Published: 2022-02-18 00:00:00 ET

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Documents Incorporated By Reference

Portions of the following documents are incorporated herein by reference as follows:

Part III of this Form 10-K incorporates by reference certain information from the registrant’s definitive proxy statement for its annual stockholders meeting to be held on May 24, 2022, (the “Proxy Statement”) to be filed not later than 120 days after the end of the fiscal year covered by this Form 10-K.

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Note 2			Summary of Significant Accounting Policies

Investments

Fixed income securities include bonds and asset-backed securities (“ABS”). ABS includes mortgage-backed securities (“MBS”) that were previously disclosed separately. Fixed income securities, which may be sold prior to their contractual maturity, are designated as available-for-sale (“AFS”) and are carried at fair value. The difference between amortized cost, net of credit loss allowances (“amortized cost, net”) and fair value, net of deferred income taxes and related life deferred policy acquisition costs (“DAC”), is reflected as a component of AOCI. The Company excludes accrued interest receivable from the amortized cost basis of its AFS fixed income securities. Cash received from calls and make-whole payments is reflected as a component of proceeds from sales and cash received from maturities and pay-downs is reflected as a component of investment collections within the Consolidated Statements of Cash Flows.

Equity securities primarily include common stocks, exchange traded and mutual funds, non-redeemable preferred stocks and real estate investment trust equity investments. Certain exchange traded and mutual funds have fixed income securities as their underlying investments. Equity securities are carried at fair value. Equity securities without readily determinable or estimable fair values are measured using the measurement alternative, which is cost less impairment, if any, and adjustments resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer.

Mortgage loans and bank loans are carried at amortized cost, net, which represent the amount expected to be collected. The Company excludes accrued interest receivable from the amortized cost basis of its mortgage and bank loans. Credit loss allowances are estimates of expected credit losses, established for loans upon origination or purchase, and are established considering all relevant information available, including past events, current conditions, and reasonable and supportable forecasts over the life of the loans. Loans are evaluated on a pooled basis when they share similar risk characteristics; otherwise, they are evaluated individually.

Investments in limited partnership interests are primarily accounted for in accordance with the equity method of accounting (“EMA”) and include interests in private equity funds, real estate funds and other funds. Investments in limited partnership interests purchased prior to January 1, 2018, where the Company’s interest is so minor that it exercises virtually no influence over operating and financial policies, are accounted for at fair value primarily utilizing the net asset value (“NAV”) as a practical expedient to determine fair value.

Short-term investments, including money market funds, commercial paper, U.S. Treasury bills and other short-term investments, are carried at fair value. Other investments primarily consist of bank loans, policy loans, real estate and derivatives. Bank loans are primarily senior secured corporate loans. Policy loans

are carried at unpaid principal balances. Real estate is carried at cost less accumulated depreciation. Derivatives are carried at fair value.

Investment income primarily consists of interest, dividends, income from limited partnership interests, rental income from real estate, and income from certain derivative transactions. Interest is recognized on an accrual basis using the effective yield method and dividends are recorded at the ex-dividend date. Interest income for ABS is determined considering estimated pay-downs, including prepayments, obtained from third-party data sources and internal estimates. Actual prepayment experience is periodically reviewed, and effective yields are recalculated when differences arise between the prepayments originally anticipated and the actual prepayments received and currently anticipated. For ABS of high credit quality with fixed interest rates, the effective yield is recalculated on a retrospective basis. For all others, the effective yield is generally recalculated on a prospective basis. Net investment income for AFS fixed income securities includes the impact of accreting the credit loss allowance for the time value of money. Accrual of income is suspended for fixed income securities when the timing and amount of cash flows expected to be received is not reasonably estimable. Accrual of income is suspended for mortgage loans and bank loans that are in default or when full and timely collection of principal and interest payments is not probable. Accrued income receivable is monitored for recoverability and when not expected to be collected is written off through net investment income. Cash receipts on investments on nonaccrual status are generally recorded as a reduction of amortized cost. Income from limited partnership interests carried at fair value is recognized based upon the changes in fair value of the investee’s equity primarily determined using NAV. Income from EMA limited partnership interests is recognized based on the Company’s share of the partnerships’ earnings. Income from EMA limited partnership interests is generally recognized on a three month delay due to the availability of the related financial statements from investees.

Net gains and losses on investments and derivatives include gains and losses on investment sales, changes in the credit loss allowances related to fixed income securities, mortgage loans and bank loans, impairments, valuation changes of equity investments, including equity securities and certain limited partnerships where the underlying assets are predominately public equity securities, and periodic changes in fair value and settlements of certain derivatives, including hedge ineffectiveness. Net gains and losses on sales of investments and derivatives are determined on a specific identification basis and are net of credit losses already recognized through an allowance.

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Rollforward of credit loss allowance for premium installment receivables
						For the years ended December 31,
($ in millions)						2021						2020
Beginning balance						$	(153)					$	(91)
Increase in the provision for credit losses						(293)						(223)
Write-off of uncollectible premium installment receivable amounts						339						161
Ending balance						$	(107)					$	(153)

Voluntary accident and health insurance products are expected to remain in force for an extended period and therefore are primarily classified as long-duration contracts. Traditional life insurance products consist principally of products with fixed and guaranteed premiums and benefits, primarily term and whole life insurance products. Premiums from these products are recognized as revenue when due from policyholders, net of any credit loss allowance for uncollectible premiums. Benefits are reflected in accident and health insurance policy benefits and recognized over the life of the policy in relation to premiums.

Interest-sensitive life contracts, such as universal life, are insurance contracts whose terms are not fixed and guaranteed. The terms that may be changed include premiums paid by the contractholder, interest credited to the contractholder account balance and contract charges assessed against the contractholder account balance. Premiums from these contracts are reported as contractholder fund deposits. Contract charges consist of fees assessed against the contractholder account balance for the cost of insurance (mortality risk), contract administration and surrender of the contract prior to contractually specified dates. These contract charges are recognized as revenue when assessed against the contractholder account balance. Benefit payments in excess of the contractholder account balance are reflected in accident and health insurance policy benefits.

Interest credited to contractholder funds represents interest accrued or paid on interest-sensitive life contracts. Crediting rates for interest-sensitive life contracts are adjusted periodically by the Company to reflect current market conditions subject to contractually guaranteed minimum rates.

Other revenue

Other revenue represents fees collected from policyholders relating to premium installment payments, commissions on sales of non-proprietary products, sales of identity protection services, fee-based services and other revenue transactions. Other revenue is recognized when performance obligations are fulfilled.

Deferred policy acquisition costs

Costs that are related directly to the successful acquisition of new or renewal policies or contracts are deferred and recorded as DAC. These costs are principally agent and broker remuneration, premium taxes and certain underwriting expenses. All other acquisition costs are expensed as incurred and included in operating costs and expenses.

For property and casualty insurance, DAC is amortized into income as premiums are earned, typically over periods of six or twelve months for personal lines policies or generally one to five years for protection plans and other contracts (primarily related to finance and insurance products), and is included in amortization of deferred policy acquisition costs. DAC associated with property and casualty insurance is periodically reviewed for recoverability and adjusted if necessary. Future investment income is considered in determining the recoverability of DAC.

For voluntary accident and health insurance and traditional life, DAC is amortized over the premium paying period of the related policies in proportion to the estimated revenues on such business.

Assumptions used in the amortization of DAC and reserve calculations are established at the time the policy is issued and are generally not revised during the life of the policy. Any deviations from projected business in force resulting from actual policy terminations differing from expected levels and any estimated premium deficiencies may result in a change to the rate of amortization in the period such events occur. Generally, the amortization periods for these policies approximates the estimated lives of the policies. The Company periodically reviews the recoverability of DAC using actual experience and current assumptions. Voluntary accident and health insurance products and traditional life insurance products are reviewed individually. If actual experience and current assumptions are adverse compared to the original assumptions and a premium deficiency is determined to exist, any remaining unamortized DAC balance would be expensed to the extent not recoverable and the establishment of a premium deficiency reserve may be required for any remaining deficiency.

For interest-sensitive life insurance, DAC is amortized in proportion to the incidence of the total present value of gross profits expected to be earned over the estimated lives of the contracts.

Gross profits primarily consist of the following components: contract charges for the cost of insurance less mortality costs and other benefits; investment income and net gains and losses on investments less interest credited; and surrender and other contract charges less maintenance expenses. The principal assumptions for determining the amount of gross profits are mortality, persistency, expenses, investment returns and interest crediting rates to contractholders.

The Company performs quarterly reviews of DAC recoverability for interest-sensitive life using actual experience and current assumptions.

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The Company also estimates a credit loss allowance for commitments to fund mortgage loans and bank loans unless they are unconditionally

cancellable by the Company. The related allowance is reported in other liabilities and accrued expenses.

Allowance for credit losses
						As of December 31,
($ in millions)						2021						2020
Fixed income securities						$	6					$	2
Mortgage loans (1)						6						67
Bank loans (1)						61						67
Investments						73						136
Premium installment receivables						107						153
Reinsurance recoverables						74						60
Other assets						26						17
Assets						280						366
Commitments to fund mortgage loans and bank loans						—						1
Liabilities						—						1
Total						$	280					$	367

(1)Includes credit loss allowance for investments that are classified as held for sale as of December 31, 2020.

Leases

The Company has certain operating leases for office facilities, computer and office equipment, and vehicles. The Company’s leases have remaining lease terms of generally 1 year to 9 years, some of which include options to extend the leases for up to 20 years, and some of which include options to terminate the leases within 32 days.

The Company determines if an arrangement is a lease at inception. Leases with an initial term less than one year are not recorded on the balance sheet and the lease costs for these leases are recorded as an expense on a straight-line basis over the lease term. Operating leases with terms greater than one year result in a lease liability recorded in other liabilities with a corresponding right-of-use (“ROU”) asset recorded in other assets. As of December 31, 2021 and 2020, the Company had $465 million and $511 million in lease liabilities and $314 million and $393 million in ROU assets, respectively.

Operating lease liabilities are recognized at the commencement date based on the present value of future minimum lease payments over the lease term. ROU assets are recognized based on the corresponding lease liabilities adjusted for qualifying initial direct costs, prepaid or accrued lease payments and unamortized lease incentives. As most of the Company’s leases do not disclose the implicit interest rate, the Company uses collateralized incremental borrowing rates based on information available at lease commencement when determining the present value of future lease payments. The Company has lease agreements with lease and non-lease components, which are accounted for as a single lease. Lease terms may include options to extend or terminate the lease which are incorporated into the Company’s measurements when it is reasonably certain that the Company will exercise the option.

Operating lease costs are recognized on a straight-line basis over the lease term and include interest expense on the lease liability and amortization

of the ROU asset. Variable lease costs are expensed as incurred and include maintenance costs and real estate taxes. Lease costs are reported in operating costs and expenses and totaled $162 million and $166 million, including $30 million and $30 million of variable lease costs in 2021 and 2020, respectively.

Other information related to operating leases
						December 31,
						2021						2020
Weighted average remaining lease term (years)						5						5
Weighted average discount rate						3.09		%				3.10		%

Maturity of lease liabilities
($ in millions)						Operating leases
2022						$	95
2023						125
2024						101
2025						79
2026						48
Thereafter						56
Total lease payments						$	504
Less: interest						(39)
Present value of lease liabilities						$	465

Consolidation of variable interest entities (“VIEs”)

A VIE is a legal entity that does not have sufficient equity at risk to finance its activities without additional financial support or is structured such that equity investors lack the ability to make significant decisions relating to the entity’s operations through voting rights or do not participate in the gains and losses of the entity. The Company consolidates VIEs in which the Company is deemed the primary beneficiary. The primary beneficiary is the entity that has both (1) the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE and (2) the power to direct the activities of the VIE that most significantly affect that entity’s economic performance.

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Computation of basic and diluted earnings per common share
						For the years ended December 31,
($ in millions, except per share data)						2021						2020						2019
Numerator:
Net income from continuing operations						$	5,159					$	5,429					$	4,327
Less: Net loss attributable to noncontrolling interest						(33)						—						—
Net income from continuing operations attributable to Allstate						5,192						5,429						4,327
Less: Preferred stock dividends						114						115						169
Net income from continuing operations applicable to common shareholders						5,078						5,314						4,158
(Loss) income from discontinued operations, net of tax						(3,593)						147						520
Net income applicable to common shareholders						$	1,485					$	5,461					$	4,678
Denominator:
Weighted average common shares outstanding						294.8						311.6						328.2
Effect of dilutive potential common shares:
Stock options						2.7						2.2						3.2
Restricted stock units (non-participating) and performance stock awards						1.6						1.7						2.1
Weighted average common and dilutive potential common shares outstanding						299.1						315.5						333.5
Earnings per share applicable to common shareholders
Basic
Continuing operations						$	17.23					$	17.06					$	12.67
Discontinued operations						(12.19)						0.47						1.58
Total						$	5.04					$	17.53					$	14.25
Diluted
Continuing operations						$	16.98					$	16.84					$	12.47
Discontinued operations						(12.02)						0.47						1.56
Total						$	4.96					$	17.31					$	14.03
Anti-dilutive options excluded from diluted earnings per common share						1.3						2.9						3.7

Adopted accounting standards

Simplifications to the Accounting for Income Taxes Effective January 1, 2021, the Company adopted new Financial Accounting Standards Board (“FASB”) guidance which simplified the accounting for income taxes by eliminating certain exceptions and clarifying certain guidance. The adoption had an immaterial impact on the Company’s results of operations and financial position.

Changes to the Disclosure Requirements for Defined Benefit Plans Effective January 1, 2021, the Company adopted new FASB guidance to modify certain annual disclosure requirements for defined benefit plans. New disclosures include explanations for significant gains and losses related to changes in the benefit obligation during the reporting period, as well as the weighted-average interest crediting rate assumptions used to determine the benefit obligation and net benefit cost for cash balance plans and other plans with interest crediting rates. Disclosures to be eliminated include amounts expected to be reclassified out of AOCI and into the income statement in the coming year and the anticipated impact of a one-percentage point change in the assumed health care cost trend rate on service and interest cost and on the accumulated benefit obligation. The impacts of adoption are to the Company’s annual disclosures only.

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Note 3			Acquisitions and Dispositions

Acquisitions

National General On January 4, 2021, the Company completed the acquisition of National General Holdings Corp. (“National General”), an insurance holding company serving customers predominantly through independent agents for property and casualty and accident and health products.

National General provides personal and commercial automobile, homeowners, umbrella, recreational vehicle, motorcycle, lender-placed, health and other niche insurance products. This acquisition increased the Company’s market share in personal property-liability and enhance its independent agent distribution platform.

Assets and liabilities recognized in the National General acquisition (1)
($ in millions)												January 4, 2021
Assets
Investments												$	4,962
Cash												400
Premiums and other receivables, net												1,539
Deferred acquisition costs (value of business acquired)												317
Reinsurance recoverables, net												1,212
Intangible assets												1,199
Other assets												734
Goodwill (2)												1,038
Total assets												11,401
Liabilities
Reserve for property and casualty insurance claims and claims expense												2,765
Reserve for future policy benefits												186
Unearned premiums												2,245
Reinsurance payable												363
Debt (3)												593
Deferred tax liabilities												162
Other liabilities												776
Total liabilities												$	7,090

(1)The amounts reflect allocation of assets acquired and liabilities assumed.

(2)$675 million, $20 million and $343 million of goodwill were allocated to the Allstate Protection, Protection Services and Allstate Health and Benefits segments, respectively, and is non-deductible for income tax purposes. Goodwill is primarily attributable to expected synergies and future growth opportunities.

(3)Subsequent to the acquisition, the Company repaid $100 million of 7.625% Subordinated Notes and $72 million of Subordinated Debentures on February 3, 2021 and March 15, 2021, respectively. As of December 31, 2021, the Company had principal balance remaining of $350 million 6.750% Senior Notes due 2024, with a fair value adjustment of $45 million.

Intangible assets by type
($ in millions)						January 4, 2021
Distribution and customer relationships						$	795
Trade names						102
Licenses						97
Technology						205
Total						$	1,199

Intangible assets (reported in other assets in the Consolidated Statements of Financial Position) consist of capitalized costs, primarily of the estimated fair value of distribution and customer relationships, trade names, licenses and technology assets. The estimated useful lives of these assets generally range from 3 to 10 years.

The estimated fair value of distribution and customer relationship intangible assets was determined using an income approach that considered cash flows and profits expected to be generated by the

acquired relationships, a weighted-average cost of capital discount rate reflecting the relative risk of achieving the anticipated cash flows, profits, the time value of money, and other relevant inputs. Technology and trade names were valued using estimated useful lives and market licensing rates discounted at a weighted-average cost of capital. Licenses are primarily insurance licenses which were valued using the median value of market transactions executed over an extended observation period.

Licenses are considered to have an indefinite useful life and are reviewed for impairment at least annually or more frequently if circumstances arise that indicate an impairment may have occurred. An impairment is recognized if the carrying amount of the asset exceeds its estimated fair value.

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Financial results from discontinued operations
						For the years ended December 31,
($ in millions)						2021						2020						2019
Revenues
Life premiums and contract charges						$	1,109					$	1,350					$	1,356
Net investment income						1,336						1,262						1,431
Net gains (losses) on investments and derivatives						195						269						347
Total revenues						2,640						2,881						3,134
Costs and expenses
Life contract benefits						1,315						1,726						1,438
Interest credited to contractholder funds						414						605						606
Amortization of DAC						87						153						180
Operating costs and expenses						163						238						268
Restructuring and related charges						31						7						2
Total costs and expenses						2,010						2,729						2,494
Amortization of deferred gain on reinsurance						4						4						6
Income (loss) from discontinued operations before income tax expense						634						156						646
Income tax expense						136						9						126
Income from discontinued operations, net of tax						498						147						520
Loss on disposition of operations						(4,315)						—						—
Income tax benefit						(224)						—						—
Loss on disposition of operations, net of tax						(4,091)						—						—
(Loss) income from discontinued operations, net of tax						$	(3,593)					$	147					$	520

Major classes of assets and liabilities disposed in transactions
($ in millions)						Closing (1)												December 31, 2020
Assets
Investments
Fixed income securities, at fair value						$	26,425											$	23,789
Equity securities, at fair value						11												1,542
Mortgage loans, net						2,662												3,329
Limited partnership interests						1,624												3,046
Short-term, at fair value						643												993
Other investments, net						690												1,998
Total investments						$	32,055											$	34,697
Cash						1,081												66
Deferred policy acquisitions costs						996												925
Reinsurance recoverables, net						1,979												2,005
Accrued investment income						240												229
Other assets						536												865
Separate accounts						3,465												3,344
Total assets						$	40,352											$	42,131
Liabilities
Reserve for future policy benefits						$	11,573											$	11,740
Contractholder funds						15,880												16,356
Deferred income taxes						834												973
Other liabilities and accrued expenses						452												912
Separate accounts						3,465												3,344
Total liabilities						$	32,204											$	33,325

(1)The Company closed the sales of Allstate Life Insurance Company of New York and Allstate Life Insurance Company and certain affiliates on October 1, 2021 and November 1, 2021, respectively.

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Note 4			Reportable Segments

The Company’s chief operating decision maker reviews financial performance and makes decisions about the allocation of resources for the five reportable segments. These segments are described below and align with the Company’s key product and service offerings.

Allstate Protection principally offers private passenger auto and homeowners insurance in the United States and Canada, with earned premiums accounting for 80.0% of Allstate’s 2021 consolidated revenues. Allstate Protection primarily operates in the U.S. (all 50 states and the District of Columbia (“D.C.”)) and Canada. For 2021, the top U.S. geographic locations for premiums earned by the Allstate Protection segment were Texas, California, New York and Florida. No other jurisdiction accounted for more than 5% of premium earned for Allstate Protection. Revenues from external customers generated outside the United States were $1.86 billion, $1.57 billion and $1.37 billion in 2021, 2020 and 2019, respectively.

Run-off Property-Liability includes property and casualty insurance coverage that primarily relates to policies written during the 1960s through the mid-1980s. Our exposure to asbestos, environmental and other run-off lines claims arises principally from direct excess commercial insurance, assumed reinsurance coverage, direct primary commercial insurance and other businesses in run-off.

Protection Services comprise Allstate Protection Plans, Allstate Dealer Services, Allstate Roadside, Arity and Allstate Identity Protection. Protection Services offer consumer product protection plans, finance and insurance products (including vehicle service contracts, guaranteed asset protection waivers, road hazard tire and wheel and paintless dent repair protection), roadside assistance, device and mobile data collection services and analytic solutions using automotive telematics information and identity protection. Protection Services primarily operate in the U.S. and Canada, with Allstate Protection Plans also offering services in Europe, Australia and Asia. Revenues from external customers generated outside the United States relate to consumer product protection plans sold primarily in the European Union and were $232 million, $188 million and $95 million in 2021, 2020 and 2019, respectively.

