Operational execution delivers strong
underlying results
The Allstate Corporation (NYSE: ALL) today reported financial
results for the second quarter of 2024.
The Allstate Corporation
Consolidated Highlights
Three months ended June
30,
Six months ended June
30,
($ in millions, except per share data
and ratios)
2024
2023
% / pts
Change
2024
2023
% / pts
Change
Consolidated revenues
$
15,714
$
13,979
12.4
%
$
30,973
$
27,765
11.6
%
Net income (loss) applicable to common
shareholders
301
(1,389
)
NM
1,490
(1,735
)
NM
per diluted common share (1)
1.13
(5.29
)
NM
5.58
(6.59
)
NM
Adjusted net income (loss)*
429
(1,162
)
NM
1,796
(1,504
)
NM
per diluted common share* (1)
1.61
(4.42
)
NM
6.73
(5.72
)
NM
Return on Allstate common shareholders’
equity (trailing twelve months)
Net income (loss) applicable to common
shareholders
19.3
%
(17.2
)%
36.5
Adjusted net income (loss)*
21.6
%
(12.7
)%
34.3
Common shares outstanding (in
millions)
264.0
261.8
0.8
%
Book value per common share
$
62.14
$
51.29
21.2
%
Consolidated premiums written
(2)
$
15,429
$
13,731
12.4
%
$
29,717
$
26,596
11.7
%
Property-Liability insurance premiums
earned
13,339
11,921
11.9
%
26,239
23,556
11.4
%
Property-Liability combined
ratio
Recorded
101.1
117.6
(16.5
)
97.1
113.1
(16.0
)
Underlying combined ratio*
85.3
92.9
(7.6
)
86.1
93.1
(7.0
)
Catastrophe losses
$
2,120
$
2,696
(21.4
)%
$
2,851
$
4,387
(35.0
)%
Total policies in force (in
thousands)
199,877
188,022
6.3
%
(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)
Includes premiums written for the Allstate
Protection and Protection Services segments and 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 strong execution capabilities benefited second
quarter results and position us for continued success,” said Tom
Wilson, Chair, President and CEO of The Allstate Corporation.
“Revenues grew by 12% from the prior year to $15.7 billion for the
quarter reflecting increased insurance premiums and higher
investment income. Almost 2 million customer claims were handled in
the quarter to help rebuild lives after storms, accidents and
device breakage. The Property-Liability profit improvement plan
progressed resulting in an underlying combined ratio* of 85.3.
Protection Services and the Health and Benefits businesses also
generated strong results. As a result, net income applicable to
common shareholders was $301 million with adjusted net income* of
$1.61 per diluted common share.”
“Allstate’s strategy of providing affordable, simple and
connected protection resulted in strong policy growth in National
General branded property-liability insurance and Allstate
protection plans sold by retailers. National General’s policies in
force increased by 12% over the prior year quarter and it is now
one of the largest personal lines insurers serving the independent
agent channel. Total Property-Liability policies in force declined
by 0.8% reflecting fewer Allstate brand auto insurance policies as
increased new business did not offset customer retention losses.
Protection Plans policies in force increased by 9% with written
premium of $518 million in the quarter, due to higher sales through
US retailers and expansion of mobile phone protection plans in
Europe. Allstate’s Transformative Growth plan, broad protection
offerings and extensive distribution is expected to create
additional shareholder value,” concluded Wilson.
Second Quarter 2024 Results
- Total revenues of $15.7 billion in the second quarter of 2024
were $1.7 billion higher than the prior year quarter driven by
increased Property-Liability earned premium.
- Net income applicable to common shareholders was $301 million
in the second quarter of 2024 compared to a net loss of $1.4
billion in the prior year quarter, as Property-Liability
underwriting results improved. Adjusted net income* was $429
million, or $1.61 per diluted share, compared to an adjusted net
loss* of $1.2 billion in the prior year quarter.
