Pursuing Health and Benefits divestiture
NORTHBROOK, Ill.--(BUSINESS WIRE)-- The Allstate Corporation (NYSE: ALL) today reported financial results for the third quarter of 2023.
The Allstate Corporation Consolidated Highlights (1) | |||||||||||||||||
| Three months ended September 30, |
| Nine months ended September 30, | ||||||||||||||
($ in millions, except per share data and ratios) | 2023 | 2022 | % / pts Change |
| 2023 | 2022 | % / pts Change | ||||||||||
Consolidated revenues | $ | 14,497 |
| $ | 13,208 |
| 9.8 | % |
| $ | 42,262 |
| $ | 37,763 |
| 11.9 | % |
Net loss applicable to common shareholders |
| (41 | ) |
| (685 | ) | (94.0 | ) |
|
| (1,776 | ) |
| (1,091 | ) | 62.8 |
|
per diluted common share (2) |
| (0.16 | ) |
| (2.55 | ) | (93.7 | ) |
|
| (6.76 | ) |
| (3.99 | ) | 69.4 |
|
Adjusted net income (loss)* |
| 214 |
|
| (411 | ) | NM |
|
|
| (1,290 | ) |
| 112 |
| NM |
|
per diluted common share* (2) |
| 0.81 |
|
| (1.53 | ) | NM |
|
|
| (4.91 | ) |
| 0.40 |
| NM |
|
Return on Allstate common shareholders’ equity (trailing twelve months) |
|
|
|
|
| ||||||||||||
Net income (loss) applicable to common shareholders |
|
|
|
|
| (14.7 | )% |
| (1.5 | )% | (13.2 | ) | |||||
Adjusted net income (loss)* |
|
|
|
|
| (9.7 | )% |
| 4.4 | % | (14.1 | ) | |||||
Common shares outstanding (in millions) |
|
|
|
|
| 261.7 |
|
| 265.9 |
| (1.6 | ) | |||||
Book value per common share |
|
|
|
|
| 47.79 |
|
| 58.39 |
| (18.2 | ) | |||||
|
|
|
|
|
|
|
| ||||||||||
Consolidated premiums written (3) |
| 14,425 |
|
| 13,157 |
| 9.6 |
|
|
| 41,021 |
|
| 37,660 |
| 8.9 |
|
Property-Liability insurance premiums earned |
| 12,270 |
|
| 11,157 |
| 10.0 |
|
|
| 35,826 |
|
| 32,529 |
| 10.1 |
|
Property-Liability combined ratio |
|
|
|
|
|
|
| ||||||||||
Recorded |
| 103.4 |
|
| 111.6 |
| (8.2 | ) |
|
| 109.8 |
|
| 105.8 |
| 4.0 |
|
Underlying combined ratio* |
| 91.9 |
|
| 96.4 |
| (4.5 | ) |
|
| 92.7 |
|
| 93.6 |
| (0.9 | ) |
Catastrophe losses |
| 1,181 |
|
| 763 |
| 54.8 |
|
|
| 5,568 |
|
| 2,333 |
| 138.7 |
|
Total policies in force (in thousands) |
|
|
|
|
| 190,089 |
|
| 185,007 |
| 2.7 |
|
(1) | Prior periods have been recast to reflect the impact of the adoption of Financial Accounting Standard Board (“FASB”) guidance revising the accounting for certain long-duration insurance contracts in the Health and Benefits segment. |
(2) | In periods where a net loss or adjusted net loss is reported, weighted average shares for basic earnings per share is used for calculating diluted earnings per share because all dilutive potential common shares are anti-dilutive and are therefore excluded from the calculation. |
(3) | Includes premiums and contract charges for the Health and Benefits segment. |
* | Measures used in this release that are not based on accounting principles generally accepted in the United States of America (“non-GAAP”) are denoted with an asterisk and defined and reconciled to the most directly comparable GAAP measure in the “Definitions of Non-GAAP Measures” section of this document. |
NM = not meaningful |
“Allstate’s focus on improving profitability while implementing our growth strategy made excellent progress this quarter,” said Tom Wilson, Chair, President and CEO of The Allstate Corporation. “Improved underwriting performance, strong investment income and profits from Protection Services and Health and Benefits generated adjusted net income* of $214 million, or $0.81 per diluted common share in the quarter. Property-Liability earned premium growth of 10.0% and execution of other components of the profit improvement plan improved the underlying combined ratio compared to the prior year quarter. Property-Liability had an underwriting loss in the quarter of $414 million, however, reflecting continued increases in auto insurance loss costs, elevated catastrophe losses and adverse prior year loss development. In response, we continue to raise auto and homeowners insurance prices, improve expense efficiencies, restrict growth in profit challenged states and enhance claims practices. The execution of these comprehensive actions will restore margins to target levels.”
“We are pursuing the sale of Allstate’s Health and Benefits businesses since substantial value can be realized when aligned with a broader set of complementary businesses and product offerings. Allstate’s voluntary workplace benefits business was combined with National General’s group and individual health business, creating a broad-based benefits platform that serves 4.3 million policyholders and generated $240 million of adjusted net income over the last twelve months. This value creation was integral to the National General acquisition plan and now positions the business for additional growth and value enhancement. A sale would likely be completed in 2024.”
