NORTHBROOK, Ill., Feb. 9, 2011 /PRNewswire/ -- The Allstate
Corporation (NYSE: ALL) today reported financial results for the
fourth quarter and full year 2010:
|
|
The Allstate
Corporation Consolidated Highlights
|
|
|
Three months
ended
December
31,
|
|
Twelve
months ended
December
31,
|
|
($ in millions, except per share
amounts and ratios)
|
2010
|
2009
|
%
Change
|
|
2010
|
2009
|
%
Change
|
|
Consolidated
revenues
|
$8,087
|
$ 8,058
|
0.4
|
|
$31,400
|
$ 32,013
|
(1.9)
|
|
Net income
|
296
|
518
|
(42.9)
|
|
928
|
854
|
8.7
|
|
Net income per diluted
share
|
0.55
|
0.96
|
(42.7)
|
|
1.71
|
1.58
|
8.2
|
|
Operating income*
|
271
|
592
|
(54.2)
|
|
1,539
|
1,881
|
(18.2)
|
|
Operating income per diluted
share*
|
0.50
|
1.09
|
(54.1)
|
|
2.84
|
3.48
|
(18.4)
|
|
Book value per
share
|
|
|
|
|
35.32
|
30.84
|
14.5
|
|
Book value per share, excluding
the impact of
unrealized net capital gains and losses on fixed
income
securities*
|
|
|
|
|
34.26
|
32.62
|
5.0
|
|
Catastrophe
losses
|
537
|
328
|
63.7
|
|
2,207
|
2,069
|
6.7
|
|
Property-Liability combined
ratio
|
100.8
|
93.2
|
7.6
pts
|
|
98.1
|
96.2
|
1.9
pts
|
|
Property-Liability combined
ratio excluding the
effect of
catastrophes and prior year reserve
reestimates ("underlying
combined ratio")*
|
92.0
|
88.1
|
3.9
pts
|
|
89.6
|
88.1
|
1.5
pts
|
|
|
|
|
|
|
|
|
|
|
|
* Measures used in this release that are not based on accounting
principles generally accepted in the
United States of America ("non-GAAP") are defined and
reconciled to the most directly comparable GAAP measure and
operating measures are defined in the "Definitions of Non-GAAP and
Operating Measures" section of this document.
"Allstate made continued progress on our business strategies in
2010 to position the company for long-term growth," said
Thomas J. Wilson, chairman,
president and chief executive officer of The Allstate Corporation.
"Allstate Protection's profitability was within our annual
outlook for the year but continued to be negatively impacted by
high catastrophe losses and increased frequency of auto insurance
claims. While we were able to increase auto insurance new
business levels at the end of the year, this was not enough to
offset lower customer renewals reflecting actions to maintain auto
profitability in several large states. Allstate Financial
successfully completed the 'Focus to Win' restructuring and is
shifting its focus to underwritten products sold through Allstate
agencies and the workplace. We also recently announced our
intentions to wind down Allstate Bank. Our investment
strategies were well timed and executed as we continued to stay
long corporate credit while reducing our municipal bond and real
estate portfolios. As a result, total investment returns were
good although investment income was down for the year reflecting
lower interest rates.
"Net income was $928 million for
the year and book value per share at December 31, 2010 was 14.5% higher than prior
year end," continued Wilson. "In November we commenced a
$1 billion share repurchase program
and acquired 5.2 million of our outstanding shares for $160 million by the end of the year. Total
shareholder return for 2010 was 8.8%. We have the operating
expertise, business platform and financial strength to continue to
improve shareholder value in 2011."
Consolidated Financial Results
Net income for the 2010 year was $928
million, or $1.71 per diluted
share, compared to $854 million in
2009. The increase was due to improved investment results and
higher operating income from Allstate Financial, partially offset
by lower Property-Liability operating income. Total operating
income was $1.5 billion, or
$2.84 per diluted share, in 2010
compared to $1.9 billion, or
$3.48 per diluted share, in 2009.
Allstate's fourth quarter 2010 net income was $296 million, or $0.55 per diluted share, compared to $518 million, or $0.96 per diluted share, in the fourth quarter of
2009. Total operating income was $271
million, or $0.50 per diluted
share, in the fourth quarter of 2010 compared to $592 million, or $1.09 per diluted share, in the same period of
2009.
Property-Liability 2010 Underlying Combined Ratio Within Full
Year Outlook
Allstate's Property-Liability business produced an underlying
combined ratio of 89.6 for 2010, within the company's full-year
outlook range of 88 to 90 announced at the beginning of 2010.
The recorded combined ratio for the year was 98.1, 1.9 points
higher than 2009. Management's priority is to maintain the
profitability of the auto business and improve homeowners
profitability, which results in an outlook for the 2011 underlying
combined ratio of 88 to 91.
The Property-Liability underlying combined ratio was 92.0 in the
fourth quarter of 2010 compared to 88.1 in the same period of 2009,
primarily due to increased claim frequencies and a higher expense
ratio. The recorded combined ratio was 100.8 for the fourth
quarter of 2010, compared to 93.2 for the fourth quarter of 2009.
Catastrophe losses remained high, reinforcing the importance of
Allstate's strategy to improve the profitability of the homeowners
business. Catastrophe losses were $537
million during the fourth quarter of 2010, reflecting 20
events, including an Arizona
hailstorm with estimated losses of $355
million. This compares to catastrophe losses of
$328 million for the fourth quarter
of 2009. Catastrophe losses added 8.3 points to the combined
ratio during the fourth quarter of 2010.
Allstate brand standard auto premiums written declined 0.4% for
the fourth quarter of 2010 compared to the prior year fourth
quarter. This decline was driven by a 1.5% decline in
policies in force, reflecting a 0.4 point decline in retention to
88.4%, partly offset by a 7.8% increase in new issued applications.
