Positioned for profitable growth in 2018
The Allstate Corporation (NYSE: ALL) today reported financial
results for the fourth quarter of 2017.
The Allstate Corporation Consolidated Highlights
Three months ended
Twelve months ended December 31,
December 31, ($ in millions, except
per share data and ratios) % / pts % / pts
2017 2016 Change
2017 2016 Change Consolidated
revenues $ 9,843 $
9,278 6.1 $
38,524 $ 36,534 5.4
Net income applicable to common
shareholders(1) 1,220
811 50.4
3,073 1,761 74.5 per
diluted common share 3.35
2.18 53.7
8.36 4.67 79.0
Adjusted net income*(2) 762
807 (5.6 )
2,467 1,838 34.2 per
diluted common share* 2.09
2.17 (3.7 )
6.71 4.87 37.8 Return
on common shareholders’ equity (trailing twelve months)
Net income applicable
to common shareholders
15.5 % 9.5 %
6.0 Adjusted net income*
13.3 % 10.4
% 2.9 Book value per common share
57.58 50.77 13.4
Property-Liability combined ratio
Recorded 91.0 89.7
1.3 93.6
96.0 (2.4 ) Underlying combined
ratio* (excludes catastrophes, prior year reserve reestimates and
amortization of purchased intangibles)
85.7 87.4 (1.7 )
84.9 87.6 (2.7
) Underlying combined ratio* as historically reported
(includes Service Businesses)
85.6 87.9
(2.3 ) Catastrophe losses
599 303 97.7
3,234 2,572 25.7
Total policies in force (in thousands)
82,276
43,811 87.8 (1) 2017 results
include a tax legislation benefit of $506 million related to the
Tax Cuts and Jobs Act of 2017, primarily due to the revaluation of
Allstate’s deferred tax assets and liabilities. The impact of tax
legislation is excluded from adjusted net income. (2) In the
fourth quarter, Allstate discontinued the use of the term
“operating income” and replaced the label with “adjusted net
income”. * Measures used in this release that are not based
on accounting principles generally accepted in the United States of
America (“non-GAAP”) are denoted with an asterisk and defined and
reconciled to the most directly comparable GAAP measure in the
“Definitions of Non-GAAP Measures” section of this document.
“In 2017, Allstate excelled at delivering strong current results
and implementing multiple initiatives to drive long-term profitable
growth,” said Tom Wilson, Chairman and Chief Executive Officer of
The Allstate Corporation. “Policies in force reached 82.3 million,
revenues grew 5% to $38.5 billion and net income was $3.07 billion
due to strong performance from our market-facing businesses and
investments. The Tax Cuts and Jobs Act resulted in a $506 million
increase to net income and
will provide future additional resources to
accelerate the company’s strategies. Fourth quarter adjusted net
income* was $762 million, excluding the impact of tax reform and
goodwill impairment related to changes in reportable segments, as
auto and homeowners insurance margins remained strong and
performance-based investments had outstanding results. Adjusted net
income return on equity* was 13.3% for 2017 and book value per
share increased by 13.4% for the year. Shareholders received cash
returns of $1.9 billion in 2017, which was 6% of the average market
capitalization, through a combination of dividends and share
repurchases.”
“This operational strength will enable us to accelerate growth
in 2018 while maintaining attractive returns. Allstate brand
policies in force increased in the fourth quarter from the third
quarter, reflecting a shift earlier in the year from improving auto
insurance margins to growing profitably. We expect the underlying
combined ratio* for the Property-Liability business to be between
86 and 88(1) for 2018, including additional growth investments as a
result of the recent tax cuts. Investments in marketing,
distribution, telematics, new products and technology are being
accelerated. Allstate Benefits, SquareTrade and Esurance are also
expected to contribute to growth in 2018. Reflecting this outlook
and a reduction in the U.S. federal income tax rate, the quarterly
dividend has been increased 24% to 46 cents per share for the first
quarter of 2018.”
“The reduction in federal taxes also enables us to enhance the
employee value proposition and improve local communities,”
continued Wilson. “Employees will receive either $1,000 or $2,000
of ‘Choice Dollars’ in 2018, which can be taken as a cash bonus or
contributed to a 401(k) or health savings account. This structure
of employee choice will be incorporated into future benefit design.
Allstate will also increase employee training in technology
literacy to support sustainable employability. An additional $34
million was contributed to The Allstate Foundation in 2017 to
expand existing programs and Allstate agency support for local
causes. Allstate will remain focused on creating prosperity for all
of our stakeholders,” concluded Wilson.
Operating Results: Fourth Quarter 2017
- Total revenue of $9.8 billion in the
fourth quarter of 2017 increased 6.1% compared to the prior year
quarter.
- Property and casualty insurance
premiums increased 3.8%.
- Life premiums and contract charges
increased 4.7%.
- Net investment income increased
14.0%.
- Realized capital gains were $127
million compared to $2 million in the prior year quarter.
- Net income applicable to common
shareholders was $1.22 billion, or $3.35 per diluted share, in the
fourth quarter of 2017, compared to $811 million, or $2.18 per
diluted share, in the fourth quarter of 2016, primarily driven by
the reduction to income tax expense following the passage of the
Tax Cuts and Jobs Act. The creation of new segments for financial
reporting led to goodwill impairment of $125 million related to
goodwill that was reallocated to the new Allstate Annuities
segment, as previously disclosed. Adjusted net income* was $762
million in the fourth quarter of 2017, compared to $807 million in
the fourth quarter of 2016, as improved underlying performance and
favorable prior year reserve reestimates were offset by higher
catastrophe losses and expenses.
- The 2017 full year underlying combined
ratio* for the Property-Liability and Service Businesses of 85.6
was better than the annual outlook range of 87-89.
- Property-Liability underwriting
income of $715 million was $86 million below the prior year
quarter, primarily due to higher catastrophe losses and increased
compensation costs. These costs partially offset the positive
impact of increased premiums earned, lower underlying loss costs
and higher favorable prior year reserve reestimates.
- The underlying combined ratio* of 85.7
for the fourth quarter was 1.7 points lower than the prior year
period, reflecting improvement in the auto insurance underlying
combined ratio for all three underwritten brands.
- Non-catastrophe prior year reserve
releases of $175 million in the fourth quarter of 2017 included
Allstate brand releases of $169 million, primarily driven by
Allstate brand auto injury coverages.
_________
(1) A reconciliation of this non-GAAP measure to the
combined ratio, a GAAP measure, is not possible on a
forward-looking basis because it is not possible to provide a
reliable forecast of catastrophes, and prior year reserve
reestimates are expected to be zero because reserves are determined
based on our best estimate of ultimate loss reserves as of the
reporting date.
