Allstate Pre-Announces Strong First Quarter 2004 Earnings.Business Editors NORTHBROOK, Ill.--(BUSINESS WIRE)--April 7, 2004 The Allstate Corporation (NYSE NYSE See: New York Stock Exchange :ALL) today announced that it expects first quarter 2004 net income per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share to be between $1.27 and $1.31 compared to $0.94 per diluted share for the first quarter of 2003. This estimate is based on estimated net income of between $900 million and $930 million for the first quarter of 2004 compared to $665 million in the first quarter of 2003. Net income includes an estimated charge of $0.25 per diluted share for the cumulative effect of a change in accounting principle as a result of adopting the previously disclosed Statement of Position 03-01, "Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate Accounts." First quarter 2004 operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. per diluted share(a) is expected to be between $1.38 and $1.42 compared to $0.95 per diluted share for the first quarter of 2003. This estimate is based on estimated operating income(a) of between $981 million and $1.01 billion for the first quarter of 2004 compared to $673 million in the first quarter of 2003. The principal factors contributing to these improved results over the prior year were higher Property-Liability earned premium Earned premium is the portion of an insurance written premium which is considered "earned" by the insurer, based on the part of the policy period that the insurance has been in effect, and during which the insurer has been exposed to loss. , lower claims due to favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. auto and homeowners loss frequency trends, and lower catastrophe Catastrophe, from the Greek Καταστροφή (katastrephein), literally means "to turn" (strephein) "downwards" (kata-). losses. In addition, net written premium(a) increased approximately 6.5% for the quarter over the first quarter of 2003. Catastrophe losses in the first quarter of 2004 are estimated to be $100 million, compared to $133 million in the first quarter of 2003. The estimated combined ratio for the first quarter of 2004, before the impact of catastrophe losses, improved more than six points compared to the first quarter of 2003. "While we benefited from relatively mild weather during the quarter, we're encouraged by the increasing growth in written premiums and the continuing strong underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. profitability we saw in the quarter," said Chairman, President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. Edward M. Liddy Edward M. Liddy is Chairman, President and Chief Executive Officer of The Allstate Corporation. He is currently on the Board of 3M, Goldman Sachs and The Kroger Company. • • . "Our Strategic Risk Management approach to underwriting, pricing and marketing is continuing to improve the quality of our book of business." (a) Measures used in this release that are not based on generally accepted accounting principles ("non-GAAP") are defined and reconciled to the most directly comparable GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). measure and operating measures are defined in the "Definitions of Non-GAAP and Operating Measures" section of this document. "On April 20, we intend to issue a press release announcing our first quarter 2004 earnings results. At that time, we will also discuss the positive impact our strong first quarter results are expected to have on the outlook for the full year." Definitions of Non-GAAP and Operating Measures Our methods of calculating these measures may differ from those used by other companies and therefore comparability may be limited. Operating income, a non-GAAP measure, is income before dividends on preferred securities and cumulative effect of change in accounting principle, after-tax, excluding: -- realized capital gains and losses, after-tax, except for periodic settlements and accruals Accruals Accounts on a balance sheet that represent liabilities and non-cash-based assets used in accrual-based accounting. These accounts include, among many others, accounts payable, accounts receivable, goodwill, future tax liability and future interest expense. on non-hedge derivative derivative: see calculus. derivative In mathematics, a fundamental concept of differential calculus representing the instantaneous rate of change of a function. instruments which are reported with realized capital gains and losses but included in operating income, -- amortization of deferred policy acquisition costs ("DAC See D/A converter and discretionary access control. DAC - Digital to Analog Converter "), to the extent that it resulted from the recognition of realized capital gains and losses, and -- (loss) gain on disposition of operations, after-tax. Net income is the GAAP measure that is most directly comparable to operating income. We use operating income to evaluate our results of operations and as an integral component for incentive compensation. It reveals trends in our insurance and financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. business that may be obscured by the net effect of realized capital gains and losses and (loss) gain on disposition of operations. These items may vary significantly between periods and are generally driven by business decisions and economic developments such as market conditions, the timing of which is unrelated to the insurance underwriting process. Moreover, we reclassify Verb 1. reclassify - classify anew, change the previous classification; "The zoologists had to reclassify the mollusks after they found new species" class, classify, sort out, assort, sort, separate - arrange or order by classes or categories; "How would you periodic settlements on non-hedge derivative instruments Derivative instruments Contracts such as options and futures whose price is derived from the price of an underlying financial asset. into operating income to report them in a manner consistent with the economically hedged investment or product attributes (e.g. net investment income and interest credited to contractholder funds) and thereby appropriately reflect trends in product performance. Therefore, we believe it is useful for investors to evaluate these components separately and in the aggregate when reviewing our performance. We note that the price to earnings multiple commonly used by insurance investors as a forward-looking valuation technique uses operating income as the denominator denominator the bottom line of a fraction; the base population on which population rates such as birth and death rates are calculated. denominator . Operating income should not be considered as a substitute for net income and does not reflect the overall profitability of our business. The following table reconciles operating income and net income for the three months ended March 31, 2004 and 2003.
