EX-99.1 2 allcorp63018earningsreleas.htm EXHIBIT 99.1 Exhibit

Exhibit 99.1

earningsreleaseimagea12.jpg
FOR IMMEDIATE RELEASE

Contacts:    
Greg Burns                John Griek
Media Relations          Investor Relations
(847) 402-5600                (847) 402-2800

Allstate Increases Profits and Growth
Return on Equity of 17%


NORTHBROOK, Ill., August 1, 2018 – The Allstate Corporation (NYSE: ALL) today reported financial results for the second quarter of 2018.
The Allstate Corporation Consolidated Highlights
 
Three months ended June 30,
 
Six months ended June 30,
($ in millions, except per share data and ratios)
2018
2017
% / pts
Change
 
2018
2017
% / pts
Change
Consolidated revenues
$
10,099

$
9,813

2.9

 
$
19,869

$
19,457

2.1

Net income applicable to common shareholders
637

550

15.8

 
1,583

1,216

30.2

per diluted common share
1.80

1.49

20.8

 
4.43

3.29

34.7

Adjusted net income*
675

510

32.4

 
1,741

1,118

55.7

per diluted common share*
1.90

1.38

37.7

 
4.87

3.02

61.3

Return on common shareholders’ equity (trailing twelve months)
 
 
 
 
 
Net income applicable to common shareholders
 
 


 
17.0
%
13.1
%
3.9

Adjusted net income*
 
 


 
15.8
%
13.5
%
2.3

Book value per common share
 
 


 
59.16

53.83

9.9

Property-Liability combined ratio
 
 
 
 
 
 
 
Recorded
94.9

96.6

(1.7
)
 
91.5

94.8

(3.3
)
Underlying combined ratio* (excludes catastrophes, prior year reserve reestimates and amortization of purchased intangibles)
85.5

84.9

0.6

 
84.8

84.5

0.3

Property and casualty insurance premiums written
8,838

8,289

6.6

 
16,969

16,012

6.0

Catastrophe losses
906

993

(8.8
)
 
1,267

1,774

(28.6
)
Total policies in force (in thousands)
 
 


 
88,434

74,968

18.0

*
Measures used in this release that are not based on accounting principles generally accepted in the United States of America (“non-GAAP”) are denoted with an asterisk and defined and reconciled to the most directly comparable GAAP measure in the “Definitions of Non-GAAP Measures” section of this document.

“Allstate’s businesses continue to deliver excellent results, growth is accelerating and we are on pace to achieve 2018’s operating priorities,” said Tom Wilson, Chairman, President and Chief Executive Officer of The Allstate Corporation. “Net income increased to $637 million in the second quarter of 2018 and return on equity was 17.0% for the latest twelve months. Revenues rose to $10.1 billion for the quarter, reflecting higher average premiums and increased policies in force. Better serving customers increased the net promoter score for most businesses which, when combined with higher new business levels, supported policy growth for the Allstate and Esurance Property-Liability businesses, SquareTrade and Allstate Benefits. Increased profitability reflected operational excellence, a decline in auto accident frequency and lower catastrophe losses. We are improving our underlying combined ratio* outlook range by one point to 85 to 87(1) for the full year 2018,” said Wilson.
_________
(1) A reconciliation of this non-GAAP measure to the combined ratio, a GAAP measure, is not possible on a forward-looking basis because it is not possible to provide a reliable forecast of catastrophes, and prior year reserve reestimates are expected to be zero because reserves are determined based on our best estimate of ultimate loss reserves as of the reporting date.

1

“The strategy to deliver differentiated products to consumers by leveraging our brands, customer base, technology and capital is also on track. The Allstate brand is a leader in using technology and analytics to offer telematics based auto insurance and settle claims. Esurance is doing the same and has successfully expanded into homeowners insurance. SquareTrade is on pace with its acquisition milestones and added 13.2 million policies in twelve months. While investment income is down slightly in the quarter, this reflects very strong performance-based returns last year. Allstate’s Life, Benefits and Annuities businesses are on track to meet their goals. Shareholders have also benefited from cash returns of almost three-quarters of a billion dollars in the quarter through dividends and share repurchases,” concluded Wilson.

Second Quarter 2018 Results

•
Total revenue of $10.1 billion in the second quarter of 2018 increased 2.9% compared to the prior year quarter.
◦
Property and casualty insurance premiums earned increased 5.5%.
◦
Life premiums and contract charges increased 3.6%.
◦
Net investment income decreased 8.1%.
◦
Realized capital losses reduced revenues by $25 million, compared to gains which generated $81 million of revenue in the prior year quarter.

•
Net income applicable to common shareholders was $637 million, or $1.80 per diluted share, in the second quarter of 2018, compared to $550 million, or $1.49 per diluted share, in the second quarter of 2017. Adjusted net income* was $675 million in the second quarter of 2018, compared to $510 million in the second quarter of 2017, driven by higher premiums earned, lower catastrophe losses, higher favorable prior year reserve releases and a lower U.S. tax rate, partially offset by lower net investment income.

•
Property-Liability underwriting income of $416 million was $151 million better than the prior year quarter. Increased premiums earned, lower catastrophe losses, lower auto insurance claim frequency and higher favorable non-catastrophe prior year reserve reestimates were partially offset by higher claim severity and operating expenses.

◦
The underlying combined ratio* of 85.5 for the second quarter of 2018 was 0.6 points higher than the prior year quarter due to increased expenses, primarily related to compensation linked to operating performance. The underlying loss ratio* of 60.2 in the second quarter was essentially flat to the prior year quarter. Second quarter results were better than the annual outlook range of 86 to 88 as auto insurance profitability was favorably impacted by a continued reduction in accident frequency. Given the positive first half 2018 performance, the underlying combined ratio* is now expected to be within 85 to 87 for the full year of 2018.

◦
Non-catastrophe prior year reserve releases of $135 million in the second quarter of 2018 included continued favorable personal lines auto injury coverages development and better than anticipated salvage and subrogation recoveries, partially offset by strengthening in our commercial business.

