NORTHBROOK, Ill., Feb. 3, 2016 /PRNewswire/ -- The Allstate
Corporation (NYSE: ALL) today reported financial results for the
fourth quarter and full year 2015. The financial highlights
were:
The Allstate
Corporation Consolidated Highlights
|
|
Three months
ended
December
31,
|
|
Twelve months
ended
December
31,
|
($ millions,
except per share amounts and ratios)
|
2015
|
2014
|
% /
pts
Change
|
|
2015
|
2014
|
% /
pts
Change
|
Consolidated
revenues
|
$
|
8,691
|
|
$
|
8,759
|
|
(0.8)
|
|
|
$
|
35,653
|
|
$
|
35,239
|
|
1.2
|
|
Net income
applicable to common shareholders
|
460
|
|
795
|
|
(42.1)
|
|
|
2,055
|
|
2,746
|
|
(25.2)
|
|
per diluted common
share
|
1.18
|
|
1.86
|
|
(36.6)
|
|
|
5.05
|
|
6.27
|
|
(19.5)
|
|
Operating
income*
|
625
|
|
736
|
|
(15.1)
|
|
|
2,113
|
|
2,367
|
|
(10.7)
|
|
per diluted common
share*
|
1.60
|
|
1.72
|
|
(7.0)
|
|
|
5.19
|
|
5.40
|
|
(3.9)
|
|
Return on common
shareholders' equity
|
|
|
|
|
|
|
|
Net income
applicable to common shareholders
|
|
|
|
|
10.6
|
%
|
13.3
|
%
|
(2.7)
pts
|
Operating
income*
|
|
|
|
|
11.6
|
%
|
12.6
|
%
|
(1.0)
pts
|
Book value per
common share
|
|
|
|
|
47.34
|
|
48.24
|
|
(1.9)
|
|
Book value per
common share, excluding the
impact of unrealized net capital gains and losses
on fixed income securities*
|
|
|
|
|
46.20
|
|
44.33
|
|
4.2
|
|
Property-Liability
combined ratio
|
|
|
|
|
|
|
|
Recorded
|
92.0
|
|
90.0
|
|
2.0
pts
|
|
94.9
|
|
93.9
|
|
1.0 pts
|
Underlying
combined ratio* (excludes
catastrophes, prior year reserve reestimates and
amortization of purchased intangibles)
|
87.4
|
|
89.5
|
|
(2.1)
pts
|
|
88.7
|
|
87.2
|
|
1.5
pts
|
Catastrophe
losses
|
358
|
|
95
|
|
N/M
|
|
1,719
|
|
1,993
|
|
(13.7)
|
|
|
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 in the
"Definitions of Non-GAAP Measures" section of this
document.
|
"Allstate had a strong fourth quarter, enabling us to achieve
our full-year 2015 underlying combined ratio goal while proactively
addressing a challenging external environment," said Thomas J. Wilson, chairman and chief executive
officer of The Allstate Corporation. "The operating environment for
auto insurance continued to reflect a widespread increase in the
number of auto accidents. Despite this, we generated an underlying
combined ratio of 87.4 in the fourth quarter, bringing the
full-year result to 88.7, which was within the range we established
at the beginning of the year. The organization focused throughout
the year to achieve this goal by increasing auto insurance prices,
tightening underwriting standards, maintaining good returns in
homeowners insurance and controlling expenses. While growth slowed
as a result of these actions, total policies in force rose by
449,000 for the year, which helped increase Property-Liability net
written premium by $1.3 billion. We
expect the property-liability underlying combined ratio for the
full year 2016 to be between 88 and 90.
"Net income was $5.05 per diluted
share for 2015, as realized capital losses in the fourth quarter
mostly offset capital gains realized earlier in the year. Operating
income per diluted share of $5.19 in
2015 was 3.9% below 2014 due to lower auto insurance margins, which
were partially offset by reduced catastrophe losses and fewer
common shares outstanding. The operating income return on equity
was 11.6% for 2015. As a result of good returns and proactive
capital management, common shareholders received $3.3 billion of cash in 2015, which represents
12.3% of our average market capitalization."
Full Year 2015 Highlights
- Total 2015 revenue of $35.7
billion reflected a 4.8% increase in property-liability
insurance premium and a 4.2% increase in Allstate Financial premium
and contract charges compared to the prior year, excluding results
from Lincoln Benefit Life Company (LBL), which was sold in
2014.
- Property-liability net written premium increased 4.2% and
policies in force rose 1.3% in 2015 compared to 2014. This growth
was driven predominantly by the Allstate brand, as net written
premium of $28.0 billion was 4.5%
higher in 2015 than 2014 and policies in force increased by 1.7%.
Esurance net written premium growth was 6.6% in 2015. Policy growth
of 1.4% in 2015 was purposefully slowed as we focused on improving
auto margins. Encompass continued to implement profit improvement
actions in 2015 which reduced the size of the business. Net written
premium for Encompass decreased by 2.8% in 2015 compared to 2014,
driven by an 8.2% decline in policies in force.
- Net investment income of $3.2
billion in 2015 was 8.8% lower than in 2014 due to the LBL
divestiture, a decline in interest-bearing income and lower
performance-based long-term income. Interest income in 2015 of
$2.6 billion was 8.5% lower compared
to 2014, driven by lower assets under management given the LBL
divestiture and declining annuity liabilities, and a lower yield
due to actions taken to make the Allstate Financial portfolio less
sensitive to rising interest rates. Income from performance-based
long-term investments, which includes private equity and real
estate, of $589 million in 2015 was
$36 million lower than 2014.
- Total realized capital gains of $30
million were recognized for the year. Net gains on sales of
$470 million, including gains taken
to reposition the Allstate Financial portfolio, were partially
offset by $195 million in impairment
write-downs and $221 million of
valuation losses recognized primarily on public equity securities
that we may sell.
- Net income applicable to common shareholders was $2.1 billion, or $5.05 per diluted share in 2015, compared to
$2.7 billion, or $6.27 per diluted share in 2014. The decrease was
due primarily to reduced property-liability underwriting income and
lower after-tax realized capital gains, partially offset by a lower
share count due to share repurchases.
- Total operating income was $2.1
billion, or $5.19 per diluted
share in 2015, compared to $2.4
billion, or $5.40 per diluted
share in 2014. Property-liability underwriting income of
$1.6 billion for 2015 was
$213 million lower than in the prior
year, driven by an increase in underlying auto losses, partially
offset by lower expenses and strong Allstate brand homeowners
profitability. Allstate Financial operating income of $509 million for 2015 was $98 million lower than 2014. Excluding 2014
earnings from LBL, operating income declined $64 million, or 11.2% in 2015, due primarily to
higher life insurance claims and a lower yield on the
interest-bearing portfolio, partly offset by premium growth and
higher income on performance-based investments.
- Allstate brand exclusive agencies increased by approximately
400 or 4.0% in the United
States.
- Allstate's Drivewise® and Esurance's
DriveSense® telematics offerings continue to expand
their reach and they together had more than 1 million active users
as of year-end 2015. Allstate made the Drivewise mobile application
available nationwide and expanded the Drivewise platform by
offering the Allstate Rewards® program during 2015.
- Esurance continued to expand its geographic reach and product
portfolio and now sells homeowners insurance in 25 states, with
auto sold in 43 states and one Canadian province, renters sold in
20 states and motorcycle sold in 11 states.