“Significant progress has also been made in executing the strategy to increase property-liability market share and broaden protection provided to customers. Providing lowest cost protection requires continued cost reductions which is reflected in a lower expense ratio. Allstate exclusive agent productivity increased, excluding three states where profit improvement actions have reduced new business, and National General is growing through independent agents. Plans to increase growth in states that are achieving target auto insurance margins are now being initiated with further expansion planned for 2024. Allstate Protection Plans continues to grow its embedded protection offerings with U.S. retailers and internationally. Shareholder value will continue to grow with higher profitability, strategic capital allocation and organic long-term growth,” concluded Wilson.
Third Quarter 2023 Results
|
Property-Liability Results | |||||||||||||||||
| Three months ended September 30, |
| Nine months ended September 30, | ||||||||||||||
($ in millions) | 2023 | 2022 | % / pts Change |
| 2023 | 2022 | % / pts Change | ||||||||||
Premiums earned | $ | 12,270 |
| $ | 11,157 |
| 10.0 | % |
| $ | 35,826 |
| $ | 32,529 |
| 10.1 | % |
Allstate brand |
| 10,215 |
|
| 9,517 |
| 7.3 |
|
|
| 30,069 |
|
| 27,816 |
| 8.1 |
|
National General |
| 2,055 |
|
| 1,640 |
| 25.3 |
|
|
| 5,757 |
|
| 4,713 |
| 22.2 |
|
|
|
|
|
|
|
|
| ||||||||||
Premiums written | $ | 13,304 |
| $ | 12,037 |
| 10.5 | % |
| $ | 37,707 |
| $ | 34,307 |
| 9.9 | % |
Allstate brand |
| 11,020 |
|
| 10,304 |
| 6.9 |
|
|
| 31,250 |
|
| 29,201 |
| 7.0 |
|
National General |
| 2,284 |
|
| 1,733 |
| 31.8 |
|
|
| 6,457 |
|
| 5,106 |
| 26.5 |
|
|
|
|
|
|
|
|
| ||||||||||
Underwriting income (loss) | $ | (414 | ) | $ | (1,292 | ) | (68.0 | )% |
| $ | (3,509 | ) | $ | (1,876 | ) | 87.0 | % |
Allstate brand |
| (168 | ) |
| (1,049 | ) | (84.0 | ) |
|
| (2,987 | ) |
| (1,623 | ) | 84.0 |
|
National General |
| (167 | ) |
| (124 | ) | 34.7 |
|
|
| (443 | ) |
| (133 | ) | NM |
|
|
|
|
|
|
|
|
| ||||||||||
Recorded combined ratio |
| 103.4 |
|
| 111.6 |
| (8.2 | ) |
|
| 109.8 |
|
| 105.8 |
| 4.0 |
|
Underlying combined ratio* |
| 91.9 |
|
| 96.4 |
| (4.5 | ) |
|
| 92.7 |
|
| 93.6 |
| (0.9 | ) |
Allstate Protection Auto Results | |||||||||||||||||
| Three months ended September 30, |
| Nine months ended September 30, | ||||||||||||||
($ in millions, except ratios) | 2023 | 2022 | % / pts Change |
| 2023 | 2022 | % / pts Change | ||||||||||
Premiums earned | $ | 8,345 | $ | 7,545 | 10.6 | % |
| $ | 24,374 | $ | 21,974 | 10.9 | % | ||||
Allstate brand |
| 6,910 |
|
| 6,416 |
| 7.7 |
|
|
| 20,342 |
|
| 18,742 |
| 8.5 |
|
National General |
| 1,435 |
|
| 1,129 |
| 27.1 |
|
|
| 4,032 |
|
| 3,232 |
| 24.8 |
|
|
|
|
|
|
|
|
| ||||||||||
Premiums written | $ | 8,770 |
| $ | 7,860 |
| 11.6 | % |
| $ | 25,388 |
| $ | 22,892 |
| 10.9 | % |
Allstate brand |
| 7,206 |
|
| 6,704 |
| 7.5 |
|
|
| 20,853 |
|
| 19,386 |
| 7.6 |
|
National General |
| 1,564 |
|
| 1,156 |
| 35.3 |
|
|
| 4,535 |
|
| 3,506 |
| 29.3 |
|
|
|
|
|
|
|
|
| ||||||||||
Policies in Force (in thousands) |
|
|
|
|
| 25,376 |
|
| 26,131 |
| (2.9 | )% | |||||
Allstate brand |
|
|
|
|
| 20,546 |
|
| 21,853 |
| (6.0 | ) | |||||
National General |
|
|
|
|
| 4,830 |
|
| 4,278 |
| 12.9 |
| |||||
|
|
|
|
|
|
|
| ||||||||||
Recorded combined ratio |
| 102.1 |
|
| 117.4 |
| (15.3 | ) |
|
| 104.9 |
|
| 109.3 |
| (4.4 | ) |
Underlying combined ratio* |
| 98.8 |
|
| 104.0 |
| (5.2 | ) |
|
| 101.2 |
|
| 101.7 |
| (0.5 | ) |
Allstate Protection Homeowners Results | |||||||||||||||||
| Three months ended September 30, |
| Nine months ended September 30, | ||||||||||||||
($ in millions, except ratios) | 2023 | 2022 | % / pts Change |
| 2023 | 2022 | % / pts Change | ||||||||||
Premiums earned | $ | 2,969 | $ | 2,642 | 12.4 | % |
| $ | 8,662 | $ | 7,698 | 12.5 | % | ||||
Allstate brand |
| 2,613 |
|
| 2,350 |
| 11.2 |
|
|
| 7,638 |
|
| 6,841 |
| 11.7 |
|
National General |
| 356 |
|
| 292 |
| 21.9 |
|
|
| 1,024 |
|
| 857 |
| 19.5 |
|
|
|
|
|
|
|
|
| ||||||||||
Premiums written | $ | 3,525 |
| $ | 3,145 |
| 12.1 | % |
| $ | 9,440 |
| $ | 8,434 |
| 11.9 | % |
Allstate brand |
| 3,118 |
|
| 2,803 |
| 11.2 |
|
|
| 8,265 |
|
| 7,488 |
| 10.4 |
|
National General |
| 407 |
|
| 342 |
| 19.0 |
|
|
| 1,175 |
|
| 946 |
| 24.2 |
|
|
|
|
|
|
|
|
| ||||||||||
Policies in Force (in thousands) |
|
|
|
|
| 7,297 |
|
| 7,237 |
| 0.8 | % | |||||
Allstate brand |