Property-Liability Results
 
Three months ended June 30,
 
Six months ended June 30,
(% to earned premiums)
2018
2017
pts
Change
 
2018
2017
pts
Change
Recorded Combined Ratio
94.9

96.6

(1.7
)
 
91.5

94.8

(3.3
)
Allstate Brand Auto
93.0

95.6

(2.6
)
 
90.8

93.2

(2.4
)
Allstate Brand Homeowners
98.3

97.2

1.1

 
89.6

95.4

(5.8
)
Allstate Brand Other Personal Lines
86.6

90.8

(4.2
)
 
87.8

91.9

(4.1
)
Esurance
101.9

106.1

(4.2
)
 
100.7

104.2

(3.5
)
Encompass
98.4

104.4

(6.0
)
 
98.4

108.1

(9.7
)
Underlying Combined Ratio*
85.5

84.9

0.6

 
84.8

84.5

0.3

Allstate Brand Auto
92.8

92.6

0.2

 
91.4

91.8

(0.4
)
Allstate Brand Homeowners
63.3

59.8

3.5

 
63.4

60.5

2.9

Allstate Brand Other Personal Lines
77.3

77.1

0.2

 
80.3

77.9

2.4

Esurance
95.9

100.5

(4.6
)
 
97.1

100.4

(3.3
)
Encompass
85.5

87.6

(2.1
)
 
86.7

87.1

(0.4
)


2


◦
Allstate brand auto insurance net written premium grew 5.8% in the second quarter of 2018, reflecting a 4.0% increase in average premium and a 1.3% increase in policies in force. Growth in policies in force was driven by continued improvement in the renewal ratio and higher new issued applications.

▪
The recorded combined ratio of 93.0 in the second quarter of 2018 was 2.6 points better than the prior year quarter, due to increased premiums earned, lower catastrophe losses and a broad-based decline in accident frequency, partially offset by higher severity and expenses, primarily related to agency and employee compensation costs. The underlying combined ratio* of 92.8 in the quarter was 0.2 points higher than the prior year quarter.

◦
Allstate brand homeowners insurance net written premium increased 5.5% in the second quarter of 2018 compared to the prior year quarter, due to increased average premium and policy growth. Policies in force increased 0.8% compared to the prior year quarter, driven by improvement in the renewal ratio and increased new issued applications.

▪
The recorded combined ratio was 98.3 in the second quarter of 2018, and the underlying combined ratio* of 63.3 was 3.5 points higher than the prior year quarter, mainly driven by adverse non-catastrophe weather and increased expenses.

◦
Allstate brand other personal lines insurance net written premium of $475 million increased 7.7% in the second quarter of 2018 compared to the prior year quarter. The recorded combined ratio of 86.6 was 4.2 points better than the prior year quarter, primarily driven by lower catastrophe losses. The underlying combined ratio* of 77.3 in the second quarter of 2018 was 0.2 points higher than the prior year period, primarily due to higher underlying loss costs partially offset by increased earned premium.

◦
Esurance net written premium grew 12.5% compared to the prior year quarter, reflecting increased average premium in auto and homeowners insurance, and a 4.1% increase in total policies in force. Auto policies in force increased 3.2% due to higher retention and new issued applications.

▪
The recorded combined ratio of 101.9 in the second quarter of 2018 was 4.2 points better than the prior year quarter, due to improvement in both the loss and expense ratios. The underlying combined ratio* of 95.9 was 4.6 points better than the prior year quarter, as both auto and homeowners insurance results improved.

◦
Encompass net written premium declined 3.5% in the second quarter of 2018 compared to the prior year quarter, reflecting the continued execution of profit improvement plans. The recorded combined ratio of 98.4 in the second quarter of 2018 was 6.0 points better than the prior year quarter, due to lower catastrophe losses and reduced auto insurance claim frequency, partially offset by a higher expense ratio related to technology initiatives and lower premiums. The underlying combined ratio* of 85.5 for the second quarter was 2.1 points better than the prior year quarter as the improvement in the underlying loss ratio more than offset a higher expense ratio.


















3


•
Service Businesses policies in force grew to 49.1 million, an increase of 13.0 million compared to the prior year quarter, driven by SquareTrade. Adjusted net income of $1 million in the second quarter of 2018 was $9 million better than the second quarter of 2017, due to improved loss experience at SquareTrade and Allstate Dealer Services.

Service Businesses Results
 
Three months ended June 30,
 
Six months ended June 30,
($ in millions)
2018
2017
% / $
Change
 
2018
2017
% / $
Change
Total Revenues
$
320

$
260

23.1
%
 
$
633

$
507

24.9

SquareTrade
122

70

74.3

 
244

129

89.1

Allstate Roadside Services
77

77

—

 
151

155

(2.6
)
Allstate Dealer Services
100

93

7.5

 
196

183

7.1

Arity
21

20

5.0

 
42

40

5.0

Adjusted Net Income / (Loss)
$
1

$
(8
)
$
9

 
$
(4
)
$
(18
)
$
14

SquareTrade
5

1

4

 
7

(7
)
14

Allstate Roadside Services
(5
)
(5
)
—

 
(10
)
(8
)
(2
)
Allstate Dealer Services
4

2

2

 
6

2

4

Arity
(3
)
(6
)
3

 
(7
)
(5
)
(2
)

◦
SquareTrade revenue was $122 million in the second quarter, reflecting policies in force growth of 13.2 million compared to the second quarter of 2017 and the adoption of the new revenue recognition accounting standard. Adjusted net income is not impacted by the new accounting standard and was $5 million in the second quarter of 2018 due to improved loss experience.

◦
Allstate Roadside Services had revenues of $77 million in the second quarter. The adjusted net loss of $5 million was comparable to the prior year quarter due to continued investments in the provider network and technology, combined with losses from certain wholesale contracts.

◦
Allstate Dealer Services revenue grew 7.5% compared to the second quarter of 2017, and adjusted net income was $4 million, reflecting improvement in loss costs.

◦
Arity had revenues of $21 million in the second quarter of 2018, largely related to contracts with affiliates. The adjusted net loss of $3 million represented continuing investments in business expansion and product development.

•
Allstate Life adjusted net income was $78 million in the second quarter of 2018, $15 million higher than the prior year quarter, primarily due to a lower effective tax rate, higher premiums and increased net investment income, partially offset by higher contract benefits. Premiums and contract charges increased 2.2% in the second quarter compared to the prior year quarter, primarily related to growth in traditional life insurance and lower reinsurance premiums ceded.

