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As Of Filer Filing For·On·As Docs:Size 8/04/20 Allstate Corp. 10-Q 6/30/20 106:34M |
Document/Exhibit Description Pages Size 1: 10-Q Quarterly Report HTML 4.52M 2: EX-15 Letter re: Unaudited Interim Financial Info HTML 34K 3: EX-31.I Certification -- §302 - SOA'02 HTML 40K 4: EX-32 Certification -- §906 - SOA'02 HTML 32K 11: R1 Document and Entity Information HTML 100K 12: R2 Condensed Consolidated Statements of Operations HTML 130K (Unaudited) 13: R3 Condensed Consolidated Statements of Comprehensive HTML 55K Income (Unaudited) 14: R4 Condensed Consolidated Statements of Financial HTML 157K Position (Unaudited) 15: R5 Condensed Consolidated Statements of Financial HTML 58K Position (Parenthetical) 16: R6 Condensed Consolidated Statements of Shareholders? 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Document |
i Delaware | i 36-3871531 | |||
(State
or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Title of each class | Trading Symbols | Name of each exchange on which registered |
Common Stock, par value $.01 per
share | ALL | New York Stock Exchange Chicago Stock Exchange |
i 5.100% Fixed-to-Floating Rate Subordinated Debentures due 2053 | i ALL.PR.B | i New
York Stock Exchange |
i Depositary Shares represent 1/1,000th of a share of 5.625% Noncumulative Preferred Stock, Series G | i ALL PR G | i New
York Stock Exchange |
i Depositary Shares represent 1/1,000th of a share of 5.100% Noncumulative Preferred Stock, Series H | i ALL PR H | i New
York Stock Exchange |
i Depositary Shares represent 1/1,000th of a share of 4.750% Noncumulative Preferred Stock, Series I | i ALL PR I | i New
York Stock Exchange |
i Large
accelerated filer | ☒ | Accelerated filer | ☐ |
Non-accelerated filer | ☐ | Smaller reporting company | i ☐ |
Emerging
growth company | i ☐ |
Part I Financial Information | Page | |
Condensed Consolidated Statements of Operations for the Three Month and Six Month Periods Ended June 30, 2020 and 2019 (unaudited) | ||
Condensed
Consolidated Statements of Comprehensive Income for the Three Month and Six Month Periods Ended June 30, 2020 and 2019 (unaudited) | ||
Condensed Consolidated Statements of Financial Position as of June 30, 2020 and December 31, 2019 (unaudited) | ||
Condensed
Consolidated Statements of Shareholders’ Equity for the Three Month and Six Month Periods Ended June 30, 2020 and 2019 (unaudited) | ||
Condensed Consolidated Statements of Cash Flows for the Six Month Periods Ended June 30, 2020 and 2019 (unaudited) | ||
Highlights | ||
Property-Liability
Operations | ||
– Allstate brand | ||
– Esurance
brand | ||
– Encompass brand | ||
Discontinued Lines and Coverages | ||
Service Businesses | ||
Allstate Life | ||
Allstate
Benefits | ||
Allstate Annuities | ||
Part
II Other Information | ||
($ in
millions, except per share data) | Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Revenues | ||||||||||||||||
Property
and casualty insurance premiums | $ | i 9,223 | $ | i 8,986 | $ | i 18,458 | $ | i 17,788 | ||||||||
Life
premiums and contract charges | i 604 | i 621 | i 1,221 | i 1,249 | ||||||||||||
Other
revenue | i 257 | i 271 | i 522 | i 521 | ||||||||||||
Net
investment income | i 409 | i 942 | i 830 | i 1,590 | ||||||||||||
Realized
capital gains (losses) | i 704 | i 324 | i 242 | i 986 | ||||||||||||
Total
revenues | i 11,197 | i 11,144 | i 21,273 | i 22,134 | ||||||||||||
Costs
and expenses | ||||||||||||||||
Property and casualty insurance claims
and claims expense | i 5,222 | i 6,356 | i 10,563 | i 12,176 | ||||||||||||
Shelter-in-Place
Payback expense | i 738 | i — | i 948 | i — | ||||||||||||
Life
contract benefits | i 497 | i 511 | i 998 | i 1,008 | ||||||||||||
Interest
credited to contractholder funds | i 200 | i 156 | i 332 | i 318 | ||||||||||||
Amortization
of deferred policy acquisition costs | i 1,349 | i 1,362 | i 2,750 | i 2,726 | ||||||||||||
Operating
costs and expenses | i 1,451 | i 1,380 | i 2,850 | i 2,760 | ||||||||||||
Pension
and other postretirement remeasurement (gains) losses | i 73 | i 125 | i 391 | i 140 | ||||||||||||
Restructuring
and related charges | i 14 | i 9 | i 19 | i 27 | ||||||||||||
Amortization
of purchased intangibles | i 29 | i 32 | i 57 | i 64 | ||||||||||||
Impairment
of purchased intangibles | i — | i 55 | i — | i 55 | ||||||||||||
Interest
expense | i 79 | i 82 | i 160 | i 165 | ||||||||||||
Total
costs and expenses | i 9,652 | i 10,068 | i 19,068 | i 19,439 | ||||||||||||
Gain
on disposition of operations | i 1 | i 2 | i 2 | i 3 | ||||||||||||
Income
from operations before income tax expense | i 1,546 | i 1,078 | i 2,207 | i 2,698 | ||||||||||||
Income
tax expense | i 296 | i 227 | i 408 | i 555 | ||||||||||||
Net
income | i 1,250 | i 851 | i 1,799 | i 2,143 | ||||||||||||
Preferred
stock dividends | i 26 | i 30 | i 62 | i 61 | ||||||||||||
Net
income applicable to common shareholders | $ | i 1,224 | $ | i 821 | $ | i 1,737 | $ | i 2,082 | ||||||||
Earnings
per common share | ||||||||||||||||
Net income applicable to common shareholders
per common share - Basic | $ | i 3.90 | $ | i 2.47 | $ | i 5.50 | $ | i 6.27 | ||||||||
Weighted
average common shares - Basic | i 313.7 | i 332.0 | i 315.6 | i 332.3 | ||||||||||||
Net
income applicable to common shareholders per common share - Diluted | $ | i 3.86 | $ | i 2.44 | $ | i 5.43 | $ | i 6.17 | ||||||||
Weighted
average common shares - Diluted | i 317.0 | i 336.9 | i 319.8 | i 337.2 |
($ in
millions) | Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Net
income | $ | i 1,250 | $ | i 851 | $ | i 1,799 | $ | i 2,143 | ||||||||
Other
comprehensive income, after-tax | ||||||||||||||||
Changes in: | ||||||||||||||||
Unrealized
net capital gains and losses | i 2,072 | i 682 | i 715 | i 1,656 | ||||||||||||
Unrealized
foreign currency translation adjustments | i 9 | i 4 | ( i 30 | ) | i 9 | |||||||||||
Unamortized
pension and other postretirement prior service credit | ( i 11 | ) | ( i 11 | ) | ( i 7 | ) | ( i 23 | ) | ||||||||
Other
comprehensive income, after-tax | i 2,070 | i 675 | i 678 | i 1,642 | ||||||||||||
Comprehensive
income | $ | i 3,320 | $ | i 1,526 | $ | i 2,477 | $ | i 3,785 |
($ in millions, except par value data) | ||||||||
Assets | ||||||||
Investments | ||||||||
Fixed
income securities, at fair value (amortized cost, net $60,534 and $56,293) | $ | i 64,448 | $ | i 59,044 | ||||
Equity
securities, at fair value (cost $3,817 and $6,568) | i 4,212 | i 8,162 | ||||||
Mortgage
loans, net | i 4,774 | i 4,817 | ||||||
Limited
partnership interests | i 6,941 | i 8,078 | ||||||
Short-term,
at fair value (amortized cost $5,343 and $4,256) | i 5,344 | i 4,256 | ||||||
Other,
net | i 3,918 | i 4,005 | ||||||
Total
investments | i 89,637 | i 88,362 | ||||||
Cash | i 547 | i 338 | ||||||
Premium
installment receivables, net | i 6,367 | i 6,472 | ||||||
Deferred
policy acquisition costs | i 4,683 | i 4,699 | ||||||
Reinsurance
and indemnification recoverables, net | i 9,290 | i 9,211 | ||||||
Accrued
investment income | i 605 | i 600 | ||||||
Property
and equipment, net | i 1,100 | i 1,145 | ||||||
Goodwill | i 2,544 | i 2,545 | ||||||
Other
assets, net | i 3,587 | i 3,534 | ||||||
Separate
Accounts | i 2,906 | i 3,044 | ||||||
Total
assets | $ | i 121,266 | $ | i 119,950 | ||||
Liabilities | ||||||||
Reserve
for property and casualty insurance claims and claims expense | $ | i 27,426 | $ | i 27,712 | ||||
Reserve
for life-contingent contract benefits | i 12,471 | i 12,300 | ||||||
Contractholder
funds | i 17,396 | i 17,692 | ||||||
Unearned
premiums | i 15,448 | i 15,343 | ||||||
Claim
payments outstanding | i 882 | i 929 | ||||||
Deferred
income taxes | i 842 | i 1,154 | ||||||
Other
liabilities and accrued expenses | i 10,275 | i 9,147 | ||||||
Long-term
debt | i 6,634 | i 6,631 | ||||||
Separate
Accounts | i 2,906 | i 3,044 | ||||||
Total
liabilities | i 94,280 | i 93,952 | ||||||
Commitments
and Contingent Liabilities (Note 12) | i | i | ||||||
Shareholders’
equity | ||||||||
Preferred stock and additional capital paid-in, $1 par value, 25 million shares authorized, 81.0 thousand and 92.5 thousand shares issued and outstanding, $2,025 and $2,313 aggregate liquidation preference | i 1,970 | i 2,248 | ||||||
Common
stock, $.01 par value, 3.0 billion shares authorized and 900 million issued, 313 million and 319 million shares outstanding | i 9 | i 9 | ||||||
Additional
capital paid-in | i 3,541 | i 3,463 | ||||||
Retained
income | i 49,380 | i 48,074 | ||||||
Treasury
stock, at cost (587 million and 581 million shares) | ( i 30,542 | ) | ( i 29,746 | ) | ||||
Accumulated
other comprehensive income: | ||||||||
Unrealized net capital gains and losses on fixed income securities with credit losses | ( i 1 | ) | i 70 | |||||
Other
unrealized net capital gains and losses | i 3,079 | i 2,094 | ||||||
Unrealized
adjustment to DAC, DSI and insurance reserves | ( i 476 | ) | ( i 277 | ) | ||||
Total
unrealized net capital gains and losses | i 2,602 | i 1,887 | ||||||
Unrealized
foreign currency translation adjustments | ( i 89 | ) | ( i 59 | ) | ||||
Unamortized
pension and other postretirement prior service credit | i 115 | i 122 | ||||||
Total
accumulated other comprehensive income (“AOCI”) | i 2,628 | i 1,950 | ||||||
Total
shareholders’ equity | i 26,986 | i 25,998 | ||||||
Total
liabilities and shareholders’ equity | $ | i 121,266 | $ | i 119,950 |
($ in
millions, except per share data) | Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Preferred
stock par value | $ | i — | $ | i — | $ | i — | $ | i — | ||||||||
Preferred
stock additional capital paid-in | ||||||||||||||||
Balance, beginning of period | i 1,970 | i 1,930 | i 2,248 | i 1,930 | ||||||||||||
Preferred
stock redemption | i — | i — | ( i 278 | ) | i — | |||||||||||
Balance,
end of period | i 1,970 | i 1,930 | i 1,970 | i 1,930 | ||||||||||||
Common
stock par value | i 9 | i 9 | i 9 | i 9 | ||||||||||||
Common
stock additional capital paid-in | ||||||||||||||||
Balance, beginning of period | i 3,519 | i 3,291 | i 3,463 | i 3,310 | ||||||||||||
Forward
contract on accelerated share repurchase agreement | i — | i 150 | i 75 | i 150 | ||||||||||||
Equity
incentive plans activity | i 22 | i 36 | i 3 | i 17 | ||||||||||||
Balance,
end of period | i 3,541 | i 3,477 | i 3,541 | i 3,477 | ||||||||||||
Retained
income | ||||||||||||||||
Balance, beginning of period | i 48,326 | i 45,148 | i 48,074 | i 44,033 | ||||||||||||
Cumulative
effect of change in accounting principle | i — | i — | ( i 88 | ) | i 21 | |||||||||||
Net
income | i 1,250 | i 851 | i 1,799 | i 2,143 | ||||||||||||
Dividends
on common stock (declared per share of $0.54, $0.50, $1.08 and $1.00) | ( i 170 | ) | ( i 166 | ) | ( i 343 | ) | ( i 333 | ) | ||||||||
Dividends
on preferred stock | ( i 26 | ) | ( i 30 | ) | ( i 62 | ) | ( i 61 | ) | ||||||||
Balance,
end of period | i 49,380 | i 45,803 | i 49,380 | i 45,803 | ||||||||||||
Deferred
ESOP expense | i — | ( i 3 | ) | i — | ( i 3 | ) | ||||||||||
Treasury
stock | ||||||||||||||||
Balance, beginning of period | ( i 30,209 | ) | ( i 28,042 | ) | ( i 29,746 | ) | ( i 28,085 | ) | ||||||||
Shares
acquired | ( i 391 | ) | ( i 498 | ) | ( i 902 | ) | ( i 498 | ) | ||||||||
Shares
reissued under equity incentive plans, net | i 58 | i 40 | i 106 | i 83 | ||||||||||||
Balance,
end of period | ( i 30,542 | ) | ( i 28,500 | ) | ( i 30,542 | ) | ( i 28,500 | ) | ||||||||
Accumulated
other comprehensive income | ||||||||||||||||
Balance, beginning of period | i 558 | i 1,085 | i 1,950 | i 118 | ||||||||||||
Change
in unrealized net capital gains and losses | i 2,072 | i 682 | i 715 | i 1,656 | ||||||||||||
Change
in unrealized foreign currency translation adjustments | i 9 | i 4 | ( i 30 | ) | i 9 | |||||||||||
Change
in unamortized pension and other postretirement prior service credit | ( i 11 | ) | ( i 11 | ) | ( i 7 | ) | ( i 23 | ) | ||||||||
Balance,
end of period | i 2,628 | i 1,760 | i 2,628 | i 1,760 | ||||||||||||
Total
shareholders’ equity | $ | i 26,986 | $ | i 24,476 | $ | i 26,986 | $ | i 24,476 |
($ in millions) | Six months ended June 30, | |||||||
2020 | 2019 | |||||||
Cash
flows from operating activities | ||||||||
Net income | $ | i 1,799 | $ | i 2,143 | ||||
Adjustments
to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation, amortization and other non-cash items | i 318 | i 317 | ||||||
Realized
capital (gains) losses | ( i 242 | ) | ( i 986 | ) | ||||
Pension
and other postretirement remeasurement (gains) losses | i 391 | i 140 | ||||||
Gain
on disposition of operations | ( i 2 | ) | ( i 3 | ) | ||||
Interest
credited to contractholder funds | i 332 | i 318 | ||||||
Impairment
of purchased intangibles | i — | i 55 | ||||||
Changes
in: | ||||||||
Policy benefits and other insurance reserves | ( i 594 | ) | i 211 | |||||
Unearned
premiums | i 143 | i 214 | ||||||
Deferred
policy acquisition costs | ( i 42 | ) | ( i 27 | ) | ||||
Premium
installment receivables, net | i 81 | ( i 209 | ) | |||||
Reinsurance
recoverables, net | ( i 56 | ) | i 235 | |||||
Income
taxes | i 257 | i 159 | ||||||
Other
operating assets and liabilities | i 491 | ( i 505 | ) | |||||
Net
cash provided by operating activities | i 2,876 | i 2,062 | ||||||
Cash
flows from investing activities | ||||||||
Proceeds from sales | ||||||||
Fixed
income securities | i 19,952 | i 17,811 | ||||||
Equity
securities | i 6,473 | i 2,098 | ||||||
Limited
partnership interests | i 862 | i 391 | ||||||
Other
investments | i 135 | i 223 | ||||||
Investment
collections | ||||||||
Fixed income securities | i 1,054 | i 1,243 | ||||||
Mortgage
loans | i 156 | i 294 | ||||||
Other
investments | i 81 | i 138 | ||||||
Investment
purchases | ||||||||
Fixed income securities | ( i 24,214 | ) | ( i 17,436 | ) | ||||
Equity
securities | ( i 2,907 | ) | ( i 4,189 | ) | ||||
Limited
partnership interests | ( i 513 | ) | ( i 672 | ) | ||||
Mortgage
loans | ( i 196 | ) | ( i 311 | ) | ||||
Other
investments | ( i 199 | ) | ( i 394 | ) | ||||
Change
in short-term and other investments, net | ( i 1,477 | ) | ( i 147 | ) | ||||
Purchases
of property and equipment, net | ( i 166 | ) | ( i 173 | ) | ||||
Acquisition
of operations | i 1 | ( i 18 | ) | |||||
Net
cash used in investing activities | ( i 958 | ) | ( i 1,142 | ) | ||||
Cash
flows from financing activities | ||||||||
Proceeds from issuance of long-term debt | i — | i 492 | ||||||
Redemption
and repayment of long-term debt | i — | ( i 317 | ) | |||||
Redemption
of preferred stock | ( i 288 | ) | i — | |||||
Contractholder
fund deposits | i 494 | i 504 | ||||||
Contractholder
fund withdrawals | ( i 791 | ) | ( i 876 | ) | ||||
Dividends
paid on common stock | ( i 331 | ) | ( i 324 | ) | ||||
Dividends
paid on preferred stock | ( i 56 | ) | ( i 61 | ) | ||||
Treasury
stock purchases | ( i 821 | ) | ( i 332 | ) | ||||
Shares
reissued under equity incentive plans, net | i 52 | i 44 | ||||||
Other | i 32 | i 50 | ||||||
Net
cash used in financing activities | ( i 1,709 | ) | ( i 820 | ) | ||||
Net
increase in cash | i 209 | i 100 | ||||||
Cash
at beginning of period | i 338 | i 499 | ||||||
Cash
at end of period | $ | i 547 | $ | i 599 |
Note
1 | General |
Allowance for credit losses | ||||||||||||
($ in millions) | ||||||||||||
Fixed income securities | $ | i 7 | $ | i 4 | $ | i — | ||||||
Mortgage
loans | i 86 | i 85 | i 45 | |||||||||
Other
investments | ||||||||||||
Bank loans | i 76 | i 79 | i 53 | |||||||||
Agent
loans | i 5 | i 5 | i 5 | |||||||||
Investments | i 174 | i 173 | i 103 | |||||||||
Premium
installment receivables | i 139 | i 96 | i 91 | |||||||||
Reinsurance
recoverables | i 74 | i 74 | i 74 | |||||||||
Other
assets | i 23 | i 18 | i 18 | |||||||||
Assets | i 410 | i 361 | i 286 | |||||||||
Commitments
to fund mortgage loans, bank loans and agent loans | i 3 | i 4 | i 3 | |||||||||
Liabilities | i 3 | i 4 | i 3 | |||||||||
Total | $ | i 413 | $ | i 365 | $ | i 289 |
Rollforward
of credit loss allowance for premium installment receivable | ||||||||
($ in millions) | Three months ended June 30, 2020 | Six months ended June 30, 2020 | ||||||
Beginning balance | $ | i 96 | $ | i 91 | ||||
Increase
in the provision for credit losses | i 94 | i 136 | ||||||
Write-off
of uncollectible premium installment receivable amounts | ( i 51 | ) | ( i 88 | ) | ||||
Ending
balance | $ | i 139 | $ | i 139 |
Note 2 | Earnings per Common Share |
Computation
of basic and diluted earnings per common share | ||||||||||||||||
(In millions, except per share data) | Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Numerator: | ||||||||||||||||
Net
income | $ | i 1,250 | $ | i 851 | $ | i 1,799 | $ | i 2,143 | ||||||||
Less:
Preferred stock dividends | i 26 | i 30 | i 62 | i 61 | ||||||||||||
Net
income applicable to common shareholders | $ | i 1,224 | $ | i 821 | $ | i 1,737 | $ | i 2,082 | ||||||||
Denominator: | ||||||||||||||||
Weighted
average common shares outstanding | i 313.7 | i 332.0 | i 315.6 | i 332.3 | ||||||||||||
Effect
of dilutive potential common shares: | ||||||||||||||||
Stock options | i 2.1 | i 3.3 | i 2.7 | i 3.2 | ||||||||||||
Restricted
stock units (non-participating) and performance stock awards | i 1.2 | i 1.6 | i 1.5 | i 1.7 | ||||||||||||
Weighted
average common and dilutive potential common shares outstanding | i 317.0 | i 336.9 | i 319.8 | i 337.2 | ||||||||||||
Earnings
per common share - Basic | $ | i 3.90 | $ | i 2.47 | $ | i 5.50 | $ | i 6.27 | ||||||||
Earnings
per common share - Diluted | i 3.86 | i 2.44 | i 5.43 | i 6.17 | ||||||||||||
Anti-dilutive
options excluded from diluted earnings per common share | i 3.2 | i 4.1 | i 1.4 | i 4.5 |
Note
3 | Acquisitions |
Note
4 | Reportable Segments |
• 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 adjusted net income |
• Pension and other postretirement remeasurement gains and losses, after-tax |
• Valuation
changes on embedded derivatives not hedged, after-tax |
• Amortization of DAC and DSI, to the extent they resulted from the recognition of certain realized capital gains and losses or valuation changes on embedded derivatives not hedged, after-tax |
• Business combination expenses and the amortization or impairment of purchased intangibles, after-tax |
• Gain (loss) on disposition of operations, after-tax |
• 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 |
Reportable
segments revenue information | ||||||||||||||||
($ in millions) | Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Property-Liability | ||||||||||||||||
Insurance
premiums | ||||||||||||||||
Auto | $ | i 6,173 | $ | i 6,035 | $ | i 12,327 | $ | i 11,965 | ||||||||
Homeowners | i 2,053 | i 1,958 | i 4,091 | i 3,893 | ||||||||||||
Other
personal lines | i 478 | i 462 | i 949 | i 921 | ||||||||||||
Commercial
lines | i 159 | i 226 | i 377 | i 409 | ||||||||||||
Allstate
Protection | i 8,863 | i 8,681 | i 17,744 | i 17,188 | ||||||||||||
Discontinued
Lines and Coverages | i — | i — | i — | i — | ||||||||||||
Total
Property-Liability insurance premiums | i 8,863 | i 8,681 | i 17,744 | i 17,188 | ||||||||||||
Other
revenue | i 182 | i 190 | i 363 | i 366 | ||||||||||||
Net
investment income | i 178 | i 471 | i 380 | i 762 | ||||||||||||
Realized
capital gains (losses) | i 382 | i 256 | i 279 | i 753 | ||||||||||||
Total
Property-Liability | i 9,605 | i 9,598 | i 18,766 | i 19,069 | ||||||||||||
Service
Businesses | ||||||||||||||||
Consumer product protection plans | i 219 | i 153 | i 425 | i 298 | ||||||||||||
Roadside
assistance | i 44 | i 63 | i 95 | i 126 | ||||||||||||
Finance
and insurance products | i 97 | i 89 | i 194 | i 176 | ||||||||||||
Intersegment
premiums and service fees (1) | i 35 | i 33 | i 73 | i 66 | ||||||||||||
Other
revenue | i 51 | i 48 | i 103 | i 95 | ||||||||||||
Net
investment income | i 11 | i 10 | i 21 | i 19 | ||||||||||||
Realized
capital gains (losses) | i 19 | i 9 | ( i 5 | ) | i 17 | |||||||||||
Total
Service Businesses | i 476 | i 405 | i 906 | i 797 | ||||||||||||
Allstate
Life | ||||||||||||||||
Traditional life insurance premiums | i 164 | i 156 | i 317 | i 310 | ||||||||||||
Accident
and health insurance premiums | i 1 | i 1 | i 1 | i 1 | ||||||||||||
Interest-sensitive
life insurance contract charges | i 174 | i 176 | i 354 | i 359 | ||||||||||||
Other
revenue | i 24 | i 33 | i 56 | i 60 | ||||||||||||
Net
investment income | i 123 | i 125 | i 251 | i 252 | ||||||||||||
Realized
capital gains (losses) | i 19 | i 1 | ( i 12 | ) | ( i 4 | ) | ||||||||||
Total
Allstate Life | i 505 | i 492 | i 967 | i 978 | ||||||||||||
Allstate
Benefits | ||||||||||||||||
Traditional life insurance premiums | i 12 | i 10 | i 21 | i 19 | ||||||||||||
Accident
and health insurance premiums | i 225 | i 246 | i 469 | i 496 | ||||||||||||
Interest-sensitive
life insurance contract charges | i 26 | i 28 | i 55 | i 57 | ||||||||||||
Net
investment income | i 20 | i 21 | i 40 | i 40 | ||||||||||||
Realized
capital gains (losses) | i 11 | i 2 | ( i 3 | ) | i 6 | |||||||||||
Total
Allstate Benefits | i 294 | i 307 | i 582 | i 618 | ||||||||||||
Allstate
Annuities | ||||||||||||||||
Fixed annuities contract charges | i 2 | i 4 | i 4 | i 7 | ||||||||||||
Net
investment income | i 66 | i 296 | i 113 | i 486 | ||||||||||||
Realized
capital gains (losses) | i 245 | i 48 | ( i 24 | ) | i 204 | |||||||||||
Total
Allstate Annuities | i 313 | i 348 | i 93 | i 697 | ||||||||||||
Corporate
and Other | ||||||||||||||||
Net investment income | i 11 | i 19 | i 25 | i 31 | ||||||||||||
Realized
capital gains (losses) | i 28 | i 8 | i 7 | i 10 | ||||||||||||
Total
Corporate and Other | i 39 | i 27 | i 32 | i 41 | ||||||||||||
Intersegment
eliminations (1) | ( i 35 | ) | ( i 33 | ) | ( i 73 | ) | ( i 66 | ) | ||||||||
Consolidated
revenues | $ | i 11,197 | $ | i 11,144 | $ | i 21,273 | $ | i 22,134 |
(1) | Intersegment
insurance premiums and service fees are primarily related to Arity and Allstate Roadside Services and are eliminated in the condensed consolidated financial statements. |
Reportable
segments financial performance | ||||||||||||||||
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
($ in millions) | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Property-Liability | ||||||||||||||||
Allstate
Protection (1) | $ | i 907 | $ | i 370 | $ | i 2,255 | $ | i 1,073 | ||||||||
Discontinued
Lines and Coverages | ( i 3 | ) | ( i 3 | ) | ( i 6 | ) | ( i 6 | ) | ||||||||
Total
underwriting income | i 904 | i 367 | i 2,249 | i 1,067 | ||||||||||||
Net
investment income | i 178 | i 471 | i 380 | i 762 | ||||||||||||
Income
tax expense on operations | ( i 209 | ) | ( i 179 | ) | ( i 512 | ) | ( i 381 | ) | ||||||||
Realized
capital gains (losses), after-tax | i 299 | i 204 | i 217 | i 597 | ||||||||||||
Property-Liability
net income applicable to common shareholders | i 1,172 | i 863 | i 2,334 | i 2,045 | ||||||||||||
Service
Businesses | ||||||||||||||||
Adjusted net income | i 38 | i 16 | i 75 | i 27 | ||||||||||||
Realized
capital gains (losses), after-tax | i 15 | i 6 | ( i 4 | ) | i 13 | |||||||||||
Amortization
of purchased intangibles, after-tax | ( i 21 | ) | ( i 25 | ) | ( i 42 | ) | ( i 49 | ) | ||||||||
Impairment
of purchased intangibles, after-tax | i — | ( i 43 | ) | i — | ( i 43 | ) | ||||||||||
Service
Businesses net income (loss) applicable to common shareholders | i 32 | ( i 46 | ) | i 29 | ( i 52 | ) | ||||||||||
Allstate
Life | ||||||||||||||||
Adjusted net income | i 72 | i 68 | i 152 | i 141 | ||||||||||||
Realized
capital gains (losses), after-tax | i 16 | i — | ( i 9 | ) | ( i 4 | ) | ||||||||||
Valuation
changes on embedded derivatives not hedged, after-tax | ( i 35 | ) | i — | ( i 23 | ) | i — | ||||||||||
DAC
and DSI amortization related to realized capital gains and losses, after-tax | i 11 | ( i 1 | ) | i 8 | ( i 3 | ) | ||||||||||
Allstate
Life net income applicable to common shareholders | i 64 | i 67 | i 128 | i 134 | ||||||||||||
Allstate
Benefits | ||||||||||||||||
Adjusted net income | i 5 | i 37 | i 29 | i 68 | ||||||||||||
Realized
capital gains (losses), after-tax | i 7 | i 2 | ( i 3 | ) | i 5 | |||||||||||
Allstate
Benefits net income applicable to common shareholders | i 12 | i 39 | i 26 | i 73 | ||||||||||||
Allstate
Annuities | ||||||||||||||||
Adjusted net (loss) income | ( i 111 | ) | i 52 | ( i 250 | ) | i 27 | ||||||||||
Realized
capital gains (losses), after-tax | i 194 | i 37 | ( i 19 | ) | i 161 | |||||||||||
Valuation
changes on embedded derivatives not hedged, after-tax | ( i 6 | ) | ( i 2 | ) | ( i 4 | ) | ( i 5 | ) | ||||||||
Gain
on disposition of operations, after-tax | i 1 | i 1 | i 2 | i 2 | ||||||||||||
Allstate
Annuities net income (loss) applicable to common shareholders | i 78 | i 88 | ( i 271 | ) | i 185 | |||||||||||
