The Allstate Corporation (NYSE: ALL) today reported financial
results for the fourth quarter of 2022.
The Allstate Corporation
Consolidated Highlights
Three months ended December
31,
Twelve months ended December
31,
($ in millions, except per share data
and ratios)
2022
2021
% / pts
Change
2022
2021
% / pts
Change
Consolidated revenues
$
13,647
$
13,011
4.9
%
$
51,412
$
50,588
1.6
%
Net income (loss) applicable to common
shareholders
(310
)
790
NM
(1,416
)
1,485
NM
per diluted common share (1)
(1.17
)
2.73
NM
(5.22
)
4.96
NM
Adjusted net income (loss)*
(359
)
796
NM
(262
)
4,033
NM
per diluted common share* (1)
(1.36
)
2.75
NM
(0.97
)
13.48
NM
Return on Allstate common shareholders’
equity (trailing twelve months)
Net income applicable to common
shareholders
(7.3
)%
5.8
%
(13.1
)
Adjusted net income*
(1.3
)%
16.9
%
(18.2
)
Common shares outstanding (in
millions)
263.5
280.6
(6.1
)
Book value per common share
58.07
81.52
(28.8
)
Consolidated premiums written
(2)
12,657
11,476
10.3
50,319
45,821
9.8
Property-Liability insurance premiums
earned
11,380
10,390
9.5
43,909
40,454
8.5
Property-Liability combined
ratio
Recorded
109.1
98.9
10.2
106.6
95.9
10.7
Underlying combined ratio*
99.2
91.3
7.9
95.1
86.2
8.9
Catastrophe losses
779
528
47.5
3,112
3,339
(6.8
)
Total policies in force (in
thousands)
189,071
190,945
(1.0
)
(1)
In periods where a net loss or adjusted
net loss is reported, weighted average shares for basic earnings
per share is used for calculating diluted earnings per share
because all dilutive potential common shares are anti-dilutive and
are therefore excluded from the calculation.
(2)
Includes premiums and contract charges for
Allstate Health and Benefits segment.
* Measures used in this release that are not based on accounting
principles generally accepted in the United States of America
(“non-GAAP”) are denoted with an asterisk and defined and
reconciled to the most directly comparable GAAP measure in the
“Definitions of Non-GAAP Measures” section of this document. NM =
not meaningful
“Allstate had a net loss of $310 million in the fourth quarter
as auto insurance underwriting losses continued to negatively
impact results," said Tom Wilson, Chair, President and CEO of The
Allstate Corporation. "While revenues increased to $13.6 billion,
due to 9.5% growth in Property-Liability premiums, higher auto
insurance prices were not sufficient to overcome increased loss
costs and reserve increases. The comprehensive plan to return auto
insurance margins to target levels continues to be implemented in
2023 and is expected to further increase average premiums, reduce
expenses and lower policy growth. Homeowners insurance maintained
attractive margins despite higher catastrophe losses from Winter
Storm Elliott. The investment portfolio had a total return of 2.5%
in the quarter. Allstate Protection Plans had excellent growth from
U.S. based retailers and expansion into furniture and international
markets. Total enterprise premiums written increased 9.8% to $50.3
billion for the year, largely due to implemented rate increases in
auto and homeowners insurance, and adjusted net income* was a loss
of $262 million."
"In addition to actions to restore auto profitability, we
continue to execute the Transformative Growth strategy to further
increase shareholder value," continued Wilson. "The affordable,
simple and connected auto insurance product launched in 2022 will
be available in more states in 2023 using a differentiated
direct-to-consumer experience that leverages our expertise in data
and analytics. Proactive risk and return management of the
investment portfolio resulted in a reduction in duration in late
2021, mitigating approximately $2 billion of losses in 2022. In
late 2022, we began to extend duration as the risk and return
profile of fixed income improved. Capital management actions also
benefited shareholders who received $3.4 billion of cash in 2022
through dividends and share repurchases," concluded Wilson.
Fourth Quarter 2022 Results
- Total revenues of $13.6 billion in the fourth quarter of 2022
increased 4.9% compared to the prior year quarter as a 9.5%
increase in Property-Liability earned premium was partially offset
by lower net investment income and reduced net gains on investments
and derivatives compared to the prior year quarter.
- Net loss applicable to common shareholders was $310 million in
the fourth quarter of 2022 compared to income of $790 million in
the prior year quarter, primarily due to an underwriting loss.
- Adjusted net loss* was $359 million, or $1.36 per diluted
share, compared to adjusted net income* of $796 million generated
in the prior year quarter. The decline reflects increased claims
severity, higher unfavorable prior year reserve reestimates,
increased catastrophe losses and lower performance-based investment
income.