•
Allstate Benefits adjusted net income was $34 million in the second quarter of 2018, $9 million higher than the prior year quarter, primarily due to increased premiums, improved benefit ratio on selected products and a lower effective tax rate, partially offset by higher expenses related to technology investments. Premiums and contract charges increased 5.2% in the second quarter compared to the prior year quarter, due to 5.4% growth in policies in force.

•
Allstate Annuities adjusted net income was $44 million in the second quarter of 2018, $21 million lower than the prior year quarter, primarily due to lower performance-based investment income.







4


•
Allstate Investments $83 billion portfolio generated net investment income of $824 million in the second quarter, which was 8.1%, or $73 million, below the prior year quarter.

Allstate Investment Results
 
Three months ended June 30,
 
Six months ended June 30,
($ in millions, except ratios)
2018
2017
% / pts
Change
 
2018
2017
% / pts
Change
Net investment income
$
824

$
897

(8.1
)
 
$
1,610

$
1,645

(2.1
)
Market-based investment income(1)
696

672

3.6

 
1,348

1,330

1.4

Performance-based investment income(1)
176

263

(33.1
)
 
357

394

(9.4
)
Realized capital gains and losses
(25
)
81

NM

 
(159
)
215

NM

Change in unrealized net capital gains, pre-tax(2)
(324
)
448

NM

 
(1,326
)
779

NM

Total return on investment portfolio
0.5
%
1.8
%
(1.3
)
 
—
%
3.4
%
(3.4
)
(1) Investment expenses are not allocated between market-based and performance-based portfolios with the exception of investee level expenses.
(2) Excludes $1.2 billion adjustment related to the adoption of recognition and measurement accounting standard in 2018.
NM = not meaningful

◦
Market-based investments contributed $696 million of income in the second quarter of 2018, an increase of 3.6% compared to the prior year quarter, primarily from higher purchase yields and modest duration extension of our fixed-income portfolio.

◦
Performance-based investments generated income of $176 million in the second quarter of 2018 with a pre-tax annualized yield of 9.0%. Investment income decreased 33.1% over a very strong prior year quarter, primarily reflecting more moderate asset appreciation.

◦
Net realized capital losses were $25 million in the second quarter of 2018, compared to gains of $81 million in the prior year quarter. Net realized losses for the quarter primarily related to sales of fixed-income securities, partially offset by increased valuation of equity investments.

◦
Unrealized net capital gains decreased $324 million from the first quarter, as higher market yields resulted in lower fixed-income valuations.

◦
Total return on the investment portfolio was 0.5% for the second quarter of 2018, which included a stable 1.0% contribution from net investment income, partially offset by lower fixed income valuations of 0.5%.


Proactive Capital Management

“Allstate returned $722 million of capital to our shareholders during the second quarter through a combination of $163 million in common stock dividends and repurchasing $559 million of outstanding shares. As of June 30, 2018, there was $376 million remaining on the $2 billion common share repurchase authorization,” said Mario Rizzo, Chief Financial Officer.

“During the quarter, Allstate redeemed $224 million in fixed-to-floating rate junior subordinated debentures and repaid $176 million in senior debentures. Our adjusted net income return on common shareholders’ equity* of 15.8% for the 12 months ended June 30, 2018, was an increase of 2.3 points compared to the prior year period. Book value per diluted common share of $59.16 was 9.9% higher than June 30, 2017.”









5


Visit www.allstateinvestors.com to view additional information about Allstate’s results, including a webcast of its quarterly conference call and the call presentation. The conference call will be held at 9 a.m. ET on Thursday, August 2.


Forward-Looking Statements
This news release contains “forward-looking statements” that anticipate results based on our estimates, assumptions and plans that are subject to uncertainty. These statements are made subject to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements do not relate strictly to historical or current facts and may be identified by their use of words like “plans,” “seeks,” “expects,” “will,” “should,” “anticipates,” “estimates,” “intends,” “believes,” “likely,” “targets” and other words with similar meanings. We believe these statements are based on reasonable estimates, assumptions and plans. However, if the estimates, assumptions or plans underlying the forward-looking statements prove inaccurate or if other risks or uncertainties arise, actual results could differ materially from those communicated in these forward-looking statements. Factors that could cause actual results to differ materially from those expressed in, or implied by, the forward-looking statements may be found in our filings with the U.S. Securities and Exchange Commission, including the “Risk Factors” section in our most recent annual report on Form 10-K. Forward-looking statements are as of the date on which they are made, and we assume no obligation to update or revise any forward-looking statement.

6

THE ALLSTATE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
 
 
 
($ in millions, except per share data)
Three months ended June 30,
 
Six months ended June 30,
 
2018
 
2017
 
2018
 
2017
 
(unaudited)
 
(unaudited)
Revenues
 
 
 
 
 
 
 
Property and casualty insurance premiums
$
8,460

 
$
8,018

 
$
16,746

 
$
15,977

Life premiums and contract charges
612

 
591

 
1,228

 
1,184

Other revenue
228

 
226

 
444

 
436

Net investment income
824

 
897

 
1,610

 
1,645

Realized capital gains and losses:
 
 
 

 
 
 
 
Total other-than-temporary impairment (“OTTI”) losses
(4
)
 
(47
)
 
(4
)
 
(109
)
OTTI losses reclassified (from) to other comprehensive income
—

 
(3
)
 
(1
)
 
—

Net OTTI losses recognized in earnings
(4
)
 
(50
)
 
(5
)
 
(109
)
Sales and valuation changes on equity investments and derivatives


(21
)
 
131

 
(154
)
 
324

Total realized capital gains and losses
(25
)
 
81

 
(159
)
 
215

 
10,099

 
9,813

 
19,869

 
19,457

 
 
 
 
 
 
 
 
Costs and expenses
 
 
 
 
 
 
 
Property and casualty insurance claims and claims expense
5,792

 
5,689

 
10,941

 
11,105

Life contract benefits
483

 
486

 
987

 
960

Interest credited to contractholder funds
165

 
175

 
326

 
348

Amortization of deferred policy acquisition costs
1,296

 
1,176

 
2,569

 
2,345

Operating costs and expenses
1,407

 
1,312

 
2,762

 
2,619

Restructuring and related charges
27

 
53

 
49

 
63

Interest expense
86

 
83

 
169

 
168

 
9,256

 
8,974

 
17,803

 
17,608

 
 
