Documents Incorporated By Reference

Portions of the following documents are incorporated herein by reference as follows:

Part III of this Form 10-K incorporates by reference certain information from the registrant’s definitive proxy statement for its annual stockholders meeting to be held on May 19, 2020, (the “Proxy Statement”) to be filed not later than 120 days after the end of the fiscal year covered by this Form 10-K.

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(1)	Allstate Protection and Discontinued Lines and Coverages segments comprise Property-Liability.

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(1)	Insurance products are offered by the Allstate, Esurance and Encompass brands.

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•	Bodily injury — inflation in medical costs, litigation trends and precedents and regulation

•	Vehicle property damage — inflation in repair costs, including parts and labor rates, mix of total losses declared, costs associated with repairing sophisticated newer vehicles, model year and used-car values

•	Homeowners — inflation in the construction industry, building materials and home furnishings, changes in the mix of loss type, and other economic and environmental factors, including short-term supply imbalances for services and supplies in areas affected by catastrophes

•	Those experienced in prior years

•	The average expected level used in pricing

•	Current reinsurance coverage limits

•	Loss estimates from hurricane and earthquake models at various levels of probability

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(1)

In accordance with the terms of its equity compensation plans, Allstate acquired the following shares in connection with the vesting of restricted stock units and performance stock awards and the exercise of stock options held by employees and/or directors. The shares were acquired in satisfaction of withholding taxes due upon exercise or vesting and in payment of the exercise price of the options.

(2)

On November 1, 2019, Allstate entered into an accelerated share repurchase agreement (“ASR agreement”) with Goldman Sachs & Co. LLC (“Goldman Sachs”) to purchase $500 million of our outstanding common stock. In exchange for an upfront payment of $500 million, Goldman Sachs initially delivered 4.01 million shares to Allstate. The ASR agreement settled on January 8, 2020, and we repurchased a total of 4.6 million shares at an average price of $109.51.

(3)	From time to time, repurchases under our programs are executed under the terms of a pre-set trading plan meeting the requirements of Rule 10b5-1(c) of the Securities Exchange Act of 1934.

(4)	On October 31, 2018, we announced the approval of a common share repurchase program for $3 billion, which was completed in January 2020.

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(1)

Due to the adoption of a new accounting standard for the recognition and measurement of financial assets and financial liabilities, the periodic change in fair value of equity investments is recognized within realized capital gains and losses on the Consolidated Statements of Operations effective January 1, 2018. As a result, 2019 and 2018 net realized capital gains and losses are not comparable to other periods presented.

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(1)	2020 operating priorities will remain consistent with the 2019 priorities.

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(1)	Our Transformative Growth Plan included a decision to reposition the Allstate brand for broader customer access, resulting in a $51 million impairment for the Esurance brand trade name. See the Esurance section of this Item for further details.

(2)	Favorable reserve reestimates are shown in parentheses.

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

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(1)	Investment expense includes $51 million and $45 million of investee level expenses in 2019 and 2018, respectively. Investee level expenses include depreciation and asset level operating expenses on directly held real estate and other consolidated investments.

(2)	Investment expense includes $27 million and $18 million related to the portion of reinvestment income on securities lending collateral paid to the counterparties in 2019 and 2018, respectively.

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(1)	Other personal lines include renters, condominium, landlord and other personal lines products.

(2)	Other business lines primarily represent Ivantage, a general agency for Allstate exclusive agencies. Ivantage provides agencies a solution for their customers when coverage through Allstate brand underwritten products is not available.

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(1)	The 2019 column presents changes in 2019 compared to 2018. The 2018 column presents changes in 2018 compared to 2017.

(2)	Includes other business lines underwriting income of $75 million and $49 million in 2019 and 2018, respectively, and Answer Financial underwriting loss of $3 million and $7 million in 2019 and 2018, respectively.

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

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(1)	Our Transformative Growth Plan included a decision to reposition the Allstate brand for broader customer access, resulting in a $51 million impairment for the Esurance brand trade name. See the Esurance section of this Item for further details.

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(1)	Other personal lines include renters, condominium, landlord and other personal lines products.

(2)	Other business lines represent Ivantage.

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(1)	The cost of our catastrophe reinsurance program increased $22 million to $286 million in 2019 from $264 million in 2018. Catastrophe placement premiums are recorded primarily in the Allstate brand and are a reduction of premium. For a more detailed discussion on reinsurance, see the Claims and Claims Expense Reserves section of the MD&A and Note 10 of the consolidated financial statements.

(1)	Allstate brand operates in 50 states, D.C. and 5 Canadian provinces.

(1)	Allstate brand operates in 50 states, D.C., and 5 Canadian provinces.

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

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(1)	Esurance brand operates in 43 states.

(1)	Esurance’s renewal ratios exclude the impact of risk related cancellations. Customers can enter into a policy without a physical inspection. During the underwriting review period, a number of policies may be canceled if upon inspection the condition is unsatisfactory.

(2)	Esurance brand operates in 31 states.

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

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(1)	Encompass announced a plan to exit business in Massachusetts in the second quarter of 2017 and previously announced a plan to exit business in North Carolina in the first half of 2016, which impacted the renewal ratio. Excluding Massachusetts and North Carolina, the renewal ratios were 76.5 points in 2018 compared to 74.5 points in 2017.

(2)	Encompass brand operates in 40 states and D.C.

(1)	Encompass announced a plan to exit business in Massachusetts in the second quarter of 2017 and previously announced a plan to exit business in North Carolina in the first half of 2016, which has impacted the renewal ratio. Excluding Massachusetts and North Carolina, the renewal ratios were 80.8 points in 2018 compared to 79.0 points in 2017.

(2)	Encompass brand operates in 40 states and D.C.

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

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(1)	Primarily related to Arity and Allstate Roadside Services and are eliminated in our consolidated financial statements.

(2)	2018 related to organizational changes at Allstate Roadside Services and 2017 related to a one-time vendor contract termination.

(3)	SquareTrade, which sells consumer protection plans using the Allstate Protection Plans name in the U.S., acquired PlumChoice on November 30, 2018 and iCracked on February 12, 2019.

(4)	InfoArmor, which sells identity protection plans using the Allstate Identity Protection name was acquired on October 5, 2018.

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(1)	Favorable reserve reestimates are shown in parentheses.

(2)	Ratios are calculated using property and casualty premiums earned.

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(1)	N/A reflects no S&P Global Ratings (“S&P”) rating available.

(2)	As of December 31, 2019 and 2018, MCCA includes $39 million and $30 million of reinsurance recoverable on paid claims, respectively, and $5.46 billion and $5.37 billion of reinsurance recoverable on unpaid claims, respectively.

(3)	Other reinsurance recoverables primarily relate to asbestos, environmental and other liability exposures as well as commercial lines, including shared economy.

(4)	As of December 31, 2019, case reserves for Lloyd’s were 68% of the reinsurance recoverable for unpaid claims.

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(1)	Decline reflects reestimates in claims and claims expense related to the 2018 Camp Fire.

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(1)	Paid claims and claims expenses reported in the table for the current and prior years, recovered from the MCCA totaled $119 million, $98 million and $97 million in 2019, 2018 and 2017, respectively.

(2)	Gross reserves for the year ended December 31, 2019, comprise 85% case reserves and 15% IBNR. Gross reserves for the year ended December 31, 2018, comprise 88% case reserves and 12% IBNR. Gross reserves for the year ended December 31, 2017 comprise 87% case reserves and 13% IBNR. The MCCA does not require member companies to report ultimate case reserves.

(1)	Total claims includes those covered and not covered by the MCCA indemnification.

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(1)	Contract charges related to the cost of insurance totaled $499 million, $493 million and $487 million in 2019, 2018 and 2017, respectively.

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(1)	The impact of realized capital gains and losses on amortization of DAC is dependent upon the relationship between the assets that give rise to the gain or loss and the product liability supported by the assets. Fluctuations result from changes in the impact of realized capital gains and losses on actual and expected gross profits.

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(1)	Included as a component of amortization of DAC on the Consolidated Statements of Operations.

(2)	Represents the change in the DAC adjustment for unrealized capital gains and losses. The DAC adjustment represents the amount by which the amortization of DAC would increase or decrease if the unrealized gains and losses in the respective product portfolios were realized.

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(1)

The table above illustrates the changes in contractholder funds, which are presented gross of reinsurance recoverables on the Consolidated Statements of Financial Position. The table above is intended to supplement our discussion and analysis of revenues, which are presented net of reinsurance on the Consolidated Statements of Operations. As a result, the net change in contractholder funds associated with products reinsured is reflected as a component of the other adjustments line.

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(1)	N/A reflects no S&P rating available.

(2)	In December 2018, the Delaware Insurance Commissioner placed Scottish Re (U.S.), Inc. under regulatory supervision and in March 2019, the reinsurer was placed in rehabilitation. We have been permitted to exercise certain setoff rights while the parties address any potential disputes. See Note 10 of the consolidated financial statements for further details.

(3)	A.M. Best rating is B++.

(4)	As of December 31, 2019 and 2018, the other category includes $12 million and $9 million, respectively, of recoverables due from reinsurers rated A- or better by S&P.

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(1)	Benefit ratio is calculated as contract benefits divided by premiums and contract charges.

(2)	Operating expense ratio is calculated as operating costs and expenses divided by premiums and contract charges.

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(1)	Included as a component of amortization of DAC on the Consolidated Statements of Operations.

(2)	Represents the change in the DAC adjustment for unrealized capital gains and losses. The DAC adjustment represents the amount by which the amortization of DAC would increase or decrease if the unrealized gains and losses in the respective product portfolios were realized.

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(1)	As of both December 31, 2019 and 2018, the other category includes $4 million of recoverables due from reinsurers rated A- or better by S&P.

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(1)	These contracts include interest rate guarantee periods, the majority of which are 5 years.

(1)	Comprises structured settlement annuities for annuitants with severe injuries or other health impairments which increased their expected mortality rate at the time the annuity was issued (“sub-standard structured settlements”) and group annuity contracts issued to sponsors of terminated pension plans.

(2)	Comprises structured settlement annuities for annuitants with standard life expectancy (“standard structured settlements”) and single premium immediate annuities (“SPIA”) with life contingencies.

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(1)

The table above illustrates the changes in contractholder funds, which are presented gross of reinsurance recoverables on the Consolidated Statements of Financial Position. The table above is intended to supplement our discussion and analysis of revenues, which are presented net of reinsurance on the Consolidated Statements of Operations. As a result, the net change in contractholder funds associated with products reinsured is reflected as a component of the other adjustments line.

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

(2)	Fixed income securities are carried at fair value. Amortized cost basis for these securities was $32.22 billion, $1.12 billion, $7.43 billion, $1.23 billion, $13.08 billion, $1.21 billion and $56.29 billion for Property-Liability, Service Businesses, Allstate Life, Allstate Benefits, Allstate Annuities, Corporate and Other, and in Total, respectively.

(3)	Equity securities are carried at fair value. The fair value of equity securities, held as of December 31, 2019, was $1.59 billion in excess of cost. These net gains were primarily concentrated in the consumer goods and technology sectors and in domestic equity index funds.

(4)	Short-term investments are carried at fair value.

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(1)	Investment expense includes $81 million, $71 million and $40 million of investee level expenses in 2019, 2018 and 2017, respectively, and has increased compared to prior year, primarily due to growth in real estate investments. Investee level expenses include depreciation and asset level operating expenses on directly held real estate and other consolidated investments.

(2)	Investment expense includes $40 million, $28 million and $10 million related to the portion of reinvestment income on securities lending collateral paid to the counterparties in 2019, 2018 and 2017, respectively.

(1)	Investee level expenses include depreciation and asset level operating expenses reported in investment expense.

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(1)	Relates to limited partnerships where the underlying assets are predominately public equity securities.

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(1)	Includes $1.46 billion of liabilities with a contractual surrender charge of less than 5% of the account balance.

(2)	$369 million of the contracts with market value adjusted surrenders have a 30-45 day period at the end of their initial and subsequent interest rate guarantee periods (which are typically 1, 5, 7 or 10 years) during which there is no surrender charge or market value adjustment. $168 million of these contracts have their 30-45 day window period in 2020.

(3)	89% of these contracts have a minimum interest crediting rate guarantee of 3% or higher.

(4)	Includes $698 million of contractholder funds on variable annuities reinsured to The Prudential Insurance Company of America, a subsidiary of Prudential Financial Inc., in 2006.

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(1)	Liabilities for collateral are typically fully secured with cash or short-term investments. We manage our short-term liquidity position to ensure the availability of a sufficient amount of liquid assets to extinguish short-term liabilities as they come due in the normal course of business, including utilizing potential sources of liquidity as disclosed previously.

(2)

Contractholder funds represent interest-bearing liabilities arising from the sale of products such as interest-sensitive life and fixed annuities, including immediate annuities without life contingencies. The reserve for life-contingent contract benefits relates primarily to traditional life insurance, immediate annuities with life contingencies and voluntary accident and health insurance. These amounts reflect the present value of estimated cash payments to be made to contractholders and policyholders. Certain of these contracts, such as immediate annuities without life contingencies, involve payment obligations where the amount and timing of the payment are essentially fixed and determinable. These amounts relate to (i) policies or contracts where we are currently making payments and will continue to do so and (ii) contracts where the timing of a portion or all of the payments has been determined by the contract. Other contracts, such as interest-sensitive life, fixed deferred annuities, traditional life insurance and voluntary accident and health insurance, involve payment obligations where a portion or all of the amount and timing of future payments is uncertain. For these contracts, we are not currently making payments and will not make payments until (i) the occurrence of an insurable event such as death or illness or (ii) the occurrence of a payment triggering event such as the surrender or partial withdrawal on a policy or deposit contract, which is outside of our control. For immediate annuities with life contingencies, the amount of future payments is uncertain since payments will continue as long as the annuitant lives. We have estimated the timing of payments related to these contracts based on historical experience and our expectation of future payment patterns. Uncertainties relating to these liabilities include mortality, morbidity, expenses, customer lapse and withdrawal activity, estimated additional deposits for interest-sensitive life contracts, and renewal premium for life policies, which may significantly impact both the timing and amount of future payments. Such cash outflows reflect adjustments for the estimated timing of mortality, retirement, and other appropriate factors, but are undiscounted with respect to interest. As a result, the sum of the cash outflows shown for all years in the table exceeds the corresponding liabilities of $17.69 billion for contractholder funds and $12.30 billion for reserve for life-contingent contract benefits as included in the Consolidated Statements of Financial Position as of December 31, 2019. The liability amount in the Consolidated Statements of Financial Position reflects the discounting for interest as well as adjustments for the timing of other factors as described above. Future premium collections are not included in the amounts presented in the table above.

(3)	Amount differs from the balance presented on the Consolidated Statements of Financial Position as of December 31, 2019, because the long-term debt amount above includes interest and excludes debt issuance costs.

(4)	Our payment obligations relating to operating leases, unconditional purchase obligations and pension and other postretirement benefits (“OPEB”) contributions are managed within the structure of our intermediate to long-term liquidity management program.

(5)

The pension plans’ obligations in the next 12 months represent our planned contributions to certain unfunded non-qualified plans where the benefit obligation exceeds the assets, and the remaining years’ contributions are projected based on the average remaining service period using the current underfunded status of the plans. The OPEB plans’ obligations are estimated based on the expected benefits to be paid. These liabilities are discounted with respect to interest, and as a result the sum of the cash outflows shown for all years in the table exceeds the corresponding liability amount of $534 million included in other liabilities and accrued expenses on the Consolidated Statements of Financial Position.

(6)

Reserve for property and casualty insurance claims and claims expense is an estimate of amounts necessary to settle all outstanding claims, including claims that have been IBNR as of the balance sheet date. We have estimated the timing of these payments based on our historical experience and our expectation of future payment patterns. However, the timing of these payments may vary significantly from the amounts shown above, especially for IBNR claims. The ultimate cost of losses may vary materially from recorded amounts that are our best estimates.

(7)	Other liabilities primarily include accrued expenses and certain benefit obligations and claim payments and other checks outstanding. Certain of these long-term liabilities are discounted with respect to interest, as a result, the sum of the cash outflows shown for all years in the table may exceed the corresponding liability amount.

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(8)

Balance sheet liabilities not included in the table above include unearned and advance premiums of $16.13 billion and gross deferred tax liabilities of $2.35 billion. These items were excluded as they do not meet the definition of a contractual liability as we are not contractually obligated to pay these amounts to third parties. Rather, they represent an accounting mechanism that allows us to present our financial statements on an accrual basis. In addition, other liabilities of $280 million were not included in the table above because they did not represent a contractual obligation or the amount and timing of their eventual payment was sufficiently uncertain.