Property-Liability
Results
Three months ended December
31,
Twelve months ended December
31,
($ in millions, except ratios)
2022
2021
% / pts
Change
2022
2021
% / pts
Change
Premiums written
$
11,480
$
10,301
11.4
%
$
45,787
$
41,358
10.7
%
Allstate Brand
9,694
8,884
9.1
38,895
35,668
9.0
National General
1,786
1,417
26.0
6,892
5,690
21.1
Premiums earned
11,380
10,390
9.5
43,909
40,454
8.5
Allstate Brand
9,654
8,911
8.3
37,470
35,112
6.7
National General
1,726
1,479
16.7
6,439
5,342
20.5
Underwriting income (loss)
(1,035
)
113
NM
(2,911
)
1,665
NM
Allstate Brand
(990
)
174
NM
(2,613
)
1,792
NM
National General
(44
)
(62
)
NM
(177
)
(21
)
NM
Recorded combined ratio
109.1
98.9
10.2
106.6
95.9
10.7
Allstate Protection auto
112.6
104.3
8.3
110.1
95.4
14.7
Allstate Protection homeowners
92.6
87.1
5.5
93.8
96.8
(3.0
)
Underlying combined ratio*
99.2
91.3
7.9
95.1
86.2
8.9
Allstate Protection auto
109.2
100.2
9.0
103.6
92.5
11.1
Allstate Protection homeowners
70.3
69.6
0.7
71.1
69.6
1.5
- Property-Liability earned premium of $11.4 billion
increased 9.5% in the fourth quarter of 2022 compared to the prior
year quarter, driven primarily by higher average premiums. The
recorded combined ratio of 109.1 was 10.2 points higher than the
prior year quarter and generated an underwriting loss of $1.0
billion.
- Premiums written of $11.5 billion increased 11.4% compared to
the prior year quarter, reflecting growth at National General and
the Allstate brand. Auto insurance written premiums increased 13.3%
driven by significant rate increases in the Allstate brand and
growth at National General. Homeowners insurance written premiums
increased 9.3%, primarily reflecting inflation in insured home
replacement costs, rate increases and policies in force
growth.
- The underwriting loss reflects increases to current report year
auto claim severities, higher catastrophe losses and adverse prior
year reserve reestimates. This was partially offset by higher
earned premiums and lower expenses.
- Prior year reserves, excluding catastrophes, were strengthened
$282 million in the fourth quarter of 2022. This included
approximately $180 million primarily related to an increase in
personal auto insurance late reported claim frequency attributable
to prior accident years and approximately $100 million related to
increased severity in commercial auto insurance principally from
shared economy and states that are being exited.
- The underlying combined ratio* of 99.2 in the fourth quarter of
2022 was 7.9 points above the prior year quarter, primarily
reflecting a higher auto insurance loss ratio.
- The expense ratio of 22.4 in the fourth quarter of 2022
decreased 2.6 points compared to the fourth quarter of 2021, mainly
from lower advertising expenses, cost reductions and increased
premiums earned.
- Allstate Protection auto insurance earned premium
increased 10.3%, driven by higher average premiums from rate
increases and a modest increase in policies in force. Allstate
brand auto net written premium growth of 10.5% compared to the
prior year quarter reflects a 14.4% increase in average gross
written premium driven by rate increases implemented throughout the
year, partially offset by a decline in policies in force. Allstate
brand implemented auto rate increases in 38 locations in the fourth
quarter at an average of 11.2%, or 6.1% on total premiums. Total
rate increases in 2022 for Allstate brand auto insurance are
expected to raise annualized written premiums by approximately
16.9% or $4.1 billion. We expect to continue to pursue additional
rate increases and underwriting actions in 2023 to improve auto
insurance profitability. Policies in force growth was driven by
National General and was partially offset by a reduction in the
Allstate brand. The recorded auto insurance combined ratio of 112.6
in the fourth quarter of 2022 was 8.3 points above the prior year
quarter, reflecting higher current report year claim severity and
accident frequency compared to the fourth quarter of 2021 and an
increase in prior year claims reserves. The underlying combined
ratio* of 109.2 was 9.0 points above the prior year quarter. Claim
severity was increased in the fourth quarter for bodily injury and
physical damage for the full year 2022 to reflect continued
increases in loss costs. The increases to 2022 report year severity
for claims reported in the first three quarters of the year are
estimated to represent 5.3 points of the fourth quarter underlying
combined ratio. Excluding this impact, the fourth quarter
underlying combined ratio* would have been 103.9.
