ALLSTATE CORP
For the period ended Dec 31, 2024. Filed Feb 24, 2025.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Feb 24, 2025
ALL$254.81-4.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-02-21.
0000899051-24-000013
Item 7. Management's Discussion and Analysis of Financial Condition and Results of OperationsHighlightsProperty-LiabilityAllstate ProtectionRun-off Property-LiabilityProtection ServicesProperty and Casualty Insurance Claims and Claims Expense ReservesAllstate Health and BenefitsInvestmentsMarket RiskCapital Resources and LiquidityEnterprise Risk and Return ManagementApplication of Critical Accounting EstimatesRegulation and Legal ProceedingsPending Accounting StandardsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-02-24.
0000899051-25-000015
Item 7. Management's Discussion and Analysis of Financial Condition and Results of OperationsHighlightsProperty-LiabilityAllstate ProtectionRun-off Property-LiabilityProtection ServicesReserve for Property and Casualty Insurance Claims and Claims ExpenseAllstate Health and BenefitsInvestmentsMarket RiskCapital Resources and LiquidityEnterprise Risk and Return ManagementApplication of Critical Accounting EstimatesRegulation and Legal ProceedingsPending Accounting StandardsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 662 previous paragraphs and 597 current paragraphs.
245 unchanged; 240 reworded; 74 added; 140 removed; 37 previous and 38 current paragraphs rearranged.
Tables are not compared: 77 previous and 72 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (74)
Current report
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Current report
34 www.allstate.com
Current report
On August 13, 2024, we entered into a share purchase agreement with StanCorp Financial Group, Inc. to sell American Heritage Life Insurance Company and American Heritage Service Company, comprising our employer voluntary benefits business for approximately $2.0 billion in cash. The employer voluntary benefits business is reported in the Allstate Health and Benefits segment, and beginning in the third quarter of 2024, the assets and liabilities of the business were classified as held for sale. The transaction is expected to close in the first half of 2025, subject to regulatory approvals and other customary closing conditions.
Current report
On January 30, 2025, Allstate entered into an agreement with Nationwide Life Insurance Company to sell Direct General Life Insurance Company, NSM Sales Corporation and The Association Benefits Solution, LLC, comprising the group health business for approximately $1.25 billion in cash, adjusted for the closing balance sheet. The group health business is reported in the Allstate Health and Benefits segment, and beginning in the first quarter of 2025, the assets
Current report
The Allstate Corporation 35 and liabilities of the business will be classified as held for sale. The transaction is expected to close during 2025, subject to regulatory approvals and other customary closing conditions. The individual health business will either be retained or divested.
Current report
The transaction prices less costs to sell exceeds the carrying value of the net assets of both transactions, resulting in an expected gain that will be recognized at closing of each transaction. The ultimate amount of the anticipated gain on the sales will be impacted by purchase price adjustments associated with certain pre-close transactions, changes in the carrying value of net assets, changes in accumulated other comprehensive income and the related tax effects.
Current report
Total revenue increased 12.3% to $64.11 billion in 2024 compared to 2023, primarily due to premium rate increases and higher net investment income.
Current report
Net investment income increased $614 million to $3.09 billion in 2024 compared to 2023, primarily due to higher market-based investment results. Market-based results continue to benefit from portfolio repositioning into higher yielding fixed income securities and higher investment balances.
Current report
Allstate Protection underwriting income was $3.15 billion in 2024 compared to an underwriting loss of $2.09 billion in 2023, primarily due to increased premiums earned, favorable reserve reestimates and lower losses, partially offset by higher advertising costs.
Current report
The effective tax rate is the ratio of income tax expense (benefit) divided by income (loss) from operations before income tax expense. For the year ended December 31, 2024, we reported an effective tax rate of 20.2% based on total income tax expense of $1.16 billion on total income from operations before income tax expense of $5.76 billion. The effective rate in 2024 is lower than the federal statutory rate of 21%, primarily due to tax benefits derived from tax credits, tax-exempt interest income, and share-based payments, offset by state income tax expense.
Current report
•In 2024, we have removed underwriting restrictions in areas that represent the majority of Allstate brand countrywide premiums, which is expected to increase premiums written and PIF. In locations not achieving acceptable returns, we expect to
Current report
continue to pursue targeted rate increases. In states where we are not achieving acceptable returns, we plan to implement rates that keep pace with increasing costs. See Note 9 for additional details on actions taken related to Adirondack Insurance Exchange and New Jersey Skylands Insurance Association
Current report
•PIF decreased 1.4% or 347 thousand to 24,936 thousand as of December 31, 2024 compared to December 31, 2023
Current report
•In 2024 rate increases of 14.5% were implemented in 53 locations, resulting in total insurance premium impact of 11.0%
Current report
Policy growth is being driven primarily by the Allstate brand and is geographically widespread. We
Current report
are not writing new homeowners business in California and Florida and we did not write new homeowners business in New Jersey in 2024. We are also non-renewing certain policies in Florida. We may not be able to grow in certain states without regulatory or legislative reforms that enable customers to be provided coverage at appropriate risk adjusted returns.
Current report
Other personal lines premiums written increased 21.8% or $549 million in 2024 compared to 2023, primarily due to involuntary auto policies purchased from other carriers by National General and Allstate brand landlords policies. We are not writing
Current report
Commercial lines premiums written decreased 31.3% or $225 million in 2024 compared to 2023, due to the strategic decision for the Allstate brand to stop
Current report
The Allstate Corporation 43 writing new business and non-renew certain policies. We are committed to offering comprehensive commercial products to customers through our exclusive agency, independent agency and direct channels, with solutions offered by the National General brand, NEXT Insurance and other brokered solutions.
Current report
Other business lines premiums written increased 15.0% or $85 million in 2024 compared to 2023 due to growth in the lender-placed business.
