NORTHBROOK, Ill., Feb. 1, 2012 /PRNewswire/ -- The Allstate
Corporation (NYSE: ALL) today reported financial results for the
fourth quarter and full year 2011:
|
|
The Allstate
Corporation Consolidated Highlights
|
|
|
Three months
ended
December
31,
|
|
Twelve
months ended
December
31,
|
|
($ in millions, except per share
amounts and ratios)
|
2011
|
2010
|
%
Change
|
|
2011
|
2010
|
%
Change
|
|
Consolidated
revenues
|
$8,236
|
$8,087
|
1.8
|
|
$32,654
|
$31,400
|
4.0
|
|
Net income
|
724
|
296
|
144.6
|
|
788
|
928
|
(15.1)
|
|
Net income per diluted
share
|
1.43
|
0.55
|
160.0
|
|
1.51
|
1.71
|
(11.7)
|
|
Operating income*
|
750
|
271
|
176.8
|
|
689
|
1,539
|
(55.2)
|
|
Operating income per diluted
share*
|
1.48
|
0.50
|
196.0
|
|
1.32
|
2.84
|
(53.5)
|
|
Book value per
share
|
|
|
|
|
36.92
|
35.32
|
4.5
|
|
Book value per share, excluding
the impact
of unrealized net capital
gains and losses
on fixed income
securities*
|
|
|
|
|
34.40
|
34.26
|
0.4
|
|
Catastrophe
losses
|
66
|
537
|
(87.7)
|
|
3,815
|
2,207
|
72.9
|
|
Property-Liability combined
ratio
|
90.7
|
100.8
|
(10.1) pts
|
|
103.4
|
98.1
|
5.3 pts
|
|
Property-Liability combined
ratio excluding
the effect of
catastrophes, prior year
reserve reestimates,
business combination
expenses and the
amortization of
purchased intangible
assets ("underlying
combined
ratio")*
|
90.5
|
92.0
|
(1.5) pts
|
|
89.3
|
89.6
|
(0.3) 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.
|
|
|
|
|
|
|
|
|
|
"We continued to execute our strategy to increase shareholder
value by improving overall returns and offering unique products for
different customer segments. Operating income increased to
$750 million in the fourth quarter, a
$479 million increase from prior year
due to substantially lower catastrophe losses. We maintained
auto insurance profitability, raised underlying returns in
homeowners and Allstate Financial, achieved excellent investment
returns and expanded our new product offerings," said Thomas J. Wilson, chairman, president and chief
executive officer of The Allstate Corporation. "While full
year 2011 net income of $788 million
was 15% below 2010, this reflects high catastrophe losses in 2011
that were largely offset by realized capital gains. The
underlying combined ratio for 2011 of 89.3 was within the outlook
established at the beginning of the year of 88 to 91.
"We also completed the acquisition of Esurance and Answer
Financial in October, both of which have strong positions in the
online delivery of insurance to self-serve customers.
Although this acquisition increased insurance premiums earned
in the quarter, we continue to experience reductions in Allstate
branded policy counts due to programs to improve profitability in
auto insurance in New York and
Florida and homeowners insurance
in catastrophe-prone markets," Wilson said.
"Allstate initiated a new $1
billion share repurchase program in November and almost
$1.4 billion was returned to
shareholders through share repurchases and dividends in 2011.
Book value per share increased by 4.5% in 2011 from year-end
2010.
"In 2012, we will continue to execute our strategy that
positions us as the only personal lines insurance company serving
all customer segments with unique offerings and will raise returns
on equity to 13% by 2014," Wilson said. "We expect the
underlying combined ratio for 2012 to be between 88 to 91 as
improvements in auto insurance in New
York and Florida and
homeowners returns are offset by investments in growth,
particularly in the Esurance brand."
Consolidated Financial Results
Net income for 2011 was $788
million, or $1.51 per diluted
share, compared to $928 million in
2010. The decrease was primarily due to lower
Property-Liability operating income partially offset by capital
gains realized in 2011 versus capital losses realized in 2010 and
an increase in Allstate Financial operating income. Total
operating income was $689 million, or
$1.32 per share, compared to
$1.5 billion, or $2.84 per diluted share in 2010. The
decline in operating income was driven by a substantial increase in
catastrophe losses experienced in 2011 compared to 2010.
For the fourth quarter of 2011, net income was $724 million, or $1.43 per diluted share, an improvement of
$428 million, or $0.88 per diluted share, from the prior year's
fourth quarter.
Property-Liability Underlying Combined Ratio within Full Year
Outlook; Catastrophe Losses Affected Total Combined Ratio
In 2011, Allstate made significant progress on its strategy to
maintain auto profitability and improve homeowners returns.
In total, Property-Liability produced an underlying combined
ratio of 89.3 for 2011, within the outlook of 88-91 established at
the beginning of 2011, and consistent with 2010's level of 89.6.
The recorded combined ratio was 103.4 for 2011, including
14.7 points of catastrophe losses estimated at $3.8 billion. In 2010, the recorded
combined ratio was 98.1 with 8.5 points of catastrophe losses.
Management remains committed to maintaining auto profit
margins while improving homeowners profitability.
The underlying combined ratio for the 2011 fourth quarter was
90.5, or 1.5 points better than in the prior year's fourth quarter.
Improvements in auto and homeowners loss trends more than
offset a 1.6 point increase in the underwriting expense ratio,
which reflects the impact of Esurance, higher marketing expenses,
and the favorable reduction in guaranty fund accruals in the prior
year quarter.