- Allstate Protection homeowners insurance earned premium
grew 9.4%, and policies in force increased 1.4% compared to the
fourth quarter of 2021. Allstate brand net written premium
increased 10.0% compared to the prior year quarter, primarily
driven by average premium increases due to inflation in insured
home replacement costs and implemented rate increases. National
General written premiums grew as we increased rates to improve
underwriting margins to targeted levels. The recorded homeowners
insurance combined ratio of 92.6 increased 5.5 points compared to
the fourth quarter of 2021 and generated underwriting income of
$212 million in the quarter. The increase primarily reflects higher
catastrophe losses related to Winter Storm Elliott. The underlying
combined ratio* of 70.3 increased 0.7 points compared to the fourth
quarter of 2021, driven by higher severity.
Protection Services
Results
Three months ended December
31,
Twelve months ended December
31,
($ in millions)
2022
2021
% / $
Change
2022
2021
% / $
Change
Total revenues (1)
$
643
$
606
6.1
%
$
2,539
$
2,336
8.7
%
Allstate Protection Plans
367
314
16.9
1,383
1,195
15.7
Allstate Dealer Services
145
135
7.4
562
517
8.7
Allstate Roadside
64
61
4.9
258
244
5.7
Arity
33
62
(46.8
)
196
252
(22.2
)
Allstate Identity Protection
34
34
—
140
128
9.4
Adjusted net income (loss)
$
38
$
29
$
9
$
169
$
179
$
(10
)
Allstate Protection Plans
42
23
19
150
142
8
Allstate Dealer Services
8
9
(1
)
35
34
1
Allstate Roadside
3
—
3
7
7
—
Arity
(7
)
(1
)
(6
)
(11
)
3
(14
)
Allstate Identity Protection
(8
)
(2
)
(6
)
(12
)
(7
)
(5
)
(1)
Excludes net gains and losses on
investments and derivatives
- Protection Services revenues increased to $643 million
in the fourth quarter of 2022, 6.1% higher than the prior year
quarter, primarily due to Allstate Protection Plans and Allstate
Dealer Services, partially offset by a decline at Arity. Adjusted
net income of $38 million increased by $9 million compared to the
prior year quarter, primarily due to Allstate Protection Plans
partially offset by decreases at Arity and Allstate Identity
Protection.
- Allstate Protection Plans revenue of $367 million
increased $53 million, or 16.9%, compared to the prior year
quarter, reflecting growth at U.S. retailers and expansion in
furniture coverage and international markets. Adjusted net income
of $42 million in the fourth quarter of 2022 was $19 million higher
than the prior year quarter, primarily due to an $11 million
one-time tax benefit and timing of expenses.
- Allstate Dealer Services revenue of $145 million was
7.4% higher than the fourth quarter of 2021. Adjusted net income of
$8 million in the fourth quarter was $1 million lower than the
prior year quarter driven by increased severity.
- Allstate Roadside revenue of $64 million in the fourth
quarter of 2022 grew 4.9% and adjusted net income was $3 million
higher than the prior year quarter, primarily driven by increased
pricing.
- Arity revenue of $33 million decreased $29 million
compared to the prior year quarter, primarily due to reductions in
insurance client advertising. Adjusted net loss of $7 million in
the fourth quarter of 2022 was $6 million worse than the prior year
quarter reflecting lower revenue.
- Allstate Identity Protection revenue of $34 million in
the fourth quarter of 2022 was in line with the prior year quarter.
Adjusted net loss of $8 million was $6 million worse than the prior
year quarter, primarily driven by one-time expenses.
Allstate Health and Benefits
Results
Three months ended December
31,
Twelve months ended December
31,
($ in millions)
2022
2021
% Change
2022
2021
% Change
Premiums and contract charges
$
435
$
459
(5.2
)%
$
1,833
$
1,821
0.7
%
Employer voluntary benefits
256
262
(2.3
)
1,036
1,031
0.5
Group health
100
90
11.1
385
350
10.0
Individual health
79
107
(26.2
)
412
440
(6.4
)
Adjusted net income
50
48
4.2
222
208
6.7
- Allstate Health and Benefits premiums and contract
charges decreased 5.2% compared to the prior year quarter,
primarily driven by a reduction in individual health, which was
partially offset by growth in group health. Adjusted net income of
$50 million in the fourth quarter of 2022 increased $2 million
compared to the fourth quarter of 2021 reflecting an improved
benefit ratio, partially offset by lower premiums and contract
charges.
