Allstate Corporation (the) · NYSE:ALL
Allstate Corporation (the) — Q1 2017 Earnings Presentation
56 slides from Allstate Corporation (the)'s earnings presentation, May 2, 2017
Slide 1: Investor Supplement First Quarter 2017
Exhibit 99.2 Measures used in these financial statements and exhibits that are not based on generally accepted accounting principles ("non-GAAP") are denoted with an asterisk (*). These measures are defined on the page "Definitions of Non-GAAP Measures" and are reconciled to the most directly compar
Slide 2: Table of Contents
PAGE Consolidated Statements of Operations 1 Contribution to Income 2 Revenues 3 Statements of Financial Position 4 Book Value Per Common Share 5 Return on Common Shareholders' Equity 6 Debt to Capital 7 Statements of Cash Flows 8 Analysis of Deferred Policy Acquisition Costs 9 Property-Liability Op
Slide 3: Consolidated Statements of Operations
1 March 31, Dec. 31, Sept. 30, June 30, March 31, 2017 2016 2016 2016 2016 Revenues Property-liability insurance premiums $ 7,959 $ 7,901 $ 7,869 $ 7,814 $ 7,723 Life and annuity premiums and contract charges 593 574 571 564 566 Net investment income 748 801 748 762 731 Realized capital gains and lo
Slide 4: Contribution to Income
2 March 31, Dec. 31, Sept. 30, June 30, March 31, 2017 2016 2016 2016 2016 Contribution to income Net income applicable to common shareholders $ 666 $ 811 $ 491 $ 242 $ 217 Realized capital gains and losses, after-tax (88) (1) (22) (17) 96 Valuation changes on embedded derivatives that are not hedge
Slide 5: Revenues
3 March 31, Dec. 31, Sept. 30, June 30, March 31, 2017 2016 2016 2016 2016 Property-Liability Property-Liability insurance premiums $ 7,959 $ 7,901 $ 7,869 $ 7,814 $ 7,723 Net investment income 311 338 310 316 302 Realized capital gains and losses 135 14 53 26 (99) Total Property-Liability revenues
Slide 6: Statements of Financial Position
4 March 31, Dec. 31, Sept. 30, June 30, March 31, March 31, Dec. 31, Sept. 30, June 30, March 31, 2017 2016 2016 2016 2016 2017 2016 2016 2016 2016 Assets Liabilities Investments Reserve for property-liability insurance claims and $ 25,628 $ 25,250 $ 25,450 $ 24,904 $ 24,605 Fixed income securities,
Slide 7: Book Value Per Common Share
5 March 31, Dec. 31, Sept. 30, June 30, March 31, 2017 2016 2016 2016 2016 Book value per common share Numerator: Common shareholders' equity (1) $ 19,412 $ 18,827 $ 19,188 $ 18,807 $ 18,594 Denominator: Common shares outstanding and dilutive potential common shares outstanding 370.4 370.8 372.7 375
Slide 8: Return on Common Shareholders' Equity
6 March 31, Dec. 31, Sept. 30, June 30, March 31, 2017 2016 2016 2016 2016 Return on Common Shareholders' Equity Numerator: Net income applicable to common shareholders (1) $ 2,210 $ 1,761 $ 1,410 $ 1,540 $ 1,624 Denominator: Beginning common shareholders' equity $ 18,594 $ 18,279 $ 18,758 $ 19,552
Slide 9: Debt to Capital
7 March 31, Dec. 31, Sept. 30, June 30, March 31, 2017 2016 2016 2016 2016 Debt Short-term debt $ - $ - $ - $ - $ - Long-term debt 6,346 6,347 5,110 5,109 5,108 Total debt $ 6,346 $ 6,347 $ 5,110 $ 5,109 $ 5,108 Capital resources Debt $ 6,346 $ 6,347 $ 5,110 $ 5,109 $ 5,108 Shareholders' equity Pref
Slide 10: Statements of Cash Flows