 
 
 
 
 
 
Gain on disposition of operations
2

 
12

 
3

 
14

 
 
 
 
 
 
 
 
Income from operations before income tax expense
845

 
851

 
2,069

 
1,863

 
 
 
 
 
 
 
 
Income tax expense
169

 
272

 
418

 
589

 
 
 
 
 
 
 
 
Net income
676

 
579

 
1,651

 
1,274

 
 
 
 
 
 
 
 
Preferred stock dividends
39

 
29

 
68

 
58

 
 
 
 
 
 
 
 
Net income applicable to common shareholders
$
637

 
$
550

 
$
1,583

 
$
1,216

 
 
 
 
 
 
 
 
Earnings per common share:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income applicable to common shareholders per common share – Basic
$
1.82

 
$
1.51

 
$
4.50

 
$
3.34

 
 
 
 
 
 
 
 
Weighted average common shares – Basic
349.2

 
363.6

 
351.6

 
364.6

 
 
 
 
 
 
 
 
Net income applicable to common shareholders per common share – Diluted
$
1.80

 
$
1.49

 
$
4.43

 
$
3.29

 
 
 
 
 
 
 
 
Weighted average common shares – Diluted
354.6

 
369.0

 
357.2

 
370.1

 
 
 
 
 
 
 
 
Cash dividends declared per common share
$
0.46

 
$
0.37

 
$
0.92

 
$
0.74






7

THE ALLSTATE CORPORATION
BUSINESS RESULTS
($ in millions, except ratios)
Three months ended June 30,

Six months ended June 30,
 
2018

2017

2018

2017
Property-Liability
 
 
 
 
 
 
 
Premiums written
$
8,541

 
$
8,030

 
$
16,385

 
$
15,499

Premiums earned
$
8,189

 
$
7,807

 
$
16,208

 
$
15,566

Other revenue
184

 
181

 
358

 
348

Claims and claims expense
(5,704
)
 
(5,607
)
 
(10,762
)
 
(10,935
)
Amortization of deferred policy acquisition costs
(1,110
)
 
(1,032
)
 
(2,198
)
 
(2,054
)
Operating costs and expenses
(1,118
)
 
(1,033
)
 
(2,185
)
 
(2,051
)
Restructuring and related charges 
(25
)
 
(51
)
 
(46
)
 
(61
)
Underwriting income
416

 
265

 
1,375

 
813

Net investment income
353

 
387

 
690

 
695

Income tax expense on operations
(157
)
 
(207
)
 
(425
)
 
(475
)
Realized capital gains and losses, after-tax
(12
)
 
56

 
(87
)
 
145

Gain on disposition of operations, after-tax
—

 
6

 
—

 
6

Net income applicable to common shareholders
$
600

 
$
507

 
$
1,553

 
$
1,184

Catastrophe losses
$
906

 
$
993

 
$
1,267

 
$
1,774

Amortization of purchased intangible assets
$
3

 
$
1

 
$
4

 
$
3

Operating ratios:
 
 
 
 
 
 
 
Claims and claims expense ratio
69.6

 
71.8

 
66.4

 
70.3

Expense ratio (1)
25.3

 
24.8

 
25.1

 
24.5

Combined ratio 
94.9

 
96.6

 
91.5

 
94.8

Effect of catastrophe losses on combined ratio
11.1

 
12.7

 
7.8

 
11.4

Effect of prior year reserve reestimates on combined ratio
(1.2
)
 
(1.1
)
 
(0.9
)
 
(1.1
)
Effect of catastrophe losses included in prior year reserve reestimates on combined ratio
0.5

 
(0.1
)
 
0.2

 
—

Effect of Discontinued Lines and Coverages on combined ratio
—

 
0.1

 
—

 
0.1

 
 
 
 
 
 
 
 
Services Businesses
 
 
 
 
 
 
 
Premiums written
$
297

 
$
259

 
$
584

 
$
513

Premiums earned
$
271

 
$
211

 
538

 
411

Intersegment insurance premiums and service fees
29

 
28

 
58

 
56

Other revenue
16

 
17

 
32

 
33

Net investment income
6

 
4

 
11

 
7

Claims and claims expense
(89
)
 
(83
)
 
(182
)
 
(173
)
Amortization of deferred policy acquisition costs
(113
)
 
(71
)
 
(223
)
 
(139
)
Operating costs and expenses
(118
)
 
(116
)
 
(237
)
 
(220
)
Restructuring and related charges
—

 
(1
)
 
(1
)
 
(1
)
Income tax (expense) benefit on operations
(1
)
 
3

 
—

 
8

Adjusted net income (loss)
1

 
(8
)
 
(4
)
 
(18
)
Realized capital gains and losses, after-tax
(1
)
 
—

 
(4
)
 
—

Amortization of purchased intangible assets, after-tax
(16
)
 
(15
)
 
(32
)
 
(30
)
Net loss applicable to common shareholders
$
(16
)
 
$
(23
)
 
$
(40
)
 
$
(48
)
 
 
 
 
 
 
 
 
Allstate Life
 
 
 
 
 
 
 
Premiums and contract charges
$
326

 
$
319

 
$
653

 
$
640

Other revenue
28

 
28

 
54

 
55

Net investment income
130

 
123

 
252

 
243

Contract benefits
(195
)
 
(187
)
 
(400
)
 
(382
)
Interest credited to contractholder funds
(71
)
 
(71
)
 
(141
)
 
(140
)
Amortization of deferred policy acquisition costs
(31
)
 
(35
)
 
(62
)
 
(67
)
Operating costs and expenses
(88
)
 
(86
)
 
(174
)
 
(172
)
Restructuring and related charges
(2
)
 
—

 
(2
)
 
—

Income tax expense on operations
(19
)
 
(28
)
 
(33
)
 
(55
)
Adjusted net income
78

 
63

 
147

 
122

Realized capital gains and losses, after-tax
(2
)
 
—

 
(4
)
 
1

DAC and DSI amortization relating to realized capital gains and losses, after-tax
(3
)
 
(3
)
 
(5
)
 
(6
)
Net income applicable to common shareholders
$
73

 
$
60

 
$
138

 
$
117

 
 
 
 
 
 
 
 
(1) Other revenue is deducted from operating costs and expenses in the expense ratio calculation.
 