Allstate Health and Benefits offers employer voluntary benefits, group health and individual health products, including life, accident, critical illness, hospital, short-term disability and other health products. Allstate Health and Benefits primarily operates in the U.S. (all 50 states and D.C.) and Canada. For 2021, the top geographic locations for statutory direct accident and health insurance premiums were Florida, Texas, Georgia, Ohio and North Carolina. No other jurisdiction accounted for more than 5% of statutory direct accident and health insurance premiums. Revenues from external customers generated outside the United States relate to voluntary accident and health insurance sold in Canada and were not material.

Corporate and Other comprises holding company activities and certain non-insurance operations, including expenses associated with strategic initiatives.

National General results are included in the following segments:

•Property and casualty - Allstate Protection

•Accident and health - Allstate Health and Benefits

•Technology solutions - Protection Services

Allstate Protection and Run-off Property Liability segments comprise Property-Liability. The Company does not allocate investment income, net gains and losses on investments and derivatives, or assets to the Allstate Protection and Run-off Property Liability segments. Management reviews assets at the Property-Liability, Protection Services, Allstate Health and Benefits, and Corporate and Other levels for decision-making purposes.

The accounting policies of the reportable segments are the same as those described in Note 2. The effects of intersegment transactions are eliminated in the consolidated results. For segment results, services provided by Protection Services to Allstate Protection are not eliminated as management considers those transactions in assessing the results of the respective segments.

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Measuring segment profit or loss

The measure of segment profit or loss used in evaluating performance is underwriting income for the Allstate Protection and Run-off Property-Liability and adjusted net income for the Protection Services, Allstate Health and Benefits and Corporate and Other segments.

Underwriting income is calculated as premiums earned and other revenue, less claims and claims expenses (“losses”), Shelter-in-Place Payback expense, amortization of DAC, operating costs and expenses, amortization or impairment of purchased intangibles and restructuring and related charges as determined using GAAP.

Adjusted net income is net income (loss) applicable to common shareholders, excluding:

•			Net gains and losses on investments and derivatives except for periodic settlements and accruals on non-hedge derivative instruments, which are reported with net gains and losses on investments and derivatives but included in adjusted net income
•			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
•			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
•			Income tax expense or benefit on reconciling items

A reconciliation of these measures to net income (loss) applicable to common shareholders is provided below.

Reportable segments financial performance
						For the years ended December 31,
($ in millions)						2021						2020						2019
Underwriting income (loss) by segment
Allstate Protection						$	1,785					$	4,569					$	2,921
Run-off Property-Liability						(120)						(144)						(108)
Total Property-Liability						1,665						4,425						2,813
Adjusted net income (loss) by segment, after-tax
Protection Services						179						153						38
Allstate Health and Benefits						208						96						115
Corporate and Other						(433)						(428)						(438)
Reconciling items
Property-Liability net investment income						3,118						1,421						1,533
Net gains (losses) on investments and derivatives						1,084						1,087						1,538
Pension and other postretirement remeasurement gains (losses)						644						51						(114)
Curtailment gains (losses)						—						8						—
Business combination expenses and amortization of purchased intangibles (1)						(157)						(106)						(122)
Business combination fair value adjustment						6						—						—
Impairment of purchased intangibles (1)						—						—						(55)
Income tax (expense) benefit on reconciling items						(1,270)						(1,393)						(1,150)
Total reconciling items						3,425						1,068						1,630
(Loss) income from discontinued operations						(3,612)						157						646
Income tax benefit (expense) from discontinued operations						19						(10)						(126)
Total from discontinued operations						$	(3,593)					$	147					$	520
Less: Net loss attributable to noncontrolling interest (2)						(34)						—						—
Net income applicable to common shareholders						$	1,485					$	5,461					$	4,678

(1)Excludes amortization or impairment of purchased intangibles in Property-Liability, which is included above in underwriting income.

(2)Reflects net loss attributable to noncontrolling interest in Property-Liability.

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Reportable segments revenue information
						For the years ended December 31,
($ in millions)						2021						2020						2019
Property-Liability
Insurance premiums
Auto						$	27,623					$	24,640					$	24,188
Homeowners						9,927						8,254						7,912
Other personal lines						2,077						1,919						1,861
Commercial lines						827						767						882
Allstate Protection						40,454						35,580						34,843
Run-off Property-Liability						—						—						—
Total Property-Liability insurance premiums						40,454						35,580						34,843
Other revenue						1,437						857						866
Net investment income						3,118						1,421						1,533
Net gains (losses) on investments and derivatives						1,021						990						1,470
Total Property-Liability						46,030						38,848						38,712
Protection Services
Protection Plans						1,132						909						633
Roadside assistance						192						188						238
Finance and insurance products						440						396						362
Intersegment premiums and service fees (1)						175						147						154
Other revenue						354						208						188
Net investment income						43						44						42
Net gains (losses) on investments and derivatives						25						30						32
Total Protection Services						2,361						1,922						1,649
Allstate Health and Benefits
Employer voluntary benefits						1,031						1,094						1,145
Group health						350						—						—
Individual health						440						—						—
Other revenue						359						—						—
Net investment income						74						78						83
Net gains (losses) on investments and derivatives						7						8						12
Total Allstate Health and Benefits						2,261						1,180						1,240
Corporate and Other
Other revenue						22						—						—
Net investment income						58						47						70
Net gains (losses) on investments and derivatives						31						59						24
Total Corporate and Other						111						106						94
Intersegment eliminations (1)						(175)						(147)						(154)
Consolidated revenues						$	50,588					$	41,909					$	41,541

(1)Intersegment insurance premiums and service fees are primarily related to Arity and Allstate Roadside and are eliminated in the consolidated financial statements.

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Additional significant financial performance data
						For the years ended December 31,
($ in millions)						2021						2020						2019
Amortization of DAC
Property-Liability						$	5,313					$	4,642					$	4,649
Protection Services						795						658						543
Allstate Health and Benefits						144						177						161
Consolidated						$	6,252					$	5,477					$	5,353
Income tax expense (benefit)
Property-Liability						$	1,151					$	1,382					$	1,196
Protection Services						39						26						(18)
Allstate Health and Benefits						50						28						35
Corporate and Other						49						(63)						(97)
Consolidated						$	1,289					$	1,373					$	1,116

Interest expense is primarily incurred in the Corporate and Other segment. Capital expenditures for long-lived assets are generally made in Property-Liability as the Company does not allocate assets to the Allstate Protection and Run-off Property-Liability segments. A portion of these long-lived assets are used by entities included in the Protection Services, Allstate Health and Benefits and Corporate and Other segments and, accordingly, are charged to expenses in proportion to their use.

Reportable segment total assets, investments and deferred policy acquisition costs
						As of December 31,
($ in millions)						2021						2020
Assets
Property-Liability						$	84,846					$	69,171
Protection Services						6,909						6,177
Allstate Health and Benefits						4,015						2,905
Corporate and Other						3,670						5,603
Assets held for sale						—						42,131
Consolidated						$	99,440					$	125,987
Investments (1)
Property-Liability						$	57,258					$	50,134
Protection Services						1,890						1,822
Allstate Health and Benefits						2,191						2,012
Corporate and Other						3,362						5,572
Consolidated						$	64,701					$	59,540
Deferred policy acquisition costs
Property-Liability						$	1,951					$	1,608
Protection Services						2,294						1,696
Allstate Health and Benefits						477						470
Consolidated						$	4,722					$	3,774

(1)The balances reflect the elimination of related party investments between segments.

Note 5			Investments

Portfolio composition
						As of December 31,
($ in millions)						2021						2020
Fixed income securities, at fair value						$	42,136					$	42,565
Equity securities, at fair value						7,061						3,168
Mortgage loans, net						821						746
Limited partnership interests						8,018						4,563
Short-term investments, at fair value						4,009						6,807
Other investments, net						2,656						1,691
Total						$	64,701					$	59,540

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Amortized cost, gross unrealized gains (losses) and fair value for fixed income securities
						Amortized cost, net						Gross unrealized												Fair value
($ in millions)												Gains						Losses
December 31, 2021
U.S. government and agencies						$	6,287					$	12					$	(26)					$	6,273
Municipal						6,130						279						(16)						6,393
Corporate						26,834						688						(192)						27,330
Foreign government						982						9						(6)						985
ABS						1,143						14						(2)						1,155
Total fixed income securities						$	41,376					$	1,002					$	(242)					$	42,136
December 31, 2020
U.S. government and agencies						$	2,058					$	50					$	(1)					$	2,107
Municipal						7,100						480						(2)						7,578
Corporate						29,057						1,986						(26)						31,017
Foreign government						921						37						—						958
ABS						898						10						(3)						905
Total fixed income securities						$	40,034					$	2,563					$	(32)					$	42,565

Scheduled maturities for fixed income securities
						As of December 31, 2021
($ in millions)						Amortized cost, net						Fair value
Due in one year or less						$	1,105					$	1,111
Due after one year through five years						21,039						21,291
Due after five years through ten years						13,808						14,079
Due after ten years						4,281						4,500
						40,233						40,981
ABS						1,143						1,155
Total						$	41,376					$	42,136

Actual maturities may differ from those scheduled as a result of calls and make-whole payments by the issuers. ABS is shown separately because of potential prepayment of principal prior to contractual maturity dates.

Net investment income
						For the years ended December 31,
($ in millions)						2021						2020						2019
Fixed income securities						$	1,148					$	1,232					$	1,201
Equity securities						100						78						175
Mortgage loans						43						34						27
Limited partnership interests						1,973						238						296
Short-term investments						5						17						70
Other investments						195						124						131
Investment income, before expense						3,464						1,723						1,900
Investment expense						(171)						(133)						(172)
Net investment income						$	3,293					$	1,590					$	1,728

Net gains (losses) on investments and derivatives by asset type
						For the years ended December 31,
($ in millions)						2021						2020						2019
Fixed income securities						$	425					$	925					$	433
Equity securities						520						117						930
Mortgage loans						20						(1)						—
Limited partnership interests						(52)						(14)						157
Derivatives						49						49						(26)
Other investments						122						11						44
Net gains (losses) on investments and derivatives						$	1,084					$	1,087					$	1,538

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Net gains (losses) on investments and derivatives by transaction type
						For the years ended December 31,
($ in millions)						2021						2020						2019
Sales						$	578					$	974					$	519
Credit losses						(42)						(32)						(26)
Valuation change of equity investments (1)						499						96						1,071
Valuation change and settlements of derivatives						49						49						(26)
Net gains (losses) on investments and derivatives						$	1,084					$	1,087					$	1,538

(1)Includes valuation change of equity securities and certain limited partnership interests where the underlying assets are predominately public equity securities.

Gross realized gains (losses) on sales of fixed income securities
						For the years ended December 31,
($ in millions)						2021						2020						2019
Gross realized gains						$	587					$	1,105					$	541
Gross realized losses						(158)						(177)						(99)

The following table presents the net pre-tax appreciation (decline) recognized in net income of equity securities and limited partnership interests carried at fair value that are still held as of December 31, 2021 and 2020, respectively.

Net appreciation (decline) recognized in net income
						For the years ended December 31,
($ in millions)						2021						2020
Equity securities						$	377					$	247
Limited partnership interests carried at fair value						435						150
Total						$	812					$	397

Credit losses recognized in net income
			For the years ended December 31,
($ in millions)						2021						2020						2019
Assets
Fixed income securities:
Corporate						$	(5)					$	(1)					$	(6)
ABS						1						(2)						(3)
Total fixed income securities						(4)						(3)						(9)
Mortgage loans						18						(1)						—
Limited partnership interests						(34)						(6)						(4)
Other investments
Bank loans						(22)						(23)						(13)
Total credit losses by asset type						$	(42)					$	(33)					$	(26)
Liabilities
Commitments to fund commercial mortgage loans and bank loans						—						1						—
Total						$	(42)					$	(32)					$	(26)

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Unrealized net capital gains and losses included in AOCI
($ in millions)						Fair value						Gross unrealized												Unrealized net gains (losses)
December 31, 2021												Gains						Losses
Fixed income securities						$	42,136					$	1,002					$	(242)					$	760
Short-term investments						4,009						—						—						—
Derivative instruments						—						—						(3)						(3)
EMA limited partnerships (1)																								(1)
Investments classified as held for sale																								—
Unrealized net capital gains and losses, pre-tax																								756
Amounts recognized for:
Insurance reserves (2)																								—
DAC and DSI (3)																								1
Reclassification of noncontrolling interest																								4
Amounts recognized																								5
Deferred income taxes																								(163)
Unrealized net capital gains and losses, after-tax																								$	598
December 31, 2020
Fixed income securities						$	42,565					$	2,563					$	(32)					$	2,531
Short-term investments						6,807						—						—						—
Derivative instruments						—						—						(3)						(3)
EMA limited partnerships																								(1)
Investments classified as held for sale																								2,369
Unrealized net capital gains and losses, pre-tax																								4,896
Amounts recognized for:
Insurance reserves (2)																								(496)
DAC and DSI (3)																								(364)
Amounts recognized																								(860)
Deferred income taxes																								(856)
Unrealized net capital gains and losses, after-tax																								$	3,180

(1)Unrealized net capital gains and losses for limited partnership interests represent the Company’s share of EMA limited partnerships’ OCI. Fair value and gross unrealized gains and losses are not applicable.

(2)The insurance reserves adjustment represents the amount by which the reserve balance would increase if the net unrealized gains in the applicable product portfolios were realized and reinvested at lower interest rates, resulting in a premium deficiency. This adjustment primarily relates to structured settlement annuities with life contingencies (a type of immediate fixed annuity), classified as held for sale as of December 31, 2020.

(3)The DAC and DSI adjustment balance represents the amount by which the amortization of DAC and DSI would increase or decrease if the unrealized gains or losses in the respective product portfolios were realized. This adjustment relates primarily to life insurance products, which are classified as held for sale as of December 31, 2020.

Change in unrealized net capital gains (losses)
						For the years ended December 31,
($ in millions)						2021						2020						2019
Fixed income securities						$	(1,771)					$	2,152					$	2,715
EMA limited partnerships						—						—						(4)
Investments classified as held for sale						(2,369)						—						—
Total						(4,140)						2,152						2,711
Amounts recognized for:
Insurance reserves						496						(370)						(126)
DAC and DSI						365						(140)						(191)
Reclassification of noncontrolling interest						4						—						—
Amounts recognized						865						(510)						(317)
Deferred income taxes						693						(349)						(505)
(Decrease) increase in unrealized net capital gains and losses, after-tax						$	(2,582)					$	1,293					$	1,889

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Mortgage loans The Company’s mortgage loans are commercial mortgage loans collateralized by a variety of commercial real estate property types located across the United States and totaled $821 million and $746 million, net of credit loss allowance, as of December 31, 2021 and 2020, respectively. Substantially all of the commercial mortgage loans are non-recourse to the borrower.

Principal geographic distribution of commercial real estate exceeding 5% of the mortgage loans portfolio
						As of December 31,
(% of mortgage loan portfolio carrying value)						2021						2020
Texas						20.4		%				22.0		%
California						19.6						15.6
Illinois						6.7						2.4
Florida						6.0						8.6
Massachusetts						5.7						3.6
Tennessee						5.7						4.7
Ohio						5.3						7.2
Missouri						4.4						5.7

Types of properties collateralizing the mortgage loan portfolio
						As of December 31,
(% of mortgage loan portfolio carrying value)						2021						2020
Apartment complex						35.3		%				53.2		%
Retail						23.8						7.9
Office						18.5						21.8
Warehouse						11.0						14.2
Other						11.4						2.9
Total						100.0		%				100.0		%

Contractual maturities of the mortgage loan portfolio
						As of December 31, 2021
($ in millions)						Number of loans						Amortized cost, net						Percent
2022						5						$	98					11.9		%
2023						6						44						5.4
2024						5						89						10.8
2025						7						115						14.0
Thereafter						30						475						57.9
Total						53						$	821					100.0		%

Limited partnerships Investments in limited partnership interests include interests in private equity funds, real estate funds and other funds. Principal factors influencing carrying value appreciation or decline include operating performance, comparable public company earnings multiples, capitalization rates and the economic environment. For equity method limited partnerships, the Company recognizes an impairment loss when evidence demonstrates that the loss is other than temporary. Evidence of a loss in value that is other than temporary may include the absence of an ability to recover the carrying amount of the investment or the inability of the investee to sustain a level of earnings that would justify the carrying amount of the investment. Changes in fair value limited partnerships are recorded through net investment income and therefore are not tested for impairment.

Carrying value for limited partnership interests
						As of December 31, 2021																		As of December 31, 2020
($ in millions)						EMA						Fair Value						Total						EMA						Fair Value						Total
Private equity						$	4,905					$	1,434					$	6,339					$	2,667					$	988					$	3,655
Real estate						823						97						920						623						74						697
Other (1)						759						—						759						211						—						211
Total (2)						$	6,487					$	1,531					$	8,018					$	3,501					$	1,062					$	4,563

(1)Other consists of certain limited partnership interests where the underlying assets are predominately public equity and debt securities.

(2)Carrying value for limited partnership interests as of December 31, 2021, includes certain investments classified as assets held for sale as of December 31, 2020 and March 31, 2021, and transferred to continuing operations in the first and second quarter of 2021, respectively.

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Municipal bonds The Company maintains a diversified portfolio of municipal bonds, including tax exempt and taxable securities, which totaled $6.39 billion and $7.58 billion as of December 31, 2021 and 2020, respectively.

The municipal bond portfolio includes general obligations of state and local issuers and revenue bonds (including pre-refunded bonds, which are bonds for which an irrevocable trust has been established to fund the remaining payments of principal and interest).

Principal geographic distribution of municipal bond issuers exceeding 5% of the portfolio
						As of December 31,
(% of municipal bond portfolio carrying value)						2021						2020
California						11.8		%				11.8		%
Texas						8.7						9.5
Pennsylvania						5.4						5.8
New York						5.1						5.2
Colorado						4.4						5.5
Florida						4.2						5.5

Short-term investments Short-term investments, including money market funds, commercial paper, U.S. Treasury bills and other short-term investments, are carried at fair value. As of December 31, 2021 and 2020, the fair value of short-term investments totaled $4.01 billion and $6.81 billion, respectively.

Other investments Other investments primarily consist of bank loans, real estate, policy loans and derivatives. Bank loans are primarily senior secured corporate loans and are carried at amortized cost, net. Policy loans are carried at unpaid principal balances. Real estate is carried at cost less accumulated depreciation. Derivatives are carried at fair value.

Other investments by asset type
						As of December 31,
($ in millions)						2021						2020
Bank loans, net						$	1,574					$	772
Real estate						809						659
Policy loans						148						181
Derivatives						12						20
Other						113						59
Total (1)						$	2,656					$	1,691

(1)Other investments as of December 31, 2021 include certain real estate and other investments classified as held for sale as of December 31, 2020 and transferred to continuing operations in the first quarter of 2021.

Agent loans were loans issued to exclusive Allstate agents and were carried at amortized cost, net. On November 15, 2021, the Company sold its portfolio of agent loans which were previously reported in other investments. Agent loans were assets of the Allstate Life segment and classified as assets held for sale as of December 31, 2020.

Concentration of credit risk As of December 31, 2021, the Company is not exposed to any credit concentration risk of a single issuer and its affiliates greater than 10% of the Company’s shareholders’ equity, other than the U.S. government and its agencies.

Securities loaned The Company’s business activities include securities lending programs with third parties, mostly large banks. As of December 31, 2021 and 2020, fixed income and equity securities with a carrying value of $1.38 billion and $872 million, respectively, were on loan under these agreements. Interest income on collateral, net of fees, was $1 million, $2 million and $3 million in 2021, 2020 and 2019, respectively.

Other investment information Included in fixed income securities are below investment grade assets totaling $7.50 billion and $6.06 billion as of December 31, 2021 and 2020, respectively.

As of December 31, 2021, fixed income securities and short-term investments with a carrying value of $211 million were on deposit with regulatory authorities as required by law.

As of December 31, 2021, the carrying value of fixed income securities and other investments that were non-income producing was $57 million.

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Rollforward of credit loss allowance for fixed income securities
						For the years ended December 31,
($ in millions)						2021						2020
Beginning balance						$	(2)					$	—
Credit losses on securities for which credit losses not previously reported						(5)						(2)
Net decreases related to credit losses previously reported						1						—
Reduction of allowance related to sales						—						—
Write-offs						—						—
Ending balance (1)						$	(6)					$	(2)

(1)Allowance for fixed income securities as of December 31, 2021 comprised $6 million of corporate bonds. Allowance for fixed income securities as of December 31, 2020 comprised $1 million and $1 million of corporate bonds and ABS, respectively.

