NORTHBROOK, Ill., April 27, 2011 /PRNewswire/ -- The Allstate
Corporation (NYSE: ALL) today reported financial results for the
first quarter of 2011:
|
|
The Allstate
Corporation Consolidated Highlights
|
|
|
Three months
ended
March
31,
|
|
($ in millions, except per share
amounts and ratios)
|
2011
|
2010
|
%
Change
|
|
Consolidated
revenues
|
$ 8,095
|
$ 7,749
|
4.5
|
|
Net income
|
519
|
120
|
NM
|
|
Net income per diluted
share
|
0.97
|
0.22
|
NM
|
|
Operating income*
|
497
|
375
|
32.5
|
|
Operating income per diluted
share*
|
0.93
|
0.69
|
34.8
|
|
Book value per
share
|
36.51
|
32.26
|
13.2
|
|
Book value per share, excluding
the impact of
unrealized net
capital gains and losses on
fixed income
securities*
|
35.22
|
32.83
|
7.3
|
|
Catastrophe
losses
|
333
|
648
|
(48.6)
|
|
Property-Liability combined
ratio
|
94.9
|
98.9
|
(4.0)
pts
|
|
Property-Liability combined
ratio excluding the
effect of
catastrophes and prior year reserve
reestimates
("underlying combined ratio")*
|
89.9
|
89.1
|
0.8
pts
|
|
|
|
|
|
NM = not meaningful
* 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 improving returns and also
benefited from lower catastrophe losses in the first quarter," said
Thomas J. Wilson, chairman,
president and chief executive officer of The Allstate Corporation.
"Operating income improved by 32.5% to $497 million and the underlying combined ratio
for Property-Liability of 89.9 was within our 88 to 91 outlook
range for the year. Our marketing programs continue to be
successful with an 11.9% increase in standard auto new business,
although policies in force declined by 0.7% when compared to the
prior year first quarter as we took actions to improve
profitability in several large states.
"Allstate Financial continued to improve returns and build a
strategic base for profitable growth," continued Wilson.
"Investment results were strong as we execute a strategy to
optimize operating income while managing interest rate exposure
from the fixed income portfolio. Net income increased to
$519 million from $120 million, due to net capital gains in the
first quarter versus net capital losses in the first quarter of
last year. As a result, book value per share was 13.2% higher
than March 31, 2010.
"We also made progress on our longer-term goals of focusing on
the customer, competitively differentiating our value proposition
and raising returns in the homeowners and fixed annuity businesses.
Last week we celebrated Allstate's 80th anniversary as an
insurer. Our strategies and strong operational execution will
enable us to further build on this legacy of serving customers and
delivering returns for shareholders," concluded Wilson.
Property-Liability Profitability Improved, Underlying
Combined Ratio Within Full-Year Outlook
Allstate's combined ratio for the first quarter of 2011 was
94.9, compared to 98.9 in the first quarter of 2010, primarily due
to lower catastrophe losses. Catastrophe losses totaled
$333 million in the first quarter of
2011, adding 5.2 points to the combined ratio, which was
significantly lower than first quarter 2010 catastrophe losses of
$648 million. The Property-Liability
business produced an underlying combined ratio of 89.9 during the
first quarter of 2011 compared to 89.1 in the first quarter of
2010. The first quarter ratio was within the full-year 2011
outlook range for the underlying combined ratio of 88 to 91.
The Allstate brand standard auto business continued to generate
high returns, but has not grown as the company balanced
profitability with growth. Standard auto premiums written
declined 1.0% for the first quarter of 2011 compared to the prior
year first quarter, reflecting lower average premiums and declining
policies in force. Average premiums decreased 0.9% in the
first quarter of 2011 compared to the first quarter of 2010,
reflecting rate decreases taken during 2010 and customers electing
lower coverage. Policies in force declined by 0.7% as lower
customer renewals more than offset an 11.9% increase in
applications issued. Allstate brand standard auto combined
ratio was 95.1, which generates an attractive return on capital.