Current report
(1)Expense ratio includes other revenue of $223 million, $57 million, and $19 million in 2024, 2023 and 2022, respectively, for fees on involuntary auto policies.
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(3)Includes anticipated return commissions on lender-placed business due to increased losses.
Current report
Homeowners loss ratio decreased 17.3 points in 2024 compared to 2023, primarily due to increased premiums earned and lower losses.
Current report
Commercial lines loss ratio increased 5.7 points in 2024 compared to 2023 primarily due to lower
Current report
premiums earned driven by Allstate brand strategy changes and unfavorable reserve development related to the shared economy business, partially offset by lower non-catastrophe losses.
Current report
Other business lines loss ratio increased 7.4 points in 2024 compared to 2023 primarily due to higher losses.
Current report
Catastrophe losses decreased 11.9% or $672 million in 2024 compared to 2023 primarily due to lower losses per event for wind and hail events, partially offset by higher losses from hurricanes. Favorable prior year reserve reestimates of $370 million in 2024 were primarily due to reserve reestimates in homeowners lines for 2023 events.
Current report
46 www.allstate.com the California FAIR Plan Association providing insurance for property losses. Refer to Note 1 for more information on the impact of the California wildfires.
Current report
Premiums written increased 5.0% or $134 million in 2024 compared to 2023, primarily due to international growth at Allstate Protection Plans, partially offset by lower sales at Allstate Roadside.
Current report
Adjusted net income increased 104.7% or $111 million in 2024 compared to 2023, due to premium growth at Allstate Protection Plans, improved claim severity at Allstate Roadside, higher lead sales revenue at Arity and both growth and lower costs at Allstate Identity Protection. Prior year adjusted net income was
Current report
PIF increased 9.3% or 14 million in 2024 compared to 2023 due to growth at Allstate Protection Plans.
Current report
Other revenue increased 38.2% or $122 million in 2024 compared to 2023, primarily due to higher revenue from increased customer lead sale purchases at Arity.
Current report
Intersegment premiums and service fees increased 30.4% to $180 million in 2024 compared to 2023, driven by increased lead sale purchases and higher software revenue at Arity.
Current report
Favorable reserve reestimates in 2024 totaled $376 million, representing 11.9% of underwriting income, were primarily due to catastrophe reserve reestimates in homeowners and non-catastrophe reserve reestimates in personal auto lines, partially offset by unfavorable reserve reestimates in other personal lines and commercial lines driven by transportation network company coverage no longer offered.
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Previous report
The Allstate Corporation 35
Previous report
Inflation continues to remain elevated, which led to increases in interest rates by the Federal Reserve and many foreign governmental authorities and central banks. These actions could create significant economic uncertainty. Market volatility resulting from these factors and from disruptions in the banking industry have and may continue to impact our investment valuations and returns.
Previous report
As of December 31, 2023, we have approximately $47 million investment exposure in the Middle East, of which approximately $43 million is held in Israel, which is primarily indirect exposure through funds managed by external asset managers.
Previous report
The Russia-Ukraine war and related sanctions imposed as a result of this conflict have increased global economic and political uncertainty, including inflationary pressures and an increased risk of cybersecurity incidents. Allstate does not have operations or direct investments in Russia, Belarus or Ukraine, but we could experience significant indirect impacts on the investment portfolio, financial position, or results of operations.
Previous report
Total revenue increased 11.1% to $57.09 billion in 2023 compared to 2022, primarily due to a 10.4% increase in property and casualty insurance premiums earned and net gains on equity valuations in 2023 compared to losses in 2022.
Previous report
Net investment income increased $75 million to $2.48 billion in 2023 compared to 2022, primarily due to higher market-based income reflecting increased fixed income portfolio yields and investment balances, partially offset by lower performance-based investment results.
Previous report
The effective tax rate is the ratio of income tax (benefit) expense divided by (loss) income from operations before income tax expense. The effective tax rate for 2023 was 38.8% compared to 26.7% in 2022 due to the total income tax benefit measured against a lower loss from operations before income tax expense of $348 million in 2023 compared to a loss of $1.83 billion in 2022.
Previous report
The Allstate Corporation 39 impact of the state deferred income taxes was not material to the consolidated results of operations but resulted in a tax expense to Protection Services and a tax benefit to Allstate Protection.
Previous report
Accounting for Long-Duration Insurance Contracts Effective January 1, 2023, the Company adopted the Financial Accounting Standards Board (”FASB”) guidance revising the accounting for certain long-duration insurance contracts using the modified retrospective approach to the transition date of January 1, 2021.
Previous report
Under the new guidance, measurement assumptions, including those for mortality, morbidity and policy lapses, are required to be reviewed at least annually, and updated as appropriate. In addition, reserves under the new guidance are required to be discounted using an upper-medium grade fixed income instrument yield that is updated through other comprehensive income (“OCI”) at each reporting date. Additionally, deferred policy acquisition costs (“DAC”) for all long-duration products are amortized on a simplified basis. Also, the Company’s reserve for future policy benefits and DAC are subject to new disclosure guidance.
Previous report
In addition, the Company met the conditions included in Accounting Standards Update No. 2022-05, Transition for Sold Contracts, and elected to not apply the new guidance for contracts that were part of the 2021 sales of Allstate Life Insurance Company (“ALIC”) and Allstate Life Insurance Company of New York (“ALNY”).
Previous report
The decrease in AOCI was primarily attributable to a change in the discount rate used in measuring the reserve for future policy benefits for traditional life contracts and other long-term products with guaranteed terms from a portfolio-based rate at contract issuance to an upper-medium grade fixed income-based rate at the transition date. The decrease in retained income primarily related to certain cohorts of long-term contracts whose expected net premiums exceeded expected gross premiums which resulted in an increase in reserves and a decrease in retained income equal to the present value of expected future benefits less the present value of expected future premiums at the transition date.
