Le Lézard
Classified in: Business
Subjects: EARNINGS, Conference Call, Webcast

Allstate Raising Insurance Prices Given Cost Inflation


The Allstate Corporation (NYSE: ALL) today reported financial results for the third quarter of 2022.

The Allstate Corporation Consolidated Highlights

 

Three months ended
September 30,

 

Nine months ended
September 30,

($ in millions, except per share data and ratios)

 

2022

 

 

2021

% / pts
Change

 

 

2022

 

 

2021

 

% / pts
Change

Consolidated revenues

$

13,208

 

$

12,480

5.8

%

 

$

37,765

 

$

37,577

 

0.5

%

Net income (loss) applicable to common shareholders

 

(694

)

 

508

NM

 

 

 

(1,106

)

 

695

 

NM

 

per diluted common share (1)

 

(2.58

)

 

1.71

NM

 

 

 

(4.04

)

 

2.30

 

NM

 

Adjusted net income (loss)*

 

(420

)

 

217

NM

 

 

 

97

 

 

3,237

 

(97.0

) %

per diluted common share* (1)

 

(1.56

)

 

0.73

NM

 

 

 

0.35

 

 

10.70

 

(96.7

)

Return on Allstate common shareholders' equity (trailing twelve months)

 

 

 

 

 

Net income applicable to common shareholders

 

 

 

 

 

(1.6

) %

 

13.2

%

(14.8

)

Adjusted net income*

 

 

 

 

 

4.3

%

 

21.2

%

(16.9

)

Common shares outstanding (in millions)

 

 

 

 

 

265.9

 

 

288.0

 

(7.7

)

Book value per common share

 

 

 

 

 

58.35

 

 

84.62

 

(31.0

)

Property-Liability insurance premiums earned

 

11,157

 

 

10,159

9.8

 

 

 

32,529

 

 

30,064

 

8.2

 

Property-Liability combined ratio

 

 

 

 

 

 

 

Recorded

 

111.6

 

 

105.3

6.3

 

 

 

105.8

 

 

94.8

 

11.0

 

Underlying combined ratio*

 

96.4

 

 

90.4

6.0

 

 

 

93.6

 

 

84.5

 

9.1

 

Catastrophe losses

 

763

 

 

1,269

(39.9

)

 

 

2,333

 

 

2,811

 

(17.0

)

Total policies in force (in thousands)

 

 

 

 

 

185,007

 

 

191,856

 

(3.6

)

(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.

*

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 operational excellence and financial strength enabled us to navigate a difficult economic environment while serving customers, adapting to significant cost increases and executing profitable growth strategies," said Tom Wilson, Chair, President and CEO of The Allstate Corporation. "Revenues increased to $13.2 billion for the quarter due to a 9.8% growth in Property-Liability earned premiums largely due to higher average premiums for auto and home insurance and a 7.2% increase in Protection Services revenue. Auto and home insurance prices continue to be increased, reflecting cost inflation with Allstate brand increases of 10.4% and 13.3% respectively, being effective in 2022. Plans to reduce personal lines insurance in states with unacceptable auto and home insurance margins are being expanded. Additionally, we are exiting commercial and shared economy insurance markets that comprise 55% of commercial premiums. The net loss of $694 million reflected a small underlying underwriting margin that was more than offset by prior year reserve increases and a $199 million valuation decline in public equity related investments in the quarter. Prior year reserves, excluding catastrophes, were increased by $875 million, primarily due to higher expected settlements with non-customer claimants reflecting more severe accidents and higher medical and litigation costs. Adjusted net income* was a loss of $420 million for the quarter."

"Excellent progress was also made in executing the strategy to increase Property-Liability market share and expand protection offerings to customers," continued Wilson. "Customer value for auto and homeowners insurance will be increased through further cost reductions and sophisticated pricing. Expanded customer access is being achieved with growth through independent agents. While Allstate branded direct sales and marketing investment have been reduced given current auto insurance profitability, execution capabilities were improved. Growth strategies for Health and Benefits, Protection Plans and Identity Protection also advanced. Allstate's capital position is strong, enabling us to provide cash returns to shareholders of $2.8 billion year-to-date through dividends and share repurchases," concluded Wilson.

