Generates excellent returns despite higher
catastrophe losses
The Allstate Corporation (NYSE: ALL) today reported financial
results for the third quarter of 2024.
The Allstate Corporation
Consolidated Highlights
Three months ended September
30,
Nine months ended September
30,
($ in millions, except per share data
and ratios)
2024
2023
% / pts
Change
2024
2023
% / pts
Change
Consolidated revenues
$
16,627
$
14,497
14.7
%
$
47,600
$
42,262
12.6
%
Net income (loss) applicable to common
shareholders
1,161
(41
)
NM
2,651
(1,776
)
NM
per diluted common share (1)
4.33
(0.16
)
NM
9.91
(6.76
)
NM
Adjusted net income (loss)*
1,048
214
NM
2,844
(1,290
)
NM
per diluted common share* (1)
3.91
0.81
NM
10.64
(4.91
)
NM
Return on Allstate common shareholders’
equity (trailing twelve months)
Net income (loss) applicable to common
shareholders
26.1
%
(14.7
)%
40.8
Adjusted net income (loss)*
26.1
%
(9.7
)%
35.8
Common shares outstanding (in
millions)
264.8
261.7
1.2
%
Book value per common share
$
70.35
$
47.79
47.2
%
Consolidated premiums written
(2)
$
15,872
$
14,425
10.0
%
$
45,589
$
41,021
11.1
%
Property-Liability insurance premiums
earned
13,694
12,270
11.6
%
39,933
35,826
11.5
%
Property-Liability combined
ratio
Recorded
96.4
103.4
(7.0
)
96.9
109.8
(12.9
)
Underlying combined ratio*
83.2
91.9
(8.7
)
85.1
92.7
(7.6
)
Catastrophe losses
$
1,703
$
1,181
44.2
%
$
4,554
$
5,568
(18.2
)%
Total policies in force (in
thousands)
205,483
190,089
8.1
%
(1)
In periods where a net loss or adjusted net loss is reported,
weighted average shares for basic earnings per share is used for
calculating diluted earnings per share because all dilutive
potential common shares are anti-dilutive and are therefore
excluded from the calculation.
(2)
Includes premiums written for the Allstate Protection and
Protection Services segments and premiums and contract charges for
the Health and Benefits segment.
*
Measures used in this release that are not
based on accounting principles generally accepted in the United
States of America (“non-GAAP”) are denoted with an asterisk and
defined and reconciled to the most directly comparable GAAP measure
in the “Definitions of Non-GAAP Measures” section of this
document.
NM = not meaningful
Third Quarter 2024 Results
- Total revenues of $16.6 billion in the third quarter of 2024
were $2.1 billion or 14.7% above the prior year quarter driven by
increased Property-Liability earned premium.
- Net income applicable to common shareholders was $1.2 billion
in the third quarter of 2024 compared to a net loss of $41 million
in the prior year quarter, as Property-Liability underwriting
results improved. Adjusted net income* was $1.0 billion, or $3.91
per diluted share, compared to adjusted net income* of $214 million
in the prior year quarter.
“Allstate’s focus on near-term performance while implementing
our long-term growth plan resulted in strong financial returns and
an improved strategic position,” said Tom Wilson, Allstate’s Chair,
CEO and President. “Revenues increased by almost 15% from the prior
year, net income was $1.2 billion for the quarter and adjusted net
income return on equity* was 26.1% for the prior twelve months.
Successful execution of the auto insurance profit improvement plan
benefited results generating $486 million of auto insurance
underwriting income. The homeowners insurance business is also
generating good returns with an underwriting profit in the quarter
despite $1.2 billion of catastrophe losses, 40% higher than the
prior year quarter. Third quarter results included Hurricanes
Beryl, Debby, Francine and Helene where we deployed over 5,000
people to handle more than 100,000 claims. Hurricane Milton
impacted customers shortly after the quarter with estimated losses
of approximately $100 million. Strong performance from Protection
Services, Health and Benefits and Investments contributed to
adjusted net income* of $3.91 per share.”
“Progress was also made on implementing the strategy to increase
market share in personal Property-Liability and expand protection
solutions. Allstate Protection auto insurance new business sales
increased 26% with increased advertising and expanded distribution.
However, retention losses reflecting the impact of significant
price increases over the last several years offset this growth
resulting in a decline in auto policies in force. Homeowners
insurance margins improved and policies in force are 2.5% higher
than the prior year. Protection Plans expanded internationally and
acquired Kingfisher to enhance mobile device protection
capabilities. Operational excellence and implementation of the
growth strategy will continue to create shareholder value,”
concluded Wilson.