Corporate
and Other | ||||||||||||||||
Adjusted net loss | ( i 99 | ) | ( i 98 | ) | ( i 206 | ) | ( i 201 | ) | ||||||||
Realized
capital gains (losses), after-tax | i 23 | i 7 | i 6 | i 8 | ||||||||||||
Pension
and other postretirement remeasurement gains (losses), after-tax | ( i 58 | ) | ( i 99 | ) | ( i 309 | ) | ( i 110 | ) | ||||||||
Corporate
and Other net loss applicable to common shareholders | ( i 134 | ) | ( i 190 | ) | ( i 509 | ) | ( i 303 | ) | ||||||||
Consolidated
net income applicable to common shareholders | $ | i 1,224 | $ | i 821 | $ | i 1,737 | $ | i 2,082 |
(1) | Due
to the significant declines in the number of auto accidents caused by mandated stay-at-home orders, other pandemic containment actions and reduced economic activity, auto and commercial lines customers received a Shelter-in-Place Payback of $ i 948 million with $ i 210
million recognized in first quarter 2020 and $ i 738 million recognized in second quarter 2020. |
Note 5 | Investments |
Portfolio
composition | ||||||||
($ in millions) | ||||||||
Fixed income securities, at fair value | $ | i 64,448 | $ | i 59,044 | ||||
Equity
securities, at fair value | i 4,212 | i 8,162 | ||||||
Mortgage
loans, net | i 4,774 | i 4,817 | ||||||
Limited
partnership interests | i 6,941 | i 8,078 | ||||||
Short-term
investments, at fair value | i 5,344 | i 4,256 | ||||||
Other,
net | i 3,918 | i 4,005 | ||||||
Total | $ | i 89,637 | $ | i 88,362 |
Amortized
cost, gross unrealized gains (losses) and fair value for fixed income securities | ||||||||||||||||
($ in millions) | Amortized cost, net | Gross unrealized | Fair value | |||||||||||||
Gains | Losses | |||||||||||||||
U.S. government and agencies | $ | i 3,312 | $ | i 208 | $ | ( i 1 | ) | $ | i 3,519 | |||||||
Municipal | i 8,579 | i 712 | ( i 6 | ) | i 9,285 | |||||||||||
Corporate | i 46,797 | i 3,227 | ( i 284 | ) | i 49,740 | |||||||||||
Foreign
government | i 915 | i 46 | i — | i 961 | ||||||||||||
ABS | i 779 | i 4 | ( i 24 | ) | i 759 | |||||||||||
MBS | i 152 | i 32 | i — | i 184 | ||||||||||||
Total
fixed income securities | $ | i 60,534 | $ | i 4,229 | $ | ( i 315 | ) | $ | i 64,448 | |||||||
U.S. government and agencies | $ | i 4,971 | $ | i 141 | $ | ( i 26 | ) | $ | i 5,086 | |||||||
Municipal | i 8,080 | i 551 | ( i 11 | ) | i 8,620 | |||||||||||
Corporate | i 41,090 | i 2,035 | ( i 47 | ) | i 43,078 | |||||||||||
Foreign
government | i 968 | i 16 | ( i 5 | ) | i 979 | |||||||||||
ABS | i 860 | i 8 | ( i 6 | ) | i 862 | |||||||||||
MBS | i 324 | i 96 | ( i 1 | ) | i 419 | |||||||||||
Total
fixed income securities | $ | i 56,293 | $ | i 2,847 | $ | ( i 96 | ) | $ | i 59,044 |
Scheduled
maturities for fixed income securities | ||||||||
($ in millions) | ||||||||
Amortized cost, net | Fair value | |||||||
Due in one year or less | $ | i 3,300 | $ | i 3,343 | ||||
Due
after one year through five years | i 24,971 | i 26,036 | ||||||
Due
after five years through ten years | i 21,627 | i 23,204 | ||||||
Due
after ten years | i 9,705 | i 10,922 | ||||||
i 59,603 | i 63,505 | |||||||
ABS
and MBS | i 931 | i 943 | ||||||
Total | $ | i 60,534 | $ | i 64,448 |
Net
investment income | ||||||||||||||||
($ in millions) | Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Fixed
income securities | $ | i 531 | $ | i 543 | $ | i 1,056 | $ | i 1,081 | ||||||||
Equity
securities | i 31 | i 68 | i 37 | i 98 | ||||||||||||
Mortgage
loans | i 51 | i 54 | i 111 | i 107 | ||||||||||||
Limited
partnership interests | ( i 220 | ) | i 254 | ( i 412 | ) | i 263 | ||||||||||
Short-term
investments | i 2 | i 26 | i 19 | i 52 | ||||||||||||
Other | i 62 | i 67 | i 125 | i 130 | ||||||||||||
Investment
income, before expense | i 457 | i 1,012 | i 936 | i 1,731 | ||||||||||||
Investment
expense | ( i 48 | ) | ( i 70 | ) | ( i 106 | ) | ( i 141 | ) | ||||||||
Net
investment income | $ | i 409 | $ | i 942 | $ | i 830 | $ | i 1,590 |
Realized
capital gains (losses) by asset type | ||||||||||||||||
($ in millions) | Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Fixed
income securities | $ | i 187 | $ | i 79 | $ | i 562 | $ | i 143 | ||||||||
Equity
securities | i 480 | i 178 | ( i 270 | ) | i 731 | |||||||||||
Mortgage
loans | i — | i — | ( i 41 | ) | i — | |||||||||||
Limited
partnership interests | i 33 | i 21 | ( i 83 | ) | i 93 | |||||||||||
Derivatives | i 18 | i 22 | i 106 | ( i 24 | ) | |||||||||||
Other | ( i 14 | ) | i 24 | ( i 32 | ) | i 43 | ||||||||||
Realized
capital gains (losses) | $ | i 704 | $ | i 324 | $ | i 242 | $ | i 986 |
Realized
capital gains (losses) by transaction type | ||||||||||||||||
($ in millions) | Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Sales | $ | i 179 | $ | i 117 | $ | i 567 | $ | i 212 | ||||||||
Credit
losses (1) | ( i 10 | ) | ( i 15 | ) | ( i 89 | ) | ( i 29 | ) | ||||||||
Valuation
of equity investments (2) | i 517 | i 200 | ( i 342 | ) | i 827 | |||||||||||
Valuation
and settlements of derivative instruments | i 18 | i 22 | i 106 | ( i 24 | ) | |||||||||||
Realized
capital gains (losses) | $ | i 704 | $ | i 324 | $ | i 242 | $ | i 986 |
(1) | Due
to the adoption of the measurement of credit losses on financial instruments accounting standard, prior period other-than-temporary impairment write-downs are now presented as credit losses. |
(2) | Includes valuation of equity securities and certain limited partnership interests where the underlying assets are predominately public equity securities. |
Net appreciation (decline)
recognized in net income | ||||||||||||||||
($ in millions) | Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Equity
securities | $ | i 390 | $ | i 207 | $ | ( i 45 | ) | $ | i 688 | |||||||
Limited
partnership interests carried at fair value | ( i 54 | ) | i 95 | ( i 109 | ) | i 59 | ||||||||||
Total | $ | i 336 | $ | i 302 | $ | ( i 154 | ) | $ | i 747 |
Credit
losses recognized in net income (1) | ||||||||||||||||
($ in millions) | Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Assets | ||||||||||||||||
Fixed
income securities: | ||||||||||||||||
Municipal | $ | ( i 3 | ) | $ | i — | $ | ( i 3 | ) | $ | i — | ||||||
Corporate | i — | ( i 7 | ) | ( i 1 | ) | ( i 7 | ) | |||||||||
ABS | ( i 2 | ) | ( i 2 | ) | ( i 2 | ) | ( i 3 | ) | ||||||||
MBS | i 1 | i — | ( i 2 | ) | ( i 1 | ) | ||||||||||
Total
fixed income securities | ( i 4 | ) | ( i 9 | ) | ( i 8 | ) | ( i 11 | ) | ||||||||
Mortgage
loans | ( i 1 | ) | i — | ( i 41 | ) | i — | ||||||||||
Limited
partnership interests | ( i 3 | ) | ( i 2 | ) | ( i 10 | ) | ( i 3 | ) | ||||||||
Other
investments | ||||||||||||||||
Bank loans | ( i 3 | ) | ( i 4 | ) | ( i 30 | ) | ( i 15 | ) | ||||||||
Total
credit losses by asset type | $ | ( i 11 | ) | $ | ( i 15 | ) | $ | ( i 89 | ) | $ | ( i 29 | ) | ||||
Liabilities | ||||||||||||||||
Commitments
to fund commercial mortgage loans, bank loans and agent loans | i 1 | i — | i — | i — | ||||||||||||
Total
| $ | ( i 10 | ) | $ | ( i 15 | ) | $ | ( i 89 | ) | $ | ( i 29 | ) |
(1) | Due
to the adoption of the measurement of credit losses on financial instruments accounting standard, realized capital losses previously reported as other-than-temporary impairment write-downs are now presented as credit losses. |
Unrealized
net capital gains and losses included in AOCI | ||||||||||||||||
($ in millions) | Fair value | Gross unrealized | Unrealized net gains (losses) | |||||||||||||
Gains | Losses | |||||||||||||||
Fixed
income securities | $ | i 64,448 | $ | i 4,229 | $ | ( i 315 | ) | $ | i 3,914 | |||||||
Short-term
investments | i 5,344 | i 1 | i — | i 1 | ||||||||||||
Derivative
instruments | i — | i — | ( i 3 | ) | ( i 3 | ) | ||||||||||
Equity
method of accounting (“EMA”) limited partnerships (1) | ( i 8 | ) | ||||||||||||||
Unrealized
net capital gains and losses, pre-tax | i 3,904 | |||||||||||||||
Amounts
recognized for: | ||||||||||||||||
Insurance reserves (2) | ( i 319 | ) | ||||||||||||||
DAC
and DSI (3) | ( i 284 | ) | ||||||||||||||
Amounts
recognized | ( i 603 | ) | ||||||||||||||
Deferred
income taxes | ( i 699 | ) | ||||||||||||||
Unrealized
net capital gains and losses, after-tax | $ | i 2,602 | ||||||||||||||
Fixed income securities | $ | i 59,044 | $ | i 2,847 | $ | ( i 96 | ) | $ | i 2,751 | |||||||
Short-term
investments | i 4,256 | i — | i — | i — | ||||||||||||
Derivative
instruments | i — | i — | ( i 3 | ) | ( i 3 | ) | ||||||||||
EMA
limited partnerships | ( i 4 | ) | ||||||||||||||
Unrealized
net capital gains and losses, pre-tax | i 2,744 | |||||||||||||||
Amounts
recognized for: | ||||||||||||||||
Insurance reserves | ( i 126 | ) | ||||||||||||||
DAC
and DSI | ( i 224 | ) | ||||||||||||||
Amounts
recognized | ( i 350 | ) | ||||||||||||||
Deferred
income taxes | ( i 507 | ) | ||||||||||||||
Unrealized
net capital gains and losses, after-tax | $ | i 1,887 |
(1) | Unrealized
net capital gains and losses for limited partnership interests represent the Company’s share of EMA limited partnerships’ OCI. Fair value and gross unrealized gains and losses are not applicable. |
(2) | The insurance reserves adjustment represents the amount by which the reserve balance would increase if the net unrealized gains in the applicable product portfolios were realized and reinvested at lower interest rates, resulting in a premium deficiency. This adjustment primarily relates to structured settlement annuities with life contingencies (a type of immediate fixed annuity). |
(3) | The
DAC and DSI adjustment balance represents the amount by which the amortization of DAC and DSI would increase or decrease if the unrealized gains or losses in the respective product portfolios were realized. |
Change
in unrealized net capital gains (losses) | ||||
($ in millions) | Six months ended June 30, 2020 | |||
Fixed income securities | $ | i 1,163 | ||
Short-term
investments | i 1 | |||
Derivative instruments | i — | |||
EMA
limited partnerships | ( i 4 | ) | ||
Total | i 1,160 | |||
Amounts
recognized for: | ||||
Insurance reserves | ( i 193 | ) | ||
DAC
and DSI | ( i 60 | ) | ||
Amounts recognized | ( i 253 | ) | ||
Deferred
income taxes | ( i 192 | ) | ||
Increase in unrealized net capital gains and losses, after-tax | $ | i 715 |
Carrying
value for limited partnership interests | ||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||
EMA | Fair Value | Total | EMA | Fair
Value | Total | |||||||||||||||||||
Private equity | $ | i 4,043 | $ | i 1,532 | $ | i 5,575 | $ | i 4,463 | $ | i 1,668 | $ | i 6,131 | ||||||||||||
Real
estate | i 982 | i 130 | i 1,112 | i 899 | i 142 | i 1,041 | ||||||||||||||||||
Other
(1) | i 251 | i 3 | i 254 | i 902 | i 4 | i 906 | ||||||||||||||||||
Total | $ | i 5,276 | $ | i 1,665 | $ | i 6,941 | $ | i 6,264 | $ | i 1,814 | $ | i 8,078 |
(1) | Other
consists of certain limited partnership interests where the underlying assets are predominately public equity securities. |
Other investments by asset type | ||||||||
($ in millions) | ||||||||
Bank loans, net | $ | i 1,118 | $ | i 1,204 | ||||
Real
estate | i 986 | i 1,005 | ||||||
Policy
loans | i 878 | i 894 | ||||||
Agent
loans, net | i 649 | i 666 | ||||||
Derivatives
and other | i 287 | i 236 | ||||||
Total | $ | i 3,918 | $ | i 4,005 |
Rollforward of credit loss allowance for fixed income securities | ||||||||
($ in millions) | Three
months ended June 30, 2020 | Six months ended June 30, 2020 | ||||||
Beginning balance | $ | ( i 4 | ) | $ | i — | |||
Credit
losses on securities for which credit losses not previously reported | ( i 5 | ) | ( i 8 | ) | ||||
Net
decreases related to credit losses previously reported | i 1 | i — | ||||||
Reduction
of allowance related to sales | i 1 | i 1 | ||||||
Ending
balance (1) | $ | ( i 7 | ) | $ | ( i 7 | ) |
(1) | Allowance
for fixed income securities as of June 30, 2020 comprised $ i 3 million, $ i 1
million, $ i 2 million and $ i 1
million of municipal bonds, corporate bonds, ABS and MBS, respectively. |
Gross
unrealized losses and fair value by type and length of time held in a continuous unrealized loss position | ||||||||||||||||||||||||||
($ in millions) | Less than 12 months | 12 months or more | Total unrealized losses | |||||||||||||||||||||||
Number of issues | Fair value | Unrealized losses | Number of issues | Fair value | Unrealized losses | |||||||||||||||||||||
Fixed
income securities | ||||||||||||||||||||||||||
U.S.
government and agencies | i 3 | $ | i 20 | $ | ( i 1 | ) | i — | $ | i — | $ | i — | $ | ( i 1 | ) | ||||||||||||
Municipal | i 171 | i 343 | ( i 6 | ) | i — | i — | i — | ( i 6 | ) | |||||||||||||||||
Corporate | i 527 | i 4,326 | ( i 232 | ) | i 36 | i 213 | ( i 52 | ) | ( i 284 | ) | ||||||||||||||||
Foreign
government | i 1 | i 1 | i — | i — | i — | i — | i — | |||||||||||||||||||
ABS | i 53 | i 479 | ( i 15 | ) | i 16 | i 64 | ( i 9 | ) | ( i 24 | ) | ||||||||||||||||
MBS | i 28 | i 16 | i — | i 85 | i 3 | i — | i — | |||||||||||||||||||
Total
fixed income securities | i 783 | $ | i 5,185 | $ | ( i 254 | ) | i 137 | $ | i 280 | $ | ( i 61 | ) | $ | ( i 315 | ) | |||||||||||
Investment
grade fixed income securities | i 402 | $ | i 2,253 | $ | ( i 86 | ) | i 102 | $ | i 114 | $ | ( i 25 | ) | $ | ( i 111 | ) | |||||||||||
Below
investment grade fixed income securities | i 381 | i 2,932 | ( i 168 | ) | i 35 | i 166 | ( i 36 | ) | ( i 204 | ) | ||||||||||||||||
Total
fixed income securities | i 783 | $ | i 5,185 | $ | ( i 254 | ) | i 137 | $ | i 280 | $ | ( i 61 | ) | $ | ( i 315 | ) | |||||||||||
Fixed
income securities | ||||||||||||||||||||||||||
U.S.
government and agencies | i 31 | $ | i 1,713 | $ | ( i 26 | ) | i 10 | $ | i 26 | $ | i — | $ | ( i 26 | ) | ||||||||||||
Municipal | i 307 | i 576 | ( i 9 | ) | i 1 | i 14 | ( i 2 | ) | ( i 11 | ) | ||||||||||||||||
Corporate | i 186 | i 1,392 | ( i 20 | ) | i 65 | i 485 | ( i 27 | ) | ( i 47 | ) | ||||||||||||||||
Foreign
government | i 55 | i 412 | ( i 4 | ) | i 6 | i 102 | ( i 1 | ) | ( i 5 | ) | ||||||||||||||||
ABS | i 36 | i 193 | ( i 2 | ) | i 23 | i 160 | ( i 4 | ) | ( i 6 | ) | ||||||||||||||||
MBS | i 27 | i 15 | i — | i 123 | i 14 | ( i 1 | ) | ( i 1 | ) | |||||||||||||||||
Total
fixed income securities | i 642 | $ | i 4,301 | $ | ( i 61 | ) | i 228 | $ | i 801 | $ | ( i 35 | ) | $ | ( i 96 | ) | |||||||||||
Investment
grade fixed income securities | i 581 | $ | i 3,878 | $ | ( i 41 | ) | i 185 | $ | i 594 | $ | ( i 20 | ) | $ | ( i 61 | ) | |||||||||||
Below
investment grade fixed income securities | i 61 | i 423 | ( i 20 | ) | i 43 | i 207 | ( i 15 | ) | ( i 35 | ) | ||||||||||||||||
Total
fixed income securities | i 642 | $ | i 4,301 | $ | ( i 61 | ) | i 228 | $ | i 801 | $ | ( i 35 | ) | $ | ( i 96 | ) |
Gross
unrealized losses by unrealized loss position and credit quality as of June 30, 2020 | ||||||||||||
($ in millions) | Investment grade | Below investment grade | Total | |||||||||
Fixed income securities with unrealized loss position less than 20% of amortized cost, net (1) (2) | $ | ( i 82 | ) | $ | ( i 124 | ) | $ | ( i 206 | ) | |||
Fixed
income securities with unrealized loss position greater than or equal to 20% of amortized cost, net (3) (4) | ( i 29 | ) | ( i 80 | ) | ( i 109 | ) | ||||||
Total
unrealized losses | $ | ( i 111 | ) | $ | ( i 204 | ) | $ | ( i 315 | ) |
(1) | Below
investment grade fixed income securities include $ i 109 million that have been in an unrealized loss position for less than twelve months. |
(2) | Related
to securities with an unrealized loss position less than 20% of amortized cost, net, the degree of which suggests that these securities do not pose a high risk of having credit losses. |
(3) | No below investment grade fixed income securities have been in an unrealized loss position for a period of twelve or more consecutive months. |
(4) | Evaluated
based on factors such as discounted cash flows and the financial condition and near-term and long-term prospects of the issue or issuer and were determined to have adequate resources to fulfill contractual obligations. |
Mortgage
loans amortized cost by debt service coverage ratio distribution and year of origination | ||||||||||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||||||||
2015 and prior | 2016 | 2017 | 2018 | 2019 | Current | Total | Total | |||||||||||||||||||||||||
Below
1.0 | $ | i 38 | $ | i — | $ | i 33 | $ | i — | $ | i — | $ | i — | $ | i 71 | $ | i 56 | ||||||||||||||||
1.0
- 1.25 | i 170 | i 27 | i 36 | i 87 | i 15 | i 30 | i 365 | i 225 | ||||||||||||||||||||||||
1.26
- 1.50 | i 494 | i 27 | i 123 | i 231 | i 369 | i 16 | i 1,260 | i 1,237 | ||||||||||||||||||||||||
Above
1.50 | i 1,299 | i 493 | i 361 | i 369 | i 499 | i 143 | i 3,164 | i 3,302 | ||||||||||||||||||||||||
Amortized
cost before allowance | $ | i 2,001 | $ | i 547 | $ | i 553 | $ | i 687 | $ | i 883 | $ | i 189 | $ | i 4,860 | $ | i 4,820 | ||||||||||||||||
Allowance
(1) | ( i 86 | ) | ( i 3 | ) | ||||||||||||||||||||||||||||
Amortized
cost, net | $ | i 4,774 | $ | i 4,817 |
(1) | Due
to the adoption of the measurement of credit losses on financial instruments accounting standard, prior valuation allowance is now presented as an allowance for expected credit losses. |
Rollforward
of credit loss allowance for mortgage loans | ||||||||
($ in millions) | Three months ended June 30, 2020 | Six months ended June 30, 2020 | ||||||
Beginning balance | $ | ( i 85 | ) | $ | ( i 3 | ) | ||
Cumulative
effect of change in accounting principle | — | ( i 42 | ) | |||||
Net
increases related to credit losses | ( i 1 | ) | ( i 41 | ) | ||||
Ending
balance | $ | ( i 86 | ) | $ | ( i 86 | ) |
Bank
loans amortized cost by credit rating and year of origination | ||||||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||||
2015 and prior | 2016 | 2017 | 2018 | 2019 | Current | Total | ||||||||||||||||||||||
BBB | $ | i — | $ | i — | $ | i 9 | $ | i 13 | $ | i 9 | $ | i 12 | $ | i 43 | ||||||||||||||
BB | i 31 | i 2 | i 36 | i 72 | i 64 | i 36 | i 241 | |||||||||||||||||||||
B | i 12 | i 34 | i 142 | i 219 | i 173 | i 104 | i 684 | |||||||||||||||||||||
CCC
and below | i 8 | i 32 | i 46 | i 55 | i 59 | i 26 | i 226 | |||||||||||||||||||||
Amortized
cost before allowance | i 51 | i 68 | i 233 | i 359 | i 305 | i 178 | i 1,194 | |||||||||||||||||||||
Allowance | ( i 76 | ) | ||||||||||||||||||||||||||
Amortized
cost, net | $ | i 1,118 |
Rollforward of credit loss allowance for bank loans | ||||||||
($
in millions) | Three months ended June 30, 2020 | Six months ended June 30, 2020 | ||||||
Beginning balance | $ | ( i 79 | ) | $ | i — | |||
Cumulative
effect of change in accounting principle | — | ( i 53 | ) | |||||
Net
increases related to credit losses | ( i 3 | ) | ( i 30 | ) | ||||
Reduction
of allowance related to sales | i 1 | i 2 | ||||||
Write-offs | i 5 | i 5 | ||||||
Ending
balance | $ | ( i 76 | ) | $ | ( i 76 | ) |
Note
6 | Fair Value of Assets and Liabilities |
(a) | Quoted
prices for similar assets or liabilities in active markets; |
(b) | Quoted prices for identical or similar assets or liabilities in markets that are not active; or |
(c) | Valuation models whose inputs are observable, directly or indirectly, for substantially the full term of the asset or liability. |
(1) | Specific
inputs significant to the fair value estimation models are not market observable. This primarily occurs in the Company’s use of broker quotes to value certain securities where the inputs have not been corroborated to be market observable, and the use of valuation models that use significant non-market observable inputs. |
(2) | Quotes continue to be received from independent third-party valuation service providers and all significant inputs are market observable; however, there has been a significant decrease in the volume and level of activity for the asset when compared to normal market activity such that the degree of market observability has declined to a
point where categorization as a Level 3 measurement is considered appropriate. The indicators considered in determining whether a significant decrease in the volume and level of activity for a specific asset has occurred include the level of new issuances in the primary market, trading volume in the secondary market, the level of credit spreads over historical levels, applicable bid-ask spreads, and price consensus among market participants and other pricing sources. |
• | Fixed
income securities: |
• | Equity
securities: The primary inputs to the valuation include quoted prices or quoted net asset values for identical or similar assets in markets that are not active. |
• | Short-term: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields and credit spreads. |
• | Other investments: Free-standing exchange listed derivatives that are not actively traded
are valued based on quoted prices for identical instruments in markets that are not active. |
• | Fixed
income securities: |
• | Equity securities: The primary inputs to the valuation
include quoted prices or quoted net asset values for identical or similar assets in markets that exhibit less liquidity relative to those markets supporting Level 2 fair value measurements. |
• | Short-term: For certain short-term investments, amortized cost is used as the best estimate of fair value. |
• | Other investments: Certain OTC derivatives, such as interest rate caps, certain credit default swaps and certain options (including swaptions),
are valued using models that are widely accepted in the financial services industry. These are categorized as Level 3 as a result of the |
• | Contractholder funds: Derivatives embedded in certain life and annuity contracts are valued internally using models widely accepted in the financial services industry that determine a single best estimate of fair value for the embedded derivatives within a block
of contractholder liabilities. The models primarily use stochastically determined cash flows based on the contractual elements of embedded derivatives, projected option cost and applicable market data, such as interest rate yield curves and equity index volatility assumptions. These are categorized as Level 3 as a result of the significance of non-market observable inputs. |
Assets
and liabilities measured at fair value | ||||||||||||||||||||
($ in millions) | Quoted prices in active markets for identical assets (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | Counterparty
and cash collateral netting | Total | |||||||||||||||
Assets | ||||||||||||||||||||
Fixed
income securities: | ||||||||||||||||||||
U.S.
government and agencies | $ | i 3,146 | $ | i 373 | $ | i — | $ | i 3,519 | ||||||||||||
Municipal | i — | i 9,202 | i 83 | i 9,285 | ||||||||||||||||
Corporate
- public | i — | i 35,944 | i 67 | i 36,011 | ||||||||||||||||
Corporate
- privately placed | i — | i 13,603 | i 126 | i 13,729 | ||||||||||||||||
Foreign
government | i — | i 961 | i — | i 961 | ||||||||||||||||
ABS | i — | i 709 | i 50 | i 759 | ||||||||||||||||
MBS | i — | i 139 | i 45 | i 184 | ||||||||||||||||
Total
fixed income securities | i 3,146 | i 60,931 | i 371 | i 64,448 | ||||||||||||||||
Equity
securities | i 3,481 | i 338 | i 393 | i 4,212 | ||||||||||||||||
Short-term
investments | i 4,907 | i 427 | i 10 | i 5,344 | ||||||||||||||||
Other
investments: Free-standing derivatives | i — | i 229 | i — | $ | ( i 43 | ) | i 186 | |||||||||||||
Separate
account assets | i 2,906 | i — | i — | i 2,906 | ||||||||||||||||
Other
assets | i 2 | i — | i — | i 2 | ||||||||||||||||
Total
recurring basis assets | i 14,442 | i 61,925 | i 774 | ( i 43 | ) | i 77,098 | ||||||||||||||
Total
assets at fair value | $ | i 14,442 | $ | i 61,925 | $ | i 774 | $ | ( i 43 | ) | $ | i 77,098 | |||||||||
%
of total assets at fair value | i 18.7 | % | i 80.3 | % | i 1.0 | % | i — | % | i 100.0 | % | ||||||||||
Investments
reported at NAV | i 1,665 | |||||||||||||||||||
Total | $ | i 78,763 | ||||||||||||||||||
Liabilities | ||||||||||||||||||||
Contractholder
funds: Derivatives embedded in life and annuity contracts | $ | i — | $ | i — | $ | ( i 488 | ) | $ | ( i 488 | ) | ||||||||||
Other
liabilities: Free-standing derivatives | i — | ( i 109 | ) | i — | $ | i 8 | ( i 101 | ) | ||||||||||||
Total
recurring basis liabilities | $ | i — | $ | ( i 109 | ) | $ | ( i 488 | ) | $ | i 8 | $ | ( i 589 | ) | |||||||
%
of total liabilities at fair value | i — | % | i 18.5 | % | i 82.9 | % | ( i 1.4 | )% | i 100.0 | % |
Assets and liabilities measured at fair value | ||||||||||||||||||||
($ in millions) | Quoted prices in active markets for identical assets (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | Counterparty and cash collateral netting | Total | |||||||||||||||
Assets | ||||||||||||||||||||
Fixed
income securities: | ||||||||||||||||||||
U.S.
