Reporting Segments

12 Months Ended

Dec. 31, 2011

Reporting Segments

Reporting Segments

19.  Reporting Segments

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

Allstate Protection principally sells private passenger auto and homeowners insurance in the United States and Canada. Revenues from external customers generated outside the United States were $892 million, $741 million and $619 million in 2011, 2010 and 2009, respectively. The Company evaluates the results of this segment based upon underwriting results.

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

Allstate Financial sells life insurance, retirement and investment products and voluntary accident and health insurance. The principal individual products are interest-sensitive, traditional and variable life insurance; fixed annuities including deferred and immediate; and voluntary accident and health insurance. The institutional product line consists primarily of funding agreements sold to unaffiliated trusts that use them to back medium-term notes issued to institutional and individual investors. Banking products and services were previously offered to customers through the Allstate Bank. Allstate Financial had no revenues from external customers generated outside the United States in 2011, 2010 or 2009. The Company evaluates the results of this segment based upon operating income.

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

       Allstate Protection and Discontinued Lines and Coverages comprise Property-Liability. The Company does not allocate Property-Liability investment income, realized capital gains and losses, or assets to the Allstate Protection and Discontinued Lines and Coverages segments. Management reviews assets at the Property-Liability, Allstate Financial, and Corporate and Other levels for decision-making purposes.

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

Measuring segment profit or loss

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

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

Operating income (loss) is net income (loss) excluding:

•

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

•

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

•

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

•

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

•

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

•

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

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

($ in millions)	2011			2010			2009
Revenues
Property-Liability
Property-liability insurance premiums
Standard auto	$	16,500		$	16,530		$	16,642
Non-standard auto		799			905			966
Total auto		17,299			17,435			17,608
Homeowners		6,200			6,078			6,077
Other personal lines		2,443			2,442			2,510
Allstate Protection		25,942			25,955			26,195
Discontinued Lines and Coverages		—			2			(1	)
Total property-liability insurance premiums		25,942			25,957			26,194
Net investment income		1,201			1,189			1,328
Realized capital gains and losses		85			(321	)		(168	)
Total Property-Liability		27,228			26,825			27,354
Allstate Financial
Life and annuity premiums and contract charges
Traditional life insurance		441			420			407
Immediate annuities with life contingencies		106			97			102
Accident and health insurance		643			621			460
Total life and annuity premiums		1,190			1,138			969
Interest-sensitive life insurance		1,015			991			944
Fixed annuities		33			39			45
Total contract charges		1,048			1,030			989
Total life and annuity premiums and contract charges		2,238			2,168			1,958
Net investment income		2,716			2,853			3,064
Realized capital gains and losses		388			(517	)		(431	)
Total Allstate Financial		5,342			4,504			4,591
Corporate and Other
Service fees		7			11			9
Net investment income		54			60			52
Realized capital gains and losses		30			11			16
Total Corporate and Other before reclassification of service fees		91			82			77
Reclassification of service fees (1)		(7	)		(11	)		(9	)
Total Corporate and Other		84			71			68
Consolidated revenues	$	32,654		$	31,400		$	32,013

⁽¹⁾

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

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

($ in millions)	2011			2010			2009
Net income
Property-Liability
Underwriting (loss) income
Allstate Protection	$	(857	)	$	525		$	1,032
Discontinued Lines and Coverages		(25	)		(31	)		(32	)
Total underwriting (loss) income		(882	)		494			1,000
Net investment income		1,201			1,189			1,328
Income tax benefit (expense) on operations		30			(426	)		(560	)
Realized capital gains and losses, after-tax		54			(207	)		(222	)
Gain on disposition of operations, after-tax		—			3			—
Property-Liability net income		403			1,053			1,546
Allstate Financial
Life and annuity premiums and contract charges		2,238			2,168			1,958
Net investment income		2,716			2,853			3,064
Periodic settlements and accruals on non-hedge derivative instruments		70			51			14
Contract benefits and interest credited to contractholder funds		(3,378	)		(3,613	)		(3,655	)
Operating costs and expenses and amortization of deferred policy acquisition costs		(898	)		(804	)		(872	)
Restructuring and related charges		(1	)		3			(25	)
Income tax expense on operations		(240	)		(214	)		(148	)
Operating income		507			444			336
Realized capital gains and losses, after-tax		250			(337	)		(417	)
Valuation changes on embedded derivatives that are not hedged, after-tax		(12	)		—			—
DAC and DSI amortization related to realized capital gains and losses and valuation changes on embedded derivatives that are not hedged, after-tax		(108	)		(29	)		(153	)
DAC and DSI unlocking related to realized capital gains and losses, after-tax		3			(12	)		(219	)
Reclassification of periodic settlements and accruals on non-hedge derivative instruments, after-tax		(45	)		(33	)		(9	)
(Loss) gain on disposition of operations, after-tax		(5	)		9			10
Allstate Financial net income (loss)		590			42			(452	)
Corporate and Other
Service fees (1)		7			11			9
Net investment income		54			60			52
Operating costs and expenses (1)		(403	)		(390	)		(419	)
Income tax benefit on operations		126			128			141
Operating loss		(216	)		(191	)		(217	)
Realized capital gains and losses, after-tax		20			7			11
Business combination expenses, after-tax		(10	)		—			—
Corporate and Other net loss		(206	)		(184	)		(206	)
Consolidated net income	$	787		$	911		$	888

⁽¹⁾

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

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

($ in millions)	2011			2010			2009
Amortization of DAC
Property-Liability	$	3,477		$	3,517		$	3,615
Allstate Financial		494			290			821
Consolidated	$	3,971		$	3,807		$	4,436
Income tax expense
Property-Liability	$	1		$	314		$	614
Allstate Financial		289			(1	)		(66	)
Corporate and Other		(118	)		(124	)		(136	)
Consolidated	$	172		$	189		$	412

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

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

($ in millions)	2011		2010		2009
Assets
Property-Liability	$	49,791	$	47,536	$	47,143
Allstate Financial		72,526		78,732		81,561
Corporate and Other		2,876		4,232		3,505
Consolidated	$	125,193	$	130,500	$	132,209
Investments
Property-Liability	$	35,998	$	35,048	$	34,526
Allstate Financial		57,373		61,582		62,216
Corporate and Other		2,247		3,853		3,091
Consolidated	$	95,618	$	100,483	$	99,833

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