Property-Liability Results
Three months ended Twelve months
ended December 31,
December 31, (% to earned premiums)
pts
pts 2017
2016 Change 2017
2016 Change Recorded Combined Ratio
91.0 89.7
1.3 93.6
96.0 (2.4 ) Allstate Brand Auto
91.9 95.3 (3.4 )
93.2 98.7 (5.5 ) Allstate Brand
Homeowners 85.4 68.7 16.7
89.4 83.7 5.7
Allstate Brand Other Personal Lines 84.5
87.1 (2.6 ) 93.1
89.6 3.5 Esurance 100.2
105.0 (4.8 ) 103.3
107.5 (4.2 ) Encompass 106.4
90.0 16.4 103.0
99.9 3.1
Underlying Combined
Ratio* 85.7 87.4
(1.7 ) 84.9
87.6 (2.7 ) Allstate
Brand Auto 94.2 96.2 (2.0
) 92.2 96.5 (4.3 )
Allstate Brand Homeowners 59.9 59.1
0.8 60.5 59.5
1.0 Allstate Brand Other Personal Lines
77.8 76.7 1.1
80.4 78.5 1.9 Esurance
99.8 105.0 (5.2 )
100.2 105.2 (5.0 ) Encompass
86.4 90.7 (4.3 )
86.5 90.3 (3.8 )
- Allstate brand auto net written
premium grew 4.2% in the fourth quarter of 2017, reflecting a 4.5%
increase in average premium compared to the prior year quarter,
which was partially offset by a 0.8% decline in policies in force.
Policies in force grew 0.3% compared to the third quarter of 2017
on continued improvement in the renewal ratio and new issued
applications.
- The recorded combined ratio of 91.9 in
the fourth quarter of 2017 was 3.4 points better than the prior
year quarter due to a broad-based decline in accident frequency,
increased premiums earned and higher favorable prior year reserve
reestimates. The underlying combined ratio* in the current quarter
was 2.0 points better than the prior year quarter.
- Allstate brand homeowners net
written premium increased 3.4% in the fourth quarter of 2017
compared to the prior year quarter, reflecting an increase in
average premium. Policies in force declined 0.5% compared to the
prior year quarter, but grew 0.3% compared to the third quarter of
2017. The renewal ratio of 87.5 was unchanged and new issued
applications grew.
- The recorded combined ratio of 85.4 in
the fourth quarter of 2017 includes the impact of increased
catastrophe losses, while the underlying combined ratio* of 59.9
continued to reflect strong underlying profitability.
- Allstate brand other personal
lines net written premium of $410 million increased 4.3% in the
fourth quarter of 2017 compared to the prior year quarter. The
recorded combined ratio of 84.5 was 2.6 points better than the
prior year quarter, primarily driven by lower catastrophe losses.
The underlying combined ratio* was 77.8 in the fourth quarter of
2017.
- Esurance net written premium
growth of 2.8% compared to the prior year quarter reflects
increased average premium in auto and homeowners insurance,
partially offset by a decline in auto policies in force. The
strategy to drive higher growth across all lines of business
continued to make progress as homeowners insurance policies in
force increased 36.2%, with written premium of $79 million in
2017.
- The recorded combined ratio of 100.2 in
the fourth quarter of 2017 improved 4.8 points compared to the
prior year quarter, primarily driven by a lower expense ratio. The
underlying combined ratio* of 99.8 was 5.2 points better than the
prior year quarter, as both auto and homeowners insurance results
improved.
- Encompass net written premium
declined 7.6% in the fourth quarter of 2017 compared to the prior
year quarter, reflecting the continued execution of profit
improvement plans. The recorded combined ratio of 106.4 in the
fourth quarter of 2017 was 16.4 points higher than the prior year
quarter, due to catastrophe losses from California wildfires which
was partially offset by lower underlying loss costs. The underlying
combined ratio* of 86.4 for the fourth quarter was 4.3 points lower
than the prior year quarter.
- Service Businesses, a new
reportable segment, offers a broad range of products and services
that expand and enhance customer value propositions. Our strategy
to deliver superior value propositions and build strategic
platforms continued in the fourth quarter as policies in force grew
to 43.5 million, an increase of 4.6 million compared to the third
quarter of 2017, driven by growth in SquareTrade.
- Adjusted net loss of $24 million in the
fourth quarter of 2017 was primarily due to investments in Arity’s
research and development, a SquareTrade restructuring charge and
the deployment of a new digital platform in Allstate Roadside
Services.
Service Businesses Results Three
months ended Twelve months ended
December 31, December
31, ($ in millions)
%
% 2017 2016
Change 2017 2016
Change Total Revenues
$ 264 $ 181
45.9 $ 993
$ 698 42.3 SquareTrade
89 — —
296 — — Allstate Roadside
Services 72 81 (11.1 )
300 340 (11.8 ) Allstate
Dealer Services 83 75
10.7 318 283 12.4
Arity 20 25 (20.0
) 79 75 5.3
Adjusted Net (Loss) / Income (24
) 1 NM
(59 ) 3 NM
SquareTrade (11 ) — —
(22 ) — — Allstate
Roadside Services (7 ) (5 ) 40.0
(20 ) (12 ) 66.7 Allstate Dealer
Services — 2 (100.0 )
(2 ) 4 (150.0 ) Arity
(6 ) 4 NM (15 )
11 NM
NM = not meaningful
- SquareTrade revenue was $89
million in the fourth quarter, and policies in force grew to 38.7
million, an increase of 4.6 million policies compared to the third
quarter of 2017. Adjusted net loss was $11 million in the fourth
quarter of 2017.
- Allstate Roadside Services
revenue in the fourth quarter of 2017 declined 11.1% compared to
the prior year quarter, reflecting non-renewal of unprofitable
third-party contracts. An adjusted net loss of $7 million was
realized as the new digital platform, which reduces response time,
is not yet profitable.
- Allstate Dealer Services revenue
grew 10.7% compared to the fourth quarter of 2016 and adjusted net
income broke even.
- Arity affiliate revenues were
$20 million in the fourth quarter of 2017, generating an adjusted
net loss of $6 million.
- Allstate Life adjusted net
income was $57 million in the fourth quarter of 2017, $9 million
lower than the prior year quarter, primarily due to increased
contract benefits and operating expenses partially offset by higher
premiums. Premiums and contract charges increased 1.9% in the
fourth quarter compared to the prior year quarter, primarily
related to higher traditional life insurance renewal premiums and
lower levels of reinsurance premiums ceded.