 
 
 

8

THE ALLSTATE CORPORATION
BUSINESS RESULTS
($ in millions, except ratios)
Three months ended June 30,
 
Six months ended June 30,
 
2018
 
2017
 
2018
 
2017
Allstate Benefits
 
 
 
 
 
 
 
Premiums and contract charges
$
283

 
$
269

 
$
569

 
$
538

Net investment income
19

 
19

 
38

 
36

Contract benefits
(143
)
 
(143
)
 
(292
)
 
(279
)
Interest credited to contractholder funds
(9
)
 
(9
)
 
(17
)
 
(18
)
Amortization of deferred policy acquisition costs
(36
)
 
(33
)
 
(77
)
 
(74
)
Operating costs and expenses
(70
)
 
(64
)
 
(142
)
 
(131
)
Income tax expense on operations
(10
)
 
(14
)
 
(17
)
 
(25
)
Adjusted net income
34

 
25

 
62

 
47

Realized capital gains and losses, after-tax
—

 
—

 
(2
)
 
—

Net income applicable to common shareholders
$
34

 
$
25

 
$
60

 
$
47

 
 
 
 
 
 
 
 
Allstate Annuities
 
 
 
 
 
 
 
Contract charges
$
3

 
$
3

 
$
6

 
$
6

Net investment income
293

 
354

 
583

 
643

Contract benefits
(145
)
 
(156
)
 
(295
)
 
(299
)
Interest credited to contractholder funds
(87
)
 
(93
)
 
(174
)
 
(188
)
Amortization of deferred policy acquisition costs
(2
)
 
(1
)
 
(3
)
 
(3
)
Operating costs and expenses
(9
)
 
(8
)
 
(18
)
 
(17
)
Restructuring and related charges
—

 
(1
)
 
—

 
(1
)
Income tax expense on operations
(9
)
 
(33
)
 
(20
)
 
(47
)
Adjusted net income
44

 
65

 
79

 
94

Realized capital gains and losses, after-tax
5

 
(3
)
 
(18
)
 
(5
)
Valuation changes on embedded derivatives not hedged, after-tax
—

 
(1
)
 
4

 
(1
)
Gain on disposition of operations, after-tax
1

 
—

 
2

 
2

Net income applicable to common shareholders
$
50

 
$
61

 
$
67

 
$
90

 
 
 
 
 
 
 
 
Corporate and Other
 
 
 
 
 
 
 
Net investment income
$
23

 
$
10

 
$
36

 
$
21

Operating costs and expenses
(12
)
 
(9
)
 
(20
)
 
(17
)
Interest expense
(86
)
 
(83
)
 
(169
)
 
(168
)
Income tax benefit on operations
19

 
31

 
36

 
61

Preferred stock dividends
(39
)
 
(29
)
 
(68
)
 
(58
)
Adjusted net loss
(95
)
 
(80
)
 
(185
)
 
(161
)
Realized capital gains and losses, after-tax
(9
)
 
—

 
(10
)
 
—

Business combination expenses, after-tax
—

 
—

 
—

 
(13
)
Net loss applicable to common shareholders
$
(104
)
 
$
(80
)
 
$
(195
)
 
$
(174
)
 
 
 
 
 
 
 
 
Consolidated net income applicable to common shareholders
$
637

 
$
550

 
$
1,583

 
$
1,216





9

THE ALLSTATE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
 
 
 
 
($ in millions, except par value data)

June 30, 2018
 
December 31, 2017
Assets
(unaudited)
 
 
Investments:
 
 
 
Fixed income securities, at fair value (amortized cost $56,750 and $57,525)
$
56,891

 
$
58,992

Equity securities, at fair value (cost $5,846 and $5,461)
6,888

 
6,621

Mortgage loans
4,535

 
4,534

Limited partnership interests
7,679

 
6,740

Short-term, at fair value (amortized cost $3,123 and $1,944)
3,123

 
1,944

Other
4,125

 
3,972

Total investments
83,241

 
82,803

Cash
489

 
617

Premium installment receivables, net
5,953

 
5,786

Deferred policy acquisition costs
4,533

 
4,191

Reinsurance recoverables, net
8,910

 
8,921

Accrued investment income
589

 
569

Property and equipment, net
1,040

 
1,072

Goodwill
2,189

 
2,181

Other assets
3,154

 
2,838

Separate Accounts
3,271

 
3,444

Total assets
$
113,369

 
$
112,422

Liabilities
 
 
 
Reserve for property and casualty insurance claims and claims expense
$
26,623

 
$
26,325

Reserve for life-contingent contract benefits
12,213

 
12,549

Contractholder funds
18,888

 
19,434

Unearned premiums
13,824

 
13,473

Claim payments outstanding
894

 
875

Deferred income taxes
723

 
782

Other liabilities and accrued expenses
7,363

 
6,639

Long-term debt
6,448

 
6,350

Separate Accounts
3,271

 
3,444

Total liabilities
90,247

 
89,871

Shareholders’ equity
 
 
 
Preferred stock and additional capital paid-in, $1 par value, 95.2 thousand and 72.2 thousand shares issued and outstanding, $2,380 and $1,805 aggregate liquidation preference
2,303

 
1,746

Common stock, $.01 par value, 900 million issued, 347 million and 355 million shares outstanding
9

 
9

Additional capital paid-in
3,391

 
3,313

Retained income
45,508

 
43,162

Deferred ESOP expense
(3
)
 
(3
)
Treasury stock, at cost (553 million and 545 million shares)
(26,818
)
 
(25,982
)
Accumulated other comprehensive income:
 
 
 
Unrealized net capital gains and losses:
 
 
 
Unrealized net capital gains and losses on fixed income securities with OTTI
83

 
85

Other unrealized net capital gains and losses
28

 
1,981

Unrealized adjustment to DAC, DSI and insurance reserves
(57
)
 
(404
)
Unrealized net capital gains and losses
54

 
1,662

Unrealized foreign currency translation adjustments
(20
)
 
(9
)
Unrecognized pension and other postretirement benefit cost
(1,302
)
 
(1,347
)
Total accumulated other comprehensive income
(1,268
)
 
306

Total shareholders’ equity
23,122

 
22,551

Total liabilities and shareholders’ equity
$
113,369

 
$
112,422



10

THE ALLSTATE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in millions)
Six months ended June 30,
 
