Delaware
|
|
1-11840
|
|
36-3871531
|
(State or other
jurisdiction of incorporation)
|
|
(Commission
File Number)
|
|
(IRS Employer
Identification No.)
|
2775 Sanders Road, Northbrook, Illinois
|
60062
|
(Address of principal executive offices)
|
(Zip Code)
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange
on which registered
|
Common Stock, par value $.01 per share
|
ALL
|
New York Stock Exchange
Chicago Stock Exchange
|
5.10% Fixed-to-Floating Rate Subordinated Debentures due 2053
|
ALL.PR.B
|
New York Stock Exchange
|
Depositary Shares each representing a 1/1,000th interest in a share of Fixed Rate Noncumulative Perpetual Preferred Stock, Series A
|
ALL PR A
|
New York Stock Exchange
|
Depositary Shares each representing a 1/1,000th interest in a share of Fixed Rate Noncumulative Perpetual Preferred Stock, Series D
|
ALL PR D
|
New York Stock Exchange
|
Depositary Shares each representing a 1/1,000th interest in a share of Fixed Rate Noncumulative Perpetual Preferred Stock, Series E
|
ALL PR E
|
New York Stock Exchange
|
Depositary Shares each representing a 1/1,000th interest in a share of Fixed Rate Noncumulative Perpetual Preferred Stock, Series F
|
ALL PR F
|
New York Stock Exchange
|
Depositary Shares each representing a 1/1,000th interest in a share of Fixed Rate Noncumulative Perpetual Preferred Stock, Series G
|
ALL PR G
|
New York Stock Exchange
|
|
|
Emerging growth company
|
____
|
Impact of the accounting change on selected financial data
|
|
|
|
|
|
|
||||||
($ in millions, except per share data and ratios)
|
|
2018
|
|
2017
|
|
2016
|
||||||
As adjusted
|
|
|
|
|
|
|
||||||
Net income
|
|
$
|
2,160
|
|
|
$
|
3,554
|
|
|
$
|
1,808
|
|
Net income applicable to common shareholders
|
|
2,012
|
|
|
3,438
|
|
|
1,692
|
|
|||
Net income applicable to common shareholders per common share - basic
|
|
5.78
|
|
|
9.50
|
|
|
4.54
|
|
|||
Net income applicable to common shareholders per common share - diluted
|
|
5.70
|
|
|
9.35
|
|
|
4.48
|
|
|||
Return on common shareholders’ equity
|
|
10.0
|
%
|
|
17.4
|
%
|
|
9.1
|
%
|
|||
Property-Liability combined ratio
|
|
93.2
|
|
|
93.0
|
|
|
95.5
|
|
|||
|
|
|
|
|
|
|
||||||
Previously reported
|
|
|
|
|
|
|
||||||
Net income
|
|
2,252
|
|
|
3,189
|
|
|
1,877
|
|
|||
Net income applicable to common shareholders
|
|
2,104
|
|
|
3,073
|
|
|
1,761
|
|
|||
Net income applicable to common shareholders per common share - basic
|
|
6.05
|
|
|
8.49
|
|
|
4.72
|
|
|||
Net income applicable to common shareholders per common share - diluted
|
|
5.96
|
|
|
8.36
|
|
|
4.67
|
|
|||
Return on common shareholders’ equity
|
|
10.5
|
%
|
|
15.5
|
%
|
|
9.5
|
%
|
|||
Property-Liability combined ratio
|
|
93.6
|
|
|
93.6
|
|
|
96.0
|
|
•
|
Part II, Item 6, Selected Financial Data
|
•
|
Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
Part II, Item 8, Financial Statements and Supplementary Data
|
•
|
Part IV, Item 15(a)(2), Financial Statement Schedules
|
23
|
|
|
99.1
|
|
|
|
|
Part II, Item 6, Selected Financial Data
|
|
|
Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
|
|
Part II, Item 8, Financial Statements and Supplementary Data
|
|
|
Part IV, Item 15(a)(2), Financial Statement Schedules
|
101.INS
|
|
XBRL Instance Document
|
101.SCH
|
|
XBRL Taxonomy Extension Schema
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase
|
|
THE ALLSTATE CORPORATION
|
|
|
(Registrant)
|
|
|
|
|
|
By:
|
/s/ Eric K. Ferren
|
|
Name: Eric K. Ferren
|
|
|
Title: Senior Vice President, Controller and Chief Accounting Officer
|
5-year summary of selected financial data
|
||||||||||||||||||||
($ in millions, except per share data)
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
||||||||||
Consolidated Operating Results
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Insurance premiums and contract charges
|
|
$
|
36,513
|
|
|
$
|
34,678
|
|
|
$
|
33,582
|
|
|
$
|
32,467
|
|
|
$
|
31,086
|
|
Other revenue
|
|
939
|
|
|
883
|
|
|
865
|
|
|
863
|
|
|
859
|
|
|||||
Net investment income
|
|
3,240
|
|
|
3,401
|
|
|
3,042
|
|
|
3,156
|
|
|
3,459
|
|
|||||
Realized capital gains and losses
|
|
(877
|
)
|
|
445
|
|
|
(90
|
)
|
|
30
|
|
|
694
|
|
|||||
Total revenues
|
|
39,815
|
|
|
39,407
|
|
|
37,399
|
|
|
36,516
|
|
|
36,098
|
|
|||||
Net income applicable to common shareholders
|
|
2,012
|
|
|
3,438
|
|
|
1,692
|
|
|
2,138
|
|
|
2,066
|
|
|||||
Net income applicable to common shareholders per common share:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income applicable to common shareholders per common share - Basic
|
|
5.78
|
|
|
9.50
|
|
|
4.54
|
|
|
5.33
|
|
|
4.79
|
|
|||||
Net income applicable to common shareholders per common share - Diluted
|
|
5.70
|
|
|
9.35
|
|
|
4.48
|
|
|
5.26
|
|
|
4.71
|
|
|||||
Cash dividends declared per common share
|
|
1.84
|
|
|
1.48
|
|
|
1.32
|
|
|
1.20
|
|
|
1.12
|
|
|||||
Consolidated Financial Position
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Investments
|
|
$
|
81,260
|
|
|
$
|
82,803
|
|
|
$
|
81,799
|
|
|
$
|
77,758
|
|
|
$
|
81,113
|
|
Total assets
|
|
112,249
|
|
|
112,422
|
|
|
108,610
|
|
|
104,656
|
|
|
108,479
|
|
|||||
Reserves for claims and claims expense, life-contingent contract benefits and contractholder funds
|
|
58,002
|
|
|
58,308
|
|
|
57,749
|
|
|
57,411
|
|
|
57,832
|
|
|||||
Long-term debt
|
|
6,451
|
|
|
6,350
|
|
|
6,347
|
|
|
5,124
|
|
|
5,140
|
|
|||||
Shareholders’ equity
|
|
21,312
|
|
|
22,551
|
|
|
20,569
|
|
|
20,020
|
|
|
22,303
|
|
|||||
Shareholders’ equity per diluted common share
|
|
57.56
|
|
|
57.58
|
|
|
50.76
|
|
|
47.33
|
|
|
48.23
|
|
|
|
Page
|
|
Overview and 2018
Highlights
|
|
||
|
|||
Property-Liability
Operations
|
|
||
|
|||
|
–
Allstate brand
|
|
|
|
–
Esurance brand
|
|
|
|
–
Encompass brand
|
|
|
|
|||
Service Businesses
|
|
||
Claims and Claims Expense Reserves
|
|
||
Allstate Life
|
|
||
Allstate Benefits
|
|
||
Allstate Annuities
|
|
||
|
|||
|
|||
|
|||
|
|||
|
|||
Application of Critical Accounting Estimates
|
|
||
|
|||
|
•
|
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.
|
•
|
Service Businesses
: revenues, premium written, PIF, adjusted net income and net income.
|
•
|
Allstate Life
: premiums and contract charges, new business sales, PIF, benefit spread, expenses, adjusted net income and net income.
|
•
|
Allstate Benefits
: premiums, new business sales, PIF, benefit ratio, expenses, adjusted net income and net income.
|
•
|
Allstate Annuities
: investment spread, asset-liability matching, contract benefits, expenses, adjusted net income, net income and invested assets.
|
•
|
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.
|
•
|
Financial condition
: liquidity, parent holding company deployable assets, financial strength ratings, operating leverage, debt levels, book value per share and return on equity.
|
•
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
|
•
Pension and other postretirement remeasurement gains and losses, after-tax
|
•
Valuation changes on embedded derivatives not hedged, after-tax
|
•
Amortization of DAC and deferred sales inducement costs (“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
|
Allstate Delivered on 2018 Operating Priorities
(1)
|
|||||
|
|
|
|
|
|
Better Serve Customers
|
|
Net Promoter Score increased for all major businesses
|
|||
|
Renewal ratio improved across Allstate, Esurance and Encompass brands
|
||||
Achieve Target Economic Returns on Capital
|
|
Return on common shareholders’ equity of 10.0% for 2018
|
|||
Grow Customer Base
|
|
Policy growth accelerated in Allstate and Esurance brands
|
|||
|
SquareTrade PIF grew 29.9 million, or 77.1%, compared to 2017
|
||||
Proactively Manage Investments
|
|
Net investment income of $3.2 billion in 2018
|
|||
|
Total return on $81 billion investment portfolio of 0.8%
|
||||
Building Long-Term Growth Platforms
|
|
Expanded telematics offerings, Arity collecting 10 billion miles of data per month
|
|||
|
SquareTrade continued its rapid growth, adding a leading U.S. retailer during the year
|
||||
|
Acquired InfoArmor, a fast growing identity protection service provider
|
(1)
|
2019 operating priorities will remain consistent with the 2018 priorities.
|
Consolidated Net Income
|
||||
($ in billions)
|
Consolidated net income applicable to common shareholders
decreased 41.5% in 2018 compared to 2017. The decrease was primarily driven by net realized capital losses compared to net realized capital gains in 2017, pension and other postretirement remeasurement losses compared to gains in 2017, a lower tax benefit from the Tax Legislation, lower favorable prior year reserve reestimates and higher distribution expenses from growth, partially offset by higher premiums earned, a lower effective tax rate from the Tax Legislation and lower catastrophe losses. The Property-Liability combined ratio was 93.2 in 2018 compared to 93.0 in 2017.
Net realized capital losses on investments in 2018 were primarily due to declines in the valuation of equity investments, which are now recorded in net income due to the adoption of the recognition and measurement accounting standard effective January 1, 2018.
2017 vs. 2016
- Increase was primarily due to higher Allstate Protection premiums earned, a tax benefit from the Tax Legislation, pension and other postretirement remeasurement gains compared to losses in 2016, 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.
|
Total Revenue
|
||||
($ in billions)
|
Total revenue
increased 1.0% in 2018 compared to 2017, driven by a 5.3% increase in insurance premiums and contract charges, which were partially offset by net realized capital losses in 2018 compared to net realized capital gains in 2017 and lower net investment income. Insurance premiums increased in the following segments: Allstate Protection (Allstate brand and Esurance), Service Businesses (SquareTrade and Allstate Dealer Services), Allstate Benefits and Allstate Life.
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.
|
Net Investment Income
|
||||
($ in billions)
|
Net investment income
decreased 4.7% in 2018 compared to 2017, primarily due to strong performance-based investment results in 2017, partially offset by higher market-based portfolio income as interest rates increased during 2018.
2017 vs. 2016
- Increase reflected strong 2017 performance-based results, primarily from limited partnerships, an increase in invested assets and stable market-based yields, partially offset by higher employee-related expenses.
|
|
Consolidated net income
|
||||||||||||
($ in millions)
|
|
2018
|
|
2017
|
|
2016
|
||||||
Revenues
|
|
|
|
|
|
|
||||||
Property and casualty insurance premiums
|
|
$
|
34,048
|
|
|
$
|
32,300
|
|
|
$
|
31,307
|
|
Life premiums and contract charges
|
|
2,465
|
|
|
2,378
|
|
|
2,275
|
|
|||
Other revenue
|
|
939
|
|
|
883
|
|
|
865
|
|
|||
Net investment income
(1)
|
|
3,240
|
|
|
3,401
|
|
|
3,042
|
|
|||
Realized capital gains and losses:
|
|
|
|
|
|
|
||||||
Total other-than-temporary impairment (“OTTI”) losses
|
|
(13
|
)
|
|
(146
|
)
|
|
(313
|
)
|
|||
OTTI losses reclassified (from) to other comprehensive income
|
|
(1
|
)
|
|
(4
|
)
|
|
10
|
|
|||
Net OTTI losses recognized in earnings
|
|
(14
|
)
|
|
(150
|
)
|
|
(303
|
)
|
|||
Sales and valuation changes on equity investments and derivatives
|
|
(863
|
)
|
|
595
|
|
|
213
|
|
|||
Total realized capital gains and losses
(1)
|
|
(877
|
)
|
|
445
|
|
|
(90
|
)
|
|||
Total revenues
|
|
39,815
|
|
|
39,407
|
|
|
37,399
|
|
|||
|
|
|
|
|
|
|
||||||
Costs and expenses
|
|
|
|
|
|
|
||||||
Property and casualty insurance claims and claims expense
|
|
(22,778
|
)
|
|
(21,847
|
)
|
|
(22,160
|
)
|
|||
Life contract benefits
|
|
(1,973
|
)
|
|
(1,923
|
)
|
|
(1,857
|
)
|
|||
Interest credited to contractholder funds
|
|
(654
|
)
|
|
(690
|
)
|
|
(726
|
)
|
|||
Amortization of deferred policy acquisition costs
|
|
(5,222
|
)
|
|
(4,784
|
)
|
|
(4,550
|
)
|
|||
Operating costs and expenses
|
|
(5,594
|
)
|
|
(5,196
|
)
|
|
(4,846
|
)
|
|||
Pension and other postretirement remeasurement gains and losses
|
|
(468
|
)
|
|
217
|
|
|
(270
|
)
|
|||
Amortization of purchased intangible assets
|
|
(105
|
)
|
|
(99
|
)
|
|
(32
|
)
|
|||
Restructuring and related charges
|
|
(67
|
)
|
|
(96
|
)
|
|
(18
|
)
|
|||
Goodwill impairment
|
|
—
|
|
|
(125
|
)
|
|
—
|
|
|||
Interest expense
|
|
(332
|
)
|
|
(335
|
)
|
|
(295
|
)
|
|||
Total costs and expenses
|
|
(37,193
|
)
|
|
(34,878
|
)
|
|
(34,754
|
)
|
|||
|
|
|
|
|
|
|
||||||
Gain on disposition of operations
|
|
6
|
|
|
20
|
|
|
5
|
|
|||
Income tax expense
(2)
|
|
(468
|
)
|
|
(995
|
)
|
|
(842
|
)
|
|||
Net income
|
|
2,160
|
|
|
3,554
|
|
|
1,808
|
|
|||
|
|
|
|
|
|
|
||||||
Preferred stock dividends
|
|
(148
|
)
|
|
(116
|
)
|
|
(116
|
)
|
|||
Net income applicable to common shareholders
|
|
$
|
2,012
|
|
|
$
|
3,438
|
|
|
$
|
1,692
|
|
(1)
|
Due to the adoption of the recognition and measurement accounting standard, limited partnerships previously reported using the cost method are now reported at fair value with changes in fair value recognized in net investment income and equity securities are reported at fair value with changes in fair value recognized in valuation changes on equity investments in realized capital gains and losses. See the Investments section of this Item and Note 2 of the consolidated financial statements for further details.
|
(2)
|
Beginning January 1, 2018, the Tax Legislation reduced the U.S. corporate income tax rate from 35% to 21%. 2018 and 2017 results include a Tax Legislation benefit of $29 million and $509 million, respectively. 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.
|
•
|
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, less other revenue to premiums earned.
|
•
|
Combined ratio
: the ratio of claims and claims expense, amortization of DAC, operating costs and expenses, and restructuring and related charges, less other revenue 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)
|
|
2018
|
|
2017
|
|
2016
|
||||||
Premiums written
|
|
$
|
33,555
|
|
|
$
|
31,648
|
|
|
$
|
30,891
|
|
|
|
|
|
|
|
|
||||||
Revenues
|
|
|
|
|
|
|
||||||
Premiums earned
|
|
$
|
32,950
|
|
|
$
|
31,433
|
|
|
$
|
30,727
|
|
Other revenue
|
|
738
|
|
|
703
|
|
|
688
|
|
|||
Net investment income
|
|
1,464
|
|
|
1,478
|
|
|
1,253
|
|
|||
Realized capital gains and losses
|
|
(639
|
)
|
|
401
|
|
|
(6
|
)
|
|||
Total revenues
|
|
34,513
|
|
|
34,015
|
|
|
32,662
|
|
|||
|
|
|
|
|
|
|
||||||
Costs and expenses
|
|
|
|
|
|
|
||||||
Claims and claims expense
|
|
(22,435
|
)
|
|
(21,484
|
)
|
|
(21,907
|
)
|
|||
Amortization of DAC
|
|
(4,475
|
)
|
|
(4,205
|
)
|
|
(4,053
|
)
|
|||
Operating costs and expenses
|
|
(4,465
|
)
|
|
(4,164
|
)
|
|
(4,068
|
)
|
|||
Restructuring and related charges
|
|
(60
|
)
|
|
(78
|
)
|
|
(17
|
)
|
|||
Total costs and expenses
|
|
(31,435
|
)
|
|
(29,931
|
)
|
|
(30,045
|
)
|
|||
|
|
|
|
|
|
|
||||||
Gain on disposition of operations
(1)
|
|
—
|
|
|
14
|
|
|
—
|
|
|||
Income tax expense
|
|
(613
|
)
|
|
(1,285
|
)
|
|
(859
|
)
|
|||
Net income applicable to common shareholders
|
|
$
|
2,465
|
|
|
$
|
2,813
|
|
|
$
|
1,758
|
|
|
|
|
|
|
|
|
||||||
Underwriting income
|
|
$
|
2,253
|
|
|
$
|
2,205
|
|
|
$
|
1,370
|
|
Net investment income
|
|
1,464
|
|
|
1,478
|
|
|
1,253
|
|
|||
Income tax expense on operations
|
|
(747
|
)
|
|
(1,187
|
)
|
|
(865
|
)
|
|||
Realized capital gains and losses, after-tax
|
|
(500
|
)
|
|
272
|
|
|
—
|
|
|||
Gain on disposition of operations, after-tax
|
|
—
|
|
|
9
|
|
|
—
|
|
|||
Tax Legislation (expense) benefit
|
|
(5
|
)
|
|
36
|
|
|
—
|
|
|||
Net income applicable to common shareholders
|
|
$
|
2,465
|
|
|
$
|
2,813
|
|
|
$
|
1,758
|
|
|
|
|
|
|
|
|
||||||
Catastrophe losses
(2)
|
|
$
|
2,855
|
|
|
$
|
3,228
|
|
|
$
|
2,571
|
|
|
|
|
|
|
|
|
||||||
GAAP operating ratios
|
|
|
|
|
|
|
||||||
Claims and claims expense ratio
|
|
68.1
|
|
|
68.4
|
|
|
71.3
|
|
|||
Expense ratio
(3)
|
|
25.1
|
|
|
24.6
|
|
|
24.2
|
|
|||
Combined ratio
|
|
93.2
|
|
|
93.0
|
|
|
95.5
|
|
|||
Effect of catastrophe losses on combined ratio
|
|
8.7
|
|
|
10.3
|
|
|
8.4
|
|
|||
Effect of prior year reserve reestimates on combined ratio
(4)
|
|
(0.7
|
)
|
|
(1.6
|
)
|
|
(0.2
|
)
|
|||
Effect of catastrophe losses included in prior year reserve reestimates on combined ratio
|
|
0.1
|
|
|
(0.1
|
)
|
|
—
|
|
|||
Effect of amortization of purchased intangible assets on combined ratio
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|||
Effect of restructuring and related charges on combined ratio
|
|
0.2
|
|
|
0.2
|
|
|
0.1
|
|
|||
Effect of Discontinued Lines and Coverages on combined ratio
|
|
0.3
|
|
|
0.3
|
|
|
0.3
|
|
(1)
|
2017 results represented the conclusion of a contractual arrangement related to the sale of Sterling Collision Centers, Inc. in 2014.
|
(2)
|
Prior year reserve reestimates included in catastrophe losses totaled
$25 million
unfavorable,
$18 million
favorable and
$6 million
unfavorable in
2018
,
2017
and
2016
, respectively.
|
(3)
|
Other revenue is deducted from operating costs and expenses in the expense ratio calculation.
|
(4)
|
Prior year favorable reserve reestimates totaled
$253 million
,
$505 million
and
$21 million
in
2018
,
2017
and
2016
, respectively.
|
Net investment income
|
||||||||||||
|
|
For the years ended December 31,
|
||||||||||
($ in millions)
|
|
2018
|
|
2017
|
|
2016
|
||||||
Fixed income securities
|
|
$
|
943
|
|
|
$
|
909
|
|
|
$
|
870
|
|
Equity securities
|
|
121
|
|
|
122
|
|
|
95
|
|
|||
Mortgage loans
|
|
17
|
|
|
12
|
|
|
11
|
|
|||
Limited partnership interests
(1)
|
|
378
|
|
|
432
|
|
|
269
|
|
|||
Short-term investments
|
|
40
|
|
|
17
|
|
|
9
|
|
|||
Other
|
|
123
|
|
|
100
|
|
|
89
|
|
|||
Investment income, before expense
|
|
1,622
|
|
|
1,592
|
|
|
1,343
|
|
|||
Investment expense
(2) (3)
|
|
(158
|
)
|
|
(114
|
)
|
|
(90
|
)
|
|||
Net investment income
|
|
$
|
1,464
|
|
|
$
|
1,478
|
|
|
$
|
1,253
|
|
(1)
|
Due to the adoption of the recognition and measurement accounting standard,
limited partnerships previously reported using the cost method are now reported at fair value
with changes in fair value recognized in net investment income
.
|
(2)
|
Investment expense includes $45 million, $22 million and $19 million of investee level expenses in
2018
,
2017
and
2016
, respectively, and has increased compared to prior year primarily due to growth in real estate investments. Investee level expenses include depreciation and asset level operating expenses on directly held real estate and other consolidated investments.
|
(3)
|
Investment expense includes $18 million, $4 million and zero related to the portion of reinvestment income on securities lending collateral paid to the counterparties in 2018, 2017 and 2016, respectively.
|
(1)
|
Due to the adoption of the recognition and measurement accounting standard, equity securities are reported at fair value with changes in fair value recognized in valuation of equity investments and are no longer included in impairment write-downs, change in intent write-downs and sales.
|
(2)
|
2018 results include $447 million of declines in the valuation of equity investments and $75 million of declines in value primarily related to certain limited partnerships where the underlying assets are predominately public equity securities.
|
Underwriting results
|
||||||||||||
|
|
For the years ended December 31,
|
||||||||||
($ in millions)
|
|
2018
|
|
2017
|
|
2016
|
||||||
Premiums written
|
|
$
|
33,555
|
|
|
$
|
31,648
|
|
|
$
|
30,888
|
|
Premiums earned
|
|
$
|
32,950
|
|
|
$
|
31,433
|
|
|
$
|
30,727
|
|
Other revenue
|
|
738
|
|
|
703
|
|
|
688
|
|
|||
Claims and claims expense
|
|
(22,348
|
)
|
|
(21,388
|
)
|
|
(21,802
|
)
|
|||
Amortization of DAC
|
|
(4,475
|
)
|
|
(4,205
|
)
|
|
(4,053
|
)
|
|||
Other costs and expenses
|
|
(4,462
|
)
|
|
(4,161
|
)
|
|
(4,066
|
)
|
|||
Restructuring and related charges
|
|
(60
|
)
|
|
(78
|
)
|
|
(17
|
)
|
|||
Underwriting income
|
|
$
|
2,343
|
|
|
$
|
2,304
|
|
|
$
|
1,477
|
|
Catastrophe losses
|
|
$
|
2,855
|
|
|
$
|
3,228
|
|
|
$
|
2,571
|
|
|
|
|
|
|
|
|
||||||
Underwriting income (loss) by line of business
|
|
|
|
|
|
|
||||||
Auto
|
|
$
|
1,791
|
|
|
$
|
1,437
|
|
|
$
|
262
|
|
Homeowners
|
|
483
|
|
|
689
|
|
|
1,100
|
|
|||
Other personal lines
(1)
|
|
110
|
|
|
141
|
|
|
175
|
|
|||
Commercial lines
|
|
(83
|
)
|
|
(13
|
)
|
|
(106
|
)
|
|||
Other business lines
(2)
|
|
49
|
|
|
51
|
|
|
53
|
|
|||
Answer Financial
|
|
(7
|
)
|
|
(1
|
)
|
|
(7
|
)
|
|||
Underwriting income
|
|
$
|
2,343
|
|
|
$
|
2,304
|
|
|
$
|
1,477
|
|
(1)
|
Other personal lines include renters, condominium, landlord and other personal lines products.
|
(2)
|
Other business lines represent 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.
|
(1)
|
The
2018
column presents changes in
2018
compared to
2017
. The
2017
column presents changes in
2017
compared to
2016
.
|
(2)
|
Includes other business lines underwriting income of
$49 million
and
$51 million
in
2018
and
2017
, respectively, and Answer Financial underwriting loss of
$7 million
and
$1 million
in
2018
and
2017
, respectively.
|
Premiums written and earned by line of business
|
||||||||||||
|
|
For the years ended December 31,
|
||||||||||
($ in millions)
|
|
2018
|
|
2017
|
|
2016
|
||||||
Premiums written
|
|
|
|
|
|
|
||||||
Auto
|
|
$
|
23,367
|
|
|
$
|
22,042
|
|
|
$
|
21,425
|
|
Homeowners
|
|
7,698
|
|
|
7,350
|
|
|
7,240
|
|
|||
Other personal lines
|
|
1,831
|
|
|
1,768
|
|
|
1,724
|
|
|||
Subtotal – Personal lines
|
|
32,896
|
|
|
31,160
|
|
|
30,389
|
|
|||
Commercial lines
|
|
659
|
|
|
488
|
|
|
499
|
|
|||
Total premiums written
|
|
$
|
33,555
|
|
|
$
|
31,648
|
|
|
$
|
30,888
|
|
Reconciliation of premiums written to premiums earned:
|
|
|
|
|
|
|
||||||
Increase in unearned premiums
|
|
(544
|
)
|
|
(258
|
)
|
|
(181
|
)
|
|||
Other
|
|
(61
|
)
|
|
43
|
|
|
20
|
|
|||
Total premiums earned
|
|
$
|
32,950
|
|
|
$
|
31,433
|
|
|
$
|
30,727
|
|
|
|
|
|
|
|
|
||||||
Auto
|
|
$
|
22,970
|
|
|
$
|
21,878
|
|
|
$
|
21,264
|
|
Homeowners
|
|
7,517
|
|
|
7,310
|
|
|
7,257
|
|
|||
Other personal lines
|
|
1,808
|
|
|
1,750
|
|
|
1,700
|
|
|||
Subtotal – Personal lines
|
|
32,295
|
|
|
30,938
|
|
|
30,221
|
|
|||
Commercial lines
|
|
655
|
|
|
495
|
|
|
506
|
|
|||
Total premiums earned
|
|
$
|
32,950
|
|
|
$
|
31,433
|
|
|
$
|
30,727
|
|
(1)
|
Other revenue is deducted from operating costs and expenses in the expense ratio calculation.
|
•
|
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 (“North Light”), 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 began writing a limited number of homeowners policies in select areas of Florida and continue to support 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.
|
•
|
Auto physical damage coverage generally includes coverage for flood-related loss. We have additional catastrophe exposure, beyond the property lines, for auto customers who have purchased physical
|
•
|
We offer a homeowners policy available in 42 states and the District of Columbia (“D.C.”), Allstate House and Home
®
, that provides options of coverage for roof damage, including graduated coverage and pricing based on roof type and age.
|
(1)
|
O
ther revenue is deducted from other costs and expenses in the expense ratio calculation.
|
Premiums written, policies in force and underwriting income (loss)
|
||||||||||||||||||||||||||||
($ in millions)
|
|
Allstate brand
|
|
Esurance brand
|
|
Encompass brand
|
|
Allstate Protection
|
||||||||||||||||||||
Premiums written
|
|
Amount
|
|
Percent to total brand
|
|
Amount
|
|
Percent to total brand
|
|
Amount
|
|
Percent to total brand
|
|
Amount
|
|
Percent to total
|
||||||||||||
Auto
|
|
$
|
20,991
|
|
|
68.6
|
%
|
|
$
|
1,839
|
|
|
94.4
|
%
|
|
$
|
537
|
|
|
52.8
|
%
|
|
$
|
23,367
|
|
|
69.6
|
%
|
Homeowners
|
|
7,199
|
|
|
23.5
|
|
|
101
|
|
|
5.2
|
|
|
398
|
|
|
39.2
|
|
|
7,698
|
|
|
22.9
|
|
||||
Other personal lines
|
|
1,742
|
|
|
5.7
|
|
|
8
|
|
|
0.4
|
|
|
81
|
|
|
8.0
|
|
|
1,831
|
|
|
5.5
|
|
||||
Commercial lines
|
|
659
|
|
|
2.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
659
|
|
|
2.0
|
|
||||
Total
|
|
$
|
30,591
|
|
|
100.0
|
%
|
|
$
|
1,948
|
|
|
100.0
|
%
|
|
$
|
1,016
|
|
|
100.0
|
%
|
|
$
|
33,555
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Percent to total Allstate Protection
|
|
|
|
91.2
|
%
|
|
|
|
5.8
|
%
|
|
|
|
3.0
|
%
|
|
|
|
100.0
|
%
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
PIF (thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Auto
|
|
20,104
|
|
|
65.2
|
%
|
|
1,488
|
|
|
91.4
|
%
|
|
502
|
|
|
61.3
|
%
|
|
22,094
|
|
|
66.4
|
%
|
||||
Homeowners
|
|
6,186
|
|
|
20.1
|
|
|
95
|
|
|
5.8
|
|
|
239
|
|
|
29.2
|
|
|
6,520
|
|
|
19.6
|
|
||||
Other personal lines
|
|
4,295
|
|
|
13.9
|
|
|
46
|
|
|
2.8
|
|
|
78
|
|
|
9.5
|
|
|
4,419
|
|
|
13.3
|
|
||||
Commercial lines
|
|
231
|
|
|
0.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
231
|
|
|
0.7
|
|
||||
Total
|
|
30,816
|
|
|
100.0
|
%
|
|
1,629
|
|
|
100.0
|
%
|
|
819
|
|
|
100.0
|
%
|
|
33,264
|
|
|
100.0
|
%
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Percent to total Allstate Protection
|
|
|
|
92.6
|
%
|
|
|
|
4.9
|
%
|
|
|
|
2.5
|
%
|
|
|
|
100.0
|
%
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Underwriting income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Auto
|
|
$
|
1,788
|
|
|
75.9
|
%
|
|
$
|
(11
|
)
|
|
44.0
|
%
|
|
$
|
14
|
|
|
77.8
|
%
|
|
$
|
1,791
|
|
|
76.4
|
%
|
Homeowners
|
|
496
|
|
|
21.0
|
|
|
(14
|
)
|
|
56.0
|
|
|
1
|
|
|
5.5
|
|
|
483
|
|
|
20.6
|
|
||||
Other personal lines
|
|
107
|
|
|
4.5
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
16.7
|
|
|
110
|
|
|
4.7
|
|
||||
Commercial lines
|
|
(83
|
)
|
|
(3.5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(83
|
)
|
|
(3.5
|
)
|
||||
Other business lines
|
|
49
|
|
|
2.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
49
|
|
|
2.1
|
|
||||
Answer Financial
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
|
(0.3
|
)
|
||||
Total
|
|
$
|
2,357
|
|
|
100.0
|
%
|
|
$
|
(25
|
)
|
|
100.0
|
%
|
|
$
|
18
|
|
|
100.0
|
%
|
|
$
|
2,343
|
|
|
100.0
|
%
|
•
|
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.