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•Effect of Shelter-in-Place Payback expense on combined and expense ratios
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•Renewal ratio: renewal policy item counts issued during the period, based on contract effective dates, divided by the total policy item counts issued generally 6 months prior for auto or 12 months prior for homeowners.
Previous report
Frequency and severity statistics, which are influenced by driving patterns, inflation and other factors, are provided to describe the trends in loss costs. Our reserving process incorporates changes in loss patterns, operational statistics and changes in claims reporting processes to determine our best estimate of recorded reserves. We use the following statistics to evaluate losses:
Previous report
•Gross claim frequency is calculated as annualized notice counts, excluding counts associated with catastrophe events, received in the period divided by the average of PIF with the applicable coverage during the period. Gross claim frequency includes all actual notice counts, regardless of their current status (open or closed) or their ultimate disposition (closed with a payment or closed without payment).
Previous report
•Report year incurred claim severity is calculated by dividing the sum of recorded estimated incurred losses and allocated loss adjustment expenses, excluding catastrophes, by the reported notice counts during that report year. Report year incurred claim severity does not include incurred
Previous report
but not reported (“IBNR”) losses or benefits from subrogation and salvage.
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•Paid claim severity is calculated by dividing the sum of paid losses and loss expenses by claims closed with a payment during the period.
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•Percent change in frequency or paid claim severity statisticsare calculated as the amount of increase or decrease in gross claim frequency or paid claim severity in the current period compared to the
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same period in the prior year divided by the prior year gross claim frequency or paid claim severity.
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•Percent change in report year incurred claim severity statistic is calculated as the amount of increase or decrease in report year incurred claim severity recorded in the current year divided by the current estimate of the prior report year incurred claim severity.
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Underwriting loss improved to $2.09 billion in 2023 compared to $2.78 billion in 2022, primarily due to increased premiums earned and lower unfavorable non-catastrophe reserve reestimates, partially offset by higher losses. We are executing a comprehensive plan to improve auto insurance profitability, by raising rates, reducing operating expenses and advertising, implementing underwriting restrictions in underperforming states and enhancing claims processes to manage loss costs.
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(1)2021 results include certain National General commercial lines insurance products.
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(2)2021 results include National General packaged policies, which include auto, and commercial lines insurance products.
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–Rate increases of 17.9% were taken for Allstate brand in 55 locations, resulting in total Allstate brand insurance premium impact of 16.4%
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–Rate increases of 18.8% were taken for National General brand in 48 locations, resulting in total National General brand insurance premium impact of 12.8%
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•We expect to continue to pursue rate increases for both Allstate and National General brands into 2024 to improve auto insurance profitability
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•PIF decreased 2.9% or 751 thousand to 25,283 thousand as of December 31, 2023 compared to December 31, 2022
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•Renewal ratio decreased 1.6 points as of December 31, 2023 compared to December 31, 2022
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•Decreased new issued applications driven by the direct and exclusive agency channels, partially offset by growth in the independent agency channel
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•The impact of the ongoing rate increases, underwriting restrictions in markets with returns below target levels and temporary reductions in advertising have and may continue to have an adverse effect on the renewal ratio, premiums and future PIF growth
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•In 2023 rate increases of 15.0% were taken for Allstate brand in 49 locations, resulting in total Allstate brand insurance premium impact of 11.3%
Previous report
•Policy growth is being reduced in states and lines of business that are underperforming. We are no longer writing new homeowners business in California and Florida, and we are non-renewing certain policies in Florida to reduce our exposure, which have and will continue to negatively impact premiums
Previous report
•The impact of the ongoing rate increases, underwriting restrictions in markets with returns below target levels and temporary reductions in advertising have and may continue to have an adverse effect on the renewal ratio, premiums and future PIF growth
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Previous wording
This section of this Form 10-K generally discusses 2023 and 2022 results and year-to-year comparisons between 2023 and 2022. Discussions of 2021 results and year-to-year comparisons between 2022 and 2021 that are not included in this Form 10-K can be found in Management’s Discussion and Analysis (“MD&A”) in Part II, Item 7 of our annual report on Form 10-K for 2022, filed February 16, 2023. Certain amounts have been reclassified or recast to reflect the application of the new guidance to all in-scope long-duration insurance contracts and to conform to current year presentation.
Current wording
This section of this Form 10-K generally discusses 2024 and 2023 results and year-to-year comparisons between 2024 and 2023. Discussions of 2022 results and year-to-year comparisons between 2023 and 2022 that are not included in this Form 10-K can be found in Management’s Discussion and Analysis (“MD&A”) in Part II, Item 7 of our annual report on Form 10-K for 2023, filed February 21, 2024.
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The most important factors we monitor to evaluate the financial condition and performance for our reportable segments and the Company include:
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The most important factors we monitor to evaluate the financial condition and performance for the Company include:
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•Allstate Protection: premium, policies in force (“PIF”), new business sales, policy retention, price changes, claim frequency and severity, catastrophes, loss ratio, expenses, underwriting results and combined ratio
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•Allstate Protection: premium, policies in force (“PIF”), new business sales, price changes, claim frequency and severity, catastrophes, loss ratio, expenses, underwriting results and combined ratio
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•Investments: exposure to market risk, asset allocation, credit quality, total return, net investment income, cash flows, net gains and losses on investments and derivatives, unrealized capital gains and losses, long-term returns and asset duration
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•Investments: exposure to market risk, asset allocation, credit quality, total return, net investment income, cash flows, net gains and losses on investments and derivatives, unrealized capital gains and losses, long-term returns and fixed income portfolio duration
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Underwriting income is calculated as premiums earned and other revenue, less claims and claims expense (“losses”), Shelter-in-Place Payback expense, amortization of deferred policy acquisition costs (“DAC”), operating costs and expenses, amortization or impairment of purchased intangibles, and restructuring and related charges, as determined using accounting principles generally accepted in the United States of America (“GAAP”). We use this measure in our evaluation of results of operations to analyze profitability.
