Profit improvement actions and mild weather
benefit results
The Allstate Corporation (NYSE: ALL) today reported financial
results for the fourth quarter of 2023.
The Allstate Corporation
Consolidated Highlights (1)
Three months ended December
31,
Twelve months ended December
31,
($ in millions, except per share data
and ratios)
2023
2022
% / pts Change
2023
2022
% / pts Change
Consolidated revenues
$
14,832
$
13,648
8.7
%
$
57,094
$
51,411
11.1
%
Net income (loss) applicable to common
shareholders
1,460
(303
)
NM
(316
)
(1,394
)
(77.3
)
per diluted common share (2)
5.52
(1.15
)
NM
(1.20
)
(5.14
)
(76.7
)
Adjusted net income (loss)*
1,541
(351
)
NM
251
(239
)
NM
per diluted common share* (2)
5.82
(1.33
)
NM
0.95
(0.88
)
NM
Return on Allstate common shareholders’
equity (trailing twelve months)
Net income (loss) applicable to common
shareholders
(2.0
)%
(7.2
)%
5.2
Adjusted net income (loss)*
1.5
%
(1.2
)%
2.7
Common shares outstanding (in
millions)
262.5
263.5
(0.4
)
Book value per common share
59.39
58.12
2.2
Consolidated premiums written
(3)
13,835
12,658
9.3
54,856
50,318
9.0
Property-Liability insurance premiums
earned
12,601
11,380
10.7
48,427
43,909
10.3
Property-Liability combined
ratio
Recorded
89.5
109.1
(19.6
)
104.5
106.6
(2.1
)
Underlying combined ratio*
86.9
99.2
(12.3
)
91.2
95.1
(3.9
)
Catastrophe losses
68
779
(91.3
)
5,636
3,112
81.1
Total policies in force (in
thousands)
192,781
189,071
2.0
(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 had strong profitability in the quarter with net
income of $1.5 billion due to improved auto profitability and mild
weather,” said Tom Wilson, Chair, President and CEO of The Allstate
Corporation. “Improved underwriting performance and higher
investment income generated adjusted net income* of $1.5 billion in
the fourth quarter, or $5.82 per diluted common share.
Property-Liability written premiums increased to $12.6 billion,
10.1% over the prior year quarter driven by rate increases in auto
and home insurance and growth in policies at National General.
Property-Liability underwriting income totaled $1.3 billion in the
quarter with a combined ratio of 89.5. The investment portfolio
return was 4.6% as proactive actions, including fixed income
duration extension, resulted in excellent investment returns.”
“The transformation of Allstate’s personal property-liability
business to generate higher growth also made significant progress
by reducing expenses, expanding customer access and leveraging
technology. Allstate exclusive agent bundling and productivity
increased, excluding three states where profit actions reduced new
business, and National General is growing through independent
agents. The new affordable, simple and connected auto insurance
product is now available in seven states, offering a differentiated
customer experience built on an agile technology ecosystem.
Allstate Protection Plans is broadening protection solutions in the
U.S. and through international growth. Allstate will continue
increasing shareholder value by improving profitability and
generating long-term profitable growth,” concluded Wilson.
Fourth Quarter 2023 Results
- Total revenues of $14.8 billion in the fourth quarter of 2023
increased 8.7%, or $1.2 billion, compared to the prior year quarter
driven by a $1.2 billion increase in Property-Liability earned
premium due to higher average premiums.
- Net income applicable to common shareholders was $1.5 billion
in the fourth quarter of 2023 compared to a loss of $303 million in
the prior year quarter, due to improved Property-Liability
underwriting results. Adjusted net income* was $1.5 billion, or
$5.82 per diluted share, compared to an adjusted net loss* of $351
million in the prior year quarter.
- Property-Liability earned premiums of $12.6 billion
increased 10.7% in the fourth quarter of 2023 compared to the prior
year quarter, primarily driven by higher average premiums from rate
increases. Underwriting income of $1.3 billion in the quarter
increased by $2.4 billion compared to the prior year quarter, due
to increased premiums earned, improved underlying losses and lower
catastrophe losses due to favorable weather.
