01—Abstract
Summary
Summary of the 10-K filed February 26, 2009. Cited figures are marked; the original filing is the authoritative source.
Allstate Corporation's 2008 Form 19-K filing reveals a challenging year marked by a consolidated net loss of $1.68 billiona, 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 billionb 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 billionc 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.
02—Key points
Key Highlights
- Consolidated net loss of $1.68 billion for 2008, a sharp decline from $4.64 billion net income in 2007.
- Property-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).
- Allstate Financial segment reported a net loss of $1.72 billion in 2008, compared to a net income of $465 million in 2007.
- Net 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.
- Suspension of the $2 billion share repurchase program to preserve capital and enhance liquidity.
- Book value per diluted share decreased by 39.1% to $23.51 as of December 31, 2008, from $38.58 as of December 31, 2007.
- Revised shareholder dividend to $0.20 per share announced in February 2009.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2008filed February 26, 2009Financial Statements
FY2008 against FY2007
| Line item | FY2008FY2007 | Change |
|---|---|---|
| Revenue | $29.39B$36.77B | −20.1% |
| Interest Expense | $351.00M$333.00M | +5.4% |
| Net Income | -$1.68B$4.64B | −136.2% |
| EPS (Basic) | $-3.06$7.80 | −139.2% |
| EPS (Diluted) | $-3.06$7.76 | −139.4% |
| Shares Outstanding (Basic) | 548.30M594.20M | −7.7% |
| Shares Outstanding (Diluted) | 548.30M597.50M | −8.2% |
05—Questions
Frequently Asked Questions
What was the primary driver of Allstate's financial performance in 2008?
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.
How did Allstate manage its capital and liquidity in response to the challenging year?
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.
What is the outlook for Allstate Protection's premium growth in 2009?
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.
How did the Allstate Financial segment perform, and what were the key factors?
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.
06—Continue