Current wording
Underwriting income (loss) is calculated as premiums earned and other revenue, less claims and claims expense (“losses”), amortization of deferred policy acquisition costs (“DAC”), operating costs and expenses, amortization or impairment of purchased intangibles, and restructuring and related charges, as determined using accounting principles generally accepted in the United States of America (“GAAP”). We
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Adjusted net incomeis net income (loss) applicable to common shareholders, excluding:
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Adjusted net income (loss) is net income (loss) applicable to common shareholders, excluding:
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These factors have affected our operations and may continue to significantly affect our results of operations, financial condition and liquidity and should be considered when comparing the current period to prior periods. Macroeconomic impacts are disclosed in Part 1 “Item 1A. Risk Factors’’, including the risk factors titled “A large-scale pandemic, the occurrence of terrorism, military actions, social unrest or other actions may have an adverse effect on our business” and “Conditions in the global economy and capital markets could adversely affect our business and results
Current wording
Macroeconomic factors have and may continue to impact the results of our operations, financial condition and liquidity, such as U.S. government fiscal and monetary policies, conflict in the Middle East, the Russia/Ukraine conflict, supply chain disruptions, labor shortages and potential trade policy actions, such as tariffs and quotas. These factors should be considered when comparing the current period to prior periods. Macroeconomic impacts are disclosed in Part 1 “Item 1A. Risk Factors’’, including the risk factors titled “A large-scale pandemic, the occurrence of terrorism, military actions, political and social unrest or other disruptive or destabilizing events may have an adverse effect on our business” and “Conditions in the global economy and capital markets could adversely affect the business and results of operations”. This is not inclusive of all potential impacts and should not be treated as such. Within the MD&A, we have included further disclosures related to macroeconomic impacts on our 2024 results.
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Note 18 of the consolidated financial statements for further information.
Current wording
See Note 4 of the consolidated financial statements for further information on the employer voluntary benefits disposition.
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Allstate continued to focus on its operating priorities while executing a comprehensive plan to improve auto insurance profitability. The table below summarizes the results of our 2023 Operating Priorities.
Current wording
Allstate continued to focus on its operating priorities while successfully executing a comprehensive plan to improve auto insurance profitability and making substantial progress in advancing Transformative Growth. The table below summarizes the results of our 2024 Operating Priorities.
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Consolidated net loss applicable to common shareholders was $316 million in 2023 compared to net loss of $1.39 billion in 2022, primarily due to improved underwriting results and net gains on equity valuations compared to losses in 2022.For the twelve months ended December 31, 2023, return on Allstate common shareholders’ equity was (2.0)% compared to (7.2)% for the twelve months ended December 31, 2022.
Current wording
Consolidated net income applicable to common shareholders was $4.55 billion in 2024 compared to net loss of $316 million in 2023, primarily due to improved underwriting results from increased earned premium and improved loss trends.For the twelve months ended December 31, 2024, return on average Allstate common shareholders’ equity was 25.8% compared to (2.0)% for the twelve months ended December 31, 2023.
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Investments totaled $66.68 billion as of December 31, 2023, increasing from $61.83 billion as of December 31, 2022.
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Investments totaled $72.61 billion as of December 31, 2024, increasing from $66.68 billion as of December 31, 2023.
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Allstate shareholders’ equity was $17.77 billion as of December 31, 2023 and $17.49 billion as of December 31, 2022. The increase is primarily due to lower unrealized net capital losses on investments, partially offset by dividends paid to shareholders, common share repurchases and a net loss.
Current wording
Allstate shareholders’ equity was $21.44 billion as of December 31, 2024 and $17.77 billion as of December 31, 2023. The increase is primarily due to net income, partially offset by dividends to shareholders.
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Book value per diluted common share (ratio of Allstate common shareholders’ equity to total common shares outstanding and dilutive potential common shares outstanding) was $59.39 as of December 31, 2023, an increase of 2.2% from $58.12 as of December 31, 2022.
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Book value per diluted common share (ratio of Allstate common shareholders’ equity to total common shares outstanding and dilutive potential common shares outstanding) was $72.35 as of December 31, 2024, an increase of 21.8% from $59.39 as of December 31, 2023.
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Return on average common Allstate shareholders’ equity For the twelve months ended December 31, 2023, return on Allstate common shareholders’ equity was (2.0)%, an increase of 5.2 points from (7.2)% for the twelve months ended December 31, 2022, primarily due to lower net loss applicable to common shareholders.
Current wording
Return on average Allstate common shareholders’ equity For the twelve months ended December 31, 2024, return on Allstate common shareholders’ equity was 25.8%, an increase of 27.8 points from (2.0)% for the twelve months ended December 31, 2023, primarily due to net income applicable to common shareholders.
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Premiums written increased 10.0% to $50.35 billion in 2023 compared to $45.79 billion in 2022, reflecting higher premiums in both Allstate and National General brands.
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Premiums written increased 11.1% to $55.93 billion in 2024 compared to $50.35 billion in 2023, reflecting higher premiums in auto and homeowners insurance.
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Protection Services adjusted net income was $106 million in 2023 compared to $169 million in 2022. The decrease in 2023 was due to higher appliance and furniture claim severity at Allstate Protection Plans and lower third-party lead sales at Arity, partially offset by improved margins at Allstate Roadside and lower expenses at Allstate Identity Protection. Adjusted net income was also impacted by an increase in state income taxes and deferred tax liabilities for Allstate Dealer Services.