$ in millions Per diluted share
-------------------------- -------------------------
Est. Est.
($ in millions, March 31, March 31, March 31, March 31,
except per 2004 2003 2004 2003
share data) ------------- ---------- ------------- ----------
Operating
income $ 981 to 1,011 $ 673 $ 1.38 to 1.42 $ 0.95
Realized capital
gains and
losses, after-
tax 103 6 0.15 --
DAC amortization
expense on
realized
capital gains
and losses,
after-tax -- (9) -- (0.01)
Reclassification
of periodic
settlements and
accruals on
non-hedge
derivative
instruments,
after-tax -- (2) -- --
(Loss) gain on
disposition of
operations,
after-tax (9) -- (0.01) --
------------- ---------- ------------- ----------
Income before
dividends on
preferred 1,075 to 1,105 1.52 to 1.56
securities
and
cumulative
effect of
change in
accounting
principle,
after-tax 668 0.94
Dividends on
preferred
securities of
subsidiary
trust, after-
tax -- (3) -- --
Cumulative
effect of
change in
accounting
principle,
after-tax (175) -- (0.25) --
------------- ---------- ------------- ----------
Net income $ 900 to 930 $ 665 $ 1.27 to 1.31 $ 0.94
============= ========== ============= ==========
Premiums written, an operating measure, is the amount of premiums charged for policies issued during a fiscal period. Premiums earned is a GAAP measure. Premiums are considered earned and are included in financial results on a pro-rata basis over the policy period. The portion of premiums written applicable to the unexpired terms of the policies is recorded as unearned premiums on our Consolidated Statements of Financial Position. The following table presents a reconciliation of premiums written to premiums earned.
Three Months Ended
March 31,
--------------------
($ in millions) Est.
2004 2003
-------- --------
Premiums written $ 6,333 $ 5,937
(Increase) decrease in unearned premiums
and other 38 62
-------- --------
Premiums earned $ 6,371 $ 5,999
======== ========
Combined ratio is based on our Property-Liability GAAP results, and is calculated as the percentage of losses, amortization of Deferred Acquisition Costs, operating costs operating costs npl → gastos mpl operacionales and expenses and restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). and related charges to premiums earned. The Allstate Corporation (NYSE: ALL) is the nation's largest publicly held personal lines insurer. Widely known through the "You're In Good Hands With Allstate(R)" slogan A slogan is a memorable motto or phrase used in a political, commercial, religious and other context as a repetitive expression of an idea or purpose. Slogans vary from the written and the visual to the chanted and the vulgar. , Allstate provides insurance products to more than 16 million households and has approximately 12,900 exclusive agencies and financial specialists in the U.S. and Canada. Customers can access Allstate products and services through Allstate agents, or in select states at allstate.com and 1-800 Allstate(R). Encompass ENCOMPASS Enhanced Consequence Management Planning and Support System (DARPA) (SM) and Deerbrook(R) Insurance brand property and casualty products are sold exclusively through independent agents. Allstate Financial Group includes the businesses that provide life insurance, annuity annuity: see insurance. annuity Payment made at a fixed interval. A common example is the payment received by retirees from their pension plan. There are two main classes of annuities: annuities certain and contingent annuities. , retirement, banking and investment products through distribution channels that include Allstate agents, independent agents, worksite, financial institutions and broker-dealers. |
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