10-QPeriod: Q1 FY2021

ALLSTATE CORP Quarterly Report for Q1 Ended Mar 31, 2021

Filed May 5, 2021For Securities:ALLALL-PJALL-PBALL-PHALL-PI

Summary

Allstate Corp. reported a net loss of $1.38 billion for the first quarter of 2021, a significant decrease from a net income of $549 million in the prior year period. This loss was primarily driven by a substantial loss from discontinued operations, which amounted to $3.79 billion, largely attributable to the pending sale of its life and annuity businesses. Despite the overall net loss, the company's core Property-Liability operations showed resilience, with underwriting income increasing by 22.9% to $1.66 billion, bolstered by the acquisition of National General Holdings Corp. and favorable auto non-catastrophe losses. Total revenues saw a notable increase of 26.2% to $12.45 billion, driven by higher insurance premiums and a significant rise in net investment income, largely from performance-based investments. The company also continued its share repurchase program and paid dividends, demonstrating a commitment to shareholder returns.

Financial Statements
Beta
Revenue$12.45B
Operating Income$2.41B
Interest Expense$86.00M
Net Income-$1.38B
EPS (Basic)$-4.65
EPS (Diluted)$-4.60
Shares Outstanding (Basic)302.50M
Shares Outstanding (Diluted)306.40M

Key Highlights

  • 1Reported a net loss of $1.38 billion for Q1 2021, primarily due to a $3.79 billion loss from discontinued operations related to the sale of life and annuity businesses.
  • 2Allstate Protection segment underwriting income increased 22.9% to $1.66 billion, driven by the National General acquisition and favorable auto non-catastrophe losses.
  • 3Total revenues grew 26.2% to $12.45 billion, supported by a 11.6% increase in property and casualty insurance premiums and a significant rise in net investment income.
  • 4Acquired National General Holdings Corp. on January 4, 2021, enhancing the company's market share in personal property-liability and independent agent distribution.
  • 5Announced pending sales of Allstate Life Insurance Company and Allstate Life Insurance Company of New York for approximately $3.0 billion, recording a $4 billion after-tax loss on disposition in Q1 2021.
  • 6Net investment income increased by 187.8% to $708 million, largely due to improved performance-based income, especially from limited partnerships.
  • 7Shareholders' equity decreased to $26.82 billion from $30.22 billion at the end of 2020, impacted by unrealized capital losses and discontinued operations, while common share repurchases and dividends continued.

Frequently Asked Questions

The substantial net loss of $1.38 billion was primarily driven by a loss from discontinued operations of $3.79 billion. This loss is largely associated with the announced pending sale of Allstate's life and annuity businesses.

The acquisition of National General Holdings Corp., completed on January 4, 2021, positively impacted the Allstate Protection segment, contributing to a 22.9% increase in underwriting income. It also significantly boosted property and casualty insurance premiums written and earned, enhancing market share and the independent agent distribution channel.

Net investment income saw a significant increase of 187.8% in the first quarter of 2021, largely due to improved performance-based income, especially from limited partnerships. However, the company notes that the low interest rate environment may continue to decrease portfolio yields and impact future net investment income, while ongoing pandemic uncertainty creates market volatility.

Allstate announced pending sales of its life and annuity businesses (Allstate Life Insurance Company and Allstate Life Insurance Company of New York) for approximately $3.0 billion. This strategic move led to the classification of these businesses as held for sale and resulted in a significant loss on disposition being recognized in the first quarter of 2021.