Allstate Investment
Results
Three months ended December
31,
Twelve months ended December
31,
($ in millions, except ratios)
2022
2021
$ / pts
Change
2022
2021
$ / pts
Change
Net investment income
$
557
$
847
$
(290
)
$
2,403
$
3,293
$
(890
)
Market-based investment income (1)
464
363
101
1,557
1,424
133
Performance-based investment income
(1)
147
516
(369
)
1,024
1,980
(956
)
Net gains (losses) on investments and
derivatives
95
266
(171
)
(1,072
)
1,084
(2,156
)
Change in unrealized net capital gains
and losses, pre-tax
863
(419
)
1,282
(3,643
)
(1,771
)
(1,872
)
Total return on investment
portfolio
2.5
%
1.1
%
1.4
(4.0
)%
4.4
%
(8.4
)
(1)
Investment expenses are not allocated
between market-based and performance-based portfolios with the
exception of investee level expenses.
- Allstate Investments $61.8 billion portfolio generated
net investment income of $557 million in the fourth quarter of
2022, a decrease of $290 million from the prior year quarter,
driven by lower performance-based income.
- Market-based investment income was $464 million in the
fourth quarter of 2022, an increase of $101 million, or 27.8%,
compared to the prior year quarter, reflecting an increase in the
fixed income portfolio yield, which has benefited from reinvesting
at higher interest rates.
- Performance-based investment income totaled $147
million in the fourth quarter of 2022, a decrease of $369 million
compared to a strong prior year quarter, reflecting lower valuation
increases for private equity investments. Idiosyncratic
contributions from direct investments and positive valuation
changes for infrastructure and real estate funds offset decreased
valuations for private equity funds.
- Net gains on investments and derivatives were $95
million in the fourth quarter of 2022, compared to $266 million in
the prior year quarter. The fourth quarter of 2022 included higher
valuation increases for equity investments and losses on the sales
of fixed income securities compared to gains on sales in the prior
year quarter.
- Unrealized net losses improved $863 million in the
fourth quarter of 2022 but were $3.6 billion lower for the full
year as higher interest rates and wider credit spreads decreased
fixed income valuations.
- Total return on the investment portfolio was 2.5% for
the fourth quarter of 2022 and (4.0)% in 2022. Proactive portfolio
actions to reduce inflation and economic risk by shortening fixed
income duration beginning in 2021 mitigated portfolio losses by
approximately $2 billion this year. During 2022 we reduced equity
exposure and in the fourth quarter we removed approximately half of
our duration shortening interest rate derivatives resulting in a
modest increase to fixed income duration.
Proactive Capital Management
“Allstate’s financial condition and capital position remain
strong,” said Jess Merten, Chief Financial Officer. “In the fourth
quarter we returned $582 million to common shareholders through a
combination of $354 million in share repurchases and $228 million
in common shareholder dividends. We reduced common shares
outstanding by 6.1% in 2022,” concluded Merten.
Visit www.allstateinvestors.com for
additional information about Allstate’s results, including a
webcast of its quarterly conference call and the call presentation.
The conference call will be at 9 a.m. ET on Thursday, February 2.
Financial information, including material announcements about The
Allstate Corporation, is routinely posted on www.allstateinvestors.com.
Forward-Looking Statements
This news release contains “forward-looking statements” that
anticipate results based on our estimates, assumptions and plans
that are subject to uncertainty. These statements are made subject
to the safe-harbor provisions of the Private Securities Litigation
Reform Act of 1995. These forward-looking statements do not relate
strictly to historical or current facts and may be identified by
their use of words like “plans,” “seeks,” “expects,” “will,”
“should,” “anticipates,” “estimates,” “intends,” “believes,”
“likely,” “targets” and other words with similar meanings. We
believe these statements are based on reasonable estimates,
assumptions and plans. However, if the estimates, assumptions or
plans underlying the forward-looking statements prove inaccurate or
if other risks or uncertainties arise, actual results could differ
materially from those communicated in these forward-looking
statements. Factors that could cause actual results to differ
materially from those expressed in, or implied by, the
forward-looking statements may be found in our filings with the
U.S. Securities and Exchange Commission, including the “Risk
Factors” section in our most recent annual report on Form 10-K.
Forward-looking statements are as of the date on which they are
made, and we assume no obligation to update or revise any
forward-looking statement.