2018
 
2017
Cash flows from operating activities
(unaudited)
Net income
$
1,651

 
$
1,274

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation, amortization and other non-cash items
248

 
238

Realized capital gains and losses
159

 
(215
)
Gain on disposition of operations
(3
)
 
(14
)
Interest credited to contractholder funds
326

 
348

Changes in:
 
 
 
Policy benefits and other insurance reserves
(22
)
 
228

Unearned premiums
211

 
34

Deferred policy acquisition costs
(80
)
 
(65
)
Premium installment receivables, net
(185
)
 
(51
)
Reinsurance recoverables, net
(9
)
 
6

Income taxes
(257
)
 
(42
)
Other operating assets and liabilities
51

 
(393
)
Net cash provided by operating activities
2,090

 
1,348

Cash flows from investing activities
 
 
 
Proceeds from sales
 
 
 
Fixed income securities
19,515

 
14,521

Equity securities
3,576

 
3,430

Limited partnership interests
182

 
481

Other investments
135

 
118

Investment collections
 
 
 
Fixed income securities
1,442

 
2,063

Mortgage loans
315

 
305

Other investments
235

 
337

Investment purchases
 

 
 

Fixed income securities
(20,401
)
 
(17,214
)
Equity securities
(3,901
)
 
(3,473
)
Limited partnership interests
(873
)
 
(578
)
Mortgage loans
(316
)
 
(148
)
Other investments
(535
)
 
(532
)
Change in short-term investments, net
(512
)
 
2,142

Change in other investments, net
(35
)
 
107

Purchases of property and equipment, net
(128
)
 
(146
)
Acquisition of operations
(10
)
 
(1,356
)
Net cash (used in) provided by investing activities
(1,311
)
 
57

Cash flows from financing activities
 
 
 
Proceeds from issuance of long-term debt
498

 
—

Repayments of long-term debt
(401
)
 
—

Proceeds from issuance of preferred stock
557

 
—

Contractholder fund deposits
506

 
515

Contractholder fund withdrawals
(997
)
 
(957
)
Dividends paid on common stock
(295
)
 
(257
)
Dividends paid on preferred stock
(58
)
 
(58
)
Treasury stock purchases
(838
)
 
(657
)
Shares reissued under equity incentive plans, net
28

 
108

Other
93

 
(53
)
Net cash used in financing activities
(907
)
 
(1,359
)
Net (decrease) increase in cash
(128
)
 
46

Cash at beginning of period
617

 
436

Cash at end of period
$
489

 
$
482


11

Definitions of Non-GAAP Measures
We believe that investors’ understanding of Allstate’s performance is enhanced by our disclosure of the following non-GAAP measures. Our methods for calculating these measures may differ from those used by other companies and therefore comparability may be limited.
Adjusted net income is net income 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 adjusted net income,
•
valuation changes on embedded derivatives not hedged, after-tax,
•
amortization of deferred policy acquisition costs (“DAC”) and deferred sales inducements (“DSI”), to the extent they resulted from the recognition of certain realized capital gains and losses or valuation changes on embedded derivatives not hedged, after-tax,
•
business combination expenses and the 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.
Net income applicable to common shareholders is the GAAP measure that is most directly comparable to adjusted net income.
We use adjusted net income as an important measure to evaluate our results of operations. We believe that the measure provides investors with a valuable measure of the company’s ongoing performance because it reveals trends in our insurance and financial services business that may be obscured by the net effect of realized capital gains and losses, valuation changes on embedded derivatives not hedged, business combination expenses and the amortization of purchased intangible assets, gain (loss) on disposition of operations and adjustments for other significant non-recurring, infrequent or unusual items. Realized capital gains and losses, valuation changes on embedded derivatives not hedged and gain (loss) on disposition of operations may vary significantly between periods and are generally driven by business decisions and external economic developments such as capital market conditions, the timing of which is unrelated to the insurance underwriting process. Consistent with our intent to protect results or earn additional income, adjusted net income includes periodic settlements and accruals on certain derivative instruments that are reported in realized capital gains and losses because they do not qualify for hedge accounting or are not designated as hedges for accounting purposes. These instruments are used for economic hedges and to replicate fixed income securities, and by including them in adjusted net income, we are appropriately reflecting their trends in our performance and in a manner consistent with the economically hedged investments, product attributes (e.g. net investment income and interest credited to contractholder funds) or replicated investments. Business combination expenses are excluded because they are non-recurring in nature and the amortization of purchased intangible assets is excluded because it relates to the acquisition purchase price and is not indicative of our underlying insurance business results or trends. Non-recurring items are excluded because, by their nature, they are not indicative of our business or economic trends. Accordingly, adjusted net income excludes the effect of items that tend to be highly variable from period to period and highlights the results from ongoing operations and the underlying profitability of our business. A byproduct of excluding these items to determine adjusted net income is the transparency and understanding of their significance to net income variability and profitability while recognizing these or similar items may recur in subsequent periods. Adjusted net income is used by management along with the other components of net income applicable to common shareholders to assess our performance. We use adjusted measures of adjusted net income in incentive compensation. Therefore, we believe it is useful for investors to evaluate net income applicable to common shareholders, adjusted net income and their components separately and in the aggregate when reviewing and evaluating our performance. We note that investors, financial analysts, financial and business media organizations and rating agencies utilize adjusted net income results in their evaluation of our and our industry’s financial performance and in their investment decisions, recommendations and communications as it represents a reliable, representative and consistent measurement of the industry and the company and management’s performance. We note that the price to earnings multiple commonly used by insurance investors as a forward-looking valuation technique uses adjusted net income as the denominator. Adjusted net income should not be considered a substitute for net income applicable to common shareholders and does not reflect the overall profitability of our business.