Fourth Quarter 2015 Operating Statistics
|
|
Allstate
Brand
|
|
|
|
Property-
liability
Consolidated
|
Auto
|
Homeowners
|
Other Personal
Lines
|
Esurance
|
Encompass
|
Policy in Force
Growth
|
|
|
|
|
|
|
Q4
2014
|
2.5
|
%
|
2.9
|
%
|
0.5
|
%
|
2.1
|
%
|
12.6
|
%
|
1.8
|
%
|
Q4
2015
|
1.3
|
%
|
2.1
|
%
|
1.1
|
%
|
2.7
|
%
|
1.4
|
%
|
-8.2
|
%
|
|
|
|
|
|
|
|
Average Premium -
Gross Written Growth
|
|
|
|
(Auto)
|
(Auto /
Home)
|
Q4
2014
|
|
2.7
|
%
|
1.6
|
%
|
|
3.5
|
%
|
1.7% /
6.5%
|
Q4
2015
|
|
3.3
|
%
|
1.7
|
%
|
|
5.2
|
%
|
8.9% /
7.1%
|
|
|
|
|
|
|
|
Net Written
Premium Growth
|
|
|
|
|
|
|
Q4
2014
|
4.9
|
%
|
4.8
|
%
|
3.2
|
%
|
2.2
|
%
|
14.0
|
%
|
5.1
|
%
|
Q4
2015
|
3.6
|
%
|
5.3
|
%
|
2.3
|
%
|
-
|
5.3
|
%
|
-5.5
|
%
|
|
|
|
|
|
|
|
Recorded Combined
Ratios
|
|
|
|
|
|
|
Q4
2014
|
90.0
|
|
97.0
|
|
63.6
|
|
87.4
|
|
115.5
|
|
93.1
|
|
Q4
2015
|
92.0
|
|
98.6
|
|
71.0
|
|
80.3
|
|
107.0
|
|
95.5
|
|
|
|
|
|
|
|
|
Underlying
Combined Ratios
|
|
|
|
|
|
Q4
2014
|
89.5
|
|
98.2
|
|
61.0
|
|
79.5
|
|
113.4
|
|
92.7
|
|
Q4
2015
|
87.4
|
|
97.6
|
|
56.0
|
|
71.9
|
|
105.3
|
|
92.3
|
|
Financial Results: Fourth Quarter 2015
Fourth quarter 2015 revenue of $8.7
billion was 0.8% below the year-ago quarter, as 4.5% growth
in property-liability insurance premium and 5.2% growth in Allstate
Financial premium and contract charges were more than offset by an
8.9% decline in net investment income and net realized capital
losses of $250 million.
Allstate's fourth quarter 2015 net income applicable to common
shareholders was $460 million, or
$1.18 per diluted share, compared to
$795 million, or $1.86 per diluted share, in the fourth quarter of
2014. Operating income was $625
million, or $1.60 per diluted
share in the fourth quarter of 2015, compared to $736 million, or $1.72 per diluted share, in the same period of
2014.
Property-liability net written premium increased 3.6% in
the fourth quarter of 2015 compared to the prior year quarter,
resulting from policy growth of 1.3% and higher average premiums
per policy. Allstate brand net written premium of $6.9 billion was 3.9% higher in the fourth
quarter of 2015 compared to the fourth quarter of 2014, driven by
increases in Allstate brand auto of 5.3% and Allstate brand
homeowners of 2.3%.
Allstate brand auto policy growth was 2.1% in the fourth
quarter of 2015. Underwriting changes along with approved rate
increases of 1.9% contributed to a 24.1% decrease in new business
applications and a 0.4 point decline in retention. Allstate brand
approved rate increases for the full year 2015 were 5.3%. Allstate
brand homeowners policy growth was 1.1% in the fourth quarter of
2015, as new business declined 2.2% and the renewal ratio of 88.5
was essentially flat to the prior year quarter.
Allstate brand auto losses remained elevated in the fourth
quarter of 2015, reflecting a continuation of the trends
experienced throughout 2015. Allstate brand auto had a fourth
quarter 2015 recorded combined ratio of 98.6 and an underlying
combined ratio of 97.6, which was 0.6 points favorable to the same
quarter a year ago, driven by a 2.9 point reduction in the expense
ratio. Property damage frequency and paid claim severities
increased 7.5% and 4.0%, respectively, compared to the prior year
quarter. Bodily injury frequency increased 3.9% while paid
severities decreased 7.0% compared to the same quarter a year
ago.
The Allstate brand homeowners recorded combined ratio of
71.0 was 7.4 points higher than the prior year quarter, driven by a
$189 million increase in catastrophe
losses compared to the fourth quarter of 2014. The underlying
combined ratio of 56.0 was 5.0 points lower than the same quarter a
year ago, partially driven by decreased fire claim frequency.
Esurance's continued focus on auto profitability improved
the underlying combined ratio to 105.3 in the fourth quarter of
2015, 8.1 points lower than the fourth quarter of 2014. Net written
premium growth slowed in the fourth quarter of 2015 to 5.3% versus
the prior year quarter, given profit improvement actions and
reduced advertising.
Encompass also continued to implement profit improvement
actions in the fourth quarter of 2015, which included increasing
rates and refining underwriting standards. Net written premium
declined by 5.5% and policies in force were 8.2% lower in the
fourth quarter of 2015 compared to the prior year quarter. The
recorded combined ratio of 95.5 in the fourth quarter of 2015 was
2.4 points higher than the prior year quarter, while the underlying
combined ratio of 92.3 was 0.4 points lower than the same period a
year ago.
Allstate Financial operating income of $98 million in the fourth quarter of 2015 was
$30 million lower than the prior year
quarter, driven by a lower yield on interest-bearing assets and a
decrease in performance-based long-term investment income. Longer
duration bonds that support immediate annuity liabilities were sold
in the third quarter, and the proceeds were invested in shorter
duration fixed income securities and public equity securities. Over
time, we plan to shift to higher-returning performance-based assets
to increase long-term returns in this business.
Net investment income of $710
million declined $69 million
in the fourth quarter of 2015 compared to the fourth quarter of
2014, due primarily to lower income from the fixed income and
performance-based long-term portfolios. Interest income declined by
$32 million in the fourth quarter of
2015 compared to the fourth quarter of 2014, primarily due to sale
of long-duration bonds to make the Allstate Financial portfolio
less sensitive to rising interest rates. Income on
performance-based long-term investments declined $52 million in the fourth quarter of 2015
compared to the prior year quarter primarily due to lower portfolio
valuations, of which $35 million was
in our infrastructure and real asset portfolio. Although
performance-based long-term investments generate attractive
long-term risk-adjusted returns, earnings can vary significantly
between periods.
Net realized capital losses were $250 million in the fourth quarter of 2015
compared to gains of $106 million in
the prior year quarter. In the fourth quarter of 2015, impairments
were $118 million and losses on sales
were $75 million. Energy-related
investments had impairments of $82
million and net losses on sales of $47 million. Approximately two thirds of the
impairments related to our market-based (primarily public)
portfolios and the remainder related to our performance-based
portfolios.
Proactive Capital Management
"Allstate provided good cash returns to our shareholders while
maintaining a strong capital position to provide strategic
flexibility," said Steve Shebik,
chief financial officer. "We paid $483
million in common shareholder dividends in 2015 and returned
another $2.8 billion to shareholders
by repurchasing 10.2% of our beginning-of-year outstanding shares.
Since the beginning of 2010, we have decreased common shares
outstanding by 34% through multiple share repurchase authorizations
at a cost of $9.0 billion."
As of December 31, 2015,
$532 million remained under
Allstate's $3 billion common share
repurchase program, which is expected to be completed by
July 2016. Deployable assets at the
holding company were $2.6 billion as
of December 31, 2015. Book value per
common share in 2015 declined 1.9% to $47.34, including the impact of unrealized gains
and losses on fixed income securities, and rose 4.2% when excluding
this impact.
Visit www.allstateinvestors.com to view additional information
about Allstate's results, including a webcast of its quarterly
conference call and the call presentation. The conference call will
be held at 9 a.m. ET on Thursday, February 4.
The Allstate Corporation (NYSE: ALL) is the nation's largest
publicly held personal lines insurer, protecting approximately 16
million households from life's uncertainties through auto, home,
life and other insurance offered through its Allstate, Esurance,
Encompass and Answer Financial brand names. Allstate is widely
known through the slogan "You're In Good Hands With
Allstate®." The Allstate brand's network of small
businesses offers auto, home, life and retirement products and
services to customers in the United
States and Canada.