The recorded combined ratio for the 2011 fourth quarter was 90.7
compared to 100.8 in the prior year period. During the
quarter we had $66 million of
catastrophe losses, including 19 catastrophe events estimated to
cost $216 million, that were
substantially offset by favorable reserve re-estimates of
$150 million, $118 million of which related to prior 2011
events. In the fourth quarter of 2010 we recorded
$537 million in catastrophe
losses.
Property-Liability net premium written for 2011 was $26 billion, slightly higher than in 2010 and
includes the results for Esurance following the close of that
acquisition in early October. For the fourth quarter 2011,
net written premium was $6.4 billion,
an increase of 2.9% over the same period a year ago driven
primarily by the inclusion of Esurance results for the fourth
quarter of 2011.
Total Allstate brand policies in force declined from 2010,
reflecting actions taken to improve homeowners profitability as
well as auto profitability in Florida and New
York. Unit growth was achieved in the Emerging
Businesses, Canada, and Allstate
Roadside Services. Customer relationships were extended
through increased life insurance sales and Good Hands(SM) Roadside
Assistance, where we signed up 390,000 members in 2011.
Allstate brand standard auto net premium written declined 0.8%
for the fourth quarter of 2011 versus the prior year quarter.
The decline resulted from a reduction in units, partially
offset by an increase in average premium. Policies in force
declined 1.5% from year-end 2010 to year-end 2011, primarily driven
by profitability actions in New
York and Florida. In
the rest of the country, policies in force remained flat with the
prior year. Compared to the fourth quarter of 2010, new
issued applications declined 14.3% while retention improved
slightly. The recorded combined ratio for Allstate brand
standard auto in the 2011 fourth quarter was 95.5, an improvement
of 4.2 points over the fourth quarter of 2010. For the year,
the combined ratio was 95.7, a 0.2 point increase from 2010 as
Allstate continued to achieve its objective of maintaining auto
profitability.
Allstate brand homeowners net premium written grew 2.8% in the
fourth quarter of 2011 compared to the same period in the prior
year. This result reflected an increase in average premium of
7.1% partially offset by lower policies in force. During the
fourth quarter, rate increases averaging 7.8% in 17 states were
approved as Allstate continued its initiatives to improve
homeowners profitability. The combined ratio for Allstate
brand homeowners was 121.6 for 2011 compared to 105.6 for 2010.
Excluding the impact of catastrophe losses and prior year
reserve re-estimates, the underlying 2011 combined ratio was 70.9,
a 2.0 point improvement from 2010.
Allstate Financial Posts a Strong Finish to 2011; Continues
to Focus on Strategy Execution
Allstate Financial's 2011 performance reflected ongoing progress
on its strategy to improve overall business returns while shifting
the focus from spread-based products to underwritten products.
Total premiums and contract charges for 2011 were
$2.2 billion, a 3.2% increase over
2010. Substantially all of the increase came from our more
profitable underwritten products, primarily life insurance and
voluntary benefits, consistent with the strategy. Net income
for 2011 was $586 million compared to
$58 million for 2010. The
increase was driven by capital gains realized in 2011 versus
capital losses realized in 2010 and increased operating income.
Operating income rose 11.1% to $529
million in 2011 from $476
million in 2010.
Premiums and contract charges of $570
million in the fourth quarter 2011 grew 7.3% over the same
period in the prior year. The increase was the result of an
$18 million growth in underwritten
products and $19 million increase in
life-contingent annuities. Life insurance applications issued
through the Allstate agencies channel increased 33% in 2011
compared to 2010 and 43% in the fourth quarter compared to prior
year, a strong finish to 2011. Operating income for the
fourth quarter of 2011 was $138
million, an increase of $34
million, due primarily to higher benefit spread and, to a
lesser extent, improved investment spread partially offset by
higher operating expenses. The majority of the 40.9%
improvement in benefit spread relates to Allstate Benefits and was
driven by a $38 million pre-tax
reserve release associated with a contract modification, better
morbidity experience and growth. The investment spread
increased 7.5% compared to the fourth quarter of 2010 as investment
portfolio repositioning and lower crediting rates more than offset
the managed decline in spread-based business in force. The
increase in operating expenses of $16
million was primarily due to an accrual for the Executive
Life Insurance Company of New York
insolvency and other one-time charges.
Proactive Management Delivers Solid Investment
Results
Allstate continued to apply a proactive approach to risk and
return optimization throughout 2011, focusing on income and
delivering solid total returns. Total portfolio yields were
stable in 2011, reflecting yield enhancement actions, favorable
limited partnership distributions and equity dividends despite a
lower interest rate environment. Portfolio management actions
in 2011 included a reduction of European holdings, a continued
increase in the allocation to investment grade corporate bonds,
reallocation of below investment grade exposure from structured
securities to high-yield corporate bonds, and termination of
derivative positions which were used for overall risk
management.
Allstate's consolidated investment portfolio totaled
$95.6 billion at December 31, 2011 compared to $97.5 billion at September
30, 2011 and $100.5 billion at
December 31, 2010. The expected
decrease primarily reflects the Allstate Financial portfolio, which
declined with the reduction in the fixed annuity business and the
voluntary winding down of Allstate Bank. The pre-tax net
unrealized capital gain totaled $2.9
billion at December 31, 2011,
compared to $2.4 billion at
September 30, 2011 and $1.4 billion at December
31, 2010, as the benefit of lower interest rates on fixed
income valuations was only partially offset by widening credit
spreads and realized gains due to sales of fixed income securities.
Net investment income was $975
million for the fourth quarter of 2011, a decrease of 1.9%
compared to the third quarter of 2011 and 2.3% below fourth quarter
2010, primarily due to Allstate Financial's lower portfolio
balances. Net investment income was $4.0 billion for 2011, a decrease of 3.2% to
2010. Total portfolio yield was 4.5% for the fourth quarter
of 2011, consistent with the third quarter 2011 and higher than the
4.3% in the fourth quarter 2010.
