NORTHBROOK, Ill., Aug. 1, 2011 /PRNewswire/ -- The Allstate
Corporation (NYSE: ALL) today reported financial results for the
second quarter of 2011:
|
|
The Allstate
Corporation Consolidated Highlights
|
|
|
Three months
ended
June
30,
|
|
($ in millions, except per share
amounts and ratios)
|
2011
|
2010
|
%
Change
|
|
Consolidated
revenues
|
$ 8,081
|
$ 7,656
|
5.6
|
|
Net (loss) income
|
(620)
|
145
|
NM
|
|
Net (loss) income per diluted
share
|
(1.19)
|
0.27
|
NM
|
|
Operating (loss)
income*
|
(642)
|
441
|
NM
|
|
Operating (loss) income per
diluted share*
|
(1.23)
|
0.81
|
NM
|
|
Book value per
share
|
35.95
|
33.24
|
8.2
|
|
Book value per share, excluding
the impact
of unrealized net capital
gains and losses
on fixed income
securities*
|
33.91
|
32.51
|
4.3
|
|
Catastrophe
losses
|
2,339
|
636
|
267.8
|
|
Property-Liability combined
ratio
|
123.3
|
96.8
|
26.5
pts
|
|
Property-Liability combined
ratio excluding
the effect of catastrophes
and prior year
reserve reestimates
("underlying
combined
ratio")*
|
87.5
|
88.1
|
(0.6) 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.
|
|
|
While underlying profitability improved across the company's
business lines this quarter, those gains were more than offset by
$2.3 billion in record second quarter
catastrophe losses.
"Our key profitability benchmark continued to improve," said
Thomas J. Wilson, chairman,
president and chief executive officer of The Allstate Corporation,
noting that the company's underlying Property-Liability combined
ratio stood at 88.7 for the first six months of 2011, well within
Allstate's full-year guidance range of 88 to 91. "We also
advanced our strategy of broadening our profitable protection
relationships by offering differentiated products tailored to the
needs of specific customer segments." However, as
anticipated, profit improvement actions in New York and Florida continued to impact growth in auto
policies. Allstate Protection's policies in force declined
slightly when compared to the prior year quarter, as a 0.6%
reduction in Allstate brand standard auto and a 3.9% reduction in
homeowners were only partially offset by increases in specialty
lines and Canada.
"We made substantial progress improving returns at Allstate
Financial," said Wilson. Allstate Financial second quarter
operating income grew 12.8% versus the same period a year ago.
Proactive management of the consolidated investment portfolio
was also reflected in total portfolio returns, which benefitted
from increased investment yields, realized capital gains, and a
$2.1 billion increase in pre-tax net
unrealized capital gains from June 30,
2010.
"We will continue to make progress on our commitment to
shareholders to improve overall returns. I'm confident the
actions we took during the quarter, including our pending
acquisition of Esurance and Answer Financial, position us well for
our longer-term focus of delivering unique value propositions to
each customer segment and improving shareholder value," Wilson
said.
Property-Liability Impacted by Record Second Quarter
Catastrophe Losses, Underlying Profitability Improved
Allstate's combined ratio for the second quarter of 2011 was
123.3, reflecting the previously reported catastrophe losses of
$2.3 billion, or 36.2 points.
During the period, Allstate experienced 33 catastrophe loss
events including five tornadoes, three wildfires and 25
wind/hailstorms. Excluding catastrophe losses and prior year
reserve reestimates, the Property-Liability underlying combined
ratio was 87.5 during the second quarter of 2011 compared to 88.1
in the second quarter of 2010, reflecting lower claims frequency.
Allstate brand standard auto policies continued to decline
during the second quarter of 2011, consistent with the company's
expectation, as growth was balanced with a focus on maintaining
auto profitability. Premiums written* declined 0.9% for the
second quarter of 2011 compared to the prior year second quarter,
reflecting declining policies in force and lower average premiums.
Policies in force declined by 0.6% compared to the second
quarter of 2010, as the level of new policies issued was not
sufficient to make up for policies not renewed. New issued
applications declined 5.2% in the quarter when compared to the
prior year quarter, while retention improved to 89.2 from 89.0 in
the second quarter of last year. Average gross premium
decreased 0.5% in the second quarter of 2011 when compared to the
second quarter of 2010, in part due to customers electing lower
coverage options. Allstate brand standard auto combined ratio
was 98.2, 3.7 points higher than the second quarter of 2010 due to
a 4.7 point increase in the impact of catastrophe losses.
Allstate brand standard auto underlying combined ratio was
93.6 in the second quarter of 2011, compared to 94.1 in the second
quarter of 2010.
Allstate brand homeowners premiums written increased 2.6% in the
second quarter of 2011 compared to the same period a year ago, as a
6.0% increase in average gross premium was partly offset by a 3.9%
decline in policies in force. Rate increases averaging 6.0%
were approved in 18 states during the second quarter, as Allstate
continued to take actions to improve homeowners returns.
Catastrophe losses impacted the Allstate brand homeowners
combined ratio by 123.2 points in the second quarter of 2011.
Excluding the impact of catastrophes and prior year reserve
reestimates, the Allstate brand homeowners underlying combined
ratio was 69.5 in the second quarter of 2011, compared to 69.8 in
the second quarter of 2010.