----------------------------------------------------------------------------------------------------------------------------------------------------------
- Property-Liability earned premiums of $13.7 billion
increased 11.6% in the third quarter of 2024 compared to the prior
year quarter, primarily driven by higher average premium levels.
Underwriting income of $495 million in the quarter was $909 million
better than a $414 million loss in the prior year quarter.
Property-Liability
Results
Three months ended September
30,
Nine months ended September
30,
($ in millions)
2024
2023
% / pts
Change
2024
2023
% / pts
Change
Premiums earned
$
13,694
$
12,270
11.6
%
$
39,933
$
35,826
11.5
%
Premiums written
$
14,707
$
13,304
10.5
%
$
42,169
$
37,707
11.8
%
Underwriting income (loss)
$
495
$
(414
)
NM
$
1,248
$
(3,509
)
NM
Recorded combined ratio
96.4
103.4
(7.0
)
96.9
109.8
(12.9
)
Underlying combined ratio*
83.2
91.9
(8.7
)
85.1
92.7
(7.6
)
- Premiums written increased 10.5% compared to the prior year
quarter reflecting higher premiums for both Allstate and National
General brands.
- Property-Liability combined ratio was 96.4 for the quarter and
96.9 for the first nine months of 2024. This was 7.0 points and
12.9 points better than the prior year as higher average earned
premiums and improved underlying loss experience more than offset
increased catastrophe losses in the third quarter and advertising
expenses.
- Allstate Protection auto insurance results reflect
successful execution of a comprehensive plan to restore margins.
Profitability improvement supported increased growth investments in
rate adequate states and risk segments.
Allstate Protection Auto
Results
Three months ended September
30,
Nine months ended September
30,
($ in millions, except ratios)
2024
2023
% / pts
Change
2024
2023
% / pts
Change
Premiums earned
$
9,270
$
8,345
11.1
%
$
27,127
$
24,374
11.3
%
Premiums written
9,539
8,770
8.8
28,180
25,388
11.0
Policies in Force (in
thousands)
24,998
25,376
(1.5
)
Recorded combined ratio
94.8
102.1
(7.3
)
95.6
104.9
(9.3
)
Underlying combined ratio*
92.0
98.8
(6.8
)
93.5
101.2
(7.7
)
- Earned premiums grew 11.1% compared to the prior year quarter.
The increase was driven by rate increases, partially offset by a
decline in policies in force of 1.5%.
- Allstate brand auto rate increases result in an annualized
total brand premium impact of 2.9% in the quarter and 6.3% through
the first nine months of 2024. National General auto rate increases
result in an annualized total brand premium impact of 1.7% in the
quarter and 7.8% through the first nine months of 2024.
- The recorded auto insurance combined ratio of 94.8 in the third
quarter of 2024 was 7.3 points lower than the prior year quarter,
reflecting higher average earned premiums, improved underlying loss
experience and favorable prior year reserve reestimates.
- The severity estimated for claims reported in the first two
quarters of the year was reduced in the third quarter which had a
favorable impact on quarterly results. Excluding this impact, the
third quarter combined ratio would have been 95.6.
- Prior year non-catastrophe reserve reestimates were favorable
$55 million in the third quarter, reflecting favorable Allstate
brand reserve development, primarily driven by physical damage
coverages.
- Allstate Protection homeowners insurance generates
attractive returns and is an attractive growth opportunity. The
third quarter was profitable despite a 40% increase in catastrophe
losses. Premiums earned increased to $3.4 billion and the recorded
combined ratio was 98.2. Third quarter catastrophe losses were $1.2
billion reflecting four hurricanes and 46 severe weather and other
events. The recorded combined ratio for the first nine months of
2024 was 97.5 which generated $249 million of underwriting income
compared to an underwriting loss of $2.0 billion during the same
period in 2023.
Allstate Protection Homeowners
Results
Three months ended September
30,
Nine months ended September
30,
($ in millions, except ratios)
2024
2023
% / pts
Change
2024
2023
% / pts
Change
Premiums earned
$
3,403
$
2,969
14.6
%
$
9,812
$
8,662
13.3
%
Premiums written
4,073
3,525
15.5
10,792
9,440
14.3
Policies in Force (in
thousands)
7,483
7,297
2.5
Recorded combined ratio
98.2
104.4
(6.2
)
97.5
122.8
(25.3
)
Catastrophe Losses
$
1,231
$
878
40.2
%
$
3,402
$
4,516
(24.7
)%
Underlying combined ratio*
62.1
72.9
(10.8
)
63.6
69.4
(5.8
)
- Earned premiums increased by 14.6% compared to the prior year
quarter, primarily reflecting higher average premium and policies
in force growth of 2.5%.