Pre-tax net realized capital gains for the fourth quarter of
2011 were $86 million, compared to
$116 million in the fourth quarter
2010. Realized gains in the fourth quarter of 2011 were
primarily due to sales and favorable limited partnership
valuations, partly offset by real estate-related and equity
impairment write-downs and credit and equity derivative valuation
losses. For the year, pre-tax net realized capital gains were
$503 million compared to $827 million of net realized capital losses in
2010.
Capital Management Remains a Key Priority; During Q4 2011,
Esurance Acquisition Closed and $1
Billion Share Repurchase Authorized by the Board
"Continuing our record of proactive capital management, we began
a new $1 billion share repurchase
program in November," said Don
Civgin, executive vice president and chief financial
officer. "We repurchased 4 million shares at a cost of
$106 million in the fourth quarter,
bringing the total for the year to 33 million shares repurchased
for $946 million. We closed the
Esurance acquisition early in the fourth quarter. By issuing
$500 million of 5.20%, 30-year senior
unsecured notes in early January, we prefunded repayment of
$350 million of senior notes maturing
in February."
Allstate will be adopting new deferred policy acquisition cost
(DAC) accounting guidance on a retrospective basis beginning with
2012 results. It is currently estimated that shareholders'
equity will decline by $375 million,
after tax. It is estimated that the new guidance will have an
insignificant effect on Property-Liability net income and will
reduce Allstate Financial net income by approximately $40 million in 2012.
Statutory surplus at December 31,
2011 was an estimated $15.0
billion for Allstate Insurance Company (AIC), including
$3.4 billion at Allstate Life
Insurance Company (ALIC). This compares to AIC statutory
surplus at September 30, 2011 of
$14.3 billion and December 31, 2010 of $15.4
billion. During the fourth quarter AIC paid a
$200 million dividend to the holding
company. Deployable assets at the holding company level
totaled $2.2 billion at year end
2011.
Book value per share at year end 2011 was $36.92, an increase of $1.60 from year end 2010, or 4.5%.
Sequentially, book value per share grew $1.36, or 3.8%.
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 Thursday, February
2.
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®. As part of Allstate's commitment to
strengthen local communities, The Allstate Foundation, Allstate
employees, agency owners and the corporation provided $28 million in 2011 to thousands of nonprofit
organizations and important causes across the United States.
|
|
THE ALLSTATE
CORPORATION AND SUBSIDIARIES
|
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
|
|
|
|
|
|
|
($ in millions, except per share
data)
|
|
Three months
ended
December
31,
|
|
Twelve
months ended
December
31,
|
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
|
|
(unaudited)
|
|
|
|
(unaudited)
|
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
Property-liability
insurance premiums
|
$
|
6,605
|
$
|
6,442
|
$
|
25,942
|
$
|
25,957
|
|
Life and annuity premiums
and contract charges
|
|
570
|
|
531
|
|
2,238
|
|
2,168
|
|
Net investment
income
|
|
975
|
|
998
|
|
3,971
|
|
4,102
|
|
Realized capital gains and
losses:
|
|
|
|
|
|
|
|
|
|
Total other-than-temporary
impairment losses
|
|
(128)
|
|
(300)
|
|
(563)
|
|
(937)
|
|
Portion of
loss recognized in other comprehensive income
|
|
4
|
|
27
|
|
(33)
|
|
(64)
|
|
Net other-than-temporary
impairment losses recognized
in earnings
|
|
(124)
|
|
(273)
|
|
(596)
|
|
(1,001)
|
|
Sales and other realized
capital gains and losses
|
|
210
|
|
389
|
|
1,099
|
|
174
|
|
Total realized capital
gains and losses
|
|
86
|
|
116
|
|
503
|
|
(827)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,236
|
|
8,087
|
|
32,654
|
|
31,400
|
|
|
|
|
|
|
|
|
|
|
|
Costs and
expenses
|
|
|
|
|
|
|
|
|
|
Property-liability
insurance claims and claims expense
|
|
4,198
|
|
4,842
|
|
20,161
|
|
18,951
|
|
Life and annuity contract
benefits
|
|
430
|
|
443
|
|
1,761
|
|
1,815
|
|
Interest credited to
contractholder funds
|
|
405
|
|
449
|
|
1,645
|
|
1,807
|
|
Amortization of deferred
policy acquisition costs
|
|
1,042
|
|
1,065
|
|
4,233
|
|
4,034
|
|
Operating costs and
expenses
|
|
1,003
|
|
835
|
|
3,468
|
|
3,281
|
|
Restructuring and related
charges
|
|
16
|
|
(3)
|
|
44
|
|
30
|
|
Interest
expense
|