Financial information, including material announcements about
The Allstate Corporation, is routinely posted on
www.allstateinvestors.com.
Forward-Looking Statements
This news release contains "forward-looking statements" that
anticipate results based on our estimates, assumptions and plans
that are subject to uncertainty. These statements are made
subject to the safe-harbor provisions of the Private Securities
Litigation Reform Act of 1995. These forward-looking
statements do not relate strictly to historical or current facts
and may be identified by their use of words like "plans," "seeks,"
"expects," "will," "should," "anticipates," "estimates," "intends,"
"believes," "likely," "targets" and other words with similar
meanings. We believe these statements are based on reasonable
estimates, assumptions and plans. However, if the estimates,
assumptions or plans underlying the forward-looking statements
prove inaccurate or if other risks or uncertainties arise, actual
results could differ materially from those communicated in these
forward-looking statements. Factors that could cause actual
results to differ materially from those expressed in, or implied
by, the forward-looking statements may be found in our filings
with the U.S. Securities and Exchange Commission, including the
"Risk Factors" section in our most recent Annual Report on Form
10-K. Forward-looking statements speak only as of the date on which
they are made, and we assume no obligation to update or revise any
forward-looking statement.
THE ALLSTATE
CORPORATION AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
|
|
|
|
($ in millions,
except per share data)
|
Three months
ended
December
31,
|
|
Twelve months
ended
December 31,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
(unaudited)
|
|
|
|
(unaudited)
|
|
|
Revenues
|
|
|
|
|
|
|
|
Property-liability
insurance premiums
|
$
|
7,684
|
|
|
$
|
7,354
|
|
|
$
|
30,309
|
|
|
$
|
28,929
|
|
Life and annuity
premiums and contract charges
|
547
|
|
|
520
|
|
|
2,158
|
|
|
2,157
|
|
Net investment
income
|
710
|
|
|
779
|
|
|
3,156
|
|
|
3,459
|
|
Realized capital
gains and losses:
|
|
|
|
|
|
|
|
Total
other-than-temporary impairment ("OTTI") losses
|
(166)
|
|
|
(65)
|
|
|
(452)
|
|
|
(242)
|
|
OTTI losses
reclassified to (from) other comprehensive income
|
16
|
|
|
(1)
|
|
|
36
|
|
|
(3)
|
|
Net OTTI losses
recognized in earnings
|
(150)
|
|
|
(66)
|
|
|
(416)
|
|
|
(245)
|
|
Sales and other
realized capital gains and losses
|
(100)
|
|
|
172
|
|
|
446
|
|
|
939
|
|
Total realized capital
gains and losses
|
(250)
|
|
|
106
|
|
|
30
|
|
|
694
|
|
|
8,691
|
|
|
8,759
|
|
|
35,653
|
|
|
35,239
|
|
|
|
|
|
|
|
|
|
Costs and
expenses
|
|
|
|
|
|
|
|
Property-liability
insurance claims and claims expense
|
5,199
|
|
|
4,618
|
|
|
21,034
|
|
|
19,428
|
|
Life and annuity
contract benefits
|
456
|
|
|
431
|
|
|
1,803
|
|
|
1,765
|
|
Interest credited to
contractholder funds
|
183
|
|
|
202
|
|
|
761
|
|
|
919
|
|
Amortization of
deferred policy acquisition costs
|
1,116
|
|
|
1,035
|
|
|
4,364
|
|
|
4,135
|
|
Operating costs and
expenses
|
938
|
|
|
1,156
|
|
|
4,081
|
|
|
4,341
|
|
Restructuring and
related charges
|
7
|
|
|
5
|
|
|
39
|
|
|
18
|
|
Loss on
extinguishment of debt
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
Interest
expense
|
73
|
|
|
73
|
|
|
292
|
|
|
322
|
|
|
7,972
|
|
|
7,520
|
|
|
32,374
|
|
|
30,929
|
|
|
|
|
|
|
|
|
|
Gain (loss) on
disposition of operations
|
1
|
|
|
3
|
|
|
3
|
|
|
(74)
|
|
|
|
|
|
|
|
|
|
Income from
operations before income tax expense
|
720
|
|
|
1,242
|
|
|
3,282
|
|
|
4,236
|
|
|
|
|
|
|
|
|
|
Income tax
expense
|
231
|
|
|
418
|
|
|
1,111
|
|
|
1,386
|
|
|
|
|
|
|
|
|
|
Net
income
|
489
|
|
|
824
|
|
|
2,171
|
|
|
2,850
|
|
|
|
|
|
|
|
|
|
Preferred stock
dividends
|
29
|
|
|
29
|
|
|
116
|
|
|
104
|
|
|
|
|
|
|
|
|
|
Net income
applicable to common shareholders
|
$
|
460
|
|
|
$
|
795
|
|
|
$
|
2,055
|
|
|
$
|
2,746
|
|
|
|
|
|
|
|
|
|
Earnings per
common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
applicable to common shareholders per
common share – Basic
|
$
|
1.19
|
|
|
$
|
1.89
|
|
|
$
|
5.12
|
|
|
$
|
6.37
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares – Basic
|
385.0
|
|
|
420.2
|
|
|
401.1
|
|
|
431.4
|
|
|
|
|
|
|
|
|
|
Net income
applicable to common shareholders per
common share – Diluted
|
$
|
1.18
|
|
|
$
|
1.86
|
|
|
$
|
5.05
|
|
|
$
|
6.27
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares – Diluted
|
390.2
|
|
|
427.7
|
|
|
406.8
|
|
|
438.2
|
|
|
|
|
|
|
|
|
|
Cash dividends
declared per common share
|
$
|
0.30
|
|
|
$
|
0.28
|
|
|
$
|
1.20
|
|
|
$
|
1.12
|
|
THE ALLSTATE
CORPORATION
|
BUSINESS
RESULTS
|
($ in millions,
except ratios)
|
Three months
ended
|
|
Twelve months
ended
|
|
December
31,
|
|
December
31,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Property-Liability
|
|
|
|
|
|
|
|
Premiums
written
|
$
|
7,551
|
|
|
$
|
7,292
|
|
|
$
|
30,871
|
|
|
$
|
29,614
|
|
Premiums
earned
|
$
|
7,684
|
|
|
$
|
7,354
|
|
|
$
|
30,309
|
|
|
$
|
28,929
|
|
Claims and claims
expense
|
(5,199)
|
|
|
(4,618)
|
|
|
(21,034)
|
|
|
(19,428)
|
|
Amortization of
deferred policy acquisition costs
|
(1,052)
|
|
|
(973)
|
|
|
(4,102)
|
|
|
(3,875)
|
|
Operating costs and
expenses
|
(812)
|
|
|
(1,021)
|
|
|
(3,575)
|
|
|
(3,838)
|
|
Restructuring and
related charges
|
(10)
|
|
|
(5)
|
|
|
(39)
|
|
|
(16)
|
|
Underwriting income
|
611
|
|
|
737
|
|
|
1,559
|
|
|
1,772
|
|
Net investment
income
|
280
|
|
|
294
|
|
|
1,237
|
|
|
1,301
|
|
Periodic settlements
and accruals on non-hedge derivative instruments
|
(1)
|
|
|
(2)
|
|
|
(3)
|
|
|
(9)
|
|
Amortization of
purchased intangible assets
|
13
|
|
|
17
|
|
|
50
|
|
|
68
|
|
Income tax expense on
operations
|
(304)
|
|
|
(359)
|
|
|
(941)
|
|
