EXHIBIT 99.2 Measures used in these financial statements and exhibits that are not based on generally accepted accounting principles ("non-GAAP") are denoted with an asterisk (*). These measures are defined on the page "Definitions of Non-GAAP Measures" and are reconciled to the most directly comparable generally accepted accounting principles ("GAAP") measure herein. The Allstate Corporation Investor Supplement First Quarter 2018 The consolidated financial statements and financial exhibits included herein are unaudited. These consolidated financial statements and exhibits should be read in conjunction with the consolidated financial statements and notes thereto included in the most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. The results of operations for interim periods should not be considered indicative of results to be expected for the full year.
Table of Contents Consolidated Operations Allstate Life Operations Statements of Operations 1 Segment Results and Other Statistics 30 Contribution to Income 2 Analysis of Net Income 31 Revenues 3 Return on Equity 32 Segment Results 4 Reserves and Contractholder Funds 33 Condensed Statements of Financial Position 5 Book Value per Common Share 6 Allstate Benefits Operations Return on Common Shareholders' Equity 7 Segment Results and Other Statistics 34 Debt to Capital 8 Segment Premium and Other Statistics 35 Statements of Cash Flows 9 Return on Equity 36 Analysis of Deferred Policy Acquisition Costs 10 Policies in Force 11 Allstate Annuities Operations Premiums Written for Allstate Protection and Service Businesses 12 Segment Results and Other Statistics 37 Catastrophe Losses 13 Analysis of Net Income 38 Prior Year Reserve Reestimates 14 Return on Equity 39 Reserves and Contractholder Funds 40 Property-Liability Operations Results 15 Corporate and Other Segment Results 41 Underwriting Results by Area of Business 16 Catastrophe Experience 17 Investments Allstate Protection Consolidated Investments 42 Impact of Net Rate Changes Approved on Premiums Written 18 Investments by Segment 43 Allstate Brand Profitability Measures 19 Unrealized Net Capital Gains and Losses by Type 44 Allstate Brand Statistics 20 Net Investment Income, Yields and Realized Capital Gains and Losses (Pre-tax) 45 Esurance Brand Profitability Measures and Statistics 21 Net Investment Income, Yields and Realized Capital Gains and Losses (Pre-tax) by Segment 46 Encompass Brand Profitability Measures and Statistics 22 Investment Position and Results by Strategy 47 Auto Profitability Measures 23 Investment Position and Results by Strategy by Segment 48 Homeowners Profitability Measures 24 Performance-Based Investments 49 Other Personal Lines Profitability Measures 25 Limited Partnership Interests 50 Commercial Lines Profitability Measures 26 Discontinued Lines and Coverages Definitions of Non-GAAP Measures 51,52 Reserves 27 Appendix Service Businesses Operations Property Damage % Change in Gross Claim Frequency and Paid Claim Severity Indexed to 2013 53 Segment Results 28 SquareTrade Results 29 The Allstate Corporation Investor Supplement - First Quarter 2018
($ in millions, except per share data) March 31, Dec. 31, Sept. 30, June 30, March 31, 2018 2017 2017 2017 2017 Revenues Property and casualty insurance premiums (1) $ 8,286 $ 8,202 $ 8,121 $ 8,018 $ 7,959 Life premiums and contract charges (2) 616 601 593 591 593 Other revenue (3) 216 219 228 226 210 Net investment income 786 913 843 897 748 Realized capital gains and losses: Total other-than-temporary impairment ("OTTI") losses - (11) (26) (47) (62) OTTI losses reclassified to (from) other comprehensive income (1) (2) (2) (3) 3 Net OTTI losses recognized in earnings (1) (13) (28) (50) (59) Sales and valuation changes on equity investments and derivatives (133) 140 131 131 193 Total realized capital gains and losses (134) 127 103 81 134 Total revenues 9,770 10,062 9,888 9,813 9,644 Costs and expenses Property and casualty insurance claims and claims expense 5,149 5,279 5,545 5,689 5,416 Life contract benefits 504 507 456 486 474 Interest credited to contractholder funds 161 168 174 175 173 Amortization of deferred policy acquisition costs 1,273 1,239 1,200 1,176 1,169 Operating costs and expenses 1,355 1,476 1,446 1,312 1,307 Restructuring and related charges 22 32 14 53 10 Goodwill impairment - 125 - - - Interest expense 83 84 83 83 85 Total costs and expenses 8,547 8,910 8,918 8,974 8,634 Gain on disposition of operations 1 5 1 12 2 Income from operations before income tax expense 1,224 1,157 971 851 1,012 Income tax expense (benefit) (4) 249 (92) (5) 305 272 317 Net income $ 975 $ 1,249 $ 666 $ 579 $ 695 Preferred stock dividends 29 29 29 29 29 Net income applicable to common shareholders $ 946 $ 1,220 $ 637 $ 550 $ 666 Earnings per common share: Net income applicable to common shareholders per common share - Basic $ 2.67 $ 3.41 $ 1.76 $ 1.51 $ 1.82 Weighted average common shares - Basic 354.1 357.5 361.3 363.6 365.7 Net income applicable to common shareholders per common share - Diluted $ 2.63 $ 3.35 $ 1.74 $ 1.49 $ 1.79 Weighted average common shares - Diluted 359.9 363.8 367.1 369.0 371.3 Cash dividends declared per common share $ 0.46 $ 0.37 $ 0.37 $ 0.37 $ 0.37 (1) (2) (3) (4) (5) Includes a $506 million benefit related to Tax Legislation. Life premiums and contract charges are reported in the Allstate Life, Allstate Benefits and Allstate Annuities results and include life insurance, voluntary accident and health insurance, and annuity products. On December 22, 2017, Public Law 115-97, known as the Tax Cuts and Jobs Act of 2017 (“Tax Legislation”) became effective, permanently reducing the U.S. corporate income tax rate from 35% to 21% beginning January 1, 2018. As a result, the corporate tax rate is not comparable between periods. The Allstate Corporation Consolidated Statements of Operations Property and casualty insurance premiums are reported in the Property-Liability and Service Businesses results and include auto, homeowners and other personal lines insurance products, as well as consumer product protection plans, roadside assistance, and finance and insurance products. Three months ended Other revenue primarily represents fees collected from policyholders relating to premium installment payments, commissions on sales of non-proprietary products, fee-based services and other revenue transactions. The Allstate Corporation 1Q18 Supplement 1
($ in millions, except per share data) March 31, Dec. 31, Sept. 30, June 30, March 31, 2018 2017 2017 2017 2017 Contribution to income Net income applicable to common shareholders $ 946 $ 1,220 $ 637 $ 550 $ 666 Realized capital gains and losses, after-tax 106 (90) (67) (53) (88) Valuation changes on embedded derivatives not hedged, after-tax (4) (2) 1 1 - DAC and DSI amortization relating to realized capital gains and losses and valuation changes on embedded derivatives not hedged, after-tax 2 2 2 3 3 Reclassification of periodic settlements and accruals on non-hedge derivative instruments, after-tax - (1) (1) (1) - Business combination expenses and the amortization of purchased intangible assets, after-tax 17 17 17 16 29 Gain on disposition of operations, after-tax (1) (3) (2) (6) (2) Goodwill impairment - 125 - - - Tax Legislation benefit - (506) - - - Adjusted net income * $ 1,066 $ 762 $ 587 $ 510 $ 608 Income per common share - Diluted Net income applicable to common shareholders $ 2.63 $ 3.35 $ 1.74 $ 1.49 $ 1.79 Realized capital gains and losses, after-tax 0.29 (0.25) (0.18) (0.14) (0.24) Valuation changes on embedded derivatives not hedged, after-tax (0.01) (0.01) - - - DAC and DSI amortization relating to realized capital gains and losses and valuation changes on embedded derivatives not hedged, after-tax - 0.01 0.01 0.01 0.01 Reclassification of periodic settlements and accruals on non-hedge derivative instruments, after-tax - - - - - Business combination expenses and the amortization of purchased intangible assets, after-tax 0.05 0.05 0.04 0.04 0.08 Gain on disposition of operations, after-tax - (0.01) (0.01) (0.02) - Goodwill impairment - 0.34 - - - Tax Legislation benefit - (1.39) - - - Adjusted net income * $ 2.96 $ 2.09 $ 1.60 $ 1.38 $ 1.64 Weighted average common shares - Diluted 359.9 363.8 367.1 369.0 371.3 The Allstate Corporation Contribution to Income Three months ended The Allstate Corporation 1Q18 Supplement 2
($ in millions) March 31, Dec. 31, Sept. 30, June 30, March 31, 2018 2017 2017 2017 2017 Property-Liability (1) Insurance premiums $ 8,019 $ 7,971 $ 7,896 $ 7,807 $ 7,759 Other revenue (2) 174 170 185 181 167 Net investment income 337 415 368 387 308 Realized capital gains and losses (95) 99 82 85 135 Total Property-Liability revenues 8,435 8,655 8,531 8,460 8,369 Service Businesses Insurance premiums 267 231 225 211 200 Intersegment insurance premiums and service fees (3) 29 28 26 28 28 Other revenue (2) 16 16 17 17 16 Net investment income 5 5 4 4 3 Realized capital gains and losses (4) - - - - Total Service Businesses revenues 313 280 272 260 247 Allstate Life Premiums and contract charges 327 324 316 319 321 Other revenue (2) 26 33 26 28 27 Net investment income 122 127 119 123 120 Realized capital gains and losses (3) 1 2 1 1 Total Allstate Life revenues 472 485 463 471 469 Allstate Benefits Premiums and contract charges 286 273 273 269 269 Net investment income 19 18 18 19 17 Realized capital gains and losses (2) - 1 - - Total Allstate Benefits revenues 303 291 292 288 286 Allstate Annuities Contract charges 3 4 4 3 3 Net investment income 290 338 324 354 289 Realized capital gains and losses (29) 33 18 (5) (2) Total Allstate Annuities revenues 264 375 346 352 290 Corporate and Other Net investment income 13 10 10 10 11 Realized capital gains and losses (1) (6) - - - Total Corporate and Other revenues 12 4 10 10 11 Intersegment eliminations (3) (29) (28) (26) (28) (28) Consolidated revenues $ 9,770 $ 10,062 $ 9,888 $ 9,813 $ 9,644 (1) (2) (3) Allstate Protection and Discontinued Lines and Coverages segments comprise Property-Liability. The Allstate Corporation Revenues Intersegment insurance premiums and service fees are primarily related to Arity and Allstate Roadside Services and are eliminated in the consolidated financial statements. Three months ended Other revenue primarily represents fees collected from policyholders relating to premium installment payments, commissions on sales of non-proprietary products, fee-based services and other revenue transactions. The Allstate Corporation 1Q18 Supplement 3
Allstate Discontinued Property- Service Allstate Allstate Allstate Corporate Intersegment ($ in millions) Protection Lines Liability Businesses Life Benefits Annuities and Other Eliminations Consolidated Premiums and contract charges 8,019$ -$ 8,019$ 267$ 327$ 286$ 3$ -$ -$ 8,902$ Intersegment insurance premiums and service fees - - - 29 - - - - (29) - Other revenue 174 - 174 16 26 - - - - 216 Claims and claims expense (5,055) (3) (5,058) (93) - - - - 2 (5,149) Contract benefits and interest credited to contractholder funds - - - - (275) (157) (233) - - (665) Amortization of deferred policy acquisition costs (1,088) - (1,088) (110) (33) (41) (1) - - (1,273) Operating costs and expenses (1,067) - (1,067) (140) (86) (72) (9) (8) 27 (1,355) Restructuring and related charges (21) - (21) (1) - - - - - (22) Interest expense - - - - - - - (83) - (83) Underwriting income (loss) 962$ (3)$ 959 Net investment income 337 5 122 19 290 13 - 786 Realized capital gains and losses (95) (4) (3) (2) (29) (1) - (134) Gain on disposition of operations - - - - 1 - - 1 Income tax (expense) benefit (248) 7 (13) (7) (5) 17 - (249) Preferred stock dividends - - - - - (29) - (29) Net income (loss) applicable to common shareholders 953$ (24)$ 65$ 26$ 17$ (91)$ -$ 946$ Realized capital gains and losses, after-tax 75 3 2 2 23 1 - 106 Valuation changes on embedded derivatives not hedged, after-tax - - - - (4) - - (4) DAC and DSI amortization relating to realized capital gains and losses and valuation changes on embedded derivatives not hedged, after-tax - - 2 - - - - 2 Reclassification of periodic settlements and accruals on non-hedge derivative instruments, after-tax - - - - - - - - Business combination expenses and the amortization of purchased intangible assets, after-tax 1 16 - - - - - 17 Gain on disposition of operations, after-tax - - - - (1) - - (1) Goodwill impairment - - - - - - - - Adjusted net income (loss) * 1,029$ (5)$ (1) 69$ (1) 28$ (1) 35$ (1) (90)$ (1) -$ 1,066$ Premiums and contract charges 7,759$ -$ 7,759$ 200$ 321$ 269$ 3$ -$ -$ 8,552$ Intersegment insurance premiums and service fees - - - 28 - - - - (28) - Other revenue 167 - 167 16 27 - - - - 210 Claims and claims expense (5,326) (2) (5,328) (90) - - - - 2 (5,416) Contract benefits and interest credited to contractholder funds - - - - (264) (145) (238) - - (647) Amortization of deferred policy acquisition costs (1,022) - (1,022) (68) (36) (41) (2) - - (1,169) Operating costs and expenses (1,018) - (1,018) (127) (86) (67) (9) (26) 26 (1,307) Restructuring and related charges (10) - (10) - - - - - - (10) Interest expense - - - - - - - (85) - (85) Underwriting income (loss) 550$ (2)$ 548 Net investment income 308 3 120 17 289 11 - 748 Realized capital gains and losses 135 - 1 - (2) - - 134 Gain on disposition of operations - - - - 2 - - 2 Income tax (expense) benefit (314) 13 (26) (11) (14) 35 - (317) Preferred stock dividends - - - - - (29) - (29) Net income (loss) applicable to common shareholders 677$ (25)$ 57$ 22$ 29$ (94)$ -$ 666$ Realized capital gains and losses, after-tax (89) - (1) - 2 - - (88) Valuation changes on embedded derivatives not hedged, after-tax - - - - - - - - DAC and DSI amortization relating to realized capital gains and losses and valuation changes on embedded derivatives not hedged, after-tax - - 3 - - - - 3 Reclassification of periodic settlements and accruals on non-hedge derivative instruments, after-tax - - - - - - - - Business combination expenses and the amortization of purchased intangible assets, after-tax 1 15 - - - 13 - 29 Gain on disposition of operations, after-tax - - - - (2) - - (2) Goodwill impairment - - - - - - - - Adjusted net income (loss) * 589$ (10)$ (1) 59$ (1) 22$ (1) 29$ (1) (81)$ (1) -$ 608$ (1) The Allstate Corporation Consolidating Segment Results Adjusted net income is the segment measure used for each business. Three months ended March 31, 2018 Three months ended March 31, 2017 The Allstate Corporation 1Q18 Supplement 4
