Allstate Reports 2004 First Quarter; 43% Increase in Net Income EPS; 52% Increase in Operating Income EPS.To download To receive a file transmitted over a network. In any communications session, "download" means receive, and "upload" means send. The download/upload often implies a big/little scenario, in which data is being downloaded from the "big" server into the "little" user's computer. high-resolution high-res·o·lu·tion adj. 1. Relating to an image that has fine detail. 2. a. Of or relating to an output device that produces images that contain a large number of dots per unit of area and are therefore sharp and , print-ready JPEG JPEG in full Joint Photographic Experts Group Standard computer file format for storing graphic images in a compressed form for general use. JPEG images are compressed using a mathematical algorithm. images, click on the thumbnail A miniature representation of a page or image that is used to identify a file by its contents. Clicking the thumbnail opens the file. Thumbnails are an option in file managers, such as Windows Explorer, and they are found in photo editing and graphics program to quickly browse multiple image above. WARNING: these images are very large (800K+) Click here for caption To download high-resolution, print-ready JPEG images, click on the thumbnail image above. WARNING: these images are very large (800K+) Click here for caption Business Editors MULTIMEDIA AVAILABLE: http://www.businesswire.com/cgi-bin/mmg.cgi?eid=4620231 NORTHBROOK Northbrook, village (1990 pop. 32,308), Cook co., NE Ill., a suburb of Chicago; settled 1836. It was incorporated as Shermerville in 1901 and was reincorporated as Northbrook in 1923. , Ill.--(BUSINESS WIRE)--April 20, 2004 The Allstate This article is about the American insurance company. For the line of automobiles, see Allstate (automobile). The Allstate Corporation NYSE: ALL is the largest publicly held personal lines insurer in the United States. Corporation (NYSE NYSE See: New York Stock Exchange :ALL) today reported for the first quarter of 2004:
Consolidated Highlights(1)
Three Months Ended March 31,
--------------------------------
Change
---------------
(in millions, except per share amounts Est. $
and ratios) 2004 2003 Amt %
--------------------------------
Consolidated revenues $8,311 $7,861 $ 450 5.7
Net income 949 665 284 42.7
Net income per diluted share 1.34 0.94 0.40 42.6
Operating income(1) 1,020 673 347 51.6
Operating income per diluted share(1) 1.44 0.95 0.49 51.6
Property-Liability combined ratio 86.4 93.1 -- (6.7)pts
Book value per diluted share 30.48 25.50 4.98 19.5
Operating income return on equity(1) 18.0 14.8 -- 3.2 pts
-- Property-Liability premiums written(1) grew 6.7% over the first quarter of 2003. Allstate brand standard auto and homeowners new business premiums written both increased 43%. -- Property-Liability underwriting income Underwriting income For an insurance company, the difference between the premiums earned and the costs of settling claims. (1) increased 109% or $452 million in the first quarter to $865 million from $413 million in the first quarter of 2003 due to higher premiums earned, continued favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. auto and homeowners loss frequencies, and lower catastrophes. The combined ratio decreased 6.7 points to 86.4 in the first quarter of 2004. -- Catastrophe Catastrophe, from the Greek Καταστροφή (katastrephein), literally means "to turn" (strephein) "downwards" (kata-). losses in the first quarter decreased to $102 million compared to $133 million in the first quarter of 2003. The impact of catastrophe losses on the combined ratio decreased to 1.6 pts from 2.2 pts in the first quarter of 2003. -- Allstate Financial had premiums and deposits(1) of $3.46 billion, a 38% increase over the first quarter of 2003. 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. was $132 million compared to $82 million in the first quarter of 2003. -- Allstate's annual operating 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 guidance(1) for 2004 (assuming the level of average expected catastrophe losses used in pricing for the remainder of the year) is in the range of $4.80 to $5.10, compared to the previously announced range of $4.30 to $4.55. (1) Measures used in this release that are not based on generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting ("non-GAAP") are defined and reconciled rec·on·cile v. rec·on·ciled, rec·on·cil·ing, rec·on·ciles v.tr. 1. To reestablish a close relationship between. 2. To settle or resolve. 3. 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. "This was an outstanding quarter for Allstate. We're we're Contraction of we are. we're we are off to a great start for 2004," 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. • • . "Simply put, our strategy is to grow profitably and this quarter's results very clearly indicate we are succeeding. And we have every intention of continuing the momentum. "I am especially pleased with the fact that this was the first time operating income reached $1 billion for a quarter. The fact is that good news is coming from across the enterprise - Allstate Protection, Allstate Financial and Investment units all generated strong results. "In our Property-Liability business, premiums written were up more than 6% in an environment of moderating rate activity. Policies in force (PIF (Program Information File) A data file in Windows 3.x and NT that stores window settings for DOS applications. It allows screen size, fonts and other options to be selected in order to customize the way the DOS app appears under Windows. ) showed healthy growth. In particular, Allstate brand standard auto and homeowners business PIF grew 3.6% and 4.6% respectively, as compared to the first quarter of 2003. We retained more customers as evidenced by the improvement in our retention ratio. And while we were pleased with our 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. performance, results also benefited from lower catastrophe losses and the mild winter, which contributed to favorable auto and homeowners loss frequency trends. "Our efforts to expand the reach of our brand through marketing and advertising are achieving success. We are reaching shoppers at targeted levels and our advertising is being well received. Our competitive position remains strong across the country as evidenced by the growth rates Growth Rates The compounded annualized rate of growth of a company's revenues, earnings, dividends, or other figures. Notes: Remember, historically high growth rates don't always mean a high rate of growth looking into the future. of our core lines. New business premiums written for Allstate brand standard auto and homeowners increased 43% compared to the first quarter of 2003. Our Strategic Risk Management approach continues to work well at attracting our target customers, which are those that tend to buy multiple products and stay with the company for a longer period of time," continued Liddy. "I am also pleased with the performance of our Allstate Exclusive Agencies. They are clearly executing our strategy to get better and bigger in our property-casualty business while also making solid contributions to becoming broader in 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. . New sales of financial products by Allstate exclusive agencies(1) for the first quarter of 2004 were $491 million, a 36% increase from the first quarter of 2003. We have an agency force that is committed to fulfilling our customers' needs and reaching more customers. "At Allstate Financial, the results are encouraging, with higher sales and operating income. Premiums and deposits increased by $959 million or 38% in the quarter compared to the prior year first quarter. In particular, we identified and took advantage of opportunities in our institutional medium-term note Medium-term note (MTN) A corporate debt instrument that is continuously offered to investors over a period of time by an agent of the issuer. Investors can select from maturity bands of: 9 months to 1 year, more than 1 year to 18 months, more than 18 months to 2 years, etc. program and issued $1.1 billion in funding agreements Funding Agreement Illiquid insurance contracts that provide guaranteed principal repayment and interest payments for a predetermined period of time. Notes: Funding agreements are marketed to mutual fund companies and municipal reinvestments. in the quarter. In addition, operating income was $132 million in the quarter," said Liddy. "Growth in investments, including separate accounts assets, was also strong increasing to $80.1 billion, an increase of $11.9 billion or 17% as compared to the first quarter of 2003. "Overall, the strategy for Allstate Financial remains focused on operational excellence while emphasizing product manufacturing for targeted distribution partners. Allstate Financial has exposure to economic conditions, which includes the impact that low interest rates has on certain products. Nonetheless, as economic conditions improve we expect favorable trends in operating income in 2004 and subsequent years. "Lastly, on the strength of this quarter and confidence that favorable trends will continue, we are increasing our operating income per diluted share guidance for 2004 to a range of $4.80 to $5.10 (assuming the level of average expected catastrophe losses used in pricing for the remainder of the year)."