|
(1,060)
|
|
Operating income
|
599
|
|
|
687
|
|
|
1,902
|
|
|
2,072
|
|
Realized capital
gains and losses, after-tax
|
(99)
|
|
|
(11)
|
|
|
(154)
|
|
|
357
|
|
Gain on disposition
of operations, after-tax
|
—
|
|
|
—
|
|
|
—
|
|
|
37
|
|
Reclassification of
periodic settlements and accruals on non-hedge
|
|
|
|
|
|
|
|
derivative instruments,
after-tax
|
1
|
|
|
2
|
|
|
2
|
|
|
6
|
|
Amortization of
purchased intangible assets, after-tax
|
(8)
|
|
|
(12)
|
|
|
(32)
|
|
|
(45)
|
|
Change in accounting
for investments in qualified affordable
|
|
|
|
|
|
|
|
housing
projects, after-tax
|
—
|
|
|
—
|
|
|
(28)
|
|
|
—
|
|
Net
income applicable to common shareholders
|
$
|
493
|
|
|
$
|
666
|
|
|
$
|
1,690
|
|
|
$
|
2,427
|
|
Catastrophe
losses
|
$
|
358
|
|
|
$
|
95
|
|
|
$
|
1,719
|
|
|
$
|
1,993
|
|
Operating
ratios:
|
|
|
|
|
|
|
|
Claims
and claims expense ratio
|
67.6
|
|
|
62.8
|
|
|
69.4
|
|
|
67.2
|
|
Expense
ratio
|
24.4
|
|
|
27.2
|
|
|
25.5
|
|
|
26.7
|
|
Combined
ratio
|
92.0
|
|
|
90.0
|
|
|
94.9
|
|
|
93.9
|
|
Effect
of catastrophe losses on combined ratio
|
4.7
|
|
|
1.3
|
|
|
5.7
|
|
|
6.9
|
|
Effect
of prior year reserve reestimates on combined ratio
|
(0.4)
|
|
|
(1.0)
|
|
|
0.3
|
|
|
(0.3)
|
|
Effect
of catastrophe losses included in prior year reserve
reestimates
|
|
|
|
|
|
|
|
on combined
ratio
|
(0.2)
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
Effect
of amortization of purchased intangible assets on combined
ratio
|
0.1
|
|
|
0.2
|
|
|
0.2
|
|
|
0.2
|
|
Effect
of Discontinued Lines and Coverages on combined ratio
|
—
|
|
|
0.1
|
|
|
0.2
|
|
|
0.4
|
|
|
|
|
|
|
|
|
|
Allstate
Financial
|
|
|
|
|
|
|
|
Premiums and contract
charges
|
$
|
547
|
|
|
$
|
520
|
|
|
$
|
2,158
|
|
|
$
|
2,157
|
|
Net investment
income
|
420
|
|
|
480
|
|
|
1,884
|
|
|
2,131
|
|
Periodic settlements
and accruals on non-hedge derivative instruments
|
—
|
|
|
—
|
|
|
—
|
|
|
(1)
|
|
Contract
benefits
|
(456)
|
|
|
(431)
|
|
|
(1,803)
|
|
|
(1,765)
|
|
Interest credited to
contractholder funds
|
(186)
|
|
|
(199)
|
|
|
(760)
|
|
|
(898)
|
|
Amortization of
deferred policy acquisition costs
|
(65)
|
|
|
(60)
|
|
|
(257)
|
|
|
(255)
|
|
Operating costs and
expenses
|
(119)
|
|
|
(121)
|
|
|
(472)
|
|
|
(466)
|
|
Restructuring and
related charges
|
3
|
|
|
—
|
|
|
—
|
|
|
(2)
|
|
Income tax expense on
operations
|
(46)
|
|
|
(61)
|
|
|
(241)
|
|
|
(294)
|
|
Operating income
|
98
|
|
|
128
|
|
|
509
|
|
|
607
|
|
Realized capital
gains and losses, after-tax
|
(62)
|
|
|
81
|
|
|
173
|
|
|
94
|
|
Valuation changes on
embedded derivatives that are not hedged, after-tax
|
2
|
|
|
(3)
|
|
|
(1)
|
|
|
(15)
|
|
DAC and DSI
amortization relating to realized capital gains and losses
and
|
|
|
|
|
|
|
|
valuation changes on embedded derivatives that are not hedged,
after-tax
|
—
|
|
|
—
|
|
|
(3)
|
|
|
(3)
|
|
Reclassification of
periodic settlements and accruals on non-hedge
|
|
|
|
|
|
|
|
derivative instruments, after-tax
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
Gain (loss) on
disposition of operations, after-tax
|
1
|
|
|
2
|
|
|
2
|
|
|
(53)
|
|
Change in accounting
for investments in qualified affordable housing
|
|
|
|
|
|
|
|
projects, after-tax
|
—
|
|
|
—
|
|
|
(17)
|
|
|
—
|
|
Net income applicable to common shareholders
|
$
|
39
|
|
|
$
|
208
|
|
|
$
|
663
|
|
|
$
|
631
|
|
|
|
|
|
|
|
|
|
Corporate and
Other
|
|
|
|
|
|
|
|
Net investment
income
|
$
|
10
|
|
|
$
|
5
|
|
|
$
|
35
|
|
|
$
|
27
|
|
Operating costs and
expenses
|
(80)
|
|
|
(87)
|
|
|
(326)
|
|
|
(359)
|
|
Income tax benefit on
operations
|
27
|
|
|
32
|
|
|
109
|
|
|
124
|
|
Preferred stock
dividends
|
(29)
|
|
|
(29)
|
|
|
(116)
|
|
|
(104)
|
|
Operating loss
|
(72)
|
|
|
(79)
|
|
|
(298)
|
|
|
(312)
|
|
Realized capital
gains and losses, after-tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Net loss
applicable to common shareholders
|
$
|
(72)
|
|
|
$
|
(79)
|
|
|
$
|
(298)
|
|
|
$
|
(312)
|
|
Consolidated net
income applicable to common shareholders
|
$
|
460
|
|
|
$
|
795
|
|
|
$
|
2,055
|
|
|
$
|
2,746
|
|
THE ALLSTATE
CORPORATION AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF FINANCIAL POSITION
|
($ in millions,
except par value data)
|
December
31,
|
|
December
31,
|
|
2015
|
|
2014
|
Assets
|
(unaudited)
|
|
|
Investments:
|
|
|
|
Fixed
income securities, at fair value (amortized cost $57,201 and
$59,672)
|
$
|
57,948
|
|
|
$
|
62,440
|
|
Equity
securities, at fair value (cost $4,806 and $3,692)
|
5,082
|
|
|
4,104
|
|
Mortgage
loans
|
4,338
|
|
|
4,188
|
|
Limited
partnership interests
|
4,874
|
|
|
4,527
|
|
Short-term, at fair value (amortized cost $2,122 and
$2,540)
|
2,122
|
|
|
2,540
|
|
Other
|
3,394
|
|
|
3,314
|
|
Total
investments
|
77,758
|
|
|
81,113
|
|
Cash
|
495
|
|
|
657
|
|
Premium installment
receivables, net
|
5,544
|
|
|
5,465
|
|
Deferred policy
acquisition costs
|
3,861
|
|
|
3,525
|
|
Reinsurance
recoverables, net
|
8,518
|
|
|
8,490
|
|
Accrued investment
income
|
569
|
|
|
591
|
|
Property and
equipment, net
|
1,024
|
|
|
1,031
|
|
Goodwill
|
1,219
|
|
|
1,219
|
|
Other
assets
|
2,010
|
|
|
1,992
|
|
Separate
Accounts
|
3,658
|
|
|
4,396
|
|
Total assets
|
$
|
104,656
|
|
|
$
|
108,479
|
|
Liabilities
|
|
|
|
Reserve for
property-liability insurance claims and claims expense
|
$
|
23,869
|
|
|
$
|
22,923
|
|
Reserve for
life-contingent contract benefits
|
12,247
|
|
|
12,380
|
|
Contractholder
funds
|
21,295
|
|
|
22,529
|
|
Unearned
premiums
|
12,202
|
|
|
11,655
|
|
Claim payments
outstanding
|
842
|
|
|
784
|
|
Deferred income
taxes
|
90
|
|
|
715
|
|
Other liabilities and
accrued expenses
|
5,304
|
|
|
5,653
|
|
Long-term
debt
|
5,124
|
|
|
5,140
|
|
Separate
Accounts
|
3,658
|
|
|
4,396
|
|
Total liabilities
|
84,631
|
|
|
86,175
|
|
Shareholders'
equity
|
|