Commercial lines PIF for the agreement with a transportation network company reflects corporate contracts as opposed to individual driver counts.
|
•
|
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 generally 12 months for auto and homeowners.
|
•
|
Renewal ratio
: Renewal policy item counts issued during the period, based on contract effective dates, divided by the total policy item counts 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)
|
|
2018
|
|
2017
|
|
2016
|
||||||
Premiums written
|
|
$
|
30,591
|
|
|
$
|
28,885
|
|
|
$
|
28,059
|
|
Premiums earned
|
|
$
|
30,058
|
|
|
$
|
28,631
|
|
|
$
|
27,865
|
|
Other revenue
|
|
582
|
|
|
559
|
|
|
545
|
|
|||
Claims and claims expense
|
|
(20,237
|
)
|
|
(19,273
|
)
|
|
(19,691
|
)
|
|||
Amortization of DAC
|
|
(4,242
|
)
|
|
(3,963
|
)
|
|
(3,791
|
)
|
|||
Other costs and expenses
|
|
(3,752
|
)
|
|
(3,497
|
)
|
|
(3,311
|
)
|
|||
Restructuring and related charges
|
|
(52
|
)
|
|
(70
|
)
|
|
(16
|
)
|
|||
Underwriting income
|
|
$
|
2,357
|
|
|
$
|
2,387
|
|
|
$
|
1,601
|
|
Catastrophe losses
|
|
$
|
2,701
|
|
|
$
|
2,985
|
|
|
$
|
2,424
|
|
|
|
|
|
|
|
|
||||||
Underwriting income (loss) by line of business
|
|
|
|
|
|
|
||||||
Auto
|
|
$
|
1,788
|
|
|
$
|
1,465
|
|
|
$
|
351
|
|
Homeowners
|
|
496
|
|
|
754
|
|
|
1,122
|
|
|||
Other personal lines
(1)
|
|
107
|
|
|
130
|
|
|
181
|
|
|||
Commercial lines
|
|
(83
|
)
|
|
(13
|
)
|
|
(106
|
)
|
|||
Other business lines
(2)
|
|
49
|
|
|
51
|
|
|
53
|
|
|||
Underwriting income
|
|
$
|
2,357
|
|
|
$
|
2,387
|
|
|
$
|
1,601
|
|
(1)
|
Other personal lines include renters, condominium, landlord and other personal lines products.
|
(2)
|
Other business lines represent Ivantage.
|
Auto premium measures and statistics
|
||||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
PIF (thousands)
|
|
20,104
|
|
|
19,580
|
|
|
19,742
|
|
|||
New issued applications (thousands)
|
|
2,933
|
|
|
2,520
|
|
|
2,312
|
|
|||
Average premium
|
|
$
|
570
|
|
|
$
|
550
|
|
|
$
|
523
|
|
Renewal ratio (%)
|
|
88.5
|
|
|
87.6
|
|
|
87.8
|
|
|||
Approved rate changes
(1)
:
|
|
|
|
|
|
|
||||||
# of locations
(2)
|
|
47
|
|
|
49
|
|
|
53
|
|
|||
Total brand (%)
(3)
|
|
1.1
|
|
|
4.0
|
|
(6)
|
7.2
|
|
|||
Location specific (%)
(4)(5)
|
|
2.9
|
|
|
6.0
|
|
(6)
|
8.1
|
|
(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, D.C. and 5 Canadian provinces.
|
(3)
|
Represents the impact in the states, D.C. 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, D.C. and Canadian provinces where rate changes were approved during the period as a percentage of their 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 $215 million, $773 million and $1.33 billion in
2018
,
2017
and
2016
, respectively.
|
(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.
|
•
|
2.7%
or
524 thousand
increase in PIF as of December 31, 2018 compared to December 31, 2017. The rate of PIF change compared to the prior year improved throughout
2018
. Auto PIF increased in 40 states, including 8 of our largest 10 states, as of
December 31, 2018
compared to
December 31, 2017
.
|
•
|
0.9
point increase in the renewal ratio in
2018
compared to
2017
. 48 states, including 9 of our largest 10 states, experienced increases in the renewal ratio in
2018
compared to
2017
.
|
•
|
16.4%
increase in new issued applications in
2018
compared to
2017
. 43 states, including 9 of our largest 10 states, experienced increases in new issued applications in
2018
compared to
2017
, with 34 states experiencing double digit increases.
|
•
|
3.6%
increase in average premium in
2018
compared to
2017
, primarily due to rate increases approved 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.
|
•
|
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.
|
(1)
|
Includes rate changes approved based on our net cost of reinsurance.
|
(2)
|
Allstate brand operates in 50 states, D.C., and 5 Canadian provinces.
|
(3)
|
Based on historical premiums written in the locations noted above, rate changes approved for homeowners totaled $189 million, $122 million and $75 million in
2018
,
2017
and
2016
, 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.
|
•
|
1.6%
or
98 thousand
increase in PIF as of
December 31, 2018
compared to
December 31, 2017
. Allstate brand homeowners PIF increased in 32 states, including 5 of our largest 10 states, as of
December 31, 2018
compared to
December 31, 2017
.
|
•
|
0.7
point increase in the renewal ratio in
2018
compared to
2017
. Of our largest 10 states, 9 experienced an increase in the renewal ratio in
2018
compared to
2017
.
|
•
|
12.7%
increase in new issued applications in
2018
compared to
2017
. Of our largest 10 states, 8 experienced increases in new issued applications in
2018
compared to
2017
.
|
•
|
2.8%
increase in average premium in
2018
compared to
2017
primarily due to rate increases and increasing insured home valuations due to inflation.
|
•
|
$19 million decrease in the cost of our catastrophe reinsurance program to $264 million in
2018
from $283 million in
2017
. Catastrophe placement premiums are recorded primarily in the Allstate brand and are a reduction of premium.
|
•
|
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
|
•
|
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 inflation.
|
•
|
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 $335 million in 2016.
|
(1)
|
Other revenue is deducted from operating costs and expenses in the expense ratio calculation.
|
•
Paid claim frequency
(1)
is calculated as annualized notice counts closed with payment in the period divided by the average of PIF with the applicable coverage during the period.
|
•
Gross claim frequency
(1)
is calculated as annualized notice counts received in the period divided by the average of PIF with the applicable coverage during the period. Gross claim frequency includes all actual notice counts, regardless of their current status (open or closed) or their ultimate disposition (closed with a payment or closed without payment).
|
•
Paid claim severity
is calculated by dividing the sum of paid losses and loss expenses by claims closed with a payment during the period.
|
•
Percent change in frequency or severity statistics
is calculated as the amount of increase or decrease in the paid or gross claim frequency or severity in the current period compared to the same period in the prior year divided by the prior year paid or gross claim frequency or severity.
|
(1)
|
Frequency statistics exclude counts associated with catastrophe events.
|
(1)
|
O
ther revenue is deducted from other costs and expenses in the expense ratio calculation.
|
(1)
|
O
ther revenue is deducted from other costs and expenses in the expense ratio calculation.
|
Underwriting results
|
||||||||||||
|
|
For the years ended December 31,
|
||||||||||
($ in millions)
|
|
2018
|
|
2017
|
|
2016
|
||||||
Premiums written
|
|
$
|
1,948
|
|
|
$
|
1,728
|
|
|
$
|
1,689
|
|
Premiums earned
|
|
$
|
1,869
|
|
|
$
|
1,712
|
|
|
$
|
1,660
|
|
Other revenue
|
|
80
|
|
|
67
|
|
|
62
|
|
|||
Claims and claims expense
|
|
(1,443
|
)
|
|
(1,329
|
)
|
|
(1,258
|
)
|
|||
Amortization of DAC
|
|
(43
|
)
|
|
(41
|
)
|
|
(41
|
)
|
|||
Other costs and expenses
|
|
(487
|
)
|
|
(462
|
)
|
|
(547
|
)
|
|||
Restructuring and related charges
|
|
(1
|
)
|
|
(3
|
)
|
|
—
|
|
|||
Underwriting loss
|
|
$
|
(25
|
)
|
|
$
|
(56
|
)
|
|
$
|
(124
|
)
|
Catastrophe losses
|
|
$
|
52
|
|
|
$
|
50
|
|
|
$
|
36
|
|
|
|
|
|
|
|
|
||||||
Underwriting income (loss) by line of business
|
|
|
|
|
|
|
||||||
Auto
|
|
$
|
(11
|
)
|
|
$
|
(37
|
)
|
|
$
|
(65
|
)
|
Homeowners
|
|
(14
|
)
|
|
(20
|
)
|
|
(59
|
)
|
|||
Other personal lines
|
|
—
|
|
|
1
|
|
|
—
|
|
|||
Underwriting loss
|
|
$
|
(25
|
)
|
|
$
|
(56
|
)
|
|
$
|
(124
|
)
|
Auto premium measures and statistics
|
||||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
PIF (thousands)
|
|
1,488
|
|
|
1,352
|
|
|
1,391
|
|
|||
New issued applications (thousands)
|
|
633
|
|
|
484
|
|
|
597
|
|
|||
Average premium
|
|
$
|
605
|
|
|
$
|
574
|
|
|
$
|
547
|
|
Renewal ratio (%)
|
|
83.3
|
|
|
81.5
|
|
|
79.4
|
|
|||
Approved rate changes
(1)
:
|
|
|
|
|
|
|
||||||
# of locations
(2)
|
|
30
|
|
|
39
|
|
|
33
|
|
|||
Total brand (%)
(3)
|
|
1.8
|
|
|
4.8
|
|
|
4.2
|
|
|||
Location specific (%)
(4) (5)
|
|
2.7
|
|
|
5.5
|
|
|
6.1
|
|
(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. In the second quarter of 2018, Esurance discontinued its operations in Canada.
|
(3)
|
Represents the impact in the states 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 where rate changes were approved during the period as a percentage of their 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 $28 million, $78 million and $65 million in
2018
,
2017
and
2016
, respectively.
|
•
|
10.1%
or
136 thousand
increase in PIF as of
December 31, 2018
compared to
December 31, 2017
.
|
•
|
1.8
point increase in the renewal ratio in
2018
compared to
2017
, primarily due to improved customer experience.
|
•
|
30.8%
increase in new issued applications in
2018
compared to
2017
, primarily due to improvements in the sales process as well as increases in quote volume driven in part by additional marketing spend.
|
•
|
5.4%
increase in average premium in
2018
compared to
2017
, primarily due to rate changes and changes in business mix.
|
•
|
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 primarily due to rate changes and changes in business mix.
|
•
|
2.1 point increase in the renewal ratio in 2017 compared to 2016, primarily due to improved customer experience.
|
(1)
|
Esurance’s renewal ratios exclude the impact of risk related cancellations. 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)
|
Includes rate changes approved based on our net cost of reinsurance.
|
(3)
|
Esurance brand operates in 31 states. In the second quarter of 2018, Esurance discontinued its operations in Canada.
|
(4)
|
Based on historical premiums written in the locations noted above, rate changes approved for homeowners totaled $2 million and $3 million in 2018 and 2017, respectively. Rate changes were only approved in Texas in 2016.
|
•
|
16 thousand
increase in PIF as of
December 31, 2018
compared to
December 31, 2017
.
|
•
|
2 thousand
decrease in new issued applications in
2018
compared to
2017
.
|
•
|
7.1%
increase in average premium in
2018
compared to
2017
, primarily due to increased premium distribution in higher average premium states and rate increases. As of
December 31, 2018
, Esurance continues to write homeowners insurance in 31 states with lower hurricane risk, contributing to lower average premium compared to the industry.
|
•
|
21 thousand increase in PIF as of December 31, 2017 compared to December 31, 2016.
|
•
|
3 thousand decrease in new issued applications in 2017 compared to 2016 due to reduced marketing activities.
|
•
|
4.8% increase in average premium in 2017 compared to 2016, primarily due to increased premium distribution in higher average premium states and rate changes. As of December 31, 2017, Esurance writes homeowners insurance in 31 states with lower hurricane risk, contributing to lower average premium compared to the industry.
|
(1)
|
Other revenue is deducted from operating costs and expenses in the expense ratio calculation.
|
(1)
|
Other revenue is deducted from other costs and expenses in the expense ratio calculation.
|
(1)
|
Other revenue is deducted from other costs and expenses in the expense ratio calculation.
|
Underwriting results
|
||||||||||||
|
|
For the years ended December 31,
|
||||||||||
($ in millions)
|
|
2018
|
|
2017
|
|
2016
|
||||||
Premiums written
|
|
$
|
1,016
|
|
|
$
|
1,035
|
|
|
$
|
1,140
|
|
Premiums earned
|
|
$
|
1,023
|
|
|
$
|
1,090
|
|
|
$
|
1,202
|
|
Other revenue
|
|
5
|
|
|
6
|
|
|
6
|
|
|||
Claims and claims expense
|
|
(668
|
)
|
|
(786
|
)
|
|
(853
|
)
|
|||
Amortization of DAC
|
|
(190
|
)
|
|
(201
|
)
|
|
(221
|
)
|
|||
Other costs and expenses
|
|
(145
|
)
|
|
(130
|
)
|
|
(126
|
)
|
|||
Restructuring and related charges
|
|
(7
|
)
|
|
(5
|
)
|
|
(1
|
)
|
|||
Underwriting income (loss)
|
|
$
|
18
|
|
|
$
|
(26
|
)
|
|
$
|
7
|
|
Catastrophe losses
|
|
$
|
102
|
|
|
$
|
193
|
|
|
$
|
111
|
|
|
|
|
|
|
|
|
||||||
Underwriting income (loss) by line of business
|
|
|
|
|
|
|
||||||
Auto
|
|
$
|
14
|
|
|
$
|
9
|
|
|
$
|
(24
|
)
|
Homeowners
|
|
1
|
|
|
(45
|
)
|
|
37
|
|
|||
Other personal lines
|
|
3
|
|
|
10
|
|
|
(6
|
)
|
|||
Underwriting income (loss)
|
|
$
|
18
|
|
|
$
|
(26
|
)
|
|
$
|
7
|
|
Auto premium measures and statistics
|
||||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
PIF (thousands)
|
|
502
|
|
|
530
|
|
|
622
|
|
|||
New issued applications (thousands)
|
|
76
|
|
|
52
|
|
|
54
|
|
|||
Average premium
|
|
$
|
1,118
|
|
|
$
|
1,079
|
|
|
$
|
1,008
|
|
Renewal ratio (%)
(1)
|
|
74.9
|
|
|
73.4
|
|
|
75.0
|
|
|||
Approved rate changes
(2)
:
|
|
|
|
|
|
|
||||||
# of locations
(3)
|
|
17
|
|
|
27
|
|
|
24
|
|
|||
Total brand (%)
(4)
|
|
2.4
|
|
|
6.2
|
|
|
10.5
|
|
|||
Location specific (%)
(5)(6)
|
|
4.8
|
|
|
7.8
|
|
|
14.3
|
|
(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 impacted the renewal ratio. Excluding Massachusetts and North Carolina, the renewal ratios were 76.5 points in 2018 compared to 74.5 points in 2017 and 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 40 states and D.C.
|
(4)
|
Represents the impact in the states and D.C. 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 D.C. where rate changes were approved during the period as a percentage of their 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 $13 million, $37 million and $68 million in
2018
,
2017
and
2016
, respectively.
|
•
|
5.3%
or
28 thousand
decrease in PIF as of
December 31, 2018
compared to
December 31, 2017
.
|
•
|
1.5
point increase in the renewal ratio in
2018
compared to
2017
, as profit improvement actions have moderated. Encompass sells a high percentage of package policies that include both auto and homeowners; therefore, declines in one product can contribute to declines in the other.
|
•
|
46.2%
or
24 thousand
increase in new issued applications in
2018
compared to
2017
.
|
•
|
3.6%
increase in average premium in
2018
compared to
2017
, primarily due to rate changes. Encompass brand policy terms are generally 12 months for auto.
|
•
|
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, primarily due to rate changes.
|
•
|
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.
|
(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 80.8 points in 2018 compared to 79.0 points in 2017 and 79.9 points in 2016.
|
(2)
|
Includes rate changes approved based on our net cost of reinsurance.
|
(3)
|
Encompass brand operates in 40 states and D.C.
|
(4)
|
Based on historical premiums written in the locations noted above, rate changes approved for homeowner totaled $20 million, $23 million and $27 million in
2018
,
2017
and
2016
, respectively.
|
•
|
5.9%
or
15 thousand
decrease in PIF as of
December 31, 2018
compared to
December 31, 2017
.
|
•
|
1.5
point increase in the renewal ratio in
2018
compared to
2017
, as profit improvement actions have moderated. Encompass sells a high percentage of package policies that include both auto and homeowners; therefore, declines in one product can contribute to declines in the other.
|
•
|
23.3%
or
7 thousand
increase in new issued applications in
2018
compared to
2017
.
|
•
|
2.4%
increase in average premium in
2018
compared to
2017
, primarily due to rate changes.
|
•
|
13.9% or 41 thousand decrease in PIF as of December 31, 2017 compared to December 31, 2016.
|
•
|
11.8% decrease in new issued applications in 2017 compared to 2016.
|
•
|
2.7% increase in average premium in 2017 compared to 2016, primarily due to rate changes.
|
•
|
1.3 point decrease in the renewal ratio in 2017 compared to 2016, primarily due to profit improvement actions taken to exit states with inadequate returns.
|
(1)
|
Other revenue is deducted from operating costs and expenses in the expense ratio calculation.
|
(1)
|
Other revenue is deducted from other costs and expenses in the expense ratio calculation.
|
(1)
|
Other revenue is deducted from other costs and expenses in the expense ratio calculation.
|
Underwriting Results
|
||||||||||||
|
|
For the years ended December 31,
|
||||||||||
($ in millions)
|
|
2018
|
|
2017
|
|
2016
|
||||||
Premiums written
(1)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3
|
|
|
|
|
|
|
|
|
||||||
Premiums earned
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Claims and claims expense
|
|
(87
|
)
|
|
(96
|
)
|
|
(105
|
)
|
|||
Operating costs and expenses
|
|
(3
|
)
|
|
(3
|
)
|
|
(2
|
)
|
|||
Underwriting loss
|
|
$
|
(90
|
)
|
|
$
|
(99
|
)
|
|
$
|
(107
|
)
|
(1)
|
Primarily represents retrospective reinsurance premium recognized when billed.
|
Summarized financial information
|
||||||||||||
|
|
For the years ended December 31,
|
||||||||||
($ in millions)
|
|
2018
|
|
2017
|
|
2016
|
||||||
Premiums written
|
|
$
|
1,431
|
|
|
$
|
1,094
|
|
|
$
|
709
|
|
|
|
|
|
|
|
|
||||||
Revenues
|
|
|
|
|
|
|
||||||
Premiums
|
|
$
|
1,098
|
|
|
$
|
867
|
|
|
$
|
580
|
|
Intersegment insurance premiums and service fees
(1)
|
|
122
|
|
|
110
|
|
|
105
|
|
|||
Other revenue
|
|
82
|
|
|
66
|
|
|
64
|
|
|||
Net investment income
|
|
27
|
|
|
16
|
|
|
13
|
|
|||
Realized capital gains and losses
|
|
(11
|
)
|
|
—
|
|
|
—
|
|
|||
Total revenues
|
|
1,318
|
|
|
1,059
|
|
|
762
|
|
|||
|
|
|
|
|
|
|
||||||
Costs and expenses
|
|
|
|
|
|
|
||||||
Claims and claims expense
|
|
(350
|
)
|
|
(369
|
)
|
|
(258
|
)
|
|||
Amortization of DAC
|
|
(463
|
)
|
|
(296
|
)
|
|
(214
|
)
|
|||
Operating costs and expenses
|
|
(505
|
)
|
|
(460
|
)
|
|
(283
|
)
|
|||
Amortization of purchased intangible assets
|
|
(94
|
)
|
|
(92
|
)
|
|
—
|
|
|||
Restructuring and related charges
(2)
|
|
(4
|
)
|
|
(13
|
)
|
|
—
|
|
|||
Total costs and expenses
|
|
(1,416
|
)
|
|
(1,230
|
)
|
|
(755
|
)
|
|||
|
|
|
|
|
|
|
||||||
Income tax benefit (expense)
|
|
19
|
|
|
194
|
|
|
(2
|
)
|
|||
Net (loss) income applicable to common shareholders
|
|
$
|
(79
|
)
|
|
$
|
23
|
|
|
$
|
5
|
|
|
|
|
|
|
|
|
||||||
Adjusted net income (loss)
|
|
$
|
8
|
|
|
$
|
(54
|
)
|
|
$
|
5
|
|
Realized capital gains and losses, after-tax
|
|
(9
|
)
|
|
—
|
|
|
—
|
|
|||
Amortization of purchased intangible assets, after-tax
|
|
(74
|
)
|
|
(60
|
)
|
|
—
|
|
|||
Tax Legislation (expense) benefit
|
|
(4
|
)
|
|
137
|
|
|
—
|
|
|||
Net (loss) income applicable to common shareholders
|
|
$
|
(79
|
)
|
|
$
|
23
|
|
|
$
|
5
|
|
|
|
|
|
|
|
|
||||||
SquareTrade
(3)
|
|
$
|
23
|
|
|
$
|
(22
|
)
|
|
$
|
—
|
|
Arity
|
|
(11
|
)
|
|
(14
|
)
|
|
10
|
|
|||
InfoArmor
(3)
|
|
1
|
|
|
—
|
|
|
—
|
|
|||
Allstate Roadside Services
|
|
(20
|
)
|
|
(17
|
)
|
|
(10
|
)
|
|||
Allstate Dealer Services
|
|
15
|
|
|
(1
|
)
|
|
5
|
|
|||
Adjusted net income (loss)
|
|
$
|
8
|
|
|
$
|
(54
|
)
|
|
$
|
5
|
|
|
|
|
|
|
|
|
||||||
SquareTrade
(3)
|
|
68,588
|
|
|
38,719
|
|
|
—
|
|
|||
InfoArmor
(3)
|
|
1,040
|
|
|
—
|
|
|
—
|
|
|||
Allstate Roadside Services
|
|
663
|
|
|
699
|
|
|
768
|
|
|||
Allstate Dealer Services
|
|
3,896
|
|
|
4,088
|
|
|
4,142
|
|
|||
Policies in force as of December 31 (in thousands)
|
|
74,187
|
|
|
43,506
|
|
|
4,910
|
|
(1)
|
Primarily related to Arity and Allstate Roadside Services and are eliminated in our consolidated financial statements.
|
(2)
|
2018 related to organizational changes at Allstate Roadside Services and 2017 related to a one-time contract termination of a SquareTrade European vendor.
|
(3)
|
SquareTrade was acquired on January 3, 2017 and InfoArmor was acquired on October 5, 2018.
|
Net reserves
|
||||||||||||
|
|
January 1 reserves
|
||||||||||
($ in millions)
|
|
2018
|
|
2017
|
|
2016
|
||||||
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
|
|
(1)
|
Impact of reserve reestimates on Allstate brand underwriting income were
14.1%
,
24.5%
and
6.9%
in
2018
,
2017
and
2016
, respectively.
|
(2)
|
Impact of reserve reestimates on Esurance brand underwriting loss were
(12.0)%
,
3.6%
and
16.9%
in
2018
,
2017
and
2016
, respectively.
|
(3)
|
Impact of reserve reestimates on Encompass brand underwriting income (loss) were
61.1%
and
53.8%
in
2018
and
2017
, respectively. Impact on results in 2016 were not meaningful.
|
(4)
|
Favorable reserve reestimates are shown in parentheses.
|
(5)
|
Ratios are calculated using property and casualty premiums earned.
|
(6)
|
Prior year reserve reestimates included in catastrophe losses totaled
$25 million
unfavorable,
$18 million
favorable and
$6 million
unfavorable in
2018
,
2017
and
2016
, respectively.
|
2018 prior year reserve reestimates
|
||||||||||||||||||||||||
($ in millions)
|
|
2013 & prior
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
Total
|
||||||||||||
Allstate brand
|
|
$
|
(61
|
)
|
|
$
|
(50
|
)
|
|
$
|
(25
|
)
|
|
$
|
(146
|
)
|
|
$
|
(50
|
)
|
|
$
|
(332
|
)
|
Esurance brand
|
|
(5
|
)
|
|
(6
|
)
|
|
9
|
|
|
13
|
|
|
(8
|
)
|
|
3
|
|
||||||
Encompass brand
|
|
(12
|
)
|
|
(11
|
)
|
|
(15
|
)
|
|
1
|
|
|
26
|
|
|
(11
|
)
|
||||||
Total Allstate Protection
|
|
(78
|
)
|
|
(67
|
)
|
|
(31
|
)
|
|
(132
|
)
|
|
(32
|
)
|
|
(340
|
)
|
||||||
Discontinued Lines and Coverages
|
|
87
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
87
|
|
||||||
Total Property-Liability
|
|
9
|
|
|
(67
|
)
|
|
(31
|
)
|
|
(132
|
)
|
|
(32
|
)
|
|
(253
|
)
|
||||||
Service Businesses
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
(2
|
)
|
||||||
Total
|
|
$
|
9
|
|
|
$
|
(67
|
)
|
|
$
|
(31
|
)
|
|
$
|
(132
|
)
|
|
$
|
(34
|
)
|
|
$
|
(255
|
)
|
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
|
)
|
Net reserves by line
|
||||||||||||
|
|
January 1 reserves
|
||||||||||
($ in millions)
|
|
2018
|
|
2017
|
|
2016
|
||||||
Auto
|
|
$
|
14,051
|
|
|
$
|
13,530
|
|
|
$
|
12,459
|
|
Homeowners
|
|
2,205
|
|
|
1,990
|
|
|
1,937
|
|
|||
Other personal lines
|
|
1,489
|
|
|
1,456
|
|
|
1,490
|
|
|||
Commercial lines
|
|
616
|
|
|
621
|
|
|
554
|
|
|||
Total Allstate Protection
|
|
$
|
18,361
|
|
|
$
|
17,597
|
|
|
$
|
16,440
|
|
•
|
Active policyholders increased by 2 in 2018, including 13 policyholders reporting asbestos claims for the first time and the closing of all claims for 11 policyholders.
|
•
|
Active policyholders decreased by 4 in 2017, including 10 policyholders reporting asbestos claims for the first time and the closing of all claims for 14 policyholders.
|
•
|
Active policyholders increased by 2 in 2016, including 17 policyholders reporting asbestos claims for the first time and the closing of all claims for 15 policyholders.
|
Reinsurance and indemnification recoverable balances net of the allowance established for uncollectible amounts
|
||||||||||
|
|
S&P financial strength rating
(1)
|
|
Reinsurance or indemnification
recoverable on paid and unpaid claims, net
|
||||||
($ in millions)
|
|
|
2018
|
|
2017
|
|||||
Indemnification programs
|
|
|
|
|
|
|
||||
State-based industry pool or facility programs
|
|
|
|
|
|
|
||||
MCCA
(2)
|
|
N/A
|
|
$
|
5,400
|
|
|
$
|
5,261
|
|
New Jersey Property-Liability Insurance Guaranty Association (“PLIGA”)
|
|
N/A
|
|
461
|
|
|
493
|
|
||
North Carolina Reinsurance Facility
|
|
N/A
|
|
86
|
|
|
86
|
|
||
Florida Hurricane Catastrophe Fund (“FHCF”)
|
|
N/A
|
|
104
|
|
|
19
|
|
||
Other
|
|
|
|
9
|
|
|
6
|
|
||
Federal Government
-
NFIP
|
|
N/A
|
|
31
|
|
|
88
|
|
||
Subtotal
|
|
|
|
6,091
|
|
|
5,953
|
|
||
|
|
|
|
|
|
|
||||
Catastrophe reinsurance recoverables
|
|
|
|
|
|
|
||||
Renaissance Reinsurance Limited
|
|
A+
|
|
65
|
|
|
1
|
|
||
Swiss Reinsurance America Corporation
|
|
AA-
|
|
39
|
|
|
—
|
|
||
Arch Reinsurance Limited
|
|
A+
|
|
37
|
|
|
—
|
|
||
Other
|
|
|
|
412
|
|
|
10
|
|
||
Subtotal
|
|
|
|
553
|
|
|
11
|
|
||
|
|
|
|
|
|
|
||||
Other reinsurance recoverables
(3)
|
|
|
|
|
|
|
||||
Lloyd’s of London (“Lloyd’s”)
(4)
|
|
A+
|
|
165
|
|
|
167
|
|
||
Westport Insurance Corporation
|
|
AA-
|
|
60
|
|
|
61
|
|
||
TIG Insurance Company
|
|
N/A
|
|
35
|
|
|
31
|
|
||
Other, including allowance for future uncollectible recoverables
|
|
|
|
344
|
|
|
326
|
|
||
Subtotal
|
|
|
|
604
|
|
|
585
|
|
||
Total Property-Liability
|
|
|
|
7,248
|
|
|
6,549
|
|
||
Service Businesses
|
|
|
|
18
|
|
|
18
|
|
||
Total
|
|
|
|
$
|
7,266
|
|
|
$
|
6,567
|
|
(1)
|
N/A reflects no S&P Global Ratings (“S&P”) rating available.
|
(2)
|
As of December 31, 2018 and 2017, MCCA includes $30 million and $27 million of reinsurance recoverable on paid claims, respectively, and $5.37 billion and $5.23 billion of reinsurance recoverable on unpaid claims, respectively.
|
(3)
|
Other reinsurance recoverables primarily relate to asbestos, environmental and other liability exposures.
|
(4)
|
As of December 31, 2018, case reserves for Lloyd’s were 69% of the reinsurance recoverable for unpaid claims.
|
(1)
|
Paid claims and claims expenses reported in the table for the current and prior years, recovered from the MCCA totaled $98 million, $97 million and $101 million in
2018
,
2017
and
2016
, respectively.
|
(2)
|
Gross reserves for the year ended December 31, 2018, comprise 88% case reserves and 12% IBNR. Gross reserves for the year ended December 31, 2017, comprise 87% case reserves and 13% IBNR. Gross reserves for the year ended December 31, 2016 comprise 85% case reserves and 15% IBNR.