Profitability actions in several large states were the
primary cause of the decline in retention. Average premium
was consistent with the fourth quarter of 2009. The Allstate
brand standard auto combined ratio was 99.7, an increase of 6.0
points from the fourth quarter of 2009, due to increasing claim
frequencies and, to a lesser extent, higher expenses which were
primarily related to the successful Mayhem advertising
campaign.
Allstate brand homeowners premiums written for the fourth
quarter of 2010 increased 2.2% compared to the same period a year
ago, as a 7.1% increase in average premium was partly offset by a
4.1% decline in policies in force. Rate increases averaging
7.4% in 10 states were approved during the fourth quarter, as
Allstate took actions to improve homeowners returns. The
Allstate brand homeowners combined ratio was 102.0 in the fourth
quarter of 2010 compared to 89.0 in the fourth quarter a year ago,
primarily due to higher catastrophe losses and lower favorable
prior year reserve reestimates. Favorable prior year reserve
reestimates not related to catastrophe losses were $7 million in the fourth quarter of 2010 compared
to $37 million in the prior year
quarter.
Allstate Financial Makes Progress on Strategy, Improves
Results in 2010
Allstate Financial made significant progress during 2010 on its
goals to produce higher returns, reduce concentrations in products
with returns dependent on investment spread and serve its customers
by focusing on Allstate agencies and Allstate Benefits (formerly,
the Allstate Workplace Division). In keeping with these
goals, this week Allstate announced its intention to wind down the
Allstate Bank. Consistent with this strategy, premiums and
contract charges on mortality and morbidity (underwritten) products
increased 9.0% when compared to the fourth quarter of 2009, while
premiums and deposits* on annuities declined by 47.7% compared to
the prior year quarter.
Allstate Financial operating income was $104 million in the fourth quarter of 2010
compared to $95 million in the prior
year fourth quarter. The increase was due to a higher benefit
spread and lower amortization of deferred acquisition costs (DAC),
partly offset by higher operating costs and expenses. The
benefit spread increased 27.0% from the 2009 fourth quarter due to
growth in Allstate Benefits and non-recurring benefit costs
recorded in the 2009 quarter. DAC amortization declined
primarily due to lower gross profits on fixed annuities.
Operating costs and expenses rose due primarily to litigation
costs in 2010 and an increase in certain acquisition-related
expenses related to growth at Allstate Benefits. For the
year, Allstate Financial generated operating income of $476 million, an increase of $136 million from 2009.
Net income of $76 million in the
fourth quarter of 2010, versus a net loss of $137 million in the 2009 quarter, reflected lower
after-tax net realized capital losses.
Allstate's Investment Portfolio Ends 2010 in a Strong
Position
Allstate continues to proactively manage its investment
portfolio with the goal of reducing risk and optimizing returns.
During 2010, the declining yield environment contributed to
strong investment returns, but also decreased net investment
income. Net investment income of $4.1
billion for 2010 was a decrease from 2009 of 7.7%.
As part of the risk reduction strategy, Allstate reduced its
municipal fixed income securities and commercial real estate by
$5.5 billion and $2.3 billion of amortized cost, respectively,
during 2010. During the fourth quarter, municipal fixed
income securities declined by $165
million and commercial real estate declined by $248 million as a result of sales, collections
and purchases of new positions.
Allstate's consolidated investment portfolio was $100.5 billion at December
31, 2010, $650 million higher
than the end of 2009, as strong investment returns more than offset
impacts from risk reduction actions and reductions in Allstate
Financial's contractholder funds. The portfolio declined
$1.7 billion during the fourth
quarter of 2010, as rising interest rates lowered the fixed income
portfolio valuations, yet were partly offset by increased equity
valuations. The net unrealized capital gain totaled
$1.4 billion, pre-tax, at
December 31, 2010 compared to a
$2.7 billion pre-tax gain at
September 30, 2010. For the
year, this was an improvement of $3.7
billion from a net unrealized capital loss of $2.3 billion, pre-tax, at the end of 2009.
Net investment income was $998
million for the fourth quarter of 2010. This was a
0.7% decline from the third quarter of 2010 and a 7.2% decline from
the fourth quarter of 2009, due to reinvestment at lower interest
rates, risk reduction actions and lower contractholder funds.
Net realized capital gains for the fourth quarter of 2010 were
$116 million, pre-tax, a reversal
from the net realized capital loss of $33
million, pre-tax, in the prior year fourth quarter.
The improvement was the result of lower other-than-temporary
impairment losses and higher derivative gains, partly offset by
lower gains on sales. Other-than-temporary impairment losses
of $273 million for the fourth
quarter of 2010 were comprised of impairment write-downs of
$198 million and write-downs related
to the company's intent to sell certain securities in future
periods of $75 million, both
primarily related to real estate and municipal bond exposures.
Derivative net gains of $179
million in the fourth quarter of 2010 were primarily driven
by Allstate's risk management actions and exposures embedded in
fixed income securities. Rising interest rates and equity
markets during the quarter resulted in derivative gains of
$129 million from the interest rate
hedging programs and $55 million from
equity exposures embedded in fixed income securities.
Book Value per Share Increased 14.5% During 2010
"The combination of an improved net unrealized position and net
income increased book value per share by 14.5% during 2010," said
Don Civgin, senior vice president
and chief financial officer. "During the fourth quarter, we
repurchased $160 million of our stock
as part of the $1 billion share
repurchase program."
Book value per share totaled $35.32 at December 31,
2010 compared to $35.48 at
September 30, 2010 and $30.84 at December 31,
2009. Fourth quarter 2010 book value per share
declined from the third quarter of 2010, as lower shareholders'
equity was partly offset by the impact of the share repurchase
program.
