December 31, 2013, total assets include $11.98 billion of investments that were classified as held for sale relating to the sale of Lincoln Benefit Life Company.
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Overview and Segment Results
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Page
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Overview and 2017
Highlights
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Property-Liability
Results
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Allstate brand
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Esurance brand
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Encompass brand
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Service Businesses
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Allstate Life
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Allstate Benefits
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Allstate Annuities
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Key Business Area Results and Updates
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Application of Critical Accounting Estimates
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•
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Allstate Protection
: premium, policies in force (“PIF”), new business sales, policy retention, price changes, claim frequency and severity, catastrophes, loss ratio, expenses, underwriting results, and relative competitive position.
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•
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Service Businesses
: revenues, premium written, PIF, adjusted net income and net income.
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Allstate Life
: premiums and contract charges, new business sales, PIF, benefit spread, expenses, adjusted net income and net income.
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•
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Allstate Benefits
: premiums, new business sales, PIF, benefit ratio, expenses, adjusted net income and net income.
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Allstate Annuities
: investment spread, asset-liability matching, contract benefits, expenses, adjusted net income, net income and invested assets.
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Investments
: exposure to market risk, asset allocation, credit quality/experience, total return, net investment income, cash flows, realized capital gains and losses, unrealized capital gains and losses, stability of long-term returns, and asset and liability duration.
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•
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Financial condition
: liquidity, parent holding company deployable assets, financial strength ratings, operating leverage, debt levels, book value per share and return on equity.
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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 adjusted net income
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Valuation changes on embedded derivatives not hedged, after-tax
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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 not hedged, after-tax
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Business combination expenses and the amortization of purchased intangible assets, after-tax
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Gain (loss) on disposition of operations, after-tax
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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
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Consolidated Net Income
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($ in billions)
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2017 vs. 2016
- Increase was primarily due to higher Allstate Protection insurance premiums, a tax benefit from the Tax Legislation, net realized capital gains in 2017 compared to net realized capital losses in 2016, higher net investment income, lower claims and claims expense, partially offset by higher catastrophe losses. The Property-Liability combined ratio was 93.6 in 2017 compared to 96.0 in 2016.
2016 vs. 2015
- Decrease was primarily due to higher claims and claims expense and catastrophe losses, net realized capital losses in 2016 compared to net realized capital gains in 2015 and lower net investment income, partially offset by higher Allstate Protection insurance premiums.
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Total Revenue
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($ in billions)
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2017 vs. 2016
- Increase was primarily due to higher Allstate Protection insurance premiums, net realized capital gains in 2017 compared to net realized capital losses in 2016, higher net investment income and the acquisition of SquareTrade.
2016 vs. 2015
- Increase was primarily due to higher Allstate Protection insurance premiums and life and annuity premiums and contract charges, partially offset by net realized capital losses in 2016 compared to net realized capital gains in 2015 and lower net investment income.
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Net Investment Income
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($ in billions)
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2017 vs. 2016
- 2017 benefited from strong performance-based results, primarily from limited partnerships, an increase in invested assets and stable market-based yields, partially offset by higher employee-related expenses. Limited partnership income reflects continued growth of our performance-based portfolio and included asset appreciation and sales of underlying investments.
2016 vs. 2015
- Decrease was primarily due to lower fixed income yields resulting from lower market yields and portfolio repositioning (including both the 2015 maturity profile shortening in the portfolio supporting annuity liabilities and the shift to performance-based investments).
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Consolidated Net Income
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($ in millions)
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2017
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2016
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2015
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Revenues
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||||||
Property and casualty insurance premiums
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$
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32,300
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$
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31,307
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$
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30,309
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Life premiums and contract charges
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2,378
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2,275
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2,158
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Net investment income
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3,401
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3,042
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3,156
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|||
Realized capital gains and losses:
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||||||
Total other-than-temporary impairment (“OTTI”) losses
|
|
(146
|
)
|
|
(313
|
)
|
|
(452
|
)
|
|||
OTTI losses reclassified to (from) other comprehensive income
|
|
(4
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)
|
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10
|
|
|
36
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|
|||
Net OTTI losses recognized in earnings
|
|
(150
|
)
|
|
(303
|
)
|
|
(416
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)
|
|||
Sales and other realized capital gains and losses
|
|
595
|
|
|
213
|
|
|
446
|
|
|||
Total realized capital gains and losses
|
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445
|
|
|
(90
|
)
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|
30
|
|
|||
Total revenues
|
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38,524
|
|
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36,534
|
|
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35,653
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|||
|
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||||||
Costs and expenses
|
|
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|
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|
||||||
Property and casualty insurance claims and claims expense
|
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(21,929
|
)
|
|
(22,221
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)
|
|
(21,034
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)
|
|||
Life contract benefits
|
|
(1,923
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)
|
|
(1,857
|
)
|
|
(1,803
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)
|
|||
Interest credited to contractholder funds
|
|
(690
|
)
|
|
(726
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)
|
|
(761
|
)
|
|||
Amortization of deferred policy acquisition costs
|
|
(4,784
|
)
|
|
(4,550
|
)
|
|
(4,364
|
)
|
|||
Operating costs and expenses
|
|
(4,658
|
)
|
|
(4,106
|
)
|
|
(4,081
|
)
|
|||
Restructuring and related charges
|
|
(109
|
)
|
|
(30
|
)
|
|
(39
|
)
|
|||
Goodwill impairment
|
|
(125
|
)
|
|
—
|
|
|
—
|
|
|||
Interest expense
|
|
(335
|
)
|
|
(295
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)
|
|
(292
|
)
|
|||
Total costs and expenses
|
|
(34,553
|
)
|
|
(33,785
|
)
|
|
(32,374
|
)
|
|||
|
|
|
|
|
|
|
||||||
Gain on disposition of operations
|
|
20
|
|
|
5
|
|
|
3
|
|
|||
Income tax expense
(1)
|
|
(802
|
)
|
|
(877
|
)
|
|
(1,111
|
)
|
|||
Net income
|
|
3,189
|
|
|
1,877
|
|
|
2,171
|
|
|||
|
|
|
|
|
|
|
||||||
Preferred stock dividends
|
|
(116
|
)
|
|
(116
|
)
|
|
(116
|
)
|
|||
Net income applicable to common shareholders
|
|
$
|
3,073
|
|
|
$
|
1,761
|
|
|
$
|
2,055
|
|
(1)
|
2017 results include a Tax Legislation benefit of $506 million. For further information on the impacts of the Tax Legislation, see Note 15 of the consolidated financial statements. 2017 results also include a tax benefit of $63 million related to the adoption of the new accounting standard for share-based payments on January 1, 2017. For a description of these changes, see Note 2 of the consolidated financial statements.
|
•
|
Loss ratio - the ratio of claims and claims expense to premiums earned. Loss ratios include the impact of catastrophe losses.
|
•
|
Expense ratio - the ratio of amortization of DAC, operating costs and expenses, and restructuring and related charges to premiums earned.
|
•
|
Combined ratio - the ratio of claims and claims expense, amortization of DAC, operating costs and expenses, and restructuring and related charges to premiums earned. The combined ratio is the sum of the loss ratio and the expense ratio. The difference between 100% and the combined ratio represents underwriting income as a percentage of premiums earned, or underwriting margin.
|
•
|
Effect of catastrophe losses on combined ratio - the ratio of catastrophe losses included in claims and claims expense to premiums earned. This ratio includes prior year reserve reestimates of catastrophe losses.
|
•
|
Effect of prior year reserve reestimates on combined ratio - the ratio of prior year reserve reestimates included in claims and claims expense to premiums earned. This ratio includes prior year reserve reestimates of catastrophe losses.
|
•
|
Effect of amortization of purchased intangible assets on combined ratio - the ratio of amortization of purchased intangible assets to premiums earned. Amortization of purchased intangible assets is reported in operating costs and expenses on the Consolidated Statements of Operations.
|
•
|
Effect of restructuring and related charges on combined ratio - the ratio of restructuring and related charges to premiums earned.
|
•
|
Effect of Discontinued Lines and Coverages on combined ratio - the ratio of claims and claims expense and operating costs and expenses in the Discontinued Lines and Coverages segment to Property-Liability premiums earned. The sum of the effect of Discontinued Lines and Coverages on the combined ratio and the Allstate Protection combined ratio is equal to the Property-Liability combined ratio.
|
Summarized financial data
|
||||||||||||
($ in millions, except ratios)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Premiums written
|
|
$
|
31,648
|
|
|
$
|
30,891
|
|
|
$
|
30,115
|
|
|
|
|
|
|
|
|
||||||
Revenues
|
|
|
|
|
|
|
||||||
Premiums earned
|
|
$
|
31,433
|
|
|
$
|
30,727
|
|
|
$
|
29,748
|
|
Net investment income
|
|
1,478
|
|
|
1,253
|
|
|
1,226
|
|
|||
Realized capital gains and losses
|
|
401
|
|
|
(6
|
)
|
|
(237
|
)
|
|||
Total revenues
|
|
33,312
|
|
|
31,974
|
|
|
30,737
|
|
|||
|
|
|
|
|
|
|
||||||
Costs and expenses
|
|
|
|
|
|
|
||||||
Claims and claims expense
|
|
(21,566
|
)
|
|
(21,968
|
)
|
|
(20,771
|
)
|
|||
Amortization of DAC
|
|
(4,205
|
)
|
|
(4,053
|
)
|
|
(3,933
|
)
|
|||
Operating costs and expenses
|
|
(3,559
|
)
|
|
(3,457
|
)
|
|
(3,440
|
)
|
|||
Restructuring and related charges
|
|
(91
|
)
|
|
(29
|
)
|
|
(38
|
)
|
|||
Total costs and expenses
|
|
(29,421
|
)
|
|
(29,507
|
)
|
|
(28,182
|
)
|
|||
|
|
|
|
|
|
|
||||||
Gain on disposition of operations
(1)
|
|
14
|
|
|
—
|
|
|
—
|
|
|||
Income tax expense
(2)
|
|
(1,318
|
)
|
|
(806
|
)
|
|
(867
|
)
|
|||
Net income applicable to common shareholders
|
|
$
|
2,587
|
|
|
$
|
1,661
|
|
|
$
|
1,688
|
|
|
|
|
|
|
|
|
||||||
Underwriting income
|
|
$
|
2,012
|
|
|
$
|
1,220
|
|
|
$
|
1,566
|
|
Net investment income
|
|
1,478
|
|
|
1,253
|
|
|
1,226
|
|
|||
Income tax expense on operations
(2)
|
|
(1,119
|
)
|
|
(812
|
)
|
|
(922
|
)
|
|||
Realized capital gains and losses, after-tax
|
|
272
|
|
|
—
|
|
|
(154
|
)
|
|||
Gain on disposition of operations, after-tax
(1)
|
|
9
|
|
|
—
|
|
|
—
|
|
|||
Change in accounting for investments in qualified affordable housing projects
|
|
—
|
|
|
—
|
|
|
(28
|
)
|
|||
Tax Legislation expense
|
|
(65
|
)
|
|
—
|
|
|
—
|
|
|||
Net income applicable to common shareholders
|
|
$
|
2,587
|
|
|
$
|
1,661
|
|
|
$
|
1,688
|
|
|
|
|
|
|
|
|
||||||
Catastrophe losses
(3)
|
|
$
|
3,228
|
|
|
$
|
2,571
|
|
|
$
|
1,719
|
|
|
|
|
|
|
|
|
||||||
Operating ratios
|
|
|
|
|
|
|
||||||
Claims and claims expense ratio
|
|
68.6
|
|
|
71.5
|
|
|
69.8
|
|
|||
Expense ratio
|
|
25.0
|
|
|
24.5
|
|
|
24.9
|
|
|||
Combined ratio
|
|
93.6
|
|
|
96.0
|
|
|
94.7
|
|
|||
Effect of catastrophe losses on combined ratio
|
|
10.3
|
|
|
8.4
|
|
|
5.8
|
|
|||
Effect of prior year reserve reestimates on combined ratio
(4)
|
|
(1.6
|
)
|
|
(0.1
|
)
|
|
0.3
|
|
|||
Effect of amortization of purchased intangible assets on combined ratio
|
|
—
|
|
|
0.1
|
|
|
0.1
|
|
|||
Effect of restructuring and related charges on combined ratio
|
|
0.3
|
|
|
0.1
|
|
|
0.1
|
|
|||
Effect of Discontinued Lines and Coverages on combined ratio
|
|
0.3
|
|
|
0.3
|
|
|
0.2
|
|
(1)
|
2017 results represent the conclusion of a contractual arrangement related to the sale of Sterling Collision Centers, Inc. in 2014.
|
(2)
|
2017 results include a tax benefit of $62 million related to the adoption of the new accounting standard for share-based payments on January 1, 2017.
|
(3)
|
Prior year reserve reestimates included in catastrophe losses totaled
$18 million
favorable,
$6 million
unfavorable and
$15 million
favorable in
2017
,
2016
and
2015
, respectively, and had no effect on the combined ratio for all periods presented.
|
(4)
|
Prior year reserve reestimates totaled
$505 million
favorable,
$21 million
favorable and
$79 million
unfavorable in
2017
,
2016
and
2015
, respectively.
|
Net investment income
|
||||||||||||
|
|
For the years ended December 31,
|
||||||||||
($ in millions)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Fixed income securities
|
|
$
|
909
|
|
|
$
|
870
|
|
|
$
|
873
|
|
Equity securities
|
|
122
|
|
|
95
|
|
|
81
|
|
|||
Mortgage loans
|
|
12
|
|
|
11
|
|
|
15
|
|
|||
Limited partnership interests
|
|
432
|
|
|
269
|
|
|
262
|
|
|||
Short-term investments
|
|
17
|
|
|
9
|
|
|
6
|
|
|||
Other
|
|
100
|
|
|
89
|
|
|
75
|
|
|||
Investment income, before expense
|
|
1,592
|
|
|
1,343
|
|
|
1,312
|
|
|||
Investment expense
(1)
|
|
(114
|
)
|
|
(90
|
)
|
|
(86
|
)
|
|||
Net investment income
|
|
$
|
1,478
|
|
|
$
|
1,253
|
|
|
$
|
1,226
|
|
(1)
|
Investment expense includes $22 million, $19 million and $14 million of investee level expenses in 2017, 2016 and 2015, respectively. Investee level expenses include depreciation and asset level operating expenses on directly held real estate and other consolidated investments.
|
Realized capital gains and losses
|
||||||||||||
|
|
For the years ended December 31,
|
||||||||||
($ in millions)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Impairment write-downs
|
|
$
|
(56
|
)
|
|
$
|
(130
|
)
|
|
$
|
(132
|
)
|
Change in intent write-downs
|
|
(44
|
)
|
|
(56
|
)
|
|
(156
|
)
|
|||
Net other-than-temporary impairment losses recognized in earnings
|
|
(100
|
)
|
|
(186
|
)
|
|
(288
|
)
|
|||
Sales and other
|
|
531
|
|
|
185
|
|
|
85
|
|
|||
Valuation and settlements of derivative instruments
|
|
(30
|
)
|
|
(5
|
)
|
|
(34
|
)
|
|||
Realized capital gains and losses, pre-tax
|
|
401
|
|
|
(6
|
)
|
|
(237
|
)
|
|||
Income tax (expense) benefit
|
|
(129
|
)
|
|
6
|
|
|
83
|
|
|||
Realized capital gains and losses, after-tax
|
|
$
|
272
|
|
|
$
|
—
|
|
|
$
|
(154
|
)
|
Underwriting results
|
||||||||||||
|
|
For the years ended December 31,
|
||||||||||
($ in millions)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Premiums written
|
|
$
|
31,648
|
|
|
$
|
30,888
|
|
|
$
|
30,115
|
|
Premiums earned
|
|
$
|
31,433
|
|
|
$
|
30,727
|
|
|
$
|
29,748
|
|
Claims and claims expense
|
|
(21,470
|
)
|
|
(21,863
|
)
|
|
(20,718
|
)
|
|||
Amortization of DAC
|
|
(4,205
|
)
|
|
(4,053
|
)
|
|
(3,933
|
)
|
|||
Other costs and expenses
|
|
(3,556
|
)
|
|
(3,455
|
)
|
|
(3,438
|
)
|
|||
Restructuring and related charges
|
|
(91
|
)
|
|
(29
|
)
|
|
(38
|
)
|
|||
Underwriting income
|
|
$
|
2,111
|
|
|
$
|
1,327
|
|
|
$
|
1,621
|
|
Catastrophe losses
|
|
$
|
3,228
|
|
|
$
|
2,571
|
|
|
$
|
1,719
|
|
|
|
|
|
|
|
|
||||||
Underwriting income (loss) by line of business
|
|
|
|
|
|
|
||||||
Auto
|
|
$
|
1,298
|
|
|
$
|
156
|
|
|
$
|
23
|
|
Homeowners
|
|
658
|
|
|
1,075
|
|
|
1,431
|
|
|||
Other personal lines
(1)
|
|
124
|
|
|
160
|
|
|
175
|
|
|||
Commercial lines
|
|
(19
|
)
|
|
(110
|
)
|
|
(40
|
)
|
|||
Other business lines
(2)
|
|
51
|
|
|
53
|
|
|
40
|
|
|||
Answer Financial
|
|
(1
|
)
|
|
(7
|
)
|
|
(8
|
)
|
|||
Underwriting income
|
|
$
|
2,111
|
|
|
$
|
1,327
|
|
|
$
|
1,621
|
|
(1)
|
Other personal lines include renters, condominium, landlord and other personal lines products.
|
(2)
|
Other business lines primarily include Ivantage, a general agency for Allstate exclusive agencies. Ivantage provides agencies a solution for their customers when coverage through Allstate brand underwritten products is not available.
|
Premiums written and earned by line of business
|
||||||||||||
|
|
For the years ended December 31,
|
||||||||||
($ in millions)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Premiums written
|
|
|
|
|
|
|
||||||
Auto
|
|
$
|
22,042
|
|
|
$
|
21,425
|
|
|
$
|
20,662
|
|
Homeowners
|
|
7,350
|
|
|
7,240
|
|
|
7,238
|
|
|||
Other personal lines
|
|
1,768
|
|
|
1,724
|
|
|
1,699
|
|
|||
Subtotal – Personal lines
|
|
31,160
|
|
|
30,389
|
|
|
29,599
|
|
|||
Commercial lines
|
|
488
|
|
|
499
|
|
|
516
|
|
|||
Total premiums written
|
|
$
|
31,648
|
|
|
$
|
30,888
|
|
|
$
|
30,115
|
|
Reconciliation of premiums written to premiums earned:
|
|
|
|
|
|
|
||||||
Increase in unearned premiums
|
|
(258
|
)
|
|
(181
|
)
|
|
(253
|
)
|
|||
Other
|
|
43
|
|
|
20
|
|
|
(114
|
)
|
|||
Total premiums earned
|
|
$
|
31,433
|
|
|
$
|
30,727
|
|
|
$
|
29,748
|
|
|
|
|
|
|
|
|
||||||
Auto
|
|
$
|
21,878
|
|
|
$
|
21,264
|
|
|
$
|
20,410
|
|
Homeowners
|
|
7,310
|
|
|
7,257
|
|
|
7,136
|
|
|||
Other personal lines
|
|
1,750
|
|
|
1,700
|
|
|
1,692
|
|
|||
Subtotal – Personal lines
|
|
30,938
|
|
|
30,221
|
|
|
29,238
|
|
|||
Commercial lines
|
|
495
|
|
|
506
|
|
|
510
|
|
|||
Total premiums earned
|
|
$
|
31,433
|
|
|
$
|
30,727
|
|
|
$
|
29,748
|
|
Combined ratios by line of business
|
|||||||||||||||||||||||||||
|
|
For the years ended December 31,
|
|||||||||||||||||||||||||
|
|
Loss ratio
(1)
|
|
Expense ratio
(1)
|
|
Combined ratio
|
|||||||||||||||||||||
|
|
2017
|
|
2016
|
|
2015
|
|
2017
|
|
2016
|
|
2015
|
|
2017
|
|
2016
|
|
2015
|
|||||||||
Auto
|
|
68.9
|
|
|
74.7
|
|
|
74.7
|
|
|
25.2
|
|
|
24.6
|
|
|
25.2
|
|
|
94.1
|
|
|
99.3
|
|
|
99.9
|
|
Homeowners
|
|
67.2
|
|
|
61.3
|
|
|
56.3
|
|
|
23.8
|
|
|
23.9
|
|
|
23.6
|
|
|
91.0
|
|
|
85.2
|
|
|
79.9
|
|
Other personal lines
|
|
64.0
|
|
|
62.9
|
|
|
62.9
|
|
|
28.9
|
|
|
27.7
|
|
|
26.8
|
|
|
92.9
|
|
|
90.6
|
|
|
89.7
|
|
Commercial lines
|
|
75.5
|
|
|
93.9
|
|
|
78.4
|
|
|
28.3
|
|
|
27.8
|
|
|
29.4
|
|
|
103.8
|
|
|
121.7
|
|
|
107.8
|
|
Total
|
|
68.3
|
|
|
71.2
|
|
|
69.7
|
|
|
25.0
|
|
|
24.5
|
|
|
24.9
|
|
|
93.3
|
|
|
95.7
|
|
|
94.6
|
|
(1)
|
Ratios are calculated using the premiums earned for the respective line of business.
|
•
|
Continuing to limit or not offer new homeowners, manufactured home and landlord package policy business in certain coastal geographies.
|
•
|
Increased capacity in our brokerage platform for customers not offered an Allstate policy.
|
•
|
In 2016, we began to write a limited number of homeowners policies in select areas of California. We continue to renew current policyholders and allow replacement policies for existing customers who buy a new home, or change their residence to rental property. Additionally, we write homeowners coverage through North Light Specialty Insurance Company (“NorthLight”), which includes earthquake coverage (other than fire following earthquakes) that is currently ceded via quota share reinsurance.
|
•
|
In certain states, we have been ceding wind exposure related to insured property located in wind pool eligible areas.
|
•
|
Starting in the second quarter of 2017, we are writing a limited number of homeowners policies in select areas of Florida and focusing on existing customers who replace their currently-insured home with an acceptable property. Encompass withdrew from property lines in Florida in 2009.
|
•
|
Tropical cyclone deductibles are generally higher than all peril deductibles and are in place for a large portion of coastal insured properties.
|
•
|
We have additional catastrophe exposure, beyond the property lines, for auto customers who have purchased physical damage coverage. Auto physical damage coverage generally includes coverage for flood-related loss. We manage this
|
•
|
Designed a homeowners new business offering available in 41 states, Allstate House and Home®, that provides options of coverage for roof damage, including graduated coverage and pricing based on roof type and age.
|
•
|
PIF: Policy counts are based on items rather than customers. A multi-car customer would generate multiple item (policy) counts, even if all cars were insured under one policy.
|
•
|
New issued applications: Item counts of automobile or homeowner insurance applications for insurance policies that were issued during the period, regardless of whether the customer was previously insured by another Allstate Protection brand. Allstate brand includes automobiles added by existing customers when they exceed the number allowed (currently 10) on a policy.
|
•
|
Average premium-gross written (“average premium”): Gross premiums written divided by issued item count. Gross premiums written include the impacts from discounts, surcharges and ceded reinsurance premiums and exclude the impacts from mid-term premium adjustments and premium refund accruals. Average premiums represent the appropriate policy term for each line. Allstate and Esurance brand policy terms are 6 months for auto and 12 months for homeowners. Encompass brand policy terms are 12 months for auto and homeowners.
|
•
|
Renewal ratio: Renewal policies issued during the period, based on contract effective dates, divided by the total policies issued 6 months prior for auto (generally 12 months prior for Encompass brand) or 12 months prior for homeowners.
|
Underwriting results
|
||||||||||||
|
|
For the years ended December 31,
|
||||||||||
($ in millions)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Premiums written
|
|
$
|
28,885
|
|
|
$
|
28,059
|
|
|
$
|
27,258
|
|
Premiums earned
|
|
$
|
28,631
|
|
|
$
|
27,865
|
|
|
$
|
26,891
|
|
Claims and claims expense
|
|
(19,352
|
)
|
|
(19,750
|
)
|
|
(18,593
|
)
|
|||
Amortization of DAC
|
|
(3,963
|
)
|
|
(3,791
|
)
|
|
(3,659
|
)
|
|||
Other costs and expenses
|
|
(3,032
|
)
|
|
(2,840
|
)
|
|
(2,783
|
)
|
|||
Restructuring and related charges
|
|
(83
|
)
|
|
(27
|
)
|
|
(37
|
)
|
|||
Underwriting income
|
|
$
|
2,201
|
|
|
$
|
1,457
|
|
|
$
|
1,819
|
|
Catastrophe losses
|
|
$
|
2,985
|
|
|
$
|
2,424
|
|
|
$
|
1,594
|
|
|
|
|
|
|
|
|
||||||
Underwriting income (loss) by line of business
|
|
|
|
|
|
|
||||||
Auto
|
|
$
|
1,331
|
|
|
$
|
250
|
|
|
$
|
204
|
|
Homeowners
|
|
725
|
|
|
1,098
|
|
|
1,418
|
|
|||
Other personal lines
(1)
|
|
113
|
|
|
166
|
|
|
197
|
|
|||
Commercial lines
|
|
(19
|
)
|
|
(110
|
)
|
|
(40
|
)
|
|||
Other business lines
(2)
|
|
51
|
|
|
53
|
|
|
40
|
|
|||
Underwriting income
|
|
$
|
2,201
|
|
|
$
|
1,457
|
|
|
$
|
1,819
|
|
(1)
|
Other personal lines include renters, condominium, landlord and other personal lines products.
|
(2)
|
Other business lines primarily include Ivantage.
|
Auto premium measures and statistics
|
||||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
PIF (thousands)
|
|
19,580
|
|
|
19,742
|
|
|
20,326
|
|
|||
New issued applications (thousands)
|
|
2,520
|
|
|
2,312
|
|
|
2,962
|
|
|||
Average premium
|
|
$
|
550
|
|
|
$
|
523
|
|
|
$
|
492
|
|
Renewal ratio (%)
|
|
87.6
|
|
|
87.8
|
|
|
88.6
|
|
|||
Approved rate changes
(1)
:
|
|
|
|
|
|
|
||||||
# of locations
(2)
|
|
49
|
|
|
53
|
|
|
50
|
|
|||
Total brand (%)
(3)
|
|
4.0
|
|
(6)
|
7.2
|
|
|
5.3
|
|
|||
Location specific (%)
(4)(5)
|
|
6.0
|
|
(6)
|
8.1
|
|
|
7.6
|
|
(1)
|
Rate changes do not include rating plan enhancements, including the introduction of discounts and surcharges that result in no change in the overall rate level in a location. These rate changes do not reflect initial rates filed for insurance subsidiaries initially writing business in a location.
|
(2)
|
Allstate brand operates in 50 states, the District of Columbia and 5 Canadian provinces.
|
(3)
|
Represents the impact in the states, the District of Columbia and Canadian provinces where rate changes were approved during the period as a percentage of total brand prior year-end premiums written.
|
(4)
|
Represents the impact in the states, the District of Columbia and Canadian provinces where rate changes were approved during the period as a percentage of its respective total prior year-end premiums written in those same locations.
|
(5)
|
Based on historical premiums written in the locations noted above, rate changes approved for auto totaled $773 million, $1.33 billion, and $942 million in 2017, 2016 and 2015, respectively. Approximately 27% of the rate increases approved in 2017 are earned in 2017, with the remainder expected to be earned in 2018 and 2019.
|
(6)
|
Includes a rate increase in California in first and fourth quarter 2017. Excluding California, Allstate brand auto total brand and location specific rate changes were 2.7% and 4.7% in 2017.
|
•
|
0.8%
or
162 thousand
decrease in PIF as of December 31, 2017 compared to December 31, 2016. The rate of PIF change compared to the prior year improved throughout 2017. Auto PIF increased in 18 states, including 3 of our largest 10 states, as of December 31, 2017 compared to December 31, 2016.
|
•
|
9.0%
increase in new issued applications in 2017 compared to 2016. 38 states, including 9 of our largest 10 states, experienced increases in new issued applications in 2017 compared to 2016, with 20 states experiencing double digit increases.
|
•
|
5.2%
increase in average premium in 2017 compared to 2016, primarily due to rate increases. Rate changes approved for auto do not assume customer choices such as non-renewal or changes
|
•
|
0.2
point decrease in the renewal ratio in 2017 compared to 2016. 20 states, including 3 of our largest 10 states, experienced increases in the renewal ratio in 2017 compared to 2016.
|
•
|
2.9%
or
584 thousand
decrease in PIF as of December 31, 2016 compared to December 31, 2015. Allstate brand auto PIF increased in 9 states, including 1 of our largest 10 states, as of December 31, 2016 compared to December 31, 2015.
|
•
|
21.9%
decrease in new issued applications in 2016 compared to 2015. All of our largest 10 states experienced decreases in new issued applications in 2016 compared to 2015. New issued
|
•
|
6.3%
increase in average premium in 2016 compared to 2015, primarily due to rate increases. Approximately 61% of the change in rates approved for auto in 2016 were driven by the increases approved in our 10 largest states.
|
•
|
0.8
point decrease in the renewal ratio in 2016 compared to 2015. Of our largest 10 states, 9 experienced decreases in the renewal ratio in 2016 compared to 2015.
|
(1)
|
Includes rate changes approved based on our net cost of reinsurance.
|
(2)
|
Allstate brand operates in 50 states, the District of Columbia, and 5 Canadian provinces.
|
(3)
|
Based on historical premiums written in the locations noted above, rate changes approved for homeowners totaled $122 million, $75 million and $190 million in 2017, 2016 and 2015, respectively.
|
(4)
|
Includes the impact of a rate decrease in California in first quarter 2016. Excluding California, Allstate brand homeowners total brand and location specific rate changes were 2.1% and 5.1% in 2016, respectively.
|
•
|
0.5%
or
32 thousand
decrease in PIF as of December 31, 2017 compared to December 31, 2016. Allstate brand homeowners PIF increased in 20 states, including 4 of our largest 10 states, as of December 31, 2017 compared to December 31, 2016.
|
•
|
2.9%
increase in new issued applications in 2017 compared to 2016. Of our largest 10 states, 6 experienced increases in new issued applications in 2017 compared to 2016.
|
•
|
1.7%
increase in average premium in 2017 compared to 2016 primarily due to rate changes and increasing insured home valuations due to inflationary costs.
|
•
|
0.5
point decrease in the renewal ratio in 2017 compared to 2016. Of our largest 10 states, 1 experienced an increase in the renewal ratio in 2017 compared to 2016.
|
•
|
$52 million decrease in the cost of our catastrophe reinsurance program to $283 million in 2017 from $335 million in 2016. Catastrophe reinsurance premiums are recorded primarily in Allstate brand and are a reduction of premium.
|
•
|
0.9% or 54 thousand decrease in PIF as of December 31, 2016 compared to December 31,
|
•
|
8.8% decrease in new issued applications in 2016 compared to 2015. Of our largest 10 states, 8 experienced decreases in new issued applications in 2016 compared to 2015. New issued applications were relatively consistent throughout the year.
|
•
|
1.9% increase in average premium in 2016 compared to 2015 primarily due to rate changes and increasing insured home valuations due to inflationary costs.
|
•
|
0.7 point decrease in the renewal ratio in 2016 compared to 2015. Of our largest 10 states, 9 experienced decreases in the renewal ratio in 2016 compared to 2015.
|
•
|
$35 million decrease in the cost of our catastrophe reinsurance program to $335 million in 2016 from $370 million in 2015.
|
(1)
|
Ratios are calculated using the premiums earned for the respective line of business.
|
Underwriting results
|
||||||||||||
|
|
For the years ended December 31,
|
||||||||||
($ in millions)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Premiums written
|
|
$
|
1,728
|
|
|
$
|
1,689
|
|
|
$
|
1,613
|
|
Premiums earned
|
|
$
|
1,712
|
|
|
$
|
1,660
|
|
|
$
|
1,588
|
|
Claims and claims expense
|
|
(1,329
|
)
|
|
(1,258
|
)
|
|
(1,192
|
)
|
|||
Amortization of DAC
|
|
(41
|
)
|
|
(41
|
)
|
|
(40
|
)
|
|||
Other costs and expenses
|
|
(395
|
)
|
|
(485
|
)
|
|
(520
|
)
|
|||
Restructuring and related charges
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|||
Underwriting loss
|
|
$
|
(56
|
)
|
|
$
|
(124
|
)
|
|
$
|
(164
|
)
|
Catastrophe losses
|
|
$
|
50
|
|
|
$
|
36
|
|
|
$
|
14
|
|
|
|
|
|
|
|
|
||||||
Underwriting income (loss) by line of business
|
|
|
|
|
|
|
||||||
Auto
|
|
$
|
(37
|
)
|
|
$
|
(65
|
)
|
|
$
|
(145
|
)
|
Homeowners
|
|
(20
|
)
|
|
(59
|
)
|
|
(19
|
)
|
|||
Other personal lines
|
|
1
|
|
|
—
|
|
|
—
|
|
|||
Underwriting loss
|
|
$
|
(56
|
)
|
|
$
|
(124
|
)
|
|
$
|
(164
|
)
|
Auto premium measures and statistics
|
||||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
PIF (thousands)
|
|
1,352
|
|
|
1,391
|
|
|
1,415
|
|
|||
New issued applications (thousands)
|
|
484
|
|
|
597
|
|
|
627
|
|
|||
Average premium
|
|
$
|
574
|
|
|
$
|
547
|
|
|
$
|
516
|
|
Renewal ratio (%)
|
|
81.5
|
|
|
79.4
|
|
|
79.5
|
|
|||
Approved rate changes
(1)
:
|
|
|
|
|
|
|
||||||
# of locations
(2)
|
|
39
|
|
|
33
|
|
|
37
|
|
|||
Total brand (%)
(3)
|
|
5.0
|
|
|
4.2
|
|
|
7.1
|
|
|||
Location specific (%)
(4) (5)
|
|
5.7
|
|
|
6.1
|
|
|
9.3
|
|
(1)
|
Rate changes do not include rating plan enhancements, including the introduction of discounts and surcharges that result in no change in the overall rate level in a location. These rate changes do not reflect initial rates filed for insurance subsidiaries initially writing business in a location.