The MCCA does not require member companies to report ultimate case reserves
.
|
(1)
|
Total claims includes those covered and not covered by the MCCA indemnification.
|
Summarized financial information
|
||||||||||||
|
|
For the years ended December 31,
|
||||||||||
($ in millions)
|
|
2018
|
|
2017
|
|
2016
|
||||||
Revenues
|
|
|
|
|
|
|
||||||
Premiums and contract charges
|
|
$
|
1,315
|
|
|
$
|
1,280
|
|
|
$
|
1,250
|
|
Other revenue
|
|
119
|
|
|
114
|
|
|
113
|
|
|||
Net investment income
|
|
505
|
|
|
489
|
|
|
482
|
|
|||
Realized capital gains and losses
|
|
(14
|
)
|
|
5
|
|
|
(38
|
)
|
|||
Total revenues
|
|
1,925
|
|
|
1,888
|
|
|
1,807
|
|
|||
|
|
|
|
|
|
|
||||||
Costs and expenses
|
|
|
|
|
|
|
||||||
Contract benefits
|
|
(809
|
)
|
|
(765
|
)
|
|
(742
|
)
|
|||
Interest credited to contractholder funds
|
|
(285
|
)
|
|
(282
|
)
|
|
(285
|
)
|
|||
Amortization of DAC
|
|
(132
|
)
|
|
(134
|
)
|
|
(131
|
)
|
|||
Operating costs and expenses
|
|
(361
|
)
|
|
(342
|
)
|
|
(331
|
)
|
|||
Restructuring and related charges
|
|
(3
|
)
|
|
(2
|
)
|
|
(1
|
)
|
|||
Total costs and expenses
|
|
(1,590
|
)
|
|
(1,525
|
)
|
|
(1,490
|
)
|
|||
|
|
|
|
|
|
|
||||||
Income tax (expense) benefit
|
|
(75
|
)
|
|
226
|
|
|
(94
|
)
|
|||
Net income applicable to common shareholders
|
|
$
|
260
|
|
|
$
|
589
|
|
|
$
|
223
|
|
|
|
|
|
|
|
|
||||||
Adjusted net income
|
|
$
|
295
|
|
|
$
|
259
|
|
|
$
|
251
|
|
Realized capital gains and losses, after-tax
|
|
(11
|
)
|
|
2
|
|
|
(24
|
)
|
|||
DAC and DSI amortization related to realized capital gains and losses, after-tax
|
|
(8
|
)
|
|
(10
|
)
|
|
(4
|
)
|
|||
Tax Legislation (expense) benefit
|
|
(16
|
)
|
|
338
|
|
|
—
|
|
|||
Net income applicable to common shareholders
|
|
$
|
260
|
|
|
$
|
589
|
|
|
$
|
223
|
|
|
|
|
|
|
|
|
||||||
Reserve for life-contingent contract benefits as of December 31
|
|
$
|
2,677
|
|
|
$
|
2,636
|
|
|
$
|
2,578
|
|
|
|
|
|
|
|
|
||||||
Contractholder funds as of December 31
|
|
$
|
7,656
|
|
|
$
|
7,608
|
|
|
$
|
7,464
|
|
|
|
|
|
|
|
|
||||||
Policies in force as of December 31 by distribution channel (in thousands)
|
|
|
|
|
|
|
||||||
Allstate agencies
|
|
1,831
|
|
|
1,822
|
|
|
1,804
|
|
|||
Closed channels
|
|
191
|
|
|
204
|
|
|
219
|
|
|||
Total
|
|
2,022
|
|
|
2,026
|
|
|
2,023
|
|
Premiums and contract charges by product
|
||||||||||||
|
|
For the years ended December 31,
|
||||||||||
($ in millions)
|
|
2018
|
|
2017
|
|
2016
|
||||||
Traditional life insurance premiums
|
|
$
|
600
|
|
|
$
|
568
|
|
|
$
|
533
|
|
Accident and health insurance premiums
|
|
2
|
|
|
2
|
|
|
2
|
|
|||
Interest-sensitive life insurance contract charges
|
|
713
|
|
|
710
|
|
|
715
|
|
|||
Premiums and contract charges
(1)
|
|
$
|
1,315
|
|
|
$
|
1,280
|
|
|
$
|
1,250
|
|
(1)
|
Contract charges related to the cost of insurance totaled
$493 million
,
$487 million
and
$488 million
in
2018
,
2017
and
2016
, respectively.
|
Components of amortization of DAC
|
||||||||||||
|
|
For the years ended December 31,
|
||||||||||
($ in millions)
|
|
2018
|
|
2017
|
|
2016
|
||||||
Amortization of DAC before amortization relating to realized capital gains and losses and changes in assumptions
|
|
$
|
117
|
|
|
$
|
134
|
|
|
$
|
131
|
|
Amortization relating to realized capital gains and losses
(1)
|
|
10
|
|
|
14
|
|
|
6
|
|
|||
Amortization acceleration (deceleration) for changes in assumptions (‘‘DAC unlocking’’)
|
|
5
|
|
|
(14
|
)
|
|
(6
|
)
|
|||
Total amortization of DAC
|
|
$
|
132
|
|
|
$
|
134
|
|
|
$
|
131
|
|
(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,
|
||||||||||||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||||||
Balance, beginning of year
|
|
$
|
465
|
|
|
$
|
438
|
|
|
$
|
687
|
|
|
$
|
762
|
|
|
$
|
1,152
|
|
|
$
|
1,200
|
|
Acquisition costs deferred
|
|
65
|
|
|
66
|
|
|
65
|
|
|
66
|
|
|
130
|
|
|
132
|
|
||||||
Amortization of DAC before amortization relating to realized capital gains and losses and changes in assumptions
(1)
|
|
(41
|
)
|
|
(39
|
)
|
|
(76
|
)
|
|
(95
|
)
|
|
(117
|
)
|
|
(134
|
)
|
||||||
Amortization relating to realized capital gains and losses
(1)
|
|
—
|
|
|
—
|
|
|
(10
|
)
|
|
(14
|
)
|
|
(10
|
)
|
|
(14
|
)
|
||||||
Amortization (acceleration) deceleration for changes in assumptions (“DAC unlocking”)
(1)
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
14
|
|
|
(5
|
)
|
|
14
|
|
||||||
Effect of unrealized capital gains and losses
(2)
|
|
—
|
|
|
—
|
|
|
150
|
|
|
(46
|
)
|
|
150
|
|
|
(46
|
)
|
||||||
Ending balance
|
|
$
|
489
|
|
|
$
|
465
|
|
|
$
|
811
|
|
|
$
|
687
|
|
|
$
|
1,300
|
|
|
$
|
1,152
|
|
(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.
|
Reserve for life-contingent contract benefits
|
||||||||||||
|
|
For the years ended December 31,
|
||||||||||
($ in millions)
|
|
2018
|
|
2017
|
|
2016
|
||||||
Traditional life insurance
|
|
$
|
2,539
|
|
|
$
|
2,460
|
|
|
$
|
2,398
|
|
Accident and health insurance
|
|
138
|
|
|
176
|
|
|
180
|
|
|||
Reserve for life-contingent contract benefits
|
|
$
|
2,677
|
|
|
$
|
2,636
|
|
|
$
|
2,578
|
|
Change in contractholder funds
|
||||||||||||
|
|
For the years ended December 31,
|
||||||||||
($ in millions)
|
|
2018
|
|
2017
|
|
2016
|
||||||
Contractholder funds, beginning balance
|
|
$
|
7,608
|
|
|
$
|
7,464
|
|
|
$
|
7,359
|
|
|
|
|
|
|
|
|
||||||
Deposits
|
|
965
|
|
|
973
|
|
|
991
|
|
|||
|
|
|
|
|
|
|
||||||
Interest credited
|
|
284
|
|
|
282
|
|
|
284
|
|
|||
|
|
|
|
|
|
|
||||||
Benefits, withdrawals and other adjustments
|
|
|
|
|
|
|
||||||
Benefits
|
|
(232
|
)
|
|
(241
|
)
|
|
(245
|
)
|
|||
Surrenders and partial withdrawals
|
|
(259
|
)
|
|
(254
|
)
|
|
(250
|
)
|
|||
Contract charges
|
|
(704
|
)
|
|
(704
|
)
|
|
(705
|
)
|
|||
Net transfers from separate accounts
|
|
6
|
|
|
4
|
|
|
4
|
|
|||
Other adjustments
(1)
|
|
(12
|
)
|
|
84
|
|
|
26
|
|
|||
Total benefits, withdrawals and other adjustments
|
|
(1,201
|
)
|
|
(1,111
|
)
|
|
(1,170
|
)
|
|||
Contractholder funds, ending balance
|
|
$
|
7,656
|
|
|
$
|
7,608
|
|
|
$
|
7,464
|
|
(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)
|
Scottish Re (U.S.), Inc. was last rated by S&P in 2009 and A.M. Best removed their rating in 2011. Scottish Re (U.S.), Inc. remains current on claims payments to Allstate.
|
(3)
|
As of December 31,
2018
and
2017
, the other category includes $9 million and $19 million, respectively, of recoverables due from reinsurers rated A- or better by S&P.
|
Summarized financial information
|
||||||||||||
|
|
For the years ended December 31,
|
||||||||||
($ in millions)
|
|
2018
|
|
2017
|
|
2016
|
||||||
Revenues
|
|
|
|
|
|
|
||||||
Premiums and contract charges
|
|
$
|
1,135
|
|
|
$
|
1,084
|
|
|
$
|
1,011
|
|
Net investment income
|
|
77
|
|
|
72
|
|
|
71
|
|
|||
Realized capital gains and losses
|
|
(9
|
)
|
|
1
|
|
|
(5
|
)
|
|||
Total revenues
|
|
1,203
|
|
|
1,157
|
|
|
1,077
|
|
|||
|
|
|
|
|
|
|
||||||
Costs and expenses
|
|
|
|
|
|
|
||||||
Contract benefits
|
|
(595
|
)
|
|
(564
|
)
|
|
(509
|
)
|
|||
Interest credited to contractholder funds
|
|
(35
|
)
|
|
(35
|
)
|
|
(36
|
)
|
|||
Amortization of DAC
|
|
(145
|
)
|
|
(142
|
)
|
|
(145
|
)
|
|||
Operating costs and expenses
|
|
(278
|
)
|
|
(258
|
)
|
|
(236
|
)
|
|||
Restructuring and related charges
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|||
Total costs and expenses
|
|
(1,053
|
)
|
|
(1,002
|
)
|
|
(926
|
)
|
|||
|
|
|
|
|
|
|
||||||
Income tax expense
|
|
(32
|
)
|
|
(1
|
)
|
|
(52
|
)
|
|||
Net income applicable to common shareholders
|
|
$
|
118
|
|
|
$
|
154
|
|
|
$
|
99
|
|
|
|
|
|
|
|
|
||||||
Adjusted net income
|
|
$
|
124
|
|
|
$
|
100
|
|
|
$
|
103
|
|
Realized capital gains and losses, after-tax
|
|
(7
|
)
|
|
—
|
|
|
(4
|
)
|
|||
DAC and DSI amortization related to realized capital gains and losses, after-tax
|
|
1
|
|
|
—
|
|
|
—
|
|
|||
Tax Legislation benefit
|
|
—
|
|
|
54
|
|
|
—
|
|
|||
Net income applicable to common shareholders
|
|
$
|
118
|
|
|
$
|
154
|
|
|
$
|
99
|
|
|
|
|
|
|
|
|
||||||
Benefit ratio
(1)
|
|
52.4
|
|
|
52.0
|
|
|
50.3
|
|
|||
|
|
|
|
|
|
|
||||||
Operating expense ratio
(2)
|
|
24.5
|
|
|
23.8
|
|
|
23.3
|
|
|||
|
|
|
|
|
|
|
||||||
Reserve for life-contingent contract benefits as of December 31
|
|
$
|
1,007
|
|
|
$
|
979
|
|
|
$
|
940
|
|
|
|
|
|
|
|
|
||||||
Contractholder funds as of December 31
|
|
$
|
898
|
|
|
$
|
890
|
|
|
$
|
881
|
|
|
|
|
|
|
|
|
||||||
Policies in force as of December 31 by product type (in thousands)
|
|
4,208
|
|
|
4,033
|
|
|
3,755
|
|
(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
|
||||||
($ in millions)
|
|
2018
|
|
2017
|
||||
Balance, beginning of year
|
|
$
|
542
|
|
|
$
|
526
|
|
Acquisition costs deferred
|
|
150
|
|
|
158
|
|
||
Amortization of DAC before amortization relating to changes in assumptions
(1)
|
|
(150
|
)
|
|
(141
|
)
|
||
Amortization relating to realized capital gains and losses
(1)
|
|
1
|
|
|
—
|
|
||
Amortization deceleration (acceleration) for changes in assumptions (“DAC unlocking”)
(1)
|
|
4
|
|
|
(1
|
)
|
||
Effect of unrealized capital gains and losses
(2)
|
|
2
|
|
|
—
|
|
||
Ending balance
|
|
$
|
549
|
|
|
$
|
542
|
|
(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)
|
|
2018
|
|
2017
|
|
2016
|
||||||
Non-deferrable commissions
|
|
$
|
109
|
|
|
$
|
98
|
|
|
$
|
91
|
|
General and administrative expenses
|
|
169
|
|
|
160
|
|
|
145
|
|
|||
Total operating costs and expenses
|
|
$
|
278
|
|
|
$
|
258
|
|
|
$
|
236
|
|
Reserve for life-contingent contract benefits
|
||||||||||||
|
|
For the years ended December 31,
|
||||||||||
($ in millions)
|
|
2018
|
|
2017
|
|
2016
|
||||||
Traditional life insurance
|
|
$
|
269
|
|
|
$
|
262
|
|
|
$
|
247
|
|
Accident and health insurance
|
|
738
|
|
|
717
|
|
|
693
|
|
|||
Reserve for life-contingent contract benefits
|
|
$
|
1,007
|
|
|
$
|
979
|
|
|
$
|
940
|
|
(1)
|
As of both
December 31, 2018
and
2017
, the other category includes $4 million of recoverables due from reinsurers rated A- or better by S&P.
|
Summarized financial information
|
||||||||||||
|
|
For the years ended December 31,
|
||||||||||
($ in millions)
|
|
2018
|
|
2017
|
|
2016
|
||||||
Revenues
|
|
|
|
|
|
|
||||||
Contract charges
|
|
$
|
15
|
|
|
$
|
14
|
|
|
$
|
14
|
|
Net investment income
|
|
1,096
|
|
|
1,305
|
|
|
1,181
|
|
|||
Realized capital gains and losses
|
|
(166
|
)
|
|
44
|
|
|
(38
|
)
|
|||
Total revenues
|
|
945
|
|
|
1,363
|
|
|
1,157
|
|
|||
|
|
|
|
|
|
|
||||||
Costs and expenses
|
|
|
|
|
|
|
||||||
Contract benefits
|
|
(569
|
)
|
|
(594
|
)
|
|
(606
|
)
|
|||
Interest credited to contractholder funds
|
|
(334
|
)
|
|
(373
|
)
|
|
(405
|
)
|
|||
Amortization of DAC
|
|
(7
|
)
|
|
(7
|
)
|
|
(7
|
)
|
|||
Operating costs and expenses
|
|
(31
|
)
|
|
(34
|
)
|
|
(31
|
)
|
|||
Total costs and expenses
|
|
(941
|
)
|
|
(1,008
|
)
|
|
(1,049
|
)
|
|||
|
|
|
|
|
|
|
||||||
Gain on disposition of operations
|
|
6
|
|
|
6
|
|
|
5
|
|
|||
Income tax benefit (expense)
|
|
66
|
|
|
58
|
|
|
(36
|
)
|
|||
Net income applicable to common shareholders
|
|
$
|
76
|
|
|
$
|
419
|
|
|
$
|
77
|
|
|
|
|
|
|
|
|
||||||
Adjusted net income
|
|
$
|
131
|
|
|
$
|
205
|
|
|
$
|
102
|
|
Realized capital gains and losses, after-tax
|
|
(131
|
)
|
|
28
|
|
|
(26
|
)
|
|||
Valuation changes on embedded derivatives not hedged, after-tax
|
|
3
|
|
|
—
|
|
|
(2
|
)
|
|||
Gain on disposition of operations, after-tax
|
|
4
|
|
|
4
|
|
|
3
|
|
|||
Tax Legislation benefit
|
|
69
|
|
|
182
|
|
|
—
|
|
|||
Net income applicable to common shareholders
|
|
$
|
76
|
|
|
$
|
419
|
|
|
$
|
77
|
|
|
|
|
|
|
|
|
||||||
Reserve for life-contingent contract benefits as of December 31
|
|
$
|
8,524
|
|
|
$
|
8,934
|
|
|
$
|
8,721
|
|
|
|
|
|
|
|
|
||||||
Contractholder funds as of December 31
|
|
$
|
9,817
|
|
|
$
|
10,936
|
|
|
$
|
11,915
|
|
|
|
|
|
|
|
|
||||||
Policies in force as of December 31 (in thousands)
|
|
|
|
|
|
|
||||||
Deferred annuities
|
|
127
|
|
|
142
|
|
|
156
|
|
|||
Immediate annuities
|
|
84
|
|
|
89
|
|
|
95
|
|
|||
Total
|
|
211
|
|
|
231
|
|
|
251
|
|
Investment spread
|
||||||||||||
|
|
For the years ended December 31,
|
||||||||||
($ in millions)
|
|
2018
|
|
2017
|
|
2016
|
||||||
Investment spread before valuation changes on embedded derivatives not hedged
|
|
$
|
267
|
|
|
$
|
432
|
|
|
$
|
268
|
|
Valuation changes on derivatives embedded in equity-indexed annuity contracts that are not hedged
|
|
3
|
|
|
(1
|
)
|
|
(3
|
)
|
|||
Total investment spread
|
|
$
|
270
|
|
|
$
|
431
|
|
|
$
|
265
|
|
Analysis of investment spread
|
|||||||||||||||||||||||||||
|
|
Weighted average
investment yield
|
|
Weighted average
interest crediting rate
|
|
Weighted average
investment spreads
|
|||||||||||||||||||||
|
|
2018
|
|
2017
|
|
2016
|
|
2018
|
|
2017
|
|
2016
|
|
2018
|
|
2017
|
|
2016
|
|||||||||
Deferred fixed annuities
|
|
4.1
|
%
|
|
4.2
|
%
|
|
4.1
|
%
|
|
2.8
|
%
|
|
2.8
|
%
|
|
2.8
|
%
|
|
1.3
|
%
|
|
1.4
|
%
|
|
1.3
|
%
|
Immediate fixed annuities with and without life contingencies
|
|
6.4
|
|
|
8.0
|
|
|
6.5
|
|
|
6.0
|
|
|
6.0
|
|
|
5.9
|
|
|
0.4
|
|
|
2.0
|
|
|
0.6
|
|
(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)
|
|
2018
|
|
2017
|
|
2016
|
||||||
Immediate fixed annuities with life contingencies
|
|
|
|
|
|
|
||||||
Sub-standard structured settlements and group pension terminations
(1)
|
|
$
|
4,990
|
|
|
$
|
5,284
|
|
|
$
|
5,029
|
|
Standard structured settlements and SPIA
(2)
|
|
3,425
|
|
|
3,565
|
|
|
3,592
|
|
|||
Other
|
|
109
|
|
|
85
|
|
|
100
|
|
|||
Reserve for life-contingent contract benefits
|
|
$
|
8,524
|
|
|
$
|
8,934
|
|
|
$
|
8,721
|
|
|
|
|
|
|
|
|
||||||
Deferred fixed annuities
|
|
$
|
7,156
|
|
|
$
|
8,128
|
|
|
$
|
8,921
|
|
Immediate fixed annuities without life contingencies
|
|
2,525
|
|
|
2,700
|
|
|
2,874
|
|
|||
Other
|
|
136
|
|
|
108
|
|
|
120
|
|
|||
Contractholder funds
|
|
$
|
9,817
|
|
|
$
|
10,936
|
|
|
$
|
11,915
|
|
(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.
|
(2)
|
Comprises structured settlement annuities for annuitants with standard life expectancy (“standard structured settlements”) and single premium immediate annuities (“SPIA”) with life contingencies.
|
Changes in contractholder funds
|
||||||||||||
|
|
For the years ended December 31,
|
||||||||||
($ in millions)
|
|
2018
|
|
2017
|
|
2016
|
||||||
Contractholder funds, beginning balance
|
|
$
|
10,936
|
|
|
$
|
11,915
|
|
|
$
|
13,070
|
|
|
|
|
|
|
|
|
||||||
Deposits
|
|
15
|
|
|
28
|
|
|
42
|
|
|||
|
|
|
|
|
|
|
||||||
Interest credited
|
|
331
|
|
|
370
|
|
|
403
|
|
|||
|
|
|
|
|
|
|
||||||
Benefits, withdrawals, maturities and other adjustments
|
|
|
|
|
|
|
||||||
Benefits
|
|
(587
|
)
|
|
(638
|
)
|
|
(705
|
)
|
|||
Surrenders and partial withdrawals
|
|
(854
|
)
|
|
(723
|
)
|
|
(780
|
)
|
|||
Maturities of and interest payments on institutional products
|
|
—
|
|
|
—
|
|
|
(86
|
)
|
|||
Contract charges
|
|
(9
|
)
|
|
(9
|
)
|
|
(9
|
)
|
|||
Net transfers from separate accounts
|
|
—
|
|
|
1
|
|
|
1
|
|
|||
Other adjustments
(1)
|
|
(15
|
)
|
|
(8
|
)
|
|
(21
|
)
|
|||
Total benefits, withdrawals, maturities and other adjustments
|
|
(1,465
|
)
|
|
(1,377
|
)
|
|
(1,600
|
)
|
|||
Contractholder funds, ending balance
|
|
$
|
9,817
|
|
|
$
|
10,936
|
|
|
$
|
11,915
|
|
(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.
|
•
|
Enhance investment portfolio returns through use of a dynamic capital allocation framework and focus on 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
$32.44 billion
,
$984 million
,
$7.36 billion
,
$1.24 billion
,
$14.00 billion
,
$1.11 billion
and
$57.13 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. The fair value of equity securities held as of
December 31, 2018
, was
$547 million
in excess of cost. These net
gains
were primarily concentrated in the consumer goods, technology and banking sectors. Beginning January 1, 2018, the periodic changes in fair value are reflected in realized capital gains and losses.
|
(4)
|
Short-term investments are carried at fair value.
|
Fixed income securities by type
|
||||||||
|
|
Fair value as of December 31,
|
||||||
($ in millions)
|
|
2018
|
|
2017
|
||||
U.S. government and agencies
|
|
$
|
5,517
|
|
|
$
|
3,616
|
|
Municipal
|
|
9,169
|
|
|
8,328
|
|
||
Corporate
|
|
40,136
|
|
|
44,026
|
|
||
Foreign government
|
|
747
|
|
|
1,021
|
|
||
Asset-backed securities (“ABS”)
|
|
1,045
|
|
|
1,272
|
|
||
Residential mortgage-backed securities (“RMBS”)
|
|
464
|
|
|
578
|
|
||
Commercial mortgage-backed securities (“CMBS”)
|
|
70
|
|
|
128
|
|
||
Redeemable preferred stock
|
|
22
|
|
|
23
|
|
||
Total fixed income securities
|
|
$
|
57,170
|
|
|
$
|
58,992
|
|
Fair value and unrealized net capital gains (losses) for fixed income securities by credit quality
|
||||||||||||||||||||||||
|
|
As of December 31, 2018
|
||||||||||||||||||||||
|
|
Investment grade
|
|
Below investment grade
|
|
Total
|
||||||||||||||||||
($ in millions)
|
|
Fair
value
|
|
Unrealized gain/(loss)
|
|
Fair
value
|
|
Unrealized gain/(loss)
|
|
Fair
value
|
|
Unrealized gain/(loss)
|
||||||||||||
U.S. government and agencies
|
|
$
|
5,517
|
|
|
$
|
131
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,517
|
|
|
$
|
131
|
|
Municipal
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Tax exempt
|
|
6,969
|
|
|
6
|
|
|
31
|
|
|
—
|
|
|
7,000
|
|
|
6
|
|
||||||
Taxable
|
|
2,133
|
|
|
201
|
|
|
36
|
|
|
(1
|
)
|
|
2,169
|
|
|
200
|
|
||||||
Corporate
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Public
|
|
26,435
|
|
|
(160
|
)
|
|
2,835
|
|
|
(136
|
)
|
|
29,270
|
|
|
(296
|
)
|
||||||
Privately placed
|
|
8,966
|
|
|
(10
|
)
|
|
1,900
|
|
|
(94
|
)
|
|
10,866
|
|
|
(104
|
)
|
||||||
Foreign government
|
|
738
|
|
|
8
|
|
|
9
|
|
|
—
|
|
|
747
|
|
|
8
|
|
||||||
ABS
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Collateralized debt obligations (“CDO”)
|
|
246
|
|
|
(3
|
)
|
|
23
|
|
|
—
|
|
|
269
|
|
|
(3
|
)
|
||||||
Consumer and other asset-backed securities (“Consumer and other ABS”)
|
|
765
|
|
|
—
|
|
|
11
|
|
|
(1
|
)
|
|
776
|
|
|
(1
|
)
|
||||||
RMBS
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. government sponsored entities (“U.S. Agency”)
|
|
81
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
81
|
|
|
1
|
|
||||||
Non-agency
|
|
35
|
|
|
1
|
|
|
348
|
|
|
85
|
|
|
383
|
|
|
86
|
|
||||||
CMBS
|
|
30
|
|
|
—
|
|
|
40
|
|
|
7
|
|
|
70
|
|
|
7
|
|
||||||
Redeemable preferred stock
|
|
22
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
22
|
|
|
1
|
|
||||||
Total fixed income securities
|
|
$
|
51,937
|
|
|
$
|
176
|
|
|
$
|
5,233
|
|
|
$
|
(140
|
)
|
|
$
|
57,170
|
|
|
$
|
36
|
|
(1)
|
Due to the adoption of the recognition and measurement accounting standard, limited partnerships previously reported using the cost method are now reported at fair value
. See Note 2 of the consolidated financial statements.
|
(2)
|
We have commitments to invest in additional limited partnership interests totaling $3.03 billion.
|
Unrealized net capital gains (losses)
|
||||||||
|
|
As of December 31,
|
||||||
($ in millions)
|
|
2018
|
|
2017
|
||||
U.S. government and agencies
|
|
$
|
131
|
|
|
$
|
36
|
|
Municipal
|
|
206
|
|
|
275
|
|
||
Corporate
|
|
(400
|
)
|
|
1,030
|
|
||
Foreign government
|
|
8
|
|
|
16
|
|
||
ABS
|
|
(4
|
)
|
|
6
|
|
||
RMBS
|
|
87
|
|
|
98
|
|
||
CMBS
|
|
7
|
|
|
4
|
|
||
Redeemable preferred stock
|
|
1
|
|
|
2
|
|
||
Fixed income securities
|
|
36
|
|
|
1,467
|
|
||
Equity securities
(1)
|
|
—
|
|
|
1,160
|
|
||
Derivatives
|
|
(3)
|
|
(1
|
)
|
|||
Equity method of accounting (“
EMA”) limited partnerships
|
|
—
|
|
|
1
|
|
||
Unrealized net capital gains and losses, pre-tax
|
|
$
|
33
|
|
|
$
|
2,627
|
|
(1)
|
Due to the adoption of the recognition and measurement accounting standard, equity securities are reported at fair value w
ith changes in fair value recognized in realized capital gains and losses and are no longer included in the table above. Upon adoption of the new guidance on January 1, 2018, $1.16 billion of pre-tax unrealized net capital gains for equity securities were reclassified from accumulated other comprehensive income (“AOCI”) to retained income. See Note 2 of the consolidated financial statements.