Current wording
Protection Services adjusted net income was $217 million in 2024 compared to $106 million in 2023. The increase in 2024 was due to premium growth at Allstate Protection Plans, improved claim severity at Allstate Roadside, higher lead sales revenue at Arity and both growth and lower costs at Allstate Identity Protection. Prior year adjusted net income was also negatively impacted by an increase in state income taxes for Allstate Dealer Services.
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Premiums and other revenues increased 9.4% or $220 million to $2.56 billion in 2023 from $2.34 billion in 2022 primarily due to Allstate Protection Plans.
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Premiums and other revenues increased 15.7% or $401 million to $2.96 billion in 2024 from $2.56 billion in 2023 primarily due to Allstate Protection Plans.
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Allstate Health and Benefits adjusted net income was $242 million in 2023 compared to $245 million in 2022. The decrease was primarily due to a decline in employer voluntary benefits, partially offset by increases in individual and group health.
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Allstate Health and Benefits adjusted net income was $186 million in 2024 compared to $242 million in 2023. The decrease was primarily due to increased benefit utilization across all lines of business.
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Premiums and contract charges totaled $1.85 billion in 2023, an increase of 0.8% from $1.83 billion in 2022 primarily due to growth in group health, partially offset by a decline in employer voluntary benefits and individual health.
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Premiums and contract charges totaled $1.92 billion in 2024, an increase of 4.1% from $1.85 billion in 2023, primarily due to growth in individual health and group health, partially offset by a decline in employer voluntary benefits.
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In both years, the effective tax rate was higher than the 21% federal statutory income tax rate, primarily due to tax credits, tax-exempt interest income and excess tax benefits on shared-based payments, offset by a change in valuation allowance and uncertain tax positions. In addition, in 2023, the Company recorded an additional tax benefit arising from the liquidation of a foreign subsidiary and the remeasurement of state deferred income taxes. The
Current wording
For the year ended December 31, 2023, we reported an effective tax rate of 38.8% based on a total income tax benefit of $135 million on the loss from operations before income tax benefit of $348 million. The effective tax rate in 2023 was higher than the federal statutory rate of 21% due to the additional tax benefit derived from tax credits, tax-exempt interest income and shared-based payments, offset by a change in valuation allowance and uncertain tax positions.
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•Expense ratio: the ratio of amortization of DAC, operating costs and expenses, amortization or impairment of purchased intangibles, restructuring and related charges and Shelter-in-Place Payback expense, less other revenue to premiums earned.
Current wording
•Expense ratio: the ratio of amortization of DAC, operating costs and expenses, amortization or impairment of purchased intangibles and restructuring and related charges, less other revenue to premiums earned.
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•PIF: policy counts are based on items rather than customers. A multi-car customer would generate multiple item (policy) counts, even if all cars were insured under one policy. Commercial lines PIF counts for shared economy agreements typically reflect contracts that cover multiple rather than individual drivers. Lender-placed policies are excluded from policy counts because relationships are with the lenders.
Current wording
•PIF: policy counts are based on items rather than customers. A multi-car customer would generate multiple item (policy) counts, even if all cars were insured under one policy. Lender-placed policies are excluded from policy counts because relationships are with the lenders.
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•Implemented rate changes: represents the impact in the locations (U.S. states, the District of Columbia or Canadian provinces) where rate changes were implemented during the period as a percentage of total brand prior year-end premiums written.
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•Implemented rate changes: represents the impact in the locations (U.S. states, the District of Columbia or Canadian provinces) where rate changes were implemented during the period as a percentage of total prior year-end premiums written.
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(1)Restructuring and related charges in 2023 primarily relate to implementing actions to streamline the organization and outsource operations, and real estate costs related to facilities being vacated. See Note 14 of the consolidated financial statements for additional details.
Current wording
(1)Restructuring and related charges in 2024 primarily relate to the organizational transformation component of the Transformative Growth plan. See Note 15 of the consolidated financial statements for additional details.
Previous wording
Private passenger auto, homeowners, and other personal lines insurance products are offered to consumers through agents, directly through contact centers and online. Our strategy is to offer products that allow customers to interact with us when, where and how they want with affordable, simple and connected protection products. For additional information on our strategy and outlook, see Part I, Item 1. Business - Strategy and Segment Information.
Current wording
Private passenger auto, homeowners, and other personal lines insurance products are offered to consumers through exclusive agents, independent agents and directly to the consumer through contact centers and online. Our strategy is to offer products that allow customers to interact with us when, where and how they want affordable, simple and connected protection products. For additional information on our strategy and outlook, see Part I, Item 1. Business - Strategy and Segment Information.
Previous wording
Allstate Protection underwriting loss was $2.09 billion in 2023 compared to underwriting loss of $2.78 billion in 2022, due to increased premiums earned and lower unfavorable non-catastrophe reserve reestimates, partially offset by higher incurred losses and higher catastrophe losses of $5.64 billion in 2023 compared to $3.11 billion in 2022.
Current wording
Underwriting income was $3.15 billion in 2024 compared to underwriting loss of $2.09 billion in 2023, primarily due to increased premiums earned, favorable reserve reestimates and lower losses, partially offset by higher advertising costs.
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(3)Include renters, condominium, landlord and other personal lines products.
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(1)Include renters, condominium, landlord and other personal lines products.
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(4)Primarily represents revenue and direct operating expenses of Ivantage, distribution of non-proprietary life and annuity products and lender-placed products. Ivantage, a general agency for Allstate exclusive agents, provides agents a solution for their customers when coverage through Allstate brand underwritten products is not available. In the first quarter of 2023, National General lender-placed products results were reclassified to other business lines. Historical results have been updated to conform with this presentation.
Current wording
(2)Other business lines represents commissions earned and other costs and expenses for Ivantage, non-proprietary life and annuity products, and lender-placed products.