----------------------------------------------------------------------------------------------------------------------------------------------------------
- Property-Liability earned premiums of $13.3 billion
increased 11.9% in the second quarter of 2024 compared to the prior
year quarter, primarily driven by higher average premiums from rate
increases. The underwriting loss of $145 million in the quarter was
$1.9 billion better than a $2.1 billion loss in the prior year
quarter.
Property-Liability
Results
Three months ended June
30,
Six months ended June
30,
($ in millions)
2024
2023
% / pts
Change
2024
2023
% / pts
Change
Premiums earned
$
13,339
$
11,921
11.9
%
$
26,239
$
23,556
11.4
%
Allstate brand
10,897
10,002
8.9
21,501
19,854
8.3
National General
2,442
1,919
27.3
4,738
3,702
28.0
Premiums written
$
14,279
$
12,620
13.1
%
$
27,462
$
24,403
12.5
%
Allstate brand
11,575
10,525
10.0
22,084
20,230
9.2
National General
2,704
2,095
29.1
5,378
4,173
28.9
Underwriting income (loss)
$
(145
)
$
(2,094
)
93.1
%
$
753
$
(3,095
)
NM
Allstate brand
(189
)
(1,847
)
89.8
601
(2,819
)
NM
National General
43
(248
)
NM
153
(276
)
NM
Recorded combined ratio
101.1
117.6
(16.5
)
97.1
113.1
(16.0
)
Underlying combined ratio*
85.3
92.9
(7.6
)
86.1
93.1
(7.0
)
- Premiums written increased 13.1% compared to the prior year
quarter driven by increases for Allstate brand of 10.0% and
National General of 29.1%.
- Underwriting loss in the second quarter of 2024 of $145 million
improved from a $2.1 billion loss in the prior year quarter, due to
increased premiums earned, improved underlying loss experience and
lower catastrophe losses.
- Property-Liability combined ratio was 101.1 for the quarter and
97.1 for the first six months of 2024. The underlying combined
ratio* was 85.3 in the second quarter, improving 7.6 points
compared to the prior year, as higher earned premiums, improved
underlying loss experience and operating efficiencies were
partially offset by increased advertising expenses.
- Allstate Protection auto insurance results reflect
execution of a comprehensive plan to restore margins through higher
rates, lower expenses, underwriting actions and claims process
enhancements. Profitability improvement enabled increased growth
investment in rate adequate states and risk segments.
Allstate Protection Auto
Results
Three months ended June
30,
Six months ended June
30,
($ in millions, except ratios)
2024
2023
% / pts
Change
2024
2023
% / pts
Change
Premiums earned
$
9,079
$
8,121
11.8
%
$
17,857
$
16,029
11.4
%
Premiums written
9,284
8,269
12.3
18,641
16,618
12.2
Policies in Force (in
thousands)
25,124
25,520
(1.6
)
Recorded combined ratio
95.9
108.3
(12.4
)
96.0
106.4
(10.4
)
Underlying combined ratio*
93.5
102.2
(8.7
)
94.3
102.4
(8.1
)
- Earned and written premiums grew 11.8% and 12.3% 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 of 1.6%.
- Allstate brand policies in force decreased by 4.5% compared to
prior year quarter as increased new business was offset by customer
retention losses.
- National General policies in force increased by 11.7% due to
growth in specialty vehicle insurance and the expansion of the
Custom360℠ products to middle market customers.
- Allstate brand auto rate increases were implemented in 21
locations in the second quarter at an average of 5.7%, resulting in
an annualized total brand premium impact of 1.0% in the quarter.
National General auto rate increases were implemented in 27
locations in the second quarter at an average of 11.2%, resulting
in an annualized total brand premium impact of 2.0% in the
quarter.
- The recorded auto insurance combined ratio of 95.9 in the
second quarter of 2024 was 12.4 points lower than the prior year
quarter, reflecting higher earned premiums, improved underlying
loss experience, favorable prior year reserve reestimates and
operating efficiencies.
