10-KPeriod: FY2008

ALLSTATE CORP Annual Report, Year Ended Dec 31, 2008

Filed February 26, 2009For Securities:ALLALL-PJALL-PBALL-PHALL-PI

Summary

Allstate Corporation's 2008 Form 19-K filing reveals a challenging year marked by a consolidated net loss of $1.68 billion, a significant downturn from the $4.64 billion net income in 2007. This loss was driven by a substantial increase in catastrophe losses to $3.34 billion in 2008, compared to $1.41 billion in 2007, impacting the Property-Liability segment's combined ratio to 99.4%, up from 89.8%. Additionally, Allstate Financial experienced a net loss of $1.72 billion in 2008, a reversal from its $465 million net income in 2007, largely due to significant net realized capital losses of $5.09 billion in 2008 compared to gains of $1.24 billion in 2007. The company suspended its $2 billion share repurchase program to bolster liquidity and capital levels, and revised its shareholder dividend to $0.20 per share. Despite the challenging financial results, Allstate is focused on protecting its financial strength, building customer loyalty, and continuing its strategy of reinventing protection and retirement.

Financial Highlights

39 data points
Beta

Revenue

$29.39B

Net Income

-$1.68B

-5.7% Net Margin

EPS (Diluted)

$-3.06

Total Assets

$134.80B

Cash & Equivalents

$415.00M

Free Cash Flow

$3.62B

Financial Statements
Beta
Revenue$29.39B
Interest Expense$351.00M
Net Income-$1.68B
EPS (Basic)$-3.06
EPS (Diluted)$-3.06
Shares Outstanding (Basic)548.30M
Shares Outstanding (Diluted)548.30M

Key Highlights

  • 1Consolidated net loss of $1.68 billion for 2008, a sharp decline from $4.64 billion net income in 2007.
  • 2Property-Liability combined ratio increased to 99.4% in 2008 from 89.8% in 2007, primarily due to higher catastrophe losses ($3.34 billion vs. $1.41 billion).
  • 3Allstate Financial segment reported a net loss of $1.72 billion in 2008, compared to a net income of $465 million in 2007.
  • 4Net realized capital losses of $5.09 billion in 2008 significantly impacted overall results, a reversal from $1.24 billion in net realized capital gains in 2007.
  • 5Suspension of the $2 billion share repurchase program to preserve capital and enhance liquidity.
  • 6Book value per diluted share decreased by 39.1% to $23.51 as of December 31, 2008, from $38.58 as of December 31, 2007.
  • 7Revised shareholder dividend to $0.20 per share announced in February 2009.

Frequently Asked Questions

The primary drivers of Allstate's significantly weaker financial performance in 2008 were a substantial increase in catastrophe losses, particularly from Hurricanes Ike and Gustav, and large net realized capital losses on investments due to market volatility and economic downturn. These factors negatively impacted both the Property-Liability and Allstate Financial segments.

In response to market volatility and to preserve capital, Allstate suspended its $2 billion share repurchase program. They also took actions to enhance liquidity, including managing the duration of their investment portfolios, reducing exposure to certain market sectors like real estate and financial institutions, and increasing cash and short-term investment positions. The shareholder dividend was also revised to $0.20 per share.

Allstate Protection premiums written in 2009 were anticipated to be lower than 2008 levels. This was attributed to a continued emphasis on preserving auto insurance margins, a transition to a value-based strategy, reduced catastrophe exposure, and the competitive environment affecting auto sales and consumer choices for lower coverage levels.

The Allstate Financial segment reported a net loss of $1.72 billion in 2008, a significant reversal from its profitable position in 2007. This was primarily driven by substantial net realized capital losses, accelerated amortization of deferred policy acquisition costs (DAC) and deferred sales inducement costs (DSI) due to changes in assumptions and a premium deficiency assessment, all stemming from adverse market conditions and revised actuarial assumptions.