Consolidated Highlights
Discussion of
Three Months Results for the
Ended Three Months Ended
($ in millions, March 31, Change March 31, 2004
except per share -------------- ------------- ----------------------
and return Est.
amounts) 2004 2003 $ Amt %
------ ------ ------- -----
Consolidated
revenues $8,311 $7,861 $ 450 5.7 Higher premiums earned
in Property-Liability
and higher realized
capital gains.
Operating income 1,020 673 347 51.6 An increase in
operating income of
$294 and $50 for
Property-Liability and
Allstate Financial,
respectively.
Realized capital
gains and losses,
after-tax 120 6 114 -- See the Components of
realized capital gains
and losses (pretax)
table.
Loss on disposition
of operations,
after-tax (2) -- (2) -- Loss related to the
disposition of the
majority of Allstate
Financial's direct
response distribution
business.
Cumulative effect
of change in
accounting
principle,
after-tax (175) -- (175) -- Adoption of AICPA SOP
03-01, "Accounting
and Reporting by
Insurance Enterprises
for Certain
Nontraditional
Long-Duration
Contracts and for
Separate Accounts."
Net income 949 665 284 42.7 Higher operating
income and realized
capital gains partly
offset by the
cumulative effect of
change in accounting
principle.
Net income per
share (diluted) 1.34 0.94 0.40 42.6
Operating income
per share
(diluted) 1.44 0.95 0.49 51.6 Compared to First Call
mean estimate of
$1.41, with a range of
$1.40 to $1.42.
Net shares
outstanding 703.2 703.6 -- (0.1) On a year to date
basis during 2004,
Allstate purchased 3.7
million shares of its
stock for $167.09
million, or an average
cost per share of
$45.22. Net shares
outstanding at
December 31, 2003 were
704.0.
Weighted average
shares outstanding
(diluted) 709.2 705.2 -- 0.6 Repurchased shares
were offset by an
increase in the
dilutive effect of
stock options due to a
rising stock price and
issuances related to
employee incentives.
Return on equity 15.1 9.8 -- 5.3 See the return on
pts equity calculation in
the Definitions of
Non-GAAP and
Operating Measures
section of this
document.
Operating income
return on equity 18.0 14.8 -- 3.2 See the return on
pts equity calculation in
the Definitions of
Non-GAAP and
Operating Measures
section of this
document.
Book value per
diluted share 30.48 25.50 4.98 19.5 At March 31, 2004 and
2003, net unrealized
gains on fixed income
securities, after-tax,
totaling $2,618 and
$2,396, respectively,
represented $3.69 and
$3.40, respectively,
of book value per
diluted share.
-- Book value per diluted share increased 19.5% compared to March 31, 2003 and 5.0% compared to December December: see month. 31, 2003.
Property-Liability Highlights
Discussion of
Three Months Results for the
Ended Three Months Ended
March 31, Change March 31, 2004
-------------- ------------- ----------------------
($ in millions, Est.
except ratios) 2004 2003 $ Amt %
------ ------ ------- -----
Property-Liability
premiums written $6,333 $5,937 $ 396 6.7 See the Property-
Liability premiums
written by market
segment table.
Property-Liability
revenues 6,986 6,444 542 8.4 Premiums earned
increased $372 or
6.2%.
Underwriting
income 865 413 452 109.4 Higher premiums
earned, continued
favorable auto and
homeowners
frequencies, and
lower catastrophes.
See the Allstate
Protection market
segment analysis
table.
Net investment
income 424 408 16 3.9 Higher portfolio
balances due to
positive cash flows
from operations,
partially offset by
lower yields.
Operating income 912 618 294 47.6 Increase of $292 in
underwriting income,
after-tax.
Realized capital
gains and losses,
after-tax 132 27 105 -- See the Components of
realized capital
gains and losses
(pretax) table.
Net income 1,044 645 399 61.9 Higher operating
income and realized
capital gains.
Catastrophe losses 102 133 (31) (23.3)
Ratios:
Property-Liability
combined ratio 86.4 93.1 -- (6.7) pts
Effect of
Discontinued Lines
and Coverages 0.1 0.6 -- (0.5) pts
Allstate Protection
combined ratio 86.3 92.5 -- (6.2) pts
Effect of catastrophe
losses 1.6 2.2 -- (0.6) pts
-- Allstate brand standard auto and homeowners policies in force (PIF) increased 3.6% and 4.6%, respectively, from March 31, 2003 levels. Both standard auto and homeowners experienced growth in most states. These results exclude impacts from Allstate Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of . -- In addition to higher new business premiums written during the first quarter of 2004 compared to the prior year first quarter, the retention ratio for the Allstate brand standard auto and homeowners increased to 90.5 and 87.8 as of March 31, 2004. These results exclude impacts from Allstate Canada.