|
|
|
|
| 6,627 |
|
| 6,599 |
| 0.4 |
| |||||
National General |
|
|
|
|
| 670 |
|
| 638 |
| 5.0 |
| |||||
|
|
|
|
|
|
|
| ||||||||||
Recorded combined ratio |
| 104.4 |
|
| 89.9 |
| 14.5 |
|
|
| 122.8 |
|
| 93.8 |
| 29.0 |
|
Catastrophe Losses | $ | 878 |
| $ | 354 |
| 148.0 | % |
| $ | 4,516 |
| $ | 1,650 |
| 173.7 | % |
Underlying combined ratio* |
| 72.9 |
|
| 74.1 |
| (1.2 | ) |
|
| 69.4 |
|
| 70.6 |
| (1.2 | ) |
|
Protection Services Results | |||||||||||||||||||
| Three months ended September 30, |
| Nine months ended September 30, | ||||||||||||||||
($ in millions) | 2023 | 2022 | % / $ Change |
| 2023 | 2022 | % / $ Change | ||||||||||||
Total revenues (1) | $ | 697 |
| $ | 640 |
|
| 8.9 | % |
| $ | 2,054 |
| $ | 1,896 |
|
| 8.3 | % |
Allstate Protection Plans |
| 416 |
|
| 349 |
|
| 19.2 |
|
|
| 1,200 |
|
| 1,016 |
|
| 18.1 |
|
Allstate Dealer Services |
| 146 |
|
| 143 |
|
| 2.1 |
|
|
| 442 |
|
| 417 |
|
| 6.0 |
|
Allstate Roadside |
| 69 |
|
| 65 |
|
| 6.2 |
|
|
| 199 |
|
| 194 |
|
| 2.6 |
|
Arity |
| 29 |
|
| 49 |
|
| (40.8 | ) |
|
| 101 |
|
| 163 |
|
| (38.0 | ) |
Allstate Identity Protection |
| 37 |
|
| 34 |
|
| 8.8 |
|
|
| 112 |
|
| 106 |
|
| 5.7 |
|
Adjusted net income (loss) | $ | 27 |
| $ | 35 |
| $ | (8 | ) |
| $ | 102 |
| $ | 131 |
| $ | (29 | ) |
Allstate Protection Plans |
| 20 |
|
| 29 |
|
| (9 | ) |
|
| 79 |
|
| 108 |
|
| (29 | ) |
Allstate Dealer Services |
| 5 |
|
| 10 |
|
| (5 | ) |
|
| 18 |
|
| 27 |
|
| (9 | ) |
Allstate Roadside |
| 7 |
|
| 1 |
|
| 6 |
|
|
| 17 |
|
| 4 |
|
| 13 |
|
Arity |
| (6 | ) |
| (2 | ) |
| (4 | ) |
|
| (13 | ) |
| (4 | ) |
| (9 | ) |
Allstate Identity Protection |
| 1 |
|
| (3 | ) |
| 4 |
|
|
| 1 |
|
| (4 | ) |
| 5 |
|
(1) | Excludes net gains and losses on investments and derivatives. |
|
Allstate Health and Benefits Results (1) | |||||||||||||||||
| Three months ended September 30, |
| Nine months ended September 30, | ||||||||||||||
($ in millions) | 2023 | 2022 | % Change |
| 2023 | 2022 | % Change | ||||||||||
Premiums and contract charges | $ | 463 | $ | 463 | — | % |
| $ | 1,379 | $ | 1,396 | (1.2 | )% | ||||
Employer voluntary benefits |
| 253 |
|
| 257 |
| (1.6 | ) |
|
| 753 |
|
| 777 |
| (3.1 | ) |
Group health |
| 111 |
|
| 96 |
| 15.6 |
|
|
| 328 |
|
| 285 |
| 15.1 |
|
Individual health |
| 99 |
|
| 110 |
| (10.0 | ) |
|
| 298 |
|
| 334 |
| (10.8 | ) |
Adjusted net income | $ | 69 |
| $ | 63 |
| 9.5 | % |
| $ | 182 |
| $ | 187 |
| (2.7 | )% |
(1) | Prior periods have been recast to reflect the impact of the adoption of FASB guidance revising the accounting for certain long-duration insurance contracts. |
|
Allstate Investment Results | |||||||||||||||||||
| Three months ended September 30, |
| Nine months ended September 30, | ||||||||||||||||
($ in millions, except ratios) | 2023 | 2022 | $ / pts Change |
| 2023 | 2022 | $ / pts Change | ||||||||||||
Net investment income | $ | 689 |
| $ | 690 |
| $ | (1 | ) |
| $ | 1,874 |
| $ | 1,846 |
| $ | 28 |
|
Market-based (1) |
| 567 |
|
| 402 |
|
| 165 |
|
|
| 1,610 |
|
| 1,093 |
|
| 517 |
|
Performance-based (1) |
| 186 |
|
| 335 |
|
| (149 | ) |
|
| 439 |
|
| 877 |
|
| (438 | ) |
Net gains (losses) on investments and derivatives | $ | (86 | ) | $ | (167 | ) | $ | 81 |
|
| $ | (223 | ) | $ | (1,167 | ) | $ | 944 |
|
Change in unrealized net capital gains and losses, pre-tax | $ | (855 | ) | $ | (1,009 | ) | $ | 154 |
|
| $ | (325 | ) | $ | (4,506 | ) | $ | 4,181 |
|
Total return on investment portfolio |
| (0.4 | )% |
| (0.8 | )% |
| 0.4 |
|
|
| 2.1 | % |
| (6.4 | )% |
| 8.5 |
|
Total return on investment portfolio (trailing twelve months) |
|
|
|
|
| 4.6 | % |
| (5.3 | )% |
| 9.9 |
|
(1) | Investment expenses are not allocated between market-based and performance-based portfolios with the exception of investee level expenses. |
Proactive Capital Management
“Allstate continues to proactively manage capital and has the financial flexibility, liquidity and capital resources to navigate the challenging operating environment and invest in growth. Our capital position remains sound with statutory surplus in the insurance companies of $13.5 billion and over $2.9 billion of assets are held at the holding company, representing 2.2 times annual fixed charges,” said Jess Merten, Chief Financial Officer. “We are making progress on the comprehensive profit improvement plan and remain confident strategic actions will result in profitable growth and attractive shareholder returns,” concluded Merten.
