Reporting Segments

Allstate management is organized around products and services, and this structure is considered in the identification of its four reportable segments. These segments and their respective operations are as follows:

Allstate Protection principally sells private passenger auto and homeowners insurance in the United States and Canada. Revenues from external customers generated outside the United States were $1.03 billion, $1.08 billion and $1.06 billion in 2015, 2014 and 2013, respectively. The Company evaluates the results of this segment based upon underwriting results.

Discontinued Lines and Coverages consists of property-liability business no longer written by Allstate, including results from asbestos, environmental and other discontinued lines claims, and certain commercial and other businesses in run-off. This segment also includes the historical results of the commercial and reinsurance businesses sold in 1996. The Company evaluates the results of this segment based upon underwriting results.

Allstate Financial sells traditional, interest-sensitive and variable life insurance and voluntary accident and health insurance products. Allstate Financial previously offered and continues to have in force fixed annuities such as deferred and immediate annuities, and institutional products consisting of funding agreements sold to unaffiliated trusts that use them to back medium-term notes. Allstate Financial had no revenues from external customers generated outside the United States in 2015, 2014 or 2013. The Company evaluates the results of this segment based upon operating income.

Corporate and Other comprises holding company activities and certain non-insurance operations.

Allstate Protection and Discontinued Lines and Coverages comprise Property-Liability. The Company does not allocate Property-Liability investment income, realized capital gains and losses, or assets to the Allstate Protection and Discontinued Lines and Coverages segments. Management reviews assets at the Property-Liability, Allstate Financial, and Corporate and Other levels for decision-making purposes. Allstate Protection and Allstate Financial performance and resources are managed by committees of senior officers of the respective segments.

The accounting policies of the reportable segments are the same as those described in Note 2. The effects of certain inter-segment transactions are excluded from segment performance evaluation and therefore are eliminated in the segment results.

Measuring segment profit or loss

The measure of segment profit or loss used by Allstate’s management in evaluating performance is underwriting income for the Allstate Protection and Discontinued Lines and Coverages segments and operating income for the Allstate Financial and Corporate and Other segments. A reconciliation of these measures to net income applicable to common shareholders is provided below.

Underwriting income is calculated as premiums earned, less claims and claims expenses (“losses”), amortization of DAC, operating costs and expenses, and restructuring and related charges as determined using GAAP.

Operating income is net income applicable to common shareholders, excluding:


•	realized capital gains and losses, after-tax, except for periodic settlements and accruals on non-hedge derivative instruments, which are reported with realized capital gains and losses but included in operating income,


•	valuation changes on embedded derivatives that are not hedged, after-tax,


•	amortization of DAC and DSI, to the extent they resulted from the recognition of certain realized capital gains and losses or valuation changes on embedded derivatives that are not hedged, after-tax,


•	amortization of purchased intangible assets, after-tax,


•	gain (loss) on disposition of operations, after-tax, and


•	adjustments for other significant non-recurring, infrequent or unusual items, when (a) the nature of the charge or gain is such that it is reasonably unlikely to recur within two years, or (b) there has been no similar charge or gain within the prior two years.

Summarized revenue data for each of the Company’s reportable segments for the years ended December 31 are as follows:



($ in millions)	2015			2014			2013
Revenues
Property-Liability
Property-liability insurance premiums
Auto	$	20,410		$	19,344		$	18,449
Homeowners	7,136			6,904			6,613
Other personal lines	1,692			1,662			1,629
Commercial lines	510			476			456
Other business lines	561			542			471
Allstate Protection	30,309			28,928			27,618
Discontinued Lines and Coverages	—			1			—
Total property-liability insurance premiums	30,309			28,929			27,618
Net investment income	1,237			1,301			1,375
Realized capital gains and losses	(237		)	549			519
Total Property-Liability	31,309			30,779			29,512
Allstate Financial
Life and annuity premiums and contract charges
Life and annuity premiums
Traditional life insurance	542			511			491
Immediate annuities with life contingencies	—			4			37
Accident and health insurance	780			744			720
Total life and annuity premiums	1,322			1,259			1,248
Contract charges
Interest-sensitive life insurance	822			879			1,086
Fixed annuities	14			19			18
Total contract charges	836			898			1,104
Total life and annuity premiums and contract charges	2,158			2,157			2,352
Net investment income	1,884			2,131			2,538
Realized capital gains and losses	267			144			74
Total Allstate Financial	4,309			4,432			4,964
Corporate and Other
Service fees	3			5			9
Net investment income	35			27			30
Realized capital gains and losses	—			1			1
Total Corporate and Other before reclassification of service fees	38			33			40
Reclassification of service fees ⁽¹⁾	(3		)	(5		)	(9		)
Total Corporate and Other	35			28			31
Consolidated revenues	$	35,653		$	35,239		$	34,507

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⁽¹⁾	For presentation in the Consolidated Statements of Operations, service fees of the Corporate and Other segment are reclassified to operating costs and expenses.