Allstate Financial Highlights
Discussion of
Three Months Results for the
Ended Three Months Ended
March 31, Change March 31, 2004
-------------- ---------- ------------------
($ in millions) Est.
2004 2003 $ Amt %
----- ------ ---- ----
Premiums and deposits $3,455 $2,496 $959 38.4 Higher sales of
institutional
products, fixed
annuities,
variable
annuities and
life products.
See the Allstate
Financial
premiums and
deposits table.
Allstate Financial
revenues 1,294 1,402 (108)(7.7) Lower premiums
from sales of
immediate
annuities with
life
contingencies and
the impact of the
disposition of
the majority of
our direct
response
distribution
business, partly
offset by higher
contract charges,
net investment
income and lower
realized capital
losses.
Operating income 132 82 50 61.0 Higher investment
margin(1), lower
amortization of
DAC (due to no
significant DAC
unlocking) and
lower operating
costs and
expenses, partly
offset by lower
mortality
margin(1) due to
the disposition
of the majority
of our direct
response
distribution
business.
Realized capital gains and
losses, after-tax (14) (21) 7 33.3 See the
Components
of realized
capital gains and
losses (pretax)
table.
Loss on disposition of
operations, after-tax (2) -- (2) -- Loss related to
the disposition
of the majority
of the direct
response
distribution
business.
Cumulative effect of
change in accounting
principle, after-tax (175) -- (175) -- Adoption of AICPA
SOP 03-01,
"Accounting and
Reporting by
Insurance
Enterprises for
Certain
Nontraditional
Long-Duration
Contracts and for
Separate
Accounts."
Net income (loss) (73) 50 (123) -- Higher operating
income and lower
realized capital
losses offset by
cumulative effect
of change in
accounting
principle.
-- Investments including separate accounts assets for the first quarter of 2004 increased 17.5% over the prior year first quarter due to market improvements and strong sales. -- The weighted average interest crediting rate on fixed annuity Fixed Annuity An insurance contract in which the insurance company makes fixed dollar payments to the annuitant for the term of the contract, usually until the annuitant dies. The insurance company guarantees both earnings and principal. and interest-sensitive life products in force, excluding market value adjusted annuities, was approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 60 basis points more than the underlying long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. guaranteed rates on these products for the quarter ended March 31, 2004. The crediting rate on approximately 40% of these contracts was at the contractually con·trac·tu·al adj. Of, relating to, or having the nature of a contract. con·trac  tu·al·ly adv.Adv. 1. guaranteed minimum rate as of March 31, 2004. -- SOP 03-01 was adopted as of January January: see month. 1, 2004. It requires the establishment of reserves primarily for benefit guarantees provided under variable annuity Variable Annuity An insurance contract in which, at the end of the accumulation stage, the insurance company guarantees a minimum payment. The remaining income payments can vary depending on the performance of the managed portfolio. contracts. In determining these reserves, this statement requires the consideration of a range of potential results under various economic scenarios, which generally necessitates the use of stochastic By guesswork; by chance; using or containing random values. stochastic - probabilistic modeling techniques. The implementation of this new modeling approach resulted in changes to expected future gross profits, and therefore resulted in a write-down Write-Down Reducing the book value of an asset because it is overvalued compared to the market value. Notes: This is usually reflected in the company's income statement as an expense, thereby reducing net income. of deferred policy acquisition costs ("DAC See D/A converter and discretionary access control. DAC - Digital to Analog Converter ") and deferred sales inducements ("DSI (Dynamic Systems Initiative) An umbrella term for a suite of Microsoft products that help manage the Windows environment in large enterprises. DSI was introduced in 2003. "). The impact of implementing this SOP on January 1, 2004, recognized as a cumulative effect of a change in accounting principle, was a $145 million increase in benefit reserves and an additional $124 million in DAC and DSI amortization or an aggregate of $269 million before-tax, $175 million after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. . -- Operating income of the Allstate Financial direct response distribution business was $3 million lower in the first quarter of 2004 than the first quarter of 2003 due to the disposition Act of disposing; transferring to the care or possession of another. The parting with, alienation of, or giving up of property. The final settlement of a matter and, with reference to decisions announced by a court, a judge's ruling is commonly referred to as disposition, regardless of of the majority of that business. This included reductions in total revenues of $59 million, operating costs operating costs npl → gastos mpl operacionales and expenses of $23 million and amortization of DAC of $8 million. The revenue decrease also contributed to a decline in the mortality margin related to the disposition of this business of $35 million in the first quarter of 2004 when compared to the first quarter of 2003.
THE ALLSTATE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended
March 31,
-------------------
Est. Percent
($ in millions, except per share data) 2004 2003 (1) Change
-------- -------- --------
Revenues
Property-liability insurance premiums $ 6,371 $ 5,999 6.2
Life and annuity premiums
and contract charges 496 639 (22.4)
Net investment income 1,274 1,222 4.3
Realized capital gains and losses 170 1 -
-------- --------
Total revenues 8,311 7,861 5.7
-------- --------
Costs and expenses
Property-liability insurance
claims and claims expense 3,986 4,151 (4.0)
Life and annuity contract benefits 395 530 (25.5)
Interest credited to contractholder funds 470 453 3.8
Amortization of deferred policy
acquisition costs 1,055 1,013 4.1
Operating costs and expenses 733 753 (2.7)
Restructuring and related charges 11 23 (52.2)
Interest expense 74 67 10.4
-------- --------
Total costs and expenses 6,724 6,990 (3.8)
-------- --------
Loss on disposition of operations (3) - -
Income from operations before income
tax expense, dividends on preferred
securities and cumulative effect of
change in accounting principle,
after-tax 1,584 871 81.9
Income tax expense 460 203 126.6
-------- --------
Income before dividends on preferred
securities and cumulative effect of
change in accounting principle,
after-tax 1,124 668 68.3
Dividends on preferred securities
of subsidiary trust - (3) 100.0
Cumulative effect of change in accounting
principle, after-tax (175) - -
-------- --------
Net income $ 949 $ 665 42.7
======== ========
Net income per share - Basic $ 1.35 $ 0.95
======== ========
Weighted average shares - Basic 704.5 703.3
======== ========
Net income per share - Diluted $ 1.34 $ 0.94
======== ========
Weighted average shares - Diluted 709.2 705.2
======== ========
(1) To conform to current period presentations, certain prior period
balances have been reclassified.