|
|
Preferred stock and
additional capital paid-in, $1 par value, 72.2 thousand
shares issued and outstanding, $1,805 aggregate
liquidation preference
|
1,746
|
|
|
1,746
|
|
Common stock, $.01
par value, 2.0 billion authorized and 900 million issued,
381 million and 418 million shares
outstanding
|
9
|
|
|
9
|
|
Additional capital
paid-in
|
3,245
|
|
|
3,199
|
|
Retained
income
|
39,413
|
|
|
37,842
|
|
Deferred ESOP
expense
|
(13)
|
|
|
(23)
|
|
Treasury stock, at
cost (519 million and 482 million shares)
|
(23,620)
|
|
|
(21,030)
|
|
Accumulated other
comprehensive income:
|
|
|
|
Unrealized net
capital gains and losses:
|
|
|
|
Unrealized net capital
gains and losses on fixed income securities with
OTTI
|
56
|
|
|
72
|
|
Other unrealized net
capital gains and losses
|
608
|
|
|
1,988
|
|
Unrealized adjustment
to DAC, DSI and insurance reserves
|
(44)
|
|
|
(134)
|
|
Total
unrealized net capital gains and losses
|
620
|
|
|
1,926
|
|
Unrealized
foreign currency translation adjustments
|
(60)
|
|
|
(2)
|
|
Unrecognized
pension and other postretirement benefit cost
|
(1,315)
|
|
|
(1,363)
|
|
Total accumulated other comprehensive (loss) income
|
(755)
|
|
|
561
|
|
Total shareholders' equity
|
20,025
|
|
|
22,304
|
|
Total liabilities and shareholders' equity
|
$
|
104,656
|
|
|
$
|
108,479
|
|
THE ALLSTATE
CORPORATION AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
($ in
millions)
|
Twelve months
ended
December 31,
|
|
2015
|
|
2014
|
Cash flows from
operating activities
|
(unaudited)
|
|
|
Net income
|
$
|
2,171
|
|
|
$
|
2,850
|
|
Adjustments to
reconcile net income to net cash provided by
operating
activities:
|
|
|
|
Depreciation,
amortization and other non-cash items
|
371
|
|
|
366
|
|
Realized capital gains
and losses
|
(30)
|
|
|
(694)
|
|
Loss on extinguishment
of debt
|
—
|
|
|
1
|
|
(Gain) loss on
disposition of operations
|
(3)
|
|
|
74
|
|
Interest credited to
contractholder funds
|
761
|
|
|
919
|
|
Changes in:
|
|
|
|
Policy benefits and
other insurance reserves
|
473
|
|
|
541
|
|
Unearned
premiums
|
638
|
|
|
766
|
|
Deferred policy
acquisition costs
|
(239)
|
|
|
(220)
|
|
Premium installment
receivables, net
|
(134)
|
|
|
(257)
|
|
Reinsurance
recoverables, net
|
(178)
|
|
|
(1,068)
|
|
Income
taxes
|
(119)
|
|
|
205
|
|
Other operating assets
and liabilities
|
(95)
|
|
|
(247)
|
|
Net cash provided by
operating activities
|
3,616
|
|
|
3,236
|
|
Cash flows from
investing activities
|
|
|
|
Proceeds from
sales
|
|
|
|
Fixed
income securities
|
28,693
|
|
|
34,609
|
|
Equity
securities
|
3,754
|
|
|
6,755
|
|
Limited
partnership interests
|
1,101
|
|
|
1,473
|
|
Mortgage
loans
|
6
|
|
|
10
|
|
Other
investments
|
545
|
|
|
406
|
|
Investment
collections
|
|
|
|
Fixed
income securities
|
4,432
|
|
|
3,736
|
|
Mortgage
loans
|
538
|
|
|
1,106
|
|
Other
investments
|
293
|
|
|
191
|
|
Investment
purchases
|
|
|
|
Fixed
income securities
|
(30,758)
|
|
|
(38,759)
|
|
Equity
securities
|
(4,960)
|
|
|
(5,443)
|
|
Limited
partnership interests
|
(1,343)
|
|
|
(1,398)
|
|
Mortgage
loans
|
(687)
|
|
|
(501)
|
|
Other
investments
|
(902)
|
|
|
(972)
|
|
Change in short-term
investments, net
|
385
|
|
|
272
|
|
Change in other
investments, net
|
(52)
|
|
|
46
|
|
Purchases of property
and equipment, net
|
(303)
|
|
|
(288)
|
|
Disposition of
operations
|
—
|
|
|
378
|
|
Net cash provided by
investing activities
|
742
|
|
|
1,621
|
|
Cash flows from
financing activities
|
|
|
|
Repayment of
long-term debt
|
(20)
|
|
|
(1,006)
|
|
Proceeds from
issuance of preferred stock
|
—
|
|
|
965
|
|
Contractholder fund
deposits
|
1,052
|
|
|
1,184
|
|
Contractholder fund
withdrawals
|
(2,327)
|
|
|
(3,446)
|
|
Dividends paid on
common stock
|
(483)
|
|
|
(477)
|
|
Dividends paid on
preferred stock
|
(116)
|
|
|
(87)
|
|
Treasury stock
purchases
|
(2,808)
|
|
|
(2,301)
|
|
Shares reissued under
equity incentive plans, net
|
130
|
|
|
266
|
|
Excess tax benefits
on share-based payment arrangements
|
45
|
|
|
41
|
|
Other
|
7
|
|
|
(14)
|
|
Net cash used in
financing activities
|
(4,520)
|
|
|
(4,875)
|
|
Net decrease in
cash
|
(162)
|
|
|
(18)
|
|
Cash at beginning
of year
|
657
|
|
|
675
|
|
Cash at end of
year
|
$
|
495
|
|
|
$
|
657
|
|
The following table
presents the investment portfolio by strategy as of December 31,
2015.
|
|
($ in
millions)
|
Total
|
|
Market-Based
Core
|
|
Market-Based
Active
|
|
Performance-
Based
Long-Term
|
|
Performance-
Based
Opportunistic
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Fixed income
securities
|
$
|
57,948
|
|
|
$
|
62,440
|
|
|
$
|
51,175
|
|
|
$
|
57,268
|
|
|
$
|
6,691
|
|
|
$
|
5,084
|
|
|
$
|
47
|
|
|
$
|
50
|
|
|
$
|
35
|
|
|
$
|
38
|
|
Equity
securities
|
5,082
|
|
|
4,104
|
|
|
4,210
|
|
|
3,080
|
|
|
764
|
|
|
870
|
|
|
77
|
|
|
57
|
|
|
31
|
|
|
97
|
|
Mortgage
loans
|
4,338
|
|
|
4,188
|
|
|
4,338
|
|
|
4,188
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Limited partnership
interests
|
4,874
|
|
|
4,527
|
|
|
364
|
|
|
358
|
|
|
—
|
|
|
—
|
|
|
4,510
|
|
|
4,169
|
|
|
—
|
|
|
—
|
|
Short-term
investments
|
2,122
|
|
|
2,540
|
|
|
1,631
|
|
|
2,488
|
|
|
491
|
|
|
52
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Other
|
3,394
|
|
|
3,314
|
|
|
2,783
|
|
|
2,811
|
|
|
183
|
|
|
221
|
|
|
415
|
|
|
282
|
|
|
13
|
|
|
—
|
|
Total
|
$
|
77,758
|
|
|
$
|
81,113
|
|
|
$
|
64,501
|
|
|
$
|
70,193
|
|
|
$
|
8,129
|
|
|
$
|
6,227
|
|
|
$
|
5,049
|
|
|
$
|
4,558
|
|
|
$
|
79
|
|
|
$
|
135
|
|
Performance-based
long-term ("PBLT") investments primarily include private equity,
real estate, infrastructure, timber and agriculture-related
investments and are materially represented through limited
partnership investments. The following table presents the
investment income and realized capital gains and losses for PBLT
investments.