Property-Liability
Results
Three months ended December
31,
Twelve months ended December
31,
($ in millions)
2023
2022
% / pts Change
2023
2022
% / pts Change
Premiums earned
$
12,601
$
11,380
10.7
%
$
48,427
$
43,909
10.3
%
Allstate brand
10,420
9,654
7.9
40,489
37,470
8.1
National General
2,181
1,726
26.4
7,938
6,439
23.3
Premiums written
$
12,640
$
11,480
10.1
%
$
50,347
$
45,787
10.0
%
Allstate brand
10,425
9,694
7.5
41,675
38,895
7.1
National General
2,215
1,786
24.0
8,672
6,892
25.8
Underwriting income (loss)
$
1,325
$
(1,035
)
NM
$
(2,184
)
$
(2,911
)
(25.0
)%
Allstate brand
1,326
(990
)
NM
(1,661
)
(2,613
)
(36.4
)
National General
3
(44
)
(106.8
)
(440
)
(177
)
148.6
Recorded combined ratio
89.5
109.1
(19.6
)
104.5
106.6
(2.1
)
Underlying combined ratio*
86.9
99.2
(12.3
)
91.2
95.1
(3.9
)
- Premiums written of $12.6 billion increased 10.1% compared to
the prior year quarter driven by both the Allstate brand and
National General. Allstate brand increased 7.5% primarily due to
higher auto and homeowners average premium, partially offset by the
impact of profitability actions on personal auto and commercial
lines policies in force. National General increased 24.0%
reflecting higher average premium and policies in force
growth.
- Allstate brand underwriting income in the fourth quarter of
2023 improved to $1.3 billion compared to a $990 million loss in
the prior year quarter, driven by higher earned premiums, lower
catastrophe losses and improved underlying loss experience.
- National General underwriting income of $3 million in the
fourth quarter of 2023 increased by $47 million compared to a loss
in the prior year quarter, reflecting higher earned premiums, a 6.1
point improvement in the expense ratio and lower catastrophe
losses, partially offset by higher non-catastrophe losses and
unfavorable prior year reserve reestimates.
- Property-Liability underlying combined ratio* of 86.9 in the
fourth quarter of 2023 improved 12.3 points compared to the prior
year quarter, primarily driven by higher earned premiums, improved
loss experience partially due to mild weather conditions and
operating efficiencies. While loss trends have stabilized, claim
severity increases remain elevated relative to historical
levels.
- Allstate Protection auto insurance results reflect the
impact of inflation in loss costs and the comprehensive plan to
restore margins through higher rates, lower expenses, underwriting
actions and claims process enhancements. National General’s
distribution capacity and a broader product portfolio is generating
growth through independent agents.
Allstate Protection Auto
Results
Three months ended December
31,
Twelve months ended December
31,
($ in millions, except ratios)
2023
2022
% / pts Change
2023
2022
% / pts Change
Premiums earned
$
8,566
$
7,741
10.7
%
$
32,940
$
29,715
10.9
%
Allstate brand
7,042
6,544
7.6
27,384
25,286
8.3
National General
1,524
1,197
27.3
5,556
4,429
25.4
Premiums written
$
8,570
$
7,774
10.2
%
$
33,958
$
30,666
10.7
%
Allstate brand
7,041
6,560
7.3
27,894
25,946
7.5
National General
1,529
1,214
25.9
6,064
4,720
28.5
Policies in Force (in
thousands)
25,283
26,034
(2.9
)%
Allstate brand
20,326
21,658
(6.2
)
National General
4,957
4,376
13.3
Recorded combined ratio
98.9
112.6
(13.7
)
103.4
110.1
(6.7
)
Underlying combined ratio*
96.4
109.2
(12.8
)
99.9
103.6
(3.7
)
- Earned and written premiums increased 10.7% and 10.2% compared
to the prior year quarter, respectively. The increase was driven by
higher average premium from rate increases, partially offset by a
decline in policies in force.
- Allstate brand auto net written premium growth of 7.3% compared
to the prior year quarter reflects a 13.8% increase in average
gross written premium driven by rate increases, partially offset by
a decline in policies in force from lower new business and
retention.
- National General auto net written premiums grew 25.9% compared
to the prior year quarter driven by higher average premium and a
13.3% increase in policies in force.
- Allstate brand auto rate increases were implemented in 33
locations in the fourth quarter at an average of 13.5%, resulting
in an annualized total brand premium impact of 6.9% in the quarter
and 16.4% for the year. National General auto rate increases were
implemented in 39 locations in the fourth quarter at an average of
10.2%, resulting in an annualized total brand premium impact of
4.0% in the quarter and 12.8% for the year. Rate increases will
continue to be implemented to keep pace with loss trends and
improve margins in states where we have not yet achieved rate
adequacy.