Gross unrealized losses and fair value by type and length of time held in a continuous unrealized loss position
						Less than 12 months																		12 months or more
($ in millions)						Number of issues						Fair value						Unrealized losses						Number of issues						Fair value						Unrealized losses						Total unrealized losses
December 31, 2021
Fixed income securities
U.S. government and agencies						112						$	5,451					$	(24)					4						$	72					$	(2)					$	(26)
Municipal						767						1,213						(15)						2						14						(1)						(16)
Corporate						1,197						9,725						(176)						22						130						(16)						(192)
Foreign government						51						415						(6)						4						3						—						(6)
ABS						80						500						(2)						53						8						—						(2)
Total fixed income securities						2,207						$	17,304					$	(223)					85						$	227					$	(19)					$	(242)
Investment grade fixed income securities						1,993						$	15,391					$	(188)					71						$	183					$	(8)					$	(196)
Below investment grade fixed income securities						214						1,913						(35)						14						44						(11)						(46)
Total fixed income securities						2,207						$	17,304					$	(223)					85						$	227					$	(19)					$	(242)
December 31, 2020
Fixed income securities
U.S. government and agencies						26						$	215					$	(1)					—						$	—					$	—					$	(1)
Municipal						43						116						(2)						—						—						—						(2)
Corporate						107						730						(21)						14						46						(5)						(26)
Foreign government						7						7						—						—						—						—						—
ABS						32						157						(2)						69						43						(1)						(3)
Total fixed income securities						215						$	1,225					$	(26)					83						$	89					$	(6)					$	(32)
Investment grade fixed income securities						146						$	855					$	(8)					66						$	45					$	—					$	(8)
Below investment grade fixed income securities						69						370						(18)						17						44						(6)						(24)
Total fixed income securities						215						$	1,225					$	(26)					83						$	89					$	(6)					$	(32)

Gross unrealized losses by unrealized loss position and credit quality as of December 31, 2021
($ in millions)						Investment grade						Below investment grade						Total
Fixed income securities with unrealized loss position less than 20% of amortized cost, net (1) (2)						$	(196)					$	(35)					$	(231)
Fixed income securities with unrealized loss position greater than or equal to 20% of amortized cost, net (3) (4)						—						(11)						(11)
Total unrealized losses						$	(196)					$	(46)					$	(242)

(1)Below investment grade fixed income securities include $33 million that have been in an unrealized loss position for less than twelve months.

(2)Related to securities with an unrealized loss position less than 20% of amortized cost, net, the degree of which suggests that these securities do not pose a high risk of having credit losses.

(3)No below investment grade fixed income securities have been in an unrealized loss position for a period of twelve or more consecutive months.

(4)Evaluated based on factors such as discounted cash flows and the financial condition and near-term and long-term prospects of the issue or issuer and were determined to have adequate resources to fulfill contractual obligations.

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Mortgage loans amortized cost by debt service coverage ratio distribution and year of origination
						December 31, 2021																																										December 31, 2020
($ in millions)						2016 and prior						2017						2018						2019						2020						Current						Total						Total
Below 1.0						$	—					$	—					$	—					$	—					$	—					$	—					$	—					$	—
1.0 - 1.25						11						—						—						25						10						—						46						46
1.26 - 1.50						39						5						—						104						—						12						160						201
Above 1.50						65						39						106						141						67						203						621						507
Amortized cost before allowance						$	115					$	44					$	106					$	270					$	77					$	215					$	827					$	754
Allowance																																										(6)						(8)
Amortized cost, net																																										$	821					$	746

Mortgage loans with a debt service coverage ratio below 1.0 that are not considered impaired primarily relate to situations where the borrower has the financial capacity to fund the revenue shortfalls from the properties for the foreseeable term, the decrease in cash flows from the properties is considered

temporary, or there are other risk mitigating factors such as additional collateral, escrow balances or borrower guarantees. Payments on all mortgage loans were current as of December 31, 2021, 2020 and 2019.

Rollforward of credit loss allowance for mortgage loans
						For the years ended December 31,
($ in millions)						2021						2020
Beginning balance						$	(67)					$	(3)
Cumulative effect of change in accounting principle						—						(42)
Net decreases related to credit losses						40						(39)
Reduction of allowance related to sales						21						17
Write-offs						—						—
Ending balance (1)						$	(6)					$	(67)

(1)Includes $59 million of credit loss allowance for mortgage loans that are classified as held for sale as of December 31, 2020.

Bank loans When it is determined a bank loan shall be evaluated individually, the Company uses various methods to estimate credit losses on individual loans such as the present value of the loan’s expected future repayment cash flows discounted at the loan’s current effective interest rate.

Credit ratings of the borrower are considered a key credit quality indicator when bank loan credit loss allowances are estimated. The ratings are updated quarterly and are either received from a nationally recognized rating agency or a comparable internal rating is derived if an externally provided rating is not available. The year of origination is determined to be the year in which the asset is acquired.

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Bank loans amortized cost by credit rating and year of origination
($ in millions)						December 31, 2021																																										December 31, 2020
						2016 and prior						2017						2018						2019						2020						Current						Total						Total
BBB						$	—					$	—					$	5					$	14					$	7					$	60					$	86					$	38
BB						9						16						15						24						31						561						656						168
B						—						18						47						34						63						606						768						456
CCC and below						3						21						18						40						9						34						125						161
Amortized cost before allowance						$	12					$	55					$	85					$	112					$	110					$	1,261					$	1,635					$	823
Allowance																																										(61)						(51)
Amortized cost, net																																										$	1,574					$	772

Rollforward of credit loss allowance for bank loans
						For the years ended December 31,
($ in millions)						2021						2020
Beginning balance						$	(67)					$	—
Cumulative effect of change in accounting principle						—						(53)
Net increases related to credit losses						(15)						(28)
Reduction of allowance related to sales						21						9
Write-offs						—						5
Ending balance (1)						$	(61)					$	(67)

(1)Includes $16 million of credit loss allowance for bank loans that are classified as held for sale as of December 31, 2020.

Note 6			Fair Value of Assets and Liabilities

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The hierarchy for inputs used in determining fair value maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that observable inputs be used when available. Assets and liabilities recorded on the Consolidated Statements of Financial Position at fair value are categorized in the fair value hierarchy based on the observability of inputs to the valuation techniques as follows:

Level 1:    Assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that the Company can access.

Level 2:    Assets and liabilities whose values are based on the following:

(a)Quoted prices for similar assets or liabilities in active markets;

(b)Quoted prices for identical or similar assets or liabilities in markets that are not active; or

(c)Valuation models whose inputs are observable, directly or indirectly, for substantially the full term of the asset or liability.

Level 3:    Assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. Unobservable inputs reflect the Company’s estimates of the assumptions that market participants would use in valuing the assets and liabilities.

The availability of observable inputs varies by instrument. In situations where fair value is based on internally developed pricing models or inputs that are unobservable in the market, the determination of fair value requires more judgment. The degree of judgment exercised by the Company in determining fair value is typically greatest for instruments categorized in Level 3. In many instances, valuation inputs used to measure fair value fall into different levels of the fair value hierarchy. The category level in the fair value hierarchy is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company uses prices and inputs that are current as of the measurement date, including during periods of market disruption. In periods of market disruption, the ability to observe prices and inputs may be reduced for many instruments.

The Company is responsible for the determination of fair value and the supporting assumptions and methodologies. The Company gains assurance that assets and liabilities are appropriately valued through the execution of various processes and controls designed to ensure the overall reasonableness and consistent application of valuation methodologies, including inputs and assumptions, and compliance with accounting standards. For fair values received from third parties or internally estimated, the Company’s processes and controls are designed to ensure that the valuation methodologies are appropriate and consistently applied, the inputs and assumptions are reasonable and consistent with the objective of determining fair value, and the fair values are accurately recorded. For example, on a continuing basis, the Company assesses the reasonableness of

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Assets and liabilities measured at fair value
						As of December 31, 2020
($ in millions)						Quoted prices in active markets for identical assets (Level 1)						Significant other observable inputs (Level 2)						Significant unobservable inputs (Level 3)						Counterparty and cash collateral netting						Total
Assets
Fixed income securities:
U.S. government and agencies						$	2,061					$	45					$	—											$	2,106
Municipal						—						7,562						17												7,579
Corporate - public						—						21,885						67												21,952
Corporate - privately placed						—						9,002						63												9,065
Foreign government						—						958						—												958
ABS						—						826						79												905
Total fixed income securities						2,061						40,278						226												42,565
Equity securities						2,468						396						304												3,168
Short-term investments						6,549						223						35												6,807
Other investments						—						29						—						$	(9)					20
Other assets						1						—						—												1
Assets held for sale						6,488						23,103						267						(6)						29,852
Total recurring basis assets						17,567						64,029						832						(15)						82,413
Total assets at fair value						$	17,567					$	64,029					$	832					$	(15)					$	82,413
% of total assets at fair value						21.3		%				77.7		%				1.0		%				—		%				100.0		%
Investments reported at NAV																														1,062
Assets held for sale at NAV																														762
Total																														$	84,237
Liabilities
Other liabilities						$	—					$	(34)					$	—					$	18					$	(16)
Liabilities held for sale						—						(119)						(516)						9						(626)
Total recurring basis liabilities						—						(153)						(516)						27						(642)
Total liabilities at fair value						$	—					$	(153)					$	(516)					$	27					$	(642)
% of total liabilities at fair value						—		%				23.8		%				80.4		%				(4.2)		%				100.0		%

As of December 31, 2021 and 2020, Level 3 fair value measurements of fixed income securities total $144 million and $226 million, respectively, and include $41 million and $69 million, respectively, of securities valued based on non-binding broker quotes where the inputs have not been corroborated to be market observable and $16 million and $18 million, respectively, of municipal fixed income securities that are not rated by third-party credit rating agencies. As the Company does not develop the Level 3 fair value

unobservable inputs for these fixed income securities, they are not included in the table above. However, an increase (decrease) in credit spreads for fixed income securities valued based on non-binding broker quotes would result in a lower (higher) fair value, and an increase (decrease) in the credit rating of municipal bonds that are not rated by third-party credit rating agencies would result in a higher (lower) fair value.

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Rollforward of Level 3 assets and liabilities held at fair value during the year ended December 31, 2021
						Balance as of December 31, 2020						Total gains (losses) included in:												Transfers												Transfers to (from) held for sale																														Balance as of December 31, 2021
($ in millions)												Net income						OCI						Into Level 3						Out of Level 3												Purchases						Sales						Issues						Settlements
Assets
Fixed income securities:
Municipal						$	17					$	—					$	—					$	1					$	—					$	—					$	3					$	—					$	—					$	(3)					$	18
Corporate - public						67						1						(1)						—						—						(7)						13						(53)						—						—						20
Corporate - privately placed						63						(2)						3						10						—						14						6						(23)						—						(5)						66
ABS						79						—						1						4						(32)						—						47						(5)						—						(54)						40
Total fixed income securities						226						(1)						3						15						(32)						7						69						(81)						—						(62)						144
Equity securities						304						61						—						—						—						101						43						(160)						—						—						349
Short-term investments						35						—						—						—						—						—						5						—						—						(35)						5
Other investments						—						—						—						—						—						—						3						(1)						—						—						2
Other assets						—						65						—						—						—						—						—						—						—						—						65
Assets held for sale						267						3						(1)						17						(13)						(108)						4						(163)						—						(6)						—
Total recurring Level 3 assets						832						128						2						32						(45)						—						124						(405)						—						(103)						565
Liabilities
Liabilities held for sale						(516)						35						—						—						—						—						—						492						(28)						17						—
Total recurring Level 3 liabilities						$	(516)					$	35					$	—					$	—					$	—					$	—					$	—					$	492					$	(28)					$	17					$	—

Rollforward of Level 3 assets and liabilities held at fair value during the year ended December 31, 2020
						Balance as of December 31, 2019						Total gains (losses) included in:												Transfers																																										Balance as of December 31, 2020
($ in millions)												Net income						OCI						Into Level 3						Out of Level 3									Purchases						Sales						Issues						Settlements
Assets
Fixed income securities:
Municipal						$	22					$	—					$	—					$	—					$	—											$	—					$	(3)					$	—					$	(2)					$	17
Corporate - public						36						—						1						1						—												48						(19)						—						—						67
Corporate - privately placed						32						—						(5)						21						—												17						(2)						—						—						63
ABS						84						(1)						—						54						(49)												59						(26)						—						(42)						79
Total fixed income securities						174						(1)						(4)						76						(49)												124						(50)						—						(44)						226
Equity securities						255						—						—						—						—												57						(8)						—						—						304
Short-term investments						25						—						—						—						(25)												35						—						—						—						35
Assets held for sale						284						1						(8)						52						(42)												24						(37)						—						(7)						267
Total recurring Level 3 assets						738						—						(12)						128						(116)												240						(95)						—						(51)						832
Liabilities
Liabilities held for sale						(462)						(43)						—						—						—												—						—						(34)						23						(516)
Total recurring Level 3 liabilities						$	(462)					$	(43)					$	—					$	—					$	—											$	—					$	—					$	(34)					$	23					$	(516)

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Rollforward of Level 3 assets and liabilities held at fair value during the year ended December 31, 2019
						Balance as of December 31, 2018						Total gains (losses) included in:												Transfers																																										Balance as of December 31, 2019
($ in millions)												Net income						OCI						Into Level 3						Out of Level 3									Purchases						Sales						Issues						Settlements
Assets
Fixed income securities:
Municipal						$	31					$	—					$	1					$	—					$	(6)											$	—					$	(3)					$	—					$	(1)					$	22
Corporate - public						38						—						2						—						—												—						(4)						—						—						$	36
Corporate - privately placed						32						—						—						2						—												1						(2)						—						(1)						$	32
ABS						73						—						—						2						(21)												33						—						—						(3)						$	84
Total fixed income securities						174						—						3						4						(27)												34						(9)						—						(5)						174
Equity securities						212						16						—						—						(1)												73						(44)						—						(1)						255
Short-term investments						30						—						—						—						—												35						(40)						—						—						25
Other investments						—						—						—						—						—												—						—						—						—						—
Assets held for sale						281						15						4						57						(4)												14						(53)						—						(30)						284
Total recurring Level 3 assets						697						31						7						61						(32)												156						(146)						—						(36)						738
Liabilities
Liabilities held for sale						(224)						(61)						—						(175)						—												—						—						(16)						14						(462)
Total recurring Level 3 liabilities						$	(224)					$	(61)					$	—					$	(175)					$	—											$	—					$	—					$	(16)					$	14					$	(462)

Total Level 3 gains (losses) included in net income
						For the years ended December 31,
($ in millions)						2021						2020						2019
Net investment income						$	1					$	(16)					$	—
Net gains (losses) on investments and derivatives						124						15						16

Transfers into Level 3 during 2021, 2020 and 2019 included situations where a quote was not provided by the Company’s independent third-party valuation service provider and as a result the price was stale or had been replaced with a broker quote where the inputs had not been corroborated to be market observable resulting in the security being classified as Level 3. Transfers into Level 3 during 2019 also included derivatives embedded in equity-indexed universal life contracts due to refinements in the valuation modeling resulting in an increase in significance of non-market observable inputs.

Transfers out of Level 3 during 2021, 2020 and 2019 included situations where a broker quote was used in the prior period and a quote became available from the Company’s independent third-party valuation service provider in the current period. A quote utilizing the new pricing source was not available as of the prior period, and any gains or losses related to the change in valuation source for individual securities were not significant.

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Valuation changes included in net income and OCI for Level 3 assets and liabilities held as of December 31,
($ in millions)						2021						2020						2019
Assets
Fixed income securities:
Corporate - public						$	—					$	(1)					$	—
Corporate - privately placed						(2)						—						—
ABS						—						—						(1)
Total fixed income securities						(2)						(1)						(1)
Equity securities						28						(1)						5
Other assets						65						—						—
Assets held for sale						—						—						2
Total recurring Level 3 assets						$	91					$	(2)					$	6
Liabilities
Liabilities held for sale						$	—					$	(43)					$	(61)
Total recurring Level 3 liabilities						—						(43)						(61)
Total included in net income						$	91					$	(45)					$	(55)
Components of net income
Net investment income						$	1					$	(16)					$	—
Net gains (losses) on investments and derivatives						90						14						4
Total included in net income						$	91					$	(2)					$	4
Assets
Corporate - public						$	—					$	1
Corporate - privately placed						3						(5)
Assets held for sale						—						(5)
Changes in unrealized net capital gains and losses reported in OCI (1)						$	3					$	(9)

(1)Effective January 1, 2020, the Company adopted the fair value accounting standard that prospectively requires the disclosure of valuation changes reported in OCI.

Financial instruments not carried at fair value
($ in millions)												December 31, 2021												December 31, 2020
Financial assets						Fair value level						Amortized cost, net						Fair value						Amortized cost, net						Fair value
Mortgage loans						Level 3						$	821					$	853					$	746					$	792
Bank loans						Level 3						1,574						1,634						772						803
Assets held for sale						Level 3						—						—						4,206						4,440
Financial liabilities						Fair value level						Carrying value (1)						Fair value						Carrying value (1)						Fair value
Contractholder funds on investment contracts						Level 3						$	55					$	55					$	—					$	—
Long-term debt						Level 2						7,976						9,150						7,825						9,489
Liability for collateral						Level 2						1,444						1,444						914						914
Liabilities held for sale (2)						Level 3						—						—						8,130						9,424

(1)Represents the amounts reported on the Consolidated Statements of Financial Position.

(2)Includes certain liabilities for collateral measured at Level 2 fair value as of December 31, 2020.

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Note 7			Derivative Financial Instruments and Off-balance Sheet Financial Instruments

The Company uses derivatives for risk reduction and to increase investment portfolio returns through asset replication. Risk reduction activity is focused on managing the risks with certain assets and liabilities arising from the potential adverse impacts from changes in risk-free interest rates, changes in equity market valuations, increases in credit spreads and foreign currency fluctuations.

Asset replication refers to the “synthetic” creation of assets through the use of derivatives. The Company replicates fixed income securities using a combination of a credit default swap, index total return swap, options, or a foreign currency forward contract and one or more highly rated fixed income securities, primarily investment grade host bonds, to synthetically replicate the economic characteristics of one or more cash market securities. The Company replicates equity securities using futures, index total return swaps, and options to increase equity exposure.

Property-Liability may use interest rate swaps, swaptions, futures and options to manage the interest rate risks of existing investments. These instruments are utilized to change the duration of the portfolio in order to offset the economic effect that interest rates would otherwise have on the fair value of its fixed income securities. Fixed income index total return swaps are used to offset valuation losses in the fixed income portfolio during periods of declining market values. Credit default swaps are typically used to mitigate the credit risk within the Property-Liability fixed income portfolio. Equity index total return swaps, futures and options are used by Property-Liability to offset valuation losses in the equity portfolio during periods of declining equity market values. In addition, equity futures are used to hedge the market risk related to deferred compensation liability contracts. Forward contracts are primarily used by Property-Liability to hedge foreign currency risk associated with holding foreign currency denominated investments and foreign operations.

The Company also has derivatives embedded in non-derivative host contracts that are required to be separated from the host contracts and accounted for at fair value with changes in fair value of embedded derivatives reported in net income.

When derivatives meet specific criteria, they may be designated as accounting hedges and accounted for as fair value, cash flow, foreign currency fair value or foreign currency cash flow hedges.

The notional amounts specified in the contracts are used to calculate the exchange of contractual payments under the agreements and are generally not representative of the potential for gain or loss on these agreements. However, the notional amounts specified in credit default swaps where the Company has sold credit protection represent the maximum amount of potential loss, assuming no recoveries.

Fair value, which is equal to the carrying value, is the estimated amount that the Company would receive

or pay to terminate the derivative contracts at the reporting date. The carrying value amounts for OTC derivatives are further adjusted for the effects, if any, of enforceable master netting agreements and are presented on a net basis, by counterparty agreement, in the Consolidated Statements of Financial Position.

For those derivatives which qualify and have been designated as fair value accounting hedges, net income includes the changes in the fair value of both the derivative instrument and the hedged risk. For cash flow hedges, gains and losses are amortized from AOCI and are reported in net income in the same period the forecasted transactions being hedged impact net income.

Non-hedge accounting is generally used for “portfolio” level hedging strategies where the terms of the individual hedged items do not meet the strict homogeneity requirements to permit the application of hedge accounting. For non-hedge derivatives, net income includes changes in fair value and accrued periodic settlements, when applicable. With the exception of non-hedge derivatives used for asset replication and non-hedge embedded derivatives, all of the Company’s derivatives are evaluated for their ongoing effectiveness as either accounting hedge or non-hedge derivative financial instruments on at least a quarterly basis.