Third Quarter 2022 Results

Property-Liability Results

 

Three months ended
September 30,

 

Nine months ended
September 30,

($ in millions, except ratios)

 

2022

 

 

2021

 

% / pts
Change

 

 

2022

 

 

2021

% / pts
Change

Premiums earned

$

11,157

 

$

10,159

 

9.8

%

 

$

32,529

 

$

30,064

8.2

%

Allstate Brand

 

9,517

 

 

8,774

 

8.5

 

 

 

27,816

 

 

26,201

6.2

 

National General

 

1,640

 

 

1,385

 

18.4

 

 

 

4,713

 

 

3,863

22.0

 

 

 

 

 

 

 

 

 

Underwriting income (loss)

 

(1,292

)

 

(534

)

NM

 

 

 

(1,876

)

 

1,552

NM

 

Allstate Brand

 

(1,049

)

 

(311

)

NM

 

 

 

(1,623

)

 

1,618

NM

 

National General

 

(124

)

 

(112

)

10.7

 

 

 

(133

)

 

41

NM

 

 

 

 

 

 

 

 

 

Recorded combined ratio

 

111.6

 

 

105.3

 

6.3

 

 

 

105.8

 

 

94.8

11.0

 

Allstate Protection auto

 

117.4

 

 

102.3

 

15.1

 

 

 

109.3

 

 

92.4

16.9

 

Allstate Protection homeowners

 

91.2

 

 

111.0

 

(19.8

)

 

 

94.2

 

 

100.2

(6.0

)

 

 

 

 

 

 

 

 

Underlying combined ratio*

 

96.4

 

 

90.4

 

6.0

 

 

 

93.6

 

 

84.5

9.1

 

Allstate Protection auto

 

104.0

 

 

97.6

 

6.4

 

 

 

101.7

 

 

89.9

11.8

 

Allstate Protection homeowners

 

74.6

 

 

71.6

 

3.0

 

 

 

71.4

 

 

69.6

1.8

 

"We continue to implement a multi-faceted program to restore Property-Liability margins to targeted levels," said Mario Rizzo, President, Property-Liability. "This includes continued increases in auto and home insurance prices, reducing expenses and adapting claims settlement practices to a high inflation environment. In addition, growth is being reduced in states and lines of business that are underperforming. At this time we will no longer write new homeowners and condominium business in California, although we will offer continuing coverage to existing customers. Commercial insurance is being exited in five states and coverage to transportation network companies will not be offered unless it utilizes telematics-based pricing. Additional actions are likely in personal auto insurance. This balanced approach enables us to serve customers while generating appropriate returns for investors," concluded Rizzo.

Protection Services Results

 

Three months ended
September 30,

 

Nine months ended
September 30,

($ in millions)

 

2022

 

 

2021

% / $
Change

 

 

2022

 

 

2021

 

% / $
Change

Total revenues (1)

$

640

 

$

597

 

7.2

%

 

$

1,896

 

$

1,730

 

 

9.6

%

Allstate Protection Plans

 

349

 

 

311

 

12.2

 

 

 

1,016

 

 

881

 

 

15.3

 

Allstate Dealer Services

 

143

 

 

129

 

10.9

 

 

 

417

 

 

382

 

 

9.2

 

Allstate Roadside

 

65

 

 

64

 

1.6

 

 

 

194

 

 

183

 

 

6.0

 

Arity

 

49

 

 

62

 

(21.0

)

 

 

163

 

 

190

 

 

(14.2

)

Allstate Identity Protection

 

34

 

 

31

 

9.7

 

 

 

106

 

 

94

 

 

12.8

 

Adjusted net income (loss)

$

35

 

$

45

$

(10

)

 

$

131

 

$

150

 

$

(19

)

Allstate Protection Plans

 

29

 

 

32

 

(3

)

 

 

108

 

 

119

 

 

(11

)

Allstate Dealer Services

 

10

 

 

7

 

3

 

 

 

27

 

 

25

 

 

2

 

Allstate Roadside

 

1

 

 

1

 

?