8 March 31, Dec. 31, Sept. 30, June 30, March 31, 2017 2016 2016 2016 2016 CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 695 $ 840 $ 520 $ 271 $ 246 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, amortization and other non-cash items 119 97 97 97
Slide 11: Analysis of Deferred Policy Acquisition Costs
9 Amortization relating to realized capital gains and Amortization DAC before DAC after losses and (acceleration) Effect of impact of Impact of impact of Beginning Acquisition Amortization valuation changes on deceleration unrealized Ending unrealized unrealized unrealized balance costs before embed
Slide 12: Property-Liability Results
10 March 31, Dec. 31, Sept. 30, June 30, March 31, 2017 2016 2016 2016 2016 Premiums written $ 7,723 $ 7,723 $ 8,311 $ 8,051 $ 7,515 Decrease (increase) in unearned premiums 234 189 (472) (264) 166 Other 2 (11) 30 27 42 Premiums earned 7,959 7,901 7,869 7,814 7,723 Claims and claims expense (5,416)
Slide 13: Property-Liability Underwriting Results by Area of Business
11 March 31, Dec. 31, Sept. 30, June 30, March 31, 2017 2016 2016 2016 2016 Property-Liability Underwriting Summary Allstate Protection $ 509 $ 799 $ 455 $ (64) $ 127 Discontinued Lines and Coverages (2) (3) (100) (2) (2) Underwriting income (loss) $ 507 $ 796 $ 355 $ (66) $ 125 Allstate Protection
Slide 14: Property-Liability Premiums Written by Brand
12 March 31, Dec. 31, Sept. 30, June 30, March 31, 2017 2016 2016 2016 2016 Allstate brand (1) Auto $ 4,882 $ 4,756 $ 4,940 $ 4,767 $ 4,746 Homeowners 1,403 1,638 1,869 1,831 1,392 Landlord 120 133 141 133 122 Renter 67 68 84 75 67 Condominium 55 63 70 67 53 Other 126 129 152 153 111 Other personal
Slide 15: Impact of Net Rate Changes Approved on Premiums Written
13 Number of Location Number of Location Number of Location locations (7) Total brand (%) (8) specific (%) (9) locations Total brand (%) specific (%) locations Total brand (%) specific (%) Allstate brand Auto (2)(3)(4) 18 1.7 (10) 5.3 (10) 23 1.3 5.6 25 1.0 7.1 Homeowners (5)(6) 14 1.0 4.2 12 0.5 4.
Slide 16: Property-Liability Policies in Force and Other Statistics
14 March 31, Dec. 31, Sept. 30, June 30, March 31, 2017 2016 2016 2016 2016 Policies in Force statistics (in thousands) (1) Allstate brand Auto (2) 19,565 19,742 19,852 20,061 20,145 Homeowners (3)(4) 6,090 6,120 6,131 6,158 6,176 Landlord 710 716 720 726 732 Renter 1,563 1,568 1,557 1,554 1,556 Con
Slide 17: Allstate Brand Profitability Measures
15 March 31, Dec. 31, Sept. 30, June 30, March 31, 2017 2016 2016 2016 2016 Net premiums written $ 6,949 $ 7,060 $ 7,564 $ 7,344 $ 6,800 Net premiums earned Auto $ 4,839 $ 4,826 $ 4,793 $ 4,745 $ 4,667 Homeowners 1,688 1,691 1,683 1,684 1,678 Other personal lines 405 403 399 397 393 Commercial lines
Slide 18: Allstate Brand Statistics
16 March 31, Dec. 31, Sept. 30, June 30, March 31, 2017 2016 2016 2016 2016 New Issued Applications (in thousands) (2) Auto (3) 610 562 584 582 584 Homeowners (4) 163 167 188 193 164 Average Premium - Gross Written ($) (5) Auto 538 537 532 516 507 Homeowners 1,187 1,181 1,181 1,171 1,174 Average Pre
Slide 19: Allstate Brand Auto Claim Frequency Analysis - Bodily Injury
17 2017 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Change in auto claim frequency (2) (% change in frequency rate year over year) % Change in gross claim frequency -2.9% 1.2% -1.8% -3.1% -2.4% -1.1% 0.8% -1.7% -0.3% -2.8% -1.3% 4.0% 6.8% 6.8% 6.4% 3.9% 1.1% 2.8% 0.3% -2.0% -6.0%