government and agencies | $ | i 4,689 | $ | i 397 | $ | i — | $ | i 5,086 | ||||||||||||
Municipal | i — | i 8,558 | i 62 | i 8,620 | ||||||||||||||||
Corporate
- public | i — | i 30,819 | i 61 | i 30,880 | ||||||||||||||||
Corporate
- privately placed | i — | i 12,084 | i 114 | i 12,198 | ||||||||||||||||
Foreign
government | i — | i 979 | i — | i 979 | ||||||||||||||||
ABS | i — | i 797 | i 65 | i 862 | ||||||||||||||||
MBS | i — | i 379 | i 40 | i 419 | ||||||||||||||||
Total
fixed income securities | i 4,689 | i 54,013 | i 342 | i 59,044 | ||||||||||||||||
Equity
securities | i 7,407 | i 384 | i 371 | i 8,162 | ||||||||||||||||
Short-term
investments | i 1,940 | i 2,291 | i 25 | i 4,256 | ||||||||||||||||
Other
investments: Free-standing derivatives | i — | i 180 | i — | $ | ( i 40 | ) | i 140 | |||||||||||||
Separate
account assets | i 3,044 | i — | i — | i 3,044 | ||||||||||||||||
Other
assets | i 1 | i — | i — | i 1 | ||||||||||||||||
Total
recurring basis assets | i 17,081 | i 56,868 | i 738 | ( i 40 | ) | i 74,647 | ||||||||||||||
Total
assets at fair value | $ | i 17,081 | $ | i 56,868 | $ | i 738 | $ | ( i 40 | ) | $ | i 74,647 | |||||||||
%
of total assets at fair value | i 22.9 | % | i 76.2 | % | i 1.0 | % | ( i 0.1 | )% | i 100.0 | % | ||||||||||
Investments
reported at NAV | i 1,814 | |||||||||||||||||||
Total | $ | i 76,461 | ||||||||||||||||||
Liabilities | ||||||||||||||||||||
Contractholder
funds: Derivatives embedded in life and annuity contracts | $ | i — | $ | i — | $ | ( i 462 | ) | $ | ( i 462 | ) | ||||||||||
Other
liabilities: Free-standing derivatives | i — | ( i 84 | ) | i — | $ | i 12 | ( i 72 | ) | ||||||||||||
Total
recurring basis liabilities | $ | i — | $ | ( i 84 | ) | $ | ( i 462 | ) | $ | i 12 | $ | ( i 534 | ) | |||||||
%
of total liabilities at fair value | i — | % | i 15.7 | % | i 86.5 | % | ( i 2.2 | )% | i 100.0 | % |
Quantitative
information about the significant unobservable inputs used in Level 3 fair value measurements | ||||||||||||
($ in millions) | Fair value | Valuation technique | Unobservable input | Range | Weighted average | |||||||
Derivatives embedded in life and annuity contracts – Equity-indexed
and forward starting options | $ | ( i 442 | ) | Stochastic
cash flow model | Projected option cost | 1.0 - 4.2% | i 2.73% | |||||
Derivatives embedded in life and annuity contracts – Equity-indexed
and forward starting options | $ | ( i 430 | ) | Stochastic
cash flow model | Projected option cost | 1.0 - 4.2% | i 2.67% |
Rollforward
of Level 3 assets and liabilities held at fair value during the three month period ended June 30, 2020 | ||||||||||||||||||||||||||||||||||||||||
Balance as of March 31, 2020 | Total gains (losses) included in: | Transfers | Balance
as of June 30, 2020 | |||||||||||||||||||||||||||||||||||||
($ in millions) | Net income | OCI | Into Level 3 | Out of Level 3 | Purchases | Sales | Issues | Settlements | ||||||||||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||||||||||
Fixed
income securities: | ||||||||||||||||||||||||||||||||||||||||
Municipal | $ | i 58 | $ | i 1 | $ | i 2 | $ | i 15 | $ | i — | $ | i 8 | $ | ( i 1 | ) | $ | i — | $ | i — | $ | i 83 | |||||||||||||||||||
Corporate
- public | i 60 | i — | ( i 8 | ) | i — | i — | i 15 | i — | i — | i — | i 67 | |||||||||||||||||||||||||||||
Corporate
- privately placed | i 88 | i 1 | ( i 4 | ) | i 11 | i — | i 37 | ( i 6 | ) | i — | ( i 1 | ) | i 126 | |||||||||||||||||||||||||||
ABS | i 39 | i 1 | ( i 2 | ) | i 43 | ( i 25 | ) | i 4 | ( i 10 | ) | i — | i — | i 50 | |||||||||||||||||||||||||||
MBS | i 40 | i 1 | ( i 1 | ) | i — | i — | i 9 | ( i 4 | ) | i — | i — | i 45 | ||||||||||||||||||||||||||||
Total
fixed income securities | i 285 | i 4 | ( i 13 | ) | i 69 | ( i 25 | ) | i 73 | ( i 21 | ) | i — | ( i 1 | ) | i 371 | ||||||||||||||||||||||||||
Equity
securities | i 342 | i 12 | i — | i — | i — | i 39 | i — | i — | i — | i 393 | ||||||||||||||||||||||||||||||
Short-term
investments | i 50 | i — | i — | i — | ( i 40 | ) | i — | i — | i — | i — | i 10 | |||||||||||||||||||||||||||||
Total
recurring Level 3 assets | i 677 | i 16 | ( i 13 | ) | i 69 | ( i 65 | ) | i 112 | ( i 21 | ) | i — | ( i 1 | ) | i 774 | ||||||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||||||||||
Contractholder
funds: Derivatives embedded in life and annuity contracts | ( i 417 | ) | ( i 69 | ) | i — | i — | i — | i — | i — | ( i 7 | ) | i 5 | ( i 488 | ) | ||||||||||||||||||||||||||
Total
recurring Level 3 liabilities | $ | ( i 417 | ) | $ | ( i 69 | ) | $ | i — | $ | i — | $ | i — | $ | i — | $ | i — | $ | ( i 7 | ) | $ | i 5 | $ | ( i 488 | ) |
Total
Level 3 gains (losses) included in net income for the three months ended June 30, 2020 | ||||||||||||||||||||
Net investment income | Realized capital gains (losses) | Life contract benefits | Interest credited to contractholder
funds | Total | ||||||||||||||||
Components of net income | $ | i 1 | $ | i 15 | $ | i 10 | $ | ( i 79 | ) | $ | ( i 53 | ) |
Rollforward
of Level 3 assets and liabilities held at fair value during the six month period ended June 30, 2020 | ||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2019 | Total gains (losses) included in: | Transfers | Balance
as of June 30, 2020 | |||||||||||||||||||||||||||||||||||||
($ in millions) | Net income | OCI | Into Level 3 | Out of Level 3 | Purchases | Sales | Issues | Settlements | ||||||||||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||||||||||
Fixed
income securities: | ||||||||||||||||||||||||||||||||||||||||
Municipal | $ | i 62 | $ | i 1 | $ | i 2 | $ | i 14 | $ | i — | $ | i 8 | $ | ( i 2 | ) | $ | i — | $ | ( i 2 | ) | $ | i 83 | ||||||||||||||||||
Corporate
- public | i 61 | i — | ( i 8 | ) | i — | i — | i 15 | i — | i — | ( i 1 | ) | i 67 | ||||||||||||||||||||||||||||
Corporate
- privately placed | i 114 | i 1 | ( i 5 | ) | i 11 | ( i 25 | ) | i 38 | ( i 6 | ) | i — | ( i 2 | ) | i 126 | ||||||||||||||||||||||||||
ABS | i 65 | i — | ( i 3 | ) | i 55 | ( i 49 | ) | i 19 | ( i 10 | ) | i — | ( i 27 | ) | i 50 | ||||||||||||||||||||||||||
MBS | i 40 | i 1 | ( i 1 | ) | i — | i — | i 10 | ( i 4 | ) | i — | ( i 1 | ) | i 45 | |||||||||||||||||||||||||||
Total
fixed income securities | i 342 | i 3 | ( i 15 | ) | i 80 | ( i 74 | ) | i 90 | ( i 22 | ) | i — | ( i 33 | ) | i 371 | ||||||||||||||||||||||||||
Equity
securities | i 371 | ( i 18 | ) | i — | i — | i — | i 40 | i — | i — | i — | i 393 | |||||||||||||||||||||||||||||
Short-term
investments | i 25 | i — | i — | i — | ( i 25 | ) | i 10 | i — | i — | i — | i 10 | |||||||||||||||||||||||||||||
Total
recurring Level 3 assets | i 738 | ( i 15 | ) | ( i 15 | ) | i 80 | ( i 99 | ) | i 140 | ( i 22 | ) | i — | ( i 33 | ) | i 774 | |||||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||||||||||
Contractholder
funds: Derivatives embedded in life and annuity contracts | ( i 462 | ) | ( i 21 | ) | i — | i — | i — | i — | i — | ( i 15 | ) | i 10 | ( i 488 | ) | ||||||||||||||||||||||||||
Total
recurring Level 3 liabilities | $ | ( i 462 | ) | $ | ( i 21 | ) | $ | i — | $ | i — | $ | i — | $ | i — | $ | i — | $ | ( i 15 | ) | $ | i 10 | $ | ( i 488 | ) |
Total
Level 3 gains (losses) included in net income for the six months ended June 30, 2020 | ||||||||||||||||||||
Net investment income | Realized capital gains (losses) | Life contract benefits | Interest credited to contractholder funds | Total | ||||||||||||||||
Components
of net income | $ | ( i 23 | ) | $ | i 8 | $ | ( i 14 | ) | $ | ( i 7 | ) | $ | ( i 36 | ) |
Rollforward
of Level 3 assets and liabilities held at fair value during the three month period ended June 30, 2019 | ||||||||||||||||||||||||||||||||||||||||
Balance as of March 31, 2019 | Total gains (losses) included in: | Transfers | Balance
as of June 30, 2019 | |||||||||||||||||||||||||||||||||||||
($ in millions) | Net income | OCI | Into Level 3 | Out of Level 3 | Purchases | Sales | Issues | Settlements | ||||||||||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||||||||||
Fixed
income securities: | ||||||||||||||||||||||||||||||||||||||||
Municipal | $ | i 68 | $ | i — | $ | i 1 | $ | i — | $ | ( i 5 | ) | $ | i — | $ | ( i 1 | ) | $ | i — | $ | i — | $ | i 63 | ||||||||||||||||||
Corporate
- public | i 90 | i — | i 1 | i — | ( i 40 | ) | i — | ( i 5 | ) | i — | i — | i 46 | ||||||||||||||||||||||||||||
Corporate
- privately placed | i 90 | i 1 | i — | i — | ( i 2 | ) | i 1 | i — | i — | ( i 1 | ) | i 89 | ||||||||||||||||||||||||||||
ABS | i 87 | i — | i — | i 1 | ( i 68 | ) | i 46 | ( i 12 | ) | i — | ( i 1 | ) | i 53 | |||||||||||||||||||||||||||
MBS | i 35 | i — | i — | i 1 | i — | i — | i — | i — | ( i 1 | ) | i 35 | |||||||||||||||||||||||||||||
Total
fixed income securities | i 370 | i 1 | i 2 | i 2 | ( i 115 | ) | i 47 | ( i 18 | ) | i — | ( i 3 | ) | i 286 | |||||||||||||||||||||||||||
Equity
securities | i 303 | i 10 | i — | i — | i — | i 20 | ( i 14 | ) | i — | i — | i 319 | |||||||||||||||||||||||||||||
Short-term
investments | i 40 | i — | i — | i — | i — | i 5 | ( i 40 | ) | i — | i — | i 5 | |||||||||||||||||||||||||||||
Free-standing
derivatives, net | i 1 | ( i 1 | ) | i — | i — | i — | i — | i — | i — | i — | i — | |||||||||||||||||||||||||||||
Total
recurring Level 3 assets | i 714 | i 10 | i 2 | i 2 | ( i 115 | ) | i 72 | ( i 72 | ) | i — | ( i 3 | ) | i 610 | |||||||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||||||||||
Contractholder
funds: Derivatives embedded in life and annuity contracts | ( i 251 | ) | ( i 12 | ) | i — | ( i 175 | ) | i — | i — | i — | i — | i 1 | ( i 437 | ) | ||||||||||||||||||||||||||
Total
recurring Level 3 liabilities | $ | ( i 251 | ) | $ | ( i 12 | ) | $ | i — | $ | ( i 175 | ) | $ | i — | $ | i — | $ | i — | $ | i — | $ | i 1 | $ | ( i 437 | ) |
Total
Level 3 gains (losses) included in net income for the three months ended June 30, 2019 | ||||||||||||||||||||
Net investment income | Realized capital gains (losses) | Life contract benefits | Interest credited to contractholder
funds | Total | ||||||||||||||||
Components of net income | $ | i 5 | $ | i 5 | $ | ( i 5 | ) | $ | ( i 7 | ) | $ | ( i 2 | ) |
Rollforward
of Level 3 assets and liabilities held at fair value during the six months period ended June 30, 2019 | ||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2018 | Total gains (losses) included in: | Transfers | Balance
as of June 30, 2019 | |||||||||||||||||||||||||||||||||||||
($ in millions) | Net income | OCI | Into Level 3 | Out of Level 3 | Purchases | Sales | Issues | Settlements | ||||||||||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||||||||||
Fixed
income securities: | ||||||||||||||||||||||||||||||||||||||||
Municipal | $ | i 70 | $ | i — | $ | i 2 | $ | i — | $ | ( i 5 | ) | $ | i — | $ | ( i 3 | ) | $ | i — | $ | ( i 1 | ) | $ | i 63 | |||||||||||||||||
Corporate
- public | i 70 | i — | i 2 | i — | ( i 40 | ) | i 20 | ( i 5 | ) | i — | ( i 1 | ) | i 46 | |||||||||||||||||||||||||||
Corporate
- privately placed | i 90 | ( i 1 | ) | i 2 | i 15 | ( i 2 | ) | i 1 | ( i 13 | ) | i — | ( i 3 | ) | i 89 | ||||||||||||||||||||||||||
ABS | i 69 | i — | i — | i 1 | ( i 115 | ) | i 124 | ( i 22 | ) | i — | ( i 4 | ) | i 53 | |||||||||||||||||||||||||||
MBS | i 26 | i — | i — | i 4 | i — | i 6 | i — | i — | ( i 1 | ) | i 35 | |||||||||||||||||||||||||||||
Total
fixed income securities | i 325 | ( i 1 | ) | i 6 | i 20 | ( i 162 | ) | i 151 | ( i 43 | ) | i — | ( i 10 | ) | i 286 | ||||||||||||||||||||||||||
Equity
securities | i 341 | i 38 | i — | i — | i — | i 22 | ( i 82 | ) | i — | i — | i 319 | |||||||||||||||||||||||||||||
Short-term
investments | i 30 | i — | i — | i — | i — | i 15 | ( i 40 | ) | i — | i — | i 5 | |||||||||||||||||||||||||||||
Free-standing
derivatives, net | i 1 | ( i 1 | ) | i — | i — | i — | i — | i — | i — | i — | i — | |||||||||||||||||||||||||||||
Total
recurring Level 3 assets | i 697 | i 36 | i 6 | i 20 | ( i 162 | ) | i 188 | ( i 165 | ) | i — | ( i 10 | ) | i 610 | |||||||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||||||||||
Contractholder
funds: Derivatives embedded in life and annuity contracts | ( i 224 | ) | ( i 40 | ) | i — | ( i 175 | ) | i — | i — | i — | i — | i 2 | ( i 437 | ) | ||||||||||||||||||||||||||
Total
recurring Level 3 liabilities | $ | ( i 224 | ) | $ | ( i 40 | ) | $ | i — | $ | ( i 175 | ) | $ | i — | $ | i — | $ | i — | $ | i — | $ | i 2 | $ | ( i 437 | ) |
Total
Level 3 gains (losses) included in net income for the six months ended June 30, 2019 | ||||||||||||||||||||
Net investment income | Realized capital gains (losses) | Life contract benefits | Interest credited to contractholder funds | Total | ||||||||||||||||
Components
of net income | $ | i 5 | $ | i 31 | $ | i 3 | $ | ( i 43 | ) | $ | ( i 4 | ) |
Valuation
changes included in net income and OCI for Level 3 assets and liabilities held as of June 30, | ||||||||||||||||
($ in millions) | Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Assets | ||||||||||||||||
Fixed
income securities: | ||||||||||||||||
Municipal | $ | i 1 | $ | i — | $ | i 1 | $ | i — | ||||||||
Corporate | i — | i — | i 1 | i — | ||||||||||||
Total
fixed income securities | i 1 | i — | i 2 | i — | ||||||||||||
Equity
securities | $ | i 12 | $ | i 10 | $ | ( i 18 | ) | $ | i 14 | |||||||
Free-standing
derivatives, net | i — | ( i 1 | ) | i — | ( i 1 | ) | ||||||||||
Total
recurring Level 3 assets | $ | i 13 | $ | i 9 | $ | ( i 16 | ) | $ | i 13 | |||||||
Liabilities | ||||||||||||||||
Contractholder
funds: Derivatives embedded in life and annuity contracts | $ | ( i 69 | ) | $ | ( i 12 | ) | $ | ( i 21 | ) | $ | ( i 40 | ) | ||||
Total
recurring Level 3 liabilities | ( i 69 | ) | ( i 12 | ) | ( i 21 | ) | ( i 40 | ) | ||||||||
Total
included in net income | $ | ( i 56 | ) | $ | ( i 3 | ) | $ | ( i 37 | ) | $ | ( i 27 | ) | ||||
Components
of net income | ||||||||||||||||
Net investment income | $ | i — | $ | i 5 | $ | ( i 23 | ) | $ | i 5 | |||||||
Realized
capital gains (losses) | i 13 | i 4 | i 7 | i 8 | ||||||||||||
Life
contract benefits | i 10 | ( i 5 | ) | ( i 14 | ) | i 3 | ||||||||||
Interest
credited to contractholder funds | ( i 79 | ) | ( i 7 | ) | ( i 7 | ) | ( i 43 | ) | ||||||||
Total
included in net income | $ | ( i 56 | ) | $ | ( i 3 | ) | $ | ( i 37 | ) | $ | ( i 27 | ) | ||||
Assets | ||||||||||||||||
Municipal | $ | i 2 | $ | i 2 | ||||||||||||
Corporate
- public | ( i 8 | ) | ( i 7 | ) | ||||||||||||
Corporate
- privately placed | ( i 3 | ) | ( i 5 | ) | ||||||||||||
ABS | ( i 3 | ) | ( i 3 | ) | ||||||||||||
Changes
in unrealized net capital gains and losses reported in OCI (1) | $ | ( i 12 | ) | $ | ( i 13 | ) |
(1) | Effective
January 1, 2020, the Company adopted the fair value accounting standard that prospectively requires the disclosure of valuation changes reported in OCI. |
Financial
instruments not carried at fair value | ||||||||||||||||||
($ in millions) | ||||||||||||||||||
Financial assets | Fair value level | Amortized
cost, net | Fair value | Amortized cost, net | Fair value | |||||||||||||
Mortgage loans | Level 3 | $ | i 4,774 | $ | i 5,073 | $ | i 4,817 | $ | i 5,012 | |||||||||
Bank
loans | Level 3 | i 1,118 | i 1,107 | i 1,204 | i 1,185 | |||||||||||||
Agent
loans | Level 3 | i 649 | i 658 | i 666 | i 664 | |||||||||||||
Financial
liabilities | Fair value level | Carrying value (1) | Fair value | Carrying value (1) | Fair value | |||||||||||||
Contractholder
funds on investment contracts | Level 3 | $ | i 8,080 | $ | i 9,318 | $ | i 8,438 | $ | i 9,158 | |||||||||
Long-term
debt | Level 2 | i 6,634 | i 8,037 | i 6,631 | i 7,738 | |||||||||||||
Liability
for collateral | Level 2 | i 1,381 | i 1,381 | i 1,829 | i 1,829 |
(1) | Represents
the amounts reported on the Condensed Consolidated Statements of Financial Position. |
Note 7 | Derivative
Financial Instruments |
Summary
of the volume and fair value positions of derivative instruments as of June 30, 2020 | ||||||||||||||||||||
($ in millions, except number of contracts) | Volume (1) | |||||||||||||||||||
Balance sheet location | Notional
amount | Number of contracts | Fair value, net | Gross asset | Gross liability | |||||||||||||||
Asset derivatives | ||||||||||||||||||||
Derivatives
designated as fair value accounting hedging instruments | ||||||||||||||||||||
Other | Other
assets | $ | i 2 | n/a | $ | i — | $ | i — | $ | i — | ||||||||||
Derivatives
not designated as accounting hedging instruments | ||||||||||||||||||||
Interest
rate contracts | ||||||||||||||||||||
Futures | Other
assets | i — | i 1,358 | i — | i — | i — | ||||||||||||||
Equity
and index contracts | ||||||||||||||||||||
Options | Other
investments | i — | i 8,038 | i 175 | i 175 | i — | ||||||||||||||
Futures | Other
assets | i — | i 1,267 | i 2 | i 2 | i — | ||||||||||||||
Total
return index contracts | ||||||||||||||||||||
Total return
swap agreements – fixed income | Other investments | i 50 | n/a | i 1 | i 1 | i — | ||||||||||||||
Total
return swap agreements – equity index | Other investments | i 7 | n/a | i — | i — | i — | ||||||||||||||
Foreign
currency contracts | ||||||||||||||||||||
Foreign
currency forwards | Other investments | i 161 | n/a | i 9 | i 10 | ( i 1 | ) | |||||||||||||
Credit
default contracts | ||||||||||||||||||||
Credit
default swaps – buying protection | Other investments | i 88 | n/a | i — | i 2 | ( i 2 | ) | |||||||||||||
Credit
default swaps – selling protection | Other investments | i 752 | n/a | i 9 | i 9 | i — | ||||||||||||||
Subtotal | i 1,058 | i 10,663 | i 196 | i 199 | ( i 3 | ) | ||||||||||||||
Total
asset derivatives | $ | i 1,060 | i 10,663 | $ | i 196 | $ | i 199 | $ | ( i 3 | ) | ||||||||||
Liability
derivatives | ||||||||||||||||||||
Derivatives
not designated as accounting hedging instruments | ||||||||||||||||||||
Interest
rate contracts | ||||||||||||||||||||
Interest
rate cap agreements | Other liabilities & accrued expenses | $ | i 33 | n/a | $ | i — | $ | i — | $ | i — | ||||||||||
Futures | Other
liabilities & accrued expenses | i — | i 1,266 | i — | i — | i — | ||||||||||||||
Equity
and index contracts | ||||||||||||||||||||
Options | Other
liabilities & accrued expenses | i — | i 7,881 | ( i 100 | ) | i — | ( i 100 | ) | ||||||||||||
Futures | Other
liabilities & accrued expenses | i — | i 401 | i — | i — | i — | ||||||||||||||
Foreign
currency contracts | ||||||||||||||||||||
Foreign
currency forwards | Other liabilities & accrued expenses | i 588 | n/a | i 28 | i 32 | ( i 4 | ) | |||||||||||||
Embedded
derivative financial instruments | ||||||||||||||||||||
Guaranteed
accumulation benefits | Contractholder funds | i 133 | n/a | ( i 26 | ) | i — | ( i 26 | ) | ||||||||||||
Guaranteed
withdrawal benefits | Contractholder funds | i 180 | n/a | ( i 20 | ) | i — | ( i 20 | ) | ||||||||||||
Equity-indexed
and forward starting options in life and annuity product contracts | Contractholder funds | i 1,774 | n/a | ( i 442 | ) | i — | ( i 442 | ) | ||||||||||||
Credit
default contracts | ||||||||||||||||||||
Credit
default swaps – buying protection | Other liabilities & accrued expenses | i 56 | n/a | ( i 2 | ) | i — | ( i 2 | ) | ||||||||||||
Credit
default swaps – selling protection | Other liabilities & accrued expenses | i 7 | n/a | i — | i — | i — | ||||||||||||||
Total
liability derivatives | i 2,771 | i 9,548 | ( i 562 | ) | $ | i 32 | $ | ( i 594 | ) | |||||||||||
Total
derivatives | $ | i 3,831 | i 20,211 | $ | ( i 366 | ) |
(1) |
Summary of the volume and fair value positions of derivative instruments as of December 31, 2019 | ||||||||||||||||||||
($ in millions, except number of contracts) | Volume | |||||||||||||||||||
Balance sheet location | Notional
amount | Number of contracts | Fair value, net | Gross asset | Gross liability | |||||||||||||||
Asset derivatives | ||||||||||||||||||||
Derivatives
designated as fair value accounting hedging instruments | ||||||||||||||||||||
Other | Other
assets | $ | i 2 | n/a | $ | i — | $ | i — | $ | i — | ||||||||||
Derivatives
not designated as accounting hedging instruments | ||||||||||||||||||||
Interest
rate contracts | ||||||||||||||||||||
Futures | Other
assets | i — | i 3,668 | i — | i — | i — | ||||||||||||||
Equity
and index contracts | ||||||||||||||||||||
Options | Other
investments | i — | i 5,539 | i 140 | i 140 | i — | ||||||||||||||
Futures
| Other assets | i — | i 1,533 | i 1 | i 1 | i — | ||||||||||||||
Total
return index contracts | ||||||||||||||||||||
Total return
swap agreements – fixed income | Other investments | i 56 | n/a | i 1 | i 1 | i — | ||||||||||||||
Credit
default contracts | ||||||||||||||||||||
Credit
default swaps – buying protection | Other investments | i 17 | n/a | i — | i — | i — | ||||||||||||||
Subtotal | i 73 | i 10,740 | i 142 | i 142 | i — | |||||||||||||||
Total
asset derivatives | $ | i 75 | i 10,740 | $ | i 142 | $ | i 142 | $ | i — | |||||||||||
Liability
derivatives | ||||||||||||||||||||
Derivatives
not designated as accounting hedging instruments | ||||||||||||||||||||
Interest
rate contracts | ||||||||||||||||||||
Interest
rate cap agreements | Other liabilities & accrued expenses | $ | i 34 | n/a | $ | i — | $ | i — | $ | i — | ||||||||||
Futures | Other
liabilities & accrued expenses | i — | i 1,089 | i — | i — | i — | ||||||||||||||
Equity
and index contracts | ||||||||||||||||||||
Options | Other
liabilities & accrued expenses | i — | i 5,400 | ( i 68 | ) | i — | ( i 68 | ) | ||||||||||||
Futures | Other
liabilities & accrued expenses | i — | i 3 | i — | i — | i — | ||||||||||||||
Total
return index contracts | ||||||||||||||||||||
Total return
swap agreements – fixed income | Other liabilities & accrued expenses | i 119 | n/a | i — | i — | i — | ||||||||||||||
Total
return swap agreements – equity index | Other liabilities & accrued expenses | i 187 | n/a | i 11 | i 11 | i — | ||||||||||||||
Foreign
currency contracts | ||||||||||||||||||||
Foreign
currency forwards | Other liabilities & accrued expenses | i 745 | n/a | i 19 | i 28 | ( i 9 | ) | |||||||||||||
Embedded
derivative financial instruments | ||||||||||||||||||||
Guaranteed
accumulation benefits | Contractholder funds | i 161 | n/a | ( i 18 | ) | i — | ( i 18 | ) | ||||||||||||
Guaranteed
withdrawal benefits | Contractholder funds | i 205 | n/a | ( i 14 | ) | i — | ( i 14 | ) | ||||||||||||
Equity-indexed
and forward starting options in life and annuity product contracts | Contractholder funds | i 1,791 | n/a | ( i 430 | ) | i — | ( i 430 | ) | ||||||||||||
Credit
default contracts | ||||||||||||||||||||
Credit
default swaps – buying protection | Other liabilities & accrued expenses | i 152 | n/a | ( i 7 | ) | i — | ( i 7 | ) | ||||||||||||
Credit
default swaps – selling protection | Other liabilities & accrued expenses | i 9 | n/a | i — | i — | i — | ||||||||||||||
Total
liability derivatives | i 3,403 | i 6,492 | ( i 507 | ) | $ | i 39 | $ | ( i 546 | ) | |||||||||||
Total
derivatives | $ | i 3,478 | i 17,232 | $ | ( i 365 | ) |
Gross
and net amounts for OTC derivatives (1) | ||||||||||||||||||||||||
($ in millions) | Offsets | |||||||||||||||||||||||
Gross
amount | Counter-party netting | Cash collateral (received) pledged | Net amount on balance sheet | Securities collateral (received) pledged | Net amount | |||||||||||||||||||
Asset
derivatives | $ | i 45 | $ | ( i 35 | ) | $ | ( i 8 | ) | $ | i 2 | $ | i — | $ | i 2 | ||||||||||
Liability
derivatives | ( i 9 | ) | i 35 | ( i 27 | ) | ( i 1 | ) | i — | ( i 1 | ) | ||||||||||||||
Asset
derivatives | $ | i 40 | $ | ( i 39 | ) | $ | ( i 1 | ) | $ | i — | $ | i — | $ | i — | ||||||||||
Liability
derivatives | ( i 16 | ) | i 39 | ( i 27 | ) | ( i 4 | ) | i — | ( i 4 | ) |
(1) | All
OTC derivatives are subject to enforceable master netting agreements. |
Gains
(losses) from valuation and settlements reported on derivatives not designated as accounting hedges | ||||||||||||||||||||
($ in millions) | Realized capital gains (losses) | Life contract benefits | Interest credited to contractholder funds | Operating costs and expenses | Total
gain (loss) recognized in net income on derivatives | |||||||||||||||
Three months ended June 30, 2020 | ||||||||||||||||||||
Interest
rate contracts | $ | i 1 | $ | i — | $ | i — | $ | i — | $ | i 1 | ||||||||||
Equity
and index contracts | i 2 | i — | i 32 | i 31 | i 65 | |||||||||||||||
Embedded
derivative financial instruments | i — | i 10 | ( i 81 | ) | i — | ( i 71 | ) | |||||||||||||
Foreign
currency contracts | ( i 5 | ) | i — | i — | i — | ( i 5 | ) | |||||||||||||
Credit
default contracts | i 12 | i — | i — | i — | i 12 | |||||||||||||||
Total
return swaps - fixed income | i 7 | i — | i — | i — | i 7 | |||||||||||||||
Total
return swaps - equity index | i 1 | i — | i — | i — | i 1 | |||||||||||||||
Total | $ | i 18 | $ | i 10 | $ | ( i 49 | ) | $ | i 31 | $ | i 10 | |||||||||
Six
months ended June 30, 2020 | ||||||||||||||||||||
Interest
rate contracts | $ | i 40 | $ | i — | $ | i — | $ | i — | $ | i 40 | ||||||||||
Equity
and index contracts | i 30 | i — | ( i 18 | ) | ( i 14 | ) | ( i 2 | ) | ||||||||||||
Embedded
derivative financial instruments | i — | ( i 14 | ) | ( i 12 | ) | i — | ( i 26 | ) | ||||||||||||
Foreign
currency contracts | i 31 | i — | i — | i — | i 31 | |||||||||||||||
Credit
default contracts | i 4 | i — | i — | i — | i 4 | |||||||||||||||
Total
return swaps - fixed income | ( i 2 | ) | i — | i — | i — | ( i 2 | ) | |||||||||||||
Total
return swaps - equity index | i 3 | i — | i — | i — | i 3 | |||||||||||||||
Total | $ | i 106 | $ | ( i 14 | ) | $ | ( i 30 | ) | $ | ( i 14 | ) | $ | i 48 | |||||||
Three
months ended June 30, 2019 | ||||||||||||||||||||
Interest
rate contracts | $ | i 19 | $ | i — | $ | i — | $ | i — | $ | i 19 | ||||||||||
Equity
and index contracts | ( i 17 | ) | i — | i 11 | i 5 | ( i 1 | ) | |||||||||||||
Embedded
derivative financial instruments | i — | ( i 5 | ) | ( i 6 | ) | i — | ( i 11 | ) | ||||||||||||
Foreign
currency contracts | i 5 | i — | i — | i — | i 5 | |||||||||||||||
Credit
default contracts | ( i 1 | ) | i — | i — | i — | ( i 1 | ) | |||||||||||||
Total
return swaps - fixed income | i 8 | i — | i — | i — | i 8 | |||||||||||||||
Total
return swaps - equity index | i 8 | i — | i — | i — | i 8 | |||||||||||||||
Total | $ | i 22 | $ | ( i 5 | ) | $ | i 5 | $ | i 5 | $ | i 27 | |||||||||
Six
months ended June 30, 2019 | ||||||||||||||||||||
Interest
rate contracts | $ | i 26 | $ | i — | $ | i — | $ | i — | $ | i 26 | ||||||||||
Equity
and index contracts | ( i 88 | ) | i — | i 42 | i 26 | ( i 20 | ) | |||||||||||||
Embedded
derivative financial instruments | i — | i 3 | ( i 41 | ) | i — | ( i 38 | ) | |||||||||||||
Foreign
currency contracts | i 10 | i — | i — | i — | i 10 | |||||||||||||||
Credit
default contracts | ( i 5 | ) | i — | i — | i — | ( i 5 | ) | |||||||||||||
Total
return swaps - fixed income | i 10 | i — | i — | i — | i 10 | |||||||||||||||
Total
return swaps - equity index | i 23 | i — | i — | i — | i 23 | |||||||||||||||
Total | $ | ( i 24 | ) | $ | i 3 | $ | i 1 | $ | i 26 | $ | i 6 |
OTC
derivatives counterparty credit exposure by counterparty credit rating | ||||||||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||||||
Rating (1) | Number of counter- parties | Notional amount (2) | Credit exposure (2) | Exposure,
net of collateral (2) | Number of counter- parties | Notional amount (2) | Credit exposure (2) | Exposure,