Statutory surplus at December 31,
2010 was an estimated $15.3
billion for Allstate Insurance Company, including
$3.3 billion at Allstate Life
Insurance Company. This compares to Allstate Insurance
Company statutory surplus of $15.2
billion at September 30, 2010
and $15.0 billion at December 31, 2009. Deployable assets at the
holding company level increased to $3.8
billion at December 31, 2010,
and reflected $700 million of
dividends from Allstate Insurance Company during the fourth quarter
and $1.3 billion during 2010.
Visit www.allstateinvestors.com to view additional information
about Allstate's fourth quarter results, including a webcast of its
quarterly conference call and the presentation discussed on the
call. The conference call will be held at 9 a.m. ET on Thursday,
February 10, 2011.
The Allstate Corporation (NYSE: ALL) is the nation's largest
publicly held personal lines insurer. Widely known through
the "You're In Good Hands With Allstate®" slogan, Allstate is
reinventing protection and retirement to help nearly 16 million
households insure what they have today and better prepare for
tomorrow. Consumers access Allstate insurance products (auto,
home, life and retirement) and services through Allstate agencies,
independent agencies, and Allstate exclusive financial
representatives in the U.S. and Canada, as well as via www.allstate.com and
1-800 Allstate®.
|
|
THE ALLSTATE
CORPORATION AND SUBSIDIARIES
|
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
|
|
|
|
|
|
|
($ in millions, except per share
data)
|
|
Three months
ended
December
31,
|
|
Twelve
months ended
December
31,
|
|
|
|
2010
|
|
2009
|
|
2010
|
|
2009
|
|
|
|
(unaudited)
|
|
(unaudited)
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
Property-liability
insurance premiums
|
$
|
6,442
|
$
|
6,517
|
$
|
25,957
|
$
|
26,194
|
|
Life and annuity premiums
and contract charges
|
|
531
|
|
498
|
|
2,168
|
|
1,958
|
|
Net investment
income
|
|
998
|
|
1,076
|
|
4,102
|
|
4,444
|
|
Realized capital gains
and losses:
|
|
|
|
|
|
|
|
|
|
Total other-than-temporary
impairment losses
|
|
(300)
|
|
(641)
|
|
(937)
|
|
(2,376)
|
|
Portion of
loss recognized in other comprehensive income
|
|
27
|
|
156
|
|
(64)
|
|
457
|
|
Net other-than-temporary
impairment losses recognized
in
earnings
|
|
(273)
|
|
(485)
|
|
(1,001)
|
|
(1,919)
|
|
Sales and other realized
capital gains and losses
|
|
389
|
|
452
|
|
174
|
|
1,336
|
|
Total realized capital
gains and losses
|
|
116
|
|
(33)
|
|
(827)
|
|
(583)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,087
|
|
8,058
|
|
31,400
|
|
32,013
|
|
|
|
|
|
|
|
|
|
|
|
Costs and
expenses
|
|
|
|
|
|
|
|
|
|
Property-liability
insurance claims and claims expense
|
|
4,842
|
|
4,451
|
|
18,951
|
|
18,746
|
|
Life and annuity contract
benefits
|
|
443
|
|
441
|
|
1,815
|
|
1,617
|
|
Interest credited to
contractholder funds
|
|
449
|
|
490
|
|
1,807
|
|
2,126
|
|
Amortization of deferred
policy acquisition costs
|
|
1,065
|
|
1,105
|
|
4,034
|
|
4,754
|
|
Operating costs and
expenses
|
|
835
|
|
760
|
|
3,281
|
|
3,007
|
|
Restructuring and related
charges
|
|
(3)
|
|
18
|
|
30
|
|
130
|
|
Interest
expense
|
|
92
|
|
101
|
|
367
|
|
392
|
|
|
|
7,723
|
|
7,366
|
|
30,285
|
|
30,772
|
|
(Loss) gain on disposition of
operations
|
|
(1)
|
|
1
|
|
11
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations before
income tax expense
|
|
363
|
|
693
|
|
1,126
|
|
1,248
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
67
|
|
175
|
|
198
|
|
394
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
|
296
|
$
|
518
|
$
|
928
|
$
|
854
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share -
Basic
|
$
|
0.55
|
$
|
0.96
|
$
|
1.72
|
$
|
1.58
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares -
Basic
|
|
539.5
|
|
539.9
|
|
540.3
|
|
539.6
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share -
Diluted
|
$
|
0.55
|
$
|
0.96
|
$
|
1.71
|
$
|
1.58
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares -
Diluted
|
|
542.0
|
|
542.1
|
|
542.5
|
|
540.9
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends declared per
share
|
$
|
0.20
|
$
|
0.20
|
$
|
0.80
|
$
|
0.80
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THE ALLSTATE
CORPORATION
|
|
SEGMENT
RESULTS
|
|
($ in millions, except
ratios)
|
|
Three months
ended
December
31,
|
|
Twelve
months ended
December
31,
|
|
|
|
|
|
|
|
|
2010
|
|
2009
|
|
2010
|
|
2009
|
|
Property-Liability
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Premiums
written
|
$
|
6,242
|
$
|
6,277
|
$
|
25,907
|
$
|
25,971
|
|
|
|
|
|
|
|
|
|
|
|
|
Premiums earned
|
$
|
6,442
|
$
|
6,517
|
$
|
25,957
|
$
|
26,194
|
|
Claims and claims
expense
|
|
(4,842)
|
|
(4,451)
|
|
(18,951)
|
|
(18,746)
|
|
Amortization of deferred
policy acquisition costs
|
|
(924)
|
|
(957)
|
|
(3,678)
|
|
(3,789)
|
|
Operating costs and
expenses
|
|
(726)
|
|
(648)
|
|
(2,800)
|
|
(2,559)
|
|
Restructuring and related
charges
|
|
1
|
|
(17)
|
|
(33)
|
|
(105)
