NORTHBROOK, Ill., July 19 /PRNewswire/ -- The Allstate Corporation
(NYSE: ALL) today reported that operating income per diluted share for the
second quarter of 2001 was $.31 compared to $.58 in the second quarter of
2000. The decline was driven by catastrophe losses, by increased homeowners
loss costs and market conditions in the financial services sector.
"The quarter was a particularly trying one for Allstate, as we experienced
the highest level of quarterly catastrophe losses since the Northridge,
California earthquake in 1994," said Chairman, President and CEO Edward M.
Liddy. "The impact of the spring storms and Tropical Storm Allison was
significant, with catastrophes this quarter at $537 million pre-tax, a full
$170 million more than last year's second quarter. Also included in this
total are $90 million of additional reserves that were recorded to provide for
the resolution of claims remaining from the Northridge earthquake. The
catastrophe impact aggravated an already difficult environment in the property
insurance market, where we continue to experience significant loss cost
pressure.
"The Good Hands(SM) Network continues to make encouraging progress, with
the rollout of three more states in the second quarter. In those states where
the Good Hands Network has been fully implemented, we see positive results
from the interaction and integration between the three channels of agencies,
call centers and the Internet for access to sales and servicing capabilities.
We continue to work to fine-tune the Network, to make sure that it is as
responsive as possible to the needs of the Allstate customer."
Operating income was $230 million in the second quarter of 2001, compared
to $432 million in the second quarter of 2000. Consolidated revenues for the
second quarter were $7.20 billion, compared to the 2000 second quarter
consolidated revenues of $7.18 billion. Consolidated net income for the
quarter was $168 million or $.23 per diluted share, compared to $459 million
or $.61 per diluted share for the same period in 2000. The decline in
consolidated net income reflects both decreased operating income and realized
capital losses resulting from market conditions affecting investment write-
downs and portfolio trading.
For the six months ended June 30, 2001, consolidated revenues were
$14.33 billion, operating income was $782 million ($1.07 per diluted share),
and net income was $668 million ($.91 per diluted share), compared to
consolidated revenues of $14.47 billion, operating income of $895 million
($1.18 per diluted share), and net income of $1.02 billion ($1.34 per diluted
share) in the first six months of 2000. Catastrophe losses for the first six
months of 2001 were $402 million after-tax, compared to $487 million after-tax
in the same period of the previous year. Consolidated realized capital losses
were $80 million after-tax through June of 2001, compared to realized capital
gains of $147 million after-tax for the first six months of 2000.
Property-Liability Business
Property-Liability written premiums increased 2.6 percent in the second
quarter of 2001 to $5.73 billion compared to $5.58 billion during the same
period of 2000. For Allstate branded products, written premiums increased
4.3 percent compared to the same period in the prior year. Encompass(SM)
Insurance and Deerbrook(SM) written premium declined as they continued to
improve the profitability of these businesses.
"We continue to see strong progress in the development of the Allstate
standard auto book of business," Liddy said. "Allstate standard auto premiums
written increased nearly 5 percent over the second quarter of last year, the
volume of new business applications continued to accelerate during the
quarter, retention remains on a positive trend and in states where the
strategic risk management system has been implemented in connection with the
rollout of the Good Hands Network our new business productivity has shown good
progress.
"As expected, the steps we have taken to address the adverse profitability
trends in our non-standard business continue to reduce written premiums in
this line, but the impact from these actions is expected to begin to moderate
in the second half. We have been actively pursuing appropriate rate increases
for all Allstate product categories."
Property-Liability revenues in the second quarter of 2001 were $5.92
billion compared to $6.06 billion for the 2000 second quarter. Operating
income for the quarter was $134 million versus 2000 second quarter operating
income of $302 million, due primarily to increased premiums being more than
offset by higher catastrophe losses and increased homeowners loss costs.
"Adverse severity trends in homeowners continue to be an issue," Liddy
said, "and in many cases homeowners' rates are lagging behind actual loss
experience. We are currently examining a range of possible remedial actions
in this area, including changes to our product design and our underwriting
approach, as well as appropriate rate initiatives."