|
92
|
|
92
|
|
367
|
|
367
|
|
|
|
7,186
|
|
7,723
|
|
31,679
|
|
30,285
|
|
Gain (loss) on disposition of
operations
|
|
2
|
|
(1)
|
|
(15)
|
|
11
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations before
income tax expense
|
|
1,052
|
|
363
|
|
960
|
|
1,126
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
328
|
|
67
|
|
172
|
|
198
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
|
724
|
$
|
296
|
$
|
788
|
$
|
928
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share -
Basic
|
$
|
1.44
|
$
|
0.55
|
$
|
1.51
|
$
|
1.72
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares -
Basic
|
|
504.5
|
|
539.5
|
|
520.7
|
|
540.3
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share -
Diluted
|
$
|
1.43
|
$
|
0.55
|
$
|
1.51
|
$
|
1.71
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares -
Diluted
|
|
506.8
|
|
542.0
|
|
523.1
|
|
542.5
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends declared per
share
|
$
|
0.21
|
$
|
0.20
|
$
|
0.84
|
$
|
0.80
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THE ALLSTATE
CORPORATION
|
|
SEGMENT
RESULTS
|
|
($ in millions, except
ratios)
|
|
Three months
ended
|
|
Twelve
months ended
|
|
|
|
December
31,
|
|
December
31,
|
|
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
Property-Liability
|
|
|
|
|
|
|
|
|
|
Premiums
written
|
$
|
6,426
|
$
|
6,242
|
$
|
25,980
|
$
|
25,907
|
|
|
|
|
|
|
|
|
|
|
|
|
Premiums earned
|
$
|
6,605
|
$
|
6,442
|
$
|
25,942
|
$
|
25,957
|
|
Claims and claims
expense
|
|
(4,198)
|
|
(4,842)
|
|
(20,161)
|
|
(18,951)
|
|
Amortization of deferred
policy acquisition costs
|
|
(921)
|
|
(924)
|
|
(3,640)
|
|
(3,678)
|
|
Operating costs and
expenses
|
|
(861)
|
|
(726)
|
|
(2,972)
|
|
(2,800)
|
|
Restructuring and related
charges
|
|
(13)
|
|
1
|
|
(43)
|
|
(33)
|
|
Underwriting income
(loss)
|
|
612
|
|
(49)
|
|
(874)
|
|
495
|
|
Net investment
income
|
|
309
|
|
291
|
|
1,201
|
|
1,189
|
|
Periodic settlements and
accruals on non-hedge derivative instruments
|
|
(3)
|
|
(3)
|
|
(15)
|
|
(7)
|
|
Business combination
expenses and the amortization of purchased
|
|
|
|
|
|
|
|
|
|
intangible
assets
|
|
49
|
|
--
|
|
49
|
|
--
|
|
Income tax (expense)
benefit on operations
|
|
(306)
|
|
(33)
|
|
15
|
|
(423)
|
|
Operating
income
|
|
661
|
|
206
|
|
376
|
|
1,254
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized capital gains and
losses, after-tax
|
|
7
|
|
54
|
|
54
|
|
(207)
|
|
Reclassification of
periodic settlements and accruals on non-hedge
|
|
|
|
|
|
|
|
|
|
derivative
instruments, after-tax
|
|
2
|
|
1
|
|
10
|
|
4
|
|
Business combination
expenses and the amortization of purchased
|
|
|
|
|
|
|
|
|
|
intangible assets,
after-tax
|
|
(32)
|
|
--
|
|
(32)
|
|
--
|
|
(Loss) gain on disposition
of operations, after-tax
|
|
--
|
|
(1)
|
|
--
|
|
3
|
|
Net income
|
$
|
638
|
$
|
260
|
$
|
408
|
$
|
1,054
|
|
Catastrophe
losses
|
$
|
66
|
$
|
537
|
$
|
3,815
|
$
|
2,207
|
|
Operating
ratios:
|
|
|
|
|
|
|
|
|
|
Claims and claims expense
ratio
|
|
63.5
|
|
75.2
|
|
77.7
|
|
73.0
|
|
Expense ratio
|
|
27.2
|
|
25.6
|
|
25.7
|
|
25.1
|
|
Combined ratio
|
|
90.7
|
|
100.8
|
|
103.4
|
|
98.1
|
|
Effect of catastrophe
losses on combined ratio
|
|
1.0
|
|
8.3
|
|
14.7
|
|
8.5
|
|
Effect of prior year
reserve reestimates on combined ratio
|
|
(2.0)
|
|
0.1
|
|
(1.3)
|
|
(0.6)
|
|
Effect of catastrophe
losses included in prior year reserve reestimates
|
|
|
|
|
|
|
|
|
|
on combined
ratio
|
|
(0.5)
|
|
(0.4)
|
|
(0.5)
|
|
(0.6)
|
|
Effect of business
combination expenses and the amortization of
|
|
|
|
|
|
|
|
|
|
purchased
intangible assets on combined ratio
|
|
0.7
|
|
--
|
|
0.2
|
|
--
|
|
Effect of Discontinued
Lines and Coverages on combined ratio
|
|
--
|
|
0.1
|
|
0.1
|
|
0.1
|
|
Allstate
Financial
|
|
|
|
|
|
|
|
|
|
Investments
|
$
|
57,373
|
$
|
61,582
|
$
|
57,373
|
$
|
61,582
|
|
Premiums and contract
charges
|
$
|
570
|
$
|
531
|
$
|
2,238
|
$
|
2,168
|
|
Net investment
income
|
|
656
|
|
692
|
|
2,716
|
|
2,853
|
|
Periodic settlements and
accruals on non-hedge derivative instruments
|
|
16
|
|
13
|
|
70
|
|
51
|
|
Contract
benefits
|
|
(430)
|
|
(443)
|
|
(1,761)
|
|
(1,815)
|
|
Interest credited to
contractholder funds
|
|
(385)
|
|
(439)
|
|
(1,617)
|
|
(1,798)
|
|
Amortization of deferred
policy acquisition costs
|
|
(93)
|
|
(86)
|
|
(410)
|
|
(286)
|
|
Operating costs and
expenses
|
|
(131)
|
|
(115)
|
|
(455)
|
|
(469)
|
|
Restructuring and related