(9)

Net unrecognized tax benefits represent our potential future obligation to the taxing authority for a tax position that was not recognized in the consolidated financial statements. We believe it is reasonably possible that a decrease of up to $58 million in unrecognized tax benefits may occur within the next twelve months due to IRS settlements. The resolution of this obligation may be for an amount different than what we have accrued.

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(1)	Includes $373 million that are valued using broker quotes and $269 million that are valued using quoted prices or quoted net asset values from deal sponsors.

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Note 1	General

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Note 2	Summary of Significant Accounting Policies

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Computation of basic and diluted earnings per common share
		For the years ended December 31,
($ in millions, except per share data)		2019				2018				2017
Numerator:
Net income		$	4,847			$	2,160			$	3,554
Less: Preferred stock dividends		169				148				116
Net income applicable to common shareholders (1)		$	4,678			$	2,012			$	3,438
Denominator:
Weighted average common shares outstanding		328.2				347.8				362.0
Effect of dilutive potential common shares:
Stock options		3.2				3.6				4.3
Restricted stock units (non-participating) and performance stock awards		2.1				1.8				1.5
Weighted average common and dilutive potential common shares outstanding		333.5				353.2				367.8
Earnings per common share – Basic		$	14.25			$	5.78			$	9.50
Earnings per common share – Diluted		$	14.03			$	5.70			$	9.35
Anti-dilutive options excluded from diluted earnings per common share		3.7				2.0				1.5

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Consolidated Statements of Operations
		Previous accounting principle				Impact of change (1)				As reported
($ in millions, except per share data)		Year Ended December 31, 2019
Property and casualty insurance claims and claims expense		$	24,074			$	(98	)		$	23,976
Operating costs and expenses		5,752				(62		)		5,690
Pension and other postretirement remeasurement gains and losses		—				114				114
Restructuring and related charges		41				—				41
Total costs and expenses		38,638				(46		)		38,592
Income from operations before income tax expense		6,043				46				6,089
Income tax expense		1,232				10				1,242
Net income		4,811				36				4,847
Net income applicable to common shareholders		$	4,642			$	36			$	4,678
Earnings per common share:
Net income applicable to common shareholders per common share - Basic		$	14.14			$	0.11			$	14.25
Net income applicable to common shareholders per common share - Diluted		$	13.92			$	0.11			$	14.03

⁽¹⁾ The Company merged two of its pension plans, which had no impact on its financial statements as the Company remeasures pension plan assets and projected benefit obligations immediately in earnings on a quarterly basis.  However, the plan merger increased the impact of change by $41 million for 2019, reflecting the shorter amortization period for losses deferred in AOCI from one of the merged plans that was required as part of the merger. 

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Consolidated Statements of Operations
		Previous accounting principle				Change in accounting principle				As adjusted
		Year Ended December 31, 2018
Property and casualty insurance claims and claims expense		$	22,839			$	(61	)		$	22,778
Operating costs and expenses		5,869				(275		)		5,594
Pension and other postretirement remeasurement gains and losses		—				468				468
Restructuring and related charges		83				(16		)		67
Total costs and expenses		37,077				116				37,193
Income from operations before income tax expense		2,744				(116		)		2,628
Income tax expense		492				(24		)		468
Net income		2,252				(92		)		2,160
Net income applicable to common shareholders		$	2,104			$	(92	)		$	2,012
Earnings per common share:
Net income applicable to common shareholders per common share - Basic		$	6.05			$	(0.27	)		$	5.78
Net income applicable to common shareholders per common share - Diluted		$	5.96			$	(0.26	)		$	5.70
		Year Ended December 31, 2017
Property and casualty insurance claims and claims expense		$	21,929			$	(82	)		$	21,847
Operating costs and expenses		5,442				(246		)		5,196
Pension and other postretirement remeasurement gains and losses		—				(217		)		(217		)
Restructuring and related charges		109				(13		)		96
Total costs and expenses		35,436				(558		)		34,878
Income from operations before income tax expense		3,991				558				4,549
Income tax expense		802				193				995
Net income		3,189				365				3,554
Net income applicable to common shareholders		$	3,073			$	365			$	3,438
Earnings per common share:
Net income applicable to common shareholders per common share - Basic		$	8.49			$	1.01			$	9.50
Net income applicable to common shareholders per common share - Diluted		$	8.36			$	0.99			$	9.35

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Consolidated Statements of Comprehensive Income
		Previous accounting principle				Impact of change				As reported
($ in millions)		Year Ended December 31, 2019
Net income		$	4,811			$	36			$	4,847
Other comprehensive income (loss), after-tax
Changes in:
Unrealized net capital gains and losses		1,889				—				1,889
Unrealized foreign currency translation adjustments		(4		)		(6		)		(10		)
Unrecognized pension and other postretirement benefit cost (1)		141				(188		)		(47		)
Other comprehensive income, after-tax		2,026				(194		)		1,832
Comprehensive income		6,837				(158		)		6,679
		Year Ended December 31, 2018
Net income		$	2,252			$	(92	)		$	2,160
Other comprehensive income (loss), after-tax
Changes in:
Unrealized net capital gains and losses		(754		)		—				(754		)
Unrealized foreign currency translation adjustments		(55		)		7				(48		)
Unrecognized pension and other postretirement benefit cost (1)		(144		)		85				(59		)
Other comprehensive loss, after-tax		(953		)		92				(861		)
Comprehensive income		1,299				—				1,299
		Year Ended December 31, 2017
Net income		$	3,189			$	365			$	3,554
Other comprehensive income (loss), after-tax
Changes in:
Unrealized net capital gains and losses		319				—				319
Unrealized foreign currency translation adjustments		47				(2		)		45
Unrecognized pension and other postretirement benefit cost (1)		307				(359		)		(52		)
Other comprehensive income, after-tax		673				(361		)		312
Comprehensive income		3,862				4				3,866

⁽¹⁾ Financial statement line item has been updated to “Unamortized pension and other postretirement prior service credit“.

Consolidated Statements of Financial Position
		Previous accounting principle			Impact of change			As reported
($ in millions)		December 31, 2019
Retained income		49,713			(1,639	)		48,074
Unrealized foreign currency translation adjustments		(68	)		9			(59	)
Unrecognized pension and other postretirement benefit cost (1)		(1,350	)		1,472			122
Total AOCI		469			1,481			1,950
Total shareholders’ equity		26,156			(158	)		25,998
		December 31, 2018
Retained income		45,708			(1,675	)		44,033
Unrealized foreign currency translation adjustments		(64	)		15			(49	)
Unrecognized pension and other postretirement benefit cost (1)		(1,491	)		1,660			169
Total AOCI		(1,557	)		1,675			118
Total shareholders’ equity		21,312			—			21,312

⁽¹⁾ Financial statement line item has been updated to “Unamortized pension and other postretirement prior service credit“.

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Consolidated Statements of Shareholders’ Equity
($ in millions)		Previous accounting principle				Impact of change				As reported
		Year Ended December 31, 2019
Retained income
Balance, beginning of year		$	45,708			$	(1,675	)		$	44,033
Cumulative effect of change in accounting principle		21				—				21
Net income		4,811				36				4,847
Dividends on common stock (declared per share of $2.00)		(658		)		—				(658		)
Dividends on preferred stock		(169		)		—				(169		)
Balance, end of year		49,713				(1,639		)		48,074
Accumulated other comprehensive income (loss)
Balance, beginning of year		(1,557		)		1,675				118
Cumulative effect of change in accounting principle		—				—				—
Change in unrealized net capital gains and losses		1,889				—				1,889
Change in unrealized foreign currency translation adjustments		(4		)		(6		)		(10		)
Change in unrecognized pension and other postretirement benefit cost (1)		141				(188		)		(47		)
Balance, end of year		$	469			$	1,481			$	1,950
		Year Ended December 31, 2018
Retained income
Balance, beginning of year		$	43,162			$	(1,583	)		$	41,579
Cumulative effect of change in accounting principle		1,088				—				1,088
Net income		2,252				(92		)		2,160
Dividends on common stock (declared per share of $1.84)		(646		)		—				(646		)
Dividends on preferred stock		(148		)		—				(148		)
Balance, end of year		45,708				(1,675		)		44,033
Accumulated other comprehensive income (loss)
Balance, beginning of year		306				1,583				1,889
Cumulative effect of change in accounting principle		(910		)		—				(910		)
Change in unrealized net capital gains and losses		(754		)		—				(754		)
Change in unrealized foreign currency translation adjustments		(55		)		7				(48		)
Change in unrecognized pension and other postretirement benefit cost (1)		(144		)		85				(59		)
Balance, end of year		(1,557		)		1,675				118
		Year Ended December 31, 2017
Retained income
Balance, beginning of year		$	40,678			$	(1,669	)		$	39,009
Net income		3,189				365				3,554
Dividends on common stock (declared per share of $1.48)		(540		)		—				(540		)
Dividends on preferred stock		(116		)		—				(116		)
Reclassification of tax effects due to change in accounting principle		(49		)		(279		)		(328		)
Balance, end of year		43,162				(1,583		)		41,579
Accumulated other comprehensive income (loss)
Balance, beginning of year		(416		)		1,665				1,249
Change in unrealized net capital gains and losses		319				—				319
Change in unrealized foreign currency translation adjustments		47				(2		)		45
Change in unrecognized pension and other postretirement benefit cost (1)		307				(359		)		(52		)
Reclassification of tax effects due to change in accounting principle		49				279				328
Balance, end of year		306				1,583				1,889

⁽¹⁾ Financial statement line item has been updated to “Change in unamortized pension and other postretirement prior service credit”.

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Consolidated Statements of Cash Flows
		Previous accounting principle				Impact of change				As reported
($ in millions)		Year Ended December 31, 2019
Cash flows from operating activities
Net income		$	4,811			$	36			$	4,847
Adjustments to reconcile net income to net cash provided by operating activities:
Pension and other postretirement measurement gains and losses		—				114				114
Income taxes		477				10				487
Other operating assets and liabilities		110				(160		)		(50		)
Net cash provided by operating activities		$	5,129			$	—			$	5,129
		Year Ended December 31, 2018
Cash flows from operating activities
Net income		$	2,252			$	(92	)		$	2,160
Adjustments to reconcile net income to net cash provided by operating activities:
Pension and other postretirement measurement gains and losses		—				468				468
Income taxes		(356		)		(24		)		(380		)
Other operating assets and liabilities		1,207				(352		)		855
Net cash provided by operating activities		$	5,175			$	—			$	5,175
		Year Ended December 31, 2017
Cash flows from operating activities
Net income		$	3,189			$	365			$	3,554
Adjustments to reconcile net income to net cash provided by operating activities:
Pension and other postretirement measurement gains and losses		—				(217		)		(217		)
Income taxes		(245		)		193				(52		)
Other operating assets and liabilities		328				(341		)		(13		)
Net cash provided by operating activities		$	4,314			$	—			$	4,314

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Note 3	Acquisitions

Note 4	Reportable Segments

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Reportable segments revenue information
		For the years ended December 31,
($ in millions)		2019				2018				2017
Property-Liability
Insurance premiums
Auto		$	24,188			$	22,970			$	21,878
Homeowners		7,912				7,517				7,310
Other personal lines		1,861				1,808				1,750
Commercial lines		882				655				495
Allstate Protection		34,843				32,950				31,433
Discontinued Lines and Coverages		—				—				—
Total Property-Liability insurance premiums		34,843				32,950				31,433
Other revenue		741				738				703
Net investment income		1,533				1,464				1,478
Realized capital gains and losses		1,470				(639		)		401
Total Property-Liability		38,587				34,513				34,015
Service Businesses
Consumer product protection plans		633				503				295
Roadside assistance		238				263				268
Finance and insurance products		362				332				304
Intersegment premiums and service fees (1)		154				122				110
Other revenue		188				82				66
Net investment income		42				27				16
Realized capital gains and losses		32				(11		)		—
Total Service Businesses		1,649				1,318				1,059
Allstate Life
Traditional life insurance premiums		630				600				568
Accident and health insurance premiums		2				2				2
Interest-sensitive life insurance contract charges		711				713				710
Other revenue		125				119				114
Net investment income		514				505				489
Realized capital gains and losses		1				(14		)		5
Total Allstate Life		1,983				1,925				1,888
Allstate Benefits
Traditional life insurance premiums		43				44				42
Accident and health insurance premiums		988				980				928
Interest-sensitive life insurance contract charges		114				111				114
Net investment income		83				77				72
Realized capital gains and losses		12				(9		)		1
Total Allstate Benefits		1,240				1,203				1,157
Allstate Annuities
Fixed annuities contract charges		13				15				14
Net investment income		917				1,096				1,305
Realized capital gains and losses		346				(166		)		44
Total Allstate Annuities		1,276				945				1,363
Corporate and Other
Net investment income		70				71				41
Realized capital gains and losses		24				(38		)		(6		)
Total Corporate and Other		94				33				35
Intersegment eliminations (1)		(154		)		(122		)		(110		)
Consolidated revenues		$	44,675			$	39,815			$	39,407

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

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Reportable segments financial performance
		For the years ended December 31,
($ in millions)		2019				2018				2017
Property-Liability
Allstate Protection		$	2,912			$	2,343			$	2,304
Discontinued Lines and Coverages		(108		)		(90		)		(99		)
Total underwriting income		2,804				2,253				2,205
Net investment income		1,533				1,464				1,478
Income tax expense on operations		(887		)		(747		)		(1,187		)
Realized capital gains and losses, after-tax		1,161				(500		)		272
Gain on disposition of operations, after-tax		—				—				9
Tax Legislation (expense) benefit		—				(5		)		36
Property-Liability net income applicable to common shareholders		4,611				2,465				2,813
Service Businesses
Adjusted net income (loss)		38				8				(54		)
Realized capital gains and losses, after-tax		25				(9		)		—
Amortization of purchased intangibles, after-tax		(97		)		(74		)		(60		)
Impairment of purchased intangibles, after-tax		(43		)		—				—
Tax Legislation (expense) benefit		—				(4		)		137
Service Businesses net (loss) income applicable to common shareholders		(77		)		(79		)		23
Allstate Life
Adjusted net income		261				295				259
Realized capital gains and losses, after-tax		—				(11		)		2
Valuation changes on embedded derivatives not hedged, after-tax		(9		)		—				—
DAC and DSI amortization related to realized capital gains and losses and valuation changes on embedded derivatives not hedged, after-tax		(5		)		(8		)		(10		)
Tax Legislation (expense) benefit		—				(16		)		338
Allstate Life net income applicable to common shareholders		247				260				589
Allstate Benefits
Adjusted net income		115				124				100
Realized capital gains and losses, after-tax		9				(7		)		—
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		124				118				154
Allstate Annuities
Adjusted net income		10				131				205
Realized capital gains and losses, after-tax		274				(131		)		28
Valuation changes on embedded derivatives not hedged, after-tax		(6		)		3				—
Gain on disposition of operations, after-tax		4				4				4
Tax Legislation benefit		—				69				182
Allstate Annuities net income applicable to common shareholders		282				76				419
Corporate and Other
Adjusted net loss		(438		)		(406		)		(320		)
Realized capital gains and losses, after-tax		19				(30		)		(4		)
Pension and other postretirement remeasurement gains and losses, after-tax		(90		)		(370		)		141
Goodwill impairment		—				—				(125		)
Business combination expenses, after-tax		—				(7		)		(14		)
Tax Legislation expense		—				(15		)		(238		)
Consolidated and Other net loss applicable to common shareholders		(509		)		(828		)		(560		)
Consolidated net income applicable to common shareholders		$	4,678			$	2,012			$	3,438

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Additional significant financial performance data
		For the years ended December 31,
($ in millions)		2019				2018				2017
Amortization of DAC
Property-Liability		$	4,649			$	4,475			$	4,205
Service Businesses		543				463				296
Allstate Life		173				132				134
Allstate Benefits		161				145				142
Allstate Annuities		7				7				7
Consolidated		$	5,533			$	5,222			$	4,784
Income tax expense (benefit)
Property-Liability		$	1,196			$	613			$	1,285
Service Businesses		(18		)		(19		)		(194		)
Allstate Life		53				75				(226		)
Allstate Benefits		35				32				1
Allstate Annuities		73				(66		)		(58		)
Corporate and Other		(97		)		(167		)		187
Consolidated		$	1,242			$	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)		2019				2018
Assets
Property-Liability		$	67,243			$	61,947
Service Businesses		5,746				5,473
Allstate Life		14,771				13,613
Allstate Benefits		2,915				2,822
Allstate Annuities		26,914				26,798
Corporate and Other		2,361				1,596
Consolidated		$	119,950			$	112,249
Investments
Property-Liability		$	48,414			$	43,634
Service Businesses		1,544				1,203
Allstate Life		11,914				10,809
Allstate Benefits		1,941				1,809
Allstate Annuities		22,221				22,336
Corporate and Other		2,328				1,469
Consolidated		$	88,362			$	81,260

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

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Note 5	Investments

Amortized cost, gross unrealized gains (losses) and fair value for fixed income securities
		Amortized cost				Gross unrealized								Fair value
($ in millions)						Gains				Losses
December 31, 2019
U.S. government and agencies		$	4,971			$	141			$	(26	)		$	5,086
Municipal		8,080				551				(11		)		8,620
Corporate		41,090				2,035				(47		)		43,078
Foreign government		968				16				(5		)		979
ABS		860				8				(6		)		862
MBS		324				96				(1		)		419
Total fixed income securities		$	56,293			$	2,847			$	(96	)		$	59,044
December 31, 2018
U.S. government and agencies		$	5,386			$	137			$	(6	)		$	5,517
Municipal		8,963				249				(43		)		9,169
Corporate		40,557				491				(890		)		40,158
Foreign government		739				13				(5		)		747
ABS		1,049				6				(10		)		1,045
MBS		440				97				(3		)		534
Total fixed income securities		$	57,134			$	993			$	(957	)		$	57,170

Scheduled maturities for fixed income securities
		As of December 31, 2019
($ in millions)		Amortized cost				Fair value
Due in one year or less		$	3,214			$	3,239
Due after one year through five years		24,108				24,781
Due after five years through ten years		18,194				19,177
Due after ten years		9,593				10,566
		55,109				57,763
ABS and MBS		1,184				1,281
Total		$	56,293			$	59,044

Actual maturities may differ from those scheduled as a result of calls and make-whole payments by the issuers. ABS and MBS are shown separately because of the potential for prepayment of principal prior to contractual maturity dates.

