Pursuing Health and Benefits
divestiture
The Allstate Corporation (NYSE: ALL) today reported financial
results for the third quarter of 2023.
The Allstate Corporation
Consolidated Highlights (1)
Three months ended September
30,
Nine months ended September
30,
($ in millions, except per share data
and ratios)
2023
2022
% / pts Change
2023
2022
% / pts Change
Consolidated revenues
$
14,497
$
13,208
9.8
%
$
42,262
$
37,763
11.9
%
Net loss applicable to common
shareholders
(41
)
(685
)
(94.0
)
(1,776
)
(1,091
)
62.8
per diluted common share (2)
(0.16
)
(2.55
)
(93.7
)
(6.76
)
(3.99
)
69.4
Adjusted net income (loss)*
214
(411
)
NM
(1,290
)
112
NM
per diluted common share* (2)
0.81
(1.53
)
NM
(4.91
)
0.40
NM
Return on Allstate common shareholders’
equity (trailing twelve months)
Net income (loss) applicable to common
shareholders
(14.7
)%
(1.5
)%
(13.2
)
Adjusted net income (loss)*
(9.7
)%
4.4
%
(14.1
)
Common shares outstanding (in
millions)
261.7
265.9
(1.6
)
Book value per common share
47.79
58.39
(18.2
)
Consolidated premiums written
(3)
14,425
13,157
9.6
41,021
37,660
8.9
Property-Liability insurance premiums
earned
12,270
11,157
10.0
35,826
32,529
10.1
Property-Liability combined
ratio
Recorded
103.4
111.6
(8.2
)
109.8
105.8
4.0
Underlying combined ratio*
91.9
96.4
(4.5
)
92.7
93.6
(0.9
)
Catastrophe losses
1,181
763
54.8
5,568
2,333
138.7
Total policies in force (in
thousands)
190,089
185,007
2.7
(1)
Prior periods have been recast to reflect
the impact of the adoption of Financial Accounting Standard Board
(“FASB”) guidance revising the accounting for certain long-duration
insurance contracts in the Health and Benefits segment.
(2)
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.
(3)
Includes premiums and contract charges for
the 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’s focus on improving profitability while implementing
our growth strategy made excellent progress this quarter,” said Tom
Wilson, Chair, President and CEO of The Allstate Corporation.
“Improved underwriting performance, strong investment income and
profits from Protection Services and Health and Benefits generated
adjusted net income* of $214 million, or $0.81 per diluted common
share in the quarter. Property-Liability earned premium growth of
10.0% and execution of other components of the profit improvement
plan improved the underlying combined ratio compared to the prior
year quarter. Property-Liability had an underwriting loss in the
quarter of $414 million, however, reflecting continued increases in
auto insurance loss costs, elevated catastrophe losses and adverse
prior year loss development. In response, we continue to raise auto
and homeowners insurance prices, improve expense efficiencies,
restrict growth in profit challenged states and enhance claims
practices. The execution of these comprehensive actions will
restore margins to target levels.”
“We are pursuing the sale of Allstate’s Health and Benefits
businesses since substantial value can be realized when aligned
with a broader set of complementary businesses and product
offerings. Allstate’s voluntary workplace benefits business was
combined with National General’s group and individual health
business, creating a broad-based benefits platform that serves 4.3
million policyholders and generated $240 million of adjusted net
income over the last twelve months. This value creation was
integral to the National General acquisition plan and now positions
the business for additional growth and value enhancement. A sale
would likely be completed in 2024.”
“Significant progress has also been made in executing the
strategy to increase property-liability market share and broaden
protection provided to customers. Providing lowest cost protection
requires continued cost reductions which is reflected in a lower
expense ratio. Allstate exclusive agent productivity increased,
excluding three states where profit improvement actions have
reduced new business, and National General is growing through
independent agents. Plans to increase growth in states that are
achieving target auto insurance margins are now being initiated
with further expansion planned for 2024. Allstate Protection Plans
continues to grow its embedded protection offerings with U.S.
retailers and internationally. Shareholder value will continue to
grow with higher profitability, strategic capital allocation and
organic long-term growth,” concluded Wilson.