($ in millions) March 31, Dec. 31, Sept. 30, June 30, March 31, March 31, Dec 31, Sept. 30, June 30, March 31, 2018 2017 2017 2017 2017 2018 2017 2017 2017 2017 Assets Liabilities Investments Reserve for property and casualty insurance claims and Fixed income securities, at fair value claims expense $ 26,115 $ 26,325 $ 27,154 $ 25,884 $ 25,628 (amortized cost $56,209, $57,525, Reserve for life-contingent contract benefits 12,333 12,549 12,227 12,234 12,223 $57,608, $56,901 and $57,194) $ 56,674 $ 58,992 $ 59,391 $ 58,656 $ 58,636 Contractholder funds 19,139 19,434 19,650 19,832 20,051 Equity securities 6,986 6,621 6,434 6,117 5,685 Unearned premiums 13,448 13,473 13,535 13,024 12,705 (cost $5,928, $5,461, $5,468, $5,321 and $5,026) Mortgage loans 4,679 4,534 4,322 4,336 4,349 Claim payments outstanding 865 875 959 939 845 Limited partnership interests 7,434 6,740 6,600 6,206 5,982 Deferred income taxes 725 782 1,249 1,104 833 Short-term, at fair value Other liabilities and accrued expenses 7,226 6,639 6,968 6,583 7,018 (amortized cost $3,424, $1,944, Long-term debt (2) 6,847 6,350 6,349 6,348 6,346 $2,198, $2,175 and $2,753) 3,424 1,944 2,198 2,175 2,753 Separate Accounts 3,314 3,444 3,422 3,416 3,436 Other 4,092 3,972 3,826 3,815 3,738 Total liabilities 90,012 89,871 91,513 89,364 89,085 Total investments 83,289 82,803 82,771 81,305 81,143 Equity Preferred stock and additional capital paid-in (3) (4) 2,303 1,746 1,746 1,746 1,746 Common stock, 352 million, 355 million, 360 million, 361 million and 365 million shares outstanding (5) 9 9 9 9 9 Additional capital paid-in 3,367 3,313 3,330 3,269 3,285 Cash 450 617 690 482 442 Retained income 45,031 43,162 42,125 41,622 41,208 Premium installment receivables, net 5,856 5,786 5,922 5,693 5,649 Deferred ESOP expense (3) (3) (6) (6) (6) Deferred policy acquisition costs 4,409 4,191 4,147 4,037 3,988 Treasury stock, at cost (548 million, 545 million, 540 million, Reinsurance recoverables, net (1) 8,916 8,921 9,748 8,722 8,723 539 million and 535 million shares) (26,280) (25,982) (25,413) (25,241) (24,887) Accrued investment income 576 569 590 573 577 Accumulated other comprehensive income: Property and equipment, net 1,060 1,072 1,067 1,072 1,067 Unrealized net capital gains and losses 187 1,662 1,651 1,526 1,256 Goodwill 2,189 2,181 2,309 2,309 2,295 Unrealized foreign currency translation adjustments (13) (9) (14) (42) (53) Other assets 3,230 2,838 2,966 3,256 2,923 Unrecognized pension and other postretirement benefit cost (1,324) (1,347) (1,309) (1,382) (1,400) Separate Accounts 3,314 3,444 3,422 3,416 3,436 Total accumulated other comprehensive income (loss) (1,150) 306 328 102 (197) Total shareholders' equity 23,277 22,551 22,119 21,501 21,158 Total assets $ 113,289 $ 112,422 $ 113,632 $ 110,865 $ 110,243 Total liabilities and shareholders' equity $ 113,289 $ 112,422 $ 113,632 $ 110,865 $ 110,243 (1) (2) (3) (4) (5) Common shares outstanding were 352,133,515; 354,690,536; 359,787,293; 361,280,366 and 365,015,746 as of March 31, 2018, December 31, 2017, September 30, 2017, June 30, 2017 and March 31, 2017, respectively. Reinsurance recoverables of unpaid losses related to Allstate Protection, Discontinued Lines and Coverages and Service Businesses segments were $6.49 billion, $6.47 billion, $7.26 billion, $6.21 billion and $6.18 billion as of March 31, 2018, December 31, 2017, September 30, 2017, June 30, 2017 and March 31, 2017, respectively. The Allstate Corporation Condensed Consolidated Statements of Financial Position On March 29, 2018, we issued 23.0 thousand shares of 5.625% Fixed Rate Noncumulative Perpetual Preferred Stock for aggregate proceeds of $575 million. Preferred shares outstanding were 95.2 thousand at March 31, 2018 and 72.2 thousand for all other periods presented. On March 29, 2018, we issued $250 million of Floating Rate Senior Notes due 2021 and $250 million Floating Rate Senior Notes due 2023. The Allstate Corporation 1Q18 Supplement 5
($ in millions, except per share data) March 31, Dec. 31, Sept. 30, June 30, March 31, 2018 2017 2017 2017 2017 Book value per common share Numerator: Common shareholders' equity (1) $ 20,974 $ 20,805 $ 20,373 $ 19,755 $ 19,412 Denominator: Common shares outstanding and dilutive potential common shares outstanding 357.7 361.3 365.8 367.0 370.4 Book value per common share $ 58.64 $ 57.58 $ 55.69 $ 53.83 $ 52.41 Book value per common share, excluding the impact of unrealized net capital gains and losses on fixed income securities Numerator: Common shareholders' equity $ 20,974 $ 20,805 $ 20,373 $ 19,755 $ 19,412 Unrealized net capital gains and losses on fixed income securities 187 757 1,028 1,013 831 Adjusted common shareholders' equity $ 20,787 $ 20,048 $ 19,345 $ 18,742 $ 18,581 Denominator: Common shares outstanding and dilutive potential common shares outstanding 357.7 361.3 365.8 367.0 370.4 Book value per common share, excluding the impact of unrealized net capital gains and losses on fixed income securities * $ 58.11 $ 55.49 $ 52.88 $ 51.07 $ 50.16 (1) The Allstate Corporation Book Value per Common Share Excludes equity related to preferred stock of $2,303 million at March 31, 2018 and $1,746 million for all other periods presented. The Allstate Corporation 1Q18 Supplement 6
($ in millions) March 31, Dec. 31, Sept. 30, June 30, March 31, 2018 2017 2017 2017 2017 Return on Common Shareholders' Equity Numerator: Net income applicable to common shareholders (1) $ 3,353 (3) $ 3,073 (3) $ 2,664 $ 2,518 $ 2,210 Denominator: Beginning common shareholders' equity $ 19,412 $ 18,827 $ 19,188 $ 18,807 $ 18,594 Ending common shareholders' equity 20,974 (3) 20,805 (3) 20,373 19,755 19,412 Average common shareholders' equity (2) $ 20,193 $ 19,816 $ 19,781 $ 19,281 $ 19,003 Return on common shareholders' equity 16.6 % 15.5 % 13.5 % 13.1 % 11.6 % Adjusted Net Income Return on Common Shareholders' Equity Numerator: Adjusted net income * (1) $ 2,925 $ 2,467 $ 2,512 $ 2,399 $ 2,124 Denominator: Beginning common shareholders' equity $ 19,412 $ 18,827 $ 19,188 $ 18,807 $ 18,594 Less: Unrealized net capital gains and losses 1,256 1,053 1,817 1,624 1,200 Adjusted beginning common shareholders' equity 18,156 17,774 17,371 17,183 17,394 Ending common shareholders' equity 20,974 (3) 20,805 (3) 20,373 19,755 19,412 Less: Unrealized net capital gains and losses 187 1,662 1,651 1,526 1,256 Adjusted ending common shareholders' equity 20,787 19,143 18,722 18,229 18,156 Average adjusted common shareholders' equity (2) $ 19,472 $ 18,459 $ 18,047 $ 17,706 $ 17,775 Adjusted net income return on common shareholders' equity * 15.0 % 13.4 % 13.9 % 13.5 % 11.9 % (1) (2) (3) Includes a $506 million benefit related to Tax Legislation. Average common shareholders' equity and average adjusted common shareholders' equity are determined using a two-point average, with the beginning and ending common shareholders' equity and adjusted common shareholders' equity, respectively, for the twelve-month period as data points. The Allstate Corporation Return on Common Shareholders' Equity Twelve months ended Net income applicable to common shareholders and adjusted net income reflect a trailing twelve-month period. The Allstate Corporation 1Q18 Supplement 7
($ in millions) March 31, Dec. 31, Sept. 30, June 30, March 31, 2018 2017 2017 2017 2017 Debt Short-term debt $ - $ - $ - $ - $ - Long-term debt 6,847 6,350 6,349 6,348 6,346 Total debt $ 6,847 $ 6,350 $ 6,349 $ 6,348 $ 6,346 Capital resources Debt $ 6,847 $ 6,350 $ 6,349 $ 6,348 $ 6,346 Shareholders' equity Preferred stock and additional capital paid-in 2,303 1,746 1,746 1,746 1,746 Common stock 9 9 9 9 9 Additional capital paid-in 3,367 3,313 3,330 3,269 3,285 Retained income 45,031 43,162 42,125 41,622 41,208 Deferred ESOP expense (3) (3) (6) (6) (6) Treasury stock (26,280) (25,982) (25,413) (25,241) (24,887) Unrealized net capital gains and losses 187 1,662 1,651 1,526 1,256 Unrealized foreign currency translation adjustments (13) (9) (14) (42) (53) Unrecognized pension and other postretirement benefit cost (1,324) (1,347) (1,309) (1,382) (1,400) Total shareholders' equity 23,277 22,551 22,119 21,501 21,158 Total capital resources $ 30,124 $ 28,901 $ 28,468 $ 27,849 $ 27,504 Ratio of debt to shareholders' equity 29.4 % 28.2 % 28.7 % 29.5 % 30.0 % Ratio of debt to capital resources 22.7 % 22.0 % 22.3 % 22.8 % 23.1 % The Allstate Corporation Debt to Capital The Allstate Corporation 1Q18 Supplement 8
($ in millions) March 31, Dec. 31, Sept. 30, June 30, March 31, 2018 2017 2017 2017 2017 Cash flows from operating activities Net income $ 975 $ 1,249 $ 666 $ 579 $ 695 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, amortization and other non-cash items 122 125 120 119 119 Realized capital gains and losses 134 (127) (103) (81) (134) Gain on disposition of operations (1) (5) (1) (12) (2) Interest credited to contractholder funds 161 168 174 175 173 Goodwill impairment - 125 - - - Changes in: Policy benefits and other insurance reserves (364) (974) 1,048 45 183 Unearned premiums (204) (62) 491 282 (248) Deferred policy acquisition costs 10 (38) (111) (79) 14 Premium installment receivables, net (58) 136 (216) (32) (19) Reinsurance recoverables, net (12) 806 (1,023) (5) 11 Income taxes 181 (364) 161 (326) 284 Other operating assets and liabilities (318) 61 660 (174) (219) Net cash provided by operating activities 626 1,100 1,866 491 857 Cash flows from investing activities Proceeds from sales Fixed income securities 10,619 5,833 4,987 7,438 7,083 Equity securities 1,138 1,325 1,749 829 2,601 Limited partnership interests 53 358 286 271 210 Other investments 76 104 52 94 24 Investment collections Fixed income securities 583 1,156 975 1,034 1,029 Mortgage loans 46 123 172 82 223 Other investments 122 184 121 163 174 Investment purchases Fixed income securities (9,789) (7,210) (6,721) (8,414) (8,800) Equity securities (1,535) (1,289) (1,823) (1,090) (2,383) Limited partnership interests (415) (358) (504) (310) (268) Mortgage loans (192) (335) (163) (62) (86) Other investments (330) (299) (168) (313) (219) Change in short-term investments, net (1,533) 353 115 570 1,572 Change in other investments, net (27) (2) (135) 117 (10) Purchases of property and equipment, net (62) (83) (70) (72) (74) Acquisition of operations (5) - - - (1,356) Net cash (used in) provided by investing activities (1,251) (140) (1,127) 337 (280) Cash flows from financing activities Proceeds from issuance of long-term debt 498 - - - - Proceeds from issuance of preferred stock 558 - - - - Contractholder fund deposits 253 258 252 258 257 Contractholder fund withdrawals (492) (474) (459) (474) (483) Dividends paid on common stock (132) (134) (134) (135) (122) Dividends paid on preferred stock (29) (29) (29) (29) (29) Treasury stock purchases (270) (647) (191) (393) (264) Shares reissued under equity incentive plans, net 10 3 24 41 67 Other 62 (10) 6 (56) 3 Net cash provided by (used in) financing activities 458 (1,033) (531) (788) (571) Net (decrease) increase in cash (167) (73) 208 40 6 Cash at beginning of period 617 690 482 442 436 Cash at end of period $ 450 $ 617 $ 690 $ 482 $ 442 The Allstate Corporation Consolidated Statements of Cash Flows Three months ended The Allstate Corporation 1Q18 Supplement 9