12

The following tables reconcile net income applicable to common shareholders and adjusted net income. Beginning January 1, 2018, the Tax Legislation reduced the U.S. corporate income tax rate from 35% to 21%. Taxes on adjustments to reconcile net income applicable to common shareholders and adjusted net income generally use a 21% effective tax rate for 2018 and 35% for 2017 and are reported net with the reconciling adjustment.
($ in millions, except per share data)
Three months ended June 30,
 
Property-Liability
 
Consolidated
 
Per diluted common share
 
2018
 
2017
 
2018
 
2017
 
2018
 
2017
Net income applicable to common shareholders
$
600

 
$
507

 
$
637

 
$
550

 
$
1.80

 
$
1.49

Realized capital gains and losses, after-tax
12

 
(56
)
 
19

 
(53
)
 
0.05

 
(0.14
)
Valuation changes on embedded derivatives not hedged, after-tax
—

 
—

 
—

 
1

 
—

 
—

DAC and DSI amortization relating to realized capital gains and losses and valuation changes on embedded derivatives not hedged, after-tax
—

 
—

 
3

 
3

 
—

 
0.01

Reclassification of periodic settlements and accruals on non-hedge derivative instruments, after-tax
(1
)
 
(1
)
 
(1
)
 
(1
)
 
—

 
—

Business combination expenses and the amortization of purchased intangible assets, after-tax
2

 
1

 
18

 
16

 
0.05

 
0.04

Gain on disposition of operations, after-tax
—

 
(6
)
 
(1
)
 
(6
)
 
—

 
(0.02
)
Adjusted net income*
$
613

 
$
445

 
$
675

 
$
510

 
$
1.90

 
$
1.38

 
 
 
 
 
 
 
 
 
 
 
 
 
Six months ended June 30,
 
Property-Liability
 
Consolidated
 
Per diluted common share
 
2018
 
2017
 
2018
 
2017
 
2018
 
2017
Net income applicable to common shareholders
$
1,553

 
$
1,184

 
$
1,583

 
$
1,216

 
$
4.43

 
$
3.29

Realized capital gains and losses, after-tax
87

 
(145
)
 
125

 
(141
)
 
0.35

 
(0.38
)
Valuation changes on embedded derivatives not hedged, after-tax
—

 
—

 
(4
)
 
1

 
(0.01
)
 
—

DAC and DSI amortization relating to realized capital gains and losses and valuation changes on embedded derivatives not hedged, after-tax
—

 
—

 
5

 
6

 
0.01

 
0.02

Reclassification of periodic settlements and accruals on non-hedge derivative instruments, after-tax
(1
)
 
(1
)
 
(1
)
 
(1
)
 
—

 
—

Business combination expenses and the amortization of purchased intangible assets, after-tax
3

 
2

 
35

 
45

 
0.10

 
0.11

Gain on disposition of operations, after-tax
—

 
(6
)
 
(2
)
 
(8
)
 
(0.01
)
 
(0.02
)
Adjusted net income*
$
1,642

 
$
1,034

 
$
1,741

 
$
1,118

 
$
4.87

 
$
3.02

Adjusted net income return on common shareholders’ equity is a ratio that uses a non-GAAP measure. It is calculated by dividing the rolling 12-month adjusted net income by the average of common shareholders’ equity at the beginning and at the end of the 12-months, after excluding the effect of unrealized net capital gains and losses. Return on common shareholders’ equity is the most directly comparable GAAP measure. We use adjusted net income as the numerator for the same reasons we use adjusted net income, as discussed above. We use average common shareholders’ equity excluding the effect of unrealized net capital gains and losses for the denominator as a representation of common shareholders’ equity primarily attributable to the company’s earned and realized business operations because it eliminates the effect of items that are unrealized and vary significantly between periods due to external economic developments such as capital market conditions like changes in equity prices and interest rates, the amount and timing of which are unrelated to the insurance underwriting process. We use it to supplement our evaluation of net income applicable to common shareholders and return on common shareholders’ equity because it excludes the effect of items that tend to be highly variable from period to period. We believe that this measure is useful to investors and that it provides a valuable tool for investors when considered along with return on common shareholders’ equity because it eliminates the after-tax effects of realized and unrealized net capital gains and losses that can fluctuate significantly from period to period and that are driven by economic developments, the magnitude and timing of which are generally not influenced by management. In addition, it eliminates non-recurring items that are not indicative of our ongoing business or economic trends. A byproduct of excluding the items noted above to determine adjusted net income return on common shareholders’ equity from return on common shareholders’ equity is the transparency and understanding of their significance to return on common shareholders’ equity variability and profitability while recognizing these or similar items may recur in subsequent periods. We use adjusted measures of adjusted net income return on common shareholders’ equity in incentive compensation. Therefore, we believe it is useful for investors to have adjusted net income return on common shareholders’ equity and return on common shareholders’ equity when evaluating our performance. We note that investors, financial analysts, financial and business media organizations and rating agencies utilize adjusted net income return on common shareholders’ equity results in their evaluation of our and our industry’s financial performance and in their investment decisions, recommendations and communications as it represents a reliable, representative and consistent measurement of the industry and the company and management’s utilization of capital. Adjusted net income return on common shareholders’ equity should not be considered a substitute for return on common shareholders’ equity and does not reflect the overall profitability of our business.

13

The following tables reconcile return on common shareholders’ equity and adjusted net income return on common shareholders’ equity.
($ in millions)
For the twelve months ended June 30,
 
2018
 
2017
Return on common shareholders’ equity
 
 
 
Numerator:
 
 
 
Net income applicable to common shareholders
$
3,440

 
$
2,518

Denominator:
 
 
 
Beginning common shareholders’ equity (1)
$
19,755

 
$
18,807

Ending common shareholders’ equity (1)
20,819

 
19,755

Average common shareholders’ equity
$
20,287

 
$
19,281

Return on common shareholders’ equity
17.0
%
 
13.1
%
($ in millions)
For the twelve months ended June 30,
 
2018
 
2017
Adjusted net income return on common shareholders’ equity
 
 
 
Numerator:
 
 
 
Adjusted net income *
$
3,090

 
$
2,399

 
 
 
 
Denominator:
 
 
 
Beginning common shareholders’ equity (1)
$
19,755

 
$
18,807

Less: Unrealized net capital gains and losses
1,526

 
1,624

Adjusted beginning common shareholders’ equity
18,229

 
17,183

 
 
 
 
Ending common shareholders’ equity (1)
20,819

 
19,755

Less: Unrealized net capital gains and losses
54

 
1,526

Adjusted ending common shareholders’ equity
20,765

 
18,229

Average adjusted common shareholders’ equity
$
19,497

 
$
17,706

Adjusted net income return on common shareholders’ equity *
15.8
%
 
13.5
%
_____________
(1) Excludes equity related to preferred stock of $2,303 million as of June 30, 2018 and $1,746 million as of June 30, 2017 and June 30, 2016.