- Allstate brand auto insurance recorded combined ratio of 96.9
in the second quarter of 2024 decreased 11.2 points compared to
prior year quarter, primarily driven by higher average earned
premiums outpacing moderating underlying loss costs per
policy.
- National General auto insurance recorded combined ratio of 91.9
in the second quarter of 2024 was 17.9 points below the prior year
quarter, reflecting lower unfavorable prior year non-catastrophe
reserve reestimates and improved underlying results.
- Prior year non-catastrophe reserve reestimates were favorable
$171 million in the second quarter, reflecting favorable Allstate
brand reserve development, primarily driven by physical damage
coverages.
- The underlying combined ratio* of 93.5 improved by 8.7 points
compared to the prior year quarter from higher average premium and
moderating loss trends.
- Allstate Protection homeowners insurance growth reflects
higher average premiums and growth in policies in force.
Underwriting loss of $375 million improved compared to a $1.3
billion loss in the prior year quarter driven by an improvement in
underlying performance and lower catastrophe losses. The recorded
combined ratio for the first six months of 2024 was 97.1 which
generated $189 million of underwriting income compared to an
underwriting loss of $1.8 billion during the same period in
2023.
Allstate Protection Homeowners
Results
Three months ended June
30,
Six months ended June
30,
($ in millions, except ratios)
2024
2023
% / pts
Change
2024
2023
% / pts
Change
Premiums earned
$
3,255
$
2,883
12.9
%
$
6,409
$
5,693
12.6
%
Premiums written
3,845
3,381
13.7
6,719
5,915
13.6
Policies in Force (in
thousands)
7,426
7,268
2.2
Recorded combined ratio
111.5
145.3
(33.8
)
97.1
132.3
(35.2
)
Catastrophe Losses
$
1,616
$
2,189
(26.2
)%
$
2,171
$
3,638
(40.3
)%
Underlying combined ratio*
63.5
67.6
(4.1
)
64.5
67.6
(3.1
)
- Earned premiums increased by 12.9% and written premiums
increased 13.7% compared to the prior year quarter, primarily
reflecting higher average premium and policies in force growth of
2.2%.
- Policies in force growth reflects improved retention and
increased new policy sales for the Allstate brand.
- Allstate brand homeowners implemented rate increases in 12
locations in the second quarter at an average of 9.9%, resulting in
an annualized total brand premium impact of 1.1% in the quarter and
4.5% through the first six months of 2024. Implemented rate
increases and inflation in insured home replacement costs resulted
in a 10.7% increase in homeowners insurance average gross written
premium compared to the prior year quarter.
- National General homeowners rate increases were implemented in
12 locations in the second quarter at an average of 14.6%,
resulting in an annualized total brand premium impact of 2.3% in
the quarter and 3.9% through the first six months of 2024.
- The recorded homeowners insurance combined ratio of 111.5 was
33.8 points below the second quarter of 2023, due to lower
catastrophe losses and higher earned premiums.
- Catastrophe losses of $1.6 billion in the quarter decreased
$573 million compared to the prior year quarter.
- The underlying combined ratio* of 63.5 decreased by 4.1 points
compared to the prior year quarter, reflecting higher earned
premiums and favorable non-catastrophe claim frequency, partially
offset by higher non-catastrophe claim severity.
----------------------------------------------------------------------------------------------------------------------------------------------------------
- Protection Services provides broad protection to
customers largely through embedded distribution programs. Revenues
increased to $773 million in the second quarter of 2024, 12.7%
higher than the prior year quarter, primarily due to Allstate
Protection Plans and Arity. Adjusted net income of $55 million
increased by $14 million compared to the prior year quarter, driven
by Allstate Protection Plans.