Previous wording
Premium measures and statistics include PIF, new issued applications, average premiums and renewal ratio to analyze our premium trends. Premiums written is the amount of premiums charged for policies issued during a fiscal period. Premiums are considered earned and are included in the financial results on a pro-rata basis over the policy period. The portion of premiums written applicable to the unexpired term of the policies is recorded as unearned premiums on our Consolidated Statements of Financial Position.
Current wording
Premium measures and statistics include PIF, new issued applications and average premiums to analyze our premium trends. Premiums written is the amount of premiums charged for policies issued during a fiscal period. Premiums are considered earned and are included in the financial results on a pro-rata basis over the policy period. The portion of premiums written applicable to the unexpired term of the policies is recorded as unearned premiums on our Consolidated Statements of Financial Position.
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Auto insurance premiums written increased 10.7% or $3.29 billion in 2023 compared to 2022, primarily due to the following factors:
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Auto insurance premiums written increased 9.8% or $3.34 billion in 2024 compared to 2023, primarily due to the following factors:
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•Increased average premiums driven by 2022 and 2023 rate increases. In the year ended December 31, 2023:
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•Increased average premiums driven by rate increases. In 2024, rate increases of 10.4% were implemented in 55 locations, resulting in total insurance premium impact of 7.5%
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Homeowners insurance premiums written increased 12.3% or $1.38 billion in 2023 compared to 2022, primarily due to the following factors:
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Homeowners insurance premiums written increased 14.6% or $1.83 billion in 2024 compared to 2023, primarily due to the following factors:
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•Higher Allstate brand average premiums from implemented rate increases taken in 2022 and 2023 and inflation in insured home replacement costs, combined with policies in force growth
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•Higher Allstate brand average premiums from implemented rate increases, combined with policies in force growth
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•Decreased new issued applications in the direct and exclusive agency channels, partially offset by growth in the independent agency channel
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•Increased new issued applications in the exclusive agency and direct channels
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•National General policy growth may be negatively impacted in future quarters as we improve underwriting margins to targeted levels in the current books of business through underwriting and rate actions. In 2023 rate increases of 23.4% were taken for National General brand in 32 locations, resulting in total National General brand insurance premium impact of 11.0%
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National General policy growth may be negatively impacted as we improve underwriting margins to targeted levels through underwriting and rate actions. See Note 9 for additional details on actions taken related to Adirondack Insurance Exchange and New Jersey Skylands Insurance Association.
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Other personal lines premiums written increased 12.0% or $270 million in 2023 compared to 2022, primarily due to increases in landlords, condominiums and personal umbrella for Allstate brand. We are no longer writing condominium new business in California and Florida and we are non-renewing certain policies in Florida, which will continue to negatively impact premiums.
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condominium new business in California and Florida and we are non-renewing certain policies in Florida.
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GAAP operating ratios include loss ratio, expense ratio and combined ratio to analyze our profitability trends. Frequency and severity statistics are used to describe the trends in loss costs.
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GAAP operating ratios include loss ratio, expense ratio and combined ratio to analyze our profitability trends. Frequency and severity changes are used to describe the trends in loss costs.
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(1)Other revenue is deducted from operating costs and expenses in the expense ratio calculation.
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(2)Other revenue is deducted from operating costs and expenses in the expense ratio calculation.
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Auto loss ratio decreased 4.4 points in 2023 compared to 2022 driven by increased earned premium compared to the prior year. Estimated report year 2023 incurred claim severity for Allstate brand, excluding Esurance and Canada, had a weighted average increase of between 8% to 9% compared to report year 2022 for major coverages due to higher part costs and labor rates for repairable vehicles, a higher mix of total losses, higher costs for claims with attorney representation, higher medical consumption and inflation. Gross claim frequency increased relative to the prior year. We are enhancing our claims practices to manage loss costs by increasing resources and expanding re-inspections, accelerating resolution of bodily injury claims, and negotiating improved vendor services and parts agreements.
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Auto loss ratio decreased 10.1 points in 2024 compared to 2023 driven by increased earned premiums and lower non-catastrophe losses compared to the prior year. Estimated report year 2024 incurred claim severity for Allstate increased compared to report year 2023 for major coverages due to higher repair costs, a higher mix of total losses, an increase in claims with attorney representation, higher medical consumption, and inflation. Gross claim frequency decreased relative to the prior year. We continue to enhance our claims practices to manage loss costs by increasing resources and expanding re-inspections, accelerating resolution of bodily injury claims, and negotiating improved vendor services and parts agreements.
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Gross claim frequency decreased in 2023 compared to 2022 primarily due to fire and water perils. Paid claim severity increased in 2023 compared to 2022 due to inflationary loss cost pressure driven by increases in labor and materials costs. Homeowner paid claim severity can be impacted by both the mix of perils and the magnitude of specific losses paid during the period.
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Gross claim frequency decreased in 2024 compared to 2023 primarily due to fewer claims reported related to water and fire perils. Paid claim severity increased in 2024 compared to 2023 due to inflationary loss cost pressure driven by increases in labor and materials costs. Homeowner paid claim severity can be impacted by both the mix of perils and the magnitude of specific losses paid during the period.
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use this measure in our evaluation of results of operations to analyze profitability.
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The Allstate Corporation 45 exposed to losses that surpass the capitalization of these facilities and to assessments from these facilities.
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associations providing insurance for wind related property losses.
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Catastrophe reinsurance The total cost of our property catastrophe reinsurance programs, excluding
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2024 Form 10-K Run-off Property-Liability
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also negatively impacted by an increase in state income taxes for Allstate Dealer Services.
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Reserve for Property and Casualty Insurance Claims and Claims Expense
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We utilize two primary strategies to manage risks and returns and to position our portfolio to take
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The Allstate Corporation 65 security issued by the trust, typically referred to as a “class”, qualifies for a specific original rating.