Assets and liabilities held for sale Asset-liability management is a risk management practice that balances the cash flows and risk and return characteristics of assets and liabilities. Depending upon the attributes of the assets acquired and liabilities issued, derivative instruments such as interest rate swaps, caps, swaptions and futures were utilized to change the interest rate characteristics of existing assets and liabilities to ensure the relationship is maintained within specified ranges and to reduce exposure to rising or falling interest rates. Futures and options were used for hedging the equity exposure contained in equity indexed life and annuity product contracts that offer equity returns to contractholders.

The Company’s primary embedded derivatives were equity options in life and annuity product contracts, which provided returns linked to equity indices to contractholders.

In connection with the sale of ALIC and certain affiliates, the sale agreement includes a provision related to contingent consideration that may be earned over a ten-year period commencing on January 1, 2026 and ending January 1, 2035. The contingent consideration is determined annually based on the average 10-year Treasury rate over the preceding 3-year period compared to a designated rate. The contingent consideration meets the definition of a derivative and is accounted for on a fair value basis with periodic changes in fair value reflected in earnings. As of December 31, 2021, the Company recorded $65 million in other assets related to this derivative.

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Summary of the volume and fair value positions of derivative instruments as of December 31, 2021
									Volume (1)
($ in millions, except number of contracts)			Balance sheet location						Notional amount						Number of contracts						Fair value, net						Gross asset						Gross liability
Asset derivatives
Derivatives not designated as accounting hedging instruments
Interest rate contracts
Futures			Other assets						n/a						1,181						$	1					$	1					$	—
Equity and index contracts
Options			Other investments						n/a						61						5						5						—
Futures			Other assets						n/a						113						—						—						—
Foreign currency contracts
Foreign currency forwards			Other investments						$	2					n/a						—						—						—
Embedded derivative financial instruments			Other investments						750						n/a						—						—						—
Contingent consideration			Other assets						250						n/a						65						65						—
Credit default contracts
Credit default swaps – buying protection			Other investments						33						n/a						(1)						—						(1)
Credit default swaps – selling protection			Other investments						250						n/a						6						6						—
Total asset derivatives									$	1,285					1,355						$	76					$	77					$	(1)
Liability derivatives
Derivatives not designated as accounting hedging instruments
Interest rate contracts
Futures			Other liabilities & accrued expenses						n/a						36,668						$	(2)					$	—					$	(2)
Equity and index contracts
Futures			Other liabilities & accrued expenses						—						1,260						(1)						—						(1)
Foreign currency contracts
Foreign currency forwards			Other liabilities & accrued expenses						715						n/a						16						23						(7)
Credit default contracts
Credit default swaps – buying protection			Other liabilities & accrued expenses						70						n/a						(4)						—						(4)
Credit default swaps – selling protection			Other liabilities & accrued expenses						5						n/a						—						—						—
Total liability derivatives									790						37,928						9						$	23					$	(14)
Total derivatives									$	2,075					39,283						$	85

(1)Volume for OTC and cleared derivative contracts is represented by their notional amounts. Volume for exchange traded derivatives is represented by the number of contracts, which is the basis on which they are traded. (n/a = not applicable)

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Summary of the volume and fair value positions of derivative instruments as of December 31, 2020
									Volume
($ in millions, except number of contracts)			Balance sheet location						Notional amount						Number of contracts						Fair value, net						Gross asset						Gross liability
Asset derivatives
Derivatives not designated as accounting hedging instruments
Interest rate contracts
Futures			Other assets						n/a						290						$	—					$	—					$	—
Equity and index contracts
Options			Other investments						n/a						56						6						6						—
Futures			Other assets						n/a						905						1						1						—
Foreign currency contracts
Foreign currency forwards			Other investments						$	291					n/a						4						9						(5)
Embedded derivative financial instruments			Other investments						750						n/a						—						—						—
Credit default contracts
Credit default swaps – buying protection			Other investments						60						n/a						(3)						—						(3)
Credit default swaps – selling protection			Other investments						750						n/a						13						13						—
Assets held for sale									158						3,189						185						189						(4)
Total asset derivatives									$	2,009					4,440						$	206					$	218					$	(12)
Liability derivatives
Derivatives not designated as accounting hedging instruments
Interest rate contracts
Futures			Other liabilities & accrued expenses						n/a						705						$	—					$	—					$	—
Equity and index contracts
Futures			Other liabilities & accrued expenses						n/a						666						—						—						—
Total return index contracts
Total return swap agreements - fixed income			Other liabilities & accrued expenses						50						n/a						—						—						—
Foreign currency contracts
Foreign currency forwards			Other liabilities & accrued expenses						250						n/a						(9)						1						(10)
Credit default contracts
Credit default swaps – buying protection			Other liabilities & accrued expenses						638						n/a						(16)						—						(16)
Credit default swaps – selling protection			Other liabilities & accrued expenses						4						n/a						—						—						—
Liabilities held for sale									2,240						2,737						(630)						1						(631)
Total liability derivatives									3,182						4,108						(655)						$	2					$	(657)
Total derivatives									$	5,191					8,548						$	(449)

Gross and net amounts for OTC derivatives (1)
												Offsets
($ in millions)						Gross amount						Counter- party netting						Cash collateral (received) pledged						Net amount on balance sheet						Securities collateral (received) pledged						Net amount
December 31, 2021
Asset derivatives						$	23					$	(24)					$	2					$	1					$	—					$	1
Liability derivatives						(10)						24						(17)						(3)						—						(3)
December 31, 2020
Asset derivatives						$	10					$	(9)					$	—					$	1					$	—					$	1
Liability derivatives						(19)						9						9						(1)						—						(1)

(1)All OTC derivatives are subject to enforceable master netting agreements.

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Gains (losses) from valuation and settlements reported on derivatives not designated as accounting hedges
($ in millions)									Net gains (losses) on investments and derivatives						Accident and health insurance policy benefits and interest credited to contractholder funds						Operating costs and expenses												(Loss) income from discontinued operations						Total gain (loss) recognized in net income on derivatives
2021
Interest rate contracts									$	22					—						$	—											—						$	22
Equity and index contracts									(7)						27						45												—						65
Contingent consideration									—						—						—												65						65
Foreign currency contracts									32						—						—												—						32
Credit default contracts									7						—						—												—						7
Total return swaps - fixed income									4						—						—												—						4
Total									$	58					$	27					$	45											$	65					$	195
2020
Interest rate contracts									$	36					$	—					$	—											$	—					$	36
Equity and index contracts									15						—						29												—						44
Foreign currency contracts									(13)						—						—												—						(13)
Credit default contracts									6						—						—												—						6
Total return swaps - fixed income									1						—						—												—						1
Total return swaps - equity index									4						—						—												—						4
Total									$	49					$	—					$	29											$	—					$	78
2019
Interest rate contracts									$	51					$	—					$	—											$	—					$	51
Equity and index contracts									(121)						—						40												—						(81)
Foreign currency contracts									5						—						—												—						5
Credit default contracts									(7)						—						—												—						(7)
Total return swaps - fixed income									13						—						—												—						13
Total return swaps - equity									33						—						—												—						33
Total									$	(26)					$	—					$	40											$	—					$	14

The Company manages its exposure to credit risk by utilizing highly rated counterparties, establishing risk control limits, executing legally enforceable master netting agreements (“MNAs”) and obtaining collateral where appropriate. The Company uses MNAs for OTC derivative transactions that permit either party to net payments due for transactions and collateral is either pledged or obtained when certain predetermined exposure limits are exceeded.

OTC cash and securities collateral pledged
($ in millions)						December 31, 2021
Pledged by the Company						$	2
Pledged to the Company (1)						17

(1)Includes no collateral posted under MNA’s for contracts containing credit-risk-contingent provisions that are in a liability provision.

The Company has not incurred any losses on derivative financial instruments due to counterparty nonperformance. Other derivatives, including futures and certain option contracts, are traded on organized exchanges which require margin deposits and guarantee the execution of trades, thereby mitigating any potential credit risk.

Counterparty credit exposure represents the Company’s potential loss if all of the counterparties concurrently fail to perform under the contractual terms of the contracts and all collateral, if any, becomes worthless. This exposure is measured by the fair value of OTC derivative contracts with a positive fair value at the reporting date reduced by the effect, if any, of legally enforceable master netting agreements.

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OTC derivatives counterparty credit exposure by counterparty credit rating
($ in millions)						2021																								2020
Rating (1)						Number of counter-parties						Notional amount (2)						Credit exposure (2)						Exposure, net of collateral (2)						Number of counter-parties						Notional amount (2)						Credit exposure (2)						Exposure, net of collateral (2)
A+						1						$	199					$	7					$	—					1						$	186					$	4					$	—
A						1						367						9						—						—						—						—						—
Total						2						$	566					$	16					$	—					1						$	186					$	4					$	—

(1)Allstate uses the lower of S&P’s or Moody’s long-term debt issuer ratings.

(2)Only OTC derivatives with a net positive fair value are included for each counterparty.

For certain exchange traded and cleared derivatives, margin deposits are required as well as daily cash settlements of margin accounts.

Exchange traded and cleared margin deposits
($ in millions)						December 31, 2021
Pledged by the Company						$	73
Received by the Company						3

Market risk is the risk that the Company will incur losses due to adverse changes in market rates and prices. Market risk exists for all of the derivative financial instruments the Company currently holds, as these instruments may become less valuable due to adverse changes in market conditions. To limit this risk, the Company’s senior management has established risk control limits. In addition, changes in fair value of the derivative financial instruments that the Company uses for risk management purposes are generally offset by the change in the fair value or cash flows of the hedged risk component of the related assets, liabilities or forecasted transactions.

Certain of the Company’s derivative transactions contain credit-risk-contingent termination events and cross-default provisions. Credit-risk-contingent termination events allow the counterparties to terminate the derivative agreement or a specific trade on certain dates if AIC’s financial strength credit ratings by Moody’s or S&P fall below a certain level. Credit-risk-contingent cross-default provisions allow the counterparties to terminate the derivative agreement if the Company defaults by pre-determined threshold amounts on certain debt instruments.

The following summarizes the fair value of derivative instruments with termination, cross-default or collateral credit-risk-contingent features that are in a liability position, as well as the fair value of assets and collateral that are netted against the liability in accordance with provisions within legally enforceable MNAs.

($ in millions)						2021						2020
Gross liability fair value of contracts containing credit-risk-contingent features						$	8					$	19
Gross asset fair value of contracts containing credit-risk-contingent features and subject to MNAs						(7)						(6)
Collateral posted under MNAs for contracts containing credit-risk-contingent features						—						(13)
Maximum amount of additional exposure for contracts with credit-risk-contingent features if all features were triggered concurrently						$	1					$	—

Credit derivatives - selling protection

A credit default swap (“CDS”) is a derivative instrument, representing an agreement between two parties to exchange the credit risk of a specified entity (or a group of entities), or an index based on the credit risk of a group of entities (all commonly referred to as the “reference entity” or a portfolio of “reference entities”), in return for a periodic premium.

In selling protection, CDS are used to replicate fixed income securities and to complement the cash market when credit exposure to certain issuers is not available or when the derivative alternative is less expensive than the cash market alternative. CDS typically have a five-year term.

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CDS notional amounts by credit rating and fair value of protection sold
						Notional amount
($ in millions)						AAA						AA						A						BBB						BB and lower						Total						Fair value
December 31, 2021
Single name
Corporate debt						$	—					$	—					$	—					$	—					$	5					$	5					$	—
Index
Corporate debt						2						4						46						190						8						250						6
Total						$	2					$	4					$	46					$	190					$	13					$	255					$	6
December 31, 2020
Single name
Corporate debt						$	—					$	—					$	—					$	—					$	4					$	4					$	—
Index
Corporate debt						6						12						156						492						84						750						13
Total						$	6					$	12					$	156					$	492					$	88					$	754					$	13

In selling protection with CDS, the Company sells credit protection on an identified single name, a basket of names in a first-to-default (“FTD”) structure or credit derivative index (“CDX”) that is generally investment grade, and in return receives periodic premiums through expiration or termination of the agreement. With single name CDS, this premium or credit spread generally corresponds to the difference between the yield on the reference entity’s public fixed maturity cash instruments and swap rates at the time the agreement is executed. With a FTD basket, because of the additional credit risk inherent in a basket of named reference entities, the premium generally corresponds to a high proportion of the sum of the credit spreads of the names in the basket and the correlation between the names. CDX is utilized to take a position on multiple (generally 125) reference entities. Credit events are typically defined as bankruptcy, failure to pay, or restructuring, depending on the nature of the reference entities. If a credit event occurs, the Company settles with the counterparty, either through physical settlement or cash settlement. In a physical settlement, a reference asset is delivered by the buyer

of protection to the Company, in exchange for cash payment at par, whereas in a cash settlement, the Company pays the difference between par and the prescribed value of the reference asset. When a credit event occurs in a single name or FTD basket (for FTD, the first credit event occurring for any one name in the basket), the contract terminates at the time of settlement. For CDX, the reference entity’s name incurring the credit event is removed from the index while the contract continues until expiration. The maximum payout on a CDS is the contract notional amount. A physical settlement may afford the Company with recovery rights as the new owner of the asset.

The Company monitors risk associated with credit derivatives through individual name credit limits at both a credit derivative and a combined cash instrument/credit derivative level. The ratings of individual names for which protection has been sold are also monitored.

Off-balance sheet financial instruments

Commitments to invest, commitments to purchase private placement securities, commitments to fund loans, financial guarantees and credit guarantees have off-balance sheet risk because their contractual amounts are not recorded in the Company’s Consolidated Statements of Financial Position.

Contractual amounts of off-balance sheet financial instruments
						As of December 31,
($ in millions)						2021						2020
Commitments to invest in limited partnership interests						$	2,720					$	2,015
Private placement commitments						104						36
Other loan commitments						16						17

In the preceding table, the contractual amounts represent the amount at risk if the contract is fully drawn upon, the counterparty defaults and the value of any underlying security becomes worthless. Unless noted otherwise, the Company does not require collateral or other security to support off-balance sheet financial instruments with credit risk.

Commitments to invest in limited partnership interests represent agreements to acquire new or additional participation in certain limited partnership investments. The Company enters into these agreements in the normal course of business. Because the investments in limited partnerships are not actively traded, it is not practical to estimate the fair value of these commitments.

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Note 8			Variable Interest Entities

Consolidated VIEs, of which the Company is the primary beneficiary, primarily include Adirondack Insurance Exchange, a New York reciprocal insurer, and New Jersey Skylands Insurance Association, a New Jersey reciprocal insurer (together “Reciprocal Exchanges”). The Reciprocal Exchanges are insurance carriers organized as unincorporated associations. The Company does not own the equity of the Reciprocal Exchanges, which is owned by their respective policyholders.

The Company manages the business operations of the Reciprocal Exchanges and has the power to direct their activities that most significantly impact their economic performance. The Company receives a management fee for the services provided to the Reciprocal Exchanges. In addition, the Company holds interests that provide capital to the Reciprocal Exchanges and would absorb any expected losses. The Company is therefore the primary beneficiary.

In the event of dissolution, policyholders would share any residual unassigned surplus but are not subject to assessment for any deficit in unassigned surplus of the Reciprocal Exchanges. The assets of the Reciprocal Exchanges can be used only to settle the obligations of the Reciprocal Exchanges and general creditors have no recourse to the Company. The results of operations of the Reciprocal Exchanges are included in the Company’s Allstate Protection segment and generated $181 million of earned premiums and $135 million in claims and claims expenses in 2021.

Assets and liabilities of Reciprocal Exchanges
($ in millions)												December 31, 2021
Assets
Fixed income securities												$	324
Short-term investments												30
Deferred policy acquisition costs												15
Premium installment and other receivables, net												42
Reinsurance recoverables, net												114
Other assets												82
Total assets												607
Liabilities
Reserve for property and casualty insurance claims and claims expense												226
Unearned premiums												175
Other liabilities and expenses												265
Total liabilities												$	666

Note 9			Reserve for Property and Casualty Insurance Claims and Claims Expense

The Company establishes reserves for claims and claims expense on reported and unreported claims of insured losses. The Company’s reserving process takes into account known facts and interpretations of circumstances and factors including the Company’s experience with similar cases, actual claims paid, historical trends involving claim payment patterns and pending levels of unpaid claims, loss management programs, product mix and contractual terms, changes

in law and regulation, judicial decisions, and economic conditions.

When the Company experiences changes in the mix or type of claims or changing claim settlement patterns, it may need to apply actuarial judgment in the determination and selection of development factors to be more reflective of the new trends. For example, the Coronavirus has had a significant impact on driving patterns and auto frequency. Supply chain

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disruptions have resulted in higher parts costs and used car values which have combined with labor shortages to increase physical damage loss costs while medical inflation, treatment trends and higher levels of attorney representation have increased liability losses. These factors may lead to historical development trends being less predictive of future loss development, potentially creating additional reserve variability. Generally, the initial reserves for a new accident year are established based on actual claim frequency and severity assumptions for different business segments, lines and coverages based on historical relationships to relevant inflation indicators. Reserves for prior accident years are statistically determined using several different actuarial estimation methods. Changes in auto claim frequency may result from changes in mix of business, the rate of distracted driving, miles driven or other macroeconomic factors. Changes in auto current year claim severity are generally influenced by inflation in the medical and auto repair sectors, the effectiveness and efficiency of claim practices and changes in mix of claim types. The Company mitigates these effects through various loss management programs. When such changes in claim data occur, actuarial judgment is used to determine appropriate development factors to establish reserves.

As part of the reserving process, the Company may also supplement its claims processes by utilizing third-party adjusters, appraisers, engineers, inspectors, and other professionals and information sources to assess and settle catastrophe and non-catastrophe related claims. The effects of inflation are implicitly considered in the reserving process.

Because reserves are estimates of unpaid portions of losses that have occurred, including IBNR losses, the establishment of appropriate reserves, including reserves for catastrophes, Run-off Property-Liability and reinsurance and indemnification recoverables, is an inherently uncertain and complex process. The ultimate cost of losses may vary materially from recorded amounts, which are based on management’s best estimates.

The highest degree of uncertainty is associated with reserves for losses incurred in the initial reporting period as it contains the greatest proportion of losses that have not been reported or settled. The Company also has uncertainty in the Run-off Property-Liability reserves that are based on events long since passed and are complicated by lack of historical data, legal interpretations, unresolved legal issues and legislative intent based on establishment of facts.

The Company regularly updates its reserve estimates as new information becomes available and as events unfold that may affect the resolution of unsettled claims. Changes in reserve estimates, which may be material, are reported in property and casualty insurance claims and claims expense in the Consolidated Statements of Operations in the period such changes are determined.

Rollforward of reserve for property and casualty insurance claims and claims expense
($ in millions)						2021						2020						2019
Balance as of January 1						$	27,610					$	27,712					$	27,423
Less recoverables (1)						(7,033)						(6,912)						(7,155)
Net balance as of January 1						20,577						20,800						20,268
National General acquisition as of January 4, 2021						1,797						—						—
SafeAuto acquisition as of October 1, 2021						134						—						—
Incurred claims and claims expense related to:
Current year						29,196						22,437						24,106
Prior years						122						(436)						(130)
Total incurred						29,318						22,001						23,976
Claims and claims expense paid related to:
Current year						(18,438)						(14,245)						(15,160)
Prior years						(9,807)						(7,979)						(8,284)
Total paid						(28,245)						(22,224)						(23,444)
Net balance as of December 31						23,581						20,577						20,800
Plus recoverables						9,479						7,033						6,912
Balance as of December 31						$	33,060					$	27,610					$	27,712

(1) Recoverables comprises reinsurance and indemnification recoverables. See Note 11 for further details.

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Reconciliation of total claims and claims expense incurred and paid by coverage
						December 31, 2021
($ in millions)						Incurred						Paid
Allstate Protection
Auto insurance - liability coverage						$	10,830					$	(9,420)
Auto insurance - physical damage coverage						7,170						(7,150)
Homeowners insurance						6,371						(6,045)
Total auto and homeowners insurance						24,371						(22,615)
Other personal lines						1,144						(1,163)
Commercial lines						767						(581)
Protection Services						376						(373)
Run-off Property-Liability						109						(97)
Unallocated loss adjustment expenses (“ULAE”)						2,569						(2,726)
Claims incurred and paid from before 2017						(69)						(622)
Other (1)						51						(68)
Total						$	29,318					$	(28,245)

(1)Paid and incurred includes amounts primarily related to the acquisition of SafeAuto. Additionally, incurred includes the amortization of the fair value adjustment related to the acquisition of National General.

Incurred claims and claims expense represents the sum of paid losses, claim adjustment expenses and reserve changes in the calendar year. This expense includes losses from catastrophes of $3.34 billion, $2.81 billion and $2.56 billion in 2021, 2020 and 2019, respectively, net of recoverables. Catastrophes are an inherent risk of the property and casualty insurance business that have contributed to, and will continue to contribute to, material year-to-year fluctuations in the Company’s results of operations and financial position.