Net investment income
		For the years ended December 31,
($ in millions)		2019				2018				2017
Fixed income securities		$	2,175			$	2,077			$	2,078
Equity securities		206				170				174
Mortgage loans		220				217				206
Limited partnership interests		471				705				889
Short-term investments		102				73				30
Other		262				272				236
Investment income, before expense		3,436				3,514				3,613
Investment expense		(277		)		(274		)		(212		)
Net investment income		$	3,159			$	3,240			$	3,401

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Realized capital gains (losses) by asset type
		For the years ended December 31,
($ in millions)		2019				2018				2017
Fixed income securities		$	461			$	(237	)		$	94
Equity securities		1,210				(594		)		255
Mortgage loans		—				2				1
Limited partnership interests		200				(101		)		132
Derivatives		(15		)		46				(46		)
Other		29				7				9
Realized capital gains and losses		$	1,885			$	(877	)		$	445

Realized capital gains (losses) by transaction type
		For the years ended December 31,
($ in millions)		2019				2018				2017
Impairment write-downs		$	(47	)		$	(14	)		$	(102	)
Change in intent write-downs		—				—				(48		)
Net OTTI losses recognized in earnings		(47		)		(14		)		(150		)
Sales		575				(215		)		641
Valuation of equity investments (1)		1,372				(691		)		—
Valuation and settlements of derivative instruments		(15		)		43				(46		)
Realized capital gains and losses		$	1,885			$	(877	)		$	445

(1)	Includes valuation of equity securities and certain limited partnership interests where the underlying assets are predominately public equity securities.

Sales of fixed income securities resulted in gross gains of $607 million, $120 million and $737 million and gross losses of $132 million, $347 million and $276 million during 2019, 2018 and 2017, respectively.

The following table presents the net pre-tax appreciation (decline) recognized in net income of equity securities and limited partnership interests carried at fair value that are still held as of December 31, 2019 and 2018, respectively.

Net appreciation (decline) recognized in net income
		For the years ended December 31,
($ in millions)		2019				2018
Equity securities		$	1,073			$	(261	)
Limited partnership interests carried at fair value		149				249
Total		$	1,222			$	(12	)

OTTI losses by asset type
		For the years ended December 31,
($ in millions)		2019												2018												2017
		Gross				Included in OCI				Net				Gross				Included in OCI				Net				Gross				Included in OCI				Net
Fixed income securities:
Municipal		$	(2	)		$	2			$	—			$	—			$	—			$	—			$	(1	)		$	(3	)		$	(4	)
Corporate		(5		)		(2		)		(7		)		(4		)		2				(2		)		(9		)		3				(6		)
ABS		(4		)		—				(4		)		(1		)		(2		)		(3		)		(1		)		(2		)		(3		)
MBS		(4		)		1				(3		)		(4		)		(1		)		(5		)		(11		)		(2		)		(13		)
Total fixed income securities		(15		)		1				(14		)		(9		)		(1		)		(10		)		(22		)		(4		)		(26		)
Equity securities		—				—				—				—				—				—				(86		)		—				(86		)
Mortgage loans		—				—				—				—				—				—				(1		)		—				(1		)
Limited partnership interests		(6		)		—				(6		)		(3		)		—				(3		)		(32		)		—				(32		)
Other		(27		)		—				(27		)		(1		)		—				(1		)		(5		)		—				(5		)
OTTI losses		$	(48	)		$	1			$	(47	)		$	(13	)		$	(1	)		$	(14	)		$	(146	)		$	(4	)		$	(150	)

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OTTI losses included in AOCI at the time of impairment for fixed income securities which were not included in earnings (1)
		As of December 31,
($ in millions)		2019				2018
Municipal		$	(7	)		$	(5	)
Corporate		—				(2		)
ABS		(10		)		(10		)
MBS		(56		)		(69		)
Total		$	(73	)		$	(86	)

(1)	The amounts exclude $161 million and $180 million as of December 31, 2019 and 2018, respectively, of net unrealized gains related to changes in valuation of the fixed income securities subsequent to the impairment measurement date.

Rollforward of the cumulative credit losses recognized in earnings for fixed income securities held
		As of December 31,
($ in millions)		2019				2018				2017
Beginning balance		$	(204	)		$	(226	)		$	(318	)
Additional credit loss for securities previously other-than-temporarily impaired		(10		)		(7		)		(18		)
Additional credit loss for securities not previously other-than-temporarily impaired		(4		)		(3		)		(8		)
Reduction in credit loss for securities disposed or collected		32				30				116
Change in credit loss due to accretion of increase in cash flows		—				2				2
Ending balance		$	(186	)		$	(204	)		$	(226	)

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Unrealized net capital gains and losses included in AOCI
($ in millions)		Fair value				Gross unrealized								Unrealized net gains (losses)
December 31, 2019						Gains				Losses
Fixed income securities		$	59,044			$	2,847			$	(96	)		$	2,751
Short-term investments		4,256				—				—				—
Derivative instruments		—				—				(3		)		(3		)
EMA limited partnerships (1)														(4		)
Unrealized net capital gains and losses, pre-tax														2,744
Amounts recognized for:
Insurance reserves (2)														(126		)
DAC and DSI (3)														(224		)
Amounts recognized														(350		)
Deferred income taxes														(507		)
Unrealized net capital gains and losses, after-tax														$	1,887
December 31, 2018
Fixed income securities		$	57,170			$	993			$	(957	)		$	36
Short-term investments		3,027				—				—				—
Derivative instruments		—				—				(3		)		(3		)
EMA limited partnerships														—
Unrealized net capital gains and losses, pre-tax														33
Amounts recognized for:
Insurance reserves														—
DAC and DSI														(33		)
Amounts recognized														(33		)
Deferred income taxes														(2		)
Unrealized net capital gains and losses, after-tax														$	(2	)

(1)	Unrealized net capital gains and losses for limited partnership interests represent the Company’s share of EMA limited partnerships’ OCI. Fair value and gross unrealized gains and losses are not applicable.

(2)	The insurance reserves adjustment represents the amount by which the reserve balance would increase if the net unrealized gains in the applicable product portfolios were realized and reinvested at lower interest rates, resulting in a premium deficiency. This adjustment primarily relates to structured settlement annuities with life contingencies (a type of immediate fixed annuities).

(3)	The DAC and DSI adjustment balance represents the amount by which the amortization of DAC and DSI would increase or decrease if the unrealized gains or losses in the respective product portfolios were realized.

Change in unrealized net capital gains (losses)
		For the years ended December 31,
($ in millions)		2019				2018				2017
Fixed income securities		$	2,715			$	(1,431	)		$	204
Equity securities (1)		—				—				651
Derivative instruments		—				(2		)		(3		)
EMA limited partnerships		(4		)		(1		)		5
Total		2,711				(1,434		)		857
Amounts recognized for:
Insurance reserves		(126		)		315				(315		)
DAC and DSI		(191		)		163				(50		)
Amounts recognized		(317		)		478				(365		)
Deferred income taxes		(505		)		202				117
Increase (decrease) in unrealized net capital gains and losses, after-tax		$	1,889			$	(754	)		$	609

(1)	Upon adoption of the recognition and measurement accounting standard on January 1, 2018, $1.16 billion of pre-tax unrealized net capital gains for equity securities were reclassified from AOCI to retained income.

Portfolio monitoring

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Gross unrealized losses and fair value by type and length of time held in a continuous unrealized loss position
		Less than 12 months											12 months or more
($ in millions)		Number of issues			Fair value				Unrealized losses				Number of issues			Fair value				Unrealized losses				Total unrealized losses
December 31, 2019
Fixed income securities
U.S. government and agencies		31			$	1,713			$	(26	)		10			$	26			$	—			$	(26	)
Municipal		307			576				(9		)		1			14				(2		)		(11		)
Corporate		186			1,392				(20		)		65			485				(27		)		(47		)
Foreign government		55			412				(4		)		6			102				(1		)		(5		)
ABS		36			193				(2		)		23			160				(4		)		(6		)
MBS		27			15				—				123			14				(1		)		(1		)
Total fixed income securities		642			$	4,301			$	(61	)		228			$	801			$	(35	)		$	(96	)
Investment grade fixed income securities		581			$	3,878			$	(41	)		185			$	594			$	(20	)		$	(61	)
Below investment grade fixed income securities		61			423				(20		)		43			207				(15		)		(35		)
Total fixed income securities		642			$	4,301			$	(61	)		228			$	801			$	(35	)		$	(96	)
December 31, 2018
Fixed income securities
U.S. government and agencies		11			$	55			$	—			38			$	364			$	(6	)		$	(6	)
Municipal		943			1,633				(10		)		1,147			1,554				(33		)		(43		)
Corporate		1,736			19,243				(543		)		645			8,374				(347		)		(890		)
Foreign government		7			20				(1		)		27			412				(4		)		(5		)
ABS		64			454				(5		)		28			161				(5		)		(10		)
MBS		169			37				—				197			52				(3		)		(3		)
Total fixed income securities		2,930			$	21,442			$	(559	)		2,082			$	10,917			$	(398	)		$	(957	)
Investment grade fixed income securities		2,348			$	17,485			$	(331	)		2,021			$	10,626			$	(360	)		$	(691	)
Below investment grade fixed income securities		582			3,957				(228		)		61			291				(38		)		(266		)
Total fixed income securities		2,930			$	21,442			$	(559	)		2,082			$	10,917			$	(398	)		$	(957	)

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Gross unrealized losses by unrealized loss position and credit quality as of December 31, 2019
($ in millions)		Investment grade				Below investment grade				Total
Fixed income securities with unrealized loss position less than 20% of amortized cost (1) (2)		$	(48	)		$	(27	)		$	(75	)
Fixed income securities with unrealized loss position greater than or equal to 20% of amortized cost (3) (4)		(13		)		(8		)		(21		)
Total unrealized losses		$	(61	)		$	(35	)		$	(96	)

(1)	Below investment grade fixed income securities include $14 million that have been in an unrealized loss position for less than twelve months.

(2)	Related to securities with an unrealized loss position less than 20% of amortized cost, the degree of which suggests that these securities do not pose a high risk of being other-than-temporarily impaired.

(3)	No below investment grade fixed income securities have been in an unrealized loss position for a period of twelve or more consecutive months.

(4)	Evaluated based on factors such as discounted cash flows and the financial condition and near-term and long-term prospects of the issue or issuer and were determined to have adequate resources to fulfill contractual obligations.

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Principal geographic distribution of commercial real estate exceeding 5% of the mortgage loans portfolio
		As of December 31,
(% of mortgage loan portfolio carrying value)		2019			2018
Texas		16.9	%		14.9	%
California		15.1			16.4
Illinois		7.1			7.8
Florida		6.4			6.1
New Jersey		5.6			6.8
North Carolina		4.5			5.1

Types of properties collateralizing the mortgage loan portfolio
		As of December 31,
(% of mortgage loan portfolio carrying value)		2019			2018
Apartment complex		36.8	%		34.4	%
Office buildings		22.6			24.5
Warehouse		16.8			15.8
Retail		13.4			14.4
Other		10.4			10.9
Total		100.0	%		100.0	%

Contractual maturities of the mortgage loan portfolio
		As of December 31, 2019
($ in millions)		Number of loans			Carrying value				Percent
2020		9			$	58			1.2	%
2021		36			446				9.3
2022		28			460				9.5
2023		52			776				16.1
Thereafter		161			3,077				63.9
Total		286			$	4,817			100.0	%

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Carrying value of non-impaired mortgage loans summarized by debt service coverage ratio distribution
		As of December 31,
($ in millions)		2019												2018
Debt Service Coverage Ratio Distribution		Fixed rate mortgage loans				Variable rate mortgage loans				Total				Fixed rate mortgage loans				Variable rate mortgage loans				Total
Below 1.0		$	13			$	32			$	45			$	6			$	31			$	37
1.0 - 1.25		225				—				225				273				—				273
1.26 - 1.50		1,219				18				1,237				1,192				—				1,192
Above 1.50		3,264				38				3,302				3,063				101				3,164
Total non-impaired mortgage loans		$	4,721			$	88			$	4,809			$	4,534			$	132			$	4,666

Net carrying value of impaired mortgage loans
		As of December 31,
($ in millions)		2019				2018
Impaired mortgage loans with a valuation allowance		$	8			$	4
Impaired mortgage loans without a valuation allowance		—				—
Total impaired mortgage loans		$	8			$	4
Valuation allowance on impaired mortgage loans		$	3			$	3

The average balance of impaired loans was $5 million, $4 million and $7 million during 2019, 2018 and 2017, respectively.

Rollforward of the valuation allowance on impaired mortgage loans
		For the years ended December 31,
($ in millions)		2019				2018				2017
Beginning balance		$	3			$	3			$	3
Net increase in valuation allowance		—				—				1
Charge offs		—				—				(1		)
Ending balance		$	3			$	3			$	3

Payments on all mortgage loans were current as of December 31, 2019, 2018 and 2017.