 

 

 

4

 

 

7

 

 

(3

)

Arity

 

(2

)

 

1

 

(3

)

 

 

(4

)

 

4

 

 

(8

)

Allstate Identity Protection

 

(3

)

 

4

 

(7

)

 

 

(4

)

 

(5

)

 

1

 

(1) Excludes net gains and losses on investments and derivatives

Allstate Health and Benefits Results

 

Three months ended
September 30,

 

Nine months ended
September 30,

($ in millions)

 

2022

 

2021

%
Change

 

 

2022

 

2021

%
Change

Premiums and contract charges

$

463

$

460

0.7

%

 

$

1,398

$

1,362

2.6

%

Employer voluntary benefits

 

257

 

251

2.4

 

 

 

780

 

769

1.4

 

Group health

 

96

 

90

6.7

 

 

 

285

 

260

9.6

 

Individual health

 

110

 

119

(7.6

)

 

 

333

 

333

?

 

Adjusted net income

 

54

 

33

63.6

 

 

 

172

 

160

7.5

 

Allstate Investment Results

 

Three months ended
September 30,

 

Nine months ended
September 30,

($ in millions, except ratios)

 

2022

 

 

2021

 

$ / pts
Change

 

 

2022

 

 

2021

 

$ / pts
Change

Net investment income

$

690

 

$

764

 

$

(74

)

 

$

1,846

 

$

2,446

 

$

(600

)

Market-based investment income (1)

 

402

 

 

352

 

 

50

 

 

 

1,093

 

 

1,061

 

 

32

 

Performance-based investment income (1)

 

335

 

 

437

 

 

(102

)

 

 

877

 

 

1,464

 

 

(587

)

Net gains (losses) on investments and derivatives

 

(167

)

 

105

 

 

(272

)

 

 

(1,167

)

 

818

 

 

(1,985

)

Change in unrealized net capital gains and losses, pre-tax

 

(1,009

)

 

(302

)

 

(707

)

 

 

(4,506

)

 

(1,352

)

 

(3,154

)

Total return on investment portfolio

 

(0.8

) %

 

1.0

%

 

(1.8

)

 

 

(6.4

) %

 

3.3

%

 

(9.7

)

Total return on investment portfolio (trailing twelve months)

 

 

 

 

 

(5.3

) %

 

6.0

%

 

(11.3

)

(1)

Investment expenses are not allocated between market-based and performance-based portfolios with the exception of investee level expenses.

Proactive Capital Management

"Allstate's capital position and liquidity remain strong with $4.5 billion of parent holding company deployable assets," said Jess Merten, Chief Financial Officer. "This enables us to navigate the challenging inflationary environment, invest in Transformative Growth and provide cash returns to shareholders. In the third quarter we returned $897 million to common shareholders through a combination of $665 million in share repurchases and $232 million in common shareholder dividends. We have $1.2 billion remaining on our current $5 billion share repurchase authorization, which is expected to be completed after the first quarter of 2023 as we moderate the pace of share repurchases," 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 9 a.m. ET on Thursday, November 3. 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,
2022

 

December 31,
2021

Assets

 

 

 

Investments

 

 

 

Fixed income securities, at fair value (amortized cost, net $45,468 and $41,376)

$

41,715

 

 

$

42,136

 

Equity securities, at fair value (cost $4,652 and $6,016)

 

4,723

 

 

 

7,061

 

Mortgage loans, net

 

833

 

 

 

821

 

Limited partnership interests

 

7,907

 

 

 

8,018

 

Short-term, at fair value (amortized cost $4,031 and $4,009)

 

4,030

 

 

 

4,009

 

Other investments, net

 

1,798

 

 

 

2,656

 

Total investments

 

61,006

 

 

 

64,701

 

Cash

 

786

 

 

 

763

 

Premium installment receivables, net

 

9,150

 

 

 

8,364

 

Deferred policy acquisition costs

 

5,273

 

 

 

4,722

 

Reinsurance and indemnification recoverables, net

 

9,961

 

 

 

10,024

 

Accrued investment income

 

389

 

 

 

339

 

Deferred income taxes

 

492

 

 

 

?

 

Property and equipment, net

 

1,008

 

 

 

939

 

Goodwill

 

3,502

 

 

 

3,502

 

Other assets, net

 

6,109

 

 

 

6,086

 

Total assets

$

97,676

 

 

$

99,440

 

Liabilities

 

 

 

Reserve for property and casualty insurance claims and claims expense

$

36,529

 

 

$

33,060

 

Reserve for future policy benefits

 

1,276

 

 

 

1,273

 

Contractholder funds

 

909

 

 

 

908

 

Unearned premiums

 

22,026

 

 

 

19,844

 

Claim payments outstanding

 

1,196

 

 

 

1,123

 

Deferred income taxes

 

?