charges
|
|
(3)
|
|
2
|
|
(1)
|
|
3
|
|
Income tax expense on
operations
|
|
(62)
|
|
(51)
|
|
(251)
|
|
(231)
|
|
Operating
income
|
|
138
|
|
104
|
|
529
|
|
476
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized capital gains and
losses, after-tax
|
|
43
|
|
23
|
|
250
|
|
(337)
|
|
Valuation changes on
embedded derivatives that are not hedged, after-tax
|
|
(13)
|
|
--
|
|
(12)
|
|
--
|
|
DAC and DSI amortization
relating to realized capital gains and
|
|
|
|
|
|
|
|
|
|
losses and
valuation changes on embedded derivatives that are not
|
|
|
|
|
|
|
|
|
|
hedged,
after-tax
|
|
(18)
|
|
(43)
|
|
(127)
|
|
(34)
|
|
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
|
|
(10)
|
|
(8)
|
|
(45)
|
|
(33)
|
|
(Loss) gain on disposition
of operations, after-tax
|
|
--
|
|
--
|
|
(10)
|
|
4
|
|
Net income
|
$
|
140
|
$
|
76
|
$
|
586
|
$
|
58
|
|
Corporate and
Other
|
|
|
|
|
|
|
|
|
|
Net investment
income
|
$
|
10
|
$
|
15
|
$
|
54
|
$
|
60
|
|
Operating costs and
expenses
|
|
(88)
|
|
(86)
|
|
(393)
|
|
(379)
|
|
Income tax benefit on
operations
|
|
29
|
|
32
|
|
123
|
|
128
|
|
Operating loss
|
|
(49)
|
|
(39)
|
|
(216)
|
|
(191)
|
|
Realized capital gains and
losses, after-tax
|
|
5
|
|
(1)
|
|
20
|
|
7
|
|
Business combination
expenses, after-tax
|
|
(10)
|
|
--
|
|
(10)
|
|
--
|
|
Net loss
|
$
|
(54)
|
$
|
(40)
|
$
|
(206)
|
$
|
(184)
|
|
Consolidated net
income
|
$
|
724
|
$
|
296
|
$
|
788
|
$
|
928
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THE ALLSTATE
CORPORATION AND SUBSIDIARIES
|
|
CONSOLIDATED
STATEMENTS OF FINANCIAL POSITION
|
|
($ in millions, except par
value data)
|
|
December
31,
|
|
December
31,
|
|
|
|
2011
|
|
2010
|
|
Assets
|
|
(unaudited)
|
|
|
|
Investments:
|
|
|
|
|
|
Fixed income
securities, at fair value (amortized cost $73,379 and
$78,786)
|
$
|
76,113
|
$
|
79,612
|
|
Equity
securities, at fair value (cost $4,203 and $4,228)
|
|
4,363
|
|
4,811
|
|
Mortgage
loans
|
|
7,139
|
|
6,679
|
|
Limited
partnership interests
|
|
4,697
|
|
3,816
|
|
Shortterm, at
fair value (amortized cost $1,291 and $3,279)
|
|
1,291
|
|
3,279
|
|
Other
|
|
2,015
|
|
2,286
|
|
Total investments
|
|
95,618
|
|
100,483
|
|
Cash
|
|
776
|
|
562
|
|
Premium installment receivables,
net
|
|
4,920
|
|
4,839
|
|
Deferred policy acquisition
costs
|
|
4,443
|
|
4,769
|
|
Reinsurance recoverables,
net
|
|
7,251
|
|
6,552
|
|
Accrued investment
income
|
|
826
|
|
809
|
|
Deferred income taxes
|
|
520
|
|
784
|
|
Property and equipment,
net
|
|
914
|
|
921
|
|
Goodwill
|
|
1,242
|
|
874
|
|
Other assets
|
|
2,069
|
|
1,605
|
|
Separate Accounts
|
|
6,984
|
|
8,676
|
|
Total
assets
|
$
|
125,563
|
$
|
130,874
|
|
Liabilities
|
|
|
|
|
|
Reserve for property-liability
insurance claims and claims expense
|
$
|
20,375
|
$
|
19,468
|
|
Reserve for life-contingent
contract benefits
|
|
14,449
|
|
13,482
|
|
Contractholder funds
|
|
42,332
|
|
48,195
|
|
Unearned premiums
|
|
10,057
|
|
9,800
|
|
Claim payments
outstanding
|
|
827
|
|
737
|
|
Other liabilities and accrued
expenses
|
|
5,929
|
|
5,564
|
|
Long-term debt
|
|
5,908
|
|
5,908
|
|
Separate Accounts
|
|
6,984
|
|
8,676
|
|
Total
liabilities
|
|
106,861
|
|
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, 501 million and
533 million shares outstanding
|
|
9
|
|
9
|
|
Additional capital
paid-in
|
|
3,189
|
|
3,176
|
|
Retained income
|
|
32,321
|
|
31,969
|
|
Deferred ESOP expense
|
|
(43)
|
|
(44)
|
|
Treasury stock, at cost (399
million and 367 million shares)
|
|
(16,795)
|
|
(15,910)
|
|
Accumulated other comprehensive
income:
|
|
|
|
|
|
Unrealized net capital gains and
losses:
|
|
|
|
|
|
Unrealized net capital losses on
fixed income securities with OTTI
|
|
(174)
|
|
(190)
|
|
Other unrealized net capital
gains and losses
|
|
2,041
|
|
1,089
|
|
Unrealized adjustment to DAC,
DSI and insurance reserves
|
|
(504)
|
|
36
|
|
Total unrealized net
capital gains and losses
|
|
1,363
|
|
935
|
|
Unrealized foreign currency
translation adjustments
|
|
57
|
|
69
|
|
Unrecognized pension and other
postretirement benefit cost
|
|
(1,427)
|
|
(1,188)
|
|
Total accumulated other
comprehensive loss
|
|
(7)
|
|
(184)
|
|
Total
shareholders' equity
|
|
18,674
|
|
19,016
|
|
Noncontrolling
interest
|
|
28
|
|
28
|
|
Total
equity
|
|
18,702
|
|
19,044
|
|
Total
liabilities and equity
|
$
|
125,563
|
$
|
130,874
|
|
|
|
|
|
|
|
|
|
|
THE ALLSTATE
CORPORATION AND SUBSIDIARIES
|
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