Third Quarter 2023 Results
- Total revenues of $14.5 billion in the third quarter of 2023
increased 9.8%, or $1.3 billion, compared to the prior year quarter
driven by a $1.1 billion increase in Property-Liability earned
premium due to higher average premiums.
- Net loss applicable to common shareholders was $41 million in
the third quarter of 2023 compared to $685 million in the prior
year quarter, due to improved Property-Liability underwriting
results. Adjusted net income* was $214 million, or $0.81 per
diluted share, in the third quarter of 2023, compared to an
adjusted net loss* of $411 million in the prior year quarter.
Restructuring expenses of $87 million were incurred during the
third quarter of 2023 primarily related to the organizational
component of Transformative Growth designed to streamline the
organization and outsource operations.
- Property-Liability earned premium of $12.3 billion
increased 10.0% in the third quarter of 2023 compared to the prior
year quarter, primarily driven by higher average premiums from rate
increases. The $414 million underwriting loss in the quarter
decreased by $878 million compared to the prior year quarter, due
to increased premiums earned and lower unfavorable prior year
reserve reestimates, partially offset by higher losses.
Property-Liability
Results
Three months ended September
30,
Nine months ended September
30,
($ in millions)
2023
2022
% / pts Change
2023
2022
% / pts Change
Premiums earned
$
12,270
$
11,157
10.0
%
$
35,826
$
32,529
10.1
%
Allstate brand
10,215
9,517
7.3
30,069
27,816
8.1
National General
2,055
1,640
25.3
5,757
4,713
22.2
Premiums written
$
13,304
$
12,037
10.5
%
$
37,707
$
34,307
9.9
%
Allstate brand
11,020
10,304
6.9
31,250
29,201
7.0
National General
2,284
1,733
31.8
6,457
5,106
26.5
Underwriting income (loss)
$
(414
)
$
(1,292
)
(68.0
)%
$
(3,509
)
$
(1,876
)
87.0
%
Allstate brand
(168
)
(1,049
)
(84.0
)
(2,987
)
(1,623
)
84.0
National General
(167
)
(124
)
34.7
(443
)
(133
)
NM
Recorded combined ratio
103.4
111.6
(8.2
)
109.8
105.8
4.0
Underlying combined ratio*
91.9
96.4
(4.5
)
92.7
93.6
(0.9
)
- Premiums written of $13.3 billion increased 10.5% compared to
the prior year quarter driven by both the Allstate brand and
National General. Allstate brand increased 6.9% primarily due to
higher auto and homeowners average premium, partially offset by the
impact of profitability actions on personal auto policies in force
and commercial lines. National General increased 31.8% reflecting
higher average premium and policies in force growth.
- Allstate brand underwriting loss in the third quarter of 2023
improved to $168 million compared to $1.0 billion in the prior year
quarter, driven by higher earned premiums and favorable prior year
reserve reestimates, excluding catastrophes, compared to
unfavorable reestimates in the prior year, partially offset by
higher catastrophe losses.
- National General underwriting loss of $167 million in the third
quarter of 2023 increased by $43 million compared to the prior year
quarter, reflecting higher incurred losses as well as unfavorable
prior year reserve reestimates, primarily related to personal auto.
These were partially offset by higher earned premiums and a 4.4
point improvement in the expense ratio.
- Property-Liability underlying combined ratio* of 91.9 in the
third quarter of 2023 improved 4.5 points compared to the prior
year quarter, primarily driven by improved loss and expense ratios
in Allstate brand auto, reflecting higher earned premiums and
operating efficiencies. While loss trends have stabilized, claim
severity increases remain elevated relative to historical levels
and auto accident frequency continues to normalize to pre-pandemic
levels.
- Allstate Protection auto insurance results reflect the
impact of inflation in loss costs and the comprehensive plan to
restore margins through higher rates, lower expenses, underwriting
actions and claims process enhancements. National General’s
distribution capacity and a broader product portfolio is generating
growth through independent agents.