- Allstate Benefits adjusted net
income was $20 million in the fourth quarter of 2017, $3 million
lower than the prior year quarter, primarily due to higher contract
benefits and operating expenses, partially offset by higher
premiums. Premiums and contract charges increased 8.3% in the
fourth quarter compared to the prior year quarter, due to 7.4%
growth in policies in force in 2017.
- Allstate Annuities adjusted net
income was $55 million in the fourth quarter of 2017, $14 million
higher than the prior year quarter, primarily due to higher
performance-based investment income. Policies in force declined
8.0% in 2017 as the business continues to run off.
- Allstate Investments $83 billion
portfolio generated net investment income of $913 million in the
fourth quarter, which was 14.0% above the prior year quarter.
Allstate Investment Results Three
months ended Twelve months ended
December 31, December 31,
($ in millions, except ratios)
% / pts
% / pts 2017
2016 Change 2017
2016 Change Net investment income
$ 913 $ 801
14.0 $ 3,401
$ 3,042 11.8
Market-based investment income(1) 664
654 1.5 2,656 2,598
2.2 Performance-based investment income(1)
296 182 62.6 917
579 58.4
Realized capital gains and
losses 127 2
NM 445 (90
) NM Change in unrealized net capital
gains, pre-tax (120 )
(1,245 ) NM 857
745 15.0 Total return
on investment portfolio 1.1 %
(0.7 )% 1.8
5.9 % 4.4 % 1.5
(1) Investment expenses are not allocated between market-based
and performance-based portfolios with the exception of investee
level expenses.
NM = not meaningful
- Market-based investments
contributed stable earnings, primarily from fixed income
securities. Market-based investment income of $664 million in the
fourth quarter of 2017 increased over the prior year quarter,
reflecting higher invested assets and stable portfolio yields.
- Performance-based investments
generated income of $296 million in the fourth quarter of 2017,
which increased 62.6% over the prior year quarter, reflecting asset
appreciation, sales of underlying investments and the continued
growth of the portfolio, across private equity and real
estate.
- Net realized capital gains were
$127 million in the fourth quarter of 2017, compared to gains of $2
million in the prior year quarter. Net realized gains on sales of
$146 million were partially offset by impairments of $13 million
and derivative losses of $6 million.
- Unrealized net capital gains
decreased $120 million in the fourth quarter of 2017 as lower fixed
income valuations offset positive equity markets.
- Total return on the investment
portfolio included approximately 1% per quarter from investment
income, as well as changes in the portfolio value between quarters.
Total return was 1.1% for the fourth quarter, with positive equity
returns offset by lower fixed income valuations. Beginning in 2018,
equity valuation changes will be included in net income due to the
adoption of new accounting standards.
Full Year 2017 Financial Highlights
- Allstate delivered on all five 2017
Operating Priorities which focus on both near-term performance and
long-term value creation.
- Better Serve Our Customers: The
Net Promoter Score, which measures how likely customers are to
recommend us, increased throughout 2017. Allstate brand auto
insurance retention improved in the second half of 2017, and
Esurance auto and homeowners insurance retention increased 2.1
points and 2.9 points, respectively, for the full year compared to
2016. If favorable trends in customer retention continue in 2018,
this will support higher future growth.
- Achieve Target Economic Returns on
Capital: The Property-Liability recorded combined ratio of 93.6
generated $2.0 billion in underwriting income for the year. Auto
insurance underwriting income increased $1.1 billion in 2017 from
the prior year, due to lower accident frequency, higher
premiums and favorable prior year reserve reestimates of $490
million. Allstate brand homeowners insurance posted a combined
ratio of 89.4, despite significant catastrophe events. The
homeowners recorded combined ratio has been below 100 for six
consecutive years, but underwriting income declined by $373 million
versus the prior year partially offsetting gains in auto insurance.
Net investment income increased 11.8% to $3.4 billion when combined
with strong underwriting income, resulted in an adjusted net income
return on shareholders’ equity* of 13.3%.
- Grow Customer Base: Consolidated
policies in force grew to 82.3 million in 2017, with positive
contributions from SquareTrade and Allstate Benefits. Allstate
Protection policies in force declined due to the impact of profit
improvement actions.
- Proactively Manage Investments:
Total return on the $83 billion investment portfolio was 5.9% for
2017, reflecting equity and fixed income market appreciation and
increased allocations to performance-based investments over the
last five years. Net investment income of $3.4 billion was 11.8%
higher than 2016, primarily due to strong asset appreciation and
sales of underlying investments in the performance-based portfolio.
The portfolio also benefited from higher market-based income,
reflecting an increase in invested assets and stable portfolio
yields.
- Build Long-Term Growth
Platforms: Allstate Benefits continued its 17-year track record
of growth, with policies in force increasing 7.4% in 2017.
SquareTrade’s first-year performance was very strong, with growth
in premium and policies in force accelerating each quarter
throughout 2017. Arity signed its first third-party insurance
customer to expand its platform outside of Allstate entities.
Tax Cuts and Jobs Act of 2017
- Allstate anticipates an effective tax
rate of 19%-20% in 2018.
- Allstate will utilize the tax reform
benefits to accelerate growth initiatives, further enhance our
employee value proposition, improve local communities and raise
shareholder returns by increasing the target quarterly dividend per
common share.
- Future insurance rate filings will be
impacted by lower tax rates, but the targeted after-tax return on
equity will not change. Tax reform affects only the profit
provision component of the rate filings, and the impact will differ
by state. As a result, this is not expected to have a material
impact on Allstate’s near-term operating results or competitive
position.
- The passage of the Tax Cuts and Jobs
Act resulted in a revaluation of deferred tax assets and
liabilities, which primarily led to a $506 million reduction to
income tax expense in the fourth quarter of 2017, or a $1.38 per
share benefit to our earnings per diluted share in 2017.
- The tax benefit was driven by the
reduction in our net deferred tax liability principally relating to
deferred acquisition costs and unrealized investment gains.
Proactive Capital Management
“Allstate continued to proactively manage shareholders’ capital
by returning $713 million during the fourth quarter through a
combination of $134 million in common stock dividends and
repurchasing $579 million of outstanding shares. For the full year
we returned a total of $1.9 billion to shareholders. As of December
31, 2017, there was $1.27 billion remaining on the $2.0 billion
common share repurchase program, which would represent 3.7% of
shares outstanding at the current share price,” said Mario Rizzo,
Chief Financial Officer. “In addition, the quarterly dividend per
common share was increased 24% to 46 cents, payable in cash on
April 2, 2018, to stockholders of record at the close of business
on March 5, 2018.”
Visit www.allstateinvestors.com to view additional information
about Allstate’s results, including a webcast of its quarterly
conference call and the call presentation. The conference call will
be held at 9 a.m. ET on Thursday, February 8.