($ in millions) Amortization relating to realized capital gains and Amortization DAC before DAC after losses and (acceleration) Effect of impact of Impact of impact of Beginning Acquisition Amortization valuation changes on deceleration unrealized Ending unrealized unrealized unrealized balance costs before embedded derivatives for changes in capital gains balance capital gains capital gains capital gains Dec. 31, 2017 deferred adjustments (1)(2) not hedged (2) assumptions (2) and losses March 31, 2018 and losses and losses and losses Allstate Protection $ 1,510 $ 1,062 $ (1,088) $ - $ - $ - $ 1,484 $ 1,484 $ - $ 1,484 Service Businesses 954 279 (3) (110) (3) - - - 1,123 1,123 - 1,123 Allstate Life Traditional life and accident and health 465 14 (11) - - - 468 468 - 468 Interest-sensitive life 687 16 (20) (2) - 79 760 866 (106) 760 Subtotal 1,152 30 (31) (2) - 79 1,228 1,334 (106) 1,228 Allstate Benefits Traditional life and accident and health 403 35 (35) - - - 403 403 - 403 Interest-sensitive life 139 5 (6) - - 1 139 139 - 139 Subtotal 542 40 (41) - - 1 542 542 - 542 Allstate Annuities Fixed annuity 33 - (1) - - - 32 32 - 32 Consolidated $ 4,191 $ 1,411 $ (1,271) $ (2) $ - $ 80 $ 4,409 $ 4,515 $ (106) $ 4,409 Amortization relating to realized capital gains and Amortization DAC before DAC after losses and (acceleration) Effect of impact of Impact of impact of Beginning Acquisition Amortization valuation changes on deceleration unrealized Ending unrealized unrealized unrealized balance costs before embedded derivatives for changes in capital gains balance capital gains capital gains capital gains Dec. 31, 2016 deferred adjustments (1)(2) not hedged (2) assumptions (2) and losses March 31, 2017 and losses and losses and losses Allstate Protection $ 1,432 $ 984 $ (1,022) $ - $ - $ - $ 1,394 $ 1,394 $ - $ 1,394 Service Businesses 756 165 (4) (68) - - - 853 853 - 853 Allstate Life Traditional life and accident and health 438 15 (9) - - - 444 444 - 444 Interest-sensitive life 762 17 (23) (4) - (17) 735 891 (156) 735 Subtotal 1,200 32 (32) (4) - (17) 1,179 1,335 (156) 1,179 Allstate Benefits Traditional life and accident and health 382 34 (35) - - - 381 381 - 381 Interest-sensitive life 144 5 (6) - - - 143 144 (1) 143 Subtotal 526 39 (41) - - - 524 525 (1) 524 Allstate Annuities Fixed annuity 40 - (2) - - - 38 38 - 38 Consolidated $ 3,954 $ 1,220 $ (1,165) $ (4) $ - $ (17) $ 3,988 $ 4,145 $ (157) $ 3,988 (1) (2) Included as a component of amortization of DAC on the Condensed Consolidated Statements of Operations. (3) (4) Includes $66 million recorded in connection with the SquareTrade acquisition on January 3, 2017. As a result of the adoption of the revenue from contracts with customers accounting standard, SquareTrade recorded an increase of approximately $160 million in acquisition costs deferred and $30 million of amortization before adjustments related to protection plans sold directly to retailers for which SquareTrade is deemed to be the principal in the transaction. For the three months ended March 31, 2018 Acquisition Costs as of March 31, 2018 The Allstate Corporation Analysis of Deferred Policy Acquisition Costs Change in Deferred Policy Acquisition Costs Reconciliation of Deferred Policy Change in Deferred Policy Acquisition Costs Reconciliation of Deferred Policy For the three months ended March 31, 2017 Acquisition Costs as of March 31, 2017 Amortization before adjustments reflects total DAC amortization before amortization/accretion related to realized capital gains and losses and valuation changes on embedded derivatives not hedged and amortization acceleration/deceleration for changes in assumptions. The Allstate Corporation 1Q18 Supplement 10
March 31, Dec. 31, Sept. 30, June 30, March 31, Policies in Force statistics (in thousands) (1) 2018 2017 2017 2017 2017 Allstate Protection Allstate brand Auto 19,617 19,580 19,513 19,548 19,565 Homeowners 6,093 6,088 6,071 6,075 6,090 Landlord 692 694 697 703 710 Renter 1,599 1,588 1,578 1,564 1,563 Condominium 663 663 662 662 663 Other 1,276 1,278 1,275 1,270 1,264 Other personal lines 4,230 4,223 4,212 4,199 4,200 Commercial lines 238 245 251 262 272 Total 30,178 30,136 30,047 30,084 30,127 Esurance brand Auto 1,399 1,352 1,369 1,388 1,400 Homeowners 84 79 76 69 63 Other personal lines 45 44 45 47 48 Total 1,528 1,475 1,490 1,504 1,511 Encompass brand Auto 517 530 548 571 595 Homeowners 248 254 262 273 284 Other personal lines 83 85 88 91 94 Total 848 869 898 935 973 Allstate Protection Policies in Force 32,554 32,480 32,435 32,523 32,611 Service Businesses SquareTrade 41,806 38,719 34,078 31,258 29,907 Allstate Roadside Services 692 699 708 724 743 Allstate Dealer Services 4,026 4,088 4,130 4,139 4,150 Total 46,524 43,506 38,916 36,121 34,800 Allstate Life 2,018 2,026 2,019 2,020 2,017 Allstate Benefits 4,260 4,033 4,035 4,064 3,992 Allstate Annuities 225 231 236 240 246 Total Policies in Force 85,581 82,276 77,641 74,968 73,666 Agency Data (2) Total Allstate agencies (3) 12,300 12,400 12,200 12,200 12,200 Licensed sales professionals (4) 24,700 24,800 23,900 24,000 23,600 Allstate independent agencies (5) 2,500 2,400 2,400 2,300 2,200 (1) • • • • • • • (2) (3) (4) (5) Includes 605 and 703 engaged Allstate independent agencies (“AIAs”) as of March 31, 2018 and December 31, 2017, respectively. Engaged AIAs, as currently determined, include those that achieve a minimum number of new policies written. Employees of Allstate agencies who are licensed to sell Allstate products. A multi-car customer would generate multiple item (policy) counts, even if all cars were insured under one policy. Non-proprietary products offered by Ivantage (insurance agency) and Answer Financial (independent insurance agency) are not included. Allstate Roadside Services reflects memberships in force and do not include their wholesale partners as the customer relationship is managed by the wholesale partner. Allstate Dealer Services reflects service contracts and other products sold in conjunction with auto lending and vehicle sales transactions and do not include their third party administrators ("TPAs") as the customer relationship is managed by the TPAs. SquareTrade represents active consumer product protection plans. Allstate Life insurance policies and Allstate Annuities in force reflect the number of contracts in force excluding sold blocks of business that remain on the balance sheet due to the dispositions of the business being effected through reinsurance arrangements. Allstate Benefits reflects certificate counts as opposed to group counts. Rounded to the nearest hundred. The Allstate Corporation Policies in Force and Other Statistics Total Allstate agencies represents exclusive Allstate agencies and financial representatives in the United States and employee producers in Canada. Policy counts are based on items rather than customers. The Allstate Corporation 1Q18 Supplement 11
($ in millions) March 31, Dec. 31, Sept. 30, June 30, March 31, 2018 2017 2017 2017 2017 Allstate Protection Allstate brand (1) Auto $ 5,151 $ 4,956 $ 5,096 $ 4,925 $ 4,882 Homeowners 1,465 1,694 1,921 1,847 1,403 Landlord 121 132 138 130 120 Renter 69 68 86 75 67 Condominium 59 65 71 68 55 Other 126 145 159 168 126 Other personal lines 375 410 454 441 368 Commercial lines 137 125 116 124 123 Total 7,128 7,185 7,587 7,337 6,776 Esurance brand Auto 470 389 427 386 439 Homeowners 21 19 24 20 16 Other personal lines 2 2 2 2 2 Total 493 410 453 408 457 Encompass brand Auto 118 128 141 148 125 Homeowners 86 95 108 112 91 Other personal lines 19 20 22 25 20 Total 223 243 271 285 236 Total Allstate Protection Auto 5,739 5,473 5,664 5,459 5,446 Homeowners 1,572 1,808 2,053 1,979 1,510 Other personal lines 396 432 478 468 390 Commercial lines 137 125 116 124 123 Total 7,844 7,838 8,311 8,030 7,469 Discontinued Lines and Coverages - - - - - Total Property-Liability $ 7,844 $ 7,838 $ 8,311 $ 8,030 $ 7,469 Service Businesses SquareTrade 130 (5) 156 104 85 81 Allstate Roadside Services 65 60 68 66 69 Allstate Dealer Services 92 93 100 108 104 Total 287 309 272 259 254 Total premiums written $ 8,131 $ 8,147 $ 8,583 $ 8,289 $ 7,723 Non-Proprietary Premiums Ivantage (3) $ 1,679 $ 1,643 $ 1,609 $ 1,584 $ 1,566 Answer Financial (4) 148 137 153 148 153 (1) Canada premiums included in Allstate brand Auto $ 186 $ 196 $ 236 $ 228 $ 171 Homeowners 50 59 69 65 44 Other personal lines 14 15 19 16 12 Total $ 250 $ 270 $ 324 $ 309 $ 227 (2) (3) (4) The Allstate Corporation Premiums Written for Allstate Protection and Service Businesses There are no premiums written for Arity, which is part of the Service Businesses segment. Represents non-proprietary premiums under management as of the end of the period related to personal and commercial line products offered by Ivantage when an Allstate product is not available. Fees for the three months ended March 31, 2018 were $37.2 million. Three months ended Represents non-proprietary premiums written for the period. Commissions earned for the three months ended March 31, 2018 were $17.3 million. The Allstate Corporation 1Q18 Supplement 12
($ in millions) March 31, Dec. 31, Sept. 30, June 30, March 31, 2018 2017 2017 2017 2017 Allstate Protection Allstate brand Auto $ (1) $ 33 $ 366 $ 208 $ 65 Homeowners 300 480 383 650 575 Other personal lines 27 20 65 57 59 Commercial lines 3 2 13 2 7 Total 329 535 827 917 706 Esurance brand Auto 2 - 15 15 4 Homeowners 1 1 2 9 4 Other personal lines - - - - - Total 3 1 17 24 8 Encompass brand Auto 1 - 1 7 4 Homeowners 26 59 11 42 61 Other personal lines 2 3 - 3 2 Total 29 62 12 52 67 Total Allstate Protection Auto 2 33 382 230 73 Homeowners 327 540 396 701 640 Other personal lines 29 23 65 60 61 Commercial lines 3 2 13 2 7 Total 361 598 856 993 781 Discontinued Lines and Coverages - - - - - Total Property-Liability $ 361 $ 598 $ 856 $ 993 $ 781 Service Businesses (1) $ - $ 1 $ 5 $ - $ - Total catastrophe losses $ 361 $ 599 $ 861 $ 993 $ 781 (1) Catastrophe losses relate to Allstate Dealer Services. The Allstate Corporation Catastrophe Losses Three months ended The Allstate Corporation 1Q18 Supplement 13
($ in millions) March 31, Dec. 31, Sept. 30, June 30, March 31, 2018 2017 2017 2017 2017 Prior Year Reserve Reestimates (1) Allstate Protection Auto $ (100) $ (154) $ (189) $ (61) $ (86) Homeowners 32 (45) (42) (20) (24) Other personal lines (6) 1 - (9) 9 Commercial lines 20 12 7 (2) 2 Total (54) (186) (224) (92) (99) Discontinued Lines and Coverages 3 3 88 3 2 Total Property-Liability $ (51) $ (183) $ (136) $ (89) $ (97) Service Businesses $ - $ 1 $ 1 $ - $ - Total prior year reserve reestimates $ (51) $ (182) $ (135) $ (89) $ (97) Allstate Protection by Brand Allstate brand $ (60) $ (176) $ (221) $ (83) $ (105) Esurance brand - - (1) (1) - Encompass brand 6 (10) (2) (8) 6 Total $ (54) $ (186) $ (224) $ (92) $ (99) Catastrophe Losses included in Prior Year Reserve Reestimates Allstate Protection Allstate brand $ (4) $ (7) $ (7) $ (4) $ 2 Esurance brand - - - (1) - Encompass brand 8 (1) - (2) 2 Total $ 4 $ (8) $ (7) $ (7) $ 4 Effect of Prior Year Reserve Reestimates on Combined Ratio (1)(2) Allstate Protection Auto (1.2) (1.9) (2.4) (0.8) (1.0) Homeowners 0.4 (0.5) (0.5) (0.3) (0.3) Other personal lines (0.1) - - (0.1) 0.1 Commercial lines 0.2 0.1 0.1 - - Total (0.7) (2.3) (2.8) (1.2) (1.2) Discontinued Lines and Coverages - 0.1 1.1 0.1 - Total Property-Liability (0.7) (2.2) (1.7) (1.1) (1.2) Service Businesses - - - - - Total prior year reserve reestimates (0.7) (2.2) (1.7) (1.1) (1.2) Allstate Protection by brand Allstate brand (0.8) (2.2) (2.8) (1.1) (1.3) Esurance brand - - - - - Encompass brand 0.1 (0.1) - (0.1) 0.1 Total (0.7) (2.3) (2.8) (1.2) (1.2) (1) (2) Calculated using the total premiums earned for Allstate Protection, Discontinued Lines and Coverages and Service Businesses for the respective period. Favorable reserve reestimates are shown in parentheses. The Allstate Corporation Prior Year Reserve Reestimates Three months ended The Allstate Corporation 1Q18 Supplement 14
($ in millions) March 31, Dec. 31, Sept. 30, June 30, March 31, 2018 2017 2017 2017 2017 Premiums written $ 7,844 $ 7,838 $ 8,311 $ 8,030 $ 7,469 Decrease (increase) in unearned premiums 209 139 (456) (239) 298 Other (34) (6) 41 16 (8) Premiums earned 8,019 7,971 7,896 7,807 7,759 Other revenue 174 170 185 181 167 Claims and claims expense (5,058) (5,190) (5,441) (5,607) (5,328) Amortization of deferred policy acquisition costs (1,088) (1,091) (1,060) (1,032) (1,022) Operating costs and expenses (1,067) (1,127) (1,084) (1,033) (1,018) Restructuring and related charges (21) (18) (12) (51) (10) Underwriting income 959 715 484 265 548 Net investment income 337 415 368 387 308 Income tax expense on operations (268) (373) (271) (207) (268) Realized capital gains and losses, after-tax (75) 73 54 56 89 Gain on disposition of operations, after-tax - 2 1 6 - Tax Legislation expense - (65) - - - Net income applicable to common shareholders $ 953 $ 767 $ 636 $ 507 $ 677 Catastrophe losses $ 361 $ 598 $ 856 $ 993 $ 781 Amortization of purchased intangible assets $ 1 $ 2 $ 2 $ 1 $ 2 Operating ratios Claims and claims expense ("loss") ratio 63.0 65.1 68.9 71.8 68.6 Expense ratio (1) 25.0 25.9 25.0 24.8 24.3 Combined ratio 88.0 91.0 93.9 96.6 92.9 Loss ratio 63.0 65.1 68.9 71.8 68.6 Less: effect of catastrophe losses 4.5 7.5 10.9 12.7 10.1 effect of prior year non-catastrophe reserve reestimates (0.7) (2.2) (1.6) (1.0) (1.3) Underlying loss ratio * 59.2 59.8 59.6 60.1 59.8 Expense ratio (1) 25.0 25.9 25.0 24.8 24.3 Less: effect of amortization of purchased intangible assets - - - - - Expense ratio, excluding the effect of amortization of purchased intangible assets 25.0 25.9 25.0 24.8 24.3 Reconciliation of combined ratio to underlying combined ratio Combined ratio 88.0 91.0 93.9 96.6 92.9 Effect of catastrophe losses (4.5) (7.5) (10.9) (12.7) (10.1) Effect of prior year non-catastrophe reserve reestimates 0.7 2.2 1.6 1.0 1.3 Effect of amortization of purchased intangible assets - - - - - Underlying combined ratio * 84.2 85.7 84.6 84.9 84.1 Effect of restructuring and related charges on combined ratio 0.3 0.2 0.2 0.7 0.1 Effect of Discontinued Lines and Coverages on combined ratio - - 1.1 0.1 - (1) Other revenue is deducted from other costs and expenses in the expense ratio calculation. The Allstate Corporation Property-Liability Results Three months ended The Allstate Corporation 1Q18 Supplement 15