|
(2)
|
Esurance brand operates in 43 states and 2 Canadian provinces.
|
(3)
|
Represents the impact in the states and Canadian provinces where rate changes were approved during the period as a percentage of total brand prior year-end premiums written.
|
(4)
|
Represents the impact in the states and Canadian provinces where rate changes were approved during the period as a percentage of its respective total prior year-end premiums written in those same locations.
|
(5)
|
Based on historical premiums written in the locations noted above, rate changes approved for auto totaled $81 million, $65 million and $106 million in 2017, 2016 and 2015, respectively.
|
•
|
2.8%
or
39 thousand
decrease in PIF as of December 31, 2017 compared to December 31, 2016.
|
•
|
18.9%
decrease in new issued applications in 2017 compared to 2016, primarily due to the impact of rate increases, decreased marketing activities and underwriting guideline changes.
|
•
|
4.9%
increase in average premium in 2017 compared to 2016.
|
•
|
2.1
point increase in the renewal ratio in 2017 compared to 2016, primarily due to improved customer experience.
|
•
|
1.7% or 24 thousand decrease in PIF as of December 31, 2016 compared to December 31, 2015.
|
•
|
4.8% decrease in new issued applications in 2016 compared to 2015 due to a decrease in marketing activities and the impact of rate increases.
|
•
|
6.0% increase in average premium in 2016 compared to 2015.
|
•
|
0.1 point decrease in the renewal ratio in 2016 compared to 2015 primarily due to continued pressure from rate actions.
|
(1)
|
Esurance’s renewal ratios exclude the impact of risk related cancellations during the new business underwriting period. Customers can enter into a policy without a physical inspection. During the underwriting review period, a number of policies may be canceled if upon inspection the condition is unsatisfactory.
|
(2)
|
Rate changes were approved in 4 states, totaled $2.9 million in 2017. Rate changes were only approved in Texas in 2016. No rate changes were approved in 2015. N/A reflects not applicable.
|
(3)
|
Esurance brand operates in 31 states and 2 Canadian provinces.
|
•
|
21 thousand
increase in PIF as of December 31, 2017 compared to December 31, 2016.
|
•
|
3 thousand
decrease in new issued applications in 2017 compared to 2016 due to reduced marketing activities.
|
•
|
4.8%
increase in average premium in 2017 compared to 2016, primarily due to increased premium distribution in higher average premium states and rate changes. As of December 31, 2017, Esurance is writing homeowners insurance in 31
|
•
|
26 thousand increase in PIF as of December 31, 2016 compared to December 31, 2015.
|
•
|
9 thousand increase in new issued applications in 2016 compared to 2015.
|
•
|
As of December 31, 2016, Esurance was writing homeowners insurance in 31 states with lower hurricane risk.
|
(1)
|
Ratios are calculated using the premiums earned for the respective line of business.
|
Underwriting results
|
||||||||||||
|
|
For the years ended December 31,
|
||||||||||
($ in millions)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Premiums written
|
|
$
|
1,035
|
|
|
$
|
1,140
|
|
|
$
|
1,244
|
|
Premiums earned
|
|
$
|
1,090
|
|
|
$
|
1,202
|
|
|
$
|
1,269
|
|
Claims and claims expense
|
|
(789
|
)
|
|
(855
|
)
|
|
(933
|
)
|
|||
Amortization of DAC
|
|
(201
|
)
|
|
(221
|
)
|
|
(234
|
)
|
|||
Other costs and expenses
|
|
(128
|
)
|
|
(124
|
)
|
|
(127
|
)
|
|||
Restructuring and related charges
|
|
(5
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|||
Underwriting (loss) income
|
|
$
|
(33
|
)
|
|
$
|
1
|
|
|
$
|
(26
|
)
|
Catastrophe losses
|
|
$
|
193
|
|
|
$
|
111
|
|
|
$
|
111
|
|
|
|
|
|
|
|
|
||||||
Underwriting income (loss) by line of business
|
|
|
|
|
|
|
||||||
Auto
|
|
$
|
4
|
|
|
$
|
(29
|
)
|
|
$
|
(36
|
)
|
Homeowners
|
|
(47
|
)
|
|
36
|
|
|
32
|
|
|||
Other personal lines
|
|
10
|
|
|
(6
|
)
|
|
(22
|
)
|
|||
Underwriting (loss) income
|
|
$
|
(33
|
)
|
|
$
|
1
|
|
|
$
|
(26
|
)
|
Auto premium measures and statistics
|
||||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
PIF (thousands)
|
|
530
|
|
|
622
|
|
|
723
|
|
|||
New issued applications (thousands)
|
|
52
|
|
|
54
|
|
|
82
|
|
|||
Average premium
|
|
$
|
1,079
|
|
|
$
|
1,008
|
|
|
$
|
945
|
|
Renewal ratio (%)
(1)
|
|
73.0
|
|
|
74.4
|
|
|
77.3
|
|
|||
Approved rate changes
(2)
:
|
|
|
|
|
|
|
||||||
# of locations
(3)
|
|
27
|
|
|
24
|
|
|
30
|
|
|||
Total brand (%)
(4)
|
|
6.2
|
|
|
10.5
|
|
|
9.4
|
|
|||
Location specific (%)
(5)(6)
|
|
7.8
|
|
|
14.3
|
|
|
11.1
|
|
(1)
|
Encompass announced a plan to exit business in Massachusetts in the second quarter of 2017 and previously announced a plan to exit business in North Carolina in the first half of 2016, which has impacted the renewal ratio. Excluding Massachusetts and North Carolina, the renewal ratios were 74.5 points in 2017 compared to 75.0 points in 2016.
|
(2)
|
Rate changes that are indicated based on loss trend analysis to achieve a targeted return will continue to be pursued. Rate changes do not include rating plan enhancements, including the introduction of discounts and surcharges that result in no change in the overall rate level in a location. These rate changes do not reflect initial rates filed for insurance subsidiaries initially writing business in a location.
|
(3)
|
Encompass brand operates in 39 states and the District of Columbia.
|
(4)
|
Represents the impact in the states and the District of Columbia where rate changes were approved during the period as a percentage of total brand prior year-end premiums written.
|
(5)
|
Represents the impact in the states and the District of Columbia where rate changes were approved during the period as a percentage of its respective total prior year-end premiums written in those same locations.
|
(6)
|
Based on historical premiums written in the locations noted above, rate changes approved for auto totaled $37 million, $68 million and $63 million in 2017, 2016 and 2015, respectively. Approximately 20% of the rate increases approved in 2017 are expected to be earned in 2017, with the remainder expected to be earned in 2018 and 2019.
|
•
|
14.8%
or
92 thousand
decrease in PIF as of December 31, 2017 compared to December 31, 2016.
|
•
|
3.7%
decrease in new issued applications in
2017
compared to
2016
.
|
•
|
7.0%
increase in average premium in
2017
compared to
2016
.
|
•
|
1.4
point decrease in the renewal ratio in
2017
compared to
2016
, primarily due to profit improvement actions taken, including exiting states with inadequate returns. Encompass sells a high percentage of package policies that include both auto and homeowners; therefore, declines in
|
•
|
14.0% or 101 thousand decrease in PIF as of December 31, 2016 compared to December 31, 2015.
|
•
|
34.1% decrease in new issued applications in 2016 compared to 2015.
|
•
|
6.7% increase in average premium in 2016 compared to 2015.
|
•
|
2.9 point decrease in the renewal ratio in 2016 compared to 2015.
|
(1)
|
Encompass announced a plan to exit business in Massachusetts in the second quarter of 2017 and previously announced a plan to exit business in North Carolina in the first half of 2016, which has impacted the renewal ratio. Excluding Massachusetts and North Carolina, the renewal ratios were 79.0 points in 2017 compared to 79.9 points in 2016.
|
(2)
|
Includes rate changes approved based on our net cost of reinsurance.
|
(3)
|
Encompass brand operates in 39 states and the District of Columbia.
|
(4)
|
Based on historical premiums written in the locations noted above, rate changes approved for homeowner totaled $23 million, $27 million and $35 million in 2017, 2016 and 2015, respectively.
|
•
|
13.9%
or
41 thousand
decrease in PIF as of December 31, 2017 compared to December 31, 2016.
|
•
|
11.8%
decrease in new issued applications in
2017
compared to
2016
.
|
•
|
2.7%
increase in average premium in
2017
compared to
2016
, primarily due to rate changes.
|
•
|
1.3
point decrease in the renewal ratio in
2017
compared to
2016
, primarily due to profit improvement actions taken to exit states with inadequate returns. Encompass sells a high percentage of package policies that include both
|
•
|
12.7% or 43 thousand decrease in PIF as of December 31, 2016 compared to December 31, 2015.
|
•
|
29.2% decrease in new issued applications in 2016 compared to 2015.
|
•
|
5.4% increase in average premium in 2016 compared to 2015, primarily due to rate changes.
|
•
|
3.1 point decrease in the renewal ratio in 2016 compared to 2015.
|
(1)
|
Ratios are calculated using the premiums earned for the respective line of business.
|
Underwriting Results
|
||||||||||||
|
|
For the years ended December 31,
|
||||||||||
($ in millions)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Premiums written
(1)
|
|
$
|
—
|
|
|
$
|
3
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
||||||
Premiums earned
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Claims and claims expense
|
|
(96
|
)
|
|
(105
|
)
|
|
(53
|
)
|
|||
Operating costs and expenses
|
|
(3
|
)
|
|
(2
|
)
|
|
(2
|
)
|
|||
Underwriting loss
|
|
$
|
(99
|
)
|
|
$
|
(107
|
)
|
|
$
|
(55
|
)
|
(1)
|
Primarily represents retrospective reinsurance premium recognized when billed.
|
Reserves by type of exposure before and after the effects of reinsurance
|
||||||||
($ in millions)
|
|
December 31, 2017
|
|
December 31, 2016
|
||||
Direct excess commercial insurance
|
|
|
|
|
||||
Gross reserves
(1)
|
|
$
|
997
|
|
|
$
|
1,051
|
|
Reinsurance
(2)
|
|
(378
|
)
|
|
(400
|
)
|
||
Net reserves
|
|
619
|
|
|
651
|
|
||
Assumed reinsurance coverage
|
|
|
|
|
||||
Gross reserves
(3)
|
|
622
|
|
|
623
|
|
||
Reinsurance
(4)
|
|
(38
|
)
|
|
(35
|
)
|
||
Net reserves
|
|
584
|
|
|
588
|
|
||
Direct primary commercial insurance
|
|
|
|
|
||||
Gross reserves
(5)
|
|
177
|
|
|
191
|
|
||
Reinsurance
(6)
|
|
(48
|
)
|
|
(51
|
)
|
||
Net reserves
|
|
129
|
|
|
140
|
|
||
Other run-off business
|
|
|
|
|
||||
Gross reserves
|
|
24
|
|
|
25
|
|
||
Reinsurance
|
|
(21
|
)
|
|
(21
|
)
|
||
Net reserves
|
|
3
|
|
|
4
|
|
||
Unallocated loss adjustment expenses
|
|
|
|
|
||||
Gross reserves
|
|
73
|
|
|
63
|
|
||
Reinsurance
|
|
(1
|
)
|
|
(1
|
)
|
||
Net reserves
|
|
72
|
|
|
62
|
|
||
Total
|
|
|
|
|
||||
Gross reserves
|
|
1,893
|
|
|
1,953
|
|
||
Reinsurance
|
|
(486
|
)
|
|
(508
|
)
|
||
Net reserves
|
|
$
|
1,407
|
|
|
$
|
1,445
|
|
Summarized financial information
|
||||||||||||
|
|
For the years ended December 31,
|
||||||||||
($ in millions)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Premiums written
|
|
$
|
1,094
|
|
|
$
|
709
|
|
|
$
|
756
|
|
|
|
|
|
|
|
|
||||||
Revenues
|
|
|
|
|
|
|
||||||
Premiums
|
|
$
|
867
|
|
|
$
|
580
|
|
|
$
|
561
|
|
Intersegment insurance premiums and service fees
(1)
|
|
110
|
|
|
105
|
|
|
42
|
|
|||
Net investment income
|
|
16
|
|
|
13
|
|
|
11
|
|
|||
Realized capital gains and losses
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total revenues
|
|
993
|
|
|
698
|
|
|
614
|
|
|||
|
|
|
|
|
|
|
||||||
Costs and expenses
|
|
|
|
|
|
|
||||||
Claims and claims expense
|
|
(369
|
)
|
|
(258
|
)
|
|
(277
|
)
|
|||
Amortization of DAC
|
|
(296
|
)
|
|
(214
|
)
|
|
(169
|
)
|
|||
Operating costs and expenses
|
|
(401
|
)
|
|
(223
|
)
|
|
(164
|
)
|
|||
Amortization of purchased intangible assets
|
|
(92
|
)
|
|
—
|
|
|
—
|
|
|||
Restructuring and related charges
(2)
|
|
(13
|
)
|
|
—
|
|
|
—
|
|
|||
Total costs and expenses
|
|
(1,171
|
)
|
|
(695
|
)
|
|
(610
|
)
|
|||
|
|
|
|
|
|
|
||||||
Income tax benefit (expense)
|
|
193
|
|
|
—
|
|
|
(2
|
)
|
|||
Net income applicable to common shareholders
|
|
$
|
15
|
|
|
$
|
3
|
|
|
$
|
2
|
|
|
|
|
|
|
|
|
||||||
Adjusted net (loss) income
|
|
$
|
(59
|
)
|
|
$
|
3
|
|
|
$
|
2
|
|
Amortization of purchased intangible assets, after-tax
|
|
(60
|
)
|
|
—
|
|
|
—
|
|
|||
Tax Legislation benefit
|
|
134
|
|
|
—
|
|
|
—
|
|
|||
Net income applicable to common shareholders
|
|
$
|
15
|
|
|
$
|
3
|
|
|
$
|
2
|
|
|
|
|
|
|
|
|
||||||
SquareTrade
|
|
$
|
(22
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Allstate Roadside Services
|
|
(20
|
)
|
|
(12
|
)
|
|
(14
|
)
|
|||
Allstate Dealers Services
|
|
(2
|
)
|
|
4
|
|
|
16
|
|
|||
Arity
|
|
(15
|
)
|
|
11
|
|
|
—
|
|
|||
Adjusted net (loss) income
|
|
$
|
(59
|
)
|
|
$
|
3
|
|
|
$
|
2
|
|
|
|
|
|
|
|
|
||||||
Policies in force as of December 31 (in thousands)
|
|
43,506
|
|
|
4,910
|
|
|
4,812
|
|
Total reserves, net of reinsurance recoverables (“net reserves”), as of December 31, by line of business
|
||||||||||||
($ in millions)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Allstate brand
|
|
$
|
16,826
|
|
|
$
|
16,108
|
|
|
$
|
14,953
|
|
Esurance brand
|
|
777
|
|
|
740
|
|
|
717
|
|
|||
Encompass brand
|
|
758
|
|
|
749
|
|
|
770
|
|
|||
Total Allstate Protection
|
|
18,361
|
|
|
17,597
|
|
|
16,440
|
|
|||
Discontinued Lines and Coverages
|
|
1,407
|
|
|
1,445
|
|
|
1,516
|
|
|||
Total Property-Liability
|
|
19,768
|
|
|
19,042
|
|
|
17,956
|
|
|||
Service Businesses
|
|
86
|
|
|
24
|
|
|
21
|
|
|||
Total net reserves
|
|
$
|
19,854
|
|
|
$
|
19,066
|
|
|
$
|
17,977
|
|
Net reserves
|
||||||||||||
($ in millions)
|
|
January 1 reserves
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Allstate brand
|
|
$
|
16,108
|
|
|
$
|
14,953
|
|
|
$
|
14,195
|
|
Esurance brand
|
|
740
|
|
|
717
|
|
|
649
|
|
|||
Encompass brand
|
|
749
|
|
|
770
|
|
|
754
|
|
|||
Total Allstate Protection
|
|
17,597
|
|
|
16,440
|
|
|
15,598
|
|
|||
Discontinued Lines and Coverages
|
|
1,445
|
|
|
1,516
|
|
|
1,612
|
|
|||
Total Property-Liability
|
|
19,042
|
|
|
17,956
|
|
|
17,210
|
|
|||
Service Businesses
|
|
24
|
|
|
21
|
|
|
19
|
|
|||
Total net reserves
|
|
$
|
19,066
|
|
|
$
|
17,977
|
|
|
$
|
17,229
|
|
Net reserves and prior year reserve reestimates
|
|||||||||||||||||||||
($ in millions, except ratios)
|
|
2017
|
|
2016
|
|
2015
|
|||||||||||||||
|
|
Reserve reestimate
(1)
|
|
Effect on combined ratio
(2)
|
|
Reserve reestimate
(1)
|
|
Effect on combined ratio
(2)
|
|
Reserve reestimate
(1)
|
|
Effect on combined ratio
(2)
|
|||||||||
Allstate brand
|
|
$
|
(585
|
)
|
|
(1.8
|
)
|
|
$
|
(110
|
)
|
|
(0.3
|
)
|
|
$
|
36
|
|
|
0.1
|
|
Esurance brand
|
|
(2
|
)
|
|
—
|
|
|
(21
|
)
|
|
(0.1
|
)
|
|
(17
|
)
|
|
—
|
|
|||
Encompass brand
|
|
(14
|
)
|
|
(0.1
|
)
|
|
5
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|||
Total Allstate Protection
|
|
(601
|
)
|
|
(1.9
|
)
|
|
(126
|
)
|
|
(0.4
|
)
|
|
26
|
|
|
0.1
|
|
|||
Discontinued Lines and Coverages
|
|
96
|
|
|
0.3
|
|
|
105
|
|
|
0.3
|
|
|
53
|
|
|
0.2
|
|
|||
Total Property-Liability
(3)
|
|
(505
|
)
|
|
(1.6
|
)
|
|
(21
|
)
|
|
(0.1
|
)
|
|
79
|
|
|
0.3
|
|
|||
Service Businesses
|
|
2
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|||
Total
|
|
$
|
(503
|
)
|
|
|
|
$
|
(17
|
)
|
|
|
|
$
|
81
|
|
|
|
|||
Reserve reestimates, after-tax
|
|
$
|
(327
|
)
|
|
|
|
$
|
(11
|
)
|
|
|
|
$
|
53
|
|
|
|
|||
Consolidated net income applicable to common shareholders
|
|
$
|
3,073
|
|
|
|
|
$
|
1,761
|
|
|
|
|
$
|
2,055
|
|
|
|
|||
Reserve reestimates as a % impact on consolidated net income applicable to common shareholders
|
|
10.6
|
%
|
|
|
|
0.6
|
%
|
|
|
|
(2.6
|
)%
|
|
|
(1)
|
Favorable reserve reestimates are shown in parentheses.
|
(2)
|
Ratios are calculated using property and casualty premiums earned.
|
(3)
|
Prior year reserve reestimates included in catastrophe losses totaled
$18 million
favorable,
$6 million
unfavorable and
$15 million
favorable in
2017
,
2016
and
2015
, respectively.
|
2016 Prior year reserve reestimates
|
||||||||||||||||||||||||
($ in millions)
|
|
2011 & prior
|
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
Total
|
||||||||||||
Allstate brand
|
|
$
|
(11
|
)
|
|
$
|
(52
|
)
|
|
$
|
(69
|
)
|
|
$
|
(40
|
)
|
|
$
|
62
|
|
|
$
|
(110
|
)
|
Esurance brand
|
|
(7
|
)
|
|
(3
|
)
|
|
(5
|
)
|
|
(9
|
)
|
|
3
|
|
|
(21
|
)
|
||||||
Encompass brand
|
|
(25
|
)
|
|
7
|
|
|
3
|
|
|
14
|
|
|
6
|
|
|
5
|
|
||||||
Total Allstate Protection
|
|
(43
|
)
|
|
(48
|
)
|
|
(71
|
)
|
|
(35
|
)
|
|
71
|
|
|
(126
|
)
|
||||||
Discontinued Lines and Coverages
|
|
105
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
105
|
|
||||||
Total Property-Liability
|
|
62
|
|
|
(48
|
)
|
|
(71
|
)
|
|
(35
|
)
|
|
71
|
|
|
(21
|
)
|
||||||
Service Businesses
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
4
|
|
||||||
Total
|
|
$
|
62
|
|
|
$
|
(48
|
)
|
|
$
|
(71
|
)
|
|
$
|
(35
|
)
|
|
$
|
75
|
|
|
$
|
(17
|
)
|
2015 Prior year reserve reestimates
|
||||||||||||||||||||||||
($ in millions)
|
|
2010 & prior
|
|
2011
|
|
2012
|
|
2013
|
|
2014
|
|
Total
|
||||||||||||
Allstate brand
|
|
$
|
(73
|
)
|
|
$
|
(74
|
)
|
|
$
|
(29
|
)
|
|
$
|
42
|
|
|
$
|
170
|
|
|
$
|
36
|
|
Esurance brand
|
|
(5
|
)
|
|
(3
|
)
|
|
(2
|
)
|
|
(5
|
)
|
|
(2
|
)
|
|
(17
|
)
|
||||||
Encompass brand
|
|
(11
|
)
|
|
1
|
|
|
2
|
|
|
12
|
|
|
3
|
|
|
7
|
|
||||||
Total Allstate Protection
|
|
(89
|
)
|
|
(76
|
)
|
|
(29
|
)
|
|
49
|
|
|
171
|
|
|
26
|
|
||||||
Discontinued Lines and Coverages
|
|
53
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
53
|
|
||||||
Total Property-Liability
|
|
(36
|
)
|
|
(76
|
)
|
|
(29
|
)
|
|
49
|
|
|
171
|
|
|
79
|
|
||||||
Service Businesses
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
2
|
|
||||||
Total
|
|
$
|
(36
|
)
|
|
$
|
(76
|
)
|
|
$
|
(29
|
)
|
|
$
|
49
|
|
|
$
|
173
|
|
|
$
|
81
|
|
Net reserves by line
|
||||||||||||
|
|
January 1 reserves
|
||||||||||
($ in millions)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Auto
|
|
$
|
13,530
|
|
|
$
|
12,459
|
|
|
$
|
11,698
|
|
Homeowners
|
|
1,990
|
|
|
1,937
|
|
|
1,849
|
|
|||
Other personal lines
|
|
1,456
|
|
|
1,490
|
|
|
1,502
|
|
|||
Commercial lines
|
|
621
|
|
|
554
|
|
|
549
|
|
|||
Total Allstate Protection
|
|
$
|
17,597
|
|
|
$
|
16,440
|
|
|
$
|
15,598
|
|
Summary of pending new and closed claims for Allstate Protection
|
|||||||||
Number of claims
|
|
2017
|
|
2016
|
|
2015
|
|||
Auto
|
|
|
|
|
|
|
|||
Pending, beginning of year
|
|
534,531
|
|
|
521,890
|
|
|
487,227
|
|
New
|
|
6,448,747
|
|
|
6,844,491
|
|
|
6,752,401
|
|
Total closed
|
|
(6,444,854
|
)
|
|
(6,831,850
|
)
|
|
(6,717,738
|
)
|
Pending, end of year
|
|
538,424
|
|
|
534,531
|
|
|
521,890
|
|
Homeowners
|
|
|
|
|
|
|
|||
Pending, beginning of year
|
|
34,691
|
|
|
38,865
|
|
|
33,648
|
|
New
|
|
898,512
|
|
|
818,084
|
|
|
714,562
|
|
Total closed
|
|
(895,909
|
)
|
|
(822,258
|
)
|
|
(709,345
|
)
|
Pending, end of year
|
|
37,294
|
|
|
34,691
|
|
|
38,865
|
|
Other personal lines
|
|
|
|
|
|
|
|||
Pending, beginning of year
|
|
14,937
|
|
|
15,835
|
|
|
15,494
|
|
New
|
|
242,427
|
|
|
219,053
|
|
|
307,011
|
|
Total closed
|
|
(240,287
|
)
|
|
(219,951
|
)
|
|
(306,670
|
)
|
Pending, end of year
|
|
17,077
|
|
|
14,937
|
|
|
15,835
|
|
Commercial lines
|
|
|
|
|
|
|
|||
Pending, beginning of year
|
|
11,518
|
|
|
11,837
|
|
|
11,836
|
|
New
|
|
55,308
|
|
|
73,139
|
|
|
74,942
|
|
Total closed
|
|
(56,410
|
)
|
|
(73,458
|
)
|
|
(74,941
|
)
|
Pending, end of year
|
|
10,416
|
|
|
11,518
|
|
|
11,837
|
|
Total Allstate Protection
|
|
|
|
|
|
|
|||
Pending, beginning of year
|
|
595,677
|
|
|
588,427
|
|
|
548,205
|
|
New
|
|
7,644,994
|
|
|
7,954,767
|
|
|
7,848,916
|
|
Total closed
|
|
(7,637,460
|
)
|
|
(7,947,517
|
)
|
|
(7,808,694
|
)
|
Pending, end of year
|
|
603,211
|
|
|
595,677
|
|
|
588,427
|
|
Net asbestos reserves by type of exposure and total reserve additions
|
||||||||||||||||||||||||||||||
($ in millions)
|
|
December 31, 2017
|
|
December 31, 2016
|
|
December 31, 2015
|
||||||||||||||||||||||||
|
|
Active policy-holders
|
|
Net reserves
|
|
% of reserves
|
|
Active policy-holders
|
|
Net reserves
|
|
% of reserves
|
|
Active policy-holders
|
|
Net reserves
|
|
% of reserves
|
||||||||||||
Direct policyholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Primary
|
|
48
|
|
|
$
|
10
|
|
|
1
|
%
|
|
51
|
|
|
$
|
9
|
|
|
1
|
%
|
|
48
|
|
|
$
|
10
|
|
|
1
|
%
|
Excess
|
|
296
|
|
|
308
|
|
|
35
|
|
|
297
|
|
|
266
|
|
|
29
|
|
|
298
|
|
|
248
|
|
|
26
|
|
|||
Total
|
|
344
|
|
|
318
|
|
|
36
|
|
|
348
|
|
|
275
|
|
|
30
|
|
|
346
|
|
|
258
|
|
|
27
|
|
|||
Assumed reinsurance
|
|
|
|
117
|
|
|
13
|
|
|
|
|
125
|
|
|
14
|
|
|
|
|
156
|
|
|
16
|
|
||||||
IBNR
|
|
|
|
449
|
|
|
51
|
|
|
|
|
512
|
|
|
56
|
|
|
|
|
546
|
|
|
57
|
|
||||||
Total net reserves
|
|
|
|
$
|
884
|
|
|
100
|
%
|
|
|
|
$
|
912
|
|
|
100
|
%
|
|
|
|
$
|
960
|
|
|
100
|
%
|
|||
Total reserve additions
|
|
|
|
$
|
61
|
|
|
|
|
|
|
$
|
67
|
|
|
|
|
|
|
$
|
39
|
|
|
|
•
|
There was a net decrease of 4 policyholders in 2017, including 10 new policyholders reporting new claims and the closing of 14 policyholders’ claims.
|
•
|
There was a net increase of 2 policyholders in 2016, including 17 new policyholders reporting new claims and the closing of 15 policyholders’ claims.
|
•
|
There was a net increase of 6 policyholders in 2015, including 15 new policyholders reporting new claims and the closing of 9 policyholders’ claims.
|
(1)
|
N/A reflects no S&P Global Ratings (“S&P”) rating available.
|
(2)
|
As of December 31, 2017 and 2016, MCCA includes $27 million and $28 million of reinsurance recoverable on paid claims, respectively, and $5.23 billion and $4.92 billion of reinsurance recoverable on unpaid claims, respectively.
|
(3)
|
As of December 31, 2017, case reserves for MCCA, PLIGA, Lloyd’s and total Property-Liability were 83%, 100%, 64% and 82% of the reinsurance recoverable for unpaid claims, respectively.
|
(1)
|
We ceded $84 million of claims and claims expenses related to Hurricane Irma to the catastrophe reinsurance programs, of which $13 million of unallocated expenses were recorded in Other. Reinsurance recoverables related to named storm Sandy also decreased the ceded claims and claims expenses by $6 million.
|
(1)
|
Paid claims and claims expenses reported in the table for the current and prior years, recovered from the MCCA totaled $97 million, $101 million and $89 million in 2017, 2016 and 2015, respectively.
|
(2)
|
Gross reserves for the year ended December 31, 2017, comprise 87% case reserves and 13% IBNR. Gross reserves for the year ended December 31, 2016 comprise 85% case reserves and 15% IBNR. Reserves for the years ended December 31, 2015 comprise 86% case reserves and 14% IBNR
. The MCCA does not require member companies to report ultimate case reserves
.
|
(1)
|
Total claims includes those covered and not covered by the MCCA reinsurance.
|
•
|
Net income applicable to common shareholders was
$577 million
in
2017
compared to
$219 million
in
2016
. 2017 results include a tax benefit of $332 million related to the Tax Legislation.
|
•
|
Adjusted net income was
$253 million
in
2017
compared to
$247 million
in
2016
.
|
•
|
Premiums and contract charges totaled
$1.28 billion
in
2017
, an increase of
2.4%
from
$1.25 billion
in
2016
.
|
•
|
Contract benefits totaled
$765 million
in
2017
, an increase of
3.1%
from
$742 million
in
2016
.
|
Summarized financial information
|
||||||||||||
|
|
For the years ended December 31,
|
||||||||||
($ in millions)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Revenues
|
|
|
|
|
|
|
||||||
Premiums and contract charges
|
|
$
|
1,280
|
|
|
$
|
1,250
|
|
|
$
|
1,223
|
|
Net investment income
|
|
489
|
|
|
482
|
|
|
490
|
|
|||
Realized capital gains and losses
|
|
5
|
|
|
(38
|
)
|
|
2
|
|
|||
Total revenues
|
|
1,774
|
|
|
1,694
|
|
|
1,715
|
|
|||
|
|
|
|
|
|
|
||||||
Costs and expenses
|
|
|
|
|
|
|
||||||
Contract benefits
|
|
(765
|
)
|
|
(742
|
)
|
|
(749
|
)
|
|||
Interest credited to contractholder funds
|
|
(282
|
)
|
|
(285
|
)
|
|
(282
|
)
|
|||
Amortization of DAC
|
|
(134
|
)
|
|
(131
|
)
|
|
(133
|
)
|
|||
Operating costs and expenses
|
|
(238
|
)
|
|
(225
|
)
|
|
(212
|
)
|
|||
Restructuring and related charges
|
|
(2
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|||
Total costs and expenses
|
|
(1,421
|
)
|
|
(1,384
|
)
|
|
(1,377
|
)
|
|||
|
|
|
|
|
|
|
||||||
Loss on disposition of operations
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|||
Income tax benefit (expense)
|
|
224
|
|
|
(91
|
)
|
|
(108
|
)
|
|||
Net income applicable to common shareholders
|
|
$
|
577
|
|
|
$
|
219
|
|
|
$
|
229
|
|
|
|
|
|
|
|
|
||||||
Adjusted net income
|
|
$
|
253
|
|
|
$
|
247
|
|
|
$
|
239
|
|
Realized capital gains and losses, after-tax
|
|
2
|
|
|
(24
|
)
|
|
1
|
|
|||
DAC and DSI amortization related to realized capital gains and losses, after-tax
|
|
(10
|
)
|
|
(4
|
)
|
|
(4
|
)
|
|||
Loss on disposition of operations, after-tax
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|||
Change in accounting for investments in qualified affordable housing projects
|
|
—
|
|
|
—
|
|
|
(6
|
)
|
|||
Tax Legislation benefit
|
|
332
|
|
|
—
|
|
|
—
|
|
|||
Net income applicable to common shareholders
|
|
$
|
577
|
|
|
$
|
219
|
|
|
$
|
229
|
|
|
|
|
|
|
|
|
||||||
Reserve for life-contingent contract benefits as of December 31
|
|
$
|
2,636
|
|
|
$
|
2,578
|
|
|
$
|
2,536
|
|
|
|
|
|
|
|
|
||||||
Contractholder funds as of December 31
|
|
$
|
7,608
|
|
|
$
|
7,464
|
|
|
$
|
7,359
|
|
|
|
|
|
|
|
|
||||||
Policies in force as of December 31 (in thousands)
|
|
2,026
|
|
|
2,023
|
|
|
2,026
|
|
Premiums and contract charges by product
|
||||||||||||
|
|
For the years ended December 31,
|
||||||||||
($ in millions)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Traditional life insurance premiums
|
|
$
|
568
|
|
|
$
|
533
|
|
|
$
|
505
|
|
Accident and health insurance premiums
|
|
2
|
|
|
2
|
|
|
2
|
|
|||
Interest-sensitive life insurance contract charges
|
|
710
|
|
|
715
|
|
|
716
|
|
|||
Premiums and contract charges
(1)
|
|
$
|
1,280
|
|
|
$
|
1,250
|
|
|
$
|
1,223
|
|
(1)
|
Contract charges related to the cost of insurance totaled $
487 million
, $488 million and $485 million in
2017
,
2016
and
2015
, respectively.
|
Components of amortization of DAC
|
||||||||||||
|
|
For the years ended December 31,
|
||||||||||
($ in millions)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Amortization of DAC before amortization relating to realized capital gains and losses and changes in assumptions
|
|
$
|
134
|
|
|
$
|
131
|
|
|
$
|
127
|
|
Amortization relating to realized capital gains and losses
(1)
|
|
14
|
|
|
6
|
|
|
5
|
|
|||
Amortization (deceleration) acceleration for changes in assumptions (‘‘DAC unlocking’’)
|
|
(14
|
)
|
|
(6
|
)
|
|
1
|
|
|||
Total amortization of DAC
|
|
$
|
134
|
|
|
$
|
131
|
|
|
$
|
133
|
|
(1)
|
The impact of realized capital gains and losses on amortization of DAC is dependent upon the relationship between the assets that give rise to the gain or loss and the product liability supported by the assets. Fluctuations result from changes in the impact of realized capital gains and losses on actual and expected gross profits.
