NORTHBROOK, Ill., July 18 /PRNewswire-FirstCall/ --
The Allstate Corporation (NYSE: ALL) today reported net income of $344 million
($0.48 per diluted share) for the second quarter of 2002 compared to
$168 million ($0.23 per diluted share) for the second quarter of 2001.
Operating income was $453 million ($0.64 per diluted share), for the second
quarter of 2002, compared to $230 million ($0.31 per diluted share) for the
second quarter of 2001. Excluding restructuring charges for the second
quarter of 2002, operating income was $476 million ($0.67 per diluted share)
compared to $233 million ($0.32 per diluted share) for the same period in
2001. Operating income is defined as net income before the after-tax effects
of realized capital gains and losses, gain (loss) on disposition of
operations, dividends on preferred securities of subsidiary trust and the
cumulative effect of changes in accounting principles.
"We had a very solid quarter and our performance improvement strategies
are working," said Chairman, President and CEO Edward M. Liddy. "With two
quarters behind us, we now anticipate that operating income per diluted share
for 2002 will be in the range of $2.70 to $2.90 (excluding restructuring
charges and assuming normal catastrophes) -- $.20 higher than the estimate we
issued at the beginning of the year.
"The rate increases we have taken in our auto and homeowners lines
continue to push premium written growth over prior year levels. We also
continue to see improvements in loss frequencies in the auto and homeowners
lines. Our underwriting strategies in targeted areas are proving successful.
And expense control efforts are also favorably impacting margins.
"Catastrophe losses in the quarter were $288 million, an amount that is
within the normal experience for a second quarter, and includes the impact of
the early season fires in Colorado and Arizona. In the second quarter of 2001
we experienced $537 million in catastrophe losses.
"We saw an encouraging 6.3% growth rate in written premium for the
Allstate brand standard auto line in the quarter over the prior year second
quarter. In this line, the loss ratio for the quarter was 75.4 and we expect
this ratio to improve in the second half of 2002.
"We strengthened our reserve position by $68 million after tax ($0.10 per
diluted share) for upward development of prior year claims, primarily in the
homeowners line. Texas water and mold claims remain a challenge, playing a
prominent role in our reserve actions this quarter. However, we remain on
track to return the Allstate branded homeowners line to acceptable levels of
profitability by mid-2003.
"We are making good progress on controlling expenses. Excluding
restructuring charges, our expense ratio for the second quarter of 2002 was
22.4, a 1.2 point decline from the second quarter of 2001 as expenses were
flat with the prior year.
"Allstate Financial's operating income of $143 million for the second
quarter of 2002 was up 20.2% over the second quarter of 2001 due to increased
investment and mortality margins. Statutory premium and deposits, including
Allstate Bank deposits, were up 13.2% over the second quarter of 2001.
"In the second quarter of 2002 compared to the second quarter of 2001,
Allstate Financial saw sales of fixed annuities rise 47% while variable
annuity sales were down 22% reflecting a change in investing attitudes among
consumers. It is clear that there is considerable consumer interest in
products that offer greater stability and guaranteed returns and Allstate
Financial's broad product portfolio has allowed it to capitalize on those
changing consumer attitudes.
"We continue to be encouraged with the progress that our exclusive agents
are making in helping transform the company to a personal financial services
company. Through the first six months of 2002 our exclusive agents have more
than doubled their sales of Allstate Financial products compared to the same
period in the prior year.
"Overall, Allstate Financial continues to perform well in the very
difficult market conditions in which we are operating."
Summary of results for the quarter and six months ended June 30, 2002:
Consolidated Highlights
Quarter Ended Six Months Ended
June 30 June 30
($ in millions,
except per-share
amounts) Est. Est.