Municipal bonds

Principal geographic distribution of municipal bond issuers exceeding 5% of the portfolio
		As of December 31,
(% of municipal bond portfolio carrying value)		2019			2018
Texas		12.7	%		12.3	%
California		8.6			7.4
Colorado		5.8			4.0
Washington		5.5			6.2
New York		3.7			5.6

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Other investments by asset type
($ in millions)		December 31, 2019				December 31, 2018
Bank loans		$	1,204			$	1,350
Real estate		1,005				791
Policy loans		894				891
Agent loans		666				620
Derivatives and other		236				200
Total		$	4,005			$	3,852

Concentration of credit risk

Note 6	Fair Value of Assets and Liabilities

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Assets and liabilities measured at fair value
		As of December 31, 2019
($ in millions)		Quoted prices in active markets for identical assets (Level 1)				Significant other observable inputs (Level 2)				Significant unobservable inputs (Level 3)				Counterparty and cash collateral netting				Total
Assets
Fixed income securities:
U.S. government and agencies		$	4,689			$	397			$	—							$	5,086
Municipal		—				8,558				62								8,620
Corporate - public		—				30,819				61								30,880
Corporate - privately placed		—				12,084				114								12,198
Foreign government		—				979				—								979
ABS		—				797				65								862
MBS		—				379				40								419
Total fixed income securities		4,689				54,013				342								59,044
Equity securities		7,407				384				371								8,162
Short-term investments		1,940				2,291				25								4,256
Other investments: Free-standing derivatives		—				180				—				(40		)		140
Separate account assets		3,044				—				—								3,044
Other assets		1				—				—								1
Total recurring basis assets		17,081				56,868				738				(40		)		74,647
Total assets at fair value		$	17,081			$	56,868			$	738			$	(40	)		$	74,647
% of total assets at fair value		22.9		%		76.2		%		1.0		%		(0.1		)%		100.0		%
Investments reported at NAV																		1,814
Total																		$	76,461
Liabilities
Contractholder funds: Derivatives embedded in life and annuity contracts		$	—			$	—			$	(462	)						$	(462	)
Other liabilities: Free-standing derivatives		—				(84		)		—				$	12			(72		)
Total recurring basis liabilities		$	—			$	(84	)		$	(462	)		$	12			$	(534	)
% of total liabilities at fair value		—		%		15.7		%		86.5		%		(2.2		)%		100.0		%

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Assets and liabilities measured at fair value
		As of December 31, 2018
($ in millions)		Quoted prices in active markets for identical assets (Level 1)				Significant other observable inputs (Level 2)				Significant unobservable inputs (Level 3)				Counterparty and cash collateral netting				Total
Assets
Fixed income securities:
U.S. government and agencies		$	5,085			$	432			$	—							$	5,517
Municipal		—				9,099				70								9,169
Corporate - public		—				29,200				70								29,270
Corporate - privately placed		—				10,798				90								10,888
Foreign government		—				747				—								747
ABS		—				976				69								1,045
MBS		—				508				26								534
Total fixed income securities		5,085				51,760				325								57,170
Equity securities		4,364				331				341								5,036
Short-term investments		1,338				1,659				30								3,027
Other investments: Free-standing derivatives		—				139				1				$	(23	)		117
Separate account assets		2,805				—				—								2,805
Other assets		2				—				—								2
Total recurring basis assets		$	13,594			$	53,889			$	697			$	(23	)		$	68,157
% of total assets at fair value		19.9		%		79.1		%		1.0		%		—		%		100.0		%
Investments reported at NAV																		1,779
Total																		$	69,936
Liabilities
Contractholder funds: Derivatives embedded in life and annuity contracts		$	—			$	—			$	(224	)						$	(224	)
Other liabilities: Free-standing derivatives		(1		)		(62		)		—				$	6			(57		)
Total recurring basis liabilities		$	(1	)		$	(62	)		$	(224	)		$	6			$	(281	)
% of total liabilities at fair value		0.3		%		22.1		%		79.7		%		(2.1		)%		100.0		%

Quantitative information about the significant unobservable inputs used in Level 3 fair value measurements
($ in millions)		Fair value				Valuation technique		Unobservable input		Range		Weighted average
December 31, 2019
Derivatives embedded in life and annuity contracts – Equity-indexed and forward starting options		$	(430	)		Stochastic cash flow model		Projected option cost		1.0 - 4.2%		2.67%
December 31, 2018
Derivatives embedded in life and annuity contracts – Equity-indexed and forward starting options		$	(185	)		Stochastic cash flow model		Projected option cost		1.0 - 2.2%		1.74%

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Rollforward of Level 3 assets and liabilities held at fair value during the year ended December 31, 2019
		Balance as of December 31, 2018				Total gains (losses) included in:								Transfers																								Balance as of December 31, 2019
($ in millions)						Net income				OCI				Into Level 3				Out of Level 3				Purchases				Sales				Issues				Settlements
Assets
Fixed income securities:
Municipal		$	70			$	1			$	4			$	—			$	(5	)		$	—			$	(5	)		$	—			$	(3	)		$	62
Corporate - public		70				—				3				30				(113		)		86				(11		)		—				(4		)		61
Corporate - privately placed		90				(1		)		2				43				(2		)		4				(13		)		—				(9		)		114
ABS		69				1				(1		)		76				(210		)		159				(22		)		—				(7		)		65
MBS		26				—				(2		)		9				—				9				—				—				(2		)		40
Total fixed income securities		325				1				6				158				(330		)		258				(51		)		—				(25		)		342
Equity securities		341				30				—				—				—				82				(82		)		—				—				371
Short-term investments		30				—				—				—				—				35				(40		)		—				—				25
Free-standing derivatives, net		1				(1		)		—				—				—				—				—				—				—				—
Total recurring Level 3 assets		697				30				6				158				(330		)		375				(173		)		—				(25		)		738
Liabilities
Contractholder funds: Derivatives embedded in life and annuity contracts		(224		)		(61		)		—				(175		)		—				—				—				(16		)		14				(462		)
Total recurring Level 3 liabilities		$	(224	)		$	(61	)		$	—			$	(175	)		$	—			$	—			$	—			$	(16	)		$	14			$	(462	)

Total Level 3 gains (losses) included in net income for the year ended December 31, 2019
($ in millions)		Net investment income				Realized capital gains and losses				Life contract benefits				Interest credited to contractholder funds				Total
Components of net income		$	(2	)		$	32			$	7			$	(68	)		$	(31	)

Rollforward of Level 3 assets and liabilities held at fair value during the year ended December 31, 2018
		Balance as of December 31, 2017				Total gains (losses) included in:								Transfers																								Balance as of December 31, 2018
($ in millions)						Net income				OCI				Into Level 3				Out of Level 3				Purchases				Sales				Issues				Settlements
Assets
Fixed income securities:
Municipal		$	101			$	1			$	(2	)		$	—			$	(26	)		$	10			$	(8	)		$	—			$	(6	)		$	70
Corporate - public		108				—				(3		)		17				(21		)		10				(38		)		—				(3		)		70
Corporate - privately placed		224				(1		)		(3		)		20				(119		)		22				(5		)		—				(48		)		90
ABS		147				—				2				42				(159		)		160				(97		)		—				(26		)		69
MBS		26				—				—				—				—				1				—				—				(1		)		26
Total fixed income securities		606				—				(6		)		79				(325		)		203				(148		)		—				(84		)		325
Equity securities		210				37				—				—				—				109				(15		)		—				—				341
Short-term investments		20				—				—				—				—				55				(45		)		—				—				30
Free-standing derivatives, net		1				—				—				—				—				—				—				—				—				1
Total recurring Level 3 assets		$	837			$	37			$	(6	)		$	79			$	(325	)		$	367			$	(208	)		$	—			$	(84	)		$	697
Liabilities
Contractholder funds: Derivatives embedded in life and annuity contracts		$	(286	)		$	58			$	—			$	—			$	—			$	—			$	—			$	(2	)		$	6			$	(224	)
Total recurring Level 3 liabilities		$	(286	)		$	58			$	—			$	—			$	—			$	—			$	—			$	(2	)		$	6			$	(224	)

Total Level 3 gains (losses) included in net income for the year ended December 31, 2018
($ in millions)		Net investment income				Realized capital gains and losses				Life contract benefits				Interest credited to contractholder funds				Total
Components of net income		$	—			$	37			$	(5	)		$	63			$	95

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Rollforward of Level 3 assets and liabilities held at fair value during the year ended December 31, 2017
		Balance as of December 31, 2016				Total gains (losses) included in:								Transfers																								Balance as of December 31, 2017
($ in millions)						Net income				OCI				Into Level 3				Out of Level 3				Purchases				Sales				Issues				Settlements
Assets
Fixed income securities:
Municipal		$	125			$	(1	)		$	7			$	—			$	(6	)		$	8			$	(29	)		$	—			$	(3	)		$	101
Corporate - public		78				—				—				4				(30		)		60				—				—				(4		)		108
Corporate - privately placed		263				8				(2		)		30				(49		)		44				(30		)		—				(40		)		224
ABS		69				—				6				60				(280		)		322				—				—				(30		)		147
MBS		23				—				—				—				—				6				—				—				(3		)		26
Total fixed income securities		558				7				11				94				(365		)		440				(59		)		—				(80		)		606
Equity securities		163				13				4				—				(4		)		48				(14		)		—				—				210
Short-term investments		15				—				—				—				—				45				(40		)		—				—				20
Free-standing derivatives, net		(2		)		3				—				—				—				—				—				—				—				1
Other assets		1				(1		)		—				—				—				—				—				—				—				—
Total recurring Level 3 assets		$	735			$	22			$	15			$	94			$	(369	)		$	533			$	(113	)		$	—			$	(80	)		$	837
Liabilities
Contractholder funds: Derivatives embedded in life and annuity contracts		$	(290	)		$	—			$	—			$	—			$	—			$	—			$	—			$	(2	)		$	6			$	(286	)
Total recurring Level 3 liabilities		$	(290	)		$	—			$	—			$	—			$	—			$	—			$	—			$	(2	)		$	6			$	(286	)

Total Level 3 gains (losses) included in net income for the year ended December 31, 2017
($ in millions)		Net investment income				Realized capital gains and losses				Life contract benefits				Interest credited to contractholder funds				Total
Components of net income		$	19			$	4			$	9			$	(10	)		$	22

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Valuation changes included in net income for Level 3 assets and liabilities held as of
		December 31,
($ in millions)		2019				2018				2017
Assets
Fixed income securities:
Municipal		$	1			$	—			$	(3	)
Corporate		—				—				1
Total fixed income securities		1				—				(2		)
Equity securities		6				36				13
Free-standing derivatives, net		(1		)		—				—
Other assets		—				—				(1		)
Total recurring Level 3 assets		$	6			$	36			$	10
Liabilities
Contractholder funds: Derivatives embedded in life and annuity contracts		$	(61	)		$	58			$	—
Total recurring Level 3 liabilities		(61		)		58				—
Total included in net income		$	(55	)		$	94			$	10
Components of net income
Net investment income		$	(2	)		$	—			$	19
Realized capital gains and losses		8				36				(8		)
Life contract benefits		7				(5		)		9
Interest credited to contractholder funds		(68		)		63				(10		)
Total included in net income		$	(55	)		$	94			$	10

Carrying values and fair value estimates of financial instruments not carried at fair value
($ in millions)				December 31, 2019								December 31, 2018
Financial assets		Fair value level		Carrying value				Fair value				Carrying value				Fair value
Mortgage loans		Level 3		$	4,817			$	5,012			$	4,670			$	4,703
Bank loans		Level 3		1,204				1,185				1,350				1,298
Agent loans		Level 3		666				664				620				617
Financial liabilities
Contractholder funds on investment contracts		Level 3		8,438				9,158				9,250				9,665
Long-term debt		Level 2		6,631				7,738				6,451				6,708
Liability for collateral		Level 2		$	1,829			$	1,829			$	1,458			$	1,458

Note 7	Derivative Financial Instruments and Off-balance Sheet Financial Instruments

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Summary of the volume and fair value positions of derivative instruments as of December 31, 2019
			Volume (1)
($ in millions, except number of contracts)	Balance sheet location		Notional amount				Number of contracts			Fair value, net				Gross asset				Gross liability
Asset derivatives
Derivatives designated as fair value accounting hedging instruments
Other	Other assets		$	2			n/a			$	—			$	—			$	—
Derivatives not designated as accounting hedging instruments
Interest rate contracts
Futures	Other assets		—				3,668			—				—				—
Equity and index contracts
Options	Other investments		—				5,539			140				140				—
Futures	Other assets		—				1,533			1				1				—
Total return index contracts
Total return swap agreements - fixed income	Other investments		56				n/a			1				1				—
Credit default contracts
Credit default swaps – buying protection	Other investments		17				n/a			—				—				—
Subtotal			73				10,740			142				142				—
Total asset derivatives			$	75			10,740			$	142			$	142			$	—
Liability derivatives
Derivatives not designated as accounting hedging instruments
Interest rate contracts
Interest rate cap agreements	Other liabilities & accrued expenses		$	34			n/a			$	—			$	—			$	—
Futures	Other liabilities & accrued expenses		—				1,089			—				—				—
Equity and index contracts
Options	Other liabilities & accrued expenses		—				5,400			(68		)		—				(68		)
Futures	Other liabilities & accrued expenses		—				3			—				—				—
Total return index contracts
Total return swap agreements - fixed income	Other liabilities & accrued expenses		119				n/a			—				—				—
Total return swap agreements - equity index	Other liabilities & accrued expenses		187				n/a			11				11				—
Foreign currency contracts
Foreign currency forwards	Other liabilities & accrued expenses		745				n/a			19				28				(9		)
Embedded derivative financial instruments
Guaranteed accumulation benefits	Contractholder funds		161				n/a			(18		)		—				(18		)
Guaranteed withdrawal benefits	Contractholder funds		205				n/a			(14		)		—				(14		)
Equity-indexed and forward starting options in life and annuity product contracts	Contractholder funds		1,791				n/a			(430		)		—				(430		)
Credit default contracts
Credit default swaps – buying protection	Other liabilities & accrued expenses		152				n/a			(7		)		—				(7		)
Credit default swaps – selling protection	Other liabilities & accrued expenses		9				n/a			—				—				—
Total liability derivatives			3,403				6,492			(507		)		$	39			$	(546	)
Total derivatives			$	3,478			17,232			$	(365	)

(1)	Volume for OTC and cleared derivative contracts is represented by their notional amounts. Volume for exchange traded derivatives is represented by the number of contracts, which is the basis on which they are traded. (n/a = not applicable)

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Summary of the volume and fair value positions of derivative instruments as of December 31, 2018
			Volume
($ in millions, except number of contracts)	Balance sheet location		Notional amount				Number of contracts			Fair value, net				Gross asset				Gross liability
Asset derivatives
Derivatives not designated as accounting hedging instruments
Interest rate contracts
Interest rate cap agreements	Other investments		$	6			n/a			$	—			$	—			$	—
Futures	Other assets		—				1,330			1				1				—
Equity and index contracts
Options	Other investments		—				11,131			115				115				—
Futures	Other assets		—				1,453			1				1				—
Total return index contracts
Total return swap agreements - fixed income	Other investments		7				n/a			—				—				—
Total return swap agreements - equity index	Other investments		61				n/a			(2		)		—				(2		)
Foreign currency contracts
Foreign currency forwards	Other investments		258				n/a			10				11				(1		)
Credit default contracts
Credit default swaps – buying protection	Other investments		136				n/a			(1		)		2				(3		)
Other contracts
Other	Other assets		2				n/a			—				—				—
Total asset derivatives			$	470			13,914			$	124			$	130			$	(6	)
Liability derivatives
Derivatives not designated as accounting hedging instruments
Interest rate contracts
Interest rate cap agreements	Other liabilities & accrued expenses		$	31			n/a			$	1			$	1			$	—
Futures	Other liabilities & accrued expenses		—				1,300			(1		)		—				(1		)
Equity and index contracts
Options and futures	Other liabilities & accrued expenses		—				10,956			(50		)		—				(50		)
Total return index contracts
Total return swap agreements - fixed income	Other liabilities & accrued expenses		38				n/a			(1		)		—				(1		)
Total return swap agreements - equity index	Other liabilities & accrued expenses		71				n/a			(4		)		—				(4		)
Foreign currency contracts
Foreign currency forwards	Other liabilities & accrued expenses		341				n/a			10				11				(1		)
Embedded derivative financial instruments
Guaranteed accumulation benefits	Contractholder funds		169				n/a			(25		)		—				(25		)
Guaranteed withdrawal benefits	Contractholder funds		210				n/a			(14		)		—				(14		)
Equity-indexed and forward starting options in life and annuity product contracts	Contractholder funds		1,770				n/a			(185		)		—				(185		)
Credit default contracts
Credit default swaps – buying protection	Other liabilities & accrued expenses		40				n/a			—				—				—
Credit default swaps – selling protection	Other liabilities & accrued expenses		5				n/a			—				—				—
Total liability derivatives			2,675				12,256			(269		)		$	12			$	(281	)
Total derivatives			$	3,145			26,170			$	(145	)

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Gross and net amounts for OTC derivatives (1)
						Offsets
($ in millions)		Gross amount				Counter- party netting				Cash collateral (received) pledged				Net amount on balance sheet				Securities collateral (received) pledged				Net amount
December 31, 2019
Asset derivatives		$	40			$	(39	)		$	(1	)		$	—			$	—			$	—
Liability derivatives		(16		)		39				(27		)		(4		)		—				(4		)
December 31, 2018
Asset derivatives		$	25			$	(18	)		$	(5	)		$	2			$	—			$	2
Liability derivatives		(12		)		18				(12		)		(6		)		—				(6		)

(1)	All OTC derivatives are subject to enforceable master netting agreements.

