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Reporting Segments
 12 Months Ended
Dec. 31, 2018
Segment Reporting [Abstract]  
Reporting Segments
Note 4
Reportable Segments
The Company’s chief operating decision maker reviews financial performance and makes decisions about the allocation of resources based on the following seven reportable segments: Allstate Protection, Discontinued Lines and Coverages, Service Businesses, Allstate Life, Allstate Benefits, Allstate Annuities, and Corporate and Other. These segments are described below and align with the Company’s key product and service offerings.
Allstate Protection principally offers private passenger auto and homeowners insurance in the United States and Canada, with earned premiums accounting for 83% of Allstate’s 2018 consolidated revenues. Allstate Protection is authorized to sell certain property and casualty products in all 50 states, the District of Columbia (“D.C.”), Puerto Rico and Canada. For 2018, the top U.S. geographic locations for premiums earned by the Allstate Protection segment were Texas, California, New York and Florida. No other jurisdiction accounted for more than 5% of premium earned for Allstate Protection. Revenues from external customers generated outside the United States were $1.20 billion, $1.13 billion and $1.08 billion in 2018, 2017 and 2016, respectively.
Discontinued Lines and Coverages includes property and casualty insurance coverage that primarily relates to policies written during the 1960s through the mid-1980s. Our exposure to asbestos, environmental and other discontinued lines claims arises principally from direct excess commercial insurance, assumed reinsurance coverage, direct primary commercial insurance and other businesses in run-off.
Service Businesses comprise SquareTrade, Arity, InfoArmor, Allstate Roadside Services and Allstate Dealer Services and offer consumer product protection plans, device and mobile data collection services and analytic solutions, identity protection, roadside assistance, and finance and insurance products (including vehicle service contracts, guaranteed asset protection waivers, road hazard tire and wheel and paintless dent repair protection). The Service Businesses primarily operate in the U.S., with certain businesses offering services in Europe, Canada and Puerto Rico. Revenues from external customers generated outside the United States relate to consumer product protection plans sold primarily in the European Union and were $61 million and $35 million in 2018 and 2017, respectively.
Allstate Life offers traditional, interest-sensitive and variable life insurance products. Allstate Life is authorized to sell life insurance products in all 50 states, D.C. and Puerto Rico. For 2018, the top geographic locations for statutory direct life insurance premiums were New York, California, Texas, Florida and Illinois. No other jurisdiction accounted for more than 5% of statutory direct life insurance premiums.
Allstate Benefits offers voluntary benefits products, including life, accident, critical illness, short-term disability and other health products. Allstate Benefits is authorized to sell its products in all 50 states, D.C., Puerto Rico, the U.S. Virgin Islands, Guam and Canada. For 2018, the top geographic locations for statutory direct accident and health insurance premiums were Florida, Texas, North Carolina and New York. No other jurisdiction accounted for more than 5% of statutory direct accident and health insurance premiums. Revenues from external customers generated outside the United States relate to voluntary accident and health insurance sold in Canada and were not material.
Allstate Annuities consists primarily of deferred fixed annuities and immediate annuities (including standard and sub-standard structured settlements). This segment is in run-off. The Company also previously offered institutional products consisting of funding agreements sold to unaffiliated trusts that used them to back medium-term notes. There were no institutional products outstanding as of December 31, 2018 or 2017.
Corporate and Other comprises holding company activities and certain non-insurance operations, including expenses associated with strategic initiatives.
Allstate Protection and Discontinued Lines and Coverages segments comprise Property-Liability. The Company does not allocate 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, Service Businesses, Allstate Life, Allstate Benefits, Allstate Annuities, and Corporate and Other levels for decision-making purposes.
The accounting policies of the reportable segments are the same as those described in Note 2. The effects of intersegment transactions are eliminated in the segment results, except for services provided by Service Businesses to Allstate Protection that are not eliminated as management considers those transactions in assessing the results of the respective segments.
Change in accounting principle
As discussed in Note 2, the Company changed its accounting principle for recognizing actuarial gains and losses and expected return on plan assets for its pension and other postretirement plans to a more preferable policy under U.S. GAAP. Under the new principle, remeasurement of projected benefit obligation and plan assets are immediately recognized through earnings and are referred to as pension and other postretirement remeasurement gains and losses on the Consolidated Statements of Operations. This change has been applied on a retrospective basis. See Note 2 for further information regarding the impact of the change in accounting principle on the consolidated financial statements.
Measuring segment profit or loss
The measure of segment profit or loss used in evaluating performance is underwriting income for the Allstate Protection and Discontinued Lines and Coverages segments and adjusted net income for the Service Businesses, Allstate Life, Allstate Benefits, Allstate Annuities, 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 and other revenue, less claims and claims expenses (“losses”), amortization of DAC, operating costs and expenses, and restructuring and related charges as determined using GAAP.
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
• Pension and other postretirement remeasurement gains and losses, after-tax
• Valuation changes on embedded derivatives 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 not hedged, after-tax
•  Business combination expenses and the amortization of purchased intangible assets, after-tax
• Gain (loss) on disposition of operations, after-tax
• 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