The combined ratio for the quarter was 106.3, compared to the 2000 second
quarter ratio of 100.9. Excluding catastrophe losses and restructuring
charges, the combined ratio was 96.5, compared to 93.9 in the second quarter
of 2000. Property-Liability realized capital losses were $11 million
after-tax in the second quarter of 2001, compared to realized capital gains of
$91 million after-tax for the same period in 2000. Net income was
$117 million for the quarter, compared to $393 million for the same period in
the previous year.
For the first six months of 2001, Property-Liability written premiums
increased 1.9 percent to $11.17 billion compared to $10.96 billion in the
first six months of 2000. Revenues for the first six months of 2001 were
$11.86 billion, operating income was $579 million, realized capital gains were
$6 million after-tax and net income was $576 million, compared to revenues of
$12.14 billion, operating income of $644 million, realized capital gains of
$210 million after-tax and net income of $854 million in the first six months
of 2000.
Allstate Financial Business
For the second quarter of 2001, Allstate Financial GAAP revenues increased
14.1 percent to $1.27 billion, compared to $1.11 billion for the same period
in the previous year. Allstate Financial operating income for the quarter was
$119 million compared to $145 million for the same period in 2000; with
increased investment margins being more than offset by the effects of
restructuring charges, decreased margins on fee-based products and increased
operating expenses intended to support the generation of future sales.
"Volatile market conditions continue to adversely impact the sales of our
fixed and variable annuity products," Liddy said, "while we saw modest growth
in our life insurance and structured settlements business, as well as a strong
response to our institutional offerings during the quarter.
"Operating income was also adversely impacted by higher than normal
expenses for the business, due in part to the increased servicing cost of the
higher number of policies, and in part to the investment in new products
currently being brought to market. We are monitoring these expense issues
carefully, and will take relevant actions as appropriate."
Net income for the second quarter of 2001 was $84 million compared to
$101 million for the second quarter of 2000, reflecting lower operating
income. Statutory premiums and deposits were $2.94 billion in the quarter
compared to $3.23 billion in the second quarter of 2000, as increased sales of
funding agreements were more than offset by lower annuity sales primarily due
to market conditions.
Allstate Financial statutory premiums and deposits for the first six
months of 2001 were $5.80 billion, revenues were $2.43 billion, operating
income was $246 million, realized capital losses were $87 million after-tax
and net income was $153 million. These totals compare to statutory premiums
and deposits of $6.24 billion, revenues of $2.31 billion, operating income of
$272 million, realized capital losses of $40 million after-tax and net income
of $232 million for the first six months of 2000.
This press release contains a forward-looking statement about the steps
Allstate has taken to address adverse profitability trends in its non-standard
auto insurance business and the impact that those steps will have on written
premiums in the second half of 2001. The statement is subject to the Private
Securities Litigation Reform Act of 1995 and is based on management's
estimates, assumptions and projections. While management believes that the
impact will begin to moderate in the second half of 2001, the negative impact
could continue at current rates or increase due to a variety of factors,
including unforeseen flaws in Allstate's pricing model.
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 available at the time of the
earnings release. A supplement will be posted to the company's website in
approximately 10 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.
Summary of results for the quarter and six months ended June 30, 2001:
Consolidated Highlights
Quarter Ended Six Months Ended
June 30 June 30
Est. Est.
2001 2000 Chg. 2001 2000 Chg.