THE ALLSTATE CORPORATION
CONTRIBUTION TO INCOME
Three Months Ended
March 31,
-------------------
Est. Percent
($ in millions, except per share data) 2004 2003 (1) Change
-------- -------- --------
Contribution to income
Operating income before the impact of
restructuring and related charges $ 1,027 $ 688 49.3
Restructuring and related charges,
after-tax 7 15 (53.3)
-------- --------
Operating income 1,020 673 51.6
Realized capital gains and losses,
after-tax 120 6 -
DAC and DSI amortization relating to
realized capital gains and losses,
after-tax (2) (10) (9) (11.1)
Reclassification of periodic settlements
and accruals on non-hedge derivative
instruments, after-tax (4) (2) (100.0)
Loss on disposition of operations,
after-tax (2) - -
Dividends on preferred securities of
subsidiary trust - (3) 100.0
Cumulative effect of change in accounting
principle, after-tax (175) - -
-------- --------
Net income $ 949 $ 665 42.7
======== ========
Income per share (Diluted)
Operating income before the impact of
restructuring and related charges $ 1.45 $ 0.98 48.0
Restructuring and related charges,
after-tax 0.01 0.03 (66.7)
-------- --------
Operating income 1.44 0.95 51.6
Realized capital gains and losses,
after-tax 0.17 - -
DAC and DSI amortization relating to
realized capital gains and losses,
after-tax (2) (0.01) (0.01) -
Reclassification of periodic settlements
and accruals on non-hedge derivative
instruments, after-tax (0.01) - -
Loss on disposition of operations,
after-tax - - -
Dividends on preferred securities of
subsidiary trust - - -
Cumulative effect of change in accounting
principle, after-tax (0.25) - -
-------- --------
Net income $ 1.34 $ 0.94 42.6
======== ========
Book value per share - Diluted $ 30.48 $ 25.50 19.5
======== ========
(1) To conform to current period presentations, certain prior period
balances have been reclassified.
(2) Includes amortization expense on deferred policy acquisition costs
("DAC") and deferred sales inducements ("DSI") relating to
realized capital gains and losses.
THE ALLSTATE CORPORATION
COMPONENTS OF REALIZED CAPITAL GAINS AND LOSSES (PRETAX)
Three Months Ended March 31, 2004 (Est.)
----------------------------------------
($ in millions) Property- Allstate Corporate
Liability Financial and Other Total
---------- ---------- --------- -----
Valuation of derivative
instruments $ (11) $ (16) $ (1) $ (28)
Settlements of derivative
instruments (11) (8) (1) (20)
Sales 220 36 4 260
Investment write-downs (7) (35) - (42)
---------- ---------- --------- -----
Total $ 191 $ (23) $ 2 $ 170
========== ========== ========= =====
Three Months Ended March 31, 2003 (1)
----------------------------------------
($ in millions) Property- Allstate Corporate
Liability Financial and Other Total
---------- ---------- --------- -----
Valuation of derivative
instruments $ (6) $ (6) $ - $ (12)
Settlements of derivative
instruments 8 6 - 14
Sales 60 23 - 83
Investment write-downs (25) (59) - (84)
---------- ---------- --------- -----
Total $ 37 $ (36) $ - $ 1
========== ========== ========= =====
(1) To conform to current period presentations, certain prior period
balances have been reclassified. The reclassifications result in
periodic settlements and accruals on derivative instruments held
for economic hedging purposes but categorized as "non-hedge" for
accounting purposes, being classified consistent with the
corresponding fair value adjustments on such instruments.
THE ALLSTATE CORPORATION
SEGMENT RESULTS
Three Months Ended
March 31,
--------------------
($ in millions) Est.
2004 2003 (1)
--------- ---------
Property-Liability
Premiums written $ 6,333 $ 5,937
========= =========
Premiums earned $ 6,371 $ 5,999
Claims and claims expense 3,986 4,151
Amortization of deferred policy acquisition
costs 924 827
Operating costs and expenses 585 585
Restructuring and related charges 11 23
--------- ---------
Underwriting income 865 413
Net investment income 424 408
Income tax expense on operations 377 203
--------- ---------
Operating income 912 618
Realized capital gains and losses, after-tax 132 27
--------- ---------
Net income $ 1,044 $ 645
========= =========
Catastrophe losses $ 102 $ 133
========= =========
Operating ratios
Claims and claims expense ratio 62.6 69.2
Expense ratio 23.8 23.9
--------- ---------
Combined ratio 86.4 93.1
========= =========
Effect of catastrophe losses on combined
ratio 1.6 2.2
========= =========
Effect of restructuring and related charges
on combined ratio 0.2 0.4
========= =========
Effect of Discontinued Lines and Coverages
on combined ratio 0.1 0.6
========= =========
Allstate Financial
Premiums and deposits $ 3,455 $ 2,496
========= =========
Investments including Separate Accounts assets $ 80,122 $ 68,211
========= =========
Premiums and contract charges $ 496 $ 639
Net investment income 821 799
Periodic settlements and accruals on non-hedge
derivative instruments 6 3
Contract benefits 395 530
Interest credited to contractholder funds 469 453
Amortization of deferred policy acquisition
costs 117 172
Operating costs and expenses 145 168
Income tax expense on operations 65 36
--------- ---------
Operating income 132 82
Realized capital gains and losses, after-tax (14) (21)
DAC and DSI amortization relating to realized
capital gains and losses, after-tax (2) (10) (9)
Reclassification of periodic settlements and
accruals on non-hedge derivative instruments,
after-tax (4) (2)
Loss on disposition of operations, after-tax (2) -
Cumulative effect of change in accounting
principle, after-tax (175) -
--------- ---------
Net (loss) income $ (73) $ 50
========= =========
Corporate and Other
Net investment income $ 29 $ 15
Operating costs and expenses 77 67
Income tax benefit on operations (24) (25)
--------- ---------
Operating loss (24) (27)
Realized capital gains and losses, after-tax 2 -
Dividends on preferred securities of subsidiary
trust - (3)
--------- ---------
Net loss $ (22) $ (30)
========= =========
Consolidated net income $ 949 $ 665
========= =========
(1) To conform to current period presentations, certain prior period
balances have been reclassified.