($ in millions)
|
|
Twelve
months ended
December
31,
|
|
|
|
2011
|
|
2010
|
|
Cash flows from operating
activities
|
|
(unaudited)
|
|
Net income
|
$
|
788
|
$
|
928
|
|
Adjustments to reconcile net
income to net cash provided by operating activities:
|
|
|
|
|
|
Depreciation, amortization
and other non-cash items
|
|
252
|
|
94
|
|
Realized capital gains and
losses
|
|
(503)
|
|
827
|
|
Loss (gain) on disposition
of operations
|
|
15
|
|
(11)
|
|
Interest credited to
contractholder funds
|
|
1,645
|
|
1,807
|
|
Changes in:
|
|
|
|
|
|
Policy benefits and other
insurance reserves
|
|
(77)
|
|
238
|
|
Unearned
premiums
|
|
37
|
|
(40)
|
|
Deferred policy
acquisition costs
|
|
167
|
|
(94)
|
|
Premium installment
receivables, net
|
|
33
|
|
10
|
|
Reinsurance recoverables,
net
|
|
(716)
|
|
(265)
|
|
Income taxes
|
|
134
|
|
200
|
|
Other operating assets and
liabilities
|
|
154
|
|
(5)
|
|
Net cash provided by
operating activities
|
|
1,929
|
|
3,689
|
|
Cash flows from investing
activities
|
|
|
|
|
|
Proceeds from sales
|
|
|
|
|
|
Fixed income
securities
|
|
29,436
|
|
22,881
|
|
Equity
securities
|
|
2,012
|
|
4,349
|
|
Limited partnership
interests
|
|
1,000
|
|
505
|
|
Mortgage loans
|
|
97
|
|
124
|
|
Other
investments
|
|
164
|
|
121
|
|
Investment
collections
|
|
|
|
|
|
Fixed income
securities
|
|
4,951
|
|
5,147
|
|
Mortgage loans
|
|
634
|
|
1,076
|
|
Other
investments
|
|
123
|
|
137
|
|
Investment purchases
|
|
|
|
|
|
Fixed income
securities
|
|
(27,896)
|
|
(25,745)
|
|
Equity
securities
|
|
(1,824)
|
|
(3,564)
|
|
Limited partnership
interests
|
|
(1,696)
|
|
(1,342)
|
|
Mortgage loans
|
|
(1,241)
|
|
(120)
|
|
Other
investments
|
|
(204)
|
|
(181)
|
|
Change in short-term
investments, net
|
|
2,182
|
|
(382)
|
|
Change in other investments,
net
|
|
(415)
|
|
(519)
|
|
(Acquisition) disposition of
operations, net of cash acquired
|
|
(916)
|
|
7
|
|
Purchases of property and
equipment, net
|
|
(246)
|
|
(162)
|
|
Net cash provided by
investing activities
|
|
6,161
|
|
2,332
|
|
Cash flows from financing
activities
|
|
|
|
|
|
Proceeds from issuance of
long-term debt
|
|
7
|
|
--
|
|
Repayment of long-term
debt
|
|
(7)
|
|
(2)
|
|
Contractholder fund
deposits
|
|
2,176
|
|
2,980
|
|
Contractholder fund
withdrawals
|
|
(8,680)
|
|
(8,470)
|
|
Dividends paid
|
|
(435)
|
|
(430)
|
|
Treasury stock
purchases
|
|
(953)
|
|
(152)
|
|
Shares reissued under equity
incentive plans, net
|
|
19
|
|
28
|
|
Excess tax benefits on
share-based payment arrangements
|
|
(5)
|
|
(7)
|
|
Other
|
|
2
|
|
(18)
|
|
Net cash used in financing
activities
|
|
(7,876)
|
|
(6,071)
|
|
Net increase (decrease) in
cash
|
|
214
|
|
(50)
|
|
Cash at beginning of
year
|
|
562
|
|
612
|
|
Cash at end of
year
|
$
|
776
|
$
|
562
|
|
|
|
|
|
|
|
|
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 deferred sales inducements (DSI), to
the extent they resulted from the recognition of certain realized
capital gains and losses or valuation changes on embedded
derivatives that are not hedged, after tax
- business combination expenses and the amortization of purchased
intangible assets, after-tax,
- gain (loss) on disposition of operations, after-tax, and
- adjustments for other significant non-recurring, infrequent or
unusual items, when (a) the nature of the charge or gain is such
that it is reasonably unlikely to recur within two years, or (b)
there has been no similar charge or gain within the prior two
years.
Net income (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, business combination expenses and
the amortization of purchased intangible assets, gain (loss) on
disposition of operations and adjustments for other significant
non-recurring, infrequent or unusual items. Realized capital
gains and losses, valuation changes on embedded derivatives 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. Business combination expenses are excluded
because they are non-recurring in nature and the amortization of
purchased intangible assets is excluded because it relates to the
acquisition purchase price and is not indicative of our underlying
insurance business results or trends. Non-recurring items are
excluded because, by their nature, they are not indicative of our
business or economic trends. Accordingly, 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 (loss) 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 (loss) 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.