- Policies in force growth reflects improved retention and
increased new policy sales.
- Allstate brand homeowners rate increases result in an
annualized total brand premium impact of 3.1% in the quarter and
7.6% through the first nine months of 2024. Implemented rate
increases and inflation in insured home replacement costs resulted
in a 10.8% increase in homeowners insurance average gross written
premium compared to the prior year quarter.
- National General brand homeowners rate increases result in an
annualized total brand premium impact of 2.2% in the quarter and
6.1% through the first nine months of 2024.
- Catastrophe losses of $1.2 billion in the quarter increased
$353 million compared to the prior year quarter.
- The recorded homeowners insurance combined ratio of 98.2 was
6.2 points below the third quarter of 2023 reflecting higher
average earned premiums and favorable average underlying loss costs
partially offset by higher catastrophe losses. The underlying
combined ratio* of 62.1 decreased by 10.8 points compared to the
prior year quarter.
----------------------------------------------------------------------------------------------------------------------------------------------------------
- Protection Services provides protection solutions and
services through five businesses largely by embedding Allstate
branded offerings in non-insurance purchases. Revenues increased to
$822 million in the third quarter of 2024, 17.9% higher than the
prior year quarter, primarily due to Allstate Protection Plans and
Arity. Adjusted net income of $58 million increased by $31 million
compared to the prior year quarter, driven by Allstate Protection
Plans.
Protection Services
Results
Three months ended September
30,
Nine months ended September
30,
($ in millions)
2024
2023
% / $
Change
2024
2023
% / $
Change
Total revenues (1)
$
822
$
697
17.9
%
$
2,348
$
2,054
14.3
%
Allstate Protection Plans
512
416
23.1
1,459
1,200
21.6
Allstate Dealer Services
146
146
—
440
442
(0.5
)
Allstate Roadside
53
69
(23.2
)
170
199
(14.6
)
Arity
74
29
155.2
165
101
63.4
Allstate Identity Protection
37
37
—
114
112
1.8
Adjusted net income (loss)
$
58
$
27
$
31
$
167
$
102
$
65
Allstate Protection Plans
39
20
19
120
79
41
Allstate Dealer Services
5
5
—
17
18
(1
)
Allstate Roadside
10
7
3
29
17
12
Arity
1
(6
)
7
(5
)
(13
)
8
Allstate Identity Protection
3
1
2
6
1
5
(1) Excludes net gains and losses
on investments and derivatives.
- Allstate Protection Plans continued to grow rapidly by
expanding distribution relationships and protection offerings.
Revenue of $512 million increased $96 million, or 23.1%, compared
to the prior year quarter driven by growth in North American and
international business. Adjusted net income of $39 million in the
third quarter of 2024 was $19 million higher than the prior year
quarter.
- Allstate Dealer Services generated revenue of $146
million and adjusted net income of $5 million which were consistent
with the prior year quarter.
- Allstate Roadside revenue of $53 million in the third
quarter of 2024 decreased 23.2% compared to the prior year quarter
reflecting the discontinuance of a large unprofitable account.
Adjusted net income of $10 million was $3 million higher than the
prior year quarter, primarily driven by increased pricing, improved
provider capacity and lower costs.
- Arity revenue of $74 million increased $45 million
compared to the prior year quarter, due to higher revenue from lead
sales. Adjusted net income of $1 million in the third quarter of
2024 was $7 million higher than prior year quarter.
- Allstate Identity Protection revenue of $37 million in
the third quarter of 2024 was consistent with prior year quarter.
Adjusted net income of $3 million in the third quarter of 2024 was
$2 million higher than prior year quarter driven by lower operating
expenses.
----------------------------------------------------------------------------------------------------------------------------------------------------------
- Allstate Health and Benefits
- Divestiture of these businesses is being pursued to capture
value through greater strategic alignment with acquiring companies.
An agreement to sell the Employer Voluntary Benefits (EVB) business
to StanCorp Financial for $2 billion was finalized and will be
completed upon regulatory approval. As a result, EVB is classified
as “Held For Sale” on the balance sheet while operations are fully
reflected in results. The process to evaluate disposition of the
remaining two businesses is progressing.
- Premiums and contract charges for health and benefits increased
5.2%, or $24 million, compared to the prior year quarter primarily
due to growth in individual health and group health, partially
offset by a decline in employer voluntary benefits. Adjusted net
income of $37 million in the third quarter was $32 million lower
than prior year quarter attributable to increased benefit
utilization across all businesses.