($ in millions) March 31, Dec. 31, Sept. 30, June 30, March 31, 2018 2017 2017 2017 2017 Property-Liability Underwriting Summary Allstate Protection $ 962 $ 719 $ 572 $ 270 $ 550 Discontinued Lines and Coverages (3) (4) (88) (5) (2) Underwriting income $ 959 $ 715 $ 484 $ 265 $ 548 Allstate Protection Underwriting Summary Premiums written $ 7,844 $ 7,838 $ 8,311 $ 8,030 $ 7,469 Premiums earned $ 8,019 $ 7,971 $ 7,896 $ 7,807 $ 7,759 Other revenue 174 170 185 181 167 Claims and claims expense (5,055) (5,187) (5,353) (5,604) (5,326) Amortization of deferred policy acquisition costs (1,088) (1,091) (1,060) (1,032) (1,022) Operating costs and expenses (1,067) (1,126) (1,084) (1,031) (1,018) Restructuring and related charges (21) (18) (12) (51) (10) Underwriting income $ 962 $ 719 $ 572 $ 270 $ 550 Catastrophe losses $ 361 $ 598 $ 856 $ 993 $ 781 Operating ratios Loss ratio 63.0 65.1 67.8 71.8 68.6 Expense ratio (1) 25.0 25.9 25.0 24.7 24.3 Combined ratio 88.0 91.0 92.8 96.5 92.9 Effect of catastrophe losses on combined ratio 4.5 7.5 10.9 12.7 10.1 Effect of restructuring and related charges on combined ratio 0.3 0.2 0.2 0.7 0.1 Discontinued Lines and Coverages Underwriting Summary Premiums written $ - $ - $ - $ - $ - Premiums earned $ - $ - $ - $ - $ - Claims and claims expense (3) (3) (88) (3) (2) Operating costs and expenses - (1) - (2) - Underwriting loss $ (3) $ (4) $ (88) $ (5) $ (2) Effect of Discontinued Lines and Coverages on the Property-Liability combined ratio - - 1.1 0.1 - Allstate Protection Underwriting Income (Loss) by Brand Allstate brand $ 957 $ 737 $ 562 $ 308 $ 594 Esurance brand 3 (1) (19) (26) (10) Encompass brand 4 (17) 29 (12) (33) Answer Financial (2) - - - (1) Underwriting income $ 962 $ 719 $ 572 $ 270 $ 550 (1) Other revenue is deducted from other costs and expenses in the expense ratio calculation. The Allstate Corporation Property-Liability Underwriting Results by Area of Business Three months ended The Allstate Corporation 1Q18 Supplement 16
Average Number Claims and Combined catastrophe Size of catastrophe of events claims expense ratio impact loss per event Greater than $250 million - - % $ - - % - $ - $101 million to $250 million 1 9.1 122 33.8 1.5 122 $50 million to $100 million 2 18.2 152 42.1 1.9 76 Less than $50 million 8 72.7 83 23.0 1.1 10 Total 11 100.0 % 357 98.9 4.5 32 Prior year reserve reestimates 4 1.1 - Total catastrophe losses $ 361 100.0 % 4.5 Premiums Total Total Effect on the earned catastrophe catastrophe property and casualty Quarter 1 Quarter 2 Quarter 3 Quarter 4 Year year-to-date losses by year losses by year combined ratio 2009 7.8 12.5 6.2 5.0 7.9 $ 26,194 $ 2,069 $ 2,159 8.2 2010 10.0 9.8 5.9 8.3 8.5 25,957 2,207 2,272 8.8 2011 5.2 36.2 16.7 1.0 14.7 25,942 3,815 3,298 12.7 2012 3.9 12.3 3.1 15.7 8.8 26,737 2,345 1,324 5.0 2013 5.3 9.4 1.8 1.7 4.5 27,618 1,251 1,352 4.9 2014 6.3 13.0 7.1 1.3 6.9 28,929 1,993 2,000 6.9 2015 4.0 10.6 3.5 4.7 5.7 30,309 1,719 1,749 5.8 2016 10.9 12.5 6.2 3.9 8.4 30,727 2,571 2,419 7.9 2017 10.1 12.7 10.9 7.5 10.3 31,433 3,228 2,611 8.3 2018 4.5 8,019 361 385 4.8 Average 6.8 14.3 6.8 5.5 8.4 7.5 (1) Catastrophe losses and the effect on the combined ratio were updated for 2017 and 2016 to remove Service Businesses from the calculation. The periods 2015 through 2009 include historical Property-Liability results, which include Allstate Protection, Discontinued Lines and Coverages and Service Businesses. The effect on the combined ratio is calculated using the total premiums earned. Effect of all catastrophe losses on the combined ratio The Allstate Corporation Property-Liability Catastrophe Experience Catastrophe by Size of Event ($ in millions) Three months ended March 31, 2018 Effect of Catastrophe Losses on the Combined Ratio (1) Excludes the effect of catastrophe losses relating to earthquakes and hurricanes The Allstate Corporation 1Q18 Supplement 17
Number of Location Number of Location Number of Location locations (7) Total brand (%) (8) specific (%) (9) locations Total brand (%) specific (%) locations Total brand (%) specific (%) Allstate brand Auto (2)(3)(4) 24 0.3 2.4 25 1.2 (10) 5.4 (10) 17 0.4 3.0 Homeowners (5)(6) 14 1.1 4.9 11 0.2 1.5 8 0.5 5.3 Esurance brand Auto 3 0.2 4.6 7 0.6 5.0 16 2.0 5.6 Homeowners 5 1.7 7.5 4 5.1 14.3 - - - Encompass brand Auto 4 0.3 3.0 8 1.7 5.7 8 0.8 4.5 Homeowners 3 0.1 2.0 7 0.9 4.5 6 0.9 6.0 Number of Location Number of Location Number of Location locations Total brand (%) specific (%) locations Total brand (%) specific (%) locations Total brand (%) specific (%) Allstate brand Auto (2)(3)(4) 23 0.7 3.2 18 1.7 (10) 5.3 (10) 23 1.3 5.6 Homeowners (5)(6) 3 0.1 2.0 14 1.0 4.2 12 0.5 4.7 Esurance brand Auto 12 1.7 5.6 7 0.7 5.3 13 2.2 6.2 Homeowners - - - - - - 1 (0.5) (10.0) Encompass brand Auto 11 2.3 7.5 5 1.4 7.2 8 3.2 9.9 Homeowners 9 2.8 8.9 3 0.2 3.4 6 0.6 3.3 (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) The Allstate Corporation Allstate Protection Impact of Net Rate Changes Approved on Premiums Written Three months ended Three months ended Three months ended Allstate brand auto rate changes were 2.6%, 4.0% 4.1%, 4.7%, 7.2% and 7.2% for the trailing twelve months ended March 31, 2018, December 31, 2017, September 30, 2017, June 30, 2017, March 31, 2017 and December 31, 2016, respectively. March 31, 2018 (1) December 31, 2017 September 30, 2017 Three months ended Three months ended Three months ended June 30, 2017 March 31, 2017 December 31, 2016 Rate changes include changes approved based on our net cost of reinsurance. These rate changes do not reflect initial rates filed for insurance subsidiaries initially writing business. Based on historical premiums written in those 50 states, the District of Columbia and Canadian provinces, rate changes approved for Allstate brand, Esurance brand and Encompass brand for the three month period ending March 31, 2018 are estimated to total $146 million. Rate changes do not include rating plan enhancements, including the introduction of discounts and surcharges that result in no change in the overall rate level in a location. Impacts of Allstate brand auto effective rate changes as a percentage of total brand prior year-end premiums written were 1.2%, 0.5%, 0.4%, 1.8%, 1.1% and 1.1% for the three months ended March 31, 2018, December 31, 2017, September 30, 2017, June 30, 2017, March 31, 2017 and December 31, 2016, respectively. Rate changes are included in the effective calculations in the period the rate change is effective for renewal contracts. Includes a rate increase in California in first and fourth quarter 2017. Excluding California, Allstate brand auto total brand and location specific rate changes were 1.1% and 4.7%, respectively, in first quarter 2017 and 0.5% and 4.2%, respectively, in fourth quarter 2017. Allstate brand auto rate changes were cumulatively $2.2 billion or 11.5% for year-to-date 2018, and 2017 and 2016. Impacts of Allstate brand homeowners effective rate changes as a percentage of total brand prior year-end premiums written were 1.0%, 0.1%, 0.6%, 0.1%, 0.9% and 0.6% for the three months ended March 31, 2018, December 31, 2017, September 30, 2017, June 30, 2017, March 31, 2017 and December 31, 2016, respectively. Allstate brand homeowner rate changes were cumulatively $265 million or 4.0% for year-to-date 2018, and 2017 and 2016. Allstate brand auto and homeowners operates in 50 states, the District of Columbia, and 5 Canadian provinces. Esurance brand auto operates in 43 states and 2 Canadian provinces. Esurance brand homeowners operates in 31 states and 2 Canadian provinces. Encompass brand auto and homeowners operates in 39 states and the District of Columbia. Represents the impact in the states, the District of Columbia and Canadian provinces where rate changes were approved during the period as a percentage of total brand prior year-end premiums written. Represents the impact in the states, the District of Columbia and Canadian provinces where rate changes were approved during the period as a percentage of its respective total prior year-end premiums written in those same locations. The Allstate Corporation 1Q18 Supplement 18
($ in millions) March 31, Dec. 31, Sept. 30, June 30, March 31, 2018 2017 2017 2017 2017 Net premiums written $ 7,128 $ 7,185 $ 7,587 $ 7,337 $ 6,776 Net premiums earned Auto $ 5,046 $ 5,003 $ 4,950 $ 4,884 $ 4,839 Homeowners 1,727 1,725 1,707 1,691 1,688 Other personal lines 420 419 414 411 405 Commercial lines 136 128 124 118 125 Total 7,329 7,275 7,195 7,104 7,057 Other revenue Auto $ 54 $ 53 $ 54 $ 54 $ 53 Homeowners 11 12 10 10 10 Other personal lines 28 30 38 33 26 Commercial lines 2 - 2 3 3 Other business lines (1) 41 39 45 45 39 Total 136 134 149 145 131 Incurred losses Auto $ 3,204 $ 3,289 $ 3,455 $ 3,442 $ 3,224 Homeowners 997 1,052 988 1,273 1,194 Other personal lines 258 226 312 258 265 Commercial lines 108 89 103 86 96 Total 4,567 4,656 4,858 5,059 4,779 Expenses Auto $ 1,317 $ 1,363 $ 1,288 $ 1,282 $ 1,216 Homeowners 410 433 410 381 397 Other personal lines 144 158 158 148 138 Commercial lines 37 37 38 37 36 Other business lines (1) 33 25 30 34 28 Total 1,941 2,016 1,924 1,882 1,815 Underwriting income (loss) Auto $ 579 $ 404 $ 261 $ 214 $ 452 Homeowners 331 252 319 47 107 Other personal lines 46 65 (18) 38 28 Commercial lines (7) 2 (15) (2) (4) Other business lines 8 14 15 11 11 Total 957 737 562 308 594 Loss ratio 62.3 64.0 67.5 71.2 67.7 Expense ratio (2) 24.6 25.9 24.7 24.5 23.9 Combined ratio 86.9 89.9 92.2 95.7 91.6 Loss ratio 62.3 64.0 67.5 71.2 67.7 Less: effect of catastrophe losses 4.5 7.4 11.5 12.9 10.0 effect of prior year non-catastrophe reserve reestimates (0.8) (2.3) (3.0) (1.1) (1.5) Underlying loss ratio * 58.6 58.9 59.0 59.4 59.2 Expense ratio (2) 24.6 25.9 24.7 24.5 23.9 Less: effect of amortization of purchased intangible assets - - - - - Expense ratio, excluding the effect of amortization of purchased intangible assets 24.6 25.9 24.7 24.5 23.9 Reconciliation of combined ratio to underlying combined ratio Combined ratio 86.9 89.9 92.2 95.7 91.6 Effect of catastrophe losses (4.5) (7.4) (11.5) (12.9) (10.0) Effect of prior year non-catastrophe reserve reestimates 0.8 2.3 3.0 1.1 1.5 Effect of amortization of purchased intangible assets - - - - - Underlying combined ratio * 83.2 84.8 83.7 83.9 83.1 Effect of prior year reserve reestimates on combined ratio (0.8) (2.4) (3.1) (1.2) (1.5) Effect of advertising expenses on combined ratio 1.6 2.0 2.1 1.9 2.0 (1) (2) Other revenue is deducted from other costs and expenses in the expense ratio calculation. Other business lines primarily include Ivantage and represents commissions earned and other costs and expenses. The Allstate Corporation Allstate Brand Profitability Measures Three months ended The Allstate Corporation 1Q18 Supplement 19
March 31, Dec. 31, Sept. 30, June 30, March 31, 2018 2017 2017 2017 2017 New Issued Applications (in thousands) (2) Auto 714 620 651 639 610 Homeowners 187 177 198 195 163 Average Premium - Gross Written ($) (3) Auto 564 561 556 544 538 Homeowners 1,212 1,206 1,203 1,192 1,187 Average Premium - Net Earned ($) (4) Auto 516 512 507 499 492 Homeowners 1,131 1,131 1,119 1,106 1,106 Annualized Average Premium ($) (5) Auto 1,029 1,022 1,015 999 989 Homeowners 1,134 1,133 1,125 1,117 1,112 Average Underlying Loss (Incurred Pure Premium) and Expense * ($) (6) Auto 926 963 925 925 899 Homeowners 720 679 689 668 682 Renewal Ratio (%) (7) Auto 88.3 87.8 87.7 87.4 87.4 Homeowners 87.5 87.5 87.5 87.0 87.1 Auto Claim Frequency (% change year-over-year) (8) Bodily injury gross (2.0) (2.9) (5.6) (4.7) (6.0) Bodily injury paid (9) (15.2) (13.2) (9.1) (23.7) (20.5) Property damage gross (2.5) (4.1) (8.0) (5.2) (3.9) Property damage paid (3.0) (5.2) (9.0) (3.4) (3.2) Auto Paid Claim Severity (% change year-over-year) (10) Bodily injury (9) 15.8 17.6 15.0 28.3 25.1 Property damage 4.7 6.7 4.9 1.6 4.8 Homeowners Excluding Catastrophe Losses (% change year-over-year) Gross claim frequency (8) (1.1) (2.9) (2.6) 6.0 7.6 Paid claim frequency (8) (4.0) (3.7) (5.4) 7.1 2.3 Paid claim severity 14.4 8.1 8.1 (0.2) 4.1 (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Paid claim frequency is calculated as annualized notice counts closed with payment in the period divided by the average of policies in force with the applicable coverage during the period. Gross claim frequency is calculated as annualized notice counts received in the period divided by the average of policies in force with the applicable coverage during the period. Gross claim frequency includes all actual notice counts, regardless of their current status (open or closed) or their ultimate disposition (closed with a payment or closed without payment). Frequency statistics exclude counts associated with catastrophe events. The percent change in paid or gross claim frequency is calculated as the amount of increase or decrease in the paid or gross claim frequency in the current period compared to the same period in the prior year; divided by the prior year paid or gross claim frequency. Bodily injury claim process changes in the second half of 2016 related to enhanced documentation of injuries and related medical treatments are having a related impact on paid claim frequency and severity due to payment mix and claim closure patterns. These process changes and the related impacts on the percent change in paid claim frequency and severity have begun to moderate, but are still impacting comparative trends. Paid claim severity is calculated by dividing the sum of paid losses and loss expenses by claims closed with a payment during the period. The percent change in paid claim severity is calculated as the amount of increase or decrease in paid claim severity in the current period compared to the same period in the prior year; divided by the prior year paid claims severity. Statistics presented for Allstate brand exclude excess and surplus lines. New Issued Applications: Item counts of automobiles or homeowners insurance applications for insurance policies that were issued during the period, regardless of whether the customer was previously insured by another Allstate Protection brand. Allstate brand includes automobiles added by existing customers when they exceed the number allowed (currently 10) on a policy. Average Premium - Gross Written: Gross premiums written divided by issued item count. Gross premiums written include the impacts from discounts, surcharges and ceded reinsurance premiums and exclude the impacts from mid-term premium adjustments and premium refund accruals. Average premiums represent the appropriate policy term for each line, which is 6 months for auto and 12 months for homeowners. Average Premium - Net Earned: Earned premium divided by average policies in force for the period. Earned premium includes the impacts from mid-term premium adjustments and ceded reinsurance, but does not include impacts of premium refund accruals. Average premiums represent the appropriate policy term for each line, which is 6 months for auto and 12 months for homeowners. Calculated by annualizing net earned premium reported in the quarter and year-to-date divided by policies in force at quarter end. Average underlying loss (incurred pure premium) and expense is calculated as the underlying combined ratio multiplied by the annualized average premium. The Allstate Corporation Allstate Brand Statistics (1) Three months ended Renewal ratio: Renewal policies issued during the period, based on contract effective dates, divided by the total policies issued 6 months prior for auto or 12 months prior for homeowners. The Allstate Corporation 1Q18 Supplement 20