2002 2001 Change 2002 2001 Change
$ $ % $ $ %
Consolidated
Revenues 7,455 7,203 3.5 14,753 14,334 2.9
Operating Income
Before
Restructuring
Charges After-tax 476 233 104.3 977 790 23.7
Operating Income Per
Share (Diluted)
Before Restructuring
Charges After-tax .67 .32 109.4 1.37 1.08 26.9
Restructuring
Charges After-tax 23 3 -- 36 8 --
Operating Income 453 230 97.0 941 782 20.3
Operating Income
Per Share (Diluted) .64 .31 106.5 1.32 1.07 23.4
Realized Capital
(Losses) Gains
After-tax (107) (47) 127.7 (171) (80) 113.8
Gain (Loss) on
Disposition of
Operations After-
tax -- (6) -- 5 (6) (183.3)
Dividends on
Preferred
Securities of
Subsidiary Trust(s)
After-tax (2) (9) (77.8) (5) (19) (73.7)
Cumulative Effect of
a Change in
Accounting
Principle After-tax -- -- -- (331) (9) --
Net Income 344 168 104.8 439 668 (34.3)
Net Income per share
(Diluted) .48 .23 108.7 .62 .91 (31.9)
Weighted Average
Shares Outstanding
(Diluted) 712.1 728.5 (2.3) 712.9 729.4 (2.3)
-- The increase in second quarter 2002 consolidated revenues was due to
increased Property-Liability premiums earned, partially offset by
higher realized capital losses as compared to the same quarter in the
prior year.
-- The consolidated operating income increase in the second quarter of
2002 when compared to the prior year quarter was due to:
-- increased Property-Liability premiums earned
-- lower catastrophe losses
-- improved auto and homeowners loss frequencies
-- increased Allstate Financial operating income
These factors were partly offset by:
-- increased reserves for prior accident years in Property-Liability
-- increased restructuring expenses
-- Restructuring expenses incurred during the second quarter of 2002
totaled $35 million, or $23 million after-tax and $0.03 per diluted
share. Restructuring expenses for the first six months of 2002 totaled
$55 million, or $36 million after-tax and $0.05 per diluted share.
These expenses related to the previously announced realignment of the
company's claim offices, Customer Information Centers and other back-
office operations.
-- During the second quarter of 2002, Allstate purchased 4.1 million
shares of its stock at an average cost per share of $38.61 for an
overall cost of $156 million. The total cost of shares repurchased
under its current $500 million repurchase program through June 30, 2002
is $296 million. The company intends to complete this repurchase
program by December 31, 2002.
-- The components of pre-tax realized capital gains (losses) were:
Est. Quarter Ended
June 30, 2002
($ in millions) Property- Allstate Corporate
Liability Financial and Other Total
Valuation of
derivative
instruments $(29) $ (16) $-- $(45)
Portfolio trading (58) 11 -- (47)
Investment write-downs (27) (32) (2) (61)
Realized Capital Gains
(Losses) $(114) $(37) $ (2) $(153)
Quarter Ended
June 30, 2001
($ in millions) Property- Allstate Corporate
Liability Financial and Other Total
Valuation of
derivative
instruments $10 $14 $-- $24
Portfolio trading 14 (26) (1) (13)
Investment write-downs (45) (37) -- (82)
Realized Capital Gains
(Losses) $(21) $(49) $ (1) $ (71)
Est. Six Months Ended
June 30, 2002
($ in millions) Property- Allstate Corporate
Liability Financial and Other Total
Valuation of
derivative
instruments $(24) $(26) $-- $(50)
Portfolio trading (60) (40) (1) (101)
Investment write-downs (45) (58) (2) (105)
Realized Capital Gains
(Losses) $(129) $(124) $ (3) $(256)
Six Months Ended
June 30, 2001
($ in millions) Property- Allstate Corporate
Liability Financial and Other Total
Valuation of
derivative
instruments $ (27) $(39) $ -- $ (66)
Portfolio trading 101 (21) 1 81
Investment write-downs (68) (69) -- (137)
Realized Capital Gains
(Losses) $6 $ (129) $ 1 $(122)
-- As of January 1, 2002, the company adopted Statement of Financial
Accounting Standard ("SFAS") No. 142 "Goodwill and Other Intangible
Assets." As required by this statement, the company ceased amortizing
goodwill in the first quarter of 2002, and completed its adoption of a
fair value appraisal method for goodwill in the second quarter of 2002.
Goodwill amortization recognized in the second quarter of 2001 totaled
$13 million and $26 million for the first six months of 2001.
The fair value appraisal of goodwill completed in the second quarter of
2002 resulted in an impairment totaling $331 million after-tax. The
impairment relates to goodwill arising from the company's purchases of
American Heritage Life Investment Corporation ("AHL") in 1999 and
Pembridge Inc. in 1998 and is a result of adopting the fair value
appraisal method required by SFAS No. 142.