Reportable segments revenue information
 
 
For the years ended December 31,

($ in millions)
 
2018
 
2017
 
2016
Property-Liability
 
 
 
 
 
 
Insurance premiums
 
 
 
 
 
 
Auto
 
$
22,970

 
$
21,878

 
$
21,264

Homeowners
 
7,517

 
7,310

 
7,257

Other personal lines
 
1,808

 
1,750

 
1,700

Commercial lines
 
655

 
495

 
506

Allstate Protection
 
32,950

 
31,433

 
30,727

Discontinued Lines and Coverages
 
—

 
—

 
—

Total Property-Liability insurance premiums
 
32,950

 
31,433

 
30,727

Other revenue
 
738

 
703

 
688

Net investment income
 
1,464

 
1,478

 
1,253

Realized capital gains and losses
 
(639
)
 
401

 
(6
)
Total Property-Liability
 
34,513

 
34,015

 
32,662

 
 
 
 
 
 
 
Service Businesses
 
 
 
 
 
 
Consumer product protection plans
 
503

 
295

 
—

Roadside assistance
 
263

 
268

 
310

Finance and insurance products
 
332

 
304

 
270

Intersegment premiums and service fees (1)
 
122

 
110

 
105

Other revenue
 
82

 
66

 
64

Net investment income
 
27

 
16

 
13

Realized capital gains and losses
 
(11
)
 
—

 
—

Total Service Businesses
 
1,318

 
1,059

 
762

 
 
 
 
 
 
 
Allstate Life
 
 
 
 
 
 
Traditional life insurance premiums
 
600

 
568

 
533

Accident and health insurance premiums
 
2

 
2

 
2

Interest-sensitive life insurance contract charges
 
713

 
710

 
715

Other revenue
 
119

 
114

 
113

Net investment income
 
505

 
489

 
482

Realized capital gains and losses
 
(14
)
 
5

 
(38
)
Total Allstate Life
 
1,925

 
1,888

 
1,807

 
 
 
 
 
 
 
Allstate Benefits
 
 
 
 
 
 
Traditional life insurance premiums
 
44

 
42

 
40

Accident and health insurance premiums
 
980

 
928

 
857

Interest-sensitive life insurance contract charges
 
111

 
114

 
114

Net investment income
 
77

 
72

 
71

Realized capital gains and losses
 
(9
)
 
1

 
(5
)
Total Allstate Benefits
 
1,203

 
1,157

 
1,077

 
 
 
 
 
 
 
Allstate Annuities
 
 
 
 
 
 
Fixed annuities contract charges
 
15

 
14

 
14

Net investment income
 
1,096

 
1,305

 
1,181

Realized capital gains and losses
 
(166
)
 
44

 
(38
)
Total Allstate Annuities
 
945

 
1,363

 
1,157

 
 
 
 
 
 
 
Corporate and Other
 
 
 
 
 
 
Net investment income
 
71

 
41

 
42

Realized capital gains and losses
 
(38
)
 
(6
)
 
(3
)
Total Corporate and Other
 
33

 
35

 
39

Intersegment eliminations (1)
 
(122
)
 
(110
)
 
(105
)
Consolidated revenues
 
$
39,815

 
$
39,407

 
$
37,399


(1) Intersegment insurance premiums and service fees are primarily related to Arity and Allstate Roadside Services and are eliminated in the consolidated financial statements.

