NORTHBROOK, Ill., Oct. 16 /PRNewswire-FirstCall/ -- The Allstate
Corporation (NYSE: ALL) today reported net income of $280 million ($0.39 per
diluted share) for the third quarter of 2002 compared to $226 million
($0.32 per diluted share) for the third quarter of 2001. Operating income was
$548 million ($0.77 per diluted share) for the third quarter of 2002, compared
to $401 million ($0.56 per diluted share) for the third quarter of 2001.
Excluding restructuring charges, operating income for the third quarter of
2002 was $574 million ($0.81 per diluted share) compared to $407 million
($0.57 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 a change in
accounting principle.
"These results mark three consecutive quarters of solid performance and
good execution on our performance improvement strategies," said Chairman,
President and CEO Edward M. Liddy. "We are pleased with our performance so far
this year and we remain committed to delivering consistent earnings growth. We
now anticipate that operating income per diluted share for 2002 will be in the
range of $2.80 to $3.00 (excluding restructuring charges and assuming normal
catastrophes) - $.30 higher than the estimate we issued at the beginning of
the year and a $.10 increase from our estimate last quarter.
"As in the previous two quarters, rate increases in auto and homeowners
lines have significantly contributed to increased written premium growth of
nearly 8% this quarter over the prior year level. Likewise, loss frequencies
in the auto and homeowners lines have improved over the prior year's quarter.
Texas water and mold related losses remained at challenging levels during the
quarter, but to a lesser extent than previous quarters this year.
"With rates taken in this quarter, which will be earned over the next 12
to 24 months, the Allstate brand is now priced at levels that approximate our
targeted returns in most markets. The Ivantage lines, however, have not yet
reached prices that are at our targeted return levels and we will continue to
work toward that goal. We will continue our practice of filing for indicated
rates for both the Allstate brand and Ivantage.
"Though some six weeks still remain, this year's Atlantic Hurricane season
has been relatively mild and catastrophe losses in the quarter were
$96 million, compared to last year's third quarter catastrophe losses of
$142 million. Actual catastrophe losses in both the 2002 and 2001 third
quarters were lower than normal experience.
"We increased our estimate of prior year incurred losses for Discontinued
Lines and Coverages, Asbestos and Environmental and other mass tort exposures
by $64 million after-tax ($0.09 per diluted share), as a result of revised
estimates of previously reported losses and loss emergence from peripheral
(non-manufacturing) insureds.
"Allstate Financial continues to perform relatively well during these
difficult economic times with $112 million in operating income, which is
$22 million or 16.4% below the third quarter last year. The company
accelerated the amortization of its deferred acquisition costs (DAC) for
certain investment and retirement products, primarily due to the continuing
decline in equity markets and recorded a net after-tax charge of $42 million
in the third quarter. Operating income for the first nine months of 2002 of
$398 million is up a modest $18 million or 4.7% over the same period in the
prior year.
"Our strategy of broadening our footprint in financial services with
Allstate agencies continues to proceed well. In the first nine months of
2002, we sold more proprietary and non-proprietary financial services products
through this channel than we did in all of 2000 and 2001 combined. This
growth is primarily driven by significant increases in fixed annuity, bank and
non-proprietary mutual fund deposits.
"In the quarter we also announced several senior management and
organizational changes that will position us well as we continue our push to
be better and bigger in the property and casualty business and broader in
financial services. And in these days of investor concern about corporate
America, Allstate shareholders, customers and employees should feel confident
that we have an outstanding management team, an excellent corporate governance
structure and rigorous financial reporting standards that serve us well."
Summary of results for the quarter and nine months ended September 30,
2002:
Consolidated Highlights
Quarter Ended Nine Months Ended
September 30 September 30
($ in millions,
except per-share
amounts) Est. Est.