net of collateral (2) | ||||||||||||||||||||||
A+ | i 4 | $ | i 744 | $ | i 30 | $ | i 1 | i 6 | $ | i 868 | $ | i 29 | $ | i — | ||||||||||||||||
A | i 1 | i 187 | i 6 | i — | i — | i — | i — | i — | ||||||||||||||||||||||
Total | i 5 | $ | i 931 | $ | i 36 | $ | i 1 | i 6 | $ | i 868 | $ | i 29 | $ | i — |
(1) | Allstate
uses the lower of S&P’s or Moody’s long-term debt issuer ratings. |
(2) | Only OTC derivatives with a net positive fair value are included for each counterparty. |
($ in
millions) | ||||||||
Gross liability fair value of contracts containing credit-risk-contingent features | $ | i 9 | $ | i 16 | ||||
Gross
asset fair value of contracts containing credit-risk-contingent features and subject to MNAs | ( i 8 | ) | ( i 11 | ) | ||||
Collateral
posted under MNAs for contracts containing credit-risk-contingent features | ( i 1 | ) | ( i 3 | ) | ||||
Maximum
amount of additional exposure for contracts with credit-risk-contingent features if all features were triggered concurrently | $ | i — | $ | i 2 |
CDS
notional amounts by credit rating and fair value of protection sold | ||||||||||||||||||||||||||||
($ in millions) | Notional amount | |||||||||||||||||||||||||||
AAA | AA | A | BBB | BB
and lower | Total | Fair value | ||||||||||||||||||||||
Single
name | ||||||||||||||||||||||||||||
Corporate
debt | $ | i — | $ | i — | $ | i — | $ | i — | $ | i 9 | $ | i 9 | $ | i — | ||||||||||||||
Index | ||||||||||||||||||||||||||||
Corporate
debt | i 6 | i 12 | i 156 | i 498 | i 78 | i 750 | i 9 | |||||||||||||||||||||
Total | $ | i 6 | $ | i 12 | $ | i 156 | $ | i 498 | $ | i 87 | $ | i 759 | $ | i 9 | ||||||||||||||
Single
name | ||||||||||||||||||||||||||||
Corporate
debt | $ | i — | $ | i — | $ | i — | $ | i — | $ | i 9 | $ | i 9 | $ | i — | ||||||||||||||
Total | $ | i — | $ | i — | $ | i — | $ | i — | $ | i 9 | $ | i 9 | $ | i — |
Note 8 | Reserve
for Property and Casualty Insurance Claims and Claims Expense |
Rollforward of the reserve for property and casualty insurance claims and claims expense | ||||||||
Six months ended June 30, | ||||||||
($ in millions) | 2020 | 2019 | ||||||
Balance
as of January 1 | $ | i 27,712 | $ | i 27,423 | ||||
Less
recoverables (1) | ( i 6,912 | ) | ( i 7,155 | ) | ||||
Net
balance as of January 1 | i 20,800 | i 20,268 | ||||||
Incurred
claims and claims expense related to: | ||||||||
Current year | i 10,566 | i 12,250 | ||||||
Prior
years | ( i 3 | ) | ( i 74 | ) | ||||
Total
incurred | i 10,563 | i 12,176 | ||||||
Claims
and claims expense paid related to: | ||||||||
Current year | ( i 5,777 | ) | ( i 6,125 | ) | ||||
Prior
years | ( i 5,173 | ) | ( i 5,237 | ) | ||||
Total
paid | ( i 10,950 | ) | ( i 11,362 | ) | ||||
Net
balance as of June 30 | i 20,413 | i 21,082 | ||||||
Plus
recoverables | i 7,013 | i 7,023 | ||||||
Balance
as of June 30 | $ | i 27,426 | $ | i 28,105 |
(1) | Recoverables
comprises reinsurance and indemnification recoverables. |
Prior
year reserve reestimates included in claims and claims expense (1) | ||||||||||||||||||||||||
Six months ended June 30, | ||||||||||||||||||||||||
Non-catastrophes losses | Catastrophes losses | Total | ||||||||||||||||||||||
($
in millions) | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||
Auto | $ | ( i 26 | ) | $ | ( i 151 | ) | $ | ( i 15 | ) | $ | ( i 7 | ) | $ | ( i 41 | ) | $ | ( i 158 | ) | ||||||
Homeowners | ( i 3 | ) | i — | i 19 | i 57 | i 16 | i 57 | |||||||||||||||||
Other
personal lines | ( i 6 | ) | i 2 | ( i 2 | ) | i 6 | ( i 8 | ) | i 8 | |||||||||||||||
Commercial
lines | i 24 | i 17 | i 3 | i — | i 27 | i 17 | ||||||||||||||||||
Discontinued
Lines and Coverages | i 4 | i 5 | i — | i — | i 4 | i 5 | ||||||||||||||||||
Service
Businesses | ( i 1 | ) | ( i 3 | ) | i — | i — | ( i 1 | ) | ( i 3 | ) | ||||||||||||||
Total
prior year reserve reestimates | $ | ( i 8 | ) | $ | ( i 130 | ) | $ | i 5 | $ | i 56 | $ | ( i 3 | ) | $ | ( i 74 | ) |
(1) | Favorable
reserve reestimates are shown in parentheses. |
Note
9 | Reinsurance and indemnification |
Effects
of reinsurance ceded and indemnification programs on property and casualty premiums earned and life premiums and contract charges | ||||||||||||||||
($ in millions) | Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Property
and casualty insurance premiums earned | $ | ( i 279 | ) | $ | ( i 287 | ) | $ | ( i 568 | ) | $ | ( i 547 | ) | ||||
Life
premiums and contract charges | ( i 67 | ) | ( i 69 | ) | ( i 111 | ) | ( i 132 | ) |
Effects
of reinsurance ceded and indemnification programs on property and casualty insurance claims and claims expense, life contract benefits and interest credited to contractholder funds | ||||||||||||||||
($ in millions) | Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Property
and casualty insurance claims and claims expense | $ | ( i 210 | ) | $ | ( i 158 | ) | $ | ( i 341 | ) | $ | ( i 249 | ) | ||||
Life
contract benefits | ( i 45 | ) | i 5 | ( i 136 | ) | ( i 18 | ) | |||||||||
Interest
credited to contractholder funds | ( i 7 | ) | ( i 5 | ) | ( i 12 | ) | ( i 8 | ) |
Reinsurance
and indemnification recoverables, net | ||||||||
($ in millions) | ||||||||
Property and casualty | ||||||||
Paid
and due from reinsurers and indemnitors | $ | i 86 | $ | i 112 | ||||
Unpaid
losses estimated (including IBNR) | i 7,014 | i 6,912 | ||||||
Total
property and casualty | $ | i 7,100 | $ | i 7,024 | ||||
Annuities | i 1,367 | i 1,305 | ||||||
Life
insurance | i 737 | i 794 | ||||||
Other | i 86 | i 88 | ||||||
Total | $ | i 9,290 | $ | i 9,211 |
Rollforward
of credit loss allowance for reinsurance recoverables | ||||||||
($ in millions) | Three months ended June 30, 2020 | Six months ended June 30, 2020 | ||||||
Property and casualty (1) (2) | ||||||||
Beginning
balance | $ | ( i 59 | ) | $ | ( i 60 | ) | ||
Decrease
in the provision for credit losses | i — | i 1 | ||||||
Ending
balance | $ | ( i 59 | ) | $ | ( i 59 | ) | ||
Annuities,
life insurance and other | ||||||||
Beginning balance | $ | ( i 15 | ) | $ | ( i 14 | ) | ||
(Increase)
decrease in the provision for credit losses | i — | ( i 1 | ) | |||||
Ending
balance | $ | ( i 15 | ) | $ | ( i 15 | ) |
(1) | Primarily
related to discontinued lines and coverages reinsurance ceded. |
(2) | Indemnification recoverables are considered collectible based on the industry pool and facility enabling legislation. |
Note
10 | Capital Structure |
Note
11 | Company Restructuring |
• | Employee - severance and relocation benefits |
• | Exit
- contract termination penalties |
Restructuring
activity during the period | ||||||||||||
($ in millions) | Employee costs | Exit costs | Total liability | |||||||||
Restructuring liability as of December 31, 2019 | $ | i 14 | $ | i 8 | $ | i 22 | ||||||
Expense
incurred | i 17 | i 2 | i 19 | |||||||||
Payments | ( i 6 | ) | ( i 2 | ) | ( i 8 | ) | ||||||
Restructuring
liability as of June 30, 2020 | $ | i 25 | $ | i 8 | $ | i 33 |
Note 12 | Guarantees and Contingent Liabilities |
Note 13 | Benefit Plans |
Components
of net cost (benefit) for pension and other postretirement plans | ||||||||||||||||
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
($ in millions) | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Pension
benefits | ||||||||||||||||
Service cost | $ | i 25 | $ | i 28 | $ | i 53 | $ | i 56 | ||||||||
Interest
cost | i 56 | i 62 | i 112 | i 127 | ||||||||||||
Expected
return on plan assets | ( i 95 | ) | ( i 101 | ) | ( i 199 | ) | ( i 194 | ) | ||||||||
Amortization
of prior service credit | ( i 14 | ) | ( i 14 | ) | ( i 28 | ) | ( i 28 | ) | ||||||||
Costs
and expenses | ( i 28 | ) | ( i 25 | ) | ( i 62 | ) | ( i 39 | ) | ||||||||
Remeasurement
of projected benefit obligation | i 672 | i 344 | i 556 | i 731 | ||||||||||||
Remeasurement
of plan assets | ( i 623 | ) | ( i 225 | ) | ( i 189 | ) | ( i 616 | ) | ||||||||
Remeasurement
(gains) losses | i 49 | i 119 | i 367 | i 115 | ||||||||||||
Pension
net cost | $ | i 21 | $ | i 94 | $ | i 305 | $ | i 76 | ||||||||
Postretirement
benefits | ||||||||||||||||
Service cost | $ | i 2 | $ | i 2 | $ | i 3 | $ | i 4 | ||||||||
Interest
cost | i 3 | i 3 | i 6 | i 7 | ||||||||||||
Amortization
of prior service credit | ( i 1 | ) | ( i 1 | ) | ( i 2 | ) | ( i 2 | ) | ||||||||
Costs
and expenses | i 4 | i 4 | i 7 | i 9 | ||||||||||||
Remeasurement
of projected benefit obligation | i 24 | i 6 | i 24 | i 25 | ||||||||||||
Remeasurement
of plan assets | i — | i — | i — | i — | ||||||||||||
Remeasurement
(gains) losses | i 24 | i 6 | i 24 | i 25 | ||||||||||||
Postretirement
net cost | $ | i 28 | $ | i 10 | $ | i 31 | $ | i 34 | ||||||||
Pension
and postretirement benefits | ||||||||||||||||
Costs and expenses | $ | ( i 24 | ) | $ | ( i 21 | ) | $ | ( i 55 | ) | $ | ( i 30 | ) | ||||
Remeasurement
(gains) losses | i 73 | i 125 | i 391 | i 140 | ||||||||||||
Total
net cost | $ | i 49 | $ | i 104 | $ | i 336 | $ | i 110 |
Pension and postretirement benefits remeasurement gains and losses | ||||||||||||||||
Three
months ended June 30, | Six months ended June 30, | |||||||||||||||
($ in millions) | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Remeasurement of projected benefit obligation (gains) losses: | ||||||||||||||||
Discount
rate | $ | i 433 | $ | i 228 | $ | i 397 | $ | i 493 | ||||||||
Other
assumptions | i 263 | i 122 | i 183 | i 263 | ||||||||||||
Remeasurement
of plan assets (gains) losses | ( i 623 | ) | ( i 225 | ) | ( i 189 | ) | ( i 616 | ) | ||||||||
Remeasurement
(gains) losses | $ | i 73 | $ | i 125 | $ | i 391 | $ | i 140 |
Note 14 | Supplemental Cash Flow Information |
($ in millions) | Six months ended June 30, | |||||||
2020 | 2019 | |||||||
Net
change in proceeds managed | ||||||||
Net change in fixed income securities | $ | i — | $ | i 80 | ||||
Net
change in short-term investments | i 456 | ( i 493 | ) | |||||
Operating
cash flow provided (used) | $ | i 456 | $ | ( i 413 | ) | |||
Net
change in cash | ( i 8 | ) | i — | |||||
Net
change in proceeds managed | $ | i 448 | $ | ( i 413 | ) | |||
Cash
flows from operating activities | ||||||||
Net change in liabilities | ||||||||
Liabilities for collateral, beginning of period | $ | ( i 1,829 | ) | $ | ( i 1,458 | ) | ||
Liabilities
for collateral, end of period | ( i 1,381 | ) | ( i 1,871 | ) | ||||
Operating
cash flow (used) provided | $ | ( i 448 | ) | $ | i 413 |
Note
15 | Other Comprehensive Income |
Components
of other comprehensive income (loss) on a pre-tax and after-tax basis | ||||||||||||||||||||||||
($ in millions) | Three months ended June 30, | |||||||||||||||||||||||
2020 | 2019 | |||||||||||||||||||||||
Pre-tax | Tax | After-tax | Pre-tax | Tax | After-tax | |||||||||||||||||||
Unrealized
net holding gains and losses arising during the period, net of related offsets | $ | i 2,796 | $ | ( i 590 | ) | $ | i 2,206 | $ | i 921 | $ | ( i 194 | ) | $ | i 727 | ||||||||||
Less:
reclassification adjustment of realized capital gains and losses | i 169 | ( i 35 | ) | i 134 | i 57 | ( i 12 | ) | i 45 | ||||||||||||||||
Unrealized
net capital gains and losses | i 2,627 | ( i 555 | ) | i 2,072 | i 864 | ( i 182 | ) | i 682 | ||||||||||||||||
Unrealized
foreign currency translation adjustments | i 11 | ( i 2 | ) | i 9 | i 5 | ( i 1 | ) | i 4 | ||||||||||||||||
Unamortized
pension and other postretirement prior service credit (1) | ( i 14 | ) | i 3 | ( i 11 | ) | ( i 14 | ) | i 3 | ( i 11 | ) | ||||||||||||||
Other
comprehensive income (loss) | $ | i 2,624 | $ | ( i 554 | ) | $ | i 2,070 | $ | i 855 | $ | ( i 180 | ) | $ | i 675 | ||||||||||
Six
months ended June 30, | ||||||||||||||||||||||||
2020 | 2019 | |||||||||||||||||||||||
Pre-tax | Tax | After-tax | Pre-tax | Tax | After-tax | |||||||||||||||||||
Unrealized
net holding gains and losses arising during the period, net of related offsets | $ | i 1,363 | $ | ( i 288 | ) | $ | i 1,075 | $ | i 2,208 | $ | ( i 467 | ) | $ | i 1,741 | ||||||||||
Less:
reclassification adjustment of realized capital gains and losses | i 456 | ( i 96 | ) | i 360 | i 108 | ( i 23 | ) | i 85 | ||||||||||||||||
Unrealized
net capital gains and losses | i 907 | ( i 192 | ) | i 715 | i 2,100 | ( i 444 | ) | i 1,656 | ||||||||||||||||
Unrealized
foreign currency translation adjustments | ( i 38 | ) | i 8 | ( i 30 | ) | i 11 | ( i 2 | ) | i 9 | |||||||||||||||
Unamortized
pension and other postretirement prior service credit (1) | ( i 8 | ) | i 1 | ( i 7 | ) | ( i 29 | ) | i 6 | ( i 23 | ) | ||||||||||||||
Other
comprehensive income (loss) | $ | i 861 | $ | ( i 183 | ) | $ | i 678 | $ | i 2,082 | $ | ( i 440 | ) | $ | i 1,642 |
(1) | Represents
prior service credits reclassified out of other comprehensive income and amortized into operating costs and expenses. |
• | Extended
our Shelter-in-Place Payback of over $948 million to customers through June 30, 2020, as the significant decline in the number of auto accidents contributed favorably to our underwriting results; $210 million of this cost was accrued in first quarter 2020 and $738 million was recognized in second quarter 2020 |
• | Offered the Allstate Special Payment plan to provide more flexible payment options, including the option to delay payments |
• | Extended
auto insurance coverage to customers using their personal vehicles to deliver food, medicine and other goods for commercial purposes; coverage for these activities is typically excluded |
• | Offered free Allstate Identity Protection to U.S. residents through December 31, 2020, regardless of whether they were already Allstate customers |
• | Increased the utilization of virtual tools such as QuickFoto Claim®
and Virtual Assist® to allow for a simple, fast and safe claims handling process for customers and our employees |
• | Availability and performance of third party vendors, including technology development, car or home repair and marketing programs |
• | Increased regulatory restrictions on profitability, rate actions or claim practices, potentially outside the scope of current policies |
• | Employee availability and
productivity |
• | Cybersecurity risks related to remote workforce |
• | Declines in auto new issued applications due to lower car sales and reductions in consumer shopping for insurance |
• | Slower written premiums growth due to decreased
consumer demand and fewer filings for rate increases |
• | Lower miles and usage in shared economy products |
• | Lower auto accident frequency from reduced miles driven |
• | More competitive new business pricing |
• | Expanding
the availability of our pay-per-mile insurance product, Milewise® |
• | Increased auto claim severity due to more severe accidents or higher replacement parts inflation |
• | Increased exposure to allowances for uncollectible receivables |
• | Validity
of statistical models given changes in underlying statistics such as auto frequency or investment projections |
• | Agent availability and productivity |
• | Volatility in consumer spending and retail sales resulting from shelter-in-place orders and increasing unemployment |
• | Reduced
demand for Allstate Dealer Services products due to lower new and used car sales |
• | Decline in claims in Allstate Dealer Services and Allstate Roadside Services due to lower miles driven |
• | Decreased sales of Allstate Identity Protection products due to higher unemployment |
• | Increased costs
from Allstate Identity Protection providing free identity protection to consumers through the end of the year |
• | Higher death benefit costs |
• | Decline in sales due to temporary underwriting restrictions placed on new business; agents will be able to offer coverage to customers outside the new guidelines through non-proprietary carriers |
• | Statutory
reserving requirements could be increased due to low interest rates, which could affect the amount of capital required to be maintained by our insurance companies |
• | Decreased sports related and auto accident injury claims and fewer elective surgeries reducing hospital product exposure, partially offset by increased claim cost exposure for our hospital indemnity, accident, disability and life products |
• | Decreased
sales and increased policy lapses due to higher employee turnover, business closures and employee layoffs and furloughs |
• | Lower performance-based investment income |
• | Higher reserves associated with prolonged low rate environment |
• | Higher
reserves released on death of the insured for life-contingent immediate annuities, which lowers contract benefits |
• | Statutory reserving requirements could be increased due to low interest rates, which could affect the amount of capital required to be maintained by our insurance companies |
• | Adverse impact on the market values, liquidity and valuations of fixed income
securities, equity securities and performance-based investments as well as changes in the expected pace of funding performance-based and loan commitments |
• | Fixed income securities in certain sectors such as energy, automotive, retail, travel, lodging and airlines were more severely impacted than others in the first quarter of 2020 and some continue to recover slower from the economic downturn |
• | State and local government budgets may be strained by the costs of responding to the
Coronavirus and reduced tax revenues from lower economic activity which may have an adverse impact on valuations and returns of our municipal bond portfolio |
• | Volatility in future investment results due to capital market conditions, including the pace of economic recovery, effectiveness of the fiscal and monetary policy responses and uncertainty resulting from the ongoing pandemic |
• | Higher expected credit losses |
• Better serve customers |
• Grow customer base |
• Achieve target returns on capital |
• Proactively
manage investments |
• Build long-term growth platforms |
• 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 adjusted net income |
• Pension
and other postretirement remeasurement gains and losses, after-tax |
• Valuation changes on embedded derivatives not hedged, after-tax |
• Amortization of DAC and deferred sales inducement costs (“DSI”), to the extent they resulted from the recognition of certain realized capital gains and losses or valuation changes on embedded derivatives not hedged, after-tax |
• Business combination expenses and the amortization or impairment of purchased intangible assets, after-tax |
• Gain (loss) on disposition of operations, after-tax |
• 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 |
Consolidated
net income | ||||
($ in millions) |
Q1 | Q2 |
Consolidated
net income applicable to common shareholders increased 49.1% to $1.22 billion in the second quarter of 2020 compared to the same period of 2019 primarily due to higher underwriting income in Allstate Protection and higher net realized capital gains, partially offset by Shelter-in-Place Payback and lower net investment income. Consolidated net income applicable to common shareholders decreased 16.6% to $1.74 billion in first six months of 2020 compared to the same period of 2019 primarily due to Shelter-in-Place Payback, lower net investment income and lower net realized capital gains, partially offset by higher underwriting income in Allstate Protection. For the twelve months ended June 30, 2020, return
on common shareholders’ equity was 18.2%, an increase of 7.0 points from 11.2% for the twelve months ended June 30, 2019. |
Total revenue | ||||
($ in millions) |
Total revenue increased
0.5% to $11.20 billion in the second quarter of 2020 compared to the same prior year period, driven by higher net realized capital gains and a 2.6% increase in property and casualty insurance premiums earned, partially offset by lower net investment income. Total revenue decreased 3.9% to $21.27 billion in the first six months of 2020 compared to the same prior year period, driven by lower net investment income and lower realized capital gains, partially offset by a 3.8% increase in property and casualty insurance premiums earned. Insurance premiums earned increased in Allstate brand and Service Businesses (Allstate Protection Plans and Allstate Dealer Services). |
Net
investment income | ||||
($ in millions) |
Net investment income decreased 56.6% to $409 million and 47.8% to $830 million in the second quarter and first six months of 2020, respectively, compared to the same prior year periods. Performance-based investment income before expense decreased $477 million and $697 million in the second quarter and the first six months of 2020, respectively, compared to the same periods of 2019, primarily
due to lower valuations of private equity investments. Market-based investment income before expense decreased $78 million and $98 million in the second quarter and the first six months of 2020, respectively, compared to the same periods of 2019, primarily due to lower interest-bearing portfolio yields. |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
($ in millions) | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Revenues | ||||||||||||||||
Property
and casualty insurance premiums | $ | 9,223 | $ | 8,986 | $ | 18,458 | $ | 17,788 | ||||||||
Life
premiums and contract charges | 604 | 621 | 1,221 | 1,249 | ||||||||||||
Other
revenue | 257 | 271 | 522 | 521 | ||||||||||||
Net investment income | 409 | 942 | 830 | 1,590 | ||||||||||||
Realized
capital gains (losses) | 704 | 324 | 242 | 986 | ||||||||||||
Total revenues | 11,197 | 11,144 | 21,273 | 22,134 | ||||||||||||
Costs
and expenses | ||||||||||||||||
Property and casualty insurance claims and claims expense | (5,222 | ) | (6,356 | ) | (10,563 | ) | (12,176 | ) | ||||||||
Shelter-in-Place
Payback expense | (738 | ) | — | (948 | ) | — | ||||||||||
Life contract
benefits and interest credited to contractholder funds | (697 | ) | (667 | ) | (1,330 | ) | (1,326 | ) | ||||||||
Amortization
of deferred policy acquisition costs | (1,349 | ) | (1,362 | ) | (2,750 | ) | (2,726 | ) | ||||||||
Operating,
restructuring and interest expenses | (1,544 | ) | (1,471 | ) | (3,029 | ) | (2,952 | ) | ||||||||
Pension and
other postretirement remeasurement gains (losses) | (73 | ) | (125 | ) | (391 | ) | (140 | ) | ||||||||
Amortization
of purchased intangibles | (29 | ) | (32 | ) | (57 | ) | (64 | ) | ||||||||
Impairment of purchased intangibles | — | (55 | ) | — | (55 | ) | ||||||||||
Total
costs and expenses | (9,652 | ) | (10,068 | ) | (19,068 | ) | (19,439 | ) | ||||||||
Gain
on disposition of operations | 1 | 2 | 2 | 3 | ||||||||||||
Income tax expense | (296 | ) | (227 | ) | (408 | ) | (555 | ) | ||||||||
Net
income | 1,250 | 851 | 1,799 | 2,143 | ||||||||||||
Preferred
stock dividends | (26 | ) | (30 | ) | (62 | ) | (61 | ) | ||||||||
Net income applicable to common shareholders | $ | 1,224 | $ | 821 | $ | 1,737 | $ | 2,082 |
• | Loss
ratio: the ratio of claims and claims expense to premiums earned. Loss ratios include the impact of catastrophe losses. |
• | Expense ratio: the ratio of amortization of DAC, operating costs and expenses, amortization of purchased intangibles, restructuring and related charges and Shelter-in-Place Payback expense, less other revenue to premiums earned. |
• | Combined ratio: the sum of the loss ratio and
the expense ratio. The difference between 100% and the combined ratio represents underwriting income as a percentage of premiums earned, or underwriting margin. |
• | Effect of catastrophe losses on combined ratio: the ratio of catastrophe losses included in claims and claims expense to premiums earned. This ratio includes prior year reserve reestimates of catastrophe losses. |
• | Effect
of prior year reserve reestimates on combined ratio: the ratio of prior year reserve reestimates included in claims and claims expense to premiums earned. This ratio includes prior year reserve reestimates of catastrophe losses. |
• | Effect of amortization of purchased intangibles on combined ratio: the ratio of amortization of purchased intangibles to premiums earned. |
• | Effect of restructuring and related charges on combined ratio: the ratio of
restructuring and related charges to premiums earned. |
• | Effect of Discontinued Lines and Coverages on combined ratio: the ratio of claims and claims expense and operating costs and expenses in the Discontinued Lines and Coverages segment to Property-Liability premiums earned. The sum of the effect of Discontinued Lines and Coverages on the combined ratio and the Allstate Protection combined ratio is equal to the Property-Liability combined ratio. |
• | Effect of Shelter-in-Place
Payback expense on combined and expense ratios: the ratio of Shelter-in-Place Payback expense to premiums earned. |
Summarized financial data | ||||||||||||||||
Three
months ended June 30, | Six months ended June 30, | |||||||||||||||
($ in millions, except ratios) | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Premiums written | $ | 9,172 | $ | 9,043 | $ | 17,764 | $ | 17,370 | ||||||||
Revenues | ||||||||||||||||
Premiums
earned | $ | 8,863 | $ | 8,681 | $ | 17,744 | $ | 17,188 | ||||||||
Other
revenue | 182 | 190 | 363 | 366 | ||||||||||||
Net investment income | 178 | 471 | 380 | 762 | ||||||||||||
Realized
capital gains (losses) | 382 | 256 | 279 | 753 | ||||||||||||
Total revenues | 9,605 | 9,598 | 18,766 | 19,069 | ||||||||||||
Costs
and expenses | ||||||||||||||||
Claims and claims expense | (5,139 | ) | (6,272 | ) | (10,390 | ) | (12,002 | ) | ||||||||
Shelter-in-Place
Payback expense (1) | (738 | ) | — | (948 | ) | — | ||||||||||
Amortization
of DAC | (1,149 | ) | (1,163 | ) | (2,316 | ) | (2,327 | ) | ||||||||
Operating costs and expenses (2) | (1,107 | ) | (1,060 | ) | (2,192 | ) | (2,131 | ) | ||||||||
Restructuring
and related charges | (8 | ) | (9 | ) | (12 | ) | (27 | ) | ||||||||
Total costs and expenses | (8,141 | ) | (8,504 | ) | (15,858 | ) | (16,487 | ) | ||||||||
Income
tax expense | (292 | ) | (231 | ) | (574 | ) | (537 | ) | ||||||||
Net income applicable to common shareholders | $ | 1,172 | $ | 863 | $ | 2,334 | $ | 2,045 | ||||||||
Underwriting
income | $ | 904 | $ | 367 | $ | 2,249 | $ | 1,067 | ||||||||
Net
investment income | 178 | 471 | 380 | 762 | ||||||||||||
Income tax expense on operations | (209 | ) | (179 | ) | (512 | ) | (381 | ) | ||||||||
Realized
capital gains (losses), after-tax | 299 | 204 | 217 | 597 | ||||||||||||
Net income
applicable to common shareholders | $ | 1,172 | $ | 863 | $ | 2,334 | $ | 2,045 | ||||||||
Catastrophe
losses | ||||||||||||||||
Catastrophe losses, excluding reserve reestimates | $ | 1,161 | $ | 1,069 | $ | 1,392 | $ | 1,696 | ||||||||
Catastrophe
reserve reestimates (3) (4) | 25 | 3 | 5 | 56 | ||||||||||||
Total
catastrophe losses | $ | 1,186 | $ | 1,072 | $ | 1,397 | $ | 1,752 | ||||||||
Non-catastrophe
reserve reestimates (3) | (35 | ) | (86 | ) | (7 | ) | (127 | ) | ||||||||
Prior
year reserve reestimates (3) | (10 | ) | (83 | ) | (2 | ) | (71 | ) | ||||||||
GAAP
operating ratios | ||||||||||||||||
Loss ratio | 58.0 | 72.3 | 58.5 | 69.8 | ||||||||||||
Expense
ratio (5) | 31.8 | 23.5 | 28.8 | 24.0 | ||||||||||||
Combined
ratio | 89.8 | 95.8 | 87.3 | 93.8 | ||||||||||||
Effect of catastrophe losses on combined
ratio | 13.4 | 12.3 | 7.9 | 10.2 | ||||||||||||
Effect of prior year reserve reestimates
on combined ratio | (0.1 | ) | (0.9 | ) | (0.1 | ) | (0.4 | ) | ||||||||
Effect of catastrophe losses included
in prior year reserve reestimates on combined ratio | 0.3 | — | — | 0.3 | ||||||||||||