Slide 20: Allstate Brand Auto Claim Frequency Analysis - Property Damage
18 2017 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Change in auto claim frequency (2) (% change in frequency rate year over year) % Change in gross claim frequency (3) -4.8% 0.7% -1.8% -4.3% -0.7% -0.3% 0.6% 1.4% 5.1% -2.4% -1.0% 0.5% 2.1% 6.9% 8.9% 7.5% 2.1% 5.6% 3.9% 1.2% -3.9%
Slide 21: Esurance Brand Profitability Measures and Statistics
19 March 31, Dec. 31, Sept. 30, June 30, March 31, 2017 2016 2016 2016 2016 Net premiums written $ 457 $ 399 $ 446 $ 392 $ 452 Net premiums earned Auto $ 403 $ 408 $ 405 $ 403 $ 394 Homeowners 14 13 11 10 8 Other personal lines 2 2 2 2 2 Total 419 423 418 415 404 Incurred losses Auto $ 300 $ 310 $ 3
Slide 22: Encompass Brand Profitability Measures and Statistics
20 March 31, Dec. 31, Sept. 30, June 30, March 31, 2017 2016 2016 2016 2016 Net premiums written $ 236 $ 263 $ 299 $ 315 $ 263 Net premiums earned Auto $ 146 $ 151 $ 155 $ 158 $ 159 Homeowners 113 115 119 121 124 Other personal lines 24 24 25 25 26 Total 283 290 299 304 309 Incurred losses Auto $ 10
Slide 23: SquareTrade Profitability Measures
21 March 31, Dec. 31, Sept. 30, June 30, March 31, ($ in millions) 2017 2016 2016 2016 2016 Net premiums written $ 81 $ - $ - $ - $ - Net premiums earned $ 59 $ - $ - $ - $ - Incurred losses $ (36) $ - $ - $ - $ - Expenses $ (58) $ - $ - $ - $ - Underwriting loss $ (35) $ - $ - $ - $ - Loss ratio 61
Slide 24: Auto Profitability Measures
22 March 31, Dec. 31, Sept. 30, June 30, March 31, ($ in millions) 2017 2016 2016 2016 2016 Net premiums written Allstate brand $ 4,882 $ 4,756 $ 4,940 $ 4,767 $ 4,746 Esurance brand 439 382 428 376 439 Encompass brand 125 138 153 162 138 5,446 5,276 5,521 5,305 5,323 Net premiums earned Allstate br
Slide 25: Homeowners Profitability Measures
23 March 31, Dec. 31, Sept. 30, June 30, March 31, ($ in millions) 2017 2016 2016 2016 2016 Net premiums written Allstate brand $ 1,403 $ 1,638 $ 1,869 $ 1,831 $ 1,392 Esurance brand 16 15 16 14 11 Encompass brand 91 103 121 126 104 1,510 1,756 2,006 1,971 1,507 Net premiums earned Allstate brand $
Slide 26: Other Personal Lines Profitability Measures
24 March 31, Dec. 31, Sept. 30, June 30, March 31, ($ in millions) 2017 2016 2016 2016 2016 Net premiums written Allstate brand $ 368 $ 393 $ 447 $ 428 $ 353 Esurance brand 2 2 2 2 2 Encompass brand 20 22 25 27 21 390 417 474 457 376 Net premiums earned Allstate brand $ 405 $ 403 $ 399 $ 397 $ 393 E
Slide 27: Underlying Combined Ratios
25 March 31, Dec. 31, Sept. 30, June 30, March 31, 2017 2016 2016 2016 2016 Auto Allstate brand combined ratio 90.6 95.3 99.0 101.2 99.0 Effect of catastrophe losses (1.3) (1.2) (3.1) (4.1) (2.9) Effect of prior year non-catastrophe reserve reestimates 1.6 2.0 - 0.7 (0.2) Allstate brand underlying c
Slide 28: Commercial Lines Profitability Measures
26 March 31, Dec. 31, Sept. 30, June 30, March 31, ($ in millions) 2017 2016 2016 2016 2016 Net premiums written $ 123 $ 115 $ 123 $ 135 $ 126 Net premiums earned $ 125 $ 123 $ 127 $ 127 $ 129 Incurred losses $ 96 $ 109 $ 112 $ 135 $ 119 Expenses $ 33 $ 34 $ 34 $ 35 $ 38 Underwriting loss $ (4) $ (2
Slide 29: Other Business Lines Profitability Measures