2002 2001 Change 2002 2001 Change
$ $ % $ $ %
Consolidated Revenues 7,239 7,173 0.9 21,992 21,507 2.3
Operating Income
Before Restructuring
Charges After-tax 574 407 41.0 1,551 1,197 29.6
Operating Income Per
Share (Diluted)
Before Restructuring
Charges After-tax .81 .57 42.1 2.18 1.65 32.1
Restructuring Charges
After-tax 26 6 -- 62 14 --
Operating Income 548 401 36.7 1,489 1,183 25.9
Operating Income Per
Share (Diluted) .77 .56 37.5 2.09 1.63 28.2
Realized Capital
(Losses) Gains
After-tax (266) (131) 103.1 (437) (211) 107.1
Gain (Loss) on
Disposition of
Operations
After-tax -- (34) (100.0) 5 (40) (112.5)
Dividends on Preferred
Securities of
Subsidiary Trust(s)
After-tax (2) (10) (80.0) (7) (29) (75.9)
Cumulative Effect of
a Change in
Accounting Principle
After-tax -- -- -- (331) (9) --
Net Income 280 226 23.9 719 894 (19.6)
Net Income per
share (Diluted) .39 .32 21.9 1.01 1.23 (17.9)
Weighted Average
Shares Outstanding
(Diluted) 708.1 719.7 (1.6) 711.3 726.2 (2.1)
Book value per
share (Diluted) 25.22 24.16 4.4 25.22 24.16 4.4
-- The increase in third 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 third quarter of 2002
when compared to the prior year quarter was due to:
-- increased Property-Liability premiums earned
-- improved auto and homeowners loss frequencies
-- lower catastrophe losses
These factors were partly offset by:
-- reserve strengthening for asbestos and environmental
-- decreased Allstate Financial operating income
-- increased restructuring expenses
-- Restructuring expenses incurred during the third quarter of 2002
totaled $40 million, or $26 million after-tax and $0.04 per diluted
share. Restructuring expenses for the first nine months of 2002
totaled $95 million, or $62 million after-tax and $0.09 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 and a non-cash charge resulting from pension
benefit payments made to agents in connection with the re-organization
of employee agents to a single exclusive agency independent contractor
program announced in 1999.
-- During the third quarter of 2002, Allstate purchased 3.6 million shares
of its stock at an average cost per share of $36.14 for an overall cost
of $131 million. The total cost of shares repurchased under its current
$500 million repurchase program through September 30, 2002 is $427
million. The company intends to complete this repurchase program by
December 31, 2002.
-- The components of pre-tax realized capital gains (losses) were:
Est. Quarter Ended
September 30, 2002
($ in millions) Property- Allstate Corporate
Liability Financial and Other Total
Valuation of
derivative instruments $(8) $(6) $-- $(14)
Sales (212) (51) 1 (262)
Investment write-downs (31) (107) (5) (143)
Realized Capital
Gains (Losses) $(251) $(164) $(4) $(419)
Quarter Ended
September 30, 2001
($ in millions) Property- Allstate Corporate
Liability Financial and Other Total
Valuation of
derivative instruments $(34) $(52) $-- $(86)
Sales (83) 9 -- (74)
Investment write-downs (17) (27) -- (44)
Realized Capital
Gains (Losses) $(134) $(70) $-- $(204)
Est. Nine Months Ended
September 30, 2002
($ in millions) Property- Allstate Corporate
Liability Financial and Other Total
Valuation of
derivative instruments $(32) $(32) $-- $(64)
Sales (272) (91) -- (363)
Investment write-downs (76) (165) (7) (248)
Realized Capital
Gains (Losses) $(380) $(288) $(7) $(675)
Nine Months Ended
September 30, 2001
($ in millions) Property- Allstate Corporate
Liability Financial and Other Total
Valuation of
derivative instruments $(71) $(84) $-- $(155)
Sales 28 (19) 1 10
Investment write-downs (85) (96) -- (181)
Realized Capital
Gains (Losses) $(128) $(199) $1 $(326)
-- The realized loss on sales during the third quarter is primarily
related to equity sales and an interest rate futures program.
Allstate had pre-tax realized capital losses totaling $174 million
during the third quarter and $213 million in the first nine months of
2002 relating to equity sales during a volatile and declining market.
Allstate manages its equity portfolio on a total return basis, and
believes that these results are consistent with the declines in the
overall equity market. Likewise, Allstate had pre-tax unrealized gains
on its equity portfolio of $213 million at September 30, 2002, a
decline of $335 million since June 30, 2002 and $647 million since
December 31, 2001. Allstate's $3.5 billion equity portfolio represents
3.9% of total invested assets at September 30, 2002.
The interest rate futures program is used to manage the Property-
Liability interest rate risk exposure relative to its duration target.
During the third quarter, a short futures position was in place which
reduced the Property-Liability portfolio duration by as much as 0.3
years and produced a pre-tax realized loss of $97 million in the third
quarter and $163 million for the first nine months of 2002.
As a component of our overall interest rate risk management, these
realized futures losses are most appropriately considered in
conjunction with the pre-tax unrealized gains on the Property-Liability
fixed income portfolio. These gains totaled $2.01 billion at September
30, 2002, an increase of $829 million since June 30, 2002 and
$1.16 billion since December 31, 2001. Viewed in the aggregate, these
results best reflect the full impact of the decline in rates on
portfolio values and the overall balance sheet. The interest rate
futures program performed as expected given the decline in interest
rates and enabled the management of our interest rate exposure.
