10-KPeriod: FY2013

ALLSTATE CORP Annual Report, Year Ended Dec 31, 2013

Filed February 20, 2014For Securities:ALLALL-PJALL-PBALL-PHALL-PI

Summary

Allstate Corporation's 2013 10-K filing reveals a company focused on stabilizing and growing its core property-liability insurance business while navigating a challenging economic environment. The 'Allstate Protection' segment, which constitutes the vast majority of the company's revenue, showed improved underwriting income driven by reduced catastrophe losses in 2013 compared to the prior year, leading to a more favorable combined ratio. However, the 'Allstate Financial' segment experienced a significant decline in net income, largely due to a substantial loss on the disposition of its Lincoln Benefit Life Company (LBL). Despite the mixed segment performance, the company demonstrated resilience in its capital position, with shareholders' equity increasing, supported by effective capital management actions including debt refinancing and preferred stock issuance. Allstate's strategic priorities for 2014 include growing policies, maintaining combined ratios, managing investments for returns, modernizing operations, and building growth platforms.

Financial Highlights

38 data points
Beta

Revenue

$34.51B

Net Income

$2.26B

6.6% Net Margin

EPS (Diluted)

$4.81

Total Assets

$123.46B

Cash & Equivalents

$675.00M

Free Cash Flow

$4.04B

Financial Statements
Beta
Revenue$34.51B
Interest Expense$367.00M
Net Income$2.26B
EPS (Basic)$4.87
EPS (Diluted)$4.81
Shares Outstanding (Basic)464.40M
Shares Outstanding (Diluted)470.30M

Key Highlights

  • 1Allstate Protection segment saw improved underwriting income in 2013, with a combined ratio of 91.5%, down from 95.5% in 2012, primarily due to lower catastrophe losses.
  • 2Consolidated net income available to common shareholders was $2.26 billion in 2013, a slight decrease from $2.31 billion in 2012, with diluted EPS at $4.81 compared to $4.68.
  • 3Allstate Financial segment experienced a significant drop in net income to $95 million in 2013 from $541 million in 2012, primarily due to a $521 million after-tax loss on the pending sale of Lincoln Benefit Life Company (LBL).
  • 4Property-Liability premiums earned increased by 3.3% to $27.62 billion in 2013, driven by growth in auto and homeowners insurance.
  • 5Catastrophe losses decreased significantly to $1.25 billion in 2013 from $2.35 billion in 2012, positively impacting the loss ratio.
  • 6Shareholders' equity increased to $21.48 billion as of December 31, 2013, reflecting strong capital generation and management actions.
  • 7The company repurchased $1.84 billion of common stock in 2013 and announced a new $2.5 billion repurchase program in February 2014, indicating a commitment to returning capital to shareholders.

Frequently Asked Questions

Allstate reported consolidated net income available to common shareholders of $2.26 billion, or $4.81 per diluted share, in 2013. This was a slight decrease from $2.31 billion, or $4.68 per diluted share, in 2012. The Property-Liability segment performed well with improved underwriting income, while the Allstate Financial segment was significantly impacted by a loss on the disposition of its Lincoln Benefit Life Company.

The Allstate Protection segment, comprising auto and homeowners insurance, showed a strong performance with underwriting income of $2.36 billion in 2013, up from $1.25 billion in 2012. This improvement was driven by lower catastrophe losses and a more favorable combined ratio of 91.5% compared to 95.5% in the previous year.

Allstate anticipates that interest rates will likely remain below historic averages for an extended period and financial markets will continue to experience volatility. The company is managing this risk by shortening the maturity profile of its Property-Liability portfolio, shifting its portfolio mix towards investments with returns derived from operating or market performance (like equities and real estate), and investing according to specific business needs. The Allstate Financial segment expects lower investment spreads due to reduced contractholder funds and the ongoing low interest rate environment.

The most significant event for the Allstate Financial segment in 2013 was the announcement and recording of an estimated loss of $521 million, after-tax, related to the pending sale of Lincoln Benefit Life Company (LBL), its life insurance business generated through independent master brokerage agencies, and its deferred fixed annuity and long-term care insurance business.