Reportable segments financial performance
 
 
For the years ended December 31,
($ in millions)
 
2018
 
2017
 
2016
Property-Liability
 
 
 
 
 
 
Allstate Protection
 
$
2,343

 
$
2,304

 
$
1,477

Discontinued Lines and Coverages
 
(90
)
 
(99
)
 
(107
)
Total underwriting income
 
2,253

 
2,205

 
1,370

Net investment income
 
1,464

 
1,478

 
1,253

Income tax expense on operations
 
(747
)
 
(1,187
)
 
(865
)
Realized capital gains and losses, after-tax
 
(500
)
 
272

 
—

Gain on disposition of operations, after-tax
 
—

 
9

 
—

Tax Legislation (expense) benefit
 
(5
)
 
36

 
—

Property-Liability net income applicable to common shareholders
 
2,465

 
2,813

 
1,758

 
 
 
 
 
 
 
Service Businesses
 
 
 
 
 
 
Adjusted net income (loss)
 
8

 
(54
)
 
5

Realized capital gains and losses, after-tax
 
(9
)
 
—

 
—

Amortization of purchased intangible assets, after-tax
 
(74
)
 
(60
)
 
—

Tax Legislation (expense) benefit
 
(4
)
 
137

 
—

Service Businesses net (loss) income applicable to common shareholders
 
(79
)
 
23

 
5

 
 
 
 
 
 
 
Allstate Life
 
 
 
 
 
 
Adjusted net income
 
295

 
259

 
251

Realized capital gains and losses, after-tax
 
(11
)
 
2

 
(24
)
DAC and DSI amortization related to realized capital gains and losses, after-tax
 
(8
)
 
(10
)
 
(4
)
Tax Legislation (expense) benefit
 
(16
)
 
338

 
—

Allstate Life net income applicable to common shareholders
 
260

 
589

 
223

 
 
 
 
 
 
 
Allstate Benefits
 
 
 
 
 
 
Adjusted net income
 
124

 
100

 
103

Realized capital gains and losses, after-tax
 
(7
)
 
—

 
(4
)
DAC and DSI amortization related to realized capital gains and losses, after-tax
 
1

 
—

 
—

Tax Legislation benefit
 
—

 
54

 
—

Allstate Benefits net income applicable to common shareholders
 
118

 
154

 
99

 
 
 
 
 
 
 
Allstate Annuities
 
 
 
 
 
 
Adjusted net income
 
131

 
205

 
102

Realized capital gains and losses, after-tax
 
(131
)
 
28

 
(26
)
Valuation changes on embedded derivatives not hedged, after-tax
 
3

 
—

 
(2
)
Gain on disposition of operations, after-tax
 
4

 
4

 
3

Tax Legislation benefit
 
69

 
182

 
—

Allstate Annuities net income applicable to common shareholders
 
76

 
419

 
77

 
 
 
 
 
 
 
Corporate and Other
 
 
 
 
 
 
Adjusted net loss
 
(406
)
 
(320
)
 
(293
)
Realized capital gains and losses, after-tax
 
(30
)
 
(4
)
 
(2
)
Pension and other postretirement remeasurement gains and losses, after-tax
 
(370
)
 
141

 
(175
)
Goodwill impairment
 
—

 
(125
)
 
—

Business combination expenses, after-tax
 
(7
)
 
(14
)
 
—

Tax Legislation expense
 
(15
)
 