As required by SFAS No. 142, the impairment is recorded as the
cumulative effect of a change in accounting principle as of January 1,
2002 and therefore impacts the previously released net income per
diluted share for the first quarter of 2002 and net income per diluted
share for the six months ended June 30, 2002, by $0.46. The previously
released first quarter 2002 net income per diluted share was $0.60. The
revised first quarter 2002 net income per diluted share including the
impact of this impairment is $0.14. This impairment decreased the
March 31, 2002 book value per diluted share by $0.46. There is no
impact of this impairment on operating income or net income per diluted
share for the second quarter of 2002.
Goodwill Impairment by Acquisition
($ in millions)
AHL $ 283
Pembridge, Inc. 48
Total impairment $ 331
-- The net income for the six months ended June 30, 2001 includes a
negative $9 million after-tax effect related to the adoption of SFAS
Nos. 133 and 138. These statements comprise a single, integrated
accounting framework for derivative instruments and hedging activities,
including specific methodologies for the valuation of derivative
securities.
Property-Liability Business
Property-Liability Highlights
Quarter Ended Six Months Ended
June 30 June 30
($ in millions,
except ratios) Est. Est.
2002 2001 Change 2002 2001 Change
$ $ % $ $ %
Property-
Liability
Premiums Written 6,042 5,728 5.5 11,758 11,168 5.3
Property-Liability
Revenues 6,117 5,918 3.4 12,205 11,864 2.9
Operating Income
before
Restructuring
Charges 357 135 164.4 744 584 27.4
Restructuring
Charges After-tax 22 1 -- 35 5 --
Operating Income 335 134 150.0 709 579 22.5
Realized Capital
(Losses) Gains
After-tax (68) (11) -- (80) 6 --
Gain (Loss) on
Disposition of
Operations -- (6) -- 5 (6) (183.3)
Cumulative Effect of
a Change in
Accounting Principle
After-tax -- -- -- (48) (3) --
Net Income 267 117 128.2 586 576 1.7
Catastrophe Losses 288 537 (46.4) 398 619 (35.7)
Combined Ratio before
impacts of
catastrophes and
restructuring
charges 94.8 96.5 (1.7)pts 95.8 96.4 (0.6)pts
Impact of
catastrophes 5.0 9.8 (4.8)pts 3.5 5.6 (2.1)pts
Impact of
restructuring
charges 0.6 -- 0.6 pts 0.5 0.1 0.4 pts
Combined Ratio 100.4 106.3 (5.9)pts 99.8 102.1 (2.3)pts
-- Factors contributing to Property-Liability premium written growth in
the second quarter of 2002 as compared to the same quarter in the prior
year included:
-- A 5.8% increase in Allstate brand premiums written
-- 6.3% increase in standard auto
-- 17.1% increase in homeowners
-- 11.1% decrease in Allstate brand non-standard auto as a result of
profit improvement actions
-- The following net rate changes have been approved for Property-
Liability:
Quarter Ended Six Months Ended
June 30, 2002 June 30, 2002
# of States Weighted # of States Weighted
Average Rate Average Rate
Change (%) Change (%)
Allstate brand
Standard Auto 18 7.6 31 7.8
Non-standard Auto 15 11.2 32 10.4
Homeowners 15 21.6 36 20.6
Ivantage brand
Standard Auto (Encompass) 14 7.8 23 6.9
Non-standard
Auto (Deerbrook) 14 14.1 20 9.5
Homeowners (Encompass) 14 8.9 22 16.0
-- Factors contributing to the increased Property-Liability loss costs in
the second quarter of 2002 when compared to the prior year quarter
include:
-- Reserve strengthening for upward development of prior year claims:
----Loss Ratio Impact---
$ in Mil. Ratio Pr. Yr. Variance
Auto $18 0.3 1.4
Homeowner 87 1.5 (1.0)*
Pre-tax Total $105 1.8 0.4
*Prior year strengthening in 2001 included $90 million for the
Northridge catastrophe.
These factors were partially offset by:
-- improved auto and homeowners frequency
-- decreased catastrophe losses
Incurred losses related to mold claims in Texas in the second
quarter of 2002 were $103 million compared to $25 million in the
second quarter of 2001. Strengthening of prior year reserves noted
above that was related to mold losses in Texas totaled $30 million.