- The recorded auto insurance combined ratio of 98.9 in the
fourth quarter of 2023 was 13.7 points lower than the prior year
quarter, reflecting higher earned premiums, improved underlying
loss experience, operating efficiencies and lower unfavorable prior
year reserve reestimates.
- Prior year non-catastrophe reserve reestimates were unfavorable
$148 million in the fourth quarter, reflecting adverse reserve
development of $116 million in the Allstate brand, driven
principally by costs related to claims in litigation, and $32
million for National General.
- The underlying combined ratio* of 96.4 improved by 12.8 points
compared to the prior year quarter from higher average premium,
operating efficiencies and the favorable influence of milder
weather conditions on accident frequency. These impacts more than
offset historically elevated claim severity levels. Weighted
average current report year incurred severity for Allstate brand
major coverages is estimated to increase by 8-9% compared to report
year 2022, a slightly lower increase from 2023 estimates as of the
third quarter. The improvement in severity from claims reported in
the first three quarters of the year represent a favorable impact
of approximately 1.8 points on the fourth quarter underlying
combined ratio. Excluding this impact, the fourth quarter
underlying combined ratio* would have been 98.2.
- Allstate Protection homeowners insurance growth reflects
higher rates and policies in force growth, driven by National
General and Allstate brand. Underwriting income was favorably
impacted by lower catastrophe losses and non-catastrophe claim
frequency due to the mild weather experienced in the quarter.
Allstate Protection Homeowners
Results
Three months ended December
31,
Twelve months ended December
31,
($ in millions, except ratios)
2023
2022
% / pts Change
2023
2022
% / pts Change
Premiums earned
$
3,077
$
2,720
13.1
%
$
11,739
$
10,418
12.7
%
Allstate brand
2,695
2,408
11.9
10,333
9,249
11.7
National General
382
312
22.4
1,406
1,169
20.3
Premiums written
$
3,144
$
2,775
13.3
%
$
12,584
$
11,209
12.3
%
Allstate brand
2,753
2,448
12.5
11,018
9,936
10.9
National General
391
327
19.6
1,566
1,273
23.0
Policies in Force (in
thousands)
7,338
7,260
1.1
%
Allstate brand
6,652
6,622
0.5
National General
686
638
7.5
Recorded combined ratio
62.0
92.8
(30.8
)
106.8
93.6
13.2
Catastrophe Losses
$
21
$
603
(96.5
)%
$
4,537
$
2,253
101.4
%
Underlying combined ratio*
61.3
69.5
(8.2
)
67.3
70.3
(3.0
)
- Earned premiums increased by 13.1% and written premiums
increased 13.3% compared to the prior year quarter, primarily
reflecting higher average premium and policies in force growth of
1.1%.
- Allstate brand net written premiums grew 12.5% compared to the
prior year quarter, primarily driven by implemented rate increases
and inflation in insured home replacement costs, along with modest
policies in force growth.
- National General net written premiums grew 19.6% compared to
the prior year quarter due to policies in force growth, driven by
the new middle market and preferred product offering, and higher
average premiums from implemented rate increases.
- Allstate brand homeowners implemented rate increases in 20
locations in the fourth quarter at an average of 9.0%, resulting in
an annualized total brand premium impact of 1.8% in the quarter and
11.3% in 2023. National General homeowners rate increases were
implemented in 17 locations in the fourth quarter at an average of
18.5%, resulting in an annualized total brand premium impact of
4.5% in the quarter and 11.0% in 2023.
- The recorded homeowners insurance combined ratio of 62.0 was
30.8 points below the fourth quarter of 2022, due to lower
catastrophe losses and higher earned premiums.
- Catastrophe losses of $21 million in the quarter decreased $582
million compared to the prior year quarter reflecting milder
weather conditions and favorable development from prior events in
2023 and prior years.
- The underlying combined ratio* of 61.3 decreased by 8.2 points
compared to the prior year quarter, driven by higher earned premium
and favorable non-catastrophe claim frequency from milder weather,
partially offset by higher non-catastrophe claim severity
reflecting increases in labor and materials costs. The underlying
combined ratio* was 67.3 in 2023, improving 3.0 points compared to
the prior year.
