01—Abstract
Summary
Summary of the 10-K filed February 19, 2016. Cited figures are marked; the original filing is the authoritative source.
The Allstate Corporation's 2015 10-K filing reveals a company focused on its core property-liability and financial services businesses.
The report highlights a strategy to serve distinct customer segments with differentiated offerings through various brands like Allstate, Esurance, and Encompass. While the company experienced a decrease in consolidated net income for 2015 compared to 2014, this was primarily attributed to higher property-liability insurance claims and lower realized net capital gains. The Allstate Protection segment, which represents the vast majority of the company's premiums, saw a slight increase in premiums earned, but a decrease in underwriting income due to higher claims.
The Allstate Financial segment demonstrated growth in net income, driven by higher net realized capital gains and improved operational performance. Allstate's balance sheet reflects significant investments in fixed income securities and a robust shareholders' equity base, although it experienced a decrease in total investments and shareholders' equity from the prior year. The company continues to emphasize capital management through share repurchases and dividends, while also navigating a low interest rate environment that impacts investment income.
The report also details the company's extensive regulatory landscape and various legal proceedings, which are standard for large insurers. Overall, Allstate appears to be managing its diverse business lines with a focus on customer segmentation and financial discipline, while navigating industry-specific risks like catastrophe losses and market volatility.
02—Key points
Key Highlights
- Consolidated net income applicable to common shareholders decreased to $2.06 billion in 2015 from $2.75 billion in 2014, primarily due to higher property-liability insurance claims and lower realized net capital gains.
- The Allstate Protection segment, the largest contributor to revenue, saw premiums earned increase by 4.8% to $30.31 billion in 2015, but underwriting income decreased due to higher claims and reserve reestimates.
- The Allstate Financial segment reported an increase in net income to $663 million in 2015 from $631 million in 2014, benefiting from higher net realized capital gains and improved operational performance.
- Total investments decreased to $77.76 billion as of December 31, 2015, from $81.11 billion in 2014, with net investment income also declining by 8.8%.
- Shareholders' equity decreased to $20.03 billion as of December 31, 2015, from $22.30 billion in 2014, impacted by share repurchases and dividends.
- The company repurchased approximately 10.2% of its outstanding shares in 2015 as part of a $3 billion repurchase program.
- Allstate continues to manage its catastrophe exposure through reinsurance and by limiting its presence in high-risk geographic areas, with catastrophe losses of $1.72 billion in 2015 compared to $1.99 billion in 2014.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2015filed February 19, 2016Financial Statements
FY2015 against FY2014
| Line item | FY2015FY2014 | Change |
|---|---|---|
| Revenue | $35.65B$35.24B | +1.2% |
| Interest Expense | $292.00M$322.00M | −9.3% |
| Net Income | $2.17B$2.85B | −23.8% |
| EPS (Basic) | $5.12$6.37 | −19.6% |
| EPS (Diluted) | $5.05$6.27 | −19.5% |
| Shares Outstanding (Basic) | 401.10M431.40M | −7.0% |
| Shares Outstanding (Diluted) | 406.80M438.20M | −7.2% |
05—Questions
Frequently Asked Questions
What was Allstate's net income in 2015?
Allstate's net income applicable to common shareholders was $2.06 billion in 2015, a decrease from $2.75 billion in 2014.
How did the Allstate Protection segment perform in 2015?
The Allstate Protection segment's premiums earned increased by 4.8% to $30.31 billion in 2015. However, underwriting income decreased due to higher claims and reserve reestimates, reflecting increased loss activity.
What is the impact of the low interest rate environment on Allstate Financial?
The low interest rate environment adversely impacts Allstate Financial's spread-based products, like annuities, by reducing investment spreads. The company is managing this by reducing its concentration in spread-based business and shifting its investment portfolio towards performance-based assets, which may lead to more volatile investment income.
How is Allstate managing its catastrophe exposure?
Allstate manages its catastrophe exposure through a comprehensive reinsurance program designed to protect against hurricanes, earthquakes, and other natural events. They also limit their homeowners insurance business in high-risk coastal geographies and are working to promote loss mitigation measures.
06—Continue