Allstate Financial Business
Allstate Financial Highlights
Quarter Ended Six Months Ended
June 30 June 30
($ in millions) Est. Est.
2002 2001 Change 2002 2001 Change
$ $ % $ $ %
Statutory
Premiums and
Deposits* 3,325 2,936 13.2 6,115 5,803 5.4
Allstate Financial
GAAP Revenues 1,321 1,266 4.3 2,515 2,427 3.6
Operating Income
before
Restructuring
Charges 144 121 19.0 287 249 15.3
Restructuring
Charges After-tax 1 2 (50.0) 1 3 (66.7)
Operating Income 143 119 20.2 286 246 16.3
Realized Capital
(Losses) Gains
After-tax (37) (35) 5.7 (89) (87) 2.3
Cumulative Effect of
a Change in
Accounting Principle
After-tax -- -- -- (283) (6) --
Net Income 106 84 26.2 (86) 153 (156.2)
Investments
including Separate
Accounts 64,427 58,501 10.1 64,427 58,501 10.1
*Statutory premiums and deposits is a measure used by Allstate management
to analyze sales trends. Statutory premiums and deposits includes premiums on
insurance policies and premiums and deposits on annuities determined in
conformity with statutory accounting practices prescribed or permitted by the
insurance regulatory authorities of the states in which the Company's
insurance subsidiaries are domiciled, and all other funds received from
customers on deposit type products which are treated as liabilities, including
the deposits of Allstate Bank.
-- Factors contributing to the increase in Allstate Financial statutory
premiums and deposits during the second quarter of 2002 as compared to
the same quarter in the prior year included:
-- an increase in the retail sales of fixed annuities
-- growth in deposits of Allstate Bank
This increase was partly offset by:
-- a decrease in variable annuity sales
-- Factors contributing to the growth in Allstate Financial operating
income in the second quarter of 2002 when compared to the same quarter
in the prior year included:
-- an increase in investment and mortality margins
-- a change in accounting eliminating the amortization of goodwill
which totaled $7 million in the second quarter of 2001 and
$15 million for the first six months of 2001.
This press release contains forward-looking statements about the
profitability of Allstate's homeowners line of business, our loss ratio for
Allstate standard auto, our operating income for 2002 and rate changes in our
Property-Liability business. These statements are subject to the Private
Securities Litigation Reform Act 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. Projected weighted average rate changes in our Property-Liability
business may be lower than projected due to a decrease in the number of
policies in force. Loss costs in our Property-Liability business, including
losses due to catastrophes such as hurricanes and earthquakes, may exceed
management's projections. Competitive pressures could lead to sales of
Property-Liability products, including private passenger auto and homeowners
insurance, that are lower than projected by management, as we increase prices
and modify our underwriting practices. Investment income may not meet
management's projections due to poor stock market performance or lower returns
on the fixed income portfolio due to worsening credit conditions. Readers are
encouraged to review the other risk factors facing Allstate that we disclose
in our current, quarterly and annual reports to the Securities and Exchange
Commission on Forms 8-K, 10-Q and 10-K. We undertake no obligation to
publicly correct or update any forward-looking statements. This press release
contains unaudited financial information.
The supplemental operating information included in the tables above allows
for additional analysis of results of operations. The net effects of realized
capital gains and losses have been excluded due to the volatility between
periods and because such data is often excluded when evaluating the overall
financial performance of insurers. After-tax realized capital gains and losses
are presented net of the effects of Allstate Financial's deferred policy
acquisition cost amortization to the extent that such effects resulted from
the recognition of realized capital gains and losses. Operating income should
not be considered as a substitute for any generally accepted accounting
principles ("GAAP") measure of performance. The method of calculating
operating income may be different from the method used by other companies and
therefore comparability may be limited.
The Allstate Corporation (NYSE: ALL) is the nation's largest publicly held
personal lines insurer. Widely known through the "You're In Good Hands With
Allstate(R)" slogan, Allstate provides insurance products to more than 14
million households and has approximately 13,000 exclusive agents 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.
Encompass(SM) and Deerbrook(SM) Insurance brand property and casualty products
are sold exclusively through independent agents. Allstate Financial Group
includes the businesses that provide life insurance, retirement and investment
products, through Allstate agents, workplace marketing, independent agents,
banks and securities firms.