- Protection Services continues to broaden the protection
provided to an increasing number of customers largely through
embedded distribution programs. Revenues increased to $719 million
in the fourth quarter of 2023, 11.8% higher than the prior year
quarter, primarily due to Allstate Protection Plans. Adjusted net
income of $4 million decreased by $34 million compared to the prior
year quarter, as a result of an increase in state income taxes and
deferred tax liabilities. This tax adjustment generated a net tax
benefit for the enterprise, but adversely impacted Protection
Services income in the fourth quarter, particularly Allstate Dealer
Services.
Protection Services
Results
Three months ended December
31,
Twelve months ended December
31,
($ in millions)
2023
2022
% / $ Change
2023
2022
% / $ Change
Total revenues (1)
$
719
$
643
11.8
%
$
2,773
$
2,539
9.2
%
Allstate Protection Plans
439
367
19.6
1,639
1,383
18.5
Allstate Dealer Services
146
145
0.7
588
562
4.6
Allstate Roadside
66
64
3.1
265
258
2.7
Arity
32
33
(3.0
)
133
196
(32.1
)
Allstate Identity Protection
36
34
5.9
148
140
5.7
Adjusted net income (loss)
$
4
$
38
$
(34
)
$
106
$
169
$
(63
)
Allstate Protection Plans
38
42
(4
)
117
150
(33
)
Allstate Dealer Services
(33
)
8
(41
)
(15
)
35
(50
)
Allstate Roadside
7
3
4
24
7
17
Arity
(5
)
(7
)
2
(18
)
(11
)
(7
)
Allstate Identity Protection
(3
)
(8
)
5
(2
)
(12
)
10
(1)
Excludes net gains and losses on
investments and derivatives.
- Allstate Protection Plans’ expanded products and
international growth resulted in revenue of $439 million, $72
million or 19.6% higher than the prior year quarter. Adjusted net
income of $38 million in the fourth quarter of 2023 was $4 million
lower than the prior year quarter, primarily due to the proportion
of lower margin business, investments in technology and higher
major appliance claim costs.
- Allstate Dealer Services generated revenue of $146
million through auto dealers, which was 0.7% higher than the fourth
quarter of 2022 due to higher earned premium. Adjusted net loss of
$33 million in the fourth quarter was $41 million lower than the
prior year quarter driven by an increase in state income taxes and
deferred tax liabilities.
- Allstate Roadside revenue of $66 million in the fourth
quarter of 2023 increased 3.1% compared to the prior year quarter
driven by price increases and new business growth. Adjusted net
income was $4 million higher than the prior year quarter, primarily
driven by increased pricing, improved provider capacity and lower
claim frequency.
- Arity revenue of $32 million decreased $1 million
compared to the prior year quarter, primarily due to lower
third-party lead sales. Adjusted net loss was $5 million in the
fourth quarter of 2023 compared to a $7 million loss in the prior
year quarter.
- Allstate Identity Protection revenue of $36 million in
the fourth quarter of 2023 was 5.9% higher than the prior year
quarter due to growth from new and existing clients. Adjusted net
loss of $3 million in the fourth quarter of 2023 compared to an $8
million loss in the prior year quarter reflects lower
expenses.
- Allstate Health and Benefits premiums and contract
charges increased 7.1%, or $31 million, compared to the prior year
quarter driven by growth in individual health and group health.
Adjusted net income of $60 million in the fourth quarter of 2023
increased 3.4%, or $2 million, compared to the prior year quarter,
primarily due to higher individual health results, partially offset
by group health.
Allstate Health and Benefits
Results (1)
Three months ended December
31,
Twelve months ended December
31,
($ in millions)
2023
2022
% Change
2023
2022
% Change
Premiums and contract charges
$
467
$
436
7.1
%
$
1,846
$
1,832
0.8
%
Employer voluntary benefits
248
256
(3.1
)
1,001
1,033
(3.1
)
Group health
112
100
12.0
440
385
14.3
Individual health
107
80
33.8
405
414
(2.2
)
Adjusted net income
$
60
$
58
3.4
%
$
242
$
245
(1.2
)%
(1)
Prior periods have been recast to reflect
the impact of the adoption of FASB guidance revising the accounting
for certain long-duration insurance contracts.
- Allstate Investments $66.7 billion portfolio generated
net investment income of $604 million in the fourth quarter of
2023, an increase of $47 million from the prior year quarter due to
higher market-based income, partially offset by lower
performance-based income.