Gains (losses) from valuation and settlements reported on derivatives not designated as accounting hedges
($ in millions)		Realized capital gains (losses)				Life contract benefits				Interest credited to contractholder funds				Operating costs and expenses				Total gain (loss) recognized in net income on derivatives
2019
Interest rate contracts		$	51			$	—			$	—			$	—			$	51
Equity and index contracts		(116		)		—				63				40				(13		)
Embedded derivative financial instruments		—				7				(70		)		—				(63		)
Foreign currency contracts		8				—				—				—				8
Credit default contracts		(8		)		—				—				—				(8		)
Total return swaps - fixed income		14				—				—				—				14
Total return swaps - equity index		36				—				—				—				36
Total		$	(15	)		$	7			$	(7	)		$	40			$	25
2018
Interest rate contracts		$	(2	)		$	—			$	—			$	—			$	(2	)
Equity and index contracts		21				—				(24		)		(21		)		(24		)
Embedded derivative financial instruments		—				(5		)		67				—				62
Foreign currency contracts		29				—				—				(1		)		28
Credit default contracts		2				—				—				—				2
Total return swaps - fixed income		(1		)		—				—				—				(1		)
Total return swaps - equity index		(6		)		—				—				—				(6		)
Total		$	43			$	(5	)		$	43			$	(22	)		$	59
2017
Equity and index contracts		$	(15	)		$	—			$	47			$	28			$	60
Embedded derivative financial instruments		—				9				(6		)		—				3
Foreign currency contracts		(27		)		—				—				6				(21		)
Credit default contracts		(4		)		—				—				—				(4		)
Total		$	(46	)		$	9			$	41			$	34			$	38

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OTC derivatives counterparty credit exposure by counterparty credit rating
($ in millions)		2019															2018
Rating (1)		Number of counter-parties			Notional amount (2)				Credit exposure (2)				Exposure, net of collateral (2)				Number of counter-parties			Notional amount (2)				Credit exposure (2)				Exposure, net of collateral (2)
A+		6			868				29				—				3			643				19				1
A		—			—				—				—				2			121				1				—
Total		6			$	868			$	29			$	—			5			$	764			$	20			$	1

(1)	Allstate uses the lower of S&P’s or Moody’s long-term debt issuer ratings.

(2)	Only OTC derivatives with a net positive fair value are included for each counterparty.

($ in millions)		2019				2018
Gross liability fair value of contracts containing credit-risk-contingent features		$	16			$	11
Gross asset fair value of contracts containing credit-risk-contingent features and subject to MNAs		(11		)		(5		)
Collateral posted under MNAs for contracts containing credit-risk-contingent features		(3		)		(2		)
Maximum amount of additional exposure for contracts with credit-risk-contingent features if all features were triggered concurrently		$	2			$	4

Off-balance sheet financial instruments

Contractual amounts of off balance sheet financial instruments
		As of December 31,
($ in millions)		2019				2018
Commitments to invest in limited partnership interests		$	2,837			$	3,028
Private placement commitments		68				47
Other loan commitments		189				233

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Note 8	Reserve for Property and Casualty Insurance Claims and Claims Expense

Rollforward of reserve for property and casualty insurance claims and claims expense
($ in millions)		2019				2018				2017
Balance as of January 1		$	27,423			$	26,325			$	25,250
Less recoverables (1)		(7,155		)		(6,471		)		(6,184		)
Net balance as of January 1		20,268				19,854				19,066
SquareTrade acquisition as of January 3, 2017		—				—				17
Incurred claims and claims expense related to:
Current year		24,106				23,033				22,350
Prior years		(130		)		(255		)		(503		)
Total incurred		23,976				22,778				21,847
Claims and claims expense paid related to:
Current year		(15,160		)		(14,877		)		(14,112		)
Prior years		(8,284		)		(7,487		)		(6,964		)
Total paid		(23,444		)		(22,364		)		(21,076		)
Net balance as of December 31		20,800				20,268				19,854
Plus recoverables		6,912				7,155				6,471
Balance as of December 31		$	27,712			$	27,423			$	26,325

⁽¹⁾ Recoverables comprises reinsurance and indemnification recoverables. See Note 10 for further details.

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Reconciliation of total claims and claims expense incurred and paid by coverage		December 31, 2019
($ in millions)		Incurred				Paid
Allstate Protection
Auto insurance - liability coverage		$	9,142			$	(8,419	)
Auto insurance - physical damage coverage		5,576				(5,570		)
Homeowners insurance		4,625				(4,616		)
Total auto and homeowners insurance		19,343				(18,605		)
Other personal lines		1,024				(1,059		)
Commercial lines		648				(404		)
Service Businesses		297				(311		)
Discontinued Lines and Coverages		91				(121		)
Unallocated loss adjustment expenses (“ULAE”)		2,687				(2,585		)
Claims incurred and paid from before 2015		(97		)		(444		)
Other		(17		)		85
Total		$	23,976			$	(23,444	)

Prior year reserve reestimates included in claims and claims expense (1)
		Twelve months ended December 31,
($ in millions)		Non-catastrophe losses												Catastrophe losses												Total
		2019				2018				2017				2019				2018				2017				2019				2018				2017
Auto (2)		$	(306	)		$	(416	)		$	(475	)		$	(17	)		$	(39	)		$	(15	)		$	(323	)		$	(455	)		$	(490	)
Homeowners		(1		)		(51		)		(124		)		66				65				(7		)		65				14				(131		)
Other personal lines		8				(6		)		(2		)		—				(1		)		3				8				(7		)		1
Commercial lines		18				108				18				(1		)		—				1				17				108				19
Discontinued Lines and Coverages (3)		105				87				96				—				—				—				105				87				96
Service Businesses		(2		)		(2		)		2				—				—				—				(2		)		(2		)		2
Total prior year reserve reestimates		$	(178	)		$	(280	)		$	(485	)		$	48			$	25			$	(18	)		$	(130	)		$	(255	)		$	(503	)

(1)	Favorable reserve reestimates are shown in parentheses.

(2)	Non-catastrophe results related to continued favorable personal lines auto injury coverage development.

(3)	The Company’s 2019 annual reserve review, using established industry and actuarial best practices, resulted in unfavorable reestimates of $95 million.

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The following presents information about incurred and paid claims development as of December 31, 2019, net of recoverables, as well as the cumulative number of reported claims and the total of IBNR reserves plus expected development on reported claims included in the net incurred claims amounts. See Note 2 for the accounting policy and methodology for determining reserves for claims and claims expense, including both reported and IBNR claims. The cumulative number of reported claims is identified by coverage and excludes reported claims for industry pools and facilities where information is not available. The information about incurred and paid claims development for the 2015 to 2019 years, and the average annual percentage payout of incurred claims by age as of December 31, 2019, is presented as required supplementary information.

Auto insurance – liability coverage

($ in millions, except number of reported claims)		Incurred claims and allocated claim adjustment expenses, net of recoverables																								IBNR reserves plus expected development on reported claims				Cumulative number of reported claims
		For the years ended December 31,																				Prior year reserve reestimates				As of December 31, 2019
		(unaudited)				(unaudited)				(unaudited)				(unaudited)
Accident year		2015				2016				2017				2018				2019
2015		$	8,763			$	8,733			$	8,677			$	8,617			$	8,578			$	(39	)		$	519			2,383,853
2016		—				9,030				8,833				8,732				8,683				(49		)		988				2,399,890
2017		—				—				8,457				8,389				8,305				(84		)		1,777				2,214,254
2018		—				—				—				8,727				8,708				(19		)		3,093				2,169,753
2019		—				—				—				—				9,333								5,838				2,108,919
														Total				$	43,607			$	(191	)
Reconciliation to total prior year reserve reestimates recognized by line
Prior year reserve reestimates for pre-2015 accident years																						(56		)
Prior year reserve reestimates for ULAE																						14
Other																						(1		)
Total prior year reserve reestimates																						$	(234	)
		Cumulative paid claims and allocated claims adjustment expenses, net of recoverables
		For the years ended December 31,
		(unaudited)				(unaudited)				(unaudited)				(unaudited)
Accident year		2015				2016				2017				2018				2019
2015		$	3,524			$	5,837			$	6,883			$	7,565			$	8,059
2016		—				3,485				5,768				6,849				7,695
2017		—				—				3,149				5,330				6,528
2018		—				—				—				3,229				5,615
2019		—				—				—				—				3,495
														Total				$	31,392
All outstanding liabilities before 2015, net of recoverables																		1,274
Liabilities for claims and claim adjustment expenses, net of recoverables																		$	13,489

Average annual percentage payout of incurred claims by age, net of recoverables, as of December 31, 2019
		1 year			2 years			3 years			4 years			5 years
Auto insurance – liability coverage		40.0	%		27.2	%		12.9	%		8.2	%		4.9	%

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Auto insurance – physical damage coverage

($ in millions, except number of reported claims)		Incurred claims and allocated claim adjustment expenses, net of recoverables																								IBNR reserves plus expected development on reported claims				Cumulative number of reported claims
		For the years ended December 31,																				Prior year reserve reestimates				As of December 31, 2019
		(unaudited)				(unaudited)				(unaudited)				(unaudited)
Accident year		2015				2016				2017				2018				2019
2015		$	4,653			$	4,681			$	4,669			$	4,660			$	4,656			$	(4	)		$	2			4,390,288
2016		—				5,125				5,052				5,025				5,020				(5		)		5				4,431,735
2017		—				—				5,119				5,037				5,025				(12		)		(2		)		4,236,640
2018		—				—				—				5,216				5,154				(62		)		17				4,306,335
2019		—				—				—				—				5,659								244				4,312,306
														Total				$	25,514			$	(83	)
Reconciliation to total prior year reserve reestimates recognized by line
Prior year reserve reestimates for pre-2015 accident years																						(4		)
Prior year reserve reestimates for ULAE																						(2		)
Other																						—
Total prior year reserve reestimates																						$	(89	)
		Cumulative paid claims and allocated claims adjustment expenses, net of recoverables
		For the years ended December 31,
		(unaudited)				(unaudited)				(unaudited)				(unaudited)
Accident year		2015				2016				2017				2018				2019
2015		$	4,507			$	4,672			$	4,658			$	4,655			$	4,654
2016		—				4,887				5,031				5,019				5,016
2017		—				—				4,845				5,036				5,027
2018		—				—				—				4,968				5,137
2019		—				—				—				—				5,414
														Total				$	25,248
All outstanding liabilities before 2015, net of recoverables																		7
Liabilities for claims and claim adjustment expenses, net of recoverables																		$	273

Average annual percentage payout of incurred claims by age, net of recoverables, as of December 31, 2019
		1 year			2 years			3 years			4 years			5 years
Auto insurance – physical damage coverage		97.0	%		3.0	%		(0.2	)%		—	%		—	%

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Homeowners insurance

($ in millions, except number of reported claims)		Incurred claims and allocated claim adjustment expenses, net of recoverables																								IBNR reserves plus expected development on reported claims				Cumulative number of reported claims
		For the years ended December 31,																				Prior year reserve reestimates				As of December 31, 2019
		(unaudited)				(unaudited)				(unaudited)				(unaudited)
Accident year		2015				2016				2017				2018				2019
2015		$	3,558			$	3,611			$	3,553			$	3,537			$	3,520			$	(17	)		$	36			721,328
2016		—				3,959				3,993				3,955				3,951				(4		)		77				813,728
2017		—				—				4,475				4,617				4,612				(5		)		177				907,218
2018		—				—				—				4,747				4,851				104				340				807,012
2019		—				—				—				—				4,547								1,233				721,434
														Total				$	21,481			$	78
Reconciliation to total prior year reserve reestimates recognized by line
Prior year reserve reestimates for pre-2015 accident years																						(36		)
Prior year reserve reestimates for ULAE																						23
Other																						—
Total prior year reserve reestimates																						$	65
		Cumulative paid claims and allocated claims adjustment expenses, net of recoverables
		For the years ended December 31,
		(unaudited)				(unaudited)				(unaudited)				(unaudited)
Accident year		2015				2016				2017				2018				2019
2015		$	2,586			$	3,296			$	3,399			$	3,458			$	3,484
2016		—				2,947				3,678				3,809				3,874
2017		—				—				3,227				4,246				4,435
2018		—				—				—				3,489				4,511
2019		—				—				—				—				3,314
														Total				$	19,618
All outstanding liabilities before 2015, net of recoverables																		126
Liabilities for claims and claim adjustment expenses, net of recoverables																		$	1,989

Average annual percentage payout of incurred claims by age, net of recoverables, as of December 31, 2019
		1 year			2 years			3 years			4 years			5 years
Homeowners insurance		74.5	%		18.9	%		3.1	%		1.4	%		0.7	%

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Reconciliation of the net incurred and paid claims development tables above to the reserve for property and casualty insurance claims and claims expense
($ in millions)		As of December 31, 2019
Net outstanding liabilities
Allstate Protection
Auto insurance - liability coverage		$	13,489
Auto insurance - physical damage coverage		273
Homeowners insurance		1,989
Other personal lines		1,326
Commercial lines		1,010
Service Businesses		36
Discontinued Lines and Coverages (1)		1,286
ULAE		1,391
Net reserve for property and casualty insurance claims and claims expense		20,800
Recoverables
Allstate Protection
Auto insurance - liability coverage		5,891
Auto insurance - physical damage coverage		3
Homeowners insurance		214
Other personal lines		160
Commercial lines		130
Service Businesses		13
Discontinued Lines and Coverages		452
ULAE		49
Total recoverables		6,912
Gross reserve for property and casualty insurance claims and claims expense		$	27,712

(1)	Discontinued Lines and Coverages includes business in run-off with most of the claims related to accident years more than 30 years ago. IBNR reserves represent $660 million of the total reserves as of December 31, 2019.

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Note 9	Reserve for Life-Contingent Contract Benefits and Contractholder Funds

Reserve for life-contingent contract benefits
		As of December 31,
($ in millions)		2019				2018
Immediate fixed annuities:
Structured settlement annuities		$	6,840			$	6,701
Other immediate fixed annuities		1,612				1,714
Traditional life insurance		2,897				2,808
Accident and health insurance		873				876
Other		78				109
Total reserve for life-contingent contract benefits		$	12,300			$	12,208

Key assumptions generally used in calculating the reserve for life-contingent contract benefits
Product		Mortality		Interest rate		Estimation method
Structured settlement annuities		U.S. population with projected calendar year improvements; mortality rates adjusted for each impaired life based on reduction in life expectancy		Interest rate assumptions range from 3.8% to 7.5%		Present value of contractually specified future benefits
Other immediate fixed annuities		1983 group annuity mortality table with internal modifications; 1983 individual annuity mortality table; Annuity 2000 mortality table with internal modifications; Annuity 2000 mortality table; 1983 individual annuity mortality table with internal modifications		Interest rate assumptions range from 0.3% to 9.0%		Present value of expected future benefits based on historical experience
Traditional life insurance		Actual company experience plus loading		Interest rate assumptions range from 2.5% to 11.3%		Net level premium reserve method using the Company’s withdrawal experience rates; includes reserves for unpaid claims
Accident and health insurance		Actual company experience plus loading		Interest rate assumptions range from 3.0% to 7.0%		Unearned premium; additional contract reserves for mortality risk and unpaid claims
Other: Variable annuity guaranteed minimum death benefits (1)		Annuity 2012 mortality table with internal modifications		Interest rate assumptions range from 2.0% to 5.8%		Projected benefit ratio applied to cumulative assessments

(1)	In 2006, the Company disposed of substantially all of its variable annuity business through reinsurance agreements with The Prudential Insurance Company of America, a subsidiary of Prudential Financial, Inc. (collectively “Prudential”).

The Company records an adjustment to the reserve for life-contingent contract benefits that represents the amount by which the reserve balance would increase if the net unrealized gains in the applicable product investment portfolios were realized and reinvested at current lower interest rates, resulting in a premium deficiency. The offset to this liability is recorded as a reduction of the unrealized net capital gains included in AOCI. This liability was $126 million and zero as of December 31, 2019 and 2018, respectively.