($ in millions) March 31, Dec. 31, Sept. 30, June 30, March 31, 2018 2017 2017 2017 2017 Net premiums written $ 493 $ 410 $ 453 $ 408 $ 457 Net premiums earned Auto $ 411 $ 411 $ 411 $ 411 $ 403 Homeowners 20 19 19 16 14 Other personal lines 2 2 2 2 2 Total 433 432 432 429 419 Other revenue Auto $ 20 $ 17 $ 17 $ 17 $ 16 Homeowners - - - - - Other personal lines - - - - - Total 20 17 17 17 16 Incurred losses Auto $ 309 $ 322 $ 322 $ 324 $ 300 Homeowners 11 9 14 21 13 Other personal lines 1 1 1 1 1 Total 321 332 337 346 314 Expenses Auto $ 121 $ 111 $ 121 $ 117 $ 123 Homeowners 7 6 9 8 8 Other personal lines 1 1 1 1 - Total 129 118 131 126 131 Underwriting income (loss) Auto $ 1 $ (5) $ (15) $ (13) $ (4) Homeowners 2 4 (4) (13) (7) Other personal lines - - - - 1 Total 3 (1) (19) (26) (10) Loss ratio 74.1 76.8 78.0 80.7 74.9 Expense ratio (1) 25.2 23.4 26.4 25.4 27.5 Combined ratio 99.3 100.2 104.4 106.1 102.4 Loss ratio 74.1 76.8 78.0 80.7 74.9 Less: effect of catastrophe losses 0.7 0.2 3.9 5.6 1.9 effect of prior year non-catastrophe reserve reestimates - - (0.2) - - Underlying loss ratio * 73.4 76.6 74.3 75.1 73.0 Expense ratio (1) 25.2 23.4 26.4 25.4 27.5 Less: effect of amortization of purchased intangible assets 0.2 0.2 0.2 - 0.3 Expense ratio, excluding the effect of amortization of purchased intangible assets 25.0 23.2 26.2 25.4 27.2 Reconciliation of combined ratio to underlying combined ratio Combined ratio 99.3 100.2 104.4 106.1 102.4 Effect of catastrophe losses (0.7) (0.2) (3.9) (5.6) (1.9) Effect of prior year non-catastrophe reserve reestimates - - 0.2 - - Effect of amortization of purchased intangible assets (0.2) (0.2) (0.2) - (0.3) Underlying combined ratio * 98.4 99.8 100.5 100.5 100.2 Effect of prior year reserve reestimates on combined ratio - - (0.2) (0.2) - Effect of advertising expenses on combined ratio 8.1 6.7 9.3 8.6 8.6 Policies in Force (in thousands) Auto 1,399 1,352 1,369 1,388 1,400 Homeowners 84 79 76 69 63 Other personal lines 45 44 45 47 48 1,528 1,475 1,490 1,504 1,511 New Issued Applications (in thousands) Auto 158 105 116 120 143 Homeowners 8 7 10 9 8 Other personal lines 8 6 6 7 8 174 118 132 136 159 Average Premium - Gross Written ($) Auto (6-month policy) 605 586 574 564 571 Homeowners (12-month policy) 970 901 924 910 919 Renewal Ratio (%) Auto 83.5 82.2 81.8 81.9 80.4 Homeowners 84.4 85.7 85.8 86.1 83.5 (1) Other revenue is deducted from other costs and expenses in the expense ratio calculation. The Allstate Corporation Esurance Profitability Measures and Statistics Three months ended The Allstate Corporation 1Q18 Supplement 21
($ in millions) March 31, Dec. 31, Sept. 30, June 30, March 31, 2018 2017 2017 2017 2017 Net premiums written $ 223 $ 243 $ 271 $ 285 $ 236 Net premiums earned Auto $ 134 $ 137 $ 140 $ 143 $ 146 Homeowners 101 104 106 108 113 Other personal lines 22 23 23 23 24 Total 257 264 269 274 283 Other revenue Auto $ 1 $ - $ 1 $ 1 $ 1 Homeowners - 1 - - 1 Other personal lines - 1 - - - Total 1 2 1 1 2 Incurred losses Auto $ 86 $ 88 $ 91 $ 105 $ 104 Homeowners 66 100 54 84 108 Other personal lines 15 11 13 10 21 Total 167 199 158 199 233 Expenses Auto $ 45 $ 42 $ 44 $ 47 $ 44 Homeowners 34 34 32 34 34 Other personal lines 8 8 7 7 7 Total 87 84 83 88 85 Underwriting income (loss) Auto $ 4 $ 7 $ 6 $ (8) $ (1) Homeowners 1 (29) 20 (10) (28) Other personal lines (1) 5 3 6 (4) Total 4 (17) 29 (12) (33) Loss ratio 65.0 75.4 58.7 72.6 82.4 Expense ratio (1) 33.4 31.0 30.5 31.8 29.3 Combined ratio 98.4 106.4 89.2 104.4 111.7 Loss ratio 65.0 75.4 58.7 72.6 82.4 Less: effect of catastrophe losses 11.3 23.4 4.5 19.0 23.7 effect of prior year non-catastrophe reserve reestimates (0.8) (3.4) (0.8) (2.2) 1.4 Underlying loss ratio * 54.5 55.4 55.0 55.8 57.3 Expense ratio (1) 33.4 31.0 30.5 31.8 29.3 Less: effect of amortization of purchased intangible assets - - - - - Expense ratio, excluding the effect of amortization of purchased intangible assets 33.4 31.0 30.5 31.8 29.3 Reconciliation of combined ratio to underlying combined ratio Combined ratio 98.4 106.4 89.2 104.4 111.7 Effect of catastrophe losses (11.3) (23.4) (4.5) (19.0) (23.7) Effect of prior year non-catastrophe reserve reestimates 0.8 3.4 0.8 2.2 (1.4) Underlying combined ratio * 87.9 86.4 85.5 87.6 86.6 Effect of prior year reserve reestimates on combined ratio 2.3 (3.8) (0.8) (2.9) 2.1 Effect of advertising expenses on combined ratio - 0.4 0.4 - - Policies in Force (in thousands) Auto 517 530 548 571 595 Homeowners 248 254 262 273 284 Other personal lines 83 85 88 91 94 848 869 898 935 973 New Issued Applications (in thousands) Auto 17 14 13 13 12 Homeowners 8 7 8 8 7 Average Premium - Gross Written ($) Auto (12-month policy) 1,116 1,111 1,087 1,065 1,057 Homeowners (12-month policy) 1,698 1,706 1,703 1,667 1,659 Renewal Ratio (%) Auto 71.8 72.6 72.0 74.2 73.1 Homeowners 78.5 77.6 77.7 78.7 78.2 (1) Other revenue is deducted from other costs and expenses in the expense ratio calculation. The Allstate Corporation Encompass Brand Profitability Measures and Statistics Three months ended The Allstate Corporation 1Q18 Supplement 22
($ in millions) March 31, Dec. 31, Sept. 30, June 30, March 31, 2018 2017 2017 2017 2017 Allstate brand auto Net premiums written $ 5,151 $ 4,956 $ 5,096 $ 4,925 $ 4,882 Net premiums earned $ 5,046 $ 5,003 $ 4,950 $ 4,884 $ 4,839 Other revenue 54 53 54 54 53 Incurred losses (3,204) (3,289) (3,455) (3,442) (3,224) Expenses (1,317) (1,363) (1,288) (1,282) (1,216) Underwriting income $ 579 $ 404 $ 261 $ 214 $ 452 Loss ratio 63.5 65.7 69.8 70.5 66.6 Less: effect of catastrophe losses - 0.7 7.3 4.2 1.4 effect of prior year non-catastrophe reserve reestimates (1.5) (3.0) (3.7) (1.2) (1.6) Underlying loss ratio * 65.0 68.0 66.2 67.5 66.8 Expense ratio (1) 25.0 26.2 24.9 25.1 24.1 Combined ratio 88.5 91.9 94.7 95.6 90.7 Effect of catastrophe losses - (0.7) (7.3) (4.2) (1.4) Effect of prior year non-catastrophe reserve reestimates 1.5 3.0 3.7 1.2 1.6 Underlying combined ratio * 90.0 94.2 91.1 92.6 90.9 Esurance brand auto Net premiums written $ 470 $ 389 $ 427 $ 386 $ 439 Net premiums earned $ 411 $ 411 $ 411 $ 411 $ 403 Other revenue 20 17 17 17 16 Incurred losses (309) (322) (322) (324) (300) Expenses (121) (111) (121) (117) (123) Underwriting income (loss) $ 1 $ (5) $ (15) $ (13) $ (4) Loss ratio 75.2 78.3 78.3 78.9 74.4 Less: effect of catastrophe losses 0.5 - 3.6 3.6 1.0 effect of prior year non-catastrophe reserve reestimates 0.3 - - 0.3 - Underlying loss ratio * 74.4 78.3 74.7 75.0 73.4 Expense ratio (1) 24.6 22.9 25.3 24.3 26.6 Combined ratio 99.8 101.2 103.6 103.2 101.0 Effect of catastrophe losses (0.5) - (3.6) (3.6) (1.0) Effect of prior year non-catastrophe reserve reestimates (0.3) - - (0.3) - Effect of amortization of purchased intangible assets (0.2) (0.2) (0.2) - (0.2) Underlying combined ratio * 98.8 101.0 99.8 99.3 99.8 Encompass brand auto Net premiums written $ 118 $ 128 $ 141 $ 148 $ 125 Net premiums earned $ 134 $ 137 $ 140 $ 143 $ 146 Other revenue 1 - 1 1 1 Incurred losses (86) (88) (91) (105) (104) Expenses (45) (42) (44) (47) (44) Underwriting income (loss) $ 4 $ 7 $ 6 $ (8) $ (1) Loss ratio 64.2 64.2 65.0 73.4 71.2 Less: effect of catastrophe losses 0.7 - 0.7 4.9 2.8 effect of prior year non-catastrophe reserve reestimates - (3.6) - - - Underlying loss ratio * 63.5 67.8 64.3 68.5 68.4 Expense ratio (1) 32.8 30.7 30.7 32.2 29.5 Combined ratio 97.0 94.9 95.7 105.6 100.7 Effect of catastrophe losses (0.7) - (0.7) (4.9) (2.8) Effect of prior year non-catastrophe reserve reestimates - 3.6 - - - Underlying combined ratio * 96.3 98.5 95.0 100.7 97.9 (1) Other revenue is deducted from other costs and expenses in the expense ratio calculation. The Allstate Corporation Auto Profitability Measures by Brand Three months ended The Allstate Corporation 1Q18 Supplement 23
($ in millions) March 31, Dec. 31, Sept. 30, June 30, March 31, 2018 2017 2017 2017 2017 Allstate brand homeowners Net premiums written $ 1,465 $ 1,694 $ 1,921 $ 1,847 $ 1,403 Net premiums earned $ 1,727 $ 1,725 $ 1,707 $ 1,691 $ 1,688 Other revenue 11 12 10 10 10 Incurred losses (997) (1,052) (988) (1,273) (1,194) Expenses (410) (433) (410) (381) (397) Underwriting income $ 331 $ 252 $ 319 $ 47 $ 107 Loss ratio 57.7 61.0 57.9 75.3 70.8 Less: effect of catastrophe losses 17.3 27.8 22.4 38.4 34.1 effect of prior year non-catastrophe reserve reestimates - (2.3) (2.3) (1.0) (1.7) Underlying loss ratio * 40.4 35.5 37.8 37.9 38.4 Expense ratio (1) 23.1 24.4 23.4 21.9 22.9 Combined ratio 80.8 85.4 81.3 97.2 93.7 Effect of catastrophe losses (17.3) (27.8) (22.4) (38.4) (34.1) Effect of prior year non-catastrophe reserve reestimates - 2.3 2.3 1.0 1.7 Underlying combined ratio * 63.5 59.9 61.2 59.8 61.3 Esurance brand homeowners Net premiums written $ 21 $ 19 $ 24 $ 20 $ 16 Net premiums earned $ 20 $ 19 $ 19 $ 16 $ 14 Other revenue - - - - - Incurred losses (11) (9) (14) (21) (13) Expenses (7) (6) (9) (8) (8) Underwriting income (loss) $ 2 $ 4 $ (4) $ (13) $ (7) Loss ratio 55.0 47.3 73.7 131.3 92.9 Less: effect of catastrophe losses 5.0 5.2 10.5 56.3 28.6 effect of prior year non-catastrophe reserve reestimates (5.0) - (5.2) - - Underlying loss ratio * 55.0 42.1 68.4 75.0 64.3 Expense ratio (1) 35.0 31.6 47.4 50.0 57.1 Combined ratio 90.0 78.9 121.1 181.3 150.0 Effect of catastrophe losses (5.0) (5.2) (10.5) (56.3) (28.6) Effect of prior year non-catastrophe reserve reestimates 5.0 - 5.2 - - Underlying combined ratio * 90.0 73.7 115.8 125.0 121.4 Encompass brand homeowners Net premiums written $ 86 $ 95 $ 108 $ 112 $ 91 Net premiums earned $ 101 $ 104 $ 106 $ 108 $ 113 Other revenue - 1 - - 1 Incurred losses (66) (100) (54) (84) (108) Expenses (34) (34) (32) (34) (34) Underwriting income (loss) $ 1 $ (29) $ 20 $ (10) $ (28) Loss ratio 65.3 96.2 50.9 77.8 95.6 Less: effect of catastrophe losses 25.7 56.7 10.3 38.9 54.0 effect of prior year non-catastrophe reserve reestimates (1.0) 1.0 - - 0.9 Underlying loss ratio * 40.6 38.5 40.6 38.9 40.7 Expense ratio (1) 33.7 31.7 30.2 31.5 29.2 Combined ratio 99.0 127.9 81.1 109.3 124.8 Effect of catastrophe losses (25.7) (56.7) (10.3) (38.9) (54.0) Effect of prior year non-catastrophe reserve reestimates 1.0 (1.0) - - (0.9) Underlying combined ratio * 74.3 70.2 70.8 70.4 69.9 (1) Other revenue is deducted from other costs and expenses in the expense ratio calculation. The Allstate Corporation Homeowners Profitability Measures by Brand Three months ended The Allstate Corporation 1Q18 Supplement 24
($ in millions) March 31, Dec. 31, Sept. 30, June 30, March 31, 2018 2017 2017 2017 2017 Allstate brand other personal lines Net premiums written $ 375 $ 410 $ 454 $ 441 $ 368 Net premiums earned $ 420 $ 419 $ 414 $ 411 $ 405 Other revenue 28 30 38 33 26 Incurred losses (258) (226) (312) (258) (265) Expenses (144) (158) (158) (148) (138) Underwriting income (loss) $ 46 $ 65 $ (18) $ 38 $ 28 Loss ratio 61.4 53.9 75.3 62.8 65.4 Less: effect of catastrophe losses 6.4 4.8 15.7 13.9 14.6 effect of prior year non-catastrophe reserve reestimates (0.7) 1.9 0.7 (0.2) (0.3) Underlying loss ratio * 55.7 47.2 58.9 49.1 51.1 Expense ratio (2) 27.6 30.6 29.0 28.0 27.7 Combined ratio 89.0 84.5 104.3 90.8 93.1 Effect of catastrophe losses (6.4) (4.8) (15.7) (13.9) (14.6) Effect of prior year non-catastrophe reserve reestimates 0.7 (1.9) (0.7) 0.2 0.3 Underlying combined ratio * 83.3 77.8 87.9 77.1 78.8 Esurance brand other personal lines Net premiums written $ 2 $ 2 $ 2 $ 2 $ 2 Net premiums earned $ 2 $ 2 $ 2 $ 2 $ 2 Other revenue - - - - - Incurred losses (1) (1) (1) (1) (1) Expenses (1) (1) (1) (1) - Underwriting income $ - $ - $ - $ - $ 1 Loss ratio 50.0 50.0 50.0 50.0 50.0 Less: effect of catastrophe losses - - - - - effect of prior year non-catastrophe reserve reestimates - - - (50.0) - Underlying loss ratio * 50.0 50.0 50.0 100.0 50.0 Expense ratio (2) 50.0 50.0 50.0 50.0 - Combined ratio 100.0 100.0 100.0 100.0 50.0 Effect of catastrophe losses - - - - - Effect of prior year non-catastrophe reserve reestimates - - - 50.0 - Underlying combined ratio * 100.0 100.0 100.0 150.0 50.0 Encompass brand other personal lines Net premiums written $ 19 $ 20 $ 22 $ 25 $ 20 Net premiums earned $ 22 $ 23 $ 23 $ 23 $ 24 Other revenue - 1 - - - Incurred losses (15) (11) (13) (10) (21) Expenses (8) (8) (7) (7) (7) Underwriting (loss) income $ (1) $ 5 $ 3 $ 6 $ (4) Loss ratio 68.2 47.8 56.5 43.5 87.5 Less: effect of catastrophe losses 9.1 13.0 - 13.0 8.3 effect of prior year non-catastrophe reserve reestimates (4.6) (21.7) (8.7) (26.1) 12.6 Underlying loss ratio * 63.7 56.5 65.2 56.6 66.6 Expense ratio (2) 36.3 30.5 30.5 30.4 29.2 Combined ratio 104.5 78.3 87.0 73.9 116.7 Effect of catastrophe losses (9.1) (13.0) - (13.0) (8.3) Effect of prior year non-catastrophe reserve reestimates 4.6 21.7 8.7 26.1 (12.6) Underlying combined ratio * 100.0 87.0 95.7 87.0 95.8 (1) (2) Other revenue is deducted from other costs and expenses in the expense ratio calculation. Other personal lines include renter, condominium, landlord and other personal lines products in Allstate Protection. The Allstate Corporation Other Personal Lines Profitability Measures by Brand (1) Three months ended The Allstate Corporation 1Q18 Supplement 25