Allstate Investment
Results
Three months ended December
31,
Twelve months ended December
31,
($ in millions, except ratios)
2023
2022
$ / pts Change
2023
2022
$ / pts Change
Net investment income
$
604
$
557
$
47
$
2,478
$
2,403
$
75
Market-based (1)
604
464
140
2,214
1,557
657
Performance-based (1)
60
147
(87
)
499
1,024
(525
)
Net gains (losses) on investments and
derivatives
$
(77
)
$
95
$
(172
)
$
(300
)
$
(1,072
)
$
772
Change in unrealized net capital gains
and losses, pre-tax
$
2,421
$
863
$
1,558
$
2,096
$
(3,643
)
$
5,739
Total return on investment
portfolio
4.6
%
2.5
%
2.1
6.7
%
(4.0
)%
10.7
(1)
Investment expenses are not allocated
between market-based and performance-based portfolios with the
exception of investee level expenses.
- Total return on the investment portfolio was 4.6% for
the fourth quarter and 6.7% for 2023.
- Market-based investment income was $604 million in the
fourth quarter of 2023, an increase of $140 million, or 30.2%,
compared to the prior year quarter, reflecting higher yields in the
$48.9 billion fixed income portfolio. Fixed income duration ended
2023 at 4.8 years compared to 3.4 years at the prior year end.
Investment portfolio allocations, including duration extension and
lower equity risk, are informed by expected risk adjusted returns
and the enterprise risk and return position.
- Performance-based investment income totaled $60
million in the fourth quarter of 2023, a decrease of $87 million
compared to the prior year quarter. Current quarter results reflect
lower valuation increases and less income from the sale of
underlying investments compared to the prior year. The portfolio
allocation to performance-based assets provides a diversifying
source of higher long-term returns, despite volatility in reported
results.
- Net losses on investments and derivatives were $77
million in the fourth quarter of 2023, compared to gains of $95
million in the prior year quarter. Net losses in the fourth quarter
of 2023 were driven by sales of fixed income securities and losses
on derivatives, partially offset by valuation increases on equity
investments.
- Unrealized net capital losses were $791 million,
reflecting an improvement of $2.4 billion compared to the prior
quarter and $2.1 billion compared to prior year end, as lower
interest rates resulted in higher fixed income valuations.
Proactive Capital Management
“Allstate’s financial condition and capital position remain
strong, with fourth quarter results demonstrating the company’s
capital generation capabilities. Statutory surplus in the insurance
companies increased compared to the prior quarter to $14.6
billion(1), and $3.4 billion of assets are held at the holding
company,” said Jess Merten, Chief Financial Officer. “We continue
to make progress on the comprehensive profit improvement plan and
remain confident strategic actions will generate attractive
shareholder returns,” concluded Merten.
(1) December 31, 2023 statutory results are preliminary with
final results expected to be filed by the end of February 2024.
Visit www.allstateinvestors.com for additional information about
Allstate’s results, including a webcast of its quarterly conference
call and the call presentation. The conference call will be at 9
a.m. ET on Thursday, February 8. Financial information, including
material announcements about The Allstate Corporation, is routinely
posted on www.allstateinvestors.com.
Forward-Looking Statements
This news release contains “forward-looking statements” that
anticipate results based on our estimates, assumptions and plans
that are subject to uncertainty. These statements are made subject
to the safe-harbor provisions of the Private Securities Litigation
Reform Act of 1995. These forward-looking statements do not relate
strictly to historical or current facts and may be identified by
their use of words like “plans,” “seeks,” “expects,” “will,”
“should,” “anticipates,” “estimates,” “intends,” “believes,”
“likely,” “targets” and other words with similar meanings. We
believe these statements are based on reasonable estimates,
assumptions and plans. However, if the estimates, assumptions or
plans underlying the forward-looking statements prove inaccurate or
if other risks or uncertainties arise, actual results could differ
materially from those communicated in these forward-looking
statements. Factors that could cause actual results to differ
materially from those expressed in, or implied by, the
forward-looking statements may be found in our filings with the
U.S. Securities and Exchange Commission, including the “Risk
Factors” section in our most recent annual report on Form 10-K.
Forward-looking statements are as of the date on which they are
made, and we assume no obligation to update or revise any
forward-looking statement.