$ $ % $ $ %
($ in millions, except
per-share amounts)
Consolidated Revenues 7,203 7,183 0.3 14,334 14,469 (0.9)
Operating Income Before
Restructuring Charges 233 435 (46.4) 790 916 (13.8)
Operating Income Per
Share (Diluted) Before
Restructuring Charges .32 .59 (45.8) 1.08 1.21 (10.7)
Restructuring Charges
After-tax 3 3 -- 8 21 (61.9)
Operating Income 230 432 (46.8) 782 895 (12.6)
Operating Income Per
Share (Diluted) .31 .58 (46.6) 1.07 1.18 (9.3)
Realized Capital (Losses)
Gains After-tax (47) 38 -- (80) 147 (154.4)
Loss on Disposition of
Operations (6) -- -- (6) -- --
Dividends on
Preferred Securities
of Subsidiary Trusts (9) (11)(18.2) (19) (22) (13.6)
Cumulative Effect of a
Change in Accounting
Principle, After-tax -- -- -- (9) -- --
Net Income 168 459 (63.4) 668 1,020 (34.5)
Net Income per share
(Diluted) .23 .61 (62.3) .91 1.34 (32.1)
Weighted Average Shares
Outstanding (Diluted) 728.5 747.8 (2.6) 729.4 760.0 (4.0)
* For the second quarter of 2001, consolidated revenues were $7.20
billion, compared to $7.18 billion in the second quarter of 2000. This
increase was due to increased investment income and Allstate Financial
premiums and contract charges offset by realized capital losses in the
second quarter of 2001 as compared to realized capital gains in the
second quarter of 2000. Consolidated operating income was $230 million
for the second quarter of 2001, or $.31 per share on a diluted basis,
compared to prior year second quarter operating income of $432 million,
or $.58 per diluted share.
* Property-Liability written premiums totaled $5.73 billion during the
second quarter of 2001 versus $5.58 billion during the same period in
2000. Excluding the impacts of Encompass Insurance, which continues to
pursue profit improvement actions, Property-Liability written premiums
totaled $5.25 billion during the second quarter of 2001, an increase
from $5.08 billion during the same period of 2000. This increase is due
to growth in Allstate's standard auto and homeowners business,
partially offset by decreases in its non-standard auto business
resulting from planned profitability actions.
* Through the first six months of 2001, standard auto rate changes have
been approved in 33 states with a projected average premium written
increase in those states of 2.7% on an annual basis, non-standard rate
actions have been approved in 27 states with a projected average
premium written increase in those states of 9.1% on an annual basis,
and homeowners rate changes have been approved in 25 states with a
projected average premium written increase in those states of 9.8% on
an annual basis.
* Although investment margins for Allstate Financial were better than
those in the second quarter of 2000, Allstate Financial operating
income was $119 million compared to $145 million in the same period of
2000. The decrease reflects the fact that operating income in the
second quarter of 2000 was affected by a non-cash pension curtailment
and settlement credit and that in the second quarter of 2001 Allstate
Financial faced decreased margins on fee-based products and increased
operating expenses intended to support the generation of future sales.
* During the second quarter of 2001, Allstate disposed of its operations
in the Philippines and Indonesia. During the quarter the Company also
announced a definitive agreement to sell operations in Italy and
Germany, which is currently awaiting regulatory approval. These
announcements reflect Allstate's intention to focus its efforts on
business in North America.
* During the second quarter of 2001, the company acquired approximately
1.89 million shares of its stock at a cost of $80 million as part of
the current stock repurchase program. The total cost of shares
repurchased under this $2 billion program is $1.64 billion.
Property-Liability Highlights
Quarter Ended Six Months Ended
June 30 June 30
Est. Est.
2001 2000 Chg. 2001 2000 Chg.
$ $ % $ $ %
($ in millions, except
ratios)
Property-Liability 5,728 5,581 2.6 11,168 10,960 1.9
Premiums Written
Property-Liability
Revenues 5,918 6,062 (2.4) 11,864 12,141 (2.3)
Operating Income
Before Restructuring
Charges 135 314 (57.0) 584 673 (13.2)
Restructuring Charges
After-tax 1 12 (91.7) 5 29 (82.8)
Operating Income 134 302 (55.6) 579 644 (10.1)
Realized Capital (Losses)
Gains After-tax (11) 91 (112.1) 6 210 (97.1)
Loss on Disposition
Of Operations (6) -- -- (6) -- --
Cumulative Effect of a
Change in Accounting
Principle, After-tax -- -- -- (3) -- --
Net Income 117 393 (70.2) 576 854 (32.6)
Catastrophes After-tax 349 239 46.0 402 487 (17.5)
Combined Ratio before
impacts of catastrophes
and restructuring
charges: 96.5 93.9 2.6pts 96.4 93.1 3.3pts
Impact of catastrophes 9.8 6.7 3.1pts 5.6 6.8 (1.2)pts
Impact of restructuring
charges -- 0.3 (0.3)pts 0.1 0.4 (0.3)pts
Combined Ratio 106.3 100.9 5.4pts 102.1 100.3 1.8pts
Allstate Financial Highlights
Quarter Ended Six Months Ended
June 30 June 30
Est. Est.