The Allstate Corporation prepares an interim investor supplement,
containing standard information that is not totally available at the time of
the earnings release. The supplement is posted to the company's website and
will be updated periodically over the next 30 days, and can be accessed by
going to the Allstate web site at allstate.com and clicking on "About
Allstate." From there, go to the "Find Financial Information" button.
THE ALLSTATE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended
June 30,
Est. Percent
($ in millions except per share data) 2002 2001 Change
Revenues
Property-liability insurance premiums $ 5,803 $ 5,503 5.5
Life and annuity premiums
and contract charges 582 576 1.0
Net investment income 1,223 1,195 2.3
Realized capital gains and losses (153) (71) 115.5
Total revenues 7,455 7,203 3.5
Costs and expenses
Property-liability insurance
claims and claims expense 4,493 4,549 (1.2)
Life and annuity contract benefits 449 419 7.2
Interest credited to contractholders'
funds 423 459 (7.8)
Amortization of deferred policy
acquisition costs 926 856 8.2
Operating costs and expenses 658 685 (3.9)
Amortization of goodwill - 13 -
Restructuring and related charges 35 4 -
Interest expense 68 61 11.5
Total costs and expenses 7,052 7,046 0.1
Gain (loss) on disposition of
operations - (10) -
Income from operations before income
tax expense (benefit), dividends on
preferred securities and cumulative
effect of change in accounting
principle, after-tax 403 147 174.1
Income tax expense (benefit) 57 (30) -
Income before dividends on preferred
securities and cumulative effect of
change in accounting principle,
after-tax 346 177 95.5
Dividends on preferred securities
of subsidiary trusts (2) (9) (77.8)
Cumulative effect of change in
accounting principle, after-tax - - -
Net income $ 344 $ 168 104.8
Net income per share - Basic $ 0.49 $ 0.23
Weighted average shares - Basic 708.7 724.6
Net income per share - Diluted $ 0.48 $ 0.23
Weighted average shares - Diluted 712.1 728.5
Six Months Ended
June 30,
Est. Percent
($ in millions except per share data) 2002 2001 Change
Revenues
Property-liability insurance premiums $ 11,507 $ 10,956 5.0
Life and annuity premiums
and contract charges 1,120 1,085 3.2
Net investment income 2,382 2,415 (1.4)
Realized capital gains and losses (256) (122) 109.8
Total revenues 14,753 14,334 2.9
Costs and expenses
Property-liability insurance
claims and claims expense 8,862 8,619 2.8
Life and annuity contract benefits 825 818 0.9
Interest credited to contractholders'
funds 852 858 (0.7)
Amortization of deferred policy
acquisition costs 1,811 1,703 6.3
Operating costs and expenses 1,298 1,344 (3.4)
Amortization of goodwill - 26 -
Restructuring and related charges 55 12 -
Interest expense 137 123 11.4
Total costs and expenses 13,840 13,503 2.5
Gain (loss) on disposition of
operations 7 (10) (170.0)
Income from operations before income
tax expense (benefit), dividends on
preferred securities and cumulative
effect of change in accounting
principle, after-tax 920 821 12.1
Income tax expense (benefit) 145 125 16.0
Income before dividends on preferred
securities and cumulative effect of
change in accounting principle,
after-tax 775 696 11.4
Dividends on preferred securities
of subsidiary trusts (5) (19) (73.7)
Cumulative effect of change in
accounting principle, after tax (331) (9) -
Net income $ 439 $ 668 (34.3)
Net income per share - Basic $ 0.62 $ 0.92
Weighted average shares - Basic 710.2 725.6
Net income per share - Diluted $ 0.62 $ 0.91
Weighted average shares - Diluted 712.9 729.4
THE ALLSTATE CORPORATION
CONTRIBUTION TO INCOME
Three Months Ended
June 30,
Est. Percent
($ in millions except per share data) 2002 2001 Change
Contribution to income