|
Changes in DAC
|
||||||||||||||||||||||||
($ in millions)
|
|
Traditional life and accident and health
|
|
Interest-sensitive life insurance
|
|
Total
|
||||||||||||||||||
|
|
For the years ended December 31,
|
||||||||||||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||||||
Balance, beginning of year
|
|
$
|
438
|
|
|
$
|
424
|
|
|
$
|
762
|
|
|
$
|
847
|
|
|
$
|
1,200
|
|
|
$
|
1,271
|
|
Acquisition costs deferred
|
|
66
|
|
|
57
|
|
|
66
|
|
|
77
|
|
|
132
|
|
|
134
|
|
||||||
Amortization of DAC before amortization relating to realized capital gains and losses and changes in assumptions
(1)
|
|
(39
|
)
|
|
(43
|
)
|
|
(95
|
)
|
|
(88
|
)
|
|
(134
|
)
|
|
(131
|
)
|
||||||
Amortization relating to realized capital gains and losses
(1)
|
|
—
|
|
|
—
|
|
|
(14
|
)
|
|
(6
|
)
|
|
(14
|
)
|
|
(6
|
)
|
||||||
Amortization deceleration for changes in assumptions (“DAC unlocking”)
(1)
|
|
—
|
|
|
—
|
|
|
14
|
|
|
6
|
|
|
14
|
|
|
6
|
|
||||||
Effect of unrealized capital gains and losses
(2)
|
|
—
|
|
|
—
|
|
|
(46
|
)
|
|
(74
|
)
|
|
(46
|
)
|
|
(74
|
)
|
||||||
Ending balance
|
|
$
|
465
|
|
|
$
|
438
|
|
|
$
|
687
|
|
|
$
|
762
|
|
|
$
|
1,152
|
|
|
$
|
1,200
|
|
(1)
|
Included as a component of amortization of DAC on the Consolidated Statements of Operations.
|
(2)
|
Represents the change in the DAC adjustment for unrealized capital gains and losses. The DAC adjustment represents the amount by which the amortization of DAC would increase or decrease if the unrealized gains and losses in the respective product portfolios were realized.
|
Operating costs and expenses
|
||||||||||||
|
|
For the years ended December 31,
|
||||||||||
($ in millions)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Non-deferrable commissions
|
|
$
|
13
|
|
|
$
|
17
|
|
|
$
|
5
|
|
General and administrative expenses
|
|
225
|
|
|
208
|
|
|
207
|
|
|||
Total operating costs and expenses
|
|
$
|
238
|
|
|
$
|
225
|
|
|
$
|
212
|
|
Reserve for life-contingent contract benefits
|
||||||||||||
|
|
For the years ended December 31,
|
||||||||||
($ in millions)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Traditional life insurance
|
|
$
|
2,460
|
|
|
$
|
2,398
|
|
|
$
|
2,353
|
|
Accident and health insurance
|
|
176
|
|
|
180
|
|
|
183
|
|
|||
Reserve for life-contingent contract benefits
|
|
$
|
2,636
|
|
|
$
|
2,578
|
|
|
$
|
2,536
|
|
Change in contractholder funds
|
||||||||||||
|
|
For the years ended December 31,
|
||||||||||
($ in millions)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Contractholder funds, beginning balance
|
|
$
|
7,464
|
|
|
$
|
7,359
|
|
|
$
|
7,254
|
|
|
|
|
|
|
|
|
||||||
Deposits
|
|
973
|
|
|
991
|
|
|
1,034
|
|
|||
|
|
|
|
|
|
|
||||||
Interest credited
|
|
282
|
|
|
284
|
|
|
282
|
|
|||
|
|
|
|
|
|
|
||||||
Benefits, withdrawals and other adjustments
|
|
|
|
|
|
|
||||||
Benefits
|
|
(241
|
)
|
|
(245
|
)
|
|
(273
|
)
|
|||
Surrenders and partial withdrawals
|
|
(254
|
)
|
|
(250
|
)
|
|
(253
|
)
|
|||
Contract charges
|
|
(704
|
)
|
|
(705
|
)
|
|
(702
|
)
|
|||
Net transfers from separate accounts
|
|
4
|
|
|
4
|
|
|
6
|
|
|||
Other adjustments
(1)
|
|
84
|
|
|
26
|
|
|
11
|
|
|||
Total benefits, withdrawals and other adjustments
|
|
(1,111
|
)
|
|
(1,170
|
)
|
|
(1,211
|
)
|
|||
Contractholder funds, ending balance
|
|
$
|
7,608
|
|
|
$
|
7,464
|
|
|
$
|
7,359
|
|
(1)
|
The table above illustrates the changes in contractholder funds, which are presented gross of reinsurance recoverables on the Consolidated Statements of Financial Position. The table above is intended to supplement our discussion and analysis of revenues, which are presented net of reinsurance on the Consolidated Statements of Operations. As a result, the net change in contractholder funds associated with products reinsured is reflected as a component of the other adjustments line.
|
(1)
|
N/A reflects no S&P rating available.
|
(2)
|
As of December 31,
2017
and
2016
, the other category includes $33 million and $35 million, respectively, of recoverables due from reinsurers rated A- or better by S&P.
|
•
|
Net income applicable to common shareholders was
$146 million
in
2017
compared to
$96 million
in
2016
. 2
017 results include a tax benefit of $51 million related to the Tax Legislation.
|
•
|
Adjusted net income was
$95 million
in
2017
compared to
$100 million
in
2016
.
|
•
|
Premiums and contract charges totaled
$1.08 billion
in
2017
, an increase of
7.2%
from
$1.01 billion
in
2016
.
|
•
|
Contract benefits totaled
$564 million
in
2017
, an increase of
10.8%
from
$509 million
in
2016
.
|
Summarized financial information
|
|||||||||||||
|
|
For the years ended December 31,
|
|||||||||||
($ in millions)
|
|
2017
|
|
2016
|
|
2015
|
|||||||
Revenues
|
—
|
|
|
|
|
|
|
||||||
Premiums and contract charges
|
|
$
|
1,084
|
|
|
$
|
1,011
|
|
|
$
|
921
|
|
|
Net investment income
|
|
72
|
|
|
71
|
|
|
71
|
|
||||
Realized capital gains and losses
|
|
1
|
|
|
(5
|
)
|
|
1
|
|
||||
Total revenues
|
|
1,157
|
|
|
1,077
|
|
|
993
|
|
||||
|
|
|
|
|
|
|
|||||||
Costs and expenses
|
|
|
|
|
|
|
|||||||
Contract benefits
|
|
(564
|
)
|
|
(509
|
)
|
|
(452
|
)
|
||||
Interest credited to contractholder funds
|
|
(35
|
)
|
|
(36
|
)
|
|
(36
|
)
|
||||
Amortization of DAC
|
|
(142
|
)
|
|
(145
|
)
|
|
(124
|
)
|
||||
Operating costs and expenses
|
|
(266
|
)
|
|
(240
|
)
|
|
(222
|
)
|
||||
Restructuring and related charges
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
||||
Total costs and expenses
|
|
(1,010
|
)
|
|
(930
|
)
|
|
(834
|
)
|
||||
|
|
|
|
|
|
|
|||||||
Income tax expense
|
|
(1
|
)
|
|
(51
|
)
|
|
(55
|
)
|
||||
Net income applicable to common shareholders
|
|
$
|
146
|
|
|
$
|
96
|
|
|
$
|
104
|
|
|
|
|
|
|
|
|
|
|||||||
Adjusted net income
|
|
$
|
95
|
|
|
$
|
100
|
|
|
$
|
104
|
|
|
Realized capital gains and losses, after-tax
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
||||
Tax Legislation benefit
|
|
51
|
|
|
—
|
|
|
—
|
|
||||
Net income applicable to common shareholders
|
|
$
|
146
|
|
|
$
|
96
|
|
|
$
|
104
|
|
|
|
|
|
|
|
|
|
|||||||
Benefit ratio
(1)
|
|
52.0
|
|
|
50.3
|
|
|
49.1
|
|
||||
|
|
|
|
|
|
|
|||||||
Operating expense ratio
(2)
|
|
24.5
|
|
|
23.7
|
|
|
24.1
|
|
||||
|
|
|
|
|
|
|
|||||||
Reserve for life-contingent contract benefits as of December 31
|
|
$
|
979
|
|
|
$
|
940
|
|
|
$
|
894
|
|
|
|
|
|
|
|
|
|
|||||||
Contractholder funds as of December 31
|
|
$
|
890
|
|
|
$
|
881
|
|
|
$
|
866
|
|
|
|
|
|
|
|
|
|
|||||||
Policies in force as of December 31 (in thousands)
|
|
4,033
|
|
|
3,755
|
|
|
3,312
|
|
(1)
|
Benefit ratio is calculated as contract benefits divided by premiums and contract charges.
|
(2)
|
Operating expense ratio is calculated as operating costs and expenses divided by premiums and contract charges.
|
Changes in DAC
|
||||||||
|
|
For the years ended December 31,
|
||||||
($ in millions)
|
|
2017
|
|
2016
|
||||
Balance, beginning of year
|
|
$
|
526
|
|
|
$
|
514
|
|
Acquisition costs deferred
|
|
158
|
|
|
157
|
|
||
Amortization of DAC before amortization relating to changes in assumptions
(1)
|
|
(141
|
)
|
|
(141
|
)
|
||
Amortization acceleration for changes in assumptions (“DAC unlocking”)
(1)
|
|
(1
|
)
|
|
(4
|
)
|
||
Ending balance
|
|
$
|
542
|
|
|
$
|
526
|
|
(1)
|
Included as a component of amortization of DAC on the Consolidated Statements of Operations.
|
Operating costs and expenses
|
||||||||||||
|
|
For the years ended December 31,
|
||||||||||
($ in millions)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Non-deferrable commissions
|
|
$
|
98
|
|
|
$
|
91
|
|
|
$
|
87
|
|
General and administrative expenses
|
|
168
|
|
|
149
|
|
|
135
|
|
|||
Total operating costs and expenses
|
|
$
|
266
|
|
|
$
|
240
|
|
|
$
|
222
|
|
Reserve for life-contingent contract benefits
|
||||||||||||
|
|
For the years ended December 31,
|
||||||||||
($ in millions)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Traditional life insurance
|
|
$
|
262
|
|
|
$
|
247
|
|
|
$
|
233
|
|
Accident and health insurance
|
|
717
|
|
|
693
|
|
|
661
|
|
|||
Reserve for life-contingent contract benefits
|
|
$
|
979
|
|
|
$
|
940
|
|
|
$
|
894
|
|
(1)
|
As of
December 31, 2017
and
2016
, the other category includes $4 million and $4 million, respectively, of recoverables due from reinsurers rated A- or better by S&P.
|
•
|
Net income applicable to common shareholders was
$418 million
in
2017
compared to
$76 million
in
2016
.
2017 results include a tax benefit of $182 million related to the Tax Legislation.
|
•
|
Adjusted net income was
$204 million
in
2017
compared to
$101 million
in
2016
.
|
•
|
Net investment income increased
10.5%
to
$1.31 billion
in 2017 from
$1.18 billion
in
2016
.
|
•
|
Net realized capital gains totaled
$44 million
in
2017
compared to net realized capital losses of
$38 million
in
2016
.
|
•
|
Contractholder funds totaled
$10.94 billion
as of
December 31, 2017
, reflecting a decrease of
$979 million
from
$11.92 billion
as of
December 31, 2016
. Reserve for life-contingent contract benefits totaled
$8.93 billion
as of
December 31, 2017
compared to
$8.72 billion
as of
December 31, 2016
.
|
Summarized financial information
|
||||||||||||
|
|
For the years ended December 31,
|
||||||||||
($ in millions)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Revenues
|
|
|
|
|
|
|
||||||
Contract charges
|
|
$
|
14
|
|
|
$
|
14
|
|
|
$
|
14
|
|
Net investment income
|
|
1,305
|
|
|
1,181
|
|
|
1,323
|
|
|||
Realized capital gains and losses
|
|
44
|
|
|
(38
|
)
|
|
264
|
|
|||
Total revenues
|
|
1,363
|
|
|
1,157
|
|
|
1,601
|
|
|||
|
|
|
|
|
|
|
||||||
Costs and expenses
|
|
|
|
|
|
|
||||||
Contract benefits
|
|
(594
|
)
|
|
(606
|
)
|
|
(602
|
)
|
|||
Interest credited to contractholder funds
|
|
(373
|
)
|
|
(405
|
)
|
|
(443
|
)
|
|||
Amortization of DAC
|
|
(7
|
)
|
|
(7
|
)
|
|
(5
|
)
|
|||
Operating costs and expenses
|
|
(35
|
)
|
|
(32
|
)
|
|
(38
|
)
|
|||
Restructuring and related charges
|
|
—
|
|
|
—
|
|
|
1
|
|
|||
Total costs and expenses
|
|
(1,009
|
)
|
|
(1,050
|
)
|
|
(1,087
|
)
|
|||
|
|
|
|
|
|
|
||||||
Gain on disposition of operations
|
|
6
|
|
|
5
|
|
|
4
|
|
|||
Income tax benefit (expense)
|
|
58
|
|
|
(36
|
)
|
|
(188
|
)
|
|||
Net income applicable to common shareholders
|
|
$
|
418
|
|
|
$
|
76
|
|
|
$
|
330
|
|
|
|
|
|
|
|
|
||||||
Adjusted net income
|
|
$
|
204
|
|
|
$
|
101
|
|
|
$
|
166
|
|
Realized capital gains and losses, after-tax
|
|
28
|
|
|
(26
|
)
|
|
172
|
|
|||
Valuation changes on embedded derivatives not hedged, after-tax
|
|
—
|
|
|
(2
|
)
|
|
(1
|
)
|
|||
DAC and DSI amortization related to realized capital gains and losses and valuation changes on embedded derivatives not hedged, after-tax
|
|
—
|
|
|
—
|
|
|
1
|
|
|||
Gain on disposition of operations, after-tax
|
|
4
|
|
|
3
|
|
|
3
|
|
|||
Change in accounting for investments in qualified affordable housing projects
|
|
—
|
|
|
—
|
|
|
(11
|
)
|
|||
Tax Legislation benefit
|
|
182
|
|
|
—
|
|
|
—
|
|
|||
Net income applicable to common shareholders
|
|
$
|
418
|
|
|
$
|
76
|
|
|
$
|
330
|
|
|
|
|
|
|
|
|
||||||
Reserve for life-contingent contract benefits as of December 31
|
|
$
|
8,934
|
|
|
$
|
8,721
|
|
|
$
|
8,817
|
|
|
|
|
|
|
|
|
||||||
Contractholder funds as of December 31
|
|
$
|
10,936
|
|
|
$
|
11,915
|
|
|
$
|
13,070
|
|
|
|
|
|
|
|
|
||||||
Policies in force as of December 31 (in thousands)
|
|
|
|
|
|
|
||||||
Deferred annuities
|
|
142
|
|
|
156
|
|
|
172
|
|
|||
Immediate annuities
|
|
89
|
|
|
95
|
|
|
100
|
|
|||
Total
|
|
231
|
|
|
251
|
|
|
272
|
|
Investment spread
|
||||||||||||
|
|
For the years ended December 31,
|
||||||||||
($ in millions)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Investment spread before valuation changes on embedded derivatives not hedged
|
|
$
|
432
|
|
|
$
|
268
|
|
|
$
|
368
|
|
Valuation changes on derivatives embedded in equity-indexed annuity contracts that are not hedged
|
|
(1
|
)
|
|
(3
|
)
|
|
(2
|
)
|
|||
Total investment spread
|
|
$
|
431
|
|
|
$
|
265
|
|
|
$
|
366
|
|
Analysis of investment spread
|
|||||||||||||||||||||||||||
|
|
Weighted average
investment yield
|
|
Weighted average
interest crediting rate
|
|
Weighted average
investment spreads
|
|||||||||||||||||||||
|
|
2017
|
|
2016
|
|
2015
|
|
2017
|
|
2016
|
|
2015
|
|
2017
|
|
2016
|
|
2015
|
|||||||||
Deferred fixed annuities and institutional products
|
|
4.2
|
%
|
|
4.1
|
%
|
|
4.3
|
%
|
|
2.8
|
%
|
|
2.8
|
%
|
|
2.8
|
%
|
|
1.4
|
%
|
|
1.3
|
%
|
|
1.5
|
%
|
Immediate fixed annuities with and without life contingencies
|
|
8.0
|
|
|
6.5
|
|
|
7.0
|
|
|
6.0
|
|
|
5.9
|
|
|
5.9
|
|
|
2.0
|
|
|
0.6
|
|
|
1.1
|
|
(1)
|
These contracts include interest rate guarantee periods which are typically 5, 6 or 10 years.
|
Product liabilities
|
||||||||||||
|
|
For the years ended December 31,
|
||||||||||
($ in millions)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Immediate fixed annuities with life contingencies
|
|
|
|
|
|
|
||||||
Sub-standard structured settlements and group pension terminations
(1)
|
|
$
|
5,284
|
|
|
$
|
5,029
|
|
|
$
|
5,030
|
|
Standard structured settlements and SPIA
(2)
|
|
3,565
|
|
|
3,592
|
|
|
3,682
|
|
|||
Other
|
|
85
|
|
|
100
|
|
|
105
|
|
|||
Reserve for life-contingent contract benefits
|
|
$
|
8,934
|
|
|
$
|
8,721
|
|
|
$
|
8,817
|
|
|
|
|
|
|
|
|
||||||
Deferred fixed annuities
|
|
$
|
8,128
|
|
|
$
|
8,921
|
|
|
$
|
9,748
|
|
Immediate fixed annuities without life contingencies
|
|
2,700
|
|
|
2,874
|
|
|
3,094
|
|
|||
Other
(3)
|
|
108
|
|
|
120
|
|
|
228
|
|
|||
Contractholder funds
|
|
$
|
10,936
|
|
|
$
|
11,915
|
|
|
$
|
13,070
|
|
(1)
|
Comprises structured settlement annuities for annuitants with severe injuries or other health impairments which increased their expected mortality rate at the time the annuity was issued (“sub-standard structured settlements”) and group annuity contracts issued to sponsors of terminated pension plans (“ABO”). Sub-standard structured settlements comprise 5% of our immediate annuity policies in force and 53% of the immediate annuity reserve for life-contingent contract benefits.
|
(2)
|
Comprises structured settlement annuities for annuitants with standard life expectancy (“standard structured settlements”) and single premium immediate annuities (“SPIA”) with life contingencies.
|
(3)
|
Includes $85 million of institutional products as of December 31, 2015.
|
Changes in contractholder funds
|
||||||||||||
|
|
For the years ended December 31,
|
||||||||||
($ in millions)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Contractholder funds, beginning balance
|
|
$
|
11,915
|
|
|
$
|
13,070
|
|
|
$
|
14,427
|
|
|
|
|
|
|
|
|
||||||
Deposits
|
|
28
|
|
|
42
|
|
|
42
|
|
|||
|
|
|
|
|
|
|
||||||
Interest credited
|
|
370
|
|
|
403
|
|
|
442
|
|
|||
|
|
|
|
|
|
|
||||||
Benefits, withdrawals, maturities and other adjustments
|
|
|
|
|
|
|
||||||
Benefits
|
|
(638
|
)
|
|
(705
|
)
|
|
(790
|
)
|
|||
Surrenders and partial withdrawals
|
|
(723
|
)
|
|
(780
|
)
|
|
(1,003
|
)
|
|||
Maturities of and interest payments on institutional products
|
|
—
|
|
|
(86
|
)
|
|
(1
|
)
|
|||
Contract charges
|
|
(9
|
)
|
|
(9
|
)
|
|
(9
|
)
|
|||
Net transfers from separate accounts
|
|
1
|
|
|
1
|
|
|
1
|
|
|||
Other adjustments
(1)
|
|
(8
|
)
|
|
(21
|
)
|
|
(39
|
)
|
|||
Total benefits, withdrawals, maturities and other adjustments
|
|
(1,377
|
)
|
|
(1,600
|
)
|
|
(1,841
|
)
|
|||
Contractholder funds, ending balance
|
|
$
|
10,936
|
|
|
$
|
11,915
|
|
|
$
|
13,070
|
|
(1)
|
The table above illustrates the changes in contractholder funds, which are presented gross of reinsurance recoverables on the Consolidated Statements of Financial Position. The table above is intended to supplement our discussion and analysis of revenues, which are presented net of reinsurance on the Consolidated Statements of Operations. As a result, the net change in contractholder funds associated with products reinsured is reflected as a component of the other adjustments line.
|
•
|
Investments totaled
$82.80 billion
as of December 31,
2017
, increasing from
$81.80 billion
as of December 31,
2016
.
|
•
|
Unrealized net capital gains totaled
$2.63 billion
as of December 31,
2017
, increasing from
$1.77 billion
as of December 31,
2016
.
|
•
|
Net investment income was
$3.40 billion
in
2017
, an increase of
11.8%
from
$3.04 billion
in
2016
.
|
•
|
Net realized capital gains were
$445 million
in
2017
compared to net realized capital losses of
$90 million
in
2016
.
|
•
|
Enhance investment portfolio returns through dynamic asset allocation and tax efficiency.
|
•
|
Leverage our broad capabilities to shift the portfolio mix to earn higher risk-adjusted returns on capital.
|
•
|
Invest for the specific needs and characteristics of Allstate’s businesses, including its corresponding liability profile.
|
(1)
|
Balances reflect the elimination of related party investments between segments.
|
(2)
|
Fixed income securities are carried at fair value. Amortized cost basis for these securities was $31.59 billion, $760 million, $7.41 billion, $1.12 billion, $14.91 billion, $1.74 billion and $57.53 billion for Property-Liability, Service Businesses, Allstate Life, Allstate Benefits, Allstate Annuities, Corporate and Other, and in Total, respectively.
|
(3)
|
Equity securities are carried at fair value. Cost basis for these securities was $3.93 billion, $144 million, $41 million, $57 million, $1.28 billion, $10 million and $5.46 billion for Property-Liability, Service Businesses, Allstate Life, Allstate Benefits, Allstate Annuities, Corporate and Other, and in Total, respectively.
|
(4)
|
Short-term investments are carried at fair value.
|
Portfolio composition by investment strategy
|
||||||||||||||||
|
|
As of December 31, 2017
|
||||||||||||||
($ in millions)
|
|
Market-based core
|
|
Market-based active
|
|
Performance-based
|
|
Total
|
||||||||
Fixed income securities
|
|
$
|
50,891
|
|
|
$
|
8,027
|
|
|
$
|
74
|
|
|
$
|
58,992
|
|
Equity securities
|
|
5,438
|
|
|
1,045
|
|
|
138
|
|
|
6,621
|
|
||||
Mortgage loans
|
|
4,534
|
|
|
—
|
|
|
—
|
|
|
4,534
|
|
||||
Limited partnership interests
|
|
695
|
|
|
—
|
|
|
6,045
|
|
|
6,740
|
|
||||
Short-term investments
|
|
1,858
|
|
|
86
|
|
|
—
|
|
|
1,944
|
|
||||
Other
|
|
3,105
|
|
|
190
|
|
|
677
|
|
|
3,972
|
|
||||
Total
|
|
$
|
66,521
|
|
|
$
|
9,348
|
|
|
$
|
6,934
|
|
|
$
|
82,803
|
|
% of total
|
|
80
|
%
|
|
11
|
%
|
|
9
|
%
|
|
|
|||||
|
|
|
|
|
|
|
|
|
||||||||
Unrealized net capital gains and losses
|
|
|
|
|
|
|
|
|
||||||||
Fixed income securities
|
|
$
|
1,446
|
|
|
$
|
21
|
|
|
$
|
—
|
|
|
$
|
1,467
|
|
Equity securities
|
|
1,050
|
|
|
95
|
|
|
15
|
|
|
1,160
|
|
||||
Limited partnership interests
|
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
||||
Other
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
||||
Total
|
|
$
|
2,495
|
|
|
$
|
116
|
|
|
$
|
16
|
|
|
$
|
2,627
|
|
Fixed income securities by type
|
||||||||
|
|
Fair value as of December 31,
|
||||||
($ in millions)
|
|
2017
|
|
2016
|
||||
U.S. government and agencies
|
|
$
|
3,616
|
|
|
$
|
3,637
|
|
Municipal
|
|
8,328
|
|
|
7,333
|
|
||
Corporate
|
|
44,026
|
|
|
43,601
|
|
||
Foreign government
|
|
1,021
|
|
|
1,075
|
|
||
Asset-backed securities (“ABS”)
|
|
1,272
|
|
|
1,171
|
|
||
Residential mortgage-backed securities (“RMBS”)
|
|
578
|
|
|
728
|
|
||
Commercial mortgage-backed securities (“CMBS”)
|
|
128
|
|
|
270
|
|
||
Redeemable preferred stock
|
|
23
|
|
|
24
|
|
||
Total fixed income securities
|
|
$
|
58,992
|
|
|
$
|
57,839
|
|
(1)
|
Beginning January 1, 2018, due to the adoption of the new accounting standard for the recognition and measurement of financial assets and liabilities, cost method limited partnerships (excluding limited partnership interests accounted for on a cost recovery basis) will be measured at fair value w
ith changes in fair value recognized in net income. The existing carrying value of these investments will increase to fair value with the offsetting adjustment, after-tax, recognized in retained income through a cumulative effect adjustment. See Note 2 of the consolidated financial statements for additional details on the new accounting standard.
|
(2)
|
Total EMA includes approximately $854 million of cumulative pre-tax appreciation. EMA limited partnerships are included in our comprehensive portfolio monitoring process to identify other-than-temporary impairment. Evidence of a loss in value that is other-than-temporary may include the absence of an ability to recover the carrying amount of the investment or the inability of the investee to sustain a level of earnings that would justify the carrying amount of the investment.
|
Unrealized net capital gains and losses
|
||||||||
|
|
As of December 31,
|
||||||
($ in millions)
|
|
2017
|
|
2016
|
||||
U.S. government and agencies
|
|
$
|
36
|
|
|
$
|
65
|
|
Municipal
|
|
275
|
|
|
217
|
|
||
Corporate
|
|
1,030
|
|
|
859
|
|
||
Foreign government
|
|
16
|
|
|
32
|
|
||
ABS
|
|
6
|
|
|
2
|
|
||
RMBS
|
|
98
|
|
|
77
|
|
||
CMBS
|
|
4
|
|
|
8
|
|
||
Redeemable preferred stock
|
|
2
|
|
|
3
|
|
||
Fixed income securities
|
|
1,467
|
|
|
1,263
|
|
||
Equity securities
(1)
|
|
1,160
|
|
|
509
|
|
||
Derivatives
|
|
(1
|
)
|
|
2
|
|
||
EMA limited partnerships
|
|
1
|
|
|
(4
|
)
|
||
Unrealized net capital gains and losses, pre-tax
|
|
$
|
2,627
|
|
|
$
|
1,770
|
|
(1)
|
Beginning January 1, 2018, due to the adoption of the new accounting standard for the recognition and measurement of financial assets and liabilities, equity securities will be measured at fair value w
ith changes in fair value recognized in net income. The existing unrealized net capital gains and losses, after-tax, will be reclassified to retained income through a cumulative-effect adjustment. See Note 2 of the consolidated financial statements for additional details on the new accounting standard.
|
Net investment income
|
||||||||||||
|
|
For the years ended December 31,
|
||||||||||
($ in millions)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Fixed income securities
|
|
$
|
2,078
|
|
|
$
|
2,060
|
|
|
$
|
2,218
|
|
Equity securities
|
|
174
|
|
|
137
|
|
|
110
|
|
|||
Mortgage loans
|
|
206
|
|
|
217
|
|
|
228
|
|
|||
Limited partnership interests
|
|
889
|
|
|
561
|
|
|
549
|
|
|||
Short-term investments
|
|
30
|
|
|
16
|
|
|
9
|
|
|||
Other
|
|
236
|
|
|
222
|
|
|
192
|
|
|||
Investment income, before expense
|
|
3,613
|
|
|
3,213
|
|
|
3,306
|
|
|||
Investment expense
(1)
|
|
(212
|
)
|
|
(171
|
)
|
|
(150
|
)
|
|||
Net investment income
|
|
$
|
3,401
|
|
|
$
|
3,042
|
|
|
$
|
3,156
|
|
|
|
|
|
|
|
|
|
|
|
|||
Market-based core
|
|
$
|
2,360
|
|
|
$
|
2,340
|
|
|
$
|
2,495
|
|
Market-based active
|
|
301
|
|
|
262
|
|
|
213
|
|
|||
Performance-based
|
|
952
|
|
|
611
|
|
|
598
|
|
|||
Investment income, before expense
|
|
$
|
3,613
|
|
|
$
|
3,213
|
|
|
$
|
3,306
|
|
(1)
|
Investment expense includes $40 million, $36 million and $19 million of investee level expenses in 2017, 2016 and 2015, respectively. Investee level expenses include depreciation and asset level operating expenses on directly held real estate and other consolidated investments.
|
Investment income for performance-based investments
|
||||||||||||
|
|
For the years ended December 31,
|
||||||||||
($ in millions)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Limited partnerships
|
|
|
|
|
|
|
||||||
Private equity
|
|
$
|
725
|
|
|
$
|
455
|
|
|
$
|
402
|
|
Real estate
|
|
164
|
|
|
106
|
|
|
157
|
|
|||
Performance-based - limited partnerships
(1)
|
|
889
|
|
|
561
|
|
|
559
|
|
|||
|
|
|
|
|
|
|
||||||
Non-limited partnerships
|
|
|
|
|
|
|
||||||
Private equity
|
|
19
|
|
|
9
|
|
|
10
|
|
|||
Real estate
|
|
44
|
|
|
41
|
|
|
29
|
|
|||
Performance-based - non-limited partnerships
|
|
63
|
|
|
50
|
|
|
39
|
|
|||
|
|
|
|
|
|
|
||||||
Total
|
|
|
|
|
|
|
||||||
Private equity
|
|
744
|
|
|
464
|
|
|
412
|
|
|||
Real estate
|
|
208
|
|
|
147
|
|
|
186
|
|
|||
Total performance-based
|
|
$
|
952
|
|
|
$
|
611
|
|
|
$
|
598
|
|
|
|
|
|
|
|
|
||||||
Investee level expenses
(2)
|
|
$
|
(35
|
)
|
|
$
|
(32
|
)
|
|
$
|
(19
|
)
|
(1)
|
Other limited partnership interests where the underlying assets consist of public securities are held in the market-based core portfolio and are not included in the table above. Investment income (loss) for these limited partnership interests was zero for both
2017
and
2016
, and $(10) million in
2015
.
|
(2)
|
Investee level expenses include depreciation and asset level operating expenses reported in investment expense. When calculating the pre-tax yields, investee level operating expenses are netted against income for directly held real estate and other consolidated investments.
|
Realized capital gains and losses for performance-based investments
|
||||||||||||
|
|
For the years ended December 31,
|
||||||||||
($ in millions)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Limited partnerships
|
|
|
|
|
|
|
||||||
Private equity
|
|
$
|
(38
|
)
|
|
$
|
(57
|
)
|
|
$
|
(46
|
)
|
Real estate
|
|
7
|
|
|
5
|
|
|
(4
|
)
|
|||
Performance-based - limited partnerships
(1)
|
|
(31
|
)
|
|
(52
|
)
|
|
(50
|
)
|
|||
|
|
|
|
|
|
|
||||||
Non-limited partnerships
|
|
|
|
|
|
|
||||||
Private equity
|
|
(26
|
)
|
|
(21
|
)
|
|
3
|
|
|||
Real estate
|
|
16
|
|
|
2
|
|
|
(2
|
)
|
|||
Performance-based - non-limited partnerships
|
|
(10
|
)
|
|
(19
|
)
|
|
1
|
|
|||
|
|
|
|
|
|
|
||||||
Total
|
|
|
|
|
|
|
||||||
Private equity
|
|
(64
|
)
|
|
(78
|
)
|
|
(43
|
)
|
|||
Real estate
|
|
23
|
|
|
7
|
|
|
(6
|
)
|
|||
Total performance-based
|
|
$
|
(41
|
)
|
|
$
|
(71
|
)
|
|
$
|
(49
|
)
|
(1)
|
Other limited partnership interests where the underlying assets consist of public securities are held in the market-based core portfolio and are not included in the table above. Realized capital gains and losses were $163 million, $31 million and $(43) million in
2017
,
2016
and
2015
, respectively, for these limited partnership interests.
|
•
Duration,
a measure of the price sensitivity of assets and liabilities to changes in interest rates
|
•
Value-at-risk,
a statistical estimate of the probability that the change in fair value of a portfolio will exceed a certain amount over a given time horizon
|
•
Scenario analysis,
an estimate of the potential changes in the fair value of a portfolio that could occur under hypothetical market conditions defined by changes to multiple market risk factors: interest rates, credit spreads, equity prices or currency exchange rates
|
•
Sensitivity analysis,
an estimate of the potential changes in the fair value of a portfolio that could occur using hypothetical shocks to a market risk factor
|
•
|
Shareholders’ equity as of December 31,
2017
was
$22.55 billion
, an increase of
9.6%
from
$20.57 billion
as of December 31,
2016
.
|
•
|
On January 3, 2017, April 3, 2017, July 3, 2017 and October 2, 2017, we paid common shareholder dividends of $0.33, $0.37, $0.37 and $0.37, respectively. On November 16, 2017, we declared a common shareholder dividend of $0.37, payable on January 2, 2018. On February 7, 2018, we declared a common shareholder dividend of $0.46 payable on April 2, 2018.