Summarized financial performance data for each of the Company’s reportable segments for the years ended December 31 are as follows:



($ in millions)	2015			2014			2013
Net income
Property-Liability
Underwriting income
Allstate Protection	$	1,614		$	1,887		$	2,361
Discontinued Lines and Coverages	(55		)	(115		)	(143		)
Total underwriting income	1,559			1,772			2,218
Net investment income	1,237			1,301			1,375
Income tax expense on operations ⁽¹⁾	(952		)	(1,040		)	(1,177		)
Realized capital gains and losses, after-tax	(154		)	357			339
Gain (loss) on disposition of operations, after-tax	—			37			(1		)
Property-Liability net income applicable to common shareholders	1,690			2,427			2,754
Allstate Financial
Life and annuity premiums and contract charges	2,158			2,157			2,352
Net investment income	1,884			2,131			2,538
Periodic settlements and accruals on non-hedge derivative instruments	—			(1		)	17
Contract benefits and interest credited to contractholder funds	(2,563		)	(2,663		)	(3,171		)
Operating costs and expenses and amortization of deferred policy acquisition costs	(729		)	(721		)	(895		)
Restructuring and related charges	—			(2		)	(7		)
Income tax expense on operations	(241		)	(294		)	(246		)
Operating income	509			607			588
Realized capital gains and losses, after-tax	173			94			46
Valuation changes on embedded derivatives that are not hedged, after-tax	(1		)	(15		)	(16		)
DAC and DSI amortization related to realized capital gains and losses and valuation changes on embedded derivatives that are not hedged, after-tax	(3		)	(3		)	(5		)
DAC and DSI unlocking related to realized capital gains and losses, after-tax	—			—			7
Reclassification of periodic settlements and accruals on non-hedge derivative instruments, after-tax	—			1			(11		)
Gain (loss) on disposition of operations, after-tax	2			(53		)	(514		)
Change in accounting for investments in qualified affordable housing projects, after-tax	(17		)	—			—
Allstate Financial net income applicable to common shareholders	663			631			95
Corporate and Other
Service fees ⁽²⁾	3			5			9
Net investment income	35			27			30
Operating costs and expenses ⁽²⁾	(329		)	(364		)	(627		)
Income tax benefit on operations	109			124			220
Preferred stock dividends	(116		)	(104		)	(17		)
Operating loss	(298		)	(312		)	(385		)
Realized capital gains and losses, after-tax	—			—			—
Loss on extinguishment of debt, after-tax	—			—			(319		)
Postretirement benefits curtailment gain, after-tax	—			—			118
Corporate and Other net loss applicable to common shareholders	(298		)	(312		)	(586		)
Consolidated net income applicable to common shareholders	$	2,055		$	2,746		$	2,263

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⁽¹⁾	Income tax on operations for Property-Liability segment includes $28 million of expense related to the change in accounting guidance for investments in qualified affordable housing projects adopted in 2015.


⁽²⁾	For presentation in the Consolidated Statements of Operations, service fees of the Corporate and Other segment are reclassified to operating costs and expenses.

Additional significant financial performance data for each of the Company’s reportable segments for the years ended December 31 are as follows:



($ in millions)	2015			2014			2013
Amortization of DAC
Property-Liability	$	4,102		$	3,875		$	3,674
Allstate Financial	262			260			328
Consolidated	$	4,364		$	4,135		$	4,002

Income tax expense
Property-Liability	$	869		$	1,211		$	1,357
Allstate Financial	351			299			87
Corporate and Other	(109		)	(124		)	(328		)
Consolidated	$	1,111		$	1,386		$	1,116

Interest expense is primarily incurred in the Corporate and Other segment. Capital expenditures for long-lived assets are generally made in the Property-Liability segment. A portion of these long-lived assets are used by entities included in the Allstate Financial and Corporate and Other segments and, accordingly, are charged expenses in proportion to their use.

Summarized data for total assets and investments for each of the Company’s reportable segments as of December 31 are as follows:



($ in millions)	2015		2014		2013
Assets
Property-Liability	$	55,671	$	55,767	$	54,726
Allstate Financial	46,342		49,248		65,707
Corporate and Other	2,643		3,464		3,027
Consolidated	$	104,656	$	108,479	$	123,460

Investments
Property-Liability	$	38,479	$	39,083	$	39,638
Allstate Financial	36,792		38,809		39,105
Corporate and Other	2,487		3,221		2,412
Consolidated	$	77,758	$	81,113	$	81,155

The balances above reflect the elimination of related party investments between segments.