 

 

 

833

 

Other liabilities and accrued expenses

 

10,212

 

 

 

9,296

 

Long-term debt

 

7,967

 

 

 

7,976

 

Total liabilities

 

80,115

 

 

 

74,313

 

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, 266 million and 281 million shares outstanding

 

9

 

 

 

9

 

Additional capital paid-in

 

3,765

 

 

 

3,722

 

Retained income

 

51,490

 

 

 

53,294

 

Treasury stock, at cost (634 million and 619 million shares)

 

(36,518

)

 

 

(34,471

)

Accumulated other comprehensive income:

 

 

 

Unrealized net capital gains and losses

 

(2,927

)

 

 

598

 

Unrealized foreign currency translation adjustments

 

(150

)

 

 

(15

)

Unamortized pension and other postretirement prior service credit

 

34

 

 

 

72

 

Total accumulated other comprehensive income

 

(3,043

)

 

 

655

 

Total Allstate shareholders' equity

 

17,673

 

 

 

25,179

 

Noncontrolling interest

 

(112

)

 

 

(52

)

Total equity

 

17,561

 

 

 

25,127

 

Total liabilities and equity

$

97,676

 

 

$

99,440

 

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,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

 

 

 

 

 

 

 

 

Revenues

 

 

 

 

 

 

 

Property and casualty insurance premiums

$

11,661

 

 

$

10,615

 

 

$

34,004

 

 

$

31,366

 

Accident and health insurance premiums and contract charges

 

463

 

 

 

460

 

 

 

1,398

 

 

 

1,362

 

Other revenue

 

561

 

 

 

536

 

 

 

1,684

 

 

 

1,585

 

Net investment income

 

690

 

 

 

764

 

 

 

1,846

 

 

 

2,446

 

Net gains (losses) on investments and derivatives

 

(167

)

 

 

105

 

 

 

(1,167

)

 

 

818

 

Total revenues

 

13,208

 

 

 

12,480

 

 

 

37,765

 

 

 

37,577

 

 

 

 

 

 

 

 

 

Costs and expenses

 

 

 

 

 

 

 

Property and casualty insurance claims and claims expense

 

10,073

 

 

 

8,264

 

 

 

27,262

 

 

 

21,514

 

Shelter-in-Place Payback expense

 

?

 

 

 

?

 

 

 

?

 

 

 

29

 

Accident, health and other policy benefits

 

263

 

 

 

277

 

 

 

801

 

 

 

771

 

Amortization of deferred policy acquisition costs

 

1,682

 

 

 

1,582

 

 

 

4,913

 

 

 

4,650

 

Operating costs and expenses

 

1,842

 

 

 

1,890

 

 

 

5,594

 

 

 

5,304

 

Pension and other postretirement remeasurement (gains) losses

 

79

 

 

 

40

 

 

 

91

 

 

 

(404

)

Restructuring and related charges

 

14

 

 

 

23

 

 

 

27

 

 

 

145

 

Amortization of purchased intangibles

 

90

 

 

 

109

 

 

 

264

 

 

 

267

 

Interest expense

 

85

 

 

 

69

 

 

 

251

 

 

 

246

 

Total costs and expenses

 

14,128

 

 

 

12,254

 

 

 

39,203

 

 

 

32,522

 

 

 

 

 

 

 

 

 

(Loss) income from operations before income tax expense

 

(920

)

 

 

226

 

 

 

(1,438

)

 

 

5,055

 

 

 

 

 

 

 

 

 

Income tax (benefit) expense

 

(237

)

 

 

20

 

 

 

(377

)

 

 

1,008

 

 

 

 

 

 

 

 

 

Net (loss) income from continuing operations

 

(683

)

 

 

206

 

 

 

(1,061

)

 

 

4,047

 

 

 

 

 

 

 

 

 

Income (loss) from discontinued operations, net of tax

 

?

 

 

 

325

 

 

 

?