($ in millions) March 31, Dec. 31, Sept. 30, June 30, March 31, 2018 2017 2017 2017 2017 Net premiums written $ 137 (2) $ 125 $ 116 $ 124 $ 123 Net premiums earned $ 136 (2) $ 128 $ 124 $ 118 $ 125 Other revenue 2 - 2 3 3 Incurred losses (108) 89 103 86 96 Expenses (37) 37 38 37 36 Underwriting (loss) income $ (7) $ 2 $ (15) $ (2) $ (4) Loss ratio 79.4 69.5 83.1 72.9 76.8 Expense ratio (3) 25.7 28.9 29.0 28.8 26.4 Combined ratio 105.1 98.4 112.1 101.7 103.2 Reconciliation of combined ratio to underlying combined ratio Combined ratio 105.1 98.4 112.1 101.7 103.2 Effect of catastrophe losses on combined ratio (2.2) (1.6) (10.5) (1.7) (5.6) Effect of prior year non-catastrophe reserve reestimates (15.4) (9.3) (4.8) 0.8 (0.8) Underlying combined ratio * 87.5 87.5 96.8 100.8 96.8 Effect of prior year reserve reestimates on combined ratio 14.7 9.3 5.6 (1.7) 1.6 Effect of catastrophe losses included in prior year reserve reestimates on combined ratio (0.7) - 0.8 (0.9) 0.8 (1) (2) (3) Other revenue is deducted from other costs and expenses in the expense ratio calculation. Commercial lines are all Allstate brand products. The Allstate Corporation Commercial Lines Profitability Measures (1) Three months ended Includes the partnership agreement with Uber effective March 1, 2018 to provide commercial auto insurance coverage in Illinois, New Jersey and Wisconsin. The premium recorded does not include deposits from Uber that will be refunded to Uber at the end of the policy term. The Allstate Corporation 1Q18 Supplement 26
($ in millions) Three months ended March 31, (net of reinsurance) 2018 2017 2016 2015 2014 2013 Asbestos claims Beginning reserves $ 884 $ 912 $ 960 $ 1,014 $ 1,017 $ 1,026 Incurred claims and claims expense - 61 67 39 87 74 Claims and claims expense paid (18) (89) (115) (93) (90) (83) Ending reserves $ 866 $ 884 $ 912 $ 960 $ 1,014 $ 1,017 Claims and claims expense paid as a percent of ending reserves 2.1% 10.1% 12.6% 9.7% 8.9% 8.2% Environmental claims Beginning reserves $ 166 $ 179 $ 179 $ 203 $ 208 $ 193 Incurred claims and claims expense - 10 23 1 15 30 Claims and claims expense paid (4) (23) (23) (25) (20) (15) Ending reserves $ 162 $ 166 $ 179 $ 179 $ 203 $ 208 Claims and claims expense paid as a percent of ending reserves 2.5% 13.9% 12.8% 14.0% 9.9% 7.2% Other claims (1) Beginning reserves $ 357 $ 354 $ 377 $ 395 $ 421 $ 418 Incurred claims and claims expense 3 25 15 13 11 38 Claims and claims expense paid (9) (22) (38) (31) (37) (35) Ending reserves $ 351 $ 357 $ 354 $ 377 $ 395 $ 421 Claims and claims expense paid as a percent of ending reserves 2.6% 6.2% 10.7% 8.2% 9.4% 8.3% Total claims (2) Beginning reserves $ 1,407 $ 1,445 $ 1,516 $ 1,612 $ 1,646 $ 1,637 Incurred claims and claims expense 3 96 105 53 113 142 Claims and claims expense paid (31) (134) (176) (149) (147) (133) Ending reserves $ 1,379 $ 1,407 $ 1,445 $ 1,516 $ 1,612 $ 1,646 Claims and claims expense paid as a percent of ending reserves 2.2% 9.5% 12.2% 9.8% 9.1% 8.1% (1) (2) Other claims include other mass torts, workers' compensation, commercial and other. The 3-year survival ratio for the combined asbestos, environmental and other claims was 9.5, 9.2, 9.2, 10.6, 12.0 and 14.2 for the annualized three-months of 2018 and twelve months ended 2017, 2016, 2015, 2014 and 2013, respectively, and is calculated by taking the ending reserves divided by net payments made during the year. The Allstate Corporation Discontinued Lines and Coverages Reserves Twelve months ended December 31, The Allstate Corporation 1Q18 Supplement 27
($ in millions) March 31, Dec. 31, Sept. 30, June 30, March 31, 2018 2017 2017 2017 2017 Net premiums written $ 287 $ 309 $ 272 $ 259 $ 254 Net premiums earned $ 267 $ 231 $ 225 $ 211 $ 200 Intersegment insurance premiums and service fees 29 28 26 28 28 Other revenue 16 16 17 17 16 Net investment income 5 5 4 4 3 Realized capital gains and losses (4) - - - - Claims and claims expense (93) (90) (106) (83) (90) Amortization of deferred policy acquisition costs (110) (79) (78) (71) (68) Operating costs and expenses (119) (132) (115) (116) (104) Amortization of purchased intangible assets (21) (23) (23) (23) (23) Restructuring and related charges (1) (11) (1) (1) - Income tax benefit 7 150 19 11 13 Net (loss) income applicable to common shareholders $ (24) $ 95 $ (32) $ (23) $ (25) Realized capital gains and losses, after-tax 3 - - - - Amortization of purchased intangible assets, after-tax 16 15 15 15 15 Tax Legislation benefit - (134) - - - Adjusted net loss $ (5) $ (24) $ (17) $ (8) $ (10) Allstate Roadside Services Net premiums written $ 65 $ 60 $ 68 $ 66 $ 69 Net premiums earned $ 64 $ 64 $ 69 $ 67 $ 68 Intersegment insurance premiums and service fees 8 8 7 8 8 Other revenue 2 1 2 2 2 Net investment income - - 1 - - Claims and claims expense (35) (35) (38) (35) (32) Amortization of deferred policy acquisition costs (1) (4) (4) (4) (6) Operating costs and other expenses (44) (45) (44) (45) (44) Restructuring and related charges (1) - (1) (1) - Income tax benefit 2 8 3 3 1 Net loss $ (5) $ (3) $ (5) $ (5) $ (3) Tax Legislation benefit - (4) - - - Adjusted net loss $ (5) $ (7) $ (5) $ (5) $ (3) Allstate Dealer Services Net premiums written $ 92 $ 93 $ 100 $ 108 $ 104 Net premiums earned $ 80 $ 79 $ 78 $ 74 $ 73 Other revenue 14 14 15 15 14 Net investment income 4 4 3 4 3 Realized capital gains and losses (2) - - - - Claims and claims expense (17) (18) (27) (20) (22) Amortization of deferred policy acquisition costs (64) (62) (63) (57) (54) Operating costs and other expenses (14) (17) (13) (13) (14) Income tax benefit (expense) - 70 3 (1) - Net income (loss) $ 1 $ 70 $ (4) $ 2 $ - Realized capital gains and losses, after-tax 1 - - - - Tax Legislation benefit - (70) - - - Adjusted net income (loss) $ 2 $ - $ (4) $ 2 $ - Arity (2) Intersegment service fees $ 21 $ 20 $ 19 $ 20 $ 20 Net investment income - - - - - Operating costs and other expenses (26) (25) (26) (27) (19) Income tax benefit (expense) 1 (3) 3 1 - Net (loss) income $ (4) $ (8) $ (4) $ (6) $ 1 Tax Legislation expense - 2 - - - Adjusted net (loss) income $ (4) $ (6) $ (4) $ (6) $ 1 (1) (2) There are no premiums written or earned for Arity. The Allstate Corporation Service Businesses Segment Results (1) Service Businesses results include SquareTrade. Further details related to SquareTrade results are on page 29. Three months ended The Allstate Corporation 1Q18 Supplement 28
($ in millions) March 31, Dec. 31, Sept. 30, June 30, March 31, 2018 2017 2017 2017 2017 Net premiums written $ 130 $ 156 $ 104 $ 85 $ 81 Net premiums earned $ 123 (3) $ 88 $ 78 $ 70 $ 59 Other revenue - 1 - - - Net investment income 1 1 - - - Realized capital gains and losses (2) - - - - Claims and claims expense (41) (37) (40) (29) (4) (36) Amortization of deferred policy acquisition costs (45) (3) (13) (11) (10) (8) Other costs and expenses (35) (45) (33) (30) (27) Amortization of purchased intangible assets (21) (23) (23) (23) (23) Restructuring and related charges - (11) - - - Income tax benefit 4 75 10 8 12 Net (loss) income applicable to common shareholders $ (16) $ 36 $ (19) $ (14) $ (23) Realized capital gains and losses, after-tax 2 - - - - Amortization of purchased intangible assets, after-tax 16 15 15 15 15 Tax Legislation benefit - (62) - - - Adjusted net income (loss) $ 2 $ (11) $ (4) $ 1 $ (8) Fair value adjustments, after-tax (1) 2 3 2 3 4 Adjusted net income (loss), excluding purchase accounting adjustments * $ 4 $ (8) $ (2) $ 4 $ (4) Protection Plans in Force (in thousands) (2) 41,806 38,719 34,078 31,258 29,907 New Issued Protection Plans (in thousands) 5,564 8,210 5,122 3,586 3,840 (1) (2) (3) (4) In connection with the acquisition, purchase accounting adjustments made to recognize the acquired assets and liabilities at their fair value for unearned premiums, contractual liability insurance policy premium expenses, and commissions paid to retailers recorded as of the acquisition date are earned over the life of the in force contracts or approximately three years. Protection plan terms generally range between one and five years with an average term of three years. The Allstate Corporation SquareTrade Results Includes a $6 million favorable adjustment for loss experience. Three months ended As a result of the adoption of the revenue from contracts with customers accounting standard, SquareTrade recognized $30 million of net premiums earned with a corresponding increase in amortization of deferred policy acquisition costs related to protection plans sold directly to retailers for which SquareTrade is deemed to be the principal in the transaction. The Allstate Corporation 1Q18 Supplement 29
($ in millions) March 31, Dec. 31, Sept. 30, June 30, March 31, 2018 2017 2017 2017 2017 Premiums $ 146 $ 149 $ 141 $ 140 $ 140 Contract charges 181 175 175 179 181 26 33 26 28 27 Net investment income 122 127 119 123 120 Contract benefits (205) (210) (173) (187) (195) Interest credited to contractholder funds (70) (71) (71) (71) (69) Amortization of deferred policy acquisition costs (31) (27) (25) (35) (32) Operating costs and expenses (86) (98) (82) (86) (86) Restructuring and related charges - (1) (1) - - Income tax expense on operations (14) (20) (35) (28) (27) Adjusted net income 69 57 74 63 59 Realized capital gains and losses, after-tax (2) - 1 - 1 DAC and DSI amortization relating to realized capital gains and losses, after-tax (2) (2) (2) (3) (3) Tax Legislation benefit - 332 - - - Net income applicable to common shareholders $ 65 $ 387 $ 73 $ 60 $ 57 Premiums and Contract Charges by Product Traditional life insurance premiums $ 146 $ 148 $ 141 $ 139 $ 140 Accident and health insurance premiums - 1 - 1 - Interest-sensitive life insurance contract charges 181 175 175 179 181 Total $ 327 $ 324 $ 316 $ 319 $ 321 Proprietary Life Insurance Policies Sold by Allstate Agencies (2) 24,771 43,318 28,962 31,447 25,970 Policies in Force (in thousands) (3) Life insurance Allstate agencies 1,897 1,903 1,893 1,891 1,887 Closed channels 119 121 123 126 127 Accident and health insurance 2 2 3 3 3 Total 2,018 2,026 2,019 2,020 2,017 (1) (2) (3) Reflect the number of contracts in force. The Allstate Corporation Allstate Life Segment Results and Other Statistics Three months ended Other revenue (1) Includes gross dealer concessions received in connection with Allstate exclusive agencies and exclusive financial specialists sales of non-proprietary products, including mutual funds, fixed and variable annuities, disability insurance and long-term care insurance. Policies sold reduced by lapses within twelve months of sale. The Allstate Corporation 1Q18 Supplement 30
($ in millions) March 31, Dec. 31, Sept. 30, June 30, March 31, 2018 2017 2017 2017 2017 Benefit spread Premiums $ 146 $ 149 $ 141 $ 140 $ 140 Cost of insurance contract charges (1) 126 119 121 123 124 Contract benefits (205) (210) (173) (187) (195) Total benefit spread 67 58 89 76 69 Investment spread Net investment income 122 127 119 123 120 Interest credited to contractholder funds (70) (71) (71) (71) (69) Total investment spread 52 56 48 52 51 Surrender charges and contract maintenance expense fees (1) 55 56 54 56 57 Other revenue 26 33 26 28 27 Realized capital gains and losses (3) 1 2 1 1 Amortization of deferred policy acquisition costs (33) (30) (29) (39) (36) Operating costs and expenses (86) (98) (82) (86) (86) Restructuring and related charges - (1) (1) - - Income tax (expense) benefit (13) 312 (34) (28) (26) Net income applicable to common shareholders $ 65 $ 387 $ 73 $ 60 $ 57 (1) Reconciliation of contract charges Cost of insurance contract charges $ 126 $ 119 $ 121 $ 123 $ 124 Surrender charges and contract maintenance expense fees 55 56 54 56 57 Total contract charges $ 181 $ 175 $ 175 $ 179 $ 181 The Allstate Corporation Allstate Life Analysis of Net Income Three months ended The Allstate Corporation 1Q18 Supplement 31
($ in millions) March 31, Dec. 31, 2018 2017 Return on Equity Numerator: Net income applicable to common shareholders (1)(2) $ 585 $ 577 Denominator: Ending equity (2) (3) $ 2,513 $ 2,591 Return on equity 23.3 % 22.3 % Adjusted Net Income Return on Adjusted Equity * Numerator: Adjusted net income (1) $ 263 $ 253 Denominator: Ending equity (2)(3) $ 2,513 $ 2,591 Less: Unrealized net capital gains and losses 142 234 Goodwill 175 175 Adjusted ending equity $ 2,196 $ 2,182 Adjusted net income return on adjusted equity * 12.0 % 11.6 % (1) (2) (3) Ending equity has been used due to the changes in reportable segments, which was effective October 2017. Twelve months ended Return on Equity Allstate Life The Allstate Corporation Net income applicable to common shareholders and adjusted net income reflect a trailing twelve-month period. Includes a $332 million benefit related to Tax Legislation. The Allstate Corporation 1Q18 Supplement 32