THE ALLSTATE CORPORATION AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
FINANCIAL POSITION
($ in millions, except par value
data)
December 31, 2023
December 31, 2022
Assets
Investments
Fixed income securities, at fair value
(amortized cost, net $49,649 and $45,370)
$
48,865
$
42,485
Equity securities, at fair value (cost
$2,244 and $4,253)
2,411
4,567
Mortgage loans, net
822
762
Limited partnership interests
8,380
8,114
Short-term, at fair value (amortized cost
$5,145 and $4,174)
5,144
4,173
Other investments, net
1,055
1,728
Total investments
66,677
61,829
Cash
722
736
Premium installment receivables, net
10,044
9,165
Deferred policy acquisition costs
5,940
5,442
Reinsurance and indemnification
recoverables, net
8,809
9,619
Accrued investment income
539
423
Deferred income taxes
219
382
Property and equipment, net
859
987
Goodwill
3,502
3,502
Other assets, net
6,051
5,904
Total assets
$
103,362
$
97,989
Liabilities
Reserve for property and casualty
insurance claims and claims expense
$
39,858
$
37,541
Reserve for future policy benefits
1,347
1,322
Contractholder funds
888
879
Unearned premiums
24,709
22,299
Claim payments outstanding
1,353
1,268
Other liabilities and accrued expenses
9,635
9,353
Debt
7,942
7,964
Total liabilities
85,732
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
3,854
3,788
Retained income
49,716
50,970
Treasury stock, at cost (638 million and
637 million shares)
(37,110
)
(36,857
)
Accumulated other comprehensive
income:
Unrealized net capital gains and
losses
(604
)
(2,255
)
Unrealized foreign currency translation
adjustments
(98
)
(165
)
Unamortized pension and other
postretirement prior service credit
13
29
Discount rate for reserve for future
policy benefits
(11
)
(1
)
Total accumulated other comprehensive
loss
(700
)
(2,392
)
Total Allstate shareholders’
equity
17,770
17,488
Noncontrolling interest
(140
)
(125
)
Total equity
17,630
17,363
Total liabilities and equity
$
103,362
$
97,989
THE ALLSTATE CORPORATION AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
OPERATIONS
($ in millions, except per share
data)
Three months ended December
31,
Twelve months ended December
31,
2023
2022
2023
2022
Revenues
Property and casualty insurance
premiums
$
13,188
$
11,900
$
50,670
$
45,904
Accident and health insurance premiums and
contract charges
467
436
1,846
1,832
Other revenue
650
660
2,400
2,344
Net investment income
604
557
2,478
2,403
Net gains (losses) on investments and
derivatives
(77
)
95
(300
)
(1,072
)
Total revenues
14,832
13,648
57,094
51,411
Costs and expenses
Property and casualty insurance claims and
claims expense
8,780
10,002
41,070
37,264
Accident, health and other policy benefits
(including remeasurement (gains) losses of $0, $(4), $0 and
$(4))
286
257
1,071
1,042
Amortization of deferred policy
acquisition costs
1,904
1,725
7,278
6,634
Operating costs and expenses
1,864
1,852
7,137
7,446
Pension and other postretirement
remeasurement (gains) losses
(47
)
25
9
116
Restructuring and related charges
28
24
169
51
Amortization of purchased intangibles
83
89
329
353
Interest expense
107
84
379
335
Total costs and expenses
13,005
14,058
57,442
53,241
Income (loss) from operations before
income tax expense
1,827
(410
)
(348
)
(1,830
)
Income tax expense (benefit)
340
(114
)
(135
)
(488
)
Net income (loss)
1,487
(296
)
(213
)
(1,342
)
Less: Net loss attributable to
noncontrolling interest
(2
)
(19
)
(25
)
(53
)
Net income (loss) attributable to
Allstate
1,489
(277
)
(188
)
(1,289
)
Less: Preferred stock dividends
29
26
128
105
Net income (loss) applicable to common
shareholders
$
1,460
$
(303
)
$
(316
)
$
(1,394
)
Earnings per common share:
Net income (loss) applicable to common
shareholders per common share - Basic
$
5.57
$
(1.15
)
$
(1.20
)
$
(5.14
)
Weighted average common shares - Basic
262.2
264.4
262.5
271.2
Net income (loss) applicable to common
shareholders per common share - Diluted
$
5.52
$
(1.15
)
$
(1.20
)
$
(5.14
)
Weighted average common shares -
Diluted
264.7
264.4
262.5
271.2
Definitions of Non-GAAP Measures
We believe that investors’ understanding of Allstate’s
performance is enhanced by our disclosure of the following non-GAAP
measures. Our methods for calculating these measures may differ
from those used by other companies and therefore comparability may
be limited.