|
|
($ in
millions)
|
Three months
ended
December
31,
|
|
Twelve months
ended
December
31,
|
|
Investment
income
|
|
Realized
capital
gains and losses
|
|
Investment
income
|
|
Realized
capital
gains and losses
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Limited
partnerships
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Private
equity
|
$
|
47
|
|
|
$
|
96
|
|
|
$
|
(49)
|
|
|
$
|
(4)
|
|
|
$
|
402
|
|
|
$
|
391
|
|
|
$
|
(46)
|
|
|
$
|
(40)
|
|
Real
estate
|
20
|
|
|
25
|
|
|
—
|
|
|
7
|
|
|
158
|
|
|
211
|
|
|
(4)
|
|
|
53
|
|
Timber and
agriculture-related
|
(1)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
PBLT - limited
partnerships
|
66
|
|
|
121
|
|
|
(49)
|
|
|
3
|
|
|
559
|
|
|
602
|
|
|
(50)
|
|
|
13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Private
equity
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
6
|
|
|
—
|
|
Real
estate
|
6
|
|
|
3
|
|
|
(1)
|
|
|
—
|
|
|
22
|
|
|
14
|
|
|
(3)
|
|
|
7
|
|
Timber and
agriculture-related
|
2
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
9
|
|
|
1
|
|
|
—
|
|
PBLT -
other
|
8
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
30
|
|
|
23
|
|
|
4
|
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Private
equity
|
47
|
|
|
96
|
|
|
(48)
|
|
|
(4)
|
|
|
403
|
|
|
391
|
|
|
(40)
|
|
|
(40)
|
|
Real
estate
|
26
|
|
|
28
|
|
|
(1)
|
|
|
7
|
|
|
180
|
|
|
225
|
|
|
(7)
|
|
|
60
|
|
Timber and
agriculture-related
|
1
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|
9
|
|
|
1
|
|
|
—
|
|
Total
PBLT
|
$
|
74
|
|
|
$
|
126
|
|
|
$
|
(49)
|
|
|
$
|
3
|
|
|
$
|
589
|
|
|
$
|
625
|
|
|
$
|
(46)
|
|
|
$
|
20
|
|
Definitions of Non-GAAP Measures
We believe that investors' understanding of Allstate's
performance is enhanced by our disclosure of the following non-GAAP
measures. Our methods for calculating these measures may differ
from those used by other companies and therefore comparability may
be limited.
Operating income is net income applicable to common
shareholders, excluding:
- realized capital gains and losses, after-tax, except for
periodic settlements and accruals on non-hedge derivative
instruments, which are reported with realized capital gains and
losses but included in operating income,
- valuation changes on embedded derivatives that are not hedged,
after-tax,
- amortization of deferred policy acquisition costs (DAC) and
deferred sales inducements (DSI), to the extent they resulted from
the recognition of certain realized capital gains and losses or
valuation changes on embedded derivatives that are not hedged,
after-tax,
- amortization of purchased intangible assets, after-tax,
- gain (loss) on disposition of operations, after-tax, and
- adjustments for other significant non-recurring, infrequent or
unusual items, when (a) the nature of the charge or gain is such
that it is reasonably unlikely to recur within two years, or (b)
there has been no similar charge or gain within the prior two
years.
Net income applicable to common shareholders is the GAAP measure
that is most directly comparable to operating income.
We use operating income as an important measure to evaluate our
results of operations. We believe that the measure provides
investors with a valuable measure of the company's ongoing
performance because it reveals trends in our insurance and
financial services business that may be obscured by the net effect
of realized capital gains and losses, valuation changes on embedded
derivatives that are not hedged, 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 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,
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.
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 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 is used by management along with the other
components of net income applicable to common shareholders to
assess our performance. We use adjusted measures of operating
income in incentive compensation. Therefore, we believe it is
useful for investors to evaluate net income applicable to common
shareholders, operating income and their components separately and
in the aggregate when reviewing and evaluating our performance. We
note that investors, financial analysts, financial and business
media organizations and rating agencies utilize 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 as the denominator.
Operating income should not be considered a substitute for net
income applicable to common shareholders and does not reflect the
overall profitability of our business.
The following tables reconcile operating income and net income
applicable to common shareholders.
($ in millions,
except per share data)
|
For the three
months ended December 31,
|
|
Property-Liability
|
|
Allstate
Financial
|
|
Consolidated
|
|
Per diluted common
share
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Operating
income
|
$
|
599
|
|
|
$
|
687
|
|
|
$
|
98
|
|
|
$
|
128
|
|
|
$
|
625
|
|
|
$
|
736
|
|
|
$
|
1.60
|
|
|
$
|
1.72
|
|
Realized capital gains
and losses, after-tax
|
(99)
|
|
|
(11)
|
|
|
(62)
|
|
|
81
|
|
|
(161)
|
|
|
70
|
|
|
(0.41)
|
|
|
0.16
|
|
Valuation changes on
embedded derivatives that are
not hedged, after-tax
|
—
|
|
|
—
|
|
|
2
|
|
|
(3)
|
|
|
2
|
|
|
(3)
|
|
|
0.01
|
|
|
(0.01)
|
|
Reclassification of
periodic settlements and accruals
on non-hedge derivative instruments,
after-tax
|
1
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
2
|
|
|
—
|
|
|
0.01
|
|
Amortization of
purchased intangible assets, after-tax
|
(8)
|
|
|
(12)
|
|
|
—
|
|
|
—
|
|
|
(8)
|
|
|
(12)
|
|
|
(0.02)
|
|
|
(0.03)
|
|
Gain on disposition
of operations, after-tax
|
—
|
|
|
—
|
|
|
1
|
|
|
2
|
|
|
1
|
|
|
2
|
|
|
—
|
|
|
0.01
|
|
Net income
applicable to common shareholders
|
$
|
493
|
|
|
$
|
666
|
|
|
$
|
39
|
|
|
$
|
208
|
|
|
$
|
460
|
|
|
$
|
795
|
|
|
$
|
1.18
|
|
|
$
|
1.86
|
|
($ in millions,
except per share data)
|
For the twelve
months ended December 31,
|
|
Property-Liability
|
|
Allstate
Financial
|
|
Consolidated
|
|
Per diluted common
share
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Operating
income
|
$
|
1,902
|
|
|
$
|
2,072
|
|
|
$
|
509
|
|
|
$
|
607
|
|
|
$
|
2,113
|
|
|
$
|
2,367
|
|
|
$
|
5.19
|
|
|
$
|
5.40
|
|
Realized capital gains
and losses, after-tax
|
(154)
|
|
|
357
|
|
|
173
|
|
|
94
|
|
|
19
|
|
|
451
|
|
|
0.05
|
|
|
1.03
|
|
Valuation changes on
embedded derivatives that are
not hedged, after-tax
|
—
|
|
|
—
|
|
|
(1)
|
|
|
(15)
|
|
|
(1)
|
|
|
(15)
|
|
|
—
|
|
|
(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
|
—
|
|
|
—
|
|
|
(3)
|
|
|
(3)
|
|
|
(3)
|
|
|
(3)
|
|
|
—
|
|
|
(0.01)
|
|
Reclassification of
periodic settlements and accruals
on non-hedge derivative instruments,
after-tax
|
2
|
|
|
6
|
|
|
—
|
|
|
1
|
|
|
2
|
|
|
7
|
|
|
—
|
|
|
0.02
|
|
Amortization of
purchased intangible assets, after-tax
|
(32)
|
|
|
(45)
|
|
|
—
|
|
|
—
|
|
|
(32)
|
|
|
(45)
|
|
|
(0.08)
|
|
|
(0.10)
|
|
Gain (loss) on
disposition of operations, after-tax
|
—
|
|
|
37
|
|
|
2
|
|
|
(53)
|
|
|
2
|
|
|
(16)
|
|
|
—
|
|
|
(0.04)
|
|
Change in accounting
for investments in qualified
affordable housing projects, after-tax
|
(28)
|
|
|
—
|
|
|
(17)
|
|
|
—
|
|
|
(45)
|
|
|
—
|
|
|
(0.11)
|
|
|
—
|
|
Net income
applicable to common shareholders
|
$
|
1,690
|
|
|
$
|
2,427
|
|
|
$
|
663
|
|
|
$
|
631
|
|
|
$
|
2,055
|
|
|
$
|
2,746
|
|
|
$
|
5.05
|
|
|
$
|
6.27
|
|
Operating income return on common shareholders' equity is
a ratio that uses a non-GAAP measure. It is calculated by dividing
the rolling 12-month operating income by the average of common
shareholders' equity at the beginning and at the end of the
12-months, after excluding the effect of unrealized net capital
gains and losses. Return on common shareholders' equity is the most
directly comparable GAAP measure. We use operating income as the
numerator for the same reasons we use operating income, as
discussed above. We use average common shareholders' equity
excluding the effect of unrealized net capital gains and losses for
the denominator as a representation of common shareholders' equity
primarily attributable to the company's earned and realized
business operations because it eliminates the effect of items that
are unrealized and vary significantly between periods due to
external economic developments such as capital market conditions
like changes in equity prices and interest rates, the amount and
timing of which are unrelated to the insurance underwriting
process. We use it to supplement our evaluation of net income
applicable to common shareholders and return on common
shareholders' equity because it excludes the effect of items that
tend to be highly variable from period to period. We believe that
this measure is useful to investors and that it provides a valuable
tool for investors when considered along with return on common
shareholders' equity because it eliminates the after-tax effects of
realized and unrealized net capital gains and losses that can
fluctuate significantly from period to period and that are driven
by economic developments, the magnitude and timing of which are
generally not influenced by management. In addition, it eliminates
non-recurring items that are not indicative of our ongoing business
or economic trends. A byproduct of excluding the items noted above
to determine operating income return on common shareholders' equity
from return on common shareholders' equity is the transparency and
understanding of their significance to return on common
shareholders' equity variability and profitability while
recognizing these or similar items may recur in subsequent periods.