|
|
Underwriting
(loss) income
|
|
(49)
|
|
444
|
|
495
|
|
995
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment
income
|
|
291
|
|
324
|
|
1,189
|
|
1,328
|
|
Periodic settlements and
accruals on non-hedge derivative instruments
|
|
(3)
|
|
(2)
|
|
(7)
|
|
(10)
|
|
Income tax expense on
operations
|
|
(33)
|
|
(212)
|
|
(423)
|
|
(555)
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
206
|
|
554
|
|
1,254
|
|
1,758
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized capital gains and
losses, after-tax
|
|
54
|
|
151
|
|
(207)
|
|
(222)
|
|
(Loss) gain on disposition
of operations, after-tax
|
|
(1)
|
|
--
|
|
3
|
|
--
|
|
Reclassification of
periodic settlements and accruals on non-hedge
|
|
|
|
|
|
|
|
|
|
derivative
instruments, after-tax
|
|
1
|
|
2
|
|
4
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
$
|
260
|
$
|
707
|
$
|
1,054
|
$
|
1,543
|
|
|
|
|
|
|
|
|
|
|
|
|
Catastrophe
losses
|
$
|
537
|
$
|
328
|
$
|
2,207
|
$
|
2,069
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
ratios:
|
|
|
|
|
|
|
|
|
|
Claims and claims
expense ratio
|
|
75.2
|
|
68.3
|
|
73.0
|
|
71.6
|
|
Expense
ratio
|
|
25.6
|
|
24.9
|
|
25.1
|
|
24.6
|
|
Combined
ratio
|
|
100.8
|
|
93.2
|
|
98.1
|
|
96.2
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of
catastrophe losses on combined ratio
|
|
8.3
|
|
5.0
|
|
8.5
|
|
7.9
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of prior
year reserve reestimates on combined ratio
|
|
0.1
|
|
(0.4)
|
|
(0.6)
|
|
(0.4)
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of
catastrophe losses included in prior year reserve reestimates
on
|
|
|
|
|
|
|
|
|
|
combined ratio
|
|
(0.4)
|
|
(0.5)
|
|
(0.6)
|
|
(0.6)
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of
Discontinued Lines and Coverages on combined ratio
|
|
0.1
|
|
0.1
|
|
0.1
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
Allstate
Financial
|
|
|
|
|
|
|
|
|
|
Investments
|
$
|
61,582
|
$
|
62,216
|
$
|
61,582
|
$
|
62,216
|
|
|
|
|
|
|
|
|
|
|
|
Premiums and
deposits
|
$
|
962
|
$
|
1,156
|
$
|
4,096
|
$
|
5,121
|
|
|
|
|
|
|
|
|
|
|
|
Premiums and contract
charges
|
$
|
531
|
$
|
498
|
$
|
2,168
|
$
|
1,958
|
|
Net investment
income
|
|
692
|
|
737
|
|
2,853
|
|
3,064
|
|
Periodic settlements and
accruals on non-hedge derivative instruments
|
|
13
|
|
14
|
|
51
|
|
14
|
|
Contract
benefits
|
|
(443)
|
|
(441)
|
|
(1,815)
|
|
(1,617)
|
|
Interest credited to
contractholder funds
|
|
(439)
|
|
(479)
|
|
(1,798)
|
|
(2,038)
|
|
Amortization of deferred
policy acquisition costs
|
|
(86)
|
|
(90)
|
|
(286)
|
|
(437)
|
|
Operating costs and
expenses
|
|
(115)
|
|
(105)
|
|
(469)
|
|
(430)
|
|
Restructuring and related
charges
|
|
2
|
|
(1)
|
|
3
|
|
(25)
|
|
Income tax expense on
operations
|
|
(51)
|
|
(38)
|
|
(231)
|
|
(149)
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
|
104
|
|
95
|
|
476
|
|
340
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized capital gains and
losses, after-tax
|
|
23
|
|
(178)
|
|
(337)
|
|
(417)
|
|
DAC and DSI amortization
relating to realized capital gains
|
|
|
|
|
|
|
|
|
|
and losses,
after-tax
|
|
(43)
|
|
(45)
|
|
(34)
|
|
(177)
|
|
DAC and DSI unlocking
relating to realized capital gains and losses, after-tax
|
--
|
|
--
|
|
(18)
|
|
(224)
|
|
Reclassification of
periodic settlements and accruals on non-hedge
|
|
|
|
|
|
|
|
|
|
derivative
instruments, after-tax
|
|
(8)
|
|
(9)
|
|
(33)
|
|
(9)
|
|
Gain on disposition of
operations, after-tax
|
|
--
|
|
--
|
|
4
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
|
76
|
$
|
(137)
|
$
|
58
|
$
|
(483)
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate and
Other
|
|
|
|
|
|
|
|
|
|
Net investment
income
|
$
|
15
|
$
|
15
|
$
|
60
|
$
|
52
|
|
Operating costs and
expenses
|
|
(86)
|
|
(108)
|
|
(379)
|
|
(410)
|
|
Income tax benefit on
operations
|
|
32
|
|
36
|
|
128
|
|
141
|
|
|
|
|
|
|
|
|
|
|
|
Operating
loss
|
|
(39)
|
|
(57)
|
|
(191)
|
|
(217)
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized capital gains and
losses, after-tax
|
|
(1)
|
|
5
|
|
7
|
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
$
|
(40)
|
$
|
(52)
|
$
|
(184)
|
$
|
(206)
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated net
income
|
$
|
296
|
$
|
518
|
$
|
928
|
$
|
854
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THE ALLSTATE
CORPORATION AND SUBSIDIARIES
|
|
CONSOLIDATED
STATEMENTS OF FINANCIAL POSITION
|
|
($ in millions, except par
value data)
|
|
December 31,
2010
|
|
December 31,
2009
|
|
|
|
|
|
Assets
|
|
(unaudited)
|
|
|
|
Investments:
|
|
|
|
|
|
Fixed income
securities, at fair value (amortized cost $78,786 and
$81,243)
|
$
|
79,612
|
$
|
78,766
|
|
Equity securities,
at fair value (cost $4,228 and $4,845)
|
|
4,811
|
|
5,024
|
|
Mortgage
loans
|
|
6,679
|
|
7,935
|
|
Limited
partnership interests
|
|
3,816
|
|
2,744
|
|
Short-term, at fair value
(amortized cost $3,279 and $3,056)
|
|
3,279
|
|
3,056
|
|
Other
|
|
2,286
|
|
2,308
|
|