Accordingly, as interest rates and the duration of the Property-
Liability fixed income portfolio have declined, the number of futures
contracts held by the Company related to this program have also
declined.
-- During the third quarter of 2002, U.S. credit market conditions
deteriorated causing both weakened corporate credit and reduced market
liquidity. Allstate had pre-tax realized capital losses related to
investment write-downs of $143 million in the third quarter and
$248 million in the first nine months of 2002, or 0.2% and 0.3% of
total investments at September 30, 2002, respectively. During the
third quarter, Allstate had write-downs on approximately 39 issuers,
with no one write-down greater than $26 million. Approximately
two-thirds of the write-downs in the third quarter were related to the
airline, utility, and oil and gas industries, with the balance spread
across multiple sectors.
Property-Liability Business
Property-Liability Highlights
Quarter Ended Nine Months Ended
September 30 September 30
($ in millions,
except ratios)
Est. Est.
2002 2001 Change 2002 2001 Change
$ $ % $ $ %
Property-Liability
Premiums Written 6,305 5,846 7.9 18,063 17,014 6.2
Property-Liability
Revenues 6,082 5,895 3.2 18,287 17,759 3.0
Operating Income
before
Restructuring
Charges 488 295 65.4 1,232 879 40.2
Restructuring
Charges After-tax 26 5 -- 61 10 --
Operating Income 462 290 59.3 1,171 869 34.8
Realized Capital
(Losses) Gains
After-tax (160) (85) 88.2 (240) (79) --
Gain (Loss) on
Disposition of
Operations -- (34) (100.0) 5 (40) (112.5)
Cumulative Effect
of a Change in
Accounting Principle
After-tax -- -- -- (48) (3) --
Net Income 302 171 76.6 888 747 18.9
Catastrophe Losses 96 142 (32.4) 494 761 (35.1)
Combined Ratio
before impacts
of catastrophes
and restructuring
charges 95.0 100.4 (5.4) 95.7 97.7 (2.0)
Impact of
catastrophes 1.6 2.5 (0.9) 2.8 4.6 (1.8)
Impact of
restructuring
charges 0.7 0.1 0.6 0.5 0.1 0.4
Combined Ratio 97.3 103.0 (5.7) 99.0 102.4 (3.4)
-- Factors contributing to Property-Liability premium written growth in
the third quarter of 2002 as compared to the same quarter in the prior
year included:
-- A 7.8% increase in Allstate brand premiums written
-- 6.8% increase in standard auto
-- 21.2% increase in homeowners
-- 10.2% decrease in non-standard auto
-- A processing slow-down following September 11, 2001
impacting written premium in the third quarter of 2001 by
an estimated 0.4%
-- The following net rate changes have been approved for Property-
Liability:
Quarter Ended Nine Months Ended
September 30, 2002 September 30, 2002
Weighted Weighted
# of States Average # of States Average
Rate Rate
Change (%) Change (%)
Allstate brand
Standard Auto 10 4.3 36 7.0
Non-standard Auto 10 17.6 34 12.3
Homeowners 8 13.0 40 19.1
Ivantage
Standard Auto (Encompass) 11 6.9 32 6.9
Non-standard Auto (Deerbrook) 4 9.0 22 9.4
Homeowners (Encompass) 12 6.7 34 14.3
-- Factors contributing to the increased Property-Liability loss costs in
the third quarter of 2002 when compared to the prior year quarter
include:
-- The completion of an annual review of reserve estimates for
asbestos, environmental and other mass tort exposures resulting in
increased incurred pre-tax losses for asbestos of $72 million as a
result of revised estimates of previously reported losses and loss
emergence from peripheral (non-manufacturing) insureds, $23
million for environmental and $3 million for other mass torts. A
similar review in the prior year third quarter resulted in
increased incurred pre-tax losses of $94 million for asbestos and
decreased incurred pre-tax losses of $46 million for environmental
and $38 million for other mass torts. Estimates for claims
incurred but not reported (IBNR) represent approximately 57% of
the total reserves held for asbestos and environmental exposures.
-- Overall development of prior year claims resulted in favorable
auto development, offset by continuing upward development of
homeowners:
---Reserve Impact--- ----Loss Ratio Impact---
$ in Mil. Ratio Pr. Yr. Variance
Auto $(83) (1.4) (0.4)
Homeowner 111 1.9 (1.1)
Pre-tax Total $28 0.5 (1.5)
These factors were partially offset by:
-- improved auto and homeowners frequency
-- decreased catastrophe losses
Approximately $35 million of Homeowner upward loss development,
noted above, was related to mold claims in Texas.