Allstate Financial Improves Financial Performance
Allstate Financial made progress on its commitment to improve
returns. By executing a strategy of reducing concentration in
and improving the profitability of investment spread products,
expanding Allstate Benefits and focusing on Allstate's core
markets, operating income increased in the second quarter when
compared to the second quarter of 2010. Premiums and contract
charges were in line with 2010 second quarter levels as growth in
underwritten products offset a decline in annuities.
Allstate Financial operating income was $141 million in the second quarter of 2011
compared to $125 million in the prior
year second quarter, due to increases in both benefit and
investment spread. The benefit spread increased to
$161 million in the second quarter
from $99 million in the 2010 second
quarter due primarily to unfavorable reserve reestimates of
$42 million recorded in 2010, as well
as higher profitability and growth in Allstate Benefits' accident
and health insurance business. The investment spread
increased 6.0% to $142 million in the
second quarter when compared to the prior year quarter, as actions
to improve investment portfolio yields and lower crediting rates on
annuities and interest sensitive-life insurance more than offset
the effect of a continued decline in spread-based business in
force. As a result, operating income return on attributed equity*
totaled 7.5% for the twelve months ended June 30, 2011.
Net income improved to $166
million in the second quarter of 2011 compared to a net loss
of $107 million in the second quarter
of 2010. The improvement was due to net realized capital
gains in the second quarter versus net realized capital losses in
the second quarter of last year, and increased operating
income.
Increasing Portfolio Yields Drive Strong Investment
Results
Allstate maintained portfolio yields through proactive
management of risk and return. The total portfolio yield was
4.5% during the second quarter of 2011, higher than both the prior
quarter and prior year quarter.
Net investment income was $1.02
billion for the second quarter of 2011, a 2.8% decline from
the second quarter of 2010, but a 3.9% increase compared to the
first quarter of 2011. Lower portfolio balances drove the
changes from the prior year quarter. Overall portfolio yields
increased in the second quarter of 2011 when compared to both the
second quarter of 2010 and first quarter of 2011, related to yield
enhancement actions on fixed income securities, seasonal foreign
equity dividends, and limited partnership distributions.
Net realized capital gains for the second quarter of 2011 were
$57 million, pre-tax, compared to a
net realized capital loss of $451
million, pre-tax, in the second quarter of 2010, primarily
due to reduced derivative losses, lower impairment write-downs, and
increased valuation gains on limited partnerships.
Allstate's consolidated investment portfolio totaled
$99.3 billion at June 30, 2011 compared to $100.5 billion at December
31, 2010, as expected reductions in the Allstate Financial
portfolio more than offset strong investment returns. The net
unrealized capital gains totaled $2.5
billion, pre-tax, at June 30,
2011 compared to $1.4 billion
at December 31, 2010.
Strong Capital Position, Repurchases Totaled $232 Million
"Our capital position continues to be strong after significant
catastrophe losses and our share repurchase program," said
Don Civgin, executive vice president
and chief financial officer.
Statutory surplus at June 30, 2011
was an estimated $15.0 billion for
Allstate Insurance Company, including $3.5
billion at Allstate Life Insurance Company. This
compares to Allstate Insurance Company statutory surplus of
$15.9 billion at March 31, 2011 and $15.4
billion at December 31, 2010.
During the second quarter of 2011, Allstate Insurance Company
made a $238 million dividend to the
holding company. Deployable assets at the holding company
level totaled $3.5 billion at
June 30, 2011 compared to
$3.7 billion at March 31, 2011 and $3.8
billion at December 31,
2010.
"The impact of this quarter's catastrophe losses on book value
per share was mostly offset by an improved unrealized position,"
Civgin said. Book value per share totaled $35.95 at June 30,
2011, compared to $36.51 at
March 31, 2011 and $33.24 at June 30,
2010. During the second quarter of 2011, Allstate
repurchased shares totaling $232
million. At June 30,
2011, $308 million remained on
the $1 billion share repurchase
program.
Visit www.allstateinvestors.com to view additional information
about Allstate's results, including a webcast of its quarterly
conference call and the presentation discussed on the call.
The conference call will be held at 9
a.m. ET on Monday, August 1.
The Allstate Corporation (NYSE: ALL) is the nation's largest
publicly held personal lines insurer known for its "You're In Good
Hands With Allstate®" slogan. Now celebrating its 80th
anniversary as an insurer, Allstate is reinventing protection and
retirement to help nearly 16 million households insure what they
have today and better prepare for tomorrow. Consumers access
Allstate insurance products (auto, home, life and retirement) and
services through Allstate agencies, independent agencies, and
Allstate exclusive financial representatives in the U.S. and
Canada, as well as via
www.allstate.com and 1-800 Allstate®.