The combined ratio increased 0.7 points from the first
quarter of 2010 as Allstate continued to address adverse loss cost
trends during the first quarter, particularly in the states of
New York and Florida.
Continued progress was made on improving returns in the
homeowners line. Allstate brand homeowners premiums written
increased 3.0% in the first quarter of 2011 compared to the same
period a year ago, as a 5.9% increase in average premium was partly
offset by a 3.7% decline in policies in force. Rate increases
averaging 9.9% were approved in 12 states during the quarter, as
Allstate continued to take actions to improve homeowners
profitability. Lower catastrophe losses resulted in an
Allstate brand homeowners combined ratio of 91.4 in the first
quarter of 2011 compared to 111.3 in the first quarter a year ago.
Allstate Financial Continued to Advance Its Strategy
Allstate Financial continued to stabilize profitability, reduce
concentrations in investment spread products and focus on
Allstate's core markets. Allstate Financial's focus
contributed to earnings growth in Allstate Benefits (the worksite
distribution channel) and sales momentum in the Allstate Agency
channel. Consistent with this strategy, premiums and contract
charges increased 4.6% during the first quarter of 2011 when
compared to the first quarter of 2010.
Allstate Financial operating income was $116 million in the first quarter of 2011
compared to $139 million in the prior
year first quarter. The annual unlocking of assumptions had
an unfavorable impact on operating income of $8 million, after-tax, compared to a favorable
impact of $26 million, after-tax, in
the prior year first quarter. Excluding the impact of the
unlocking, Allstate Financial had strong operating results with an
increase in operating income of $11
million when compared to the prior year first quarter.
The benefit spread increased 9.2% from the 2010 first quarter
due to higher profitability and growth related to Allstate
Benefits' accident and health insurance business, and increased
contract charges for interest-sensitive life.
Net income improved to $97 million
in the first quarter of 2011 compared to $4
million in the first quarter of 2010. The improvement
was due to net realized capital gains in the first quarter versus
net realized capital losses last year, partly offset by higher
deferred acquisition and sales inducement costs and a loss on the
planned exit from the consumer banking business totaling
$16 million, after-tax. Costs
related to the annual unlocking of assumptions resulted in an
unfavorable charge to net income of $7
million, after-tax, in the first quarter of 2011 compared to
a favorable credit of $8 million,
after-tax, in the first quarter of 2010.
Allstate's Investment Portfolio Yields Stabilized and
Generated Solid Returns
Proactive management of risk and return in the investment
portfolio stabilized yields and generated solid results. The
municipal bond portfolio continued to be reduced, although the
decline slowed substantially. The fixed income maturity
profile is also being reshaped to optimize returns and manage risk
given a steep and potentially changing interest rate curve.
In addition, the interest rate and equity macro hedge
programs were not extended given the strength of Allstate's capital
position.
Net investment income was $982
million for the first quarter of 2011, a 6.5% decline from
the first quarter of 2010, with approximately two-thirds caused by
expected reductions in the size of Allstate Financial's portfolio
reflecting the strategy to reduce concentrations in spread-based
products. The remaining decline in investment income was
caused by lower yields in the Property-Liability portfolio.
Compared to the fourth quarter of 2010, a 1.6% decrease in
net investment income resulted primarily from reductions in
Allstate Financial's portfolio, while investment yields remained
stable.
Net realized capital gains for the first quarter of 2011 were
$96 million, pre-tax, compared to a
net realized capital loss of $348
million, pre-tax, in the first quarter of 2010. The
components of the first quarter 2011 improvement, when compared to
the first quarter of 2010, were higher net realized gains on sales
of $283 million compared to
$88 million, reduced derivative
losses of $67 million compared to
$185 million, lower impairment
write-downs of $114 million compared
to $223 million, and increased
valuation gains on limited partnerships of $63 million compared to $4
million. Impairment write-downs continued on a
favorable trend with the lowest recorded amount since the third
quarter of 2007. The derivatives that were terminated due to
not extending the macro hedge programs had a realized capital loss
of $62 million in the first quarter
of 2011.