Effect
of restructuring and related charges on combined ratio | 0.1 | 0.1 | 0.1 | 0.2 | ||||||||||||
Effect
of Discontinued Lines and Coverages on combined ratio | — | 0.1 | — | — | ||||||||||||
Effect
of Shelter-in-Place Payback expense on combined and expense ratios | 8.3 | — | 5.3 | — |
(1) | Due
to the significant declines in the number of auto accidents caused by mandated stay-at-home orders, other pandemic containment actions and reduced economic activity, auto and commercial lines customers received a Shelter-in-Place Payback of $948 million with $210 million recognized in the first quarter of 2020 and $738 million recognized in the second quarter of 2020. |
(2) | As a result of the Coronavirus, we offered the Allstate Special Payment plan to provide more flexible
payment options, including the option to delay payments to customers, resulting in increased bad debt expense of $44 million and $47 million for the three and six months ended June 30, 2020, respectively. This increase added 0.5 points and 0.3 points to the expense ratio for the second quarter and first six months of 2020, respectively. |
(3) | Favorable reserve reestimates are shown in parentheses. |
(4) | 2019
includes $5 million and $20 million of reinstatement reinsurance premiums incurred during the period related to the 2018 Camp Fire in the three and six months ended June 30, 2019, respectively. |
(5) | Other revenue is deducted from operating costs and expenses in the expense ratio calculation. |
Net
investment income | ||||||||||||||||
Three months ended June 30, | Six months
ended June 30, | |||||||||||||||
($ in millions) | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Fixed income securities | $ | 275 | $ | 265 | $ | 542 | $ | 524 | ||||||||
Equity
securities | 16 | 49 | 22 | 72 | ||||||||||||
Mortgage loans | 6 | 4 | 12 | 8 | ||||||||||||
Limited
partnership interests | (117 | ) | 152 | (194 | ) | 158 | ||||||||||
Short-term investments | 2 | 16 | 11 | 31 | ||||||||||||
Other | 25 | 27 | 50 | 53 | ||||||||||||
Investment
income, before expense | 207 | 513 | 443 | 846 | ||||||||||||
Investment expense (1)
(2) | (29 | ) | (42 | ) | (63 | ) | (84 | ) | ||||||||
Net investment income | $ | 178 | $ | 471 | $ | 380 | $ | 762 |
(1) | Investment
expense includes $9 million and $14 million of investee level expenses in the second quarter of 2020 and 2019, respectively, and $17 million and $27 million in the first six months of 2020 and 2019, respectively. Investee level expenses include asset level operating expenses on directly held real estate and other consolidated investments. Beginning January 1, 2020, depreciation previously included in investee level expenses is reported as realized capital gains or losses. |
(2) | Investment
expense includes zero and $8 million related to the portion of reinvestment income on securities lending collateral paid to the counterparties in the second quarter of 2020 and 2019, respectively, and $4 million and $15 million in the first six months of 2020 and 2019, respectively. |
Realized
capital gains (losses) | ||||||||||||||||
($ in millions) | Three months ended June 30, | Six
months ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Sales (1) | $ | 150 | $ | 107 | $ | 516 | $ | 208 | ||||||||
Credit
losses (2) | — | (10 | ) | (35 | ) | (17 | ) | |||||||||
Valuation
of equity investments | 218 | 141 | (294 | ) | 594 | |||||||||||
Valuation
and settlements of derivative instruments | 14 | 18 | 92 | (32 | ) | |||||||||||
Realized
capital gains (losses), pre-tax | 382 | 256 | 279 | 753 | ||||||||||||
Income tax
expense | (83 | ) | (52 | ) | (62 | ) | (156 | ) | ||||||||
Realized capital gains (losses), after-tax | $ | 299 | $ | 204 | $ | 217 | $ | 597 |
(1) | Beginning
January 1, 2020, depreciation previously included in investee level expenses is reported as realized capital gains or losses. |
(2) | Due to the adoption of the measurement of credit losses on financial instruments accounting standard, realized capital losses previously reported as other-than-temporary impairment write-downs are now presented as credit losses. |
Underwriting results | ||||||||||||||||
Three
months ended June 30, | Six months ended June 30, | |||||||||||||||
($ in millions) | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Premiums written | $ | 9,172 | $ | 9,043 | $ | 17,764 | $ | 17,370 | ||||||||
Premiums
earned | $ | 8,863 | $ | 8,681 | $ | 17,744 | $ | 17,188 | ||||||||
Other
revenue | 182 | 190 | 363 | 366 | ||||||||||||
Claims and claims expense | (5,137 | ) | (6,269 | ) | (10,386 | ) | (11,997 | ) | ||||||||
Shelter-in-Place
Payback expense | (738 | ) | — | (948 | ) | — | ||||||||||
Amortization of DAC | (1,149 | ) | (1,163 | ) | (2,316 | ) | (2,327 | ) | ||||||||
Other
costs and expenses | (1,106 | ) | (1,060 | ) | (2,190 | ) | (2,130 | ) | ||||||||
Restructuring and related charges | (8 | ) | (9 | ) | (12 | ) | (27 | ) | ||||||||
Underwriting
income | $ | 907 | $ | 370 | $ | 2,255 | $ | 1,073 | ||||||||
Catastrophe
losses | $ | 1,186 | $ | 1,072 | $ | 1,397 | $ | 1,752 | ||||||||
Underwriting
income (loss) by line of business | ||||||||||||||||
Auto | $ | 999 | $ | 401 | $ | 1,655 | $ | 911 | ||||||||
Homeowners | (140 | ) | (88 | ) | 441 | 54 | ||||||||||
Other
personal lines (1) | 43 | 47 | 134 | 80 | ||||||||||||
Commercial
lines | (11 | ) | (7 | ) | (6 | ) | — | |||||||||
Other business lines (2) | 16 | 18 | 30 | 29 | ||||||||||||
Answer
Financial | — | (1 | ) | 1 | (1 | ) | ||||||||||
Underwriting income | $ | 907 | $ | 370 | $ | 2,255 | $ | 1,073 |
(1) | Other
personal lines include renters, condominium, landlord and other personal lines products. |
(2) | Other business lines primarily represent Ivantage, a general agency for Allstate exclusive agencies and reflects revenue and direct operating expenses of the business. Ivantage provides agencies a solution for their customers when coverage through Allstate brand underwritten products is not available. |
Changes
in underwriting results from prior year by component and by line of business (1) | ||||||||||||||||||||||||||||||||||||||||
Three months ended June 30, | ||||||||||||||||||||||||||||||||||||||||
Auto | Homeowners | Other personal lines | Commercial
lines | Allstate Protection (2) | ||||||||||||||||||||||||||||||||||||
($ in millions) | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||||||||||
Underwriting
income (loss) - prior period | $ | 401 | $ | 399 | $ | (88 | ) | $ | 15 | $ | 47 | $ | 65 | $ | (7 | ) | $ | (36 | ) | $ | 370 | $ | 458 | |||||||||||||||||
Changes
in underwriting income (loss) from: | ||||||||||||||||||||||||||||||||||||||||
Increase
(decrease) premiums earned | 138 | 330 | 95 | 94 | 16 | 7 | (67 | ) | 61 | 182 | 492 | |||||||||||||||||||||||||||||
Increase
(decrease) other revenue | (6 | ) | — | (1 | ) | — | 1 | 1 | — | 1 | (8 | ) | 6 | |||||||||||||||||||||||||||
(Increase)
decrease incurred claims and claims expense (“losses”): | ||||||||||||||||||||||||||||||||||||||||
Incurred
losses, excluding catastrophe losses and reserve reestimates | 1,204 | (265 | ) | 2 | (41 | ) | 9 | — | 83 | (62 | ) | 1,298 | (368 | ) | ||||||||||||||||||||||||||
Catastrophe
losses, excluding reserve reestimates | 57 | (14 | ) | (119 | ) | (176 | ) | (26 | ) | (13 | ) | (4 | ) | — | (92 | ) | (203 | ) | ||||||||||||||||||||||
Catastrophe
reserve reestimates | — | 1 | (16 | ) | 33 | (5 | ) | 3 | (1 | ) | — | (22 | ) | 37 | ||||||||||||||||||||||||||
Non-catastrophe
reserve reestimates | (50 | ) | (54 | ) | (3 | ) | (10 | ) | 8 | (16 | ) | (7 | ) | 32 | (52 | ) | (48 | ) | ||||||||||||||||||||||
Losses
subtotal | 1,211 | (332 | ) | (136 | ) | (194 | ) | (14 | ) | (26 | ) | 71 | (30 | ) | 1,132 | (582 | ) | |||||||||||||||||||||||
Shelter-in-Place
Payback expense | (734 | ) | — | — | — | — | — | (4 | ) | — | (738 | ) | — | |||||||||||||||||||||||||||
(Increase)
decrease expenses | (11 | ) | 4 | (10 | ) | (3 | ) | (7 | ) | — | (4 | ) | (3 | ) | (31 | ) | (4 | ) | ||||||||||||||||||||||
Underwriting
income (loss) | $ | 999 | $ | 401 | $ | (140 | ) | $ | (88 | ) | $ | 43 | $ | 47 | $ | (11 | ) | $ | (7 | ) | $ | 907 | $ | 370 | ||||||||||||||||
Six
months ended June 30, | ||||||||||||||||||||||||||||||||||||||||
Auto | Homeowners | Other personal lines | Commercial lines | Allstate Protection (2) | ||||||||||||||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||||||||||
Underwriting
income (loss) - prior period | $ | 911 | $ | 1,016 | $ | 54 | $ | 356 | $ | 80 | $ | 115 | $ | — | $ | (42 | ) | $ | 1,073 | $ | 1,466 | |||||||||||||||||||
Changes
in underwriting income (loss) from: | ||||||||||||||||||||||||||||||||||||||||
Increase
(decrease) premiums earned | 362 | 669 | 198 | 181 | 28 | 22 | (32 | ) | 108 | 556 | 980 | |||||||||||||||||||||||||||||
Increase
(decrease) other revenue | (2 | ) | 3 | (1 | ) | — | 2 | 1 | — | — | (3 | ) | 8 | |||||||||||||||||||||||||||
(Increase)
decrease losses: | ||||||||||||||||||||||||||||||||||||||||
Incurred
losses, excluding catastrophe losses and reserve reestimates | 1,334 | (533 | ) | (14 | ) | (90 | ) | 5 | 8 | 52 | (112 | ) | 1,377 | (727 | ) | |||||||||||||||||||||||||
Catastrophe
losses, excluding reserve reestimates | 110 | (60 | ) | 183 | (376 | ) | 14 | (39 | ) | (3 | ) | 2 | 304 | (473 | ) | |||||||||||||||||||||||||
Catastrophe
reserve reestimates | 8 | (25 | ) | 38 | 21 | 8 | (8 | ) | (3 | ) | — | 51 | (12 | ) | ||||||||||||||||||||||||||
Non-catastrophe
reserve reestimates | (125 | ) | (74 | ) | 3 | (19 | ) | 8 | (18 | ) | (7 | ) | 48 | (121 | ) | (63 | ) | |||||||||||||||||||||||
Losses
subtotal | 1,327 | (692 | ) | 210 | (464 | ) | 35 | (57 | ) | 39 | (62 | ) | 1,611 | (1,275 | ) | |||||||||||||||||||||||||
Shelter-in-Place
Payback expense | (944 | ) | — | — | — | — | — | (4 | ) | — | (948 | ) | — | |||||||||||||||||||||||||||
(Increase)
decrease expenses | 1 | (85 | ) | (20 | ) | (19 | ) | (11 | ) | (1 | ) | (9 | ) | (4 | ) | (34 | ) | (106 | ) | |||||||||||||||||||||
Underwriting
income (loss) | $ | 1,655 | $ | 911 | $ | 441 | $ | 54 | $ | 134 | $ | 80 | $ | (6 | ) | $ | — | $ | 2,255 | $ | 1,073 |
(1) | The
2020 column presents changes relative to 2019. The 2019 column presents changes relative to 2018. |
(2) | Includes other business lines and Answer Financial. |
Premiums written and earned by line of business | ||||||||||||||||
($ in
millions) | Three months ended June 30, | Six months ended June 30, | ||||||||||||||
Premiums written | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Auto | $ | 6,190 | $ | 6,087 | $ | 12,399 | $ | 12,134 | ||||||||
Homeowners
| 2,284 | 2,219 | 4,016 | 3,895 | ||||||||||||
Other personal lines | 528 | 501 | 958 | 920 | ||||||||||||
Subtotal
– Personal lines | 9,002 | 8,807 | 17,373 | 16,949 | ||||||||||||
Commercial lines | 170 | 236 | 391 | 421 | ||||||||||||
Total
premiums written | $ | 9,172 | $ | 9,043 | $ | 17,764 | $ | 17,370 | ||||||||
Reconciliation
of premiums written to premiums earned: | ||||||||||||||||
(Increase) decrease in unearned premiums | (349 | ) | (384 | ) | 21 | (205 | ) | |||||||||
Other | 40 | 22 | (41 | ) | 23 | |||||||||||
Total
premiums earned | $ | 8,863 | $ | 8,681 | $ | 17,744 | $ | 17,188 | ||||||||
Auto | $ | 6,173 | $ | 6,035 | $ | 12,327 | $ | 11,965 | ||||||||
Homeowners | 2,053 | 1,958 | 4,091 | 3,893 | ||||||||||||
Other
personal lines | 478 | 462 | 949 | 921 | ||||||||||||
Subtotal – Personal lines | 8,704 | 8,455 | 17,367 | 16,779 | ||||||||||||
Commercial
lines | 159 | 226 | 377 | 409 | ||||||||||||
Total premiums earned | $ | 8,863 | $ | 8,681 | $ | 17,744 | $ | 17,188 |
Combined
ratios by line of business | ||||||||||||||||||
Loss ratio | Expense ratio (1) | Combined ratio | ||||||||||||||||
2020 | 2019 | 2020 | 2019 | 2020 | 2019 | |||||||||||||
Three
months ended June 30, | ||||||||||||||||||
Auto | 48.0 | 69.2 | 35.8 | 24.2 | 83.8 | 93.4 | ||||||||||||
Impact
of Shelter-in-Place Payback | — | — | 11.9 | — | 11.9 | — | ||||||||||||
Homeowners | 84.8 | 82.0 | 22.0 | 22.5 | 106.8 | 104.5 | ||||||||||||
Other
personal lines | 64.9 | 64.1 | 26.1 | 25.7 | 91.0 | 89.8 | ||||||||||||
Commercial
lines | 78.6 | 86.7 | 28.3 | 16.4 | 106.9 | 103.1 | ||||||||||||
Impact
of Shelter-in-Place Payback | — | — | 2.5 | — | 2.5 | — | ||||||||||||
Total | 58.0 | 72.2 | 31.8 | 23.5 | 89.8 | 95.7 | ||||||||||||
Impact
of Shelter-in-Place Payback | — | — | 8.3 | — | 8.3 | — | ||||||||||||
Impact
of Allstate Special Payment plan bad debt expense (2) | — | — | 0.5 | — | 0.5 | — | ||||||||||||
Six
months ended June 30, | ||||||||||||||||||
Auto | 55.1 | 67.8 | 31.5 | 24.6 | 86.6 | 92.4 | ||||||||||||
Impact
of Shelter-in-Place Payback | — | — | 7.7 | — | 7.7 | — | ||||||||||||
Homeowners | 66.9 | 75.7 | 22.3 | 22.9 | 89.2 | 98.6 | ||||||||||||
Other
personal lines | 59.7 | 65.2 | 26.2 | 26.1 | 85.9 | 91.3 | ||||||||||||
Commercial
lines | 78.5 | 81.9 | 23.1 | 18.1 | 101.6 | 100.0 | ||||||||||||
Impact
of Shelter-in-Place Payback | — | — | 1.1 | — | 1.1 | — | ||||||||||||
Total | 58.5 | 69.8 | 28.8 | 24.0 | 87.3 | 93.8 | ||||||||||||
Impact
of Shelter-in-Place Payback | — | — | 5.3 | — | 5.3 | — | ||||||||||||
Impact
of Allstate Special Payment plan bad debt expense (2) | — | — | 0.3 | — | 0.3 | — |
(1) | Other
revenue is deducted from operating costs and expenses in the expense ratio calculation. |
(2) | Relates to the Allstate Special Payment plan offered to customers as a result of the Coronavirus to provide more flexible payment options, including the option to delay payments. Approximately 70% of the higher bad debt expense was attributed to auto. |
Loss ratios by line of business | ||||||||||||||||||||||||
Loss ratio | Effect
of catastrophe losses | Effect of prior year reserve reestimates | Effect of catastrophe losses included in prior year reserve reestimates | |||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||
Three
months ended June 30, | ||||||||||||||||||||||||
Auto | 48.0 | 69.2 | 2.2 | 3.2 | (0.9 | ) | (1.7 | ) | (0.1 | ) | (0.1 | ) | ||||||||||||
Homeowners | 84.8 | 82.0 | 46.4 | 41.8 | 1.1 | 0.2 | 1.3 | 0.6 | ||||||||||||||||
Other
personal lines | 64.9 | 64.1 | 18.6 | 12.6 | (0.4 | ) | 0.2 | 0.4 | (0.6 | ) | ||||||||||||||
Commercial
lines | 78.6 | 86.7 | 5.7 | 1.8 | 13.2 | 5.7 | 1.3 | 0.4 | ||||||||||||||||
Total | 58.0 | 72.2 | 13.4 | 12.3 | (0.1 | ) | (1.0 | ) | 0.3 | — | ||||||||||||||
Six
months ended June 30, | ||||||||||||||||||||||||
Auto | 55.1 | 67.8 | 1.2 | 2.2 | (0.3 | ) | (1.3 | ) | (0.1 | ) | (0.1 | ) | ||||||||||||
Homeowners | 66.9 | 75.7 | 27.8 | 34.8 | 0.4 | 1.5 | 0.5 | 1.5 | ||||||||||||||||
Other
personal lines | 59.7 | 65.2 | 10.7 | 13.5 | (0.8 | ) | 0.9 | (0.2 | ) | 0.7 | ||||||||||||||
Commercial
lines | 78.5 | 81.9 | 2.9 | 1.2 | 7.2 | 4.2 | 0.8 | — | ||||||||||||||||
Total | 58.5 | 69.8 | 7.9 | 10.2 | (0.1 | ) | (0.4 | ) | — | 0.3 |
Catastrophe losses by the size of event | ||||||||||||||||||||
Three months ended
June 30, 2020 | ||||||||||||||||||||
($ in millions) | Number of events | Claims and claims expense | Combined ratio impact | Average
catastrophe loss per event | ||||||||||||||||
Size of catastrophe loss | ||||||||||||||||||||
Greater
than $250 million | — | — | % | $ | — | — | % | — | $ | — | ||||||||||
$101
million to $250 million | 3 | 12.5 | 473 | 39.9 | 5.3 | 158 | ||||||||||||||
$50
million to $100 million | 6 | 25.0 | 375 | 31.6 | 4.2 | 63 | ||||||||||||||
Less
than $50 million | 15 | 62.5 | 297 | 25.0 | 3.4 | 20 | ||||||||||||||
Total | 24 | 100.0 | % | 1,145 | 96.5 | 12.9 | 48 | |||||||||||||
Prior
year reserve reestimates | 25 | 2.1 | 0.3 | |||||||||||||||||
Prior
quarter reserve reestimates | 16 | 1.4 | 0.2 | |||||||||||||||||
Total
catastrophe losses | $ | 1,186 | 100.0 | % | 13.4 | |||||||||||||||
Six
months ended June 30, 2020 | ||||||||||||||||||||
Number of events | Claims and claims expense | Combined ratio impact | Average
catastrophe loss per event | |||||||||||||||||
Size of catastrophe loss | ||||||||||||||||||||
Greater
than $250 million | — | — | % | $ | — | — | % | — | $ | — | ||||||||||
$101
million to $250 million | 3 | 8.3 | 473 | 33.9 | 2.7 | 158 | ||||||||||||||
$50
million to $100 million | 8 | 22.2 | 498 | 35.6 | 2.8 | 62 | ||||||||||||||
Less
than $50 million | 25 | 69.5 | 421 | 30.1 | 2.4 | 17 | ||||||||||||||
Total | 36 | 100.0 | % | 1,392 | 99.6 | 7.9 | 39 | |||||||||||||
Prior
year reserve reestimates | 5 | 0.4 | — | |||||||||||||||||
Total
catastrophe losses | $ | 1,397 | 100.0 | % | 7.9 |
Catastrophe
losses by the type of event | ||||||||||||||||||||||||||||
Three months ended June 30, | Six
months ended June 30, | |||||||||||||||||||||||||||
($ in millions) | Number of events | 2020 | Number of events | 2019 | Number of events | 2020 | Number
of events | 2019 | ||||||||||||||||||||
Hurricanes/Tropical storms | — | $ | — | — | $ | — | — | $ | — | — | $ | — | ||||||||||||||||
Tornadoes | — | — | 3 | 305 | 2 | 39 | 4 | 320 | ||||||||||||||||||||
Wind/Hail | 23 | 1,141 | 34 | 776 | 31 | 1,340 | 49 | 1,256 | ||||||||||||||||||||
Wildfires | — | — | — | — | 1 | 2 | — | — | ||||||||||||||||||||
Other
events | 1 | 4 | — | — | 2 | 11 | 6 | 120 | ||||||||||||||||||||
Prior
year reserve reestimates | 25 | 3 | 5 | 56 | ||||||||||||||||||||||||
Prior
quarter reserve reestimates | 16 | (12 | ) | — | — | |||||||||||||||||||||||
Total
catastrophe losses | 24 | $ | 1,186 | 37 | $ | 1,072 | 36 | $ | 1,397 | 59 | $ | 1,752 |
Impact
of specific costs and expenses on the expense ratio | ||||||||||||
Three months ended June 30, | Six
months ended June 30, | |||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||
Amortization of DAC | 13.0 | 13.4 | 13.1 | 13.6 | ||||||||
Advertising
expense | 2.4 | 2.2 | 2.3 | 2.2 | ||||||||
Other costs and expenses | 7.5 | 7.8 | 7.7 | 8.0 | ||||||||
Restructuring
and related charges | 0.1 | 0.1 | 0.1 | 0.2 | ||||||||
Subtotal | 23.0 | 23.5 | 23.2 | 24.0 | ||||||||
Shelter-in-Place
Payback expense | 8.3 | — | 5.3 | — | ||||||||
Allstate Special Payment plan bad debt expense | 0.5 | — | 0.3 | — | ||||||||
Total
expense ratio | 31.8 | 23.5 | 28.8 | 24.0 |
Total
reserves, net of reinsurance (estimated cost of outstanding claims) as of January 1, by line of business | ||||||||
($ in millions) | 2020 | 2019 | ||||||
Auto | $ | 14,728 | $ | 14,378 | ||||
Homeowners | 2,138 | 2,157 | ||||||
Other
personal lines | 1,458 | 1,489 | ||||||
Commercial lines | 1,072 | 801 | ||||||
Total
Allstate Protection | $ | 19,396 | $ | 18,825 |
Reserve
reestimates | ||||||||||||||||||||||||||||
Three months ended June 30, | Six months
ended June 30, | |||||||||||||||||||||||||||
Reserve reestimate (1) | Effect on combined ratio (2) | Reserve reestimate (1) | Effect on combined ratio (2) | |||||||||||||||||||||||||
($ in millions, except ratios) | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
Auto | $ | (54 | ) | $ | (104 | ) | (0.6 | ) | (1.2 | ) | $ | (41 | ) | $ | (158 | ) | (0.3 | ) | (0.9 | ) | ||||||||
Homeowners | 23 | 4 | 0.3 | — | 16 | 57 | 0.1 | 0.4 | ||||||||||||||||||||
Other
personal lines | (2 | ) | 1 | — | — | (8 | ) | 8 | — | — | ||||||||||||||||||
Commercial
lines | 21 | 13 | 0.2 | 0.2 | 27 | 17 | 0.1 | 0.1 | ||||||||||||||||||||
Total
Allstate Protection | $ | (12 | ) | $ | (86 | ) | (0.1 | ) | (1.0 | ) | $ | (6 | ) | $ | (76 | ) | (0.1 | ) | (0.4 | ) | ||||||||
Allstate
brand | $ | (12 | ) | $ | (83 | ) | (0.1 | ) | (1.0 | ) | $ | (5 | ) | $ | (81 | ) | (0.1 | ) | (0.4 | ) | ||||||||
Esurance
brand | 1 | — | — | — | 2 | 3 | — | — | ||||||||||||||||||||
Encompass
brand | (1 | ) | (3 | ) | — | — | (3 | ) | 2 | — | — | |||||||||||||||||
Total
Allstate Protection | $ | (12 | ) | $ | (86 | ) | (0.1 | ) | (1.0 | ) | $ | (6 | ) | $ | (76 | ) | (0.1 | ) | (0.4 | ) |
(1) | Favorable
reserve reestimates are shown in parentheses. |
(2) | Ratios are calculated using Allstate Protection premiums earned. |
Premiums
written, policies in force and underwriting income (loss) | ||||||||||||||||||||||||||||
($ in millions) | Allstate brand | Esurance brand | Encompass brand | Allstate Protection | ||||||||||||||||||||||||
Premiums written | Amount | Percent
to total brand | Amount | Percent to total brand | Amount | Percent to total brand | Amount | Percent to total | ||||||||||||||||||||
Auto | $ | 11,146 | 68.7 | % | $ | 999 | 93.9 | % | $ | 254 | 52.4 | % | $ | 12,399 | 69.8 | % | ||||||||||||
Homeowners | 3,762 | 23.2 | 61 | 5.7 | 193 | 39.8 | 4,016 | 22.6 | ||||||||||||||||||||
Other
personal lines | 916 | 5.7 | 4 | 0.4 | 38 | 7.8 | 958 | 5.4 | ||||||||||||||||||||
Commercial
lines | 391 | 2.4 | — | — | — | — | 391 | 2.2 | ||||||||||||||||||||
Total | $ | 16,215 | 100.0 | % | $ | 1,064 | 100.0 | % | $ | 485 | 100.0 | % | $ | 17,764 | 100.0 | % | ||||||||||||
Percent
to total Allstate Protection | 91.3 | % | 6.0 | % | 2.7 | % | 100.0 | % | ||||||||||||||||||||
PIF
(thousands) | ||||||||||||||||||||||||||||
Auto | 20,464 | 65.3 | % | 1,514 | 90.8 | % | 473 | 61.3 | % | 22,451 | 66.5 | % | ||||||||||||||||
Homeowners | 6,284 | 20.1 | 107 | 6.4 | 225 | 29.1 | 6,616 | 19.6 | ||||||||||||||||||||
Other
personal lines | 4,369 | 13.9 | 46 | 2.8 | 74 | 9.6 | 4,489 | 13.3 | ||||||||||||||||||||
Commercial
lines | 221 | 0.7 | — | — | — | — | 221 | 0.6 | ||||||||||||||||||||
Total
| 31,338 | 100.0 | % | 1,667 | 100.0 | % | 772 | 100.0 | % | 33,777 | 100.0 | % | ||||||||||||||||
Percent
to total Allstate Protection | 92.8 | % | 4.9 | % | 2.3 | % | 100.0 | % | ||||||||||||||||||||
Underwriting
income (loss) | ||||||||||||||||||||||||||||
Auto | $ | 1,546 | 72.1 | % | $ | 79 | 86.8 | % | $ | 30 | 150.0 | % | $ | 1,655 | 73.4 | % | ||||||||||||
Homeowners | 437 | 20.4 | 11 | 12.1 | (7 | ) | (35.0 | ) | 441 | 19.6 | ||||||||||||||||||
Other
personal lines | 136 | 6.4 | 1 | 1.1 | (3 | ) | (15.0 | ) | 134 | 6.0 | ||||||||||||||||||
Commercial
lines | (6 | ) | (0.3 | ) | — | — | — | — | (6 | ) | (0.3 | ) | ||||||||||||||||
Other
business lines | 30 | 1.4 | — | — | — | — | 30 | 1.3 | ||||||||||||||||||||
Answer
Financial | — | — | — | — | — | — | 1 | — | ||||||||||||||||||||
Total | $ | 2,143 | 100.0 | % | $ | 91 | 100.0 | % | $ | 20 | 100.0 | % | $ | 2,255 | 100.0 | % |
• | PIF: Policy counts are based on items rather than customers. A multi-car customer would generate multiple item (policy) counts, even if all cars were insured under one policy while Commercial lines PIF counts for shared economy agreements typically reflect contracts that cover multiple rather than individual drivers. |
• | New
issued applications: Item counts of automobile or homeowner insurance applications for insurance policies that were issued during the period, regardless of whether the customer was previously insured by another Allstate Protection brand. Allstate brand includes automobiles added by existing customers when they exceed the number allowed (currently 10) on a policy. |
• | Average premium-gross written (“average premium”): Gross premiums written divided by issued item count. Gross premiums written include the impacts from discounts, surcharges and ceded reinsurance premiums and exclude the impacts from mid-term premium adjustments and premium refund accruals. Average premiums represent the
appropriate policy term for each line. Allstate and Esurance brand policy terms are 6 months for auto and 12 months for homeowners. Encompass brand policy terms are generally 12 months for auto and homeowners. |
• | Renewal ratio: Renewal policy item counts issued during the period, based on contract effective dates, divided by the total policy item counts issued 6 months prior for auto (generally 12 months prior for Encompass brand) or 12 months prior for homeowners. |
• | Approved
rate changes: Based on historical premiums written in locations where the brands operate, not including rate plan enhancements (such as the introduction of discounts and surcharges that result in no change in the overall rate level) and initial rates filed for insurance subsidiaries initially writing business in a location. Includes rate changes approved based on our net cost of reinsurance. The rate change percentages are calculated using approved rate changes during the period as a percentage of: |
– | Total brand premiums written |
– | Premiums
written in respective locations with rate changes |
Underwriting
results | ||||||||||||||||
($ in millions) | Three months ended June 30, | Six
months ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Premiums written | $ | 8,391 | $ | 8,262 | $ | 16,215 | $ | 15,806 | ||||||||
Premiums
earned | $ | 8,087 | $ | 7,902 | $ | 16,193 | $ | 15,654 | ||||||||
Other
revenue | 141 | 151 | 280 | 286 | ||||||||||||
Claims and claims expense | (4,685 | ) | (5,683 | ) | (9,404 | ) | (10,853 | ) | ||||||||
Shelter-in-Place
Payback expense | (664 | ) | — | (852 | ) | — | ||||||||||
Amortization of DAC | (1,090 | ) | (1,103 | ) | (2,197 | ) | (2,208 | ) | ||||||||
Other
costs and expenses | (953 | ) | (891 | ) | (1,867 | ) | (1,785 | ) | ||||||||
Restructuring and related charges | (7 | ) | (9 | ) | (10 | ) | (25 | ) | ||||||||
Underwriting
income | $ | 829 | $ | 367 | $ | 2,143 | $ | 1,069 | ||||||||
Catastrophe
losses | $ | 1,109 | $ | 1,021 | $ | 1,305 | $ | 1,665 | ||||||||
Underwriting
income (loss) by line of business | ||||||||||||||||
Auto | $ | 894 | $ | 387 | $ | 1,546 | $ | 899 | ||||||||
Homeowners | (118 | ) | (79 | ) | 437 | 63 | ||||||||||
Other
personal lines (1) | 48 | 48 | 136 | 78 | ||||||||||||
Commercial
lines | (11 | ) | (7 | ) | (6 | ) | — | |||||||||
Other business lines (2) | 16 | 18 | 30 | 29 | ||||||||||||
Underwriting
income | $ | 829 | $ | 367 | $ | 2,143 | $ | 1,069 |
(1) | Other
personal lines include renters, condominium, landlord and other personal lines products. |
(2) | Other business lines primarily represent Ivantage. |
Changes in underwriting results from prior
year by component (1) | ||||||||||||||||
($ in millions) | Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Underwriting
income (loss) - prior period | $ | 367 | $ | 463 | $ | 1,069 | $ | 1,464 | ||||||||
Changes
in underwriting income (loss) from: | ||||||||||||||||
Increase (decrease) premiums earned | 185 | 432 | 539 | 855 | ||||||||||||
Increase
(decrease) other revenue | (10 | ) | 8 | (6 | ) | 7 | ||||||||||
(Increase) decrease incurred claims
and claims expense (“losses”): | ||||||||||||||||
Incurred losses, excluding catastrophe losses and reserve reestimates | 1,129 | (292 | ) | 1,204 | (590 | ) | ||||||||||
Catastrophe
losses, excluding reserve reestimates | (60 | ) | (224 | ) | 321 | (486 | ) | |||||||||
Catastrophe reserve
reestimates | (28 | ) | 40 | 39 | (13 | ) | ||||||||||
Non-catastrophe reserve reestimates | (43 | ) | (49 | ) | (115 | ) | (58 | ) | ||||||||
Losses
subtotal | 998 | (525 | ) | 1,449 | (1,147 | ) | ||||||||||
Shelter-in-Place Payback expense | (664 | ) | — | (852 | ) | — | ||||||||||
(Increase)
decrease expenses | (47 | ) | (11 | ) | (56 | ) | (110 | ) | ||||||||
Underwriting income | $ | 829 | $ | 367 | $ | 2,143 | $ | 1,069 |
(1) | The
2020 column presents changes in 2020 compared to 2019. The 2019 column presents changes in 2019 compared to 2018. |
Premiums written and earned by line of business | ||||||||||||||||
($ in
millions) | Three months ended June 30, | Six months ended June 30, | ||||||||||||||
Premiums written | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Auto | $ | 5,572 | $ | 5,472 | $ | 11,146 | $ | 10,867 | ||||||||