Allstate Protection Auto
Results
Three months ended September
30,
Nine months ended September
30,
($ in millions, except ratios)
2023
2022
% / pts Change
2023
2022
% / pts Change
Premiums earned
$
8,345
$
7,545
10.6
%
$
24,374
$
21,974
10.9
%
Allstate brand
6,910
6,416
7.7
20,342
18,742
8.5
National General
1,435
1,129
27.1
4,032
3,232
24.8
Premiums written
$
8,770
$
7,860
11.6
%
$
25,388
$
22,892
10.9
%
Allstate brand
7,206
6,704
7.5
20,853
19,386
7.6
National General
1,564
1,156
35.3
4,535
3,506
29.3
Policies in Force (in
thousands)
25,376
26,131
(2.9
)%
Allstate brand
20,546
21,853
(6.0
)
National General
4,830
4,278
12.9
Recorded combined ratio
102.1
117.4
(15.3
)
104.9
109.3
(4.4
)
Underlying combined ratio*
98.8
104.0
(5.2
)
101.2
101.7
(0.5
)
- Earned and written premiums increased 10.6% and 11.6% compared
to the prior year quarter, respectively. The increase was driven by
higher average premium from rate increases, partially offset by a
decline in policies in force.
- Allstate brand auto net written premium growth of 7.5% compared
to the prior year quarter reflects a 15.7% increase in average
gross written premium driven by rate increases, partially offset by
a decline in policies in force from lower new business and
retention.
- National General auto net written premium grew 35.3% compared
to the prior year quarter driven by higher average premium and
policies in force growth.
- Allstate brand auto rate increases were implemented in 25
locations in the third quarter at an average of 5.9%, resulting in
an annualized total brand premium impact of 2.0% in the quarter and
9.5% through the first nine months of 2023. National General auto
rate increases were implemented in 33 locations in the third
quarter at an average of 6.2%, resulting in an annualized total
brand premium impact of 3.3% in the quarter and 8.8% through the
first nine months of 2023. We remain committed to the pursuit of
additional rate increases as a core component of the profit
improvement plan.
- The recorded auto insurance combined ratio of 102.1 in the
third quarter of 2023 was 15.3 points lower than the prior year
quarter, reflecting higher earned premiums, lower unfavorable prior
year reserve reestimates and lower catastrophe losses.
- Prior year non-catastrophe reserve reestimates were unfavorable
$27 million in the third quarter, reflecting adverse reserve
development of $95 million for National General, partially offset
by favorable Allstate brand reserve reestimates of $68
million.
- The underlying combined ratio* of 98.8 improved by 5.2 points
from the prior year quarter as higher average premium and operating
efficiencies were only partially offset by higher incurred losses
from claim severity and accident frequency. Weighted average
current report year incurred severity of Allstate brand major
coverages is currently estimated to increase 9% compared to report
year 2022, improving from estimates as of the second quarter 2023.
The improvement in severity from claims reported in the first two
quarters of the year represent a favorable impact of approximately
1.7 points on the third quarter underlying combined ratio.
Excluding this impact, the third quarter underlying combined ratio*
would have been 100.5.
- Allstate Protection homeowners insurance growth reflects
higher rates and policies in force growth. Underwriting income was
negatively impacted by elevated catastrophe losses and
non-catastrophe claim severity.
Allstate Protection Homeowners
Results
Three months ended September
30,
Nine months ended September
30,
($ in millions, except ratios)
2023
2022
% / pts Change
2023
2022
% / pts Change
Premiums earned
$
2,969
$
2,642
12.4
%
$
8,662
$
7,698
12.5
%
Allstate brand
2,613
2,350
11.2
7,638
6,841
11.7
National General
356
292
21.9
1,024
857
19.5
Premiums written
$
3,525
$
3,145
12.1
%
$
9,440
$
8,434
11.9
%
Allstate brand
3,118
2,803
11.2
8,265
7,488
10.4
National General
407
342
19.0
1,175
946
24.2
Policies in Force (in
thousands)
7,297
7,237
0.8
%
Allstate brand
6,627
6,599
0.4
National General
670
638
5.0
Recorded combined ratio
104.4
89.9
14.5
122.8
93.8
29.0
Catastrophe Losses
$
878
$
354
148.0
%
$
4,516
$
1,650
173.7
%
Underlying combined ratio*
72.9
74.1
(1.2
)
69.4
70.6
(1.2
)
- Earned premiums increased by 12.4% and written premiums
increased 12.1% compared to the prior year quarter, primarily
reflecting higher average premium and policies in force growth of
0.8% compared to the third quarter of 2022.
