10-QPeriod: Q3 FY2013

ALLSTATE CORP Quarterly Report for Q3 Ended Sep 30, 2013

Filed October 30, 2013For Securities:ALLALL-PJALL-PBALL-PHALL-PI

Summary

The Allstate Corporation's Q3 2013 10-Q filing reveals a mixed financial performance, with a notable decline in net income available to common shareholders compared to the prior year period. Consolidated net income available to common shareholders was $310 million for the third quarter of 2013, down from $723 million in Q3 2012, impacting diluted earnings per share to $0.66 from $1.48. This decline was influenced by several factors, including an estimated loss on the disposition of Lincoln Benefit Life Company (LBL) of $475 million after tax. Despite the lower overall net income, the Property-Liability segment demonstrated resilience, with net income available to common shareholders increasing slightly to $656 million from $639 million year-over-year. The segment's combined ratio improved marginally to 90.0 from 90.2, driven by a reduction in catastrophe losses and favorable prior year reserve re-estimates, although these were partially offset by higher expenses and less favorable reserve re-estimates in standard auto lines. The Allstate Financial segment, however, experienced a significant net loss of $360 million, largely attributable to the LBL sale loss, contrasting sharply with a net income of $131 million in the prior year's quarter.

Financial Highlights

34 data points
Beta

Revenue

$8.46B

Net Income

$310.00M

3.7% Net Margin

EPS (Diluted)

$0.66

Total Assets

$122.28B

Cash & Equivalents

$1.07B

Free Cash Flow

$1.45B

Financial Statements
Beta
Revenue$8.46B
Interest Expense$83.00M
Net Income$310.00M
EPS (Basic)$0.67
EPS (Diluted)$0.66
Shares Outstanding (Basic)461.10M
Shares Outstanding (Diluted)467.10M

Key Highlights

  • 1Consolidated net income available to common shareholders decreased to $310 million in Q3 2013 from $723 million in Q3 2012.
  • 2Property-Liability segment net income increased slightly to $656 million, with a combined ratio of 90.0.
  • 3Allstate Financial segment reported a net loss of $360 million, significantly impacted by the sale of Lincoln Benefit Life Company (LBL).
  • 4An estimated after-tax loss of $475 million was recorded for the disposition of LBL.
  • 5Property-Liability premiums written increased by 5.3% to $7.44 billion, driven by growth in standard auto and homeowners insurance.
  • 6Investments decreased to $80.48 billion as of September 30, 2013, from $97.28 billion at the end of 2012, partly due to assets held for sale.
  • 7The company issued new subordinated debentures and preferred stock during the quarter to manage its capital structure and refinance debt.

Frequently Asked Questions

The primary reason for the significant decrease in net income was the estimated after-tax loss of $475 million recognized from the disposition of Lincoln Benefit Life Company (LBL), coupled with a general increase in operating expenses and slightly higher claims and claims expenses in certain lines of business.

The Property-Liability segment performed well, showing a slight increase in net income available to common shareholders to $656 million from $639 million in the prior year. This was supported by a marginal improvement in the combined ratio to 90.0 and a 5.3% increase in premiums written, driven by growth in auto and homeowners insurance, and a reduction in catastrophe losses.

Allstate is focused on optimizing returns and managing risk in the volatile market. Strategies include shortening the maturity profile of its Property-Liability portfolio to reduce interest rate risk, shifting towards a greater proportion of asset ownership (like real estate) over lending, and managing the alignment of assets with Allstate Financial's liability profile. The company anticipates continued volatility and lower portfolio yields as cash flows are reinvested at lower market rates.

Allstate has actively managed its capital structure by issuing new subordinated debentures and preferred stock during the quarter. The company also completed a share repurchase program and has remaining authorization for further repurchases. Liquidity is managed at both the entity and enterprise level, with significant deployable assets at the parent company level, and access to a commercial paper facility and a revolving credit facility. Dividends from insurance subsidiaries are subject to regulatory approval.