Homeowners
(1) | 2,144 | 2,076 | 3,762 | 3,641 | ||||||||||||
Other
personal lines | 505 | 478 | 916 | 877 | ||||||||||||
Subtotal – Personal lines | 8,221 | 8,026 | 15,824 | 15,385 | ||||||||||||
Commercial
lines | 170 | 236 | 391 | 421 | ||||||||||||
Total | $ | 8,391 | $ | 8,262 | $ | 16,215 | $ | 15,806 | ||||||||
Premiums
earned | ||||||||||||||||
Auto | $ | 5,547 | $ | 5,404 | $ | 11,079 | $ | 10,725 | ||||||||
Homeowners | 1,924 | 1,832 | 3,831 | 3,643 | ||||||||||||
Other
personal lines | 457 | 440 | 906 | 877 | ||||||||||||
Subtotal – Personal lines | 7,928 | 7,676 | 15,816 | 15,245 | ||||||||||||
Commercial
lines | 159 | 226 | 377 | 409 | ||||||||||||
Total | $ | 8,087 | $ | 7,902 | $ | 16,193 | $ | 15,654 |
(1) | The
cost of our catastrophe reinsurance program increased $7 million to $80 million in the second quarter of 2020 from $73 million in the second quarter of 2019 and increased $19 million to $155 million in the first six months of 2020 from $136 million in the first six months of 2019. Catastrophe placement premiums are recorded primarily in the Allstate brand and are a reduction of premium. For a more detailed discussion on reinsurance, see Note 9 of the condensed consolidated financial statements. |
Auto
premium measures and statistics | ||||||||||||||||||||||||
Three
months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||
2020 | 2019 | Change | 2020 | 2019 | Change | |||||||||||||||||||
PIF
(thousands) | 20,464 | 20,301 | 0.8 | % | 20,464 | 20,301 | 0.8 | % | ||||||||||||||||
New
issued applications (thousands) | 751 | 755 | (0.5 | )% | 1,502 | 1,495 | 0.5 | % | ||||||||||||||||
Average
premium | $ | 594 | $ | 581 | 2.2 | % | $ | 596 | $ | 579 | 2.9 | % | ||||||||||||
Renewal
ratio (%) | 88.1 | 88.8 | (0.7 | ) | 88.1 | 88.8 | (0.7 | ) | ||||||||||||||||
Approved
rate changes: | ||||||||||||||||||||||||
Impact of rate changes ($ in millions) | $ | 26 | $ | 177 | $ | (151 | ) | $ | 111 | $ | 297 | $ | (186 | ) | ||||||||||
Number
of locations (1) | 14 | 20 | (6 | ) | 23 | 29 | (6 | ) | ||||||||||||||||
Total
brand (%) | 0.1 | 0.8 | (0.7 | ) | 0.5 | 1.4 | (0.9 | ) | ||||||||||||||||
Location
specific (%) | 0.4 | 3.4 | (3.0 | ) | 1.6 | 3.9 | (2.3 | ) |
(1) | Allstate
brand operates in 50 states, the District of Columbia and 5 Canadian provinces. |
Homeowners premium measures and statistics | ||||||||||||||||||||||||
Three
months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||
2020 | 2019 | Change | 2020 | 2019 | Change | |||||||||||||||||||
PIF
(thousands) | 6,284 | 6,221 | 1.0 | % | 6,284 | 6,221 | 1.0 | % | ||||||||||||||||
New
issued applications (thousands) | 224 | 229 | (2.2 | )% | 423 | 426 | (0.7 | )% | ||||||||||||||||
Average
premium | $ | 1,328 | $ | 1,295 | 2.5 | % | $ | 1,322 | $ | 1,283 | 3.0 | % | ||||||||||||
Renewal
ratio (%) | 87.3 | 88.2 | (0.9 | ) | 87.5 | 88.3 | (0.8 | ) | ||||||||||||||||
Approved
rate changes: | ||||||||||||||||||||||||
Impact of rate changes ($ in millions) | $ | 11 | $ | 8 | $ | 3 | $ | 110 | $ | 163 | $ | (53 | ) | |||||||||||
Number
of locations (1) | 5 | 4 | 1 | 20 | 24 | (4 | ) | |||||||||||||||||
Total
brand (%) | 0.1 | 0.1 | — | 1.4 | 2.2 | (0.8 | ) | |||||||||||||||||
Location
specific (%) | 3.4 | 5.1 | (1.7 | ) | 4.1 | 5.4 | (1.3 | ) |
(1) | Allstate
brand operates in 50 states, the District of Columbia and 5 Canadian provinces. |
Combined
ratios by line of business | ||||||||||||||||||
Loss ratio | Expense ratio (1) | Combined ratio | ||||||||||||||||
2020 | 2019 | 2020 | 2019 | 2020 | 2019 | |||||||||||||
Three
months ended June 30, | ||||||||||||||||||
Auto | 47.7 | 68.4 | 36.2 | 24.4 | 83.9 | 92.8 | ||||||||||||
Impact
of Shelter-in-Place Payback | — | — | 11.9 | — | 11.9 | — | ||||||||||||
Homeowners | 84.5 | 82.3 | 21.6 | 22.0 | 106.1 | 104.3 | ||||||||||||
Other
personal lines | 63.7 | 63.9 | 25.8 | 25.2 | 89.5 | 89.1 | ||||||||||||
Commercial
lines | 78.6 | 86.7 | 28.3 | 16.4 | 106.9 | 103.1 | ||||||||||||
Impact
of Shelter-in-Place Payback | — | — | 2.5 | — | 2.5 | — | ||||||||||||
Total | 57.9 | 71.9 | 31.8 | 23.5 | 89.7 | 95.4 | ||||||||||||
Impact
of Shelter-in-Place Payback | — | — | 8.2 | — | 8.2 | — | ||||||||||||
Impact
of Allstate Special Payment plan bad debt expense (2) | — | — | 0.5 | — | 0.5 | — | ||||||||||||
Six
months ended June 30, | ||||||||||||||||||
Auto | 54.3 | 67.0 | 31.7 | 24.6 | 86.0 | 91.6 | ||||||||||||
Impact
of Shelter-in-Place Payback | — | — | 7.7 | — | 7.7 | — | ||||||||||||
Homeowners | 66.6 | 75.8 | 22.0 | 22.5 | 88.6 | 98.3 | ||||||||||||
Other
personal lines | 58.9 | 65.3 | 26.1 | 25.8 | 85.0 | 91.1 | ||||||||||||
Commercial
lines | 78.5 | 81.9 | 23.1 | 18.1 | 101.6 | 100.0 | ||||||||||||
Impact
of Shelter-in-Place Payback | — | — | 1.1 | — | 1.1 | — | ||||||||||||
Total | 58.1 | 69.3 | 28.7 | 23.9 | 86.8 | 93.2 | ||||||||||||
Impact
of Shelter-in-Place Payback | — | — | 5.3 | — | 5.3 | — | ||||||||||||
Impact
of Allstate Special Payment plan bad debt expense (2) | — | — | 0.3 | — | 0.3 | — |
(1) | Other
revenue is deducted from operating costs and expenses in the expense ratio calculation. |
(2) | Relates to the Allstate Special Payment plan offered to customers as a result of the Coronavirus to provide more flexible payment options, including the option to delay payments. Approximately 70% of the higher bad debt expense was attributed to auto. |
Loss ratios by line of business | ||||||||||||||||||||||||
Loss
ratio | Effect of catastrophe losses | Effect of prior year reserve reestimates | Effect of catastrophe losses included in prior year reserve reestimates | |||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||
Three
months ended June 30, | ||||||||||||||||||||||||
Auto | 47.7 | 68.4 | 2.2 | 3.3 | (0.9 | ) | (1.7 | ) | (0.1 | ) | (0.1 | ) | ||||||||||||
Homeowners | 84.5 | 82.3 | 46.3 | 42.6 | 1.1 | (0.1 | ) | 1.4 | 0.3 | |||||||||||||||
Other
personal lines | 63.7 | 63.9 | 18.8 | 13.0 | (0.5 | ) | (0.2 | ) | 0.4 | (0.6 | ) | |||||||||||||
Commercial
lines | 78.6 | 86.7 | 5.7 | 1.8 | 13.2 | 5.7 | 1.3 | 0.4 | ||||||||||||||||
Total | 57.9 | 71.9 | 13.7 | 13.0 | (0.2 | ) | (1.0 | ) | 0.3 | — | ||||||||||||||
Six
months ended June 30, | ||||||||||||||||||||||||
Auto | 54.3 | 67.0 | 1.2 | 2.3 | (0.4 | ) | (1.4 | ) | (0.1 | ) | — | |||||||||||||
Homeowners | 66.6 | 75.8 | 27.7 | 35.5 | 0.5 | 1.2 | 0.6 | 1.3 | ||||||||||||||||
Other
personal lines | 58.9 | 65.3 | 10.8 | 13.8 | (0.7 | ) | 1.0 | (0.3 | ) | 0.7 | ||||||||||||||
Commercial
lines | 78.5 | 81.9 | 2.9 | 1.2 | 7.2 | 4.2 | 0.8 | — | ||||||||||||||||
Total | 58.1 | 69.3 | 8.1 | 10.7 | — | (0.5 | ) | 0.1 | 0.3 |
• Paid claim frequency (1) is calculated as annualized notice counts closed with payment in the period divided by the average of PIF with the applicable coverage during the period. |
• Gross claim
frequency (1) is calculated as annualized notice counts received in the period divided by the average of PIF with the applicable coverage during the period. Gross claim frequency includes all actual notice counts, regardless of their current status (open or closed) or their ultimate disposition (closed with a payment or closed without payment). |
• Paid claim severity is calculated by dividing the sum of paid losses and loss expenses by claims closed with a payment during the period. |
• Percent change in frequency or severity statistics is calculated as the amount of increase or decrease in the paid or gross claim frequency or severity in the current period compared
to the same period in the prior year divided by the prior year paid or gross claim frequency or severity. |
(1) | Frequency statistics exclude counts associated with catastrophe events. |
• | Paid frequency trends for property damage claims reflect smaller differences as timing
between opening and settlement is generally less. |
• | Gross frequency trends for bodily injury reflect emerging trends since the difference in timing between opening and settlement is much greater and gross frequency does not typically experience the same quarterly fluctuations as seen in paid frequency |
• | In evaluating frequency, we typically rely upon paid frequency trends for physical damage coverages such as property damage and gross frequency for casualty coverages
such as bodily injury to provide an indicator of emerging trends in overall claim frequency while also providing insights for our analysis of severity. |
• | Digital Operating Centers handle auto physical damage claims countrywide utilizing our virtual estimation capabilities, which includes estimating damage with photos and video
through the use of QuickFoto Claim® and Virtual Assist® |
• | Virtual Assist and aerial imagery using satellites, airplanes and drones handle property claims by estimating damage through video |
Auto frequency and severity statistics | ||||||
Three months ended June 30, 2020 | Six months ended June 30, 2020 | |||||
(%
change year-over-year) | ||||||
Auto property damage: | ||||||
Gross claim frequency | (46.4 | )% | (29.4 | )% | ||
Paid
claim frequency | (37.8 | ) | (20.6 | ) | ||
Paid claim severity | 20.1 | 12.7 | ||||
Bodily
injury gross claim frequency | (49.2 | ) | (30.5 | ) |
• | Impacts of shelter-in-place restrictions, social distancing requirements, limits on large gatherings and
events, and restrictions on non-essential businesses as these become more or less strict |
• | Changes in unemployment levels |
• | Changes in commuting activity and utilization of public transportation |
• | Changes in paid claims settlement rates as the low frequency environment creates capacity to
settle claims faster |
• | Changes in mix of claim types due to changes in driving behavior (e.g., speed, time of day) |
• | Labor and part cost variability |
• | Changes in limits purchased |
• | Cadence
of routine automobile maintenance |
• | Court system variability in both timing and magnitude of claim settlement |
• | Declines
in auto miles driven related to the Coronavirus |
• | Gross claim frequency declined by 34.6% in June 2020 compared to June 2019, reflecting an increase in miles driven compared to April and May 2020 as shelter-in-place restrictions were lifted in several states |
• | The timing of payments on property damage claims significantly impacted the average paid severity as the mix of claims paid in the second quarter of 2020 shifted to older claims as there were fewer new claims reported |
– | Claims settled within days or weeks of the loss tend to be less complex and have lower severity, while the higher severity property damage claims generally take longer to resolve |
• | Continued
impact of higher costs to repair more sophisticated newer model vehicles and higher third-party subrogation demands |
Impact
of specific costs and expenses on the expense ratio | ||||||||||||
Three months ended June 30, | Six
months ended June 30, | |||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||
Amortization of DAC | 13.5 | 14.1 | 13.5 | 14.1 | ||||||||
Advertising
expense | 2.2 | 1.9 | 2.1 | 1.9 | ||||||||
Other costs and expenses | 7.3 | 7.4 | 7.4 | 7.7 | ||||||||
Restructuring
and related charges | 0.1 | 0.1 | 0.1 | 0.2 | ||||||||
Subtotal | 23.1 | 23.5 | 23.1 | 23.9 | ||||||||
Shelter-in-Place
Payback expense | 8.2 | — | 5.3 | — | ||||||||
Allstate Special Payment plan bad debt expense | 0.5 | — | 0.3 | — | ||||||||
Total
expense ratio | 31.8 | 23.5 | 28.7 | 23.9 |
Underwriting results | ||||||||||||||||
($ in millions) | Three
months ended June 30, | Six months ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Premiums written | $ | 518 | $ | 503 | $ | 1,064 | $ | 1,062 | ||||||||
Premiums
earned | $ | 523 | $ | 525 | $ | 1,042 | $ | 1,027 | ||||||||
Other
revenue | 23 | 20 | 46 | 40 | ||||||||||||
Claims and claims expense | (298 | ) | (419 | ) | (671 | ) | (803 | ) | ||||||||
Shelter-in-Place
Payback expense | (58 | ) | — | (75 | ) | — | ||||||||||
Amortization of DAC | (11 | ) | (12 | ) | (22 | ) | (23 | ) | ||||||||
Other
costs and expenses | (107 | ) | (117 | ) | (228 | ) | (241 | ) | ||||||||
Restructuring and related charges | — | — | (1 | ) | — | |||||||||||
Underwriting
income (loss) | $ | 72 | $ | (3 | ) | $ | 91 | $ | — | |||||||
Catastrophe
losses | $ | 18 | $ | 25 | $ | 21 | $ | 31 | ||||||||
Underwriting
income (loss) by line of business | ||||||||||||||||
Auto | $ | 73 | $ | 8 | $ | 79 | $ | 7 | ||||||||
Homeowners | (1 | ) | (11 | ) | 11 | (7 | ) | |||||||||
Other
personal lines | — | — | 1 | — | ||||||||||||
Underwriting income (loss) | $ | 72 | $ | (3 | ) | $ | 91 | $ | — |
Changes
in underwriting results from prior year by component (1) | ||||||||||||||||
($ in millions) | Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Underwriting
income (loss) - prior period | $ | (3 | ) | $ | (9 | ) | $ | — | $ | (6 | ) | |||||
Changes
in underwriting income (loss) from: | ||||||||||||||||
Increase (decrease) premiums earned | (2 | ) | 62 | 15 | 131 | |||||||||||
Increase
(decrease) other revenue | 3 | — | 6 | — | ||||||||||||
(Increase) decrease incurred
claims and claims expense (“losses”): | ||||||||||||||||
Incurred losses, excluding catastrophe losses and reserve reestimates | 117 | (60 | ) | 123 | (117 | ) | ||||||||||
Catastrophe
losses, excluding reserve reestimates | 5 | 5 | 8 | 2 | ||||||||||||
Catastrophe reserve
reestimates | 2 | (1 | ) | 2 | (1 | ) | ||||||||||
Non-catastrophe reserve reestimates | (3 | ) | 1 | (1 | ) | (2 | ) | |||||||||
Losses
subtotal | 121 | (55 | ) | 132 | (118 | ) | ||||||||||
Shelter-in-Place Payback expense | (58 | ) | — | (75 | ) | — | ||||||||||
(Increase)
decrease expenses | 11 | (1 | ) | 13 | (7 | ) | ||||||||||
Underwriting income (loss) | $ | 72 | $ | (3 | ) | $ | 91 | $ | — |
(1) | The
2020 column presents changes in 2020 compared to 2019. The 2019 column presents changes in 2019 compared to 2018. |
Premiums written and earned by line of business | ||||||||||||||||
($ in
millions) | Three months ended June 30, | Six months ended June 30, | ||||||||||||||
Premiums written | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Auto | $ | 482 | $ | 469 | $ | 999 | $ | 1,001 | ||||||||
Homeowners | 34 | 32 | 61 | 57 | ||||||||||||
Other
personal lines | 2 | 2 | 4 | 4 | ||||||||||||
Total | $ | 518 | $ | 503 | $ | 1,064 | $ | 1,062 | ||||||||
Premiums
earned | ||||||||||||||||
Auto | $ | 491 | $ | 496 | $ | 978 | $ | 971 | ||||||||
Homeowners | 30 | 27 | 60 | 52 | ||||||||||||
Other
personal lines | 2 | 2 | 4 | 4 | ||||||||||||
Total | $ | 523 | $ | 525 | $ | 1,042 | $ | 1,027 |
Auto
premium measures and statistics | ||||||||||||||||||||||||
Three months ended June 30, | Six
months ended June 30, | |||||||||||||||||||||||
2020 | 2019 | Change | 2020 | 2019 | Change | |||||||||||||||||||
PIF
(thousands) | 1,514 | 1,548 | (2.2 | )% | 1,514 | 1,548 | (2.2 | )% | ||||||||||||||||
New
issued applications (thousands) | 117 | 145 | (19.3 | )% | 247 | 325 | (24.0 | )% | ||||||||||||||||
Average
premium | $ | 653 | $ | 611 | 6.9 | % | $ | 642 | $ | 619 | 3.7 | % | ||||||||||||
Renewal
ratio (%) | 83.4 | 84.0 | (0.6 | ) | 82.7 | 84.0 | (1.3 | ) | ||||||||||||||||
Approved
rate changes: | ||||||||||||||||||||||||
Impact of rate changes ($ in millions) | $ | 3 | $ | 42 | $ | (39 | ) | $ | 53 | $ | 54 | $ | (1 | ) | ||||||||||
Number
of locations (1) | 1 | 6 | (5 | ) | 11 | 15 | (4 | ) | ||||||||||||||||
Total
brand (%) | 0.1 | 2.4 | (2.3 | ) | 2.7 | 3.0 | (0.3 | ) | ||||||||||||||||
Location
specific (%) | 6.6 | 5.3 | 1.3 | 7.2 | 5.0 | 2.2 |
(1) | Esurance
brand operates in 43 states. |
Homeowners
premium measures and statistics | ||||||||||||||||||||||||
Three months ended June 30, | Six
months ended June 30, | |||||||||||||||||||||||
2020 | 2019 | Change | 2020 | 2019 | Change | |||||||||||||||||||
PIF
(thousands) | 107 | 101 | 5.9 | % | 107 | 101 | 5.9 | % | ||||||||||||||||
New
issued applications (thousands) | 6 | 7 | (14.3 | )% | 11 | 14 | (21.4 | )% | ||||||||||||||||
Average
premium | $ | 1,093 | $ | 1,063 | 2.8 | % | $ | 1,088 | $ | 1,045 | 4.1 | % | ||||||||||||
Renewal
ratio (%) (1) | 84.7 | 85.5 | (0.8 | ) | 84.3 | 85.2 | (0.9 | ) | ||||||||||||||||
Approved
rate changes: | ||||||||||||||||||||||||
Impact of rate changes ($ in millions) | $ | — | $ | 3 | $ | (3 | ) | $ | — | $ | 5 | $ | (5 | ) | ||||||||||
Number
of locations (2) | — | 2 | (2 | ) | — | 4 | (4 | ) | ||||||||||||||||
Total
brand (%) | — | 2.7 | (2.7 | ) | — | 4.7 | (4.7 | ) | ||||||||||||||||
Location
specific (%) | — | 19.9 | (19.9 | ) | — | 19.1 | (19.1 | ) |
(1) | Esurance’s
renewal ratios exclude the impact of risk related cancellations. Customers can enter into a policy without a physical inspection. During the underwriting review period, a number of policies may be canceled if upon inspection the condition is unsatisfactory. |
(2) | Esurance brand operates in 31 states. |
Combined ratios by line of business | ||||||||||||||||||
Loss ratio | Expense
ratio (1) | Combined ratio | ||||||||||||||||
2020 | 2019 | 2020 | 2019 | 2020 | 2019 | |||||||||||||
Three
months ended June 30, | ||||||||||||||||||
Auto | 55.4 | 78.0 | 29.7 | 20.4 | 85.1 | 98.4 | ||||||||||||
Impact
of Shelter-in-Place Payback | — | — | 11.8 | — | 11.8 | — | ||||||||||||
Homeowners | 83.3 | 114.8 | 20.0 | 25.9 | 103.3 | 140.7 | ||||||||||||
Total | 57.0 | 79.8 | 29.2 | 20.8 | 86.2 | 100.6 | ||||||||||||
Impact
of Shelter-in-Place Payback | — | — | 11.1 | — | 11.1 | — | ||||||||||||
Six
months ended June 30, | ||||||||||||||||||
Auto | 64.5 | 77.7 | 27.4 | 21.6 | 91.9 | 99.3 | ||||||||||||
Impact
of Shelter-in-Place Payback | — | — | 7.7 | — | 7.7 | — | ||||||||||||
Homeowners | 63.4 | 88.5 | 18.3 | 25.0 | 81.7 | 113.5 | ||||||||||||
Total | 64.4 | 78.2 | 26.9 | 21.8 | 91.3 | 100.0 | ||||||||||||
Impact
of Shelter-in-Place Payback | — | — | 7.2 | — | 7.2 | — |
(1) | Other
revenue is deducted from operating costs and expenses in the expense ratio calculation. |
Loss ratios by line of business | ||||||||||||||||||||||||
Loss
ratio | Effect of catastrophe losses | Effect of prior year reserve reestimates | Effect of catastrophe losses included in prior year reserve reestimates | |||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||
Three
months ended June 30, | ||||||||||||||||||||||||
Auto | 55.4 | 78.0 | 1.4 | 2.0 | 0.2 | (0.2 | ) | — | 0.2 | |||||||||||||||
Homeowners | 83.3 | 114.8 | 36.6 | 55.5 | — | 3.7 | — | 3.7 | ||||||||||||||||
Total | 57.0 | 79.8 | 3.4 | 4.8 | 0.2 | — | — | 0.4 | ||||||||||||||||
Six
months ended June 30, | ||||||||||||||||||||||||
Auto | 64.5 | 77.7 | 0.8 | 1.3 | 0.4 | 0.4 | — | 0.1 | ||||||||||||||||
Homeowners | 63.4 | 88.5 | 21.7 | 34.6 | (3.3 | ) | — | — | 1.9 | |||||||||||||||
Total | 64.4 | 78.2 | 2.0 | 3.0 | 0.2 | 0.3 | — | 0.2 |
Impact
of specific costs and expenses on the expense ratio | ||||||||||||
Three months ended June 30, | Six
months ended June 30, | |||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||
Amortization of DAC | 2.1 | 2.4 | 2.1 | 2.2 | ||||||||
Advertising
expense | 5.9 | 7.4 | 7.2 | 7.8 | ||||||||
Amortization of purchased intangibles | 0.2 | — | 0.1 | 0.1 | ||||||||
Other
costs and expenses | 9.3 | 11.0 | 9.8 | 11.7 | ||||||||
Restructuring and related charges | — | — | 0.1 | — | ||||||||
Subtotal
| 17.5 | 20.8 | 19.3 | 21.8 | ||||||||
Shelter-in-Place Payback expense | 11.1 | — | 7.2 | — | ||||||||
Allstate
Special Payment plan bad debt expense (1) | 0.6 | — | 0.4 | — | ||||||||
Total
expense ratio | 29.2 | 20.8 | 26.9 | 21.8 |
(1) | Relates
to the Allstate Special Payment plan offered to customers as a result of the Coronavirus to provide more flexible payment options, including the option to delay payments. |
Underwriting
results | ||||||||||||||||
($ in millions) | Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Premiums
written | $ | 263 | $ | 278 | $ | 485 | $ | 502 | ||||||||
Premiums
earned | $ | 253 | $ | 254 | $ | 509 | $ | 507 | ||||||||
Other
revenue | 1 | 1 | 2 | 2 | ||||||||||||
Claims and claims expense | (154 | ) | (167 | ) | (311 | ) | (341 | ) | ||||||||
Shelter-in-Place
Payback expense | (16 | ) | — | (21 | ) | — | ||||||||||
Amortization of DAC | (48 | ) | (48 | ) | (97 | ) | (96 | ) | ||||||||
Other
costs and expenses | (29 | ) | (33 | ) | (61 | ) | (65 | ) | ||||||||
Restructuring and related charges | (1 | ) | — | (1 | ) | (2 | ) | |||||||||
Underwriting
income | $ | 6 | $ | 7 | $ | 20 | $ | 5 | ||||||||
Catastrophe
losses | $ | 59 | $ | 26 | $ | 71 | $ | 56 | ||||||||
Underwriting
income (loss) by line of business | ||||||||||||||||
Auto | $ | 32 | $ | 6 | $ | 30 | $ | 5 | ||||||||
Homeowners | (21 | ) | 2 | (7 | ) | (2 | ) | |||||||||
Other
personal lines | (5 | ) | (1 | ) | (3 | ) | 2 | |||||||||
Underwriting income | $ | 6 | $ | 7 | $ | 20 | $ | 5 |
Changes
in underwriting results from prior year by component (1) | ||||||||||||||||
($ in millions) | Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Underwriting
income (loss) - prior period | $ | 7 | $ | 5 | $ | 5 | $ | 11 | ||||||||
Changes
in underwriting loss from: | ||||||||||||||||
Increase (decrease) premiums earned | (1 | ) | (2 | ) | 2 | (6 | ) | |||||||||
Increase
(decrease) other revenue | — | (1 | ) | — | (1 | ) | ||||||||||
(Increase) decrease incurred claims
and claims expense (“losses”): | ||||||||||||||||
Incurred losses, excluding catastrophe losses and reserve reestimates | 52 | (16 | ) | 50 | (20 | ) | ||||||||||
Catastrophe
losses, excluding reserve reestimates | (37 | ) | 16 | (25 | ) | 11 | ||||||||||
Catastrophe reserve
reestimates | 4 | (2 | ) | 10 | 2 | |||||||||||
Non-catastrophe reserve reestimates | (6 | ) | — | (5 | ) | (3 | ) | |||||||||
Losses
subtotal | 13 | (2 | ) | 30 | (10 | ) | ||||||||||
Shelter-in-Place Payback expense | (16 | ) | — | (21 | ) | — | ||||||||||
(Increase)
decrease expenses | 3 | 7 | 4 | 11 | ||||||||||||
Underwriting income | $ | 6 | $ | 7 | $ | 20 | $ | 5 |
(1) | The
2020 column presents changes in 2020 compared to 2019. The 2019 column presents changes in 2019 compared to 2018. |
Premiums written and earned by line of business | ||||||||||||||||
($ in
millions) | Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Premiums
written | ||||||||||||||||
Auto | $ | 136 | $ | 146 | $ | 254 | $ | 266 | ||||||||
Homeowners | 106 | 111 | 193 | 197 | ||||||||||||
Other
personal lines | 21 | 21 | 38 | 39 | ||||||||||||
Total | $ | 263 | $ | 278 | $ | 485 | $ | 502 | ||||||||
Premiums
earned | ||||||||||||||||
Auto | $ | 135 | $ | 135 | $ | 270 | $ | 269 | ||||||||
Homeowners | 99 | 99 | 200 | 198 | ||||||||||||
Other
personal lines | 19 | 20 | 39 | 40 | ||||||||||||
Total | $ | 253 | $ | 254 | $ | 509 | $ | 507 |
Auto
premium measures and statistics | |||||||||||||||||||||||||
Three months ended June 30, | Six
months ended June 30, | ||||||||||||||||||||||||
2020 | 2019 | Change | 2020 | 2019 | Change | ||||||||||||||||||||
PIF
(thousands) | 473 | 497 | (4.8 | )% | 473 | 497 | (4.8 | )% | |||||||||||||||||
New
issued applications (thousands) | 14 | 22 | (36.4 | )% | 30 | 42 | (28.6 | )% | |||||||||||||||||
Average
premium | $ | 1,166 | $ | 1,130 | 3.2 | % | $ | 1,164 | $ | 1,132 | 2.8 | % | |||||||||||||
Renewal
ratio (%) | 76.5 | 78.1 | (1.6 | ) | 76.9 | 77.9 | (1.0 | ) | |||||||||||||||||
Approved
rate changes: | |||||||||||||||||||||||||
Impact of rate changes ($
in millions) | $ | (1 | ) | $ | — | $ | (1 | ) | $ | (1 | ) | $ | 2 | $ | (3 | ) | |||||||||
Number
of locations (1) | 2 | 1 | 1 | 7 | 4 | 3 | |||||||||||||||||||
Total
brand (%) | (0.1 | ) | — | (0.1 | ) | (0.1 | ) | 0.5 | (0.6 | ) | |||||||||||||||
Location
specific (%) | (1.9 | ) | (2 | ) | 3.6 | (5.5 | ) | (0.6 | ) | 4.5 | (5.1 | ) |
(1) | Encompass
brand operates in 40 states and the District of Columbia. |
(2) | Primarily related to rate declines in Michigan and the absence of approved rates related to the Coronavirus. |
Homeowners
premium measure and statistics | ||||||||||||||||||||||||
Three months ended June 30, | Six
months ended June 30, | |||||||||||||||||||||||
2020 | 2019 | Change | 2020 | 2019 | Change | |||||||||||||||||||
PIF
(thousands) | 225 | 236 | (4.7 | )% | 225 | 236 | (4.7 | )% | ||||||||||||||||
New
issued applications (thousands) | 8 | 12 | (33.3 | )% | 16 | 21 | (23.8 | )% | ||||||||||||||||
Average
premium | $ | 1,901 | $ | 1,782 | 6.7 | % | $ | 1,891 | $ | 1,775 | 6.5 | % | ||||||||||||
Renewal
ratio (%) | 80.5 | 82.5 | (2.0 | ) | 81.1 | 82.3 | (1.2 | ) | ||||||||||||||||
Approved
rate changes: | ||||||||||||||||||||||||
Impact of rate changes ($ in millions) | $ | 3 | $ | 6 | $ | (3 | ) | $ | 10 | $ | 12 | $ | (2 | ) | ||||||||||
Number
of locations (1) | 6 | 8 | (2 | ) | 10 | 11 | (1 | ) | ||||||||||||||||
Total
brand (%) | 0.7 | 1.4 | (0.7 | ) | 2.5 | 2.8 | (0.3 | ) | ||||||||||||||||
Location
specific (%) | 6.3 | 6.5 | (0.2 | ) | 10.0 | 8.1 | 1.9 |
(1) | Encompass
brand operates in 40 states and the District of Columbia. |
Combined ratios by line of business | ||||||||||||||||||
Loss ratio | Expense
ratio (1) | Combined ratio | ||||||||||||||||
2020 | 2019 | 2020 | 2019 | 2020 | 2019 | |||||||||||||
Three
months ended June 30, | ||||||||||||||||||
Auto | 34.1 | 64.5 | 42.2 | 31.1 | 76.3 | 95.6 | ||||||||||||
Impact
of Shelter-in-Place Payback | — | — | 11.9 | — | 11.9 | — | ||||||||||||
Homeowners | 90.9 | 66.7 | 30.3 | 31.3 | 121.2 | 98.0 | ||||||||||||
Other
personal lines | 94.7 | 70.0 | 31.6 | 35.0 | 126.3 | 105.0 | ||||||||||||
Total | 60.9 | 65.7 | 36.7 | 31.5 | 97.6 | 97.2 | ||||||||||||
Impact
of Shelter-in-Place Payback | — | — | 6.3 | — | 6.3 | — | ||||||||||||
Six
months ended June 30, | ||||||||||||||||||
Auto | 50.4 | 66.2 | 38.5 | 31.9 | 88.9 | 98.1 | ||||||||||||
Impact
of Shelter-in-Place Payback | — | — | 7.8 | — | 7.8 | — | ||||||||||||
Homeowners | 72.5 | 69.7 | 31.0 | 31.3 | 103.5 | 101.0 | ||||||||||||
Other
personal lines | 76.9 | 62.5 | 30.8 | 32.5 | 107.7 | 95.0 | ||||||||||||
Total | 61.1 | 67.3 | 35.0 | 31.7 | 96.1 | 99.0 | ||||||||||||
Impact
of Shelter-in-Place Payback | — | — | 4.1 | — | 4.1 | — |
(1) | Other
revenue is deducted from operating costs and expenses in the expense ratio calculation. |
Loss ratios by line of business | ||||||||||||||||||||||||
Loss
ratio | Effect of catastrophe losses | Effect of prior year reserve reestimates | Effect of catastrophe losses included in prior year reserve reestimates | |||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||
Three
months ended June 30, | ||||||||||||||||||||||||
Auto | 34.1 | 64.5 | 3.0 | 2.2 | (0.8 | ) | (6.6 | ) | — | — | ||||||||||||||
Homeowners | 90.9 | 66.7 | 52.5 | 22.2 | — | 4.0 | — | 4.0 | ||||||||||||||||
Other
personal lines | 94.7 | 70.0 | 15.8 | 5.0 | — | 10.0 | — | — | ||||||||||||||||
Total | 60.9 | 65.7 | 23.3 | 10.2 | (0.4 | ) | (1.2 | ) | — | 1.6 | ||||||||||||||
Six
months ended June 30, | ||||||||||||||||||||||||
Auto | 50.4 | 66.2 | 1.5 | 2.2 | — | (3.4 | ) | (0.4 | ) | — | ||||||||||||||
Homeowners | 72.5 | 69.7 | 31.5 | 23.7 | (0.5 | ) | 6.0 | (0.5 | ) | 4.0 | ||||||||||||||
Other
personal lines | 76.9 | 62.5 | 10.2 | 7.5 | (5.1 | ) | (2.5 | ) | — | — | ||||||||||||||
Total | 61.1 | 67.3 | 13.9 | 11.0 | (0.5 | ) | 0.4 | (0.4 | ) | 1.6 |
Impact
of specific costs and expenses on the expense ratio | ||||||||||||
Three months ended June 30, | Six months ended June 30, | |||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||
Amortization
of DAC | 18.9 | 18.9 | 19.1 | 18.9 | ||||||||
Advertising expense | 0.4 | 0.4 | 0.2 | 0.2 | ||||||||
Other