|
|
THE ALLSTATE
CORPORATION AND SUBSIDIARIES
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
|
|
|
|
|
|
($ in millions, except per share
data)
|
|
Three months
ended
June
30,
|
|
Six months
ended
June
30,
|
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
|
|
(unaudited)
|
|
(unaudited)
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
Property-liability
insurance premiums
|
$
|
6,457
|
$
|
6,513
|
$
|
12,905
|
$
|
13,016
|
|
Life and annuity premiums
and contract charges
|
|
547
|
|
545
|
|
1,116
|
|
1,089
|
|
Net investment
income
|
|
1,020
|
|
1,049
|
|
2,002
|
|
2,099
|
|
Realized capital gains
and losses:
|
|
|
|
|
|
|
|
|
|
Total other-than-temporary
impairment losses
|
|
(82)
|
|
(288)
|
|
(238)
|
|
(538)
|
|
Portion of
loss recognized in other comprehensive income
|
|
(4)
|
|
(18)
|
|
(31)
|
|
(23)
|
|
Net other-than-temporary
impairment losses recognized
in earnings
|
|
(86)
|
|
(306)
|
|
(269)
|
|
(561)
|
|
Sales and other realized
capital gains and losses
|
|
143
|
|
(145)
|
|
422
|
|
(238)
|
|
Total realized capital
gains and losses
|
|
57
|
|
(451)
|
|
153
|
|
(799)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,081
|
|
7,656
|
|
16,176
|
|
15,405
|
|
|
|
|
|
|
|
|
|
|
|
Costs and
expenses
|
|
|
|
|
|
|
|
|
|
Property-liability
insurance claims and claims expense
|
|
6,355
|
|
4,714
|
|
10,831
|
|
9,506
|
|
Life and annuity contract
benefits
|
|
422
|
|
485
|
|
876
|
|
927
|
|
Interest credited to
contractholder funds
|
|
417
|
|
450
|
|
835
|
|
913
|
|
Amortization of deferred
policy acquisition costs
|
|
1,018
|
|
949
|
|
2,069
|
|
1,963
|
|
Operating costs and
expenses
|
|
802
|
|
789
|
|
1,640
|
|
1,618
|
|
Restructuring and related
charges
|
|
11
|
|
13
|
|
20
|
|
24
|
|
Interest
expense
|
|
91
|
|
92
|
|
183
|
|
184
|
|
|
|
9,116
|
|
7,492
|
|
16,454
|
|
15,135
|
|
Gain (loss) on disposition of
operations
|
|
6
|
|
2
|
|
(17)
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income from operations
before income tax (benefit)
expense
|
|
(1,029)
|
|
166
|
|
(295)
|
|
273
|
|
|
|
|
|
|
|
|
|
|
|
Income tax (benefit)
expense
|
|
(409)
|
|
21
|
|
(194)
|
|
8
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
$
|
(620)
|
$
|
145
|
$
|
(101)
|
$
|
265
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per share -
Basic
|
$
|
(1.19)
|
$
|
0.27
|
$
|
(0.19)
|
$
|
0.49
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares -
Basic
|
|
523.1
|
|
540.7
|
|
528.2
|
|
540.4
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per share -
Diluted
|
$
|
(1.19)
|
$
|
0.27
|
$
|
(0.19)
|
$
|
0.49
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares -
Diluted
|
|
523.1
|
|
543.0
|
|
528.2
|
|
542.4
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends declared per
share
|
$
|
0.21
|
$
|
0.20
|
$
|
0.42
|
$
|
0.40
|
|
|
|
|
|
|
|
|
|
|
|
THE ALLSTATE
CORPORATION
|
|
SEGMENT
RESULTS
|
|
($ in millions, except
ratios)
|
|
Three months
ended
|
|
Six months
ended
|
|
|
|
June
30,
|
|
June
30,
|
|
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
Property-Liability
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Premiums
written
|
$
|
6,611
|
$
|
6,640
|
$
|
12,826
|
$
|
12,898
|
|
|
|
|
|
|
|
|
|
|
|
|
Premiums earned
|
$
|
6,457
|
$
|
6,513
|
$
|
12,905
|
$
|
13,016
|
|
Claims and claims
expense
|
|
(6,355)
|
|
(4,714)
|
|
(10,831)
|
|
(9,506)
|
|
Amortization of deferred
policy acquisition costs
|
|
(908)
|
|
(914)
|
|
(1,812)
|
|
(1,839)
|
|
Operating costs and
expenses
|
|
(685)
|
|
(664)
|
|
(1,415)
|
|
(1,368)
|
|
Restructuring and related
charges
|
|
(11)
|
|
(14)
|
|
(22)
|
|
(25)
|
|
Underwriting
(loss) income
|
|
(1,502)
|
|
207
|
|
(1,175)
|
|
278
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment
income
|
|
310
|
|
310
|
|
594
|
|
614
|
|
Periodic settlements and
accruals on non-hedge derivative instruments
|
|
(3)
|
|
(1)
|
|
(7)
|
|
(2)
|
|
Income tax benefit
(expense) on operations
|
|
462
|
|
(148)
|
|
282
|
|
(236)
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (loss)
income
|
|
(733)
|
|
368
|
|
(306)
|
|
654
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized capital gains and
losses, after-tax
|
|
(6)
|
|
(69)
|
|
32
|
|
(192)
|
|
Reclassification of
periodic settlements and accruals on non-hedge
|
|
|
|
|
|
|
|
|
|
derivative instruments,
after-tax
|
|
1
|
|
--
|
|
4
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
income
|
$
|
(738)
|
$
|
299
|
$
|
(270)
|
$
|
463
|
|
|
|
|
|
|
|
|
|
|
|
|
Catastrophe
losses
|
$
|
2,339
|
$
|
636
|
$
|
2,672
|