27 March 31, Dec. 31, Sept. 30, June 30, March 31, ($ in millions) 2017 2016 2016 2016 2016 Other Business Lines Net premiums written $ 173 $ 158 $ 185 $ 183 $ 183 Net premiums earned $ 141 $ 145 $ 150 $ 142 $ 143 Incurred losses (52) (60) (69) (64) (61) Expenses (86) (83) (74) (74) (68) Underwritin
Slide 30: Allstate Brand Auto and Homeowners Underlying Loss and Expense
28 March 31, Dec. 31, Sept. 30, June 30, March 31, 2017 2016 2016 2016 2016 Auto Annualized average premium (1) $ 989 $ 978 $ 966 $ 946 $ 927 Underlying combined ratio * 90.9 96.1 95.9 97.8 95.9 Average underlying loss (incurred pure premium) and expense * $ 899 $ 940 $ 926 $ 925 $ 889 Homeowners An
Slide 31: Homeowners Supplemental Information
29 Annual impact of Effect of rate changes Earned Incurred Catastrophe catastrophes Number of Number of on state specific Primary Exposure Groupings (1) premiums losses Loss ratios losses on loss ratio catastrophes locations premiums written Florida $ 26 $ 16 61.5% $ 3 11.5% Other hurricane exposure
Slide 32: Catastrophe Losses by Brand
30 March 31, Dec. 31, Sept. 30, June 30, March 31, 2017 2016 2016 2016 2016 Allstate brand Auto $ 65 $ 59 $ 150 $ 195 $ 137 Homeowners 575 183 259 644 574 Other personal lines 59 39 24 62 63 Commercial lines 7 7 7 12 9 Other business lines - 1 - - - Total 706 289 440 913 783 Esurance brand Auto 4 4
Slide 33: Catastrophe Experience
31 Average Number Claims and Combined catastrophe Size of catastrophe of events claims expense ratio impact loss per event Greater than $250 million 1 3.6 % $ 267 34.2 % 3.4 267 $101 million to $250 million - - - - - - $50 million to $100 million 3 10.7 230 29.4 2.9 77 Less than $50 million 24 85.7
Slide 34: Prior Year Reserve Reestimates
32 March 31, Dec. 31, Sept. 30, June 30, March 31, 2017 2016 2016 2016 2016 Prior Year Reserve Reestimates (1) Auto $ (86) $ (114) $ (10) $ (36) $ 5 Homeowners (24) (32) (4) 19 (7) Other personal lines 9 (1) (2) (11) 5 Commercial lines 2 6 13 23 20 Other business lines - 1 3 - - Allstate Protection
Slide 35: Asbestos and Environmental Reserves
33 2016 2015 2014 2013 2012 (net of reinsurance) Asbestos claims (1) Beginning reserves $ 912 $ 960 $ 1,014 $ 1,017 $ 1,026 $ 1,078 Incurred claims and claims expense - 67 39 87 74 26 Claims and claims expense paid (21) (115) (93) (90) (83) (78) Ending reserves $ 891 $ 912 $ 960 $ 1,014 $ 1,017 $ 1,
Slide 36: Allstate Financial Segment Results
34 March 31, Dec. 31, Sept. 30, June 30, March 31, 2017 2016 2016 2016 2016 Premiums $ 381 $ 364 $ 361 $ 353 $ 354 Contract charges 212 210 210 211 212 Net investment income 426 453 427 435 419 Contract benefits (474) (464) (484) (454) (455) Interest credited to contractholder funds (173) (177) (183
Slide 37: Return on Attributed Equity
35 March 31, Dec. 31, Sept. 30, June 30, March 31, 2017 2016 2016 2016 2016 Return on Attributed Equity Numerator: Net income applicable to common shareholders (1) $ 431 $ 391 $ 303 $ 485 $ 548 Denominator: Beginning attributed equity (2) $ 7,680 $ 7,350 $ 7,475 $ 7,621 $ 7,920 Ending attributed equ
Slide 38: Allstate Financial Premiums and Contract Charges
36 March 31, Dec. 31, Sept. 30, June 30, March 31, 2017 2016 2016 2016 2016 PREMIUMS AND CONTRACT CHARGES - BY PRODUCT Underwritten Products Traditional life insurance premiums $ 149 $ 151 $ 145 $ 139 $ 138 Accident and health insurance premiums 232 213 216 214 216 Interest-sensitive life insurance