Visit www.allstateinvestors.com for additional information about Allstate’s results, including a webcast of its quarterly conference call and the call presentation. The conference call will be at 11 a.m. ET on Wednesday, November 2. Financial information, including material announcements about The Allstate Corporation, is routinely posted on www.allstateinvestors.com.
Forward-Looking Statements
This news release contains “forward-looking statements” that anticipate results based on our estimates, assumptions and plans that are subject to uncertainty. These statements are made subject to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements do not relate strictly to historical or current facts and may be identified by their use of words like “plans,” “seeks,” “expects,” “will,” “should,” “anticipates,” “estimates,” “intends,” “believes,” “likely,” “targets” and other words with similar meanings. We believe these statements are based on reasonable estimates, assumptions and plans. However, if the estimates, assumptions or plans underlying the forward-looking statements prove inaccurate or if other risks or uncertainties arise, actual results could differ materially from those communicated in these forward-looking statements. Factors that could cause actual results to differ materially from those expressed in, or implied by, the forward-looking statements may be found in our filings with the U.S. Securities and Exchange Commission, including the “Risk Factors” section in our most recent annual report on Form 10-K. Forward-looking statements are as of the date on which they are made, and we assume no obligation to update or revise any forward-looking statement.
THE ALLSTATE CORPORATION AND SUBSIDIARIES | |||||||
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED) | |||||||
|
|
|
| ||||
($ in millions, except par value data)
| September 30, 2023 |
| December 31, 2022 | ||||
Assets |
|
|
| ||||
Investments |
|
|
| ||||
Fixed income securities, at fair value (amortized cost, net $49,979 and $45,370) | $ | 46,771 |
|
| $ | 42,485 |
|
Equity securities, at fair value (cost $2,393 and $4,253) |
| 2,419 |
|
|
| 4,567 |
|
Mortgage loans, net |
| 830 |
|
|
| 762 |
|
Limited partnership interests |
| 8,363 |
|
|
| 8,114 |
|
Short-term, at fair value (amortized cost $3,369 and $4,174) |
| 3,368 |
|
|
| 4,173 |
|
Other investments, net |
| 1,608 |
|
|
| 1,728 |
|
Total investments |
| 63,359 |
|
|
| 61,829 |
|
Cash |
| 860 |
|
|
| 736 |
|
Premium installment receivables, net |
| 10,102 |
|
|
| 9,165 |
|
Deferred policy acquisition costs |
| 5,824 |
|
|
| 5,442 |
|
Reinsurance and indemnification recoverables, net |
| 9,083 |
|
|
| 9,619 |
|
Accrued investment income |
| 525 |
|
|
| 423 |
|
Deferred income taxes |
| 816 |
|
|
| 382 |
|
Property and equipment, net |
| 909 |
|
|
| 987 |
|
Goodwill |
| 3,502 |
|
|
| 3,502 |
|
Other assets, net |
| 6,196 |
|
|
| 5,904 |
|
Total assets | $ | 101,176 |
|
| $ | 97,989 |
|
Liabilities |
|
|
| ||||
Reserve for property and casualty insurance claims and claims expense | $ | 40,659 |
|
| $ | 37,541 |
|
Reserve for future policy benefits |
| 1,309 |
|
|
| 1,322 |
|
Contractholder funds |
| 884 |
|
|
| 879 |
|
Unearned premiums |
| 24,518 |
|
|
| 22,299 |
|
Claim payments outstanding |
| 1,480 |
|
|
| 1,268 |
|
Other liabilities and accrued expenses |
| 9,933 |
|
|
| 9,353 |
|
Debt |
| 7,946 |
|
|
| 7,964 |
|
Total liabilities |
| 86,729 |
|
|
| 80,626 |
|
Equity |
|
|
| ||||
Preferred stock and additional capital paid-in, $1 par value, 25 million shares authorized, 82.0 thousand and 81.0 thousand shares issued and outstanding, $2,050 and $2,025 aggregate liquidation preference |
| 2,001 |
|
|
| 1,970 |
|
Common stock, $.01 par value, 2.0 billion shares authorized and 900 million issued, 262 million and 263 million shares outstanding |
| 9 |
|
|
| 9 |
|
Additional capital paid-in |
| 3,811 |
|
|
| 3,788 |
|
Retained income |
| 48,491 |
|
|
| 50,970 |
|
Treasury stock, at cost (638 million and 637 million shares) |
| (37,149 | ) |
|
| (36,857 | ) |
Accumulated other comprehensive income: |
|
|
| ||||
Unrealized net capital gains and losses |