($ in millions) March 31, Dec. 31, Sept. 30, June 30, March 31, 2018 2017 2017 2017 2017 Reserve for life-contingent contract benefits Traditional life insurance $ 2,467 $ 2,460 $ 2,426 $ 2,420 $ 2,405 Accident and health insurance 170 176 178 180 179 Total $ 2,637 $ 2,636 $ 2,604 $ 2,600 $ 2,584 Contractholders funds, beginning balance $ 7,608 $ 7,559 $ 7,514 $ 7,497 $ 7,464 Deposits 240 243 236 243 251 Interest credited 70 71 71 70 70 Benefits, withdrawals and other adjustments Benefits (59) (58) (54) (66) (63) Surrenders and partial withdrawals (67) (64) (62) (63) (65) Contract charges (176) (177) (175) (176) (176) Net transfers from separate accounts 2 1 - 2 1 Other adjustments (15) 33 29 7 15 Total benefits, withdrawals and other adjustments (315) (265) (262) (296) (288) Contractholder funds, ending balance $ 7,603 $ 7,608 $ 7,559 $ 7,514 $ 7,497 The Allstate Corporation Allstate Life Reserves and Contractholder Funds Three months ended The Allstate Corporation 1Q18 Supplement 33
($ in millions) March 31, Dec. 31, Sept. 30, June 30, March 31, 2018 2017 2017 2017 2017 Premiums $ 258 $ 244 $ 244 $ 241 $ 241 Contract charges 28 29 29 28 28 Net investment income 19 18 18 19 17 Contract benefits (149) (143) (142) (143) (136) Interest credited to contractholder funds (8) (9) (8) (9) (9) Amortization of deferred policy acquisition costs (41) (37) (31) (33) (41) Operating costs and expenses (72) (70) (65) (64) (67) Restructuring and related charges - (2) (1) - - Income tax expense on operations (7) (10) (16) (14) (11) Adjusted net income 28 20 28 25 22 Realized capital gains and losses, after-tax (2) (1) 1 - - Tax Legislation benefit - 51 - - - Net income applicable to common shareholders $ 26 $ 70 $ 29 $ 25 $ 22 Benefit ratio (1) 52.1 52.4 52.0 53.2 50.6 Operating expense ratio (2) 25.2 25.6 23.8 23.8 24.9 (1) (2) Benefit ratio is contract benefits divided by premiums and contract charges. Operating expense ratio is operating costs and expenses divided by premiums and contract charges. The Allstate Corporation Allstate Benefits Segment Results and Other Statistics Three months ended The Allstate Corporation 1Q18 Supplement 34
($ in millions) March 31, Dec. 31, Sept. 30, June 30, March 31, 2018 2017 2017 2017 2017 Premiums and Contract Charges by Product Life $ 38 $ 40 $ 41 $ 37 $ 37 Accident 74 68 70 71 71 Critical illness 121 117 116 116 119 Short-term disability 27 26 27 25 24 Other health 26 22 19 20 18 Total $ 286 $ 273 $ 273 $ 269 $ 269 New Annualized Premium Sales by Product (1) Life $ 8 $ 18 $ 10 $ 11 $ 9 Accident 21 55 21 21 25 Critical illness 25 74 22 23 28 Short-term disability 10 13 9 10 29 Other health 12 35 7 8 16 Total $ 76 $ 195 $ 69 $ 73 $ 107 Annualized Premium Inforce (2) $ 1,237 $ 1,185 $ 1,187 $ 1,193 $ 1,179 Policies in Force (in thousands) (3) Life insurance 468 458 460 466 462 Accident and health insurance 3,792 3,575 3,575 3,598 3,530 Total 4,260 4,033 4,035 4,064 3,992 (1) (2) (3) New annualized premium sales reflects annualized premiums at initial customer enrollment (including new accounts and new employees or policies of existing accounts), reduced by an estimate for certain policies that are expected to lapse. A significant portion of Allstate Benefits business is seasonally written in the fourth quarter during many clients’ annual employee benefits enrollment. Premium amount paid annually for all active policies, which have not been cancelled. Individual life and accident and health insurance policies reflect the number of contracts in force. Group life and accident and health insurance reflect certificate counts as opposed to group counts. The Allstate Corporation Allstate Benefits Segment Premium and Other Statistics Three months ended The Allstate Corporation 1Q18 Supplement 35
($ in millions) March 31, Dec. 31, 2018 2017 Return on Equity Numerator: Net income applicable to common shareholders (1)(2) $ 150 $ 146 Denominator: Ending equity (2) (3) $ 803 $ 801 Return on equity 18.7 % 18.2 % Adjusted Net Income Return on Adjusted Equity * Numerator: Adjusted net income (1) $ 101 $ 95 Denominator: Ending equity (2)(3) $ 803 $ 801 Less: Unrealized net capital gains and losses 8 57 Goodwill 96 96 Adjusted ending equity $ 699 $ 648 Adjusted net income return on adjusted equity * 14.4 % 14.7 % (1) (2) (3) Ending equity has been used due to the changes in reportable segments, which was effective October 2017. Twelve months ended The Allstate Corporation Allstate Benefits Return on Equity Net income applicable to common shareholders and adjusted net income reflect a trailing twelve-month period. Includes a $51 million benefit related to Tax Legislation. The Allstate Corporation 1Q18 Supplement 36
($ in millions) March 31, Dec. 31, Sept. 30, June 30, March 31, 2018 2017 2017 2017 2017 Contract charges $ 3 $ 4 $ 4 $ 3 $ 3 Net investment income 290 338 324 354 289 Contract benefits (150) (154) (141) (156) (143) Interest credited to contractholder funds (87) (90) (94) (93) (95) Amortization of deferred policy acquisition costs (1) (2) (2) (1) (2) Operating costs and expenses (9) (9) (9) (8) (9) Restructuring and related charges - - 1 (1) - Income tax expense on operations (11) (32) (28) (33) (14) Adjusted net income 35 55 55 65 29 Realized capital gains and losses, after-tax (23) 22 11 (3) (2) Valuation changes on embedded derivatives not hedged, after-tax 4 2 (1) (1) - Gain on disposition of operations, after-tax 1 1 1 - 2 Tax Legislation benefit - 182 - - - Net income applicable to common shareholders $ 17 $ 262 $ 66 $ 61 $ 29 Policies in Force (in thousands) (1) Deferred annuities 137 142 145 148 152 Immediate annuities 88 89 91 92 94 225 231 236 240 246 (1) Allstate Annuities in force reflect the number of contracts in force excluding sold blocks of business that remain on the balance sheet due to the dispositions of the business being effected through reinsurance arrangements. The Allstate Corporation Allstate Annuities Segment Results and Other Statistics Three months ended The Allstate Corporation 1Q18 Supplement 37
($ in millions) March 31, Dec. 31, Sept. 30, June 30, March 31, 2018 2017 2017 2017 2017 Benefit spread Cost of insurance contract charges (1) $ 2 $ 3 $ 3 $ 1 $ 2 Contract benefits excluding the implied interest on immediate annuities with life contingencies (2) (26) (29) (17) (30) (17) Total benefit spread (24) (26) (14) (29) (15) Investment spread Net investment income (3) 290 338 324 354 289 Implied interest on immediate annuities with life contingencies (2) (124) (125) (124) (126) (126) Interest credited to contractholder funds (83) (88) (95) (95) (95) Total investment spread 83 125 105 133 68 Surrender charges and contract maintenance expense fees (1) 1 1 1 2 1 Realized capital gains and losses (29) 33 18 (5) (2) Amortization of deferred policy acquisition costs (1) (2) (2) (1) (2) Operating costs and expenses (9) (9) (9) (8) (9) Restructuring and related charges - - 1 (1) - Gain on disposition of operations 1 1 1 2 2 Income tax (expense) benefit (5) 139 (35) (32) (14) Net income applicable to common shareholders $ 17 $ 262 $ 66 $ 61 $ 29 (1) Reconciliation of contract charges Cost of insurance contract charges $ 2 $ 3 $ 3 $ 1 $ 2 Surrender charges and contract maintenance expense fees 1 1 1 2 1 Total contract charges $ 3 $ 4 $ 4 $ 3 $ 3 (2) Reconciliation of contract benefits Contract benefits excluding the implied interest on immediate annuities with life contingencies $ (26) $ (29) $ (17) $ (30) $ (17) Implied interest on immediate annuities with life contingencies (124) (125) (124) (126) (126) Total contract benefits $ (150) $ (154) $ (141) $ (156) $ (143) (3) Performance-based net investment income $ 97 $ 142 $ 115 $ 137 $ 69 The Allstate Corporation Allstate Annuities Analysis of Net Income Three months ended The Allstate Corporation 1Q18 Supplement 38
($ in millions) March 31, Dec. 31, 2018 2017 Return on Equity Numerator: Net income applicable to common shareholders (1)(2) $ 406 $ 418 Denominator: Ending equity (2) (3) $ 5,005 $ 4,947 Return on equity 8.1 % 8.4 % Adjusted Net Income Return on Adjusted Equity * Numerator: Adjusted net income (1) $ 210 $ 204 Denominator: Ending equity (2)(3) $ 5,005 $ 4,947 Less: Unrealized net capital gains and losses 278 607 Adjusted ending equity $ 4,727 $ 4,340 Adjusted net income return on adjusted equity * 4.4 % 4.7 % Adjusted net income return on adjusted equity by product Deferred annuities 10.5 % 11.3 % Immediate annuities 3.7 % 3.8 % (1) (2) (3) Ending equity has been used due to the changes in reportable segments, which was effective October 2017. Twelve months ended The Allstate Corporation Allstate Annuities Return on Equity Net income applicable to common shareholders and adjusted net income reflect a trailing twelve-month period. Includes a $182 million benefit related to Tax Legislation. The Allstate Corporation 1Q18 Supplement 39
($ in millions) March 31, Dec. 31, Sept. 30, June 30, March 31, 2018 2017 2017 2017 2017 Reserve for life-contingent contract benefits Immediate fixed annuities with life contingencies: Sub-standard structured settlements and group pension terminations (1) $ 5,135 $ 5,284 $ 5,027 $ 5,034 $ 5,033 Standard structured settlements and SPIA (2) 3,491 3,565 3,525 3,545 3,559 Subtotal (3) 8,626 8,849 8,552 8,579 8,592 Other 81 85 92 95 101 Total $ 8,707 $ 8,934 $ 8,644 $ 8,674 $ 8,693 Contractholder funds Deferred fixed annuities $ 7,883 $ 8,128 $ 8,341 $ 8,523 $ 8,722 Immediate fixed annuities without life contingencies (4) 2,656 2,700 2,744 2,792 2,831 Other 104 108 119 113 116 Total $ 10,643 $ 10,936 $ 11,204 $ 11,428 $ 11,669 Contractholders funds, beginning balance $ 10,936 $ 11,204 $ 11,428 $ 11,669 $ 11,915 Deposits 4 5 6 6 11 Interest credited 82 88 94 94 94 Benefits, withdrawals and other adjustments Benefits (156) (149) (163) (160) (166) Surrenders and partial withdrawals (201) (197) (165) (180) (181) Contract charges (2) (3) (3) (1) (2) Net transfers from separate accounts - - - - 1 Other adjustments (20) (12) 7 - (3) Total benefits, withdrawals and other adjustments (379) (361) (324) (341) (351) Contractholder funds, ending balance $ 10,643 $ 10,936 $ 11,204 $ 11,428 $ 11,669 (1) (2) (3) (4) To the extent that unrealized gains on fixed income securities would result in a premium deficiency had those gains actually been realized, a premium deficiency reserve is recorded for certain immediate annuities with life contingencies. Liabilities of $119 million and $315 million are included in the reserve for life-contingent contract benefits with respect to this deficiency as of March 31, 2018 and December 31, 2017, respectively. The offset to this liability is recorded as a reduction of the unrealized net capital gains included in accumulated other comprehensive income. The liability was zero for all other periods presented here. Includes period certain structured settlements and single premium immediate annuities without life contingencies. The Allstate Corporation Allstate Annuities Reserves and Contractholder Funds Includes life-contingent structured settlement annuities for annuitants with standard life expectancy and single premium immediate annuities with life contingencies. Includes structured settlement annuities for severe injuries or other health impairments which significantly reduced their life expectancy at the time the annuity was issued and group annuity contracts issued to sponsors of terminated pension plans. Three months ended The Allstate Corporation 1Q18 Supplement 40
($ in millions) March 31, Dec. 31, Sept. 30, June 30, March 31, 2018 2017 2017 2017 2017 Net investment income $ 13 $ 10 $ 10 $ 10 $ 11 Operating costs and expenses (8) (44) (1) (93) (1) (9) (8) Interest expense (83) (84) (82) (83) (85) Income tax benefit on operations 17 43 60 31 30 Preferred stock dividends (29) (29) (29) (29) (29) Adjusted net loss (90) (104) (134) (80) (81) Realized capital gains and losses, after-tax (1) (4) - - - Business combination expenses, after-tax - - (1) - (13) Goodwill impairment - (125) - - - Tax Legislation expense - (128) - - - Net loss applicable to common shareholders $ (91) $ (361) $ (135) $ (80) $ (94) (1) Includes a pension settlement loss of $36 million and $86 million for the three months ended December 31, 2017 and September 30, 2017, respectively. The Allstate Corporation Corporate and Other Segment Results Three months ended The Allstate Corporation 1Q18 Supplement 41
($ in millions) March 31, Dec. 31, Sept. 30, June 30, March 31, 2018 2017 2017 2017 2017 Consolidated Investments Fixed income securities, at fair value: Tax-exempt $ 6,310 $ 6,010 $ 5,479 $ 5,520 $ 5,164 Taxable 50,364 52,982 53,912 53,136 53,472 Equity securities (1) (2) 6,986 6,621 6,434 6,117 5,685 Mortgage loans 4,679 4,534 4,322 4,336 4,349 Limited partnership interests (3) 7,434 6,740 6,600 6,206 5,982 Short-term, at fair value 3,424 1,944 2,198 2,175 2,753 Other 4,092 3,972 3,826 3,815 3,738 Total $ 83,289 $ 82,803 $ 82,771 $ 81,305 $ 81,143 Fixed income securities, amortized cost: Tax-exempt $ 6,379 $ 6,011 $ 5,440 $ 5,482 $ 5,165 Taxable 49,830 51,514 52,168 51,419 52,029 Ratio of fair value to amortized cost 100.8 % 102.6 % 103.1 % 103.1 % 102.5 % Short-term, amortized cost $ 3,424 $ 1,944 $ 2,198 $ 2,175 $ 2,753 (1) (2) (3) The Allstate Corporation Consolidated Investments Equity securities may include investments in exchange traded and mutual funds whose underlying investments are fixed income securities. As of March 31, 2018, we have commitments to invest in additional limited partnership interests totaling $3.2 billion. Beginning January 1, 2018, equity securities are reported at fair value with changes in fair value recognized in realized capital gains and losses. The Allstate Corporation 1Q18 Supplement 42