(2) Includes amortization expense on deferred policy acquisition costs
("DAC") and deferred sales inducements ("DSI") relating to
realized capital gains and losses.
THE ALLSTATE CORPORATION
UNDERWRITING RESULTS BY AREA OF BUSINESS
Three Months Ended
March 31,
-------------------
Est. Percent
($ in millions) 2004 2003 Change
--------- -------- -------
Consolidated Underwriting Summary
Allstate Protection $ 870 $ 451 92.9
Discontinued Lines and Coverages (5) (38) 86.8
--------- --------
Underwriting income $ 865 $ 413 109.4
========= ========
Allstate Protection Underwriting Summary
Premiums written $ 6,332 $ 5,936 6.7
========= ========
Premiums earned $ 6,370 $ 5,997 6.2
Claims and claims expense 3,982 4,113 (3.2)
Amortization of deferred policy
acquisition costs 924 827 11.7
Other costs and expenses 583 583 -
Restructuring and related charges 11 23 (52.2)
--------- --------
Underwriting income $ 870 $ 451 92.9
========= ========
Catastrophe losses $ 102 $ 133 (23.3)
========= ========
Operating ratios
Claims and claims expense ratio 62.5 68.6
Expense ratio 23.8 23.9
--------- --------
Combined ratio 86.3 92.5
========= ========
Effect of catastrophe losses
on combined ratio 1.6 2.2
========= ========
Effect of restructuring and related
charges on combined ratio 0.2 0.4
========= ========
Discontinued Lines and Coverages
Underwriting Summary
Premiums written $ 1 $ 1 -
========= ========
Premiums earned $ 1 $ 2 (50.0)
Claims and claims expense 4 38 (89.5)
Other costs and expenses 2 2 -
--------- --------
Underwriting loss $ (5) $ (38) 86.8
========= ========
Effect of Discontinued Lines and
Coverages on the Property-Liability
combined ratio 0.1 0.6
========= ========
THE ALLSTATE CORPORATION
PROPERTY-LIABILITY PREMIUMS WRITTEN BY MARKET SEGMENT
Three Months Ended
March 31,
-------------------
Est. Percent
($ in millions) 2004 2003 Change
--------- --------- -------
Allstate Brand
Standard auto $ 3,607 $ 3,344 7.9
Non-standard auto 473 531 (10.9)
--------- ---------
Auto 4,080 3,875 5.3
Involuntary auto 60 50 20.0
Commercial lines 229 206 11.2
Homeowners 1,161 1,042 11.4
Other personal lines 324 298 8.7
--------- ---------
5,854 5,471 7.0
Ivantage
Standard auto 280 285 (1.8)
Non-standard auto 43 41 4.9
--------- ---------
Auto 323 326 (0.9)
Involuntary auto 12 9 33.3
Homeowners 119 110 8.2
Other personal lines 24 20 20.0
--------- ---------
478 465 2.8
--------- ---------
Allstate Protection 6,332 5,936 6.7
Discontinued Lines
and Coverages 1 1 -
--------- ---------
Property-Liability $ 6,333 $ 5,937 6.7
========= =========
Allstate Protection
Standard auto $ 3,887 $ 3,629 7.1
Non-standard auto 516 572 (9.8)
--------- ---------
Auto 4,403 4,201 4.8
Involuntary auto 72 59 22.0
Commercial lines 229 206 11.2
Homeowners 1,280 1,152 11.1
Other personal lines 348 318 9.4
--------- ---------
$ 6,332 $ 5,936 6.7
========= =========
THE ALLSTATE CORPORATION
PROPERTY-LIABILITY NET RATE CHANGES APPROVED (1)
Three Months Ended
March 31, 2004
------------------------------------------------
Annual Impact
Weighted of Rate Changes on
Number of Average State Specific
States Rate Change (%) Premiums Written (%)
----------- --------------- --------------------
Allstate Brand
Standard auto 5 0.1 1.8
Non-standard auto 2 1.2 9.9
Homeowners 3 0.1 4.6
Ivantage
Standard auto
(Encompass) 9 1.0 4.0
Non-standard auto
(Deerbrook) 7 1.9 4.8
Homeowners
(Encompass) 9 1.5 7.0
(1) Rate increases that are indicated based on a loss trend analysis
to achieve a targeted return, will continue to be pursued in all
locations and for all products.
THE ALLSTATE CORPORATION
ALLSTATE PROTECTION MARKET SEGMENT ANALYSIS
Three Months Ended March 31,
--------------------------------------------------
($ in millions) Est. Est. Est. Est.
2004 2003 2004 2003 2004 2003 2004 2003
------ ------ ----- ----- ------ ----- ----- -----
Loss Ratio
Excluding
the Effect of
Premiums Catastrophe Expense
Earned Loss Ratio Losses Ratio
------------- ----------- ------------ -----------
Allstate Brand
Standard auto $3,486 $3,240 66.8 71.5 67.2 71.5 23.6 23.5
Non-standard
auto 474 548 62.4 75.2 62.2 75.2 19.7 19.5
------ ------
Auto 3,960 3,788 66.3 72.1 66.6 72.1 23.1 22.9
Homeowners 1,300 1,174 48.6 56.6 41.4 47.6 22.6 23.3
Other (1) 604 556 63.1 68.0 60.9 65.3 26.8 26.4
------ ------
Total
Allstate
brand 5,864 5,518 62.0 68.4 60.5 66.2 23.4 23.3
Ivantage
Standard auto 300 296 68.7 73.6 68.7 73.6 29.3 30.5
Non-standard
auto 43 36 79.1 83.3 79.1 83.3 27.9 30.6
------ ------
Auto 343 332 70.0 74.7 70.0 74.7 29.1 30.4
Homeowners 128 121 57.8 64.5 51.6 55.4 30.5 31.4
Other (1) 35 26 85.7 53.8 82.9 50.0 28.6 27.0
------ ------
Total
Ivantage 506 479 68.0 71.0 66.2 68.5 29.4 30.5
------ ------
Allstate
Protection $6,370 $5,997 62.5 68.6 60.9 66.4 23.8 23.9
====== ======
(1) Other includes involuntary auto, commercial lines and other
personal lines.