(238
)
 
—

Corporate and Other net loss applicable to common shareholders
 
(828
)
 
(560
)
 
(470
)
 
 
 
 
 
 
 
Consolidated net income applicable to common shareholders
 
$
2,012

 
$
3,438

 
$
1,692



Additional significant financial performance data
 
 
 
 
 
 
 
 
For the years ended December 31,
($ in millions)
 
2018
 
2017
 
2016
Amortization of DAC
 
 
 
 
 
 
Property-Liability
 
$
4,475

 
$
4,205

 
$
4,053

Service Businesses
 
463

 
296

 
214

Allstate Life
 
132

 
134

 
131

Allstate Benefits
 
145

 
142

 
145

Allstate Annuities
 
7

 
7

 
7

Consolidated
 
$
5,222

 
$
4,784

 
$
4,550

 
 
 
 
 
 
 
Income tax expense (benefit)
 
 
 
 
 
 
Property-Liability
 
$
613

 
$
1,285

 
$
859

Service Businesses
 
(19
)
 
(194
)
 
2

Allstate Life
 
75

 
(226
)
 
94

Allstate Benefits
 
32

 
1

 
52

Allstate Annuities
 
(66
)
 
(58
)
 
36

Corporate and Other
 
(167
)
 
187

 
(201
)
Consolidated
 
$
468

 
$
995

 
$
842


Impacts of Tax Legislation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income tax expense (benefit) before Tax Legislation
 
Tax Legislation expense (benefit)
 
Income tax expense (benefit) after Tax Legislation
 
 
For the years ended December 31,
($ in millions)
 
2018
 
2017
 
2018
 
2017
 
2018
 
2017
Income tax expense (benefit)
 
 
 
 
 
 
 
 
 
 
 
 
Property-Liability
 
$
608

 
$
1,321

 
$
5

 
$
(36
)
 
$
613

 
$
1,285

Service Businesses
 
(23
)
 
(57
)
 
4

 
(137
)
 
(19
)
 
(194
)
Allstate Life
 
59

 
112

 
16

 
(338
)
 
75

 
(226
)
Allstate Benefits
 
32

 
55

 
—

 
(54
)
 
32

 
1

Allstate Annuities
 
3

 
124

 
(69
)
 
(182
)
 
(66
)
 
(58
)
Corporate and Other
 
(182
)
 
(51
)
 
15

 
238

 
(167
)
 
187

Consolidated
 
$
497

 
$
1,504

 
$
(29
)
 
$
(509
)
 
$
468

 
$
995


Interest expense is primarily incurred in the Corporate and Other segment. Capital expenditures for long-lived assets are generally made in Property-Liability as the Company does not allocate assets to the Allstate Protection and Discontinued Lines and Coverages segments. A portion of these long-lived assets are used by entities included in the Service Businesses, Allstate Life, Allstate Benefits, Allstate Annuities and Corporate and Other segments and, accordingly, are charged to expenses in proportion to their use.
Reportable segment total assets and investments (1)
 
 
 
 
 
 
As of December 31,
($ in millions)
 
2018
 
2017
Assets
 
 
 
 
Property-Liability
 
$
61,947

 
$
60,197

Service Businesses
 
5,473

 
4,531

Allstate Life
 
13,613

 
14,107

Allstate Benefits
 
2,822

 
2,766

Allstate Annuities
 
26,798

 
28,836

Corporate and Other
 
1,596

 
1,985

Consolidated
 
$
112,249

 
$
112,422

​
 
 
 
​
Investments
 
 
 
 
Property-Liability
 
$
43,634

 
$
43,183

Service Businesses
 
1,203

 
954

Allstate Life
 
10,809

 
11,210

Allstate Benefits
 
1,809

 
1,776

Allstate Annuities
 
22,336

 
23,722

Corporate and Other
 
1,469

 
1,958

Consolidated
 
$
81,260

 
$
82,803


(1) 
The balances reflect the elimination of related party investments between segments.