Allstate Health and Benefits
Results
Three months ended September
30,
Nine months ended September
30,
($ in millions)
2024
2023
% Change
2024
2023
% Change
Premiums and contract charges
$
487
$
463
5.2
%
$
1,439
$
1,379
4.4
%
Employer voluntary benefits
248
253
(2.0
)
742
753
(1.5
)
Group health
120
111
8.1
358
328
9.1
Individual health
119
99
20.2
339
298
13.8
Adjusted net income
$
37
$
69
(46.4
)
$
151
$
182
(17.0
)%
-----------------------------------------------------------------------------------------------------------------------------------------------------------
- Allstate Investments pursues a proactive approach to
balancing risk and returns for the $73.6 billion portfolio. In
2023, fixed income duration was extended and public equity holdings
significantly lowered to optimize risk adjusted returns on capital.
Net investment income of $783 million in the third quarter of 2024,
increased by $94 million from the prior year quarter due to
portfolio repositioning into higher yielding fixed income
securities and increased investment balances.
Allstate Investment
Results
Three months ended September
30,
Nine months ended September
30,
($ in millions, except ratios)
2024
2023
$ / pts
Change
2024
2023
$ / pts
Change
Net investment income
$
783
$
689
$
94
$
2,259
$
1,874
$
385
Market-based (1)
708
567
141
2,001
1,610
391
Performance-based (1)
143
186
(43
)
451
439
12
Net gains (losses) on investments and
derivatives
$
243
$
(86
)
$
329
$
(24
)
$
(223
)
$
199
Change in unrealized net capital gains
and losses, pre-tax
$
1,677
$
(855
)
$
2,532
$
1,252
$
(325
)
$
1,577
Total return on investment portfolio
(2)
3.7
%
(0.4
)%
4.1
5.0
%
2.1
%
2.9
Total return on investment portfolio
(2) (trailing twelve months)
9.4
%
4.6
%
4.8
(1) Investment expenses are not allocated between market-based and
performance-based portfolios with the exception of investee level
expenses. (2)
Beginning in the third quarter of 2024, calculations include
investments held for sale.
- Market-based investment income was $708 million in the
third quarter of 2024, an increase of $141 million, or 24.9%,
compared to the prior year quarter, reflecting higher yields and
increased asset balances in the $63.3 billion market-based
portfolio. Fixed income duration was 5.3 years as of September 30,
2024, 0.5 years above prior year end.
- Performance-based investment income totaled $143
million in the third quarter of 2024, a decrease of $43 million
compared to the prior year quarter primarily reflecting lower real
estate investment results. The portfolio allocation to
performance-based assets provides a diversifying source of higher
long-term returns, and volatility in reported results is
expected.
- Net gains on investments and derivatives were $243
million in the third quarter of 2024, compared to losses of $86
million in the prior year quarter. Net gains in the third quarter
of 2024 were driven by valuation gains on equity investments and
sales of fixed income securities.
- Unrealized net capital gains increased by $1.7 billion
from the second quarter of 2024 as lower interest rates resulted in
higher fixed income valuations.
- Total return on the investment portfolio was 3.7% for
the third quarter of 2024 and 9.4% for the latest twelve
months.
Proactive Capital Management
“Allstate continues to be strongly capitalized while generating
attractive returns with adjusted net income return on equity* of
26.1% over the last twelve months. Total estimated statutory
surplus in the insurance companies increased to $17.3 billion and
$3.0 billion of assets are held at the holding company. The
divestiture of the Employer Voluntary Benefits business is expected
in the first half of 2025,” said Jess Merten, Chief Financial
Officer.
Visit www.allstateinvestors.com for
additional information about Allstate’s results, including a
webcast of its quarterly conference call and the call presentation.
The conference call will be at 9 a.m. ET on Thursday, October 31.
Financial information, including material announcements about The
Allstate Corporation, is routinely posted on www.allstateinvestors.com.
Forward-Looking Statements
This news release contains “forward-looking statements” that
anticipate results based on our estimates, assumptions and plans
that are subject to uncertainty. These statements are made subject
to the safe-harbor provisions of the Private Securities Litigation
Reform Act of 1995. These forward-looking statements do not relate
strictly to historical or current facts and may be identified by
their use of words like “plans,” “seeks,” “expects,” “will,”
“should,” “anticipates,” “estimates,” “intends,” “believes,”
“likely,” “targets” and other words with similar meanings. We
believe these statements are based on reasonable estimates,
assumptions and plans. However, if the estimates, assumptions or
plans underlying the forward-looking statements prove inaccurate or
if other risks or uncertainties arise, actual results could differ
materially from those communicated in these forward-looking
statements. Factors that could cause actual results to differ
materially from those expressed in, or implied by, the
forward-looking statements may be found in our filings with the
U.S. Securities and Exchange Commission, including the “Risk
Factors” section in our most recent annual report on Form 10-K.
