8-KRegulation FD

ALLSTATE CORP 8-K Report, Regulation FD Disclosure (Jul 15, 2013)

Filed July 15, 2013For Securities:ALLALL-PJALL-PBALL-PHALL-PI

Summary

Allstate Corporation (ALL) announced significant changes to its retirement and life insurance benefits, effective January 2014. These adjustments aim to align the company's offerings with market standards, enhance consistency across its employee base, and reduce the company's cost structure. Key changes include the transition from current pension formulas to a new cash balance pension formula, a revision to employer 401(k) matching contributions to the maximum of the current variable range, and modifications to employee and retiree life insurance benefits, including the discontinuation of retiree life benefits for current employees. These benefit modifications are expected to result in a positive impact on Allstate's book value per common share, estimated between $1.70 and $2.00. This increase is primarily due to the higher discount rate applied in remeasuring benefit obligations, differences in projected and accumulated benefit obligations for pension plans, and a reduction in the accrued benefit obligation for the employee retiree life insurance program. Additionally, the company anticipates a reduction in benefit expense starting in the third quarter of 2013. Allstate plans to discuss these financial and accounting implications in its upcoming earnings communications and its Form 10-Q for the quarter ended June 30, 2013.

Key Highlights

  • 1Allstate is overhauling its retirement and life insurance benefits, effective January 2014.
  • 2The company is replacing current pension formulas with a new cash balance pension formula.
  • 3Employer 401(k) matching contributions will be set at the maximum of the current variable range.
  • 4Retiree life benefits for current employees will be discontinued.
  • 5These changes are expected to increase Allstate's book value per common share by an estimated $1.70 to $2.00.
  • 6The company anticipates a reduction in benefit expense beginning in Q3 2013.
  • 7A re-valuation of pension and retiree life insurance plans will occur in Q3 2013, impacting financial statements.

Frequently Asked Questions

Allstate is transitioning to a cash balance pension formula, setting employer 401(k) matching contributions to the maximum of the current range, revising employee life insurance benefits, and discontinuing retiree life benefits for current employees, effective January 2014.

The company estimates these changes will boost book value per common share by $1.70 to $2.00, primarily due to an increased discount rate, pension obligation adjustments, and reduced retiree life insurance obligations. Benefit expense is also expected to decrease starting in Q3 2013. A re-valuation of plans will occur in Q3 2013.

Most benefit changes are effective January 2014. The re-valuation of plans will take place in the third quarter of 2013, and the financial impacts, including the book value increase and reduced benefit expense, will be reflected in the company's Q3 2013 financial statements.

The primary goals are to align Allstate's benefits with competitive market offerings, create more consistent benefits across employees, and reduce the company's cost structure while still providing a contemporary and competitive package.