$
|
1,284
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
ratios:
|
|
|
|
|
|
|
|
|
|
Claims and claims
expense ratio
|
|
98.4
|
|
72.4
|
|
83.9
|
|
73.1
|
|
Expense
ratio
|
|
24.9
|
|
24.4
|
|
25.2
|
|
24.8
|
|
Combined
ratio
|
|
123.3
|
|
96.8
|
|
109.1
|
|
97.9
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of
catastrophe losses on combined ratio
|
|
36.2
|
|
9.8
|
|
20.7
|
|
9.9
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of prior
year reserve reestimates on combined ratio
|
|
(0.7)
|
|
(2.3)
|
|
(0.7)
|
|
(1.3)
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of
catastrophe losses included in prior year reserve reestimates
on
|
|
|
|
|
|
|
|
|
|
combined ratio
|
|
(0.3)
|
|
(1.2)
|
|
(0.4)
|
|
(0.7)
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of
Discontinued Lines and Coverages on combined ratio
|
|
0.1
|
|
--
|
|
0.1
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
Allstate
Financial
|
|
|
|
|
|
|
|
|
|
Investments
|
$
|
59,659
|
$
|
61,804
|
$
|
59,659
|
$
|
61,804
|
|
|
|
|
|
|
|
|
|
|
|
Premiums and contract
charges
|
$
|
547
|
$
|
545
|
$
|
1,116
|
$
|
1,089
|
|
Net investment
income
|
|
694
|
|
723
|
|
1,378
|
|
1,454
|
|
Periodic settlements and
accruals on non-hedge derivative instruments
|
|
19
|
|
11
|
|
36
|
|
28
|
|
Contract
benefits
|
|
(422)
|
|
(485)
|
|
(876)
|
|
(927)
|
|
Interest credited to
contractholder funds
|
|
(412)
|
|
(450)
|
|
(837)
|
|
(913)
|
|
Amortization of deferred
policy acquisition costs
|
|
(103)
|
|
(41)
|
|
(216)
|
|
(99)
|
|
Operating costs and
expenses
|
|
(110)
|
|
(116)
|
|
(219)
|
|
(236)
|
|
Restructuring and related
charges
|
|
--
|
|
1
|
|
2
|
|
1
|
|
Income tax expense on
operations
|
|
(72)
|
|
(63)
|
|
(127)
|
|
(133)
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
|
141
|
|
125
|
|
257
|
|
264
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized capital gains and
losses, after-tax
|
|
40
|
|
(230)
|
|
65
|
|
(335)
|
|
Valuation changes on
embedded derivatives that are not hedged, after-tax
|
|
(3)
|
|
--
|
|
5
|
|
--
|
|
DAC and DSI (amortization)
accretion relating to realized capital gains and
|
|
|
|
|
|
|
|
|
|
losses and
valuation changes on embedded derivatives that are not
|
|
|
|
|
|
|
|
|
|
hedged,
after-tax
|
|
(5)
|
|
4
|
|
(31)
|
|
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
|
|
(11)
|
|
(7)
|
|
(23)
|
|
(18)
|
|
Gain (loss) on disposition
of operations, after-tax
|
|
4
|
|
1
|
|
(11)
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
|
166
|
$
|
(107)
|
$
|
263
|
$
|
(103)
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate and
Other
|
|
|
|
|
|
|
|
|
|
Net investment
income
|
$
|
16
|
$
|
16
|
$
|
30
|
$
|
31
|
|
Operating costs and
expenses
|
|
(98)
|
|
(101)
|
|
(189)
|
|
(198)
|
|
Income tax benefit on
operations
|
|
32
|
|
33
|
|
63
|
|
65
|
|
|
|
|
|
|
|
|
|
|
|
Operating
loss
|
|
(50)
|
|
(52)
|
|
(96)
|
|
(102)
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized capital gains and
losses, after-tax
|
|
2
|
|
5
|
|
2
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
$
|
(48)
|
$
|
(47)
|
$
|
(94)
|
$
|
(95)
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated net (loss)
income
|
$
|
(620)
|
$
|
145
|
$
|
(101)
|
$
|
265
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THE ALLSTATE
CORPORATION AND SUBSIDIARIES
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
|
|
($ in millions, except par
value data)
|
|
June
30,
|
|
December
31,
|
|
|
|
2011
|
|
2010
|
|
Assets
|
|
(unaudited)
|
|
|
|
Investments:
|
|
|
|
|
|
Fixed income securities, at fair
value (amortized cost $76,502 and $78,786)
|
$
|
78,414
|
$
|
79,612
|
|
Equity securities, at fair value
(cost $4,329 and $4,228)
|
|
4,954
|
|
4,811
|
|
Mortgage loans
|
|
6,827
|
|
6,679
|
|
Limited partnership
interests
|
|
4,400
|
|
3,816
|
|
Short-term, at fair value
(amortized cost $2,536 and $3,279)
|
|
2,536
|
|
3,279
|
|
Other
|
|
2,158
|
|
2,286
|
|
Total investments
|
|
99,289
|
|
100,483
|
|
Cash
|
|
693
|
|
562
|
|
Premium installment receivables,
net
|
|
4,869
|
|
4,839
|
|
Deferred policy acquisition
costs
|
|
4,572
|
|
4,769
|
|
Reinsurance recoverables,
net
|
|
6,446
|
|
6,552
|
|
Accrued investment
income
|
|
875
|
|
809
|
|
Deferred income taxes
|
|
525
|
|
784
|
|
Property and equipment,
net
|
|
914
|
|
921
|
|
Goodwill
|
|
874
|
|
874
|
|
Other assets
|
|
1,791
|
|
1,605
|
|
Separate Accounts
|
|
8,175
|
|
8,676
|
|
Total assets
|
$
|
129,023
|
$
|
130,874
|
|
Liabilities
|
|
|
|
|
|
Reserve for property-liability