Total investments
|
|
100,483
|
|
99,833
|
|
Cash
|
|
562
|
|
612
|
|
Premium installment receivables,
net
|
|
4,839
|
|
4,839
|
|
Deferred policy acquisition
costs
|
|
4,769
|
|
5,470
|
|
Reinsurance recoverables,
net
|
|
6,552
|
|
6,355
|
|
Accrued investment
income
|
|
809
|
|
864
|
|
Deferred income taxes
|
|
784
|
|
1,870
|
|
Property and equipment,
net
|
|
921
|
|
990
|
|
Goodwill
|
|
874
|
|
875
|
|
Other assets
|
|
1,605
|
|
1,872
|
|
Separate Accounts
|
|
8,676
|
|
9,072
|
|
Total assets
|
$
|
130,874
|
$
|
132,652
|
|
Liabilities
|
|
|
|
|
|
Reserve for property-liability
insurance claims and claims expense
|
$
|
19,468
|
$
|
19,167
|
|
Reserve for life-contingent
contract benefits
|
|
13,482
|
|
12,910
|
|
Contractholder funds
|
|
48,195
|
|
52,582
|
|
Unearned premiums
|
|
9,800
|
|
9,822
|
|
Claim payments
outstanding
|
|
737
|
|
742
|
|
Other liabilities and accrued
expenses
|
|
5,564
|
|
5,726
|
|
Long-term debt
|
|
5,908
|
|
5,910
|
|
Separate Accounts
|
|
8,676
|
|
9,072
|
|
Total liabilities
|
|
111,830
|
|
115,931
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
Preferred stock, $1 par value,
25 million shares authorized, none issued
|
|
--
|
|
--
|
|
Common stock, $.01 par value, 2.0 billion shares authorized and 900 million
issued,
533 million and 537 million shares outstanding
|
|
9
|
|
9
|
|
Additional capital
paid-in
|
|
3,176
|
|
3,172
|
|
Retained income
|
|
31,969
|
|
31,492
|
|
Deferred ESOP expense
|
|
(44)
|
|
(47)
|
|
Treasury stock, at cost (367
million and 363 million shares)
|
|
(15,910)
|
|
(15,828)
|
|
Accumulated other comprehensive
income:
|
|
|
|
|
|
Unrealized net capital gains and
losses:
|
|
|
|
|
|
Unrealized net capital losses on
fixed income securities with OTTI
|
|
(190)
|
|
(441)
|
|
Other unrealized net capital
gains and losses
|
|
1,089
|
|
(1,072)
|
|
Unrealized adjustment to DAC,
DSI and insurance reserves
|
|
36
|
|
643
|
|
Total
unrealized net capital gains and losses
|
|
935
|
|
(870)
|
|
Unrealized foreign
currency translation adjustments
|
|
69
|
|
46
|
|
Unrecognized
pension and other postretirement benefit cost
|
|
(1,188)
|
|
(1,282)
|
|
Total accumulated other comprehensive
loss
|
|
(184)
|
|
(2,106)
|
|
Total shareholders'
equity
|
|
19,016
|
|
16,692
|
|
Noncontrolling
interest
|
|
28
|
|
29
|
|
Total equity
|
|
19,044
|
|
16,721
|
|
Total liabilities and
equity
|
$
|
130,874
|
$
|
132,652
|
|
|
|
|
|
|
|
|
|
|
THE ALLSTATE
CORPORATION AND SUBSIDIARIES
|
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
($ in millions)
|
|
Twelve
months ended
December
31,
|
|
|
|
|
|
|
2010
|
|
2009
|
|
Cash flows from operating
activities
|
|
(unaudited)
|
|
Net income
|
$
|
928
|
$
|
854
|
|
Adjustments to reconcile net
income to net cash provided by operating activities:
|
|
|
|
|
|
Depreciation, amortization
and other non-cash items
|
|
94
|
|
(91)
|
|
Realized capital gains and
losses
|
|
827
|
|
583
|
|
Gain on disposition of
operations
|
|
(11)
|
|
(7)
|
|
Interest credited to
contractholder funds
|
|
1,807
|
|
2,126
|
|
Changes in:
|
|
|
|
|
|
Policy benefits and other
insurance reserves
|
|
238
|
|
(577)
|
|
Unearned
premiums
|
|
(40)
|
|
(247)
|
|
Deferred policy
acquisition costs
|
|
(94)
|
|
514
|
|
Premium installment
receivables, net
|
|
10
|
|
26
|
|
Reinsurance recoverables,
net
|
|
(265)
|
|
(85)
|
|
Income taxes
|
|
200
|
|
1,660
|
|
Other operating assets and
liabilities
|
|
(5)
|
|
(455)
|
|
Net cash provided by
operating activities
|
|
3,689
|
|
4,301
|
|
Cash flows from investing
activities
|
|
|
|
|
|
Proceeds from sales
|
|
|
|
|
|
Fixed income
securities
|
|
22,881
|
|
21,359
|
|
Equity
securities
|
|
4,349
|
|
6,894
|
|
Limited
partnership interests
|
|
505
|
|
369
|
|
Mortgage
loans
|
|
124
|
|
340
|
|
Other
investments
|
|
121
|
|
520
|
|
Investment
collections
|
|
|
|
|
|
Fixed income
securities
|
|
5,147
|
|
5,556
|
|
Mortgage loans
|
|
1,076
|
|
1,764
|
|
Other
investments
|
|
137
|
|
117
|
|
Investment purchases
|
|
|
|
|
|
Fixed income
securities
|
|
(25,745)
|
|
(29,573)
|
|
Equity
securities
|
|
(3,564)
|
|
(8,496)
|
|
Limited partnership
interests
|
|
(1,342)
|
|
(784)
|
|
Mortgage loans
|
|
(120)
|
|
(26)
|
|
Other
investments
|
|
(181)
|
|
(64)
|
|
Change in short-term
investments, net
|
|
(382)
|
|
5,981
|
|
Change in other investments,
net
|
|
(519)
|
|
(340)
|
|
Disposition of
operations
|
|
7
|
|
12
|
|
Purchases of property and
equipment, net
|
|
(162)
|
|
(189)
|
|
Net cash provided by
investing activities
|
|
2,332
|
|
3,440
|
|
Cash flows from financing
activities
|
|
|
|
|
|
Proceeds from issuance of
long-term debt
|
|
--
|
|
1,003
|
|
Repayment of long-term
debt
|
|
(2)
|
|
(752)
|
|
Contractholder fund
deposits
|
|
2,980
|
|
4,150
|
|
Contractholder fund
withdrawals
|
|
(8,470)
|
|
(11,406)
|
|
Dividends paid
|
|
(430)
|
|
(542)
|
|
Treasury stock
purchases
|
|
(152)
|
|
(4)
|
|
Shares reissued under equity
incentive plans, net
|
|
28
|
|
3
|
|
Excess tax benefits on