- Allstate brand net written premium increased 11.2% compared to
the prior year quarter, primarily driven by an increase in average
gross written premium due to implemented rate increases and
inflation in insured home replacement costs.
- National General net written premium grew 19.0% compared to the
prior year quarter primarily due to policies in force growth and
higher average premium as rates were increased to improve
underwriting margins.
- Allstate brand homeowners implemented rate increases in 12
locations in the third quarter at an average of 6.5%, resulting in
an annualized total brand premium impact of 2.1% in the quarter and
9.5% through the first nine months of 2023. National General
homeowners rate increases were implemented in 11 locations in the
third quarter at an average of 17.6%, resulting in an annualized
total brand premium impact of 1.2% in the quarter and 6.5% through
the first nine months of 2023.
- The recorded homeowners insurance combined ratio of 104.4 was
14.5 points higher than the third quarter of 2022, due to higher
catastrophe losses and severity, partially offset by premiums
earned.
- Catastrophe losses of $878 million in the quarter increased
$524 million compared to the prior year quarter, primarily related
to the Maui wildfire and a large Texas hailstorm.
- The underlying combined ratio* of 72.9 decreased by 1.2 points
compared to the prior year quarter, driven by higher earned premium
and a lower expense ratio, partially offset by higher
non-catastrophe claim severity reflecting increases in labor and
materials costs.
- Allstate business insurance strategy is being advanced
through an equity investment and commercial partnership with NEXT
Insurance, a high-growth, digital-first insurer with a proprietary
technology platform for small business insurance. The partnership
will allow both companies to expand the availability of their
products across a broad distribution network and provides
opportunity to co-develop unique products to serve the unmet needs
of 33 million U.S. small businesses that increasingly want to
purchase insurance digitally.
- Protection Services continues to broaden the protection
provided to an increasing number of customers largely through
embedded distribution programs. Revenues increased to $697 million
in the third quarter of 2023, 8.9% higher than the prior year
quarter, primarily due to Allstate Protection Plans. Adjusted net
income of $27 million decreased by $8 million compared to the prior
year quarter, primarily due to higher claim severity at Allstate
Protection Plans.
Protection Services
Results
Three months ended September
30,
Nine months ended September
30,
($ in millions)
2023
2022
% / $ Change
2023
2022
% / $ Change
Total revenues (1)
$
697
$
640
8.9
%
$
2,054
$
1,896
8.3
%
Allstate Protection Plans
416
349
19.2
1,200
1,016
18.1
Allstate Dealer Services
146
143
2.1
442
417
6.0
Allstate Roadside
69
65
6.2
199
194
2.6
Arity
29
49
(40.8
)
101
163
(38.0
)
Allstate Identity Protection
37
34
8.8
112
106
5.7
Adjusted net income (loss)
$
27
$
35
$
(8
)
$
102
$
131
$
(29
)
Allstate Protection Plans
20
29
(9
)
79
108
(29
)
Allstate Dealer Services
5
10
(5
)
18
27
(9
)
Allstate Roadside
7
1
6
17
4
13
Arity
(6
)
(2
)
(4
)
(13
)
(4
)
(9
)
Allstate Identity Protection
1
(3
)
4
1
(4
)
5
(1)
Excludes net gains and losses on
investments and derivatives.
- Allstate Protection Plans’ expanded products and
international growth resulted in revenue of $416 million, $67
million or 19.2% higher than the prior year quarter. Adjusted net
income of $20 million in the third quarter of 2023 was $9 million
lower than the prior year quarter, primarily due to the proportion
of lower margin business and higher appliance and furniture claim
severity.