insurance claims and claims expense
|
$
|
20,456
|
$
|
19,468
|
|
Reserve for life-contingent
contract benefits
|
|
13,787
|
|
13,482
|
|
Contractholder funds
|
|
45,078
|
|
48,195
|
|
Unearned premiums
|
|
9,727
|
|
9,800
|
|
Claim payments
outstanding
|
|
948
|
|
737
|
|
Other liabilities and accrued
expenses
|
|
6,152
|
|
5,564
|
|
Long-term debt
|
|
5,907
|
|
5,908
|
|
Separate Accounts
|
|
8,175
|
|
8,676
|
|
Total liabilities
|
|
110,230
|
|
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, 517 million and
533 million shares outstanding
|
|
9
|
|
9
|
|
Additional capital
paid-in
|
|
3,165
|
|
3,176
|
|
Retained income
|
|
31,647
|
|
31,969
|
|
Deferred ESOP expense
|
|
(43)
|
|
(44)
|
|
Treasury stock, at cost (383
million and 367 million shares)
|
|
(16,387)
|
|
(15,910)
|
|
Accumulated other comprehensive
income:
|
|
|
|
|
|
Unrealized net capital gains and
losses:
|
|
|
|
|
|
Unrealized net capital losses on
fixed income securities with OTTI
|
|
(156)
|
|
(190)
|
|
Other unrealized net capital
gains and losses
|
|
1,783
|
|
1,089
|
|
Unrealized adjustment to DAC,
DSI and insurance reserves
|
|
(181)
|
|
36
|
|
Total
unrealized net capital gains and losses
|
|
1,446
|
|
935
|
|
Unrealized foreign
currency translation adjustments
|
|
83
|
|
69
|
|
Unrecognized
pension and other postretirement benefit cost
|
|
(1,156)
|
|
(1,188)
|
|
Total accumulated other
comprehensive income (loss)
|
|
373
|
|
(184)
|
|
Total shareholders'
equity
|
|
18,764
|
|
19,016
|
|
Noncontrolling
interest
|
|
29
|
|
28
|
|
Total equity
|
|
18,793
|
|
19,044
|
|
Total liabilities and
equity
|
$
|
129,023
|
$
|
130,874
|
|
|
|
|
|
|
|
|
|
|
THE ALLSTATE
CORPORATION AND SUBSIDIARIES
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
($ in millions)
|
|
Six months
ended
June
30,
|
|
|
|
2011
|
|
2010
|
|
Cash flows from operating
activities
|
|
(unaudited)
|
|
Net (loss) income
|
$
|
(101)
|
$
|
265
|
|
Adjustments to reconcile net
(loss) income to net cash provided by operating
activities:
|
|
|
|
|
|
Depreciation, amortization
and other non-cash items
|
|
89
|
|
26
|
|
Realized capital gains and
losses
|
|
(153)
|
|
799
|
|
Loss (gain) on disposition
of operations
|
|
17
|
|
(3)
|
|
Interest credited to
contractholder funds
|
|
835
|
|
913
|
|
Changes in:
|
|
|
|
|
|
Policy benefits and other
insurance reserves
|
|
665
|
|
306
|
|
Unearned
premiums
|
|
(87)
|
|
(135)
|
|
Deferred policy
acquisition costs
|
|
57
|
|
(70)
|
|
Premium installment
receivables, net
|
|
(22)
|
|
9
|
|
Reinsurance recoverables,
net
|
|
(40)
|
|
(206)
|
|
Income taxes
|
|
(226)
|
|
74
|
|
Other operating assets and
liabilities
|
|
226
|
|
116
|
|
Net cash provided by
operating activities
|
|
1,260
|
|
2,094
|
|
Cash flows from investing
activities
|
|
|
|
|
|
Proceeds from sales
|
|
|
|
|
|
Fixed income
securities
|
|
14,140
|
|
9,114
|
|
Equity
securities
|
|
854
|
|
3,046
|
|
Limited
partnership interests
|
|
335
|
|
278
|
|
Mortgage
loans
|
|
65
|
|
44
|
|
Other
investments
|
|
109
|
|
62
|
|
Investment
collections
|
|
|
|
|
|
Fixed income
securities
|
|
2,385
|
|
2,391
|
|
Mortgage loans
|
|
308
|
|
638
|
|
Other
investments
|
|
92
|
|
44
|
|
Investment purchases
|
|
|
|
|
|
Fixed income
securities
|
|
(13,934)
|
|
(11,900)
|
|
Equity
securities
|
|
(781)
|
|
(1,501)
|
|
Limited partnership
interests
|
|
(765)
|
|
(616)
|
|
Mortgage loans
|
|
(536)
|
|
(10)
|
|
Other
investments
|
|
(146)
|
|
(79)
|
|
Change in short-term
investments, net
|
|
1,166
|
|
439
|
|
Change in other investments,
net
|
|
(170)
|
|
(128)
|
|
Purchases of property and
equipment, net
|
|
(106)
|
|
(69)
|
|
Disposition of
operations
|
|
(1)
|
|
--
|
|
Net cash provided by
investing activities
|
|
3,015
|
|
1,753
|
|
Cash flows from financing
activities
|
|
|
|
|
|
Repayment of long-term
debt
|
|
(1)
|
|
(1)
|
|
Contractholder fund
deposits
|
|
1,120
|
|
1,567
|
|
Contractholder fund
withdrawals
|
|
(4,508)
|
|
(5,112)
|
|
Dividends paid
|
|
(218)
|
|
(215)
|
|
Treasury stock
purchases
|
|
(544)
|
|
(5)
|
|
Shares reissued under equity
incentive plans, net
|
|
17
|
|
25
|
|
Excess tax benefits on
share-based payment arrangements
|
|
(3)
|
|
(4)
|
|
Other
|
|
(7)
|
|
(3)
|
|
Net cash used in financing
activities
|
|
(4,144)
|
|
(3,748)
|
|
Net increase in
cash
|
|
131
|
|
99
|
|
Cash at beginning of
period
|
|
562
|
|
612
|
|
Cash at end of
period
|
$
|
693
|
$
|
711
|
|
|
|
|
|
|
|
|
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 tables reconcile operating (loss) income and net
(loss) income.