Allstate's consolidated investment portfolio totaled
$99.6 billion at March 31, 2011 compared to $100.5 billion at December
31, 2010, as expected reductions in the Allstate Financial
portfolio more than offset strong investment returns and operating
cash flows. The net unrealized capital gains totaled
$1.6 billion, pre-tax, at
March 31, 2011 compared to
$1.4 billion at December 31, 2010.
Book Value Per Share Increased 3.4%; Repurchases Totaled
$300 Million
"Book value per share increased 3.4% during the first quarter
due to strong operating results, an improved investment value and
an aggressive share repurchase program," said Don Civgin, executive vice president and chief
financial officer. "Book value per share totaled $36.51 at March 31,
2011 compared to $35.32 at
December 31, 2010 and $32.26 at March 31,
2010. We repurchased $300
million of our stock in the first quarter, leaving
$540 million remaining on the
$1 billion share repurchase
program."
Visit www.allstateinvestors.com to view additional information
about Allstate's first quarter results, including a webcast of its
quarterly conference call and the presentation discussed on the
call. The conference call will be held at 9 a.m. ET on Thursday,
April 28, 2011.
The Allstate Corporation (NYSE: ALL) is the nation's largest
publicly held personal lines insurer known for its "You're In Good
Hands With Allstate®" slogan. Now celebrating its 80th
anniversary as an insurer, Allstate is reinventing protection and
retirement to help nearly 16 million households insure what they
have today and better prepare for tomorrow. Consumers access
Allstate insurance products (auto, home, life and retirement) and
services through Allstate agencies, independent agencies, and
Allstate exclusive financial representatives in the U.S. and
Canada, as well as via
www.allstate.com and 1-800 Allstate®.
|
|
THE ALLSTATE
CORPORATION AND SUBSIDIARIES
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
|
|
($ in millions, except per share
data)
|
|
Three months
ended
March
31,
|
|
|
|
2011
|
|
2010
|
|
|
|
(unaudited)
|
|
Revenues
|
|
|
|
|
|
Property-liability
insurance premiums
|
$
|
6,448
|
$
|
6,503
|
|
Life and annuity premiums
and contract charges
|
|
569
|
|
544
|
|
Net investment
income
|
|
982
|
|
1,050
|
|
Realized capital gains
and losses:
|
|
|
|
|
|
Total other-than-temporary
impairment losses
|
|
(156)
|
|
(250)
|
|
Portion of
loss recognized in other comprehensive income
|
|
(27)
|
|
(5)
|
|
Net other-than-temporary
impairment losses recognized
in
earnings
|
|
(183)
|
|
(255)
|
|
Sales and other realized
capital gains and losses
|
|
279
|
|
(93)
|
|
Total realized capital
gains and losses
|
|
96
|
|
(348)
|
|
|
|
|
|
|
|
|
|
8,095
|
|
7,749
|
|
|
|
|
|
|
|