|
Net investment income
|
||||||||||||
|
|
For the years ended December 31,
|
||||||||||
($ in millions)
|
|
2018
|
|
2017
|
|
2016
|
||||||
Fixed income securities
|
|
$
|
2,077
|
|
|
$
|
2,078
|
|
|
$
|
2,060
|
|
Equity securities
|
|
170
|
|
|
174
|
|
|
137
|
|
|||
Mortgage loans
|
|
217
|
|
|
206
|
|
|
217
|
|
|||
Limited partnership interests
(1)
|
|
705
|
|
|
889
|
|
|
561
|
|
|||
Short-term investments
|
|
73
|
|
|
30
|
|
|
16
|
|
|||
Other
|
|
272
|
|
|
236
|
|
|
222
|
|
|||
Investment income, before expense
|
|
3,514
|
|
|
3,613
|
|
|
3,213
|
|
|||
Investment expense
(2) (3)
|
|
(274
|
)
|
|
(212
|
)
|
|
(171
|
)
|
|||
Net investment income
|
|
$
|
3,240
|
|
|
$
|
3,401
|
|
|
$
|
3,042
|
|
|
|
|
|
|
|
|
|
|
|
|||
Market-based core
|
|
$
|
2,431
|
|
|
$
|
2,360
|
|
|
$
|
2,340
|
|
Market-based active
|
|
303
|
|
|
301
|
|
|
262
|
|
|||
Performance-based
|
|
780
|
|
|
952
|
|
|
611
|
|
|||
Investment income, before expense
|
|
$
|
3,514
|
|
|
$
|
3,613
|
|
|
$
|
3,213
|
|
(1)
|
Due to the adoption of the recognition and measurement accounting standard, limited partnerships previously reported using the cost method are now reported at fair value with changes in fair value recognized in net investment income.
|
(2)
|
Investment expense includes $71 million, $40 million and $36 million of investee level expenses in
2018
,
2017
and
2016
, respectively, and has increased compared to prior year primarily due to growth in real estate investments. Investee level expenses include depreciation and asset level operating expenses on directly held real estate and other consolidated investments.
|
(3)
|
Investment expense includes $28 million, $10 million and $1 million related to the portion of reinvestment income on securities lending collateral paid to the counterparties in
2018
,
2017
and
2016
, respectively.
|
Performance-based investment income
|
||||||||||||
|
|
For the years ended December 31,
|
||||||||||
($ in millions)
|
|
2018
|
|
2017
|
|
2016
|
||||||
Limited partnerships
|
|
|
|
|
|
|
||||||
Private equity
|
|
$
|
582
|
|
|
$
|
725
|
|
|
$
|
455
|
|
Real estate
|
|
123
|
|
|
164
|
|
|
106
|
|
|||
Performance-based - limited partnerships
|
|
705
|
|
|
889
|
|
|
561
|
|
|||
|
|
|
|
|
|
|
||||||
Non-limited partnerships
|
|
|
|
|
|
|
||||||
Private equity
|
|
9
|
|
|
19
|
|
|
9
|
|
|||
Real estate
|
|
66
|
|
|
44
|
|
|
41
|
|
|||
Performance-based - non-limited partnerships
|
|
75
|
|
|
63
|
|
|
50
|
|
|||
|
|
|
|
|
|
|
||||||
Total
|
|
|
|
|
|
|
||||||
Private equity
|
|
591
|
|
|
744
|
|
|
464
|
|
|||
Real estate
|
|
189
|
|
|
208
|
|
|
147
|
|
|||
Total performance-based
|
|
$
|
780
|
|
|
$
|
952
|
|
|
$
|
611
|
|
|
|
|
|
|
|
|
||||||
Investee level expenses
(1)
|
|
$
|
(64
|
)
|
|
$
|
(35
|
)
|
|
$
|
(32
|
)
|
(1)
|
Investee level expenses include depreciation and asset level operating expenses reported in investment expense.
|
(1)
|
Due to the adoption of the recognition and measurement accounting standard, equity securities are reported at fair value with changes in fair value recognized in valuation of equity investments and are no longer included in impairment write-downs, change in intent write-downs and sales.
|
Realized capital gains (losses) for performance-based investments
|
||||||||||||
|
|
For the years ended December 31,
|
||||||||||
($ in millions)
|
|
2018
|
|
2017
|
|
2016
|
||||||
Impairment write-downs
|
|
$
|
(3
|
)
|
|
$
|
(32
|
)
|
|
$
|
(90
|
)
|
Change in intent write-downs
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|||
Net OTTI losses recognized in earnings
|
|
(3
|
)
|
|
(32
|
)
|
|
(91
|
)
|
|||
Sales
|
|
7
|
|
|
15
|
|
|
9
|
|
|||
Valuation of equity investments
|
|
36
|
|
|
—
|
|
|
—
|
|
|||
Valuation and settlements of derivative instruments
|
|
29
|
|
|
(24
|
)
|
|
11
|
|
|||
Total performance-based
|
|
$
|
69
|
|
|
$
|
(41
|
)
|
|
$
|
(71
|
)
|
•
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
|
Capital resources
|
|
|
|
|
|
|
||||||
|
|
As of December 31,
|
||||||||||
($ in millions)
|
|
2018
|
|
2017
|
|
2016
|
||||||
Preferred stock, common stock, treasury stock, retained income and other shareholders’ equity items
|
|
$
|
21,194
|
|
|
$
|
20,662
|
|
|
$
|
19,320
|
|
Accumulated other comprehensive (loss) income
|
|
118
|
|
|
1,889
|
|
|
1,249
|
|
|||
Total shareholders’ equity
|
|
21,312
|
|
|
22,551
|
|
|
20,569
|
|
|||
Debt
|
|
6,451
|
|
|
6,350
|
|
|
6,347
|
|
|||
Total capital resources
|
|
$
|
27,763
|
|
|
$
|
28,901
|
|
|
$
|
26,916
|
|
Ratio of debt to shareholders’ equity
|
|
30.3
|
%
|
|
28.2
|
%
|
|
30.9
|
%
|
|||
Ratio of debt to capital resources
|
|
23.2
|
%
|
|
22.0
|
%
|
|
23.6
|
%
|
Intercompany dividends
|
||||||||||||
($ in millions)
|
|
2018
|
|
2017
|
|
2016
|
||||||
AIC to AIH
|
|
$
|
2,874
|
|
|
$
|
1,555
|
|
|
$
|
1,905
|
|
AIH to the Corporation
|
|
2,897
|
|
|
1,613
|
|
|
1,865
|
|
|||
ALIC to AIC
|
|
250
|
|
|
600
|
|
|
—
|
|
|||
AHL to AFIHC
|
|
55
|
|
|
70
|
|
|
55
|
|
•
|
The Corporation has access to a commercial paper facility with a borrowing limit of $1.00 billion to cover short-term cash needs. As of December 31,
2018
, 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 $500
|
•
|
The Corporation has access to a universal shelf registration statement with the Securities and
|
Contractholder funds by contractual withdrawal provisions
|
|
|
|
|
|||
($ in millions)
|
|
December 31, 2018
|
|
Percent to total
|
|||
Not subject to discretionary withdrawal
|
|
$
|
2,848
|
|
|
15.5
|
%
|
Subject to discretionary withdrawal with adjustments:
|
|
|
|
|
|||
Specified surrender charges
(1)
|
|
4,753
|
|
|
25.9
|
|
|
Market value adjustments
(2)
|
|
996
|
|
|
5.4
|
|
|
Subject to discretionary withdrawal without adjustments
(3)
|
|
9,774
|
|
|
53.2
|
|
|
Total contractholder funds
(4)
|
|
$
|
18,371
|
|
|
100.0
|
%
|
(1)
|
Includes $870 million of liabilities with a contractual surrender charge of less than 5% of the account balance.
|
(2)
|
$512 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. $225 million of these contracts have their 30-45 day window period in 2019.
|
(3)
|
89% of these contracts have a minimum interest crediting rate guarantee of 3% or higher.
|
(4)
|
Includes $732 million of contractholder funds on variable annuities reinsured to The Prudential Insurance Company of America, a subsidiary of Prudential Financial Inc., in 2006.
|
Contractual obligations and payments due by period
|
||||||||||||||||||||
|
|
As of December 31, 2018
|
||||||||||||||||||
($ in millions)
|
|
Total
|
|
Less than 1 year
|
|
1 to 3 years
|
|
Over 3 years to 5 years
|
|
Over 5 years
|
||||||||||
Liabilities for collateral
(1)
|
|
$
|
1,458
|
|
|
$
|
1,458
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Contractholder funds
(2)
|
|
37,570
|
|
|
2,185
|
|
|
4,094
|
|
|
3,736
|
|
|
27,555
|
|
|||||
Reserve for life-contingent contract benefits
(2)
|
|
38,787
|
|
|
1,425
|
|
|
2,661
|
|
|
2,428
|
|
|
32,273
|
|
|||||
Long-term debt
(3)
|
|
13,429
|
|
|
625
|
|
|
843
|
|
|
1,320
|
|
|
10,641
|
|
|||||
Operating leases
(4)
|
|
650
|
|
|
139
|
|
|
217
|
|
|
144
|
|
|
150
|
|
|||||
Unconditional purchase obligations
(4)
|
|
568
|
|
|
287
|
|
|
274
|
|
|
6
|
|
|
1
|
|
|||||
Defined benefit pension plans and other postretirement benefit plans
(4)(5)
|
|
958
|
|
|
47
|
|
|
113
|
|
|
117
|
|
|
681
|
|
|||||
Reserve for property and casualty insurance claims and claims expense
(6)
|
|
27,423
|
|
|
12,498
|
|
|
8,692
|
|
|
3,040
|
|
|
3,193
|
|
|||||
Other liabilities and accrued expenses
(7)(8)
|
|
5,918
|
|
|
5,634
|
|
|
259
|
|
|
12
|
|
|
13
|
|
|||||
Net unrecognized tax benefits
(9)
|
|
70
|
|
|
58
|
|
|
12
|
|
|
—
|
|
|
—
|
|
|||||
Total contractual cash obligations
|
|
$
|
126,831
|
|
|
$
|
24,356
|
|
|
$
|
17,165
|
|
|
$
|
10,803
|
|
|
$
|
74,507
|
|
(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
$18.37 billion
for contractholder funds and
$12.21 billion
for reserve for life-contingent contract benefits as included in the Consolidated Statements of Financial Position as of December 31,
2018
. 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. Future premium collections are not included in the amounts presented in the table above.
|
(3)
|
Amount differs from the balance presented on the Consolidated Statements of Financial Position as of December 31,
2018
, 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 $510 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 $4 million.
|
(8)
|
Balance sheet liabilities not included in the table above include unearned and advance premiums of $15.29 billion and gross deferred tax liabilities of
$1.58 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 $252 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 a decrease of up to $58 million in unrecognized tax benefits may occur within the next twelve months due to IRS settlements. The resolution of this obligation may be for an amount different than what we have accrued.
|
•
|
The Allstate Corporation Board of Directors (“Allstate Board”) has overall responsibility for oversight of management’s design and implementation of ERRM.
|
•
|
The Risk and Return Committee (“RRC”) of the Allstate Board oversees effectiveness of the ERRM framework, governance structure and decision-making, while focusing on the Company’s overall risk profile.
|
•
|
The Audit Committee oversees effectiveness of management’s control framework for risks and cybersecurity.
|
•
|
The Enterprise Risk and Return Council (“ERRC”) is Allstate’s senior risk management committee that directs ERRM by establishing risk-return targets, determining economic capital levels and directing integrated strategies and actions from an enterprise perspective. The ERRC consists of Allstate’s chief executive officer and president, vice chair, chief financial officer, business unit presidents, chief investment and corporate strategy officer, chief risk officer, general counsel, treasurer, vice president of operational risk, business unit chief risk officers, and business unit chief financial officers.
|
•
|
Other key committees work with the ERRC to direct ERRM activities, including the Operating Committee, the Operational Risk Council, the Corporate Asset Liability Committee, legal entity liability governance committees, and legal entity investment committees.
|
•
|
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 extreme but plausible insurance-related events such as multiple hurricanes and/or wildfires. Scenarios evaluated include combined multiple event scenarios across risk categories and time periods, considering the effects of macroeconomic conditions.
|
•
|
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.
|
•
|
Scenario analysis: measures material adverse outcomes such as shock scenarios applied to credit, public and private equity markets. Some of the stress scenarios are a combination of multiple scenarios across risk categories and over multiple time periods, considering the effects of macroeconomic conditions.
|
•
|
Fair value of financial assets
|
•
|
Impairment of fixed income 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 $379 million that are valued using broker quotes and $268 million that are valued using quoted prices or quoted net asset values from deal sponsors.
|
($ in millions)
|
|
Increase/(reduction)
in sufficiency
|
|
Change in sufficiency as a percentage of applicable reserves
|
Increase in future investment yields of 25 basis points
|
|
$198
|
|
3%
|
Decrease in future investment yields of 25 basis points
|
|
$(205)
|
|
(3)%
|
Consolidated Financial Statements
|
|
Page
|
|
|
|||
|
|||
|
|||
Consolidated Statements of Shareholders’ Equity
|
|
||
|
|||
|
|
|
|
|
|
||
Note 1
|
General
|
|
|
Note 2
|
Summary of Significant Accounting Policies
|
|
|
Note 3
|
Acquisitions
|
|
|
Note 4
|
Reportable Segments
|
|
|
Note 5
|
Investments
|
|
|
Note 6
|
Fair Value of Assets and Liabilities
|
|
|
Note 7
|
Derivative Financial Instruments and Off-balance Sheet Financial Instruments
|
|
|
Note 8
|
Reserve for Property and Casualty Insurance Claims and Claims Expense
|
|
|
Note 9
|
Reserve for Life-Contingent Contract Benefits and Contractholder Funds
|
|
|
Note 10
|
Reinsurance and Indemnification
|
|
|
Note 11
|
Deferred Policy Acquisition and Sales Inducement Costs
|
|
|
Note 12
|
Capital Structure
|
|
|
Note 13
|
Company Restructuring
|
|
|
Note 14
|
Commitments, Guarantees and Contingent Liabilities
|
|
|
Note 15
|
Income Taxes
|
|
|
Note 16
|
Statutory Financial Information and Dividend Limitations
|
|
|
Note 17
|
Benefit Plans
|
|
|
Note 18
|
Equity Incentive Plans
|
|
|
Note 19
|
Supplemental Cash Flow Information
|
|
|
Note 20
|
Other Comprehensive Income
|
|
|
Note 21
|
Quarterly Results (unaudited)
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
||||||||||
($ in millions, except per share data)
|
|
2018
|
|
2017
|
|
2016
|
||||||
Revenues
|
|
|
|
|
|
|
||||||
Property and casualty insurance premiums (net of reinsurance ceded and indemnification programs of $1,016, $971 and $987)
|
|
$
|
34,048
|
|
|
$
|
32,300
|
|
|
$
|
31,307
|
|
Life premiums and contract charges (net of reinsurance ceded of $290, $303 and $309)
|
|
2,465
|
|
|
2,378
|
|
|
2,275
|
|
|||
Other revenue
|
|
939
|
|
|
883
|
|
|
865
|
|
|||
Net investment income
|
|
3,240
|
|
|
3,401
|
|
|
3,042
|
|
|||
Realized capital gains and losses:
|
|
|
|
|
|
|
||||||
Total other-than-temporary impairment (“OTTI”) losses
|
|
(13
|
)
|
|
(146
|
)
|
|
(313
|
)
|
|||
OTTI losses reclassified (from) to other comprehensive income ("OCI")
|
|
(1
|
)
|
|
(4
|
)
|
|
10
|
|
|||
Net OTTI losses recognized in earnings
|
|
(14
|
)
|
|
(150
|
)
|
|
(303
|
)
|
|||
Sales and valuation changes on equity investments and derivatives
|
|
(863
|
)
|
|
595
|
|
|
213
|
|
|||
Total realized capital gains and losses
|
|
(877
|
)
|
|
445
|
|
|
(90
|
)
|
|||
Total revenues
|
|
39,815
|
|
|
39,407
|
|
|
37,399
|
|
|||
|
|
|
|
|
|
|
||||||
Costs and expenses
|
|
|
|
|
|
|
||||||
Property and casualty insurance claims and claims expense
(net of reinsurance ceded and indemnification programs of $1,378, $1,807 and $1,116)
|
|
22,778
|
|
|
21,847
|
|
|
22,160
|
|
|||
Life contract benefits (net of reinsurance ceded of $240, $179 and $208)
|
|
1,973
|
|
|
1,923
|
|
|
1,857
|
|
|||
Interest credited to contractholder funds (net of reinsurance ceded of $24, $25 and $26)
|
|
654
|
|
|
690
|
|
|
726
|
|
|||
Amortization of deferred policy acquisition costs
|
|
5,222
|
|
|
4,784
|
|
|
4,550
|
|
|||
Operating costs and expenses
|
|
5,594
|
|
|
5,196
|
|
|
4,846
|
|
|||
Pension and other postretirement remeasurement gains and losses
|
|
468
|
|
|
(217
|
)
|
|
270
|
|
|||
Amortization of purchased intangible assets
|
|
105
|
|
|
99
|
|
|
32
|
|
|||
Restructuring and related charges
|
|
67
|
|
|
96
|
|
|
18
|
|
|||
Goodwill impairment
|
|
—
|
|
|
125
|
|
|
—
|
|
|||
Interest expense
|
|
332
|
|
|
335
|
|
|
295
|
|
|||
Total costs and expenses
|
|
37,193
|
|
|
34,878
|
|
|
34,754
|
|
|||
|
|
|
|
|
|
|
||||||
Gain on disposition of operations
|
|
6
|
|
|
20
|
|
|
5
|
|
|||
|
|
|
|
|
|
|
||||||
Income from operations before income tax expense
|
|
2,628
|
|
|
4,549
|
|
|
2,650
|
|
|||
|
|
|
|
|
|
|
||||||
Income tax expense
|
|
468
|
|
|
995
|
|
|
842
|
|
|||
|
|
|
|
|
|
|
||||||
Net income
|
|
2,160
|
|
|
3,554
|
|
|
1,808
|
|
|||
|
|
|
|
|
|
|
||||||
Preferred stock dividends
|
|
148
|
|
|
116
|
|
|
116
|
|
|||
|
|
|
|
|
|
|
||||||
Net income applicable to common shareholders
|
|
$
|
2,012
|
|
|
$
|
3,438
|
|
|
$
|
1,692
|
|
|
|
|
|
|
|
|
||||||
Earnings per common share:
|
|
|
|
|
|
|
||||||
Net income applicable to common shareholders per common share - Basic
|
|
$
|
5.78
|
|
|
$
|
9.50
|
|
|
$
|
4.54
|
|
Weighted average common shares - Basic
|
|
347.8
|
|
|
362.0
|
|
|
372.8
|
|
|||
Net income applicable to common shareholders per common share - Diluted
|
|
$
|
5.70
|
|
|
$
|
9.35
|
|
|
$
|
4.48
|
|
Weighted average common shares - Diluted
|
|
353.2
|
|
|
367.8
|
|
|
377.3
|
|
|
|
Years Ended December 31,
|
||||||||||
($ in millions)
|
|
2018
|
|
2017
|
|
2016
|
||||||
Net income
|
|
$
|
2,160
|
|
|
$
|
3,554
|
|
|
$
|
1,808
|
|
|
|
|
|
|
|
|
||||||
Other comprehensive (loss) income, after-tax
|
|
|
|
|
|
|
||||||
Changes in:
|
|
|
|
|
|
|
||||||
Unrealized net capital gains and losses
|
|
(754
|
)
|
|
319
|
|
|
433
|
|
|||
Unrealized foreign currency translation adjustments
|
|
(48
|
)
|
|
45
|
|
|
9
|
|
|||
Unamortized pension and other postretirement prior service credit
|
|
(59
|
)
|
|
(52
|
)
|
|
(33
|
)
|
|||
Other comprehensive (loss) income, after-tax
|
|
(861
|
)
|
|
312
|
|
|
409
|
|
|||
|
|
|
|
|
|
|
||||||
Comprehensive income
|
|
$
|
1,299
|
|
|
$
|
3,866
|
|
|
$
|
2,217
|
|
|
|
December 31,
|
||||||
($ in millions, except par value data)
|
|
2018
|
|
2017
|
||||
Assets
|
|
|
|
|
||||
Investments
|
|
|
|
|
||||
Fixed income securities, at fair value (amortized cost $57,134 and $57,525)
|
|
$
|
57,170
|
|
|
$
|
58,992
|
|
Equity securities, at fair value (cost $4,489 and $5,461)
|
|
5,036
|
|
|
6,621
|
|
||
Mortgage loans
|
|
4,670
|
|
|
4,534
|
|
||
Limited partnership interests
|
|
7,505
|
|
|
6,740
|
|
||
Short-term, at fair value (amortized cost $3,027 and $1,944)
|
|
3,027
|
|
|
1,944
|
|
||
Other
|
|
3,852
|
|
|
3,972
|
|
||
Total investments
|
|
81,260
|
|
|
82,803
|
|
||
Cash
|
|
499
|
|
|
617
|
|
||
Premium installment receivables, net
|
|
6,154
|
|
|
5,786
|
|
||
Deferred policy acquisition costs
|
|
4,784
|
|
|
4,191
|
|
||
Reinsurance and indemnification recoverables, net
|
|
9,565
|
|
|
8,921
|
|
||
Accrued investment income
|
|
600
|
|
|
569
|
|
||
Property and equipment, net
|
|
1,045
|
|
|
1,072
|
|
||
Goodwill
|
|
2,530
|
|
|
2,181
|
|
||
Other assets
|
|
3,007
|
|
|
2,838
|
|
||
Separate Accounts
|
|
2,805
|
|
|
3,444
|
|
||
Total assets
|
|
$
|
112,249
|
|
|
$
|
112,422
|
|
Liabilities
|
|
|
|
|
||||
Reserve for property and casualty insurance claims and claims expense
|
|
$
|
27,423
|
|
|
$
|
26,325
|
|
Reserve for life-contingent contract benefits
|
|
12,208
|
|
|
12,549
|
|
||
Contractholder funds
|
|
18,371
|
|
|
19,434
|
|
||
Unearned premiums
|
|
14,510
|
|
|
13,473
|
|
||
Claim payments outstanding
|
|
1,007
|
|
|
875
|
|
||
Deferred income taxes
|
|
425
|
|
|
782
|
|
||
Other liabilities and accrued expenses
|
|
7,737
|
|
|
6,639
|
|
||
Long-term debt
|
|
6,451
|
|
|
6,350
|
|
||
Separate Accounts
|
|
2,805
|
|
|
3,444
|
|
||
Total liabilities
|
|
90,937
|
|
|
89,871
|
|
||
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, 79.8 thousand and 72.2 thousand issued and outstanding, $1,995 and $1,805 aggregate liquidation preference
|
|
1,930
|
|
|
1,746
|
|
||
Common stock, $.01 par value, 2.0 billion shares authorized and 900 million issued, 332 million and 355 million shares outstanding
|
|
9
|
|
|
9
|
|
||
Additional capital paid-in
|
|
3,310
|
|
|
3,313
|
|
||
Retained income
|
|
44,033
|
|
|
41,579
|
|
||
Deferred Employee Stock Ownership Plan (
“
ESOP
”
) expense
|
|
(3
|
)
|
|
(3
|
)
|
||
Treasury stock, at cost (568 million and 545 million shares)
|
|
(28,085
|
)
|
|
(25,982
|
)
|
||
Accumulated other comprehensive income:
|
|
|
|
|
||||
Unrealized net capital gains and losses:
|
|
|
|
|
||||
Unrealized net capital gains and losses on fixed income securities with OTTI
|
|
75
|
|
|
85
|
|
||
Other unrealized net capital gains and losses
|
|
(51
|
)
|
|
1,981
|
|
||
Unrealized adjustment to DAC, DSI and insurance reserves
|
|
(26
|
)
|
|
(404
|
)
|
||
Total unrealized net capital gains and losses
|
|
(2
|
)
|
|
1,662
|
|
||
Unrealized foreign currency translation adjustments
|
|
(49
|
)
|
|
(1
|
)
|
||
Unamortized pension and other postretirement prior service credit
|
|
169
|
|
|
228
|
|
||
Total accumulated other comprehensive income ("AOCI")
|
|
118
|
|
|
1,889
|
|
||
Total shareholders’ equity
|
|
21,312
|
|
|
22,551
|
|
||
Total liabilities and shareholders’ equity
|
|
$
|
112,249
|
|
|
$
|
112,422
|
|
|
|
Years Ended December 31,
|
||||||||||
($ in millions)
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
|
|
|
|
|
||||||
Preferred stock par value
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Preferred stock additional capital paid-in
|
|
|
|
|
|
|
||||||
Balance, beginning of year
|
|
1,746
|
|
|
1,746
|
|
|
1,746
|
|
|||
Preferred stock issuance
|
|
557
|
|
|
—
|
|
|
—
|
|
|||
Preferred stock redemption
|
|
(373
|
)
|
|
—
|
|
|
—
|
|
|||
Balance, end of year
|
|
1,930
|
|
|
1,746
|
|
|
1,746
|
|
|||
|
|
|
|
|
|
|
||||||
Common stock par value
|
|
9
|
|
|
9
|
|
|
9
|
|
|||
Common stock additional capital paid-in
|
|
|
|
|
|
|
||||||
Balance, beginning of year
|
|
3,313
|
|
|
3,303
|
|
|
3,245
|
|
|||
Forward contract on accelerated share repurchase agreement
|
|
(105
|
)
|
|
(45
|
)
|
|
—
|
|
|||
Equity incentive plans activity
|
|
102
|
|
|
55
|
|
|
58
|
|
|||
Balance, end of year
|
|
3,310
|
|
|
3,313
|
|
|
3,303
|
|
|||
|
|
|
|
|
|
|
||||||
Retained income
|
|
|
|
|
|
|
||||||
Balance, beginning of year
|
|
41,579
|
|
|
39,009
|
|
|
37,813
|
|
|||
Cumulative effect of change in accounting principle
|
|
1,088
|
|
|
—
|
|
|
—
|
|
|||
Net income
|
|
2,160
|
|
|
3,554
|
|
|
1,808
|
|
|||
Dividends on common stock (declared per share of $1.84, $1.48 and $1.32)
|
|
(646
|
)
|
|
(540
|
)
|
|
(496
|
)
|
|||
Dividends on preferred stock
|
|
(148
|
)
|
|
(116
|
)
|
|
(116
|
)
|
|||
Reclassification of tax effects due to change in accounting principle
|
|
—
|
|
|
(328
|
)
|
|
—
|
|
|||
Balance, end of year
|
|
44,033
|
|
|
41,579
|
|
|
39,009
|
|
|||
|
|
|
|
|
|
|
||||||
Deferred ESOP expense
|
|
|
|
|
|
|
||||||
Balance, beginning of year
|
|
(3
|
)
|
|
(6
|
)
|
|
(13
|
)
|
|||
Payments
|
|
—
|
|
|
3
|
|
|
7
|
|
|||
Balance, end of year
|
|
(3
|
)
|
|
(3
|
)
|
|
(6
|
)
|
|||
|
|
|
|
|
|
|
||||||
Treasury stock
|
|
|
|
|
|
|
||||||
Balance, beginning of year
|
|
(25,982
|
)
|
|
(24,741
|
)
|
|
(23,620
|
)
|
|||
Shares acquired
|
|
(2,198
|
)
|
|
(1,423
|
)
|
|
(1,341
|
)
|
|||
Shares reissued under equity incentive plans, net
|
|
95
|
|
|
182
|
|
|
220
|
|
|||
Balance, end of year
|
|
(28,085
|
)
|
|
(25,982
|
)
|
|
(24,741
|
)
|
|||
|
|
|
|
|
|
|
||||||
Accumulated other comprehensive income (loss)
|
|
|
|
|
|
|
||||||
Balance, beginning of year
|
|
1,889
|
|
|
1,249
|
|
|
840
|
|
|||
Cumulative effect of change in accounting principle
|
|
(910
|
)
|
|
—
|
|
|
—
|
|
|||
Change in unrealized net capital gains and losses
|
|
(754
|
)
|
|
319
|
|
|
433
|
|
|||
Change in unrealized foreign currency translation adjustments
|
|
(48
|
)
|
|
45
|
|
|
9
|
|
|||
Unamortized pension and other postretirement prior service credit
|
|
(59
|
)
|
|
(52
|
)
|
|
(33
|
)
|
|||
Reclassification of tax effects due to change in accounting principle
|
|
—
|
|
|
328
|
|
|
—
|
|
|||
Balance, end of year
|
|
118
|
|
|
1,889
|
|
|
1,249
|
|
|||
Total shareholders’ equity
|
|
$
|
21,312
|
|
|
$
|
22,551
|
|
|
$
|
20,569
|
|
|
|
Years Ended December 31,
|
||||||||||
($ in millions)
|
|
2018
|
|
2017
|
|
2016
|
||||||
Cash flows from operating activities
|
|
|
|
|
|
|
||||||
Net income
|
|
$
|
2,160
|
|
|
$
|
3,554
|
|
|
$
|
1,808
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
||||||
Depreciation, amortization and other non-cash items
|
|
511
|
|
|
483
|
|
|
382
|
|
|||
Realized capital gains and losses
|
|
877
|
|
|
(445
|
)
|
|
90
|
|
|||
Pension and other postretirement remeasurement gains and losses
|
|
468
|
|
|
(217
|
)
|
|
270
|
|
|||
Gain on disposition of operations
|
|
(6
|
)
|
|
(20
|
)
|
|
(5
|
)
|
|||
Interest credited to contractholder funds
|
|
654
|
|
|
690
|
|
|
726
|
|
|||
Goodwill impairment
|
|
—
|
|
|
125
|
|
|
—
|
|
|||
Changes in:
|
|
|
|
|
|
|
||||||
Policy benefits and other insurance reserves
|
|
469
|
|
|
302
|
|
|
631
|
|
|||
Unearned premiums
|
|
915
|
|
|
463
|
|
|
362
|
|
|||
Deferred policy acquisition costs
|
|
(296
|
)
|
|
(214
|
)
|
|
(165
|
)
|
|||
Premium installment receivables, net
|
|
(396
|
)
|
|
(131
|
)
|
|
(42
|
)
|
|||
Reinsurance recoverables, net
|
|
(656
|
)
|
|
(211
|
)
|
|
(264
|
)
|
|||
Income taxes
|
|
(380
|
)
|
|
(52
|
)
|
|
381
|
|
|||
Other operating assets and liabilities
|
|
855
|
|
|
(13
|
)
|
|
(181
|
)
|
|||
Net cash provided by operating activities
|
|
5,175
|
|
|
4,314
|
|
|
3,993
|
|
|||
Cash flows from investing activities
|
|
|
|
|
|
|
||||||
Proceeds from sales
|
|
|
|
|
|
|
||||||
Fixed income securities
|
|
33,183
|
|
|
25,341
|
|
|
25,061
|
|
|||
Equity securities
|
|
6,859
|
|
|
6,504
|
|
|
5,546
|
|
|||
Limited partnership interests
|
|
764
|
|
|
1,125
|
|
|
881
|
|
|||
Other investments
|
|
533
|
|
|
274
|
|
|
262
|
|
|||
Investment collections
|
|
|
|
|
|
|
||||||
Fixed income securities
|
|
3,466
|
|
|
4,194
|
|
|
4,533
|
|
|||
Mortgage loans
|
|
529
|
|
|
600
|
|
|
501
|
|
|||
Other investments
|
|
488
|
|
|
642
|
|
|
421
|
|
|||
Investment purchases
|
|
|
|
|
|
|
||||||
Fixed income securities
|
|
(36,960
|
)
|
|
(31,145
|
)
|
|
(27,990
|
)
|
|||
Equity securities
|
|
(5,936
|
)
|
|
(6,585
|
)
|
|
(5,950
|
)
|
|||
Limited partnership interests
|
|
(1,679
|
)
|
|
(1,440
|
)
|
|
(1,450
|
)
|
|||
Mortgage loans
|
|
(664
|
)
|
|
(646
|
)
|
|
(646
|
)
|
|||
Other investments
|
|
(864
|
)
|
|
(999
|
)
|
|
(885
|
)
|
|||
Change in short-term investments, net
|
|
(505
|
)
|
|
2,610
|
|
|
(2,446
|
)
|
|||
Change in other investments, net
|
|
(98
|
)
|
|
(30
|
)
|
|
(51
|
)
|
|||
Purchases of property and equipment, net
|
|
(277
|
)
|
|
(299
|
)
|
|
(313
|
)
|
|||
Acquisition of operations
|
|
(558
|
)
|
|
(1,356
|
)
|
|
—
|
|
|||
Net cash used in investing activities
|
|
(1,719
|
)
|
|
(1,210
|
)
|
|
(2,526
|
)
|
|||
Cash flows from financing activities
|
|
|
|
|
|
|
||||||
Proceeds from issuance of long-term debt
|
|
498
|
|
|
—
|
|
|
1,236
|
|
|||
Redemption and repayment of long-term debt
|
|
(400
|
)
|
|
—
|
|
|
(17
|
)
|
|||
Proceeds from issuance of preferred stock
|
|
557
|
|
|
—
|
|
|
—
|
|
|||
Redemption of preferred stock
|
|
(385
|
)
|
|
—
|
|
|
—
|
|
|||
Contractholder fund deposits
|
|
1,010
|
|
|
1,025
|
|
|
1,049
|
|
|||
Contractholder fund withdrawals
|
|
(1,967
|
)
|
|
(1,890
|
)
|
|
(2,087
|
)
|
|||
Dividends paid on common stock
|
|
(614
|
)
|
|
(525
|
)
|
|
(486
|
)
|
|||
Dividends paid on preferred stock
|
|
(134
|
)
|
|
(116
|
)
|
|
(116
|
)
|
|||
Treasury stock purchases
|
|
(2,303
|
)
|
|
(1,495
|
)
|
|
(1,337
|
)
|
|||
Shares reissued under equity incentive plans, net
|
|
73
|
|
|
135
|
|
|
164
|
|
|||
Excess tax benefits on share-based payment arrangements
|
|
—
|
|
|
—
|
|
|
32
|
|
|||
Other
|
|
91
|
|
|
(57
|
)
|
|
36
|
|
|||
Net cash used in financing activities
|
|
(3,574
|
)
|
|
(2,923
|
)
|
|
(1,526
|
)
|
|||
Net (decrease) increase in cash
|
|
(118
|
)
|
|
181
|
|
|
(59
|
)
|
|||
Cash at beginning of year
|
|
617
|
|
|
436
|
|
|
495
|
|
|||
Cash at end of year
|
|
$
|
499
|
|
|
$
|
617
|
|
|
$
|
436
|
|
Note 1
|
General
|
Note 2
|
Summary of Significant Accounting Policies
|
Goodwill by reporting unit
|
||||||||
|
|
As of December 31,
|
||||||
($ in millions)
|
|
2018
|
|
2017
|
||||
Allstate Protection
|
|
$
|
810
|
|
|
$
|
810
|
|
Service Businesses
|
|
1,449
|
|
|
1,100
|
|
||
Allstate Life
|
|
175
|
|
|
175
|
|
||
Allstate Benefits
|
|
96
|
|
|
96
|
|
||
Total
|
|
$
|
2,530
|
|
|
$
|
2,181
|
|
Intangible assets by type
|
||||||||
|
|
As of December 31,
|
||||||
($ in millions)
|
|
2018
|
|
2017
|
||||
Customers relationships
|
|
$
|
530
|
|
|
$
|
396
|
|
Trade names and licenses
|
|
143
|
|
|
143
|
|
||
Technology and other
|
|
40
|
|
|
17
|
|
||
Total
|
|
$
|
713
|
|
|
$
|
556
|
|
(1)
|
Net income applicable to common shareholders is net income less preferred stock dividends.