Slide 39: Allstate Financial Change in Contractholder Funds
37 March 31, Dec. 31, Sept. 30, June 30, March 31, 2017 2016 2016 2016 2016 Contractholders funds, beginning balance $ 20,260 $ 20,583 $ 20,845 $ 21,092 $ 21,295 Deposits Interest-sensitive life insurance 249 248 251 251 252 Fixed annuities 45 38 40 40 44 Total deposits 294 286 291 291 296 Interest
Slide 40: Allstate Financial Analysis of Net Income
38 March 31, Dec. 31, Sept. 30, June 30, March 31, 2017 2016 2016 2016 2016 Benefit spread Premiums $ 381 $ 364 $ 361 $ 353 $ 354 Cost of insurance contract charges (1) 141 139 136 140 141 Contract benefits excluding the implied interest on immediate annuities with life contingencies (2) (348) (336)
Slide 41: Allstate Financial Weighted Average Investment Spreads
39 Weighted average Weighted average Weighted average Weighted average Weighted average Weighted average investment yield interest crediting rate investment spreads investment yield interest crediting rate investment spreads Interest-sensitive life insurance 5.0 % 3.8 % 1.2 % 5.0 % 3.9 % 1.1 % Defer
Slide 42: Allstate Financial Supplemental Product Information
40 Twelve months ended March 31, 2017 Attributed equity Reserves and excluding unrealized March Dec. Sept. June March Contractholder funds capital gains/losses (3)(4) Operating income (5) 2017 2016 2016 2016 2016 Underwritten products Life insurance $ 10,891 $ 2,413 $ 254 10.4 % 9.9 % 10.1 % 10.8 %
Slide 43: Allstate Financial Insurance Policies and Annuities in Force
41 March 31, Dec. 31, Sept. 30, June 30, March 31, 2017 2016 2016 2016 2016 ALLSTATE FINANCIAL INSURANCE POLICIES AND ANNUITIES IN FORCE BY PRODUCT Underwritten products Life insurance 2,474 2,476 2,475 2,478 2,467 Accident and health insurance 3,533 3,300 3,275 3,294 3,278 6,007 5,776 5,750 5,772 5
Slide 44: Allstate Life, Annuities and Benefits Results and Product Information
42 Allstate Allstate Allstate Allstate Allstate Financial Allstate Allstate Allstate Financial Life Benefits Annuities Segment Life Benefits Annuities Segment $ 140 $ 241 $ - $ 381 $ 130 $ 224 $ - $ 354 181 28 3 212 182 27 3 212 120 17 289 426 120 18 281 419 (195) (136) (143) (474) (180) (128) (147)
Slide 45: Corporate and Other Segment Results
43 March 31, Dec. 31, Sept. 30, June 30, March 31, 2017 2016 2016 2016 2016 Net investment income $ 11 $ 10 $ 11 $ 11 $ 10 Operating costs and expenses (8) (9) (7) (7) (6) Interest expense (85) (77) (73) (72) (73) Income tax benefit on operations 30 29 26 26 25 Preferred stock dividends (29) (29) (2
Slide 46: Investments
44 March 31, Dec. 31, Sept. 30, June 30, March 31, March 31, Dec. 31, Sept. 30, June 30, March 31, 2017 2016 2016 2016 2016 2017 2016 2016 2016 2016 Fixed income securities, at fair value: Tax-exempt $ 4,623 $ 4,447 $ 4,798 $ 4,612 $ 4,466 $ - $ - $ 1 $ 2 $ 2 Taxable 26,754 25,855 26,968 25,139 24,6
Slide 47: Unrealized Net Capital Gains and Losses on Security Portfolio by Type
45 Unrealized net Fair value Unrealized net Fair value Unrealized net Fair value capital gains Fair as a percent of capital gains Fair as a percent of capital gains Fair as a percent of and losses value amortized cost (1) and losses value amortized cost (1) and losses value amortized cost (1) Fixed