 

 

 

(3,272

)

 

 

 

 

 

 

 

 

Net (loss) income

 

(683

)

 

 

531

 

 

 

(1,061

)

 

 

775

 

 

 

 

 

 

 

 

 

Less: Net loss attributable to noncontrolling interest

 

(15

)

 

 

(7

)

 

 

(34

)

 

 

(7

)

 

 

 

 

 

 

 

 

Net (loss) income attributable to Allstate

 

(668

)

 

 

538

 

 

 

(1,027

)

 

 

782

 

 

 

 

 

 

 

 

 

Less: Preferred stock dividends

 

26

 

 

 

30

 

 

 

79

 

 

 

87

 

 

 

 

 

 

 

 

 

Net (loss) income applicable to common shareholders

$

(694

)

 

$

508

 

 

$

(1,106

)

 

$

695

 

 

 

 

 

 

 

 

 

Earnings per common share applicable to common shareholders

 

 

 

 

 

 

 

Basic

 

 

 

 

 

 

 

Continuing operations

$

(2.58

)

 

$

0.62

 

 

$

(4.04

)

 

$

13.31

 

Discontinued operations

 

?

 

 

 

1.11

 

 

 

?

 

 

 

(10.98

)

Total

$

(2.58

)

 

$

1.73

 

 

$

(4.04

)

 

$

2.33

 

 

 

 

 

 

 

 

 

Diluted

 

 

 

 

 

 

 

Continuing operations

$

(2.58

)

 

$

0.62

 

 

$

(4.04

)

 

$

13.11

 

Discontinued operations

 

?

 

 

 

1.09

 

 

 

?

 

 

 

(10.81

)

Total

$

(2.58

)

 

$

1.71

 

 

$

(4.04

)

 

$

2.30

 

 

 

 

 

 

 

 

 

Weighted average common shares ? Basic

 

268.7

 

 

 

293.1

 

 

 

273.5

 

 

 

298.1

 

Weighted average common shares ? Diluted

 

268.7

 

 

 

297.9

 

 

 

273.5

 

 

 

302.6

 

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, business combination expenses and the amortization or impairment of purchased intangibles, income or loss from discontinued operations, gain or loss on disposition of operations and adjustments for other significant non-recurring, infrequent or unusual items and the related tax expense or benefit of these items. Net gains and losses on investments and derivatives, and pension and other postretirement remeasurement gains and losses may vary significantly between periods and are generally driven by business decisions and external economic developments such as capital market conditions, the timing of which is unrelated to the insurance underwriting process. Business combination expenses, income or loss from discontinued operations and gain or loss on disposition of operations are excluded because they are non-recurring in nature and the amortization or impairment of purchased intangibles is excluded because it relates to the acquisition purchase price and is not indicative of our underlying business results or trends. Non-recurring items are excluded because, by their nature, they are not indicative of our business or economic trends. Accordingly, adjusted net income excludes the effect of items that tend to be highly variable from period to period and highlights the results from ongoing operations and the underlying profitability of our business. A byproduct of excluding these items to determine adjusted net income is the transparency and understanding of their significance to net income variability and profitability while recognizing these or similar items may recur in subsequent periods. Adjusted net income is used by management along with the other components of net income (loss) applicable to common shareholders to assess our performance. We use adjusted measures of adjusted net income in incentive compensation. Therefore, we believe it is useful for investors to evaluate net income (loss) applicable to common shareholders, adjusted net income and their components separately and in the aggregate when reviewing and evaluating our performance. We note that investors, financial analysts, financial and business media organizations and rating agencies utilize adjusted net income results in their evaluation of our and our industry's financial performance and in their investment decisions, recommendations and communications as it represents a reliable, representative and consistent measurement of the industry and the Company and management's performance. We note that the price to earnings multiple commonly used by insurance investors as a forward-looking valuation technique uses adjusted net income as the denominator. Adjusted net income should not be considered a substitute for net income (loss) applicable to common shareholders and does not reflect the overall profitability of our business.

The following tables reconcile net income (loss) applicable to common shareholders and adjusted net income. Taxes on adjustments to reconcile net income (loss) applicable to common shareholders and adjusted net income generally use a 21% effective tax rate.

($ in millions, except per share data)

Three months ended September 30,

 

Consolidated

 

Per diluted common share

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Net income (loss) applicable to common shareholders

$

(694

)

 

$

508

 

 

$

(2.58

)

(1)

$

1.71

 

Net (gains) losses on investments and derivatives

 

167

 

 

 

(105

)

 

 

0.62

 

 

 

(0.35

)

Pension and other postretirement remeasurement (gains) losses

 

79

 

 

 

40

 

 

 

0.29

 

 

 

0.13

 

Reclassification of periodic settlements and accruals on non-hedge derivative instruments

 

?