Costs and
expenses
|
|
|
|
|
|
Property-liability
insurance claims and claims expense
|
|
4,476
|
|
4,792
|
|
Life and annuity contract
benefits
|
|
454
|
|
442
|
|
Interest credited to
contractholder funds
|
|
418
|
|
463
|
|
Amortization of deferred
policy acquisition costs
|
|
1,051
|
|
1,014
|
|
Operating costs and
expenses
|
|
838
|
|
829
|
|
Restructuring and related
charges
|
|
9
|
|
11
|
|
Interest
expense
|
|
92
|
|
92
|
|
|
|
7,338
|
|
7,643
|
|
|
|
|
|
|
|
(Loss) gain on disposition of
operations
|
|
(23)
|
|
1
|
|
|
|
|
|
|
|
Income from operations before
income tax expense (benefit)
|
|
734
|
|
107
|
|
|
|
|
|
|
|
Income tax expense
(benefit)
|
|
215
|
|
(13)
|
|
|
|
|
|
|
|
Net income
|
$
|
519
|
$
|
120
|
|
|
|
|
|
|
|
Earnings per
share:
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share -
Basic
|
$
|
0.98
|
$
|
0.22
|
|
|
|
|
|
|
|
Weighted average shares -
Basic
|
|
531.0
|
|
540.5
|
|
|
|
|
|
|
|
Net income per share -
Diluted
|
$
|
0.97
|
$
|
0.22
|
|
|
|
|
|
|
|
Weighted average shares -
Diluted
|
|
533.6
|
|
541.8
|
|
|
|
|
|
|
|
Cash dividends declared per
share
|
$
|
0.21
|
$
|
0.20
|
|
|
|
|
|
|
|
|
|
|
THE ALLSTATE
CORPORATION
|
|
SEGMENT
RESULTS
|
|
($ in millions, except
ratios)
|
|
Three months
ended
|
|
|
|
March
31,
|
|
|
|
|
2011
|
|
2010
|
|
Property-Liability
|
|
|
|
|
|
|
|
|
|
|
|
Premiums
written
|
$
|
6,215
|
$
|
6,258
|
|
|
|
|
|
|
|
|
Premiums
earned
|
$
|
6,448
|
$
|
6,503
|
|
Claims and claims
expense
|
|
(4,476)
|
|
(4,792)
|
|
Amortization of
deferred policy acquisition costs
|
|
(904)
|
|
(925)
|
|
Operating costs and
expenses
|
|
(730)
|
|
(704)
|
|
Restructuring and
related charges
|
|
(11)
|
|
(11)
|
|
Underwriting income
|
|
327
|
|
71
|
|
|
|
|
|
|
|
|
Net investment
income
|
|
284
|
|
304
|
|
Periodic
settlements and accruals on non-hedge derivative
instruments
|
|
(4)
|
|
(1)
|
|
Income tax expense
on operations
|
|
(180)
|
|
(88)
|
|
|
|
|
|
|
|
|
Operating
income
|
|
427
|
|
286
|
|
|
|
|
|
|
|
|
Realized capital
gains and losses, after-tax
|
|
38
|
|
(123)
|
|
Reclassification of
periodic settlements and accruals on non-hedge
|
|
|
|
|
|
derivative
instruments, after-tax
|
|
3
|
|
1
|
|
|
|
|
|
|
|
|
Net
income
|
$
|
468
|
$
|
164
|
|
|
|
|
|
|
|
|
Catastrophe
losses
|
$
|
333
|
$
|
648
|
|
|
|
|
|
|
|
|
Operating
ratios:
|
|
|
|
|
|
Claims and
claims expense ratio
|
|
69.4
|
|
73.7
|
|
Expense
ratio
|
|
25.5
|
|
25.2
|
|
Combined
ratio
|
|
94.9
|
|
98.9
|
|
|
|
|
|
|
|
|
Effect of
catastrophe losses on combined ratio
|
|
5.2
|
|
10.0
|
|
|
|
|
|
|
|
|
Effect of
prior year reserve reestimates on combined ratio
|
|
(0.7)
|
|
(0.4)
|
|
|
|
|
|
|
|
|
Effect of
catastrophe losses included in prior year reserve reestimates
on
|
|
|
|
|
|