|
|
($ in millions, except per share
data)
|
|
For the
three months ended June 30,
|
|
|
|
Property-Liability
|
|
Allstate
Financial
|
|
Consolidated
|
|
Per diluted
share
|
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
Operating (loss)
income
|
$
|
(733)
|
$
|
368
|
$
|
141
|
$
|
125
|
$
|
(642)
|
$
|
441
|
$
|
(1.23)
|
$
|
0.81
|
|
Realized capital gains and
losses
|
|
(8)
|
|
(106)
|
|
62
|
|
(353)
|
|
57
|
|
(451)
|
|
|
|
|
|
Income tax benefit
(expense)
|
|
2
|
|
37
|
|
(22)
|
|
123
|
|
(21)
|
|
157
|
|
|
|
|
|
Realized capital gains and
losses,
after-tax
|
|
(6)
|
|
(69)
|
|
40
|
|
(230)
|
|
36
|
|
(294)
|
|
0.07
|
|
(0.53)
|
|
Valuation changes on
embedded
derivatives that are not
hedged,
after-tax
|
|
--
|
|
--
|
|
(3)
|
|
--
|
|
(3)
|
|
--
|
|
(0.01)
|
|
--
|
|
DAC and DSI
(amortization) accretion
relating to realized
capital gains and
losses and valuation
changes on
embedded derivatives that
are not
hedged,
after-tax
|
|
--
|
|
--
|
|
(5)
|
|
4
|
|
(5)
|
|
4
|
|
(0.01)
|
|
--
|
|
Reclassification of periodic
settlements
and accruals on non-hedge
derivative
instruments,
after-tax
|
|
1
|
|
--
|
|
(11)
|
|
(7)
|
|
(10)
|
|
(7)
|
|
(0.02)
|
|
(0.01)
|
|
Gain on disposition of
operations,
after-tax
|
|
--
|
|
--
|
|
4
|
|
1
|
|
4
|
|
1
|
|
0.01
|
|
--
|
|
Net (loss) income
|
$
|
(738)
|
$
|
299
|
$
|
166
|
$
|
(107)
|
$
|
(620)
|
$
|
145
|
$
|
(1.19)
|
$
|
0.27
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in millions, except per share
data)
|
|
For the six
months ended June 30,
|
|
|
|
Property-Liability
|
|
Allstate
Financial
|
|
Consolidated
|
|
Per diluted
share
|
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
Operating (loss)
income
|
$
|
(306)
|
$
|
654
|
$
|
257
|
$
|
264
|
$
|
(145)
|
$
|
816
|
$
|
(0.27)
|
$
|
1.50
|
|
Realized capital gains and
losses
|
|
49
|
|
(296)
|
|
101
|
|
(515)
|
|
153
|
|
(799)
|
|
|
|
|
|
Income tax (expense)
benefit
|
|
(17)
|
|
104
|
|
(36)
|
|
180
|
|
(54)
|
|
279
|
|
|
|
|
|
Realized capital gains and
losses,
after-tax
|
|
32
|
|
(192)
|
|
65
|
|
(335)
|
|
99
|
|
(520)
|
|
0.19
|
|
(0.95)
|
|
Valuation changes on
embedded
derivatives that are not
hedged,
after-tax
|
|
--
|
|
--
|
|
5
|
|
--
|
|
5
|
|
--
|
|
0.01
|
|
--
|
|
DAC and DSI
(amortization) accretion
relating to realized
capital gains and
losses and valuation
changes on
embedded derivatives that
are not
hedged,
after-tax
|
|
--
|
|
--
|
|
(31)
|
|
2
|
|
(31)
|
|
2
|
|
(0.06)
|
|
--
|
|
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
|
|
4
|
|
1
|
|
(23)
|
|
(18)
|
|
(19)
|
|
(17)
|
|
(0.04)
|
|
(0.03)
|
|
(Loss) gain on disposition of
operations,
after-tax
|
|
--
|
|
--
|
|
(11)
|
|
2
|
|
(11)
|
|
2
|
|
(0.02)
|
|
--
|
|
Net (loss) income
|
$
|
(270)
|
$
|
463
|
$
|
263
|
$
|
(103)
|
$
|
(101)
|
$
|
265
|
$
|
(0.19)
|
$
|
0.49
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 Property-Liability combined ratio
excluding the effect of catastrophes and prior year reserve
reestimates to the Property-Liability combined ratio is provided in
the following table.