- Allstate Dealer Services generated revenue of $146
million through auto dealers, which was 2.1% higher than the third
quarter of 2022 due to higher earned premium. Adjusted net income
of $5 million in the third quarter was $5 million lower than the
prior year quarter driven by increased claim severity, higher
expenses and restructuring charges.
- Allstate Roadside revenue of $69 million in the third
quarter of 2023 increased 6.2% compared to the prior year quarter
driven by price increases and new business growth. Adjusted net
income was $6 million higher than the prior year quarter, primarily
driven by increased pricing, lower loss severity from in-network
sourcing and lower retail frequency.
- Arity revenue of $29 million decreased $20 million
compared to the prior year quarter, primarily due to reductions in
insurance client advertising. Adjusted net loss of $6 million in
the third quarter of 2023 compared to a $2 million loss in the
prior year quarter reflects lower revenue.
- Allstate Identity Protection revenue of $37 million in
the third quarter of 2023 was 8.8% higher than the prior year
quarter due to growth from new and existing clients. Adjusted net
income of $1 million in the third quarter of 2023 compared to a $3
million loss in the prior year quarter reflects lower
expenses.
- Allstate Health and Benefits premiums and contract
charges were flat compared to the prior year quarter as growth in
group health was offset by lower individual health. Adjusted net
income of $69 million in the third quarter of 2023 increased $6
million compared to the prior year quarter, primarily due to
increases in group and individual health and lower operating
expenses.
Allstate Health and Benefits
Results (1)
Three months ended September
30,
Nine months ended September
30,
($ in millions)
2023
2022
% Change
2023
2022
% Change
Premiums and contract charges
$
463
$
463
—
%
$
1,379
$
1,396
(1.2
)%
Employer voluntary benefits
253
257
(1.6
)
753
777
(3.1
)
Group health
111
96
15.6
328
285
15.1
Individual health
99
110
(10.0
)
298
334
(10.8
)
Adjusted net income
$
69
$
63
9.5
%
$
182
$
187
(2.7
)%
(1)
Prior periods have been recast to reflect
the impact of the adoption of FASB guidance revising the accounting
for certain long-duration insurance contracts.
- Allstate Investments $63.4 billion portfolio generated
net investment income of $689 million in the third quarter of 2023,
a decrease of $1 million from the prior year quarter due to lower
performance-based results, mostly offset by higher market-based
income.
Allstate Investment
Results
Three months ended September
30,
Nine months ended September
30,
($ in millions, except ratios)
2023
2022
$ / pts Change
2023
2022
$ / pts Change
Net investment income
$
689
$
690
$
(1
)
$
1,874
$
1,846
$
28
Market-based (1)
567
402
165
1,610
1,093
517
Performance-based (1)
186
335
(149
)
439
877
(438
)
Net gains (losses) on investments and
derivatives
$
(86
)
$
(167
)
$
81
$
(223
)
$
(1,167
)
$
944
Change in unrealized net capital gains
and losses, pre-tax
$
(855
)
$
(1,009
)
$
154
$
(325
)
$
(4,506
)
$
4,181
Total return on investment
portfolio
(0.4
)%
(0.8
)%
0.4
2.1
%
(6.4
)%
8.5
Total return on investment portfolio
(trailing twelve months)
4.6
%
(5.3
)%
9.9
(1)
Investment expenses are not allocated
between market-based and performance-based portfolios with the
exception of investee level expenses.
- Market-based investment income was $567 million in the
third quarter of 2023, an increase of $165 million, or 41.0%,
compared to the prior year quarter, reflecting higher yields and
extended duration of the $46.8 billion fixed income portfolio.
Investment portfolio allocations, including extending duration and
lowering equity risk over the last year, are based on expected risk
adjusted returns and the enterprise risk and return position.
- Performance-based investment income totaled $186
million in the third quarter of 2023, a decrease of $149 million
compared to the prior year quarter. Current quarter results reflect
lower net gains on the sale of underlying investments than the
prior year quarter. The portfolio allocation to performance-based
assets has remained stable as these investments provide a
diversifying source of higher long-term returns, despite volatility
in reported results. Performance-based total return for the third
quarter was 2.8% and was 5.4% through the first nine months of
2023. Quarterly total returns over the past 5 years have ranged
from (2.3)% to 8.6%, while the 5- and 10-year IRR as of September
30, 2023 were 12.2% and 12.5%, respectively.