|
•
|
In 2017, we returned $1.9 billion to shareholders through a combination of common stock dividends and repurchasing 4.3% of our beginning-of-year outstanding shares. As of December 31, 2017, there was
$1.27 billion
remaining on the $2.00 billion common share repurchase program.
|
Capital resources
|
|
|
|
|
|
|
||||||
|
|
As of December 31,
|
||||||||||
($ in millions)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Preferred stock, common stock, treasury stock, retained income and other shareholders’ equity items
|
|
$
|
22,245
|
|
|
$
|
20,989
|
|
|
$
|
20,780
|
|
Accumulated other comprehensive income (loss)
|
|
306
|
|
|
(416
|
)
|
|
(755
|
)
|
|||
Total shareholders’ equity
|
|
22,551
|
|
|
20,573
|
|
|
20,025
|
|
|||
Debt
|
|
6,350
|
|
|
6,347
|
|
|
5,124
|
|
|||
Total capital resources
|
|
$
|
28,901
|
|
|
$
|
26,920
|
|
|
$
|
25,149
|
|
Ratio of debt to shareholders’ equity
|
|
28.2
|
%
|
|
30.9
|
%
|
|
25.6
|
%
|
|||
Ratio of debt to capital resources
|
|
22.0
|
%
|
|
23.6
|
%
|
|
20.4
|
%
|
Senior long-term debt, commercial paper and insurance financial strength ratings
|
||||||
|
|
As of December 31, 2017
|
||||
|
|
Moody’s
|
|
S&P Global Ratings
|
|
A.M. Best
|
The Allstate Corporation (debt)
|
|
A3
|
|
A-
|
|
a-
|
The Allstate Corporation (short-term issuer)
|
|
P-2
|
|
A-2
|
|
AMB-1
|
Allstate Insurance Company (insurance financial strength)
|
|
Aa3
|
|
AA-
|
|
A+
|
Allstate Life Insurance Company (insurance financial strength)
|
|
A1
|
|
A+
|
|
A+
|
Allstate Assurance Company (insurance financial strength)
|
|
A1
|
|
N/A
|
|
A+
|
•
|
The Corporation has access to a commercial paper facility with a borrowing limit of $1.00 billion to cover short-term cash needs. In December 2017, we issued $100 million of commercial paper which was outstanding for seven days with a weighted average interest rate of 1.47% and was used for general corporate purposes. As of December 31,
2017
, there were no balances outstanding and therefore the remaining borrowing capacity was $1.00 billion; however, the outstanding balance can fluctuate daily.
|
•
|
The Corporation, AIC and ALIC have access to a $1.00 billion unsecured revolving credit facility that is available for short-term liquidity requirements. The maturity date of this facility is April 2021. The facility is fully subscribed among 11 lenders with the largest commitment being $115 million. The commitments of the lenders are several and no lender is responsible for any other lender’s commitment if such lender fails to make a loan under the facility. This facility contains an increase provision that would allow up to an additional $500 million of borrowing. This facility has a financial covenant requiring that we not exceed a 37.5% debt to capitalization ratio as defined in the agreement. This ratio was 14.9% as of December 31,
2017
. Although the right to borrow under the facility is not subject to a minimum rating requirement, the costs of maintaining the facility and borrowing under it are based on the ratings of our senior unsecured, unguaranteed long-term debt. There were no borrowings under the credit facility during
2017
.
|
•
|
The Corporation has access to a universal shelf registration statement that was filed with the Securities and Exchange Commission on April 30, 2015. We can use this shelf registration to issue an unspecified amount of debt securities, common stock (including 545 million shares of treasury stock as of December 31,
2017
), preferred stock,
|
Contractholder funds by contractual withdrawal provisions
|
|
|
|
|
|||
|
|
As of December 31, 2017
|
|||||
($ in millions)
|
|
|
|
Percent to total
|
|||
Not subject to discretionary withdrawal
|
|
$
|
3,015
|
|
|
15.5
|
%
|
Subject to discretionary withdrawal with adjustments:
|
|
|
|
|
|||
Specified surrender charges
(1)
|
|
4,878
|
|
|
25.1
|
|
|
Market value adjustments
(2)
|
|
1,387
|
|
|
7.1
|
|
|
Subject to discretionary withdrawal without adjustments
(3)
|
|
10,154
|
|
|
52.3
|
|
|
Total contractholder funds
(4)
|
|
$
|
19,434
|
|
|
100.0
|
%
|
(1)
|
Includes $1.09 billion of liabilities with a contractual surrender charge of less than 5% of the account balance.
|
(2)
|
$850 million of the contracts with market value adjusted surrenders have a 30-45 day period at the end of their initial and subsequent interest rate guarantee periods (which are typically 1, 5, 7 or 10 years) during which there is no surrender charge or market value adjustment. $426 million of these contracts have their 30-45 day window period in 2018.
|
(3)
|
89% of these contracts have a minimum interest crediting rate guarantee of 3% or higher.
|
(4)
|
Includes $738 million of contractholder funds on variable annuities reinsured to The Prudential Insurance Company of America, a subsidiary of Prudential Financial Inc., in 2006.
|
Contractual obligations and payments due by period
|
||||||||||||||||||||
|
|
As of December 31, 2017
|
||||||||||||||||||
($ in millions)
|
|
Total
|
|
Less than 1 year
|
|
1 to 3 years
|
|
Over 3 years to 5 years
|
|
Over 5 years
|
||||||||||
Liabilities for collateral
(1)
|
|
$
|
1,124
|
|
|
$
|
1,124
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Contractholder funds
(2)
|
|
38,474
|
|
|
2,452
|
|
|
4,216
|
|
|
3,856
|
|
|
27,950
|
|
|||||
Reserve for life-contingent contract benefits
(2)
|
|
39,381
|
|
|
1,420
|
|
|
2,640
|
|
|
2,442
|
|
|
32,879
|
|
|||||
Long-term debt
(3)
|
|
14,069
|
|
|
496
|
|
|
910
|
|
|
584
|
|
|
12,079
|
|
|||||
Operating leases
(4)
|
|
643
|
|
|
126
|
|
|
208
|
|
|
134
|
|
|
175
|
|
|||||
Unconditional purchase obligations
(4)
|
|
520
|
|
|
200
|
|
|
286
|
|
|
31
|
|
|
3
|
|
|||||
Defined benefit pension plans and other postretirement benefit plans
(4)(5)
|
|
979
|
|
|
39
|
|
|
115
|
|
|
118
|
|
|
707
|
|
|||||
Reserve for property and casualty insurance claims and claims expense
(6)
|
|
26,325
|
|
|
11,809
|
|
|
8,553
|
|
|
3,083
|
|
|
2,880
|
|
|||||
Other liabilities and accrued expenses
(7)(8)
|
|
5,043
|
|
|
4,792
|
|
|
227
|
|
|
13
|
|
|
11
|
|
|||||
Net unrecognized tax benefits
(9)
|
|
55
|
|
|
55
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total contractual cash obligations
|
|
$
|
126,613
|
|
|
$
|
22,513
|
|
|
$
|
17,155
|
|
|
$
|
10,261
|
|
|
$
|
76,684
|
|
(1)
|
Liabilities for collateral are typically fully secured with cash or short-term investments. We manage our short-term liquidity position to ensure the availability of a sufficient amount of liquid assets to extinguish short-term liabilities as they come due in the normal course of business, including utilizing potential sources of liquidity as disclosed previously.
|
(2)
|
Contractholder funds represent interest-bearing liabilities arising from the sale of products such as interest-sensitive life and fixed annuities, including immediate annuities without life contingencies. The reserve for life-contingent contract benefits relates primarily to traditional life insurance, immediate annuities with life contingencies and voluntary accident and health insurance. These amounts reflect the present value of estimated cash payments to be made to contractholders and policyholders. Certain of these contracts, such as immediate annuities without life contingencies, involve payment obligations where the amount and timing of the payment are essentially fixed and determinable. These amounts relate to (i) policies or contracts where we are currently making payments and will continue to do so and (ii) contracts where the timing of a portion or all of the payments has been determined by the contract. Other contracts, such as interest-sensitive life, fixed deferred annuities, traditional life insurance and voluntary accident and health insurance, involve payment obligations where a portion or all of the amount and timing of future payments is uncertain. For these contracts, we are not currently making payments and will not make payments until (i) the occurrence of an insurable event such as death or illness or (ii) the occurrence of a payment triggering event such as the surrender or partial withdrawal on a policy or deposit contract, which is outside of our control. For immediate annuities with life contingencies, the amount of future payments is uncertain since payments will continue as long as the annuitant lives. We have estimated the timing of payments related to these contracts based on historical experience and our expectation of future payment patterns. Uncertainties relating to these liabilities include mortality, morbidity, expenses, customer lapse and withdrawal activity, estimated additional deposits for interest-sensitive life contracts, and renewal premium for life policies, which may significantly impact both the timing and amount of future payments. Such cash outflows reflect adjustments for the estimated timing of mortality, retirement, and other appropriate factors, but are undiscounted with respect to interest. As a result, the sum of the cash outflows shown for all years in the table exceeds the corresponding liabilities of
$19.43 billion
for contractholder funds and
$12.55 billion
for reserve for life-contingent contract benefits as included in the Consolidated Statements of Financial Position as of December 31,
2017
. The liability amount in the Consolidated Statements of Financial Position reflects the discounting for interest as well as adjustments for the timing of other factors as described above.
|
(3)
|
Amount differs from the balance presented on the Consolidated Statements of Financial Position as of December 31,
2017
, because the long-term debt amount above includes interest and excludes debt issuance costs.
|
(4)
|
Our payment obligations relating to operating leases, unconditional purchase obligations and pension and other postretirement benefits (“OPEB”) contributions are managed within the structure of our intermediate to long-term liquidity management program.
|
(5)
|
The pension plans’ obligations in the next 12 months represent our planned contributions to certain unfunded non-qualified plans where the benefit obligation exceeds the assets, and the remaining years’ contributions are projected based on the average remaining service period using the current underfunded status of the plans. The OPEB plans’ obligations are estimated based on the expected benefits to be paid. These liabilities are discounted with respect to interest, and as a result the sum of the cash outflows shown for all years in the table exceeds the corresponding liability amount of $526 million included in other liabilities and accrued expenses on the Consolidated Statements of Financial Position.
|
(6)
|
Reserve for property and casualty insurance claims and claims expense is an estimate of amounts necessary to settle all outstanding claims, including claims that have been IBNR as of the balance sheet date. We have estimated the timing of these payments based on our historical experience and our expectation of future payment patterns. However, the timing of these payments may vary significantly from the amounts shown above, especially for IBNR claims. The ultimate cost of losses may vary materially from recorded amounts that are our best estimates.
|
(7)
|
Other liabilities primarily include accrued expenses and certain benefit obligations and claim payments and other checks outstanding. Certain of these long-term liabilities are discounted with respect to interest, as a result the sum of the cash outflows shown for all years in the table exceeds the corresponding liability amount by $5 million.
|
(8)
|
Balance sheet liabilities not included in the table above include unearned and advance premiums of $14.20 billion and gross deferred tax liabilities of
$1.75 billion
. These items were excluded as they do not meet the definition of a contractual liability as we are not contractually obligated to pay these amounts to third parties. Rather, they represent an accounting mechanism that allows us to present our financial statements on an accrual basis. In addition, other liabilities of $306 million were not included in the table above because they did not represent a contractual obligation or the amount and timing of their eventual payment was sufficiently uncertain.
|
(9)
|
Net unrecognized tax benefits represent our potential future obligation to the taxing authority for a tax position that was not recognized in the consolidated financial statements. We believe it is reasonably possible that the liability balance will not significantly increase within the next twelve months. The resolution of this obligation may be for an amount different than what we have accrued.
|
•
|
Stochastic methods: measures and monitors risks such as natural catastrophes and severe weather. We develop probabilistic estimates of risk based on our exposures, historical observed volatility and/or industry-recognized models in the case of catastrophe risk.
|
•
|
Scenario analysis: measures and monitors risks and estimated losses due to catastrophe scenarios and stress scenario events for mortality/morbidity exposures.
|
•
|
Sensitivity analysis: measures the impact from a unit change in a market risk input.
|
•
|
Stochastic and probabilistic estimation of potential losses: combines portfolio risk exposures with historical or recent market volatilities and correlations to assess the potential span of future investment results.
|
•
|
Stress testing: measures material adverse outcomes such as shock scenarios applied to credit, public and private equity markets.
|
•
|
Fair value of financial assets
|
•
|
Impairment of fixed income and equity securities
|
•
|
Deferred policy acquisition costs amortization
|
•
|
Evaluation of goodwill for impairment
|
•
|
Reserve for property and casualty insurance claims and claims expense estimation
|
•
|
Reserve for life-contingent contract benefits estimation
|
(1)
|
Includes $730 million that are valued using broker quotes.
|
($ in millions)
|
|
Increase/(reduction)
in sufficiency
|
|
Change in sufficiency as a percentage of applicable reserves
|
Increase in future investment yields of 25 basis points
|
|
$207
|
|
3%
|
Decrease in future investment yields of 25 basis points
|
|
$(219)
|
|
(3)%
|
Consolidated Financial Statements
|
|
Page
|
|
||
|
||
|
||
Consolidated Statements of Shareholders’ Equity
|
|
|
|
||
|
|
|
|
||
|
|
|
|
|
|
Years Ended December 31,
|
||||||||||
($ in millions, except per share data)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Revenues
|
|
|
|
|
|
|
||||||
Property and casualty insurance premiums (net of reinsurance ceded of $971, $987 and $1,006)
|
|
$
|
32,300
|
|
|
$
|
31,307
|
|
|
$
|
30,309
|
|
Life premiums and contract charges (net of reinsurance ceded of $303, $309 and $332)
|
|
2,378
|
|
|
2,275
|
|
|
2,158
|
|
|||
Net investment income
|
|
3,401
|
|
|
3,042
|
|
|
3,156
|
|
|||
Realized capital gains and losses:
|
|
|
|
|
|
|
||||||
Total other-than-temporary impairment (“OTTI”) losses
|
|
(146
|
)
|
|
(313
|
)
|
|
(452
|
)
|
|||
OTTI losses reclassified to other comprehensive income
|
|
(4
|
)
|
|
10
|
|
|
36
|
|
|||
Net OTTI losses recognized in earnings
|
|
(150
|
)
|
|
(303
|
)
|
|
(416
|
)
|
|||
Sales and other realized capital gains and losses
|
|
595
|
|
|
213
|
|
|
446
|
|
|||
Total realized capital gains and losses
|
|
445
|
|
|
(90
|
)
|
|
30
|
|
|||
Total revenues
|
|
38,524
|
|
|
36,534
|
|
|
35,653
|
|
|||
|
|
|
|
|
|
|
||||||
Costs and expenses
|
|
|
|
|
|
|
||||||
Property and casualty insurance claims and claims expense (net of reinsurance ceded of $1,807, $1,116 and $602)
|
|
21,929
|
|
|
22,221
|
|
|
21,034
|
|
|||
Life contract benefits (net of reinsurance ceded of $179, $208 and $219)
|
|
1,923
|
|
|
1,857
|
|
|
1,803
|
|
|||
Interest credited to contractholder funds (net of reinsurance ceded of $25, $26 and $25)
|
|
690
|
|
|
726
|
|
|
761
|
|
|||
Amortization of deferred policy acquisition costs
|
|
4,784
|
|
|
4,550
|
|
|
4,364
|
|
|||
Operating costs and expenses
|
|
4,658
|
|
|
4,106
|
|
|
4,081
|
|
|||
Restructuring and related charges
|
|
109
|
|
|
30
|
|
|
39
|
|
|||
Goodwill impairment
|
|
125
|
|
|
—
|
|
|
—
|
|
|||
Interest expense
|
|
335
|
|
|
295
|
|
|
292
|
|
|||
Total costs and expenses
|
|
34,553
|
|
|
33,785
|
|
|
32,374
|
|
|||
|
|
|
|
|
|
|
||||||
Gain on disposition of operations
|
|
20
|
|
|
5
|
|
|
3
|
|
|||
|
|
|
|
|
|
|
||||||
Income from operations before income tax expense
|
|
3,991
|
|
|
2,754
|
|
|
3,282
|
|
|||
|
|
|
|
|
|
|
||||||
Income tax expense
|
|
802
|
|
|
877
|
|
|
1,111
|
|
|||
|
|
|
|
|
|
|
||||||
Net income
|
|
3,189
|
|
|
1,877
|
|
|
2,171
|
|
|||
|
|
|
|
|
|
|
||||||
Preferred stock dividends
|
|
116
|
|
|
116
|
|
|
116
|
|
|||
|
|
|
|
|
|
|
||||||
Net income applicable to common shareholders
|
|
$
|
3,073
|
|
|
$
|
1,761
|
|
|
$
|
2,055
|
|
|
|
|
|
|
|
|
||||||
Earnings per common share:
|
|
|
|
|
|
|
||||||
Net income applicable to common shareholders per common share - Basic
|
|
$
|
8.49
|
|
|
$
|
4.72
|
|
|
$
|
5.12
|
|
Weighted average common shares - Basic
|
|
362.0
|
|
|
372.8
|
|
|
401.1
|
|
|||
Net income applicable to common shareholders per common share - Diluted
|
|
$
|
8.36
|
|
|
$
|
4.67
|
|
|
$
|
5.05
|
|
Weighted average common shares - Diluted
|
|
367.8
|
|
|
377.3
|
|
|
406.8
|
|
|||
Cash dividends declared per common share
|
|
$
|
1.48
|
|
|
$
|
1.32
|
|
|
$
|
1.20
|
|
|
|
Years Ended December 31,
|
||||||||||
($ in millions)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Net income
|
|
$
|
3,189
|
|
|
$
|
1,877
|
|
|
$
|
2,171
|
|
|
|
|
|
|
|
|
||||||
Other comprehensive income (loss), after-tax
|
|
|
|
|
|
|
||||||
Changes in:
|
|
|
|
|
|
|
||||||
Unrealized net capital gains and losses
|
|
319
|
|
|
433
|
|
|
(1,306
|
)
|
|||
Unrealized foreign currency translation adjustments
|
|
47
|
|
|
10
|
|
|
(58
|
)
|
|||
Unrecognized pension and other postretirement benefit cost
|
|
307
|
|
|
(104
|
)
|
|
48
|
|
|||
Other comprehensive income (loss), after-tax
|
|
673
|
|
|
339
|
|
|
(1,316
|
)
|
|||
|
|
|
|
|
|
|
||||||
Comprehensive income
|
|
$
|
3,862
|
|
|
$
|
2,216
|
|
|
$
|
855
|
|
|
|
December 31,
|
||||||
($ in millions, except par value data)
|
|
2017
|
|
2016
|
||||
Assets
|
|
|
|
|
||||
Investments
|
|
|
|
|
||||
Fixed income securities, at fair value (amortized cost $57,525 and $56,576)
|
|
$
|
58,992
|
|
|
$
|
57,839
|
|
Equity securities, at fair value (cost $5,461 and $5,157)
|
|
6,621
|
|
|
5,666
|
|
||
Mortgage loans
|
|
4,534
|
|
|
4,486
|
|
||
Limited partnership interests
|
|
6,740
|
|
|
5,814
|
|
||
Short-term, at fair value (amortized cost $1,944 and $4,288)
|
|
1,944
|
|
|
4,288
|
|
||
Other
|
|
3,972
|
|
|
3,706
|
|
||
Total investments
|
|
82,803
|
|
|
81,799
|
|
||
Cash
|
|
617
|
|
|
436
|
|
||
Premium installment receivables, net
|
|
5,786
|
|
|
5,597
|
|
||
Deferred policy acquisition costs
|
|
4,191
|
|
|
3,954
|
|
||
Reinsurance recoverables, net
|
|
8,921
|
|
|
8,745
|
|
||
Accrued investment income
|
|
569
|
|
|
567
|
|
||
Property and equipment, net
|
|
1,072
|
|
|
1,065
|
|
||
Goodwill
|
|
2,181
|
|
|
1,219
|
|
||
Other assets
|
|
2,838
|
|
|
1,835
|
|
||
Separate Accounts
|
|
3,444
|
|
|
3,393
|
|
||
Total assets
|
|
$
|
112,422
|
|
|
$
|
108,610
|
|
Liabilities
|
|
|
|
|
||||
Reserve for property and casualty insurance claims and claims expense
|
|
$
|
26,325
|
|
|
$
|
25,250
|
|
Reserve for life-contingent contract benefits
|
|
12,549
|
|
|
12,239
|
|
||
Contractholder funds
|
|
19,434
|
|
|
20,260
|
|
||
Unearned premiums
|
|
13,473
|
|
|
12,583
|
|
||
Claim payments outstanding
|
|
875
|
|
|
879
|
|
||
Deferred income taxes
|
|
782
|
|
|
487
|
|
||
Other liabilities and accrued expenses
|
|
6,639
|
|
|
6,599
|
|
||
Long-term debt
|
|
6,350
|
|
|
6,347
|
|
||
Separate Accounts
|
|
3,444
|
|
|
3,393
|
|
||
Total liabilities
|
|
89,871
|
|
|
88,037
|
|
||
Commitments and Contingent Liabilities (Note 7, 8 and 14)
|
|
|
|
|
||||
Shareholders’ equity
|
|
|
|
|
||||
Preferred stock and additional capital paid-in, $1 par value, 25 million shares authorized, 72.2 thousand issued and outstanding, $1,805 aggregate liquidation preference
|
|
1,746
|
|
|
1,746
|
|
||
Common stock, $.01 par value, 2.0 billion shares authorized and 900 million issued, 355 million and 366 million shares outstanding
|
|
9
|
|
|
9
|
|
||
Additional capital paid-in
|
|
3,313
|
|
|
3,303
|
|
||
Retained income
|
|
43,162
|
|
|
40,678
|
|
||
Deferred ESOP expense
|
|
(3
|
)
|
|
(6
|
)
|
||
Treasury stock, at cost (545 million and 534 million shares)
|
|
(25,982
|
)
|
|
(24,741
|
)
|
||
Accumulated other comprehensive income:
|
|
|
|
|
||||
Unrealized net capital gains and losses:
|
|
|
|
|
||||
Unrealized net capital gains and losses on fixed income securities with OTTI
|
|
85
|
|
|
57
|
|
||
Other unrealized net capital gains and losses
|
|
1,981
|
|
|
1,091
|
|
||
Unrealized adjustment to DAC, DSI and insurance reserves
|
|
(404
|
)
|
|
(95
|
)
|
||
Total unrealized net capital gains and losses
|
|
1,662
|
|
|
1,053
|
|
||
Unrealized foreign currency translation adjustments
|
|
(9
|
)
|
|
(50
|
)
|
||
Unrecognized pension and other postretirement benefit cost
|
|
(1,347
|
)
|
|
(1,419
|
)
|
||
Total accumulated other comprehensive income (loss) (“AOCI”)
|
|
306
|
|
|
(416
|
)
|
||
Total shareholders’ equity
|
|
22,551
|
|
|
20,573
|
|
||
Total liabilities and shareholders’ equity
|
|
$
|
112,422
|
|
|
$
|
108,610
|
|
|
|
Years Ended December 31,
|
||||||||||
($ in millions)
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
|
|
|
|
||||||
Preferred stock par value
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
||||||
Preferred stock additional capital paid-in
|
|
1,746
|
|
|
1,746
|
|
|
1,746
|
|
|||
|
|
|
|
|
|
|
||||||
Common stock
|
|
9
|
|
|
9
|
|
|
9
|
|
|||
|
|
|
|
|
|
|
||||||
Additional capital paid-in
|
|
|
|
|
|
|
||||||
Balance, beginning of year
|
|
3,303
|
|
|
3,245
|
|
|
3,199
|
|
|||
Forward contract on accelerated share repurchase agreement
|
|
(45
|
)
|
|
—
|
|
|
—
|
|
|||
Equity incentive plans activity
|
|
55
|
|
|
58
|
|
|
46
|
|
|||
Balance, end of year
|
|
3,313
|
|
|
3,303
|
|
|
3,245
|
|
|||
|
|
|
|
|
|
|
||||||
Retained income
|
|
|
|
|
|
|
||||||
Balance, beginning of year
|
|
40,678
|
|
|
39,413
|
|
|
37,842
|
|
|||
Net income
|
|
3,189
|
|
|
1,877
|
|
|
2,171
|
|
|||
Dividends on common stock
|
|
(540
|
)
|
|
(496
|
)
|
|
(484
|
)
|
|||
Dividends on preferred stock
|
|
(116
|
)
|
|
(116
|
)
|
|
(116
|
)
|
|||
Reclassification of tax effects due to change in accounting principle
|
|
(49
|
)
|
|
—
|
|
|
—
|
|
|||
Balance, end of year
|
|
43,162
|
|
|
40,678
|
|
|
39,413
|
|
|||
|
|
|
|
|
|
|
||||||
Deferred ESOP expense
|
|
|
|
|
|
|
||||||
Balance, beginning of year
|
|
(6
|
)
|
|
(13
|
)
|
|
(23
|
)
|
|||
Payments
|
|
3
|
|
|
7
|
|
|
10
|
|
|||
Balance, end of year
|
|
(3
|
)
|
|
(6
|
)
|
|
(13
|
)
|
|||
|
|
|
|
|
|
|
||||||
Treasury stock
|
|
|
|
|
|
|
||||||
Balance, beginning of year
|
|
(24,741
|
)
|
|
(23,620
|
)
|
|
(21,030
|
)
|
|||
Shares acquired
|
|
(1,423
|
)
|
|
(1,341
|
)
|
|
(2,804
|
)
|
|||
Shares reissued under equity incentive plans, net
|
|
182
|
|
|
220
|
|
|
214
|
|
|||
Balance, end of year
|
|
(25,982
|
)
|
|
(24,741
|
)
|
|
(23,620
|
)
|
|||
|
|
|
|
|
|
|
||||||
Accumulated other comprehensive income (loss)
|
|
|
|
|
|
|
||||||
Balance, beginning of year
|
|
(416
|
)
|
|
(755
|
)
|
|
561
|
|
|||
Change in unrealized net capital gains and losses
|
|
319
|
|
|
433
|
|
|
(1,306
|
)
|
|||
Change in unrealized foreign currency translation adjustments
|
|
47
|
|
|
10
|
|
|
(58
|
)
|
|||
Change in unrecognized pension and other postretirement benefit cost
|
|
307
|
|
|
(104
|
)
|
|
48
|
|
|||
Reclassification of tax effects due to change in accounting principle
|
|
49
|
|
|
—
|
|
|
—
|
|
|||
Balance, end of year
|
|
306
|
|
|
(416
|
)
|
|
(755
|
)
|
|||
Total shareholders’ equity
|
|
$
|
22,551
|
|
|
$
|
20,573
|
|
|
$
|
20,025
|
|
|
|
Years Ended December 31,
|
||||||||||
($ in millions)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Cash flows from operating activities
|
|
|
|
|
|
|
||||||
Net income
|
|
$
|
3,189
|
|
|
$
|
1,877
|
|
|
$
|
2,171
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
||||||
Depreciation, amortization and other non-cash items
|
|
483
|
|
|
382
|
|
|
371
|
|
|||
Realized capital gains and losses
|
|
(445
|
)
|
|
90
|
|
|
(30
|
)
|
|||
Gain on disposition of operations
|
|
(20
|
)
|
|
(5
|
)
|
|
(3
|
)
|
|||
Interest credited to contractholder funds
|
|
690
|
|
|
726
|
|
|
761
|
|
|||
Goodwill Impairment
|
|
125
|
|
|
—
|
|
|
—
|
|
|||
Changes in:
|
|
|
|
|
|
|
||||||
Policy benefits and other insurance reserves
|
|
302
|
|
|
631
|
|
|
473
|
|
|||
Unearned premiums
|
|
463
|
|
|
362
|
|
|
638
|
|
|||
Deferred policy acquisition costs
|
|
(214
|
)
|
|
(165
|
)
|
|
(239
|
)
|
|||
Premium installment receivables, net
|
|
(131
|
)
|
|
(42
|
)
|
|
(134
|
)
|
|||
Reinsurance recoverables, net
|
|
(211
|
)
|
|
(264
|
)
|
|
(178
|
)
|
|||
Income taxes
|
|
(245
|
)
|
|
417
|
|
|
(119
|
)
|
|||
Other operating assets and liabilities
|
|
328
|
|
|
(16
|
)
|
|
(95
|
)
|
|||
Net cash provided by operating activities
|
|
4,314
|
|
|
3,993
|
|
|
3,616
|
|
|||
Cash flows from investing activities
|
|
|
|
|
|
|
||||||
Proceeds from sales
|
|
|
|
|
|
|
||||||
Fixed income securities
|
|
25,341
|
|
|
25,061
|
|
|
28,693
|
|
|||
Equity securities
|
|
6,504
|
|
|
5,546
|
|
|
3,754
|
|
|||
Limited partnership interests
|
|
1,125
|
|
|
881
|
|
|
1,101
|
|
|||
Mortgage loans
|
|
—
|
|
|
—
|
|
|
6
|
|
|||
Other investments
|
|
274
|
|
|
262
|
|
|
545
|
|
|||
Investment collections
|
|
|
|
|
|
|
||||||
Fixed income securities
|
|
4,194
|
|
|
4,533
|
|
|
4,432
|
|
|||
Mortgage loans
|
|
600
|
|
|
501
|
|
|
538
|
|
|||
Other investments
|
|
642
|
|
|
421
|
|
|
293
|
|
|||
Investment purchases
|
|
|
|
|
|
|
||||||
Fixed income securities
|
|
(31,145
|
)
|
|
(27,990
|
)
|
|
(30,758
|
)
|
|||
Equity securities
|
|
(6,585
|
)
|
|
(5,950
|
)
|
|
(4,960
|
)
|
|||
Limited partnership interests
|
|
(1,440
|
)
|
|
(1,450
|
)
|
|
(1,343
|
)
|
|||
Mortgage loans
|
|
(646
|
)
|
|
(646
|
)
|
|
(687
|
)
|
|||
Other investments
|
|
(999
|
)
|
|
(885
|
)
|
|
(902
|
)
|
|||
Change in short-term investments, net
|
|
2,610
|
|
|
(2,446
|
)
|
|
385
|
|
|||
Change in other investments, net
|
|
(30
|
)
|
|
(51
|
)
|
|
(52
|
)
|
|||
Purchases of property and equipment, net
|
|
(299
|
)
|
|
(313
|
)
|
|
(303
|
)
|
|||
Acquisition of operations
|
|
(1,356
|
)
|
|
—
|
|
|
—
|
|
|||
Net cash (used in) provided by investing activities
|
|
(1,210
|
)
|
|
(2,526
|
)
|
|
742
|
|
|||
Cash flows from financing activities
|
|
|
|
|
|
|
||||||
Proceeds from issuance of long-term debt
|
|
—
|
|
|
1,236
|
|
|
—
|
|
|||
Repayments of long-term debt
|
|
—
|
|
|
(17
|
)
|
|
(20
|
)
|
|||
Contractholder fund deposits
|
|
1,025
|
|
|
1,049
|
|
|
1,052
|
|
|||
Contractholder fund withdrawals
|
|
(1,890
|
)
|
|
(2,087
|
)
|
|
(2,327
|
)
|
|||
Dividends paid on common stock
|
|
(525
|
)
|
|
(486
|
)
|
|
(483
|
)
|
|||
Dividends paid on preferred stock
|
|
(116
|
)
|
|
(116
|
)
|
|
(116
|
)
|
|||
Treasury stock purchases
|
|
(1,495
|
)
|
|
(1,337
|
)
|
|
(2,808
|
)
|
|||
Shares reissued under equity incentive plans, net
|
|
135
|
|
|
164
|
|
|
130
|
|
|||
Excess tax benefits on share-based payment arrangements
|
|
—
|
|
|
32
|
|
|
45
|
|
|||
Other
|
|
(57
|
)
|
|
36
|
|
|
7
|
|
|||
Net cash used in financing activities
|
|
(2,923
|
)
|
|
(1,526
|
)
|
|
(4,520
|
)
|
|||
Net increase (decrease) in cash
|
|
181
|
|
|
(59
|
)
|
|
(162
|
)
|
|||
Cash at beginning of year
|
|
436
|
|
|
495
|
|
|
657
|
|
|||
Cash at end of year
|
|
$
|
617
|
|
|
$
|
436
|
|
|
$
|
495
|
|
Note 1
|
General
|
Note 2
|
Summary of Significant Accounting Policies
|
(1)
|
Net income applicable to common shareholders is net income less preferred stock dividends.