Adjusted net income is net income (loss) applicable to
common shareholders, excluding:
- Net gains and losses on investments and derivatives
- Pension and other postretirement remeasurement gains and
losses
- Amortization or impairment of purchased intangibles
- Gain or loss on disposition
- Adjustments for other significant non-recurring, infrequent or
unusual items, when (a) the nature of the charge or gain is such
that it is reasonably unlikely to recur within two years, or (b)
there has been no similar charge or gain within the prior two
years
- Related income tax expense or benefit of these items
Net income (loss) applicable to common shareholders is the GAAP
measure that is most directly comparable to adjusted net
income.
We use adjusted net income as an important measure to evaluate
our results of operations. We believe that the measure provides
investors with a valuable measure of the Company’s ongoing
performance because it reveals trends in our insurance and
financial services business that may be obscured by the net effect
of net gains and losses on investments and derivatives, pension and
other postretirement remeasurement gains and losses, amortization
or impairment of purchased intangibles, gain or loss on disposition
and adjustments for other significant non-recurring, infrequent or
unusual items and the related tax expense or benefit of these
items. Net gains and losses on investments and derivatives, and
pension and other postretirement remeasurement gains and losses may
vary significantly between periods and are generally driven by
business decisions and external economic developments such as
capital market conditions, the timing of which is unrelated to the
insurance underwriting process. Gain or loss on disposition is
excluded because it is non-recurring in nature and the amortization
or impairment of purchased intangibles is excluded because it
relates to the acquisition purchase price and is not indicative of
our underlying business results or trends. Non-recurring items are
excluded because, by their nature, they are not indicative of our
business or economic trends. Accordingly, adjusted net income
excludes the effect of items that tend to be highly variable from
period to period and highlights the results from ongoing operations
and the underlying profitability of our business. A byproduct of
excluding these items to determine adjusted net income is the
transparency and understanding of their significance to net income
variability and profitability while recognizing these or similar
items may recur in subsequent periods. Adjusted net income is used
by management along with the other components of net income (loss)
applicable to common shareholders to assess our performance. We use
adjusted measures of adjusted net income in incentive compensation.
Therefore, we believe it is useful for investors to evaluate net
income (loss) applicable to common shareholders, adjusted net
income and their components separately and in the aggregate when
reviewing and evaluating our performance. We note that investors,
financial analysts, financial and business media organizations and
rating agencies utilize adjusted net income results in their
evaluation of our and our industry’s financial performance and in
their investment decisions, recommendations and communications as
it represents a reliable, representative and consistent measurement
of the industry and the Company and management’s performance. We
note that the price to earnings multiple commonly used by insurance
investors as a forward-looking valuation technique uses adjusted
net income as the denominator. Adjusted net income should not be
considered a substitute for net income (loss) applicable to common
shareholders and does not reflect the overall profitability of our
business.
The following tables reconcile net income (loss) applicable to
common shareholders and adjusted net income (loss). 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 December
31,
Consolidated
Per diluted common
share
2023
2022
2023
2022
Net income (loss) applicable to common
shareholders (1)
$
1,460
$
(303
)
$
5.52
$
(1.15
)
Net (gains) losses on investments and
derivatives
77
(95
)
0.29
(0.36
)
Pension and other postretirement
remeasurement (gains) losses
(47
)
25
(0.18
)
0.09
Amortization of purchased intangibles
83
89
0.31
0.34
(Gain) loss on disposition
(8
)
(83
)
(3)
(0.03
)
(0.32
)
Non-recurring costs
—
—
—
—
Income tax expense (benefit)
(24
)
16
(0.09
)
0.07
Adjusted net income (loss) *
(1)
$
1,541
$
(351
)
$
5.82
$
(1.33
)
Weighted average dilutive potential common
shares excluded due to net loss applicable to common shareholders
(1)
—
3.1
Twelve months ended December
31,
Consolidated
Per diluted common
share
2023
2022
2023
2022
Net income (loss) applicable to common
shareholders (1)
$
(316
)
$
(1,394
)
$
(1.20
)
$
(5.14
)
Net (gains) losses on investments and
derivatives
300
1,072
1.13
3.95
Pension and other postretirement
remeasurement (gains) losses
9
116
0.04
0.43
Amortization of purchased intangibles
329
353
1.24
1.30
(Gain) loss on disposition
(4
)
(89
)
(3)
(0.01
)
(0.33
)
Non-recurring costs (2)
90
—
0.34
—
Income tax expense (benefit)
(157
)
(297
)
(0.59
)
(1.09
)
Adjusted net income (loss) *
(1)
$
251
$
(239
)
$
0.95
$
(0.88
)
Weighted average dilutive potential common
shares excluded due to net loss applicable to common shareholders
(1)
2.2
3.1
______________
(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.