|
|
($ in millions, except per share
data)
|
|
For the
three months ended December 31,
|
|
|
|
Property-Liability
|
|
Allstate
Financial
|
|
Consolidated
|
|
Per diluted
share
|
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
Operating income
|
$
|
661
|
$
|
206
|
$
|
138
|
$
|
104
|
$
|
750
|
$
|
271
|
$
|
1.48
|
$
|
0.50
|
|
Realized capital gains and
losses
|
|
12
|
|
82
|
|
68
|
|
36
|
|
86
|
|
116
|
|
|
|
|
|
Income tax expense
|
|
(5)
|
|
(28)
|
|
(25)
|
|
(13)
|
|
(31)
|
|
(40)
|
|
|
|
|
|
Realized capital gains and
losses,
after-tax
|
|
7
|
|
54
|
|
43
|
|
23
|
|
55
|
|
76
|
|
0.11
|
|
0.14
|
|
Valuation changes on
embedded
derivatives that are not
hedged,
after-tax
|
|
--
|
|
--
|
|
(13)
|
|
--
|
|
(13)
|
|
--
|
|
(0.03)
|
|
--
|
|
DAC and DSI
amortization relating to
realized capital gains
and losses and
valuation changes on
embedded
derivatives that are not
hedged,
after-tax
|
|
--
|
|
--
|
|
(18)
|
|
(43)
|
|
(18)
|
|
(43)
|
|
(0.03)
|
|
(0.08)
|
|
Reclassification of periodic
settlements
and accruals on non-hedge
derivative
instruments,
after-tax
|
|
2
|
|
1
|
|
(10)
|
|
(8)
|
|
(8)
|
|
(7)
|
|
(0.02)
|
|
(0.01)
|
|
Business combination expenses
and the
amortization of purchased
intangible
assets,
after-tax
|
|
(32)
|
|
--
|
|
--
|
|
--
|
|
(42)
|
|
--
|
|
(0.08)
|
|
--
|
|
Loss on disposition of
operations,
after-tax
|
|
--
|
|
(1)
|
|
--
|
|
--
|
|
--
|
|
(1)
|
|
--
|
|
--
|
|
Net income
|
$
|
638
|
$
|
260
|
$
|
140
|
$
|
76
|
$
|
724
|
$
|
296
|
$
|
1.43
|
$
|
0.55
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in millions, except per share
data)
|
|
For the
twelve months ended December 31,
|
|
|
|
Property-Liability
|
|
Allstate
Financial
|
|
Consolidated
|
|
Per diluted
share
|
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
Operating income
|
$
|
376
|
$
|
1,254
|
$
|
529
|
$
|
476
|
$
|
689
|
$
|
1,539
|
$
|
1.32
|
$
|
2.84
|
|
Realized capital gains and
losses
|
|
85
|
|
(321)
|
|
388
|
|
(517)
|
|
503
|
|
(827)
|
|
|
|
|
|
Income tax (expense)
benefit
|
|
(31)
|
|
114
|
|
(138)
|
|
180
|
|
(179)
|
|
290
|
|
|
|
|
|
Realized capital gains and
losses,
after-tax
|
|
54
|
|
(207)
|
|
250
|
|
(337)
|
|
324
|
|
(537)
|
|
0.62
|
|
(0.99)
|
|
Valuation changes on
embedded
derivatives that are not
hedged,
after-tax
|
|
--
|
|
--
|
|
(12)
|
|
--
|
|
(12)
|
|
--
|
|
(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
|
|
--
|
|
--
|
|
(127)
|
|
(34)
|
|
(127)
|
|
(34)
|
|
(0.24)
|
|
(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
|
|
10
|
|
4
|
|
(45)
|
|
(33)
|
|
(35)
|
|
(29)
|
|
(0.07)
|
|
(0.06)
|
|
Business combination expenses
and the
amortization of
purchased intangible
assets,
after-tax
|
|
(32)
|
|
--
|
|
--
|
|
--
|
|
(42)
|
|
--
|
|
(0.08)
|
|
--
|
|
Gain (loss) on disposition of
operations,
after-tax
|
|
--
|
|
3
|
|
(10)
|
|
4
|
|
(10)
|
|
7
|
|
(0.02)
|
|
0.01
|
|
Net income
|
$
|
408
|
$
|
1,054
|
$
|
586
|
$
|
58
|
$
|
788
|
$
|
928
|
$
|
1.51
|
$
|
1.71
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, prior
year reserve reestimates, business combination expenses and the
amortization of purchased intangible assets ("underlying combined
ratio") is a non-GAAP ratio, which is computed as the
difference between four GAAP operating ratios: the combined ratio,
the effect of catastrophes on the combined ratio, the effect of
prior year non-catastrophe reserve reestimates on the combined
ratio, the effect of business combination expenses and the
amortization of purchased intangible assets on the combined ratio.
We believe that this ratio is useful to investors and it is
used by management to reveal the trends in our Property-Liability
business that may be obscured by catastrophe losses, prior year
reserve reestimates, business combination expenses and the
amortization of purchased intangible assets. Catastrophe
losses cause our loss trends to vary significantly between periods
as a result of their incidence of occurrence and magnitude, and can
have a significant impact on the combined ratio. Prior year
reserve reestimates are caused by unexpected loss development on
historical reserves. Business combination expenses and the
amortization of purchased intangible assets primarily relate to the
acquisition purchase price and are not indicative of our underlying
insurance business results or trends. We believe it is
useful for investors to evaluate these components separately and in
the aggregate when reviewing our underwriting performance. We
also provide it to facilitate a comparison to our outlook on the
underlying combined ratio. The most directly comparable GAAP
measure is the combined ratio. The underlying combined ratio
should not be considered a substitute for the combined ratio and
does not reflect the overall underwriting profitability of our
business.