-- Incurred losses related to mold claims in Texas, have been:
($ in millions) 2002 2001
First Quarter $119 $7
Second Quarter 103 25
Third Quarter 90 74
Fourth Quarter 78
Year to Date $312 $ 184
Allstate Financial Business
Allstate Financial Highlights
Quarter Ended Nine Months Ended
September 30 September 30
($ in millions) Est. Est.
2002 2001 Change 2002 2001 Change
$ $ % $ $ %
Statutory Premiums
and Deposits* 2,958 2,491 18.7 9,073 8,294 9.4
Allstate Financial
GAAP Revenues 1,142 1,257 (9.1) 3,657 3,684 (0.7)
Operating Income
before
Restructuring
Charges 112 135 (17.0) 399 384 3.9
Restructuring
Charges After-tax -- 1 (100.0) 1 4 (75.0)
Operating Income 112 134 (16.4) 398 380 4.7
Realized Capital
(Losses) Gains
After-tax (103) (46) 123.9 (192) (133) 44.4
Cumulative Effect
of a Change in
Accounting
Principle
After-tax -- -- -- (283) (6) --
Net Income 9 88 (89.8) (77) 241 (132.0)
Investments
including
Separate
Accounts 65,082 58,655 11.0 65,082 58,655 11.0
*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 net new deposits of Allstate Bank.
-- Factors contributing to the increase in Allstate Financial statutory
premiums and deposits during the third 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 structured financial product sales,
primarily funding agreements, as a result of
unfavorable market conditions
-- Factors contributing to the decline in Allstate Financial operating
income in the third quarter of 2002 when compared to the same quarter
in the prior year were:
-- Accelerated amortization of deferred acquisition costs
(DAC) on variable annuity products totaling $94
million, partially offset by lower DAC amortization on
fixed annuities and interest sensitive life products
resulting from improved margins, improved persistency
and other recoveries. The net impact of the
accelerated amortization totaled $42 million after-tax
or $.06 per diluted share.
-- Growth related increases in operating expenses and DAC
amortization
These factors were offset by:
-- A positive tax impact due to an adjustment for prior
year tax issues totaling $21 million
-- An increase in investment and mortality margins
-- A change in accounting eliminating the amortization of
goodwill in 2002. Allstate Financial goodwill
amortization totaled $7 million in the third quarter
of 2001 and $22 million for the first nine months of
2001.
Some further details regarding Allstate Financial's DAC practices and
variable annuity guaranteed minimum death benefit (GMDB) are:
-- DAC for certain investment and retirement products is amortized over
the expected life of the products in relation to the expected gross
profits. Traditional life, accidental and health products are
amortized in relation to the expected net premiums, subject to
recoverability reviews. The recoverability of DAC on certain
investment and retirement products is reviewed regularly in the
aggregate using current assumptions.
-- Allstate Financial's variable annuity DAC amortization methodology
includes a long-term market return assumption for account values of
8% after fees. When market returns vary from the 8% long-term
expectation or mean, Allstate Financial assumes a reversion to this
mean over a seven-year period, which includes two prior years and
five future years. The assumed returns over this period are limited
to a range between 0% to 13.25% after fees. The steep and sustained
decline in the equity markets for the nine months ending September
30, 2002 resulted in the acceleration of variable annuity DAC
amortization by $94 million for the third quarter. DAC amortization
from improved persistency on fixed annuities, along with other
recoveries, partially offset the $94 million acceleration. Future
volatility in the equity markets of similar or greater magnitude may
result in non-symmetrical changes in the amortization of DAC, both
increases and decreases.
-- The total DAC asset for all Allstate Financial products as of the end
of the third quarter is $3.14 billion. DAC for all annuities, both
fixed and variable, is $966 million at the end of the third quarter,
which is 3.1% of total annuity account values. DAC for variable
annuities is $799 million at the end of the third quarter, which is
6.6% of the variable annuity account values. Approximately two-thirds
of the variable annuity DAC and three-fourths of fixed annuity DAC is
amortized during the surrender charge period.
-- Allstate Financial's guaranteed value in excess of the account value,
payable if all contract holders were to die as of September 30, 2002,
is estimated to be $4.53 billion, net of reinsurance. Approximately
two-thirds of this exposure is related to the return of the original
deposits while the remaining one-third is attributable to a death
benefit greater than the original deposits. The costs associated
with GMDBs are included in the DAC amortization model. Generally,
less DAC is amortized during periods in which GMDBs are higher than
projected. Net cash payments for GMDBs were $11 million and $31
million for the quarter and the nine months ended September 30, 2002,
respectively, net of reinsurance, hedging gains, and other
contractual arrangements.