THE ALLSTATE CORPORATION
PROPERTY-LIABILITY
EFFECT OF PRETAX PRIOR YEAR RESERVE REESTIMATES ON THE COMBINED RATIO
Three Months Ended March 31,
-------------------------------------
Effect of Pretax
Reserve
Reestimates on
Pretax the Combined
Reserve Reestimates Ratio
-------------------- ----------------
Est. Est.
($ in millions) 2004 2003 2004 Change
--------- --------- --------- ------
Auto $ (47) $ (32) (0.7) (0.2)
Homeowners (2) 14 - (0.2)
Other (3) 25 (0.1) (0.5)
--------- --------- --------- ------
Allstate Protection (52) 7 (0.8) (0.9)
Discontinued Lines and
Coverages 4 38 0.1 (0.5)
--------- --------- --------- ------
Property-Liability $ (48) $ 45 (0.7) (1.4)
========= ========= ========= ======
Allstate Brand $ (52) $ 1 (0.8) (0.8)
Ivantage - 6 - (0.1)
--------- --------- --------- ------
Allstate Protection $ (52) $ 7 (0.8) (0.9)
========= ========= ========= ======
THE ALLSTATE CORPORATION
ALLSTATE FINANCIAL PREMIUMS AND DEPOSITS
Three Months Ended
March 31,
-------------------
Est. Percent
($ in millions) 2004 2003 Change
--------- -------- -------
Life Products
Interest-sensitive life $ 340 $ 243 39.9
Traditional 72 87 (17.2)
Other 113 152 (25.7)
--------- --------
525 482 8.9
Annuities
Fixed annuities - deferred 1,084 926 17.1
Fixed annuities - immediate 206 265 (22.3)
Variable annuities 451 389 15.9
--------- --------
1,741 1,580 10.2
Institutional Products
Indexed funding agreements 1 114 (99.1)
Funding agreements backing medium-
term notes 1,100 235 -
Other - 4 (100.0)
--------- --------
1,101 353 -
Bank Deposits 88 81 8.6
--------- --------
Total $ 3,455 $ 2,496 38.4
========= ========
THE ALLSTATE CORPORATION
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
March 31, December 31,
($ in millions, except par value data) 2004 (Est.) 2003
------------ ------------
Assets
Investments
Fixed income securities, at fair value
(amortized cost $84,059 and $82,607) $ 90,363 $ 87,741
Equity securities, at fair value (cost
$4,206 and $4,028) 5,451 5,288
Mortgage loans 6,797 6,539
Short-term 2,926 1,815
Other 1,702 1,698
------------ ------------
Total investments 107,239 103,081
Cash 316 366
Premium installment receivables, net 4,489 4,386
Deferred policy acquisition costs 4,342 4,842
Reinsurance recoverables, net 3,108 3,121
Accrued investment income 1,051 1,068
Property and equipment, net 1,023 1,046
Goodwill 929 929
Other assets 1,995 1,878
Separate Accounts 13,550 13,425
------------ ------------
Total assets $ 138,042 $ 134,142
============ ============
Liabilities
Reserve for property-liability insurance
claims and claims expense $ 17,584 $ 17,714
Reserve for life-contingent contract
benefits 11,478 11,020
Contractholder funds 49,162 47,071
Unearned premiums 9,138 9,187
Claim payments outstanding 635 698
Other liabilities and accrued expenses 9,191 8,283
Deferred income taxes 1,027 1,103
Short-term debt 25 3
Long-term debt 4,672 5,073
Separate Accounts 13,550 13,425
------------ ------------
Total liabilities 116,462 113,577
------------ ------------
Shareholders' equity
Preferred stock, $1 par value, 25 million
shares authorized, none issued - -
Common stock, $.01 par value, 2.0 billion
shares authorized and 900 million issued,
703 million and 704 million shares
outstanding 9 9
Additional capital paid-in 2,642 2,614
Retained income 22,393 21,641
Deferred compensation expense (185) (194)
Treasury stock, at cost (197 million and
196 million shares) (6,337) (6,261)
Accumulated other comprehensive income:
Unrealized net capital gains and losses
and net gains and losses on derivative
financial instruments 3,428 3,125
Unrealized foreign currency translation
adjustments (11) (10)
Minimum pension liability adjustment (359) (359)
------------ ------------
Total accumulated other
comprehensive income 3,058 2,756
------------ ------------
Total shareholders' equity 21,580 20,565
------------ ------------
Total liabilities and shareholders'
equity $ 138,042 $ 134,142
============ ============
Definitions of Non-GAAP and Operating Measures We believe that investors' understanding of Allstate's performance is enhanced by our disclosure of the following non-GAAP financial measures. Our methods of calculating these measures may differ from those used by other companies and therefore comparability may be limited. Operating income 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") and deferred sales inducements ("DSI"), to the extent that they 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 businesses 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 ec·o·nom·i·cal adj. 1. Prudent and thrifty in management; not wasteful or extravagant. See Synonyms at sparing. 2. Intended to save money, as by efficient operation or elimination of unnecessary features; economic: hedged hedge n. 1. A row of closely planted shrubs or low-growing trees forming a fence or boundary. 2. A line of people or objects forming a barrier: a hedge of spectators along the sidewalk. 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 for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. 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 tables reconcile operating income and net income for the three months ended March 31, 2004 and 2003.
Property- Allstate Per diluted
Liability Financial Consolidated share
------------- ------------- -------------- ---------------
($ in
millions,
except per Est. Est. Est. Est.