14

Combined ratio excluding the effect of catastrophes, prior year reserve reestimates and amortization of purchased intangible assets (“underlying combined ratio”) is a non-GAAP ratio, which is computed as the difference between four GAAP operating ratios: the combined ratio, the effect of catastrophes on the combined ratio, the effect of prior year non-catastrophe reserve reestimates on the combined ratio, and the effect of amortization of purchased intangible assets on the combined ratio. We believe that this ratio is useful to investors and it is used by management to reveal the trends in our Property-Liability business that may be obscured by catastrophe losses, prior year reserve reestimates and amortization of purchased intangible assets. Catastrophe losses cause our loss trends to vary significantly between periods as a result of their incidence of occurrence and magnitude, and can have a significant impact on the combined ratio. Prior year reserve reestimates are caused by unexpected loss development on historical reserves. Amortization of purchased intangible assets relates to the acquisition purchase price and is not indicative of our underlying insurance business results or trends. We believe it is useful for investors to evaluate these components separately and in the aggregate when reviewing our underwriting performance. We also provide it to facilitate a comparison to our outlook on the underlying combined ratio. The most directly comparable GAAP measure is the combined ratio. The underlying combined ratio should not be considered a substitute for the combined ratio and does not reflect the overall underwriting profitability of our business.
The following tables reconcile the respective combined ratio to the underlying combined ratio. Underwriting margin is calculated as 100% minus the combined ratio.
Property-Liability
Three months ended June 30,
 
Six months ended June 30,
 
2018
 
2017
 
2018
 
2017
Combined ratio
94.9

 
96.6

 
91.5

 
94.8

Effect of catastrophe losses
(11.1
)
 
(12.7
)
 
(7.8
)
 
(11.4
)
Effect of prior year non-catastrophe reserve reestimates
1.7

 
1.0

 
1.1

 
1.1

Underlying combined ratio*
85.5

 
84.9

 
84.8

 
84.5

 
 
 
 
 
 
 
 
Effect of prior year catastrophe reserve reestimates
0.5

 
(0.1
)
 
0.2

 
—

Allstate brand - Total
Three months ended June 30,
 
Six months ended June 30,
 
2018
 
2017
 
2018
 
2017
Combined ratio
94.3

 
95.7

 
90.7

 
93.6

Effect of catastrophe losses
(11.2
)
 
(12.9
)
 
(7.9
)
 
(11.4
)
Effect of prior year non-catastrophe reserve reestimates
1.7

 
1.1

 
1.2

 
1.3

Underlying combined ratio*
84.8

 
83.9

 
84.0

 
83.5

 
 
 
 
 
 
 
 
Effect of prior year catastrophe reserve reestimates
0.5

 
(0.1
)
 
0.2

 
—

Allstate brand - Auto Insurance
Three months ended June 30,
 
Six months ended June 30,
 
2018
 
2017
 
2018
 
2017
Combined ratio
93.0

 
95.6

 
90.8

 
93.2

Effect of catastrophe losses
(3.1
)
 
(4.2
)
 
(1.6
)
 
(2.8
)
Effect of prior year non-catastrophe reserve reestimates
2.9

 
1.2

 
2.2

 
1.4

Underlying combined ratio*
92.8

 
92.6

 
91.4

 
91.8

 
 
 
 
 
 
 
 
Effect of prior year catastrophe reserve reestimates
(0.1
)
 
—

 
(0.3
)
 
(0.1
)
Allstate brand - Homeowners Insurance
Three months ended June 30,
 
Six months ended June 30,
 
2018
 
2017
 
2018
 
2017
Combined ratio
98.3

 
97.2

 
89.6

 
95.4

Effect of catastrophe losses
(36.0
)
 
(38.4
)
 
(26.7
)
 
(36.2
)
Effect of prior year non-catastrophe reserve reestimates
1.0

 
1.0

 
0.5

 
1.3

Underlying combined ratio*
63.3

 
59.8

 
63.4

 
60.5

 
 
 
 
 
 
 
 
Effect of prior year catastrophe reserve reestimates
2.4

 
—

 
2.0

 
—

Allstate brand - Other Personal Lines
Three months ended June 30,
 
Six months ended June 30,
 
2018
 
2017
 
2018
 
2017
Combined ratio
86.6

 
90.8

 
87.8

 
91.9

Effect of catastrophe losses
(10.7
)
 
(13.9
)
 
(8.6
)
 
(14.2
)
Effect of prior year non-catastrophe reserve reestimates
1.4

 
0.2

 
1.1

 
0.2

Underlying combined ratio*
77.3

 
77.1

 
80.3

 
77.9

 
 
 
 
 
 
 
 
Effect of prior year catastrophe reserve reestimates
—

 
(0.5
)
 
(0.3
)
 
0.6


15

Esurance brand - Total
Three months ended June 30,
 
Six months ended June 30,
 
2018
 
2017
 
2018
 
2017
Combined ratio
101.9

 
106.1

 
100.7

 
104.2

Effect of catastrophe losses
(6.2
)
 
(5.6
)
 
(3.6
)
 
(3.7
)
Effect of prior year non-catastrophe reserve reestimates
0.2

 
—

 
0.1

 
—

Effect of amortization of purchased intangible assets
—

 
—

 
(0.1
)
 
(0.1
)
Underlying combined ratio*
95.9

 
100.5

 
97.1

 
100.4

 
 
 
 
 
 
 
 
Effect of prior year catastrophe reserve reestimates
0.2

 
(0.2
)
 
0.1

 
(0.1
)
Encompass brand - Total
Three months ended June 30,
 
Six months ended June 30,
 
2018
 
2017
 
2018
 
2017
Combined ratio
98.4

 
104.4

 
98.4

 
108.1

Effect of catastrophe losses
(15.6
)
 
(19.0
)
 
(13.5
)
 
(21.4
)
Effect of prior year non-catastrophe reserve reestimates
2.7

 
2.2

 
1.8

 
0.4

Underlying combined ratio*
85.5

 
87.6

 
86.7

 
87.1

 
 
 
 
 
 
 
 
Effect of prior year catastrophe reserve reestimates
0.8

 
(0.7
)
 
2.0

 
—



# # # # #

16