costs and expenses | 10.7 | 12.2 | 11.4 | 12.2 | ||||||||
Restructuring and related charges | 0.4 | — | 0.2 | 0.4 | ||||||||
Subtotal | 30.4 | 31.5 | 30.9 | 31.7 | ||||||||
Shelter-in-Place
Payback expense | 6.3 | — | 4.1 | — | ||||||||
Total expense ratio | 36.7 | 31.5 | 35.0 | 31.7 |
Underwriting results | ||||||||||||||||
($ in millions) | Three
months ended June 30, | Six months ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Claims and claims expense | $ | (2 | ) | $ | (3 | ) | $ | (4 | ) | $ | (5 | ) | ||||
Operating
costs and expenses | (1 | ) | — | (2 | ) | (1 | ) | |||||||||
Underwriting loss | $ | (3 | ) | $ | (3 | ) | $ | (6 | ) | $ | (6 | ) |
Reserves
for asbestos, environmental and other discontinued lines claims before and after the effects of reinsurance | ||||||||
($ in millions) | ||||||||
Asbestos claims | ||||||||
Gross
reserves | $ | 1,126 | $ | 1,172 | ||||
Reinsurance | (347 | ) | (362 | ) | ||||
Net
reserves | 779 | 810 | ||||||
Environmental claims | ||||||||
Gross reserves | 209 | 219 | ||||||
Reinsurance
| (38 | ) | (40 | ) | ||||
Net reserves | 171 | 179 | ||||||
Other
discontinued lines | ||||||||
Gross reserves | 417 | 427 | ||||||
Reinsurance | (47 | ) | (51 | ) | ||||
Net
reserves | 370 | 376 | ||||||
Total | ||||||||
Gross reserves | 1,752 | 1,818 | ||||||
Reinsurance | (432 | ) | (453 | ) | ||||
Net
reserves | $ | 1,320 | $ | 1,365 |
Reserves by type of exposure
before and after the effects of reinsurance | ||||||||
($ in millions) | ||||||||
Direct excess commercial insurance | ||||||||
Gross
reserves | $ | 908 | $ | 948 | ||||
Reinsurance | (317 | ) | (332 | ) | ||||
Net
reserves | 591 | 616 | ||||||
Assumed reinsurance coverage | ||||||||
Gross reserves | 607 | 606 | ||||||
Reinsurance
| (54 | ) | (53 | ) | ||||
Net reserves | 553 | 553 | ||||||
Direct
primary commercial insurance | ||||||||
Gross reserves | 146 | 169 | ||||||
Reinsurance | (50 | ) | (54 | ) | ||||
Net
reserves | 96 | 115 | ||||||
Other run-off business | ||||||||
Gross reserves | 11 | 15 | ||||||
Reinsurance | (10 | ) | (13 | ) | ||||
Net
reserves | 1 | 2 | ||||||
Unallocated loss adjustment expenses | ||||||||
Gross reserves | 80 | 80 | ||||||
Reinsurance | (1 | ) | (1 | ) | ||||
Net
reserves | 79 | 79 | ||||||
Total | ||||||||
Gross reserves | 1,752 | 1,818 | ||||||
Reinsurance | (432 | ) | (453 | ) | ||||
Net
reserves | $ | 1,320 | $ | 1,365 |
Percentage
of gross and ceded reserves by case and incurred but not reported (“IBNR”) | ||||||||||||
Case | IBNR | Case | IBNR | |||||||||
Direct
excess commercial insurance | ||||||||||||
Gross reserves (1) | 78 | % | 22 | % | 68 | % | 32 | % | ||||
Ceded
(2) | 87 | 13 | 78 | 22 | ||||||||
Assumed reinsurance coverage | ||||||||||||
Gross
reserves | 37 | 63 | 34 | 66 | ||||||||
Ceded | 39 | 61 | 35 | 65 | ||||||||
Direct
primary commercial insurance | ||||||||||||
Gross reserves | 54 | 46 | 56 | 44 | ||||||||
Ceded | 78 | 22 | 78 | 22 |
(1) |
(2) |
Gross
payments from case reserves by type of exposure | ||||||||||||||||
($ in millions) | Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Direct
excess commercial insurance | ||||||||||||||||
Gross (1) | $ | 9 | $ | 28 | $ | 38 | $ | 54 | ||||||||
Ceded
(2) | (3 | ) | (10 | ) | (14 | ) | (21 | ) | ||||||||
Assumed
reinsurance coverage | ||||||||||||||||
Gross | 13 | 9 | 22 | 18 | ||||||||||||
Ceded | (1 | ) | — | (2 | ) | (1 | ) | |||||||||
Direct
primary commercial insurance | ||||||||||||||||
Gross | 1 | 7 | 3 | 10 | ||||||||||||
Ceded | — | (1 | ) | (1 | ) | (1 | ) |
Summarized financial information | ||||||||||||||||
($ in millions) | Three
months ended June 30, | Six months ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Premiums written | $ | 467 | $ | 350 | $ | 846 | $ | 718 | ||||||||
Revenues | ||||||||||||||||
Premiums
| $ | 360 | $ | 305 | $ | 714 | $ | 600 | ||||||||
Other
revenue | 51 | 48 | 103 | 95 | ||||||||||||
Intersegment insurance premiums and service
fees (1) | 35 | 33 | 73 | 66 | ||||||||||||
Net
investment income | 11 | 10 | 21 | 19 | ||||||||||||
Realized capital gains (losses) | 19 | 9 | (5 | ) | 17 | |||||||||||
Total
revenues | 476 | 405 | 906 | 797 | ||||||||||||
Costs
and expenses | ||||||||||||||||
Claims and claims expense | (85 | ) | (86 | ) | (177 | ) | (178 | ) | ||||||||
Amortization
of DAC | (160 | ) | (134 | ) | (313 | ) | (261 | ) | ||||||||
Operating costs and expenses | (163 | ) | (158 | ) | (324 | ) | (309 | ) | ||||||||
Restructuring
and related charges | (3 | ) | 1 | (3 | ) | 1 | ||||||||||
Amortization of purchased intangibles | (26 | ) | (31 | ) | (53 | ) | (62 | ) | ||||||||
Impairment
of purchased intangibles | — | (55 | ) | — | (55 | ) | ||||||||||
Total costs and expenses | (437 | ) | (463 | ) | (870 | ) | (864 | ) | ||||||||
Income
tax (expense) benefit | (7 | ) | 12 | (7 | ) | 15 | ||||||||||
Net income (loss) applicable to common
shareholders | $ | 32 | $ | (46 | ) | $ | 29 | $ | (52 | ) | ||||||
Adjusted
net income | $ | 38 | $ | 16 | $ | 75 | $ | 27 | ||||||||
Realized
capital gains (losses), after-tax | 15 | 6 | (4 | ) | 13 | |||||||||||
Amortization of purchased
intangibles, after-tax | (21 | ) | (25 | ) | (42 | ) | (49 | ) | ||||||||
Impairment of purchased intangibles,
after-tax | — | (43 | ) | — | (43 | ) | ||||||||||
Net income (loss) applicable to common shareholders | $ | 32 | $ | (46 | ) | $ | 29 | $ | (52 | ) | ||||||
Allstate
Protection Plans | $ | 35 | $ | 19 | $ | 69 | $ | 33 | ||||||||
Allstate
Dealer Services | 8 | 7 | 15 | 13 | ||||||||||||
Allstate Roadside Services | 2 | (3 | ) | 4 | (9 | ) | ||||||||||
Arity | (3 | ) | (1 | ) | (6 | ) | (3 | ) | ||||||||
Allstate
Identity Protection | (4 | ) | (6 | ) | (7 | ) | (7 | ) | ||||||||
Adjusted net income | $ | 38 | $ | 16 | $ | 75 | $ | 27 | ||||||||
Allstate
Protection Plans | 120,301 | 83,968 | ||||||||||||||
Allstate Dealer
Services | 4,101 | 4,253 | ||||||||||||||
Allstate Roadside Services | 562 | 635 | ||||||||||||||
Allstate
Identity Protection | 2,312 | 1,260 | ||||||||||||||
Policies in force
as of June 30 (in thousands) | 127,276 | 90,116 |
(1) | Primarily
related to Arity and Allstate Roadside Services and are eliminated in our condensed consolidated financial statements. |
Summarized
financial information | ||||||||||||||||
($ in millions) | Three months ended June 30, | Six
months ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Revenues | ||||||||||||||||
Premiums
and contract charges | $ | 339 | $ | 333 | $ | 672 | $ | 670 | ||||||||
Other
revenue | 24 | 33 | 56 | 60 | ||||||||||||
Net investment income | 123 | 125 | 251 | 252 | ||||||||||||
Realized
capital gains (losses) | 19 | 1 | (12 | ) | (4 | ) | ||||||||||
Total revenues | 505 | 492 | 967 | 978 | ||||||||||||
Costs
and expenses | ||||||||||||||||
Contract
benefits | (238 | ) | (216 | ) | (450 | ) | (430 | ) | ||||||||
Interest credited to contractholder funds | (114 | ) | (70 | ) | (170 | ) | (142 | ) | ||||||||
Amortization
of DAC | (4 | ) | (29 | ) | (38 | ) | (57 | ) | ||||||||
Operating costs and expenses | (75 | ) | (91 | ) | (159 | ) | (182 | ) | ||||||||
Restructuring
and related charges | (2 | ) | (1 | ) | (3 | ) | (1 | ) | ||||||||
Total costs and expenses | (433 | ) | (407 | ) | (820 | ) | (812 | ) | ||||||||
Income
tax expense | (8 | ) | (18 | ) | (19 | ) | (32 | ) | ||||||||
Net income applicable to common shareholders | $ | 64 | $ | 67 | $ | 128 | $ | 134 | ||||||||
Adjusted
net income | $ | 72 | $ | 68 | $ | 152 | $ | 141 | ||||||||
Realized
capital gains (losses), after-tax | 16 | — | (9 | ) | (4 | ) | ||||||||||
Valuation changes on embedded
derivatives not hedged, after-tax | (35 | ) | — | (23 | ) | — | ||||||||||
DAC and DSI amortization
related to realized capital gains and losses and valuation changes on embedded derivatives not hedged, after-tax | 11 | (1 | ) | 8 | (3 | ) | ||||||||||
Net
income applicable to common shareholders | $ | 64 | $ | 67 | $ | 128 | $ | 134 | ||||||||
Reserve
for life-contingent contract benefits as of June 30 | $ | 2,729 | $ | 2,720 | ||||||||||||
Contractholder
funds as of June 30 | $ | 7,857 | $ | 7,711 | ||||||||||||
Policies
in force as of June 30 by distribution channel (in thousands) | ||||||||||||||||
Allstate agencies | 1,789 | 1,822 | ||||||||||||||
Closed
channels | 103 | 111 | ||||||||||||||
Total | 1,892 | 1,933 |
(1) | Contract
charges related to the cost of insurance totaled $126 million and $123 million for the second quarter of 2020 and 2019, respectively, and $254 million and $252 million for the first six months of 2020 and 2019, respectively. |
Investment spread | ||||||||||||||||
Three
months ended June 30, | Six months ended June 30, | |||||||||||||||
($ in millions) | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Investment spread before valuation changes on embedded derivatives
not hedged | $ | 52 | $ | 55 | $ | 110 | $ | 110 | ||||||||
Valuation
changes on derivatives embedded in equity-indexed universal life contracts that are not hedged | (43 | ) | — | (29 | ) | — | ||||||||||
Total
investment spread | $ | 9 | $ | 55 | $ | 81 | $ | 110 |
Components of amortization of DAC | ||||||||||||||||
Three
months ended June 30, | Six months ended June 30, | |||||||||||||||
($ in millions) | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Amortization of DAC before amortization relating to realized
capital gains and losses, valuation changes on embedded derivatives that are not hedged and changes in assumptions | $ | 18 | $ | 27 | $ | 48 | $ | 53 | ||||||||
Amortization
relating to realized capital gains and losses (1) and valuation changes on embedded derivatives that are not hedged | (14 | ) | 2 | (10 | ) | 4 | ||||||||||
Amortization
acceleration for changes in assumptions (‘‘DAC unlocking’’) | — | — | — | — | ||||||||||||
Total
amortization of DAC | $ | 4 | $ | 29 | $ | 38 | $ | 57 |
(1) | The
impact of realized capital gains and losses on amortization of DAC is dependent upon the relationship between the assets that give rise to the gain or loss and the product liability supported by the assets. Fluctuations result from changes in the impact of realized capital gains and losses on actual and expected gross profits. |
Change in contractholder funds | ||||||||||||||||
Three
months ended June 30, | Six months ended June 30, | |||||||||||||||
($ in millions) | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Contractholder funds, beginning balance | $ | 7,754 | $ | 7,686 | $ | 7,805 | $ | 7,656 | ||||||||
Deposits | 229 | 242 | 460 | 476 | ||||||||||||
Interest
credited | 114 | 70 | 170 | 142 | ||||||||||||
Benefits,
withdrawals and other adjustments | ||||||||||||||||
Benefits | (51 | ) | (63 | ) | (114 | ) | (124 | ) | ||||||||
Surrenders
and partial withdrawals | (46 | ) | (63 | ) | (117 | ) | (133 | ) | ||||||||
Contract
charges | (175 | ) | (174 | ) | (350 | ) | (350 | ) | ||||||||
Net transfers from separate accounts | — | 4 | 2 | 6 | ||||||||||||
Other
adjustments (1) | 32 | 9 | 1 | 38 | ||||||||||||
Total
benefits, withdrawals and other adjustments | (240 | ) | (287 | ) | (578 | ) | (563 | ) | ||||||||
Contractholder
funds, ending balance | $ | 7,857 | $ | 7,711 | $ | 7,857 | $ | 7,711 |
(1) | The
table above illustrates the changes in contractholder funds, which are presented gross of reinsurance recoverables on the Condensed Consolidated Statements of Financial Position. The table above is intended to supplement our discussion and analysis of revenues, which are presented net of reinsurance on the Condensed Consolidated Statements of Operations. As a result, the net change in contractholder funds associated with products reinsured is reflected as a component of the other adjustments line. |
Summarized financial information | |||||||||||||||||
Three
months ended June 30, | Six months ended June 30, | ||||||||||||||||
($ in millions) | 2020 | 2019 | 2020 | 2019 | |||||||||||||
Revenues | |||||||||||||||||
Premiums
and contract charges | $ | 263 | $ | 284 | $ | 545 | $ | 572 | |||||||||
Net
investment income | 20 | 21 | 40 | 40 | |||||||||||||
Realized capital gains (losses) | 11 | 2 | (3 | ) | 6 | ||||||||||||
Total
revenues | 294 | 307 | 582 | 618 | |||||||||||||
Costs
and expenses | |||||||||||||||||
Contract
benefits | (123 | ) | (143 | ) | (264 | ) | (288 | ) | |||||||||
Interest credited to contractholder funds | (9 | ) | (8 | ) | (18 | ) | (17 | ) | |||||||||
Amortization
of DAC | (35 | ) | (35 | ) | (80 | ) | (78 | ) | |||||||||
Operating costs and expenses | (110 | ) | (71 | ) | (185 | ) | (142 | ) | |||||||||
Restructuring
and related charges | (1 | ) | — | (1 | ) | — | |||||||||||
Total costs and expenses | (278 | ) | (257 | ) | (548 | ) | (525 | ) | |||||||||
Income
tax expense | (4 | ) | (11 | ) | (8 | ) | (20 | ) | |||||||||
Net income applicable to common shareholders | $ | 12 | $ | 39 | $ | 26 | $ | 73 | |||||||||
Adjusted
net income | $ | 5 | $ | 37 | $ | 29 | $ | 68 | |||||||||
Realized
capital gains (losses), after-tax | 7 | 2 | (3 | ) | 5 | ||||||||||||
Net income applicable to
common shareholders | $ | 12 | $ | 39 | $ | 26 | $ | 73 | |||||||||
Benefit
ratio (1) | 46.8 | 50.4 | 48.4 | 50.3 | |||||||||||||
Operating
expense ratio (2) | 41.8 | 25.0 | 33.9 | 24.8 | |||||||||||||
Reserve
for life-contingent contract benefits as of June 30 | $ | 1,035 | $ | 1,010 | |||||||||||||
Contractholder
funds as of June 30 | $ | 886 | $ | 906 | |||||||||||||
Policies
in force as of June 30 (in thousands) | 4,410 | (3) | 4,296 |
(1) |
(2) | Operating expense ratio is calculated as operating costs and expenses divided by premiums and contract charges. |
(3) | Includes
approximately 220 thousand policies that we estimate will lapse, after the extended grace periods expire in the third quarter of 2020, primarily due to Coronavirus-related layoffs and furloughs. |
Premiums
and contract charges by product | ||||||||||||||||
Three months ended June 30, | Six
months ended June 30, | |||||||||||||||
($ in millions) | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Life | $ | 38 | $ | 38 | $ | 76 | $ | 76 | ||||||||
Accident | 69 | 74 | 142 | 150 | ||||||||||||
Critical
illness | 115 | 120 | 237 | 242 | ||||||||||||
Short-term disability | 17 | 27 | 37 | 53 | ||||||||||||
Other
health | 24 | 25 | 53 | 51 | ||||||||||||
Premiums and contract
charges | $ | 263 | $ | 284 | $ | 545 | $ | 572 |
Operating
costs and expenses | ||||||||||||||||
Three months ended June 30, | Six months
ended June 30, | |||||||||||||||
($ in millions) | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Non-deferrable commissions | $ | 25 | $ | 26 | $ | 51 | $ | 52 | ||||||||
General
and administrative expenses | 85 | 45 | 134 | 90 | ||||||||||||
Total operating costs
and expenses | $ | 110 | $ | 71 | $ | 185 | $ | 142 |
Summarized financial information | ||||||||||||||||
Three
months ended June 30, | Six months ended June 30, | |||||||||||||||
($ in millions) | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Revenues | ||||||||||||||||
Contract
charges | $ | 2 | $ | 4 | $ | 4 | $ | 7 | ||||||||
Net
investment income | 66 | 296 | 113 | 486 | ||||||||||||
Realized capital gains (losses) | 245 | 48 | (24 | ) | 204 | |||||||||||
Total
revenues | 313 | 348 | 93 | 697 | ||||||||||||
Costs
and expenses | ||||||||||||||||
Contract
benefits | (136 | ) | (152 | ) | (284 | ) | (290 | ) | ||||||||
Interest credited to contractholder funds | (77 | ) | (78 | ) | (144 | ) | (159 | ) | ||||||||
Amortization
of DAC | (1 | ) | (1 | ) | (3 | ) | (3 | ) | ||||||||
Operating costs and expenses | (7 | ) | (8 | ) | (13 | ) | (15 | ) | ||||||||
Total
costs and expenses | (221 | ) | (239 | ) | (444 | ) | (467 | ) | ||||||||
Gain
on disposition of operations | 1 | 2 | 2 | 3 | ||||||||||||
Income tax (expense) benefit | (15 | ) | (23 | ) | 78 | (48 | ) | |||||||||
Net
income (loss) applicable to common shareholders | $ | 78 | $ | 88 | $ | (271 | ) | $ | 185 | |||||||
Adjusted
net (loss) income | $ | (111 | ) | $ | 52 | $ | (250 | ) | $ | 27 | ||||||
Realized
capital gains (losses), after-tax | 194 | 37 | (19 | ) | 161 | |||||||||||
Valuation changes
on embedded derivatives not hedged, after-tax | (6 | ) | (2 | ) | (4 | ) | (5 | ) | ||||||||
Gain on disposition
of operations, after-tax | 1 | 1 | 2 | 2 | ||||||||||||
Net income (loss) applicable
to common shareholders | $ | 78 | $ | 88 | $ | (271 | ) | $ | 185 | |||||||
Reserve
for life-contingent contract benefits as of June 30 | $ | 8,707 | $ | 8,607 | ||||||||||||
Contractholder
funds as of June 30 | $ | 8,653 | $ | 9,347 | ||||||||||||
Policies
in force as of June 30 (in thousands) | ||||||||||||||||
Deferred annuities | 109 | 120 | ||||||||||||||
Immediate
annuities | 76 | 81 | ||||||||||||||
Total | 185 | 201 |
Investment spread | ||||||||||||||||
Three
months ended June 30, | Six months ended June 30, | |||||||||||||||
($ in millions) | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Investment spread before valuation changes on embedded
derivatives not hedged | $ | (118 | ) | $ | 102 | $ | (259 | ) | $ | 93 | ||||||
Valuation
changes on derivatives embedded in equity-indexed annuity contracts that are not hedged | (8 | ) | (3 | ) | (5 | ) | (6 | ) | ||||||||
Total
investment spread | $ | (126 | ) | $ | 99 | $ | (264 | ) | $ | 87 |
Analysis
of investment spread | ||||||||||||||||||
Three months ended June 30, | ||||||||||||||||||
Weighted average investment yield | Weighted average interest crediting rate | Weighted average investment spreads | ||||||||||||||||
2020 | 2019 | 2020 | 2019 | 2020 | 2019 | |||||||||||||
Deferred
fixed annuities | 3.9 | % | 4.5 | % | 2.7 | % | 2.7 | % | 1.2 | % | 1.8 | % | ||||||
Immediate
fixed annuities with and without life contingencies | (0.2 | ) | 7.3 | 5.8 | 5.9 | (6.0 | ) | 1.4 | ||||||||||
Six
months ended June 30, | ||||||||||||||||||
Weighted average investment yield | Weighted average interest crediting rate | Weighted average investment spreads | ||||||||||||||||
2020 | 2019 | 2020 | 2019 | 2020 | 2019 | |||||||||||||
Deferred
fixed annuities | 4.1 | % | 4.3 | % | 2.7 | % | 2.7 | % | 1.4 | % | 1.6 | % | ||||||
Immediate
fixed annuities with and without life contingencies | (0.6 | ) | 5.4 | 5.8 | 5.9 | (6.4 | ) | (0.5 | ) |
Product
liabilities | ||||||||
($ in millions) | ||||||||
Immediate fixed annuities with life contingencies: | ||||||||
Sub-standard
structured settlements and group pension terminations (1) | $ | 5,231 | $ | 5,085 | ||||
Standard structured settlements and SPIA (2) | 3,361 | 3,367 | ||||||
Other | 115 | 78 | ||||||
Reserve
for life-contingent contract benefits | $ | 8,707 | $ | 8,530 | ||||
Deferred
fixed annuities | $ | 6,225 | $ | 6,499 | ||||
Immediate fixed annuities without life contingencies | 2,260 | 2,346 | ||||||
Other | 168 | 127 | ||||||
Contractholder
funds | $ | 8,653 | $ | 8,972 |
(1) | Comprises structured settlement annuities for annuitants with severe injuries or other health impairments which increased their expected mortality rate at the time
the annuity was issued (“sub-standard structured settlements”) and group annuity contracts issued to sponsors of terminated pension plans. |
(2) | Comprises structured settlement annuities for annuitants with standard life expectancy (“standard structured settlements”) and single premium immediate annuities (“SPIA”) with life contingencies. |
Changes
in contractholder funds | ||||||||||||||||
Three months ended June 30, | Six
months ended June 30, | |||||||||||||||
($ in millions) | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Contractholder funds, beginning balance | $ | 8,773 | $ | 9,571 | $ | 8,972 | $ | 9,817 | ||||||||
Deposits | 6 | 4 | 10 | 9 | ||||||||||||
Interest
credited | 76 | 78 | 143 | 158 | ||||||||||||
Benefits,
withdrawals and other adjustments | ||||||||||||||||
Benefits | (121 | ) | (135 | ) | (260 | ) | (276 | ) | ||||||||
Surrenders
and partial withdrawals | (97 | ) | (150 | ) | (248 | ) | (331 | ) | ||||||||
Contract
charges | (2 | ) | (2 | ) | (4 | ) | (4 | ) | ||||||||
Net transfers from separate accounts | — | — | — | (1 | ) | |||||||||||
Other
adjustments (1) | 18 | (19 | ) | 40 | (25 | ) | ||||||||||
Total
benefits, withdrawals and other adjustments | (202 | ) | (306 | ) | (472 | ) | (637 | ) | ||||||||
Contractholder
funds, ending balance | $ | 8,653 | $ | 9,347 | $ | 8,653 | $ | 9,347 |
(1) | The
table above illustrates the changes in contractholder funds, which are presented gross of reinsurance recoverables on the Condensed Consolidated Statements of Financial Position. The table above is intended to supplement our discussion and analysis of revenues, which are presented net of reinsurance on the Condensed Consolidated Statements of Operations. As a result, the net change in contractholder funds associated with products reinsured is reflected as a component of the other adjustments line. |
Portfolio composition and strategy by reporting segment (1) | ||||||||||||||||||||||||||||
($ in millions) | Property-Liability | Service Businesses | Allstate Life | Allstate Benefits | Allstate Annuities | Corporate
and Other | Total | |||||||||||||||||||||
Fixed income securities (2) | $ | 37,866 | $ | 1,549 | $ | 8,336 | $ | 1,383 | $ | 14,078 | $ | 1,236 | $ | 64,448 | ||||||||||||||
Equity
securities (3) | 2,093 | 132 | 172 | 73 | 1,402 | 340 | 4,212 | |||||||||||||||||||||
Mortgage
loans, net | 604 | — | 1,797 | 201 | 2,172 | — | 4,774 | |||||||||||||||||||||
Limited
partnership interests | 4,092 | — | — | — | 2,848 | 1 | 6,941 | |||||||||||||||||||||
Short-term
investments (4) | 1,868 | 89 | 441 | 73 | 763 | 2,110 | 5,344 | |||||||||||||||||||||
Other,
net | 1,648 | — | 1,326 | 299 | 643 | 2 | 3,918 | |||||||||||||||||||||
Total | $ | 48,171 | $ | 1,770 | $ | 12,072 | $ | 2,029 | $ | 21,906 | $ | 3,689 | $ | 89,637 | ||||||||||||||
Percent
to total | 53.7 | % | 2.0 | % | 13.5 | % | 2.3 | % | 24.4 | % | 4.1 | % | 100.0 | % | ||||||||||||||
Market-based | $ | 43,151 | $ | 1,770 | $ | 12,072 | $ | 2,029 | $ | 18,725 | $ | 3,687 | $ | 81,434 | ||||||||||||||
Performance-based | 5,020 | — | — | — | 3,181 | 2 | 8,203 | |||||||||||||||||||||
Total | $ | 48,171 | $ | 1,770 | $ | 12,072 | $ | 2,029 | $ | 21,906 | $ | 3,689 | $ | 89,637 |
(1) | Balances
reflect the elimination of related party investments between segments. |
(2) | Fixed income securities are carried at fair value. Amortized cost, net for these securities was $36.19 billion, $1.46 billion, $7.52 billion, $1.28 billion, $12.91 billion, $1.18 billion and $60.53 billion for Property-Liability, Service Businesses, Allstate Life, Allstate Benefits, Allstate Annuities, Corporate and Other, and in
total, respectively. |
(3) | Equity securities are carried at fair value. The fair value of equity securities held as of June 30, 2020, was $395 million in excess of cost. These net gains were primarily concentrated in the technology, consumer goods and banking sectors. Equity securities include $1.36 billion of funds with underlying investments in fixed income securities as of June 30, 2020. |
(4) | Short-term
investments are carried at fair value. |
Portfolio
composition by investment strategy | ||||||||||||
($ in millions) | Market-based | Performance-based | Total | |||||||||
Fixed income securities | $ | 64,344 | $ | 104 | $ | 64,448 | ||||||
Equity
securities | 3,886 | 326 | 4,212 | |||||||||
Mortgage loans, net | 4,774 | — | 4,774 | |||||||||
Limited
partnership interests | 254 | 6,687 | 6,941 | |||||||||
Short-term investments | 5,344 | — | 5,344 | |||||||||
Other,
net | 2,832 | 1,086 | 3,918 | |||||||||
Total | $ | 81,434 | $ | 8,203 | $ | 89,637 | ||||||
Percent
to total | 90.8 | % | 9.2 | % | 100.0 | % | ||||||
Unrealized
net capital gains and losses | ||||||||||||
Fixed income securities | $ | 3,914 | $ | — | $ | 3,914 | ||||||
Limited
partnership interests | — | (8 | ) | (8 | ) | |||||||
Short-term investments | 1 | — | 1 | |||||||||
Other | (3 | ) | — | (3 | ) | |||||||
Total | $ | 3,912 | $ | (8 | ) | $ | 3,904 |
Fixed
income securities by type | ||||||||
Fair value as of | ||||||||
($ in millions) | ||||||||
U.S. government and agencies | $ | 3,519 | $ | 5,086 | ||||
Municipal | 9,285 | 8,620 | ||||||
Corporate | 49,740 | 43,078 | ||||||
Foreign
government | 961 | 979 | ||||||
Asset-backed securities (“ABS”) | 759 | 862 | ||||||
Mortgage-backed
securities (“MBS”) | 184 | 419 | ||||||
Total fixed income securities | $ | 64,448 | $ | 59,044 |
Fair
value and unrealized net capital gains (losses) for fixed income securities by credit rating | ||||||||||||||||||||||||
A and above | BBB | BB | ||||||||||||||||||||||
($ in millions) | Fair value | Unrealized gain
(loss) | Fair value | Unrealized gain (loss) | Fair value | Unrealized gain (loss) | ||||||||||||||||||
U.S. government and agencies | $ | 3,519 | $ | 207 | $ | — | $ | — | $ | — | $ | — | ||||||||||||
Municipal | 8,910 | 674 | 311 | 31 | 8 | — | ||||||||||||||||||
Corporate | ||||||||||||||||||||||||
Public | 15,231 | 1,221 | 17,573 | 1,174 | 2,611 | 35 | ||||||||||||||||||
Privately
placed | 4,523 | 331 | 5,470 | 270 | 2,171 | (3 | ) | |||||||||||||||||
Total
corporate | 19,754 | 1,552 | 23,043 | 1,444 | 4,782 | 32 | ||||||||||||||||||
Foreign
government | 945 | 45 | 10 | 1 | 6 | — | ||||||||||||||||||
ABS | 654 | (7 | ) | 10 | (3 | ) | 20 | (4 | ) | |||||||||||||||
MBS | 60 | 3 | 52 | — | 8 | — | ||||||||||||||||||
Total
fixed income securities | $ | 33,842 | $ | 2,474 | $ | 23,426 | $ | 1,473 | $ | 4,824 | $ | 28 | ||||||||||||
B | CCC
and lower | Total | ||||||||||||||||||||||
Fair value | Unrealized gain (loss) | Fair value | Unrealized gain
(loss) | Fair value | Unrealized gain (loss) | |||||||||||||||||||
U.S. government and agencies | $ | — | $ | — | $ | — | $ | — | $ | 3,519 | $ | 207 | ||||||||||||
Municipal | 11 | — | 45 | 1 | 9,285 | 706 | ||||||||||||||||||
Corporate | ||||||||||||||||||||||||
Public | 542 | (27 | ) | 54 | (8 | ) | 36,011 | 2,395 | ||||||||||||||||
Privately
placed | 1,380 | (28 | ) | 185 | (22 | ) | 13,729 | 548 | ||||||||||||||||
Total
corporate | 1,922 | (55 | ) | 239 | (30 | ) | 49,740 | 2,943 | ||||||||||||||||
Foreign
government | — | — | — | — | 961 | 46 | ||||||||||||||||||
ABS | 13 | (2 | ) | 62 | (4 | ) | 759 | (20 | ) | |||||||||||||||
MBS | 4 | — | 60 | 29 | 184 | 32 | ||||||||||||||||||
Total
fixed income securities | $ | 1,950 | $ | (57 | ) | $ | 406 | $ | (4 | ) | $ | 64,448 | $ | 3,914 |
Types of properties collateralizing the mortgage loan portfolio | |||
(% of mortgage loan portfolio carrying value) | |||
Apartment complex | 38.0 | % | |
Office buildings | 22.1 | ||
Warehouse | 15.1 | ||
Retail | 12.5 | ||
Other | 12.3 | ||
Total | 100.0 | % |
Private equity limited
partnerships by sector | |||
(% of carrying value) | |||
Industrial | 17.7 | % | |
Consumer staples | 12.1 | ||
Utilities | 10.7 | ||
Consumer
discretionary | 10.1 | ||
Information technology | 9.7 | ||
Healthcare | 9.1 | ||
Other | 30.6 | ||
Total | 100.0 | % |
Real
estate limited partnerships by sector | |||
(% of carrying value) | |||
Industrial | 28.3 | % | |
Residential | 26.7 | ||
Office | 13.2 | ||
Other | 31.8 | ||
Total | 100.0 | % |
Direct real estate investments by sector | |||
(% of carrying value) | |||
Residential | 42.8 | % | |
Industrial | 16.1 | ||
Retail | 14.2 | ||
Timber | 10.5 | ||
Agriculture | 9.8 | ||
Other | 6.6 | ||
Total | 100.0 | % |
Unrealized net capital gains (losses) | ||||||||
June 30, | December 31, | |||||||
($ in millions) | 2020 | 2019 | ||||||
U.S.