combined ratio
|
|
(0.5)
|
|
(0.2)
|
|
|
|
|
|
|
|
|
Effect of
Discontinued Lines and Coverages on combined ratio
|
|
0.1
|
|
0.1
|
|
|
|
|
|
|
|
|
Allstate
Financial
|
|
|
|
|
|
Investments
|
$
|
60,484
|
$
|
62,336
|
|
|
|
|
|
|
|
Premiums and
contract charges
|
$
|
569
|
$
|
544
|
|
Net investment
income
|
|
684
|
|
731
|
|
Periodic
settlements and accruals on non-hedge derivative
instruments
|
|
17
|
|
17
|
|
Contract
benefits
|
|
(454)
|
|
(442)
|
|
Interest credited
to contractholder funds
|
|
(425)
|
|
(463)
|
|
Amortization of
deferred policy acquisition costs
|
|
(113)
|
|
(58)
|
|
Operating costs and
expenses
|
|
(109)
|
|
(120)
|
|
Restructuring and
related charges
|
|
2
|
|
--
|
|
Income tax expense
on operations
|
|
(55)
|
|
(70)
|
|
|
|
|
|
|
|
Operating
income
|
|
116
|
|
139
|
|
|
|
|
|
|
|
|
Realized capital
gains and losses, after-tax
|
|
25
|
|
(105)
|
|
Valuation changes
on embedded derivatives that are not hedged, after-tax
|
|
8
|
|
--
|
|
DAC and DSI
amortization relating to realized capital gains and
losses
|
|
|
|
|
|
and
valuation changes on embedded derivatives that are not
hedged,
after-tax
|
|
(26)
|
|
(2)
|
|
DAC and DSI
unlocking relating to realized capital gains and losses,
after-tax
|
1
|
|
(18)
|
|
Reclassification of
periodic settlements and accruals on non-hedge
|
|
|
|
|
|
derivative
instruments, after-tax
|
|
(12)
|
|
(11)
|
|
(Loss) gain on
disposition of operations, after-tax
|
|
(15)
|
|
1
|
|
|
|
|
|
|
|
Net
income
|
$
|
97
|
$
|
4
|
|
|
|
|
|
|
|
|
Corporate and
Other
|
|
|
|
|
|
Net investment
income
|
$
|
14
|
$
|
15
|
|
Operating costs and
expenses
|
|
(91)
|
|
(97)
|
|
Income tax benefit
on operations
|
|
31
|
|
32
|
|
|
|
|
|
|
|
Operating
loss
|
|
(46)
|
|
(50)
|
|
|
|
|
|
|
|
|
Realized capital
gains and losses, after-tax
|
|
--
|
|
2
|
|
|
|
|
|
|
|
|
Net
loss
|
$
|
(46)
|
$
|
(48)
|
|
|
|
|
|
|
|
|
Consolidated net
income
|
$
|
519
|
$
|
120
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THE ALLSTATE
CORPORATION AND SUBSIDIARIES
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
|
|
($ in millions, except par
value data)
|
|
March
31,
|
|
December
31,
|
|
|
|
2011
|
|
2010
|
|
Assets
|
|
(unaudited)
|
|
|
|
Investments:
|
|
|
|
|
|
Fixed income securities, at fair
value (amortized cost $79,292 and $78,786)
|
$
|
80,242
|
$
|
79,612
|
|
Equity securities, at fair value
(cost $3,792 and $4,228)
|
|
4,437
|
|
4,811
|
|
Mortgage loans
|
|
6,582
|
|
6,679
|
|
Limited partnership
interests
|
|
4,077
|
|
3,816
|
|
Shortterm, at
fair value (amortized cost $1,986 and $3,279)
|
|
1,986
|
|
3,279
|
|
Other
|
|
2,287
|
|
2,286
|
|
Total investments
|
|
99,611
|
|
100,483
|
|
Cash
|
|
641
|
|
562
|
|
Premium installment receivables,
net
|
|
4,842
|
|
4,839