|
Consolidated Statements of Operations
|
||||||||||||
|
|
Previously reported
|
|
Impact of change
|
|
As adjusted
|
||||||
($ in millions, except per share data)
|
|
Year Ended December 31, 2018
|
||||||||||
Property and casualty insurance claims and claims expense
|
|
$
|
22,839
|
|
|
$
|
(61
|
)
|
|
$
|
22,778
|
|
Operating costs and expenses
|
|
5,869
|
|
|
(275
|
)
|
|
5,594
|
|
|||
Pension and other postretirement remeasurement gains and losses
|
|
—
|
|
|
468
|
|
|
468
|
|
|||
Restructuring and related charges
|
|
83
|
|
|
(16
|
)
|
|
67
|
|
|||
Total costs and expenses
|
|
37,077
|
|
|
116
|
|
|
37,193
|
|
|||
Income from operations before income tax expense
|
|
2,744
|
|
|
(116
|
)
|
|
2,628
|
|
|||
Income tax expense
|
|
492
|
|
|
(24
|
)
|
|
468
|
|
|||
Net income
|
|
2,252
|
|
|
(92
|
)
|
|
2,160
|
|
|||
Net income applicable to common shareholders
|
|
$
|
2,104
|
|
|
$
|
(92
|
)
|
|
$
|
2,012
|
|
|
|
|
|
|
|
|
||||||
Earnings per common share:
|
|
|
|
|
|
|
||||||
Net income applicable to common shareholders per common share - Basic
|
|
$
|
6.05
|
|
|
$
|
(0.27
|
)
|
|
$
|
5.78
|
|
Net income applicable to common shareholders per common share - Diluted
|
|
$
|
5.96
|
|
|
$
|
(0.26
|
)
|
|
$
|
5.70
|
|
Consolidated Statements of Operations
|
||||||||||||
|
|
Previously reported
|
|
Impact of change
|
|
As adjusted
|
||||||
($ in millions, except per share data)
|
|
Year Ended December 31, 2017
|
||||||||||
Property and casualty insurance claims and claims expense
|
|
$
|
21,929
|
|
|
$
|
(82
|
)
|
|
$
|
21,847
|
|
Operating costs and expenses
|
|
5,442
|
|
|
(246
|
)
|
|
5,196
|
|
|||
Pension and other postretirement remeasurement gains and losses
|
|
—
|
|
|
(217
|
)
|
|
(217
|
)
|
|||
Restructuring and related charges
|
|
109
|
|
|
(13
|
)
|
|
96
|
|
|||
Total costs and expenses
|
|
35,436
|
|
|
(558
|
)
|
|
34,878
|
|
|||
Income from operations before income tax expense
|
|
3,991
|
|
|
558
|
|
|
4,549
|
|
|||
Income tax expense
|
|
802
|
|
|
193
|
|
|
995
|
|
|||
Net income
|
|
3,189
|
|
|
365
|
|
|
3,554
|
|
|||
Net income applicable to common shareholders
|
|
$
|
3,073
|
|
|
$
|
365
|
|
|
$
|
3,438
|
|
|
|
|
|
|
|
|
||||||
Earnings per common share:
|
|
|
|
|
|
|
||||||
Net income applicable to common shareholders per common share - Basic
|
|
$
|
8.49
|
|
|
$
|
1.01
|
|
|
$
|
9.50
|
|
Net income applicable to common shareholders per common share - Diluted
|
|
$
|
8.36
|
|
|
$
|
0.99
|
|
|
$
|
9.35
|
|
|
|
|
|
|
|
|
||||||
|
|
Year Ended December 31, 2016
|
||||||||||
Property and casualty insurance claims and claims expense
|
|
$
|
22,221
|
|
|
$
|
(61
|
)
|
|
$
|
22,160
|
|
Operating costs and expenses
|
|
4,939
|
|
|
(93
|
)
|
|
4,846
|
|
|||
Pension and other postretirement remeasurement gains and losses
|
|
—
|
|
|
270
|
|
|
270
|
|
|||
Restructuring and related charges
|
|
30
|
|
|
(12
|
)
|
|
18
|
|
|||
Total costs and expenses
|
|
34,650
|
|
|
104
|
|
|
34,754
|
|
|||
Income from operations before income tax expense
|
|
2,754
|
|
|
(104
|
)
|
|
2,650
|
|
|||
Income tax expense
|
|
877
|
|
|
(35
|
)
|
|
842
|
|
|||
Net income
|
|
1,877
|
|
|
(69
|
)
|
|
1,808
|
|
|||
Net income applicable to common shareholders
|
|
$
|
1,761
|
|
|
$
|
(69
|
)
|
|
$
|
1,692
|
|
|
|
|
|
|
|
|
||||||
Earnings per common share:
|
|
|
|
|
|
|
||||||
Net income applicable to common shareholders per common share - Basic
|
|
$
|
4.72
|
|
|
$
|
(0.18
|
)
|
|
$
|
4.54
|
|
Net income applicable to common shareholders per common share - Diluted
|
|
$
|
4.67
|
|
|
$
|
(0.19
|
)
|
|
$
|
4.48
|
|
Consolidated Statements of Financial Position
|
|
|
||||||||||
|
|
Previously reported
|
|
Impact of change
|
|
As adjusted
|
||||||
($ in millions)
|
|
December 31, 2018
|
||||||||||
Retained income
|
|
$
|
45,708
|
|
|
$
|
(1,675
|
)
|
|
$
|
44,033
|
|
Unrealized foreign currency translation adjustments
|
|
(64
|
)
|
|
15
|
|
|
(49
|
)
|
|||
Unrecognized pension and other postretirement benefit cost
|
|
(1,491
|
)
|
|
1,660
|
|
|
169
|
|
|||
Total AOCI
|
|
$
|
(1,557
|
)
|
|
$
|
1,675
|
|
|
$
|
118
|
|
|
|
|
|
|
|
|
||||||
|
|
December 31, 2017
|
||||||||||
Retained income
|
|
$
|
43,162
|
|
|
$
|
(1,583
|
)
|
|
$
|
41,579
|
|
Unrealized foreign currency translation adjustments
|
|
(9
|
)
|
|
8
|
|
|
(1
|
)
|
|||
Unrecognized pension and other postretirement benefit cost
|
|
(1,347
|
)
|
|
1,575
|
|
|
228
|
|
|||
Total AOCI
|
|
$
|
306
|
|
|
$
|
1,583
|
|
|
$
|
1,889
|
|
Consolidated Statements of Shareholders’ Equity
|
|
|
|
|
|
|
||||||
|
|
Previously reported
|
|
Impact of change
|
|
As adjusted
|
||||||
($ in millions)
|
|
Year Ended December 31, 2018
|
||||||||||
Retained income
|
|
|
|
|
|
|
||||||
Balance, beginning of year
|
|
$
|
43,162
|
|
|
$
|
(1,583
|
)
|
|
$
|
41,579
|
|
Cumulative effect of change in accounting principle
|
|
1,088
|
|
|
—
|
|
|
1,088
|
|
|||
Net income
|
|
2,252
|
|
|
(92
|
)
|
|
2,160
|
|
|||
Dividends on common stock (declared per share of $1.84)
|
|
(646
|
)
|
|
—
|
|
|
(646
|
)
|
|||
Dividends on preferred stock
|
|
(148
|
)
|
|
—
|
|
|
(148
|
)
|
|||
Balance, end of year
|
|
45,708
|
|
|
(1,675
|
)
|
|
44,033
|
|
|||
|
|
|
|
|
|
|
||||||
Accumulated other comprehensive income (loss)
|
|
|
|
|
|
|
||||||
Balance, beginning of year
|
|
306
|
|
|
1,583
|
|
|
1,889
|
|
|||
Cumulative effect of change in accounting principle
|
|
(910
|
)
|
|
—
|
|
|
(910
|
)
|
|||
Change in unrealized net capital gains and losses
|
|
(754
|
)
|
|
—
|
|
|
(754
|
)
|
|||
Change in unrealized foreign currency translation adjustments
|
|
(55
|
)
|
|
7
|
|
|
(48
|
)
|
|||
Change in unrecognized pension and other postretirement benefit cost
(1)
|
|
(144
|
)
|
|
85
|
|
|
(59
|
)
|
|||
Balance, end of year
|
|
$
|
(1,557
|
)
|
|
$
|
1,675
|
|
|
$
|
118
|
|
|
|
|
|
|
|
|
||||||
|
|
Year Ended December 31, 2017
|
||||||||||
Retained income
|
|
|
|
|
|
|
||||||
Balance, beginning of year
|
|
$
|
40,678
|
|
|
$
|
(1,669
|
)
|
|
$
|
39,009
|
|
Net income
|
|
3,189
|
|
|
365
|
|
|
3,554
|
|
|||
Dividends on common stock (declared per share of $1.48)
|
|
(540
|
)
|
|
—
|
|
|
(540
|
)
|
|||
Dividends on preferred stock
|
|
(116
|
)
|
|
—
|
|
|
(116
|
)
|
|||
Reclassification of tax effects due to change in accounting principle
|
|
(49
|
)
|
|
(279
|
)
|
|
(328
|
)
|
|||
Balance, end of year
|
|
43,162
|
|
|
(1,583
|
)
|
|
41,579
|
|
|||
|
|
|
|
|
|
|
||||||
Accumulated other comprehensive income (loss)
|
|
|
|
|
|
|
||||||
Balance, beginning of year
|
|
(416
|
)
|
|
1,665
|
|
|
1,249
|
|
|||
Change in unrealized net capital gains and losses
|
|
319
|
|
|
—
|
|
|
319
|
|
|||
Change in unrealized foreign currency translation adjustments
|
|
47
|
|
|
(2
|
)
|
|
45
|
|
|||
Change in unrecognized pension and other postretirement benefit cost
(1)
|
|
307
|
|
|
(359
|
)
|
|
(52
|
)
|
|||
Reclassification of tax effects due to change in accounting principle
|
|
49
|
|
|
279
|
|
|
328
|
|
|||
Balance, end of year
|
|
$
|
306
|
|
|
$
|
1,583
|
|
|
$
|
1,889
|
|
|
|
|
|
|
|
|
||||||
|
|
Year Ended December 31, 2016
|
||||||||||
Retained income
|
|
|
|
|
|
|
||||||
Balance, beginning of year
|
|
$
|
39,413
|
|
|
$
|
(1,600
|
)
|
|
$
|
37,813
|
|
Net income
|
|
1,877
|
|
|
(69
|
)
|
|
1,808
|
|
|||
Dividends on common stock (declared per share of $1.32)
|
|
(496
|
)
|
|
—
|
|
|
(496
|
)
|
|||
Dividends on preferred stock
|
|
(116
|
)
|
|
—
|
|
|
(116
|
)
|
|||
Balance, end of year
|
|
40,678
|
|
|
(1,669
|
)
|
|
39,009
|
|
|||
|
|
|
|
|
|
|
||||||
Accumulated other comprehensive income (loss)
|
|
|
|
|
|
|
||||||
Balance, beginning of year
|
|
(755
|
)
|
|
1,595
|
|
|
840
|
|
|||
Change in unrealized net capital gains and losses
|
|
433
|
|
|
—
|
|
|
433
|
|
|||
Change in unrealized foreign currency translation adjustments
|
|
10
|
|
|
(1
|
)
|
|
9
|
|
|||
Change in unrecognized pension and other postretirement benefit cost
(1)
|
|
(104
|
)
|
|
71
|
|
|
(33
|
)
|
|||
Balance, end of year
|
|
$
|
(416
|
)
|
|
$
|
1,665
|
|
|
$
|
1,249
|
|
Total shareholders’ equity
|
|
$
|
20,573
|
|
|
$
|
(4
|
)
|
|
$
|
20,569
|
|
Consolidated Statements of Cash Flows
|
|
|
||||||||||
|
|
Previously reported
|
|
Impact of change
|
|
As adjusted
|
||||||
($ in millions)
|
|
Year Ended December 31, 2018
|
||||||||||
Cash flows from operating activities
|
|
|
|
|
|
|
||||||
Net income
|
|
$
|
2,252
|
|
|
$
|
(92
|
)
|
|
$
|
2,160
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
||||||
Pension and other postretirement remeasurement gains and losses
|
|
—
|
|
|
468
|
|
|
468
|
|
|||
Income taxes
|
|
(356
|
)
|
|
(24
|
)
|
|
(380
|
)
|
|||
Other operating assets and liabilities
|
|
1,207
|
|
|
(352
|
)
|
|
855
|
|
|||
Net cash provided by operating activities
|
|
$
|
5,175
|
|
|
$
|
—
|
|
|
$
|
5,175
|
|
|
|
|
|
|
|
|
||||||
|
|
Year Ended December 31, 2017
|
||||||||||
Cash flows from operating activities
|
|
|
|
|
|
|
||||||
Net income
|
|
$
|
3,189
|
|
|
$
|
365
|
|
|
$
|
3,554
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
||||||
Pension and other postretirement remeasurement gains and losses
|
|
—
|
|
|
(217
|
)
|
|
(217
|
)
|
|||
Income taxes
|
|
(245
|
)
|
|
193
|
|
|
(52
|
)
|
|||
Other operating assets and liabilities
|
|
328
|
|
|
(341
|
)
|
|
(13
|
)
|
|||
Net cash provided by operating activities
|
|
$
|
4,314
|
|
|
$
|
—
|
|
|
$
|
4,314
|
|
|
|
|
|
|
|
|
||||||
|
|
Year Ended December 31, 2016
|
||||||||||
Cash flows from operating activities
|
|
|
|
|
|
|
||||||
Net income
|
|
$
|
1,877
|
|
|
$
|
(69
|
)
|
|
$
|
1,808
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
||||||
Pension and other postretirement remeasurement gains and losses
|
|
—
|
|
|
270
|
|
|
270
|
|
|||
Income taxes
|
|
417
|
|
|
(36
|
)
|
|
381
|
|
|||
Other operating assets and liabilities
|
|
(16
|
)
|
|
(165
|
)
|
|
(181
|
)
|
|||
Net cash provided by operating activities
|
|
$
|
3,993
|
|
|
$
|
—
|
|
|
$
|
3,993
|
|
Reportable segments financial performance
|
||||||||||||||||||||||||
|
|
Net income (loss) applicable to common shareholders
|
|
Underwriting income or Adjusted net income (loss)
(2)
|
||||||||||||||||||||
|
|
For the years ended December 31,
|
||||||||||||||||||||||
|
|
Previously reported
|
||||||||||||||||||||||
($ in millions)
|
|
2018
|
|
2017
|
|
2016
|
|
2018
|
|
2017
|
|
2016
|
||||||||||||
Property-Liability
(1)
|
|
$
|
2,341
|
|
|
$
|
2,587
|
|
|
$
|
1,661
|
|
|
$
|
2,097
|
|
|
$
|
2,012
|
|
|
$
|
1,220
|
|
Service Businesses
|
|
(85
|
)
|
|
15
|
|
|
3
|
|
|
2
|
|
|
(59
|
)
|
|
3
|
|
||||||
Allstate Life
|
|
254
|
|
|
577
|
|
|
219
|
|
|
289
|
|
|
253
|
|
|
247
|
|
||||||
Allstate Benefits
|
|
113
|
|
|
146
|
|
|
96
|
|
|
119
|
|
|
95
|
|
|
100
|
|
||||||
Allstate Annuities
|
|
75
|
|
|
418
|
|
|
76
|
|
|
130
|
|
|
204
|
|
|
101
|
|
||||||
Corporate and Other
|
|
(594
|
)
|
|
(670
|
)
|
|
(294
|
)
|
|
(542
|
)
|
|
(399
|
)
|
|
(292
|
)
|
||||||
Consolidated
|
|
$
|
2,104
|
|
|
$
|
3,073
|
|
|
$
|
1,761
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
Impact of change
|
||||||||||||||||||||||
|
|
2018
|
|
2017
|
|
2016
|
|
2018
|
|
2017
|
|
2016
|
||||||||||||
Property-Liability
|
|
$
|
124
|
|
|
$
|
226
|
|
|
$
|
97
|
|
|
$
|
156
|
|
|
$
|
193
|
|
|
$
|
150
|
|
Service Businesses
|
|
6
|
|
|
8
|
|
|
2
|
|
|
6
|
|
|
5
|
|
|
2
|
|
||||||
Allstate Life
|
|
6
|
|
|
12
|
|
|
4
|
|
|
6
|
|
|
6
|
|
|
4
|
|
||||||
Allstate Benefits
|
|
5
|
|
|
8
|
|
|
3
|
|
|
5
|
|
|
5
|
|
|
3
|
|
||||||
Allstate Annuities
|
|
1
|
|
|
1
|
|
|
1
|
|
|
1
|
|
|
1
|
|
|
1
|
|
||||||
Corporate and Other
|
|
(234
|
)
|
|
110
|
|
|
(176
|
)
|
|
136
|
|
|
79
|
|
|
(1
|
)
|
||||||
Consolidated
|
|
$
|
(92
|
)
|
|
$
|
365
|
|
|
$
|
(69
|
)
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
As adjusted
|
||||||||||||||||||||||
|
|
2018
|
|
2017
|
|
2016
|
|
2018
|
|
2017
|
|
2016
|
||||||||||||
Property-Liability
|
|
$
|
2,465
|
|
|
$
|
2,813
|
|
|
$
|
1,758
|
|
|
$
|
2,253
|
|
|
$
|
2,205
|
|
|
$
|
1,370
|
|
Service Businesses
|
|
(79
|
)
|
|
23
|
|
|
5
|
|
|
8
|
|
|
(54
|
)
|
|
5
|
|
||||||
Allstate Life
|
|
260
|
|
|
589
|
|
|
223
|
|
|
295
|
|
|
259
|
|
|
251
|
|
||||||
Allstate Benefits
|
|
118
|
|
|
154
|
|
|
99
|
|
|
124
|
|
|
100
|
|
|
103
|
|
||||||
Allstate Annuities
|
|
76
|
|
|
419
|
|
|
77
|
|
|
131
|
|
|
205
|
|
|
102
|
|
||||||
Corporate and Other
|
|
(828
|
)
|
|
(560
|
)
|
|
(470
|
)
|
|
(406
|
)
|
|
(320
|
)
|
|
(293
|
)
|
||||||
Consolidated
|
|
$
|
2,012
|
|
|
$
|
3,438
|
|
|
$
|
1,692
|
|
|
|
|
|
|
|
(1)
|
Allstate Protection and Discontinued Lines and Coverages segments comprise Property-Liability.
|
(2)
|
The measure of segment profit or loss used in evaluating performance is underwriting income for the Allstate Protection and Discontinued Lines and Coverages segments while all other segments use adjusted net income (loss).