|
Note 3
|
Acquisition
|
Note 4
|
Reportable Segments
|
•
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 adjusted net income
|
•
Valuation changes on embedded derivatives 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 not hedged, after-tax
|
•
Business combination expenses and the amortization of purchased intangible assets, after-tax
|
•
Gain (loss) on disposition of operations, after-tax
|
•
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
|
Reportable segments revenue information
|
||||||||||||
|
|
For the years ended December 31,
|
||||||||||
($ in millions)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Property-Liability
|
|
|
|
|
|
|
||||||
Insurance premiums
|
|
|
|
|
|
|
||||||
Auto
|
|
$
|
21,878
|
|
|
$
|
21,264
|
|
|
$
|
20,410
|
|
Homeowners
|
|
7,310
|
|
|
7,257
|
|
|
7,136
|
|
|||
Other personal lines
|
|
1,750
|
|
|
1,700
|
|
|
1,692
|
|
|||
Commercial lines
|
|
495
|
|
|
506
|
|
|
510
|
|
|||
Allstate Protection
|
|
31,433
|
|
|
30,727
|
|
|
29,748
|
|
|||
Discontinued Lines and Coverages
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total property-liability insurance premiums
|
|
31,433
|
|
|
30,727
|
|
|
29,748
|
|
|||
Net investment income
|
|
1,478
|
|
|
1,253
|
|
|
1,226
|
|
|||
Realized capital gains and losses
|
|
401
|
|
|
(6
|
)
|
|
(237
|
)
|
|||
Total Property-Liability
|
|
33,312
|
|
|
31,974
|
|
|
30,737
|
|
|||
|
|
|
|
|
|
|
||||||
Service Businesses
|
|
|
|
|
|
|
||||||
Consumer product protection plans
|
|
295
|
|
|
—
|
|
|
—
|
|
|||
Roadside assistance
|
|
268
|
|
|
310
|
|
|
340
|
|
|||
Finance and insurance products
|
|
304
|
|
|
270
|
|
|
221
|
|
|||
Intersegment premiums and service fees
(1)
|
|
110
|
|
|
105
|
|
|
42
|
|
|||
Net investment income
|
|
16
|
|
|
13
|
|
|
11
|
|
|||
Total Service Businesses
|
|
993
|
|
|
698
|
|
|
614
|
|
|||
|
|
|
|
|
|
|
||||||
Allstate Life
|
|
|
|
|
|
|
||||||
Traditional life insurance premiums
|
|
568
|
|
|
533
|
|
|
505
|
|
|||
Accident and health insurance premiums
|
|
2
|
|
|
2
|
|
|
2
|
|
|||
Interest-sensitive life insurance contract charges
|
|
710
|
|
|
715
|
|
|
716
|
|
|||
Net investment income
|
|
489
|
|
|
482
|
|
|
490
|
|
|||
Realized capital gains and losses
|
|
5
|
|
|
(38
|
)
|
|
2
|
|
|||
Total Allstate Life
|
|
1,774
|
|
|
1,694
|
|
|
1,715
|
|
|||
|
|
|
|
|
|
|
||||||
Allstate Benefits
|
|
|
|
|
|
|
||||||
Traditional life insurance premiums
|
|
42
|
|
|
40
|
|
|
37
|
|
|||
Accident and health insurance premiums
|
|
928
|
|
|
857
|
|
|
778
|
|
|||
Interest-sensitive life insurance contract charges
|
|
114
|
|
|
114
|
|
|
106
|
|
|||
Net investment income
|
|
72
|
|
|
71
|
|
|
71
|
|
|||
Realized capital gains and losses
|
|
1
|
|
|
(5
|
)
|
|
1
|
|
|||
Total Allstate Benefits
|
|
1,157
|
|
|
1,077
|
|
|
993
|
|
|||
|
|
|
|
|
|
|
||||||
Allstate Annuities
|
|
|
|
|
|
|
||||||
Fixed annuities contract charges
|
|
14
|
|
|
14
|
|
|
14
|
|
|||
Net investment income
|
|
1,305
|
|
|
1,181
|
|
|
1,323
|
|
|||
Realized capital gains and losses
|
|
44
|
|
|
(38
|
)
|
|
264
|
|
|||
Total Allstate Annuities
|
|
1,363
|
|
|
1,157
|
|
|
1,601
|
|
|||
|
|
|
|
|
|
|
||||||
Corporate and Other
|
|
|
|
|
|
|
||||||
Net investment income
|
|
41
|
|
|
42
|
|
|
35
|
|
|||
Realized capital gains and losses
|
|
(6
|
)
|
|
(3
|
)
|
|
—
|
|
|||
|
|
|
|
|
|
|
||||||
Total Corporate and Other
|
|
35
|
|
|
39
|
|
|
35
|
|
|||
Intersegment eliminations
(1)
|
|
(110
|
)
|
|
(105
|
)
|
|
(42
|
)
|
|||
Consolidated revenues
|
|
$
|
38,524
|
|
|
$
|
36,534
|
|
|
$
|
35,653
|
|
Reportable segments financial performance
|
||||||||||||
|
|
For the years ended December 31,
|
||||||||||
($ in millions)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Property-Liability
|
|
|
|
|
|
|
||||||
Allstate Protection
|
|
$
|
2,111
|
|
|
$
|
1,327
|
|
|
$
|
1,621
|
|
Discontinued Lines and Coverages
|
|
(99
|
)
|
|
(107
|
)
|
|
(55
|
)
|
|||
Total underwriting income
|
|
2,012
|
|
|
1,220
|
|
|
1,566
|
|
|||
Net investment income
|
|
1,478
|
|
|
1,253
|
|
|
1,226
|
|
|||
Income tax expense on operations
|
|
(1,119
|
)
|
|
(812
|
)
|
|
(922
|
)
|
|||
Realized capital gains and losses, after-tax
|
|
272
|
|
|
—
|
|
|
(154
|
)
|
|||
Gain on disposition of operations, after-tax
|
|
9
|
|
|
—
|
|
|
—
|
|
|||
Change in accounting for investments in qualified affordable housing projects
|
|
—
|
|
|
—
|
|
|
(28
|
)
|
|||
Tax Legislation expense
|
|
(65
|
)
|
|
—
|
|
|
—
|
|
|||
Property-Liability net income applicable to common shareholders
|
|
2,587
|
|
|
1,661
|
|
|
1,688
|
|
|||
|
|
|
|
|
|
|
||||||
Service Businesses
|
|
|
|
|
|
|
||||||
Adjusted net (loss) income
|
|
(59
|
)
|
|
3
|
|
|
2
|
|
|||
Amortization of purchased intangible assets, after-tax
|
|
(60
|
)
|
|
—
|
|
|
—
|
|
|||
Tax Legislation benefit
|
|
134
|
|
|
—
|
|
|
—
|
|
|||
Service Businesses net income applicable to common shareholders
|
|
15
|
|
|
3
|
|
|
2
|
|
|||
|
|
|
|
|
|
|
||||||
Allstate Life
|
|
|
|
|
|
|
||||||
Adjusted net income
|
|
253
|
|
|
247
|
|
|
239
|
|
|||
Realized capital gains and losses, after-tax
|
|
2
|
|
|
(24
|
)
|
|
1
|
|
|||
DAC and DSI amortization related to realized capital gains and losses, after-tax
|
|
(10
|
)
|
|
(4
|
)
|
|
(4
|
)
|
|||
Loss on disposition of operations, after-tax
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|||
Change in accounting for investments in qualified affordable housing projects
|
|
—
|
|
|
—
|
|
|
(6
|
)
|
|||
Tax Legislation benefit
|
|
332
|
|
|
—
|
|
|
—
|
|
|||
Allstate Life net income applicable to common shareholders
|
|
577
|
|
|
219
|
|
|
229
|
|
|||
|
|
|
|
|
|
|
||||||
Allstate Benefits
|
|
|
|
|
|
|
||||||
Adjusted net income
|
|
95
|
|
|
100
|
|
|
104
|
|
|||
Realized capital gains and losses, after-tax
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
|||
Tax Legislation benefit
|
|
51
|
|
|
—
|
|
|
—
|
|
|||
Allstate Benefits net income applicable to common shareholders
|
|
146
|
|
|
96
|
|
|
104
|
|
|||
|
|
|
|
|
|
|
||||||
Allstate Annuities
|
|
|
|
|
|
|
||||||
Adjusted net income
|
|
204
|
|
|
101
|
|
|
166
|
|
|||
Realized capital gains and losses, after-tax
|
|
28
|
|
|
(26
|
)
|
|
172
|
|
|||
Valuation changes on embedded derivatives not hedged, after-tax
|
|
—
|
|
|
(2
|
)
|
|
(1
|
)
|
|||
DAC and DSI amortization related to realized capital gains and losses and valuation changes on embedded derivatives not hedged, after-tax
|
|
—
|
|
|
—
|
|
|
1
|
|
|||
Gain on disposition of operations, after-tax
|
|
4
|
|
|
3
|
|
|
3
|
|
|||
Change in accounting for investments in qualified affordable housing projects
|
|
—
|
|
|
—
|
|
|
(11
|
)
|
|||
Tax Legislation benefit
|
|
182
|
|
|
—
|
|
|
—
|
|
|||
Allstate Annuities net income applicable to common shareholders
|
|
418
|
|
|
76
|
|
|
330
|
|
|||
|
|
|
|
|
|
|
||||||
Corporate and Other
|
|
|
|
|
|
|
||||||
Adjusted net loss
|
|
(399
|
)
|
|
(292
|
)
|
|
(298
|
)
|
|||
Realized capital gains and losses, after-tax
|
|
(4
|
)
|
|
(2
|
)
|
|
—
|
|
|||
Goodwill impairment
|
|
(125
|
)
|
|
—
|
|
|
—
|
|
|||
Business combination expenses, after-tax
|
|
(14
|
)
|
|
—
|
|
|
—
|
|
|||
Tax Legislation expense
|
|
(128
|
)
|
|
—
|
|
|
—
|
|
|||
Corporate and Other net loss applicable to common shareholders
|
|
(670
|
)
|
|
(294
|
)
|
|
(298
|
)
|
|||
|
|
|
|
|
|
|
||||||
Consolidated net income applicable to common shareholders
|
|
$
|
3,073
|
|
|
$
|
1,761
|
|
|
$
|
2,055
|
|
Additional significant financial performance data
|
|
|
|
|
|
|
||||||
|
|
For the years ended December 31,
|
||||||||||
($ in millions)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Amortization of DAC
|
|
|
|
|
|
|
||||||
Property-Liability
|
|
$
|
4,205
|
|
|
$
|
4,053
|
|
|
$
|
3,933
|
|
Service Businesses
|
|
296
|
|
|
214
|
|
|
169
|
|
|||
Allstate Life
|
|
134
|
|
|
131
|
|
|
133
|
|
|||
Allstate Benefits
|
|
142
|
|
|
145
|
|
|
124
|
|
|||
Allstate Annuities
|
|
7
|
|
|
7
|
|
|
5
|
|
|||
Consolidated
|
|
$
|
4,784
|
|
|
$
|
4,550
|
|
|
$
|
4,364
|
|
|
|
|
|
|
|
|
||||||
Income tax expense (benefit)
|
|
|
|
|
|
|
||||||
Property-Liability
|
|
$
|
1,318
|
|
|
$
|
806
|
|
|
$
|
867
|
|
Service Businesses
|
|
(193
|
)
|
|
—
|
|
|
2
|
|
|||
Allstate Life
|
|
(224
|
)
|
|
91
|
|
|
108
|
|
|||
Allstate Benefits
|
|
1
|
|
|
51
|
|
|
55
|
|
|||
Allstate Annuities
|
|
(58
|
)
|
|
36
|
|
|
188
|
|
|||
Corporate and Other
|
|
(42
|
)
|
|
(107
|
)
|
|
(109
|
)
|
|||
Consolidated
|
|
$
|
802
|
|
|
$
|
877
|
|
|
$
|
1,111
|
|
Impacts of Tax Legislation
|
|
|
|
|
|
|
||||||
|
|
For the year ended December 31, 2017
|
||||||||||
($ in millions)
|
|
Income tax expense (benefit) before Tax Legislation
|
|
Tax Legislation expense (benefit)
|
|
Income tax expense (benefit) after Tax Legislation
|
||||||
Income tax expense (benefit)
|
|
|
|
|
|
|
||||||
Property-Liability
|
|
$
|
1,253
|
|
|
$
|
65
|
|
|
$
|
1,318
|
|
Service Businesses
|
|
(59
|
)
|
|
(134
|
)
|
|
(193
|
)
|
|||
Allstate Life
|
|
108
|
|
|
(332
|
)
|
|
(224
|
)
|
|||
Allstate Benefits
|
|
52
|
|
|
(51
|
)
|
|
1
|
|
|||
Allstate Annuities
|
|
124
|
|
|
(182
|
)
|
|
(58
|
)
|
|||
Corporate and Other
|
|
(170
|
)
|
|
128
|
|
|
(42
|
)
|
|||
Consolidated
|
|
$
|
1,308
|
|
|
$
|
(506
|
)
|
|
$
|
802
|
|
(1)
|
The balances above reflect the elimination of related party investments between segments.
|
(2)
|
Due to the changes in reportable segments, prior year total assets are not available for the new segments as it was impracticable to calculate. Total assets for previously reported Property-Liability, Allstate Financial, and Corporate and Other segments were
$60.39 billion
,
$45.95 billion
and
$2.27 billion
as of December 31, 2016, respectively, and
$55.67 billion
,
$46.34 billion
and
$2.64 billion
as of December 31, 2015, respectively.
|
(3)
|
Due to the changes in reportable segments, prior year investments balances are not available for the new segments as it was impracticable to calculate. Total investments for previously reported Property-Liability, Allstate Financial, and Corporate and Other segments were
$42.72 billion
,
$36.84 billion
and
$2.24 billion
as of December 31, 2016, respectively, and
$38.48 billion
,
$36.79 billion
and
$2.49 billion
as of December 31, 2015, respectively.
|
Note 5
|
Investments
|
Amortized cost, gross unrealized gains and losses and fair value for fixed income securities
|
||||||||||||||||
|
|
Amortized
cost
|
|
Gross unrealized
|
|
Fair
value
|
||||||||||
($ in millions)
|
|
|
Gains
|
|
Losses
|
|
||||||||||
December 31, 2017
|
|
|
|
|
|
|
|
|
||||||||
U.S. government and agencies
|
|
$
|
3,580
|
|
|
$
|
56
|
|
|
$
|
(20
|
)
|
|
$
|
3,616
|
|
Municipal
|
|
8,053
|
|
|
311
|
|
|
(36
|
)
|
|
8,328
|
|
||||
Corporate
|
|
42,996
|
|
|
1,234
|
|
|
(204
|
)
|
|
44,026
|
|
||||
Foreign government
|
|
1,005
|
|
|
27
|
|
|
(11
|
)
|
|
1,021
|
|
||||
ABS
|
|
1,266
|
|
|
13
|
|
|
(7
|
)
|
|
1,272
|
|
||||
RMBS
|
|
480
|
|
|
101
|
|
|
(3
|
)
|
|
578
|
|
||||
CMBS
|
|
124
|
|
|
6
|
|
|
(2
|
)
|
|
128
|
|
||||
Redeemable preferred stock
|
|
21
|
|
|
2
|
|
|
—
|
|
|
23
|
|
||||
Total fixed income securities
|
|
$
|
57,525
|
|
|
$
|
1,750
|
|
|
$
|
(283
|
)
|
|
$
|
58,992
|
|
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2016
|
|
|
|
|
|
|
|
|
||||||||
U.S. government and agencies
|
|
$
|
3,572
|
|
|
$
|
74
|
|
|
$
|
(9
|
)
|
|
$
|
3,637
|
|
Municipal
|
|
7,116
|
|
|
304
|
|
|
(87
|
)
|
|
7,333
|
|
||||
Corporate
|
|
42,742
|
|
|
1,178
|
|
|
(319
|
)
|
|
43,601
|
|
||||
Foreign government
|
|
1,043
|
|
|
36
|
|
|
(4
|
)
|
|
1,075
|
|
||||
ABS
|
|
1,169
|
|
|
13
|
|
|
(11
|
)
|
|
1,171
|
|
||||
RMBS
|
|
651
|
|
|
85
|
|
|
(8
|
)
|
|
728
|
|
||||
CMBS
|
|
262
|
|
|
17
|
|
|
(9
|
)
|
|
270
|
|
||||
Redeemable preferred stock
|
|
21
|
|
|
3
|
|
|
—
|
|
|
24
|
|
||||
Total fixed income securities
|
|
$
|
56,576
|
|
|
$
|
1,710
|
|
|
$
|
(447
|
)
|
|
$
|
57,839
|
|
Scheduled maturities for fixed Income securities
|
||||||||
|
|
As of December 31, 2017
|
||||||
($ in millions)
|
|
Amortized
cost
|
|
Fair
value
|
||||
Due in one year or less
|
|
$
|
4,771
|
|
|
$
|
4,783
|
|
Due after one year through five years
|
|
28,736
|
|
|
29,080
|
|
||
Due after five years through ten years
|
|
16,956
|
|
|
17,278
|
|
||
Due after ten years
|
|
5,192
|
|
|
5,873
|
|
||
|
|
55,655
|
|
|
57,014
|
|
||
ABS, RMBS and CMBS
|
|
1,870
|
|
|
1,978
|
|
||
Total
|
|
$
|
57,525
|
|
|
$
|
58,992
|
|
Net investment income
|
||||||||||||
|
|
For the years ended December 31,
|
||||||||||
($ in millions)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Fixed income securities
|
|
$
|
2,078
|
|
|
$
|
2,060
|
|
|
$
|
2,218
|
|
Equity securities
|
|
174
|
|
|
137
|
|
|
110
|
|
|||
Mortgage loans
|
|
206
|
|
|
217
|
|
|
228
|
|
|||
Limited partnership interests
|
|
889
|
|
|
561
|
|
|
549
|
|
|||
Short-term investments
|
|
30
|
|
|
16
|
|
|
9
|
|
|||
Other
|
|
236
|
|
|
222
|
|
|
192
|
|
|||
Investment income, before expense
|
|
3,613
|
|
|
3,213
|
|
|
3,306
|
|
|||
Investment expense
|
|
(212
|
)
|
|
(171
|
)
|
|
(150
|
)
|
|||
Net investment income
|
|
$
|
3,401
|
|
|
$
|
3,042
|
|
|
$
|
3,156
|
|
(1)
|
Beginning January 1, 2018, due to the adoption of the new accounting standard for the recognition and measurement of financial assets and liabilities, equity securities will be measured at fair value w
ith changes in fair value recognized in net income. The existing unrealized net capital gains and losses, after-tax, will be reclassified to retained income through a cumulative effect adjustment. See Note 2 for additional details on the new accounting standard.
|
(2)
|
Included in the fair value of derivative instruments is
$2 million
classified as liabilities.
|
(3)
|
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.
|
(4)
|
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. This adjustment primarily relates to structured settlement annuities with life contingencies (a type of immediate fixed annuities).
|
(5)
|
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.
|
(6)
|
Unrealized net capital gains and losses were reduced by deferred income taxes at the newly enacted 21% U.S. corporate tax rate.
|
(1)
|
Included in the fair value of derivative instruments is
$5 million
classified as assets.
|
(2)
|
Unrealized net capital gains and losses were reduced by deferred income taxes at the
35%
corporate tax rate.
|
Gross unrealized losses and fair value by type and length of time held in a continuous unrealized loss position
|
||||||||||||||||||||||||||
($ in millions)
|
|
Less than 12 months
|
|
12 months or more
|
|
|
||||||||||||||||||||
|
|
Number of issues
|
|
Fair value
|
|
Unrealized losses
|
|
Number of issues
|
|
Fair value
|
|
Unrealized losses
|
|
Total unrealized losses
|
||||||||||||
December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fixed income securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. government and agencies
|
|
66
|
|
|
$
|
2,829
|
|
|
$
|
(18
|
)
|
|
18
|
|
|
$
|
182
|
|
|
$
|
(2
|
)
|
|
$
|
(20
|
)
|
Municipal
|
|
1,756
|
|
|
3,143
|
|
|
(24
|
)
|
|
165
|
|
|
349
|
|
|
(12
|
)
|
|
(36
|
)
|
|||||
Corporate
|
|
781
|
|
|
11,616
|
|
|
(102
|
)
|
|
208
|
|
|
3,289
|
|
|
(102
|
)
|
|
(204
|
)
|
|||||
Foreign government
|
|
45
|
|
|
580
|
|
|
(10
|
)
|
|
5
|
|
|
44
|
|
|
(1
|
)
|
|
(11
|
)
|
|||||
ABS
|
|
57
|
|
|
476
|
|
|
(3
|
)
|
|
9
|
|
|
34
|
|
|
(4
|
)
|
|
(7
|
)
|
|||||
RMBS
|
|
118
|
|
|
35
|
|
|
(1
|
)
|
|
181
|
|
|
50
|
|
|
(2
|
)
|
|
(3
|
)
|
|||||
CMBS
|
|
2
|
|
|
1
|
|
|
—
|
|
|
6
|
|
|
23
|
|
|
(2
|
)
|
|
(2
|
)
|
|||||
Redeemable preferred stock
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total fixed income securities
|
|
2,826
|
|
|
18,680
|
|
|
(158
|
)
|
|
592
|
|
|
3,971
|
|
|
(125
|
)
|
|
(283
|
)
|
|||||
Equity securities
|
|
127
|
|
|
369
|
|
|
(12
|
)
|
|
2
|
|
|
—
|
|
|
—
|
|
|
(12
|
)
|
|||||
Total fixed income and equity securities
|
|
2,953
|
|
|
$
|
19,049
|
|
|
$
|
(170
|
)
|
|
594
|
|
|
$
|
3,971
|
|
|
$
|
(125
|
)
|
|
$
|
(295
|
)
|
Investment grade fixed income securities
|
|
2,706
|
|
|
$
|
17,668
|
|
|
$
|
(134
|
)
|
|
535
|
|
|
$
|
3,751
|
|
|
$
|
(98
|
)
|
|
$
|
(232
|
)
|
Below investment grade fixed income securities
|
|
120
|
|
|
1,012
|
|
|
(24
|
)
|
|
57
|
|
|
220
|
|
|
(27
|
)
|
|
(51
|
)
|
|||||
Total fixed income securities
|
|
2,826
|
|
|
$
|
18,680
|
|
|
$
|
(158
|
)
|
|
592
|
|
|
$
|
3,971
|
|
|
$
|
(125
|
)
|
|
$
|
(283
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fixed income securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. government and agencies
|
|
46
|
|
|
$
|
943
|
|
|
$
|
(9
|
)
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(9
|
)
|
Municipal
|
|
1,310
|
|
|
3,073
|
|
|
(76
|
)
|
|
8
|
|
|
29
|
|
|
(11
|
)
|
|
(87
|
)
|
|||||
Corporate
|
|
862
|
|
|
13,343
|
|
|
(256
|
)
|
|
83
|
|
|
678
|
|
|
(63
|
)
|
|
(319
|
)
|
|||||
Foreign government
|
|
41
|
|
|
225
|
|
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|||||
ABS
|
|
31
|
|
|
222
|
|
|
(1
|
)
|
|
14
|
|
|
109
|
|
|
(10
|
)
|
|
(11
|
)
|
|||||
RMBS
|
|
89
|
|
|
53
|
|
|
(1
|
)
|
|
179
|
|
|
91
|
|
|
(7
|
)
|
|
(8
|
)
|
|||||
CMBS
|
|
15
|
|
|
59
|
|
|
(4
|
)
|
|
4
|
|
|
15
|
|
|
(5
|
)
|
|
(9
|
)
|
|||||
Redeemable preferred stock
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total fixed income securities
|
|
2,395
|
|
|
17,918
|
|
|
(351
|
)
|
|
288
|
|
|
922
|
|
|
(96
|
)
|
|
(447
|
)
|
|||||
Equity securities
|
|
195
|
|
|
654
|
|
|
(56
|
)
|
|
46
|
|
|
165
|
|
|
(29
|
)
|
|
(85
|
)
|
|||||
Total fixed income and equity securities
|
|
2,590
|
|
|
$
|
18,572
|
|
|
$
|
(407
|
)
|
|
334
|
|
|
$
|
1,087
|
|
|
$
|
(125
|
)
|
|
$
|
(532
|
)
|
Investment grade fixed income securities
|
|
2,202
|
|
|
$
|
15,678
|
|
|
$
|
(293
|
)
|
|
201
|
|
|
$
|
493
|
|
|
$
|
(51
|
)
|
|
$
|
(344
|
)
|
Below investment grade fixed income securities
|
|
193
|
|
|
2,240
|
|
|
(58
|
)
|
|
87
|
|
|
429
|
|
|
(45
|
)
|
|
(103
|
)
|
|||||
Total fixed income securities
|
|
2,395
|
|
|
$
|
17,918
|
|
|
$
|
(351
|
)
|
|
288
|
|
|
$
|
922
|
|
|
$
|
(96
|
)
|
|
$
|
(447
|
)
|
Contractual maturities of the mortgage loan portfolio
|
||||||||||
|
|
As of December 31, 2017
|
||||||||
($ in millions)
|
|
Number of loans
|
|
Carrying value
|
|
Percent
|
||||
2018
|
|
17
|
|
|
$
|
169
|
|
|
3.7
|
%
|
2019
|
|
10
|
|
|
268
|
|
|
5.9
|
|
|
2020
|
|
14
|
|
|
192
|
|
|
4.2
|
|
|
2021
|
|
43
|
|
|
625
|
|
|
13.8
|
|
|
Thereafter
|
|
201
|
|
|
3,280
|
|
|
72.4
|
|
|
Total
|
|
285
|
|
|
$
|
4,534
|
|
|
100.0
|
%
|
Net carrying value of impaired mortgage loans
|
||||||||
|
|
As of December 31,
|
||||||
($ in millions)
|
|
2017
|
|
2016
|
||||
Impaired mortgage loans with a valuation allowance
|
|
$
|
4
|
|
|
$
|
5
|
|
Impaired mortgage loans without a valuation allowance
|
|
—
|
|
|
—
|
|
||
Total impaired mortgage loans
|
|
$
|
4
|
|
|
$
|
5
|
|
Valuation allowance on impaired mortgage loans
|
|
$
|
3
|
|
|
$
|
3
|
|
Note 6
|
Fair Value of Assets and Liabilities
|
(a)
|
Quoted prices for similar assets or liabilities in active markets;
|
(b)
|
Quoted prices for identical or similar assets or liabilities in markets that are not active; or
|
(c)
|
Valuation models whose inputs are observable, directly or indirectly, for substantially the full term of the asset or liability.
|
•
|
Fixed income securities:
Comprise certain U.S. Treasury fixed income securities. Valuation is based on unadjusted quoted prices for identical assets in active markets that the Company can access.
|
•
|
Equity securities:
Comprise actively traded, exchange-listed equity securities. Valuation is based on unadjusted quoted prices for identical assets in active markets that the Company can access.
|
•
|
Short-term:
Comprise U.S. Treasury bills valued based on unadjusted quoted prices for identical assets in active markets that the Company can access and actively traded money market funds that have daily quoted net asset values for identical assets that the Company can access.
|
•
|
Separate account assets:
Comprise actively traded mutual funds that have daily quoted net asset values for identical assets that the Company can access. Net asset values for the actively traded mutual funds in which the separate account assets are invested are obtained daily from the fund managers.
|
•
|
Fixed income securities:
|
•
|
Equity securities:
The primary inputs to the valuation include quoted prices or quoted net asset
|
•
|
Short-term:
The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields and credit spreads. For certain short-term investments, amortized cost is used as the best estimate of fair value.
|
•
|
Other investments:
Free-standing exchange listed derivatives that are not actively traded are valued based on quoted prices for identical instruments in markets that are not active.
|
•
|
Fixed income securities:
|
•
|
Equity securities:
The primary inputs to the valuation include quoted prices or quoted net asset values for identical or similar assets in markets that exhibit less liquidity relative to those markets supporting Level 2 fair value measurements.
|
•
|
Other investments:
Certain OTC derivatives, such as interest rate caps, certain credit default swaps and certain options (including swaptions), are valued using models that are widely accepted in
|
•
|
Contractholder funds:
Derivatives embedded in certain life and annuity contracts are valued internally using models widely accepted in the financial services industry that determine a single best estimate of fair value for the embedded derivatives within a block of contractholder liabilities. The models primarily use stochastically determined cash flows based on the contractual elements of embedded derivatives, projected option cost and applicable market data, such as
|
(1)
|
Includes
$3 million
of limited partnership interests written-down to fair value in connection with recognizing other-than-temporary impairments.
|
(1)
|
Includes
$24 million
of limited partnership interests written-down to fair value in connection with recognizing other-than-temporary impairments.
|
Quantitative information about the significant unobservable inputs used in Level 3 fair value measurements
|
||||||||||||
($ in millions)
|
|
Fair value
|
|
Valuation
technique
|
|
Unobservable
input
|
|
Range
|
|
Weighted
average
|
||
December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
||
Derivatives embedded in life and annuity contracts – Equity-indexed and forward starting options
|
|
$
|
(252
|
)
|
|
Stochastic cash flow model
|
|
Projected option cost
|
|
1.0 - 2.2%
|
|
1.74%
|
|
|
|
|
|
|
|
|
|
|
|
||
December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
||
Derivatives embedded in life and annuity contracts – Equity-indexed and forward starting options
|
|
$
|
(247
|
)
|
|
Stochastic cash flow model
|
|
Projected option cost
|
|
1.0 - 2.2%
|
|
1.75%
|
(1)
|
The effect to net income totals
$22 million
and is reported in the Consolidated Statements of Operations as follows:
$4 million
in realized capital gains and losses,
$19 million
in net investment income,
$(10) million
in interest credited to contractholder funds and
$9 million
in life contract benefits.
|
(2)
|
Comprises
$1 million
of assets.
|
Rollforward of level 3 assets and liabilities held at fair value on a recurring basis during the period
|
|||||||||||||||||||||
|
|
|
|
December 31, 2016
|
|
||||||||||||||||
|
|
Balance as of December 31, 2015
|
|
Total gains (losses) included in:
|
|
Transfers into Level 3
|
|
Transfers out of Level 3
|
|
||||||||||||
($ in millions)
|
|
|
Net income
(1)
|
|
OCI
|
|
|
|
|||||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed income securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. government and agencies
|
|
$
|
5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(4
|
)
|
|
Municipal
|
|
161
|
|
|
12
|
|
|
(10
|
)
|
|
6
|
|
|
(23
|
)
|
|
|||||
Corporate - public
|
|
46
|
|
|
—
|
|
|
—
|
|
|
41
|
|
|
(43
|
)
|
|
|||||
Corporate - privately placed
|
|
502
|
|
|
15
|
|
|
18
|
|
|
16
|
|
|
(398
|
)
|
|
|||||
ABS - CDO
|
|
61
|
|
|
1
|
|
|
6
|
|
|
10
|
|
|
(43
|
)
|
|
|||||
ABS - consumer and other
|
|
50
|
|
|
—
|
|
|
(3
|
)
|
|
3
|
|
|
(35
|
)
|
|
|||||
RMBS
|
|
1
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|||||
CMBS
|
|
20
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
|||||
Total fixed income securities
|
|
846
|
|
|
29
|
|
|
11
|
|
|
76
|
|
|
(547
|
)
|
|
|||||
Equity securities
|
|
133
|
|
|
(32
|
)
|
|
12
|
|
|
—
|
|
|
(12
|
)
|
|
|||||
Short-term investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|||||
Free-standing derivatives, net
|
|
(7
|
)
|
|
6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|||||
Other assets
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|||||
Total recurring Level 3 assets
|
|
$
|
973
|
|
|
$
|
3
|
|
|
$
|
23
|
|
|
$
|
76
|
|
|
$
|
(559
|
)
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Contractholder funds: Derivatives embedded in life and annuity contracts
|
|
$
|
(299
|
)
|
|
$
|
5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Total recurring Level 3 liabilities
|
|
$
|
(299
|
)
|
|
$
|
5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
Purchases
|
|
Sales
|
|
Issues
|
|
Settlements
|
|
Balance as of December 31, 2016
|
|
||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed income securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. government and agencies
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
Municipal
|
|
22
|
|
|
(40
|
)
|
|
—
|
|
|
(3
|
)
|
|
125
|
|
|
|||||
Corporate - public
|
|
47
|
|
|
(11
|
)
|
|
—
|
|
|
(2
|
)
|
|
78
|
|
|
|||||
Corporate - privately placed
|
|
181
|
|
|
(15
|
)
|
|
—
|
|
|
(56
|
)
|
|
263
|
|
|
|||||
ABS - CDO
|
|
40
|
|
|
(3
|
)
|
|
—
|
|
|
(45
|
)
|
|
27
|
|
|
|||||
ABS - consumer and other
|
|
35
|
|
|
(5
|
)
|
|
—
|
|
|
(3
|
)
|
|
42
|
|
|
|||||
RMBS
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
1
|
|
|
|||||
CMBS
|
|
5
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
22
|
|
|
|||||
Total fixed income securities
|
|
330
|
|
|
(75
|
)
|
|
—
|
|
|
(112
|
)
|
|
558
|
|
|
|||||
Equity securities
|
|
65
|
|
|
(4
|
)
|
|
—
|
|
|
1
|
|
|
163
|
|
|
|||||
Short-term investments
|
|
15
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15
|
|
|
|||||
Free-standing derivatives, net
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(2
|
)
|
(2)
|
|||||
Other assets
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
|||||
Total recurring Level 3 assets
|
|
$
|
410
|
|
|
$
|
(79
|
)
|
|
$
|
—
|
|
|
$
|
(112
|
)
|
|
$
|
735
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Contractholder funds: Derivatives embedded in life and annuity contracts
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(3
|
)
|
|
$
|
7
|
|
|
$
|
(290
|
)
|
|
Total recurring Level 3 liabilities
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(3
|
)
|
|
$
|
7
|
|
|
$
|
(290
|
)
|
|
(1)
|
The effect to net income totals
$8 million
and is reported in the Consolidated Statements of Operations as follows:
$(9) million
in realized capital gains and losses,
$12 million
in net investment income,
$(4) million
in interest credited to contractholder funds and
$9 million
in life contract benefits.
|
(2)
|
Comprises
$1 million
of assets and
$3 million
of liabilities.
|
(1)
|
The effect to net income totals
$24 million
and is reported in the Consolidated Statements of Operations as follows:
$(8) million
in realized capital gains and losses,
$13 million
in net investment income,
$26 million
in interest credited to contractholder funds and
$(7) million
in life contract benefits.
|
(2)
|
Comprises
$1 million
of assets and
$8 million
of liabilities.
|
(1)
|
Beginning January 1, 2018, due to the adoption of the new accounting standard for the recognition and measurement of financial assets and liabilities, cost method limited partnerships (excluding limited partnership interests accounted for on a cost recovery basis) will be measured at fair value w
ith changes in fair value recognized in net income. The existing carrying value of these investments will increase to fair value with the offsetting adjustment recognized in retained income through a cumulative effect adjustment. See Note 2 for additional details on the new accounting standard.