The Allstate Corporation (NYSE: ALL) is the nation’s largest
publicly held personal lines insurer, protecting people from life’s
uncertainties with 82 million proprietary policies. Allstate offers
a broad array of protection products through multiple brands and
diverse distribution channels, including auto, home, life and other
insurance offered through its Allstate, Esurance, Encompass and
Answer Financial brands. The company provides additional protection
products and services through Allstate Benefits, Allstate Roadside
Services, Allstate Dealer Services, Arity and SquareTrade. Allstate
is widely known from the slogan “You’re In Good Hands With
Allstate®.” Allstate agencies are in virtually every local
community in America. The Allstate Foundation, Allstate, its
employees and agency owners have a proud history of caring for
local communities.
Financial information, including material announcements about
The Allstate Corporation, is routinely posted on
www.allstateinvestors.com.
Forward-Looking Statements
This news release contains “forward-looking statements” that
anticipate results based on our estimates, assumptions and plans
that are subject to uncertainty. These statements are made subject
to the safe-harbor provisions of the Private Securities Litigation
Reform Act of 1995. These forward-looking statements do not relate
strictly to historical or current facts and may be identified by
their use of words like “plans,” “seeks,” “expects,” “will,”
“should,” “anticipates,” “estimates,” “intends,” “believes,”
“likely,” “targets” and other words with similar meanings. We
believe these statements are based on reasonable estimates,
assumptions and plans. However, if the estimates, assumptions or
plans underlying the forward-looking statements prove inaccurate or
if other risks or uncertainties arise, actual results could differ
materially from those communicated in these forward-looking
statements. Factors that could cause actual results to differ
materially from those expressed in, or implied by, the
forward-looking statements may be found in our filings with the
U.S. Securities and Exchange Commission, including the “Risk
Factors” section in our most recent annual report on Form 10-K.
Forward-looking statements speak only as of the date on which they
are made, and we assume no obligation to update or revise any
forward-looking statement.
THE ALLSTATE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
($ in millions, except per share data) Three
months ended Twelve months ended December 31,
December 31, 2017 2016 2017
2016 (unaudited) (unaudited)
Revenues Property
and casualty insurance premiums $ 8,202 $ 7,901 $ 32,300 $ 31,307
Life premiums and contract charges 601 574 2,378 2,275 Net
investment income 913 801 3,401 3,042 Realized capital gains and
losses: Total other-than-temporary impairment (“OTTI”) losses (11 )
(72 ) (146 ) (313 ) OTTI losses reclassified to (from) other
comprehensive income (2 ) 2 (4 ) 10 Net OTTI losses
recognized in earnings (13 ) (70 ) (150 ) (303 ) Sales and other
realized capital gains and losses 140 72 595
213 Total realized capital gains and losses 127 2
445 (90 ) 9,843 9,278 38,524
36,534
Costs and expenses Property and
casualty insurance claims and claims expense 5,279 5,083 21,929
22,221 Life contract benefits 507 464 1,923 1,857 Interest credited
to contractholder funds 168 168 690 726 Amortization of deferred
policy acquisition costs 1,239 1,157 4,784 4,550 Operating costs
and expenses 1,257 1,063 4,658 4,106 Restructuring and related
charges 32 9 109 30 Goodwill impairment 125 — 125 — Interest
expense 84 77 335 295 8,691
8,021 34,553 33,785 Gain on disposition
of operations 5 1 20 5
Income
from operations before income tax expense 1,157 1,258 3,991
2,754 Income tax (benefit) expense (92 ) 418 802
877
Net income 1,249 840
3,189 1,877 Preferred stock dividends 29
29 116 116
Net income
applicable to common shareholders $ 1,220 $ 811 $
3,073 $ 1,761
Earnings per common
share: Net income applicable to common shareholders
per common share – Basic $ 3.41 $ 2.20 $ 8.49
$ 4.72
Weighted average common shares –
Basic 357.5 368.0 362.0 372.8
Net income applicable to common shareholders per common
share – Diluted $ 3.35 $ 2.18 $ 8.36 $
4.67
Weighted average common shares – Diluted
363.8 372.5 367.8 377.3
Cash
dividends declared per common share $ 0.37 $ 0.33
$ 1.48 $ 1.32
THE ALLSTATE CORPORATION
BUSINESS RESULTS ($ in millions, except ratios)
Three months ended Twelve
months ended December 31, December 31,
2017 2016 2017 2016
Property-Liability Premiums written $ 7,838 $ 7,565
$ 31,648 $ 30,891 Premiums earned $ 7,971 $
7,756 $ 31,433 $ 30,727 Claims and claims expense (5,190 ) (5,024 )
(21,566 ) (21,968 ) Amortization of deferred policy acquisition
costs (1,091 ) (1,029 ) (4,205 ) (4,053 ) Operating costs and
expenses (957 ) (893 ) (3,559 ) (3,457 ) Restructuring and related
charges (18 ) (9 ) (91 ) (29 ) Underwriting income 715 801
2,012 1,220 Net investment income 415 334
1,478 1,253 Income tax expense on operations (373 ) (385 ) (1,119 )
(812 ) Realized capital gains and losses, after-tax 73 10 272 —
Gain on disposition of operations, after-tax 2 — 9 — Tax
Legislation expense (65 ) — (65 ) — Net income
applicable to common shareholders $ 767 $ 760 $ 2,587
$ 1,661 Catastrophe losses $ 598 $ 302
$ 3,228 $ 2,571 Amortization of purchased intangible
assets $ 2 $ 5 $ 7 $ 32 Operating
ratios: Claims and claims expense ratio 65.1 64.8 68.6 71.5 Expense
ratio 25.9 24.9 25.0 24.5 Combined
ratio 91.0 89.7 93.6 96.0 Effect of
catastrophe losses on combined ratio 7.5 3.9 10.3
8.4 Effect of prior year reserve reestimates on
combined ratio (2.3 ) (1.8 ) (1.6 ) (0.1 ) 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 —
0.1 Effect of Discontinued Lines and Coverages on combined
ratio — 0.1 0.3 0.3
Services
Businesses Premiums written $ 309 $ 158 $ 1,094
$ 709 Premiums earned 231 145 867 580 Intersegment
insurance premiums and service fees 28 32 110 105 Net investment
income 5 4 16 13 Claims and claims expense (90 ) (60 ) (369 ) (258
) Amortization of deferred policy acquisition costs (79 ) (57 )
(296 ) (214 ) Operating costs and expenses (116 ) (65 ) (401 ) (223
) Restructuring and related charges (11 ) — (13 ) — Income tax
benefit on operations 8 2 27 — Adjusted