|
Note 3
|
Acquisitions
|
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
|
•
Pension and other postretirement remeasurement gains and losses, after-tax
|
•
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)
|
|
2018
|
|
2017
|
|
2016
|
||||||
Property-Liability
|
|
|
|
|
|
|
||||||
Insurance premiums
|
|
|
|
|
|
|
||||||
Auto
|
|
$
|
22,970
|
|
|
$
|
21,878
|
|
|
$
|
21,264
|
|
Homeowners
|
|
7,517
|
|
|
7,310
|
|
|
7,257
|
|
|||
Other personal lines
|
|
1,808
|
|
|
1,750
|
|
|
1,700
|
|
|||
Commercial lines
|
|
655
|
|
|
495
|
|
|
506
|
|
|||
Allstate Protection
|
|
32,950
|
|
|
31,433
|
|
|
30,727
|
|
|||
Discontinued Lines and Coverages
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total Property-Liability insurance premiums
|
|
32,950
|
|
|
31,433
|
|
|
30,727
|
|
|||
Other revenue
|
|
738
|
|
|
703
|
|
|
688
|
|
|||
Net investment income
|
|
1,464
|
|
|
1,478
|
|
|
1,253
|
|
|||
Realized capital gains and losses
|
|
(639
|
)
|
|
401
|
|
|
(6
|
)
|
|||
Total Property-Liability
|
|
34,513
|
|
|
34,015
|
|
|
32,662
|
|
|||
|
|
|
|
|
|
|
||||||
Service Businesses
|
|
|
|
|
|
|
||||||
Consumer product protection plans
|
|
503
|
|
|
295
|
|
|
—
|
|
|||
Roadside assistance
|
|
263
|
|
|
268
|
|
|
310
|
|
|||
Finance and insurance products
|
|
332
|
|
|
304
|
|
|
270
|
|
|||
Intersegment premiums and service fees
(1)
|
|
122
|
|
|
110
|
|
|
105
|
|
|||
Other revenue
|
|
82
|
|
|
66
|
|
|
64
|
|
|||
Net investment income
|
|
27
|
|
|
16
|
|
|
13
|
|
|||
Realized capital gains and losses
|
|
(11
|
)
|
|
—
|
|
|
—
|
|
|||
Total Service Businesses
|
|
1,318
|
|
|
1,059
|
|
|
762
|
|
|||
|
|
|
|
|
|
|
||||||
Allstate Life
|
|
|
|
|
|
|
||||||
Traditional life insurance premiums
|
|
600
|
|
|
568
|
|
|
533
|
|
|||
Accident and health insurance premiums
|
|
2
|
|
|
2
|
|
|
2
|
|
|||
Interest-sensitive life insurance contract charges
|
|
713
|
|
|
710
|
|
|
715
|
|
|||
Other revenue
|
|
119
|
|
|
114
|
|
|
113
|
|
|||
Net investment income
|
|
505
|
|
|
489
|
|
|
482
|
|
|||
Realized capital gains and losses
|
|
(14
|
)
|
|
5
|
|
|
(38
|
)
|
|||
Total Allstate Life
|
|
1,925
|
|
|
1,888
|
|
|
1,807
|
|
|||
|
|
|
|
|
|
|
||||||
Allstate Benefits
|
|
|
|
|
|
|
||||||
Traditional life insurance premiums
|
|
44
|
|
|
42
|
|
|
40
|
|
|||
Accident and health insurance premiums
|
|
980
|
|
|
928
|
|
|
857
|
|
|||
Interest-sensitive life insurance contract charges
|
|
111
|
|
|
114
|
|
|
114
|
|
|||
Net investment income
|
|
77
|
|
|
72
|
|
|
71
|
|
|||
Realized capital gains and losses
|
|
(9
|
)
|
|
1
|
|
|
(5
|
)
|
|||
Total Allstate Benefits
|
|
1,203
|
|
|
1,157
|
|
|
1,077
|
|
|||
|
|
|
|
|
|
|
||||||
Allstate Annuities
|
|
|
|
|
|
|
||||||
Fixed annuities contract charges
|
|
15
|
|
|
14
|
|
|
14
|
|
|||
Net investment income
|
|
1,096
|
|
|
1,305
|
|
|
1,181
|
|
|||
Realized capital gains and losses
|
|
(166
|
)
|
|
44
|
|
|
(38
|
)
|
|||
Total Allstate Annuities
|
|
945
|
|
|
1,363
|
|
|
1,157
|
|
|||
|
|
|
|
|
|
|
||||||
Corporate and Other
|
|
|
|
|
|
|
||||||
Net investment income
|
|
71
|
|
|
41
|
|
|
42
|
|
|||
Realized capital gains and losses
|
|
(38
|
)
|
|
(6
|
)
|
|
(3
|
)
|
|||
Total Corporate and Other
|
|
33
|
|
|
35
|
|
|
39
|
|
|||
Intersegment eliminations
(1)
|
|
(122
|
)
|
|
(110
|
)
|
|
(105
|
)
|
|||
Consolidated revenues
|
|
$
|
39,815
|
|
|
$
|
39,407
|
|
|
$
|
37,399
|
|
Reportable segments financial performance
|
||||||||||||
|
|
For the years ended December 31,
|
||||||||||
($ in millions)
|
|
2018
|
|
2017
|
|
2016
|
||||||
Property-Liability
|
|
|
|
|
|
|
||||||
Allstate Protection
|
|
$
|
2,343
|
|
|
$
|
2,304
|
|
|
$
|
1,477
|
|
Discontinued Lines and Coverages
|
|
(90
|
)
|
|
(99
|
)
|
|
(107
|
)
|
|||
Total underwriting income
|
|
2,253
|
|
|
2,205
|
|
|
1,370
|
|
|||
Net investment income
|
|
1,464
|
|
|
1,478
|
|
|
1,253
|
|
|||
Income tax expense on operations
|
|
(747
|
)
|
|
(1,187
|
)
|
|
(865
|
)
|
|||
Realized capital gains and losses, after-tax
|
|
(500
|
)
|
|
272
|
|
|
—
|
|
|||
Gain on disposition of operations, after-tax
|
|
—
|
|
|
9
|
|
|
—
|
|
|||
Tax Legislation (expense) benefit
|
|
(5
|
)
|
|
36
|
|
|
—
|
|
|||
Property-Liability net income applicable to common shareholders
|
|
2,465
|
|
|
2,813
|
|
|
1,758
|
|
|||
|
|
|
|
|
|
|
||||||
Service Businesses
|
|
|
|
|
|
|
||||||
Adjusted net income (loss)
|
|
8
|
|
|
(54
|
)
|
|
5
|
|
|||
Realized capital gains and losses, after-tax
|
|
(9
|
)
|
|
—
|
|
|
—
|
|
|||
Amortization of purchased intangible assets, after-tax
|
|
(74
|
)
|
|
(60
|
)
|
|
—
|
|
|||
Tax Legislation (expense) benefit
|
|
(4
|
)
|
|
137
|
|
|
—
|
|
|||
Service Businesses net (loss) income applicable to common shareholders
|
|
(79
|
)
|
|
23
|
|
|
5
|
|
|||
|
|
|
|
|
|
|
||||||
Allstate Life
|
|
|
|
|
|
|
||||||
Adjusted net income
|
|
295
|
|
|
259
|
|
|
251
|
|
|||
Realized capital gains and losses, after-tax
|
|
(11
|
)
|
|
2
|
|
|
(24
|
)
|
|||
DAC and DSI amortization related to realized capital gains and losses, after-tax
|
|
(8
|
)
|
|
(10
|
)
|
|
(4
|
)
|
|||
Tax Legislation (expense) benefit
|
|
(16
|
)
|
|
338
|
|
|
—
|
|
|||
Allstate Life net income applicable to common shareholders
|
|
260
|
|
|
589
|
|
|
223
|
|
|||
|
|
|
|
|
|
|
||||||
Allstate Benefits
|
|
|
|
|
|
|
||||||
Adjusted net income
|
|
124
|
|
|
100
|
|
|
103
|
|
|||
Realized capital gains and losses, after-tax
|
|
(7
|
)
|
|
—
|
|
|
(4
|
)
|
|||
DAC and DSI amortization related to realized capital gains and losses, after-tax
|
|
1
|
|
|
—
|
|
|
—
|
|
|||
Tax Legislation benefit
|
|
—
|
|
|
54
|
|
|
—
|
|
|||
Allstate Benefits net income applicable to common shareholders
|
|
118
|
|
|
154
|
|
|
99
|
|
|||
|
|
|
|
|
|
|
||||||
Allstate Annuities
|
|
|
|
|
|
|
||||||
Adjusted net income
|
|
131
|
|
|
205
|
|
|
102
|
|
|||
Realized capital gains and losses, after-tax
|
|
(131
|
)
|
|
28
|
|
|
(26
|
)
|
|||
Valuation changes on embedded derivatives not hedged, after-tax
|
|
3
|
|
|
—
|
|
|
(2
|
)
|
|||
Gain on disposition of operations, after-tax
|
|
4
|
|
|
4
|
|
|
3
|
|
|||
Tax Legislation benefit
|
|
69
|
|
|
182
|
|
|
—
|
|
|||
Allstate Annuities net income applicable to common shareholders
|
|
76
|
|
|
419
|
|
|
77
|
|
|||
|
|
|
|
|
|
|
||||||
Corporate and Other
|
|
|
|
|
|
|
||||||
Adjusted net loss
|
|
(406
|
)
|
|
(320
|
)
|
|
(293
|
)
|
|||
Realized capital gains and losses, after-tax
|
|
(30
|
)
|
|
(4
|
)
|
|
(2
|
)
|
|||
Pension and other postretirement remeasurement gains and losses, after-tax
|
|
(370
|
)
|
|
141
|
|
|
(175
|
)
|
|||
Goodwill impairment
|
|
—
|
|
|
(125
|
)
|
|
—
|
|
|||
Business combination expenses, after-tax
|
|
(7
|
)
|
|
(14
|
)
|
|
—
|
|
|||
Tax Legislation expense
|
|
(15
|
)
|
|
(238
|
)
|
|
—
|
|
|||
Corporate and Other net loss applicable to common shareholders
|
|
(828
|
)
|
|
(560
|
)
|
|
(470
|
)
|
|||
|
|
|
|
|
|
|
||||||
Consolidated net income applicable to common shareholders
|
|
$
|
2,012
|
|
|
$
|
3,438
|
|
|
$
|
1,692
|
|
Additional significant financial performance data
|
|
|
|
|
|
|
||||||
|
|
For the years ended December 31,
|
||||||||||
($ in millions)
|
|
2018
|
|
2017
|
|
2016
|
||||||
Amortization of DAC
|
|
|
|
|
|
|
||||||
Property-Liability
|
|
$
|
4,475
|
|
|
$
|
4,205
|
|
|
$
|
4,053
|
|
Service Businesses
|
|
463
|
|
|
296
|
|
|
214
|
|
|||
Allstate Life
|
|
132
|
|
|
134
|
|
|
131
|
|
|||
Allstate Benefits
|
|
145
|
|
|
142
|
|
|
145
|
|
|||
Allstate Annuities
|
|
7
|
|
|
7
|
|
|
7
|
|
|||
Consolidated
|
|
$
|
5,222
|
|
|
$
|
4,784
|
|
|
$
|
4,550
|
|
|
|
|
|
|
|
|
||||||
Income tax expense (benefit)
|
|
|
|
|
|
|
||||||
Property-Liability
|
|
$
|
613
|
|
|
$
|
1,285
|
|
|
$
|
859
|
|
Service Businesses
|
|
(19
|
)
|
|
(194
|
)
|
|
2
|
|
|||
Allstate Life
|
|
75
|
|
|
(226
|
)
|
|
94
|
|
|||
Allstate Benefits
|
|
32
|
|
|
1
|
|
|
52
|
|
|||
Allstate Annuities
|
|
(66
|
)
|
|
(58
|
)
|
|
36
|
|
|||
Corporate and Other
|
|
(167
|
)
|
|
187
|
|
|
(201
|
)
|
|||
Consolidated
|
|
$
|
468
|
|
|
$
|
995
|
|
|
$
|
842
|
|
Impacts of Tax Legislation
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
Income tax expense (benefit) before Tax Legislation
|
|
Tax Legislation expense (benefit)
|
|
Income tax expense (benefit) after Tax Legislation
|
||||||||||||||||||
|
|
For the years ended December 31,
|
||||||||||||||||||||||
($ in millions)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||||||
Income tax expense (benefit)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Property-Liability
|
|
$
|
608
|
|
|
$
|
1,321
|
|
|
$
|
5
|
|
|
$
|
(36
|
)
|
|
$
|
613
|
|
|
$
|
1,285
|
|
Service Businesses
|
|
(23
|
)
|
|
(57
|
)
|
|
4
|
|
|
(137
|
)
|
|
(19
|
)
|
|
(194
|
)
|
||||||
Allstate Life
|
|
59
|
|
|
112
|
|
|
16
|
|
|
(338
|
)
|
|
75
|
|
|
(226
|
)
|
||||||
Allstate Benefits
|
|
32
|
|
|
55
|
|
|
—
|
|
|
(54
|
)
|
|
32
|
|
|
1
|
|
||||||
Allstate Annuities
|
|
3
|
|
|
124
|
|
|
(69
|
)
|
|
(182
|
)
|
|
(66
|
)
|
|
(58
|
)
|
||||||
Corporate and Other
|
|
(182
|
)
|
|
(51
|
)
|
|
15
|
|
|
238
|
|
|
(167
|
)
|
|
187
|
|
||||||
Consolidated
|
|
$
|
497
|
|
|
$
|
1,504
|
|
|
$
|
(29
|
)
|
|
$
|
(509
|
)
|
|
$
|
468
|
|
|
$
|
995
|
|
Reportable segment total assets and investments
(1)
|
|
|
|
|
||||
|
|
As of December 31,
|
||||||
($ in millions)
|
|
2018
|
|
2017
|
||||
Assets
|
|
|
|
|
||||
Property-Liability
|
|
$
|
61,947
|
|
|
$
|
60,197
|
|
Service Businesses
|
|
5,473
|
|
|
4,531
|
|
||
Allstate Life
|
|
13,613
|
|
|
14,107
|
|
||
Allstate Benefits
|
|
2,822
|
|
|
2,766
|
|
||
Allstate Annuities
|
|
26,798
|
|
|
28,836
|
|
||
Corporate and Other
|
|
1,596
|
|
|
1,985
|
|
||
Consolidated
|
|
$
|
112,249
|
|
|
$
|
112,422
|
|
|
|
|
|
|
||||
Investments
|
|
|
|
|
||||
Property-Liability
|
|
$
|
43,634
|
|
|
$
|
43,183
|
|
Service Businesses
|
|
1,203
|
|
|
954
|
|
||
Allstate Life
|
|
10,809
|
|
|
11,210
|
|
||
Allstate Benefits
|
|
1,809
|
|
|
1,776
|
|
||
Allstate Annuities
|
|
22,336
|
|
|
23,722
|
|
||
Corporate and Other
|
|
1,469
|
|
|
1,958
|
|
||
Consolidated
|
|
$
|
81,260
|
|
|
$
|
82,803
|
|
(1)
|
The balances reflect the elimination of related party investments between segments.
|
Note 5
|
Investments
|
Amortized cost, gross unrealized gains (losses) and fair value for fixed income securities
|
||||||||||||||||
|
|
Amortized
cost
|
|
Gross unrealized
|
|
Fair
value
|
||||||||||
($ in millions)
|
|
|
Gains
|
|
Losses
|
|
||||||||||
December 31, 2018
|
|
|
|
|
|
|
|
|
||||||||
U.S. government and agencies
|
|
$
|
5,386
|
|
|
$
|
137
|
|
|
$
|
(6
|
)
|
|
$
|
5,517
|
|
Municipal
|
|
8,963
|
|
|
249
|
|
|
(43
|
)
|
|
9,169
|
|
||||
Corporate
|
|
40,536
|
|
|
490
|
|
|
(890
|
)
|
|
40,136
|
|
||||
Foreign government
|
|
739
|
|
|
13
|
|
|
(5
|
)
|
|
747
|
|
||||
ABS
|
|
1,049
|
|
|
6
|
|
|
(10
|
)
|
|
1,045
|
|
||||
RMBS
|
|
377
|
|
|
89
|
|
|
(2
|
)
|
|
464
|
|
||||
CMBS
|
|
63
|
|
|
8
|
|
|
(1
|
)
|
|
70
|
|
||||
Redeemable preferred stock
|
|
21
|
|
|
1
|
|
|
—
|
|
|
22
|
|
||||
Total fixed income securities
|
|
$
|
57,134
|
|
|
$
|
993
|
|
|
$
|
(957
|
)
|
|
$
|
57,170
|
|
|
|
|
|
|
|
|
|
|
||||||||
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
|
|
Net investment income
|
||||||||||||
|
|
For the years ended December 31,
|
||||||||||
($ in millions)
|
|
2018
|
|
2017
|
|
2016
|
||||||
Fixed income securities
|
|
$
|
2,077
|
|
|
$
|
2,078
|
|
|
$
|
2,060
|
|
Equity securities
|
|
170
|
|
|
174
|
|
|
137
|
|
|||
Mortgage loans
|
|
217
|
|
|
206
|
|
|
217
|
|
|||
Limited partnership interests
(1)(2)
|
|
705
|
|
|
889
|
|
|
561
|
|
|||
Short-term investments
|
|
73
|
|
|
30
|
|
|
16
|
|
|||
Other
|
|
272
|
|
|
236
|
|
|
222
|
|
|||
Investment income, before expense
|
|
3,514
|
|
|
3,613
|
|
|
3,213
|
|
|||
Investment expense
|
|
(274
|
)
|
|
(212
|
)
|
|
(171
|
)
|
|||
Net investment income
|
|
$
|
3,240
|
|
|
$
|
3,401
|
|
|
$
|
3,042
|
|
(1)
|
Due to the adoption of the recognition and measurement accounting standard, limited partnerships previously reported using the cost method are now reported at fair value with changes in fair value recognized in net investment income.
|
(2)
|
Includes net investment income of
$451 million
for EMA limited partnership interests and
$254 million
for limited partnership interests carried at fair value for
2018
.
|
Realized capital gains (losses) by transaction type
|
||||||||||||
|
|
For the years ended December 31,
|
||||||||||
($ in millions)
|
|
2018
|
|
2017
|
|
2016
|
||||||
Impairment write-downs
(1)
|
|
$
|
(14
|
)
|
|
$
|
(102
|
)
|
|
$
|
(234
|
)
|
Change in intent write-downs
(1)
|
|
—
|
|
|
(48
|
)
|
|
(69
|
)
|
|||
Net OTTI losses recognized in earnings
|
|
(14
|
)
|
|
(150
|
)
|
|
(303
|
)
|
|||
Sales
(1)
|
|
(215
|
)
|
|
641
|
|
|
213
|
|
|||
Valuation of equity investments
(1)
(2)
|
|
(691
|
)
|
|
—
|
|
|
—
|
|
|||
Valuation and settlements of derivative instruments
|
|
43
|
|
|
(46
|
)
|
|
—
|
|
|||
Realized capital gains and losses
|
|
$
|
(877
|
)
|
|
$
|
445
|
|
|
$
|
(90
|
)
|
(1)
|
Due to the adoption of the recognition and measurement accounting standard, equity securities are reported at fair value with changes in fair value recognized in valuation of equity investments and are no longer included in impairment write-downs, change in intent write-downs and sales.
|
(2)
|
Includes valuation of equity securities and certain limited partnership interests where the underlying assets are predominately public equity securities.
|
Net appreciation (decline) recognized in net income
|
||||
|
|
For the year ended
|
||
($ in millions)
|
|
December 31, 2018
|
||
Equity securities
|
|
$
|
(261
|
)
|
Limited partnership interests carried at fair value
|
|
249
|
|
|
Total
|
|
$
|
(12
|
)
|
OTTI losses by asset type
|
||||||||||||||||||||||||||||||||||||
|
|
For the years ended December 31,
|
||||||||||||||||||||||||||||||||||
($ in millions)
|
|
2018
|
|
2017
|
|
2016
|
||||||||||||||||||||||||||||||
|
|
Gross
|
|
Included in OCI
|
|
Net
|
|
Gross
|
|
Included in OCI
|
|
Net
|
|
Gross
|
|
Included in OCI
|
|
Net
|
||||||||||||||||||
Fixed income securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Municipal
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
(3
|
)
|
|
$
|
(4
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Corporate
|
|
(4
|
)
|
|
2
|
|
|
(2
|
)
|
|
(9
|
)
|
|
3
|
|
|
(6
|
)
|
|
(33
|
)
|
|
9
|
|
|
(24
|
)
|
|||||||||
ABS
|
|
(1
|
)
|
|
(2
|
)
|
|
(3
|
)
|
|
(1
|
)
|
|
(2
|
)
|
|
(3
|
)
|
|
(6
|
)
|
|
—
|
|
|
(6
|
)
|
|||||||||
RMBS
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|
(2
|
)
|
|
(3
|
)
|
|
(5
|
)
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
|||||||||
CMBS
|
|
(3
|
)
|
|
(1
|
)
|
|
(4
|
)
|
|
(9
|
)
|
|
1
|
|
|
(8
|
)
|
|
(15
|
)
|
|
2
|
|
|
(13
|
)
|
|||||||||
Total fixed income securities
|
|
(9
|
)
|
|
(1
|
)
|
|
(10
|
)
|
|
(22
|
)
|
|
(4
|
)
|
|
(26
|
)
|
|
(54
|
)
|
|
10
|
|
|
(44
|
)
|
|||||||||
Equity securities
(1)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(86
|
)
|
|
—
|
|
|
(86
|
)
|
|
(194
|
)
|
|
—
|
|
|
(194
|
)
|
|||||||||
Mortgage loans
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Limited partnership interests
(1)
|
|
(3
|
)
|
|
—
|
|
|
(3
|
)
|
|
(32
|
)
|
|
—
|
|
|
(32
|
)
|
|
(56
|
)
|
|
—
|
|
|
(56
|
)
|
|||||||||
Other
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|
(5
|
)
|
|
—
|
|
|
(5
|
)
|
|
(9
|
)
|
|
—
|
|
|
(9
|
)
|
|||||||||
OTTI losses
|
|
$
|
(13
|
)
|
|
$
|
(1
|
)
|
|
$
|
(14
|
)
|
|
$
|
(146
|
)
|
|
$
|
(4
|
)
|
|
$
|
(150
|
)
|
|
$
|
(313
|
)
|
|
$
|
10
|
|
|
$
|
(303
|
)
|
(1)
|
Due to the adoption of the recognition and measurement accounting standard, equity securities and limited partnerships previously reported using the cost method are now reported at fair value with changes in fair value recognized in net income and are no longer included in the table above.
|
(1)
|
Unrealized net capital gains and losses for limited partnership interests represent the Company’s share of EMA limited partnerships’ OCI. Fair value and gross unrealized gains and losses are not applicable.
|
(2)
|
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 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).
|
(3)
|
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.
|
(1)
|
Included in the fair value of derivative instruments is
$2 million
classified as liabilities.
|
Change in unrealized net capital gains (losses)
|
||||||||||||
|
|
For the years ended December 31,
|
||||||||||
($ in millions)
|
|
2018
|
|
2017
|
|
2016
|
||||||
Fixed income securities
|
|
$
|
(1,431
|
)
|
|
$
|
204
|
|
|
$
|
516
|
|
Equity securities
(1)
|
|
—
|
|
|
651
|
|
|
233
|
|
|||
Derivative instruments
|
|
(2
|
)
|
|
(3
|
)
|
|
(4
|
)
|
|||
EMA limited partnerships
|
|
(1
|
)
|
|
5
|
|
|
—
|
|
|||
Total
|
|
(1,434
|
)
|
|
857
|
|
|
745
|
|
|||
Amounts recognized for:
|
|
|
|
|
|
|
||||||
Insurance reserves
|
|
315
|
|
|
(315
|
)
|
|
—
|
|
|||
DAC and DSI
|
|
163
|
|
|
(50
|
)
|
|
(79
|
)
|
|||
Amounts recognized
|
|
478
|
|
|
(365
|
)
|
|
(79
|
)
|
|||
Deferred income taxes
|
|
202
|
|
|
117
|
|
|
(233
|
)
|
|||
(Decrease) increase in unrealized net capital gains and losses, after-tax
|
|
$
|
(754
|
)
|
|
$
|
609
|
|
|
$
|
433
|
|
(1)
|
Upon adoption of the recognition and measurement accounting standard on January 1, 2018,
$1.16 billion
of pre-tax unrealized net capital gains for equity securities were reclassified from AOCI to retained income. See Note 2 for further details.
|
Net carrying value of impaired mortgage loans
|
||||||||
|
|
As of December 31,
|
||||||
($ in millions)
|
|
2018
|
|
2017
|
||||
Impaired mortgage loans with a valuation allowance
|
|
$
|
4
|
|
|
$
|
4
|
|
Impaired mortgage loans without a valuation allowance
|
|
—
|
|
|
—
|
|
||
Total impaired mortgage loans
|
|
$
|
4
|
|
|
$
|
4
|
|
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 that are readily determinable 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 values for identical or similar assets in markets that are not active.
|
•
|
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.
|
•
|
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.
|
•
|
Short-term:
For certain short-term investments, amortized cost is used as the best estimate of fair value.
|
•
|
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 the financial services industry. These are categorized as Level 3 as a result of the significance of non-market observable inputs such as volatility. Other primary inputs include interest rate yield curves and credit spreads.
|
•
|
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 interest rate yield curves and equity index volatility assumptions. These are categorized as Level 3 as a result of the significance of non-market observable inputs.
|
Assets and liabilities measured at fair value
|
||||||||||||||||||||
|
|
As of December 31, 2018
|
||||||||||||||||||
($ in millions)
|
|
Quoted prices in active markets for identical assets
(Level 1)
|
|
Significant other observable inputs
(Level 2)
|
|
Significant unobservable inputs
(Level 3)
|
|
Counterparty and cash collateral netting
|
|
Total
|
||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed income securities:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. government and agencies
|
|
$
|
5,085
|
|
|
$
|
432
|
|
|
$
|
—
|
|
|
|
|
$
|
5,517
|
|
||
Municipal
|
|
—
|
|
|
9,099
|
|
|
70
|
|
|
|
|
9,169
|
|
||||||
Corporate - public
|
|
—
|
|
|
29,200
|
|
|
70
|
|
|
|
|
29,270
|
|
||||||
Corporate - privately placed
|
|
—
|
|
|
10,776
|
|
|
90
|
|
|
|
|
10,866
|
|
||||||
Foreign government
|
|
—
|
|
|
747
|
|
|
—
|
|
|
|
|
747
|
|
||||||
ABS - CDO
|
|
—
|
|
|
263
|
|
|
6
|
|
|
|
|
269
|
|
||||||
ABS - consumer and other
|
|
—
|
|
|
713
|
|
|
63
|
|
|
|
|
776
|
|
||||||
RMBS
|
|
—
|
|
|
464
|
|
|
—
|
|
|
|
|
464
|
|
||||||
CMBS
|
|
—
|
|
|
44
|
|
|
26
|
|
|
|
|
70
|
|
||||||
Redeemable preferred stock
|
|
—
|
|
|
22
|
|
|
—
|
|
|
|
|
22
|
|
||||||
Total fixed income securities
|
|
5,085
|
|
|
51,760
|
|
|
325
|
|
|
|
|
57,170
|
|
||||||
Equity securities
|
|
4,364
|
|
|
331
|
|
|
341
|
|
|
|
|
5,036
|
|
||||||
Short-term investments
|
|
1,338
|
|
|
1,659
|
|
|
30
|
|
|
|
|
3,027
|
|
||||||
Other investments: Free-standing derivatives
|
|
—
|
|
|
139
|
|
|
1
|
|
|
(23
|
)
|
|
117
|
|
|||||
Separate account assets
|
|
2,805
|
|
|
—
|
|
|
—
|
|
|
|
|
2,805
|
|
||||||
Other assets
|
|
2
|
|
|
—
|
|
|
—
|
|
|
|
|
2
|
|
||||||
Total recurring basis assets
|
|
$
|
13,594
|
|
|
$
|
53,889
|
|
|
$
|
697
|
|
|
$
|
(23
|
)
|
|
$
|
68,157
|
|
% of total assets at fair value
|
|
19.9
|
%
|
|
79.1
|
%
|
|
1.0
|
%
|
|
—
|
%
|
|
100.0
|
%
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Investments reported at NAV
|
|
|
|
|
|
|
|
|
|
1,779
|
|
|||||||||
Total
|
|
|
|
|
|
|
|
|
|
$
|
69,936
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Liabilities
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Contractholder funds: Derivatives embedded in life and annuity contracts
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(224
|
)
|
|
|
|
$
|
(224
|
)
|
||
Other liabilities: Free-standing derivatives
|
|
(1
|
)
|
|
(62
|
)
|
|
—
|
|
|
$
|
6
|
|
|
(57
|
)
|
||||
Total recurring basis liabilities
|
|
$
|
(1
|
)
|
|
$
|
(62
|
)
|
|
$
|
(224
|
)
|
|
$
|
6
|
|
|
$
|
(281
|
)
|
% of total liabilities at fair value
|
|
0.3
|
%
|
|
22.1
|
%
|
|
79.7
|
%
|
|
(2.1
|
)%
|
|
100.0
|
%
|
(1)
|
Includes
$3 million
of limited partnership interests written-down to fair value in connection with recognizing OTTI losses.
|
Quantitative information about the significant unobservable inputs used in Level 3 fair value measurements
|
||||||||||||
($ in millions)
|
|
Fair value
|
|
Valuation
technique
|
|
Unobservable
input
|
|
Range
|
|
Weighted
average
|
||
December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
||
Derivatives embedded in life and annuity contracts – Equity-indexed and forward starting options
|
|
$
|
(185
|
)
|
|
Stochastic cash flow model
|
|
Projected option cost
|
|
1.0 - 2.2%
|
|
1.74%
|
|
|
|
|
|
|
|
|
|
|
|
||
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%
|
(1)
|
The effect to net income totals
$95 million
and is reported in the Consolidated Statements of Operations as follows:
$37 million
in realized capital gains and losses,
$63 million
in interest credited to contractholder funds and
$(5) million
in life contract benefits.
|
(2)
|
Comprises
$1 million
of assets.
|
Rollforward of Level 3 assets and liabilities held at fair value during the year ended December 31, 2017
|
|||||||||||||||||||||
|
|
Balance as of December 31, 2016
|
|
Total gains (losses) included in:
|
|
Transfers into Level 3
|
|
Transfers out of Level 3
|
|
||||||||||||
($ in millions)
|
|
|
Net income
(1)
|
|
OCI
|
|
|
|
|||||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed income securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Municipal
|
|
125
|
|
|
(1
|
)
|
|
7
|
|
|
—
|
|
|
(6
|
)
|
|
|||||
Corporate - public
|
|
78
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
(30
|
)
|
|
|||||
Corporate - privately placed
|
|
263
|
|
|
8
|
|
|
(2
|
)
|
|
30
|
|
|
(49
|
)
|
|
|||||
ABS - CDO
|
|
27
|
|
|
—
|
|
|
6
|
|
|
60
|
|
|
(190
|
)
|
|
|||||
ABS - consumer and other
|
|
42
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(90
|
)
|
|
|||||
RMBS
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|||||
CMBS
|
|
22
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|||||
Total fixed income securities
|
|
558
|
|
|
7
|
|
|
11
|
|
|
94
|
|
|
(365
|
)
|
|
|||||
Equity securities
|
|
163
|
|
|
13
|
|
|
4
|
|
|
—
|
|
|
(4
|
)
|
|
|||||
Short-term investments
|
|
15
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|||||
Free-standing derivatives, net
|
|
(2
|
)
|
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|||||
Other assets
|
|
1
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|||||
Total recurring Level 3 assets
|
|
$
|
735
|
|
|
$
|
22
|
|
|
$
|
15
|
|
|
$
|
94
|
|
|
$
|
(369
|
)
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Contractholder funds: Derivatives embedded in life and annuity contracts
|
|
$
|
(290
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Total recurring Level 3 liabilities
|
|
$
|
(290
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
Purchases
|
|
Sales
|
|
Issues
|
|
Settlements
|
|
Balance as of December 31, 2017
|
|
||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed income securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Municipal
|
|
8
|
|
|
(29
|
)
|
|
—
|
|
|
(3
|
)
|
|
101
|
|
|
|||||
Corporate - public
|
|
60
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
108
|
|
|
|||||
Corporate - privately placed
|
|
44
|
|
|
(30
|
)
|
|
—
|
|
|
(40
|
)
|
|
224
|
|
|
|||||
ABS - CDO
|
|
219
|
|
|
—
|
|
|
—
|
|
|
(23
|
)
|
|
99
|
|
|
|||||
ABS - consumer and other
|
|
103
|
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
|
48
|
|
|
|||||
RMBS
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
|||||
CMBS
|
|
6
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
26
|
|
|
|||||
Total fixed income securities
|
|
440
|
|
|
(59
|
)
|
|
—
|
|
|
(80
|
)
|
|
606
|
|
|
|||||
Equity securities
|
|
48
|
|
|
(14
|
)
|
|
—
|
|
|
—
|
|
|
210
|
|
|
|||||
Short-term investments
|
|
45
|
|
|
(40
|
)
|
|
—
|
|
|
—
|
|
|
20
|
|
|
|||||
Free-standing derivatives, net
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
(2)
|
|||||
Other assets
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|||||
Total recurring Level 3 assets
|
|
$
|
533
|
|
|
$
|
(113
|
)
|
|
$
|
—
|
|
|
$
|
(80
|
)
|
|
$
|
837
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Contractholder funds: Derivatives embedded in life and annuity contracts
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(2
|
)
|
|
$
|
6
|
|
|
$
|
(286
|
)
|
|
Total recurring Level 3 liabilities
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(2
|
)
|
|
$
|
6
|
|
|
$
|
(286
|
)
|
|
(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.
|
(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
$3 million
of liabilities.
|
Note 7
|
Derivative Financial Instruments and Off-balance Sheet Financial Instruments
|
(1)
|
Volume for OTC and cleared derivative contracts is represented by their notional amounts. Volume for exchange traded derivatives is represented by the number of contracts, which is the basis on which they are traded. (n/a = not applicable)
|
(1)
|
Volume for OTC and cleared derivative contracts is represented by their notional amounts. Volume for exchange traded derivatives is represented by the number of contracts, which is the basis on which they are traded. (n/a = not applicable)
|
(1)
|
All OTC derivatives are subject to enforceable master netting agreements.
|
Summary of the impacts of the foreign currency contracts in cash flow hedging relationships
|
||||||||||||
|
|
For the years ended December 31,
|
||||||||||
($ in millions)
|
|
2018
|
|
2017
|
|
2016
|
||||||
Gain (loss) recognized in OCI on derivatives during the period
|
|
$
|
1
|
|
|
$
|
(2
|
)
|
|
$
|
—
|
|
(Loss) gain recognized in OCI on derivatives during the term of the hedging relationship
|
|
(3
|
)
|
|
(1
|
)
|
|
2
|
|
|||
Gain reclassified from AOCI into income (net investment income)
|
|
—
|
|
|
1
|
|
|
1
|
|
|||
Gain reclassified from AOCI into income (realized capital gains and losses)
|
|
3
|
|
|
—
|
|
|
3
|
|
(1)
|
Allstate uses the lower of S&P’s or Moody’s long term debt issuer ratings.
|
(2)
|
Only OTC derivatives with a net positive fair value are included for each counterparty.