Forward-looking statements are as of the date on which they are
made, and we assume no obligation to update or revise any
forward-looking statement.
THE ALLSTATE CORPORATION AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF FINANCIAL POSITION (UNAUDITED)
($ in millions, except par value
data)
September 30, 2024
December 31, 2023
Assets
Investments
Fixed income securities, at fair value
(amortized cost, net $53,447 and $49,649)
$
53,961
$
48,865
Equity securities, at fair value (cost
$1,829 and $2,244)
2,091
2,411
Mortgage loans, net
765
822
Limited partnership interests
8,925
8,380
Short-term, at fair value (amortized cost
$6,995 and $5,145)
6,994
5,144
Other investments, net
866
1,055
Total investments
73,602
66,677
Cash
816
722
Premium installment receivables, net
11,041
10,044
Deferred policy acquisition costs
5,751
5,940
Reinsurance and indemnification
recoverables, net
9,013
8,809
Accrued investment income
603
539
Deferred income taxes
—
219
Property and equipment, net
714
859
Goodwill
3,206
3,502
Other assets, net
5,834
6,051
Assets held for sale
3,163
—
Total assets
$
113,743
$
103,362
Liabilities
Reserve for property and casualty
insurance claims and claims expense
$
42,743
$
39,858
Reserve for future policy benefits
274
1,347
Contractholder funds
—
888
Unearned premiums
27,059
24,709
Claim payments outstanding
1,727
1,353
Other liabilities and accrued expenses
10,644
9,635
Debt
8,083
7,942
Liabilities held for sale
2,164
—
Total liabilities
92,905
85,732
Equity
Preferred stock and additional capital
paid-in, $1 par value, 25 million shares authorized, 82.0 thousand
shares issued and outstanding, $2,050 aggregate liquidation
preference
2,001
2,001
Common stock, $.01 par value, 2.0 billion
shares authorized and 900 million issued, 265 million and 262
million shares outstanding
9
9
Additional capital paid-in
3,987
3,854
Retained income
51,635
49,716
Treasury stock, at cost (635 million and
638 million shares)
(37,006
)
(37,110
)
Accumulated other comprehensive income
(loss):
Unrealized net capital gains and
losses
361
(604
)
Unrealized foreign currency translation
adjustments
(99
)
(98
)
Unamortized pension and other
postretirement prior service credit
12
13
Discount rate for reserve for future
policy benefits
(23
)
(11
)
Total accumulated other comprehensive
income (loss)
251
(700
)
Total Allstate shareholders’
equity
20,877
17,770
Noncontrolling interest
(39
)
(140
)
Total equity
20,838
17,630
Total liabilities and equity
$
113,743
$
103,362
THE ALLSTATE CORPORATION AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS (UNAUDITED)
($ in millions, except per share
data)
Three months ended September
30,
Nine months ended September
30,
2024
2023
2024
2023
Revenues
Property and casualty insurance
premiums
$
14,333
$
12,839
$
41,797
$
37,482
Accident and health insurance premiums and
contract charges
487
463
1,439
1,379
Other revenue
781
592
2,129
1,750
Net investment income
783
689
2,259
1,874
Net gains (losses) on investments and
derivatives
243
(86
)
(24
)
(223
)
Total revenues
16,627
14,497
47,600
42,262
Costs and expenses
Property and casualty insurance claims and
claims expense
10,409
10,237
30,711
32,290
Accident, health and other policy benefits
(including remeasurement (gains) losses of $1, $0, $1 and $0)
317
262
904
785
Amortization of deferred policy
acquisition costs
2,037
1,841
5,977
5,374
Operating costs and expenses
2,217
1,771
6,121
5,273
Pension and other postretirement
remeasurement (gains) losses
26
149
15
56
Restructuring and related charges
28
87
51
141
Amortization of purchased intangibles
71
83
210
246
Interest expense
104
88
299
272
Total costs and expenses
15,209
14,518
44,288
44,437
Income (loss) from operations before
income tax expense
1,418
(21
)
3,312
(2,175
)
Income tax expense (benefit)
254
(17
)
603
(475
)
Net income (loss)
1,164
(4
)
2,709
(1,700
)
Less: Net (loss) income attributable to
noncontrolling interest
(26
)
1
(30
)
(23
)
Net income (loss) attributable to
Allstate
1,190
(5
)
2,739
(1,677
)
Less: Preferred stock dividends
29
36
88
99
Net income (loss) applicable to common
shareholders
$
1,161
$
(41
)
$
2,651
$
(1,776
)
Earnings per common share:
Net income (loss) applicable to common
shareholders per common share - Basic
$
4.39
$
(0.16
)
$
10.04
$
(6.76
)
Weighted average common shares - Basic
264.6
261.8
264.1
262.6
Net income (loss) applicable to common
shareholders per common share - Diluted
$
4.33
$
(0.16
)
$
9.91
$
(6.76
)
Weighted average common shares -
Diluted
268.0
261.8
267.4
262.6
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.