|
Note 7
|
Derivative Financial Instruments and Off-balance sheet Financial Instruments
|
(1)
|
Volume for OTC and cleared derivative contracts is represented by their notional amounts. Volume for exchange traded derivatives is represented by the number of contracts, which is the basis on which they are traded. (n/a = not applicable)
|
(1)
|
Volume for OTC and cleared derivative contracts is represented by their notional amounts. Volume for exchange traded derivatives is represented by the number of contracts, which is the basis on which they are traded. (n/a = not applicable)
|
(1)
|
All OTC derivatives are subject to enforceable master netting agreements.
|
OTC derivatives counterparty credit exposure by counterparty credit rating
|
||||||||||||||||||||||||||||||
($ in millions)
|
|
2017
|
|
2016
|
||||||||||||||||||||||||||
Rating
(1)
|
|
Number of counter-parties
|
|
Notional amount
(2)
|
|
Credit exposure
(2)
|
|
Exposure, net of collateral
(2)
|
|
Number of counter-parties
|
|
Notional amount
(2)
|
|
Credit exposure
(2)
|
|
Exposure, net of collateral
(2)
|
||||||||||||||
AA–
|
|
1
|
|
|
$
|
18
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
2
|
|
|
$
|
80
|
|
|
$
|
2
|
|
|
$
|
2
|
|
A+
|
|
3
|
|
|
90
|
|
|
3
|
|
|
1
|
|
|
5
|
|
|
698
|
|
|
20
|
|
|
9
|
|
||||||
A–
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
110
|
|
|
1
|
|
|
1
|
|
||||||
Total
|
|
4
|
|
|
$
|
108
|
|
|
$
|
4
|
|
|
$
|
1
|
|
|
8
|
|
|
$
|
888
|
|
|
$
|
23
|
|
|
$
|
12
|
|
(1)
|
Rating is the lower of S&P or Moody’s ratings.
|
(2)
|
Only OTC derivatives with a net positive fair value are included for each counterparty.
|
($ in millions)
|
|
2017
|
|
2016
|
||||
Gross liability fair value of contracts containing credit-risk-contingent features
|
|
$
|
28
|
|
|
$
|
9
|
|
Gross asset fair value of contracts containing credit-risk-contingent features and subject to MNAs
|
|
(17
|
)
|
|
(7
|
)
|
||
Collateral posted under MNAs for contracts containing credit-risk-contingent features
|
|
(6
|
)
|
|
—
|
|
||
Maximum amount of additional exposure for contracts with credit-risk-contingent features if all features were triggered concurrently
|
|
$
|
5
|
|
|
$
|
2
|
|
Note 8
|
Reserve for Property and Casualty Insurance Claims and Claims Expense
|
Average annual percentage payout of incurred claims by age, net of reinsurance, as of December 31, 2017
|
|||||||||||||||
|
|
1 year
|
|
2 years
|
|
3 years
|
|
4 years
|
|
5 years
|
|||||
Auto insurance
–
liability coverage
|
|
40.2
|
%
|
|
27.4
|
%
|
|
12.5
|
%
|
|
8.0
|
%
|
|
4.7
|
%
|
Average annual percentage payout of incurred claims by age, net of reinsurance, as of December 31, 2017
|
|||||||||||||||
|
|
1 year
|
|
2 years
|
|
3 years
|
|
4 years
|
|
5 years
|
|||||
Auto insurance
– p
hysical damage coverage
|
|
96.6
|
%
|
|
3.2
|
%
|
|
(0.2
|
)%
|
|
—
|
%
|
|
—
|
%
|
($ in millions, except number of reported claims)
|
|
Incurred claims and allocated claim adjustment expenses, net of reinsurance
|
|
IBNR reserves plus expected development on reported claims
|
|
Cumulative number of reported claims
|
|||||||||||||||||||||
|
|
For the years ended December 31,
|
|
As of December 31, 2017
|
|||||||||||||||||||||||
|
|
(unaudited)
|
|
(unaudited)
|
|
(unaudited)
|
|
(unaudited)
|
|
|
|
||||||||||||||||
Accident year
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
||||||||||||||||
2013
|
|
$
|
3,098
|
|
|
$
|
3,170
|
|
|
$
|
3,163
|
|
|
$
|
3,142
|
|
|
$
|
3,121
|
|
|
$
|
51
|
|
|
682,873
|
|
2014
|
|
—
|
|
|
3,608
|
|
|
3,651
|
|
|
3,653
|
|
|
3,621
|
|
|
88
|
|
|
765,001
|
|
||||||
2015
|
|
—
|
|
|
—
|
|
|
3,572
|
|
|
3,622
|
|
|
3,560
|
|
|
158
|
|
|
720,102
|
|
||||||
2016
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,972
|
|
|
4,001
|
|
|
319
|
|
|
809,045
|
|
||||||
2017
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,490
|
|
|
1,260
|
|
|
840,254
|
|
||||||
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
18,793
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
|
Cumulative paid claims and allocated claims adjustment expenses, net of reinsurance
|
|
|
|
|
|||||||||||||||||||||
|
|
For the years ended December 31,
|
|
|
|
|
|||||||||||||||||||||
|
|
(unaudited)
|
|
(unaudited)
|
|
(unaudited)
|
|
(unaudited)
|
|
|
|
|
|
|
|||||||||||||
Accident year
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
|
|
|
|||||||||||||
2013
|
|
$
|
2,288
|
|
|
$
|
2,885
|
|
|
$
|
2,998
|
|
|
$
|
3,045
|
|
|
$
|
3,070
|
|
|
|
|
|
|||
2014
|
|
—
|
|
|
2,736
|
|
|
3,365
|
|
|
3,481
|
|
|
3,533
|
|
|
|
|
|
||||||||
2015
|
|
—
|
|
|
—
|
|
|
2,589
|
|
|
3,299
|
|
|
3,402
|
|
|
|
|
|
||||||||
2016
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,950
|
|
|
3,682
|
|
|
|
|
|
||||||||
2017
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,230
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
16,917
|
|
|
|
|
|
||||||||||
All outstanding liabilities before 2013, net of reinsurance
|
|
173
|
|
|
|
|
|
||||||||||||||||||||
Liabilities for claims and claim adjustment expenses, net of reinsurance
|
|
$
|
2,049
|
|
|
|
|
|
Average annual percentage payout of incurred claims by age, net of reinsurance, as of December 31, 2017
|
|||||||||||||||
|
|
1 year
|
|
2 years
|
|
3 years
|
|
4 years
|
|
5 years
|
|||||
Homeowners insurance
|
|
74.6
|
%
|
|
18.6
|
%
|
|
2.9
|
%
|
|
1.3
|
%
|
|
0.7
|
%
|
(1)
|
Discontinued Lines and Coverages includes business in run-off. All of the claims primarily relate to accident years more than 30 years ago. IBNR reserves represent
$733 million
of the total reserves as of December 31,
2017
.
|
Note 9
|
Reserve for Life-Contingent Contract Benefits and Contractholder Funds
|
Reserve for life-contingent contract benefits
|
||||||||
|
|
As of December 31,
|
||||||
($ in millions)
|
|
2017
|
|
2016
|
||||
Immediate fixed annuities:
|
|
|
|
|
||||
Structured settlement annuities
|
|
$
|
6,994
|
|
|
$
|
6,681
|
|
Other immediate fixed annuities
|
|
1,855
|
|
|
1,941
|
|
||
Traditional life insurance
|
|
2,722
|
|
|
2,643
|
|
||
Accident and health insurance
|
|
893
|
|
|
873
|
|
||
Other
|
|
85
|
|
|
101
|
|
||
Total reserve for life-contingent contract benefits
|
|
$
|
12,549
|
|
|
$
|
12,239
|
|
Key assumptions generally used in calculating the reserve for life-contingent contract benefits
|
||||||
Product
|
|
Mortality
|
|
Interest rate
|
|
Estimation method
|
Structured settlement annuities
|
|
U.S. population with projected calendar year improvements; mortality rates adjusted for each impaired life based on reduction in life expectancy
|
|
Interest rate assumptions range from 2.9% to 9.0%
|
|
Present value of contractually specified future benefits
|
Other immediate fixed annuities
|
|
1983 group annuity mortality table with internal modifications; 1983 individual annuity mortality table; Annuity 2000 mortality table with internal modifications; Annuity 2000 mortality table; 1983 individual annuity mortality table with internal modifications
|
|
Interest rate assumptions range from 0% to 11.5%
|
|
Present value of expected future benefits based on historical experience
|
Traditional life insurance
|
|
Actual company experience plus loading
|
|
Interest rate assumptions range from 2.5% to 11.3%
|
|
Net level premium reserve method using the Company’s withdrawal experience rates; includes reserves for unpaid claims
|
Accident and health insurance
|
|
Actual company experience plus loading
|
|
Interest rate assumptions range from 3.0% to 7.0%
|
|
Unearned premium; additional contract reserves for mortality risk and unpaid claims
|
Other:
Variable annuity guaranteed minimum death benefits
(1)
|
|
Annuity 2012 mortality table with internal modifications
|
|
Interest rate assumptions range from 2.0% to 5.8%
|
|
Projected benefit ratio applied to cumulative assessments
|
(1)
|
In 2006, the Company disposed of substantially all of its variable annuity business through reinsurance agreements with The Prudential Insurance Company of America, a subsidiary of Prudential Financial, Inc. (collectively “Prudential”).
|
Contractholder funds
|
||||||||
|
|
As of December 31,
|
||||||
($ in millions)
|
|
2017
|
|
2016
|
||||
Interest-sensitive life insurance
|
|
$
|
8,190
|
|
|
$
|
8,062
|
|
Investment contracts:
|
|
|
|
|
||||
Fixed annuities
|
|
10,828
|
|
|
11,933
|
|
||
Other investment contracts
|
|
416
|
|
|
265
|
|
||
Total contractholder funds
|
|
$
|
19,434
|
|
|
$
|
20,260
|
|
(1)
|
In 2006, the Company disposed of substantially all of its variable annuity business through reinsurance agreements with Prudential.
|
Contractholder funds activity
|
||||||||||||
|
|
For the years ended December 31,
|
||||||||||
($ in millions)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Balance, beginning of year
|
|
$
|
20,260
|
|
|
$
|
21,295
|
|
|
$
|
22,529
|
|
Deposits
|
|
1,130
|
|
|
1,164
|
|
|
1,203
|
|
|||
Interest credited
|
|
687
|
|
|
722
|
|
|
760
|
|
|||
Benefits
|
|
(901
|
)
|
|
(966
|
)
|
|
(1,077
|
)
|
|||
Surrenders and partial withdrawals
|
|
(999
|
)
|
|
(1,053
|
)
|
|
(1,278
|
)
|
|||
Maturities of and interest payments on institutional products
|
|
—
|
|
|
(86
|
)
|
|
(1
|
)
|
|||
Contract charges
|
|
(826
|
)
|
|
(829
|
)
|
|
(818
|
)
|
|||
Net transfers from separate accounts
|
|
5
|
|
|
5
|
|
|
7
|
|
|||
Other adjustments
|
|
78
|
|
|
8
|
|
|
(30
|
)
|
|||
Balance, end of year
|
|
$
|
19,434
|
|
|
$
|
20,260
|
|
|
$
|
21,295
|
|
($ in millions)
|
|
As of December 31,
|
||||||
|
|
2017
|
|
2016
|
||||
In the event of death
|
|
|
|
|
||||
Separate account value
|
|
$
|
3,344
|
|
|
$
|
3,298
|
|
Net amount at risk
(1)
|
|
$
|
454
|
|
|
$
|
585
|
|
Average attained age of contractholders
|
|
70 years
|
|
|
70 years
|
|
||
At annuitization (includes income benefit guarantees)
|
|
|
|
|
||||
Separate account value
|
|
$
|
944
|
|
|
$
|
915
|
|
Net amount at risk
(2)
|
|
$
|
202
|
|
|
$
|
265
|
|
Weighted average waiting period until annuitization options available
|
|
None
|
|
|
None
|
|
||
For cumulative periodic withdrawals
|
|
|
|
|
||||
Separate account value
|
|
$
|
253
|
|
|
$
|
267
|
|
Net amount at risk
(3)
|
|
$
|
10
|
|
|
$
|
10
|
|
Accumulation at specified dates
|
|
|
|
|
||||
Separate account value
|
|
$
|
170
|
|
|
$
|
310
|
|
Net amount at risk
(4)
|
|
$
|
17
|
|
|
$
|
26
|
|
Weighted average waiting period until guarantee date
|
|
5 years
|
|
|
3 years
|
|
(1)
|
Defined as the estimated current guaranteed minimum death benefit in excess of the current account balance as of the balance sheet date.
|
(2)
|
Defined as the estimated present value of the guaranteed minimum annuity payments in excess of the current account balance.
|
(3)
|
Defined as the estimated current guaranteed minimum withdrawal balance (initial deposit) in excess of the current account balance as of the balance sheet date.
|
(4)
|
Defined as the estimated present value of the guaranteed minimum accumulation balance in excess of the current account balance.
|
(1)
|
Included in the total liability balance as of
December 31, 2016
are reserves for variable annuity death benefits of
$100 million
, variable annuity income benefits of
$40 million
, variable annuity accumulation benefits of
$34 million
, variable annuity withdrawal benefits of
$9 million
and other guarantees of
$182 million
.
|
(2)
|
Included in the total liability balance as of
December 31, 2017
are reserves for variable annuity death benefits of
$85 million
, variable annuity income benefits of
$26 million
, variable annuity accumulation benefits of
$22 million
, variable annuity withdrawal benefits of
$12 million
and other guarantees of
$225 million
.
|
(3)
|
Included in the total liability balance as of
December 31, 2015
are reserves for variable annuity death benefits of
$105 million
, variable annuity income benefits of
$65 million
, variable annuity accumulation benefits of
$38 million
, variable annuity withdrawal benefits of
$14 million
and other guarantees of
$144 million
.
|
Note 10
|
Reinsurance
|
Effects of reinsurance on property and casualty premiums written and earned and life premiums and contract charges
|
||||||||||||
|
|
For the years ended December 31,
|
||||||||||
($ in millions)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Property and casualty insurance premiums written
|
|
|
|
|
|
|
||||||
Direct
|
|
$
|
33,685
|
|
|
$
|
32,614
|
|
|
$
|
31,924
|
|
Assumed
|
|
64
|
|
|
47
|
|
|
39
|
|
|||
Ceded
|
|
(1,007
|
)
|
|
(1,061
|
)
|
|
(1,092
|
)
|
|||
Property and casualty insurance premiums written, net of reinsurance
|
|
$
|
32,742
|
|
|
$
|
31,600
|
|
|
$
|
30,871
|
|
|
|
|
|
|
|
|
||||||
Property and casualty insurance premiums earned
|
|
|
|
|
|
|
||||||
Direct
|
|
$
|
33,221
|
|
|
$
|
32,249
|
|
|
$
|
31,274
|
|
Assumed
|
|
50
|
|
|
45
|
|
|
41
|
|
|||
Ceded
|
|
(971
|
)
|
|
(987
|
)
|
|
(1,006
|
)
|
|||
Property and casualty insurance premiums earned, net of reinsurance
|
|
$
|
32,300
|
|
|
$
|
31,307
|
|
|
$
|
30,309
|
|
|
|
|
|
|
|
|
||||||
Life premiums and contract charges
|
|
|
|
|
|
|
||||||
Direct
|
|
$
|
1,894
|
|
|
$
|
1,766
|
|
|
$
|
1,641
|
|
Assumed
|
|
787
|
|
|
818
|
|
|
849
|
|
|||
Ceded
|
|
(303
|
)
|
|
(309
|
)
|
|
(332
|
)
|
|||
Life premiums and contract charges, net of reinsurance
|
|
$
|
2,378
|
|
|
$
|
2,275
|
|
|
$
|
2,158
|
|
•
|
The majority of our program comprises multi-year contracts, primarily placed in the traditional reinsurance market, such that one third of the program is renewed every year.
|
•
|
Coverage is generally purchased on a broad geographic, product line and multiple peril loss basis.
|
•
|
The Company purchases reinsurance from traditional reinsurance companies as well as the insurance linked securities market (e.g. “PCS Agreements”).
|
•
|
Florida property and New Jersey property and auto are each covered by separate agreements, as the risk of loss is different and our subsidiaries operating in these states are separately capitalized.
|
Retention limits by period of policy issuance
|
||
Period
|
|
Retention limits
|
April 2015 through current
|
|
Single life: $2 million per life
Joint life: no longer offered
|
April 2011 through March 2015
|
|
Single life: $5 million per life, $3 million age 70 and over, and $10 million for contracts that meet specific criteria
Joint life: $8 million per life, and $10 million for contracts that meet specific criteria
|
July 2007 through March 2011
|
|
$5 million per life, $3 million age 70 and over, and $10 million for contracts that meet specific criteria
|
September 1998 through June 2007
|
|
$2 million per life, in 2006 the limit was increased to $5 million for instances when specific criteria were met
|
August 1998 and prior
|
|
Up to $1 million per life
|
Note 11
|
Deferred Policy Acquisition and Sales Inducement Costs
|
(1)
|
Deferred sales inducement costs primarily relate to fixed annuities and interest-sensitive life contracts.
|
Note 12
|
Capital Structure
|
Total debt outstanding
|
||||||||
|
|
As of December 31,
|
||||||
($ in millions)
|
|
2017
|
|
2016
|
||||
6.75% Senior Debentures, due 2018
|
|
$
|
176
|
|
|
$
|
176
|
|
7.45% Senior Notes, due 2019
(1)
|
|
317
|
|
|
317
|
|
||
Due after one year through five years
|
|
493
|
|
|
493
|
|
||
3.15% Senior Notes, due 2023
(1)
|
|
500
|
|
|
500
|
|
||
3.28% Senior Notes, due 2026
(1)
|
|
550
|
|
|
550
|
|
||
Due after five years through ten years
|
|
1,050
|
|
|
1,050
|
|
||
6.125% Senior Notes, due 2032
(1)
|
|
159
|
|
|
159
|
|
||
5.35% Senior Notes due 2033
(1)
|
|
323
|
|
|
323
|
|
||
5.55% Senior Notes due 2035
(1)
|
|
546
|
|
|
546
|
|
||
5.95% Senior Notes, due 2036
(1)
|
|
386
|
|
|
386
|
|
||
6.90% Senior Debentures, due 2038
|
|
165
|
|
|
165
|
|
||
5.20% Senior Notes, due 2042
(1)
|
|
62
|
|
|
62
|
|
||
4.50% Senior Notes, due 2043
(1)
|
|
500
|
|
|
500
|
|
||
4.20% Senior Notes, due 2046
(1)
|
|
700
|
|
|
700
|
|
||
5.10% Subordinated Debentures, due 2053
|
|
500
|
|
|
500
|
|
||
5.75% Subordinated Debentures, due 2053
|
|
800
|
|
|
800
|
|
||
6.125% Junior Subordinated Debentures, due 2067
|
|
224
|
|
|
224
|
|
||
6.50% Junior Subordinated Debentures, due 2067
|
|
500
|
|
|
500
|
|
||
Due after ten years
|
|
4,865
|
|
|
4,865
|
|
||
|
|
|
|
|
||||
Long-term debt total principal
|
|
6,408
|
|
|
6,408
|
|
||
Debt issuance costs
|
|
(58
|
)
|
|
(61
|
)
|
||
Total long-term debt
|
|
6,350
|
|
|
6,347
|
|
||
Short-term debt
(2)
|
|
—
|
|
|
—
|
|
||
Total debt
|
|
$
|
6,350
|
|
|
$
|
6,347
|
|
(1)
|
Senior Notes are subject to redemption at the Company’s option in whole or in part at any time at the greater of either
100%
of the principal amount plus accrued and unpaid interest to the redemption date or the discounted sum of the present values of the remaining scheduled payments of principal and interest and accrued and unpaid interest to the redemption date.
|
(2)
|
The Company classifies any borrowings which have a maturity of twelve months or less at inception as short-term debt.
|
Note 13
|
Company Restructuring
|
Note 14
|
Commitments, Guarantees and Contingent Liabilities
|
($ in millions)
|
|
|
||
2018
|
|
$
|
126
|
|
2019
|
|
113
|
|
|
2020
|
|
95
|
|
|
2021
|
|
74
|
|
|
2022
|
|
60
|
|
|
Thereafter
|
|
175
|
|
|
Total
|
|
$
|
643
|
|
Note 15
|
Income Taxes
|
1.
|
Amends the U.S. Internal Revenue Code of 1986, as amended, which among other items, permanently reduces the corporate income tax rate from a maximum of 35% to 21% beginning January 1, 2018.
|
2.
|
Changes international taxation to a modified territorial tax system whereby profits from non-U.S. subsidiaries will generally be taxed only in their local jurisdictions.
|
3.
|
Contains several other provisions, such as limitations of deductibility of executive compensation, meals and entertainment and lobbying expenses and changes to the dividends received deduction.
|
4.
|
Affects the timing of certain tax deductions for reserves and deferred acquisition costs, but does not impact the Company’s overall income tax expense.
|
(1)
|
Changes in deferred tax assets and liabilities primarily relate to the Tax Legislation.
|
Reconciliation of the statutory federal income tax rate to the effective income tax rate
|
|||||||||
|
|
For the years ended December 31,
|
|||||||
|
|
2017
|
|
2016
|
|
2015
|
|||
Statutory federal income tax rate on income from operations
|
|
35.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
Tax Legislation benefit
|
|
(12.7
|
)
|
|
—
|
|
|
—
|
|
Share-based payments
(1)
|
|
(1.6
|
)
|
|
—
|
|
|
—
|
|
Tax-exempt income
|
|
(0.8
|
)
|
|
(1.2
|
)
|
|
(1.0
|
)
|
Tax credits
|
|
(0.9
|
)
|
|
(1.2
|
)
|
|
(0.9
|
)
|
Non-deductible goodwill impairment
|
|
1.1
|
|
|
—
|
|
|
—
|
|
Other
(2)
|
|
—
|
|
|
(0.7
|
)
|
|
0.8
|
|
Effective income tax rate on income from operations
|
|
20.1
|
%
|
|
31.9
|
%
|
|
33.9
|
%
|
(1)
|
Includes a tax benefit of $
63 million
related to the 2017 adoption of the new accounting standard for share-based payments.
|
(2)
|
Includes
$45 million
of income tax expense related to the change in accounting guidance for investments in qualified affordable housing projects adopted in 2015.
|
Note 16
|
Statutory Financial Information and Dividend Limitations
|
Note 17
|
Benefit Plans
|
Components of the pension and other postretirement plans’ funded status reflected in the Consolidated Statements of Financial Position
|
||||||||||||||||
|
|
As of December 31,
|
||||||||||||||
|
|
Pension
benefits
|
|
Postretirement
benefits
|
||||||||||||
($ in millions)
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Fair value of plan assets
|
|
$
|
6,284
|
|
|
$
|
5,650
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Less: Benefit obligation
|
|
6,815
|
|
|
6,591
|
|
|
386
|
|
|
373
|
|
||||
Funded status
|
|
$
|
(531
|
)
|
|
$
|
(941
|
)
|
|
$
|
(386
|
)
|
|
$
|
(373
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Items not yet recognized as a component of net periodic cost:
|
|
|
|
|
|
|
|
|
||||||||
Net actuarial loss (gain)
|
|
$
|
2,224
|
|
|
$
|
2,807
|
|
|
$
|
(218
|
)
|
|
$
|
(251
|
)
|
Prior service credit
|
|
(254
|
)
|
|
(310
|
)
|
|
(37
|
)
|
|
(62
|
)
|
||||
Unrecognized pension and other postretirement benefit cost, pre-tax
|
|
1,970
|
|
|
2,497
|
|
|
(255
|
)
|
|
(313
|
)
|
||||
Deferred income tax
(1)
|
|
(419
|
)
|
|
(874
|
)
|
|
51
|
|
|
109
|
|
||||
Unrecognized pension and other postretirement benefit cost
|
|
$
|
1,551
|
|
|
$
|
1,623
|
|
|
$
|
(204
|
)
|
|
$
|
(204
|
)
|
(1)
|
Components of the pension plan and other postretirement benefits were reduced by deferred income taxes at the newly enacted 21% U.S. corporate tax rate as of December 31, 2017 and 35% as of December 31, 2016.
|
(1)
|
Benefits paid include lump sum distributions, a portion of which triggered settlement accounting treatment.
|
Components of net periodic cost
|
||||||||||||||||||||||||
|
|
For the years ended December 31,
|
||||||||||||||||||||||
|
|
Pension benefits
|
|
Postretirement benefits
|
||||||||||||||||||||
($ in millions)
|
|
2017
|
|
2016
|
|
2015
|
|
2017
|
|
2016
|
|
2015
|
||||||||||||
Service cost
|
|
$
|
114
|
|
|
$
|
113
|
|
|
$
|
114
|
|
|
$
|
8
|
|
|
$
|
9
|
|
|
$
|
12
|
|
Interest cost
|
|
264
|
|
|
286
|
|
|
258
|
|
|
15
|
|
|
17
|
|
|
23
|
|
||||||
Expected return on plan assets
|
|
(409
|
)
|
|
(398
|
)
|
|
(424
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Amortization of:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Prior service credit
|
|
(56
|
)
|
|
(56
|
)
|
|
(56
|
)
|
|
(25
|
)
|
|
(21
|
)
|
|
(22
|
)
|
||||||
Net actuarial loss (gain)
|
|
189
|
|
|
174
|
|
|
190
|
|
|
(24
|
)
|
|
(24
|
)
|
|
(9
|
)
|
||||||
Settlement loss
|
|
153
|
|
|
27
|
|
|
31
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Net periodic cost (credit)
|
|
$
|
255
|
|
|
$
|
146
|
|
|
$
|
113
|
|
|
$
|
(26
|
)
|
|
$
|
(19
|
)
|
|
$
|
4
|
|
Change in pension plan assets
|
||||||||
|
|
For the years ended December 31,
|
||||||
($ in millions)
|
|
2017
|
|
2016
|
||||
Fair value of plan assets, beginning of year
|
|
$
|
5,650
|
|
|
$
|
5,353
|
|
Actual return on plan assets
|
|
1,051
|
|
|
491
|
|
||
Employer contribution
|
|
131
|
|
|
131
|
|
||
Benefits paid
|
|
(553
|
)
|
|
(301
|
)
|
||
Translation adjustment and other
|
|
5
|
|
|
(24
|
)
|
||
Fair value of plan assets, end of year
|
|
$
|
6,284
|
|
|
$
|
5,650
|
|
(1)
|
The target asset allocation considers risk based exposure while the actual percentage of plan assets utilizes a financial reporting view excluding exposure provided through derivatives.
|
(2)
|
The actual percentage of plan assets for equity securities include private equity investments that are subject to the limited partnership interests target allocation of
2%
and
1
% in
2017
and
2016
, respectively, fixed income mutual funds that are subject to the fixed income securities target allocation of
3%
for both
2017
and
2016
as well as
1%
of equity exposure created through a derivative which is not included in the actual allocations in 2017.
|
(3)
|
Securities lending collateral reinvestment of
$202 million
and
$143 million
is excluded from the table above in
2017
and
2016
, respectively.
|
Fair values of pension plan assets as of December 31, 2017
|
||||||||||||||||
($ in millions)
|
|
Quoted prices in active markets for identical assets (Level 1)
|
|
Significant other observable inputs
(Level 2)
|
|
Significant unobservable inputs
(Level 3)
|
|
Balance as of December 31, 2017
|
||||||||
Equity securities
|
|
$
|
126
|
|
|
$
|
264
|
|
|
$
|
29
|
|
|
$
|
419
|
|
Fixed income securities:
|
|
|
|
|
|
|
|
|
||||||||
U.S. government and agencies
|
|
174
|
|
|
420
|
|
|
—
|
|
|
594
|
|
||||
Corporate
|
|
—
|
|
|
1,543
|
|
|
10
|
|
|
1,553
|
|
||||
Short-term investments
|
|
97
|
|
|
197
|
|
|
—
|
|
|
294
|
|
||||
Cash and cash equivalents
|
|
21
|
|
|
—
|
|
|
—
|
|
|
21
|
|
||||
Free-standing derivatives:
|
|
|
|
|
|
|
|
|
||||||||
Assets
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||
Total plan assets at fair value
|
|
$
|
418
|
|
|
$
|
2,425
|
|
|
$
|
39
|
|
|
2,882
|
|
|
% of total plan assets at fair value
|
|
14.5
|
%
|
|
84.1
|
%
|
|
1.4
|
%
|
|
100.0
|
%
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Investments measured using the net asset value practical expedient
(1)
|
|
|
|
|
|
|
|
3,598
|
|
|||||||
Securities lending obligation
(2)
|
|
|
|
|
|
|
|
(216
|
)
|
|||||||
Other net plan assets
(3)
|
|
|
|
|
|
|
|
20
|
|
|||||||
Total reported plan assets
|
|
|
|
|
|
|
|
$
|
6,284
|
|
(1)
|
In 2017, the Company retrospectively adopted a new accounting standard for pension plans which eliminates the requirement to include investments in the fair value hierarchy for which fair value is measured using net asset value (“NAV”) per share practical expedient. As a result, certain pension plan investments that are measured at fair value using the NAV per share practical expedient have not been classified in the fair value hierarchy, including the related rollforward of Level 3 plan assets presented below. These investments comprised of
$3.20 billion
of equity investments and
$402 million
of limited partnerships.
|
(2)
|
The securities lending obligation represents the plan’s obligation to return securities lending collateral received under a securities lending program. The terms of the program allow both the plan and the counterparty the right and ability to redeem/return the securities loaned on short notice. Due to its relatively short-term nature, the outstanding balance of the obligation approximates fair value.
|
(3)
|
Other net plan assets represent interest and dividends receivable and net receivables related to settlements of investment transactions, such as purchases and sales.