net (loss) income (24 ) 1 (59 ) 3 Amortization of purchased
intangible assets, after-tax (15 ) — (60 ) — Tax Legislation
benefit 134 — 134 — Net income
applicable to common shareholders $ 95 $ 1 $ 15
$ 3
Allstate Life Premiums and contract
charges $ 324 $ 318 $ 1,280 $ 1,250 Net investment income 127 124
489 482 Contract benefits (210 ) (188 ) (765 ) (742 ) Interest
credited to contractholder funds (71 ) (72 ) (282 ) (285 )
Amortization of deferred policy acquisition costs (27 ) (32 ) (119
) (125 ) Operating costs and expenses (65 ) (56 ) (238 ) (225 )
Restructuring and related charges (1 ) — (2 ) (1 ) Income tax
expense on operations (20 ) (28 ) (110 ) (107 ) Adjusted net income
57 66 253 247 Realized capital gains and losses, after-tax — (7 ) 2
(24 ) DAC and DSI amortization relating to realized capital gains
and losses, after-tax (2 ) (1 ) (10 ) (4 ) Tax Legislation benefit
332 — 332 — Net income applicable to
common shareholders $ 387 $ 58 $ 577 $ 219
THE ALLSTATE CORPORATION BUSINESS
RESULTS ($ in millions, except ratios) Three months
ended Twelve months ended December 31,
December 31, 2017 2016 2017 2016
Allstate Benefits Premiums and contract charges $ 273 $ 252
$ 1,084 $ 1,011 Net investment income 18 17 72 71 Contract benefits
(143 ) (129 ) (564 ) (509 ) Interest credited to contractholder
funds (9 ) (8 ) (35 ) (36 ) Amortization of deferred policy
acquisition costs (37 ) (36 ) (142 ) (145 ) Operating costs and
expenses (70 ) (62 ) (266 ) (240 ) Restructuring and related
charges (2 ) — (3 ) — Income tax expense on operations (10 ) (11 )
(51 ) (52 ) Adjusted net income 20 23 95 100 Realized capital gains
and losses, after-tax (1 ) (1 ) — (4 ) Tax Legislation benefit 51
— 51 — Net income applicable to common
shareholders $ 70 $ 22 $ 146 $ 96
Allstate Annuities Contract charges $ 4 $ 4 $ 14 $ 14
Net investment income 338 312 1,305 1,181 Contract benefits (154 )
(147 ) (594 ) (606 ) Interest credited to contractholder funds (90
) (97 ) (372 ) (402 ) Amortization of deferred policy acquisition
costs (2 ) (2 ) (7 ) (7 ) Operating costs and expenses (9 ) (9 )
(35 ) (32 ) Income tax expense on operations (32 ) (20 ) (107 ) (47
) Adjusted net income 55 41 204 101 Realized capital gains and
losses, after-tax 22 — 28 (26 ) Valuation changes on embedded
derivatives not hedged, after-tax 2 6 — (2 ) Gain on disposition of
operations, after-tax 1 — 4 3 Tax Legislation benefit 182 —
182 — Net income applicable to common
shareholders $ 262 $ 47 $ 418 $ 76
Corporate and Other Net investment income $ 10 $ 10 $
41 $ 42 Operating costs and expenses (128 ) (86 ) (488 ) (324 )
Income tax benefit on operations 43 29 164 106 Preferred stock
dividends (29 ) (29 ) (116 ) (116 ) Adjusted net loss (104 ) (76 )
(399 ) (292 ) Realized capital gains and losses, after-tax (4 ) (1
) (4 ) (2 ) Business combination expenses, after-tax — — (14 ) —
Goodwill impairment (125 ) — (125 ) — Tax Legislation expense (128
) — (128 ) — Net loss applicable to common
shareholders $ (361 ) $ (77 ) $ (670 ) $ (294 )
Consolidated net income applicable to common
shareholders $ 1,220 $ 811 $ 3,073 $ 1,761
THE ALLSTATE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
($ in millions, except par value data)
December 31, December 31, 2017 2016
Assets (unaudited) Investments: Fixed income securities, at
fair value (amortized cost $57,525 and $56,576) $ 58,992 $ 57,839
Equity securities, at fair value (cost $5,461 and $5,157) 6,621
5,666 Mortgage loans 4,534 4,486 Limited partnership interests
6,740 5,814 Short-term, at fair value (amortized cost $1,944 and
$4,288) 1,944 4,288 Other 3,972 3,706 Total
investments 82,803 81,799 Cash 617 436 Premium installment
receivables, net 5,786 5,597 Deferred policy acquisition costs
4,191 3,954 Reinsurance recoverables, net 8,921 8,745 Accrued
investment income 569 567 Property and equipment, net 1,072 1,065
Goodwill 2,181 1,219 Other assets 2,838 1,835 Separate Accounts
3,444 3,393
Total assets $ 112,422 $
108,610
Liabilities Reserve for property and casualty
insurance claims and claims expense $ 26,325 $ 25,250 Reserve for
life-contingent contract benefits 12,549 12,239 Contractholder
funds 19,434 20,260 Unearned premiums 13,473 12,583 Claim payments
outstanding 875 879 Deferred income taxes 782 487 Other liabilities
and accrued expenses 6,639 6,599 Long-term debt 6,350 6,347
Separate Accounts 3,444 3,393
Total
liabilities 89,871 88,037
Shareholders’
equity Preferred stock and additional capital paid-in, $1 par
value, 72.2 thousand shares issued and outstanding, $1,805
aggregate liquidation preference 1,746 1,746 Common stock, $.01 par
value, 900 million issued, 355 million and 366 million shares
outstanding 9 9 Additional capital paid-in 3,313 3,303 Retained
income (1) 43,211 40,678 Deferred ESOP expense (3 ) (6 ) Treasury
stock, at cost (545 million and 534 million shares) (25,982 )
(24,741 ) Accumulated other comprehensive income: Unrealized net
capital gains and losses: Unrealized net capital gains and losses
on fixed income securities with OTTI 70 57 Other unrealized net
capital gains and losses 1,634 1,091 Unrealized adjustment to DAC,
DSI and insurance reserves (332 ) (95 ) Unrealized net capital
gains and losses (1) 1,372 1,053 Unrealized foreign currency
translation adjustments (1) (3 ) (50 ) Unrecognized pension and
other postretirement benefit cost (1) (1,112 ) (1,419 ) Total
accumulated other comprehensive income (loss) (1) 257 (416 )
Total shareholders’ equity 22,551 20,573
Total liabilities and shareholders’ equity $ 112,422
$ 108,610 (1) In January 2018, the FASB issued a
Proposed Accounting Standards Update titled “Reclassification of
Certain Tax Effects from Accumulated Other Comprehensive Income,”
requiring reclassification of the impact of the newly enacted tax
rates on the unrealized balances presented net of tax in
accumulated other comprehensive income to retained income. We plan
to early adopt the new guidance as of December 31, 2017, when
finalized. The impact of the adoption will decrease retained income
by $49 million, increase unrealized net capital gains and losses by
$290 million, decrease unrealized foreign currency translation
adjustments by $6 million and decrease unrecognized pension and
other postretirement benefit cost by $235 million.