We use adjusted measures of operating income return on common
shareholders' equity in incentive compensation. Therefore, we
believe it is useful for investors to have operating income return
on common shareholders' equity and return on common shareholders'
equity when evaluating our performance. We note that investors,
financial analysts, financial and business media organizations and
rating agencies utilize operating income return on common
shareholders' equity results in their evaluation of our and our
industry's financial performance and in their investment decisions,
recommendations and communications as it represents a reliable,
representative and consistent measurement of the industry and the
company and management's utilization of capital. Operating income
return on common shareholders' equity should not be considered a
substitute for return on common shareholders' equity and does not
reflect the overall profitability of our business.
The following tables reconcile return on common shareholders'
equity and operating income return on common shareholders'
equity.
($ in
millions)
|
For the twelve
months ended
December 31,
|
|
2015
|
|
2014
|
Return on
common shareholders' equity
|
|
|
|
Numerator:
|
|
|
|
Net
income applicable to common shareholders
|
$
|
2,055
|
|
|
$
|
2,746
|
|
Denominator:
|
|
|
|
Beginning common shareholders' equity
(1)
|
$
|
20,558
|
|
|
$
|
20,700
|
|
Ending
common shareholders' equity (1)
|
18,279
|
|
|
20,558
|
|
Average
common shareholders' equity
|
$
|
19,419
|
|
|
$
|
20,629
|
|
Return on common shareholders' equity
|
10.6
|
%
|
|
13.3
|
%
|
|
For the twelve
months ended
December 31,
|
|
2015
|
|
2014
|
Operating income
return on common shareholders' equity
|
|
|
|
Numerator:
|
|
|
|
Operating income
|
$
|
2,113
|
|
|
$
|
2,367
|
|
|
|
|
|
Denominator:
|
|
|
|
Beginning common shareholders' equity
|
$
|
20,558
|
|
|
$
|
20,700
|
|
Unrealized net capital gains and losses
|
1,926
|
|
|
1,646
|
|
Adjusted
beginning common shareholders' equity
|
18,632
|
|
|
19,054
|
|
|
|
|
|
Ending
common shareholders' equity
|
18,279
|
|
|
20,558
|
|
Unrealized net capital gains and losses
|
620
|
|
|
1,926
|
|
Adjusted
ending common shareholders' equity
|
17,659
|
|
|
18,632
|
|
Average
adjusted common shareholders' equity
|
$
|
18,146
|
|
|
$
|
18,843
|
|
Operating income return on common shareholders' equity
|
11.6
|
%
|
|
12.6
|
%
|
_____________
|
(1)
Excludes equity related to preferred stock of $1,746 million as of
December 31, 2015 and 2014.
|
Underwriting income 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 applicable to common
shareholders is the most directly comparable GAAP measure.
Underwriting income should not be considered a substitute for net
income applicable to common shareholders and does not reflect the
overall profitability of our business. A reconciliation of
Property-Liability underwriting income to net income applicable to
common shareholders is provided in the "Business Results" page.
Combined ratio excluding the effect of catastrophes, prior
year reserve reestimates and amortization of purchased intangible
assets ("underlying combined ratio") is a non-GAAP ratio, which
is computed as the difference between four GAAP operating ratios:
the combined ratio, the effect of catastrophes on the combined
ratio, the effect of prior year non-catastrophe reserve reestimates
on the combined ratio, and the effect of amortization of purchased
intangible assets on the combined ratio. We believe that this ratio
is useful to investors and it is used by management to reveal the
trends in our Property-Liability business that may be obscured by
catastrophe losses, prior year reserve reestimates and amortization
of purchased intangible assets. Catastrophe losses cause our loss
trends to vary significantly between periods as a result of their
incidence of occurrence and magnitude, and can have a significant
impact on the combined ratio. Prior year reserve reestimates are
caused by unexpected loss development on historical reserves.
Amortization of purchased intangible assets relates to the
acquisition purchase price and is not indicative of our underlying
insurance business results or trends. We believe it is useful for
investors to evaluate these components separately and in the
aggregate when reviewing our underwriting performance. We also
provide it to facilitate a comparison to our outlook on the
underlying combined ratio. The most directly comparable GAAP
measure is the combined ratio. The underlying combined ratio should
not be considered a substitute for the combined ratio and does not
reflect the overall underwriting profitability of our business.
The following table reconciles the Property-Liability underlying
combined ratio to the Property-Liability combined ratio.
|
Three months
ended
December 31,
|
|
Twelve months
ended
December 31,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Combined ratio
excluding the effect of catastrophes, prior year
reserve reestimates and amortization of purchased
intangible
assets ("underlying combined ratio")
|
87.4
|
|
|
89.5
|
|
|
88.7
|
|
|
87.2
|
|
Effect of catastrophe
losses
|
4.7
|
|
|
1.3
|
|
|
5.7
|
|
|
6.9
|
|
Effect of prior year
non-catastrophe reserve reestimates
|
(0.2)
|
|
|
(1.0)
|
|
|
0.3
|
|
|
(0.4)
|
|
Effect of
amortization of purchased intangible assets
|
0.1
|
|
|
0.2
|
|
|
0.2
|
|
|
0.2
|
|
Combined
ratio
|
92.0
|
|
|
90.0
|
|
|
94.9
|
|
|
93.9
|
|
|
|
|
|
|
|
|
|
Effect of prior year
catastrophe reserve reestimates
|
(0.2)
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
Underwriting margin is calculated as 100% minus the combined
ratio.
In this news release, we provide our outlook range on the
Property-Liability 2016 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.