Contractholder funds
		As of December 31,
($ in millions)		2019				2018
Interest-sensitive life insurance		$	8,384			$	8,229
Investment contracts:
Fixed annuities		8,845				9,681
Other investment contracts		463				461
Total contractholder funds		$	17,692			$	18,371

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Key contract provisions of contractholder funds
Product		Interest rate		Withdrawal/surrender charges
Interest-sensitive life insurance		Interest rates credited range from 0.0% to 10.0% for equity-indexed life (whose returns are indexed to the S&P 500) and 1.0% to 6.0% for all other products		Either a percentage of account balance or dollar amount grading off generally over 20 years
Fixed annuities		Interest rates credited range from 0.5% to 7.5% for immediate annuities; (8.0)% to 10.0% for equity-indexed annuities (whose returns are indexed to the S&P 500); and 0.1% to 6.0% for all other products		Either a declining or a level percentage charge generally over ten years or less. Additionally, approximately 12.0% of fixed annuities are subject to market value adjustment for discretionary withdrawals
Other investment contracts: Guaranteed minimum income, accumulation and withdrawal benefits on variable (1) and fixed annuities and secondary guarantees on interest-sensitive life insurance and fixed annuities		Interest rates used in establishing reserves range from 1.7% to 10.3%		Withdrawal and surrender charges are based on the terms of the related interest-sensitive life insurance or fixed annuity contract

(1)	In 2006, the Company disposed of substantially all of its variable annuity business through reinsurance agreements with Prudential.

Contractholder funds activity
		For the years ended December 31,
($ in millions)		2019				2018				2017
Balance, beginning of year		$	18,371			$	19,434			$	20,260
Deposits		1,091				1,109				1,130
Interest credited		636				650				687
Benefits		(791		)		(844		)		(901		)
Surrenders and partial withdrawals		(884		)		(1,135		)		(999		)
Contract charges		(825		)		(824		)		(826		)
Net transfers from separate accounts		10				6				5
Other adjustments		84				(25		)		78
Balance, end of year		$	17,692			$	18,371			$	19,434

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The table below presents information regarding the Company’s variable annuity contracts with guarantees. The Company’s variable annuity contracts may offer more than one type of guarantee in each contract; therefore, the sum of amounts listed exceeds the total account balances of variable annuity contracts’ separate accounts with guarantees.

($ in millions)		As of December 31,
		2019				2018
In the event of death
Separate account value		$	2,928			$	2,711
Net amount at risk (1)		$	373			$	605
Average attained age of contractholders		71 years				71 years
At annuitization (includes income benefit guarantees)
Separate account value		$	848			$	778
Net amount at risk (2)		$	173			$	264
Weighted average waiting period until annuitization options available		None				None
For cumulative periodic withdrawals
Separate account value		$	190			$	190
Net amount at risk (3)		$	13			$	16
Accumulation at specified dates
Separate account value		$	123			$	129
Net amount at risk (4)		$	15			$	26
Weighted average waiting period until guarantee date		4 years				4 years

(1)	Defined as the estimated current guaranteed minimum death benefit in excess of the current account balance as of the balance sheet date.

(2)	Defined as the estimated present value of the guaranteed minimum annuity payments in excess of the current account balance.

(3)	Defined as the estimated current guaranteed minimum withdrawal balance (initial deposit) in excess of the current account balance as of the balance sheet date.

(4)	Defined as the estimated present value of the guaranteed minimum accumulation balance in excess of the current account balance.

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Summary of liabilities for guarantees
($ in millions)		Liability for guarantees related to death benefits and interest-sensitive life products				Liability for guarantees related to income benefits				Liability for guarantees related to accumulation and withdrawal benefits				Total
Balance, December 31, 2018 (1)		$	308			$	39			$	97			$	444
Less reinsurance recoverables		111				35				39				185
Net balance as of December 31, 2018		197				4				58				259
Incurred guarantee benefits		18				—				12				30
Paid guarantee benefits		(3		)		—				—				(3		)
Net change		15				—				12				27
Net balance as of December 31, 2019		212				4				70				286
Plus reinsurance recoverables		81				20				32				133
Balance, December 31, 2019 (2)		$	293			$	24			$	102			$	419
Balance, December 31, 2017 (3)		$	262			$	29			$	79			$	370
Less reinsurance recoverables		87				25				34				146
Net balance as of December 31, 2017		175				4				45				224
Incurred guarantee benefits		24				—				13				37
Paid guarantee benefits		(2		)		—				—				(2		)
Net change		22				—				13				35
Net balance as of December 31, 2018		197				4				58				259
Plus reinsurance recoverables		111				35				39				185
Balance, December 31, 2018 (1)		$	308			$	39			$	97			$	444

(1)	Included in the total liability balance as of December 31, 2018 are reserves for variable annuity death benefits of $109 million, variable annuity income benefits of $36 million, variable annuity accumulation benefits of $25 million, variable annuity withdrawal benefits of $14 million and other guarantees of $260 million.

(2)	Included in the total liability balance as of December 31, 2019 are reserves for variable annuity death benefits of $78 million, variable annuity income benefits of $21 million, variable annuity accumulation benefits of $18 million, variable annuity withdrawal benefits of $14 million and other guarantees of $288 million.

(3)	Included in the total liability balance as of December 31, 2017 are reserves for variable annuity death benefits of $85 million, variable annuity income benefits of $26 million, variable annuity accumulation benefits of $22 million, variable annuity withdrawal benefits of $12 million and other guarantees of $225 million.

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Note 10	Reinsurance and Indemnification

Effects of reinsurance and indemnification on property and casualty premiums written and earned and life premiums and contract charges
		For the years ended December 31,
($ in millions)		2019				2018				2017
Property and casualty insurance premiums written
Direct		$	37,976			$	35,895			$	33,685
Assumed		95				99				64
Ceded		(1,117		)		(1,008		)		(1,007		)
Property and casualty insurance premiums written, net of recoverables		$	36,954			$	34,986			$	32,742
Property and casualty insurance premiums earned
Direct		$	37,104			$	34,977			$	33,221
Assumed		94				87				50
Ceded		(1,122		)		(1,016		)		(971		)
Property and casualty insurance premiums earned, net of recoverables		$	36,076			$	34,048			$	32,300
Life premiums and contract charges
Direct		$	2,074			$	2,001			$	1,894
Assumed		712				754				787
Ceded		(285		)		(290		)		(303		)
Life premiums and contract charges, net of recoverables		$	2,501			$	2,465			$	2,378

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Retention limits by period of policy issuance
Period		Retention limits
April 2015 through current		Single life: $2 million per life Joint life: no longer offered
April 2011 through March 2015		Single life: $5 million per life, $3 million age 70 and over, and $10 million for contracts that meet specific criteria Joint life: $8 million per life, and $10 million for contracts that meet specific criteria
July 2007 through March 2011		$5 million per life, $3 million age 70 and over, and $10 million for contracts that meet specific criteria
September 1998 through June 2007		$2 million per life, in 2006 the limit was increased to $5 million for instances when specific criteria were met
August 1998 and prior		Up to $1 million per life

Amounts ceded to Prudential
		As of December 31,
($ in millions)		2019				2018				2017
Premiums and contract charges		$	65			$	72			$	76
Contract benefits		4				87				7
Interest credited to contractholder funds		19				20				20
Operating costs and expenses		12				14				15

Reinsurance recoverables on paid and unpaid benefits
		As of December 31,
($ in millions)		2019				2018
Annuities		$	1,305			$	1,381
Life insurance		749				776
Other		133				142
Total		$	2,187			$	2,299

As of both December 31, 2019 and 2018, approximately 93% of the reinsurance recoverables are due from companies rated A- or better by S&P.

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Note 11	Deferred Policy Acquisition and Sales Inducement Costs

Deferred policy acquisition costs activity
		For the years ended December 31,
($ in millions)		2019				2018				2017
Balance, beginning of year		$	4,784			$	4,191			$	3,954
SquareTrade acquisition		—				—				66
Acquisition costs deferred		5,622				5,663				5,001
Amortization charged to income		(5,533		)		(5,222		)		(4,784		)
Effect of unrealized gains and losses		(174		)		152				(46		)
Balance, end of year		$	4,699			$	4,784			$	4,191

Deferred sales inducement costs activity (1)
		For the years ended December 31,
($ in millions)		2019				2018				2017
Balance, beginning of year		$	34			$	36			$	40
Amortization charged to income		(5		)		(4		)		(4		)
Effect of unrealized gains and losses		(2		)		2				—
Balance, end of year		$	27			$	34			$	36

(1)	Deferred sales inducement costs primarily relate to fixed annuities and interest-sensitive life contracts and are recorded as part of other assets on the Consolidated Statements of Financial Position.

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Note 12	Capital Structure

Total debt outstanding
		As of December 31,
($ in millions)		2019				2018
7.450% Senior Notes, due 2019 (1)		$	—			$	317
Floating Rate Senior Notes, due 2021(1)		250				250
Floating Rate Senior Notes, due 2023 (1)		250				250
3.150% Senior Notes, due 2023 (1)		500				500
Due after one year through five years		1,000				1,317
3.280% Senior Notes, due 2026 (1)		550				550
Due after five years through ten years		550				550
6.125% Senior Notes, due 2032 (1)		159				159
5.350% Senior Notes due 2033 (1)		323				323
5.550% Senior Notes due 2035 (1)		546				546
5.950% Senior Notes, due 2036 (1)		386				386
6.900% Senior Debentures, due 2038		165				165
5.200% Senior Notes, due 2042 (1)		62				62
4.500% Senior Notes, due 2043 (1)		500				500
4.200% Senior Notes, due 2046 (1)		700				700
3.850% Senior Notes, due 2049		500				—
5.100% Subordinated Debentures, due 2053		500				500
5.750% Subordinated Debentures, due 2053		800				800
6.500% Junior Subordinated Debentures, due 2067		500				500
Due after ten years		5,141				4,641
Long-term debt total principal		6,691				6,508
Debt issuance costs		(60		)		(57		)
Total long-term debt		6,631				6,451
Short-term debt (2)		—				—
Total debt		$	6,631			$	6,451

(1)

Senior Notes, with the exception of Senior Floating Notes (as defined below), are subject to redemption at the Company’s option in whole or in part at any time at the greater of either 100% of the principal amount plus accrued and unpaid interest to the redemption date or the discounted sum of the present values of the remaining scheduled payments of principal and interest and accrued and unpaid interest to the redemption date.

(2)	The Company classifies any borrowings which have a maturity of twelve months or less at inception as short-term debt.

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Total preferred stock outstanding
		As of December 31,						Aggregate liquidation preference ($ in millions)											Dividend per depository share (1)												Aggregate dividend payment ($ in millions)
		2019			2018			2019				2018				Dividend rate			2019				2018				2017				2019				2018				2017
Series A		11,500			11,500			$	287.5			$	287.5			5.625	%		$	1.41			$	1.41			$	1.41			$	16			$	16			$	16
Series C		—			—			—				—				6.750	%		—				1.69				1.69				—				26			(2)	26
Series D		—			5,400			—				135.0				6.625	%		1.66				1.66				1.66				9			(2)	9				9
Series E		—			29,900			—				747.5				6.625	%		1.66				1.66				1.66				49			(2)	49				49
Series F		—			10,000			—				250.0				6.250	%		1.56				1.56				1.56				16			(2)	16				16
Series G		23,000			23,000			575.0				575.0				5.625	%		1.41				1.41				—				32				18				—
Series H		46,000			—			1,150.0				—				5.100	%		1.28				—				—				12				—				—
Series I		12,000			—			300.0				—				4.750	%		1.19				—				—				—				—				—
Total		92,500			79,800			$	2,313			$	1,995																		$	134		(2)	$	134		(2)	$	116

(1)	Each depositary share represents a 1/1,000th interest in a share of preferred stock.

(2)	Excludes $37 million and $13 million in 2019 and 2018, respectively, related to original issuance costs in preferred stock dividends on the Consolidated Statements of Operations and Consolidated Statements of Shareholders’ Equity as a result of the preferred stock redemptions.

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Note 13	Company Restructuring

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Restructuring activity during the period
($ in millions)		Employee costs				Exit costs				Total liability
Restructuring liability as of December 31, 2018		$	29			$	15			$	44
Expense incurred		43				7				50
Adjustments to liability		(9		)		—				(9		)
Payments and non-cash pension settlements		(49		)		(14		)		(63		)
Restructuring liability as of December 31, 2019		$	14			$	8			$	22

Note 14	Commitments, Guarantees and Contingent Liabilities

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Note 15	Income Taxes

Reconciliation of the change in the amount of unrecognized tax benefits
		For the years ended December 31,
($ in millions)		2019				2018				2017
Balance – beginning of year		$	70			$	55			$	10
Increase for tax positions taken in a prior year		—				3				34
Increase for tax positions taken in the current year		—				12				11
Balance – end of year		$	70			$	70			$	55

The Company believes it is reasonably possible that a decrease of up to $58 million in unrecognized tax benefits may occur within the next twelve months due to IRS settlements.

Components of the deferred income tax assets and liabilities
		As of December 31,
($ in millions)		2019				2018
Deferred tax assets
Unearned premium reserves		$	642			$	594
Pension		197				192
Accrued compensation		147				145
Discount on loss reserves		78				67
Other postretirement benefits		49				45
Net operating loss carryover		26				50
Other assets		54				57
Total deferred tax assets		1,193				1,150
Deferred tax liabilities
DAC		(847		)		(854		)
Unrealized net capital gains		(507		)		(2		)
Investments		(567		)		(278		)
Life and annuity reserves		(222		)		(194		)
Intangible assets		(98		)		(145		)
Other liabilities		(106		)		(102		)
Total deferred tax liabilities		(2,347		)		(1,575		)
Net deferred tax liability		$	(1,154	)		$	(425	)

Although realization is not assured, management believes it is more likely than not that the deferred tax assets will be realized based on the Company’s assessment that the deductions ultimately recognized for tax purposes will be fully utilized. As of December 31, 2019, the Company has U.S. federal and foreign net operating loss carryforwards of $93 million and $29 million, respectively.

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The provisions of the Tax Cuts and Jobs Act of 2017 eliminated the 20-year carryforward period and made it indefinite for federal net operating losses generated in tax years after December 31, 2017.  For such amounts generated prior to 2018, the 20-year carryforward period continues to apply.

Components of the net operating loss carryforwards as of December 31, 2019
($ in millions)		20-Year Carryforward Expires in 2025-2037				Indefinite Carryforward Period				Total
US Federal		$	72			$	21			$	93
Foreign		—				29				29
Total		$	72			$	50			$	122

Components of income tax expense
		For the years ended December 31,
($ in millions)		2019				2018				2017
Current		$	991			$	704			$	1,018
Deferred		251				(236		)		(23		)
Total income tax expense		$	1,242			$	468			$	995

The Company paid income taxes of $648 million, $731 million and $968 million in 2019, 2018 and 2017, respectively.

The Company had a current income tax payable of $124 million and a current tax receivable of $124 million as of December 31, 2019 and 2018, respectively.

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Note 16	Statutory Financial Information and Dividend Limitations

Statutory net income (loss) and capital and surplus of Allstate’s domestic insurance subsidiaries
		Net income (loss)												Capital and surplus
($ in millions)		2019				2018				2017				2019				2018
Amounts by major business type:
Property and casualty insurance		$	3,989			$	2,939			$	3,050			$	16,192			$	14,328
Life insurance, annuities and voluntary accident and health insurance		422				465				327				4,208				3,819
Amount per statutory accounting practices		$	4,411			$	3,404			$	3,377			$	20,400			$	18,147

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Note 17	Benefit Plans

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Change in projected benefit obligation, plan assets and funded status
		As of December 31,
		Pension benefits								Postretirement benefits
($ in millions)		2019				2018				2019				2018
Change in projected benefit obligation
Benefit obligation, beginning of year		$	6,224			$	6,815			$	375			$	386
Service cost		117				110				8				7
Interest cost		240				255				14				15
Participant contributions		—				—				15				13
Actuarial losses (gains)		927				(255		)		19				(4		)
Benefits paid		(356		)		(646		)		(39		)		(35		)
Translation adjustment and other		(13		)		(55		)		5				(7		)
Benefit obligation, end of year		$	7,139			$	6,224			$	397			$	375
Change in plan assets
Fair value of plan assets, beginning of year		$	5,299			$	6,284
Actual return on plan assets		1,235				(300		)
Employer contribution		27				16
Benefits paid		(356		)		(646		)
Translation adjustment and other		(13		)		(55		)
Fair value of plan assets, end of year		$	6,192			$	5,299
Funded status (1)		$	(947	)		$	(925	)		$	(397	)		$	(375	)
Amounts recognized in AOCI
Unamortized pension and other postretirement prior service credit		$	(142	)		$	(198	)		$	(13	)		$	(16	)

(1)	The funded status is recorded within other liabilities and accrued expenses on the Consolidated Statements of Financial Position.