 

 

 

?

 

 

 

?

 

 

 

?

 

Business combination expenses and the amortization of purchased intangibles

 

90

 

 

 

109

 

 

 

0.34

 

 

 

0.37

 

Business combination fair value adjustment

 

?

 

 

 

?

 

 

 

?

 

 

 

?

 

(Gain) loss on disposition of operations

 

5

 

 

 

?

 

 

 

0.02

 

 

 

?

 

(Income) loss from discontinued operations

 

?

 

 

 

(235

)

 

 

?

 

 

 

(0.79

)

Income tax expense (benefit)

 

(67

)

 

 

(100

)

 

 

(0.25

)

 

 

(0.34

)

Adjusted net income (loss) *

$

(420

)

 

$

217

 

 

$

(1.56

)

(1)

$

0.73

 

 

 

 

 

 

 

 

 

 

Nine months ended September 30,

 

Consolidated

 

Per diluted common share

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Net income (loss) applicable to common shareholders

$

(1,106

)

 

$

695

 

 

$

(4.04

)

(2)

$

2.30

 

Net (gains) losses on investments and derivatives

 

1,167

 

 

 

(818

)

 

 

4.23

 

 

 

(2.70

)

Pension and other postretirement remeasurement (gains) losses

 

91

 

 

 

(404

)

 

 

0.34

 

 

 

(1.34

)

Reclassification of periodic settlements and accruals on non-hedge derivative instruments

 

?

 

 

 

1

 

 

 

?

 

 

 

?

 

Business combination expenses and the amortization of purchased intangibles

 

264

 

 

 

289

 

 

 

0.96

 

 

 

0.96

 

Business combination fair value adjustment

 

?

 

 

 

(6

)

 

 

?

 

 

 

(0.02

)

(Gain) loss on disposition of operations

 

(6

)

 

 

?

 

 

 

(0.02

)

 

 

?

 

(Income) loss from discontinued operations

 

?

 

 

 

3,435

 

 

 

?

 

 

 

11.35

 

Income tax expense (benefit)

 

(313

)

 

 

45

 

 

 

(1.12

)

 

 

0.15

 

Adjusted net income (loss) *

$

97

 

 

$

3,237

 

 

$

0.35

 

 

$

10.70

 

_____________

(1)

Due to a net loss reported for the three months ended September 30, 2022, calculation uses weighted average shares of 268.7 million, which excludes weighted average diluted shares of 2.9 million.

(2)

Due to a net loss reported for the nine months ended September 30, 2022, calculation uses weighted average shares of 273.5 million, which excludes weigh average diluted shares of 3.3 million.

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 return on Allstate common shareholders' equity.

($ in millions)

For the twelve months ended
September 30,

 

 

2022

 

 

 

2021

 

Return on Allstate common shareholders' equity

 

 

 

Numerator:

 

 

 

Net income applicable to common shareholders

$

(316

)

 

$

3,293

 

Denominator:

 

 

 

Beginning Allstate common shareholders' equity

$

24,759

 

 

$

25,293

 

Ending Allstate common shareholders' equity (1)

 

15,703

 

 

 

24,759

 

Average Allstate common shareholders' equity

$

20,231

 

 

$

25,026

 

Return on Allstate common shareholders' equity

 

(1.6

) %

 

 

13.2

%

($ in millions)

For the twelve months ended
September 30,

 

 

2022

 

 

 

2021

 

Adjusted net income return on Allstate common shareholders' equity

 

 

 

Numerator:

 

 

 

Adjusted net income *

$

893

 

 

$

4,829

 

 

 

 

 

Denominator:

 

 

 

Beginning Allstate common shareholders' equity

$

24,759

 

 

$

25,293

 

Less: Unrealized net capital gains and losses

 

1,828

 

 

 

2,744

 

Adjusted beginning Allstate common shareholders' equity

 

22,931

 

 

 

22,549

 

 

 

 

 

Ending Allstate common shareholders' equity (1)

 

15,703

 

 

 

24,759

 

Less: Unrealized net capital gains and losses

 

(2,927

)

 

 

1,828

 

Adjusted ending Allstate common shareholders' equity

 

18,630

 

 

 

22,931

 

Average adjusted Allstate common shareholders' equity

$

20,781

 

 

$

22,740

 

Adjusted net income return on Allstate common shareholders' equity *

 

4.3

%

 

 

21.2

%

_____________

(1)

Excludes equity related to preferred stock of $1,970 million as of September 30, 2022 and September 30, 2021.