Operating income $ 453 $ 230 97.0
Realized capital gains and losses (107) (47) 127.7
Gain (loss) on disposition of operations - (6) -
Dividends on preferred securities
of subsidiary trusts (2) (9) (77.8)
Cumulative effect of change in
accounting principle - - -
Net income $ 344 $ 168 104.8
Operating income before the impact of
restructuring and related charges $ 476 $ 233 104.3
Income per share (Diluted)
Operating income $ 0.64 $ 0.31 106.5
Realized capital gains and losses (0.15) (0.06) 150.0
Gain (loss) on disposition of operations - (0.01) -
Dividends on preferred securities
of subsidiary trusts (0.01) (0.01) -
Cumulative effect of change in
accounting principle - - -
Net income $ 0.48 $ 0.23 108.7
Operating income before the impact of
restructuring and related charges $ 0.67 $ 0.32 109.4
Book value per share - Diluted $ 24.26 $ 24.13 0.5
Six Months Ended
June 30,
Est. Percent
($ in millions except per share data) 2002 2001 Change
Contribution to income
Operating income $ 941 $ 782 20.3
Realized capital gains and losses (171) (80) 113.8
Gain (loss) on disposition of operations 5 (6) (183.3)
Dividends on preferred securities
of subsidiary trusts (5) (19) (73.7)
Cumulative effect of change in
accounting principle (331) (9) -
Net income $ 439 $ 668 (34.3)
Operating income before the impact of
restructuring and related charges $ 977 $ 790 23.7
Income per share (Diluted)
Operating income $ 1.32 $ 1.07 23.4
Realized capital gains and losses (0.24) (0.11) 118.2
Gain (loss) on disposition of operations 0.01 (0.01) -
Dividends on preferred securities
of subsidiary trusts (0.01) (0.03) (66.7)
Cumulative effect of change in
accounting principle (0.46) (0.01) -
Net income $ 0.62 $ 0.91 (31.9)
Operating income before the impact of
restructuring and related charges $ 1.37 $ 1.08 26.9
Book value per share - Diluted $ 24.26 $ 24.13 0.5
THE ALLSTATE CORPORATION
SUPPLEMENTARY INFORMATION
Three Months Ended
June 30,
Est.
($ in millions) 2002 2001
Property-Liability
Premiums written $6,042 $5,728
Premiums earned $5,803 $5,503
Claims and claims expense 4,493 4,549
Operating costs and expenses 1,297 1,292
Amortization of Goodwill - 5
Restructuring and related charges 34 1
Underwriting (loss) income (21) (344)
Net investment income 428 436
Income tax expense (benefit) on operations 72 (42)
Operating income 335 134
Realized capital gains and losses, after-tax (68) (11)
Gain (loss) on disposition of operations,
after-tax - (6)
Cumulative effect of change in accounting
principle, after-tax - -
Net income $267 $117
Catastrophe losses $288 $537
Operating ratios
Claims and claims expense ratio 77.4 82.7
Expense ratio 23.0 23.6
Combined ratio 100.4 106.3
Effect of catastrophe losses on combined
ratio 5.0 9.8
Effect of restructuring and related charges
on combined ratio 0.6 -
Allstate Financial
Statutory premiums and deposits $3,325 $2,936
Investments including
Separate Account assets $64,427 $58,501
Premiums and contract charges $582 $576
Net investment income 776 739
Contract benefits 449 419
Interest credited to contractholders' funds 423 459
Operating costs and expenses 277 242
Amortization of goodwill - 7
Restructuring and related charges 1 3
Income tax expense on operations 65 66
Operating income 143 119
Realized capital gains and losses, after-tax (37) (35)
Cumulative effect of change in accounting
principle, after-tax - -
Net income (loss) $106 $84
Corporate and Other
Net investment income $ 19 $20
Operating costs and expenses 69 63
Amortization of goodwill - 1
Income tax benefit on operations (25) (21)
Operating loss (25) (23)
Realized capital gains and losses, after-tax (2) (1)
Dividends on preferred securities
of subsidiary trusts (2) (9)
Net loss $(29) $(33)
Six Months Ended
June 30,
Est.