Changes in items not yet recognized as a component of net cost for pension and other postretirement plans
($ in millions)		Pension benefits				Postretirement benefits
Items not yet recognized as a component of net cost – December 31, 2018		$	(198	)		$	(16	)
Prior service credit amortized to net cost		56				3
Items not yet recognized as a component of net cost – December 31, 2019		$	(142	)		$	(13	)

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Components of net cost (benefit) for pension and other postretirement plans
		For the years ended December 31,
		Pension benefits												Postretirement benefits												Total Pension and Postretirement Benefits
($ in millions)		2019				2018				2017				2019				2018				2017				2019				2018				2017
Service cost		$	117			$	110			$	111			$	8			$	7			$	8			$	125			$	117			$	119
Interest cost		240				255				254				14				15				15				254				270				269
Expected return on plan assets		(403		)		(427		)		(419		)		—				—				—				(403		)		(427		)		(419		)
Amortization of prior service credit		(56		)		(56		)		(56		)		(3		)		(21		)		(25		)		(59		)		(77		)		(81		)
Costs and expenses		(102		)		(118		)		(110		)		19				1				(2		)		(83		)		(117		)		(112		)
Remeasurement of projected benefit obligation		927				(255		)		406				19				(4		)		8				946				(259		)		414
Remeasurement of plan assets		(832		)		727				(631		)		—				—				—				(832		)		727				(631		)
Remeasurement gains and losses		95				472				(225		)		19				(4		)		8				114				468				(217		)
Total net (benefit) cost		$	(7	)		$	354			$	(335	)		$	38			$	(3	)		$	6			$	31			$	351			$	(329	)

Weighted average assumptions used to determine net pension cost and net postretirement benefit cost
		For the years ended December 31,
		Pension benefits									Postretirement benefits
($ in millions)		2019			2018			2017			2019			2018			2017
Discount rate		3.70	%		4.06	%		3.96	%		3.61	%		3.95	%		3.91	%
Expected long-term rate of return on plan assets		7.34			7.33			7.32			n/a			n/a			n/a

Weighted average assumptions used to determine benefit obligations
		For the years ended December 31,
		Pension benefits						Postretirement benefits
		2019			2018			2019			2018
Discount rate		3.31	%		4.31	%		3.27	%		4.22	%

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Weighted average target asset allocation and actual percentage of plan assets by asset category
		As of December 31, 2019
		Target asset allocation (1)		Actual percentage of plan assets
Pension plan’s asset category		2019		2019			2018
Equity securities (2)		37 - 55%		50	%		47	%
Fixed income securities		37 - 48%		38			41
Limited partnership interests		1 - 15%		10			9
Short-term investments and other		—		2			3
Total without securities lending (3)				100	%		100	%

(1)	The target asset allocation considers risk-based exposure while the actual percentage of plan assets utilizes a financial reporting view excluding exposure provided through derivatives.

(2)	The actual percentage of plan assets for equity securities includes 1% of private equity investments in both 2019 and 2018 that are subject to the limited partnership interests target allocation and none and 4% of fixed income mutual funds in 2019 and 2018, respectively, that are subject to the fixed income securities target allocation.

(3)	Securities lending collateral reinvestment of $258 million and $208 million is excluded from the table above in 2019 and 2018, respectively.

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Fair values of pension plan assets as of December 31, 2019
($ in millions)		Quoted prices in active markets for identical assets (Level 1)				Significant other observable inputs (Level 2)				Significant unobservable inputs (Level 3)				Balance as of December 31, 2019
Equity securities		$	216			$	45			$	—			$	261
Fixed income securities:
U.S. government and agencies		237				1,096				—				1,333
Corporate		—				1,060				—				1,060
Short-term investments		128				252				—				380
Free-standing derivatives:
Assets		—				5				—				5
Liabilities		(2		)		(17		)		—				(19		)
Total plan assets at fair value		$	579			$	2,441			$	—			3,020
% of total plan assets at fair value		19.2		%		80.8		%		—		%		100.0		%
Investments measured using the net asset value practical expedient														3,418
Securities lending obligation (1)														(272		)
Derivatives counterparty and cash collateral netting														9
Other net plan assets (2)														17
Total reported plan assets														$	6,192

(1)

The securities lending obligation represents the plan’s obligation to return securities lending collateral received under a securities lending program. The terms of the program allow both the plan and the counterparty the right and ability to redeem/return the securities loaned on short notice. Due to its relatively short-term nature, the outstanding balance of the obligation approximates fair value.

(2)	Other net plan assets represent cash and cash equivalents, interest and dividends receivable and net receivables related to settlements of investment transactions, such as purchases and sales.

Fair values of pension plan assets as of December 31, 2018
($ in millions)		Quoted prices in active markets for identical assets (Level 1)				Significant other observable inputs (Level 2)				Significant unobservable inputs (Level 3)				Balance as of December 31, 2018
Equity securities		$	51			$	265			$	—			$	316
Fixed income securities:
U.S. government and agencies		172				509				—				681
Corporate		—				1,479				5				1,484
Short-term investments		122				198				—				320
Free-standing derivatives:
Assets		—				19				—				19
Liabilities		—				(11		)		—				(11		)
Total plan assets at fair value		$	345			$	2,459			$	5			2,809
% of total plan assets at fair value		12.3		%		87.5		%		0.2		%		100.0		%
Investments measured using the net asset value practical expedient														2,687
Securities lending obligation														(222		)
Derivatives counterparty and cash collateral netting														(6		)
Other net plan assets														31
Total reported plan assets														$	5,299

The fair values of pension plan assets are estimated using the same methodologies and inputs as those used to determine the fair values for the respective asset category of the Company. These methodologies and inputs are disclosed in Note 6.

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Rollforward of Level 3 plan assets during December 31, 2019
						Actual return on plan assets:
($ in millions)		Balance as of December 31, 2018				Relating to assets sold during the period				Relating to assets still held at the reporting date				Purchases, sales and settlements, net				Net transfers in and/or (out) of Level 3				Balance as of December 31, 2019
Equity securities		$	—			$	—			$	—			$	—			$	—			$	—
Fixed income securities:
Corporate		5				—				—				(5		)		—				—
Total Level 3 plan assets		$	5			$	—			$	—			$	(5	)		$	—			$	—

Rollforward of Level 3 plan assets during December 31, 2018
						Actual return on plan assets:
($ in millions)		Balance as of December 31, 2017				Relating to assets sold during the period				Relating to assets still held at the reporting date				Purchases, sales and settlements, net				Net transfers in and/or (out) of Level 3				Balance as of December 31, 2018
Equity securities		$	29			$	—			$	3			$	—			$	(32	)		$	—
Fixed income securities:
Corporate		10				—				—				(5		)		—				5
Total Level 3 plan assets		$	39			$	—			$	3			$	(5	)		$	(32	)		$	5

Rollforward of Level 3 plan assets during December 31, 2017
						Actual return on plan assets:
($ in millions)		Balance as of December 31, 2016				Relating to assets sold during the period				Relating to assets still held at the reporting date				Purchases, sales and settlements, net				Net transfers in and/or (out) of Level 3				Balance as of December 31, 2017
Equity securities		$	—			$	—			$	—			$	29			$	—			$	29
Fixed income securities:
Corporate		10				—				—				—				—				10
Total Level 3 plan assets		$	10			$	—			$	—			$	29			$	—			$	39

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Estimated future benefit payments expected to be paid in the next 10 years
		As of December 31, 2019
($ in millions)		Pension benefits				Postretirement benefits
2020		$	600			$	23
2021		629				24
2022		636				26
2023		634				27
2024		626				27
2025-2029		2,401				136
Total benefit payments		$	5,526			$	263

Allstate 401(k) Savings Plan

ESOP benefit
		For the years December 31,
($ in millions)		2019				2018				2017
Interest expense recognized by ESOP		$	—			$	—			$	—
Less: dividends accrued on ESOP shares		(1		)		(1		)		(1		)
Cost of shares allocated		3				—				3
Compensation expense		2				(1		)		2
Reduction of defined contribution due to ESOP		43				1				38
ESOP benefit		$	(41	)		$	(2	)		$	(36	)

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Note 18	Equity Incentive Plans

Option grant assumptions
		2019			2018			2017
Weighted average expected term		5.8 years			5.7 years			6.1 years
Expected volatility		15.6 - 28.9%			15.6 - 30.7%			15.7 - 32.7%
Weighted average volatility		18.4	%		19.8	%		21.0	%
Expected dividends		1.9 - 2.2%			1.5 - 2.2%			1.4 - 1.9%
Weighted average expected dividends		2.2	%		2.0	%		1.9	%
Risk-free rate		1.3 - 2.7%			1.3 - 3.2%			0.5 - 2.5%

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Summary of option activity
		For the year ended December 31, 2019
		Number (in 000s)			Weighted average exercise price				Aggregate intrinsic value (in 000s)				Weighted average remaining contractual term (years)
Outstanding as of January 1, 2019		11,730			$	65.82
Granted		2,802			92.66
Exercised		(2,622	)		58.70
Forfeited		(235	)		89.20
Expired		(4	)		31.78
Outstanding as of December 31, 2019		11,671			73.40				$	455,691			6.3
Outstanding, net of expected forfeitures		11,547			73.20				453,268				6.3
Outstanding, exercisable (“vested”)		6,744			60.81				348,285				4.8

The weighted average grant date fair value of options granted was $14.96, $17.03 and $14.60 during 2019, 2018 and 2017, respectively. The intrinsic value, which is the difference between the fair value and the exercise price, of options exercised was $114 million, $72 million and $199 million during 2019, 2018 and 2017, respectively.

Changes in restricted stock units
		For the year ended December 31, 2019
		Number (in 000s)			Weighted average grant date fair value
Nonvested as of January 1, 2019		957			$	74.58
Granted		271			92.97
Vested		(308	)		62.89
Forfeited		(43	)		84.75
Nonvested as of December 31, 2019		877			83.87

The fair value of restricted stock units is based on the market value of the Company’s stock as of the date of the grant. The market value in part reflects the payment of future dividends expected. The weighted average grant date fair value of restricted stock units granted was $92.97, $93.16 and $80.12 during 2019, 2018 and 2017, respectively. The total fair value of restricted stock units vested was $29 million, $47 million and $58 million during 2019, 2018 and 2017, respectively.

Changes in performance stock awards
		For the year ended December 31, 2019
		Number (in 000s)			Weighted average grant date fair value
Nonvested as of January 1, 2019		1,248			$	77.35
Granted		415			92.49
Adjustment for performance achievement		267			62.32
Vested		(702	)		62.32
Forfeited		(47	)		87.83
Nonvested as of December 31, 2019		1,181			87.78

The change in performance stock awards comprises those initially granted in 2019 and the adjustment to previously granted performance stock awards for performance achievement. The fair value of performance stock awards is based on the market value of the Company’s stock as of the date of the grant. The market value in part reflects the payment of future dividends expected. The weighted average grant date fair value of performance stock awards granted was $92.49, $92.88 and $78.47 during 2019, 2018 and 2017, respectively. The total fair value of performance stock awards vested was $65 million, $15 million and $17 million during 2019, 2018 and 2017, respectively.

The Company recognizes all tax effects related to share-based payments at settlement or expiration through the income statement.

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Note 19	Supplemental Cash Flow Information

		For the years ended December 31,
($ in millions)		2019				2018				2017
Net change in proceeds managed
Net change in fixed income securities		$	80			$	234			$	259
Net change in short-term investments		(451		)		(568		)		(255		)
Operating cash flow (used) provided		(371		)		(334		)		4
Net change in cash		—				—				1
Net change in proceeds managed		$	(371	)		$	(334	)		$	5
Net change in liabilities
Liabilities for collateral, beginning of year		$	(1,458	)		$	(1,124	)		$	(1,129	)
Liabilities for collateral, end of year		(1,829		)		(1,458		)		(1,124		)
Operating cash flow provided (used)		$	371			$	334			$	(5	)

Note 20	Other Comprehensive Income

Components of other comprehensive income (loss) on a pre-tax and after-tax basis
		For the years ended December 31,
($ in millions)		2019												2018												2017
		Pre-tax				Tax				After-tax				Pre-tax				Tax				After-tax				Pre-tax				Tax				After-tax
Unrealized net holding gains and losses arising during the period, net of related offsets		$	2,807			$	(592	)		$	2,215			$	(1,142	)		$	241			$	(901	)		$	866			$	(304	)		$	562
Less: reclassification adjustment of realized capital gains and losses		413				(87		)		326				(186		)		39				(147		)		374				(131		)		243
Unrealized net capital gains and losses		2,394				(505		)		1,889				(956		)		202				(754		)		492				(173		)		319
Unrealized foreign currency translation adjustments		(13		)		3				(10		)		(61		)		13				(48		)		69				(24		)		45
Unamortized pension and other postretirement prior service credit		(59		)		12				(47		)		(77		)		18				(59		)		(80		)		28				(52		)
Other comprehensive income (loss)		$	2,322			$	(490	)		$	1,832			$	(1,094	)		$	233			$	(861	)		$	481			$	(169	)		$	312

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Note 21	Quarterly Results (unaudited)

		First Quarter								Second Quarter								Third Quarter								Fourth Quarter
($ in millions, except per share data)		2019				2018				2019				2018				2019				2018				2019				2018
Revenues		$	10,990			$	9,770			$	11,144			$	10,099			$	11,069			$	10,465			$	11,472			$	9,481
Net income (loss) applicable to common shareholders		1,261				977				821				678				889				942				1,707				(585		)
Earnings per common share - Basic		3.79				2.76				2.47				1.94				2.71				2.72				5.32				(1.71		)
Earnings per common share - Diluted		3.74				2.71				2.44				1.91				2.67				2.68				5.23				(1.71		)

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. See Note 2 for discussion of the change in accounting principle and further information regarding the impact of the change on the consolidated financial statements.

Impact of change		First Quarter								Second Quarter								Third Quarter								Fourth Quarter
($ in millions, except per share data)		2019				2018				2019				2018				2019				2018				2019				2018
Revenues		$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—
Net income (loss) applicable to common shareholders		5				31				(69		)		41				(140		)		109				240				(273		)
Earnings per common share - Basic		0.01				0.09				(0.21		)		0.12				(0.43		)		0.31				0.75				(0.80		)
Earnings per common share - Diluted		0.02				0.08				(0.20		)		0.11				(0.42		)		0.31				0.73				(0.80		)

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•	We tested the effectiveness of controls related to the reserve for property and casualty insurance claims and claims expense, including those over the Company’s estimates and projections.

•	We evaluated the methods and assumptions used by the Company to estimate the reserve for property and casualty insurance claims and claims expense by:

◦	Testing the underlying data that served as the basis for the actuarial analysis, including historical claims, to test that the inputs to the actuarial estimate were complete and accurate.

◦	Comparing the Company’s prior year assumptions of expected development and ultimate loss to actual losses incurred during the year to assess the reasonableness of those assumptions, including consideration of potential bias, in the determination of the reserve for property and casualty claims and claims expense.

◦	With the assistance of our actuarial specialists, we developed independent estimates for the reserve for property and casualty insurance claims and claims expense, utilizing loss data and industry claim development factors, and compared our estimates to management’s estimates.

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•	We tested the effectiveness of controls over management’s premium deficiency reserve and GPV and PFBL analysis, including those over the Company’s selection of assumptions.

•	With the assistance of our actuarial specialists, we evaluated the reasonableness of assumptions and their incorporation into the projection model used by the Company to perform its premium deficiency reserve analysis by:

◦	Testing the underlying data that served as the basis for the assumptions setting and the underlying data used in the projection model to ensure the inputs were complete and accurate.

◦	Comparing mortality assumptions selected to actual historical experience.

◦	Comparing projected investment yields selected to historical portfolio returns, evaluating for consistency with current investment portfolio yields and the Company’s long-term reinvestment strategy, and comparing to independently obtained market data.

•	With the assistance of our actuarial specialists, we independently calculated the gross premium valuation reserves from the Company’s projection model for a sample of contracts and compared our estimates to management’s estimates.

•	With the assistance of our actuarial specialists, we evaluated the aggregate cash flows generated through the Company’s premium deficiency reserve testing for evidence of potential PFBL scenarios that would require the accrual of additional reserves to cover such future losses.

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•	Stock Ownership Information – Security Ownership of Directors and Executive Officers

•	Stock Ownership Information – Security Ownership of Certain Beneficial Owners

(1)

Consists of the 2019 Equity Incentive Plan, which amended and restated the 2013 Equity Incentive Plan; the 2017 Equity Compensation Plan for Non-Employee Directors; the 2006 Equity Compensation Plan for Non-Employee Directors; and the Equity Incentive Plan for Non-Employee Directors (the equity plan for non-employee directors prior to 2006). The Corporation does not maintain any equity compensation plans not approved by stockholders.