| (2,512 | ) |
|
| (2,255 | ) |
Unrealized foreign currency translation adjustments |
| (101 | ) |
|
| (165 | ) |
Unamortized pension and other postretirement prior service credit |
| 15 |
|
|
| 29 |
|
Discount rate for reserve for future policy benefits |
| 28 |
|
|
| (1 | ) |
Total accumulated other comprehensive loss |
| (2,570 | ) |
|
| (2,392 | ) |
Total Allstate shareholders’ equity |
| 14,593 |
|
|
| 17,488 |
|
Noncontrolling interest |
| (146 | ) |
|
| (125 | ) |
Total equity |
| 14,447 |
|
|
| 17,363 |
|
Total liabilities and equity | $ | 101,176 |
|
| $ | 97,989 |
|
THE ALLSTATE CORPORATION AND SUBSIDIARIES | |||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) | |||||||||||||||
|
|
|
| ||||||||||||
($ in millions, except per share data) | Three months ended September 30, |
| Nine months ended September 30, | ||||||||||||
| 2023 |
| 2022 |
| 2023 |
| 2022 | ||||||||
|
|
|
|
|
|
|
| ||||||||
Revenues |
|
|
|
|
|
|
| ||||||||
Property and casualty insurance premiums | $ | 12,839 |
|
| $ | 11,661 |
|
| $ | 37,482 |
|
| $ | 34,004 |
|
Accident and health insurance premiums and contract charges |
| 463 |
|
|
| 463 |
|
|
| 1,379 |
|
|
| 1,396 |
|
Other revenue |
| 592 |
|
|
| 561 |
|
|
| 1,750 |
|
|
| 1,684 |
|
Net investment income |
| 689 |
|
|
| 690 |
|
|
| 1,874 |
|
|
| 1,846 |
|
Net gains (losses) on investments and derivatives |
| (86 | ) |
|
| (167 | ) |
|
| (223 | ) |
|
| (1,167 | ) |
Total revenues |
| 14,497 |
|
|
| 13,208 |
|
|
| 42,262 |
|
|
| 37,763 |
|
|
|
|
|
|
|
|
| ||||||||
Costs and expenses |
|
|
|
|
|
|
| ||||||||
Property and casualty insurance claims and claims expense |
| 10,237 |
|
|
| 10,073 |
|
|
| 32,290 |
|
|
| 27,262 |
|
Accident, health and other policy benefits (including remeasurement (gains) losses of $0, $(4), $0 and $(4)) |
| 262 |
|
|
| 252 |
|
|
| 785 |
|
|
| 785 |
|
Amortization of deferred policy acquisition costs |
| 1,841 |
|
|
| 1,683 |
|
|
| 5,374 |
|
|
| 4,909 |
|
Operating costs and expenses |
| 1,771 |
|
|
| 1,842 |
|
|
| 5,273 |
|
|
| 5,594 |
|
Pension and other postretirement remeasurement (gains) losses |
| 149 |
|
|
| 79 |
|
|
| 56 |
|
|
| 91 |
|
Restructuring and related charges |
| 87 |
|
|
| 14 |
|
|
| 141 |
|
|
| 27 |
|
Amortization of purchased intangibles |
| 83 |
|
|
| 90 |
|
|
| 246 |
|
|
| 264 |
|
Interest expense |
| 88 |
|
|
| 85 |
|
|
| 272 |
|
|
| 251 |
|
Total costs and expenses |
| 14,518 |
|
|
| 14,118 |
|
|
| 44,437 |
|
|
| 39,183 |
|
|
|
|
|
|
|
|
| ||||||||
Loss from operations before income tax expense |
| (21 | ) |
|
| (910 | ) |
|
| (2,175 | ) |
|
| (1,420 | ) |
|
|
|
|
|
|
|
| ||||||||
Income tax benefit |
| (17 | ) |
|
| (236 | ) |
|
| (475 | ) |
|
| (374 | ) |
|
|
|
|
|
|
|
| ||||||||
Net loss |
| (4 | ) |
|
| (674 | ) |
|
| (1,700 | ) |
|
| (1,046 | ) |
|
|
|
|
|
|
|
| ||||||||
Less: Net income (loss) attributable to noncontrolling interest |
| 1 |
|
|
| (15 | ) |
|
| (23 | ) |
|
| (34 | ) |
|
|
|
|
|
|
|
| ||||||||
Net loss attributable to Allstate |
| (5 | ) |
|
| (659 | ) |
|
| (1,677 | ) |
|
| (1,012 | ) |
|
|
|
|
|
|
|
| ||||||||
Less: Preferred stock dividends |
| 36 |
|
|
| 26 |
|
|
| 99 |
|
|
| 79 |
|
|
|
|
|
|
|
|
| ||||||||
Net loss applicable to common shareholders | $ | (41 | ) |
| $ | (685 | ) |
| $ | (1,776 | ) |
| $ | (1,091 | ) |
|
|
|
|
|
|
|
| ||||||||
Earnings per common share: |
|
|
|
|
|
|
| ||||||||
Net loss applicable to common shareholders per common share - Basic | $ | (0.16 | ) |
| $ | (2.55 | ) |
| $ | (6.76 | ) |
| $ | (3.99 | ) |
Weighted average common shares - Basic |
| 261.8 |
|
|
| 268.7 |
|
|
| 262.6 |
|
|
| 273.5 |
|
Net loss applicable to common shareholders per common share - Diluted | $ | (0.16 | ) |
| $ | (2.55 | ) |
| $ | (6.76 | ) |
| $ | (3.99 | ) |
Weighted average common shares - Diluted |
| 261.8 |
|
|
| 268.7 |
|
|
| 262.6 |
|
|
| 273.5 |
|
Definitions of Non-GAAP Measures
We believe that investors’ understanding of Allstate’s performance is enhanced by our disclosure of the following non-GAAP measures. Our methods for calculating these measures may differ from those used by other companies and therefore comparability may be limited.
