ALLSTATE CORP
For the period ended Dec 31, 2024. Filed Feb 24, 2025.
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FY2024 · Filed Feb 24, 2025
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Highlights
2024 Highlights
Overview
The following discussion highlights significant factors influencing the consolidated financial position and results of operations of The Allstate Corporation (referred to in this document as “we,” “our,” “us,” the “Company” or “Allstate”). It should be read in conjunction with the consolidated financial statements and related notes found under Item 8. contained herein.
A discussion of strategy, including updates to the multi-year Transformative Growth initiative, can be found in Part 1, Item 1. Business.
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.
The most important factors we monitor to evaluate the financial condition and performance for the Company include:
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
Protection Services: revenues, premium written, PIF and adjusted net income
Allstate Health and Benefits: premiums, other revenue, new business sales, PIF, benefit ratio, expenses and adjusted net income
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
Financial condition: liquidity, parent holding company deployable assets, financial strength ratings, operating leverage, debt levels, book value per share and return on equity
Measuring segment profit or loss
The measure of segment profit or loss used in evaluating performance is underwriting income for the Allstate Protection and Run-off Property-Liability segments and adjusted net income for the Protection Services, Allstate Health and Benefits, and Corporate and Other segments.
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
use this measure in our evaluation of results of operations to analyze profitability.
Adjusted net income (loss) is net income (loss) applicable to common shareholders, excluding:
| • | Net gains and losses on investments and derivatives |
|---|---|
| • | Pension and other postretirement remeasurement gains and losses |
| • | Amortization or impairment of purchased intangibles |
| • | Gain or loss on disposition |
| • | Adjustments for other significant non-recurring, infrequent or unusual items, when (a) the nature of the charge or gain is such that it is reasonably unlikely to recur within two years, or (b) there has been no similar charge or gain within the prior two years |
| • | Income tax expense or benefit on reconciling items |
Macroeconomic impacts
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.
Dispositions
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.
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
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.
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.
See Note 4 of the consolidated financial statements for further information on the employer voluntary benefits disposition.
2024 Operating priorities and results
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.
| 2024 Operating priorities (1) | ||||
|---|---|---|---|---|
| Grow Customer Base | Achieve 2024 Plan Growth Objectives | Consolidated policies in force reached 208 million, a 7.2% increase from prior year. Allstate Protection policies in force decreased by 0.6% compared to the prior year, as continued growth in the homeowners insurance business was more than offset by declines in the auto insurance business. | ||
| Protection Services policies in force and revenue increased 9.3% and 16.7%, respectively, primarily due to growth at Allstate Protection Plans through expanding distribution relationships and protection offerings. | ||||
| Achieve Target Economic Returns on Capital | Achieve 2024 Plan Returns | Return on average Allstate common shareholders’ equity was 25.8% in 2024. | ||
| Total return on the $72.61 billion investment portfolio was 3.8% in 2024. Proactive portfolio management repositioned the fixed income portfolio into longer duration and higher-yielding assets to increase income. | ||||
| The Property-Liability combined ratio of 94.3 for the full year decreased compared to the prior year primarily reflecting successful execution of the Company’s comprehensive auto insurance profitability plan and lower catastrophe losses. | ||||
| Execute Transformative Growth | Improve Customer Value | Enterprise Net Promoter Score, which measures how likely customers are to recommend Allstate, finished below the prior year, reflecting the impact of substantial price increases necessary to offset higher loss costs. | ||
| Improved over 25 million customer interactions. | ||||
| Expand Customer Access | Increased auto insurance new issued applications in all channels. | |||
| National General continues to build a strong competitive position in independent agent distribution with successful expansion on non-standard auto sales and roll-out of our auto and home Custom360 product now available in 30 states. | ||||
| Increase Sophistication and Investment in Customer Acquisition | Increased advertising and reduced underwriting restrictions as higher average premium outpaced increased loss costs per policy. | |||
| Deploy New Technology Ecosystems | Continued roll-out of Affordable, Simple and Connected auto insurance offering now available in 31 states for auto, 28 states for renters and Affordable, Simple and Connected homeowners insurance offering now available in 4 states. | |||
| Continued to build a digital enterprise by expanding utilization of machine-based learning and artificial intelligence. | ||||
| Drive Organizational Transformation | Streamlined the organization by reducing bureaucracy, risk aversion and organizational silos. | |||
(1)2025 operating priorities will remain mostly consistent with the 2024 priorities.
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Consolidated net income (loss) applicable to common shareholders
($ in millions)
Consolidated net income applicable to common shareholders was $4.55 billion in 2024 compared to net loss of $316 million in 2023, primarily due to improved underwriting results from increased earned premium and improved loss trends.For the twelve months ended December 31, 2024, return on average Allstate common shareholders’ equity was 25.8% compared to (2.0)% for the twelve months ended December 31, 2023.
Total revenue
($ in millions)
Total revenue increased 12.3% to $64.11 billion in 2024 compared to 2023, primarily due to premium rate increases and higher net investment income.
Net investment income
($ in millions)
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.
Financial highlights
Investments totaled $72.61 billion as of December 31, 2024, increasing from $66.68 billion as of December 31, 2023.
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.
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 $59.39 as of December 31, 2023.
Return on average Allstate common shareholders’ equity For the twelve months ended December 31, 2024, return on Allstate common shareholders’ equity was 25.8%, an increase of 27.8 points from (2.0)% for the twelve months ended December 31, 2023, primarily due to net income applicable to common shareholders.
The Allstate Corporation 37
Summarized financial results
| Years Ended December 31, | |||
|---|---|---|---|
| ($ in millions) | 2024 | 2023 | 2022 |
| Revenues | |||
| Property and casualty insurance premiums | $56,388 | $50,670 | $45,904 |
| Accident and health insurance premiums and contract charges | 1,921 | 1,846 | 1,832 |
| Other revenue | 2,930 | 2,400 | 2,344 |
| Net investment income | 3,092 | 2,478 | 2,403 |
| Net gains (losses) on investments and derivatives | (225) | (300) | (1,072) |
| Total revenues | 64,106 | 57,094 | 51,411 |
| Costs and expenses | |||
| Property and casualty insurance claims and claims expense | (39,735) | (41,070) | (37,264) |
| Accident, health and other policy benefits | (1,241) | (1,071) | (1,042) |
| Amortization of deferred policy acquisition costs | (8,039) | (7,278) | (6,634) |
| Operating, restructuring and interest expenses | (9,087) | (7,685) | (7,832) |
| Pension and other postretirement remeasurement gains (losses) | 37 | (9) | (116) |
| Amortization of purchased intangibles | (280) | (329) | (353) |
| Total costs and expenses | (58,345) | (57,442) | (53,241) |
| Income (loss) from operations before income tax expense | 5,761 | (348) | (1,830) |
| Income tax (expense) benefit | (1,162) | 135 | 488 |
| Net income (loss) | 4,599 | (213) | (1,342) |
| Less: Net loss attributable to noncontrolling interest | (68) | (25) | (53) |
| Net income (loss) attributable to Allstate | 4,667 | (188) | (1,289) |
| Preferred stock dividends | (117) | (128) | (105) |
| Net income (loss) applicable to common shareholders | $4,550 | $(316) | $(1,394) |
Segment highlights
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.
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.
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.
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.
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.
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.
Income taxes
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.
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.
For additional information, see Note 17 of the consolidated financial statements.
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The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.