|
Estimated future benefit payments expected to be paid in the next 10 years
|
||||||||
|
|
As of December 31, 2017,
|
||||||
($ in millions)
|
|
Pension benefits
|
|
Postretirement benefits
|
||||
2018
|
|
$
|
426
|
|
|
$
|
22
|
|
2019
|
|
463
|
|
|
24
|
|
||
2020
|
|
485
|
|
|
24
|
|
||
2021
|
|
514
|
|
|
25
|
|
||
2022
|
|
533
|
|
|
26
|
|
||
2023-2027
|
|
2,477
|
|
|
136
|
|
||
Total benefit payments
|
|
$
|
4,898
|
|
|
$
|
257
|
|
ESOP benefit
|
||||||||||||
|
|
For the years December 31,
|
||||||||||
($ in millions)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Interest expense recognized by ESOP
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
1
|
|
Less: dividends accrued on ESOP shares
|
|
(1
|
)
|
|
(3
|
)
|
|
(3
|
)
|
|||
Cost of shares allocated
|
|
3
|
|
|
7
|
|
|
10
|
|
|||
Compensation expense
|
|
2
|
|
|
5
|
|
|
8
|
|
|||
Reduction of defined contribution due to ESOP
|
|
38
|
|
|
60
|
|
|
73
|
|
|||
ESOP benefit
|
|
$
|
(36
|
)
|
|
$
|
(55
|
)
|
|
$
|
(65
|
)
|
Note 18
|
Equity Incentive Plans
|
Option grant assumptions
|
|||||||||
|
|
2017
|
|
2016
|
|
2015
|
|||
Weighted average expected term
|
|
6.1 years
|
|
|
5.0 years
|
|
|
6.5 years
|
|
Expected volatility
|
|
15.7 - 32.7%
|
|
|
16.0 - 34.3%
|
|
|
16.0 - 37.8%
|
|
Weighted average volatility
|
|
21.0
|
%
|
|
24.3
|
%
|
|
24.7
|
%
|
Expected dividends
|
|
1.4 - 1.9%
|
|
|
1.9 - 2.1%
|
|
|
1.6 - 2.1%
|
|
Weighted average expected dividends
|
|
1.9
|
%
|
|
2.1
|
%
|
|
1.7
|
%
|
Risk-free rate
|
|
0.5 - 2.5%
|
|
|
0.2 - 2.4%
|
|
|
0.0 - 2.4%
|
|
Summary of option activity
|
|||||||||||||
|
|
For the year ended December 31, 2017
|
|||||||||||
|
|
Number
(in 000s)
|
|
Weighted average exercise price
|
|
Aggregate intrinsic value
(in 000s)
|
|
Weighted average remaining contractual term (years)
|
|||||
Outstanding as of January 1, 2017
|
|
13,560
|
|
|
$
|
50.01
|
|
|
|
|
|
||
Granted
|
|
2,631
|
|
|
78.93
|
|
|
|
|
|
|||
Exercised
|
|
(4,688
|
)
|
|
44.91
|
|
|
|
|
|
|||
Forfeited
|
|
(229
|
)
|
|
70.85
|
|
|
|
|
|
|||
Expired
|
|
(12
|
)
|
|
59.91
|
|
|
|
|
|
|||
Outstanding as of December 31, 2017
|
|
11,262
|
|
|
58.46
|
|
|
$
|
520,900
|
|
|
6.5
|
|
Outstanding, net of expected forfeitures
|
|
11,140
|
|
|
58.27
|
|
|
517,276
|
|
|
6.5
|
||
Outstanding, exercisable (“vested”)
|
|
6,314
|
|
|
47.83
|
|
|
359,121
|
|
|
5.1
|
Changes in restricted stock units
|
|||||||
|
|
For the year ended December 31, 2017
|
|||||
|
|
Number
(in 000s)
|
|
Weighted average grant date fair value
|
|||
Nonvested as of January 1, 2017
|
|
1,679
|
|
|
$
|
58.49
|
|
Granted
|
|
333
|
|
|
80.12
|
|
|
Vested
|
|
(718
|
)
|
|
51.42
|
|
|
Forfeited
|
|
(53
|
)
|
|
69.19
|
|
|
Nonvested as of December 31, 2017
|
|
1,241
|
|
|
67.93
|
|
Changes in performance stock awards
|
|||||||
|
|
For the year ended December 31, 2017
|
|||||
|
|
Number
(in 000s)
|
|
Weighted average grant date fair value
|
|||
Nonvested as of January 1, 2017
|
|
919
|
|
|
$
|
61.50
|
|
Granted
|
|
458
|
|
|
78.47
|
|
|
Adjustment for performance achievement
|
|
(33
|
)
|
|
52.75
|
|
|
Vested
|
|
(213
|
)
|
|
52.52
|
|
|
Forfeited
|
|
(41
|
)
|
|
69.30
|
|
|
Nonvested as of December 31, 2017
|
|
1,090
|
|
|
70.35
|
|
Note 19
|
Supplemental Cash Flow Information
|
|
|
For the years ended December 31,
|
||||||||||
($ in millions)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Net change in proceeds managed
|
|
|
|
|
|
|
||||||
Net change in fixed income securities
|
|
$
|
259
|
|
|
$
|
(584
|
)
|
|
$
|
—
|
|
Net change in short-term investments
|
|
(255
|
)
|
|
295
|
|
|
(59
|
)
|
|||
Operating cash flow provided (used)
|
|
4
|
|
|
(289
|
)
|
|
(59
|
)
|
|||
Net change in cash
|
|
1
|
|
|
—
|
|
|
1
|
|
|||
Net change in proceeds managed
|
|
$
|
5
|
|
|
$
|
(289
|
)
|
|
$
|
(58
|
)
|
|
|
|
|
|
|
|
||||||
Cash flows from operating activities
|
||||||||||||
Net change in liabilities
|
|
|
|
|
|
|
||||||
Liabilities for collateral, beginning of year
|
|
$
|
(1,129
|
)
|
|
$
|
(840
|
)
|
|
$
|
(782
|
)
|
Liabilities for collateral, end of year
|
|
(1,124
|
)
|
|
(1,129
|
)
|
|
(840
|
)
|
|||
Operating cash flow (used) provided
|
|
$
|
(5
|
)
|
|
$
|
289
|
|
|
$
|
58
|
|
Note 20
|
Other Comprehensive Income
|
Components of other comprehensive income (loss) on a pre-tax and after-tax basis
|
||||||||||||||||||||||||||||||||||||
|
|
For the years ended December 31,
|
||||||||||||||||||||||||||||||||||
($ in millions)
|
|
2017
|
|
2016
|
|
2015
|
||||||||||||||||||||||||||||||
|
|
Pre-tax
|
|
Tax
|
|
After-tax
|
|
Pre-tax
|
|
Tax
|
|
After-tax
|
|
Pre-tax
|
|
Tax
|
|
After-tax
|
||||||||||||||||||
Unrealized net holding gains and losses arising during the period, net of related offsets
|
|
$
|
866
|
|
|
$
|
(304
|
)
|
|
$
|
562
|
|
|
$
|
486
|
|
|
$
|
(170
|
)
|
|
$
|
316
|
|
|
$
|
(1,896
|
)
|
|
$
|
663
|
|
|
$
|
(1,233
|
)
|
Less: reclassification adjustment of realized capital gains and losses
|
|
374
|
|
|
(131
|
)
|
|
243
|
|
|
(180
|
)
|
|
63
|
|
|
(117
|
)
|
|
112
|
|
|
(39
|
)
|
|
73
|
|
|||||||||
Unrealized net capital gains and losses
|
|
492
|
|
|
(173
|
)
|
|
319
|
|
|
666
|
|
|
(233
|
)
|
|
433
|
|
|
(2,008
|
)
|
|
702
|
|
|
(1,306
|
)
|
|||||||||
Unrealized foreign currency translation adjustments
|
|
72
|
|
|
(25
|
)
|
|
47
|
|
|
15
|
|
|
(5
|
)
|
|
10
|
|
|
(89
|
)
|
|
31
|
|
|
(58
|
)
|
|||||||||
Unrecognized pension and other postretirement benefit cost arising during the period
|
|
232
|
|
|
(79
|
)
|
|
153
|
|
|
(263
|
)
|
|
94
|
|
|
(169
|
)
|
|
(64
|
)
|
|
25
|
|
|
(39
|
)
|
|||||||||
Less: reclassification adjustment of net periodic cost recognized in operating costs and expenses
|
|
(237
|
)
|
|
83
|
|
|
(154
|
)
|
|
(100
|
)
|
|
35
|
|
|
(65
|
)
|
|
(134
|
)
|
|
47
|
|
|
(87
|
)
|
|||||||||
Unrecognized pension and other postretirement benefit cost
|
|
469
|
|
|
(162
|
)
|
|
307
|
|
|
(163
|
)
|
|
59
|
|
|
(104
|
)
|
|
70
|
|
|
(22
|
)
|
|
48
|
|
|||||||||
Other comprehensive income (loss)
|
|
$
|
1,033
|
|
|
$
|
(360
|
)
|
|
$
|
673
|
|
|
$
|
518
|
|
|
$
|
(179
|
)
|
|
$
|
339
|
|
|
$
|
(2,027
|
)
|
|
$
|
711
|
|
|
$
|
(1,316
|
)
|
Note 21
|
Quarterly Results (unaudited)
|
|
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
||||||||||||||||||||||||
($ in millions, except per share data)
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||||||||||
Revenues
|
|
$
|
9,434
|
|
|
$
|
8,871
|
|
|
$
|
9,587
|
|
|
$
|
9,164
|
|
|
$
|
9,660
|
|
|
$
|
9,221
|
|
|
$
|
9,843
|
|
|
$
|
9,278
|
|
Net income applicable to common shareholders
|
|
666
|
|
|
217
|
|
|
550
|
|
|
242
|
|
|
637
|
|
|
491
|
|
|
1,220
|
|
|
811
|
|
||||||||
Net income applicable to common shareholders earnings per common share - Basic
|
|
1.82
|
|
|
0.57
|
|
|
1.51
|
|
|
0.65
|
|
|
1.76
|
|
|
1.32
|
|
|
3.41
|
|
|
2.20
|
|
||||||||
Net income applicable to common shareholders earnings per common share - Diluted
|
|
1.79
|
|
|
0.57
|
|
|
1.49
|
|
|
0.64
|
|
|
1.74
|
|
|
1.31
|
|
|
3.35
|
|
|
2.18
|
|
•
|
Corporate Governance – Director Compensation
|
•
|
Executive Compensation
|
•
|
Stock Ownership Information – Security Ownership of Directors and Executive Officers
|
•
|
Stock Ownership Information – Security Ownership of Certain Beneficial Owners
|
(1)
|
Consists of the 2013 Equity Incentive Plan, which amended and restated the 2009 Equity Incentive Plan; the 2017 Equity Compensation Plan for Non-Employee Directors; the 2006 Equity Compensation Plan for Non-Employee Directors; and the Equity Incentive Plan for Non-Employee Directors (the equity plan for non-employee directors prior to 2006). The Corporation does not maintain any equity compensation plans not approved by stockholders.
|
(2)
|
As of December 31, 2017, 1,241,053 restricted stock units (“RSUs”) and 2,180,644 performance stock awards (“PSAs”) were outstanding. The weighted-average exercise price of outstanding options, warrants, and rights does not take into account RSUs and PSAs, which have no exercise price. PSAs are reported at the maximum potential amount awarded for incomplete performance periods and the amount earned for the 2015 PSA grant, reduced for forfeitures. For incomplete performance periods, the actual number of shares earned may be less and are based upon measures achieved at the end of the three-year performance period for those PSAs granted in 2016 and 2017.
|
(3)
|
Includes 15,523,581 shares that may be issued in the form of stock options, unrestricted stock, restricted stock, restricted stock units, stock appreciation rights, performance units, performance stock, and stock in lieu of cash under the 2013 Equity Incentive Plan; and 382,828 shares that may be issued in the form of stock options, unrestricted stock, restricted stock, restricted stock units, and stock in lieu of cash compensation under the 2017 Equity Compensation Plan for Non-Employee Directors.
|
•
|
Consolidated Statements of Operations
|
•
|
Consolidated Statements of Comprehensive Income
|
•
|
Consolidated Statements of Financial Position
|
•
|
Consolidated Statements of Shareholders’ Equity
|
•
|
Consolidated Statements of Cash Flows
|
•
|
Notes to the Consolidated Financial Statements
|
•
|
Report of Independent Registered Public Accounting Firm
|
The Allstate Corporation
|
|
Page
|
||
|
|
|
|
|
Schedules required to be filed under the provisions of Regulation S-X Article 7:
|
||||
|
|
|
|
|
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|
|
Incorporated by Reference
|
|
|||
Exhibit
Number
|
Exhibit Description
|
Form
|
File
Number
|
Exhibit
|
Filing Date
|
Filed or
Furnished
Herewith
|
2.1
|
8-K
|
1-11840
|
2.1
|
November 28, 2016
|
|
|
3.1
|
8-K
|
1-11840
|
3(i)
|
May 23, 2012
|
|
|
3.2
|
8-K
|
1-11840
|
3.1
|
November 19, 2015
|
|
|
3.3
|
8-K
|
1-11840
|
3.1
|
June 12, 2013
|
|
|
3.4
|
8-K
|
1-11840
|
3.1
|
September 30, 2013
|
|
|
3.5
|
8-K
|
1-11840
|
3.1
|
December 16, 2013
|
|
|
|
Incorporated by Reference
|
|
|||
Exhibit
Number
|
Exhibit Description
|
Form
|
File
Number
|
Exhibit
|
Filing Date
|
Filed or
Furnished
Herewith
|
3.6
|
10-K
|
1-11840
|
3.6
|
February 20, 2014
|
|
|
3.7
|
8-K
|
1-11840
|
3.1
|
March 3, 2014
|
|
|
3.8
|
8-K
|
1-11840
|
3.1
|
June 12, 2014
|
|
|
4.1
|
The Allstate Corporation hereby agrees to furnish to the Commission, upon request, the instruments defining the rights of holders of each issue of long-term debt of it and its consolidated subsidiaries
|
|
|
|
|
|
4.2
|
8-K
|
1-11840
|
4.1
|
June 12, 2013
|
|
|
4.3
|
8-K
|
1-11840
|
4.2
|
June 12, 2013
|
|
|
4.4
|
8-K
|
1-11840
|
4.3
|
June 12, 2013
|
|
|
4.5
|
8-K
|
1-11840
|
4.1
|
September 30, 2013
|
|
|
4.6
|
8-K
|
1-11840
|
4.2
|
September 30, 2013
|
|
|
4.7
|
8-K
|
1-11840
|
4.3
|
September 30, 2013
|
|
|
4.8
|
8-K
|
1-11840
|
4.1
|
December 16, 2013
|
|
|
4.9
|
8-K
|
1-11840
|
4.2
|
December 16, 2013
|
|
|
4.10
|
8-K
|
1-11840
|
4.3
|
December 16, 2013
|
|
|
4.11
|
8-K
|
1-11840
|
4.1
|
March 3, 2014
|
|
|
4.12
|
8-K
|
1-11840
|
4.2
|
March 3, 2014
|
|
|
4.13
|
8-K
|
1-11840
|
4.3
|
March 3, 2014
|
|
|
4.14
|
8-K
|
1-11840
|
4.1
|
June 12, 2014
|
|
|
4.15
|
8-K
|
1-11840
|
4.2
|
June 12, 2014
|
|
|
4.16
|
8-K
|
1-11840
|
4.3
|
June 12, 2014
|
|
|
10.1
|
10-Q
|
1-11840
|
10.6
|
May 2, 2012
|
|
|
10.2
|
8-K
|
1-11840
|
10.1
|
April 29, 2014
|
|
|
10.3*
|
Proxy
|
1-11840
|
App. B
|
April 7, 2014
|
|
|
|
Incorporated by Reference
|
|
|||
Exhibit
Number
|
Exhibit Description
|
Form
|
File
Number
|
Exhibit
|
Filing Date
|
Filed or
Furnished
Herewith
|
10.4*
|
|
|
|
|
|
X
|
10.5*
|
10-Q
|
1-11840
|
10.1
|
May 6, 2014
|
|
|
10.6*+
|
10-Q
|
1-11840
|
10.4
|
May 2, 2012
|
|
|
10.7*+
|
10-Q
|
1-11840
|
10.3
|
May 2, 2012
|
|
|
10.8*+
|
8-K
|
1-11840
|
10.2
|
December 28, 2011
|
|
|
10.9*+
|
10-Q
|
1-11840
|
10.3
|
April 27, 2011
|
|
|
10.10*+
|
8-K/A
|
1-11840
|
10.3
|
May 20, 2009
|
|
|
10.11*†
|
8-K
|
1-11840
|
10.3
|
September 19, 2008
|
|
|
10.12*†
|
8-K
|
1-11840
|
10.1
|
July 20, 2006
|
|
|
10.13*+
|
10-Q
|
1-11840
|
10.2
|
May 2, 2012
|
|
|
10.14*
|
10-Q
|
1-11840
|
10.3
|
July 31, 2013
|
|
|
10.15*
|
8-K
|
1-11840
|
10.1
|
December 28, 2011
|
|
|
10.16*
|
8-K
|
1-11840
|
10.7
|
September 19, 2008
|
|
|
10.17*
|
8-K
|
1-11840
|
10.5
|
September 19, 2008
|
|
|
10.18*
|
8-K
|
1-11840
|
10.6
|
September 19, 2008
|
|
|
10.19*
|
Proxy
|
1-11840
|
App. D
|
April 12, 2017
|
|
|
10.20*
|
8-K
|
1-11840
|
10.3
|
May 19, 2006
|
|
|
10.21*
|
8-K
|
1-11840
|
10.8
|
September 19, 2008
|
|
|
10.22*
|
8-K
|
1-11840
|
10.9
|
September 19, 2008
|
|
|
10.23*
|
|
10-Q
|
1-11840
|
10.2
|
August 3, 2016
|
|
|
|
Incorporated by Reference
|
|
|||
Exhibit
Number
|
Exhibit Description
|
Form
|
File
Number
|
Exhibit
|
Filing Date
|
Filed or
Furnished
Herewith
|
10.24*
|
|
10-Q
|
1-11840
|
10.2
|
August 1, 2017
|
|
10.25*
|
10-Q
|
1-11840
|
10.2
|
August 1, 2007
|
|
|
10.26*
|
10-K
|
1-11840
|
10.24
|
February 17, 2017
|
|
|
10.27
|
8-K
|
1-11840
|
10.1
|
July 22, 2013
|
|
|
10.28
|
8-K
|
1-11840
|
10.1
|
April 7, 2014
|
|
|
10.29
|
8-K
|
1-11840
|
10
|
March 10, 2016
|
|
|
10.30
|
|
10-Q
|
1-11840
|
10.3
|
August 1, 2017
|
|
12
|
|
|
|
|
X
|
|
21
|
|
|
|
|
X
|
|
23
|
|
|
|
|
X
|
|
31(i)
|
|
|
|
|
X
|
|
31(i)
|
|
|
|
|
X
|
|
32
|
|
|
|
|
X
|
|
101.INS
|
XBRL Instance Document
|
|
|
|
|
X
|
101.SCH
|
XBRL Taxonomy Extension Schema
|
|
|
|
|
X
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase
|
|
|
|
|
X
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase
|
|
|
|
|
X
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase
|
|
|
|
|
X
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase
|
|
|
|
|
X
|
|
|
The Allstate Corporation
(Registrant)
|
|
|
|
|
|
/s/ Eric K. Ferren
|
|
|
By: Eric K. Ferren
Senior Vice President, Controller, and Chief Accounting Officer
(Principal Accounting Officer)
|
|
|
February 26, 2018
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ Thomas J. Wilson
|
|
Chairman of the Board, President, Chief Executive Officer and a Director
(Principal Executive Officer)
|
|
February 26, 2018
|
Thomas J. Wilson
|
|
|
||
|
|
|
|
|
/s/ Mario Rizzo
|
|
Executive Vice President and Chief Financial Officer (Principal Financial Officer)
|
|
February 26, 2018
|
Mario Rizzo
|
|
|
||
|
|
|
|
|
/s/ Kermit R. Crawford
|
|
Director
|
|
February 26, 2018
|
Kermit R. Crawford
|
|
|
||
|
|
|
|
|
/s/ Michael L. Eskew
|
|
Director
|
|
February 26, 2018
|
Michael L. Eskew
|
|
|
||
|
|
|
|
|
/s/ Margaret M. Keane
|
|
Director
|
|
February 26, 2018
|
Margaret M. Keane
|
|
|
||
|
|
|
|
|
/s/ Siddharth N. Mehta
|
|
Director
|
|
February 26, 2018
|
Siddharth N. Mehta
|
|
|
||
|
|
|
|
|
/s/ Jacques P. Perold
|
|
Director
|
|
February 26, 2018
|
Jacques P. Perold
|
|
|
||
|
|
|
|
|
/s/ Andrea Redmond
|
|
Director
|
|
February 26, 2018
|
Andrea Redmond
|
|
|
||
|
|
|
|
|
/s/ John W. Rowe
|
|
Director
|
|
February 26, 2018
|
John W. Rowe
|
|
|
||
|
|
|
|
|
/s/ Gregg M. Sherrill
|
|
Director
|
|
February 26, 2018
|
Gregg M. Sherrill
|
|
|
||
|
|
|
|
|
/s/ Judith A. Sprieser
|
|
Lead Director
|
|
February 26, 2018
|
Judith A. Sprieser
|
|
|
||
|
|
|
|
|
/s/ Mary Alice Taylor
|
|
Director
|
|
February 26, 2018
|
Mary Alice Taylor
|
|
|
||
|
|
|
|
|
/s/ Perry M. Traquina
|
|
Director
|
|
February 26, 2018
|
Perry M. Traquina
|
|
|
|
|
As of December 31,
2017
|
||||||||||
($ in millions)
|
|
Cost/amortized cost
|
|
Fair
value
|
|
Amount at which shown in the
Balance Sheet
|
||||||
Type of investment
|
|
|
|
|
|
|
||||||
Fixed maturities:
|
|
|
|
|
|
|
||||||
Bonds:
|
|
|
|
|
|
|
||||||
United States government, government agencies and authorities
|
|
$
|
3,580
|
|
|
$
|
3,616
|
|
|
$
|
3,616
|
|
States, municipalities and political subdivisions
|
|
8,053
|
|
|
8,328
|
|
|
8,328
|
|
|||
Foreign governments
|
|
1,005
|
|
|
1,021
|
|
|
1,021
|
|
|||
Public utilities
|
|
5,655
|
|
|
5,988
|
|
|
5,988
|
|
|||
All other corporate bonds
|
|
37,341
|
|
|
38,038
|
|
|
38,038
|
|
|||
Asset-backed securities
|
|
1,266
|
|
|
1,272
|
|
|
1,272
|
|
|||
Residential mortgage-backed securities
|
|
480
|
|
|
578
|
|
|
578
|
|
|||
Commercial mortgage-backed securities
|
|
124
|
|
|
128
|
|
|
128
|
|
|||
Redeemable preferred stocks
|
|
21
|
|
|
23
|
|
|
23
|
|
|||
Total fixed maturities
|
|
57,525
|
|
|
$
|
58,992
|
|
|
58,992
|
|
||
|
|
|
|
|
|
|
||||||
Equity securities:
|
|
|
|
|
|
|
||||||
Common stocks:
|
|
|
|
|
|
|
||||||
Public utilities
|
|
84
|
|
|
$
|
99
|
|
|
99
|
|
||
Banks, trusts and insurance companies
|
|
565
|
|
|
725
|
|
|
725
|
|
|||
Industrial, miscellaneous and all other
|
|
4,591
|
|
|
5,506
|
|
|
5,506
|
|
|||
Nonredeemable preferred stocks
|
|
221
|
|
|
291
|
|
|
291
|
|
|||
Total equity securities
|
|
5,461
|
|
|
$
|
6,621
|
|
|
6,621
|
|
||
|
|
|
|
|
|
|
||||||
Mortgage loans on real estate
|
|
4,534
|
|
|
$
|
4,732
|
|
|
4,534
|
|
||
Real estate (none acquired in satisfaction of debt)
|
|
468
|
|
|
|
|
468
|
|
||||
Policy loans
|
|
905
|
|
|
|
|
905
|
|
||||
Derivative instruments
|
|
127
|
|
|
$
|
127
|
|
|
127
|
|
||
Limited partnership interests
|
|
6,740
|
|
|
|
|
6,740
|
|
||||
Other long-term investments
|
|
2,472
|
|
|
|
|
2,472
|
|
||||
Short-term investments
|
|
1,944
|
|
|
$
|
1,944
|
|
|
1,944
|
|
||
Total investments
|
|
$
|
80,176
|
|
|
|
|
$
|
82,803
|
|
|
|
Year Ended December 31,
|
||||||||||
($ in millions)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Revenues
|
|
|
|
|
|
|
||||||
Investment income, less investment expense
|
|
$
|
10
|
|
|
$
|
11
|
|
|
$
|
8
|
|
Realized capital gains and losses
|
|
(2
|
)
|
|
2
|
|
|
—
|
|
|||
Other income
|
|
36
|
|
|
55
|
|
|
66
|
|
|||
|
|
44
|
|
|
68
|
|
|
74
|
|
|||
|
|
|
|
|
|
|
||||||
Expenses
|
|
|
|
|
|
|
||||||
Interest expense
|
|
334
|
|
|
295
|
|
|
292
|
|
|||
Pension and other postretirement benefit expense
|
|
119
|
|
|
10
|
|
|
(15
|
)
|
|||
Other operating expenses
|
|
50
|
|
|
28
|
|
|
34
|
|
|||
|
|
503
|
|
|
333
|
|
|
311
|
|
|||
|
|
|
|
|
|
|
||||||
Loss from operations before income tax benefit and equity in net income of subsidiaries
|
|
(459
|
)
|
|
(265
|
)
|
|
(237
|
)
|
|||
|
|
|
|
|
|
|
||||||
Income tax benefit
|
|
(92
|
)
|
|
(115
|
)
|
|
(108
|
)
|
|||
Loss before equity in net income of subsidiaries
|
|
(367
|
)
|
|
(150
|
)
|
|
(129
|
)
|
|||
|
|
|
|
|
|
|
||||||
Equity in net income of subsidiaries
|
|
3,556
|
|
|
2,027
|
|
|
2,300
|
|
|||
Net income
|
|
3,189
|
|
|
1,877
|
|
|
2,171
|
|
|||
|
|
|
|
|
|
|
||||||
Preferred stock dividends
|
|
116
|
|
|
116
|
|
|
116
|
|
|||
|
|
|
|
|
|
|
||||||
Net income applicable to common shareholders
|
|
3,073
|
|
|
1,761
|
|
|
2,055
|
|
|||
|
|
|
|
|
|
|
||||||
Other comprehensive income (loss), after-tax
|
|
|
|
|
|
|
||||||
Changes in:
|
|
|
|
|
|
|
||||||
Unrealized net capital gains and losses
|
|
319
|
|
|
433
|
|
|
(1,306
|
)
|
|||
Unrealized foreign currency translation adjustments
|
|
47
|
|
|
10
|
|
|
(58
|
)
|
|||
Unrecognized pension and other postretirement benefit cost
|
|
307
|
|
|
(104
|
)
|
|
48
|
|
|||
Other comprehensive income (loss), after-tax
|
|
673
|
|
|
339
|
|
|
(1,316
|
)
|
|||
Comprehensive income
|
|
$
|
3,862
|
|
|
$
|
2,216
|
|
|
$
|
855
|
|
($ in millions, except par value data)
|
|
December 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Assets
|
|
|
|
|
||||
Investments in subsidiaries
|
|
$
|
29,126
|
|
|
$
|
26,929
|
|
Fixed income securities, at fair value (amortized cost $361 and $510)
|
|
362
|
|
|
513
|
|
||
Short-term investments, at fair value (amortized cost $171 and $219)
|
|
171
|
|
|
219
|
|
||
Cash
|
|
—
|
|
|
2
|
|
||
Receivable from subsidiaries
|
|
427
|
|
|
385
|
|
||
Deferred income taxes
|
|
124
|
|
|
348
|
|
||
Other assets
|
|
150
|
|
|
138
|
|
||
Total assets
|
|
$
|
30,360
|
|
|
$
|
28,534
|
|
|
|
|
|
|
||||
Liabilities
|
|
|
|
|
||||
Long-term debt
|
|
$
|
6,350
|
|
|
$
|
6,347
|
|
Pension and other postretirement benefit obligations
|
|
675
|
|
|
1,079
|
|
||
Deferred compensation
|
|
297
|
|
|
274
|
|
||
Notes due to subsidiaries
|
|
250
|
|
|
—
|
|
||
Dividends payable to shareholders
|
|
167
|
|
|
157
|
|
||
Other liabilities
|
|
70
|
|
|
104
|
|
||
Total liabilities
|
|
7,809
|
|
|
7,961
|
|
||
|
|
|
|
|
||||
Shareholders’ equity
|
|
|
|
|
||||
Preferred stock and additional capital paid-in, $1 par value, 25 million shares authorized, 72.2 thousand issued and outstanding, and $1,805 aggregate liquidation preference
|
|
1,746
|
|
|
1,746
|
|
||
Common stock, $.01 par value, 2.0 billion shares authorized and 900 million issued, 355 million and 366 million shares outstanding
|
|
9
|
|
|
9
|
|
||
Additional capital paid-in
|
|
3,313
|
|
|
3,303
|
|
||
Retained income
|
|
43,162
|
|
|
40,678
|
|
||
Deferred ESOP expense
|
|
(3
|
)
|
|
(6
|
)
|
||
Treasury stock, at cost (545 million and 534 million shares)
|
|
(25,982
|
)
|
|
(24,741
|
)
|
||
Accumulated other comprehensive income:
|
|
|
|
|
||||
Unrealized net capital gains and losses
|
|
1,662
|
|
|
1,053
|
|
||
Unrealized foreign currency translation adjustments
|
|
(9
|
)
|
|
(50
|
)
|
||
Unrealized pension and other postretirement benefit cost
|
|
(1,347
|
)
|
|
(1,419
|
)
|
||
Total accumulated other comprehensive loss
|
|
306
|
|
|
(416
|
)
|
||
Total shareholders’ equity
|
|
22,551
|
|
|
20,573
|
|
||
Total liabilities and shareholders’ equity
|
|
$
|
30,360
|
|
|
$
|
28,534
|
|
($ in millions)
|
|
Years Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Cash flows from operating activities
|
|
|
|
|
|
|
||||||
Net income
|
|
$
|
3,189
|
|
|
$
|
1,877
|
|
|
$
|
2,171
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
||||||
Equity in net income of subsidiaries
|
|
(3,556
|
)
|
|
(2,027
|
)
|
|
(2,300
|
)
|
|||
Dividends received from subsidiaries
|
|
1,671
|
|
|
1,874
|
|
|
2,300
|
|
|||
Realized capital gains and losses
|
|
2
|
|
|
(2
|
)
|
|
—
|
|
|||
Changes in:
|
|
|
|
|
|
|
||||||
Pension and other postretirement benefits
|
|
119
|
|
|
10
|
|
|
(15
|
)
|
|||
Income taxes
|
|
35
|
|
|
13
|
|
|
77
|
|
|||
Operating assets and liabilities
|
|
56
|
|
|
43
|
|
|
26
|
|
|||
Net cash provided by operating activities
|
|
1,516
|
|
|
1,788
|
|
|
2,259
|
|
|||
|
|
|
|
|
|
|
||||||
Cash flows from investing activities
|
|
|
|
|
|
|
||||||
Proceeds from sales of investments
|
|
880
|
|
|
389
|
|
|
399
|
|
|||
Investment purchases
|
|
(748
|
)
|
|
(243
|
)
|
|
(4
|
)
|
|||
Investment collections
|
|
13
|
|
|
60
|
|
|
—
|
|
|||
Return of capital from subsidiaries
|
|
42
|
|
|
(1,500
|
)
|
|
50
|
|
|||
Transfers to subsidiaries through intercompany loan agreement
|
|
—
|
|
|
(30
|
)
|
|
—
|
|
|||
Change in short-term investments, net
|
|
48
|
|
|
58
|
|
|
397
|
|
|||
Net cash provided (used in) by investing activities
|
|
235
|
|
|
(1,266
|
)
|
|
842
|
|
|||
|
|
|
|
|
|
|
||||||
Cash flows from financing activities
|
|
|
|
|
|
|
||||||
Proceeds from borrowings from subsidiaries
|
|
300
|
|
|
—
|
|
|
—
|
|
|||
Repayment of notes due to subsidiaries
|
|
(50
|
)
|
|
—
|
|
|
—
|
|
|||
Proceeds from issuance of long-term debt
|
|
—
|
|
|
1,236
|
|
|
—
|
|
|||
Repayment of long-term debt
|
|
—
|
|
|
(17
|
)
|
|
(20
|
)
|
|||
Dividends paid on common stock
|
|
(525
|
)
|
|
(486
|
)
|
|
(483
|
)
|
|||
Dividends paid on preferred stock
|
|
(116
|
)
|
|
(116
|
)
|
|
(116
|
)
|
|||
Treasury stock purchases
|
|
(1,495
|
)
|
|
(1,337
|
)
|
|
(2,808
|
)
|
|||
Shares reissued under equity incentive plans, net
|
|
135
|
|
|
164
|
|
|
130
|
|
|||
Excess tax benefits on share-based payment arrangements
|
|
—
|
|
|
32
|
|
|
45
|
|
|||
Other
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|||
Net cash used in financing activities
|
|
(1,753
|
)
|
|
(524
|
)
|
|
(3,252
|
)
|
|||
|
|
|
|
|
|
|
||||||
Net decrease in cash
|
|
(2
|
)
|
|
(2
|
)
|
|
(151
|
)
|
|||
Cash at beginning of year
|
|
2
|
|
|
4
|
|
|
155
|
|
|||
Cash at end of year
|
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
4
|
|
($ in millions)
|
|
As of December 31,
|
|
For the years ended December 31,
|
||||||||||||||||||||||||||||||||
Segment
|
|
Deferred
policy
acquisition
costs
|
|
Reserves for claims and claims expense, contract benefits and contractholder funds
|
|
Unearned premiums
|
|
Premium revenue and contract charges
|
|
Net investment income
(1)
|
|
Claims and claims expense, contract benefits and interest credited to contractholders
|
|
Amortization of deferred policy acquisition costs
|
|
Other operating costs and expenses
|
|
Premiums written (excluding life)
|
||||||||||||||||||
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Property-Liability
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Allstate Protection
|
|
$
|
1,510
|
|
|
$
|
24,336
|
|
|
$
|
11,409
|
|
|
$
|
31,433
|
|
|
|
|
$
|
21,470
|
|
|
$
|
4,205
|
|
|
$
|
3,647
|
|
|
$
|
31,648
|
|
||
Discontinued Lines and Coverages
|
|
—
|
|
|
1,893
|
|
|
—
|
|
|
—
|
|
|
|
|
96
|
|
|
—
|
|
|
3
|
|
|
—
|
|
||||||||||
Total Property-Liability
|
|
1,510
|
|
|
26,229
|
|
|
11,409
|
|
|
31,433
|
|
|
$
|
1,478
|
|
|
21,566
|
|
|
4,205
|
|
|
3,650
|
|
|
31,648
|
|
||||||||
Service Businesses
(2)
|
|
954
|
|
|
96
|
|
|
2,052
|
|
|
977
|
|
|
16
|
|
|
369
|
|
|
296
|
|
|
506
|
|
|
1,094
|
|
|||||||||
Allstate Life
|
|
1,152
|
|
|
10,244
|
|
|
4
|
|
|
1,280
|
|
|
489
|
|
|
1,047
|
|
|
134
|
|
|
240
|
|
|
—
|
|
|||||||||
Allstate Benefits
|
|
541
|
|
|
1,869
|
|
|
8
|
|
|
1,084
|
|
|
72
|
|
|
599
|
|
|
142
|
|
|
269
|
|
|
919
|
|
|||||||||
Allstate Annuities
|
|
34
|
|
|
19,870
|
|
|
—
|
|
|
14
|
|
|
1,305
|
|
|
967
|
|
|
7
|
|
|
35
|
|
|
—
|
|
|||||||||
Corporate and Other
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
41
|
|
|
—
|
|
|
—
|
|
|
631
|
|
|
—
|
|
|||||||||
Intersegment Eliminations
(2)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(110
|
)
|
|
—
|
|
|
(6
|
)
|
|
—
|
|
|
(104
|
)
|
|
—
|
|
|||||||||
Total
|
|
$
|
4,191
|
|
|
$
|
58,308
|
|
|
$
|
13,473
|
|
|
$
|
34,678
|
|
|
$
|
3,401
|
|
|
$
|
24,542
|
|
|
$
|
4,784
|
|
|
$
|
5,227
|
|
|
$
|
33,661
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Property-Liability
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Allstate Protection
|
|
$
|
1,432
|
|
|
$
|
23,263
|
|
|
$
|
11,160
|
|
|
$
|
30,727
|
|
|
|
|
$
|
21,863
|
|
|
$
|
4,053
|
|
|
$
|
3,484
|
|
|
$
|
30,888
|
|
||
Discontinued Lines and Coverages
|
|
—
|
|
|
1,953
|
|
|
—
|
|
|
—
|
|
|
|
|
105
|
|
|
—
|
|
|
2
|
|
|
3
|
|
||||||||||
Total Property-Liability
|
|
1,432
|
|
|
25,216
|
|
|
11,160
|
|
|
30,727
|
|
|
$
|
1,253
|
|
|
21,968
|
|
|
4,053
|
|
|
3,486
|
|
|
30,891
|
|
||||||||
Service Businesses
(2)
|
|
756
|
|
|
34
|
|
|
1,411
|
|
|
685
|
|
|
13
|
|
|
258
|
|
|
214
|
|
|
223
|
|
|
709
|
|
|||||||||
Allstate Life
|
|
1,200
|
|
|
10,042
|
|
|
4
|
|
|
1,250
|
|
|
482
|
|
|
1,027
|
|
|
131
|
|
|
226
|
|
|
—
|
|
|||||||||
Allstate Benefits
|
|
526
|
|
|
1,821
|
|
|
8
|
|
|
1,011
|
|
|
71
|
|
|
545
|
|
|
145
|
|
|
240
|
|
|
855
|
|
|||||||||
Allstate Annuities
|
|
40
|
|
|
20,636
|
|
|
—
|
|
|
14
|
|
|
1,181
|
|
|
1,011
|
|
|
7
|
|
|
32
|
|
|
—
|
|
|||||||||
Corporate and Other
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
42
|
|
|
—
|
|
|
—
|
|
|
324
|
|
|
—
|
|
|||||||||
Intersegment Eliminations
(2)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(105
|
)
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
(100
|
)
|
|
—
|
|
|||||||||
Total
|
|
$
|
3,954
|
|
|
$
|
57,749
|
|
|
$
|
12,583
|
|
|
$
|
33,582
|
|
|
$
|
3,042
|
|
|
$
|
24,804
|
|
|
$
|
4,550
|
|
|
$
|
4,431
|
|
|
$
|
32,455
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Property-Liability
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Allstate Protection
|
|
$
|
1,410
|
|
|
$
|
21,777
|
|
|
$
|
10,979
|
|
|
$
|
29,748
|
|
|
|
|
$
|
20,718
|
|
|
$
|
3,933
|
|
|
$
|
3,476
|
|
|
$
|
30,115
|
|
||
Discontinued Lines and Coverages
|
|
—
|
|
|
2,062
|
|
|
—
|
|
|
—
|
|
|
|
|
53
|
|
|
—
|
|
|
2
|
|
|
—
|
|
||||||||||
Total Property-Liability
|
|
1,410
|
|
|
23,839
|
|
|
10,979
|
|
|
29,748
|
|
|
$
|
1,226
|
|
|
20,771
|
|
|
3,933
|
|
|
3,478
|
|
|
30,115
|
|
||||||||
Service Businesses
(2)
|
|
619
|
|
|
30
|
|
|
1,210
|
|
|
603
|
|
|
11
|
|
|
277
|
|
|
169
|
|
|
164
|
|
|
756
|
|
|||||||||
Allstate Life
|
|
1,271
|
|
|
9,895
|
|
|
4
|
|
|
1,223
|
|
|
490
|
|
|
1,031
|
|
|
133
|
|
|
213
|
|
|
—
|
|
|||||||||
Allstate Benefits
|
|
514
|
|
|
1,760
|
|
|
9
|
|
|
921
|
|
|
71
|
|
|
488
|
|
|
124
|
|
|
222
|
|
|
777
|
|
|||||||||
Allstate Annuities
|
|
47
|
|
|
21,887
|
|
|
—
|
|
|
14
|
|
|
1,323
|
|
|
1,045
|
|
|
5
|
|
|
37
|
|
|
—
|
|
|||||||||
Corporate and Other
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
35
|
|
|
—
|
|
|
—
|
|
|
326
|
|
|
—
|
|
|||||||||
Intersegment Eliminations
(2)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(42
|
)
|
|
—
|
|
|
(14
|
)
|
|
—
|
|
|
(28
|
)
|
|
—
|
|
|||||||||
Total
|
|
$
|
3,861
|
|
|
$
|
57,411
|
|
|
$
|
12,202
|
|
|
$
|
32,467
|
|
|
$
|
3,156
|
|
|
$
|
23,598
|
|
|
$
|
4,364
|
|
|
$
|
4,412
|
|
|
$
|
31,648
|
|
(1)
|
A single investment portfolio supports both Allstate Protection and Discontinued Lines and Coverages segments.