|
($ in millions)
|
|
2018
|
|
2017
|
||||
Gross liability fair value of contracts containing credit-risk-contingent features
|
|
$
|
11
|
|
|
$
|
28
|
|
Gross asset fair value of contracts containing credit-risk-contingent features and subject to MNAs
|
|
(5
|
)
|
|
(17
|
)
|
||
Collateral posted under MNAs for contracts containing credit-risk-contingent features
|
|
(2
|
)
|
|
(6
|
)
|
||
Maximum amount of additional exposure for contracts with credit-risk-contingent features if all features were triggered concurrently
|
|
$
|
4
|
|
|
$
|
5
|
|
Note 8
|
Reserve for Property and Casualty Insurance Claims and Claims Expense
|
Reconciliation of total claims and claims expense incurred and paid by coverage
|
|
December 31, 2018
|
||||||
($ in millions)
|
|
Incurred
|
|
Paid
|
||||
Allstate Protection
|
|
|
|
|
||||
Auto insurance - liability coverage
|
|
$
|
8,413
|
|
|
$
|
(7,535
|
)
|
Auto insurance - physical damage coverage
|
|
5,088
|
|
|
(5,134
|
)
|
||
Homeowners insurance
|
|
4,817
|
|
|
(4,714
|
)
|
||
Total auto and homeowners insurance
|
|
18,318
|
|
|
(17,383
|
)
|
||
Other personal lines
|
|
1,081
|
|
|
(1,055
|
)
|
||
Commercial lines
|
|
545
|
|
|
(369
|
)
|
||
Service Businesses
|
|
313
|
|
|
(325
|
)
|
||
Discontinued Lines and Coverages
|
|
73
|
|
|
(91
|
)
|
||
Unallocated loss adjustment expenses (“ULAE”)
|
|
2,479
|
|
|
(2,574
|
)
|
||
Claims incurred and paid from before 2014
|
|
(68
|
)
|
|
(398
|
)
|
||
Other
|
|
37
|
|
|
(169
|
)
|
||
Total
|
|
$
|
22,778
|
|
|
$
|
(22,364
|
)
|
($ in millions, except number of reported claims)
|
|
Incurred claims and allocated claim adjustment expenses, net of recoverables
|
|
|
|
IBNR reserves plus expected development on reported claims
|
|
Cumulative number of reported claims
|
|||||||||||||||||||||||
|
|
For the years ended December 31,
|
|
Prior year reserve reestimates
|
|
As of December 31, 2018
|
|||||||||||||||||||||||||
|
|
(unaudited)
|
|
(unaudited)
|
|
(unaudited)
|
|
(unaudited)
|
|
|
|
|
|||||||||||||||||||
Accident year
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
|
|||||||||||||||||||
2014
|
|
$
|
4,296
|
|
|
$
|
4,284
|
|
|
$
|
4,258
|
|
|
$
|
4,261
|
|
|
$
|
4,260
|
|
|
$
|
(1
|
)
|
|
$
|
3
|
|
|
4,144,633
|
|
2015
|
|
—
|
|
|
4,646
|
|
|
4,675
|
|
|
4,663
|
|
|
4,654
|
|
|
(9
|
)
|
|
6
|
|
|
4,389,912
|
|
|||||||
2016
|
|
—
|
|
|
—
|
|
|
5,118
|
|
|
5,045
|
|
|
5,018
|
|
|
(27
|
)
|
|
6
|
|
|
4,430,776
|
|
|||||||
2017
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,111
|
|
|
5,029
|
|
|
(82
|
)
|
|
1
|
|
|
4,232,605
|
|
|||||||
2018
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,207
|
|
|
|
|
246
|
|
|
4,150,524
|
|
||||||||
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
24,168
|
|
|
$
|
(119
|
)
|
|
|
|
|
||||||||||
Reconciliation to total prior year reserve reestimates recognized by line
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Prior year reserve reestimates for pre-2014 accident years
|
|
(3
|
)
|
|
|
|
|
||||||||||||||||||||||||
Prior year reserve reestimates for ULAE
|
|
(5
|
)
|
|
|
|
|
||||||||||||||||||||||||
Other
|
|
1
|
|
|
|
|
|
||||||||||||||||||||||||
Total prior year reserve reestimates
|
|
$
|
(126
|
)
|
|
|
|
|
|||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
|
Cumulative paid claims and allocated claims adjustment expenses, net of recoverables
|
|
|
|
|
|
|
|||||||||||||||||||||||
|
|
For the years ended December 31,
|
|
|
|
|
|
|
|||||||||||||||||||||||
|
|
(unaudited)
|
|
(unaudited)
|
|
(unaudited)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|||||||||||||||
Accident year
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
|
|
|
|
|
|||||||||||||||
2014
|
|
$
|
4,137
|
|
|
$
|
4,269
|
|
|
$
|
4,261
|
|
|
$
|
4,258
|
|
|
$
|
4,257
|
|
|
|
|
|
|
|
|||||
2015
|
|
—
|
|
|
4,501
|
|
|
4,665
|
|
|
4,652
|
|
|
4,648
|
|
|
|
|
|
|
|
||||||||||
2016
|
|
—
|
|
|
—
|
|
|
4,881
|
|
|
5,024
|
|
|
5,012
|
|
|
|
|
|
|
|
||||||||||
2017
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,838
|
|
|
5,029
|
|
|
|
|
|
|
|
||||||||||
2018
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,960
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
23,906
|
|
|
|
|
|
|
|
||||||||||||
All outstanding liabilities before 2014, net of recoverables
|
|
9
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Liabilities for claims and claim adjustment expenses, net of recoverables
|
|
$
|
271
|
|
|
|
|
|
|
|
Average annual percentage payout of incurred claims by age, net of recoverables, as of December 31, 2018
|
|||||||||||||||
|
|
1 year
|
|
2 years
|
|
3 years
|
|
4 years
|
|
5 years
|
|||||
Auto insurance
– p
hysical damage coverage
|
|
96.9
|
%
|
|
3.1
|
%
|
|
(0.2
|
)%
|
|
—
|
%
|
|
—
|
%
|
Average annual percentage payout of incurred claims by age, net of recoverables, as of December 31, 2018
|
|||||||||||||||
|
|
1 year
|
|
2 years
|
|
3 years
|
|
4 years
|
|
5 years
|
|||||
Homeowners insurance
|
|
74.7
|
%
|
|
18.8
|
%
|
|
2.9
|
%
|
|
1.4
|
%
|
|
0.7
|
%
|
Reconciliation of the net incurred and paid claims development tables above to the reserve for property and casualty insurance claims and claims expense
|
||||
($ in millions)
|
|
As of December 31, 2018
|
||
Net outstanding liabilities
|
|
|
||
Allstate Protection
|
|
|
||
Auto insurance - liability coverage
|
|
$
|
13,180
|
|
Auto insurance - physical damage coverage
|
|
271
|
|
|
Homeowners insurance
|
|
2,044
|
|
|
Other personal lines
|
|
1,356
|
|
|
Commercial lines
|
|
766
|
|
|
Service Businesses
|
|
50
|
|
|
Discontinued Lines and Coverages
(1)
|
|
1,315
|
|
|
ULAE
|
|
1,286
|
|
|
Net reserve for property and casualty insurance claims and claims expense
|
|
20,268
|
|
|
|
|
|
||
Recoverables
|
|
|
||
Allstate Protection
|
|
|
||
Auto insurance - liability coverage
|
|
5,829
|
|
|
Auto insurance - physical damage coverage
|
|
12
|
|
|
Homeowners insurance
|
|
472
|
|
|
Other personal lines
|
|
195
|
|
|
Commercial lines
|
|
53
|
|
|
Service Businesses
|
|
12
|
|
|
Discontinued Lines and Coverages
|
|
473
|
|
|
ULAE
|
|
109
|
|
|
Total recoverables
|
|
7,155
|
|
|
Gross reserve for property and casualty insurance claims and claims expense
|
|
$
|
27,423
|
|
(1)
|
Discontinued Lines and Coverages includes business in run-off with a majority of the claims related to accident years more than 30 years ago. IBNR reserves represent
$693 million
of the total reserves as of December 31,
2018
.
|
Note 9
|
Reserve for Life-Contingent Contract Benefits and Contractholder Funds
|
Reserve for life-contingent contract benefits
|
||||||||
|
|
As of December 31,
|
||||||
($ in millions)
|
|
2018
|
|
2017
|
||||
Immediate fixed annuities:
|
|
|
|
|
||||
Structured settlement annuities
|
|
$
|
6,701
|
|
|
$
|
6,994
|
|
Other immediate fixed annuities
|
|
1,714
|
|
|
1,855
|
|
||
Traditional life insurance
|
|
2,808
|
|
|
2,722
|
|
||
Accident and health insurance
|
|
876
|
|
|
893
|
|
||
Other
|
|
109
|
|
|
85
|
|
||
Total reserve for life-contingent contract benefits
|
|
$
|
12,208
|
|
|
$
|
12,549
|
|
(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)
|
|
2018
|
|
2017
|
||||
Interest-sensitive life insurance
|
|
$
|
8,229
|
|
|
$
|
8,190
|
|
Investment contracts:
|
|
|
|
|
||||
Fixed annuities
|
|
9,681
|
|
|
10,828
|
|
||
Other investment contracts
|
|
461
|
|
|
416
|
|
||
Total contractholder funds
|
|
$
|
18,371
|
|
|
$
|
19,434
|
|
Key contract provisions of contractholder funds
|
||||
Product
|
|
Interest rate
|
|
Withdrawal/surrender charges
|
Interest-sensitive life insurance
|
|
Interest rates credited range from 0.0% to 10.5% for equity-indexed life (whose returns are indexed to the S&P 500) and 1.0% to 6.0% for all other products
|
|
Either a percentage of account balance or dollar amount grading off generally over 20 years
|
Fixed annuities
|
|
Interest rates credited range from 0.0% to 9.8% for immediate annuities; (8.0)% to 10.8% for equity-indexed annuities (whose returns are indexed to the S&P 500); and 0.1% to 6.0% for all other products
|
|
Either a declining or a level percentage charge generally over ten years or less. Additionally, approximately 13.5% of fixed annuities are subject to market value adjustment for discretionary withdrawals
|
Other investment contracts:
Guaranteed minimum income, accumulation and withdrawal benefits on variable
(1)
and fixed annuities and secondary guarantees on interest-sensitive life insurance and fixed annuities
|
|
Interest rates used in establishing reserves range from 1.7% to 10.3%
|
|
Withdrawal and surrender charges are based on the terms of the related interest-sensitive life insurance or fixed annuity contract
|
(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)
|
|
2018
|
|
2017
|
|
2016
|
||||||
Balance, beginning of year
|
|
$
|
19,434
|
|
|
$
|
20,260
|
|
|
$
|
21,295
|
|
Deposits
|
|
1,109
|
|
|
1,130
|
|
|
1,164
|
|
|||
Interest credited
|
|
650
|
|
|
687
|
|
|
722
|
|
|||
Benefits
|
|
(844
|
)
|
|
(901
|
)
|
|
(966
|
)
|
|||
Surrenders and partial withdrawals
|
|
(1,135
|
)
|
|
(999
|
)
|
|
(1,053
|
)
|
|||
Maturities of and interest payments on institutional products
|
|
—
|
|
|
—
|
|
|
(86
|
)
|
|||
Contract charges
|
|
(824
|
)
|
|
(826
|
)
|
|
(829
|
)
|
|||
Net transfers from separate accounts
|
|
6
|
|
|
5
|
|
|
5
|
|
|||
Other adjustments
|
|
(25
|
)
|
|
78
|
|
|
8
|
|
|||
Balance, end of year
|
|
$
|
18,371
|
|
|
$
|
19,434
|
|
|
$
|
20,260
|
|
($ in millions)
|
|
As of December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
In the event of death
|
|
|
|
|
||||
Separate account value
|
|
$
|
2,711
|
|
|
$
|
3,344
|
|
Net amount at risk
(1)
|
|
$
|
605
|
|
|
$
|
454
|
|
Average attained age of contractholders
|
|
71 years
|
|
|
70 years
|
|
||
At annuitization (includes income benefit guarantees)
|
|
|
|
|
||||
Separate account value
|
|
$
|
778
|
|
|
$
|
944
|
|
Net amount at risk
(2)
|
|
$
|
264
|
|
|
$
|
202
|
|
Weighted average waiting period until annuitization options available
|
|
None
|
|
|
None
|
|
||
For cumulative periodic withdrawals
|
|
|
|
|
||||
Separate account value
|
|
$
|
190
|
|
|
$
|
253
|
|
Net amount at risk
(3)
|
|
$
|
16
|
|
|
$
|
10
|
|
Accumulation at specified dates
|
|
|
|
|
||||
Separate account value
|
|
$
|
129
|
|
|
$
|
170
|
|
Net amount at risk
(4)
|
|
$
|
26
|
|
|
$
|
17
|
|
Weighted average waiting period until guarantee date
|
|
4 years
|
|
|
5 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.
|
Summary of liabilities for guarantees
|
||||||||||||||||
($ in millions)
|
|
Liability for guarantees related to death benefits and interest-sensitive life products
|
|
Liability for guarantees related to income benefits
|
|
Liability for guarantees related to accumulation and withdrawal benefits
|
|
Total
|
||||||||
Balance, December 31, 2017
(1)
|
|
$
|
262
|
|
|
$
|
29
|
|
|
$
|
79
|
|
|
$
|
370
|
|
Less reinsurance recoverables
|
|
87
|
|
|
25
|
|
|
34
|
|
|
146
|
|
||||
Net balance as of December 31, 2017
|
|
175
|
|
|
4
|
|
|
45
|
|
|
224
|
|
||||
Incurred guarantee benefits
|
|
24
|
|
|
—
|
|
|
13
|
|
|
37
|
|
||||
Paid guarantee benefits
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
||||
Net change
|
|
22
|
|
|
—
|
|
|
13
|
|
|
35
|
|
||||
Net balance as of December 31, 2018
|
|
197
|
|
|
4
|
|
|
58
|
|
|
259
|
|
||||
Plus reinsurance recoverables
|
|
111
|
|
|
35
|
|
|
39
|
|
|
185
|
|
||||
Balance, December 31, 2018
(2)
|
|
$
|
308
|
|
|
$
|
39
|
|
|
$
|
97
|
|
|
$
|
444
|
|
|
|
|
|
|
|
|
|
|
||||||||
Balance, December 31, 2016
(3)
|
|
$
|
244
|
|
|
$
|
44
|
|
|
$
|
77
|
|
|
$
|
365
|
|
Less reinsurance recoverables
|
|
101
|
|
|
40
|
|
|
43
|
|
|
184
|
|
||||
Net balance as of December 31, 2016
|
|
143
|
|
|
4
|
|
|
34
|
|
|
181
|
|
||||
Incurred guarantee benefits
|
|
34
|
|
|
—
|
|
|
11
|
|
|
45
|
|
||||
Paid guarantee benefits
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
||||
Net change
|
|
32
|
|
|
—
|
|
|
11
|
|
|
43
|
|
||||
Net balance as of December 31, 2017
|
|
175
|
|
|
4
|
|
|
45
|
|
|
224
|
|
||||
Plus reinsurance recoverables
|
|
87
|
|
|
25
|
|
|
34
|
|
|
146
|
|
||||
Balance, December 31, 2017
(1)
|
|
$
|
262
|
|
|
$
|
29
|
|
|
$
|
79
|
|
|
$
|
370
|
|
(1)
|
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
.
|
(2)
|
Included in the total liability balance as of
December 31, 2018
are reserves for variable annuity death benefits of
$109 million
, variable annuity income benefits of
$36 million
, variable annuity accumulation benefits of
$25 million
, variable annuity withdrawal benefits of
$14 million
and other guarantees of
$260 million
.
|
(3)
|
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
$182 million
.
|
Note 10
|
Reinsurance and Indemnification
|
Effects of reinsurance and indemnification on property and casualty premiums written and earned and life premiums and contract charges
|
||||||||||||
|
|
For the years ended December 31,
|
||||||||||
($ in millions)
|
|
2018
|
|
2017
|
|
2016
|
||||||
Property and casualty insurance premiums written
|
|
|
|
|
|
|
||||||
Direct
|
|
$
|
35,895
|
|
|
$
|
33,685
|
|
|
$
|
32,614
|
|
Assumed
|
|
99
|
|
|
64
|
|
|
47
|
|
|||
Ceded
|
|
(1,008
|
)
|
|
(1,007
|
)
|
|
(1,061
|
)
|
|||
Property and casualty insurance premiums written, net of recoverables
|
|
$
|
34,986
|
|
|
$
|
32,742
|
|
|
$
|
31,600
|
|
|
|
|
|
|
|
|
||||||
Property and casualty insurance premiums earned
|
|
|
|
|
|
|
||||||
Direct
|
|
$
|
34,977
|
|
|
$
|
33,221
|
|
|
$
|
32,249
|
|
Assumed
|
|
87
|
|
|
50
|
|
|
45
|
|
|||
Ceded
|
|
(1,016
|
)
|
|
(971
|
)
|
|
(987
|
)
|
|||
Property and casualty insurance premiums earned, net of recoverables
|
|
$
|
34,048
|
|
|
$
|
32,300
|
|
|
$
|
31,307
|
|
|
|
|
|
|
|
|
||||||
Life premiums and contract charges
|
|
|
|
|
|
|
||||||
Direct
|
|
$
|
2,001
|
|
|
$
|
1,894
|
|
|
$
|
1,766
|
|
Assumed
|
|
754
|
|
|
787
|
|
|
818
|
|
|||
Ceded
|
|
(290
|
)
|
|
(303
|
)
|
|
(309
|
)
|
|||
Life premiums and contract charges, net of recoverables
|
|
$
|
2,465
|
|
|
$
|
2,378
|
|
|
$
|
2,275
|
|
1.
|
Indemnification programs - in
dustry pools, facilities or associations that are governed by state insurance statutes or regulations or the federal government.
|
2.
|
Catastrophe reinsurance programs - reinsurance protection for catastrophe exposure nationwide and by specific states, as applicable.
|
3.
|
Other reinsurance programs - reinsurance protection for asbestos, environmental and other liability exposures.
|
•
|
The majority of our program comprises multi-year contracts, primarily placed in the traditional reinsurance market, such that generally 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. “Property Claims Services Agreements” or “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.
|
Note 11
|
Deferred Policy Acquisition and Sales Inducement Costs
|
(1)
|
Includes
$152 million
of acquisition costs deferred and
$101 million
of amortization charged to income related to the revenue from contracts with customers accounting standard adopted in 2018.
|
(2)
|
Deferred sales inducement costs primarily relate to fixed annuities and interest-sensitive life contracts and are recorded as part of other assets on the Consolidated Statements of Financial Position.
|
Note 12
|
Capital Structure
|
Total debt outstanding
|
||||||||
|
|
As of December 31,
|
||||||
($ in millions)
|
|
2018
|
|
2017
|
||||
6.75% Senior Debentures, due 2018
|
|
$
|
—
|
|
|
$
|
176
|
|
7.45% Senior Notes, due 2019
(1)
|
|
317
|
|
|
317
|
|
||
Floating Rate Senior Notes, due 2021
(1)
|
|
250
|
|
|
—
|
|
||
Floating Rate Senior Notes, due 2023
(1)
|
|
250
|
|
|
—
|
|
||
3.15% Senior Notes, due 2023
(1)
|
|
500
|
|
|
500
|
|
||
Due after one year through five years
|
|
1,317
|
|
|
993
|
|
||
3.28% Senior Notes, due 2026
(1)
|
|
550
|
|
|
550
|
|
||
Due after five years through ten years
|
|
550
|
|
|
550
|
|
||
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
|
|
||
6.50% Junior Subordinated Debentures, due 2067
|
|
500
|
|
|
500
|
|
||
Due after ten years
|
|
4,641
|
|
|
4,865
|
|
||
|
|
|
|
|
||||
Long-term debt total principal
|
|
6,508
|
|
|
6,408
|
|
||
Debt issuance costs
|
|
(57
|
)
|
|
(58
|
)
|
||
Total long-term debt
|
|
6,451
|
|
|
6,350
|
|
||
Short-term debt
(2)
|
|
—
|
|
|
—
|
|
||
Total debt
|
|
$
|
6,451
|
|
|
$
|
6,350
|
|
(1)
|
Senior Notes, with the exception of Senior Floating Notes (as defined below), 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.
|
(1)
|
Each depositary share represents a 1/1,000
th
interest in a share of preferred stock.
|
(2)
|
Excludes
$13 million
related to the excess of redemption price over carrying value recognized as part of preferred stock dividends on the Consolidated Statements of Operations and Consolidated Statements of Shareholders’ Equity.
|
Note 13
|
Company Restructuring
|
Restructuring activity during the period
|
||||||||||||
($ in millions)
|
|
Employee costs
|
|
Exit costs
|
|
Total liability
|
||||||
Restructuring liability as of December 31, 2017
|
|
$
|
15
|
|
|
$
|
30
|
|
|
$
|
45
|
|
Expense incurred
|
|
50
|
|
|
20
|
|
|
70
|
|
|||
Adjustments to liability
|
|
(1
|
)
|
|
(2
|
)
|
|
(3
|
)
|
|||
Payments and non-cash pension settlements
|
|
(35
|
)
|
|
(33
|
)
|
|
(68
|
)
|
|||
Restructuring liability as of December 31, 2018
|
|
$
|
29
|
|
|
$
|
15
|
|
|
$
|
44
|
|
Note 14
|
Commitments, Guarantees and Contingent Liabilities
|
($ in millions)
|
|
|
||
2019
|
|
$
|
130
|
|
2020
|
|
121
|
|
|
2021
|
|
96
|
|
|
2022
|
|
80
|
|
|
2023
|
|
65
|
|
|
Thereafter
|
|
151
|
|
|
Total
|
|
$
|
643
|
|
Note 15
|
Income Taxes
|
1.
|
Amended the U.S. Internal Revenue Code of 1986, as amended, which among other items, permanently reduced the corporate income tax rate from a maximum of 35% to 21% beginning January 1, 2018. As a result, the corporate tax rate is not comparable between periods.
|
2.
|
Changed international taxation to a modified territorial tax system whereby U.S. federal income taxes are generally eliminated on dividends from foreign subsidiaries, and certain earnings of controlled foreign corporations are included in U.S. federal taxable income.
|
3.
|
Contained 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.
|
Affected the timing of certain tax deductions for reserves and deferred acquisition costs, but does not impact the Company’s overall income tax expense.
|
Components of income tax expense
|
||||||||||||
|
|
For the years ended December 31,
|
||||||||||
($ in millions)
|
|
2018
|
|
2017
|
|
2016
|
||||||
Current
|
|
$
|
704
|
|
|
$
|
1,018
|
|
|
$
|
654
|
|
Deferred
|
|
(236
|
)
|
|
(23
|
)
|
|
188
|
|
|||
Total income tax expense
|
|
$
|
468
|
|
|
$
|
995
|
|
|
$
|
842
|
|
Reconciliation of the statutory federal income tax rate to the effective income tax rate
|
|||||||||
|
|
For the years ended December 31,
|
|||||||
|
|
2018
|
|
2017
|
|
2016
|
|||
Statutory federal income tax rate on income from operations
|
|
21.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
Tax Legislation benefit
|
|
(1.1
|
)
|
|
(11.2
|
)
|
|
—
|
|
Share-based payments
|
|
(0.6
|
)
|
|
(1.4
|
)
|
|
—
|
|
Tax-exempt income
|
|
(0.9
|
)
|
|
(0.7
|
)
|
|
(1.2
|
)
|
Tax credits
|
|
(1.3
|
)
|
|
(1.3
|
)
|
|
(1.3
|
)
|
Non-deductible goodwill impairment
|
|
—
|
|
|
1.0
|
|
|
—
|
|
Other
|
|
0.7
|
|
|
0.5
|
|
|
(0.7
|
)
|
Effective income tax rate on income from operations
|
|
17.8
|
%
|
|
21.9
|
%
|
|
31.8
|
%
|
Note 16
|
Statutory Financial Information and Dividend Limitations
|
Note 17
|
Benefit Plans
|
Change in projected benefit obligation, plan assets and funded status
|
||||||||||||||||
|
|
As of December 31,
|
||||||||||||||
|
|
Pension
benefits
|
|
Postretirement
benefits
|
||||||||||||
($ in millions)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Change in projected benefit obligation
|
|
|
|
|
|
|
|
|
||||||||
Benefit obligation, beginning of year
|
|
$
|
6,815
|
|
|
$
|
6,591
|
|
|
$
|
386
|
|
|
$
|
373
|
|
Service cost
|
|
110
|
|
|
111
|
|
|
7
|
|
|
8
|
|
||||
Interest cost
|
|
255
|
|
|
254
|
|
|
15
|
|
|
15
|
|
||||
Participant contributions
|
|
—
|
|
|
—
|
|
|
13
|
|
|
12
|
|
||||
Actuarial (gains) losses
|
|
(255
|
)
|
|
406
|
|
|
(4
|
)
|
|
8
|
|
||||
Benefits paid
|
|
(646
|
)
|
|
(553
|
)
|
|
(35
|
)
|
|
(35
|
)
|
||||
Translation adjustment and other
|
|
(55
|
)
|
|
6
|
|
|
(7
|
)
|
|
5
|
|
||||
Benefit obligation, end of year
|
|
$
|
6,224
|
|
|
$
|
6,815
|
|
|
$
|
375
|
|
|
$
|
386
|
|
|
|
|
|
|
|
|
|
|
||||||||
Change in plan assets
|
|
|
|
|
|
|
|
|
||||||||
Fair value of plan assets, beginning of year
|
|
$
|
6,284
|
|
|
$
|
5,650
|
|
|
|
|
|
||||
Actual return on plan assets
|
|
(300
|
)
|
|
1,051
|
|
|
|
|
|
||||||
Employer contribution
|
|
16
|
|
|
131
|
|
|
|
|
|
||||||
Benefits paid
|
|
(646
|
)
|
|
(553
|
)
|
|
|
|
|
||||||
Translation adjustment and other
|
|
(55
|
)
|
|
5
|
|
|
|
|
|
||||||
Fair value of plan assets, end of year
|
|
$
|
5,299
|
|
|
$
|
6,284
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Funded status
(1) (2) (3)
|
|
$
|
(925
|
)
|
|
$
|
(531
|
)
|
|
$
|
(375
|
)
|
|
$
|
(386
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Amounts recognized in AOCI
|
|
|
|
|
|
|
|
|
||||||||
Unamortized pension and other postretirement prior service credit
|
|
$
|
(198
|
)
|
|
$
|
(254
|
)
|
|
$
|
(16
|
)
|
|
$
|
(37
|
)
|
(1)
|
The primary qualified employee plan represents
78%
of the pension benefits’ underfunded status as of
December 31, 2018
.
|
(2)
|
The funded status is recorded within other liabilities and accrued expenses on the Consolidated Statements of Financial Position.
|
(3)
|
The Company’s other postretirement benefit plans are not funded.
|
(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 includes
1%
and
2
% of private equity investments in
2018
and
2017
, respectively, that are subject to the limited partnership interests target allocation and
4%
and
3%
of fixed income mutual funds in
2018
and
2017
, respectively, that are subject to the fixed income securities target allocation.
|
(3)
|
Securities lending collateral reinvestment of
$208 million
and
$202 million
is excluded from the table above in
2018
and
2017
, respectively.
|
(1)
|
The securities lending obligation represents the plan’s obligation to return securities lending collateral received under a securities lending program. The terms of the program allow both the plan and the counterparty the right and ability to redeem/return the securities loaned on short notice. Due to its relatively short-term nature, the outstanding balance of the obligation approximates fair value.
|
(2)
|
Other net plan assets represent cash and cash equivalents, interest and dividends receivable and net receivables related to settlements of investment transactions, such as purchases and sales.