THE ALLSTATE CORPORATION AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
FINANCIAL POSITION
($ in millions, except par value
data)
December 31, 2022
December 31, 2021
Assets
Investments
Fixed income securities, at fair value
(amortized cost, net $45,370 and $41,376)
$
42,485
$
42,136
Equity securities, at fair value (cost
$4,253 and $6,016)
4,567
7,061
Mortgage loans, net
762
821
Limited partnership interests
8,114
8,018
Short-term, at fair value (amortized cost
$4,174 and $4,009)
4,173
4,009
Other investments, net
1,728
2,656
Total investments
61,829
64,701
Cash
736
763
Premium installment receivables, net
9,165
8,364
Deferred policy acquisition costs
5,418
4,722
Reinsurance and indemnification
recoverables, net
9,606
10,024
Accrued investment income
423
339
Deferred income taxes
386
—
Property and equipment, net
987
939
Goodwill
3,502
3,502
Other assets, net
5,905
6,086
Total assets
$
97,957
$
99,440
Liabilities
Reserve for property and casualty
insurance claims and claims expense
$
37,541
$
33,060
Reserve for future policy benefits
1,273
1,273
Contractholder funds
897
908
Unearned premiums
22,311
19,844
Claim payments outstanding
1,268
1,123
Deferred income taxes
—
833
Other liabilities and accrued expenses
9,353
9,296
Debt
7,964
7,976
Total liabilities
80,607
74,313
Equity
Preferred stock and additional capital
paid-in, $1 par value, 25 million shares authorized, 81.0 thousand
shares issued and outstanding, $2,025 aggregate liquidation
preference
1,970
1,970
Common stock, $.01 par value, 2.0 billion
shares authorized and 900 million issued, 263 million and 281
million shares outstanding
9
9
Additional capital paid-in
3,788
3,722
Retained income
50,954
53,294
Treasury stock, at cost (637 million and
619 million shares)
(36,857
)
(34,471
)
Accumulated other comprehensive
income:
Unrealized net capital gains and
losses
(2,253
)
598
Unrealized foreign currency translation
adjustments
(165
)
(15
)
Unamortized pension and other
postretirement prior service credit
29
72
Total accumulated other comprehensive
income
(2,389
)
655
Total Allstate shareholders’
equity
17,475
25,179
Noncontrolling interest
(125
)
(52
)
Total equity
17,350
25,127
Total liabilities and equity
$
97,957
$
99,440
THE ALLSTATE CORPORATION AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
OPERATIONS
($ in millions, except per share
data)
Three months ended December
31,
Twelve months ended December
31,
2022
2021
2022
2021
Revenues
Property and casualty insurance
premiums
$
11,900
$
10,852
$
45,904
$
42,218
Accident and health insurance premiums and
contract charges
435
459
1,833
1,821
Other revenue
660
587
2,344
2,172
Net investment income
557
847
2,403
3,293
Net gains (losses) on investments and
derivatives
95
266
(1,072
)
1,084
Total revenues
13,647
13,011
51,412
50,588
Costs and expenses
Property and casualty insurance claims and
claims expense
10,002
7,804
37,264
29,318
Shelter-in-Place Payback expense
—
—
—
29
Accident, health and other policy
benefits
260
278
1,061
1,049
Amortization of deferred policy
acquisition costs
1,731
1,602
6,644
6,252
Operating costs and expenses
1,852
1,956
7,446
7,260
Pension and other postretirement
remeasurement (gains) losses
25
(240
)
116
(644
)
Restructuring and related charges
24
25
51
170
Amortization of purchased intangibles
89
109
353
376
Interest expense
84
84
335
330
Total costs and expenses
14,067
11,618
53,270
44,140
(Loss) income from operations before
income tax expense
(420
)
1,393
(1,858
)
6,448
Income tax (benefit) expense
(117
)
281
(494
)
1,289
Net (loss) income from continuing
operations
(303
)
1,112
(1,364
)
5,159
Income (loss) from discontinued
operations, net of tax
—
(321
)
—
(3,593
)
Net (loss) income
(303
)
791
(1,364
)
1,566
Less: Net loss attributable to
noncontrolling interest
(19
)
(26
)
(53
)
(33
)
Net (loss) income attributable to
Allstate
(284
)
817
(1,311
)
1,599
Less: Preferred stock dividends
26
27
105
114
Net (loss) income applicable to common
shareholders
$
(310
)
$
790
$
(1,416
)
$
1,485
Earnings per common share applicable to
common shareholders
Basic
Continuing operations
$
(1.17
)
$
3.90
$
(5.22
)
$
17.23
Discontinued operations
—
(1.13
)
—
(12.19
)
Total
$
(1.17
)
$
2.77
$
(5.22
)
$
5.04
Diluted
Continuing operations
$
(1.17
)
$
3.84
$
(5.22
)
$
16.98
Discontinued operations
—
(1.11
)
—
(12.02
)
Total
$
(1.17
)
$
2.73
$
(5.22
)
$
4.96
Weighted average common shares – Basic
264.4
285.0
271.2
294.8
Weighted average common shares –
Diluted
264.4
289.0
271.2
299.1
Definitions of Non-GAAP Measures
We believe that investors’ understanding of Allstate’s
performance is enhanced by our disclosure of the following non-GAAP
measures. Our methods for calculating these measures may differ
from those used by other companies and therefore comparability may
be limited.