($ in millions) 2002 2001
Property-Liability
Premiums written $11,758 $11,168
Premiums earned $11,507 $10,956
Claims and claims expense 8,862 8,619
Operating costs and expenses 2,569 2,552
Amortization of Goodwill - 10
Restructuring and related charges 54 8
Underwriting (loss) income 22 (233)
Net investment income 827 902
Income tax expense (benefit) on operations 140 90
Operating income 709 579
Realized capital gains and losses, after-tax (80) 6
Gain (loss) on disposition of operations,
after-tax 5 (6)
Cumulative effect of change in accounting
principle, after-tax (48) (3)
Net income $586 $576
Catastrophe losses $398 $619
Operating ratios
Claims and claims expense ratio 77.0 78.7
Expense ratio 22.8 23.4
Combined ratio 99.8 102.1
Effect of catastrophe losses on combined
ratio 3.5 5.6
Effect of restructuring and related charges
on combined ratio 0.5 0.1
Allstate Financial
Statutory premiums and deposits $6,115 $5,803
Investments including
Separate Account assets $64,427 $58,501
Premiums and contract charges $1,120 $1,085
Net investment income 1,519 1,471
Contract benefits 825 818
Interest credited to contractholders' funds 852 858
Operating costs and expenses 535 487
Amortization of goodwill - 15
Restructuring and related charges 1 4
Income tax expense on operations 140 128
Operating income 286 246
Realized capital gains and losses, after-tax (89) (87)
Cumulative effect of change in accounting
principle, after-tax (283) (6)
Net income (loss) $(86) $153
Corporate and Other
Net investment income $36 $42
Operating costs and expenses 139 126
Amortization of goodwill - 1
Income tax benefit on operations (49) (42)
Operating loss (54) (43)
Realized capital gains and losses, after-tax (2) 1
Dividends on preferred securities
of subsidiary trusts (5) (19)
Net loss $(61) $(61)
THE ALLSTATE CORPORATION
UNDERWRITING RESULTS BY AREA OF BUSINESS
Three Months Ended
June 30,
Est. Percent
($ in millions) 2002 2001 Change
Consolidated Underwriting Summary
PP&C $(15) $(340) (95.6)
Discontinued lines and coverages (6) (4) 50.0
Underwriting (loss) income $(21) $(344) (93.9)
PP&C Underwriting Summary
Premiums written $6,040 $5,720 5.6
Premiums earned $5,800 $5,494 5.6
Claims and claims expense 4,484 4,540 (1.2)
Other costs and expenses 1,297 1,288 0.7
Amortization of goodwill - 5 -
Restructuring and related charges 34 1 -
Underwriting (loss) income $(15) $(340) (95.6)
Catastrophe losses $ 288 $537 (46.4)
Operating ratios
Claims and claims expense ratio 77.3 82.6
Expense ratio 23.0 23.6
Combined ratio 100.3 106.2
Effect of catastrophe losses
on combined ratio 5.0 9.8
Effect of restructuring charges
on combined ratio 0.6 -
Discontinued Lines and Coverages
Underwriting Summary
Premiums written $ 2 $ 8 (75.0)
Premiums earned $ 3 $ 9 (66.7)
Claims and claims expense 9 9 -
Other costs and expenses - 4 -
Underwriting loss $ (6) $(4) 50.0
Six Months Ended
June 30,
Est. Percent
($ in millions) 2002 2001 Change
Consolidated Underwriting Summary
PP&C $32 $(225) (114.2)
Discontinued lines and coverages (10) (8) 25.0
Underwriting (loss) income $22 $(233) (109.4)
PP&C Underwriting Summary
Premiums written $11,753 $11,161 5.3
Premiums earned $11,501 $10,947 5.1
Claims and claims expense 8,850 8,607 2.8
Other costs and expenses 2,565 2,547 0.7
Amortization of goodwill - 10 -
Restructuring and related charges 54 8 -
Underwriting (loss) income $32 $(225) (114.2)
Catastrophe losses $398 $619 (35.7)
Operating ratios
Claims and claims expense ratio 76.9 78.6
Expense ratio 22.8 23.5