Adjusted net income is net income (loss) applicable to
common shareholders, excluding:
- Net gains and losses on investments and derivatives
- Pension and other postretirement remeasurement gains and
losses
- Amortization or impairment of purchased intangibles
- Gain or loss on disposition
- Adjustments for other significant non-recurring, infrequent or
unusual items, when (a) the nature of the charge or gain is such
that it is reasonably unlikely to recur within two years, or (b)
there has been no similar charge or gain within the prior two
years
- Related income tax expense or benefit of these items
Net income (loss) applicable to common shareholders is the GAAP
measure that is most directly comparable to adjusted net
income.
We use adjusted net income as an important measure to evaluate
our results of operations. We believe that the measure provides
investors with a valuable measure of the Company’s ongoing
performance because it reveals trends in our insurance and
financial services business that may be obscured by the net effect
of net gains and losses on investments and derivatives, pension and
other postretirement remeasurement gains and losses, amortization
or impairment of purchased intangibles, gain or loss on disposition
and adjustments for other significant non-recurring, infrequent or
unusual items and the related tax expense or benefit of these
items. Net gains and losses on investments and derivatives, and
pension and other postretirement remeasurement gains and losses may
vary significantly between periods and are generally driven by
business decisions and external economic developments such as
capital market conditions, the timing of which is unrelated to the
insurance underwriting process. Gain or loss on disposition is
excluded because it is non-recurring in nature and the amortization
or impairment of purchased intangibles is excluded because it
relates to the acquisition purchase price and is not indicative of
our underlying business results or trends. Non-recurring items are
excluded because, by their nature, they are not indicative of our
business or economic trends. Accordingly, adjusted net income
excludes the effect of items that tend to be highly variable from
period to period and highlights the results from ongoing operations
and the underlying profitability of our business. A byproduct of
excluding these items to determine adjusted net income is the
transparency and understanding of their significance to net income
variability and profitability while recognizing these or similar
items may recur in subsequent periods. Adjusted net income is used
by management along with the other components of net income (loss)
applicable to common shareholders to assess our performance. We use
adjusted measures of adjusted net income in incentive compensation.
Therefore, we believe it is useful for investors to evaluate net
income (loss) applicable to common shareholders, adjusted net
income and their components separately and in the aggregate when
reviewing and evaluating our performance. We note that investors,
financial analysts, financial and business media organizations and
rating agencies utilize adjusted net income results in their
evaluation of our and our industry’s financial performance and in
their investment decisions, recommendations and communications as
it represents a reliable, representative and consistent measurement
of the industry and the Company and management’s performance. We
note that the price to earnings multiple commonly used by insurance
investors as a forward-looking valuation technique uses adjusted
net income as the denominator. Adjusted net income should not be
considered a substitute for net income (loss) applicable to common
shareholders and does not reflect the overall profitability of our
business.
The following tables reconcile net income (loss) applicable to
common shareholders and adjusted net income (loss). Taxes on
adjustments to reconcile net income (loss) applicable to common
shareholders and adjusted net income (loss) generally use a 21%
effective tax rate.