Protection Services
Results
Three months ended June
30,
Six months ended June
30,
($ in millions)
2024
2023
% / $
Change
2024
2023
% / $
Change
Total revenues (1)
$
773
$
686
12.7
%
$
1,526
$
1,357
12.5
%
Allstate Protection Plans
483
399
21.1
947
784
20.8
Allstate Dealer Services
148
148
—
294
296
(0.7
)
Allstate Roadside
51
66
(22.7
)
117
130
(10.0
)
Arity
52
35
48.6
91
72
26.4
Allstate Identity Protection
39
38
2.6
77
75
2.7
Adjusted net income (loss)
$
55
$
41
$
14
$
109
$
75
$
34
Allstate Protection Plans
41
31
10
81
59
22
Allstate Dealer Services
6
6
—
12
13
(1
)
Allstate Roadside
8
6
2
19
10
9
Arity
(2
)
(3
)
1
(6
)
(7
)
1
Allstate Identity Protection
2
1
1
3
—
3
(1) Excludes net gains and losses on
investments and derivatives.
- Allstate Protection Plans revenue of $483 million
increased $84 million, or 21.1%, compared to the prior year quarter
driven by growth in North American and international business.
Adjusted net income of $41 million in the second quarter of 2024
was $10 million higher than the prior year quarter, reflecting
increased revenue.
- Allstate Dealer Services generated revenue of $148
million and adjusted net income of $6 million which were consistent
with the prior year quarter.
- Allstate Roadside revenue of $51 million in the second
quarter of 2024 decreased 22.7% compared to the prior year quarter
reflecting the discontinuance of a large unprofitable account.
Adjusted net income of $8 million was $2 million higher than the
prior year quarter, primarily driven by increased pricing, improved
provider capacity and lower costs.
- Arity revenue of $52 million increased $17 million
compared to the prior year quarter, due to higher advertising
revenue. Adjusted net loss was $2 million in the second quarter of
2024 compared to a net loss of $3 million in the prior year
quarter.
- Allstate Identity Protection revenue of $39 million in
the second quarter of 2024 was 2.6% higher than the prior year
quarter due to growth from new and existing clients. Adjusted net
income of $2 million in the second quarter of 2024 was $1 million
higher than prior year quarter.
----------------------------------------------------------------------------------------------------------------------------------------------------------
- Allstate Health and Benefits premiums and contract
charges increased 4.6%, or $21 million, compared to the prior year
quarter mostly due to growth in individual health and group health.
Adjusted net income of $58 million in the second quarter was
slightly higher than the prior year quarter resulting from
increased group health and employer voluntary benefits income,
partially offset by lower individual health income.
Allstate Health and Benefits
Results
Three months ended June
30,
Six months ended June
30,
($ in millions)
2024
2023
% Change
2024
2023
% Change
Premiums and contract charges
$
474
$
453
4.6
%
$
952
$
916
3.9
%
Employer voluntary benefits
246
245
0.4
494
500
(1.2
)
Group health
120
110
9.1
238
217
9.7
Individual health
108
98
10.2
220
199
10.6
Adjusted net income
$
58
$
57
1.8
$
114
$
113
0.9
%
- Allstate Investments $70.6 billion portfolio generated
net investment income of $712 million in the second quarter of
2024, an increase of $102 million from the prior year quarter due
to higher market-based income, partially offset by lower
performance-based income.
Allstate Investment
Results
Three months ended June
30,
Six months ended June
30,
($ in millions, except ratios)
2024
2023
$ / pts
Change
2024
2023
$ / pts
Change
Net investment income
$
712
$
610
$
102
$
1,476
$
1,185
$
291
Market-based (1)
667
536
131
1,293
1,043
250
Performance-based (1)
107
127
(20
)
308
253
55
Net gains (losses) on investments and
derivatives
$
(103
)
$
(151
)
$
48
$
(267
)
$
(137
)
$
(130
)
Change in unrealized net capital gains
and losses, pre-tax
$
(152
)
$
(342
)
$
190
$
(425
)
$
530
$
(955
)
Total return on investment
portfolio
0.7
%
0.2
%
0.5
1.1
%
2.5
%
(1.4
)
Total return on investment portfolio
(trailing twelve months)
5.3
%
4.2
%
1.1
(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 0.7% for
the second quarter of 2024 and 5.3% for the latest twelve
months.