share-based payment arrangements
|
|
(7)
|
|
(5)
|
|
Other
|
|
(18)
|
|
9
|
|
Net cash used in financing
activities
|
|
(6,071)
|
|
(7,544)
|
|
Net (decrease) increase in
cash
|
|
(50)
|
|
197
|
|
Cash at beginning of
period
|
|
612
|
|
415
|
|
Cash at end of
period
|
$
|
562
|
$
|
612
|
|
|
|
|
|
|
|
|
Definitions of Non-GAAP and Operating Measures
We believe that investors' understanding of Allstate's
performance is enhanced by our disclosure of the following non-GAAP
and operating financial measures. Our methods for calculating
these measures may differ from those used by other companies and
therefore comparability may be limited.
Operating income (loss) is net income (loss),
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 operating income (loss),
- amortization of DAC and DSI, to the extent they resulted from
the recognition of certain realized capital gains and losses,
- 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 (loss) is the GAAP measure that is most directly
comparable to operating income (loss).
We use operating income (loss) 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, gain (loss) on disposition of
operations and adjustments for other significant non-recurring,
infrequent or unusual items. Realized capital gains and
losses 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, operating income (loss) 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 operating income (loss), 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.
Non-recurring items are excluded because, by their nature,
they are not indicative of our business or economic trends.
Accordingly, operating income (loss) 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 operating 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. Operating income (loss) is used by
management along with the other components of net income (loss) to
assess our performance. We use adjusted measures of operating
income (loss) and operating income (loss) per diluted share in
incentive compensation. Therefore, we believe it is useful
for investors to evaluate net income (loss), operating income
(loss) 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 operating 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 operating income (loss) as
the denominator. Operating income (loss) should not be
considered as a substitute for net income (loss) and does not
reflect the overall profitability of our business.
The following tables reconcile operating income and net income
(loss) for the three months and twelve months ended December 31, 2010 and 2009.
|
|
For the
three months ended
December 31,
|
|
Property-Liability
|
|
Allstate Financial
|
|
Consolidated
|
|
Per diluted share
|
|
($ in millions, except per share
data)
|
|
2010
|
|
2009
|
|
2010
|
|
2009
|
|
2010
|
|
2009
|
|
2010
|
|
2009
|
|
Operating income
|
$
|
206
|
$
|
554
|
$
|
104
|
$
|
95
|
$
|
271
|
$
|
592
|
$
|
0.50
|
$
|
1.09
|
|
Realized capital gains and
losses
|
|
82
|
|
235
|
|
36
|
|
(275)
|
|
116
|
|
(33)
|
|
|
|
|
|
Income tax (expense)
benefit
|
|
(28)
|
|
(84)
|
|
(13)
|
|
97
|
|
(40)
|
|
11
|
|
|
|
|
|
Realized capital gains and
losses,
after-tax
|
|
54
|
|
151
|
|
23
|
|
(178)
|
|
76
|
|
(22)
|
|
0.14
|
|
(0.04)
|
|
DAC and DSI
amortization relating to
realized capital gains and losses, after-
tax
|
|
--
|
|
--
|
|
(43)
|
|
(45)
|
|
(43)
|
|
(45)
|
|
(0.08)
|
|
(0.08)
|
|
Reclassification of periodic
settlements
and accruals on non-hedge derivative
instruments,
after-tax
|
|
1
|
|
2
|
|
(8)
|
|
(9)
|
|
(7)
|
|
(7)
|
|
(0.01)
|
|
(0.01)
|
|
Loss on disposition of
operations,
after-tax
|
|
(1)
|
|
--
|
|
--
|
|
--
|
|
(1)
|
|
--
|
|
--
|
|
--
|
|
Net income (loss)
|
$
|
260
|
$
|
707
|
$
|
76
|
$
|
(137)
|
$
|
296
|
$
|
518
|
$
|
0.55
|
$
|
0.96
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the
twelve months ended
December 31,
|
|
Property-Liability
|
|
Allstate Financial
|
|
Consolidated
|
|
Per diluted share
|
|
($ in millions, except per share
data)
|
|
2010
|
|
2009
|
|
2010
|
|
2009
|
|
2010
|
|
2009
|
|
2010
|
|
2009
|
|
Operating income
|
$
|
1,254
|
$
|
1,758
|
$
|
476
|
$
|
340
|
$
|
1,539
|
$
|
1,881
|
$
|
2.84
|
$
|
3.48
|
|
Realized capital gains and
losses
|
|
(321)
|
|
(168)
|
|
(517)
|
|
(431)
|
|
(827)
|
|
(583)
|
|
|
|
|
|
Income tax benefit
(expense)
|
|
114
|
|
(54)
|
|
180
|
|
14
|
|
290
|
|
(45)
|
|
|
|
|
|
Realized capital gains and
losses,
after-tax
|
|
(207)
|
|
(222)
|
|
(337)
|
|
(417)
|
|
(537)
|
|
(628)
|
|
(0.99)
|
|
(1.16)
|
|
DAC and DSI
amortization relating to
realized capital gains and losses, after-
tax
|
|
--
|
|
--
|
|
(34)
|
|
(177)
|
|
(34)
|
|
(177)
|
|
(0.06)
|
|
(0.33)
|
|
DAC and DSI
unlocking relating to
realized capital gains and losses,
after-tax
|
|
--
|
|
--
|
|
(18)
|
|
(224)
|
|
(18)
|
|
(224)
|
|
(0.03)
|
|
(0.42)
|
|
Reclassification of periodic
settlements
and accruals
on non-hedge derivative
instruments,
after-tax
|
|
4
|
|
7
|
|
(33)
|
|
(9)
|
|
(29)
|
|
(2)
|
|
(0.06)
|
|
--
|
|