Adjusted net income is net income (loss) applicable to
common shareholders, excluding:
- Net gains and losses on investments and derivatives
- Pension and other postretirement remeasurement gains and
losses
- Business combination expenses and the amortization or
impairment of purchased intangibles
- Income or loss from discontinued operations
- Gain or loss on disposition
- 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
- Related income tax expense or benefit of these items
Net income (loss) applicable to common shareholders is the GAAP
measure that is most directly comparable to adjusted net
income.
We use adjusted net income as an important measure to evaluate
our results of operations. We believe that the measure provides
investors with a valuable measure of the Company’s ongoing
performance because it reveals trends in our insurance and
financial services business that may be obscured by the net effect
of net gains and losses on investments and derivatives, pension and
other postretirement remeasurement gains and losses, business
combination expenses and the amortization or impairment of
purchased intangibles, income or loss from discontinued operations,
gain or loss on disposition and adjustments for other significant
non-recurring, infrequent or unusual items and the related tax
expense or benefit of these items. Net gains and losses on
investments and derivatives, and pension and other postretirement
remeasurement gains and losses may vary significantly between
periods and are generally driven by business decisions and external
economic developments such as capital market conditions, the timing
of which is unrelated to the insurance underwriting process.
Business combination expenses, income or loss from discontinued
operations and gain or loss on disposition are excluded because
they are non-recurring in nature and the amortization or impairment
of purchased intangibles is excluded because it relates to the
acquisition purchase price and is not indicative of our underlying
business results or trends. Non-recurring items are excluded
because, by their nature, they are not indicative of our business
or economic trends. Accordingly, adjusted net income excludes the
effect of items that tend to be highly variable from period to
period and highlights the results from ongoing operations and the
underlying profitability of our business. A byproduct of excluding
these items to determine adjusted net income is the transparency
and understanding of their significance to net income variability
and profitability while recognizing these or similar items may
recur in subsequent periods. Adjusted net income is used by
management along with the other components of net income (loss)
applicable to common shareholders to assess our performance. We use
adjusted measures of adjusted net income in incentive compensation.
Therefore, we believe it is useful for investors to evaluate net
income (loss) applicable to common shareholders, adjusted net
income and their components separately and in the aggregate when
reviewing and evaluating our performance. We note that investors,
financial analysts, financial and business media organizations and
rating agencies utilize adjusted net income results in their
evaluation of our and our industry’s financial performance and in
their investment decisions, recommendations and communications as
it represents a reliable, representative and consistent measurement
of the industry and the Company and management’s performance. We
note that the price to earnings multiple commonly used by insurance
investors as a forward-looking valuation technique uses adjusted
net income as the denominator. Adjusted net income should not be
considered a substitute for net income (loss) applicable to common
shareholders and does not reflect the overall profitability of our
business.
The following tables reconcile net income (loss) applicable to
common shareholders and adjusted net income. Taxes on adjustments
to reconcile net income (loss) applicable to common shareholders
and adjusted net income generally use a 21% effective tax rate.
($ in millions, except per share
data)
Three months ended December
31,
Consolidated
Per diluted common
share
2022
2021
2022
2021
Net income (loss) applicable to common
shareholders
$
(310
)
$
790
$
(1.17
)
(2)
$
2.73
Net (gains) losses on investments and
derivatives
(95
)
(266
)
(0.36
)
(0.92
)
Pension and other postretirement
remeasurement (gains) losses
25
(240
)
0.09
(0.83
)
Reclassification of periodic settlements
and accruals on non-hedge derivative instruments
—
(1
)
—
—
Business combination expenses and the
amortization of purchased intangibles
89
109
0.34
0.38
Business combination fair value
adjustment
—
—
—
—
(Gain) loss on disposition
(83
)
(1)
—
(0.32
)
—
(Income) loss from discontinued
operations
—
177
—
0.61
Income tax expense (benefit) and other
15
227
0.06
0.78
Adjusted net income (loss) *
$
(359
)
$
796
$
(1.36
)
(2)
$
2.75
Twelve months ended December
31,
Consolidated
Per diluted common
share
2022
2021
2022
2021
Net income (loss) applicable to common
shareholders
$
(1,416
)
$
1,485
$
(5.22
)
(3)
$
4.96
Net (gains) losses on investments and
derivatives
1,072
(1,084
)
3.95
(3.63
)
Pension and other postretirement
remeasurement (gains) losses
116
(644
)
0.43
(2.15
)
Reclassification of periodic settlements
and accruals on non-hedge derivative instruments
—
—
—
—
Business combination expenses and the
amortization of purchased intangibles
353
398
1.30
1.33
Business combination fair value
adjustment
—
(6
)
—
(0.02
)
(Gain) loss on disposition
(89
)
(1)
—
(0.33
)
—
(Income) loss from discontinued
operations
—
3,612
—
12.08
Income tax expense (benefit) and other
(298
)
272
(1.10
)
0.91
Adjusted net income (loss) *
$
(262
)
$
4,033
$
(0.97
)
(3)
$
13.48
_____________
(1)
Includes $83 million related to the gain
on sale of headquarters in the fourth quarter of 2022 reported as
other revenue in Corporate and Other segment.