- Market-based investment income was $667 million in the
second quarter of 2024, an increase of $131 million, or 24.4%,
compared to the prior year quarter, reflecting higher yields in the
$52.6 billion fixed income portfolio. Fixed income duration was 5.0
years as of June 30, 2024, 0.2 years above prior year end and 1.6
years higher than year end 2022. Investment portfolio allocations,
including fixed income duration and equity risk levels, are
informed by expected risk adjusted returns and the enterprise risk
and return position.
- Performance-based investment income totaled $107
million in the second quarter of 2024, a decrease of $20 million
compared to the prior year quarter primarily reflecting lower real
estate investment results. The portfolio allocation to
performance-based assets provides a diversifying source of higher
long-term returns, and volatility in reported results is
expected.
- Net losses on investments and derivatives were $103
million in the second quarter of 2024, compared to $151 million in
the prior year quarter. Net losses in the second quarter of 2024
were driven by sales of fixed income securities.
- Unrealized net capital losses were $1.2 billion or $152
million adverse to the prior quarter as higher interest rates
resulted in lower fixed income valuations.
Proactive Capital Management
“Operating and financial performance in the second quarter
reinforces Allstate’s ability to successfully execute the profit
improvement plan while accelerating the implementation of the
Transformative Growth strategy. Financial condition and capital
position remain strong with statutory surplus in the insurance
companies of $16.0 billion and $3.0 billion of assets held at the
holding company. The sale of the Health and Benefits business is
progressing, validating the attractiveness of these businesses.
Allstate has the financial flexibility, liquidity and capital
resources to continue to accelerate Transformative Growth,” said
Jess Merten, Chief Financial Officer.
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, August 1. 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)
June 30, 2024
December 31, 2023
Assets
Investments
Fixed income securities, at fair value
(amortized cost, net $53,788 and $49,649)
$
52,576
$
48,865
Equity securities, at fair value (cost
$2,003 and $2,244)
2,216
2,411
Mortgage loans, net
815
822
Limited partnership interests
8,730
8,380
Short-term, at fair value (amortized cost
$5,290 and $5,145)
5,288
5,144
Other investments, net
979
1,055
Total investments
70,604
66,677
Cash
599
722
Premium installment receivables, net
10,762
10,044
Deferred policy acquisition costs
6,112
5,940
Reinsurance and indemnification
recoverables, net
8,730
8,809
Accrued investment income
609
539
Deferred income taxes
212
219
Property and equipment, net
777
859
Goodwill
3,502
3,502
Other assets, net
6,461
6,051
Total assets
$
108,368
$
103,362
Liabilities
Reserve for property and casualty
insurance claims and claims expense
$
41,553
$
39,858
Reserve for future policy benefits
1,344
1,347
Contractholder funds
891
888
Unearned premiums
25,929
24,709
Claim payments outstanding
1,575
1,353
Other liabilities and accrued expenses
10,421
9,635
Debt
8,082
7,942
Total liabilities
89,795
85,732
Equity
Preferred stock and additional capital
paid-in, $1 par value, 25 million shares authorized, 82.0 thousand
shares issued and outstanding, $2,050 aggregate liquidation
preference
2,001
2,001
Common stock, $.01 par value, 2.0 billion
shares authorized and 900 million issued, 264 million and 262
million shares outstanding
9
9
Additional capital paid-in
3,927
3,854
Retained income
50,718
49,716
Treasury stock, at cost (636 million and
638 million shares)
(37,036
)
(37,110
)
Accumulated other comprehensive
income:
Unrealized net capital gains and
losses
(938
)