- Net losses on investments and derivatives totaled $86
million in the third quarter of 2023, compared to $167 million in
the prior year quarter. Net losses in the third quarter of 2023
were driven by sales of fixed income securities.
- Unrealized net capital losses were $3.2 billion, $855
million more than the prior quarter, as higher interest rates
resulted in lower fixed income valuations.
- Total return on the investment portfolio was negative
0.4% in the quarter and positive 4.6% over the latest twelve months
ended September 30, 2023.
Proactive Capital Management
“Allstate continues to proactively manage capital and has the
financial flexibility, liquidity and capital resources to navigate
the challenging operating environment and invest in growth. Our
capital position remains sound with statutory surplus in the
insurance companies of $13.5 billion and over $2.9 billion of
assets are held at the holding company, representing 2.2 times
annual fixed charges,” said Jess Merten, Chief Financial Officer.
“We are making progress on the comprehensive profit improvement
plan and remain confident strategic actions will result in
profitable growth and attractive shareholder returns,” 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 11
a.m. ET on Wednesday, November 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
CONDENSED CONSOLIDATED
STATEMENTS OF FINANCIAL POSITION (UNAUDITED)
($ in millions, except par value
data)
September 30, 2023
December 31, 2022
Assets
Investments
Fixed income securities, at fair value
(amortized cost, net $49,979 and $45,370)
$
46,771
$
42,485
Equity securities, at fair value (cost
$2,393 and $4,253)
2,419
4,567
Mortgage loans, net
830
762
Limited partnership interests
8,363
8,114
Short-term, at fair value (amortized cost
$3,369 and $4,174)
3,368
4,173
Other investments, net
1,608
1,728
Total investments
63,359
61,829
Cash
860
736
Premium installment receivables, net
10,102
9,165
Deferred policy acquisition costs
5,824
5,442
Reinsurance and indemnification
recoverables, net
9,083
9,619
Accrued investment income
525
423
Deferred income taxes
816
382
Property and equipment, net
909
987
Goodwill
3,502
3,502
Other assets, net
6,196
5,904
Total assets
$
101,176
$
97,989
Liabilities
Reserve for property and casualty
insurance claims and claims expense
$
40,659
$
37,541
Reserve for future policy benefits
1,309
1,322
Contractholder funds
884
879
Unearned premiums
24,518
22,299
Claim payments outstanding
1,480
1,268
Other liabilities and accrued expenses
9,933
9,353
Debt
7,946
7,964
Total liabilities
86,729
80,626
Equity
Preferred stock and additional capital
paid-in, $1 par value, 25 million shares authorized, 82.0 thousand
and 81.0 thousand shares issued and outstanding, $2,050 and $2,025
aggregate liquidation preference
2,001
1,970
Common stock, $.01 par value, 2.0 billion
shares authorized and 900 million issued, 262 million and 263
million shares outstanding
9
9
Additional capital paid-in
3,811
3,788
Retained income
48,491
50,970
Treasury stock, at cost (638 million and
637 million shares)
(37,149
)
(36,857
)
Accumulated other comprehensive
income:
Unrealized net capital gains and
losses
(2,512
)
(2,255
)
Unrealized foreign currency translation
adjustments
(101
)
(165
)
Unamortized pension and other
postretirement prior service credit
15
29
Discount rate for reserve for future
policy benefits
28
(1
)
Total accumulated other comprehensive
loss
(2,570
)
(2,392
)
Total Allstate shareholders’
equity
14,593
17,488
Noncontrolling interest
(146
)
(125
)
Total equity
14,447
17,363
Total liabilities and equity
$
101,176
$
97,989
THE ALLSTATE CORPORATION AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS (UNAUDITED)
($ in millions, except per share
data)
Three months ended September
30,
Nine months ended September
30,
2023
2022