($ in millions, except per share
data)
Three months ended September
30,
Consolidated
Per diluted common
share
2024
2023
2024
2023
Net income (loss) applicable to common
shareholders (1)
$
1,161
$
(41
)
$
4.33
$
(0.16
)
Net (gains) losses on investments and
derivatives
(243
)
86
(0.91
)
0.33
Pension and other postretirement
remeasurement (gains) losses
26
149
0.10
0.57
Amortization of purchased intangibles
71
83
0.26
0.31
(Gain) loss on disposition
(1
)
5
—
0.02
Income tax expense (benefit)
34
(68
)
0.13
(0.26
)
Adjusted net income (loss) *
$
1,048
$
214
$
3.91
$
0.81
Weighted average dilutive potential common
shares excluded due to net loss applicable to common shareholders
(1)
—
1.5
Nine months ended September
30,
Consolidated
Per diluted common
share
2024
2023
2024
2023
Net income (loss) applicable to common
shareholders (1)
$
2,651
$
(1,776
)
$
9.91
$
(6.76
)
Net (gains) losses on investments and
derivatives
24
223
0.09
0.85
Pension and other postretirement
remeasurement (gains) losses
15
56
0.06
0.21
Amortization of purchased intangibles
210
246
0.79
0.94
(Gain) loss on disposition
(6
)
4
(0.02
)
0.02
Non-recurring costs (2)
—
90
—
0.34
Income tax expense (benefit)
(50
)
(133
)
(0.19
)
(0.51
)
Adjusted net income (loss) *
(1)
$
2,844
$
(1,290
)
$
10.64
$
(4.91
)
Weighted average dilutive potential common
shares excluded due to net loss applicable to common shareholders
(1)
—
1.9
_____________ (1)
In periods where a net loss or adjusted net loss is reported,
weighted average shares for basic earnings per share is used for
calculating diluted earnings per share because all dilutive
potential common shares are anti-dilutive and are therefore
excluded from the calculation.
(2)
Relates to settlement costs for
non-recurring litigation that is outside of the ordinary course of
business.
Adjusted net income (loss) return on Allstate common
shareholders’ equity is a ratio that uses a non-GAAP measure.
It is calculated by dividing the rolling 12-month adjusted net
income by the average of Allstate common shareholders’ equity at
the beginning and at the end of the 12-months, after excluding the
effect of unrealized net capital gains and losses. Return on
Allstate common shareholders’ equity is the most directly
comparable GAAP measure. We use adjusted net income as the
numerator for the same reasons we use adjusted net income, as
discussed previously. We use average Allstate common shareholders’
equity excluding the effect of unrealized net capital gains and
losses for the denominator as a representation of common
shareholders’ equity primarily applicable to Allstate's earned and
realized business operations because it eliminates the effect of
items that are unrealized and vary significantly between periods
due to external economic developments such as capital market
conditions like changes in equity prices and interest rates, the
amount and timing of which are unrelated to the insurance
underwriting process. We use it to supplement our evaluation of net
income (loss) applicable to common shareholders and return on
Allstate common shareholders’ equity because it excludes the effect
of items that tend to be highly variable from period to period. We
believe that this measure is useful to investors and that it
provides a valuable tool for investors when considered along with
return on Allstate common shareholders’ equity because it
eliminates the after-tax effects of realized and unrealized net
capital gains and losses that can fluctuate significantly from
period to period and that are driven by economic developments, the
magnitude and timing of which are generally not influenced by
management. In addition, it eliminates non-recurring items that are
not indicative of our ongoing business or economic trends. A
byproduct of excluding the items noted above to determine adjusted
net income return on Allstate common shareholders’ equity from
return on Allstate common shareholders’ equity is the transparency
and understanding of their significance to return on common
shareholders’ equity variability and profitability while
recognizing these or similar items may recur in subsequent periods.
We use adjusted measures of adjusted net income return on Allstate
common shareholders’ equity in incentive compensation. Therefore,
we believe it is useful for investors to have adjusted net income
return on Allstate common shareholders’ equity and return on
Allstate common shareholders’ equity when evaluating our
performance. We note that investors, financial analysts, financial
and business media organizations and rating agencies utilize
adjusted net income return on common shareholders’ equity results
in their evaluation of our and our industry’s financial performance
and in their investment decisions, recommendations and
communications as it represents a reliable, representative and
consistent measurement of the industry and the company and
management’s utilization of capital. We also provide it to
facilitate a comparison to our long-term adjusted net income return
on Allstate common shareholders’ equity goal. Adjusted net income
return on Allstate common shareholders’ equity should not be
considered a substitute for return on Allstate common shareholders’
equity and does not reflect the overall profitability of our
business.
The following tables reconcile return on Allstate common
shareholders’ equity and adjusted net income (loss) return on
Allstate common shareholders’ equity.