(604
)
Unrealized foreign currency translation
adjustments
(113
)
(98
)
Unamortized pension and other
postretirement prior service credit
12
13
Discount rate for reserve for future
policy benefits
13
(11
)
Total accumulated other comprehensive
loss
(1,026
)
(700
)
Total Allstate shareholders’
equity
18,593
17,770
Noncontrolling interest
(20
)
(140
)
Total equity
18,573
17,630
Total liabilities and equity
$
108,368
$
103,362
THE ALLSTATE CORPORATION AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS (UNAUDITED)
($ in millions, except per share
data)
Three months ended June
30,
Six months ended June
30,
2024
2023
2024
2023
Revenues
Property and casualty insurance
premiums
$
13,952
$
12,470
$
27,464
$
24,643
Accident and health insurance premiums and
contract charges
474
453
952
916
Other revenue
679
597
1,348
1,158
Net investment income
712
610
1,476
1,185
Net gains (losses) on investments and
derivatives
(103
)
(151
)
(267
)
(137
)
Total revenues
15,714
13,979
30,973
27,765
Costs and expenses
Property and casualty insurance claims and
claims expense
10,801
11,727
20,302
22,053
Accident, health and other policy
benefits
291
258
587
523
Amortization of deferred policy
acquisition costs
2,001
1,789
3,940
3,533
Operating costs and expenses
2,019
1,786
3,904
3,502
Pension and other postretirement
remeasurement (gains) losses
(9
)
(40
)
(11
)
(93
)
Restructuring and related charges
13
27
23
54
Amortization of purchased intangibles
70
82
139
163
Interest expense
98
98
195
184
Total costs and expenses
15,284
15,727
29,079
29,919
Income (loss) from operations before
income tax expense
430
(1,748
)
1,894
(2,154
)
Income tax expense (benefit)
83
(373
)
349
(458
)
Net income (loss)
347
(1,375
)
1,545
(1,696
)
Less: Net income (loss) attributable to
noncontrolling interest
16
(23
)
(4
)
(24
)
Net income (loss) attributable to
Allstate
331
(1,352
)
1,549
(1,672
)
Less: Preferred stock dividends
30
37
59
63
Net income (loss) applicable to common
shareholders
$
301
$
(1,389
)
$
1,490
$
(1,735
)
Earnings per common share:
Net income (loss) applicable to common
shareholders per common share - Basic
$
1.14
$
(5.29
)
$
5.65
$
(6.59
)
Weighted average common shares - Basic
264.1
262.6
263.8
263.1
Net income (loss) applicable to common
shareholders per common share - Diluted
$
1.13
$
(5.29
)
$
5.58
$
(6.59
)
Weighted average common shares -
Diluted
267.1
262.6
266.8
263.1
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 June
30,
Consolidated
Per diluted common
share
2024
2023
2024
2023
Net income (loss) applicable to common
shareholders (1)
$
301
$
(1,389
)
$
1.13
$
(5.29
)
Net (gains) losses on investments and
derivatives
103
151
0.38
0.58
Pension and other postretirement
remeasurement (gains) losses
(9
)
(40
)
(0.03
)
(0.15
)
Amortization of purchased intangibles
70
82
0.26
0.31
(Gain) loss on disposition
(1
)
8
—
0.03
Non-recurring costs
—
90
—
0.34
Income tax benefit
(35
)
(64
)
(0.13
)
(0.24
)
Adjusted net income (loss) *
(1)
$
429
$
(1,162
)
$
1.61
$
(4.42
)
Weighted average dilutive potential common
shares excluded due to net loss applicable to common shareholders
(1)
—
1.7
Six months ended June
30,
Consolidated
Per diluted common
share
2024
2023
2024
2023
Net income (loss) applicable to common
shareholders (1)
$
1,490
$
(1,735
)
$
5.58
$
(6.59
)
Net (gains) losses on investments and
derivatives
267
137
1.00
0.52
Pension and other postretirement
remeasurement (gains) losses
(11
)
(93
)
(0.04
)
(0.35
)
Amortization of purchased intangibles
139
163
0.52
0.62
(Gain) loss on disposition
(5
)
(1
)
(0.02
)
(0.01
)
Non-recurring costs (2)
—
90
—
0.34
Income tax benefit
(84
)
(65
)
(0.31
)
(0.25
)
Adjusted net income (loss) *
(1)
$
1,796
$
(1,504
)
$
6.73
$
(5.72
)
Weighted average dilutive potential common
shares excluded due to net loss applicable to common shareholders
(1)