This press release contains forward-looking statements about 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, due to our increased prices and our modified 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 provided allows for additional
analysis of results of operations. 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 a change
in accounting principle have been excluded from operating income 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 16
million households and has approximately 12,500 exclusive agents and financial
specialists in the U.S. and Canada. Customers can access Allstate products and
services through Allstate agents, or in select states at allstate.com and
1-800-Allstate(SM). Encompass(SM) and Deerbrook(R) Insurance brand property
and casualty products are sold exclusively through independent agents.
Allstate Financial Group includes the businesses that provide life insurance,
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
September 30,
($ in millions except Est. Percent
per share data) 2002 2001 Change
Revenues
Property-liability
insurance premiums $ 5,904 $ 5,597 5.5
Life and annuity premiums
and contract charges 512 580 (11.7)
Net investment income 1,242 1,200 3.5
Realized capital gains
and losses (419) (204) 105.4
Total revenues 7,239 7,173 0.9
Costs and expenses
Property-liability insurance
claims and claims expense 4,342 4,474 (3.0)
Life and annuity contract
benefits 388 452 (14.2)
Interest credited to
contractholder funds 464 434 6.9
Amortization of deferred policy
acquisition costs 966 863 11.9
Operating costs and expenses 710 641 10.8
Amortization of goodwill --- 14 (100.0)
Restructuring and related
charges 40 10 ---
Interest expense 67 63 6.3
Total costs and expenses 6,977 6,951 0.4
Loss on disposition of
operations --- (53) (100.0)
Income from operations before
income tax benefit, dividends
on preferred securities and
cumulative effect of change in
accounting principle, after-tax 262 169 55.0
Income tax benefit (20) (67) (70.1)
Income before dividends on
preferred securities and
cumulative effect of change in
accounting principle, after-tax 282 236 19.5
Dividends on preferred securities
of subsidiary trusts (2) (10) (80.0)
Cumulative effect of change in
accounting principle, after-tax --- --- ---
Net income $ 280 $ 226 23.9
Net income per share - Basic $ 0.39 $ 0.32
Weighted average shares - Basic 705.4 717.3
Net income per share -
Diluted $ 0.39 $ 0.32
Weighted average shares -
Diluted 708.1 719.7
Nine Months Ended
September 30,
($ in millions except Est. Percent
per share data) 2002 2001 Change
Revenues
Property-liability
insurance premiums $ 17,411 $ 16,553 5.2
Life and annuity premiums
and contract charges 1,632 1,665 (2.0)
Net investment income 3,624 3,615 0.2
Realized capital gains and
losses (675) (326) 107.1
Total revenues 21,992 21,507 2.3
Costs and expenses
Property-liability insurance
claims and claims expense 13,204 13,093 0.8
Life and annuity contract
benefits 1,213 1,270 (4.5)
Interest credited to
contractholder funds 1,316 1,292 1.9
Amortization of deferred
policy acquisition costs 2,777 2,566 8.2
Operating costs and expenses 2,008 1,985 1.2
Amortization of goodwill --- 40 (100.0)
Restructuring and related
charges 95 22 ---
Interest expense 204 186 9.7
Total costs and expenses 20,817 20,454 1.8
Gain (loss) on disposition of
operations 7 (63) (111.1)
Income from operations before
income tax expense, dividends on
preferred securities and
cumulative effect of change in
accounting principle, after-tax 1,182 990 19.4
Income tax expense 125 58 115.5
Income before dividends on
preferred securities and
cumulative effect of change in
accounting principle, after-tax 1,057 932 13.4
Dividends on preferred securities
of subsidiary trusts (7) (29) (75.9)
Cumulative effect of change in
accounting principle, after-tax (331) (9) ---
Net income $ 719 $ 894 (19.6)
Net income per share - Basic $ 1.01 $ 1.24
Weighted average shares - Basic 708.6 722.8
Net income per share -
Diluted $ 1.01 $ 1.23