share data) 2004 2003 2004 2003 2004 2003 2004 2003
------ ------ ------ ------ ------- ------ ------- -------
Operating
income $ 912 $ 618 $ 132 $ 82 $1,020 $ 673 $ 1.44 $ 0.95
Realized
capital
gains and
losses 191 37 (23) (36) 170 1
Income tax
benefit
(expense) (59) (10) 9 15 (50) 5
------ ------ ------ ------ ------- ------
Realized
capital gains
and losses,
after-tax 132 27 (14) (21) 120 6 0.17 --
DAC and DSI
amortization
relating to
realized
capital gains
and losses,
after-tax -- -- (10) (9) (10) (9) (0.01) (0.01)
Reclassification
of periodic
settlements
and accruals
on non-hedge
derivative
instruments,
after-tax -- -- (4) (2) (4) (2) (0.01) --
Loss on
disposition
of operations,
after-tax -- -- (2) -- (2) -- -- --
------ ------ ------ ------ ------- ------- ------ -------
Income before
dividends on
preferred
securities
and
cumulative
effect of
change in
accounting
principle,
after-tax 1,044 645 102 50 1,124 668 1.59 0.94
Dividends on
preferred
securities
of
subsidiary
trust,
after-tax -- -- -- -- -- (3) -- --
Cumulative
effect of
change in
accounting
principle,
after-tax -- -- (175) -- (175) -- (0.25) --
------ ------ ------ ------ ------- ------ ------- -------
Net income
(loss) $1,044 $ 645 $ (73) $ 50 $ 949 $ 665 $ 1.34 $ 0.94
======= ====== ====== ====== ======= ====== ======= =======
In this press release, we provide guidance on operating income per diluted share for 2004 (assuming a level of average expected catastrophe losses used in pricing for the remainder of the year). A reconciliation of this measure to net income is not accessible on a forward-looking basis because it is not possible to provide a reliable forecast of realized capital gains and losses including periodic settlements and accruals on non-hedge derivative instruments, which can vary substantially from one period to another and may have a significant impact on net income. Because a forecast of realized capital gains and losses is not accessible, neither is a forecast of the effects of amortization of DAC and DSI on realized capital gains and losses nor income taxes. The other reconciling items between operating income and net income on a forward-looking basis are (loss) gain on disposition of operations, after-tax, and cumulative effect of changes in accounting principle, after-tax, which we assume to be zero for the remainder of the year. Underwriting income (loss) is premiums earned, less claims and claims expense ("losses"), amortization of DAC, operating costs 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 as determined using GAAP. Management uses this measure in its evaluation of results of operations to analyze an·a·lyze v. 1. To examine methodically by separating into parts and studying their interrelations. 2. To separate a chemical substance into its constituent elements to determine their nature or proportions. 3. the profitability of our Property-Liability insurance operations separately from investment results. It is also an integral component of incentive compensation. We believe it is useful for investors to evaluate the components of income separately and in the aggregate when reviewing our performance. Net income is the most directly comparable GAAP measure. Underwriting income (loss) should not be considered as a substitute for net income and does not reflect the overall profitability of our business. A reconciliation of Property-Liability Underwriting income to net income is provided in the Segment Results table. Operating income return on equity is a ratio that uses a non-GAAP measure. It is calculated by dividing the rolling 12-month operating income by the average of the beginning and end of the 12-month period shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. after excluding the after-tax effect of unrealized net capital gains. We use it to supplement our evaluation of net income and return on equity. We believe that this measure is useful to investors because it eliminates the effect of items that can fluctuate significantly from period to period: the after-tax effects of realized and unrealized capital gains and losses and the cumulative effect of change in accounting principle. Return on equity is the most directly comparable GAAP measure. The following table shows the two computations.
For the twelve months
($ in millions) ended March 31,
-------------------------
Est. 2004 2003
------------ -----------
Return on equity
Numerator:
Net income $ 2,989 $ 1,704
============ ===========
Denominator:
Beginning shareholders' equity 17,983 16,887
Ending shareholders' equity 21,580 17,983
Average shareholders' equity $ 19,782 $ 17,435
============ ===========
ROE 15.1% 9.8%
============ ===========
For the twelve months
($ in millions) ended March 31,
-------------------------
Est. 2004 2003
------------ ----------
Operating income return on equity
Numerator:
Operating income $ 3,009 $ 2,260
============ ==========
Denominator:
Beginning shareholders' equity 17,983 16,887
Unrealized net capital gains 2,646 1,606
------------ ----------
Adjusted beginning shareholders'
equity 15,337 15,281
Ending shareholders' equity 21,580 17,983
Unrealized net capital gains 3,428 2,646
------------ ----------
Adjusted ending shareholders'
equity 18,152 15,337
Average shareholders' equity $ 16,745 $ 15,309
============ ==========
Operating income ROE 18.0% 14.8%
============ ==========
Investment margin represents the excess of net investment income over interest credited to contractholder funds and the implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. interest on life contingent Fortuitous; dependent upon the possible occurrence of a future event, the existence of which is not assured. The word contingent denotes that there is no present interest or right but only a conditional one which will become effective upon the happening of the immediate annuities immediate annuity An annuity that is purchased with a lump sum and that begins making payments one period after the purchase. Immediate annuities are most commonly purchased by people who have accumulated a sum of money and are ready for retirement. included in Allstate Financial's reserve for life-contingent contract benefits. We use investment margin to evaluate Allstate Financial's profitability related to the difference between investment returns on assets supporting certain products and the amounts credited to customers ("spread") during a fiscal period. Mortality margin represents life and 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. premiums and cost of insurance contract charges less related policy and contract benefits. We use mortality margin to evaluate Allstate Financial's underwriting performance, as it reflects the profitability of our products with respect to mortality or morbidity morbidity /mor·bid·i·ty/ (mor-bid´it-e) 1. a diseased condition or state. 2. the incidence or prevalence of a disease or of all diseases in a population. mor·bid·i·ty n. risk during a fiscal period. Gross margin represents life and annuity premiums and contract charges and net investment income, less contract benefits and interest credited to contractholder funds. We use gross margin as a component of our evaluation of the profitability of Allstate Financial's life insurance and financial product portfolio. Additionally, for many of our products, including fixed annuities Fixed annuities Contracts in which an insurance company or issuing financial institution pays a fixed dollar amount of money per period. , variable life and annuities, and interest-sensitive life insurance, the amortization of DAC and DSI is determined based on actual and expected gross margin. We believe that the investment, mortality and gross margins are useful to investors because they allow for the evaluation of income components separately and in the aggregate when reviewing performance. These margins should not be considered as a substitute for net income and do not reflect the overall profitability of the business. Net income is the GAAP measure that is most directly comparable to these margins. Investment margin, mortality margin and gross margin are reconciled to Allstate Financial GAAP net income in the following tables.
Three Months Ended
March 31,
------------------
($ in millions) Est.