2023
2022
Revenues
Property and casualty insurance
premiums
$
12,839
$
11,661
$
37,482
$
34,004
Accident and health insurance premiums and
contract charges
463
463
1,379
1,396
Other revenue
592
561
1,750
1,684
Net investment income
689
690
1,874
1,846
Net gains (losses) on investments and
derivatives
(86
)
(167
)
(223
)
(1,167
)
Total revenues
14,497
13,208
42,262
37,763
Costs and expenses
Property and casualty insurance claims and
claims expense
10,237
10,073
32,290
27,262
Accident, health and other policy benefits
(including remeasurement (gains) losses of $0, $(4), $0 and
$(4))
262
252
785
785
Amortization of deferred policy
acquisition costs
1,841
1,683
5,374
4,909
Operating costs and expenses
1,771
1,842
5,273
5,594
Pension and other postretirement
remeasurement (gains) losses
149
79
56
91
Restructuring and related charges
87
14
141
27
Amortization of purchased intangibles
83
90
246
264
Interest expense
88
85
272
251
Total costs and expenses
14,518
14,118
44,437
39,183
Loss from operations before income tax
expense
(21
)
(910
)
(2,175
)
(1,420
)
Income tax benefit
(17
)
(236
)
(475
)
(374
)
Net loss
(4
)
(674
)
(1,700
)
(1,046
)
Less: Net income (loss) attributable to
noncontrolling interest
1
(15
)
(23
)
(34
)
Net loss attributable to
Allstate
(5
)
(659
)
(1,677
)
(1,012
)
Less: Preferred stock dividends
36
26
99
79
Net loss applicable to common
shareholders
$
(41
)
$
(685
)
$
(1,776
)
$
(1,091
)
Earnings per common share:
Net loss applicable to common shareholders
per common share - Basic
$
(0.16
)
$
(2.55
)
$
(6.76
)
$
(3.99
)
Weighted average common shares - Basic
261.8
268.7
262.6
273.5
Net loss applicable to common shareholders
per common share - Diluted
$
(0.16
)
$
(2.55
)
$
(6.76
)
$
(3.99
)
Weighted average common shares -
Diluted
261.8
268.7
262.6
273.5
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
- Amortization or impairment of purchased intangibles
- 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, amortization
or impairment of purchased intangibles, 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. Gain or loss on disposition is
excluded because it is 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 (loss) generally use a 21% effective tax
rate.
($ in millions, except per share
data)
Three months ended September
30,
Consolidated
Per diluted common
share
2023
2022
2023
2022
Net loss applicable to common
shareholders (1)
$
(41
)
$
(685
)
$
(0.16
)
$
(2.55
)
Net (gains) losses on investments and
derivatives
86
167
0.33
0.62
Pension and other postretirement
remeasurement (gains) losses
149
79
0.57
0.29
Amortization of purchased intangibles
83
90
0.31
0.34
(Gain) loss on disposition
5
5
0.02
0.02
Income tax expense (benefit)
(68
)
(67
)
(0.26
)
(0.25
)
Adjusted net income (loss) *
(1)
$
214
$
(411
)
$
0.81
$
(1.53
)
Weighted average dilutive potential common
shares excluded due to net loss applicable to common shareholders
(1)
1.5
2.9
Nine months ended September
30,
Consolidated
Per diluted common
share
2023
2022
2023
2022
Net loss applicable to common
shareholders (1)
$
(1,776
)
$
(1,091
)
$
(6.76
)
$
(3.99
)
Net (gains) losses on investments and
derivatives
223
1,167
0.85
4.23
Pension and other postretirement
remeasurement (gains) losses
56
91
0.21
0.34
Amortization of purchased intangibles
246
264
0.94
0.96
(Gain) loss on disposition
4
(6
)
0.02
(0.02
)
Non-recurring costs (2)
90
—
0.34
—
Income tax expense (benefit)
(133
)
(313
)
(0.51
)
(1.12
)
Adjusted net income (loss) *
(1)
$
(1,290
)
$
112
$
(4.91
)
$
0.40
Weighted average dilutive potential common
shares excluded due to net loss applicable to common shareholders
(1)
1.9
3.3
_____________
(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)
Relates to settlement costs for
non-recurring litigation that is outside of the ordinary course of
business.