A reconciliation of the Property-Liability underlying combined
ratio to the Property-Liability combined ratio is provided in the
following table.
|
|
|
Three months
ended
December
31,
|
|
Twelve
months ended
December
31,
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
Combined ratio excluding the
effect of catastrophes, prior year
reserve reestimates,
business combination expenses and
the amortization of
purchased intangible assets ("underlying
combined
ratio")
|
90.5
|
|
92.0
|
|
89.3
|
|
89.6
|
|
Effect of catastrophe
losses
|
1.0
|
|
8.3
|
|
14.7
|
|
8.5
|
|
Effect of prior year
non-catastrophe reserve reestimates
|
(1.5)
|
|
0.5
|
|
(0.8)
|
|
--
|
|
Effect of business combination
expense and the amortization of
purchased intangible
assets
|
0.7
|
|
--
|
|
0.2
|
|
--
|
|
Combined ratio
|
90.7
|
|
100.8
|
|
103.4
|
|
98.1
|
|
|
|
|
|
|
|
|
|
|
Effect of prior year catastrophe
reserve reestimates
|
(0.5)
|
|
(0.4)
|
|
(0.5)
|
|
(0.6)
|
|
|
|
|
|
|
|
|
|
|
|
The Property-Liability underlying combined ratio by brand is
provided in the following table.
|
|
|
Three months
ended
December
31,
|
|
Twelve
months ended
December
31,
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
Allstate brand
|
89.9
|
|
91.8
|
|
88.8
|
|
89.3
|
|
Encompass brand
|
99.6
|
|
96.1
|
|
96.8
|
|
94.9
|
|
Esurance brand
|
97.5
|
|
--
|
|
97.5
|
|
--
|
|
|
|
|
|
|
|
|
|
|
|
In this news release, we provide our outlook range on the
Property-Liability 2012 underlying combined ratio. 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 underlying
combined ratio to the Allstate brand standard auto combined ratio
is provided in the following table.
|
|
|
Three months
ended
December
31,
|
|
Twelve
months ended
December
31,
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
Underlying combined
ratio
|
98.4
|
|
100.1
|
|
95.3
|
|
95.2
|
|
Effect of catastrophe
losses
|
0.2
|
|
0.8
|
|
2.6
|
|
1.0
|
|
Effect of prior year
non-catastrophe reserve reestimates
|
(3.1)
|
|
(1.2)
|
|
(2.2)
|
|
(0.7)
|
|
Combined ratio
|
95.5
|
|
99.7
|
|
95.7
|
|
95.5
|
|
|
|
|
|
|
|
|
|
|
Effect of prior year catastrophe
reserve reestimates
|
(0.1)
|
|
--
|
|
(0.1)
|
|
(0.2)
|
|
|
|
|
|
|
|
|
|
|
|
A reconciliation of the Allstate brand homeowners underlying
combined ratio to the Allstate brand homeowners combined ratio is
provided in the following table.
|
|
|
Three months
ended
December
31,
|
|
Twelve
months ended
December
31,
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
Underlying combined
ratio
|
66.8
|
|
72.2
|
|
70.9
|
|
72.9
|
|
Effect of catastrophe
losses
|
3.5
|
|
30.3
|
|
50.0
|
|
31.3
|
|
Effect of prior year
non-catastrophe reserve reestimates
|
(0.5)
|
|
(0.5)
|
|
0.7
|
|
1.4
|
|
Combined ratio
|
69.8
|
|
102.0
|
|
121.6
|
|
105.6
|
|
|
|
|
|
|
|
|
|
|
Effect of prior year catastrophe
reserve reestimates
|
(1.9)
|
|
(1.3)
|
|
(1.9)
|
|
(1.7)
|
|
|
|
|
|
|
|
|
|
|
|
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. 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 is
the most directly comparable GAAP measure. 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,
|
|
|
|
2011
|
|
2010
|
|
Book value per
share
|
|
|
|
|
|
Numerator:
|
|
|
|
|
|
Shareholders' equity
|
$
|
18,674
|
$
|
19,016
|
|
Denominator:
|
|
|
|
|
|
Shares
outstanding and dilutive potential shares
outstanding
|
|
505.8
|
|
538.4
|
|
Book value per share
|
$
|
36.92
|
$
|
35.32
|
|
|
|
|
|
|
|
Book value per share, excluding
the impact of
unrealized net capital
gains and losses on fixed
income
securities
|
|
|
|
|
|
Numerator:
|
|
|
|
|
|
Shareholders' equity
|
$
|
18,674
|
$
|
19,016
|
|
Unrealized
net capital gains and losses on fixed income
securities
|
|
1,274
|
|
573
|
|
Adjusted shareholders'
equity
|
$
|
17,400
|
$
|
18,443
|
|
Denominator:
|
|
|
|
|
|
Shares
outstanding and dilutive potential shares
outstanding
|
|
505.8
|
|
538.4
|
|
Book value per share, excluding
the impact of unrealized
net capital gains and
losses on fixed income securities
|
$
|
34.40
|
$
|
34.26
|
|
|
|
|
|
|
|
|
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,
|
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
Property-Liability premiums
written
|
$
|
6,426
|
$
|
6,242
|
$
|
25,980
|
$
|
25,907
|
|
(Increase) decrease in unearned
premiums
|
|
174
|
|
203
|
|
(33)
|
|
19
|
|
Other
|
|
5
|
|
(3)
|
|
(5)
|
|
31
|
|
Property-Liability premiums
earned
|
$
|
6,605
|
$
|
6,442
|
$
|
25,942
|
$
|
25,957
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward-Looking Statements and Risk Factors
This news release contains forward-looking statements about our
outlook for the Property-Liability combined ratio excluding the
effect of catastrophes, prior year reserve reestimates, business
combination expenses, and the amortization of purchased intangible
assets for 2012 and returns on equity. 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.
- Returns on equity may be materially less than projected and
adversely affected by our inability to obtain regulatory approval
for rate changes that may be required to achieve targeted levels of
profitability.
- 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