(2)

As of December 31, 2019, 877,151 restricted stock units (“RSUs”) and 2,362,608 performance stock awards (“PSAs”) were outstanding. The weighted-average exercise price of outstanding options, warrants, and rights does not take into account RSUs and PSAs, which have no exercise price. PSAs are reported at the maximum potential amount awarded for incomplete performance periods and the amount earned for the 2017 PSA grant, reduced for forfeitures. For incomplete performance periods, the actual number of shares earned may be less and are based upon measures achieved at the end of the three-year performance period for those PSAs granted in 2018 and 2019.

(3)

Includes 21,121,308 shares that may be issued in the form of stock options, unrestricted stock, restricted stock, restricted stock units, stock appreciation rights, performance units, performance stock, and stock in lieu of cash under the 2019 Equity Incentive Plan; and 350,795 shares that may be issued in the form of stock options, unrestricted stock, restricted stock, restricted stock units, and stock in lieu of cash compensation under the 2017 Equity Compensation Plan for Non-Employee Directors.

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•	Consolidated Statements of Operations

•	Consolidated Statements of Comprehensive Income

•	Consolidated Statements of Financial Position

•	Consolidated Statements of Shareholders’ Equity

•	Consolidated Statements of Cash Flows

•	Notes to the Consolidated Financial Statements

•	Report of Independent Registered Public Accounting Firm

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Schedule I — Summary of Investments Other than Investments in Related Parties

		As of December 31, 2019
($ in millions)		Cost/amortized cost				Fair value (if applicable)				Amount shown in the Balance Sheet
Type of investment
Fixed maturities:
Bonds:
United States government, government agencies and authorities		$	4,971			$	5,086			$	5,086
States, municipalities and political subdivisions		8,080				8,620				8,620
Foreign governments		968				979				979
Public utilities		5,197				5,576				5,576
All other corporate bonds		35,893				37,502				37,502
Asset-backed securities		860				862				862
Mortgage-backed securities		324				419				419
Total fixed maturities		56,293				$	59,044			59,044
Equity securities:
Common stocks:
Public utilities		98				136				136
Banks, trusts and insurance companies		565				771				771
Industrial, miscellaneous and all other		5,662				6,957				6,957
Nonredeemable preferred stocks		243				298				298
Total equity securities		6,568				$	8,162			8,162
Mortgage loans on real estate		4,817				5,012				4,817
Real estate (none acquired in satisfaction of debt)		1,005								1,005
Policy loans		894								894
Derivative instruments		140				140				140
Limited partnership interests		8,078								8,078
Other long-term investments		1,966								1,966
Short-term investments		4,256				4,256				4,256
Total investments		$	84,017							$	88,362

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Schedule II — Condensed Financial Information of Registrant Statement of Operations

		Year Ended December 31,
($ in millions)		2019				2018				2017
Revenues
Investment income, less investment expense		$	35			$	25			$	10
Realized capital gains and losses		9				(10		)		(2		)
Other income		41				3				36
		85				18				44
Expenses
Interest expense		355				337				334
Pension and other postretirement remeasurement gains and losses		103				454				(219		)
Pension and other postretirement benefit expense		(122		)		(116		)		(224		)
Other operating expenses		49				50				50
		385				725				(59		)
(Loss) gain from operations before income tax benefit and equity in net income of subsidiaries		(300		)		(707		)		103
Income tax (benefit) expense		(75		)		(136		)		105
Loss before equity in net income of subsidiaries		(225		)		(571		)		(2		)
Equity in net income of subsidiaries		5,072				2,731				3,556
Net income		4,847				2,160				3,554
Preferred stock dividends		169				148				116
Net income applicable to common shareholders		4,678				2,012				3,438
Other comprehensive income (loss), after-tax
Changes in:
Unrealized net capital gains and losses		1,889				(754		)		319
Unrealized foreign currency translation adjustments		(10		)		(48		)		45
Unamortized pension and other postretirement prior service credit		(47		)		(59		)		(52		)
Other comprehensive income (loss), after-tax		1,832				(861		)		312
Comprehensive income		$	6,679			$	1,299			$	3,866

See accompanying notes to condensed financial information and notes to consolidated financial statements.

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The Allstate Corporation and Subsidiaries

Schedule II (Continued) — Condensed Financial Information of Registrant Statement of Financial Position

($ in millions, except par value data)		December 31,
		2019				2018
Assets
Investments in subsidiaries		$	33,428			$	29,301
Fixed income securities, at fair value (amortized cost $458 and $355)		466				356
Short-term investments, at fair value (amortized cost $702 and $285)		702				285
Cash		2				—
Receivable from subsidiaries		448				426
Deferred income taxes		230				225
Other assets		86				92
Total assets		$	35,362			$	30,685
Liabilities
Long-term debt		$	6,631			$	6,451
Pension and other postretirement benefit obligations		1,081				1,050
Deferred compensation		327				281
Payable to subsidiaries		14				3
Notes due to subsidiaries		1,000				1,250
Dividends payable to shareholders		199				198
Other liabilities		112				140
Total liabilities		9,364				9,373
Shareholders’ equity
Preferred stock and additional capital paid-in, $1 par value, 25 million shares authorized, 92.5 thousand and 79.8 thousand shares issued and outstanding, $2,313 and $1,995 aggregate liquidation preference		2,248				1,930
Common stock, $.01 par value, 2.0 billion shares authorized and 900 million issued, 319 million and 332 million shares outstanding		9				9
Additional capital paid-in		3,463				3,310
Retained income		48,074				44,033
Deferred ESOP expense		—				(3		)
Treasury stock, at cost (581 million and 568 million shares)		(29,746		)		(28,085		)
Accumulated other comprehensive income:
Unrealized net capital gains and losses		1,887				(2		)
Unrealized foreign currency translation adjustments		(59		)		(49		)
Unamortized pension and other postretirement prior service credit		122				169
Total accumulated other comprehensive income		1,950				118
Total shareholders’ equity		25,998				21,312
Total liabilities and shareholders’ equity		$	35,362			$	30,685

See accompanying notes to condensed financial information and notes to consolidated financial statements.

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The Allstate Corporation and Subsidiaries

Schedule II (Continued) — Condensed Financial Information of Registrant Statement of Cash Flows

($ in millions)		Years Ended December 31,
		2019				2018				2017
Cash flows from operating activities
Net income		$	4,847			$	2,160			$	3,554
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in net income of subsidiaries		(5,072		)		(2,731		)		(3,556		)
Dividends received from subsidiaries		2,434				2,059				1,671
Realized capital gains and losses		(9		)		10				2
Pension and other postretirement remeasurement gains and losses		103				454				(219		)
Changes in:
Pension and other postretirement benefits		(122		)		(116		)		(224		)
Income taxes		13				(28		)		232
Operating assets and liabilities		111				160				56
Net cash provided by operating activities		2,305				1,968				1,516
Cash flows from investing activities
Proceeds from sales of investments		1,094				1,370				880
Proceeds from sales of investments to subsidiaries		—				390				—
Investment purchases		(892		)		(1,037		)		(748		)
Investment collections		65				108				13
Capital contribution or return of capital from subsidiaries		43				(975		)		42
Change in short-term investments, net		(417		)		(115		)		48
Net cash (used in) provided by investing activities		(107		)		(259		)		235
Cash flows from financing activities
Proceeds from borrowings from subsidiaries		1,000				1,250				300
Repayment of notes due to subsidiaries		(1,250		)		(250		)		(50		)
Proceeds from issuance of long-term debt		491				498				—
Redemption of preferred stock		(1,132		)		(385		)		—
Redemption and repayment of long-term debt		(317		)		(400		)		—
Proceeds from issuance of preferred stock		1,414				557				—
Dividends paid on common stock		(653		)		(614		)		(525		)
Dividends paid on preferred stock		(134		)		(134		)		(116		)
Treasury stock purchases		(1,735		)		(2,303		)		(1,495		)
Shares reissued under equity incentive plans, net		120				73				135
Other		—				(1		)		(2		)
Net cash used in financing activities		(2,196		)		(1,709		)		(1,753		)
Net increase (decrease) in cash		2				—				(2		)
Cash at beginning of year		—				—				2
Cash at end of year		$	2			$	—			$	—

See accompanying notes to condensed financial information and notes to consolidated financial statements.

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The Allstate Corporation and Subsidiaries

Schedule II (Continued) — Condensed Financial Information of Registrant

Notes to Condensed Financial Information

1.     General

Pursuant to rules and regulations of the SEC, the unconsolidated condensed financial statements of the Parent Company do not reflect all of the information and notes normally included with financial statements prepared in accordance with GAAP. Therefore, these condensed financial statements of the Registrant should be read in conjunction with the consolidated financial statements and notes thereto included in Item 8.

The long-term debt presented in Note 12 “Capital Structure” are direct obligations of the Registrant. A majority of the pension and other postretirement benefits plans presented in Note 17 “Benefit Plans” are direct obligations of the Registrant.

Participating subsidiaries fund the pension plans contributions under a master services cost sharing agreement. In addition, as a result of joint and several pension liability rules under the Internal Revenue Code and the Employee Retirement Income Security Act of 1974, as amended, many liabilities that arise in connection with pension plans are joint and several across all members of a controlled group of entities.

2.   Notes due to subsidiaries

On June 19, 2019, the Registrant issued a $1.00 billion note, with a rate of 2.63% due on June 19, 2020 to Kennett Capital Inc. The proceeds of this issuance were used for cash management purposes.

On October 11, 2018 and December 18, 2018, the Registrant issued $250 million and $1.00 billion notes, with a rate of 2.49% and 3.03% due on April 11, 2019 and June 18, 2019, respectively, both to its wholly owned subsidiary Kennett Capital Inc. The proceeds of these issuances were used for cash management purposes. On April 11, 2019 and June 18, 2019, the Registrant repaid $250 million and $1.00 billion, respectively, to Kenneth Capital Inc.

3.    Supplemental Disclosures of Cash Flow Information

The Registrant paid $312 million, $330 million and $331 million of interest on debt in 2019, 2018 and 2017, respectively.

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Schedule III — Supplementary Insurance Information

($ in millions)		As of December 31,												For the years ended December 31,
Segment		Deferred policy acquisition costs				Reserves for claims and claims expense, contract benefits and contractholder funds				Unearned premiums				Premium revenue and contract charges				Net investment income (1)				Claims and claims expense, contract benefits and interest credited to contractholders				Amortization of deferred policy acquisition costs				Other operating costs and expenses				Premiums written (excluding life)
2019
Property-Liability
Allstate Protection		$	1,624			$	25,843			$	12,567			$	34,843							$	23,517			$	4,649			$	4,506			$	35,419
Discontinued Lines and Coverages		—				1,818				—				—								105				—				3				—
Total Property-Liability		1,624				27,661				12,567				34,843				$	1,533			23,622				4,649				4,509				35,419
Service Businesses (2)		1,449				51				2,765				1,387				42				363				543				838				1,535
Allstate Life		1,079				10,541				3				1,343				514				1,154				173				356				—
Allstate Benefits		527				1,950				8				1,145				83				635				161				285				988
Allstate Annuities		20				17,501				—				13				917				890				7				30				—
Corporate and Other		—				—				—				—				70				—				—				531				—
Intersegment Eliminations (2)		—				—				—				(154		)		—				(9		)		—				(145		)		—
Total		$	4,699			$	57,704			$	15,343			$	38,577			$	3,159			$	26,655			$	5,533			$	6,404			$	37,942
2018
Property-Liability
Allstate Protection		$	1,618			$	25,495			$	11,953			$	32,950							$	22,348			$	4,475			$	4,522			$	33,555
Discontinued Lines and Coverages		—				1,864				—				—								87				—				3				—
Total Property-Liability		1,618				27,359				11,953				32,950				$	1,464			22,435				4,475				4,525				33,555
Service Businesses (2)		1,290				64				2,546				1,220				27				350				463				603				1,431
Allstate Life		1,300				10,333				3				1,315				505				1,094				132				364				—
Allstate Benefits		549				1,905				8				1,135				77				630				145				278				980
Allstate Annuities		27				18,341				—				15				1,096				903				7				31				—
Corporate and Other		—				—				—				—				71				—				—				880				—
Intersegment Eliminations (2)		—				—				—				(122		)		—				(7		)		—				(115		)		—
Total		$	4,784			$	58,002			$	14,510			$	36,513			$	3,240			$	25,405			$	5,222			$	6,566			$	35,966
2017
Property-Liability
Allstate Protection		$	1,510			$	24,336			$	11,409			$	31,433							$	21,388			$	4,205			$	4,239			$	31,648
Discontinued Lines and Coverages		—				1,893				—				—								96				—				3				—
Total Property-Liability		1,510				26,229				11,409				31,433				$	1,478			21,484				4,205				4,242				31,648
Service Businesses (2)		954				96				2,052				977				16				369				296				565				1,094
Allstate Life		1,152				10,244				4				1,280				489				1,047				134				344				—
Allstate Benefits		541				1,869				8				1,084				72				599				142				261				919
Allstate Annuities		34				19,870				—				14				1,305				967				7				34				—
Corporate and Other		—				—				—				—				41				—				—				292				—
Intersegment Eliminations (2)		—				—				—				(110		)		—				(6		)		—				(104		)		—
Total		$	4,191			$	58,308			$	13,473			$	34,678			$	3,401			$	24,460			$	4,784			$	5,634			$	33,661

(1)	A single investment portfolio supports both Allstate Protection and Discontinued Lines and Coverages segments.

(2)	Includes intersegment premiums and service fees and the related incurred losses and expenses that are eliminated in the consolidated financial statements.

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Schedule IV — Reinsurance

($ in millions)		Gross amount				Ceded to other companies (1)				Assumed from other companies				Net amount				Percentage of amount assumed to net
Year ended December 31, 2019
Life insurance in force		$	219,785			$	74,021			$	229,419			$	375,183			61.1	%
Premiums and contract charges:
Life insurance		$	1,062			$	262			$	712			$	1,512			47.1	%
Accident and health insurance		1,012				23				—				989				—	%
Property and casualty insurance		37,104				1,122				94				36,076				0.3	%
Total premiums and contract charges		$	39,178			$	1,407			$	806			$	38,577			2.1	%
Year ended December 31, 2018
Life insurance in force		$	207,434			$	81,186			$	243,161			$	369,409			65.8	%
Premiums and contract charges:
Life insurance		$	994			$	266			$	754			$	1,482			50.9	%
Accident and health insurance		1,007				24				—				983				—	%
Property and casualty insurance		34,977				1,016				87				34,048				0.3	%
Total premiums and contract charges		$	36,978			$	1,306			$	841			$	36,513			2.3	%
Year ended December 31, 2017
Life insurance in force		$	188,186			$	86,642			$	259,671			$	361,215			71.9	%
Premiums and contract charges:
Life insurance		$	936			$	276			$	787			$	1,447			54.4	%
Accident and health insurance		958				27				—				931				—	%
Property and casualty insurance		33,221				971				50				32,300				0.2	%
Total premiums and contract charges		$	35,115			$	1,274			$	837			$	34,678			2.4	%

(1)	No reinsurance or coinsurance income was netted against premium ceded in 2019, 2018 or 2017.

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Schedule V — Valuation Allowances and Qualifying Accounts

($ in millions)						Additions
Description		Balance as of beginning of period				Charged to costs and expenses				Other additions				Deductions				Balance as of end of period
Year ended December 31, 2019
Allowance for reinsurance recoverables		$	65			$	(2	)		$	—			$	—			$	63
Allowance for premium installment receivable		77				137				—				124				90
Allowance for deferred tax assets		—				—				—				—				—
Allowance for estimated losses on mortgage loans		3				—				—				—				3
Allowance for estimated losses on agent loans		2				1				—				—				3
Year ended December 31, 2018
Allowance for reinsurance recoverables		$	70			$	(5	)		$	—			$	—			$	65
Allowance for premium installment receivable		77				118				—				118				77
Allowance for deferred tax assets		—				—				—				—				—
Allowance for estimated losses on mortgage loans		3				—				—				—				3
Allowance for estimated losses on agent loans		2				—				—				—				2
Year ended December 31, 2017
Allowance for reinsurance recoverables		$	84			$	(10	)		$	—			$	4			$	70
Allowance for premium installment receivable		84				109				—				116				77
Allowance for deferred tax assets		—				—				—				—				—
Allowance for estimated losses on mortgage loans		3				1				—				1				3
Allowance for estimated losses on agent loans		2				—				—				—				2