2001 2000 Chg. 2001 2000 Chg.
$ $ % $ $ %
($ in millions)
Statutory Premiums and
Deposits 2,936 3,233 (9.2) 5,803 6,242 (7.0)
Allstate Financial
GAAP Revenues 1,266 1,110 14.1 2,427 2,310 5.1
Operating Income
before Restructuring
Charges 121 136 (11.0) 249 264 (5.7)
Restructuring Charges
After-tax 2 (9)(122.2) 3 (8)(137.5)
Operating Income 119 145 (17.9) 246 272 (9.6)
Realized Capital(Losses)
Gains After-tax (35) (44) (20.5) (87) (40) 117.5
Cumulative Effect of a
Change in Accounting
Principle, After-tax -- -- -- (6) -- --
Net Income 84 101 (16.8) 153 232 (34.1)
Investments including
Separate Accounts 58,618 52,479 11.7 58,618 52,479 11.7
THE ALLSTATE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended Six Months Ended
June 30, June 30,
($ in millions except Est. Percent Est. Percent
per share data) 2001 2000 Change 2001 2000 Change
Revenues
Property-liability
insurance premiums $5,503 $5,481 0.4 $10,956 $10,952 -
Life and annuity
premiums
and contract charges 576 511 12.7 1,085 1,052 3.1
Net investment income 1,195 1,129 5.8 2,415 2,219 8.8
Realized capital gains
and losses (71) 62 - (122) 246 (149.6)
Total revenues 7,203 7,183 0.3 14,334 14,469 (0.9)
Costs and expenses
Property-liability
insurance
claims and claims
expense 4,549 4,198 8.4 8,619 8,336 3.4
Life and annuity
contract benefits 878 742 18.3 1,676 1,487 12.7
Amortization of
deferred policy
acquisition costs 856 860 (0.5) 1,703 1,750 (2.7)
Operating costs and
expenses 685 668 2.5 1,344 1,306 2.9
Amortization of
goodwill 13 14 (7.1) 26 26 -
Restructuring and
related charges 4 5 (20.0) 12 33 (63.6)
Interest expense 61 58 5.2 123 105 17.1
Total costs and
expenses 7,046 6,545 7.7 13,503 13,043 3.5
Loss on disposition of
operations (10) - - (10) - -
Income from operations
before income
tax expense, dividends
on preferred
securities and
cumulative effect of
change
in accounting
principle, after tax 147 638 (77.0) 821 1,426 (42.4)
Income tax expense (30) 168 (117.9) 125 384 (67.4)
Income before dividends
on preferred
securities and
cumulative effect of
change
in accounting
principle, after tax 177 470 (62.3) 696 1,042 (33.2)
Dividends on preferred
securities
of subsidiary trusts (9) (11) (18.2) (19) (22) (13.6)
Cumulative effect of
change in accounting
principle, after tax - - - (9) - -
Net income $168 $459 (63.4) $668 $1,020 (34.5)
Net income per share -
Diluted $0.23 $0.61 $0.91 $1.34
Weighted average shares
- Diluted 728.5 747.8 729.4 760.0
Net income per share -
Basic $0.23 $0.62 $0.92 $1.35
Weighted average shares
- Basic 724.6 742.3 725.6 755.0
THE ALLSTATE CORPORATION
CONTRIBUTION TO INCOME
Three Months Ended Six Months Ended
June 30, June 30,
($ in millions except
per share data) Est. Percent Est. Percent
2001 2000 Change 2001 2000 Change
Contribution to income
Operating income $230 $432 (46.8) $782 $895 (12.6)
Realized capital
gains and losses (47) 38 - (80) 147 (154.4)
Loss on disposition
of operations (6) - - (6) - -
Dividends on
preferred securities
of subsidiary trusts (9) (11) (18.2) (19) (22) (13.6)