2004 2003
-------- --------
Life and annuity premiums and contract charges $ 496 $ 639
Net investment income(1) 827 802
Contract benefits (395) (530)
Interest credited to contractholder funds(2) (456) (453)
-------- --------
Gross margin 472 458
Amortization of DAC and DSI (130) (172)
Operating costs and expenses (145) (168)
Income tax expense (65) (36)
Realized capital gains and losses, after-tax (14) (21)
DAC and DSI amortization relating to realized
capital
gains and losses, after-tax (10) (9)
Reclassification of periodic settlements and
accruals on non-hedge derivative instruments,
after-tax (4) (2)
Loss on disposition of operations, after-tax (2) --
Cumulative effect of change in accounting
principle, after-tax (175) --
-------- --------
Allstate Financial net income $ (73) $ 50
======== ========
(1) Net investment income includes periodic settlements and accruals
on non-hedge derivative instruments, pretax, totaling $6 million
for the first quarter of 2004 and $3 million for the first quarter
of 2003.
(2) Beginning in 2004, amortization of DSI is excluded
from life and annuity premiums and contract charges and interest
credited to contractholder funds for purposes of calculating gross
margin. Amortization of DSI totaled $14 million in the first
quarter of 2004. Prior periods have not been restated.
($ in millions) Three Months Ended March 31, 2004 (Est.)
-------------------------------------------------
Investment Mortality Maintenance Surrender Gross
Margin Margin Charges Charges Margin
---------- --------- ----------- --------- ------
Life and annuity
premiums $ - $ 246 $ - $ - $ 246
Contract charges - 128 101 21 250
Net investment
income 827 - - - 827
Contract benefits (131) (264) - - (395)
Interest credited
to contractholder
funds (456) - - - (456)
---------- --------- ----------- --------- ------
$ 240 $ 110 $ 101 $ 21 $ 472
========== ========= =========== ========= ======
Three Months Ended March 31, 2003
-------------------------------------------------
Investment Mortality Maintenance Surrender Gross
Margin Margin Charges Charges Margin
---------- --------- ----------- --------- ------
Life and annuity
premiums $ - $ 412 $ - $ - $ 412
Contract charges - 127 81 19 227
Net investment
income 802 - - - 802
Contract benefits (126) (404) - - (530)
Interest credited
to contractholder
funds (453) - - - (453)
---------- --------- ----------- --------- ------
$ 223 $ 135 $ 81 $ 19 $ 458
========== ========= =========== ========= ======
Operating Measures We believe that investors' understanding of Allstate's performance is enhanced by our disclosure of the following operating financial measures. Our method of calculating these measures may differ from that used by other companies and therefore comparability may be limited. Premiums written 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 Pro-rata Used to describe a proportionate allocation. Notes: For example, a pro-rata dividend means that every shareholder gets an equal proportion for each share they own. See also: Dividend 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 con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: 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
Change in Property-Liability unearned
premiums 42 22
Other (4) 40
-------- ---------
Premiums earned $ 6,371 $ 5,999
======== =========
Premiums and deposits is an operating measure that we use to analyze production trends for Allstate Financial sales. It includes premiums on insurance policies and annuities and all deposits and other funds received from customers on deposit-type products including the net new deposits of Allstate Bank, which we account for under GAAP as increases to liabilities rather than as revenue. The following table illustrates where premiums and deposits are reflected in the consolidated financial statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge .
Three Months Ended
March 31,
------------------
($ in millions) Est.
2004 2003
-------- --------
Life and annuity premiums(1) $ 246 $ 412
Deposits to contractholder funds, separate
accounts and other 3,209 2,084
-------- --------
Total premiums and deposits $ 3,455 $ 2,496
======== ========
(1) Life and annuity contract charges in the amount of est. $250
million and $227 million for the three months ended March 31, 2004
and 2003, respectively, which are also revenues recognized for
GAAP, have been excluded from the table above, but are a component
of the Consolidated Statements of Operations line item life and
annuity premiums and contract charges.
New sales of financial products by Allstate exclusive agencies is an operating measure that we use to quantify Quantify - A performance analysis tool from Pure Software. the current year sales of financial products by the Allstate proprietary distribution channel. New sales of financial products by Allstate exclusive agencies includes annual premiums on new insurance policies, initial premiums and deposits on annuities, net new deposits in the Allstate Bank, sales of other companies' mutual funds, and excludes renewal premiums. New sales of financial products by Allstate exclusive agencies for the three months ended March 31, 2004 and 2003 totaled est. $491 million and $361 million, respectively. This press release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. about our operating income for 2004. These statements are subject to the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995 and are based on management's estimates, assumptions and projections. Actual results may differ materially from those projected in the forward-looking statements for a variety of reasons. Weighted average rate changes and the annual impact of rate changes on premiums written in our Property-Liability business may be lower than projected due to a decrease in PIF. Loss costs in our Property-Liability business, including losses due to catastrophes such as hurricanes and earthquakes Earthquakes See also geology. bathyseism an earthquake occurring at very deep levels of the earth. bradyseism the slow upward and downward motion of the earth’s crust. — bradyseismic, adj. , may exceed management's projections. In addition, claim frequency could be higher than expected. Lower interest rates and equity market returns could increase DAC amortization, reduce contract charges, investment margins and the profitability of the Allstate Financial segment. We undertake no obligation to publicly correct or update any forward-looking statements. This press release contains unaudited financial information. The Allstate Corporation (NYSE:ALL) is the nation's largest publicly held personal lines insurer An individual or company who, through a contractual agreement, undertakes to compensate specified losses, liability, or damages incurred by another individual. An insurer is frequently an insurance company and is also known as an underwriter. . Widely known through the "You're you're Contraction of you are. you're you are you're be 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, retirement, banking and investment products through distribution channels that include Allstate agents, independent agents, worksite, financial institutions and broker-dealers. We post an investor supplement on our web site. You can access it by going to allstate.com and clicking on "Investor Relations Investor relations The process by which the corporation communicates with its investors. ." From there, go to the "Quarterly Investor Info INFO Information INFO Information (logging abbreviation) INFO Inform(ed/ation) INFO Ionic Difluoroamino Oxidizer " button. We will post additional information to the supplement over the next 30 days as it becomes available. MULTIMEDIA AVAILABLE: http://www.businesswire.com/cgi-bin/mmg.cgi?eid=4620231 |
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