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 (loss) return on
Allstate common shareholders’ equity.
($ in millions)
For the twelve months ended
September 30,
2023
2022
Return on Allstate common
shareholders’ equity
Numerator:
Net income (loss) applicable to common
shareholders
$
(2,079
)
$
(294
)
Denominator:
Beginning Allstate common shareholders’
equity
$
15,713
$
24,515
Ending Allstate common shareholders’
equity (1)
12,592
15,713
Average Allstate common shareholders’
equity
$
14,153
$
20,114
Return on Allstate common shareholders’
equity
(14.7
)%
(1.5
)%
($ in millions)
For the twelve months ended
September 30,
2023
2022
Adjusted net income (loss) return on
Allstate common shareholders’ equity
Numerator:
Adjusted net income (loss) *
$
(1,641
)
$
915
Denominator:
Beginning Allstate common shareholders’
equity
$
15,713
$
24,515
Less: Unrealized net capital gains and
losses
(2,929
)
1,829
Adjusted beginning Allstate common
shareholders’ equity
18,642
22,686
Ending Allstate common shareholders’
equity (1)
12,592
15,713
Less: Unrealized net capital gains and
losses
(2,512
)
(2,929
)
Adjusted ending Allstate common
shareholders’ equity
15,104
18,642
Average adjusted Allstate common
shareholders’ equity
$
16,873
$
20,664
Adjusted net income (loss) return on
Allstate common shareholders’ equity *
(9.7
)%
4.4
%
_____________
(1)
Excludes equity related to preferred stock
of $2,001 million and $1,970 million as of September 30, 2023 and
2022, respectively.
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 September
30,
Nine months ended September
30,
2023
2022
2023
2022
Combined ratio
103.4
111.6
109.8
105.8
Effect of catastrophe losses
(9.6
)
(6.8
)
(15.5
)
(7.2
)
Effect of prior year non-catastrophe
reserve reestimates
(1.4
)
(7.8
)
(1.1
)
(4.5
)
Effect of amortization of purchased
intangibles
(0.5
)
(0.6
)
(0.5
)
(0.5
)
Underlying combined ratio*
91.9
96.4
92.7
93.6
Effect of prior year catastrophe reserve
reestimates
0.1
(0.1
)
—
0.1
Allstate
Protection - Auto Insurance
Three months ended September
30,
Nine months ended September
30,
2023
2022
2023
2022
Combined ratio
102.1
117.4
104.9
109.3
Effect of catastrophe losses
(2.6
)
(4.4
)
(2.7
)
(2.2
)
Effect of prior year non-catastrophe
reserve reestimates
(0.3
)
(8.5
)
(0.5
)
(4.9
)
Effect of amortization of purchased
intangibles
(0.4
)
(0.5
)
(0.5
)
(0.5
)
Underlying combined ratio*
98.8
104.0
101.2
101.7
Effect of prior year catastrophe reserve
reestimates
0.1
(0.1
)
(0.1
)
(0.3
)
Allstate
Protection - Homeowners Insurance
Three months ended September
30,
Nine months ended September
30,
2023
2022
2023
2022
Combined ratio
104.4
89.9
122.8
93.8
Effect of catastrophe losses
(29.6
)
(13.4
)
(52.1
)
(21.4
)
Effect of prior year non-catastrophe
reserve reestimates
(1.5
)
(1.9
)
(0.9
)
(1.3
)
Effect of amortization of purchased
intangibles
(0.4
)
(0.5
)
(0.4
)
(0.5
)
Underlying combined ratio*
72.9
74.1
69.4
70.6
Effect of prior year catastrophe reserve
reestimates
0.6
0.1
0.7
1.0
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231101233935/en/
Al Scott Media Relations (847) 402-5600
Brent Vandermause Investor Relations (847) 402-2800
Grafico Azioni Allstate (NYSE:ALL)
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Grafico Azioni Allstate (NYSE:ALL)
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