THE
ALLSTATE CORPORATION AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF CASH FLOWS ($ in millions)
Twelve months ended December 31, 2017
2016 Cash flows from operating activities
(unaudited) Net income $ 3,189 $ 1,877 Adjustments to reconcile net
income to net cash provided by operating activities: Depreciation,
amortization and other non-cash items 483 382 Realized capital
gains and losses (445 ) 90 Gain on disposition of operations (20 )
(5 ) Interest credited to contractholder funds 690 726 Goodwill
Impairment 125 — Changes in: Policy benefits and other insurance
reserves 302 631 Unearned premiums 463 362 Deferred policy
acquisition costs (214 ) (165 ) Premium installment receivables,
net (131 ) (42 ) Reinsurance recoverables, net (211 ) (264 ) Income
taxes (245 ) 417 Other operating assets and liabilities 328
(16 ) Net cash provided by operating activities 4,314 3,993
Cash flows from investing activities Proceeds from
sales Fixed income securities 25,341 25,061 Equity securities 6,504
5,546 Limited partnership interests 1,125 881 Other investments 274
262 Investment collections Fixed income securities 4,194 4,533
Mortgage loans 600 501 Other investments 642 421 Investment
purchases Fixed income securities (31,145 ) (27,990 ) Equity
securities (6,585 ) (5,950 ) Limited partnership interests (1,440 )
(1,450 ) Mortgage loans (646 ) (646 ) Other investments (999 ) (885
) Change in short-term investments, net 2,610 (2,446 ) Change in
other investments, net (30 ) (51 ) Purchases of property and
equipment, net (299 ) (313 ) Acquisition of operations (1,356 ) —
Net cash used in investing activities (1,210 ) (2,526 )
Cash flows from financing activities Proceeds from issuance
of long-term debt — 1,236 Repayments of long-term debt — (17 )
Contractholder fund deposits 1,025 1,049 Contractholder fund
withdrawals (1,890 ) (2,087 ) Dividends paid on common stock (525 )
(486 ) Dividends paid on preferred stock (116 ) (116 ) Treasury
stock purchases (1,495 ) (1,337 ) Shares reissued under equity
incentive plans, net 135 164 Excess tax benefits on share-based
payment arrangements — 32 Other (57 ) 36 Net cash used in
financing activities (2,923 ) (1,526 )
Net increase (decrease)
in cash 181 (59 )
Cash at beginning of year 436
495
Cash at end of year $ 617 $ 436
Definitions of Non-GAAP Measures
We believe that investors’ understanding of Allstate’s
performance is enhanced by our disclosure of the following non-GAAP
measures. Our methods for calculating these measures may differ
from those used by other companies and therefore comparability may
be limited.
Adjusted net income is net income applicable to common
shareholders, excluding:
- realized capital gains and losses,
after-tax, except for periodic settlements and accruals on
non-hedge derivative instruments, which are reported with realized
capital gains and losses but included in adjusted net income,
- valuation changes on embedded
derivatives not hedged, after-tax,
- amortization of deferred policy
acquisition costs (“DAC”) and deferred sales inducements (“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, and
- adjustments for other significant
non-recurring, infrequent or unusual items, when (a) the nature of
the charge or gain is such that it is reasonably unlikely to recur
within two years, or (b) there has been no similar charge or gain
within the prior two years.
Net income applicable to common shareholders is the GAAP measure
that is most directly comparable to adjusted net income.
We use adjusted net income as an important measure to evaluate
our results of operations. We believe that the measure provides
investors with a valuable measure of the company’s ongoing
performance because it reveals trends in our insurance and
financial services business that may be obscured by the net effect
of realized capital gains and losses, valuation changes on embedded
derivatives not hedged, business combination expenses and the
amortization of purchased intangible assets, gain (loss) on
disposition of operations and adjustments for other significant
non-recurring, infrequent or unusual items. Realized capital gains
and losses, valuation changes on embedded derivatives not hedged
and gain (loss) on disposition of operations may vary significantly
between periods and are generally driven by business decisions and
external economic developments such as capital market conditions,
the timing of which is unrelated to the insurance underwriting
process. Consistent with our intent to protect results or earn
additional income, adjusted net income includes periodic
settlements and accruals on certain derivative instruments that are
reported in realized capital gains and losses because they do not
qualify for hedge accounting or are not designated as hedges for
accounting purposes. These instruments are used for economic hedges
and to replicate fixed income securities, and by including them in
adjusted net income, we are appropriately reflecting their trends
in our performance and in a manner consistent with the economically
hedged investments, product attributes (e.g. net investment income
and interest credited to contractholder funds) or replicated
investments. Business combination expenses are excluded because
they are non-recurring in nature and the amortization of purchased
intangible assets is excluded because it relates to the acquisition
purchase price and is not indicative of our underlying insurance
business results or trends. Non-recurring items are excluded
because, by their nature, they are not indicative of our business
or economic trends. Accordingly, adjusted net income excludes the
effect of items that tend to be highly variable from period to
period and highlights the results from ongoing operations and the
underlying profitability of our business. A byproduct of excluding
these items to determine adjusted net income is the transparency
and understanding of their significance to net income variability
and profitability while recognizing these or similar items may
recur in subsequent periods. Adjusted net income is used by
management along with the other components of net income applicable
to common shareholders to assess our performance. We use adjusted
measures of adjusted net income in incentive compensation.
Therefore, we believe it is useful for investors to evaluate net
income applicable to common shareholders, adjusted net income and
their components separately and in the aggregate when reviewing and
evaluating our performance. We note that investors, financial
analysts, financial and business media organizations and rating
agencies utilize adjusted net income results in their evaluation of
our and our industry’s financial performance and in their
investment decisions, recommendations and communications as it
represents a reliable, representative and consistent measurement of
the industry and the company and management’s performance. We note
that the price to earnings multiple commonly used by insurance
investors as a forward-looking valuation technique uses adjusted
net income as the denominator. Adjusted net income should not be
considered a substitute for net income applicable to common
shareholders and does not reflect the overall profitability of our
business.
The following tables reconcile net income applicable to common
shareholders and adjusted net income. Taxes on adjustments to
reconcile net income applicable to common shareholders and adjusted
net income generally use a 35% effective tax rate and are reported
net with the reconciling adjustment, except for goodwill impairment
that has no tax benefit and Tax Legislation expense (benefit) that
is all tax.