|
Rollforward of Level 3 plan assets during December 31, 2018
|
||||||||||||||||||||||||
|
|
|
|
Actual return on plan assets:
|
|
|
|
|
|
|
||||||||||||||
($ in millions)
|
|
Balance as of December 31, 2017
|
|
Relating to assets sold during the period
|
|
Relating to assets still held at the reporting date
|
|
Purchases, sales and settlements, net
|
|
Net transfers in and/or (out) of Level 3
|
|
Balance as of December 31, 2018
|
||||||||||||
Equity securities
|
|
$
|
29
|
|
|
$
|
—
|
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
(32
|
)
|
|
$
|
—
|
|
Fixed income securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Corporate
|
|
10
|
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
5
|
|
||||||
Total Level 3 plan assets
|
|
$
|
39
|
|
|
$
|
—
|
|
|
$
|
3
|
|
|
$
|
(5
|
)
|
|
$
|
(32
|
)
|
|
$
|
5
|
|
ESOP benefit
|
||||||||||||
|
|
For the years December 31,
|
||||||||||
($ in millions)
|
|
2018
|
|
2017
|
|
2016
|
||||||
Interest expense recognized by ESOP
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1
|
|
Less: dividends accrued on ESOP shares
|
|
(1
|
)
|
|
(1
|
)
|
|
(3
|
)
|
|||
Cost of shares allocated
|
|
—
|
|
|
3
|
|
|
7
|
|
|||
Compensation expense
|
|
(1
|
)
|
|
2
|
|
|
5
|
|
|||
Reduction of defined contribution due to ESOP
|
|
1
|
|
|
38
|
|
|
60
|
|
|||
ESOP benefit
|
|
$
|
(2
|
)
|
|
$
|
(36
|
)
|
|
$
|
(55
|
)
|
Note 18
|
Equity Incentive Plans
|
Option grant assumptions
|
|||||||||
|
|
2018
|
|
2017
|
|
2016
|
|||
Weighted average expected term
|
|
5.7 years
|
|
|
6.1 years
|
|
|
5.0 years
|
|
Expected volatility
|
|
15.6 - 30.7%
|
|
|
15.7 - 32.7%
|
|
|
16.0 - 34.3%
|
|
Weighted average volatility
|
|
19.8
|
%
|
|
21.0
|
%
|
|
24.3
|
%
|
Expected dividends
|
|
1.5 - 2.2%
|
|
|
1.4 - 1.9%
|
|
|
1.9 - 2.1%
|
|
Weighted average expected dividends
|
|
2.0
|
%
|
|
1.9
|
%
|
|
2.1
|
%
|
Risk-free rate
|
|
1.3 - 3.2%
|
|
|
0.5 - 2.5%
|
|
|
0.2 - 2.4%
|
|
Summary of option activity
|
|||||||||||||
|
|
For the year ended December 31, 2018
|
|||||||||||
|
|
Number
(in 000s)
|
|
Weighted average exercise price
|
|
Aggregate intrinsic value
(in 000s)
|
|
Weighted average remaining contractual term (years)
|
|||||
Outstanding as of January 1, 2018
|
|
11,262
|
|
|
$
|
58.46
|
|
|
|
|
|
||
Granted
|
|
2,388
|
|
|
93.04
|
|
|
|
|
|
|||
Exercised
|
|
(1,710
|
)
|
|
53.57
|
|
|
|
|
|
|||
Forfeited
|
|
(206
|
)
|
|
80.79
|
|
|
|
|
|
|||
Expired
|
|
(4
|
)
|
|
52.21
|
|
|
|
|
|
|||
Outstanding as of December 31, 2018
|
|
11,730
|
|
|
65.82
|
|
|
$
|
221,999
|
|
|
6.3
|
|
Outstanding, net of expected forfeitures
|
|
11,614
|
|
|
65.59
|
|
|
221,832
|
|
|
6.3
|
||
Outstanding, exercisable (“vested”)
|
|
6,968
|
|
|
54.14
|
|
|
198,747
|
|
|
5.0
|
Changes in restricted stock units
|
|||||||
|
|
For the year ended December 31, 2018
|
|||||
|
|
Number
(in 000s)
|
|
Weighted average grant date fair value
|
|||
Nonvested as of January 1, 2018
|
|
1,241
|
|
|
$
|
67.93
|
|
Granted
|
|
255
|
|
|
93.16
|
|
|
Vested
|
|
(498
|
)
|
|
67.45
|
|
|
Forfeited
|
|
(41
|
)
|
|
75.40
|
|
|
Nonvested as of December 31, 2018
|
|
957
|
|
|
74.58
|
|
Changes in performance stock awards
|
|||||||
|
|
For the year ended December 31, 2018
|
|||||
|
|
Number
(in 000s)
|
|
Weighted average grant date fair value
|
|||
Nonvested as of January 1, 2018
|
|
1,090
|
|
|
$
|
70.35
|
|
Granted
|
|
402
|
|
|
92.88
|
|
|
Adjustment for performance achievement
|
|
(34
|
)
|
|
70.53
|
|
|
Vested
|
|
(161
|
)
|
|
70.53
|
|
|
Forfeited
|
|
(49
|
)
|
|
76.33
|
|
|
Nonvested as of December 31, 2018
|
|
1,248
|
|
|
77.35
|
|
Note 19
|
Supplemental Cash Flow Information
|
|
|
For the years ended December 31,
|
||||||||||
($ in millions)
|
|
2018
|
|
2017
|
|
2016
|
||||||
Net change in proceeds managed
|
|
|
|
|
|
|
||||||
Net change in fixed income securities
|
|
$
|
234
|
|
|
$
|
259
|
|
|
$
|
(584
|
)
|
Net change in short-term investments
|
|
(568
|
)
|
|
(255
|
)
|
|
295
|
|
|||
Operating cash flow (used) provided
|
|
(334
|
)
|
|
4
|
|
|
(289
|
)
|
|||
Net change in cash
|
|
—
|
|
|
1
|
|
|
—
|
|
|||
Net change in proceeds managed
|
|
$
|
(334
|
)
|
|
$
|
5
|
|
|
$
|
(289
|
)
|
|
|
|
|
|
|
|
||||||
Cash flows from operating activities
|
|
|
|
|
|
|
||||||
Net change in liabilities
|
|
|
|
|
|
|
||||||
Liabilities for collateral, beginning of year
|
|
$
|
(1,124
|
)
|
|
$
|
(1,129
|
)
|
|
$
|
(840
|
)
|
Liabilities for collateral, end of year
|
|
(1,458
|
)
|
|
(1,124
|
)
|
|
(1,129
|
)
|
|||
Operating cash flow provided (used)
|
|
$
|
334
|
|
|
$
|
(5
|
)
|
|
$
|
289
|
|
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)
|
|
2018
|
|
2017
|
|
2016
|
||||||||||||||||||||||||||||||
|
|
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
|
|
$
|
(1,142
|
)
|
|
$
|
241
|
|
|
$
|
(901
|
)
|
|
$
|
866
|
|
|
$
|
(304
|
)
|
|
$
|
562
|
|
|
$
|
486
|
|
|
$
|
(170
|
)
|
|
$
|
316
|
|
Less: reclassification adjustment of realized capital gains and losses
|
|
(186
|
)
|
|
39
|
|
|
(147
|
)
|
|
374
|
|
|
(131
|
)
|
|
243
|
|
|
(180
|
)
|
|
63
|
|
|
(117
|
)
|
|||||||||
Unrealized net capital gains and losses
|
|
(956
|
)
|
|
202
|
|
|
(754
|
)
|
|
492
|
|
|
(173
|
)
|
|
319
|
|
|
666
|
|
|
(233
|
)
|
|
433
|
|
|||||||||
Unrealized foreign currency translation adjustments
|
|
(61
|
)
|
|
13
|
|
|
(48
|
)
|
|
69
|
|
|
(24
|
)
|
|
45
|
|
|
14
|
|
|
(5
|
)
|
|
9
|
|
|||||||||
Unamortized pension and other postretirement prior service credit arising during the period
|
|
—
|
|
|
2
|
|
|
2
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
22
|
|
|
(5
|
)
|
|
17
|
|
|||||||||
Less: reclassification adjustment of prior service credit amortized into operating costs and expenses
|
|
77
|
|
|
(16
|
)
|
|
61
|
|
|
81
|
|
|
(28
|
)
|
|
53
|
|
|
77
|
|
|
(27
|
)
|
|
50
|
|
|||||||||
Unamortized pension and other postretirement prior service credit
|
|
(77
|
)
|
|
18
|
|
|
(59
|
)
|
|
(80
|
)
|
|
28
|
|
|
(52
|
)
|
|
(55
|
)
|
|
22
|
|
|
(33
|
)
|
|||||||||
Other comprehensive (loss) income
|
|
$
|
(1,094
|
)
|
|
$
|
233
|
|
|
$
|
(861
|
)
|
|
$
|
481
|
|
|
$
|
(169
|
)
|
|
$
|
312
|
|
|
$
|
625
|
|
|
$
|
(216
|
)
|
|
$
|
409
|
|
Note 21
|
Quarterly Results (unaudited)
|
As adjusted
|
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
||||||||||||||||||||||||
($ in millions, except per share data)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||||||||||
Revenues
|
|
$
|
9,770
|
|
|
$
|
9,644
|
|
|
$
|
10,099
|
|
|
$
|
9,813
|
|
|
$
|
10,465
|
|
|
$
|
9,888
|
|
|
$
|
9,481
|
|
|
$
|
10,062
|
|
Net income (loss) applicable to common shareholders
|
|
977
|
|
|
785
|
|
|
678
|
|
|
549
|
|
|
942
|
|
|
810
|
|
|
(585
|
)
|
|
1,294
|
|
||||||||
Earnings per common share - Basic
|
|
2.76
|
|
|
2.15
|
|
|
1.94
|
|
|
1.51
|
|
|
2.72
|
|
|
2.24
|
|
|
(1.71
|
)
|
|
3.62
|
|
||||||||
Earnings per common share - Diluted
|
|
2.71
|
|
|
2.11
|
|
|
1.91
|
|
|
1.49
|
|
|
2.68
|
|
|
2.21
|
|
|
(1.71
|
)
|
|
3.56
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Impact of change
|
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
||||||||||||||||||||||||
($ in millions, except per share data)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||||||||||
Revenues
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Net income (loss) applicable to common shareholders
|
|
31
|
|
|
119
|
|
|
41
|
|
|
(1
|
)
|
|
109
|
|
|
173
|
|
|
(273
|
)
|
|
74
|
|
||||||||
Earnings per common share - Basic
|
|
0.09
|
|
|
0.33
|
|
|
0.12
|
|
|
—
|
|
|
0.31
|
|
|
0.48
|
|
|
(0.80
|
)
|
|
0.21
|
|
||||||||
Earnings per common share - Diluted
|
|
0.08
|
|
|
0.32
|
|
|
0.11
|
|
|
—
|
|
|
0.31
|
|
|
0.47
|
|
|
(0.80
|
)
|
|
0.21
|
|
The Allstate Corporation
|
|
Page
|
||
|
|
|
|
|
Schedules required to be filed under the provisions of Regulation S-X Article 7:
|
||||
|
|
|
|
|
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|
|
As of December 31, 2018
|
||||||||||
($ in millions)
|
|
Cost/amortized cost
|
|
Fair value
(if applicable)
|
|
Amount shown in the
Balance Sheet
|
||||||
Type of investment
|
|
|
|
|
|
|
||||||
Fixed maturities:
|
|
|
|
|
|
|
||||||
Bonds:
|
|
|
|
|
|
|
||||||
United States government, government agencies and authorities
|
|
$
|
5,386
|
|
|
$
|
5,517
|
|
|
$
|
5,517
|
|
States, municipalities and political subdivisions
|
|
8,963
|
|
|
9,169
|
|
|
9,169
|
|
|||
Foreign governments
|
|
739
|
|
|
747
|
|
|
747
|
|
|||
Public utilities
|
|
5,410
|
|
|
5,514
|
|
|
5,514
|
|
|||
All other corporate bonds
|
|
35,126
|
|
|
34,622
|
|
|
34,622
|
|
|||
Asset-backed securities
|
|
1,049
|
|
|
1,045
|
|
|
1,045
|
|
|||
Residential mortgage-backed securities
|
|
377
|
|
|
464
|
|
|
464
|
|
|||
Commercial mortgage-backed securities
|
|
63
|
|
|
70
|
|
|
70
|
|
|||
Redeemable preferred stocks
|
|
21
|
|
|
22
|
|
|
22
|
|
|||
Total fixed maturities
|
|
57,134
|
|
|
$
|
57,170
|
|
|
57,170
|
|
||
|
|
|
|
|
|
|
||||||
Equity securities:
|
|
|
|
|
|
|
||||||
Common stocks:
|
|
|
|
|
|
|
||||||
Public utilities
|
|
78
|
|
|
93
|
|
|
93
|
|
|||
Banks, trusts and insurance companies
|
|
452
|
|
|
525
|
|
|
525
|
|
|||
Industrial, miscellaneous and all other
|
|
3,737
|
|
|
4,159
|
|
|
4,159
|
|
|||
Nonredeemable preferred stocks
|
|
222
|
|
|
259
|
|
|
259
|
|
|||
Total equity securities
|
|
4,489
|
|
|
$
|
5,036
|
|
|
5,036
|
|
||
|
|
|
|
|
|
|
||||||
Mortgage loans on real estate
|
|
4,670
|
|
|
4,703
|
|
|
4,670
|
|
|||
Real estate (none acquired in satisfaction of debt)
|
|
624
|
|
|
|
|
624
|
|
||||
Policy loans
|
|
891
|
|
|
|
|
891
|
|
||||
Derivative instruments
|
|
117
|
|
|
117
|
|
|
117
|
|
|||
Limited partnership interests
|
|
7,505
|
|
|
|
|
7,505
|
|
||||
Other long-term investments
|
|
2,220
|
|
|
|
|
2,220
|
|
||||
Short-term investments
|
|
3,027
|
|
|
3,027
|
|
|
3,027
|
|
|||
Total investments
|
|
$
|
80,677
|
|
|
|
|
$
|
81,260
|
|
|
|
Year Ended December 31,
|
||||||||||
($ in millions)
|
|
2018
|
|
2017
|
|
2016
|
||||||
Revenues
|
|
|
|
|
|
|
||||||
Investment income, less investment expense
|
|
$
|
25
|
|
|
$
|
10
|
|
|
$
|
11
|
|
Realized capital gains and losses
|
|
(10
|
)
|
|
(2
|
)
|
|
2
|
|
|||
Other income
|
|
3
|
|
|
36
|
|
|
55
|
|
|||
|
|
18
|
|
|
44
|
|
|
68
|
|
|||
|
|
|
|
|
|
|
||||||
Expenses
|
|
|
|
|
|
|
||||||
Interest expense
|
|
337
|
|
|
334
|
|
|
295
|
|
|||
Pension and other postretirement remeasurement gains and losses
|
|
454
|
|
|
(219
|
)
|
|
264
|
|
|||
Pension and other postretirement benefit expense
|
|
(116
|
)
|
|
(224
|
)
|
|
(159
|
)
|
|||
Other operating expenses
|
|
50
|
|
|
50
|
|
|
28
|
|
|||
|
|
725
|
|
|
(59
|
)
|
|
428
|
|
|||
|
|
|
|
|
|
|
||||||
(Loss) gain from operations before income tax benefit and equity in net income of subsidiaries
|
|
(707
|
)
|
|
103
|
|
|
(360
|
)
|
|||
|
|
|
|
|
|
|
||||||
Income tax (benefit) expense
|
|
(136
|
)
|
|
105
|
|
|
(148
|
)
|
|||
Loss before equity in net income of subsidiaries
|
|
(571
|
)
|
|
(2
|
)
|
|
(212
|
)
|
|||
|
|
|
|
|
|
|
||||||
Equity in net income of subsidiaries
|
|
2,731
|
|
|
3,556
|
|
|
2,020
|
|
|||
Net income
|
|
2,160
|
|
|
3,554
|
|
|
1,808
|
|
|||
|
|
|
|
|
|
|
||||||
Preferred stock dividends
|
|
148
|
|
|
116
|
|
|
116
|
|
|||
|
|
|
|
|
|
|
||||||
Net income applicable to common shareholders
|
|
2,012
|
|
|
3,438
|
|
|
1,692
|
|
|||
|
|
|
|
|
|
|
||||||
Other comprehensive income (loss), after-tax
|
|
|
|
|
|
|
||||||
Changes in:
|
|
|
|
|
|
|
||||||
Unrealized net capital gains and losses
|
|
(754
|
)
|
|
319
|
|
|
433
|
|
|||
Unrealized foreign currency translation adjustments
|
|
(48
|
)
|
|
45
|
|
|
9
|
|
|||
Unamortized pension and other postretirement prior service credit
|
|
(59
|
)
|
|
(52
|
)
|
|
(33
|
)
|
|||
Other comprehensive (loss) income, after-tax
|
|
(861
|
)
|
|
312
|
|
|
409
|
|
|||
Comprehensive income
|
|
$
|
1,299
|
|
|
$
|
3,866
|
|
|
$
|
2,217
|
|
($ in millions, except par value data)
|
|
December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Assets
|
|
|
|
|
||||
Investments in subsidiaries
|
|
$
|
29,301
|
|
|
$
|
29,126
|
|
Fixed income securities, at fair value (amortized cost $355 and $361)
|
|
356
|
|
|
362
|
|
||
Short-term investments, at fair value (amortized cost $285 and $171)
|
|
285
|
|
|
171
|
|
||
Receivable from subsidiaries
|
|
426
|
|
|
427
|
|
||
Deferred income taxes
|
|
225
|
|
|
124
|
|
||
Other assets
|
|
92
|
|
|
150
|
|
||
Total assets
|
|
$
|
30,685
|
|
|
$
|
30,360
|
|
|
|
|
|
|
||||
Liabilities
|
|
|
|
|
||||
Long-term debt
|
|
$
|
6,451
|
|
|
$
|
6,350
|
|
Pension and other postretirement benefit obligations
|
|
1,050
|
|
|
675
|
|
||
Deferred compensation
|
|
281
|
|
|
297
|
|
||
Payable to subsidiaries
|
|
3
|
|
|
—
|
|
||
Notes due to subsidiaries
|
|
1,250
|
|
|
250
|
|
||
Dividends payable to shareholders
|
|
198
|
|
|
167
|
|
||
Other liabilities
|
|
140
|
|
|
70
|
|
||
Total liabilities
|
|
9,373
|
|
|
7,809
|
|
||
|
|
|
|
|
||||
Shareholders’ equity
|
|
|
|
|
||||
Preferred stock and additional capital paid-in, $1 par value, 25 million shares authorized, 79.8 thousand and 72.2 thousand shares issued and outstanding, $1,995 and $1,805 aggregate liquidation preference
|
|
1,930
|
|
|
1,746
|
|
||
Common stock, $.01 par value, 2.0 billion shares authorized and 900 million issued, 332 million and 355 million shares outstanding
|
|
9
|
|
|
9
|
|
||
Additional capital paid-in
|
|
3,310
|
|
|
3,313
|
|
||
Retained income
|
|
44,033
|
|
|
41,579
|
|
||
Deferred ESOP expense
|
|
(3
|
)
|
|
(3
|
)
|
||
Treasury stock, at cost (568 million and 545 million shares)
|
|
(28,085
|
)
|
|
(25,982
|
)
|
||
Accumulated other comprehensive income:
|
|
|
|
|
||||
Unrealized net capital gains and losses
|
|
(2
|
)
|
|
1,662
|
|
||
Unrealized foreign currency translation adjustments
|
|
(49
|
)
|
|
(1
|
)
|
||
Unamortized pension and other postretirement prior service credit
|
|
169
|
|
|
228
|
|
||
Total accumulated other comprehensive income
|
|
118
|
|
|
1,889
|
|
||
Total shareholders’ equity
|
|
21,312
|
|
|
22,551
|
|
||
Total liabilities and shareholders’ equity
|
|
$
|
30,685
|
|
|
$
|
30,360
|
|
($ in millions)
|
|
Years Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Cash flows from operating activities
|
|
|
|
|
|
|
||||||
Net income
|
|
$
|
2,160
|
|
|
$
|
3,554
|
|
|
$
|
1,808
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
||||||
Equity in net income of subsidiaries
|
|
(2,731
|
)
|
|
(3,556
|
)
|
|
(2,020
|
)
|
|||
Dividends received from subsidiaries
|
|
2,059
|
|
|
1,671
|
|
|
1,874
|
|
|||
Realized capital gains and losses
|
|
10
|
|
|
2
|
|
|
(2
|
)
|
|||
Pension and other postretirement remeasurement gains and losses
|
|
454
|
|
|
(219
|
)
|
|
264
|
|
|||
Changes in:
|
|
|
|
|
|
|
||||||
Pension and other postretirement benefits
|
|
(116
|
)
|
|
(224
|
)
|
|
(159
|
)
|
|||
Income taxes
|
|
(28
|
)
|
|
232
|
|
|
(20
|
)
|
|||
Operating assets and liabilities
|
|
160
|
|
|
56
|
|
|
43
|
|
|||
Net cash provided by operating activities
|
|
1,968
|
|
|
1,516
|
|
|
1,788
|
|
|||
|
|
|
|
|
|
|
||||||
Cash flows from investing activities
|
|
|
|
|
|
|
||||||
Proceeds from sales of investments
|
|
1,370
|
|
|
880
|
|
|
389
|
|
|||
Proceeds from sales of investments to subsidiaries
|
|
390
|
|
|
—
|
|
|
—
|
|
|||
Investment purchases
|
|
(1,037
|
)
|
|
(748
|
)
|
|
(243
|
)
|
|||
Investment collections
|
|
108
|
|
|
13
|
|
|
60
|
|
|||
Capital contribution or return of capital from subsidiaries
|
|
(975
|
)
|
|
42
|
|
|
(1,500
|
)
|
|||
Transfers to subsidiaries through intercompany loan agreement
|
|
—
|
|
|
—
|
|
|
(30
|
)
|
|||
Change in short-term investments, net
|
|
(115
|
)
|
|
48
|
|
|
58
|
|
|||
Net cash (used in) provided by investing activities
|
|
(259
|
)
|
|
235
|
|
|
(1,266
|
)
|
|||
|
|
|
|
|
|
|
||||||
Cash flows from financing activities
|
|
|
|
|
|
|
||||||
Proceeds from borrowings from subsidiaries
|
|
1,250
|
|
|
300
|
|
|
—
|
|
|||
Repayment of notes due to subsidiaries
|
|
(250
|
)
|
|
(50
|
)
|
|
—
|
|
|||
Proceeds from issuance of long-term debt
|
|
498
|
|
|
—
|
|
|
1,236
|
|
|||
Redemption of preferred stock
|
|
(385
|
)
|
|
—
|
|
|
—
|
|
|||
Redemption and repayment of long-term debt
|
|
(400
|
)
|
|
—
|
|
|
(17
|
)
|
|||
Proceeds from issuance of preferred stock
|
|
557
|
|
|
—
|
|
|
—
|
|
|||
Dividends paid on common stock
|
|
(614
|
)
|
|
(525
|
)
|
|
(486
|
)
|
|||
Dividends paid on preferred stock
|
|
(134
|
)
|
|
(116
|
)
|
|
(116
|
)
|
|||
Treasury stock purchases
|
|
(2,303
|
)
|
|
(1,495
|
)
|
|
(1,337
|
)
|
|||
Shares reissued under equity incentive plans, net
|
|
73
|
|
|
135
|
|
|
164
|
|
|||
Excess tax benefits on share-based payment arrangements
|
|
—
|
|
|
—
|
|
|
32
|
|
|||
Other
|
|
(1
|
)
|
|
(2
|
)
|
|
—
|
|
|||
Net cash used in financing activities
|
|
(1,709
|
)
|
|
(1,753
|
)
|
|
(524
|
)
|
|||
|
|
|
|
|
|
|
||||||
Net decrease in cash
|
|
—
|
|
|
(2
|
)
|
|
(2
|
)
|
|||
Cash at beginning of year
|
|
—
|
|
|
2
|
|
|
4
|
|
|||
Cash at end of year
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2
|
|
($ 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)
|
||||||||||||||||||
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Property-Liability
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Allstate Protection
|
|
$
|
1,618
|
|
|
$
|
25,495
|
|
|
$
|
11,953
|
|
|
$
|
32,950
|
|
|
|
|
$
|
22,348
|
|
|
$
|
4,475
|
|
|
$
|
4,522
|
|
|
$
|
33,555
|
|
||
Discontinued Lines and Coverages
|
|
—
|
|
|
1,864
|
|
|
—
|
|
|
—
|
|
|
|
|
87
|
|
|
—
|
|
|
3
|
|
|
—
|
|
||||||||||
Total Property-Liability
|
|
1,618
|
|
|
27,359
|
|
|
11,953
|
|
|
32,950
|
|
|
$
|
1,464
|
|
|
22,435
|
|
|
4,475
|
|
|
4,525
|
|
|
33,555
|
|
||||||||
Service Businesses
(2)
|
|
1,290
|
|
|
64
|
|
|
2,546
|
|
|
1,220
|
|
|
27
|
|
|
350
|
|
|
463
|
|
|
603
|
|
|
1,431
|
|
|||||||||
Allstate Life
|
|
1,300
|
|
|
10,333
|
|
|
3
|
|
|
1,315
|
|
|
505
|
|
|
1,094
|
|
|
132
|
|
|
364
|
|
|
—
|
|
|||||||||
Allstate Benefits
|
|
549
|
|
|
1,905
|
|
|
8
|
|
|
1,135
|
|
|
77
|
|
|
630
|
|
|
145
|
|
|
278
|
|
|
980
|
|
|||||||||
Allstate Annuities
|
|
27
|
|
|
18,341
|
|
|
—
|
|
|
15
|
|
|
1,096
|
|
|
903
|
|
|
7
|
|
|
31
|
|
|
—
|
|
|||||||||
Corporate and Other
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
71
|
|
|
—
|
|
|
—
|
|
|
880
|
|
|
—
|
|
|||||||||
Intersegment Eliminations
(2)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(122
|
)
|
|
—
|
|
|
(7
|
)
|
|
—
|
|
|
(115
|
)
|
|
—
|
|
|||||||||
Total
|
|
$
|
4,784
|
|
|
$
|
58,002
|
|
|
$
|
14,510
|
|
|
$
|
36,513
|
|
|
$
|
3,240
|
|
|
$
|
25,405
|
|
|
$
|
5,222
|
|
|
$
|
6,566
|
|
|
$
|
35,966
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Property-Liability
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Allstate Protection
|
|
$
|
1,510
|
|
|
$
|
24,336
|
|
|
$
|
11,409
|
|
|
$
|
31,433
|
|
|
|
|
$
|
21,388
|
|
|
$
|
4,205
|
|
|
$
|
4,239
|
|
|
$
|
31,648
|
|
||
Discontinued Lines and Coverages
|
|
—
|
|
|
1,893
|
|
|
—
|
|
|
—
|
|
|
|
|
96
|
|
|
—
|
|
|
3
|
|
|
—
|
|
||||||||||
Total Property-Liability
|
|
1,510
|
|
|
26,229
|
|
|
11,409
|
|
|
31,433
|
|
|
$
|
1,478
|
|
|
21,484
|
|
|
4,205
|
|
|
4,242
|
|
|
31,648
|
|
||||||||
Service Businesses
(2)
|
|
954
|
|
|
96
|
|
|
2,052
|
|
|
977
|
|
|
16
|
|
|
369
|
|
|
296
|
|
|
565
|
|
|
1,094
|
|
|||||||||
Allstate Life
|
|
1,152
|
|
|
10,244
|
|
|
4
|
|
|
1,280
|
|
|
489
|
|
|
1,047
|
|
|
134
|
|
|
344
|
|
|
—
|
|
|||||||||
Allstate Benefits
|
|
541
|
|
|
1,869
|
|
|
8
|
|
|
1,084
|
|
|
72
|
|
|
599
|
|
|
142
|
|
|
261
|
|
|
919
|
|
|||||||||
Allstate Annuities
|
|
34
|
|
|
19,870
|
|
|
—
|
|
|
14
|
|
|
1,305
|
|
|
967
|
|
|
7
|
|
|
34
|
|
|
—
|
|
|||||||||
Corporate and Other
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
41
|
|
|
—
|
|
|
—
|
|
|
292
|
|
|
—
|
|
|||||||||
Intersegment Eliminations
(2)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(110
|
)
|
|
—
|
|
|
(6
|
)
|
|
—
|
|
|
(104
|
)
|
|
—
|
|
|||||||||
Total
|
|
$
|
4,191
|
|
|
$
|
58,308
|
|
|
$
|
13,473
|
|
|
$
|
34,678
|
|
|
$
|
3,401
|
|
|
$
|
24,460
|
|
|
$
|
4,784
|
|
|
$
|
5,634
|
|
|
$
|
33,661
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Property-Liability
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Allstate Protection
|
|
$
|
1,432
|
|
|
$
|
23,263
|
|
|
$
|
11,160
|
|
|
$
|
30,727
|
|
|
|
|
$
|
21,802
|
|
|
$
|
4,053
|
|
|
$
|
4,083
|
|
|
$
|
30,888
|
|
||
Discontinued Lines and Coverages
|
|
—
|
|
|
1,953
|
|
|
—
|
|
|
—
|
|
|
|
|
105
|
|
|
—
|
|
|
2
|
|
|
3
|
|
||||||||||
Total Property-Liability
|
|
1,432
|
|
|
25,216
|
|
|
11,160
|
|
|
30,727
|
|
|
$
|
1,253
|
|
|
21,907
|
|
|
4,053
|
|
|
4,085
|
|
|
30,891
|
|
||||||||
Service Businesses
(2)
|
|
756
|
|
|
34
|
|
|
1,411
|
|
|
685
|
|
|
13
|
|
|
258
|
|
|
214
|
|
|
283
|
|
|
709
|
|
|||||||||
Allstate Life
|
|
1,200
|
|
|
10,042
|
|
|
4
|
|
|
1,250
|
|
|
482
|
|
|
1,027
|
|
|
131
|
|
|
332
|
|
|
—
|
|
|||||||||
Allstate Benefits
|
|
526
|
|
|
1,821
|
|
|
8
|
|
|
1,011
|
|
|
71
|
|
|
545
|
|
|
145
|
|
|
236
|
|
|
855
|
|
|||||||||
Allstate Annuities
|
|
40
|
|
|
20,636
|
|
|
—
|
|
|
14
|
|
|
1,181
|
|
|
1,011
|
|
|
7
|
|
|
31
|
|
|
—
|
|
|||||||||
Corporate and Other
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
42
|
|
|
—
|
|
|
—
|
|
|
594
|
|
|
—
|
|
|||||||||
Intersegment Eliminations
(2)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(105
|
)
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
(100
|
)
|
|
—
|
|
|||||||||
Total
|
|
$
|
3,954
|
|
|
$
|
57,749
|
|
|
$
|
12,583
|
|
|
$
|
33,582
|
|
|
$
|
3,042
|
|
|
$
|
24,743
|
|
|
$
|
4,550
|
|
|
$
|
5,461
|
|
|
$
|
32,455
|
|
(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, 2018
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Life insurance in force
|
|
$
|
207,434
|
|
|
$
|
81,186
|
|
|
$
|
243,161
|
|
|
$
|
369,409
|
|
|
65.8
|
%
|
Premiums and contract charges:
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Life insurance
|
|
$
|
994
|
|
|
$
|
266
|
|
|
$
|
754
|
|
|
$
|
1,482
|
|
|
50.9
|
%
|
Accident and health insurance
|
|
1,007
|
|
|
24
|
|
|
—
|
|
|
983
|
|
|
—
|
%
|
||||
Property and casualty insurance
|
|
34,977
|
|
|
1,016
|
|
|
87
|
|
|
34,048
|
|
|
0.3
|
%
|
||||
Total premiums and contract charges
|
|
$
|
36,978
|
|
|
$
|
1,306
|
|
|
$
|
841
|
|
|
$
|
36,513
|
|
|
2.3
|
%
|
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
|
%
|
(1)
|
No
reinsurance or coinsurance income was netted against premium ceded in
2018
,
2017
or
2016
.
|
($ 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, 2018
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Allowance for reinsurance recoverables
|
|
$
|
70
|
|
|
$
|
(5
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
65
|
|
Allowance for premium installment receivable
|
|
77
|
|
|
118
|
|
|
—
|
|
|
118
|
|
|
77
|
|
|||||
Allowance for deferred tax assets
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Allowance for estimated losses on mortgage loans
|
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|||||
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
|
|