The Company calculates and records a single best reserve estimate for losses from catastrophes, in conformance with generally accepted actuarial standards. As a result, management believes that no other estimate is better than the recorded amount. Due to the uncertainties involved, including the factors described above, the ultimate cost of losses may vary materially from recorded amounts, which are based on management’s best estimates. Accordingly, management believes that it is not practical to develop a meaningful range for any such changes in losses incurred.

Prior year reserve reestimates included in claims and claims expense (1)
						Twelve months ended December 31,
						Non-catastrophe losses																		Catastrophe losses																		Total
($ in millions)						2021						2020						2019						2021(2)(3)						2020 (4)						2019						2021						2020						2019
Auto						$	178					$	(63)					$	(306)					$	(29)					$	(44)					$	(17)					$	149					$	(107)					$	(323)
Homeowners						12						(17)						(1)						(165)						(422)						66						(153)						(439)						65
Other personal lines						(96)						(27)						8						(11)						(39)						—						(107)						(66)						8
Commercial lines						116						34						18						3						2						(1)						119						36						17
Run-off Property-Liability (5)						116						141						105						—						—						—						116						141						105
Protection Services						(2)						(1)						(2)						—						—						—						(2)						(1)						(2)
Total prior year reserve reestimates						$	324					$	67					$	(178)					$	(202)					$	(503)					$	48					$	122					$	(436)					$	(130)

(1)Favorable reserve reestimates are shown in parentheses.

(2)Includes approximately $240 million of estimated recoveries related to Nationwide Aggregate Reinsurance Program cover for aggregate catastrophe losses occurring between April 1, 2020 and December 31, 2020, which primarily impacted homeowners reestimates.

(3)Includes approximately $110 million favorable subrogation settlements arising from the Woolsey wildfire, which primarily impacted homeowners reestimates.

(4)2020 includes approximately $495 million of favorable reserve reestimates related to the PG&E Corporation and Southern California Edison subrogation settlements, which primarily impacted homeowners.

(5)The Company’s 2021 annual reserve review, using established industry and actuarial best practices, resulted in unfavorable reestimates of $111 million.

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The following presents information about incurred and paid claims development as of December 31, 2021, net of recoverables, as well as the cumulative number of reported claims and the total of IBNR reserves plus expected development on reported claims included in the net incurred claims amounts. See Note 2 for the accounting policy and methodology for determining reserves for claims and claims expense, including both reported and IBNR claims. The cumulative number of reported claims is identified by coverage and excludes reported claims for industry pools and facilities where information is not available. The information about incurred and paid claims development for the 2017 to 2021 years, and the average annual percentage payout of incurred claims by age as of December 31, 2021, is presented as required supplementary information.

Auto insurance – liability coverage

($ in millions, except number of reported claims)						Incurred claims and allocated claim adjustment expenses, net of recoverables																																				IBNR reserves plus expected development on reported claims						Cumulative number of reported claims
						For the years ended December 31,																														Prior year reserve reestimates						As of December 31, 2021
						(unaudited)						(unaudited)						(unaudited)						(unaudited)
Accident year						2017						2018						2019						2020						2021
2017						$	9,424					$	9,341					$	9,286					$	9,332					$	9,392					$	60					$	581					2,519,909
2018						—						9,817						9,786						9,825						9,862						37						1,140						2,499,583
2019						—						—						10,557						10,503						10,750						247						2,080						2,632,610
2020						—						—						—						8,773						8,770						(3)						2,901						1,891,726
2021						—						—						—						—						10,489												6,860						2,150,167
																								Total						$	49,263					$	341
Reconciliation to total prior year reserve reestimates recognized by line
Prior year reserve reestimates for pre-2017 accident years																																				(51)
Prior year reserve reestimates for ULAE																																				29
Other																																				(18)
Total prior year reserve reestimates																																				$	301
						Cumulative paid claims and allocated claims adjustment expenses, net of recoverables
						For the years ended December 31,
						(unaudited)						(unaudited)						(unaudited)						(unaudited)
Accident year						2017						2018						2019						2020						2021
2017						$	3,554					$	6,058					$	7,386					$	8,241					$	8,811
2018						—						3,672						6,417						7,801						8,722
2019						—						—						3,985						7,096						8,670
2020						—						—						—						3,143						5,869
2021						—						—						—						—						3,629
																								Total						$	35,701
All outstanding liabilities before 2017, net of recoverables																														1,393
Liabilities for claims and claim adjustment expenses, net of recoverables																														$	14,955

Average annual percentage payout of incurred claims by age, net of recoverables, as of December 31, 2021
						1 year						2 years						3 years						4 years						5 years
Auto insurance – liability coverage						38.8		%				28.1		%				13.2		%				8.4		%				5.1		%

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Auto insurance – physical damage coverage

($ in millions, except number of reported claims)						Incurred claims and allocated claim adjustment expenses, net of recoverables																																				IBNR reserves plus expected development on reported claims						Cumulative number of reported claims
						For the years ended December 31,																														Prior year reserve reestimates						As of December 31, 2021
						(unaudited)						(unaudited)						(unaudited)						(unaudited)
Accident year						2017						2018						2019						2020						2021
2017						$	5,738					$	5,627					$	5,612					$	5,610					$	5,613					$	3					$	4					4,634,171
2018						—						5,788						5,704						5,659						5,652						(7)						5						4,686,395
2019						—						—						6,269						6,188						6,150						(38)						(2)						4,860,355
2020						—						—						—						5,508						5,419						(89)						(8)						4,008,243
2021						—						—						—						—						7,301												429						4,407,369
																								Total						$	30,135					$	(131)
Reconciliation to total prior year reserve reestimates recognized by line
Prior year reserve reestimates for pre-2017 accident years																																				(5)
Prior year reserve reestimates for ULAE																																				(14)
Other																																				(2)
Total prior year reserve reestimates																																				$	(152)
						Cumulative paid claims and allocated claims adjustment expenses, net of recoverables
						For the years ended December 31,
						(unaudited)						(unaudited)						(unaudited)						(unaudited)
Accident year						2017						2018						2019						2020						2021
2017						$	5,398					$	5,625					$	5,614					$	5,609					$	5,609
2018						—						5,475						5,693						5,650						5,647
2019						—						—						5,959						6,158						6,152
2020						—						—						—						5,140						5,427
2021						—						—						—						—						6,872
																								Total						$	29,707
All outstanding liabilities before 2017, net of recoverables																														7
Liabilities for claims and claim adjustment expenses, net of recoverables																														$	435

Average annual percentage payout of incurred claims by age, net of recoverables, as of December 31, 2021
						1 year						2 years						3 years						4 years						5 years
Auto insurance – physical damage coverage						96.2		%				3.9		%				(0.3)		%				(0.1)		%				—		%

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Homeowners insurance

($ in millions, except number of reported claims)						Incurred claims and allocated claim adjustment expenses, net of recoverables																																				IBNR reserves plus expected development on reported claims						Cumulative number of reported claims
						For the years ended December 31,																														Prior year reserve reestimates						As of December 31, 2021
						(unaudited)						(unaudited)						(unaudited)						(unaudited)
Accident year						2017						2018						2019						2020						2021
2017						$	4,929					$	5,036					$	5,037					$	4,805					$	4,816					$	11					$	60					977,319
2018						—						5,155						5,262						4,958						4,829						(129)						82						898,425
2019						—						—						4,864						4,924						4,931						7						153						868,577
2020						—						—						—						5,792						5,839						47						280						982,690
2021						—						—						—						—						6,435												1,884						908,890
																								Total						$	26,850					$	(64)
Reconciliation to total prior year reserve reestimates recognized by line
Prior year reserve reestimates for pre-2017 accident years																																				(13)
Prior year reserve reestimates for ULAE																																				(70)
Other																																				(6)
Total prior year reserve reestimates																																				$	(153)
						Cumulative paid claims and allocated claims adjustment expenses, net of recoverables
						For the years ended December 31,
						(unaudited)						(unaudited)						(unaudited)						(unaudited)
Accident year						2017						2018						2019						2020						2021
2017						$	3,521					$	4,634					$	4,835					$	4,734					$	4,756
2018						—						3,775						4,883						4,759						4,747
2019						—						—						3,535						4,587						4,778
2020						—						—						—						4,266						5,559
2021						—						—						—						—						4,551
																								Total						$	24,391
All outstanding liabilities before 2017, net of recoverables																														115
Liabilities for claims and claim adjustment expenses, net of recoverables																														$	2,574

Average annual percentage payout of incurred claims by age, net of recoverables, as of December 31, 2021
						1 year						2 years						3 years						4 years						5 years
Homeowners insurance						73.7		%				20.7		%				2.8		%				0.8		%				0.7		%

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Reconciliation of the net incurred and paid claims development tables above to the reserve for property and casualty insurance claims and claims expense
($ in millions)						As of December 31, 2021
Net outstanding liabilities
Allstate Protection
Auto insurance - liability coverage						$	14,955
Auto insurance - physical damage coverage						435
Homeowners insurance						2,574
Other personal lines						1,316
Commercial lines						1,316
Protection Services						33
Run-off Property-Liability (1)						1,342
ULAE						1,430
Other (2)						180
Net reserve for property and casualty insurance claims and claims expense						23,581
Recoverables
Allstate Protection
Auto insurance - liability coverage						7,247
Auto insurance - physical damage coverage						81
Homeowners insurance						1,023
Other personal lines						173
Commercial lines						256
Protection Services						9
Run-off Property-Liability						494
ULAE						196
Total recoverables						9,479
Gross reserve for property and casualty insurance claims and claims expense						$	33,060

(1)Run-off Property-Liability includes business in run-off with most of the claims related to accident years more than 30 years ago. IBNR reserves represent $733 million of the total reserves as of December 31, 2021.

(2)Includes amounts primarily related to the acquisition of SafeAuto and the unamortized fair value adjustment related to the acquisition of National General.

Management believes that the reserve for property and casualty insurance claims and claims expense, net of recoverables, is appropriately established in the aggregate and adequate to cover the ultimate net cost of reported and unreported claims arising from losses which had occurred by the date of the Consolidated Statements of Financial Position based on available facts, technology, laws and regulations.

Note 10			Reserve for Future Policy Benefits and Contractholder Funds

Reserve for future policy benefits
						As of December 31,
($ in millions)						2021						2020
Traditional life insurance and other						$	313					$	299
Accident and health insurance						960						729
Reserve for future policy benefits						$	1,273					$	1,028

Key assumptions generally used in calculating the reserve for future policy benefits

Product

Mortality

Interest rate

Estimation method

Traditional life insurance

Actual company experience plus loading

Interest rate assumptions range from 1.8% to 7.0%

Net level premium reserve method using the Company’s withdrawal experience rates; includes reserves for unpaid claims

Accident and health insurance

Actual company experience plus loading

Interest rate assumptions range from 2.8% to 7.0%

Unearned premium; additional contract reserves for mortality risk and unpaid claims

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Accident and health short-duration contracts

The following presents information about incurred and paid claims development as of December 31, 2021, net of recoverables, as well as the cumulative number of reported claims and the total of IBNR reserves plus expected development on reported claims included in the net incurred claims amounts. See Note 2 for the accounting policy and methodology for determining reserves for future policy benefits, including both reported and IBNR claims. The information about incurred and paid claims development for the 2017 to 2021 years, as of December 31, 2021, is presented as required supplementary information.

Group and individual accident and health

($ in millions, except number of reported claims)						Incurred claims and allocated claim adjustment expenses, net of recoverables																																				IBNR reserves plus expected development on reported claims						Cumulative number of reported claims
						For the years ended December 31,																																				As of December 31, 2021
						(unaudited)						(unaudited)						(unaudited)						(unaudited)
Accident year						2017						2018						2019						2020						2021
2017						$	211					$	186					$	183					$	183					$	183											$	—					302,100
2018						—						235						205						203						203												—						269,095
2019						—						—						257						239						242												—						306,998
2020						—						—						—						297						293												9						410,031
2021						—						—						—						—						424												152						465,525
																								Total						$	1,345
						Cumulative paid claims and allocated claims adjustment expenses, net of recoverables
						For the years ended December 31,
						(unaudited)						(unaudited)						(unaudited)						(unaudited)
Accident year						2017						2018						2019						2020						2021
2017						$	105					$	178					$	182					$	183					$	183
2018						—						126						201						203						203
2019						—						—						158						234						242
2020						—						—						—						184						284
2021						—						—						—						—						272
																								Total						$	1,184
All outstanding liabilities before 2017, net of recoverables																														—
Liabilities for claims and claim adjustment expenses, net of recoverables																														$	161

Reconciliation of the net incurred and paid claims development tables above to the reserve for future policy benefits
($ in millions)						As of December 31, 2021
Net outstanding liabilities
Group and individual accident and health short-duration contracts						$	161
Other accident and health short-duration contracts						28
Long duration accident and health insurance						617
Long duration traditional life insurance and other						313
Net reserve for future policy benefits						1,119
Recoverables
Group and individual accident and health short-duration contracts						38
Other accident and health short-duration contracts						—
Insurance lines other than short-duration						116
Gross reserve for future policy benefits						$	1,273

Average annual percentage payout of incurred claims by age, net of recoverables, as of December 31, 2021
						1 year						2 years						3 years						4 years						5 years
Group and individual accident and health						62.6		%				35.1		%				1.9		%				0.4		%				—		%

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Contractholder funds for interest-sensitive life insurance were $853 million and $857 million as of December 31, 2021 and 2020, respectively.

Contractholder funds activity
						For the years ended December 31,
($ in millions)						2021						2020						2019
Balance, beginning of year						$	857					$	915					$	898
Deposits						118						121						126
Interest credited						34						33						34
Benefits						(41)						(34)						(11)
Surrenders and partial withdrawals						(23)						(61)						(21)
Contract charges						(107)						(123)						(114)
Other adjustments						70						6						3
Balance, end of year						$	908					$	857					$	915

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Note 11			Reinsurance and Indemnification

Effects of reinsurance and indemnification on property and casualty premiums written and earned and accident and health insurance premiums and contract charges
						For the years ended December 31,
($ in millions)						2021						2020						2019
Property and casualty insurance premiums written
Direct						$	45,523					$	38,695					$	37,976
Assumed						213						105						95
Ceded						(1,736)						(1,142)						(1,117)
Property and casualty insurance premiums written, net of recoverables						$	44,000					$	37,658					$	36,954
Property and casualty insurance premiums earned
Direct						$	43,944					$	38,115					$	37,104
Assumed						178						99						94
Ceded						(1,904)						(1,141)						(1,122)
Property and casualty insurance premiums earned, net of recoverables						$	42,218					$	37,073					$	36,076
Accident and health insurance premiums and contract charges
Direct						$	1,878					$	1,093					$	1,145
Assumed						21						14						14
Ceded						(78)						(13)						(14)
Accident and health insurance premiums and contract charges, net of recoverables						$	1,821					$	1,094					$	1,145

Reinsurance and indemnification recoverables

Reinsurance and indemnification recoverables, net
						As of December 31,
($ in millions)						2021						2020
Property and casualty
Paid and due from reinsurers and indemnitors						$	391					$	101
Unpaid losses estimated (including IBNR)						9,479						7,033
Total property and casualty						$	9,870					$	7,134
Accident and health insurance						154						81
Total						$	10,024					$	7,215

Rollforward of credit loss allowance for reinsurance recoverables
						For the years ended December 31,
($ in millions)						2021						2020
Property and casualty (1) (2)
Beginning balance						$	(59)					$	(60)
(Increase)/Decrease in the provision for credit losses						(8)						1
Write-offs						1						—
Ending balance						$	(66)					$	(59)
Accident and health insurance
Beginning balance						$	(1)					$	(1)
Increase in the provision for credit losses						(7)						—
Write-offs						—						—
Ending Balance						$	(8)					$	(1)

(1)Primarily related to run-off lines reinsurance ceded.

(2)Indemnification recoverables are considered collectible based on the industry pool and facility enabling legislation.

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Property and casualty

Property and casualty programs are grouped by the following characteristics:

1.Indemnification programs - industry pools, facilities or associations that are governed by state insurance statutes or regulations or the federal government.

2.Catastrophe reinsurance programs - reinsurance protection for catastrophe exposure nationwide and by specific states, as applicable.

3.Other reinsurance programs - reinsurance protection for asbestos, environmental and other liability exposures as well as commercial lines, including shared economy.

Property and casualty reinsurance is in place for the Allstate Protection, Run-off lines and Protection Services segments. The Company purchases reinsurance after evaluating the financial condition of the reinsurer as well as the terms and price of coverage.

Indemnification programs

The Company participates in state-based industry pools or facilities mandating participation by insurers offering certain coverage in their state, including the Michigan Catastrophic Claims Association (“MCCA”), the New Jersey Property-Liability Insurance Guaranty Association (“PLIGA”), the North Carolina Reinsurance Facility (“NCRF”) and the Florida Hurricane Catastrophe Fund (“FHCF”). When the Company pays qualifying claims under the coverage indemnified by a state’s pool or facility, the Company is reimbursed for the qualifying claim losses or expenses. Each state pool or facility may assess participating companies to collect sufficient amounts to meet its total indemnification requirements. The enabling legislation for each state’s pool or facility compels the pool or facility only to indemnify participating companies for qualifying claim losses or expenses; the state pool or facility does not underwrite the coverage or take on the ultimate risk of the indemnified business. As a pass through, these pools or facilities manage the receipt of assessments paid by participating companies and payment of indemnified amounts for covered claims presented by participating companies. The Company has not had any credit losses related to these indemnification programs.

State-based industry pools or facilities

Michigan Catastrophic Claims Association The MCCA is a statutory indemnification mechanism for member insurers’ qualifying personal injury protection claims paid for the unlimited lifetime medical benefits above the applicable retention level for qualifying injuries from automobile, motorcycle and commercial vehicle accidents. Indemnification recoverables on paid and unpaid claims, including IBNR, as of December 31, 2021 and 2020 include $6.70 billion and $5.65 billion, respectively, from the MCCA for its indemnification obligation.

The MCCA is funded by annually assessing participating member companies actively writing motor vehicle coverage in Michigan on a per vehicle basis that is currently $86 per vehicle insured. The MCCA’s calculation of the annual assessment is based upon the total of members’ actuarially determined present value of expected payments on lifetime claims by all persons expected to be catastrophically injured in that year and ultimately qualify for MCCA reimbursement, its operating expenses, and adjustments for the amount of excesses or deficiencies in prior assessments. The MCCA has also included its calculation of the impacts of the auto insurance reforms which have begun to phase in since their passage in June 2019, including the personal injury protection medical fee schedule that became effective July 2, 2021. The assessment is incurred by the Company as policies are written and recovered as a component of premiums from the Company’s customers.

The MCCA indemnifies qualifying claims of all current and former member companies (whether or not actively writing motor vehicle coverage in Michigan) for qualifying claims and claims expenses incurred while the member companies were actively writing the mandatory personal injury protection coverage in Michigan. Member companies actively writing automobile coverage in Michigan include the MCCA annual assessments in determining the level of premiums to charge insureds in the state.

As required for member companies by the MCCA, the Company reports covered paid and unpaid claims to the MCCA when estimates of loss for a reported claim are expected to exceed the retention level, the claims involve certain types of severe injuries, or there are litigation demands received suggesting the claim value exceeds certain thresholds. The retention level is adjusted upward every other MCCA fiscal year by the lesser of 6% or the increase in the Consumer Price Index. The retention level will be $600 thousand per claim for the fiscal two-years ending June 30, 2023 compared to $580 thousand per claim for the fiscal two-years ending June 30, 2021.

The MCCA is obligated to fund the ultimate liability of member companies’ qualifying claims and claim expenses. The MCCA does not underwrite the insurance coverage or hold any underwriting risk.

The MCCA indemnifies members as qualifying claims are paid and billed by members to the MCCA. Unlimited lifetime covered losses result in significant levels of ultimate incurred claim reserves being recorded by member companies along with offsetting indemnification recoverables. Disputes with claimants over coverage on certain reported claims can result in additional losses, which may be recoverable from the MCCA, excluding litigation expenses. There is currently no method by which insurers are able to obtain the benefit of managed care programs to reduce claims costs through the MCCA.