($ in millions, except per share data)
Three months ended December 31,
Per diluted Property-Liability Consolidated
common share 2017 2016 2017
2016 2017 2016 Net income
applicable to common shareholders $ 767 $ 760 $ 1,220 $ 811 $
3.35 $ 2.18 Realized capital gains and losses, after-tax (73 ) (10
) (90 ) (1 ) (0.25 ) — Valuation changes on embedded derivatives
not hedged, after-tax — — (2 ) (6 ) (0.01 ) (0.02 ) DAC and DSI
amortization relating to realized capital gains and losses and
valuation changes on embedded derivatives not hedged, after-tax — —
2 1 0.01 — Reclassification of periodic settlements and accruals on
non-hedge derivative instruments, after-tax (1 ) (2 ) (1 ) (2 ) — —
Business combination expenses and the amortization of purchased
intangible assets, after-tax 2 4 17 4 0.05 0.01 Gain on disposition
of operations, after-tax (2 ) — (3 ) — (0.01 ) — Goodwill
impairment — — 125 — 0.34 — Tax Legislation expense (benefit) 65
— (506 ) — (1.39 ) —
Adjusted net
income* $ 758 $ 752 $ 762 $ 807 $
2.09 $ 2.17
Twelve months ended December
31, Per diluted Property-Liability
Consolidated common share 2017 2016
2017 2016 2017 2016 Net income
applicable to common shareholders $ 2,587 $ 1,661 $ 3,073 $
1,761 $ 8.36 $ 4.67 Realized capital gains and losses, after-tax
(272 ) — (298 ) 56 (0.81 ) 0.15 Valuation changes on embedded
derivatives not hedged, after-tax — — — 2 — — DAC and DSI
amortization relating to realized capital gains and losses and
valuation changes on embedded derivatives not hedged, after-tax — —
10 4 0.03 0.01 Reclassification of periodic settlements and
accruals on non-hedge derivative instruments, after-tax (3 ) (3 )
(3 ) (3 ) (0.01 ) (0.01 ) Business combination expenses and the
amortization of purchased intangible assets, after-tax 5 21 79 21
0.22 0.06 Gain on disposition of operations, after-tax (9 ) — (13 )
(3 ) (0.04 ) (0.01 ) Goodwill impairment — — 125 — 0.34 — Tax
Legislation expense (benefit) 65 — (506 ) —
(1.38 ) —
Adjusted net income* $ 2,373 $ 1,679
$ 2,467 $ 1,838 $ 6.71 $ 4.87
Adjusted net income return on common shareholders’ equity
is a ratio that uses a non-GAAP measure. It is calculated by
dividing the rolling 12-month adjusted net income by the average of
common shareholders’ equity at the beginning and at the end of the
12-months, after excluding the effect of unrealized net capital
gains and losses. Return on common shareholders’ equity is the most
directly comparable GAAP measure. We use adjusted net income as the
numerator for the same reasons we use adjusted net income, as
discussed above. We use average common shareholders’ equity
excluding the effect of unrealized net capital gains and losses for
the denominator as a representation of common shareholders’ equity
primarily attributable to the company’s earned and realized
business operations because it eliminates the effect of items that
are unrealized and vary significantly between periods due to
external economic developments such as capital market conditions
like changes in equity prices and interest rates, the amount and
timing of which are unrelated to the insurance underwriting
process. We use it to supplement our evaluation of net income
applicable to common shareholders and return on common
shareholders’ equity because it excludes the effect of items that
tend to be highly variable from period to period. We believe that
this measure is useful to investors and that it provides a valuable
tool for investors when considered along with return on common
shareholders’ equity because it eliminates the after-tax effects of
realized and unrealized net capital gains and losses that can
fluctuate significantly from period to period and that are driven
by economic developments, the magnitude and timing of which are
generally not influenced by management. In addition, it eliminates
non-recurring items that are not indicative of our ongoing business
or economic trends. A byproduct of excluding the items noted above
to determine adjusted net income return on common shareholders’
equity from return on common shareholders’ equity is the
transparency and understanding of their significance to return on
common shareholders’ equity variability and profitability while
recognizing these or similar items may recur in subsequent periods.
We use adjusted measures of adjusted net income return on common
shareholders’ equity in incentive compensation. Therefore, we
believe it is useful for investors to have adjusted net income
return on common shareholders’ equity and return on common
shareholders’ equity when evaluating our performance. We note that
investors, financial analysts, financial and business media
organizations and rating agencies utilize adjusted net income
return on common shareholders’ equity results in their evaluation
of our and our industry’s financial performance and in their
investment decisions, recommendations and communications as it
represents a reliable, representative and consistent measurement of
the industry and the company and management’s utilization of
capital. Adjusted net income return on common shareholders’ equity
should not be considered a substitute for return on common
shareholders’ equity and does not reflect the overall profitability
of our business.
The following tables reconcile return on common shareholders’
equity and adjusted net income return on common shareholders’
equity.
($ in millions) For the twelve months
ended December 31, 2017 2016
Return on common shareholders’ equity Numerator: Net
income applicable to common shareholders $ 3,073 $ 1,761
Denominator: Beginning common shareholders’ equity (1) $
18,827 $ 18,279 Ending common shareholders’ equity (1) 20,805
18,827 Average common shareholders’ equity $ 19,816 $ 18,553
Return on common shareholders’ equity (2) 15.5 % 9.5 %
($ in millions) For the twelve
months ended December 31, 2017
2016 Adjusted net income return on common shareholders’
equity Numerator: Adjusted net income $ 2,467 $ 1,838
Denominator: Beginning common shareholders’ equity $
18,827 $ 18,279 Less: Unrealized net capital gains and losses 1,053
620 Adjusted beginning common shareholders’ equity
17,774 17,659 Ending common shareholders’ equity 20,805
18,827 Less: Unrealized net capital gains and losses 1,372
1,053 Adjusted ending common shareholders’ equity 19,433
17,774 Average adjusted common shareholders’ equity $ 18,604
$ 17,717 Adjusted net income return on common shareholders’
equity *(2)(3) 13.3 % 10.4 %
_____________
(1) Excludes equity related to preferred stock of $1,746
million. (2) The Tax Legislation adjustment recorded in
fourth quarter 2017 increased return on equity by 2.4 points and
decreased adjusted net income return on equity by 0.1 points.
