10-QPeriod: Q3 FY2010

ALLSTATE CORP Quarterly Report for Q3 Ended Sep 30, 2010

Filed October 27, 2010For Securities:ALLALL-PJALL-PBALL-PHALL-PI

Summary

Allstate Corporation's (ALL) Q3 2010 results showed a notable increase in net income, reaching $367 million compared to $221 million in the same quarter of the prior year. This improvement was driven by a combination of factors including a reduction in realized capital losses and a turnaround in the Allstate Financial segment, which reported a net income of $85 million versus a net loss of $38 million in Q3 2009. The Property-Liability segment demonstrated stable underwriting income, though the combined ratio saw a slight increase to 95.9% due to higher catastrophe losses and prior year reserve reestimates, partially offset by favorable developments in other lines. Investment income saw a decrease year-over-year, reflecting lower yields and duration shortening strategies, while the company maintained a strong capital position with shareholders' equity increasing to $19.27 billion.

Financial Highlights

35 data points
Beta

Revenue

$7.91B

Net Income

$367.00M

4.6% Net Margin

EPS (Diluted)

$0.68

Total Assets

$132.53B

Cash & Equivalents

$500.00M

Free Cash Flow

$884.00M

Financial Statements
Beta
Revenue$7.91B
Interest Expense$91.00M
Net Income$367.00M
EPS (Basic)$0.68
EPS (Diluted)$0.68
Shares Outstanding (Basic)540.90M
Shares Outstanding (Diluted)543.00M

Key Highlights

  • 1Consolidated net income increased to $367 million in Q3 2010 from $221 million in Q3 2009.
  • 2Allstate Financial segment turned profitable, reporting $85 million in net income for Q3 2010, compared to a net loss of $38 million in Q3 2009.
  • 3Property-Liability combined ratio was 95.9% for Q3 2010, an increase from 94.7% in Q3 2009, impacted by catastrophe losses and reserve reestimates.
  • 4Total revenues increased to $7.91 billion in Q3 2010 from $7.58 billion in Q3 2009.
  • 5Net investment income decreased to $1.01 billion in Q3 2010 from $1.08 billion in Q3 2009.
  • 6Shareholders' equity grew to $19.27 billion at September 30, 2010, up from $16.69 billion at December 31, 2009.
  • 7The company reported $3.53 billion in deployable invested assets at the parent holding company level.

Frequently Asked Questions

The increase in net income was primarily driven by a significant improvement in the Allstate Financial segment, which moved from a net loss to a net profit, and a reduction in net realized capital losses compared to the prior year. Property-Liability segment's performance remained relatively stable with strong underwriting income, although the combined ratio saw a slight increase.

The Property-Liability segment reported stable underwriting income. However, the combined ratio increased to 95.9% from 94.7% in the prior year's quarter. This was mainly due to higher catastrophe losses and prior year reserve reestimates, partially offset by favorable reserve developments in other lines of business and improved underwriting results in the standard auto line.

Allstate's investment strategy focuses on managing interest rate, equity, credit, and real estate risks while seeking income and capital appreciation. Net investment income decreased year-over-year to $1.01 billion from $1.08 billion due to lower yields and duration shortening strategies. The investment portfolio saw an increase in unrealized net capital gains to $2.65 billion from net capital losses of $2.32 billion at year-end 2009, reflecting improved market valuations for fixed income securities.

Allstate maintained a strong capital position, with shareholders' equity increasing to $19.27 billion at the end of the quarter. Deployable invested assets at the parent holding company level were $3.53 billion. The company reported holding $37.49 billion in cash and liquid investments saleable within one quarter, demonstrating robust liquidity.