Slide 48: Net Investment Income, Yields and Realized Capital Gains and Losses
46 March 31, Dec. 31, Sept. 30, June 30, March 31, 2017 2016 2016 2016 2016 NET INVESTMENT INCOME Fixed income securities $ 518 $ 514 $ 508 $ 520 $ 518 Equity securities 44 34 31 44 28 Mortgage loans 55 55 56 53 53 Limited partnership interests ("LP") 120 178 136 126 121 Short-term 6 5 4 3 4 Other 5
Slide 49: Property-Liability Net Investment Income, Yields and Realized Gains and Losses
47 March 31, Dec. 31, Sept. 30, June 30, March 31, 2017 2016 2016 2016 2016 NET INVESTMENT INCOME Fixed income securities: Tax-exempt $ 22 $ 23 $ 23 $ 23 $ 23 Taxable 204 200 192 198 200 Equity securities 29 24 21 30 20 Mortgage loans 3 3 3 3 3 Limited partnership interests 55 82 69 60 58 Short-term
Slide 50: Allstate Financial Net Investment Income, Yields and Realized Gains and Losses
48 March 31, Dec. 31, Sept. 30, June 30, March 31, 2017 2016 2016 2016 2016 NET INVESTMENT INCOME Fixed income securities $ 281 $ 280 $ 282 $ 288 $ 284 Equity securities 15 10 10 14 8 Mortgage loans 52 52 53 50 50 Limited partnership interests 65 96 67 66 63 Short-term 1 2 1 1 2 Other 33 34 32 33 30
Slide 51: Consolidated Investment Position and Results by Strategy
49 March 31, Dec. 31, Sept. 30, June 30, March 31, 2017 2016 2016 2016 2016 MARKET-BASED ("MB") (1) Investment Position Interest-bearing investments $ 68,836 $ 69,688 $ 69,579 $ 68,357 $ 68,001 Equity securities 5,578 5,567 5,194 5,192 5,032 LP and other alternative investments (2) 555 535 481 405 4
Slide 52: Property-Liability Investment Position and Results by Strategy
50 March 31, Dec. 31, Sept. 30, June 30, March 31, 2017 2016 2016 2016 2016 MARKET-BASED Investment Position Interest-bearing investments $ 34,389 $ 35,138 $ 34,057 $ 32,729 $ 31,852 Equity securities 3,956 4,022 3,554 3,589 3,660 LP and other alternative investments 376 369 333 282 277 Total $ 38,7
Slide 53: Allstate Financial Investment Position and Results by Strategy
51 March 31, Dec. 31, Sept. 30, June 30, March 31, 2017 2016 2016 2016 2016 MARKET-BASED Investment Position Interest-bearing investments $ 31,917 $ 32,317 $ 32,995 $ 33,387 $ 33,351 Equity securities 1,619 1,542 1,637 1,600 1,369 LP and other alternative investments 179 165 147 122 122 Total $ 33,7
Slide 54: Performance-Based Investments
52 March 31, Dec. 31, Sept. 30, June 30, March 31, 2017 2016 2016 2016 2016 Investment position Limited partnerships Private equity (1) $ 4,139 $ 4,031 $ 3,839 $ 3,663 $ 3,324 Real estate (2) 1,140 1,102 1,130 1,204 1,229 Timber and agriculture-related (3) 185 179 171 170 170 PB - limited partnershi
Slide 55: Limited Partnership Interests
53 March 31, Dec. 31, Sept. 30, June 30, March 31, 2017 2016 2016 2016 2016 Investment position Accounting basis Cost method $ 1,293 $ 1,282 $ 1,375 $ 1,284 $ 1,193 Equity method ("EMA") (1) 4,689 4,532 4,213 4,123 3,898 Total $ 5,982 $ 5,814 $ 5,588 $ 5,407 $ 5,091 Cost method-fair value (2) $ 1,52
Slide 56: Definitions of Non-GAAP Measures
54 Definitions of Non-GAAP Measures We believe that investors’ understanding of Allstate’s performance is enhanced by our disclosure of the following non-GAAP measures. Our methods for calculating these measures may differ from those used by other companies and therefore comparability may be limited