10-KPeriod: FY2014

ALLSTATE CORP Annual Report, Year Ended Dec 31, 2014

Filed February 19, 2015For Securities:ALLALL-PJALL-PBALL-PHALL-PI

Summary

Allstate Corporation's 2014 10-K filing reveals a strong financial performance, driven by a robust Allstate Protection segment which constitutes 93% of the company's consolidated insurance premiums. The company, the largest publicly held personal lines insurer in the U.S., reported consolidated net income available to common shareholders of $2.75 billion, a notable increase from $2.26 billion in 2013. This improvement was largely due to a reduction in disposition charges related to the sale of Lincoln Benefit Life Company and lower debt extinguishment charges, partially offset by a decrease in underwriting income from the Property-Liability segment due to higher catastrophe losses. Allstate strategically operates across distinct consumer segments with its Allstate, Esurance, and Encompass brands, each catering to different customer preferences in terms of advice, service, and brand loyalty. The company is focused on growing policies in force, maintaining a healthy combined ratio, proactively managing investments, modernizing its operating model, and building long-term growth platforms. Key financial highlights include a 4.7% increase in property-liability premiums earned to $28.93 billion, a 6.5% increase in book value per diluted common share to $48.24, and a return on average common shareholders' equity of 13.3% for the year.

Financial Statements
Beta
Revenue$35.24B
Interest Expense$322.00M
Net Income$2.85B
EPS (Basic)$6.37
EPS (Diluted)$6.27
Shares Outstanding (Basic)431.40M
Shares Outstanding (Diluted)438.20M

Key Highlights

  • 1Consolidated net income available to common shareholders was $2.75 billion in 2014, up from $2.26 billion in 2013.
  • 2The Property-Liability combined ratio was 93.9 in 2014, compared to 92.0 in 2013, with catastrophe losses increasing to $1.99 billion from $1.25 billion.
  • 3Allstate Protection premiums earned increased by 4.7% to $28.93 billion, driven by growth in auto and homeowners insurance.
  • 4The Allstate Financial segment saw a significant increase in net income to $631 million from $95 million, largely due to the sale of Lincoln Benefit Life Company.
  • 5The company repurchased $2.31 billion of common shares in 2014 and announced a new $3 billion repurchase program.
  • 6Shareholders' equity increased by 3.8% to $22.30 billion as of December 31, 2014.
  • 7The company maintains strong financial strength ratings from major agencies (A+ from A.M. Best for its insurance subsidiaries) with a stable outlook.

Frequently Asked Questions

Allstate reported a net income available to common shareholders of $2.75 billion in 2014, an increase from $2.26 billion in 2013. This improvement was driven by reduced disposition charges related to the sale of Lincoln Benefit Life Company and lower debt extinguishment charges.

The Allstate Protection segment, which represents the core property-liability insurance business, saw premiums earned increase by 4.7% to $28.93 billion. However, the combined ratio increased to 93.9 from 92.0 in 2013, mainly due to a rise in catastrophe losses to $1.99 billion.

Allstate's strategy focuses on growing insurance policies in force, maintaining a healthy combined ratio, managing investments for attractive risk-adjusted returns, modernizing its operating model, and building long-term growth platforms. It aims to serve diverse consumer segments through its Allstate, Esurance, and Encompass brands, emphasizing personalized advice for the Allstate brand and digital-first experiences for Esurance, while Encompass targets the mass affluent market with bundled policies.

Allstate actively manages its catastrophe risk through purchasing reinsurance, limiting exposure in high-risk coastal areas by not writing new homeowners business or by withdrawing from certain markets, implementing tropical cyclone deductibles, and redesigning products with features like graduated coverage based on roof age. The company also invests in loss mitigation measures for homes and communities.