(3) In January 2018,the FASB issued a Proposed Accounting
Standards Update titled “Reclassification of Certain Tax Effects
from Accumulated Other Comprehensive Income,” requiring
reclassification of the impact of the newly enacted tax rates on
the unrealized balances presented net of tax in accumulated other
comprehensive income to retained income. We plan to early adopt the
new guidance as of December 31, 2017, when finalized. The impact of
the adoption will increase the adjusted net income return on equity
calculation by 0.1 points.
Combined ratio excluding the effect of catastrophes, prior
year reserve reestimates and amortization of purchased intangible
assets (“underlying combined ratio”) is a non-GAAP ratio, which
is computed as the difference between four GAAP operating ratios:
the combined ratio, the effect of catastrophes on the combined
ratio, the effect of prior year non-catastrophe reserve reestimates
on the combined ratio, and the effect of amortization of purchased
intangible assets on the combined ratio. We believe that this ratio
is useful to investors and it is used by management to reveal the
trends in our Property-Liability business that may be obscured by
catastrophe losses, prior year reserve reestimates and amortization
of purchased intangible assets. Catastrophe losses cause our loss
trends to vary significantly between periods as a result of their
incidence of occurrence and magnitude, and can have a significant
impact on the combined ratio. Prior year reserve reestimates are
caused by unexpected loss development on historical reserves.
Amortization of purchased intangible assets relates to the
acquisition purchase price and is not indicative of our underlying
insurance business results or trends. We believe it is useful for
investors to evaluate these components separately and in the
aggregate when reviewing our underwriting performance. We also
provide it to facilitate a comparison to our outlook on the
underlying combined ratio. The most directly comparable GAAP
measure is the combined ratio. The underlying combined ratio should
not be considered a substitute for the combined ratio and does not
reflect the overall underwriting profitability of our business.
The following tables reconcile the respective combined ratio to
the underlying combined ratio.
Property-Liability
Three months ended Twelve
months ended December 31, December 31,
2017 2016 2017 2016
Combined ratio 91.0 89.7 93.6 96.0 Effect of catastrophe
losses (7.5 ) (3.9 ) (10.3 ) (8.4 ) Effect of prior year
non-catastrophe reserve reestimates 2.2 1.7 1.6 0.1 Effect of
amortization of purchased intangible assets — (0.1 ) —
(0.1 )
Underlying combined ratio* 85.7 87.4
84.9 87.6 Effect of prior year
catastrophe reserve reestimates (0.1 ) (0.1 ) — —
Underwriting margin is calculated as 100% minus the combined
ratio.
Property-Liability as historically reported
(1)
Three months ended Twelve
months ended December 31, December 31,
2017 2016 2017 2016
Combined ratio 92.0 89.9 94.4 96.1 Effect of catastrophe
losses (7.3 ) (3.8 ) (10.0 ) (8.2 ) Effect of prior year
non-catastrophe reserve reestimates 2.1 1.6 1.5 0.1 Effect of
amortization of purchased intangible assets (0.3 ) — (0.3 )
(0.1 )
Underlying combined ratio* 86.5 87.7
85.6 87.9 Effect of prior year catastrophe
reserve reestimates (0.1 ) (0.1 ) (0.1 ) — (1)
Property-Liability, as historically reported, includes Allstate
Protection, Services Businesses and Discontinued Lines and
Coverages segment results.
Allstate brand -
Total
Three months ended Twelve
months ended December 31, December 31,
2017 2016 2017 2016
Combined ratio 89.9 88.7 92.3 94.8 Effect of catastrophe
losses (7.4 ) (4.1 ) (10.4 ) (8.7 ) Effect of prior year
non-catastrophe reserve reestimates 2.3 1.6 2.0
0.4
Underlying combined ratio* 84.8
86.2 83.9 86.5 Effect of prior year
catastrophe reserve reestimates (0.1 ) (0.1 ) — —
Allstate brand -
Auto Insurance
Three months ended Twelve
months ended December 31, December 31,
2017 2016 2017 2016
Combined ratio 91.9 95.3 93.2 98.7 Effect of catastrophe
losses (0.7 ) (1.2 ) (3.4 ) (2.8 ) Effect of prior year
non-catastrophe reserve reestimates 3.0 2.1 2.4
0.6
Underlying combined ratio* 94.2
96.2 92.2 96.5 Effect of prior year
catastrophe reserve reestimates — — (0.1 ) (0.1 )
Allstate brand -
Homeowners Insurance
Three months ended Twelve
months ended December 31, December 31,
2017 2016 2017 2016
Combined ratio 85.4 68.7 89.4 83.7 Effect of catastrophe
losses (27.8 ) (10.8 ) (30.7 ) (24.6 ) Effect of prior year
non-catastrophe reserve reestimates 2.3 1.2 1.8
0.4
Underlying combined ratio* 59.9
59.1 60.5 59.5 Effect of prior year
catastrophe reserve reestimates (0.3 ) (0.5 ) (0.1 ) 0.1
Allstate brand -
Other Personal Lines
Three months ended Twelve
months ended December 31, December 31,
2017 2016 2017 2016
Combined ratio 84.5 87.1 93.1 89.6 Effect of catastrophe
losses (4.8 ) (9.7 ) (12.2 ) (11.8 ) Effect of prior year
non-catastrophe reserve reestimates (1.9 ) (0.7 ) (0.5 ) 0.7
Underlying combined ratio* 77.8 76.7 80.4
78.5 Effect of prior year catastrophe reserve
reestimates (0.5 ) (0.2 ) 0.2 (0.2 )
Esurance brand -
Total
Three months ended Twelve
months ended December 31, December 31,
2017 2016 2017 2016
Combined ratio 100.2 105.0 103.3 107.5 Effect of catastrophe
losses (0.2 ) (1.2 ) (2.9 ) (2.2 ) Effect of prior year
non-catastrophe reserve reestimates — 2.1 — 1.3 Effect of
amortization of purchased intangible assets (0.2 ) (0.9 ) (0.2 )
(1.4 )
Underlying combined ratio* 99.8 105.0
100.2 105.2 Effect of prior year catastrophe
reserve reestimates — — (0.1 ) —
Encompass brand -
Total
Three months ended Twelve
months ended December 31, December 31,
2017 2016 2017 2016
Combined ratio 106.4 90.0 103.0 99.9 Effect of catastrophe
losses (23.4 ) (3.1 ) (17.7 ) (9.2 ) Effect of prior year
non-catastrophe reserve reestimates 3.4 3.8 1.2
(0.4 )
Underlying combined ratio* 86.4 90.7
86.5 90.3 Effect of prior year
catastrophe reserve reestimates (0.4 ) — (0.1 ) —
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version on businesswire.com: http://www.businesswire.com/news/home/20180207006363/en/
The Allstate CorporationGreg BurnsMedia Relations(847)
402-5600orJohn GriekInvestor Relations(847) 402-2800
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