NORTHBROOK, Ill.--(BUSINESS WIRE)-- The Allstate Corporation (NYSE: ALL) today announced estimated results for the third quarter of 2022 of a net loss between $675 million and $725 million and adjusted net loss* estimated between $400 million and $450 million.
Property-Liability Premiums
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* 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. |
Property-Liability Underwriting Results
Catastrophe Losses
Estimated third quarter recorded and underlying combined ratios*:
|
| Three months ended September 30, 2022 | ||
|
| Combined ratio |
| Underlying combined ratio* |
Property-Liability |
| 111.6 |
| 96.4 |
Allstate Protection - auto insurance |
| 117.4 |
| 104.0 |
Allstate Protection - homeowners insurance |
| 91.2 |
| 74.6 |
Investment Results
The company plans to file a current report on Form 8-K and its Form 10-Q with the Securities and Exchange Commission announcing quarterly results after close of market 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.
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Definition 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.
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 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, 2022 | |
Estimated Combined ratio | 111.6 |
|
Effect of catastrophe losses | (6.8 | ) |
Effect of prior year non-catastrophe reserve reestimates | (7.8 | ) |
Effect of amortization of purchased intangibles | (0.6 | ) |
Estimated Underlying combined ratio* | 96.4 |
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|
|
Allstate Protection - Auto Insurance | Three months ended September 30, 2022 | |
Estimated Combined ratio | 117.4 |
|
Effect of catastrophe losses | (4.4 | ) |
Effect of prior year non-catastrophe reserve reestimates | (8.5 | ) |
Effect of amortization of purchased intangibles | (0.5 | ) |
Estimated Underlying combined ratio* | 104.0 |
|
|
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Allstate Protection - Homeowners Insurance | Three months ended September 30, 2022 | |
Estimated Combined ratio | 91.2 |
|
Effect of catastrophe losses | (14.1 | ) |
Effect of prior year non-catastrophe reserve reestimates | (1.8 | ) |
Effect of amortization of purchased intangibles | (0.7 | ) |
Estimated Underlying combined ratio* | 74.6 |
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Adjusted net income is net income (loss) applicable to common shareholders, excluding:
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 of operations 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 of operations 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 | |||
| September 30, 2022 | |||
|
| |||
Estimated range of net income (loss) applicable to common shareholders | $ | (675) - (725 | ) | |
Net (gains) losses on investments and derivatives |
| 167 |
| |
Pension and other postretirement remeasurement (gains) losses |
| 79 |
| |
Reclassification of periodic settlements and accruals on non-hedge derivative instruments |
| — |
| |
Business combination expenses and the amortization of purchased intangibles |
| 90 |
| |
Business combination fair value adjustment |
| — |
| |
(Gain) loss on disposition of operations |
| 5 |
| |
(Income) loss from discontinued operations |
| — |
| |
Income tax expense (benefit) |
| (67 | ) | |
Estimated range of adjusted net income (loss) * | $ | (400) - (450 | ) |
View source version on businesswire.com: https://www.businesswire.com/news/home/20221019006161/en/
Al Scott Media Relations (847) 402-5600
Mark Nogal Investor Relations (847) 402-2800
Source: Allstate Corporation