(2)
Due to a net loss reported for the three
months ended December 31, 2022, calculation uses weighted average
shares of 264.4 million, which excludes weighted average diluted
shares of 3.1 million.
(3)
Due to a net loss reported for the twelve
months ended December 31, 2022, calculation uses weighted average
shares of 271.2 million, which excludes weighted average diluted
shares of 3.1 million.
Adjusted net income return on Allstate common shareholders’
equity is a ratio that uses a non-GAAP measure. It is
calculated by dividing the rolling 12-month adjusted net income by
the average of Allstate common shareholders’ equity at the
beginning and at the end of the 12-months, after excluding the
effect of unrealized net capital gains and losses. Return on
Allstate common shareholders’ equity is the most directly
comparable GAAP measure. We use adjusted net income as the
numerator for the same reasons we use adjusted net income, as
discussed previously. We use average Allstate common shareholders’
equity excluding the effect of unrealized net capital gains and
losses for the denominator as a representation of common
shareholders’ equity primarily applicable to Allstate's earned and
realized business operations because it eliminates the effect of
items that are unrealized and vary significantly between periods
due to external economic developments such as capital market
conditions like changes in equity prices and interest rates, the
amount and timing of which are unrelated to the insurance
underwriting process. We use it to supplement our evaluation of net
income (loss) applicable to common shareholders and return on
Allstate common shareholders’ equity because it excludes the effect
of items that tend to be highly variable from period to period. We
believe that this measure is useful to investors and that it
provides a valuable tool for investors when considered along with
return on Allstate common shareholders’ equity because it
eliminates the after-tax effects of realized and unrealized net
capital gains and losses that can fluctuate significantly from
period to period and that are driven by economic developments, the
magnitude and timing of which are generally not influenced by
management. In addition, it eliminates non-recurring items that are
not indicative of our ongoing business or economic trends. A
byproduct of excluding the items noted above to determine adjusted
net income return on Allstate common shareholders’ equity from
return on Allstate common shareholders’ equity is the transparency
and understanding of their significance to return on common
shareholders’ equity variability and profitability while
recognizing these or similar items may recur in subsequent periods.
We use adjusted measures of adjusted net income return on Allstate
common shareholders’ equity in incentive compensation. Therefore,
we believe it is useful for investors to have adjusted net income
return on Allstate common shareholders’ equity and return on
Allstate common shareholders’ equity when evaluating our
performance. We note that investors, financial analysts, financial
and business media organizations and rating agencies utilize
adjusted net income return on common shareholders’ equity results
in their evaluation of our and our industry’s financial performance
and in their investment decisions, recommendations and
communications as it represents a reliable, representative and
consistent measurement of the industry and the company and
management’s utilization of capital. We also provide it to
facilitate a comparison to our long-term adjusted net income return
on Allstate common shareholders’ equity goal. Adjusted net income
return on Allstate common shareholders’ equity should not be
considered a substitute for return on Allstate common shareholders’
equity and does not reflect the overall profitability of our
business.
The following tables reconcile return on Allstate common
shareholders’ equity and adjusted net income return on Allstate
common shareholders’ equity.