Weighted average shares -
Diluted 711.3 726.2
THE ALLSTATE CORPORATION
CONTRIBUTION TO INCOME
Three Months Ended
September 30,
($ in millions except per share data) Est. Percent
2002 2001 Change
Contribution to income
Operating income $ 548 $ 401 36.7
Realized capital gains and losses (266) (131) 103.1
Loss on disposition of
operations --- (34) (100.0)
Dividends on preferred securities
of subsidiary trusts (2) (10) (80.0)
Cumulative effect of change in
accounting principle --- --- ---
Net income $ 280 $ 226 23.9
Operating income before the impact of
restructuring and related charges $ 574 $ 407 41.0
Income per share (Diluted)
Operating income $ 0.77 $ 0.56 37.5
Realized capital gains and losses (0.38) (0.18) 111.1
Loss on disposition of
operations --- (0.05) (100.0)
Dividends on preferred securities
of subsidiary trusts --- (0.01) (100.0)
Cumulative effect of change in
accounting principle --- --- ---
Net income $ 0.39 $ 0.32 21.9
Operating income before the impact of
restructuring and related charges $ 0.81 $ 0.57 42.1
Book value per share - Diluted $ 25.22 $ 24.16 4.4
Nine Months Ended
September 30,
($ in millions except per share data) Est. Percent
2002 2001 Change
Contribution to income
Operating income $ 1,489 $ 1,183 25.9
Realized capital gains and losses (437) (211) 107.1
Gain (loss) on disposition of
operations 5 (40) (112.5)
Dividends on preferred securities
of subsidiary trusts (7) (29) (75.9)
Cumulative effect of change in
accounting principle (331) (9) ---
Net income $ 719 $ 894 (19.6)
Operating income before the impact of
restructuring and related charges $ 1,551 $ 1,197 29.6
Income per share (Diluted)
Operating income $ 2.09 $ 1.63 28.2
Realized capital gains and losses (0.62) (0.29) 113.8
Gain (loss) on disposition of
operations 0.01 (0.06) (116.7)
Dividends on preferred securities
of subsidiary trusts (0.01) (0.04) (75.0)
Cumulative effect of change in
accounting principle (0.46) (0.01) ---
Net income $ 1.01 $ 1.23 (17.9)
Operating income before the impact of
restructuring and related charges $ 2.18 $ 1.65 32.1
Book value per share - Diluted $ 25.22 $ 24.16 4.4
THE ALLSTATE CORPORATION
SUPPLEMENTARY INFORMATION
Three Months Ended
September 30,
Est.
($ in millions) 2002 2001
Property-Liability
Premiums written $ 6,305 $ 5,846
Premiums earned $ 5,904 $ 5,597
Claims and claims expense 4,342 4,474
Amortization of deferred policy acquisition
costs 814 776
Operating costs and expenses 548 499
Amortization of goodwill --- 6
Restructuring and related charges 40 8
Underwriting income (loss) 160 (166)
Net investment income 429 432
Income tax expense (benefit) on operations 127 (24)
Operating income 462 290
Realized capital gains and losses, after-tax (160) (85)
Loss on disposition of operations,
after-tax --- (34)
Net income $ 302 $ 171
Catastrophe losses $ 96 $ 142
Operating ratios
Claims and claims expense ratio 73.6 80.0
Expense ratio 23.7 23.0
Combined ratio 97.3 103.0
Effect of catastrophe losses on combined
ratio 1.6 2.5
Effect of restructuring and related
charges on combined ratio 0.7 0.1
Allstate Financial
Statutory premiums and deposits $ 2,958 $ 2,491
Investments including
Separate Account assets $ 65,082 $ 58,655
Premiums and contract charges $ 512 $ 580
Net investment income 794 747
Contract benefits 388 452
Interest credited to contractholder funds 464 434
Amortization of deferred policy acquisition
costs 158 83
Operating costs and expenses 159 142
Amortization of goodwill --- 7
Restructuring and related charges --- 2
Income tax expense on operations 25 73
Operating income 112 134
Realized capital gains and losses, after-tax (103) (46)
Net income $ 9 $ 88
Corporate and Other
Net investment income $ 19 $ 21
Operating costs and expenses 69 64
Amortization of goodwill --- 1
Income tax benefit on operations (24) (21)
Operating loss (26) (23)
Realized capital gains and losses, after-tax (3) ---
Dividends on preferred securities
of subsidiary trusts (2) (10)
Net loss $ (31) $ (33)
Nine Months Ended
September 30,
Est.