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Note 12			Deferred Policy Acquisition Costs

Deferred policy acquisition costs activity
						For the years ended December 31,
($ in millions)						2021						2020						2019
Balance, beginning of year						$	3,774					$	3,600					$	3,457
National General acquisition						317						—						—
SafeAuto acquisition						7						—						—
Acquisition costs deferred						6,874						5,651						5,499
Amortization charged to income						(6,252)						(5,477)						(5,353)
Effect of unrealized gains and losses						2						—						(3)
Balance, end of year						$	4,722					$	3,774					$	3,600

Note 13			Capital Structure

Total debt outstanding
						As of December 31,
($ in millions)						2021						2020
Floating Rate Senior Notes, due 2021						$	—					$	250
Floating Rate Senior Notes, due 2023 (1)						250						250
3.150% Senior Notes, due 2023 (2)						500						500
6.750% Senior Notes due 2024 (2) (3)						350						—
0.750% Senior Notes, due 2025 (2)						600						600
3.280% Senior Notes, due 2026 (2)						550						550
Due after one year through five years						2,250						2,150
1.450% Senior Notes, due 2030 (2)						600						600
Due after five years through ten years						600						600
6.125% Senior Notes, due 2032 (2)						159						159
5.350% Senior Notes due 2033 (2)						323						323
5.550% Senior Notes due 2035 (2)						546						546
5.950% Senior Notes, due 2036 (2)						386						386
6.900% Senior Debentures, due 2038						165						165
5.200% Senior Notes, due 2042 (2)						62						62
4.500% Senior Notes, due 2043 (2)						500						500
4.200% Senior Notes, due 2046 (2)						700						700
3.850% Senior Notes, due 2049 (2)						500						500
5.100% Subordinated Debentures, due 2053						500						500
5.750% Subordinated Debentures, due 2053						800						800
6.500% Junior Subordinated Debentures, due 2067						500						500
Due after ten years						5,141						5,141
Long-term debt total principal						7,991						7,891
Fair value adjustments (3)						45						—
Debt issuance costs						(60)						(66)
Total long-term debt						7,976						7,825
Short-term debt (4)						—						—
Total debt						$	7,976					$	7,825

(1)2023 Floating Rate Senior Notes are not redeemable prior to the applicable maturity dates and bear interest at a floating rate equal to three-month LIBOR, reset quarterly on each interest reset date, plus 0.63% per year.

(2)Senior Notes are subject to redemption at the Company’s option in whole or in part at any time at the greater of either 100% of the principal amount plus accrued and unpaid interest to the redemption date or the discounted sum of the present values of the remaining scheduled payments of principal and interest and accrued and unpaid interest to the redemption date.

(3)Debt acquired as part of the National General acquisition completed on January 4, 2021.

(4)The Company classifies any borrowings which have a maturity of twelve months or less at inception as short-term debt.

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the termination of the RCC, (iii) the Company does not have any series of outstanding debt that is eligible to be treated as covered debt under the RCC, (iv) the Debentures are accelerated as a result of an event of default, (v) certain rating agency or change in control events occur, (vi) S&P, or any successor thereto, no longer assigns a solicited rating on senior debt issued or guaranteed by the Company, or (vii) the termination of the RCC would have no effect on the equity credit provided by S&P with respect to the Debentures. An event of default, as defined by the supplemental indenture, includes default in the payment of interest or principal and bankruptcy proceedings.

The administrator of LIBOR has announced it will cease the publication of the one week and two month U.S. dollar (“USD”) LIBOR settings immediately after December 31, 2021, and the remaining USD LIBOR settings immediately following the LIBOR publication on June 30, 2023. The Subordinated Debentures and the 2023 Floating Rate Senior Notes allow for the use of an alternative methodology to determine the interest rate if LIBOR is no longer available.

To manage short-term liquidity, the Company maintains a commercial paper program and a credit facility as a potential source of funds. The commercial paper program has a borrowing limit of $750 million. In November 2020, the Company entered into a new agreement for a $750 million unsecured revolving credit facility with a maturity date of November 2025. In November 2021, the maturity date was extended to November 2026. This facility contains an increase provision that would allow up to an additional $500 million of borrowing. This facility has a financial covenant requiring the Company not to exceed a 37.5% debt to capitalization ratio as defined in the agreement. Although the right to borrow under the facility is not subject to a minimum rating requirement, the costs of maintaining the facility and borrowing

under it are based on the ratings of the Company’s senior unsecured, unguaranteed long-term debt. The total amount outstanding at any point in time under the combination of the commercial paper program and the credit facility cannot exceed the amount that can be borrowed under the credit facility. No amounts were outstanding under the credit facility as of December 31, 2021 or 2020. The Company had no commercial paper outstanding as of December 31, 2021 or 2020.

The Company paid $321 million, $311 million and $312 million of interest on debt in 2021, 2020 and 2019, respectively.

The Company had $401 million and $306 million of investment-related debt that is reported in other liabilities and accrued expenses as of December 31, 2021 and 2020, respectively.

During 2021, the Company filed a universal shelf registration statement with the Securities and Exchange Commission (“SEC”) that expires in 2024. The registration statement covers an unspecified amount of securities and can be used to issue debt securities, common stock, preferred stock, depositary shares, warrants, stock purchase contracts, stock purchase units and securities of trust subsidiaries.

Common stock The Company had 900 million shares of issued common stock of which 281 million shares were outstanding and 619 million shares were held in treasury as of December 31, 2021. In 2021, the Company acquired 26 million shares at an average cost of $123.87 and reissued 3 million net shares under equity incentive plans.

Preferred stock All outstanding preferred stock represents noncumulative perpetual preferred stock with a $1.00 par value per share and a liquidation preference of $25,000 per share.

Total preferred stock outstanding
						As of December 31,												Aggregate liquidation preference ($ in millions)																		Dividend per depository share (1)																		Aggregate dividend payment ($ in millions)
						2021						2020						2021						2020						Dividend rate						2021						2020						2019						2021						2020						2019
Series A						—						—						$	—					$	—					5.625		%				$	—					$	—					$	1.41					$	—					$	4		(2)			$	16
Series D						—						—						—						—						6.625		%				—						—						1.66						—						—						9			(2)
Series E						—						—						—						—						6.625		%				—						—						1.66						—						—						49			(2)
Series F						—						—						—						—						6.250		%				—						—						1.56						—						—						16			(2)
Series G						23,000						23,000						575.0						575.0						5.625		%				1.41						1.41						1.41						32						32						32
Series H						46,000						46,000						1,150.0						1,150.0						5.100		%				1.28						1.28						1.28						59						59						12
Series I						12,000						12,000						300.0						300.0						4.750		%				1.19						1.19						1.19						14						13						—
National General Series (3)																																																						9						—						—
Total						81,000						81,000						$	2,025					$	2,025																													$	114					$	108					$	134		(2)

(1)Each depositary share represents a 1/1,000th interest in a share of preferred stock.

(2)Excludes $10 million and $37 million in 2020 and 2019, respectively, related to original issuance costs in preferred stock dividends on the Consolidated Statements of Operations and Consolidated Statements of Shareholders’ Equity as a result of the preferred stock redemptions.

(3)On February 2, 2021 and July 15, 2021, the Company redeemed all outstanding shares of National General Preferred Stock Series A, B and D, and National General Preferred Stock Series C, respectively.

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Note 14			Company Restructuring

The Company undertakes various programs to reduce expenses. These programs generally involve a reduction in staffing levels, and in certain cases, office closures. Restructuring and related charges primarily include the following costs related to these programs:

•Employee - severance and relocation benefits

•Exit - contract termination penalties

The expenses related to these activities are included in the Consolidated Statements of Operations as restructuring and related charges and totaled $170 million, $253 million and $39 million in 2021, 2020 and 2019, respectively.

Restructuring expenses in 2021 are primarily due to the future of work environment as we reevaluate our facilities footprint. The Company continues to identify ways to improve operating efficiency and reduce cost which may result in additional restructuring charges in the future.

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Restructuring programs
($ in millions)						Future work environment						Transformative Growth
Expected program charges						$	110					$	290
2020 expenses						—						(238)
2021 expenses						(131)						6
Change in estimated program costs in 2021						37						(52)
Remaining program charges						$	16					$	6

These charges are primarily in the Allstate Protection segment. The actions related to the Transformative Growth program are substantially complete as of December 31, 2021. The future work environment program will be substantially complete in the first half of 2022 based on decisions made through December 31, 2021.

Employee costs include severance and employee benefits primarily impacting claims, sales, service and support functions. Exit costs, primarily related to future work environment, reflect real estate costs primarily related to accelerated amortization of right of use assets and related leasehold improvements at facilities to be vacated.

Restructuring activity during the period
($ in millions)						Employee costs						Exit costs						Total liability
Restructuring liability as of December 31, 2020						$	72					$	—					$	72
Expense incurred						51						144						195
Adjustments to liability						(25)						—						(25)
Payments and non-cash charges						(84)						(137)						(221)
Restructuring liability as of December 31, 2021						$	14					$	7					$	21

As of December 31, 2021, the cumulative amount incurred to date for active programs related to employee severance, relocation benefits and exit expenses totaled $247 million for employee costs and $157 million for exit costs.

Note 15			Commitments, Guarantees and Contingent Liabilities

Shared markets and state facility assessments

The Company is required to participate in assigned risk plans, reinsurance facilities and joint underwriting associations in various states that provide insurance coverage to individuals or entities that otherwise are unable to purchase such coverage from private insurers.

The Company routinely reviews its exposure to assessments from these plans, facilities and government programs. Underwriting results related to these arrangements, which tend to be adverse, have been immaterial to the Company’s results of operations in the last three years. Because of the Company’s participation, it may be exposed to losses that surpass the capitalization of these facilities or assessments from these facilities.

Florida Citizens Castle Key is subject to assessments from Citizens Property Insurance Corporation in the state of Florida (“FL Citizens”), which was initially created by the state of Florida to provide insurance to property owners unable to obtain coverage in the private insurance market. FL Citizens, at the discretion and direction of its Board of Governors, can levy a regular assessment on assessable insurers and assessable insureds for a deficit in any calendar year up to a maximum of the greater of: 2% of the projected deficit or 2% of the aggregate statewide direct written premium for the prior calendar year. The base of assessable insurers includes all property and casualty premiums in the state, except workers’ compensation, medical malpractice, accident and health insurance and policies written under the NFIP. An insurer may recoup a

regular assessment through a surcharge to policyholders. In order to recoup this assessment, an insurer must file for a policy surcharge with the Florida Office of Insurance Regulation at least fifteen days prior to imposing the surcharge on policies. If a deficit remains after the regular assessment, FL Citizens can also levy emergency assessments in the current and subsequent years. Companies are required to collect the emergency assessments directly from residential property policyholders and remit to FL Citizens as collected. Currently, the emergency assessment is zero for all policies issued or renewed on or after July 1, 2015.

Louisiana Citizens Louisiana Citizens Property Insurance Corporation (“LA Citizens”) can levy a regular assessment on participating companies for a deficit in any calendar year up to a maximum of the greater of 10% of the calendar year deficit or 10% of Louisiana direct property premiums industry-wide for the prior calendar year. If the plan year deficit exceeds the amount that can be recovered through regular assessments, LA Citizens may fund the remaining deficit by issuing revenue assessment bonds in the capital markets. LA Citizens then declares emergency assessments each year to provide debt service on the bonds until they are retired. Companies writing assessable lines must surcharge their policyholders emergency assessments in the percentage established annually by LA Citizens and must remit amounts collected to the bond trustee on a quarterly basis. Emergency assessments to pay off bonds issued in 2007 for the hurricanes of 2005 will continue until 2025.

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Note 16			Income Taxes

The Company and its domestic subsidiaries file a consolidated federal income tax return. Tax liabilities and benefits realized by the consolidated group are allocated as generated by the respective entities.

Deferred income taxes result from temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements that will result in taxable or deductible amounts in future years. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in years in which those temporary differences are expected to be recovered or settled. Deferred tax assets and liabilities are adjusted through income tax expense as changes in tax laws or rates are enacted.

The Company qualified and claimed certain employer payroll tax credits that are allowed under the Coronavirus Aid, Relief and Economic Security Act. For the year ended December 31, 2021, the Company recorded $21 million of refundable employee retention tax credit reported in property and casualty claims and claims expense in the Consolidated Statements of Operations.

Regulatory tax examinations On January 4, 2021 and October 1, 2021, the Company acquired National General and SafeAuto, respectively. For tax years prior to the acquisition, National General and SafeAuto are subject to separate Internal Revenue Service (“IRS”) audits. The IRS has completed its exam of Allstate’s tax years prior to 2017, National General tax years prior to 2016, and SafeAuto’s tax years prior to 2018. Currently, the Company is under exam for the 2017 and 2018 tax years and National General is under exam for the 2016, 2017, and 2018 tax years. Any adjustments that may result from IRS examinations of the Company’s tax returns are not expected to have a material effect on the consolidated financial statements.

Unrecognized tax benefits The Company recognizes tax positions in the consolidated financial statements only when it is more likely than not that the position will be sustained on examination by the relevant taxing authority based on the technical merits of the position. A position that meets this standard is measured at the largest amount of benefit that will more likely than not be realized on settlement. A liability is established for differences between positions taken in a tax return and amounts recognized in the consolidated financial statements.

Reconciliation of the change in the amount of unrecognized tax benefits
						For the years ended December 31,
($ in millions)						2021						2020						2019
Balance – beginning of year						$	12					$	70					$	70
Acquisitions						5						—						—
Decrease for settlements						—						(58)						—
Balance – end of year						$	17					$	12					$	70

    The Company believes that the unrecognized tax benefits balance will not materially change within the next twelve months.

Components of the deferred income tax assets and liabilities
						As of December 31,
($ in millions)						2021						2020
Deferred tax assets
Unearned premium reserves						$	742					$	659
Discount on loss reserves						169						79
Accrued compensation						151						146
Net operating loss carryover						88						23
Other postretirement benefits						31						34
Pension						—						187
Other assets						90						91
Total deferred tax assets before valuation allowance						1,271						1,219
Valuation allowance						(24)						—
Total deferred tax assets after valuation allowance						1,247						1,219
Deferred tax liabilities
DAC						(924)						(683)
Investments						(666)						(216)
Intangible assets						(219)						(86)
Unrealized net capital gains						(163)						(539)
Pension						(9)						—
Other liabilities						(99)						(77)
Total deferred tax liabilities						(2,080)						(1,601)
Net deferred tax liabilities						$	(833)					$	(382)

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As of December 31, 2021, the Company has U.S. federal and foreign net operating loss (“NOL”) carryforwards, some of which will expire on various dates from 2024 through 2037 as indicated in the table below. In assessing the realizability of gross deferred tax assets, management considers whether it is more likely than not that some portion or all of the gross deferred tax assets will not be realized. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment, as well as limitations on use in future periods. Accordingly, management believes that it is more likely than not that the benefit from certain NOL carryforwards from recent acquisitions will not be realized. The Company had a valuation allowance of $24 million on the deferred tax assets related to these NOL carryforwards.

The provisions of the Tax Cuts and Jobs Act of 2017 eliminated the 20-year carryforward period and made it indefinite for federal net operating losses generated in tax years after December 31, 2017. For such amounts generated prior to 2018, the 20-year carryforward period continues to apply.

Components of the net operating loss carryforwards as of December 31, 2021
($ in millions)						20-Year Carryforward Expires in 2024-2037						Indefinite Carryforward Period						Total
US Federal						$	195					$	9					$	204
Foreign						—						218						218
Total						$	195					$	227					$	422

Components of income tax expense
						For the years ended December 31,
($ in millions)						2021						2020						2019
Current						$	841					$	1,480					$	919
Deferred						448						(107)						197
Total income tax expense						$	1,289					$	1,373					$	1,116

The Company paid income taxes of $1.05 billion, $1.48 billion and $648 million in 2021, 2020 and 2019, respectively.

The Company had current income tax receivable of $370 million and payable of $55 million as of December 31, 2021 and 2020, respectively.

Reconciliation of the statutory federal income tax rate to the effective income tax rate
						For the years ended December 31,
($ in millions)						2021									2020									2019
Income before income taxes						$	6,448								$	6,802								$	5,443
Statutory federal income tax rate on income from operations						1,354			21.0		%				1,428			21.0		%				1,141			21.0		%
State income taxes						13			0.2						31			0.4						39			0.7
Tax credits						(42)			(0.6)						(24)			(0.4)						(19)			(0.3)
Tax-exempt income						(18)			(0.3)						(23)			(0.3)						(27)			(0.5)
Share-based payments						(18)			(0.3)						(30)			(0.4)						(24)			(0.4)
Other						—			—						(9)			(0.1)						6			—
Effective income tax rate on income from operations						$	1,289		20.0		%				$	1,373		20.2		%				$	1,116		20.5		%

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Note 17			Statutory Financial Information and Dividend Limitations

Allstate’s domestic property and casualty and life insurance subsidiaries prepare their statutory-basis financial statements in conformity with accounting practices prescribed or permitted by the insurance department of the applicable state of domicile. Prescribed statutory accounting practices include a variety of publications of the National Association of Insurance Commissioners (“NAIC”), as well as state laws, regulations and general administrative rules. Permitted statutory accounting practices encompass all accounting practices not so prescribed.

All states require domiciled insurance companies to prepare statutory-basis financial statements in conformity with the NAIC Accounting Practices and Procedures Manual, subject to any deviations prescribed or permitted by the applicable insurance commissioner or director. Statutory accounting practices differ from GAAP primarily since they require charging policy acquisition costs to expense as incurred, establishing life insurance reserves based on different actuarial assumptions, and valuing certain investments and establishing deferred taxes on a different basis.

Statutory net income (loss) and capital and surplus of Allstate’s domestic insurance subsidiaries
						Net income (loss)																		Capital and surplus
($ in millions)						2021						2020						2019						2021						2020
Amounts by major business type:
Property and casualty insurance						$	5,975					$	6,232					$	3,989					$	21,186					$	17,128
Accident and health insurance						96						95						92						322						231
Life and annuity business sold						1,642						(81)						330						—						4,024
Amount per statutory accounting practices						$	7,713					$	6,246					$	4,411					$	21,508					$	21,383

Dividend Limitations

There are no regulatory restrictions that limit the payment of dividends by the Corporation, except those generally applicable to corporations incorporated in Delaware. Dividends are payable only out of certain components of shareholders’ equity as permitted by Delaware law. However, the ability of the Corporation to pay dividends is dependent on business conditions, income, cash requirements of the Company, receipt of dividends from AIC and other relevant factors.

The payment of shareholder dividends by AIC without the prior approval of the Illinois Department of Insurance (“IL DOI”) is limited to formula amounts based on net income and capital and surplus, determined in conformity with statutory accounting practices, as well as the timing and amount of dividends paid in the preceding twelve months. AIC paid dividends of $5.95 billion in 2021. The maximum amount of dividends AIC will be able to pay without prior IL DOI approval at a given point in time during 2022 is $5.51 billion, less dividends paid during the preceding twelve months measured at that point in time. The payment of a dividend in excess of this amount requires 30 days advance written notice to the IL DOI. The dividend is deemed approved, unless the IL DOI disapproves it within the 30-day notice period. Additionally, any dividend must be paid out of unassigned surplus excluding unrealized appreciation from investments, which for AIC totaled $12.72 billion as of December 31, 2021, and cannot result in capital and surplus being less than the minimum amount required by law.

Under state insurance laws, insurance companies are required to maintain paid up capital of not less than the minimum capital requirement applicable to the types of insurance they are authorized to write. Insurance companies are also subject to risk-based capital (“RBC”) requirements adopted by state

insurance regulators. A company’s “authorized control level RBC” is calculated using various factors applied to certain financial balances and activity. Companies that do not maintain adjusted statutory capital and surplus at a level in excess of the company action level RBC, which is two times authorized control level RBC, are required to take specified actions. Company action level RBC is significantly in excess of the minimum capital requirements. Total adjusted statutory capital and surplus and authorized control level RBC of AIC were $18.43 billion and $2.90 billion, respectively, as of December 31, 2021. Most of the Corporation’s insurance subsidiaries are subsidiaries of or reinsure all of their business to AIC. AIC’s subsidiaries are included as a component of AIC’s total statutory capital and surplus.

The amount of restricted net assets, as represented by the Corporation’s investment in its insurance subsidiaries, was $27.72 billion as of December 31, 2021.

Intercompany transactions

Notification and approval of intercompany lending activities is also required by the IL DOI for transactions that exceed a level that is based on a formula using statutory admitted assets and statutory surplus.

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Note 18			Benefit Plans

Pension and other postretirement plans

Defined benefit pension plans cover most full-time employees, certain part-time employees and employee-agents. Benefits under the pension plans are based upon the employee’s length of service, eligible annual compensation and, prior to January 1, 2014, either a cash balance or final average pay formula. A cash balance formula applies to all eligible employees hired after August 1, 2002. Eligible employees hired before August 1, 2002 chose between the cash balance formula and the final average pay formula. In July 2013, the Company amended its primary plans effective January 1, 2014 to introduce a new cash balance formula to replace the previous formulas (including the final average pay formula and the previous cash balance formula) under which eligible employees accrue benefits. The Company merged two of its qualified pension plans effective March 31, 2019.

