01—Abstract
Summary
Summary of the 10-K filed February 17, 2017. Cited figures are marked; the original filing is the authoritative source.
The Allstate Corporation's 2016 10-K filing reveals a company focused on its core property-liability and financial services segments, aiming for improved customer service, target economic returns, customer base growth, proactive investment management, and long-term growth platforms.
The company, the largest publicly held personal lines insurer in the U.S., generated over $33 billiona in premiums and contract charges. Key drivers of financial performance were the Allstate Protection segment, which accounted for 93% of consolidated insurance premiums, and the Allstate Financial segment. Despite a slight decrease in net income applicable to common shareholders compared to 2015, largely due to higher property-liability insurance claims and catastrophe losses, the company demonstrated resilience.
Allstate Protection's underwriting income saw a decrease driven by increased catastrophe losses, while Allstate Financial's net income also declined, primarily due to net realized capital losses and lower investment income. The company continued its commitment to shareholder returns through dividends and share repurchases, and is strategically investing in technology and product innovation, including the acquisition of SquareTrade.
02—Key points
Key Highlights
- Total revenues reached $36.53 billion in 2016, an increase from $35.65 billion in 2015.
- Allstate Protection segment premiums earned were $31.31 billion, a 3.3% increase year-over-year, with auto premiums driving the growth.
- Catastrophe losses in the Property-Liability segment increased significantly to $2.57 billion in 2016 from $1.72 billion in 2015.
- The Property-Liability combined ratio deteriorated slightly to 96.1% in 2016 from 94.9% in 2015, primarily due to higher catastrophe losses.
- Allstate Financial segment net income applicable to common shareholders decreased to $391 million in 2016 from $663 million in 2015.
- The company announced an agreement to acquire SquareTrade Holding Company, Inc., a consumer product protection plan provider, for approximately $1.4 billion, which closed in January 2017.
- Shareholders' equity increased to $20.57 billion as of December 31, 2016, from $20.03 billion as of December 31, 2015.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2016filed February 17, 2017Financial Statements
FY2016 against FY2015
| Line item | FY2016FY2015 | Change |
|---|---|---|
| Revenue | $37.40B$35.65B | +4.9% |
| Interest Expense | $295.00M$292.00M | +1.0% |
| Net Income | $1.88B$2.17B | −13.5% |
| EPS (Basic) | $4.72$5.12 | −7.8% |
| EPS (Diluted) | $4.67$5.05 | −7.5% |
| Shares Outstanding (Basic) | 372.80M401.10M | −7.1% |
| Shares Outstanding (Diluted) | 377.30M406.80M | −7.3% |
05—Questions
Frequently Asked Questions
What were Allstate's primary business segments in 2016?
Allstate's primary business segments in 2016 were Allstate Protection (principally private passenger auto and homeowners insurance), Discontinued Lines and Coverages (run-off business), Allstate Financial (life insurance, retirement, and accident and health products), and Corporate and Other (holding company activities).
How did catastrophe losses impact Allstate's financial performance in 2016?
Catastrophe losses in the Property-Liability segment increased significantly to $2.57 billion in 2016, compared to $1.72 billion in 2015. This increase, coupled with rising loss costs, negatively impacted the underwriting income and contributed to a higher combined ratio for the Allstate Protection segment.
What strategic acquisitions or significant corporate actions did Allstate undertake around this period?
Allstate announced an agreement to acquire SquareTrade Holding Company, Inc., a consumer product protection plan provider, for approximately $1.4 billion. This transaction closed in January 2017, expanding Allstate's product offerings. The company also continued its share repurchase program, returning capital to shareholders.
How did the low interest rate environment affect Allstate's financial segment?
The low interest rate environment adversely impacted Allstate Financial's profitability, particularly for spread-based products like fixed annuities. Lower investment yields on reinvested assets and the inability to sufficiently reduce crediting rates on certain products squeezed investment spreads, leading to lower net investment income and a decline in Allstate Financial's net income applicable to common shareholders.
06—Continue