($ in millions) 2002 2001
Property-Liability
Premiums written $ 18,063 $ 17,014
Premiums earned $ 17,411 $ 16,553
Claims and claims expense 13,204 13,093
Amortization of deferred policy acquisition
costs 2,399 2,285
Operating costs and expenses 1,532 1,542
Amortization of goodwill --- 16
Restructuring and related charges 94 16
Underwriting income (loss) 182 (399)
Net investment income 1,256 1,334
Income tax expense on operations 267 66
Operating income 1,171 869
Realized capital gains and losses, after-tax (240) (79)
Gain (loss) on disposition of operations,
after-tax 5 (40)
Cumulative effect of change in accounting
principles, after-tax (48) (3)
Net income $ 888 $ 747
Catastrophe losses $ 494 $ 761
Operating ratios
Claims and claims expense ratio 75.9 79.1
Expense ratio 23.1 23.3
Combined ratio 99.0 102.4
Effect of catastrophe losses on combined
ratio 2.8 4.6
Effect of restructuring and related
charges on combined ratio 0.5 0.1
Allstate Financial
Statutory premiums and deposits $ 9,073 $ 8,294
Investments including
Separate Account assets $ 65,082 $ 58,655
Premiums and contract charges $ 1,632 $ 1,665
Net investment income 2,313 2,218
Contract benefits 1,213 1,270
Interest credited to contractholder funds 1,316 1,292
Amortization of deferred policy acquisition
costs 380 273
Operating costs and expenses 472 439
Amortization of goodwill --- 22
Restructuring and related charges 1 6
Income tax expense on operations 165 201
Operating income 398 380
Realized capital gains and losses, after-tax (192) (133)
Cumulative effect of change in accounting
principle, after-tax (283) (6)
Net (loss) income $ (77) $ 241
Corporate and Other
Net investment income $ 55 $ 63
Operating costs and expenses 208 190
Amortization of goodwill --- 2
Income tax benefit on operations (73) (63)
Operating loss (80) (66)
Realized capital gains and losses, after-tax (5) 1
Dividends on preferred securities
of subsidiary trusts (7) (29)
Net loss $ (92) $ (94)
THE ALLSTATE CORPORATION
UNDERWRITING RESULTS BY AREA OF BUSINESS
Three Months Ended
($ in millions) September 30,
Est. Percent
2002 2001 Change
Consolidated Underwriting
Summary
Allstate Protection $ 269 $ (161) ---
Discontinued lines and
coverages (109) (5) ---
Underwriting income (loss) $ 160 $ (166) (196.4)
Allstate Protection Underwriting
Summary
Premiums written $ 6,303 $ 5,845 7.8
Premiums earned $ 5,902 $ 5,595 5.5
Claims and claims expense 4,232 4,469 (5.3)
Amortization of deferred policy
acquisition costs 814 776 4.9
Other costs and expenses 547 497 10.1
Amortization of goodwill --- 6 (100.0)
Restructuring and related
charges 40 8 ---
Underwriting income (loss) $ 269 $ (161) ---
Catastrophe losses $ 96 $ 142 (32.4)
Operating ratios
Claims and claims expense
ratio 71.7 79.9
Expense ratio 23.7 23.0
Combined ratio 95.4 102.9
Effect of catastrophe losses
on combined ratio 1.6 2.5
Effect of restructuring
charges on combined ratio 0.7 0.1
Discontinued Lines and Coverages
Underwriting Summary
Premiums written $ 2 $ 1 100.0
Premiums earned $ 2 $ 2 ---
Claims and claims expense 110 5 ---
Other costs and expenses 1 2 (50.0)
Underwriting loss $ (109) $ (5) ---
Nine Months Ended
($ in millions) September 30,
Est. Percent
2002 2001 Change
Consolidated Underwriting
Summary
Allstate Protection $ 301 $ (386) (178.0)
Discontinued lines
and coverages (119) (13) ---
Underwriting income (loss) $ 182 $ (399) (145.6)
Allstate Protection
Underwriting Summary
Premiums written $ 18,056 $ 17,006 6.2
Premiums earned $ 17,403 $ 16,542 5.2
Claims and claims expense 13,082 13,076 ---
Amortization of deferred
policy acquisition costs 2,399 2,285 5.0
Other costs and expenses 1,527 1,535 (0.5)
Amortization of goodwill --- 16 (100.0)
Restructuring and related
charges 94 16 ---