Gain on disposition of
operations,
after-tax
|
|
3
|
|
--
|
|
4
|
|
4
|
|
7
|
|
4
|
|
0.01
|
|
0.01
|
|
Net income (loss)
|
$
|
1,054
|
$
|
1,543
|
$
|
58
|
$
|
(483)
|
$
|
928
|
$
|
854
|
$
|
1.71
|
$
|
1.58
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting income (loss) is calculated as premiums
earned, less claims and claims expense ("losses"), amortization of
DAC, operating costs and expenses and restructuring and related
charges as determined using GAAP. Management uses this
measure in its evaluation of the results of operations to analyze
the profitability of our Property-Liability insurance operations
separately from investment results. It is also an integral
component of incentive compensation. It is useful for
investors to evaluate the components of income separately and in
the aggregate when reviewing performance. Net income (loss)
is the most directly comparable GAAP measure. Underwriting
income (loss) should not be considered as a substitute for net
income (loss) and does not reflect the overall profitability of our
business. A reconciliation of Property-Liability underwriting
income (loss) to net income (loss) is provided in the "Segment
Results" page.
Combined ratio excluding the effect of catastrophes and prior
year reserve reestimates ("underlying combined ratio") is a
non-GAAP ratio, which is computed as the difference between three
GAAP operating ratios: the combined ratio, the effect of
catastrophes on the combined ratio and the effect of prior year
non-catastrophe reserve reestimates on the combined ratio.
The most directly comparable GAAP measure is 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 and prior year reserve reestimates. These 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. 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 combined ratio
excluding the effect of catastrophe losses and prior year reserve
reestimates. The combined ratio excluding the effect of
catastrophes and prior year reserve reestimates should not be
considered a substitute for the combined ratio and does not reflect
the overall underwriting profitability of our business. A
reconciliation of the combined ratio excluding the effect of
catastrophes and prior year reserve reestimates to the combined
ratio is provided in the following table.
|
|
|
Three months ended
December
31,
|
|
Twelve months ended
December
31,
|
|
|
2010
|
|
2009
|
|
2010
|
|
2009
|
|
Combined ratio excluding the effect of catastrophes and prior
year
reserve reestimates ("underlying combined ratio")
|
92.0
|
|
88.1
|
|
89.6
|
|
88.1
|
|
Effect of catastrophe
losses
|
8.3
|
|
5.0
|
|
8.5
|
|
7.9
|
|
Effect of prior year
non-catastrophe reserve reestimates
|
0.5
|
|
0.1
|
|
--
|
|
0.2
|
|
Combined ratio
|
100.8
|
|
93.2
|
|
98.1
|
|
96.2
|
|
|
|
|
|
|
|
|
|
|
Effect of prior year catastrophe
reserve reestimates
|
(0.4)
|
|
(0.5)
|
|
(0.6)
|
|
(0.6)
|
|
|
|
|
|
|
|
|
|
|
|
In this news release, we provide our outlook range on the 2011
combined ratio excluding the effect of catastrophe losses and prior
year reserve reestimates. A reconciliation of this measure to
the combined ratio is not possible on a forward-looking basis
because it is not possible to provide a reliable forecast of
catastrophes. Future 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.
Book value per share, excluding the impact of unrealized net
capital gains and losses on fixed income securities, is a ratio
that uses a non-GAAP measure. It is calculated by dividing
shareholders' equity after excluding the impact of unrealized net
capital gains and losses on fixed income securities and related
DAC, DSI and life insurance reserves by total shares outstanding
plus dilutive potential shares outstanding. Book value per
share is the most directly comparable GAAP measure.
We use the trend in book value per share, excluding the impact
of unrealized net capital gains and losses on fixed income
securities, in conjunction with book value per share to identify
and analyze the change in net worth attributable to management
efforts between periods. We believe the non-GAAP ratio is
useful to investors because it eliminates the effect of items that
can fluctuate significantly from period to period and are generally
driven by economic developments, primarily capital market
conditions, the magnitude and timing of which are generally not
influenced by management, and we believe it enhances understanding
and comparability of performance by highlighting underlying
business activity and profitability drivers. We note that
book value per share, excluding the impact of unrealized net
capital gains and losses on fixed income securities, is a measure
commonly used by insurance investors as a valuation
technique. Book value per share, excluding the impact of
unrealized net capital gains and losses on fixed income securities,
should not be considered as a substitute for book value per share,
and does not reflect the recorded net worth of our business.