Cumulative effect of
change in
accounting principle - - - (9) - -
Net income $168 $459 (63.4) $668 $1,020 (34.5)
Operating income
before the impact of
restructuring and
related charges $233 $435 (46.4) $790 $916 (13.8)
Income per share
(Diluted)
Operating income $0.31 $0.58 (46.6) $1.07 $1.18 (9.3)
Realized capital
gains and losses (0.06) 0.05 - (0.11) 0.19 (157.9)
Loss on disposition
of operations (0.01) - - (0.01) - -
Dividends on
preferred securities
of subsidiary trusts (0.01) (0.02) (50.0) (0.03) (0.03) -
Cumulative effect of
change in
accounting principle - - - (0.01) - -
Net income $0.23 $0.61 (62.3) $0.91 $1.34 (32.1)
Operating income
before the impact of
restructuring and
related charges $0.32 $0.59 (45.8) $1.08 $1.21 (10.7)
Book value per share -
Diluted $24.13 $21.82 10.6 $24.13 $21.82 10.6
THE ALLSTATE CORPORATION
SUPPLEMENTARY INFORMATION
Three Months Ended Six Months Ended
June 30, June 30,
Est. Est.
($ in millions) 2001 2000 2001 2000
Property-Liability
Premiums written $5,728 $5,581 $11,168 $10,960
Premiums earned $5,503 $5,481 $10,956 $10,952
Claims and claims expense 4,549 4,198 8,619 8,336
Operating costs and expenses 1,292 1,310 2,552 2,595
Amortization of Goodwill 5 7 10 12
Restructuring and related charges 1 18 8 44
Underwriting loss (344) (52) (233) (35)
Net investment income 436 439 902 863
Income tax (benefit) expense on
operations (42) 85 90 184
Operating income 134 302 579 644
Realized capital gains and
losses, after-tax (11) 91 6 210
Loss on disposition of
operations, after-tax (6) - (6) -
Cumulative effect of change in
accounting
principle, after-tax - - (3) -
Net income $117 $393 $576 $854
Catastrophe losses $537 $367 $619 $749
Operating ratios
Claims and claims expense
ratio 82.7 76.6 78.7 76.1
Expense ratio 23.6 24.3 23.4 24.2
Combined ratio 106.3 100.9 102.1 100.3
Effect of catastrophe losses
on combined ratio 9.8 6.7 5.6 6.8
Effect of restructuring and
related charges
on combined ratio - 0.3 0.1 0.4
Allstate Financial
Statutory premiums and deposits $2,936 $3,233 $5,803 $6,242
Investments including
Separate Account assets $58,618 $52,479 $58,618 $52,479
Premiums and contract charges $576 $511 $1,085 $1,052
Net investment income 739 665 1,471 1,302
Contract benefits 878 742 1,676 1,487
Operating costs and expenses 242 216 487 444
Amortization of goodwill 7 7 15 14
Restructuring and related charges 3 (13) 4 (11)
Income tax expense on operations 66 79 128 148
Operating income 119 145 246 272
Realized capital gains and
losses, after-tax (35) (44) (87) (40)
Cumulative effect of change in
accounting
principle, after-tax - - (6) -
Net Income $84 $101 $153 $232
Corporate and Other
Operating costs and expenses $63 $58 $126 $105
Amortization of goodwill 1 - 1 -
Net investment income 20 25 42 54
Income tax benefit on operations (21) (18) (42) (30)
Operating loss (23) (15) (43) (21)
Realized capital gains and
losses, after-tax (1) (9) 1 (23)
Dividends on preferred securities
of subsidiary trusts (9) (11) (19) (22)