Underwriting income (loss) $ 301 $ (386) (178.0)
Catastrophe losses $ 494 $ 761 (35.1)
Operating ratios
Claims and claims expense
ratio 75.2 79.0
Expense ratio 23.1 23.3
Combined ratio 98.3 102.3
Effect of catastrophe losses
on combined ratio 2.8 4.6
Effect of restructuring
charges on combined ratio 0.5 0.1
Discontinued Lines and Coverages
Underwriting Summary
Premiums written $ 7 $ 8 (12.5)
Premiums earned $ 8 $ 11 (27.3)
Claims and claims expense 122 17 ---
Other costs and expenses 5 7 (28.6)
Underwriting loss $ (119) $ (13) ---
THE ALLSTATE CORPORATION
PROPERTY-LIABILITY PREMIUMS WRITTEN BY MARKET SEGMENT
Three Months Ended
September 30,
Est. Percent
($ in millions) 2002 2001 Change
ALLSTATE-BRAND
Standard auto $3,314 $3,104 6.8
Non-standard auto 584 650 (10.2)
Involuntary auto 54 37 45.9
Commercial lines 191 176 8.5
Homeowners 1,327 1,095 21.2
Other personal lines 330 316 4.4
5,800 5,378 7.8
IVANTAGE
Standard auto 314 306 2.6
Non-standard auto 36 11 ---
Involuntary auto 3 4 (25.0)
Homeowners 128 123 4.1
Other personal lines 22 23 (4.3)
503 467 7.7
ALLSTATE PROTECTION 6,303 5,845 7.8
DISCONTINUED LINES
AND COVERAGES 2 1 100.0
PROPERTY-LIABILITY $6,305 $5,846 7.9
Nine Months Ended
September 30,
Est. Percent
($ in millions) 2002 2001 Change
ALLSTATE-BRAND
Standard auto $9,650 $9,051 6.6
Non-standard auto 1,813 2,027 (10.6)
Involuntary auto 151 117 29.1
Commercial lines 580 540 7.4
Homeowners 3,480 2,942 18.3
Other personal lines 942 939 0.3
16,616 15,616 6.4
IVANTAGE
Standard auto 919 918 0.1
Non-standard auto 80 34 135.3
Involuntary auto 5 15 (66.7)
Homeowners 368 348 5.7
Other personal lines 68 75 (9.3)
1,440 1,390 3.6
ALLSTATE PROTECTION 18,056 17,006 6.2
DISCONTINUED LINES
AND COVERAGES 7 8 (12.5)
PROPERTY-LIABILITY $18,063 $17,014 6.2
THE ALLSTATE CORPORATION
ALLSTATE PROTECTION MARKET SEGMENT ANALYSIS
Three Months Ended September 30,
Est. Est. Est. Est.
($ in 2002 2001 2002 2001 2002 2001 2002 2001
millions)
Loss Ratio
Excluding the
Effect of
Premiums Earned Loss Ratio CAT Losses Expense Ratio
ALLSTATE-
BRAND
Standard
auto $3,203 $3,013 72.8 73.6 72.7 74.2
Non-
standard
auto 599 669 68.3 85.9 68.1 84.5
Homeowners 1,091 965 71.1 94.5 64.4 85.4
Other (A) 543 497 66.1 77.3 63.9 67.2
Sub-total 5,436 5,144 71.3 79.5 69.7 76.9 22.9 22.5
IVANTAGE
Standard
auto 298 297 74.8 89.6 74.5 89.9
Non-
standard
auto 26 11 130.8 27.3 130.8 27.3
Homeowners 118 116 73.7 79.3 67.8 69.8
Other (A) 24 27 54.2 70.4 54.2 66.7
Sub-total 466 451 76.6 84.3 74.9 81.8 33.5 29.3
ALLSTATE
PROTECTION $5,902 $5,595 71.7 79.9 70.1 77.4 23.7 23.0
Nine Months Ended September 30,
Est. Est. Est. Est.
($ in 2002 2001 2002 2001 2002 2001 2002 2001
millions)
Loss Ratio
Excluding the
Effect of
Premiums Earned Loss Ratio CAT Losses Expense Ratio
ALLSTATE-
BRAND
Standard
auto $9,448 $8,808 74.2 73.9 73.5 72.4
Non-
standard
auto 1,844 2,049 73.2 83.4 72.9 82.4
Homeowners 3,139 2,821 80.6 92.0 70.1 75.6
Other (A) 1,595 1,486 70.5 75.6 67.6 70.2
Sub-total 16,026 15,164 74.9 78.7 72.2 74.1 22.3 22.5
IVANTAGE
Standard
auto 896 910 76.1 82.0 75.3 80.8
Non-
standard
auto 57 42 117.5 76.2 117.5 76.2
Homeowners 350 345 85.7 81.7 73.4 65.5
Other (A) 74 81 29.7 106.2 27.0 102.5
Sub-total 1,377 1,378 77.8 83.2 74.0 78.1 32.7 31.5
ALLSTATE
PRO-
TECTION $17,403 $16,542 75.2 79.0 72.4 74.4 23.1 23.3
(A) Other includes involuntary auto, commercial coverages and other
personal lines.
SOURCE Allstate Corporation
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http://www.allstate.com
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CONTACT:
Media Relations, Michael Trevino,
+1-847-402-5600, or Investor Relations, Robert Block, Larry
Moews, or Phil Dorn, +1-847-402-2800, all for Allstate
Corporation
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