(3)
Includes $83 million related to the gain
on sale of headquarters in the fourth quarter of 2022 reported as
other revenue in Corporate and Other segment.
Adjusted net income (loss) 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
December 31,
2023
2022
Return on Allstate common
shareholders’ equity
Numerator:
Net income (loss) applicable to common
shareholders
$
(316
)
$
(1,394
)
Denominator:
Beginning Allstate common shareholders’
equity
$
15,518
$
22,974
Ending Allstate common shareholders’
equity (1)
15,769
15,518
Average Allstate common shareholders’
equity
$
15,644
$
19,246
Return on Allstate common shareholders’
equity
(2.0
)%
(7.2
)%
($ in millions)
For the twelve months ended
December 31,
2023
2022
Adjusted net income (loss) return on
Allstate common shareholders’ equity
Numerator:
Adjusted net income (loss) *
$
251
$
(239
)
Denominator:
Beginning Allstate common shareholders’
equity
$
15,518
$
22,974
Less: Unrealized net capital gains and
losses
(2,255
)
598
Adjusted beginning Allstate common
shareholders’ equity
17,773
22,376
Ending Allstate common shareholders’
equity (1)
15,769
15,518
Less: Unrealized net capital gains and
losses
(604
)
(2,255
)
Adjusted ending Allstate common
shareholders’ equity
16,373
17,773
Average adjusted Allstate common
shareholders’ equity
$
17,073
$
20,075
Adjusted net income (loss) return on
Allstate common shareholders’ equity *
1.5
%
(1.2
)%
_____________
(1) Excludes equity related to preferred
stock of $2,001 million and $1,970 million as of December 31, 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 December
31,
Twelve months ended December
31,
2023
2022
2023
2022
Combined ratio
89.5
109.1
104.5
106.6
Effect of catastrophe losses
(0.5
)
(6.8
)
(11.6
)
(7.1
)
Effect of prior year non-catastrophe
reserve reestimates
(1.6
)
(2.5
)
(1.2
)
(3.9
)
Effect of amortization of purchased
intangibles
(0.5
)
(0.6
)
(0.5
)
(0.5
)
Underlying combined ratio*
86.9
99.2
91.2
95.1
Effect of prior year catastrophe reserve
reestimates
(0.2
)
(0.1
)
—
—
Allstate
Protection - Auto Insurance
Three months ended December
31,
Twelve months ended December
31,
2023
2022
2023
2022
Combined ratio
98.9
112.6
103.4
110.1
Effect of catastrophe losses
(0.3
)
(0.5
)
(2.1
)
(1.7
)
Effect of prior year non-catastrophe
reserve reestimates
(1.7
)
(2.3
)
(0.9
)
(4.2
)
Effect of amortization of purchased
intangibles
(0.5
)
(0.6
)
(0.5
)
(0.6
)
Underlying combined ratio*
96.4
109.2
99.9
103.6
Effect of prior year catastrophe reserve
reestimates
(0.1
)
(0.1
)
(0.2
)
(0.2
)
Allstate
Protection - Homeowners Insurance
Three months ended December
31,
Twelve months ended December
31,
2023
2022
2023
2022
Combined ratio
62.0
92.8
106.8
93.6
Effect of catastrophe losses
(0.7
)
(22.2
)
(38.6
)
(21.6
)
Effect of prior year non-catastrophe
reserve reestimates
0.3
(0.7
)
(0.5
)
(1.2
)
Effect of amortization of purchased
intangibles
(0.3
)
(0.4
)
(0.4
)
(0.5
)
Underlying combined ratio*
61.3
69.5
67.3
70.3
Effect of prior year catastrophe reserve
reestimates
(0.8
)
—
0.3
0.7
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240207884719/en/
Al Scott Media Relations (847) 402-5600
Brent Vandermause Investor Relations (847) 402-2800
Allstate (NYSE:ALL)
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