|
|
Deferred policy acquisition
costs
|
|
4,697
|
|
4,769
|
|
Reinsurance recoverables,
net
|
|
6,589
|
|
6,552
|
|
Accrued investment
income
|
|
885
|
|
809
|
|
Deferred income taxes
|
|
612
|
|
784
|
|
Property and equipment,
net
|
|
912
|
|
921
|
|
Goodwill
|
|
874
|
|
874
|
|
Other assets
|
|
2,159
|
|
1,605
|
|
Separate Accounts
|
|
8,603
|
|
8,676
|
|
Total assets
|
$
|
130,425
|
$
|
130,874
|
|
Liabilities
|
|
|
|
|
|
Reserve for property-liability
insurance claims and claims expense
|
$
|
19,494
|
$
|
19,468
|
|
Reserve for
lifecontingent contract
benefits
|
|
13,552
|
|
13,482
|
|
Contractholder funds
|
|
46,834
|
|
48,195
|
|
Unearned premiums
|
|
9,563
|
|
9,800
|
|
Claim payments
outstanding
|
|
761
|
|
737
|
|
Other liabilities and accrued
expenses
|
|
6,369
|
|
5,564
|
|
Long-term debt
|
|
5,908
|
|
5,908
|
|
Separate Accounts
|
|
8,603
|
|
8,676
|
|
Total liabilities
|
|
111,084
|
|
111,830
|
|
|
|
|
|
|
|
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, 524 million and 533 million shares outstanding
|
|
9
|
|
9
|
|
Additional capital
paidin
|
|
3,156
|
|
3,176
|
|
Retained income
|
|
32,377
|
|
31,969
|
|
Deferred ESOP expense
|
|
(42)
|
|
(44)
|
|
Treasury stock, at cost (376
million and 367 million shares)
|
|
(16,173)
|
|
(15,910)
|
|
Accumulated other comprehensive
income:
|
|
|
|
|
|
Unrealized net capital gains and
losses:
|
|
|
|
|
|
Unrealized net capital losses on
fixed income securities with OTTI
|
|
(167)
|
|
(190)
|
|
Other unrealized net capital
gains and losses
|
|
1,186
|
|
1,089
|
|
Unrealized adjustment to DAC,
DSI and insurance reserves
|
|
60
|
|
36
|
|
Total
unrealized net capital gains and losses
|
|
1,079
|
|
935
|
|
Unrealized foreign currency
translation adjustments
|
|
79
|
|
69
|
|
Unrecognized pension and other
postretirement benefit cost
|
|
(1,173)
|
|
(1,188)
|
|
Total accumulated other
comprehensive loss
|
|
(15)
|
|
(184)
|
|
Total shareholders'
equity
|
|
19,312
|
|
19,016
|
|
Noncontrolling
interest
|
|
29
|
|
28
|
|
Total equity
|
|
19,341
|
|
19,044
|
|
Total liabilities and
equity
|
$
|
130,425
|
$
|
130,874
|
|
|
|
|
|
|
|
|
|
|
THE ALLSTATE
CORPORATION AND SUBSIDIARIES
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
($ in millions)
|
|
Three months
ended
March
31,
|
|
|
|
2011
|
|
2010
|
|
Cash flows from operating
activities
|
|
(unaudited)
|
|
Net income
|
$
|
519
|
$
|
120
|
|
Adjustments to reconcile net
income to net cash provided by operating activities:
|
|
|
|
|
|
Depreciation, amortization
and other non-cash items
|
|
31
|
|
16
|
|
Realized capital gains and
losses
|
|
(96)
|
|
348
|
|
Loss (gain) on disposition
of operations
|
|
23
|
|
(1)
|
|
Interest credited to
contractholder funds
|
|
418
|
|
463
|
|
Changes in:
|
|
|
|