Net loss $(33) $(35) $(61) $(66)
THE ALLSTATE CORPORATION
UNDERWRITING RESULTS BY AREA OF BUSINESS
Three Months Ended Six Months Ended
($ in millions) June 30, June 30,
Est. Percent Est. Percent
2001 2000 Change 2001 2000 Change
Consolidated Underwriting
Summary
PP&C $(340) $(49) - $(225) $(27) -
Discontinued lines and
coverages (4) (3) 33.3 (8) (8) -
Underwriting loss $(344) $(52) - $(233) $(35) -
PP&C Underwriting Summary
Premiums written $5,720 $5,580 2.5 $11,161 $10,959 1.8
Premiums earned $5,494 $5,479 0.3 $10,947 $10,949 -
Claims and claims
expense 4,540 4,196 8.2 8,607 8,330 3.3
Other costs and expenses 1,288 1,307 (1.5) 2,547 2,590 (1.7)
Amortization of goodwill 5 7 (28.6) 10 12 (16.7)
Restructuring and
related charges 1 18 (94.4) 8 44 (81.8)
Underwriting loss $(340) $(49) - $(225) $(27) -
Catastrophe losses $537 $367 46.3 $619 $749 (17.4)
Operating ratios
Claims and claims
expense ratio 82.6 76.6 78.6 76.1
Expense ratio 23.6 24.3 23.5 24.1
Combined ratio 106.2 100.9 102.1 100.2
Effect of catastrophe
losses
on combined ratio 9.8 6.7 5.7 6.8
Effect of restructuring
charges
on combined ratio - 0.3 0.1 0.4
Discontinued Lines and
Coverages
Underwriting Summary
Premiums written $8 $1 $7 $1
Premiums earned $9 $2 $9 $3
Claims and claims
expense 9 2 12 6
Other costs and expenses 4 3 5 5
Underwriting loss $(4) $(3) $(8) $(8)
THE ALLSTATE CORPORATION
PROPERTY-LIABILITY PREMIUMS WRITTEN BY MARKET SEGMENT
($ in millions)
Three Months Ended Six Months Ended
June 30, June 30,
Est. Percent Est. Percent
2001 2000 Change 2001 2000 Change
PP&C
Preferred, standard and
other voluntary
automobile $3,245 $3,124 3.9 $6,524 $6,286 3.8
Non-standard/specialty
automobile 722 804 (10.2) 1,435 1,680 (14.6)
Involuntary automobile 50 17 194.1 91 30 -
Commercial lines 185 176 5.1 364 345 5.5
Homeowners 1,160 1,084 7.0 2,072 1,948 6.4
Other personal lines 358 375 (4.5) 675 670 0.7
5,720 5,580 2.5 11,161 10,959 1.8
DISCONTINUED LINES AND
COVERAGES 8 1 - 7 1 -
TOTAL $5,728 $5,581 2.6 $11,168 $10,960 1.9
Three Months Ended Six Months Ended
June 30, June 30,
Est. Percent Est. Percent
2001 2000 Change 2001 2000 Change
PP&C, EXCLUDING ENCOMPASS
Preferred, standard and
other voluntary
automobile $2,920 $2,786 4.8 $5,912 $5,637 4.9
Non-standard/specialty
automobile 723 804 (10.1) 1,435 1,680 (14.6)
Involuntary automobile 47 12 - 80 22 -
Commercial lines 185 176 5.1 364 345 5.5
Homeowners 1,034 975 6.1 1,847 1,734 6.5
Other personal lines 334 326 2.5 623 607 2.6
5,243 5,079 3.2 10,261 10,025 2.4
DISCONTINUED LINES AND
COVERAGES 8 1 - 7 1 -
TOTAL, EXCLUDING
ENCOMPASS $5,251 $5,080 3.4 $10,268 $10,026 2.4
SOURCE Allstate Corporation
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Related links:
http://www.allstate.com
CONTACT:
Media Relations, Mary Alice Horstman or
Michael Trevino, +1-847-402-5600, or Investor Relations, Robert
Block or Phil Dorn, +1-847-402-2800, all of Allstate Corporation
CNOC: http://www.prnewswire.com/gh/cnoc/comp/109885.html
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