|
(2)
|
Includes intersegment premiums and service fees and the related incurred losses and expenses that are eliminated in the consolidated financial statements.
|
($ in millions)
|
|
Gross amount
|
|
Ceded to other companies
(1)
|
|
Assumed from other companies
|
|
Net amount
|
|
Percentage of amount assumed to net
|
|||||||||
Year ended December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Life insurance in force
|
|
$
|
188,186
|
|
|
$
|
86,642
|
|
|
$
|
259,671
|
|
|
$
|
361,215
|
|
|
71.9
|
%
|
Premiums and contract charges:
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Life insurance
|
|
$
|
936
|
|
|
$
|
276
|
|
|
$
|
787
|
|
|
$
|
1,447
|
|
|
54.4
|
%
|
Accident and health insurance
|
|
958
|
|
|
27
|
|
|
—
|
|
|
931
|
|
|
—
|
%
|
||||
Property and casualty insurance
|
|
33,221
|
|
|
971
|
|
|
50
|
|
|
32,300
|
|
|
0.2
|
%
|
||||
Total premiums and contract charges
|
|
$
|
35,115
|
|
|
$
|
1,274
|
|
|
$
|
837
|
|
|
$
|
34,678
|
|
|
2.4
|
%
|
Year ended December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Life insurance in force
|
|
$
|
167,355
|
|
|
$
|
90,011
|
|
|
$
|
275,008
|
|
|
$
|
352,352
|
|
|
78.0
|
%
|
Premiums and contract charges:
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Life insurance
|
|
$
|
877
|
|
|
$
|
279
|
|
|
$
|
818
|
|
|
$
|
1,416
|
|
|
57.8
|
%
|
Accident and health insurance
|
|
889
|
|
|
30
|
|
|
—
|
|
|
859
|
|
|
—
|
%
|
||||
Property and casualty insurance
|
|
32,249
|
|
|
987
|
|
|
45
|
|
|
31,307
|
|
|
0.1
|
%
|
||||
Total premiums and contract charges
|
|
$
|
34,015
|
|
|
$
|
1,296
|
|
|
$
|
863
|
|
|
$
|
33,582
|
|
|
2.6
|
%
|
Year ended December 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Life insurance in force
|
|
$
|
156,486
|
|
|
$
|
93,326
|
|
|
$
|
280,644
|
|
|
$
|
343,804
|
|
|
81.6
|
%
|
Premiums and contract charges:
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Life insurance
|
|
$
|
828
|
|
|
$
|
299
|
|
|
$
|
849
|
|
|
$
|
1,378
|
|
|
61.6
|
%
|
Accident and health insurance
|
|
813
|
|
|
33
|
|
|
—
|
|
|
780
|
|
|
—
|
%
|
||||
Property and casualty insurance
|
|
31,274
|
|
|
1,006
|
|
|
41
|
|
|
30,309
|
|
|
0.1
|
%
|
||||
Total premiums and contract charges
|
|
$
|
32,915
|
|
|
$
|
1,338
|
|
|
$
|
890
|
|
|
$
|
32,467
|
|
|
2.7
|
%
|
(1)
|
No
reinsurance or coinsurance income was netted against premium ceded in
2017
,
2016
or
2015
.
|
($ in millions)
|
|
|
|
Additions
|
|
|
|
|
||||||||||||
Description
|
|
Balance as
of beginning
of period
|
|
Charged to costs and expenses
|
|
Other
additions
|
|
Deductions
|
|
Balance
as of end
of period
|
||||||||||
Year ended December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Allowance for reinsurance recoverables
|
|
$
|
84
|
|
|
$
|
(10
|
)
|
|
$
|
—
|
|
|
$
|
4
|
|
|
$
|
70
|
|
Allowance for premium installment receivable
|
|
84
|
|
|
109
|
|
|
—
|
|
|
116
|
|
|
77
|
|
|||||
Allowance for deferred tax assets
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Allowance for estimated losses on mortgage loans
|
|
3
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
3
|
|
|||||
Year ended December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Allowance for reinsurance recoverables
|
|
$
|
80
|
|
|
$
|
5
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
84
|
|
Allowance for premium installment receivable
|
|
90
|
|
|
107
|
|
|
—
|
|
|
113
|
|
|
84
|
|
|||||
Allowance for deferred tax assets
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Allowance for estimated losses on mortgage loans
|
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|||||
Year ended December 31, 2015
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Allowance for reinsurance recoverables
|
|
$
|
95
|
|
|
$
|
(15
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
80
|
|
Allowance for premium installment receivable
|
|
83
|
|
|
107
|
|
|
—
|
|
|
100
|
|
|
90
|
|
|||||
Allowance for deferred tax assets
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Allowance for estimated losses on mortgage loans
|
|
8
|
|
|
(4
|
)
|
|
—
|
|
|
1
|
|
|
3
|
|
1.1
|
TITLE AND PURPOSE
|
(a)
|
Title. This Plan shall be known as "The Allstate Corporation Deferred Compensation Plan."
|
(b)
|
Purpose. This Plan was established by The Allstate Corporation for the purpose of providing deferred compensation for eligible employees. The Plan is intended to be an unfunded plan maintained for a select group of management or highly compensated employees within the meaning of the Employee Retirement Income Security Act of 1974 (“ERISA”). With respect to amounts deferred on or after January 1, 2005, this Plan is intended to be a nonqualified deferred compensation plan maintained in conformity with the requirements of Internal Revenue Code Section 409A and shall be interpreted accordingly.
|
(c)
|
Effective Date and Plan History. The Plan was adopted by Allstate Insurance Company effective January 1, 1995. The Plan was amended and restated by the Company, effective January 1, 1996, November 11, 1997, September 1, 1999, November 1, 2000, November 1, 2001, June 1, 2002, October 7, 2002, May 28, 2004, December 31, 2008, July 31, 2009, January 1, 2011, January 1, 2013, January 1, 2014, January 1, 2015, and January 1, 2018. The terms of this Plan are effective for all benefits under the Plan that are not fully distributed as of January 1, 2005, except that actions taken on or after January 1, 2005 and prior to December 31, 2008, are subject to the terms of the then existing Plan and, as applicable, a reasonable and good faith interpretation of Code Section 409A and the transition guidance provided thereunder.
|
1.2
|
GENERAL DEFINITIONS
|
(l)
|
"Eligible Employee" shall mean any Employee who the Committee determines shall be eligible to participate in the Plan and whose (i) Eligible Salary is expected to exceed the Compensation Floor, or (ii) Eligible Compensation is expected to exceed the Compensation Floor for the Plan Year and, therefore, is eligible to make a deferral under Article II of this Plan.
|
(m)
|
“Eligible Salary” shall mean an Employee’s base salary during the Prior Plan Year annualized in such manner as the Committee shall determine, plus any bonus amounts paid on a monthly, quarterly or other nonannual basis included as Compensation during the Prior Plan Year up through the date the Employee’s eligibility is determined, as set forth by the Committee.
|
(w)
|
“Post-2017 Sub-Accounts” shall mean nominal bookkeeping sub-accounts of the Participant’s Account established after 2017 for each distribution election filed by the Participant pursuant to Section 5.1(c), used to measure and determine the amount to be paid to a Participant under the Plan. Each Post-2017 Sub-Account shall reflect the balance of (i) Compensation deferred by a Participant with respect to any calendar year after 2017 as adjusted pursuant to Article IV of the Plan and (ii) earnings and losses on amounts contributed pursuant to (i) of this subsection, as provided in Article IV.
|
(y)
|
“Prior Plan Year” shall mean the Plan Year immediately preceding the Current Plan Year.
|
(z)
|
“Separation from Service” shall mean the termination of employment or cessation or reduction of services by a Participant that results in a distribution as specifically defined and determined under Article V of the Plan. “Separation from Service” shall have distinct meanings with respect to the Pre-2005 Sub-Account, and the 2005-2017 and Post-2017 Sub-Accounts, as set forth in Article V of the Plan.
|
(aa)
|
“2005-2017 Sub-Account” shall mean a nominal bookkeeping sub-account of the Participant’s Account established to state the balance of (i) Compensation deferred by a Participant under
|
2.1
|
PARTICIPATION AND DEFERRAL ELECTIONS
|
2.2
|
TIMING OF DEFERRAL ELECTIONS
|
(a)
|
In no event shall a Participant be permitted to make a deferral election with respect to his or her base salary after December 31 of the calendar year preceding the Plan Year in which such deferral election shall take effect. All elections to defer base salary for a Plan Year shall be irrevocable as of December 31 of the preceding Plan Year (or such earlier date as may be determined by the Committee from time to time) and, therefore, may not be changed by either the Committee or the Participant after December 31 (or such earlier date, if applicable).
|
(b)
|
An election to defer Incentive shall be filed no later than December 31 of the calendar year preceding the Plan Year in which services are first performed with respect to such Incentive, unless the Committee determines that a Participant’s Incentive constitutes “performance-based compensation” within the meaning of Code Section 409A. In such case, the Committee may establish a later date for the filing of Incentive deferral elections; provided that, as of such date established by the Committee, Incentive is not readily ascertainable within the meaning of Code Section 409A, and further provided that such date shall in no event be later than 6 months prior to the end of the applicable performance period for such Incentive. Such deferral election shall be irrevocable as of the filing date established by the Committee.
|
(c)
|
Any newly hired Employee, not subject to Section 2.2(d), who becomes an Eligible Employee during the Plan Year, may participate in the Plan for the remainder of such Plan Year if he or she elects to do so no later than 30 days following the date he or she becomes an Eligible Employee. Elections made by Employees who become Eligible Employees during the Plan Year will be effective on the first of the month following the date their election is received in the manner specified by the Committee. If an Eligible Employee fails to make an election, such failure will be deemed an election not to become a Participant for the Plan Year.
|
(d)
|
An Employee who is rehired after having previously been a Participant will not become eligible to participate in the Plan for a period of 24 months following the date of Separation from Service. An Employee who was previously a participant in a plan aggregated with this Plan under Code Section 409A and separated from service within the meaning of Code Section 409A will not become eligible to participate in the Plan for a period of 24 months following the date of such separation from service. Such Employees may elect to make a deferral election with respect to Compensation earned after the January 1 following the expiration of this 24-month period in accordance with Sections 2.2(a) and (b).
|
(e)
|
“Evergreen” Deferral Elections. If a Participant fails to make a deferral election for a given Plan Year as provided in this Section 2.2, such Participant’s deferral election for that Plan Year shall be deemed to be zero, unless the Committee exercises its discretion to establish rules under which deferral elections shall remain in effect for all succeeding Plan Years in which the Participant is eligible to make a deferral election, subject to and in accordance with Code Section 409A.
|
(f)
|
Hardship and Unforeseeable Financial Emergency. Notwithstanding the other provisions of this Section 2.2, the Committee may in its sole discretion cancel all outstanding deferral elections of a Participant and prohibit the Participant from making a deferral election for the next Plan Year if the Participant experiences a Hardship or upon the Committee’s determination that the Participant has experienced an Unforeseeable Financial Emergency. Any subsequent election to defer shall be subject to the terms of this Section 2.2(a), (b), and (e).
|
3.1
|
AMOUNT OF DEFERRAL
|
(a)
|
Elections made pursuant to Section 2.2 to defer base salary shall be made in whole number percentages up to 80% and shall apply only to base salary payable on or after the Participant has earned Compensation in the Plan Year equal to the Compensation Floor for the Plan Year.
|
(b)
|
Elections made pursuant to Section 2.2(b) to defer Incentive shall be made in whole number percentages up to 100%. If a Participant’s Compensation (determined solely for this purpose on an annualized basis as of the date that such election becomes irrevocable pursuant to Section 2.2(b)) does not exceed the Compensation Floor, the election to defer Incentive shall be reduced dollar for dollar until the total of such Compensation and the Incentive that is not deferred and is payable to the Participant equals the Compensation Floor.
|
3.2
|
EFFECTIVE DATE OF DEFERRAL
|
3.3
|
USE OF AMOUNTS DEFERRED
|
4.1
|
ESTABLISHMENT OF ACCOUNT
|
4.2
|
CONTRIBUTIONS TO ACCOUNT
|
4.3
|
MAINTENANCE OF ACCOUNT BALANCES ‑ INVESTMENT
|
4.4
|
VESTING
|
5.1
|
EVENTS CAUSING ACCOUNT S TO BECOME DISTRIBUTABLE
|
(1)
|
A Participant's Account shall become distributable upon notification to the Plan of the Participant’s Separation from Service or, at the election of the Participant pursuant to Section 5.3(a), in one of the first through fifth years after Separation from Service. In either event, the Participant may elect to receive payment in a lump sum or in annual installments as provided in Section 5.3(a).
|
(2)
|
That portion of a Participant's Account determined to be necessary to alleviate a demonstrated Hardship shall become distributable upon the date of such determination, subject to Section 5.2.
|
(3)
|
Effective September 1, 1999, a Participant may at any time irrevocably elect to receive a distribution of his or her entire Account balance, subject to the forfeiture to the Company of 10% of such Account balance (a “100% In‑Service Withdrawal”) provided that any deferral election for the current Plan Year will continue subject to Section 2.2(a) and the Participant may not elect to defer any base salary or Incentives earned during the next succeeding Plan Year (“Suspension Period”). If a Participant elects a 100% In-Service Withdrawal after the enrollment period for the next succeeding Plan Year and before the end of the current Plan Year, then any deferral election for base salary or Incentives earned during the next succeeding Plan Year will be cancelled. The Participant’s Account balance shall become distributable subject to Section 5.2 following the date of such election.
|
(4)
|
In the event of a Participant’s death prior to distribution of his or her entire Account balance, the remaining Account balance shall become distributable following the date on which all events have occurred which entitle the Beneficiary or Beneficiaries to payment.
|
(b)
|
2005-2017 Sub-Account. Distributions of the 2005-2017 Sub-Account shall be made (in the case of a lump sum) or commence (in the case of up to 10 installments) on the first day of the first calendar month that commences after the six-month anniversary of the Participant’s Separation from Service. Unless otherwise specified pursuant to Section 5.3, distributions shall be in the form of a single lump sum payment. For purposes of this Section 5.1(b), “Separation from Service” shall mean a termination of employment upon which a Participant ceases performing services for all entities within the Controlled Group. Notwithstanding, a Separation from Service shall also include a reduction in a Participant’s rate of services to any such entity that is reasonably anticipated to be a permanent reduction to a rate that is 20% or less of the average rate of services performed by the Participant in the 36 months prior to such reduction. If a Participant ceases or reduces services under a bona fide leave of absence, a Separation from Service occurs after the close of the six-month anniversary of such leave; provided, however, that if the Participant has a statutory or contractual right to reemployment, the Separation from Service shall be delayed until the date that the Participant’s right ceases or, if the Participant resumes services, until the Participant subsequently Separates from Service. For purposes of determining whether a Participant has a Separation from Service, services taken into account shall include services performed for the Company as an independent contractor but not services performed as a non-employee member of the board of directors of any entity within the Controlled Group. Determination of whether a Separation from Service occurs shall be made in a manner that is consistent with Treas. Reg. 1.409A-1(h).
|
(c)
|
Post-2017 Sub-Accounts. Distributions of Post-2017 Sub-Accounts shall be as follows based on the Participant’s election. A Participant’s election shall specify how the percentage of
|
(1)
|
In the case of a lump sum distribution, a Participant may elect a distribution:
|
i.
|
on the first day of the first calendar month that commences after the six-month anniversary of the Participant’s Separation from Service;
|
ii.
|
on January 1 of the fifth year following the Participant’s Separation from Service; or
|
iii.
|
on January 1 of a year that is subsequent to the year in which the Compensation deferred under the terms of the Plan would otherwise have been payable to such Participant. A Participant may only have two different deferral year elections outstanding at any time pursuant to this subsection iii. If the date the Participant elected pursuant to this subsection iii. has not occurred at the date of the Participant’s Separation from Service, payments will commence as provided in subsection (c)(1)i.
|
(2)
|
In the case of installment payments, a Participant may elect up to 5 annual installments to commence:
|
i.
|
no earlier than the first day of the first calendar month that commences after the six-month anniversary of the Participant’s Separation from Service. Subsequent installment payments shall be paid on January 1 of each succeeding calendar year, but in no event later than the end of each succeeding calendar year;
|
ii.
|
on January 1 of the fifth year following the Participant’s Separation from Service. Succeeding payments shall generally be made on January 1 of each succeeding calendar year, but in no event later than the end of each succeeding calendar year.
|
(d)
|
In the event of a Participant’s death prior to the full distribution of his or her 2005-2017 Sub-Account or a Post-2017 Sub-Account, the undistributed Account shall be distributed to the Participant’s Beneficiary by December 31 of the calendar year following the year of death.
|
(e)
|
The Committee retains sole discretion to determine whether and to what extent all or any portion of the 2005-2017 Sub-Account or a Post-2017 Sub-Account may be payable on account of an Unforeseeable Financial Emergency. If the Committee determines that such distribution shall be made, payment shall be made within 30 days of the determination of Unforeseeable Financial Emergency and the Committee may, in its discretion, determine how any partial distribution of the 2005-2017 Sub-Account or a Post-2017 Sub-Account shall be allocated among the hypothetical Investment Options applicable to such Sub-Account.
|
(f)
|
Payment Dates. If a payment is due on a nonbusiness day or a federal or state holiday, such payment shall be due on the next succeeding business day.
|
5.2
|
NOTICE OF ACCOUNT PAYMENT AND COMMENCEMENT OF DISTRIBUTION FOR PRE-2005 SUB-ACCOUNTS
|
5.3
|
FORM OF PAYMENT
|
5.4
|
DISTRIBUTION ELECTION
|
6.1
|
GENERAL ADMINISTRATION; RIGHTS AND DUTIES
|
6.2
|
CLAIMS PROCEDURES
|
7.1
|
AMENDMENTS
|
7.2
|
TERMINATION OF PLAN
|
8.1
|
NOTIFICATION TO COMMITTEE
|
8.2
|
PARTICIPANT'S EMPLOYMENT
|
8.3
|
STATUS OF PARTICIPANTS
|
8.4
|
BENEFICIARIES AND CONTINGENT BENEFICIARIES
|
(a)
|
Beneficiary Designation. Each Participant shall, in accordance with procedures established by the Committee, designate one or more persons or entities (including a trust or trusts or his or her estate) to receive distribution of his or her Account that are not distributed prior to the Participant’s death. The Participant may also designate a person or persons as a Contingent Beneficiary who shall succeed to the rights of the person or persons originally designated as Beneficiary, in case the latter should die. The Participant may from time to time change any designation of Beneficiary or Contingent Beneficiary so made, by submitting a new designation in accordance with procedures established by the Committee. The last valid designation made by a Participant under the Plan, in accordance with procedures established by the Committee, shall be controlling.
|
(b)
|
Spousal Consent Required. In the event a Participant designates a person other than his or her spouse as Beneficiary of any interests under this Plan, the Participant's spouse shall sign a notarized statement specifically approving such designation and authorizing the Committee to make payment of such interests in the manner provided in such designation.
|
8.5
|
TAXES AND OTHER CHARGES
|
8.6
|
BENEFITS NOT ASSIGNABLE; OBLIGATIONS BINDING UPON SUCCESSORS
|
8.7
|
ILLINOIS LAW GOVERNS; SAVING CLAUSE
|
8.8
|
HEADINGS NOT PART OF PLAN
|
($ in millions)
|
|
For the year ended December 31,
|
|
|||||||||||||||||||
|
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
1.
|
Income from operations before income tax
|
|
$
|
3,991
|
|
|
$
|
2,754
|
|
|
$
|
3,282
|
|
|
$
|
4,236
|
|
|
$
|
3,396
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Fixed Charges:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
2.
|
Interest in indebtedness
|
|
$
|
335
|
|
|
$
|
295
|
|
|
$
|
292
|
|
|
$
|
322
|
|
|
$
|
367
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
3.
|
Interest factor of annual rental expense
|
|
18
|
|
|
18
|
|
|
19
|
|
|
18
|
|
|
19
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
4.
|
Interest credited to contractholder funds
|
|
690
|
|
|
726
|
|
|
761
|
|
|
919
|
|
|
1,278
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
5.
|
Total fixed charges (2+3+4)
|
|
$
|
1,043
|
|
|
$
|
1,039
|
|
|
$
|
1,072
|
|
|
$
|
1,259
|
|
|
$
|
1,664
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
6.
|
Preferred stock dividends
|
|
116
|
|
|
116
|
|
|
116
|
|
|
104
|
|
|
17
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
7.
|
Total fixed charges and preferred stock dividends (5+6)
|
|
$
|
1,159
|
|
|
$
|
1,155
|
|
|
$
|
1,188
|
|
|
$
|
1,363
|
|
|
$
|
1,681
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
8.
|
Income from operations before income taxes and fixed charges (1+5)
|
|
$
|
5,034
|
|
|
$
|
3,793
|
|
|
$
|
4,354
|
|
|
$
|
5,495
|
|
|
$
|
5,060
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
9.
|
Ratio of earnings to fixed charges (8/5)
|
|
4.8
|
|
X
|
3.7
|
|
X
|
4.1
|
|
X
|
4.4
|
|
X
|
3.0
|
|
X
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
10.
|
Income from operations before income taxes and fixed charges and preferred stock dividends (1+7)
|
|
$
|
5,150
|
|
|
$
|
3,909
|
|
|
$
|
4,470
|
|
|
$
|
5,599
|
|
|
$
|
5,077
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
11.
|
Ratio of earnings to fixed charges and preferred stock dividends (10/7)
|
|
4.4
|
|
X
|
3.4
|
|
X
|
3.8
|
|
X
|
4.1
|
|
X
|
3.0
|
|
X
|
Subsidiaries
|
EXHIBIT 21
|
Company Name
|
|
Domicile
|
AIMCO MOA - 1, LLC
|
|
Delaware
|
ALIC Reinsurance Company
|
|
South Carolina
|
ALINV Mosaic, LLC
|
|
Delaware
|
Allstate Assignment Company
|
|
Nebraska
|
Allstate Assurance Company
|
|
Illinois
|
Allstate County Mutual Insurance Company
|
|
Texas
|
Allstate Digital Ventures, LLC
|
|
Delaware
|
Allstate Distributors, LLC
|
|
Delaware
|
Allstate Enterprises, LLC
|
|
Delaware
|
Allstate Exchange Services, LLC
|
|
Delaware
|
Allstate Finance Company, LLC
|
|
Delaware
|
Allstate Finance Company Agency Loans, LLC
|
|
Delaware
|
Allstate Financial Advisors, LLC
|
|
Delaware
|
Allstate Financial Corporation
|
|
Illinois
|
Allstate Financial Insurance Holdings Corporation
|
|
Delaware
|
Allstate Financial Services, LLC
(1)
|
|
Delaware
|
Allstate Financial, LLC
|
|
Delaware
|
Allstate Fire and Casualty Insurance Company
|
|
Illinois
|
Allstate Global Holdings Limited
|
|
Northern Ireland
|
Allstate Indemnity Company
|
|
Illinois
|
Allstate Insurance Company
|
|
Illinois
|
Allstate Insurance Company of Canada
|
|
Canada
|
Allstate Insurance Holdings, LLC
|
|
Delaware
|
Allstate International Assignments, Ltd.
|
|
Barbados
|
Allstate International Holdings, Inc.
|
|
Delaware
|
Allstate Investment Management Company
|
|
Delaware
|
Allstate Investments, LLC
|
|
Delaware
|
Allstate Life Insurance Company
|
|
Illinois
|
Allstate Life Insurance Company of Canada
|
|
Canada
|
Allstate Life Insurance Company of New York
|
|
New York
|
Allstate Motor Club, Inc.
|
|
Delaware
|
Allstate New Jersey Insurance Company
|
|
Illinois
|
Allstate New Jersey Property and Casualty Insurance Company
|
|
Illinois
|
Allstate Non-Insurance Holdings, Inc.
|
|
Delaware
|
Allstate North American Insurance Company
|
|
Illinois
|
Allstate Northbrook Indemnity Company
|
|
Illinois
|
Allstate Northern Ireland Limited
|
|
Northern Ireland
|
Allstate Property and Casualty Insurance Company
|
|
Illinois
|
Allstate Settlement Corporation
|
|
Nebraska
|
Allstate Short Term Pool, LLC
|
|
Delaware
|
Allstate Solutions Private Limited
|
|
India
|
Allstate Texas Lloyd’s
|
|
Texas
|
Allstate Texas Lloyd’s, Inc.
|
|
Texas
|
Allstate Vehicle and Property Insurance Company
|
|
Illinois
|
American Heritage Life Insurance Company
|
|
Florida
|
American Heritage Service Company
|
|
Florida
|
Answer Financial Inc.
|
|
Delaware
|
Answer Marketplace, LLC
|
|
Delaware
|
AP Real Estate, LLC
|
|
Delaware
|
AP Riverway Plaza, LLC
|
|
Delaware
|
AP Timber, LLC
|
|
Delaware
|
Arity, LLC
|
|
Delaware
|
Arity International Limited
|
|
Northern Ireland
|
Castle Key Indemnity Company
|
|
Illinois
|
Castle Key Insurance Company
|
|
Illinois
|
CE Care Plan Corp
|
|
Delaware
|
Complete Product Care Corp
|
|
Delaware
|
Current Creek Investments, LLC
|
|
Delaware
|
Company Name
|
|
Domicile
|
E.R.J. Insurance Group, Inc.
(2)
|
|
Florida
|
Encompass Floridian Indemnity Company
|
|
Illinois
|
Encompass Floridian Insurance Company
|
|
Illinois
|
Encompass Home and Auto Insurance Company
|
|
Illinois
|
Encompass Indemnity Company
|
|
Illinois
|
Encompass Independent Insurance Company
|
|
Illinois
|
Encompass Insurance Company
|
|
Illinois
|
Encompass Insurance Company of America
|
|
Illinois
|
Encompass Insurance Company of Massachusetts
|
|
Massachusetts
|
Encompass Insurance Company of New Jersey
|
|
Illinois
|
Encompass Insurance Holdings, LLC
|
|
Delaware
|
Encompass Property and Casualty Company
|
|
Illinois
|
Encompass Property and Casualty Insurance Company of New Jersey
|
|
Illinois
|
Esurance Holdings, Inc.
|
|
Delaware
|
Esurance Insurance Company
|
|
Wisconsin
|
Esurance Insurance Company of Canada
|
|
Canada
|
Esurance Insurance Company of New Jersey
|
|
Wisconsin
|
Esurance Insurance Services Company of Canada
|
|
Canada
|
Esurance Insurance Services, Inc.
(3)
|
|
Delaware
|
Esurance Property and Casualty Insurance Company
|
|
Wisconsin
|
First Colonial Insurance Company
|
|
Florida
|
Insurance Answer Center, LLC
(4)
|
|
Delaware
|
Intramerica Life Insurance Company
|
|
New York
|
Ivantage Insurance Brokers Inc.
|
|
Canada
|
Ivantage Select Agency, Inc.
|
|
Illinois
|
Kennett Capital, Inc.
|
|
Delaware
|
Lincoln Benefit Facility Company, LLC
|
|
Delaware
|
NBInv AF1, LLC
|
|
Delaware
|
NBInv AF2, LLC
|
|
Delaware
|
NBInv AF3, LLC
|
|
Delaware
|
NBInv AF4, LLC
|
|
Delaware
|
NBInv AF5, LLC
|
|
Delaware
|
NBInv AP1, LLC
|
|
Delaware
|
NBInv AP2, LLC
|
|
Delaware
|
NBInv AP3, LLC
|
|
Delaware
|
NBInv AP4, LLC
|
|
Delaware
|
NBInv AP5, LLC
|
|
Delaware
|
NBInv AP6, LLC
|
|
Delaware
|
NBInv APAF1, LLC
|
|
Delaware
|
NBInv Riverside Cars1, LLC
|
|
Delaware
|
NBInv Riverside Management, LLC
|
|
Delaware
|
North Light Specialty Insurance Company
|
|
Illinois
|
Northeast Agencies, Inc.
(5)
|
|
New York
|
Pablo Creek Services, Inc.
|
|
Illinois
|
Pafco Insurance Company
|
|
Canada
|
Pembridge Insurance Company
|
|
Canada
|
Protection Plan Group, Inc.
|
|
Delaware
|
Right Answer Insurance Agency, LLC
|
|
Delaware
|
Road Bay Investments, LLC
|
|
Delaware
|
Signature Agency, Inc.
|
|
Delaware
|
Signature Motor Club of California, Inc.
|
|
California
|
Signature Motor Club, Inc.
|
|
Delaware
|
Signature Nationwide Auto Club of California, Inc.
|
|
California
|
Signature’s Nationwide Auto Club, Inc.
|
|
Delaware
|
SquareTradeGo, Inc.
|
|
Delaware
|
SquareTrade, Inc.
(6)
|
|
Delaware
|
SquareTrade Holding Company, Inc.
|
|
Delaware
|
SquareTrade Insurance Services, Inc.
|
|
Delaware
|
Company Name
|
|
Domicile
|
SquareTrade Limited
|
|
United Kingdom
|
SquareTrade Protection Solutions, Inc.
|
|
Delaware
|
ST International Limited
|
|
Guernsey
|
ST Product Care Corp
|
|
Delaware
|
Tech-Cor, LLC
|
|
Delaware
|
West Plaza RE Holdings, LLC
|
|
Delaware
|
(1)
|
Doing business as LSA Securities in Louisiana and Pennsylvania
|
(2)
|
Doing business as American Heritage Insurance Services in all states, including th District of Columbia, except Massachusetts
|
(3)
|
Doing business as Esurance Insurance Agency Services in New York
|
(4)
|
Doing business as Insurance Answer Center, LLC, an Insurance Agency in New York
|
(5)
|
Doing business as Northeast Agency Insurance Services in California, NEA Insurance Services in Georgia, NEA Brokerage Solutions in New Hampshire, and Northeast Insurance Agencies, Inc. in Utah
|
(6)
|
Doing business as SquareTrade New York in New York
|
Certifications
|
EXHIBIT 31 (i)
|
/s/ Thomas J. Wilson
|
Thomas J. Wilson
|
Chairman of the Board, President and Chief Executive Officer
|
Certifications
|
EXHIBIT 31 (i)
|
/s/ Mario Rizzo
|
Mario Rizzo
|
Executive Vice President and Chief Financial Officer
|
|
/s/ Thomas J. Wilson
|
Thomas J. Wilson
|
Chairman of the Board, President and Chief Executive Officer
|
|
/s/ Mario Rizzo
|
Mario Rizzo
|
Executive Vice President and Chief Financial Officer
|