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Performance-based investment results and income can vary significantly between periods and are influenced by economic conditions, equity market
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Our assessment of credit spread risk reflects the effect of changing credit spreads on spread-sensitive assets, including investments with callable or prepayable features. As of December 31, 2024 and 2023, the spread duration(1) was 4.7.
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(2)Includes the effects of foreign currency derivative contracts and the offset from liabilities in foreign currencies.
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In October 2024, Moody’s affirmed the Corporation’s senior debt and short-term issuer ratings of A3 and P-2, respectively, and AIC’s insurance financial strength rating of Aa3. The outlook for the ratings is negative.
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Short-term contractual obligationsare typically settled with cash or short-term investments and
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intercompany agreements in place that facilitate liquidity management across the Company to enhance flexibility.
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•The Corporation and AIC have access to a $750 million unsecured revolving credit facility that is available for short-term liquidity requirements. The maturity date of this facility is November 2027. The facility is fully subscribed among 11 lenders with the largest commitment being $95 million. The commitments of the lenders are several and
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expectation of future payment patterns. The ultimate cost of losses may vary materially from recorded amounts that are our best estimates. See Note 10 of the consolidated financial statements and Application of Critical Accounting Estimates section of the MD&A for further information.
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framework and conduct an internal own risk and solvency assessment of the insurer’s material risks in normal and stressed environments. Results of the assessment are filed annually.
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Impairment of fixed income securities with credit losses
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Reserve for property and casualty insurance claims and claims expense estimation
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Allstate Protection’s current period claims are typically reported promptly with relatively little lag between the date of occurrence and the date the loss is reported. Auto and homeowners liability losses
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Estimating the ultimate cost of claims and claims expenses is an inherently uncertain and complex process involving a high degree of judgment and is subject to the evaluation of numerous variables. Underwriting results are significantly influenced by estimates of property and casualty insurance claims and claims expense reserves.
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How reserve estimates are established and updated Reserve estimates are developed at a detailed level, and the results are aggregated to form a consolidated reserve estimate. The detailed estimates include each line of insurance, major components of losses (such as coverages and perils), major states or groups of states and for reported losses and IBNR. The significant lines of business are auto, homeowners, and other personal lines for Allstate Protection, and asbestos, environmental, and other run-off lines for Run-off Property-Liability. Reserves are established for each business segment and line of business, independently of business segment management.
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treatment trends, attorney representation and litigation costs while physical damage claims are affected largely by auto repair cost inflation, used car prices, length of claim resolution and the timing of receipt of third-party carrier claims.
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The Allstate Corporation 85 reserve estimate that will most accurately reflect the expected impacts on severity development.
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Based on our Allstate brand products and coverages, historical experience, the statistical credibility of our extensive data and stochastic modeling of actuarial methodologies used to develop reserve estimates, we have derived standard deviations and the resulting pre-tax income for Allstate Protection reserves, excluding catastrophe losses, as shown below.
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The estimation of claims and claims expense reserves for catastrophe losses also comprises estimates of losses from reported claims and IBNR, primarily for damage to property. In general, our estimates for catastrophe reserves are based on claim adjuster inspections and the application of historical loss development factors as described above. However, depending on the nature of the catastrophe, the estimation process can be further complicated.
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For example, to complete estimates for certain areas affected by catastrophes not yet inspected by our claims adjusting staff, or where we believed our historical loss development factors were not predictive, we rely on:
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•Analysis of actual claim notices received compared to total PIF.
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•Visual, governmental and third-party information, including aerial photos, using satellites, aircrafts and drones, area observations, and data on wind speed and flood depth to the extent available.
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The process employed to estimate MCCA covered losses involves a number of activities including the comprehensive review and interpretation of MCCA actuarial reports, other MCCA members’ reports and our PIP loss trends which have increased in severity over time. A significant portion of incurred claim reserves can be attributed to a small number of catastrophic claims and thus a large portion of the recoverable is similarly concentrated. We conduct comprehensive claim file reviews to develop case
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The Allstate Corporation 87 liability coverage and annual aggregate limits for all coverages. Our experience to date is that these policy form changes have limited the extent of our exposure to environmental and asbestos claim risks.
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After evaluating our insureds’ probable liabilities for asbestos, environmental and other run-off claims, we evaluate our insureds’ coverage programs for such
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There are also complex legal issues concerning the interpretation of various insurance policy provisions and whether those losses are covered, or were ever intended to be covered, and could be recoverable through retrospectively determined premium, reinsurance or other contractual agreements. Courts have reached different and sometimes inconsistent conclusions as to when losses are deemed to have occurred and which policies provide coverage; what types of losses are covered; whether there is an insurer obligation to defend; how policy limits are determined; how policy exclusions and conditions are applied and interpreted; and whether clean-up costs represent insured property damage.
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Our reserves for asbestos, environmental and other run-off exposures could be affected by tort
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88 www.allstate.com reform, class action litigation, and other potential legislation and judicial decisions. Environmental exposures could also be affected by a change in the existing federal Superfund law and similar state statutes. There can be no assurance that any reform legislation will be enacted or that any such legislation will provide for a fair, effective and cost-efficient system for settlement of asbestos or environmental claims. We believe these issues are not likely to be resolved in the near future, and the ultimate costs may vary materially from the amounts currently recorded resulting in material changes in loss reserves. Due to the uncertainties and factors described above, management believes it is not practicable to develop a meaningful net loss reserve range. Historical variability of reserve estimates is reported in the Property and Casualty Insurance Claims and Claims Expense Reserves section of the MD&A.