|
|
Policy benefits and other
insurance reserves
|
|
(58)
|
|
188
|
|
Unearned
premiums
|
|
(248)
|
|
(261)
|
|
Deferred policy
acquisition costs
|
|
72
|
|
30
|
|
Premium installment
receivables, net
|
|
3
|
|
24
|
|
Reinsurance recoverables,
net
|
|
(117)
|
|
(72)
|
|
Income taxes
|
|
200
|
|
73
|
|
Other operating assets and
liabilities
|
|
(21)
|
|
36
|
|
Net cash provided by
operating activities
|
|
726
|
|
964
|
|
Cash flows from investing
activities
|
|
|
|
|
|
Proceeds from sales
|
|
|
|
|
|
Fixed income
securities
|
|
8,363
|
|
4,930
|
|
Equity
securities
|
|
642
|
|
1,990
|
|
Limited
partnership interests
|
|
113
|
|
146
|
|
Mortgage
loans
|
|
26
|
|
3
|
|
Other
investments
|
|
63
|
|
37
|
|
Investment
collections
|
|
|
|
|
|
Fixed income
securities
|
|
1,201
|
|
1,122
|
|
Mortgage loans
|
|
88
|
|
263
|
|
Other
investments
|
|
77
|
|
18
|
|
Investment purchases
|
|
|
|
|
|
Fixed income
securities
|
|
(10,207)
|
|
(7,099)
|
|
Equity
securities
|
|
(144)
|
|
(556)
|
|
Limited partnership
interests
|
|
(334)
|
|
(185)
|
|
Mortgage loans
|
|
(26)
|
|
(1)
|
|
Other
investments
|
|
(58)
|
|
(43)
|
|
Change in short-term
investments, net
|
|
1,649
|
|
411
|
|
Change in other investments,
net
|
|
(119)
|
|
(49)
|
|
Purchases of property and
equipment, net
|
|
(48)
|
|
(24)
|
|
Disposition of
operations
|
|
(1)
|
|
--
|
|
Net cash provided by
investing activities
|
|
1,285
|
|
963
|
|
Cash flows from financing
activities
|
|
|
|
|
|
Contractholder fund
deposits
|
|
596
|
|
828
|
|
Contractholder fund
withdrawals
|
|
(2,122)
|
|
(2,569)
|
|
Dividends paid
|
|
(107)
|
|
(107)
|
|
Treasury stock
purchases
|
|
(305)
|
|
(5)
|
|
Shares reissued under equity
incentive plans, net
|
|
9
|
|
14
|
|
Excess tax benefits on
share-based payment arrangements
|
|
(3)
|
|
(2)
|
|
Other
|
|
--
|
|
6
|
|
Net cash used in financing
activities
|
|
(1,932)
|
|
(1,835)
|
|
Net increase in
cash
|
|
79
|
|
92
|
|
Cash at beginning of
period
|
|
562
|
|
612
|
|
Cash at end of
period
|
$
|
641
|
$
|
704
|
|
|
|
|
|
|
|
|
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),
- valuation changes on embedded derivatives that are not hedged,
after-tax,
- amortization of DAC and DSI, to the extent they resulted from
the recognition of certain realized capital gains and losses or
valuation changes on embedded derivatives that are not hedged,
- 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, valuation changes on embedded
derivatives that are not hedged, 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 that are 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, 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 table reconciles operating income and net income
for the three months ended March 31,
2011 and 2010.