government and agencies | $ | 207 | $ | 115 | ||||
Municipal | 706 | 540 | ||||||
Corporate | 2,943 | 1,988 | ||||||
Foreign
government | 46 | 11 | ||||||
ABS | (20 | ) | 2 | |||||
MBS | 32 | 95 | ||||||
Fixed
income securities | 3,914 | 2,751 | ||||||
Short-term investments | 1 | — | ||||||
Derivatives | (3 | ) | (3 | ) | ||||
EMA
limited partnerships | (8 | ) | (4 | ) | ||||
Unrealized net capital gains and losses, pre-tax | $ | 3,904 | $ | 2,744 |
Gross
unrealized gains (losses) on fixed income securities | ||||||||
June 30, | December 31, | |||||||
($ in millions) | 2020 | 2019 | ||||||
Gross unrealized gains | $ | 4,229 | $ | 2,847 | ||||
Gross
unrealized losses | (315 | ) | (96 | ) | ||||
Unrealized net capital gains and losses | $ | 3,914 | $ | 2,751 |
Gross unrealized gains (losses) on fixed income securities by type and sector | ||||||||||||||||
($ in millions) | Amortized cost, net | Gross unrealized | Fair value | |||||||||||||
Gains | Losses | |||||||||||||||
Corporate: | ||||||||||||||||
Consumer
goods | ||||||||||||||||
Cyclical | ||||||||||||||||
Gaming,
lodging and leisure | $ | 522 | $ | 14 | $ | (13 | ) | $ | 523 | |||||||
Automotive | 1,757 | 72 | (6 | ) | 1,823 | |||||||||||
Retailers | 1,168 | 114 | (1 | ) | 1,281 | |||||||||||
Restaurants | 485 | 38 | (1 | ) | 522 | |||||||||||
Other | 1,124 | 54 | (12 | ) | 1,166 | |||||||||||
Total
cyclical | 5,056 | 292 | (33 | ) | 5,315 | |||||||||||
Non-cyclical | 7,962 | 576 | (19 | ) | 8,519 | |||||||||||
Total
consumer goods | 13,018 | 868 | (52 | ) | 13,834 | |||||||||||
Energy | ||||||||||||||||
Midstream | 1,645 | 77 | (25 | ) | 1,697 | |||||||||||
Independent/upstream | 285 | 16 | (23 | ) | 278 | |||||||||||
Integrated | 501 | 49 | — | 550 | ||||||||||||
Other | 242 | 14 | (3 | ) | 253 | |||||||||||
Total
energy | 2,673 | 156 | (51 | ) | 2,778 | |||||||||||
Transportation | ||||||||||||||||
Airlines | 331 | 1 | (39 | ) | 293 | |||||||||||
Railroad
and other | 1,640 | 174 | (8 | ) | 1,806 | |||||||||||
Total transportation | 1,971 | 175 | (47 | ) | 2,099 | |||||||||||
Financial
services | ||||||||||||||||
Finance companies | 569 | 10 | (37 | ) | 542 | |||||||||||
Life
insurance | 957 | 54 | (1 | ) | 1,010 | |||||||||||
Other | 1,408 | 89 | (3 | ) | 1,494 | |||||||||||
Total
financial services | 2,934 | 153 | (41 | ) | 3,046 | |||||||||||
Banking | 5,532 | 295 | (24 | ) | 5,803 | |||||||||||
Capital
goods | 5,282 | 339 | (20 | ) | 5,601 | |||||||||||
Basic industry | 2,230 | 143 | (14 | ) | 2,359 | |||||||||||
Utilities
| 5,986 | 569 | (13 | ) | 6,542 | |||||||||||
Communications | 3,308 | 263 | (12 | ) | 3,559 | |||||||||||
Other | 259 | 7 | (6 | ) | 260 | |||||||||||
Technology | 3,604 | 259 | (4 | ) | 3,859 | |||||||||||
Total
corporate fixed income portfolio | 46,797 | 3,227 | (284 | ) | 49,740 | |||||||||||
U.S.
government and agencies | 3,312 | 208 | (1 | ) | 3,519 | |||||||||||
Municipal | 8,579 | 712 | (6 | ) | 9,285 | |||||||||||
Foreign
government | 915 | 46 | — | 961 | ||||||||||||
ABS | 779 | 4 | (24 | ) | 759 | |||||||||||
MBS | 152 | 32 | — | 184 | ||||||||||||
Total
fixed income securities | $ | 60,534 | $ | 4,229 | $ | (315 | ) | $ | 64,448 |
Gross
unrealized gains (losses) on fixed income securities by type and sector | ||||||||||||||||
($ in millions) | Amortized cost | Gross unrealized | Fair value | |||||||||||||
Gains | Losses | |||||||||||||||
Corporate: | ||||||||||||||||
Consumer
goods | ||||||||||||||||
Cyclical | ||||||||||||||||
Gaming,
lodging and leisure | $ | 596 | $ | 28 | $ | — | $ | 624 | ||||||||
Automotive | 1,463 | 42 | (1 | ) | 1,504 | |||||||||||
Retailers | 920 | 52 | — | 972 | ||||||||||||
Restaurants | 390 | 19 | — | 409 | ||||||||||||
Other | 1,056 | 49 | (3 | ) | 1,102 | |||||||||||
Total
cyclical | 4,425 | 190 | (4 | ) | 4,611 | |||||||||||
Non-cyclical | 7,112 | 316 | (1 | ) | 7,427 | |||||||||||
Total
consumer goods | 11,537 | 506 | (5 | ) | 12,038 | |||||||||||
Energy | ||||||||||||||||
Midstream | 1,570 | 77 | (4 | ) | 1,643 | |||||||||||
Independent/upstream | 422 | 19 | (10 | ) | 431 | |||||||||||
Integrated | 406 | 32 | — | 438 | ||||||||||||
Other | 237 | 11 | — | 248 | ||||||||||||
Total
energy | 2,635 | 139 | (14 | ) | 2,760 | |||||||||||
Transportation | ||||||||||||||||
Airlines | 418 | 12 | — | 430 | ||||||||||||
Railroad
and other | 1,613 | 120 | — | 1,733 | ||||||||||||
Total transportation | 2,031 | 132 | — | 2,163 | ||||||||||||
Financial
services | ||||||||||||||||
Finance companies | 582 | 24 | — | 606 | ||||||||||||
Life
insurance | 725 | 30 | — | 755 | ||||||||||||
Other | 1,169 | 53 | (2 | ) | 1,220 | |||||||||||
Total
financial services | 2,476 | 107 | (2 | ) | 2,581 | |||||||||||
Banking | 4,610 | 143 | (14 | ) | 4,739 | |||||||||||
Capital
goods | 4,945 | 229 | (1 | ) | 5,173 | |||||||||||
Basic industry | 1,897 | 114 | (2 | ) | 2,009 | |||||||||||
Utilities
| 5,197 | 385 | (6 | ) | 5,576 | |||||||||||
Communications | 2,721 | 158 | (2 | ) | 2,877 | |||||||||||
Other | 276 | 10 | — | 286 | ||||||||||||
Technology | 2,765 | 112 | (1 | ) | 2,876 | |||||||||||
Total
corporate fixed income portfolio | 41,090 | 2,035 | (47 | ) | 43,078 | |||||||||||
U.S. government
and agencies | 4,971 | 141 | (26 | ) | 5,086 | |||||||||||
Municipal | 8,080 | 551 | (11 | ) | 8,620 | |||||||||||
Foreign
government | 968 | 16 | (5 | ) | 979 | |||||||||||
ABS | 860 | 8 | (6 | ) | 862 | |||||||||||
MBS | 324 | 96 | (1 | ) | 419 | |||||||||||
Total
fixed income securities | $ | 56,293 | $ | 2,847 | $ | (96 | ) | $ | 59,044 |
Equity
securities by sector | ||||||||||||||||||||||||
($ in millions) | Cost | Over (under) cost | Fair value | Cost | Over
(under) cost | Fair value | ||||||||||||||||||
Capital goods | $ | 168 | $ | (18 | ) | $ | 150 | $ | 331 | $ | 91 | $ | 422 | |||||||||||
Energy | 115 | (8 | ) | 107 | 275 | 15 | 290 | |||||||||||||||||
Utilities | 56 | 4 | 60 | 116 | 38 | 154 | ||||||||||||||||||
Transportation | 41 | 6 | 47 | 81 | 32 | 113 | ||||||||||||||||||
Basic
industry | 48 | 14 | 62 | 135 | 40 | 175 | ||||||||||||||||||
Other
(1) | 1,303 | 342 | 1,645 | 2,526 | 1,062 | 3,588 | ||||||||||||||||||
Funds | ||||||||||||||||||||||||
Bonds | 1,339 | 21 | 1,360 | 1,727 | 62 | 1,789 | ||||||||||||||||||
Equities | 747 | 34 | 781 | 1,377 | 254 | 1,631 | ||||||||||||||||||
Total
funds | 2,086 | 55 | 2,141 | 3,104 | 316 | 3,420 | ||||||||||||||||||
Total
equity securities | $ | 3,817 | $ | 395 | $ | 4,212 | $ | 6,568 | $ | 1,594 | $ | 8,162 |
(1) | Other
is comprised of REITs, communications, financial services, banking, consumer goods and technology sectors. |
Net investment income | ||||||||||||||||
Three
months ended June 30, | Six months ended June 30, | |||||||||||||||
($ in millions) | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Fixed income securities | $ | 531 | $ | 543 | $ | 1,056 | $ | 1,081 | ||||||||
Equity
securities | 31 | 68 | 37 | 98 | ||||||||||||
Mortgage loans | 51 | 54 | 111 | 107 | ||||||||||||
Limited
partnership interests | (220 | ) | 254 | (412 | ) | 263 | ||||||||||
Short-term investments | 2 | 26 | 19 | 52 | ||||||||||||
Other | 62 | 67 | 125 | 130 | ||||||||||||
Investment
income, before expense | 457 | 1,012 | 936 | 1,731 | ||||||||||||
Investment expense
(1) (2) | (48 | ) | (70 | ) | (106 | ) | (141 | ) | ||||||||
Net
investment income | $ | 409 | $ | 942 | $ | 830 | $ | 1,590 | ||||||||
Market-based | 655 | 733 | 1,330 | 1,428 | ||||||||||||
Performance-based | (198 | ) | 279 | (394 | ) | 303 | ||||||||||
Investment
income, before expense | $ | 457 | $ | 1,012 | $ | 936 | $ | 1,731 |
(1) | Investment
expense includes $14 million and $20 million of investee level expenses in the second quarter of 2020 and 2019, respectively and $27 million and $40 million in the first six months of 2020 and 2019, respectively. Investee level expenses include asset level operating expenses on directly held real estate and other consolidated investments. Beginning January 1, 2020, depreciation previously included in investee level expenses is reported
as realized capital gains or losses. |
(2) | Investment expense includes zero and $11 million related to the portion of reinvestment income on securities lending collateral paid to the counterparties in the second quarter of 2020 and 2019, respectively, and $6 million and $22 million in the first six months of 2020
and 2019, respectively. |
Performance-based
investment income | ||||||||||||||||
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
($ in millions) | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Limited
partnerships | ||||||||||||||||
Private equity | $ | (213 | ) | $ | 216 | $ | (412 | ) | $ | 211 | ||||||
Real
estate | (7 | ) | 38 | — | 50 | |||||||||||
Performance-based - limited partnerships | (220 | ) | 254 | (412 | ) | 261 | ||||||||||
Non-limited
partnerships | ||||||||||||||||
Private equity | 4 | 10 | (17 | ) | 13 | |||||||||||
Real
estate | 18 | 15 | 35 | 29 | ||||||||||||
Performance-based - non-limited partnerships | 22 | 25 | 18 | 42 | ||||||||||||
Total | ||||||||||||||||
Private
equity | (209 | ) | 226 | (429 | ) | 224 | ||||||||||
Real estate | 11 | 53 | 35 | 79 | ||||||||||||
Total
performance-based income before investee level expenses | $ | (198 | ) | $ | 279 | $ | (394 | ) | $ | 303 | ||||||
Investee
level expenses (1) | (13 | ) | (18 | ) | (25 | ) | (36 | ) | ||||||||
Total
performance-based income | $ | (211 | ) | $ | 261 | $ | (419 | ) | $ | 267 |
(1) | Investee
level expenses include asset level operating expenses reported in investment expense. Beginning January 1, 2020, depreciation previously included in investee level expenses is reported as realized capital gains or losses. |
Components
of realized capital gains (losses) and the related tax effect | ||||||||||||||||
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
($ in millions) | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Sales
(1) | $ | 179 | $ | 117 | $ | 567 | $ | 212 | ||||||||
Credit
losses (2) | ||||||||||||||||
Fixed income securities | (4 | ) | (9 | ) | (8 | ) | (11 | ) | ||||||||
Mortgage
Loans | — | — | (41 | ) | — | |||||||||||
Limited partnership interests | (3 | ) | (2 | ) | (10 | ) | (3 | ) | ||||||||
Other
investments | (3 | ) | (4 | ) | (30 | ) | (15 | ) | ||||||||
Total credit losses | (10 | ) | (15 | ) | (89 | ) | (29 | ) | ||||||||
Valuation
of equity investments - appreciation (decline): | ||||||||||||||||
Equity securities | 480 | 178 | (270 | ) | 731 | |||||||||||
Limited
partnerships (3) | 37 | 22 | (72 | ) | 96 | |||||||||||
Total
valuation of equity investments | 517 | 200 | (342 | ) | 827 | |||||||||||
Valuation and settlements
of derivative instruments | 18 | 22 | 106 | (24 | ) | |||||||||||
Realized capital gains (losses),
pre-tax | 704 | 324 | 242 | 986 | ||||||||||||
Income tax expense | (150 | ) | (68 | ) | (54 | ) | (206 | ) | ||||||||
Realized
capital gains (losses), after-tax | $ | 554 | $ | 256 | $ | 188 | $ | 780 | ||||||||
Market-based | 690 | 287 | 197 | 892 | ||||||||||||
Performance-based | 14 | 37 | 45 | 94 | ||||||||||||
Realized
capital gains (losses), pre-tax | $ | 704 | $ | 324 | $ | 242 | $ | 986 |
(1) | Beginning
January 1, 2020, depreciation previously included in investee level expenses is reported as realized capital gains or losses. |
(2) | Due to the adoption of the measurement of credit losses on financial instruments accounting standard, realized capital losses previously reported as other-than-temporary impairment write-downs are now presented as credit losses. |
(3) | Relates to limited partnerships where the underlying assets are
predominately public equity securities. |
Realized capital gains (losses) for performance-based investments | ||||||||||||||||
Three
months ended June 30, | Six months ended June 30, | |||||||||||||||
($ in millions) | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Sales (1) | $ | (8 | ) | $ | 31 | $ | 2 | $ | 60 | |||||||
Credit
losses (2) | (5 | ) | (2 | ) | (13 | ) | (3 | ) | ||||||||
Valuation
of equity investments | 32 | 2 | 25 | 27 | ||||||||||||
Valuation and settlements of
derivative instruments | (5 | ) | 6 | 31 | 10 | |||||||||||
Total performance-based | $ | 14 | $ | 37 | $ | 45 | $ | 94 |
(1) | Beginning
January 1, 2020, depreciation previously included in investee level expenses is reported as realized capital gains or losses. |
(2) | Due to the adoption of the measurement of credit losses on financial instruments accounting standard, realized capital losses previously reported as other-than-temporary impairment write-downs are now presented as credit losses. |
Capital resources | ||||||||
($ in millions) | ||||||||
Preferred stock, common stock, treasury stock, retained income and other shareholders’ equity items | $ | 24,358 | $ | 24,048 | ||||
Accumulated
other comprehensive income | 2,628 | 1,950 | ||||||
Total shareholders’ equity | 26,986 | 25,998 | ||||||
Debt | 6,634 | 6,631 | ||||||
Total
capital resources | $ | 33,620 | $ | 32,629 | ||||
Ratio
of debt to shareholders’ equity | 24.6 | % | 25.5 | % | ||||
Ratio of debt to capital resources | 19.7 | 20.3 |
Debt
maturities for each of the next five years and thereafter (excluding issuance costs) | ||||
($ in millions) | ||||
2020 | $ | — | ||
2021 | 250 | |||
2022 | — | |||
2023 | 750 | |||
2024 | — | |||
2025 | — | |||
Thereafter | 5,691 | |||
Total
long-term debt principal | $ | 6,691 |
Intercompany dividends | ||||
($ in millions) | ||||
AIC
to AIH | $ | 2,879 | ||
AIH to the Corporation | 2,879 |
• | The
Corporation, AIC and ALIC have access to a $1.00 billion unsecured revolving credit facility that is available for short-term liquidity requirements. The maturity date of this facility is April 2021. The facility is fully subscribed among 11 lenders with the largest commitment being $115 million. The commitments of the lenders are several and no lender is responsible for any other lender’s commitment if such lender fails to make a loan under the facility. This facility contains an increase provision that would allow up to an additional $500 million of borrowing, subject to the lenders’ commitment. This facility has a financial covenant requiring that we not exceed a 37.5% debt to capitalization ratio as defined in the agreement. This ratio was 15.8% as of June 30, 2020. Although the right to borrow under the facility is not subject to a minimum rating requirement,
the costs of maintaining the facility and borrowing under it are based on the ratings of our senior unsecured, unguaranteed long-term debt. There were no borrowings under the credit facility during 2020. |
• | The Corporation has access to the commercial paper market for short-term borrowings up to $1.00 billion. The combined total amount outstanding at any one point from commercial paper borrowings and the credit facility cannot exceed the amount that can be borrowed under the credit facility. As of June 30, 2020, there were no commercial paper borrowings outstanding. |
• | The
Corporation has access to a universal shelf registration statement with the Securities and Exchange Commission that expires in 2021. We can use this shelf registration to issue an unspecified amount of debt securities, common stock (including 587 million shares of treasury stock as of June 30, 2020), preferred stock, depositary shares, warrants, stock purchase contracts, stock purchase units and securities of trust subsidiaries. The specific terms of any securities we issue under this registration statement will be provided in the applicable prospectus supplements. |
Contractholder funds by contractual withdrawal provisions | |||||||
($ in millions) | Percent to total | ||||||
Not subject to discretionary withdrawal | $ | 2,651 | 15.2 | % | |||
Subject to discretionary withdrawal with adjustments: | |||||||
Specified
surrender charges (1) | 4,852 | 27.9 | |||||
Market value adjustments (2) | 741 | 4.3 | |||||
Subject
to discretionary withdrawal without adjustments (3) | 9,152 | 52.6 | |||||
Total contractholder funds | $ | 17,396 | 100.0 | % |
(1) | Includes
$1.70 billion of liabilities with a contractual surrender charge of less than 5% of the account balance. |
(2) | $318 million of the contracts with market value adjusted surrenders have a 30-45 day period at the end of their initial and subsequent interest rate guarantee periods (which are typically 1, 5, 7 or 10 years) during which there is no surrender charge or market value adjustment. |
(3) | 90%
of these contracts have a minimum interest crediting rate guarantee of 3% or higher. |
Period | Total
number of shares (or units) purchased (1) | Average price paid per share (or unit) | Total number of shares (or units) purchased as part of publicly announced plans or programs (2) | Maximum number (or approximate dollar value) of shares (or units) that may yet be purchased under the plans or programs (3) | ||||||||||
Open Market Purchases | 2,317,122 | $ | 97.60 | 2,294,746 | ||||||||||
Open Market Purchases | 1,111,422 | $ | 99.52 | 1,036,268 | ||||||||||
Open Market Purchases | 646,501 | $ | 98.59 | 643,525 | ||||||||||
Total | 4,075,045 | $ | 98.28 | 3,974,539 | $ | 2.36 | billion |
(1) | In
accordance with the terms of its equity compensation plans, Allstate acquired the following shares in connection with the vesting of restricted stock units and performance stock awards and the exercise of stock options held by employees and/or directors. The shares were acquired in satisfaction of withholding taxes due upon exercise or vesting and in payment of the exercise price of the options. |
(2) | From
time to time, repurchases under our programs are executed under the terms of a pre-set trading plan meeting the requirements of Rule 10b5-1(c) of the Securities Exchange Act of 1934. |
(3) | In February 2020, we announced the approval of a common share repurchase program for $3 billion, which is expected to be completed by the end of 2021. |
(a) | Exhibits |
Exhibit Number | Exhibit Description | Form | File Number | Exhibit | Filing Date | Filed or Furnished Herewith |
2.1 | 8-K | 2.1 | ||||
4 | The
Allstate Corporation hereby agrees to furnish to the Commission, upon request, the instruments defining the rights of holders of each issue of long-term debt of it and its consolidated subsidiaries | |||||
15 | X | |||||
31(i) | X | |||||
31(i) | X | |||||
32 | X | |||||
101.INS | Inline
XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | X | ||||
101.SCH | Inline XBRL Taxonomy Extension Schema Document | X | ||||
101.CAL | Inline
XBRL Taxonomy Extension Calculation Linkbase Document | X | ||||
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | X | ||||
101.LAB | Inline
XBRL Taxonomy Extension Label Linkbase Document | X | ||||
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | X | ||||
104 | Cover
Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) | X |
The Allstate Corporation | ||
(Registrant) | ||
By | /s/ John C. Pintozzi | |
Senior Vice President, Controller and Chief Accounting Officer | ||
(Authorized
Signatory and Principal Accounting Officer) |
This ‘10-Q’ Filing | Date | Other Filings | ||
---|---|---|---|---|
12/15/22 | ||||
12/15/21 | ||||
12/31/20 | 10-K, 11-K, 13F-HR | |||
12/15/20 | ||||
10/1/20 | 4 | |||
9/4/20 | ||||
8/27/20 | ||||
8/24/20 | ||||
Filed on: | 8/4/20 | 8-K | ||
7/24/20 | ||||
7/20/20 | ||||
7/16/20 | 8-K, SC 13D | |||
7/8/20 | 8-K | |||
7/7/20 | 8-K | |||
7/1/20 | 4 | |||
For Period end: | 6/30/20 | 13F-HR | ||
6/25/20 | ||||
6/20/20 | ||||
6/1/20 | 4 | |||
5/31/20 | ||||
5/19/20 | 8-K, DEF 14A | |||
5/1/20 | ||||
4/30/20 | ||||
4/1/20 | 4 | |||
3/31/20 | 10-Q, 13F-HR | |||
2/21/20 | 10-K, 4 | |||
2/20/20 | 8-K | |||
2/12/20 | SC 13G/A | |||
1/15/20 | 25-NSE | |||
1/2/20 | ||||
1/1/20 | 4 | |||
12/31/19 | 10-K, 11-K, 13F-HR | |||
11/8/19 | 8-A12B, 8-K | |||
11/1/19 | 4, 8-K | |||
9/17/19 | ||||
6/30/19 | 10-Q, 13F-HR | |||
5/14/19 | ||||
4/25/19 | ||||
4/9/19 | 4 | |||
3/31/19 | 10-Q, 13F-HR | |||
3/26/19 | ||||
3/6/19 | ||||
2/12/19 | 4 | |||
12/31/18 | 10-K, 11-K, 13F-HR | |||
12/14/18 | 8-K | |||
12/4/18 | ||||
9/24/18 | ||||
9/12/18 | ||||
8/7/18 | 4, CORRESP | |||
6/29/18 | ||||
6/22/18 | ||||
5/21/18 | ||||
4/12/18 | ||||
2/27/18 | ||||
8/3/17 | ||||
11/11/16 | ||||
8/3/15 | 10-Q, 8-K | |||
10/29/14 | 10-Q, 8-K | |||
4/1/14 | 4, 8-K | |||
List all Filings |
As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 11/20/20 Allstate Corp. 424B2 1:1.5M Toppan Merrill/FA 11/19/20 Allstate Corp. 424B2 1:1.5M Toppan Merrill/FA |
As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 7/08/20 Allstate Corp. 8-K:1,7,9 7/07/20 14:1.1M Toppan Merrill/FA |