|
|
|
Three months
ended
June
30,
|
|
Six months
ended
June
30,
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
Combined ratio excluding the
effect of catastrophes and prior
year reserve reestimates
("underlying combined ratio")
|
87.5
|
|
88.1
|
|
88.7
|
|
88.6
|
|
Effect of catastrophe
losses
|
36.2
|
|
9.8
|
|
20.7
|
|
9.9
|
|
Effect of prior year
non-catastrophe reserve reestimates
|
(0.4)
|
|
(1.1)
|
|
(0.3)
|
|
(0.6)
|
|
Combined ratio
|
123.3
|
|
96.8
|
|
109.1
|
|
97.9
|
|
|
|
|
|
|
|
|
|
|
Effect of prior year catastrophe
reserve reestimates
|
(0.3)
|
|
(1.2)
|
|
(0.4)
|
|
(0.7)
|
|
|
|
|
|
|
|
|
|
|
|
In this news release, we provide our outlook range on the
Property-Liability 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.
A reconciliation of the Allstate brand standard auto combined
ratio excluding the effect of catastrophes and prior year reserve
reestimates to the Allstate brand standard auto combined ratio is
provided in the following table.
|
|
|
Three months
ended
June
30,
|
|
Six months
ended
June
30,
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
Combined ratio excluding the
effect of catastrophes and prior
year reserve reestimates
("underlying combined ratio")
|
93.6
|
|
94.1
|
|
94.2
|
|
93.8
|
|
Effect of catastrophe
losses
|
6.7
|
|
2.0
|
|
3.6
|
|
1.3
|
|
Effect of prior year
non-catastrophe reserve reestimates
|
(2.1)
|
|
(1.6)
|
|
(1.2)
|
|
(0.6)
|
|
Combined ratio
|
98.2
|
|
94.5
|
|
96.6
|
|
94.5
|
|
|
|
|
|
|
|
|
|
|
Effect of prior year catastrophe
reserve reestimates
|
(0.1)
|
|
(0.3)
|
|
(0.1)
|
|
(0.4)
|
|
|
|
|
|
|
|
|
|
|
|
A reconciliation of the Allstate brand homeowners combined ratio
excluding the effect of catastrophes and prior year reserve
reestimates to the Allstate brand homeowners combined ratio is
provided in the following table.
|
|
|
Three months
ended
June
30,
|
|
Six months
ended
June
30,
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
Combined ratio excluding the
effect of catastrophes and prior
year reserve reestimates
("underlying combined ratio")
|
69.5
|
|
69.8
|
|
71.7
|
|
72.2
|
|
Effect of catastrophe
losses
|
123.2
|
|
34.7
|
|
70.6
|
|
35.9
|
|
Effect of prior year
non-catastrophe reserve reestimates
|
0.7
|
|
(0.1)
|
|
0.3
|
|
(0.3)
|
|
Combined ratio
|
193.4
|
|
104.4
|
|
142.6
|
|
107.8
|
|
|
|
|
|
|
|
|
|
|
Effect of prior year catastrophe
reserve reestimates
|
(0.4)
|
|
(4.1)
|
|
(1.5)
|
|
(2.0)
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss) return on shareholders' equity is
a ratio that uses a non-GAAP measure. It is calculated by
dividing the rolling 12-month operating income (loss) by the
average of 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 shareholders' equity is the most
directly comparable GAAP measure. We use operating income
(loss) as the numerator for the same reasons we use operating
income (loss), as discussed above. We use average
shareholders' equity excluding the effect of unrealized net capital
gains and losses for the denominator as a representation of
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 (loss) and return on 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 net income (loss) return on 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 operating income (loss) return on shareholders'
equity from return on shareholders' equity is the transparency and
understanding of their significance to return on shareholders'
equity variability and profitability while recognizing these or
similar items may recur in subsequent periods. Therefore, we
believe it is useful for investors to have operating income (loss)
return on shareholders' equity and return on shareholders' equity
when evaluating our performance. We note that investors, financial
analysts, financial and business media organizations and rating
agencies utilize operating income (loss) return on 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. Operating
income (loss) return on shareholders' equity should not be
considered as a substitute for return on shareholders' equity and
does not reflect the overall profitability of our business.
The following table reconciles return on shareholders' equity
and operating income return on shareholders' equity.
|
|
($ in millions)
|
For the
twelve months ended
June
30,
|
|
|
|
2011
|
|
2010
|
|
Return on shareholders'
equity
|
|
|
|
|
|
Numerator:
|
|
|
|
|
|
Net
income
|
$
|
562
|
$
|
1,004
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
Beginning
shareholders' equity
|
$
|
18,039
|
$
|
15,068
|
|
Ending
shareholders' equity
|
|
18,764
|
|
18,039
|
|
Average
shareholders' equity
|
$
|
18,402
|
$
|
16,554
|
|
Return on
shareholders' equity
|
|
3.1%
|
|
6.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
For the
twelve months ended
June
30,
|
|
|
|
2011
|
|
2010
|
|
Operating income return on
shareholders'
equity
|
|
|
|
|
|
Numerator:
|
|
|
|
|
|
Operating
income
|
$
|
578
|
$
|
1,946
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
Beginning
shareholders' equity
|
$
|
18,039
|
$
|
15,068
|
|
Unrealized net
capital gains and losses
|
|
328
|
|
(2,112)
|
|
Adjusted beginning
shareholders' equity
|
|
17,711
|
|
17,180
|
|
Ending
shareholders' equity
|
|
18,764
|
|
18,039
|
|
Unrealized net
capital gains and losses
|
|
1,446
|
|
328
|
|
Adjusted ending
shareholders' equity
|
|
17,318
|
|
17,711
|
|
Average adjusted
shareholders' equity
|
$
|
17,515
|
$
|
17,446
|
|
Operating income
return on shareholders'
equity
|
|
3.3%
|
|
11.2%
|
|
|
|
|
|
|
|
|
The following tables reconcile Allstate Financial segment return
on attributed equity and operating income return on attributed
equity, including a reconciliation of Allstate Financial segment
attributed equity to The Allstate Corporation shareholders'
equity.