|
|
For the
three months ended
March 31,
|
|
Property-Liability
|
|
Allstate
Financial
|
|
Consolidated
|
|
Per diluted
share
|
|
($ in millions, except per share
data)
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
2011
|
|
010
|
|
Operating income
|
$
|
427
|
$
|
286
|
$
|
116
|
$
|
139
|
$
|
497
|
$
|
375
|
$
|
0.93
|
$
|
0.69
|
|
Realized capital gains and
losses
|
|
57
|
|
(190)
|
|
39
|
|
(162)
|
|
96
|
|
(348)
|
|
|
|
|
|
Income tax (expense)
benefit
|
|
(19)
|
|
67
|
|
(14)
|
|
57
|
|
(33)
|
|
122
|
|
|
|
|
|
Realized capital gains and
losses,
after-tax
|
|
38
|
|
(123)
|
|
25
|
|
(105)
|
|
63
|
|
(226)
|
|
0.12
|
|
(0.42)
|
|
Valuation changes on
embedded
derivatives that are not
hedged,
after-tax
|
|
--
|
|
--
|
|
8
|
|
--
|
|
8
|
|
--
|
|
0.02
|
|
--
|
|
DAC and DSI amortization
relating to
realized capital gains
and losses and
valuation changes on
embedded
derivatives that are not
hedged,
after-tax
|
|
--
|
|
--
|
|
(26)
|
|
(2)
|
|
(26)
|
|
(2)
|
|
(0.05)
|
|
--
|
|
DAC and DSI
unlocking relating to
realized capital gains
and losses,
after-tax
|
|
--
|
|
--
|
|
1
|
|
(18)
|
|
1
|
|
(18)
|
|
--
|
|
(0.03)
|
|
Reclassification of periodic
settlements
and accruals on
non-hedge
derivative instruments,
after-tax
|
|
3
|
|
1
|
|
(12)
|
|
(11)
|
|
(9)
|
|
(10)
|
|
(0.02)
|
|
(0.02)
|
|
(Loss) gain on disposition of
operations,
after-tax
|
|
--
|
|
--
|
|
(15)
|
|
1
|
|
(15)
|
|
1
|
|
(0.03)
|
|
--
|
|
Net income
|
$
|
468
|
$
|
164
|
$
|
97
|
$
|
4
|
$
|
519
|
$
|
120
|
$
|
0.97
|
$
|
0.22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
March
31,
|
|
|
2011
|
|
2010
|
|
Combined ratio excluding the
effect of catastrophes and prior
year reserve
reestimates ("underlying combined ratio")
|
89.9
|
|
89.1
|
|
Effect of catastrophe
losses
|
5.2
|
|
10.0
|
|
Effect of prior year
non-catastrophe reserve reestimates
|
(0.2)
|
|
(0.2)
|
|
Combined ratio
|
94.9
|
|
98.9
|
|
|
|
|
|
|
Effect of prior year catastrophe
reserve reestimates
|
(0.5)
|
|
(0.2)
|
|
|
|
|
|
|
|
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 March
31,
|
|
|
|
2011
|
|
2010
|
|
Book value per
share
|
|
|
|
|
|
Numerator:
|
|
|
|
|
|
Shareholders'
equity
|
$
|
19,312
|
$
|
17,560
|
|
Denominator:
|
|
|
|
|
|
Shares outstanding
and dilutive potential shares
outstanding
|
|
529.0
|
|
544.3
|
|
Book value per share
|
$
|
36.51
|
$
|
32.26
|
|
|
|
|
|
|
|
Book value per share, excluding
the impact of
unrealized net
capital gains and losses on fixed
income
securities
|
|
|
|
|
|
Numerator:
|
|
|
|
|
|
Shareholders'
equity
|
$
|
19,312
|
$
|
17,560
|
|
Unrealized net
capital gains and losses on fixed income
securities
|
|
678
|
|
(309)
|
|
Adjusted shareholders'
equity
|
$
|
18,634
|
$
|
17,869
|
|
Denominator:
|
|
|
|
|
|
Shares
outstanding and dilutive potential shares
outstanding
|
|
529.0
|
|
544.3
|
|
Book value per share, excluding
the impact of unrealized
net capital gains
and losses on fixed income securities
|
$
|
35.22
|
$
|
32.83
|
|
|
|
|
|
|
|
|
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
Condensed Consolidated Statements of Financial Position. A
reconciliation of premiums written to premiums earned is presented
in the following table.
|
|
($ in millions)
|
|
Three months
ended
March
31,
|
|
|
|
2011
|
|
2010
|
|
Premiums written
|
$
|
6,215
|
$
|
6,258
|
|
Decrease in Property-Liability
unearned premiums
|
|
234
|
|
245
|
|
Other
|
|
(1)
|
|
--
|
|
Premiums earned
|
$
|
6,448
|
$
|
6,503
|
|
|
|
|
|
|
|
|
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