—
2.1
_____________ (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.
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
June 30,
2024
2023
Return on Allstate common
shareholders’ equity
Numerator:
Net income (loss) applicable to common
shareholders
$
2,909
$
(2,723
)
Denominator:
Beginning Allstate common shareholders’
equity
$
13,516
$
18,094
Ending Allstate common shareholders’
equity (1)
16,592
13,516
Average Allstate common shareholders’
equity
$
15,054
$
15,805
Return on Allstate common shareholders’
equity
19.3
%
(17.2
)%
($ in millions)
For the twelve months ended
June 30,
2024
2023
Adjusted net income (loss) return on
Allstate common shareholders’ equity
Numerator:
Adjusted net income (loss) *
$
3,551
$
(2,266
)
Denominator:
Beginning Allstate common shareholders’
equity
$
13,516
$
18,094
Less: Unrealized net capital gains and
losses
(1,845
)
(2,140
)
Adjusted beginning Allstate common
shareholders’ equity
15,361
20,234
Ending Allstate common shareholders’
equity (1)
16,592
13,516
Less: Unrealized net capital gains and
losses
(938
)
(1,845
)
Adjusted ending Allstate common
shareholders’ equity
17,530
15,361
Average adjusted Allstate common
shareholders’ equity
$
16,446
$
17,798
Adjusted net income (loss) return on
Allstate common shareholders’ equity *
21.6
%
(12.7
)%
_____________
(1)
Excludes equity related to
preferred stock of $2,001 million as of June 30, 2024 and 2023.
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 June
30,
Six months ended June
30,
2024
2023
2024
2023
Combined ratio
101.1
117.6
97.1
113.1
Effect of catastrophe losses
(15.9
)
(22.6
)
(10.9
)
(18.6
)
Effect of prior year non-catastrophe
reserve reestimates
0.5
(1.6
)
0.3
(0.9
)
Effect of amortization of purchased
intangibles
(0.4
)
(0.5
)
(0.4
)
(0.5
)
Underlying combined ratio*
85.3
92.9
86.1
93.1
Effect of prior year catastrophe reserve
reestimates
(1.0
)
0.3
(1.1
)
(0.1
)
Allstate
Protection - Auto Insurance
Three months ended June
30,
Six months ended June
30,
2024
2023
2024
2023
Combined ratio
95.9
108.3
96.0
106.4
Effect of catastrophe losses
(3.9
)
(4.2
)
(2.6
)
(2.7
)
Effect of prior year non-catastrophe
reserve reestimates
1.9
(1.4
)
1.3
(0.8
)
Effect of amortization of purchased
intangibles
(0.4
)
(0.5
)
(0.4
)
(0.5
)
Underlying combined ratio*
93.5
102.2
94.3
102.4
Effect of prior year catastrophe reserve
reestimates
(0.1
)
(0.2
)
(0.1
)
(0.3
)
Allstate
Protection - Homeowners Insurance
Three months ended June
30,
Six months ended June
30,
2024
2023
2024
2023
Combined ratio
111.5
145.3
97.1
132.3
Effect of catastrophe losses
(49.6
)
(75.9
)
(33.9
)
(63.9
)
Effect of prior year non-catastrophe
reserve reestimates
1.9
(1.4
)
1.6
(0.5
)
Effect of amortization of purchased
intangibles
(0.3
)
(0.4
)
(0.3
)
(0.3
)
Underlying combined ratio*
63.5
67.6
64.5
67.6
Effect of prior year catastrophe reserve
reestimates
(3.9
)
1.8
(4.3
)
0.8
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240731608197/en/
Nick Nottoli Media Relations (847) 402-5600
Allister Gobin Investor Relations (847) 402-2800
Allstate (NYSE:ALL)
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Allstate (NYSE:ALL)
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