The following table shows the reconciliation.
|
|
($ in millions, except per share
data)
|
|
As of
December 31,
|
|
|
|
2010
|
|
2009
|
|
Book value per
share
|
|
|
|
|
|
Numerator:
|
|
|
|
|
|
Shareholders'
equity
|
$
|
19,016
|
$
|
16,692
|
|
Denominator:
|
|
|
|
|
|
Shares outstanding and
dilutive potential shares
outstanding
|
|
538.4
|
|
541.3
|
|
Book value per share
|
$
|
35.32
|
$
|
30.84
|
|
|
|
|
|
|
|
Book value per share, excluding
the impact of
unrealized net capital gains and losses on fixed
income
securities
|
|
|
|
|
|
Numerator:
|
|
|
|
|
|
Shareholders'
equity
|
$
|
19,016
|
$
|
16,692
|
|
Unrealized net
capital gains and losses on fixed income
securities
|
|
573
|
|
(967)
|
|
Adjusted shareholders'
equity
|
$
|
18,443
|
$
|
17,659
|
|
Denominator:
|
|
|
|
|
|
Shares
outstanding and dilutive potential shares
outstanding
|
|
538.4
|
|
541.3
|
|
Book value per share, excluding
the impact of unrealized
net
capital gains and losses on fixed income securities
|
$
|
34.26
|
$
|
32.62
|
|
|
|
|
|
|
|
|
Premiums written is the amount of premiums charged for
policies issued during a fiscal period. Premiums earned is a
GAAP measure. Premiums are considered earned and are included
in financial results on a pro-rata basis over the policy period.
The portion of premiums written applicable to the unexpired
terms of the policies is recorded as unearned premiums on our
Consolidated Statements of Financial Position. A
reconciliation of premiums written to premiums earned is presented
in the following table.
|
|
($ in millions)
|
|
Three months
ended
December
31,
|
|
Twelve
months ended
December
31,
|
|
|
|
2010
|
|
2009
|
|
2010
|
|
2009
|
|
Premiums written
|
$
|
6,242
|
$
|
6,277
|
$
|
25,907
|
$
|
25,971
|
|
Decrease in Property-Liability
unearned premiums
|
|
203
|
|
248
|
|
19
|
|
200
|
|
Other
|
|
(3)
|
|
(8)
|
|
31
|
|
23
|
|
Premiums earned
|
$
|
6,442
|
$
|
6,517
|
$
|
25,957
|
$
|
26,194
|
|
|
|
|
|
|
|
|
|
|
|
|
Premiums and deposits is an operating measure that we use
to analyze production trends for Allstate Financial sales. It
includes premiums on insurance policies and annuities and all
deposits and other funds received from customers on deposit-type
products including the net new deposits of Allstate Bank, which we
account for under GAAP as increases to liabilities rather than as
revenue. The following table illustrates where premiums and
deposits are reflected in the consolidated financial
statements.
|
|
($ in
millions)
|
|
Three months
ended
December
31,
|
|
Twelve
months ended
December
31,
|
|
|
|
2010
|
|
2009
|
|
2010
|
|
2009
|
|
Total premiums and
deposits
|
$
|
962
|
$
|
1,156
|
$
|
4,096
|
$
|
5,121
|
|
Deposits to contractholder
funds
|
|
(683)
|
|
(898)
|
|
(2,980)
|
|
(4,150)
|
|
Deposits to separate
accounts
|
|
(25)
|
|
(27)
|
|
(101)
|
|
(110)
|
|
Change in unearned premiums and
other adjustments
|
|
19
|
|
12
|
|
123
|
|
108
|
|
Life and annuity
premiums (1)
|
$
|
273
|
$
|
243
|
$
|
1,138
|
$
|
969
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Life and annuity contract
charges in the amount of $258 million and $255 million for the
three months ended December 31, 2010 and 2009, respectively, and
$1.03 billion and $989 million for the twelve months ended December
31, 2010 and 2009, respectively, which are also revenues recognized
for GAAP, have been excluded from the table above, but are a
component of the Consolidated Statements of Operations line item
life and annuity premiums and contract charges.
|
|
|
|
|
Forward-Looking Statements and Risk Factors
This news release contains forward-looking statements about our
outlook for the combined ratio excluding the effect of catastrophes
and prior year reserve reestimates for 2011. These statements
are subject to the Private Securities Litigation Reform Act of 1995
and are based on management's estimates, assumptions and
projections. Actual results may differ materially from those
projected based on the risk factors described below.
- Premiums written and premiums earned, the denominator of the
underlying combined ratio, may be materially less than projected.
Policyholder attrition may be greater than anticipated
resulting in a lower amount of insurance in force.
- Unanticipated increases in the severity or frequency of
standard auto insurance claims may adversely affect our
underwriting results. Changes in the severity or frequency of
claims may affect the profitability of our Allstate Protection
segment. Changes in bodily injury claim severity are driven
primarily by inflation in the medical sector of the economy and
litigation. Changes in auto physical damage claim severity
are driven primarily by inflation in auto repair costs, auto parts
prices and used car prices. The short-term level of claim
frequency we experience may vary from period to period and may not
be sustainable over the longer term. A decline in gas prices,
increase in miles driven, and higher unemployment are examples of
factors leading to a short-term frequency change. A
significant long-term increase in claim frequency could have an
adverse effect on our underwriting results.
We undertake no obligation to publicly correct or update any
forward-looking statements. This news release contains
unaudited financial information.
SOURCE The Allstate Corporation