Adjusted net income is net income (loss) applicable to common shareholders, excluding:
Net income (loss) applicable to common shareholders is the GAAP measure that is most directly comparable to adjusted net income.
We use adjusted net income as an important measure to evaluate our results of operations. We believe that the measure provides investors with a valuable measure of the Company’s ongoing performance because it reveals trends in our insurance and financial services business that may be obscured by the net effect of net gains and losses on investments and derivatives, pension and other postretirement remeasurement gains and losses, amortization or impairment of purchased intangibles, gain or loss on disposition and adjustments for other significant non-recurring, infrequent or unusual items and the related tax expense or benefit of these items. Net gains and losses on investments and derivatives, and pension and other postretirement remeasurement gains and losses may vary significantly between periods and are generally driven by business decisions and external economic developments such as capital market conditions, the timing of which is unrelated to the insurance underwriting process. Gain or loss on disposition is excluded because it is non-recurring in nature and the amortization or impairment of purchased intangibles is excluded because it relates to the acquisition purchase price and is not indicative of our underlying business results or trends. Non-recurring items are excluded because, by their nature, they are not indicative of our business or economic trends. Accordingly, adjusted net income excludes the effect of items that tend to be highly variable from period to period and highlights the results from ongoing operations and the underlying profitability of our business. A byproduct of excluding these items to determine adjusted net income is the transparency and understanding of their significance to net income variability and profitability while recognizing these or similar items may recur in subsequent periods. Adjusted net income is used by management along with the other components of net income (loss) applicable to common shareholders to assess our performance. We use adjusted measures of adjusted net income in incentive compensation. Therefore, we believe it is useful for investors to evaluate net income (loss) applicable to common shareholders, adjusted net income and their components separately and in the aggregate when reviewing and evaluating our performance. We note that investors, financial analysts, financial and business media organizations and rating agencies utilize adjusted net income results in their evaluation of our and our industry’s financial performance and in their investment decisions, recommendations and communications as it represents a reliable, representative and consistent measurement of the industry and the Company and management’s performance. We note that the price to earnings multiple commonly used by insurance investors as a forward-looking valuation technique uses adjusted net income as the denominator. Adjusted net income should not be considered a substitute for net income (loss) applicable to common shareholders and does not reflect the overall profitability of our business.
The following tables reconcile net income (loss) applicable to common shareholders and adjusted net income. Taxes on adjustments to reconcile net income (loss) applicable to common shareholders and adjusted net income (loss) generally use a 21% effective tax rate.
($ in millions, except per share data) | Three months ended September 30, | ||||||||||||||
| Consolidated |
| Per diluted common share | ||||||||||||
| 2023 |
| 2022 |
| 2023 |
| 2022 | ||||||||
Net loss applicable to common shareholders (1) | $ | (41 | ) |
| $ | (685 | ) |
| $ | (0.16 | ) |
| $ | (2.55 | ) |
Net (gains) losses on investments and derivatives |
| 86 |
|
|
| 167 |
|
|
| 0.33 |
|
|
| 0.62 |
|
Pension and other postretirement remeasurement (gains) losses |
| 149 |
|
|
| 79 |
|
|
| 0.57 |
|
|
| 0.29 |
|
Amortization of purchased intangibles |
| 83 |
|
|
| 90 |
|
|
| 0.31 |
|
|
| 0.34 |
|
(Gain) loss on disposition |
| 5 |
|
|
| 5 |
|
|
| 0.02 |
|
|
| 0.02 |
|
Income tax expense (benefit) |
| (68 | ) |
|
| (67 | ) |
|
| (0.26 | ) |
|
| (0.25 | ) |
Adjusted net income (loss) * (1) | $ | 214 |
|
| $ | (411 | ) |
| $ | 0.81 |
|
| $ | (1.53 | ) |
|
|
|
|
|
|
|
| ||||||||
Weighted average dilutive potential common shares excluded due to net loss applicable to common shareholders (1) |
|
|
|
|
| 1.5 |
|
|
| 2.9 |
| ||||
|
|
|
|
|
|
|
| ||||||||
| Nine months ended September 30, | ||||||||||||||
| Consolidated |
| Per diluted common share | ||||||||||||
| 2023 |
| 2022 |
| 2023 |
| 2022 | ||||||||
Net loss applicable to common shareholders (1) | $ | (1,776 | ) |
| $ | (1,091 | ) |
| $ | (6.76 | ) |