The following table reconciles the Allstate brand underlying
combined ratio to the Allstate brand combined ratio.
|
Three months
ended
December 31,
|
|
Twelve months
ended
December 31,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Underlying
combined ratio
|
86.2
|
|
|
87.9
|
|
|
87.4
|
|
|
85.4
|
|
Effect of catastrophe
losses
|
4.9
|
|
|
1.3
|
|
|
5.8
|
|
|
6.9
|
|
Effect of prior year
non-catastrophe reserve reestimates
|
(0.1)
|
|
|
(0.9)
|
|
|
0.2
|
|
|
(0.8)
|
|
Combined
ratio
|
91.0
|
|
|
88.3
|
|
|
93.4
|
|
|
91.5
|
|
|
|
|
|
|
|
|
|
Effect of prior year
catastrophe reserve reestimates
|
(0.2)
|
|
|
(0.1)
|
|
|
(0.1)
|
|
|
0.1
|
|
The following table reconciles the Allstate brand auto
underlying combined ratio to the Allstate brand auto combined
ratio.
|
Three months
ended
December 31,
|
|
Twelve months
ended
December 31,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Underlying
combined ratio
|
97.6
|
|
|
98.2
|
|
|
97.3
|
|
|
94.2
|
|
Effect of catastrophe
losses
|
1.1
|
|
|
0.2
|
|
|
1.3
|
|
|
1.6
|
|
Effect of prior year
non-catastrophe reserve reestimates
|
(0.1)
|
|
|
(1.4)
|
|
|
0.3
|
|
|
(1.1)
|
|
Combined
ratio
|
98.6
|
|
|
97.0
|
|
|
98.9
|
|
|
94.7
|
|
|
|
|
|
|
|
|
|
Effect of prior year
catastrophe reserve reestimates
|
(0.2)
|
|
|
(0.1)
|
|
|
(0.1)
|
|
|
(0.1)
|
|
The following table reconciles the Allstate brand homeowners
underlying combined ratio to the Allstate brand homeowners combined
ratio.
|
Three months
ended
December 31,
|
|
Twelve months
ended
December 31,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Underlying
combined ratio
|
56.0
|
|
|
61.0
|
|
|
60.5
|
|
|
61.7
|
|
Effect of catastrophe
losses
|
15.0
|
|
|
3.8
|
|
|
18.3
|
|
|
21.4
|
|
Effect of prior year
non-catastrophe reserve reestimates
|
—
|
|
|
(1.2)
|
|
|
(0.2)
|
|
|
(0.6)
|
|
Combined
ratio
|
71.0
|
|
|
63.6
|
|
|
78.6
|
|
|
82.5
|
|
|
|
|
|
|
|
|
|
Effect of prior year
catastrophe reserve reestimates
|
(0.5)
|
|
|
0.1
|
|
|
(0.1)
|
|
|
1.0
|
|
The following table reconciles the Allstate brand other personal
lines underlying combined ratio to the Allstate brand other
personal lines combined ratio.
|
Three months
ended
December 31,
|
|
Twelve months
ended
December 31,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Underlying
combined ratio
|
71.9
|
|
|
79.5
|
|
|
78.8
|
|
|
79.2
|
|
Effect of catastrophe
losses
|
8.4
|
|
|
2.8
|
|
|
8.1
|
|
|
8.2
|
|
Effect of prior year
non-catastrophe reserve reestimates
|
—
|
|
|
5.1
|
|
|
0.6
|
|
|
2.3
|
|
Combined
ratio
|
80.3
|
|
|
87.4
|
|
|
87.5
|
|
|
89.7
|
|
|
|
|
|
|
|
|
|
Effect of prior year
catastrophe reserve reestimates
|
(0.3)
|
|
|
—
|
|
|
(0.1)
|
|
|
(0.2)
|
|
The following table reconciles the Encompass brand underlying
combined ratio to the Encompass brand combined ratio.
|
Three months
ended
December 31,
|
|
Twelve months
ended
December 31,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Underlying
combined ratio
|
92.3
|
|
|
92.7
|
|
|
92.6
|
|
|
93.7
|
|
Effect of catastrophe
losses
|
4.8
|
|
|
1.9
|
|
|
8.7
|
|
|
13.2
|
|
Effect of prior year
non-catastrophe reserve reestimates
|
(1.6)
|
|
|
(1.5)
|
|
|
0.7
|
|
|
(0.8)
|
|
Combined
ratio
|
95.5
|
|
|
93.1
|
|
|
102.0
|
|
|
106.1
|
|
|
|
|
|
|
|
|
|
Effect of prior year
catastrophe reserve reestimates
|
(0.3)
|
|
|
0.3
|
|
|
(0.1)
|
|
|
0.1
|
|
Underlying loss ratio is a non-GAAP ratio, which is
computed as the difference between three GAAP operating ratios: the
loss ratio, the effect of catastrophes on the combined ratio and
the effect of prior year non-catastrophe reserve reestimates on the
combined ratio. We believe that this ratio is useful to
investors and it is used by management to reveal the trends that
may be obscured by catastrophe losses and prior year reserve
reestimates. 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. The most directly comparable GAAP measure is the
loss ratio. The underlying loss ratio should not be considered a
substitute for the loss ratio and does not reflect the overall loss
ratio of our business.
The following table reconciles the Esurance brand underlying
loss ratio and underlying combined ratio to the Esurance brand
combined ratio.
|
Three months
ended
December 31,
|
|
Twelve months
ended
December 31,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Underlying loss
ratio
|
75.3
|
|
|
80.3
|
|
|
75.4
|
|
|
76.6
|
|
Expense ratio,
excluding the effect of amortization of purchased
intangible assets
|
30.0
|
|
|
33.1
|
|
|
33.0
|
|
|
37.6
|
|
Underlying
combined ratio
|
105.3
|
|
|
113.4
|
|
|
108.4
|
|
|
114.2
|
|
Effect of catastrophe
losses
|
0.8
|
|
|
0.3
|
|
|
0.9
|
|
|
1.3
|
|
Effect of prior year
non-catastrophe reserve reestimates
|
(1.3)
|
|
|
(1.3)
|
|
|
(1.2)
|
|
|
(1.1)
|
|
Effect of
amortization of purchased intangible assets
|
2.2
|
|
|
3.1
|
|
|
2.2
|
|
|
3.3
|
|
Combined
ratio
|
107.0
|
|
|
115.5
|
|
|
110.3
|
|
|
117.7
|
|
Book value per common 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 common 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 common shares outstanding plus dilutive potential common
shares outstanding. We use the trend in book value per common
share, excluding the impact of unrealized net capital gains and
losses on fixed income securities, in conjunction with book value
per common 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 common 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 common share is the most directly
comparable GAAP measure. Book value per common share, excluding the
impact of unrealized net capital gains and losses on fixed income
securities, should not be considered a substitute for book value
per common 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,
|
|
2015
|
|
2014
|
Book value per
common share
|
|
|
|
Numerator:
|
|
|
|
Common
shareholders' equity
|
$
|
18,279
|
|
|
$
|
20,558
|
|
Denominator:
|
|
|
|
Common shares
outstanding and dilutive potential common shares
outstanding
|
386.1
|
|
|
426.2
|
|
Book value per common
share
|
$
|
47.34
|
|
|
$
|
48.24
|
|
|
|
|
|
Book value per
common share, excluding the impact of unrealized
net capital gains and losses on fixed income
securities
|
|
|
|
Numerator:
|
|
|
|
Common
shareholders' equity
|
$
|
18,279
|
|
|
$
|
20,558
|
|
Unrealized net capital gains and losses
on fixed income securities
|
443
|
|
|
1,666
|
|
Adjusted common
shareholders' equity
|
$
|
17,836
|
|
|
$
|
18,892
|
|
Denominator:
|
|
|
|
Common shares
outstanding and dilutive potential common shares
outstanding
|
386.1
|
|
|
426.2
|
|
Book value per common
share, excluding the impact of unrealized net
capital gains and losses on fixed income
securities
|
$
|
46.20
|
|
|
$
|
44.33
|
|
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SOURCE The Allstate Corporation