Combined ratio 99.7 102.1
Effect of catastrophe losses
on combined ratio 3.5 5.7
Effect of restructuring charges
on combined ratio 0.5 0.1
Discontinued Lines and Coverages
Underwriting Summary
Premiums written $ 5 $7 (28.6)
Premiums earned $ 6 $9 (33.3)
Claims and claims expense 12 12 -
Other costs and expenses 4 5 (20.0)
Underwriting loss $(10) $(8) 25.0
THE ALLSTATE CORPORATION
PROPERTY-LIABILITY PREMIUMS WRITTEN BY MARKET SEGMENT
Three Months Ended
June 30,
Est. Percent
($ in millions) 2002 2001 Change
ALLSTATE-BRAND
Standard auto $ 3,141 $ 2,955 6.3
Non-standard auto 602 677 (11.1)
Involuntary auto 47 47 -
Commercial lines 201 185 8.6
Homeowners 1,211 1,034 17.1
Other personal lines 334 334 -
5,536 5,232 5.8
IVANTAGE
Standard auto 319 325 (1.8)
Non-standard auto 25 10 150.0
Involuntary auto 2 3 (33.3)
Homeowners 132 126 4.8
Other personal lines 26 24 8.3
504 488 3.3
PP&C 6,040 5,720 5.6
DISCONTINUED LINES
AND COVERAGES 2 8 (75.0)
PROPERTY-LIABILITY $ 6,042 $ 5,728 5.5
Six Months Ended
June 30,
Est. Percent
($ in millions) 2002 2001 Change
ALLSTATE-BRAND
Standard auto $ 6,336 $ 5,947 6.5
Non-standard auto 1,229 1,377 (10.7)
Involuntary auto 97 80 21.3
Commercial lines 389 364 6.9
Homeowners 2,153 1,847 16.6
Other personal lines 612 623 (1.8)
10,816 10,238 5.6
IVANTAGE
Standard auto 605 612 (1.1)
Non-standard auto 44 23 91.3
Involuntary auto 2 11 (81.8)
Homeowners 240 225 6.7
Other personal lines 46 52 (11.5)
937 923 1.5
PP&C 11,753 11,161 5.3
DISCONTINUED LINES
AND COVERAGES 5 7 (28.6)
PROPERTY-LIABILITY $ 11,758 $ 11,168 5.3
THE ALLSTATE CORPORATION
PP&C MARKET SEGMENT ANALYSIS
Three Months Ended June 30,
Est. Est. Est. Est.
($ in 2002 2001 2002 2001 2002 2001 2002 2001
millions) $ $
Loss Ratio
Excluding
the Effect of Expense
Premiums Earned Loss Ratio CAT Losses Ratio
ALLSTATE-
BRAND
Standard
auto 3,151 2,925 75.4 76.6 74.0 71.6
Non-standard
auto 620 688 75.6 81.8 75.2 80.5
Homeowners 1,041 937 86.2 102.5 69.5 69.4
Other (A) 530 498 68.5 74.7 62.8 70.7
Sub-total 5,342 5,048 76.8 82.0 72.1 72.3 22.1 22.6
IVANTAGE
Standard
auto 298 297 76.5 80.5 74.2 76.4
Non-standard
auto 18 13 116.7 84.6 116.7 84.6
Homeowners 116 111 102.6 83.8 77.6 49.5
Other (A) 26 25 46.2 240.0 38.5 236.0
Sub-total 458 446 83.0 90.4 74.7 78.9 33.2 34.8
PP&C 5,800 5,494 77.3 82.6 72.3 72.8 23.0 23.6
(A) Other includes involuntary auto, commercial lines and other
personal lines.
Six Months Ended June 30,
Est. Est. Est. Est.
($ in 2002 2001 2002 2001 2002 2001 2002 2001
millions) $ $
Loss Ratio
Excluding
the Effect of Expense
Premiums Earned Loss Ratio CAT Losses Ratio
ALLSTATE-
BRAND
Standard
auto 6,245 5,795 74.9 74.0 73.9 71.4
Non-standard
auto 1,245 1,380 75.6 82.1 75.3 81.4
Homeowners 2,048 1,856 85.6 90.6 73.0 70.5
Other (A) 1,052 989 72.7 74.7 69.5 71.7
Sub-total 10,590 10,020 76.8 78.3 73.5 72.7 22.0 22.6
IVANTAGE
Standard
auto 598 613 76.8 78.3 75.8 76.3
Non-standard
auto 31 31 106.5 93.5 106.5 93.5
Homeowners 232 229 91.8 83.0 76.3 63.3
Other (A) 50 54 18.0 124.1 14.0 120.4
Sub-total 911 927 78.4 82.6 73.5 76.3 32.3 32.6
PP&C 11,501 10,947 76.9 78.6 73.4 72.9 22.8 23.5
(A) Other includes involuntary auto, commercial lines and other
personal lines.
SOURCE The Allstate Corporation
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CONTACT:
Michael Trevino, Media Relations,
+1-847-402-5600, or Robert Block, Larry Moews or Phil Dorn,
Investor Relations, +1-847-402-2800, all of The Allstate
Corporation
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