| $ | (3.99 | ) |
Net (gains) losses on investments and derivatives |
| 223 |
|
|
| 1,167 |
|
|
| 0.85 |
|
|
| 4.23 |
|
Pension and other postretirement remeasurement (gains) losses |
| 56 |
|
|
| 91 |
|
|
| 0.21 |
|
|
| 0.34 |
|
Amortization of purchased intangibles |
| 246 |
|
|
| 264 |
|
|
| 0.94 |
|
|
| 0.96 |
|
(Gain) loss on disposition |
| 4 |
|
|
| (6 | ) |
|
| 0.02 |
|
|
| (0.02 | ) |
Non-recurring costs (2) |
| 90 |
|
|
| — |
|
|
| 0.34 |
|
|
| — |
|
Income tax expense (benefit) |
| (133 | ) |
|
| (313 | ) |
|
| (0.51 | ) |
|
| (1.12 | ) |
Adjusted net income (loss) * (1) | $ | (1,290 | ) |
| $ | 112 |
|
| $ | (4.91 | ) |
| $ | 0.40 |
|
|
|
|
|
|
|
|
| ||||||||
Weighted average dilutive potential common shares excluded due to net loss applicable to common shareholders (1) |
|
|
|
|
| 1.9 |
|
|
| 3.3 |
|
_____________ | |
(1) | In periods where a net loss or adjusted net loss is reported, weighted average shares for basic earnings per share is used for calculating diluted earnings per share because all dilutive potential common shares are anti-dilutive and are therefore excluded from the calculation. |
(2) | Relates to settlement costs for non-recurring litigation that is outside of the ordinary course of business. |
Adjusted net income return on Allstate common shareholders’ equity is a ratio that uses a non-GAAP measure. It is calculated by dividing the rolling 12-month adjusted net income by the average of Allstate common shareholders’ equity at the beginning and at the end of the 12-months, after excluding the effect of unrealized net capital gains and losses. Return on Allstate common shareholders’ equity is the most directly comparable GAAP measure. We use adjusted net income as the numerator for the same reasons we use adjusted net income, as discussed previously. We use average Allstate common shareholders’ equity excluding the effect of unrealized net capital gains and losses for the denominator as a representation of common shareholders’ equity primarily applicable to Allstate's earned and realized business operations because it eliminates the effect of items that are unrealized and vary significantly between periods due to external economic developments such as capital market conditions like changes in equity prices and interest rates, the amount and timing of which are unrelated to the insurance underwriting process. We use it to supplement our evaluation of net income (loss) applicable to common shareholders and return on Allstate common shareholders’ equity because it excludes the effect of items that tend to be highly variable from period to period. We believe that this measure is useful to investors and that it provides a valuable tool for investors when considered along with return on Allstate common shareholders’ equity because it eliminates the after-tax effects of realized and unrealized net capital gains and losses that can fluctuate significantly from period to period and that are driven by economic developments, the magnitude and timing of which are generally not influenced by management. In addition, it eliminates non-recurring items that are not indicative of our ongoing business or economic trends. A byproduct of excluding the items noted above to determine adjusted net income return on Allstate common shareholders’ equity from return on Allstate common shareholders’ equity is the transparency and understanding of their significance to return on common shareholders’ equity variability and profitability while recognizing these or similar items may recur in subsequent periods. We use adjusted measures of adjusted net income return on Allstate common shareholders’ equity in incentive compensation. Therefore, we believe it is useful for investors to have adjusted net income return on Allstate common shareholders’ equity and return on Allstate common shareholders’ equity when evaluating our performance. We note that investors, financial analysts, financial and business media organizations and rating agencies utilize adjusted net income return on common shareholders’ equity results in their evaluation of our and our industry’s financial performance and in their investment decisions, recommendations and communications as it represents a reliable, representative and consistent measurement of the industry and the company and management’s utilization of capital. We also provide it to facilitate a comparison to our long-term adjusted net income return on Allstate common shareholders’ equity goal. Adjusted net income return on Allstate common shareholders’ equity should not be considered a substitute for return on Allstate common shareholders’ equity and does not reflect the overall profitability of our business.
The following tables reconcile return on Allstate common shareholders’ equity and adjusted net income (loss) return on Allstate common shareholders’ equity.