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Pension and other postretirement plans net costs and assumptions
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The expected long-term rate of return on plan assets reflects the average rate of earnings expected on plan assets. While this rate reflects long-term assumptions and is consistent with long-term historical returns, sustained changes in the market or changes in
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Macroeconomic factors have and may continue to impact the results of our operations, financial condition and liquidity, such as U.S. government fiscal and monetary policies, banking system instability, the Russia/Ukraine and Israel/Hamas conflicts and the remaining impacts of the Novel Coronavirus Pandemic or COVID-19 (“Coronavirus”), such as supply chain disruptions, labor shortages and other macroeconomic factors that have increased inflation.
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of operations”. This is not inclusive of all potential impacts and should not be treated as such. Within the MD&A, we have included further disclosures related to macroeconomic impacts on our 2023 results.
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Pension and other postretirement remeasurement gains and losses We recorded pension and other postretirement remeasurement losses of $9 million in 2023, primarily related to losses on the remeasurement of the projected benefit obligation driven by a decrease in the liability discount rate, partially offset by gains due to favorable asset performance compared to expected return on plan assets. See Note 18 of the consolidated financial statements and Application of Critical Accounting Estimates section of the MD&A for further information.
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–Reduced our exposure to high risk areas, including California and Florida. Since December 31, 2022, PIF has declined by an average of approximately 7% in those two states.
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The Allstate Corporation 49 increase our presence in areas where adequate risk adjusted returns can be achieved.
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costs. A description of our current catastrophe reinsurance program appears in Note 11 of the consolidated financial statements.
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2023 Form 10-KRun-off Property-Liability
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Reinsurance collections were $35 million and $37 million for 2023 and 2022, respectively. The allowance for uncollectible reinsurance recoverables was $59 million and $58 million as of December 31, 2023 and 2022, respectively. The allowance represents 10.3% and 10.0% of the related reinsurance recoverable balances as of December 31, 2023 and 2022, respectively.
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Property and Casualty Insurance Claims and Claims Expense Reserves
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The facts and circumstances leading to reestimates of reserves relate to changes in claim activity and revisions to the development factors used to predict how losses are likely to develop from the end of a reporting period until all claims have been paid. Reestimates occur when actual losses differ from those predicted by the estimated development factors used in prior reserve estimates.
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The allowance is based upon our ongoing review of amounts outstanding, length of collection periods, changes in reinsurer credit standing, and other relevant factors. In addition, in the ordinary course of
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Adverse developments in the insurance industry have led to a decline in the financial strength of some of our reinsurance carriers, causing amounts
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In 2023, ceded claims and claims expenses decreased $967 million primarily due to lower amounts related to NFIP, and a reduction in gross reserves for
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Accident, health and other policy benefits include changes in the reserve for future policy benefits,
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and the categorization of these securities is based on the expected ratings indicated by internal analysis.
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The Allstate Corporation 67 our fixed income portfolio monitoring process, see Note 5 of the consolidated financial statements.
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exposure include property type and geographic diversification. For further detail on our mortgage loan portfolio, see Note 5 of the consolidated financial statements.
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As of December 31, 2023, the spread duration(1) was 4.7 compared to 4.0 as of December 31, 2022.
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78 www.allstate.com with defined “usual ranges”. Additional regulatory scrutiny may occur if a company’s ratios fall outside the usual ranges for four or more of the ratios. Nine of our domestic insurance companies have four or more
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contractual commitments that require cash needs beyond 12 months.
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Allstate manages these risks through an Enterprise Risk and Return Management (“ERRM”) framework that includes governance, processes, culture, and activities
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Steering Committee, liability governance committees, and investment committees.
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operate within risk limits and for risk-return optimization, Allstate establishes risk limits and capital targets specific to each business unit. Allstate’s risk management strategies adapt to changes in business and market environments.
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We actively manage our capital and liquidity levels in light of changing market, economic and business conditions. Our capital position, capital generation capacity, and targeted risk profile provide strategic and financial flexibility.
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Upon acquisition, the purchase price of the acquired business is assumed to be its fair value. Subsequently, we estimate the fair value of our businesses in each goodwill reporting unit, utilizing a
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in the Property and Casualty Insurance Claims and Claims Expense Reserves section of the MD&A.
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reserves are reestimated using statistical actuarial processes to reflect the impact actual loss trends have on development factors incorporated into the actuarial estimation processes.
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90 www.allstate.com catastrophes in any period cannot be reliably predicted.
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result we believe that no other estimate is better than our recorded amount. Due to the uncertainties involved, the ultimate cost of losses may vary materially from recorded amounts, which are based on our best estimates.
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Our exposure to liability for asbestos, environmental and other run-off claims losses manifests differently depending on whether it arises from assumed reinsurance coverage, direct excess commercial insurance or direct primary commercial insurance.
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92 www.allstate.com majority of our assumed reinsurance exposure, approximately 85%, is for excess of loss coverage, while the remaining 15% is for pro-rata coverage.
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characteristics of specific individual coverage exposures.
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investment income and, if applicable, restructuring and related charges and 2) remeasurement gains and losses comprised of changes in actuarial assumptions and the difference between actual and expected returns on plan assets which are recognized immediately in earnings as part of pension and other postretirement remeasurement gains and losses.
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other assumptions, primarily related to an increase in the long-term lump sum interest rate.
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94 www.allstate.com measurement date with cash flows that match expected plan benefit requirements. Significant changes in discount rates, such as those caused by changes in the credit spreads, yield curve, the mix of bonds available in the market, the duration of selected bonds and expected benefit payments, may result in volatility in pension cost. The weighted average discount rate used to measure the benefit obligation decreased to 5.35% at December 31, 2023 compared to 5.64% at December 31, 2022, resulting in remeasurement losses for 2023.
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primarily due to positive equity returns and higher fixed income valuations from lower interest rates and tighter credit spreads. In 2022, the actual return on plan assets was lower than the expected return primarily due to higher interest rates, widening credit spreads and weak equity market performance.