($ in millions)
For the twelve months ended
September 30,
2024
2023
Return on Allstate common
shareholders’ equity
Numerator:
Net income (loss) applicable to common
shareholders
$
4,111
$
(2,079
)
Denominator:
Beginning Allstate common shareholders’
equity
$
12,592
$
15,713
Ending Allstate common shareholders’
equity (1)
18,876
12,592
Average Allstate common shareholders’
equity
$
15,734
$
14,153
Return on Allstate common shareholders’
equity
26.1
%
(14.7
)%
($ in millions)
For the twelve months ended
September 30,
2024
2023
Adjusted net income (loss) return on
Allstate common shareholders’ equity
Numerator:
Adjusted net income (loss) *
$
4,385
$
(1,641
)
Denominator:
Beginning Allstate common shareholders’
equity
$
12,592
$
15,713
Less: Unrealized net capital gains and
losses
(2,512
)
(2,929
)
Adjusted beginning Allstate common
shareholders’ equity
15,104
18,642
Ending Allstate common shareholders’
equity (1)
18,876
12,592
Less: Unrealized net capital gains and
losses
361
(2,512
)
Adjusted ending Allstate common
shareholders’ equity
18,515
15,104
Average adjusted Allstate common
shareholders’ equity
$
16,810
$
16,873
Adjusted net income (loss) return on
Allstate common shareholders’ equity *
26.1
%
(9.7
)%
_____________
(1)
Excludes equity related to preferred stock
of $2,001 million as of September 30, 2024 and 2023.
Combined ratio excluding the effect of catastrophes, prior
year reserve reestimates and amortization or impairment of
purchased intangibles (“underlying combined ratio”) is a
non-GAAP ratio, which is computed as the difference between four
GAAP operating ratios: the combined ratio, the effect of
catastrophes on the combined ratio, the effect of prior year
non-catastrophe reserve reestimates on the combined ratio, and the
effect of amortization or impairment of purchased intangibles on
the combined ratio. We believe that this ratio is useful to
investors, and it is used by management to reveal the trends in our
Property-Liability business that may be obscured by catastrophe
losses, prior year reserve reestimates and amortization or
impairment of purchased intangibles. Catastrophe losses cause our
loss trends to vary significantly between periods as a result of
their incidence of occurrence and magnitude, and can have a
significant impact on the combined ratio. Prior year reserve
reestimates are caused by unexpected loss development on historical
reserves, which could increase or decrease current year net income.
Amortization or impairment of purchased intangibles relates to the
acquisition purchase price and is not indicative of our underlying
insurance business results or trends. We believe it is useful for
investors to evaluate these components separately and in the
aggregate when reviewing our underwriting performance. The most
directly comparable GAAP measure is the combined ratio. The
underlying combined ratio should not be considered a substitute for
the combined ratio and does not reflect the overall underwriting
profitability of our business.
The following tables reconcile the respective combined ratio to
the underlying combined ratio. Underwriting margin is calculated as
100% minus the combined ratio.
Property-Liability
Three months ended September
30,
Nine months ended September
30,
2024
2023
2024
2023
Combined ratio
96.4
103.4
96.9
109.8
Effect of catastrophe losses
(12.4
)
(9.6
)
(11.4
)
(15.5
)
Effect of prior year non-catastrophe
reserve reestimates
(0.4
)
(1.4
)
—
(1.1
)
Effect of amortization of purchased
intangibles
(0.4
)
(0.5
)
(0.4
)
(0.5
)
Underlying combined ratio*
83.2
91.9
85.1
92.7
Effect of prior year catastrophe reserve
reestimates
(0.1
)
0.1
(0.8
)
—
Allstate
Protection - Auto Insurance
Three months ended September
30,
Nine months ended September
30,
2024
2023
2024
2023
Combined ratio
94.8
102.1
95.6
104.9
Effect of catastrophe losses
(3.0
)
(2.6
)
(2.7
)
(2.7
)
Effect of prior year non-catastrophe
reserve reestimates
0.6
(0.3
)
1.0
(0.5
)
Effect of amortization of purchased
intangibles
(0.4
)
(0.4
)
(0.4
)
(0.5
)
Underlying combined ratio*
92.0
98.8
93.5
101.2
Effect of prior year catastrophe reserve
reestimates
(0.1
)
0.1
(0.1
)
(0.1
)
Allstate
Protection - Homeowners Insurance
Three months ended September
30,
Nine months ended September
30,
2024
2023
2024
2023
Combined ratio
98.2
104.4
97.5
122.8
Effect of catastrophe losses
(36.2
)
(29.6
)
(34.7
)
(52.1
)
Effect of prior year non-catastrophe
reserve reestimates
0.4
(1.5
)
1.1
(0.9
)
Effect of amortization of purchased
intangibles
(0.3
)
(0.4
)
(0.3
)
(0.4
)
Underlying combined ratio*
62.1
72.9
63.6
69.4
Effect of prior year catastrophe reserve
reestimates
—
0.6
(2.8
)
0.7
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241030167165/en/
Nick Nottoli Media Relations (847) 402-5600
Allister Gobin Investor Relations (847) 402-2800
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