($ in millions) | For the twelve months ended September 30, | ||||||
| 2023 |
| 2022 | ||||
Return on Allstate commonshareholders’ equity |
|
|
| ||||
Numerator: |
|
|
| ||||
Net income (loss) applicable to common shareholders | $ | (2,079 | ) |
| $ | (294 | ) |
Denominator: |
|
|
| ||||
Beginning Allstate commonshareholders’ equity | $ | 15,713 |
|
| $ | 24,515 |
|
Ending Allstate commonshareholders’ equity (1) |
| 12,592 |
|
|
| 15,713 |
|
Average Allstate commonshareholders’ equity | $ | 14,153 |
|
| $ | 20,114 |
|
Return on Allstate common shareholders’ equity |
| (14.7 | )% |
|
| (1.5 | )% |
($ in millions) | For the twelve months ended September 30, | ||||||
| 2023 |
| 2022 | ||||
Adjusted net income (loss) return on Allstate common shareholders’ equity |
|
|
| ||||
Numerator: |
|
|
| ||||
Adjusted net income (loss) * | $ | (1,641 | ) |
| $ | 915 |
|
|
|
|
| ||||
Denominator: |
|
|
| ||||
Beginning Allstate commonshareholders’ equity | $ | 15,713 |
|
| $ | 24,515 |
|
Less: Unrealized net capital gains and losses |
| (2,929 | ) |
|
| 1,829 |
|
Adjusted beginning Allstate commonshareholders’ equity |
| 18,642 |
|
|
| 22,686 |
|
|
|
|
| ||||
Ending Allstate commonshareholders’ equity (1) |
| 12,592 |
|
|
| 15,713 |
|
Less: Unrealized net capital gains and losses |
| (2,512 | ) |
|
| (2,929 | ) |
Adjusted ending Allstate commonshareholders’ equity |
| 15,104 |
|
|
| 18,642 |
|
Average adjusted Allstate commonshareholders’ equity | $ | 16,873 |
|
| $ | 20,664 |
|
Adjusted net income (loss) return on Allstate common shareholders’ equity * |
| (9.7 | )% |
|
| 4.4 | % |
_____________ | |
(1) | Excludes equity related to preferred stock of $2,001 million and $1,970 million as of September 30, 2023 and 2022, respectively. |
Combined ratio excluding the effect of catastrophes, prior year reserve reestimates and amortization or impairment of purchased intangibles (“underlying combined ratio”) is a non-GAAP ratio, which is computed as the difference between four GAAP operating ratios: the combined ratio, the effect of catastrophes on the combined ratio, the effect of prior year non-catastrophe reserve reestimates on the combined ratio, and the effect of amortization or impairment of purchased intangibles on the combined ratio. We believe that this ratio is useful to investors, and it is used by management to reveal the trends in our Property-Liability business that may be obscured by catastrophe losses, prior year reserve reestimates and amortization or impairment of purchased intangibles. Catastrophe losses cause our loss trends to vary significantly between periods as a result of their incidence of occurrence and magnitude, and can have a significant impact on the combined ratio. Prior year reserve reestimates are caused by unexpected loss development on historical reserves, which could increase or decrease current year net income. Amortization or impairment of purchased intangibles relates to the acquisition purchase price and is not indicative of our underlying insurance business results or trends. We believe it is useful for investors to evaluate these components separately and in the aggregate when reviewing our underwriting performance. The most directly comparable GAAP measure is the combined ratio. The underlying combined ratio should not be considered a substitute for the combined ratio and does not reflect the overall underwriting profitability of our business.
The following tables reconcile the respective combined ratio to the underlying combined ratio. Underwriting margin is calculated as 100% minus the combined ratio.
Property-Liability | Three months ended September 30, |
| Nine months ended September 30, | ||||||||
| 2023 |
| 2022 |
| 2023 |
| 2022 | ||||
Combined ratio | 103.4 |
|
| 111.6 |
|
| 109.8 |
|
| 105.8 |
|
Effect of catastrophe losses | (9.6 | ) |
| (6.8 | ) |
| (15.5 | ) |
| (7.2 | ) |
Effect of prior year non-catastrophe reserve reestimates | (1.4 | ) |
| (7.8 | ) |
| (1.1 | ) |
| (4.5 | ) |
Effect of amortization of purchased intangibles | (0.5 | ) |
| (0.6 | ) |
| (0.5 | ) |
| (0.5 | ) |
Underlying combined ratio* | 91.9 |
|
| 96.4 |
|
| 92.7 |
|
| 93.6 |
|
|
|
|
|
|
|
|
| ||||
Effect of prior year catastrophe reserve reestimates | 0.1 |
|
| (0.1 | ) |
| — |
|
| 0.1 |
|
Allstate Protection - Auto Insurance | Three months ended September 30, |
| Nine months ended September 30, | ||||||||
| 2023 |
| 2022 |
| 2023 |
| 2022 | ||||
Combined ratio | 102.1 |
|
| 117.4 |
|
| 104.9 |
|
| 109.3 |
|
Effect of catastrophe losses | (2.6 | ) |
| (4.4 | ) |
| (2.7 | ) |
| (2.2 | ) |
Effect of prior year non-catastrophe reserve reestimates | (0.3 | ) |
| (8.5 | ) |
| (0.5 | ) |
| (4.9 | ) |
Effect of amortization of purchased intangibles | (0.4 | ) |
| (0.5 | ) |
| (0.5 | ) |
| (0.5 | ) |
Underlying combined ratio* | 98.8 |
|
| 104.0 |
|
| 101.2 |
|
| 101.7 |
|
|
|
|
|
|
|
|
| ||||
Effect of prior year catastrophe reserve reestimates | 0.1 |
|
| (0.1 | ) |
| (0.1 | ) |
| (0.3 | ) |
Allstate Protection - Homeowners Insurance | Three months ended September 30, |
| Nine months ended September 30, | ||||||||
| 2023 |
| 2022 |
| 2023 |
| 2022 | ||||
Combined ratio | 104.4 |
|
| 89.9 |
|
| 122.8 |
|
| 93.8 |
|
Effect of catastrophe losses | (29.6 | ) |
| (13.4 | ) |
| (52.1 | ) |
| (21.4 | ) |
Effect of prior year non-catastrophe reserve reestimates | (1.5 | ) |
| (1.9 | ) |
| (0.9 | ) |
| (1.3 | ) |
Effect of amortization of purchased intangibles | (0.4 | ) |
| (0.5 | ) |
| (0.4 | ) |
| (0.5 | ) |
Underlying combined ratio* | 72.9 |
|
| 74.1 |
|
| 69.4 |
|
| 70.6 |
|
|
|
|
|
|
|
|
| ||||
Effect of prior year catastrophe reserve reestimates | 0.6 |
|
| 0.1 |
|
| 0.7 |
|
| 1.0 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20231101233935/en/
Al Scott Media Relations (847) 402-5600
Brent Vandermause Investor Relations (847) 402-2800
Source: The Allstate Corporation