10-KPeriod: FY2012

ALLSTATE CORP Annual Report, Year Ended Dec 31, 2012

Filed February 20, 2013For Securities:ALLALL-PJALL-PBALL-PHALL-PI

Summary

In its 2013 Form 10-K filing, The Allstate Corporation reported a significant rebound in profitability for 2012, with consolidated net income reaching $2.31 billion, a substantial increase from $787 million in 2011. This improvement was driven by a strong performance in the Property-Liability segment, which posted net income of $1.97 billion, a marked turnaround from a net loss in the prior year, largely due to a much-improved combined ratio of 95.5% compared to 103.4%. The Allstate Protection segment specifically saw underwriting income of $1.25 billion, a significant improvement from the prior year's underwriting loss, aided by lower catastrophe losses. The Allstate Financial segment, while experiencing a slight dip in net income to $541 million from $590 million, continues to contribute positively. The company's strategy for 2013 focuses on growing premiums, maintaining auto profitability, raising returns in homeowners and annuity businesses, proactively managing investments, and reducing costs. Key financial highlights include a 17.2% increase in book value per diluted share, reaching $42.39, and a return on average equity of 11.9% for 2012.

Financial Highlights

38 data points
Beta

Revenue

$33.31B

Net Income

$2.31B

6.9% Net Margin

EPS (Diluted)

$4.68

Total Assets

$126.95B

Cash & Equivalents

$806.00M

Free Cash Flow

$2.77B

Financial Statements
Beta
Revenue$33.31B
Interest Expense$373.00M
Net Income$2.31B
EPS (Basic)$4.71
EPS (Diluted)$4.68
Shares Outstanding (Basic)489.40M
Shares Outstanding (Diluted)493.00M

Key Highlights

  • 1Consolidated net income surged to $2.31 billion in 2012, a substantial increase from $787 million in 2011, driven by improved Property-Liability segment performance.
  • 2The Property-Liability segment's combined ratio improved significantly to 95.5% in 2012 from 103.4% in 2011, indicating enhanced underwriting profitability.
  • 3Allstate Protection segment achieved underwriting income of $1.25 billion in 2012, a strong recovery from an underwriting loss of $857 million in 2011.
  • 4Book value per diluted share increased by 17.2% to $42.39 as of December 31, 2012.
  • 5The company repurchased $910 million of common stock in 2012 and announced new, significant share repurchase programs, signaling confidence and a commitment to returning capital to shareholders.
  • 6Allstate Financial segment reported net income of $541 million, demonstrating continued profitability, although slightly down from $590 million in 2011.

Frequently Asked Questions

The primary driver of Allstate's improved profitability in 2012 was the significant turnaround in the Property-Liability segment, particularly the Allstate Protection segment. This segment benefited from lower catastrophe losses, which reduced claims and claims expenses, and improved underwriting results across key lines like homeowners insurance.

Allstate manages its catastrophe exposure through reinsurance and by adjusting underwriting practices, especially in markets with significant catastrophe risk. Catastrophe losses were $2.35 billion in 2012, a decrease from $3.82 billion in 2011, which contributed to the improved underwriting results for the year. The company continues to refine its strategies, including selectively not offering continuing coverage in certain high-risk coastal areas and purchasing reinsurance.

Allstate Financial's strategy focuses on expanding customer relationships, growing underwritten products, improving returns on and reducing exposure to spread-based products (like fixed annuities), and emphasizing capital efficiency. The segment performed well, reporting net income of $541 million in 2012, although this was a slight decrease from $590 million in 2011, mainly due to net realized capital losses in 2012 compared to gains in 2011 and lower net investment income.

Allstate demonstrates a commitment to returning capital to shareholders through dividends and share repurchases. In 2012, the company paid $0.88 per share in dividends and repurchased $910 million of its common stock. It also announced new, substantial share repurchase programs, signaling management's confidence in the company's financial health and future prospects.