The Company also provides a medical coverage subsidy for eligible employees hired before January 1, 2003, including their eligible dependents, when they retire and certain life insurance benefits for eligible retirees (“postretirement benefits”). Effective January 1, 2021, the Company eliminated the medical coverage subsidy for employees who were not eligible to retire as of December 31, 2020.

Qualified employees may become eligible for a medical subsidy if they retire in accordance with the terms of the applicable plans and are insured under the Company’s group plans or other approved plans in accordance with the plan’s participation requirements. The Company shares the cost of retiree medical benefits with non Medicare-eligible retirees based on years of service, with the Company’s share being subject to a 5% limit on future annual medical cost inflation after retirement. For Medicare-eligible retirees, the Company provides a fixed Company contribution based on years of service and other factors, which is not subject to adjustments for inflation.

In July 2013, the Company amended the plan to eliminate the life insurance benefits effective January 1, 2014 for current eligible employees and effective January 1, 2016 for eligible retirees who retired after 1989. Subject to a court order, the Company paid life insurance premiums for certain retiree plaintiffs until their lawsuit seeking to keep their life insurance benefits intact was resolved. In September 2020, the court entered summary judgment in favor of the Company and dismissed the action, releasing the Company from the order requiring the continued payment of premiums for certain retirees. In December 2021, the Court of Appeals affirmed summary judgment in favor of the Company. In January 2022, the remaining plaintiffs signaled they will appeal to U.S. Supreme Court.

The Company has reserved the right to modify or terminate its benefit plans at any time and for any reason.

Obligations and funded status

The Company calculates benefit obligations based upon generally accepted actuarial methodologies using the projected benefit obligation (“PBO”) for pension plans and the accumulated postretirement benefit obligation (“APBO”) for other postretirement plans. Pension costs and other postretirement obligations are determined using a December 31 measurement date. The benefit obligations represent the actuarial present value of all benefits attributed to employee service rendered as of the measurement date. The PBO is measured using the pension benefit formulas and assumptions. A plan’s funded status is calculated as the difference between the benefit obligation and the fair value of plan assets. The Company’s funding policy for the pension plans is to make contributions at a level in accordance with regulations under the Internal Revenue Code (“IRC”) and generally accepted actuarial principles. The Company’s other postretirement benefit plans are not funded.

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Change in projected benefit obligation, plan assets and funded status
						As of December 31,
						Pension benefits												Postretirement benefits
($ in millions)						2021						2020						2021						2020
Change in projected benefit obligation
Benefit obligation, beginning of year						$	7,763					$	7,139					$	318					$	397
Service cost						103						104						1						4
Interest cost						191						210						8						11
Participant contributions						—						—						16						14
Remeasurement of projected benefit obligation (gains) losses						(309)						813						(16)						22
Benefits paid						(1,242)						(522)						(43)						(37)
Plan amendments						—						—						—						(102)
Translation adjustment and other						(6)						(1)						—						(1)
Curtailment losses (gains)						—						20						—						10
Benefit obligation, end of year						$	6,500					$	7,763					$	284					$	318
Change in plan assets
Fair value of plan assets, beginning of year						$	6,987					$	6,192
Actual return on plan assets						764						1,300
Employer contribution						22						18
Benefits paid						(1,242)						(522)
Translation adjustment and other						(6)						(1)
Fair value of plan assets, end of year						$	6,525					$	6,987
Funded status (1)						$	25					$	(776)					$	(284)					$	(318)
Amounts recognized in AOCI
Unamortized pension and other postretirement prior service credit						$	(28)					$	(78)					$	(65)					$	(89)

(1)The funded status is recorded within other assets or other liabilities and accrued expenses on the Consolidated Statements of Financial Position.

Changes in items not yet recognized as a component of net cost for pension and other postretirement plans
($ in millions)						Pension benefits						Postretirement benefits
Items not yet recognized as a component of net cost – December 31, 2020						$	(78)					$	(89)
Prior service credit amortized to net cost						50						25
Translation adjustment and other						—						(1)
Items not yet recognized as a component of net cost – December 31, 2021						$	(28)					$	(65)

The prior service credit is recognized as a component of net cost for pension and other postretirement plans amortized over the average remaining service period of active employees expected to receive benefits.

The accumulated benefit obligation (“ABO”) for all defined benefit pension plans was $6.36 billion and $7.55 billion as of December 31, 2021 and 2020, respectively. The ABO is the actuarial present value of all benefits attributed by the pension benefit formula

to employee service rendered at the measurement date. However, it differs from the PBO due to the

exclusion of an assumption as to future compensation levels.

The PBO, ABO and fair value of plan assets for the Company’s pension plans with an ABO in excess of plan assets were $123 million, $121 million and zero, respectively, as of December 31, 2021 and $7.33 billion, $7.13 billion and $6.56 billion, respectively, as of December 31, 2020. Included in the accrued benefit cost of the pension benefits are certain unfunded non-qualified plans with accrued benefit costs of $123 million and $139 million for 2021 and 2020, respectively.

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Components of net cost (benefit) for pension and other postretirement plans
						For the years ended December 31,
						Pension benefits																		Postretirement benefits																		Total pension and postretirement benefits
($ in millions)						2021						2020						2019						2021						2020						2019						2021						2020						2019
Service cost						$	103					$	104					$	117					$	1					$	4					$	8					$	104					$	108					$	125
Interest cost						191						210						240						8						11						14						199						221						254
Expected return on plan assets						(445)						(414)						(403)						—						—						—						(445)						(414)						(403)
Amortization of prior service credit						(50)						(54)						(56)						(25)						(10)						(3)						(75)						(64)						(59)
Curtailment losses (gains)						—						10						—						—						(8)						—						—						2						—
Costs and expenses						(201)						(144)						(102)						(16)						(3)						19						(217)						(147)						(83)
Remeasurement of projected benefit obligation						(309)						813						927						(16)						22						19						(325)						835						946
Remeasurement of plan assets						(319)						(886)						(832)						—						—						—						(319)						(886)						(832)
Remeasurement (gains) losses						(628)						(73)						95						(16)						22						19						(644)						(51)						114
Total net (benefit) cost						$	(829)					$	(217)					$	(7)					$	(32)					$	19					$	38					$	(861)					$	(198)					$	31

The service cost component is the actuarial present value of the benefits attributed by the plans’ benefit formula to services rendered by the employees during the period.

Interest cost is the increase in the PBO in the period due to the passage of time at the discount rate.

Interest cost fluctuates as the discount rate changes and is also impacted by the related change in the size of the PBO.

The expected return on plan assets is determined as the product of the expected long-term rate of return on plan assets and the fair value of plan assets.

Pension and other postretirement service cost, interest cost, expected return on plan assets, amortization of prior service credit and curtailment gains and losses are reported in property and casualty insurance claims and claims expense, operating costs and expenses, net investment income and (if applicable) restructuring and related charges on the Consolidated Statements of Operations.

Remeasurement gains and losses relate to changes in discount rates, the differences between actual return on plan assets and the expected long-term rate of return on plan assets, and differences between actual plan experience and actuarial assumptions.

Weighted average assumptions used to determine net pension cost and net postretirement benefit cost
						For the years ended December 31,
						Pension benefits																		Postretirement benefits
						2021						2020						2019						2021						2020						2019
Discount rate						2.84		%				3.00		%				3.70		%				2.75		%				2.99		%				3.61		%
Expected long-term rate of return on plan assets						7.06						7.08						7.34						n/a						n/a						n/a
Cash balance interest credit rate						2.04						1.65						2.59						n/a						n/a						n/a

Weighted average assumptions used to determine benefit obligations
						For the years ended December 31,
						Pension benefits												Postretirement benefits
						2021						2020						2021						2020
Discount rate						2.93		%				2.51		%				2.86		%				2.39		%
Cash balance interest credit rate						1.90						1.65						n/a						n/a

The weighted average health care cost trend rate used in measuring the accumulated postretirement benefit cost is 6.6% for 2022, gradually declining to 4.5% in 2035 and remaining at that level thereafter.

Pension plan assets In general, the Company’s pension plan assets are managed in accordance with investment policies approved by pension investment committees. The purpose of the policies is to ensure the plans’ long-term ability to meet benefit obligations by prudently investing plan assets and Company contributions, while taking into consideration regulatory and legal requirements and current market conditions. The investment policies are reviewed periodically and specify target plan asset allocation by

asset category. In addition, the policies specify various asset allocation and other risk limits. The target asset allocation takes the plans’ funding status into consideration, among other factors, including anticipated demographic changes or liquidity requirements that may affect the funding status such as the potential impact of lump sum settlements as well as existing or expected market conditions. In general, the allocation has a lower overall investment risk when a plan is in a stronger funded status position since there is less economic incentive to take risk to increase the expected returns on the plan assets. The pension plans’ asset exposure within each asset category is tracked against widely accepted

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established benchmarks for each asset class with limits on variation from the benchmark established in the investment policy. Pension plan assets are regularly

monitored for compliance with these limits and other risk limits specified in the investment policies.

Weighted average target asset allocation and actual percentage of plan assets by asset category
						As of December 31, 2021
						Target asset allocation (1)						Actual percentage of plan assets
Pension plan’s asset category						2021						2021						2020
Equity securities (2)						42 - 56%						55		%				50		%
Fixed income securities						26 - 45						30						38
Limited partnership interests						1 - 18						14						10
Short-term investments and other						—						1						2
Total without securities lending (3)												100		%				100		%

(1)The target asset allocation considers risk-based exposure while the actual percentage of plan assets utilizes a financial reporting view excluding exposure provided through derivatives.

(2)The actual percentage of plan assets for equity securities includes 3% and 1% of fixed income mutual funds in 2021 and 2020, respectively, that are subject to the fixed income securities target allocation.

(3)Securities lending collateral reinvestment of $121 million and $101 million is excluded from the table above in 2021 and 2020, respectively.

The target asset allocation for an asset category may be achieved either through direct investment holdings, through replication using derivative instruments (e.g., futures or swaps) or net of hedges using derivative instruments to reduce exposure to an asset category. The net notional amount of derivatives used for replication and non-hedging strategies is limited to 115% of total plan assets. Market performance of the different asset categories may, from time to time, cause deviation from the target

asset allocation. The asset allocation mix is reviewed on a periodic basis and rebalanced to bring the allocation within the target ranges.

Outside the target asset allocation, the pension plans participate in a securities lending program to enhance returns. As of December 31, 2021, fixed income securities are lent out and cash collateral is invested in short-term investments.

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Fair values of pension plan assets as of December 31, 2021
($ in millions)						Quoted prices in active markets for identical assets (Level 1)						Significant other observable inputs (Level 2)						Significant unobservable inputs (Level 3)						Balance as of December 31, 2021
Equity securities						$	311					$	44					$	2					$	357
Fixed income securities:
Government bonds (1)						58						1,206						—						1,264
Corporate bonds						—						696						—						696
Short-term investments						135						65						—						200
Free-standing derivatives:
Assets						—						4						—						4
Liabilities						—						(3)						—						(3)
Other assets						2						—						—						2
Total plan assets at fair value						$	506					$	2,012					$	2					2,520
% of total plan assets at fair value						20.1		%				79.8		%				0.1		%				100.0		%
Investments measured using the net asset value practical expedient																								4,109
Securities lending obligation (2)																								(121)
Derivatives counterparty and cash collateral netting																								(3)
Other net plan assets (3)																								20
Total reported plan assets																								$	6,525

(1)Includes U.S. government and agencies and foreign government bonds.

(2)The securities lending obligation represents the plan’s obligation to return securities lending collateral received under a securities lending program. The terms of the program allow both the plan and the counterparty the right and ability to redeem/return the securities loaned on short notice. Due to its relatively short-term nature, the outstanding balance of the obligation approximates fair value.

(3)Other net plan assets represent cash and cash equivalents, interest and dividends receivable and net receivables related to settlements of investment transactions, such as purchases and sales.

Fair values of pension plan assets as of December 31, 2020
($ in millions)						Quoted prices in active markets for identical assets (Level 1)						Significant other observable inputs (Level 2)						Significant unobservable inputs (Level 3)						Balance as of December 31, 2020
Equity securities						$	227					$	42					$	—					$	269
Fixed income securities:
Government bonds						32						865						—						897
Corporate bonds						—						1,709						2						1,711
Short-term investments						210						35						—						245
Free-standing derivatives:
Assets						—						21						—						21
Liabilities						(2)						(21)						—						(23)
Other assets						2						—						—						2
Total plan assets at fair value						$	469					$	2,651					$	2					3,122
% of total plan assets at fair value						15.0		%				84.9		%				0.1		%				100.0		%
Investments measured using the net asset value practical expedient																								3,908
Securities lending obligation																								(101)
Derivatives counterparty and cash collateral netting																								(19)
Other net plan assets																								77
Total reported plan assets																								$	6,987

The fair values of pension plan assets are estimated using the same methodologies and inputs as those used to determine the fair values for the respective asset category of the Company. These methodologies and inputs are disclosed in Note 6.

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Rollforward of Level 3 plan assets during December 31, 2021
												Actual return on plan assets:
($ in millions)						Balance as of December 31, 2020						Relating to assets sold during the period						Relating to assets still held at the reporting date						Purchases, sales and settlements, net						Net transfers in (out) of Level 3						Balance as of December 31, 2021
Equity securities						$	—					$	—					$	—					$	2					$	—					$	2
Fixed income securities:
Corporate						2						—						—						(2)						—						—
Total Level 3 plan assets						$	2					$	—					$	—					$	—					$	—					$	2

Rollforward of Level 3 plan assets during December 31, 2020
												Actual return on plan assets:
($ in millions)						Balance as of December 31, 2019						Relating to assets sold during the period						Relating to assets still held at the reporting date						Purchases, sales and settlements, net						Net transfers in (out) of Level 3						Balance as of December 31, 2020
Fixed income securities:
Corporate						$	—					$	—					$	—					$	2					$	—					$	2
Total Level 3 plan assets						$	—					$	—					$	—					$	2					$	—					$	2

Rollforward of Level 3 plan assets during December 31, 2019
												Actual return on plan assets:
($ in millions)						Balance as of December 31, 2018						Relating to assets sold during the period						Relating to assets still held at the reporting date						Purchases, sales and settlements, net						Net transfers in (out) of Level 3						Balance as of December 31, 2019
Fixed income securities:
Corporate						$	5					$	—					$	—					$	(5)					$	—					$	—
Total Level 3 plan assets						$	5					$	—					$	—					$	(5)					$	—					$	—

The expected long-term rate of return on plan assets reflects the average rate of earnings expected on plan assets. The Company’s assumption for the expected long-term rate of return on plan assets is evaluated annually giving consideration to appropriate data including, but not limited to, the plan asset allocation, forward-looking expected returns for the period over which benefits will be paid, historical returns on plan assets and other relevant market data. Given the long-term forward-looking nature of this assumption, the actual returns in any one year do not immediately result in a change to the expected long-term rate of return on plan assets. In consideration of the targeted plan asset allocation, the Company evaluated expected returns using sources including historical average asset class returns from independent nationally recognized providers of this type of data blended together using the asset allocation policy weights for the Company’s pension plans; asset class return forecasts developed by employees with relevant expertise in such forecasts and who are independent from those charged with managing the pension plan assets; and expected portfolio returns from a proprietary simulation methodology of a widely recognized external

investment consulting firm that performs asset allocation and actuarial services for corporate pension plan sponsors. The above sources support the Company’s weighted average long-term rate of return on plan assets assumption of 7.06% used for 2021 and an estimate of 7.06% that will be used for 2022. As of the 2021 measurement date, the arithmetic average of the annual actual return on plan assets for the most recent 10 and 5 years was 11.7% and 15.0%, respectively.

Cash flows There was no required cash contribution necessary to satisfy the minimum funding requirement under the IRC for the tax qualified pension plan for the year ended December 31, 2021.

The Company currently plans to contribute $24 million to its unfunded non-qualified plans and zero to both its primary and other qualified funded pension plans in 2022.

The Company contributed $27 million and $23 million to the postretirement benefit plans in 2021 and 2020, respectively. Contributions by participants were $16 million and $14 million in 2021 and 2020, respectively.

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Estimated future benefit payments expected to be paid in the next 10 years
						As of December 31, 2021
($ in millions)						Pension benefits						Postretirement benefits
2022						$	602					$	25
2023						586						25
2024						566						25
2025						533						25
2026						517						24
2027-2031						2,180						85
Total benefit payments						$	4,984					$	209

Allstate 401(k) Savings Plan

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Note 19			Equity Incentive Plans

The Company currently has equity incentive plans under which it grants nonqualified stock options, restricted stock units and performance stock awards to certain employees and directors of the Company.

Equity awards
($ in millions)						2021						2020						2019
Compensation expense						$	120					$	124					$	105
Income tax benefits						18						18						17
Cash received from exercise of options						151						111						154
Tax benefit realized on options exercised and release of stock restrictions						37						53						43

The Company records compensation expense related to awards under these plans over the shorter of the period in which the requisite service is rendered or retirement eligibility is attained. Compensation expense for performance stock awards with no market condition is based on the probable number of awards expected to vest using the performance level most likely to be achieved at the end of the performance period. Compensation expense for performance stock awards with a market condition is based on the number of awards expected to vest as estimated at the grant date and does not change if the market condition is not met.

Nonvested awards as of December 31, 2021
($ in millions)						Unrecognized compensation						Weighted average vesting period
Nonqualified stock options						$	16					1.61
Restricted stock units						44						1.87
Performance stock awards						30						1.65
Total						$	90

Options are granted to employees with exercise prices equal to the closing share price of the Company’s common stock on the applicable grant date. Options granted to employees vest ratably over a three-year period. Vesting is subject to continued service, except for employees who are retirement eligible and in certain other limited circumstances. Options may be exercised once vested and will expire no later than ten years after the date of grant.

Restricted stock units for directors vest immediately and convert into shares of stock on the earlier of the day of the third anniversary of the grant date or the date the director’s service terminates, unless a deferred period of restriction is elected.

Restricted stock units granted to directors prior to June 1, 2016 convert upon leaving the board. Restricted stock units granted to employees prior to February 19, 2020 vest on the day prior to the third anniversary of the grant date. Restricted stock units granted to employees on or after February 19, 2020 vest ratably over a three-year period. Restricted stock units granted to employees subsequently convert into shares of stock on the day of the respective anniversary of the grant date. Vesting is subject to continued service, except for employees who are retirement eligible and in certain other limited circumstances.

Performance stock awards vest into shares of stock based on achieving established company-specific performance goals. Performance stock awards granted prior to February 19, 2020 vest into shares of stock on the day prior to the third anniversary of the grant date. Performance stock awards granted on or after February 19, 2020 vest into shares of stock on the third anniversary of the grant date.

The numbers of shares earned upon vesting of the performance stock awards is based on the attainment of performance goals for each of the performance periods, subject to continued service, except for employees who are retirement eligible and in certain other limited circumstances.

Since 2001, a total of 110.8 million shares of common stock were authorized to be used for awards under the plans, subject to adjustment in accordance with the plans’ terms. As of December 31, 2021, 17.0 million shares were reserved and remained available for future issuance under these plans. The Company uses its treasury shares for these issuances.

The fair value of each option grant is estimated on the date of grant using a binomial lattice model. The Company uses historical data to estimate option exercise and employee termination within the valuation model. In addition, separate groups of employees that have similar historical exercise behavior are considered separately for valuation purposes. The expected term of options granted is derived from the output of the binomial lattice model and represents the period of time that options granted are expected to be outstanding. The expected volatility of the price of the underlying shares is implied based on traded options and historical volatility of the Company’s common stock. The expected dividends were based on the current dividend yield of the Company’s stock as of the date of the grant. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

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Option grant assumptions
						2021						2020						2019
Weighted average expected term						7.5 years						6.1 years						5.8 years
Expected volatility						16.5% - 28.8%						16.3% - 37.1%						15.6% - 28.9%
Weighted average volatility						23.0		%				17.6		%				18.4		%
Expected dividends						2.0% - 3.0%						1.6% - 2.4%						1.9% - 2.2%
Weighted average expected dividends						3.1		%				1.8		%				2.2		%
Risk-free rate						—% - 1.7%						0.1% - 1.8%						1.3% - 2.7%

Summary of option activity
						For the year ended December 31, 2021
						Number (in 000s)						Weighted average exercise price						Aggregate intrinsic value (in 000s)						Weighted average remaining contractual term (years)
Outstanding as of January 1, 2021						10,617						$	83.65
Granted						1,738						105.45
Exercised						(2,167)						74.05
Forfeited						(319)						106.33
Expired						(15)						104.22
Outstanding as of December 31, 2021						9,854						88.84						$	292,514					5.8
Outstanding, net of expected forfeitures						9,791						88.71						291,849						5.8
Outstanding, exercisable (“vested”)						6,654						79.96						253,563						4.6

The weighted average grant date fair value of options granted was $15.61, $18.17 and $14.96 during 2021, 2020 and 2019, respectively. The intrinsic value, which is the difference between the fair value and the exercise price, of options exercised was $112 million, $119 million and $114 million during 2021, 2020 and 2019, respectively.