($ in millions)
For the twelve months ended
December 31,
2022
2021
Return on Allstate common
shareholders’ equity
Numerator:
Net income applicable to common
shareholders
$
(1,416
)
$
1,485
Denominator:
Beginning Allstate common shareholders’
equity
$
23,209
$
28,247
Ending Allstate common shareholders’
equity (1)
15,505
23,209
Average Allstate common shareholders’
equity
$
19,357
$
25,728
Return on Allstate common shareholders’
equity
(7.3
)%
5.8
%
($ in millions)
For the twelve months ended
December 31,
2022
2021
Adjusted net income return on Allstate
common shareholders’ equity
Numerator:
Adjusted net income *
$
(262
)
$
4,033
Denominator:
Beginning Allstate common shareholders’
equity
$
23,209
$
28,247
Less: Unrealized net capital gains and
losses
598
3,180
Adjusted beginning Allstate common
shareholders’ equity
22,611
25,067
Ending Allstate common shareholders’
equity (1)
15,505
23,209
Less: Unrealized net capital gains and
losses
(2,253
)
598
Adjusted ending Allstate common
shareholders’ equity
17,758
22,611
Average adjusted Allstate common
shareholders’ equity
$
20,185
$
23,839
Adjusted net income return on Allstate
common shareholders’ equity *
(1.3
)%
16.9
%
_____________
(1)
Excludes equity related to preferred stock
of $1,970 million as of December 31, 2022 and December 31,
2021.
Combined ratio excluding the effect of catastrophes, prior
year reserve reestimates and amortization or impairment of
purchased intangibles (“underlying combined ratio”) is a
non-GAAP ratio, which is computed as the difference between four
GAAP operating ratios: the combined ratio, the effect of
catastrophes on the combined ratio, the effect of prior year
non-catastrophe reserve reestimates on the combined ratio, and the
effect of amortization or impairment of purchased intangibles on
the combined ratio. We believe that this ratio is useful to
investors and it is used by management to reveal the trends in our
Property-Liability business that may be obscured by catastrophe
losses, prior year reserve reestimates and amortization or
impairment of purchased intangibles. Catastrophe losses cause our
loss trends to vary significantly between periods as a result of
their incidence of occurrence and magnitude, and can have a
significant impact on the combined ratio. Prior year reserve
reestimates are caused by unexpected loss development on historical
reserves, which could increase or decrease current year net income.
Amortization or impairment of purchased intangibles relates to the
acquisition purchase price and is not indicative of our underlying
insurance business results or trends. We believe it is useful for
investors to evaluate these components separately and in the
aggregate when reviewing our underwriting performance. The most
directly comparable GAAP measure is the combined ratio. The
underlying combined ratio should not be considered a substitute for
the combined ratio and does not reflect the overall underwriting
profitability of our business.
The following tables reconcile the respective combined ratio to
the underlying combined ratio. Underwriting margin is calculated as
100% minus the combined ratio.
Property-Liability
Three months ended December
31,
Twelve months ended December
31,
2022
2021
2022
2021
Combined ratio
109.1
98.9
106.6
95.9
Effect of catastrophe losses
(6.8
)
(5.1
)
(7.1
)
(8.3
)
Effect of prior year non-catastrophe
reserve reestimates
(2.5
)
(1.8
)
(3.9
)
(0.8
)
Effect of amortization of purchased
intangibles
(0.6
)
(0.7
)
(0.5
)
(0.6
)
Underlying combined ratio*
99.2
91.3
95.1
86.2
Effect of prior year catastrophe reserve
reestimates
(0.1
)
—
—
(0.5
)
Allstate Protection - Auto
Insurance
Three months ended December
31,
Twelve months ended December
31,
2022
2021
2022
2021
Combined ratio
112.6
104.3
110.1
95.4
Effect of catastrophe losses
(0.5
)
(1.3
)
(1.7
)
(1.7
)
Effect of prior year non-catastrophe
reserve reestimates
(2.3
)
(2.1
)
(4.2
)
(0.6
)
Effect of amortization of purchased
intangibles
(0.6
)
(0.7
)
(0.6
)
(0.6
)
Underlying combined ratio*
109.2
100.2
103.6
92.5
Effect of prior year catastrophe reserve
reestimates
(0.1
)
—
(0.2
)
(0.1
)
Allstate Protection - Homeowners
Insurance
Three months ended December
31,
Twelve months ended December
31,
2022
2021
2022
2021
Combined ratio
92.6
87.1
93.8
96.8
Effect of catastrophe losses
(21.1
)
(16.6
)
(21.1
)
(26.3
)
Effect of prior year non-catastrophe
reserve reestimates
(0.7
)
—
(1.0
)
(0.2
)
Effect of amortization of purchased
intangibles
(0.5
)
(0.9
)
(0.6
)
(0.7
)
Underlying combined ratio*
70.3
69.6
71.1
69.6
Effect of prior year catastrophe reserve
reestimates
(0.1
)
0.1
0.8
(1.7
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230201006066/en/
Al Scott Media Relations (847) 402-5600
Mark Nogal Investor Relations (847) 402-2800
Grafico Azioni Allstate (NYSE:ALL)
Storico
Da Feb 2023 a Mar 2023
Grafico Azioni Allstate (NYSE:ALL)
Storico
Da Mar 2022 a Mar 2023