|
|
($ in millions)
|
For the
twelve months ended
June
30,
|
|
|
|
2011
|
|
2010
|
|
Allstate Financial segment
return on attributed equity(1)
|
|
|
|
|
|
Numerator:
|
|
|
|
|
|
Net income
(loss)
|
$
|
424
|
$
|
(278)
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
Beginning
attributed equity
|
$
|
6,280
|
$
|
4,809
|
|
Ending attributed
equity (2)
|
|
7,214
|
|
6,280
|
|
Average attributed
equity
|
$
|
6,747
|
$
|
5,545
|
|
Return on
attributed equity
|
|
6.3%
|
|
(5.0)%
|
|
|
|
|
|
|
|
|
|
|
|
|
For the
twelve months ended
June
30,
|
|
|
|
2011
|
|
2010
|
|
Allstate Financial segment
operating income return on
attributed
equity
|
|
|
|
|
|
Numerator:
|
|
|
|
|
|
Operating
income
|
$
|
469
|
$
|
454
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
Beginning
attributed equity
|
$
|
6,280
|
$
|
4,809
|
|
Unrealized net
capital gains and losses
|
|
199
|
|
(1,155)
|
|
Adjusted beginning
attributed equity
|
|
6,081
|
|
5,964
|
|
Ending attributed
equity
|
|
7,214
|
|
6,280
|
|
Unrealized net
capital gains and losses
|
|
764
|
|
199
|
|
Adjusted ending
attributed equity
|
|
6,450
|
|
6,081
|
|
Average adjusted
attributed equity
|
$
|
6,266
|
$
|
6,023
|
|
Operating income
return on attributed equity
|
|
7.5%
|
|
7.5%
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of beginning and
ending Allstate Financial segment
attributed equity
and The Allstate Corporation beginning and
ending
shareholders' equity
|
|
For the twelve months
ended
June
30,
|
|
|
|
2011
|
|
2010
|
|
Beginning Allstate Financial
segment attributed equity
|
$
|
6,280
|
$
|
4,809
|
|
Beginning all other
equity
|
|
11,759
|
|
10,259
|
|
Beginning Allstate
Corporation shareholders' equity
|
$
|
18,039
|
$
|
15,068
|
|
|
|
|
|
|
|
Ending Allstate Financial
segment attributed equity
|
$
|
7,214
|
$
|
6,280
|
|
Ending all other
equity
|
|
11,550
|
|
11,759
|
|
Ending Allstate Corporation
shareholders' equity
|
$
|
18,764
|
$
|
18,039
|
|
|
|
|
|
|
|
|
(1)
|
Allstate Financial
attributed equity is the sum of equity for Allstate Life Insurance
Company, the applicable equity for American Heritage Life
Investment Corporation, and the equity for Allstate Bank, excluding
the most recently available capital in excess of management
requirements.
|
|
|
|
|
(2)
|
As of June 30, 2011, the
amount excluded from the attributed equity balance for capital in
excess of management requirements is zero.
|
|
|
|
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 June
30,
|
|
|
|
2011
|
|
2010
|
|
Book value per
share
|
|
|
|
|
|
Numerator:
|
|
|
|
|
|
Shareholders'
equity
|
$
|
18,764
|
$
|
18,039
|
|
Denominator:
|
|
|
|
|
|
Shares outstanding and
dilutive potential shares
outstanding
|
|
522.0
|
|
542.7
|
|
Book value per share
|
$
|
35.95
|
$
|
33.24
|
|
|
|
|
|
|
|
Book value per share, excluding
the impact of
unrealized net capital
gains and losses on fixed
income
securities
|
|
|
|
|
|
Numerator:
|
|
|
|
|
|
Shareholders'
equity
|
$
|
18,764
|
$
|
18,039
|
|
Unrealized net
capital gains and losses on fixed income
securities
|
|
1,062
|
|
398
|
|
Adjusted shareholders'
equity
|
$
|
17,702
|
$
|
17,641
|
|
Denominator:
|
|
|
|
|
|
Shares
outstanding and dilutive potential shares outstanding
|
|
522.0
|
|
542.7
|
|
Book value per share, excluding
the impact of unrealized
net
capital gains and losses on fixed income securities
|
$
|
33.91
|
$
|
32.51
|
|
|
|
|
|
|
|
|
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
June
30,
|
|
Six months
ended
June
30,
|
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
Property-Liability premiums
written
|
$
|
6,611
|
$
|
6,640
|
$
|
12,826
|
$
|
12,898
|
|
(Increase) decrease in unearned
premiums
|
|
(165)
|
|
(110)
|
|
69
|
|
135
|
|
Other
|
|
11
|
|
(17)
|
|
10
|
|
(17)
|
|
Property-Liability premiums
earned
|
$
|
6,457
|
$
|
6,513
|
$
|
12,905
|
$
|
13,016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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