Changes in restricted stock units
						For the year ended December 31, 2021
						Number (in 000s)						Weighted average grant date fair value
Nonvested as of January 1, 2021						948						$	98.61
Granted						552						108.99
Vested						(322)						102.45
Forfeited						(140)						105.68
Nonvested as of December 31, 2021						1,038						101.98

The fair value of restricted stock units is based on the market value of the Company’s stock as of the date of the grant. The market value in part reflects the payment of future dividends expected. The weighted average grant date fair value of restricted stock units granted was $108.99, $118.61 and $92.97 during 2021, 2020 and 2019, respectively. The total fair value of restricted stock units vested was $35 million, $32 million and $29 million during 2021, 2020 and 2019, respectively.

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Note 20			Supplemental Cash Flow Information

Non-cash investing activities include $51 million, $55 million and $131 million related to mergers and exchanges completed with equity securities, fixed income securities and limited partnerships, and modifications of certain mortgage loans and other investments in 2021, 2020 and 2019, respectively.

Non-cash financing activities include $53 million, $56 million and $50 million related to the issuance of Allstate common shares for vested equity awards in 2021, 2020 and 2019, respectively.

Cash flows used in operating activities in the Consolidated Statements of Cash Flows include cash paid for operating leases related to amounts included in the measurement of lease liabilities of $181 million, $156 million and $155 million for the twelve months ended December 31, 2021, 2020 and 2019, respectively. Non-cash operating activities include $98 million,

$51 million and $604 million related to right-of-use assets obtained in exchange for lease obligations for the twelve months ended December 31, 2021, 2020 and 2019, respectively. Non-cash operating activities related to right-of-use assets obtained in exchange for lease obligations for twelve months ended December 31, 2019 include the impact of $488 million related to the adoption of the accounting for leases standard.

Liabilities for collateral received in conjunction with the Company’s securities lending program and OTC and cleared derivatives are reported in other liabilities and accrued expenses or other investments. The accompanying cash flows are included in cash flows from operating activities in the Consolidated Statements of Cash Flows along with the activities resulting from management of the proceeds as follows:

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Note 21			Other Comprehensive Income

Components of other comprehensive income (loss) on a pre-tax and after-tax basis
						For the years ended December 31,
						2021																		2020																		2019
($ in millions)						Pre-tax						Tax						After-tax						Pre-tax						Tax						After-tax						Pre-tax						Tax						After-tax
Unrealized net holding gains and losses arising during the period, net of related offsets (1)						$	(2,839)					$	601					$	(2,238)					$	2,512					$	(532)					$	1,980					$	2,807					$	(592)					$	2,215
Less: reclassification adjustment of net gains and losses on investments and derivatives						436						(92)						344						870						(183)						687						413						(87)						326
Unrealized net capital gains and losses						(3,275)						693						(2,582)						1,642						(349)						1,293						2,394						(505)						1,889
Unrealized foreign currency translation adjustments						(10)						2						(8)						66						(14)						52						(13)						3						(10)
Unamortized pension and other postretirement prior service credit (2)						(75)						16						(59)						12						(3)						9						(59)						12						(47)
Other comprehensive (loss) income						$	(3,360)					$	711					$	(2,649)					$	1,720					$	(366)					$	1,354					$	2,322					$	(490)					$	1,832

(1)Includes $2.4 billion of losses related to held for sale investments in connection with 2021 sale of life and annuity business.

(2)Represents prior service credits reclassified out of other comprehensive income and amortized into operating costs and expenses.

Note 22			Quarterly Results (unaudited)

						First Quarter												Second Quarter												Third Quarter												Fourth Quarter
($ in millions, except per share data)						2021						2020						2021						2020						2021						2020						2021						2020
Revenues						$	12,451					$	9,866					$	12,646					$	10,403					$	12,480					$	10,678					$	13,011					$	10,962
Net income from continuing operations applicable to common shareholders						2,385						801						1,399						1,080						183						1,189						1,111						2,244
Income (loss) from discontinued operations, net of tax						(3,793)						(288)						196						144						325						(63)						(321)						354
Net income (loss) applicable to common shareholders						$	(1,408)					$	513					$	1,595					$	1,224					$	508					$	1,126					$	790					$	2,598
Earnings per common share applicable to common shareholders
Basic
Continuing operations						$	7.88					$	2.52					$	4.68					$	3.44					$	0.62					$	3.82					$	3.90					$	7.38
Discontinued operations						(12.53)						(0.90)						0.66						0.46						1.11						(0.20)						(1.13)						1.16
Total						$	(4.65)					$	1.62					$	5.34					$	3.90					$	1.73					$	3.62					$	2.77					$	8.54
Diluted
Continuing operations						$	7.78					$	2.48					$	4.61					$	3.41					$	0.62					$	3.78					$	3.84					$	7.30
Discontinued operations						(12.38)						(0.89)						0.65						0.45						1.09						(0.20)						(1.11)						1.15
Total						$	(4.60)					$	1.59					$	5.26					$	3.86					$	1.71					$	3.58					$	2.73					$	8.45

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Schedule I — Summary of Investments Other than Investments in Related Parties

						As of December 31, 2021
($ in millions)						Cost/amortized cost, net						Fair value (if applicable)						Amount shown in the Balance Sheet
Type of investment
Fixed maturities:
Bonds:
United States government, government agencies and authorities						$	6,287					$	6,273					$	6,273
States, municipalities and political subdivisions						6,130						6,393						6,393
Foreign governments						982						985						985
Public utilities						2,009						2,024						2,024
All other corporate bonds						24,825						25,306						25,306
Asset-backed securities						1,143						1,155						1,155
Total fixed maturities						41,376						42,136						42,136
Equity securities:
Common stocks:
Public utilities						99						118						118
Banks, trusts and insurance companies						548						653						653
Industrial, miscellaneous and all other						5,145						5,954						5,954
Nonredeemable preferred stocks						224						336						336
Total equity securities						6,016						7,061						7,061
Mortgage loans on real estate						821						853						821
Real estate (none acquired in satisfaction of debt)						809												809
Policy loans						148												148
Derivative instruments						12						12						12
Limited partnership interests						8,018												8,018
Other long-term investments						1,687												1,687
Short-term investments						4,009						4,009						4,009
Total investments						$	62,896											$	64,701

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Schedule II — Condensed Financial Information of Registrant Statement of Operations

						Year Ended December 31,
($ in millions)						2021						2020						2019
Revenues
Investment income, less investment expense						$	13					$	12					$	35
Net gains (losses) on investments and derivatives						12						33						9
Other income						—						—						41
Total revenues						25						45						85
Expenses
Interest expense						328						328						355
Pension and other postretirement remeasurement (gains) losses						(611)						(73)						103
Pension and other postretirement (benefit) expense						(218)						(168)						(122)
Other operating expenses						71						73						49
Total expenses						(430)						160						385
Gain (loss) from operations before income tax benefit and equity in net income of subsidiaries						455						(115)						(300)
Income tax expense (benefit)						93						(26)						(75)
Gain (loss) before equity in net income of subsidiaries						362						(89)						(225)
Equity in net income of subsidiaries (1)						1,237						5,665						5,072
Net income						1,599						5,576						4,847
Preferred stock dividends						114						115						169
Net income applicable to common shareholders						1,485						5,461						4,678
Other comprehensive income (loss), after-tax
Changes in:
Unrealized net capital gains and losses						(2,582)						1,293						1,889
Unrealized foreign currency translation adjustments						(8)						52						(10)
Unamortized pension and other postretirement prior service credit						(59)						9						(47)
Other comprehensive (loss) income, after-tax						(2,649)						1,354						1,832
Comprehensive (loss) income						$	(1,050)					$	6,930					$	6,679

(1)Includes results of operations for the life and annuity business held for sale reported as discontinued operations in the Consolidated Statements of Operations.

See accompanying notes to condensed financial information and notes to consolidated financial statements.

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The Allstate Corporation and Subsidiaries

Schedule II (Continued) — Condensed Financial Information of Registrant Statement of Financial Position

						December 31,
($ in millions, except par value data)						2021						2020
Assets
Investments in subsidiaries (1)						$	32,058					$	35,603
Fixed income securities, at fair value (amortized cost, net $1,708 and zero)						1,718						—
Short-term investments, at fair value (amortized cost, net $297 and $4,479)						297						4,479
Cash						1						—
Receivable from subsidiaries						504						524
Deferred income taxes						22						187
Other assets						222						87
Total assets						34,822						40,880
Liabilities
Long-term debt						7,581						7,825
Pension and other postretirement benefit obligations						211						874
Deferred compensation						383						351
Payable to subsidiaries						—						—
Notes due to subsidiaries						1,000						1,250
Dividends payable to shareholders						269						201
Other liabilities						199						162
Total liabilities						9,643						10,663
Shareholders’ 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, 281 million and 304 million shares outstanding						9						9
Additional capital paid-in						3,722						3,498
Retained income						53,294						52,767
Treasury stock, at cost (619 million and 596 million shares)						(34,471)						(31,331)
Accumulated other comprehensive income:
Unrealized net capital gains and losses						598						3,180
Unrealized foreign currency translation adjustments						(15)						(7)
Unamortized pension and other postretirement prior service credit						72						131
Total accumulated other comprehensive income						655						3,304
Total Allstate shareholders’ equity						25,179						30,217
Total liabilities and equity						$	34,822					$	40,880

(1)2020 includes results for life and annuity business classified as held for sale in the Consolidated Statements of Financial Position.

See accompanying notes to condensed financial information and notes to consolidated financial statements.

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The Allstate Corporation and Subsidiaries

Schedule II (Continued) — Condensed Financial Information of Registrant Statement of Cash Flows

						Years Ended December 31,
($ in millions)						2021						2020						2019
Cash flows from operating activities
Net income						$	1,599					$	5,576					$	4,847
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in net income of subsidiaries (1)						(1,237)						(5,665)						(5,072)
Dividends received from subsidiaries						5,112						4,157						2,434
Net (gains) losses on investments and derivatives						(12)						(33)						(9)
Pension and other postretirement remeasurement (gains) losses						(611)						(73)						103
Changes in:
Pension and other postretirement benefits						(218)						(168)						(122)
Income taxes						177						54						13
Operating assets and liabilities						158						110						111
Net cash provided by operating activities						4,968						3,958						2,305
Cash flows from investing activities
Proceeds from sales of investments						1,743						1,251						1,094
Investment purchases						(2,673)						(402)						(892)
Investment collections						38						16						65
Capital contribution or return of capital from subsidiaries						383						251						43
Change in short-term investments, net						4,182						(3,777)						(417)
Acquisition of subsidiaries						(4,144)						—						—
Net cash used in investing activities						(471)						(2,661)						(107)
Cash flows from financing activities
Proceeds from borrowings from subsidiaries						2,200						1,250						1,000
Repayment of notes due to subsidiaries						(2,450)						(1,000)						(1,250)
Proceeds from issuance of long-term debt						—						1,189						491
Redemption of preferred stock						—						(288)						(1,132)
Redemption and repayment of long-term debt						(250)						—						(317)
Proceeds from issuance of preferred stock						—						—						1,414
Dividends paid on common stock						(885)						(668)						(653)
Dividends paid on preferred stock						(105)						(108)						(134)
Treasury stock purchases						(3,120)						(1,737)						(1,735)
Shares reissued under equity incentive plans, net						114						63						120
Other						—						—						—
Net cash used in financing activities						(4,496)						(1,299)						(2,196)
Net increase (decrease) in cash						1						(2)						2
Cash at beginning of year						—						2						—
Cash at end of year						$	1					$	—					$	2

(1)Includes results of operations for the life and annuity business held for sale reported as discontinued operations in the Consolidated Statements of Operations.

See accompanying notes to condensed financial information and notes to consolidated financial statements.

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The Allstate Corporation and Subsidiaries

Schedule II (Continued) — Condensed Financial Information of Registrant

Notes to Condensed Financial Information

1.     General

Pursuant to rules and regulations of the SEC, the unconsolidated condensed financial statements of the Parent Company do not reflect all of the information and notes normally included with financial statements prepared in accordance with GAAP. Therefore, these condensed financial statements of the Registrant should be read in conjunction with the consolidated financial statements and notes thereto included in Item 8.

The long-term debt presented in Note 13 “Capital Structure” are direct obligations of or guaranteed by the Registrant. A majority of the pension and other postretirement benefits plans presented in Note 18 “Benefit Plans” are direct obligations of the Registrant.

Participating subsidiaries fund the pension plans contributions under a master services cost sharing agreement. In addition, as a result of joint and several pension liability rules under the Internal Revenue Code and the Employee Retirement Income Security Act of 1974, as amended, many liabilities that arise in connection with pension plans are joint and several across all members of a controlled group of entities.

2.   Notes due to subsidiaries

On March 1, 2021 and June 18, 2021, the Registrant issued $200 million and $1.00 billion notes, with rates of 0.21% and 0.20%, due on March 1, 2022 and June 18, 2022, respectively, to Kennett Capital Inc. The proceeds of these issuances were used for cash management purposes. On April 05, 2021, the Registrant repaid $200 million to Kennett Capital Inc.

On June 18, 2020 and December 29, 2020, the Registrant issued $1.00 billion and $250 million notes, with rates of 0.43% and 0.33%, due on June 18, 2021 and December 29, 2021, respectively, to Kennett Capital Inc. The proceeds of these issuances were used for cash management purposes. On April 5, 2021 and June 18, 2021, the Registrant repaid $250 million and $1.00 billion, respectively, to Kennett Capital Inc.

On June 19, 2019, the Registrant issued a $1.00 billion note, with a rate of 2.63% due on June 19, 2020 to Kennett Capital Inc. The proceeds of this issuance were used for cash management purposes. On June 18, 2020, the Registrant repaid $1.00 billion to Kennett Capital Inc.

3.    Supplemental Disclosures of Cash Flow Information

The Registrant paid $321 million, $311 million and $312 million of interest on debt in 2021, 2020 and 2019, respectively.

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Schedule III — Supplementary Insurance Information

($ in millions)						As of December 31,																		For the years ended December 31,
Segment						Deferred policy acquisition costs						Reserves for claims and claims expense, contract benefits and contractholder funds						Unearned premiums						Premium revenue and contract charges						Net investment income (1)						Claims and claims expense, contract benefits and interest credited to contractholders						Amortization of deferred policy acquisition costs						Other operating costs and expenses						Premiums written (excluding life)
2021
Property-Liability
Allstate Protection						$	1,951					$	31,099					$	15,763					$	40,454											$	28,760					$	5,313					$	6,033					$	41,358
Run-off Property-Liability						—						1,916						—						—												116						—						4						—
Total Property-Liability						1,951						33,015						15,763						40,454						$	3,118					28,876						5,313						6,037						41,358
Protection Services (2)						2,294						45						4,054						1,939						43						458						795						938						2,642
Allstate Health and Benefits						477						2,181						27						1,821						74						1,049						144						838						1,630
Corporate and Other						—						—						—						—						58						—						—						(133)						—
Intersegment Eliminations (2)						—						—						—						(175)						—						(16)						—						(159)						—
Total						$	4,722					$	35,241					$	19,844					$	44,039					$	3,293					$	30,367					$	6,252					$	7,521					$	45,630
2020
Property-Liability
Allstate Protection						$	1,608					$	25,679					$	12,772					$	35,580											$	21,485					$	4,642					$	5,741					$	35,768
Run-off Property-Liability						—						1,888						—						—												141						—						3						—
Total Property-Liability						1,608						27,567						12,772						35,580						$	1,421					21,626						4,642						5,744						35,768
Protection Services (2)						1,696						43						3,167						1,640						44						386						658						760						1,890
Allstate Health and Benefits						470						1,885						7						1,094						78						549						177						323						839
Corporate and Other						—						—						—						—						47						—						—						389						—
Intersegment Eliminations (2)						—						—						—						(147)						—						(11)						—						(136)						—
Total						$	3,774					$	29,495					$	15,946					$	38,167					$	1,590					$	22,550					$	5,477					$	7,080					$	38,497
2019
Property-Liability
Allstate Protection						$	1,624					$	25,843					$	12,567					$	34,843											$	23,517					$	4,649					$	4,622					$	35,419
Run-off Property-Liability						—						1,818						—						—												105						—						3						—
Total Property-Liability						1,624						27,661						12,567						34,843						$	1,533					23,622						4,649						4,625						35,419
Protection Services (2)						1,449						51						2,765						1,387						42						363						543						838						1,535
Allstate Health and Benefits						527						1,950						8						1,145						83						635						161						285						868
Corporate and Other						—						—						—						—						70						—						—						531						—
Intersegment Eliminations (2)						—						—						—						(154)						—						(9)						—						(145)						—
Total						$	3,600					$	29,662					$	15,340					$	37,221					$	1,728					$	24,611					$	5,353					$	6,134					$	37,822

(1)A single investment portfolio supports both Allstate Protection and Run-off Property-Liability segments.

(2)Includes intersegment premiums and service fees and the related incurred losses and expenses that are eliminated in the consolidated financial statements.

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Schedule IV — Reinsurance

($ in millions)						Gross amount						Ceded to other companies (1)						Assumed from other companies						Net amount						Percentage of amount assumed to net
Year ended December 31, 2021
Life insurance in force						$	20,535					$	640					$	1,528					$	21,423					7.1		%
Premiums and contract charges:
Life insurance						$	156					$	6					$	15					$	165					9.1		%
Accident and health insurance						1,722						72						6						1,656						0.4
Property and casualty insurance						43,944						1,904						178						42,218						0.4
Total premiums and contract charges						$	45,822					$	1,982					$	199					$	44,039					0.5
Year ended December 31, 2020
Life insurance in force						$	17,124					$	16,528					$	1,003					$	1,599					62.7		%
Premiums and contract charges:
Life insurance						$	162					$	8					$	14					$	168					8.3		%
Accident and health insurance						931						5						—						926						—
Property and casualty insurance						38,115						1,141						99						37,073						0.3
Total premiums and contract charges						$	39,208					$	1,154					$	113					$	38,167					0.3
Year ended December 31, 2019
Life insurance in force						$	18,575					$	17,801					$	1,062					$	1,836					57.8		%
Premiums and contract charges:
Life insurance						$	151					$	8					$	14					$	157					8.9		%
Accident and health insurance						994						6						—						988						—
Property and casualty insurance						37,104						1,122						94						36,076						0.3
Total premiums and contract charges						$	38,249					$	1,136					$	108					$	37,221					0.3

(1)No reinsurance or coinsurance income was netted against premium ceded in 2021, 2020 or 2019.

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Schedule V — Valuation Allowances and Qualifying Accounts

($ in millions)												Additions
Description						Balance as of beginning of period (1)						Charged to costs and expenses						Other additions						Deductions						Balance as of end of period
Year ended December 31, 2021
Fixed income securities						$	2					$	4					$	—					$	—					$	6
Mortgage loans						67						(61)						—						—						6
Bank loans						67						(6)						—						—						61
Investments						136						(63)						—						—						73
Premium installment receivable						153						274						19						339						107
Reinsurance recoverables						60						15						—						1						74
Other assets						17						9						—						—						26
Assets						366						235						19						340						280
Commitments to fund mortgage loans and bank loans						1						—						—						1						—
Liabilities						1						—						—						1						—
Total						$	367					$	235					$	19					$	341					$	280
Valuation allowance for deferred tax assets						$	—					$	—					$	38					$	14					$	24
Year ended December 31, 2020
Fixed income securities						$	—					$	2					$	—					$	—					$	2
Mortgage loans (2)						45						39						—						17						67
Bank loans (2)						53						28						—						14						67
Investments						98						69						—						31						136
Premium installment receivable						91						223						—						161						153
Reinsurance recoverables						61						(1)						—						—						60
Other assets						15						2						—						—						17
Assets						265						293						—						192						366
Commitments to fund mortgage loans and bank loans						3						—						—						2						1
Liabilities						3						—						—						2						1
Total						$	268					$	293					$	—					$	194					$	367
Year ended December 31, 2019
Mortgage loans (2)						$	3					$	—					$	—					$	—					$	3
Premium installment receivable						77						137						—						124						90
Reinsurance recoverables						$	65					$	(5)					$	—					$	—					$	60

(1)Effective January 1, 2020, the Company adopted the measurement of credit losses on financial instruments accounting standard that primarily affected mortgage loans, bank loans and reinsurance recoverables. After consideration of existing valuation allowances maintained prior to adopting the new guidance, the Company increased its valuation allowances for credit losses at January 1, 2020 to conform to the new requirements.

(2)Includes credit loss allowance for investments that are classified as held for sale as of December 31, 2020 and 2019.