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,

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Combined ratio

111.6

 

 

105.3

 

 

105.8

 

 

94.8

 

Effect of catastrophe losses

(6.8

)

 

(12.5

)

 

(7.2

)

 

(9.4

)

Effect of prior year non-catastrophe reserve reestimates

(7.8

)

 

(1.6

)

 

(4.5

)

 

(0.4

)

Effect of amortization of purchased intangibles

(0.6

)

 

(0.8

)

 

(0.5

)

 

(0.5

)

Underlying combined ratio*

96.4

 

 

90.4

 

 

93.6

 

 

84.5

 

 

 

 

 

 

 

 

 

Effect of prior year catastrophe reserve reestimates

(0.1

)

 

?

 

 

0.1

 

 

(0.7

)

Allstate Protection - Auto Insurance

Three months ended
September 30,

 

Nine months ended
September 30,

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Combined ratio

117.4

 

 

102.3

 

 

109.3

 

 

92.4

 

Effect of catastrophe losses

(4.4

)

 

(2.9

)

 

(2.2

)

 

(1.9

)

Effect of prior year non-catastrophe reserve reestimates

(8.5

)

 

(1.1

)

 

(4.9

)

 

(0.1

)

Effect of amortization of purchased intangibles

(0.5

)

 

(0.7

)

 

(0.5

)

 

(0.5

)

Underlying combined ratio*

104.0

 

 

97.6

 

 

101.7

 

 

89.9

 

 

 

 

 

 

 

 

 

Effect of prior year catastrophe reserve reestimates

(0.1

)

 

(0.1

)

 

(0.3

)

 

(0.1

)

Allstate Protection - Homeowners Insurance

Three months ended
September 30,

 

Nine months ended
September 30,

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Combined ratio

91.2

 

 

111.0

 

 

94.2

 

 

100.2

 

Effect of catastrophe losses

(14.1

)

 

(38.0

)

 

(21.0

)

 

(29.8

)

Effect of prior year non-catastrophe reserve reestimates

(1.8

)

 

(0.6

)

 

(1.2

)

 

(0.2

)

Effect of amortization of purchased intangibles

(0.7

)

 

(0.8

)

 

(0.6

)

 

(0.6

)

Underlying combined ratio*

74.6

 

 

71.6

 

 

71.4

 

 

69.6

 

 

 

 

 

 

 

 

 

Effect of prior year catastrophe reserve reestimates

0.2

 

 

0.1

 

 

1.0

 

 

(2.3

)

 


These press releases may also interest you

at 14:31
Ademi LLP is investigating Atlas  for possible breaches of fiduciary duty and other violations of law in its transaction with GI Partners. ...

at 14:30
1/ST's 2023 Pegasus World Cup presented by Baccarat took place in front of 10,000 fans on Saturday, January 28 at...

at 14:30
American Transmission Systems, Inc. (ATSI), a subsidiary of FirstEnergy Corp. , recently broke ground on a new operations service center in North Jackson, Mahoning County, to help streamline operations and maximize efficiencies along the local...

at 14:17
BCS Automotive, a leading manufacturer of automotive parts, has announced that it will be auctioning the contents of its Galesville Injection Mold Shop. The auction will be conducted by Cincinnati Industrial Auctioneers, a well-respected auction...

at 14:07
The Tribunal issued its Reasons for Decision in the above named matter.  A copy of the Reasons for Decision dated January 30, 2023 is available at capitalmarketstribunal.ca Registrar, Governance & Tribunal SecretariatOntario Securities Commission...

at 14:05
TriMas announced today that it will host its fourth quarter and full year 2022 earnings conference call on Thursday, February 23, 2023. The conference call will begin at 10 a.m. Eastern Time and will follow the Company's release of fourth quarter...



News published on 2 november 2022 at 18:15 and distributed by: