ALLSTATE CORP
For the period ended Dec 31, 2023. Filed Feb 21, 2024.
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FY2023 · Filed Feb 21, 2024
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Allstate Health and Benefits
2023 Form 10-KAllstate Health and Benefits
Allstate Health and Benefits Segment
Allstate Health and Benefits offers employer voluntary benefits, group health and individual health products, including life, accident, critical illness, hospital indemnity, short-term disability and other health products.
In 2023, Allstate Health and Benefits represented 2.1% of total PIF. Our target customers are consumers with family and financial protection needs. For additional information on our strategy and outlook, see Part I, Item 1. Business - Strategy and Segment Information.
Effective January 1, 2023, we adopted the FASB guidance revising the accounting for certain long-duration insurance contracts in the Allstate Health and Benefits segment using the modified retrospective approach at the transition date of January 1, 2021. See Note 2 of the consolidated financial statements for further information regarding the impact of the adopted accounting standard on our consolidated financial statements.
| Summarized financial information | |||
|---|---|---|---|
| For the years ended December 31, | |||
| ($ in millions) | 2023 | 2022 | 2021 |
| Revenues | |||
| Accident and health insurance premiums and contract charges | $1,846 | $1,832 | $1,834 |
| Other revenue | 447 | 402 | 359 |
| Net investment income | 82 | 69 | 74 |
| Costs and expenses | |||
| Accident, health and other policy benefits | (1,071) | (1,042) | (1,060) |
| Amortization of DAC | (150) | (136) | (128) |
| Operating costs and expenses | (842) | (814) | (787) |
| Restructuring and related charges | (7) | (2) | (9) |
| Income tax expense on operations | (63) | (64) | (60) |
| Adjusted net income | $242 | $245 | $223 |
| Benefit ratio (1) | 56.2 | 55.1 | 55.9 |
| Employer voluntary benefits (2) | 3,590 | 3,783 | 3,804 |
| Group health (3) | 136 | 119 | 122 |
| Individual health (4) | 417 | 394 | 407 |
| Policies in force as of December 31 (in thousands) | 4,143 | 4,296 | 4,333 |
(1)Benefit ratio is calculated as accident, health and other policy benefits less interest credited to contractholder funds of $33 million, $33 million, and $34 million for the years ended December 31, 2023, 2022, and 2021, respectively, divided by premiums and contract charges.
(2)Employer voluntary benefits include supplemental life and health products offered through workplace enrollment.
(3)Group health includes health products and administrative services sold to employers.
(4)Individual health includes short-term medical and other health products sold directly to individuals.
Adjusted net income decreased $3 million in 2023 compared to 2022, primarily due to a decline in employer voluntary benefits, partially offset by increases in individual and group health.
Premiums and contract charges increased 0.8% or $14 million in 2023 compared to 2022, primarily due to growth in group health, partially offset by a decline in employer voluntary benefits and individual health.
| Premiums and contract charges by line of business | |||
|---|---|---|---|
| For the years ended December 31, | |||
| ($ in millions) | 2023 | 2022 | 2021 |
| Employer voluntary benefits | $1,001 | $1,033 | $1,040 |
| Group health | 440 | 385 | 350 |
| Individual health | 405 | 414 | 444 |
| Premiums and contract charges | $1,846 | $1,832 | $1,834 |
The Allstate Corporation 63
2023 Form 10-K Allstate Health and Benefits
New annualized premium sales (annualized premiums at initial employer voluntary benefits customer enrollment or health policy sale) decreased by $2 million to $732 million in 2023. The decrease in 2023 primarily relates to a decline in employer voluntary benefits, partially offset by growth in group health and individual health businesses.
Other revenue increased $45 million in 2023 compared to 2022, primarily due to an increase in group health administrative fees.
Accident, health and other policy benefits increased 2.8% or $29 million in 2023 compared to 2022, primarily due to growth in group health, partially offset by lower benefit utilization in individual health.
Accident, health and other policy benefits include changes in the reserve for future policy benefits,
expected development on reported claims, and reserves for incurred but not reported claims as shown in Note 10 of the consolidated financial statements.
Benefit ratio increased 1.1 points to 56.2 in 2023 compared to 55.1 in 2022, primarily due to higher benefit utilization in employer voluntary benefits and group health, partially offset by lower benefit utilization in individual health.
Amortization of DACincreased 10.3% or $14 million in 2023 compared to 2022, primarily due to higher amortization related to growth in individual health. For information on changes in DAC, see Note 12 of the consolidated financial statements.
| Operating costs and expenses | |||
|---|---|---|---|
| For the years ended December 31, | |||
| ($ in millions) | 2023 | 2022 | 2021 |
| Non-deferrable commissions | $319 | $321 | $316 |
| General and administrative expenses | 523 | 493 | 471 |
| Total operating costs and expenses | $842 | $814 | $787 |
Operating costs and expenses increased $28 million in 2023 compared to 2022, primarily due to growth in group health and investments in the employer voluntary benefits business.
Allstate Health and Benefits reinsurance ceded
The vast majority of reinsurance relates to the disposition of long-term care and other closed blocks of business. We retain primary liability as a direct insurer for all risks ceded to reinsurers.
| Reinsurance recoverables by reinsurer, net | ||||
|---|---|---|---|---|
| S&P financial strength rating · A.M. Best financial strength rating · Reinsurance recoverable on paid and unpaid benefits | ||||
| As of December 31, | ||||
| ($ in millions) · 2023 · 2022 | ||||
| Mutual of Omaha Insurance | A+ | A+ | $70 | $65 |
| Everlake Life Insurance Company | NR | A+ | 33 | 35 |
| Argo Capital Group Ltd. | NR | NR | 24 | 20 |
| General Re Life Corporation | AA+ | A++ | 15 | 13 |
| Midlands Casualty Insurance Company | NR | NR | 15 | 16 |
| Other (1) | 5 | 6 | ||
| Credit loss allowance | (3) | (3) | ||
| Total | $159 | $152 | ||
(1)As of December 31, 2023, the other category includes $4 million and $5 million of recoverables due from reinsurers rated A- or better by S&P and A.M. Best, respectively. As of December 31, 2022, the other category includes $3 million and $4 million of recoverables due from reinsurers rated A- or better by S&P and A.M. Best, respectively.
We continuously monitor the creditworthiness of reinsurers in order to determine our risk of recoverability on an individual and aggregate basis. No reinsurance recoverables have been written off in the three-years ended December 31, 2023.
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