01—Abstract
Summary
Summary of the 10-K filed February 21, 2020. Cited figures are marked; the original filing is the authoritative source.
The Allstate Corporation's 2019 Form 10-K filing highlights a strong year for the company, characterized by significant growth in net income and total revenues, largely driven by a substantial increase in net realized capital gains compared to the prior year's losses.
The "Allstate Protection" segment, comprising the Allstate, Encompass, and Esurance brands, remained the primary revenue driver, showing improved underwriting income due to increased premiums earned and lower catastrophe losses, despite higher non-catastrophe losses and amortization of deferred policy acquisition costs. The company continued its "Transformative Growth Plan" focused on expanding customer access, improving customer value, and increasing investments in marketing and technology. Key initiatives include integrating the Esurance brand into the Allstate brand in 2020 and expanding customer interaction methods.
The company also reported growth in its "Service Businesses" segment, driven by Allstate Protection Plans and Allstate Dealer Services, and demonstrated progress in managing its "Allstate Life" and "Allstate Benefits" segments. Financially, Allstate reported a robust return on equity and a significant increase in shareholders' equity.
The company actively managed its capital through share repurchases and preferred stock redemptions and issuances, demonstrating a commitment to returning value to shareholders while maintaining a strong financial position. The report also detailed the company's comprehensive risk management framework and its efforts to navigate various risks, including those related to catastrophes, market volatility, and regulatory changes.
02—Key points
Key Highlights
- Allstate reported a substantial increase in net income applicable to common shareholders to $4.68 billion in 2019, up from $2.01 billion in 2018, primarily driven by higher net realized capital gains and improved underwriting income in the Allstate Protection segment.
- Total revenues increased by 12.2% to $44.67 billion in 2019, supported by growth in insurance premiums across multiple segments and positive realized capital gains.
- The Allstate Protection segment, the company's largest, delivered strong underwriting income of $2.91 billion, a 24.3% increase year-over-year, with improved performance in auto and homeowners insurance.
- The company continued to execute its Transformative Growth Plan, with a key initiative being the integration of the Esurance brand into the Allstate brand in 2020 to broaden customer access and simplify operations.
- Shareholders' equity saw a significant increase to $26.00 billion as of December 31, 2019, reflecting strong net income, higher unrealized capital gains on investments, and strategic capital management activities.
- The company managed its capital effectively through a $3 billion common share repurchase program, which was completed in January 2020, and the authorization of a new $3 billion repurchase program.
- Allstate maintained strong financial strength ratings from major agencies (A.M. Best, Moody's, S&P), with stable outlooks, indicating confidence in its financial stability and operational performance.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2019filed February 21, 2020Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $41.54B$39.81B | +4.3% |
| Operating Income | $4.33B— | — |
| Interest Expense | $327.00M$332.00M | −1.5% |
| Net Income | $4.85B$2.16B | +124.4% |
| EPS (Basic) | $14.25$5.78 | +146.5% |
| EPS (Diluted) | $14.03$5.70 | +146.1% |
| Shares Outstanding (Basic) | 328.20M347.80M | −5.6% |
| Shares Outstanding (Diluted) | 333.50M353.20M | −5.6% |
05—Questions
Frequently Asked Questions
What were Allstate's key financial results for 2019?
Allstate reported a net income applicable to common shareholders of $4.68 billion, a significant increase from $2.01 billion in 2018. Total revenues rose to $44.67 billion, up 12.2% from the prior year. The "Allstate Protection" segment showed strong performance with underwriting income of $2.91 billion, up 24.3% year-over-year.
What is Allstate's "Transformative Growth Plan" and how is it progressing?
Allstate's "Transformative Growth Plan" aims to increase market share in personal property and casualty insurance and expand its protection businesses. Key components include expanding customer access (e.g., integrating Esurance into the Allstate brand in 2020), improving customer value through product redesign and technology, and reducing expenses. The company reported progress in executing this plan during 2019.
How did the company manage its capital and shareholder returns in 2019?
Allstate actively managed its capital by completing a $3 billion common share repurchase program and authorizing a new $3 billion program. Shareholders' equity increased significantly to $26.00 billion. The company also managed its preferred stock through redemptions and issuances, maintaining strong financial strength ratings.
What were the main drivers of the increase in net realized capital gains?
The increase in net realized capital gains in 2019 compared to losses in 2018 was primarily due to increased valuations on equity investments and gains on sales of fixed income securities.
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