($ in millions) Property- Service Allstate Allstate Allstate Corporate Liability Businesses Life Benefits Annuities and Other Total Investments by Segment Fixed income securities, at fair value: Tax-exempt $ 5,710 $ 2 $ - $ - $ 52 $ 546 $ 6,310 Taxable 23,988 776 7,683 1,132 14,974 1,811 50,364 Equity securities (1) (2) 5,239 136 7 97 1,497 10 6,986 Mortgage loans 421 - 1,859 202 2,197 - 4,679 Limited partnership interests 4,029 - - - 3,404 1 7,434 Short-term, at fair value 1,216 52 252 41 386 1,477 3,424 Other 1,854 - 1,205 313 720 - 4,092 Total $ 42,457 $ 966 $ 11,006 $ 1,785 $ 23,230 $ 3,845 $ 83,289 Fixed income securities, amortized cost: Tax-exempt $ 5,781 $ 2 $ - $ - $ 52 $ 544 $ 6,379 Taxable 24,198 786 7,395 1,122 14,503 1,826 49,830 Ratio of fair value to amortized cost 99.1 % 98.7 % 103.9 % 100.9 % 103.2 % 99.5 % 100.8 % Short-term, amortized cost $ 1,216 $ 52 $ 252 $ 41 $ 386 $ 1,477 $ 3,424 Fixed income securities portfolio duration (in years) (3) 3.50 3.15 5.69 4.89 4.06 2.01 3.90 (1) (2) (3) Duration measures the price sensitivity of assets and liabilities to changes in interest rates. The Allstate Corporation Investments by Segment As of March 31, 2018 Equity securities may include investments in exchange traded and mutual funds whose underlying investments are fixed income securities. Beginning January 1, 2018, equity securities are reported at fair value with changes in fair value recognized in realized capital gains and losses. The Allstate Corporation 1Q18 Supplement 43
($ in millions) Unrealized net Fair value Unrealized net Fair value Unrealized net Fair value capital gains Fair as a percent of capital gains Fair as a percent of capital gains Fair as a percent of and losses value amortized cost (1) and losses value amortized cost (1) and losses value amortized cost (1) Fixed income securities U.S. government and agencies $ 33 $ 3,406 101.0 $ 36 $ 3,616 101.0 $ 57 $ 3,900 101.5 Municipal 165 8,569 102.0 275 8,328 103.4 310 7,794 104.1 Corporate 152 41,851 100.4 1,030 44,026 102.4 1,287 44,546 103.0 Foreign government 11 979 101.1 16 1,021 101.6 16 1,093 101.5 Asset-backed securities ("ABS") 1 1,197 100.1 6 1,272 100.5 7 1,270 100.6 Residential mortgage-backed securities ("RMBS") 97 550 121.4 98 578 120.4 99 611 119.3 Commercial mortgage-backed securities ("CMBS") 4 99 104.2 4 128 103.2 4 153 102.7 Redeemable preferred stock 2 23 109.5 2 23 109.5 3 24 114.3 Total fixed income securities 465 56,674 100.8 1,467 58,992 102.6 1,783 59,391 103.1 Equity securities (2) - 6,986 n/a 1,160 6,621 121.2 966 6,434 117.7 Short-term investments - 3,424 100.0 - 1,944 100.0 - 2,198 100.0 Derivatives (1) 103 n/a (1) 127 n/a (2) 101 n/a EMA limited partnership interests (3) 1 n/a n/a 1 n/a n/a - n/a n/a Unrealized net capital gains and losses, pre-tax 465 2,627 2,747 Amounts recognized for: Insurance reserves (4) (119) (315) - DAC and DSI (5) (109) (196) (203) Amounts recognized (228) (511) (203) Deferred income taxes (50) (454) (893) Unrealized net capital gains and losses, after-tax $ 187 $ 1,662 $ 1,651 Unrealized net Fair value Unrealized net Fair value Unrealized net Fair value capital gains Fair as a percent of capital gains Fair as a percent of capital gains Fair as a percent of and losses value amortized cost (1) and losses value amortized cost (1) and losses value amortized cost (1) Fixed income securities U.S. government and agencies $ 63 $ 3,426 101.9 $ 66 $ 4,395 101.5 $ 65 $ 3,637 101.8 Municipal 312 7,855 104.1 258 7,507 103.6 217 7,333 103.0 Corporate 1,244 44,251 102.9 992 43,535 102.3 859 43,601 102.0 Foreign government 28 1,047 102.7 32 1,027 103.2 32 1,075 103.1 ABS 6 1,243 100.5 3 1,265 100.2 2 1,171 100.2 RMBS 92 641 116.8 83 672 114.1 77 728 111.8 CMBS 7 170 104.3 5 211 102.4 8 270 103.1 Redeemable preferred stock 3 23 115.0 3 24 114.3 3 24 114.3 Total fixed income securities 1,755 58,656 103.1 1,442 58,636 102.5 1,263 57,839 102.2 Equity securities (2) 796 6,117 115.0 659 5,685 113.1 509 5,666 109.9 Short-term investments - 2,175 100.0 - 2,753 100.0 - 4,288 100.0 Derivatives (1) 108 n/a - 108 n/a 2 111 n/a EMA limited partnership interests (3) (1) n/a n/a - n/a n/a (4) n/a n/a Unrealized net capital gains and losses, pre-tax 2,549 2,101 1,770 Amounts recognized for: Insurance reserves (4) - - - DAC and DSI (5) (198) (165) (146) Amounts recognized (198) (165) (146) Deferred income taxes (825) (680) (571) Unrealized net capital gains and losses, after-tax $ 1,526 $ 1,256 $ 1,053 (1) (2) (3) (4) (5) The Allstate Corporation Unrealized Net Capital Gains and Losses by Type March 31, 2018 December 31, 2017 September 30, 2017 June 30, 2017 March 31, 2017 December 31, 2016 Beginning January 1, 2018, due to the adoption of the recognition and measurement accounting standard, equity securities are measured at fair value with changes in fair value recognized in realized capital gains and losses. 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. The comparison of percentages from period to period may be distorted by investment transactions such as sales, purchases and impairment write-downs. Unrealized net capital gains and losses for limited partnership interests represent the Company's share of EMA limited partnerships' other comprehensive income. Fair value and amortized cost are not applicable. 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 current 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). The Allstate Corporation 1Q18 Supplement 44
($ in millions) March 31, Dec. 31, Sept. 30, June 30, March 31, 2018 2017 2017 2017 2017 Net Investment Income Fixed income securities $ 508 $ 514 $ 519 $ 527 $ 518 Equity securities 34 44 37 49 44 Mortgage loans 51 49 52 50 55 Limited partnership interests ("LP") 180 293 223 253 120 Short-term 12 9 9 6 6 Other 66 62 58 60 56 Investment income, before expense 851 971 898 945 799 Less: Investment expense (65) (58) (55) (48) (51) Net investment income $ 786 $ 913 $ 843 $ 897 $ 748 Interest-bearing investments (1) $ 622 $ 623 $ 627 $ 631 $ 625 Equity securities 34 44 37 49 44 LP and other alternative investments (2) 195 304 234 265 130 Investment income, before expense $ 851 $ 971 $ 898 $ 945 $ 799 Pre-Tax Yields (3) Fixed income securities 3.6 % 3.6 % 3.6 % 3.7 % 3.6 % Equity securities 2.5 3.2 2.7 3.8 3.5 Mortgage loans 4.4 4.4 4.8 4.6 4.9 Limited partnership interests 10.1 17.5 13.9 16.6 8.1 Total portfolio 4.1 4.8 4.5 4.7 4.0 Interest-bearing investments 3.7 3.7 3.7 3.8 3.7 Realized Capital Gains and Losses (Pre-tax) by Transaction Type Impairment write-downs (4) $ (1) $ (8) $ (23) $ (28) $ (43) Change in intent write-downs (4) - (5) (5) (22) (16) Net other-than-temporary impairment losses recognized in earnings (1) (13) (28) (50) (59) Sales (4) (42) 146 148 139 208 Valuation of equity investments (4) (83) - - - - Valuation and settlements of derivative instruments (8) (6) (17) (8) (15) Total $ (134) $ 127 $ 103 $ 81 $ 134 Total Return on Investment Portfolio (5) Income 0.9 % 1.1 % 1.0 % 1.1 % 0.9 % Valuation-interest bearing (1.3) (0.4) 0.2 0.5 0.3 Valuation-equity owned (0.1) 0.4 0.3 0.2 0.4 Total (0.5) % 1.1 % 1.5 % 1.8 % 1.6 % Average Investment Balances (in billions) (6) $ 81.0 $ 80.1 $ 79.4 $ 78.9 $ 79.5 (1) (2) (3) (4) (5) (6) Quarterly pre-tax yield is calculated as annualized quarterly investment income, before investment expense divided by the average of the current and prior quarter investment balances. Year-to-date pre-tax yield is calculated as annualized year-to-date investment income, before investment expense divided by the average of investment balances at the beginning of the year and the end of each quarter during the year. For the purposes of the pre-tax yield calculation, income for directly held real estate and other consolidated investments is net of investee level expenses (depreciation and asset level operating expenses reported in investment expense). Fixed income securities investment balances exclude unrealized capital gains and losses. Equity securities investment balances use cost in the calculation. Total return on investment portfolio is calculated from GAAP results, including the total of net investment income, realized capital gains and losses, the change in unrealized net capital gains and losses, and the change in the difference between fair value and carrying value of mortgage loans, cost method limited partnerships for periods prior to 2018, bank loans and agent loans divided by the average fair value balances. Average investment balances for the quarter are calculated as the average of the current and prior quarter investment balances. Year-to-date average investment balances are calculated as the average of investment balances at the beginning of the year and the end of each quarter during the year. For purposes of the average investment balances calculation, unrealized capital gains and losses on fixed income securities are excluded and equity securities investment balances are at cost. Due to the adoption of the recognition and measurement accounting standard, equity securities are reported at fair value with changes in fair value recognized in valuation of equity investments, and are no longer included in impairment write-downs, change in intent write-downs and sales. The Allstate Corporation Net Investment Income, Yields and Realized Capital Gains and Losses (Pre-Tax) Three months ended Comprise fixed income securities, mortgage loans, short-term investments, and other investments including bank and agent loans and derivatives. Comprise limited partnership interests and other alternative investments, including real estate investments classified as other investments. The Allstate Corporation 1Q18 Supplement 45
($ in millions) Property- Service Allstate Allstate Allstate Corporate Liability Businesses Life Benefits Annuities and Other Total Net Investment Income Fixed income securities $ 227 $ 4 $ 88 $ 12 $ 165 $ 12 $ 508 Equity securities 26 1 - - 7 - 34 Mortgage loans 4 - 20 2 25 - 51 Limited partnership interests ("LP") 84 - - - 96 - 180 Short-term 6 - 2 - 2 2 12 Other 29 - 17 5 14 1 66 Investment income, before expense 376 5 127 19 309 15 851 Less: Investment expense (39) - (5) - (19) (2) (65) Net investment income $ 337 $ 5 $ 122 $ 19 $ 290 $ 13 $ 786 Net investment income, after-tax $ 275 $ 4 $ 100 $ 15 $ 228 $ 11 $ 633 Interest-bearing investments (1) $ 256 $ 4 $ 127 $ 19 $ 201 $ 15 $ 622 Equity securities 26 1 - - 7 - 34 LP and other alternative investments (2) 94 - - - 101 - 195 Investment income, before expense $ 376 $ 5 $ 127 $ 19 $ 309 $ 15 $ 851 Pre-Tax Yields (3) Fixed income securities 2.9 % 2.2 % 4.8 % 4.2 % 4.5 % 2.4 % 3.6 % Equity securities 2.5 1.8 4.0 2.9 2.4 0.7 2.5 Mortgage loans 3.8 - 4.4 4.4 4.5 - 4.4 Limited partnership interests 8.8 - - - 11.7 (0.9) 10.1 Total portfolio 3.4 2.1 4.8 4.5 5.4 2.1 4.1 Interest-bearing investments 3.0 2.2 4.8 4.6 4.5 2.1 3.7 Realized Capital Gains and Losses (Pre-tax) by transaction type Impairment write-downs (4) $ - $ - $ - $ - $ (1) $ - $ (1) Change in intent write-downs (4) - - - - - - - Net other-than-temporary impairment losses recognized in earnings - - - - (1) - (1) Sales (4) (35) (1) (2) - (3) (1) (42) Valuation of equity investments (4) (55) (3) (1) (2) (22) - (83) Valuation and settlements of derivative instruments (5) - - - (3) - (8) Total $ (95) $ (4) $ (3) $ (2) $ (29) $ (1) $ (134) (1) (2) (3) (4) Quarterly pre-tax yield is calculated as annualized quarterly investment income, before investment expense divided by the average of the current and prior quarter investment balances. For the purposes of the pre-tax yield calculation, income for directly held real estate and other consolidated investments is net of investee level expenses (depreciation and asset level operating expenses reported in investment expense). Fixed income securities investment balances exclude unrealized capital gains and losses. Equity securities investment balances use cost in the calculation. Due to the adoption of the recognition and measurement accounting standard, equity securities are reported at fair value with changes in fair value recognized in valuation of equity investments, and are no longer included in impairment write-downs, change in intent write-downs and sales. The Allstate Corporation Net Investment Income, Yields and Realized Capital Gains and Losses (Pre-Tax) by Segment Three months ended March 31, 2018 Comprised of fixed income securities, mortgage loans, short-term investments, and other investments including bank and agent loans and derivatives. Comprised of limited partnership interests and other alternative investments, including real estate investments classified as other investments. The Allstate Corporation 1Q18 Supplement 46
($ in millions) March 31, Dec. 31, Sept. 30, June 30, March 31, 2018 2017 2017 2017 2017 Market-Based ("MB") (1) Investment Position Interest-bearing investments $ 67,934 $ 68,648 $ 69,070 $ 68,331 $ 68,836 Equity securities (2) 6,818 6,483 6,336 6,021 5,578 LP and other alternative investments (3) 828 738 694 591 555 Total $ 75,580 $ 75,869 $ 76,100 $ 74,943 $ 74,969 Investment income Interest-bearing investments $ 619 $ 620 $ 625 $ 629 $ 624 Equity securities 34 44 37 45 35 LP and other alternative investments 1 1 1 - - Investment income, before expense 654 665 663 674 659 Investee level expenses (4) (2) (1) (1) (2) (1) Income for yield calculation $ 652 $ 664 $ 662 $ 672 $ 658 Market-based pre-tax yield 3.5 % 3.6 % 3.6 % 3.7 % 3.6 % Realized capital gains and losses (pre-tax) by transaction type Impairment write-downs (5) $ (1) $ (8) $ (7) $ (19) $ (36) Change in intent write-downs (5) - (5) (5) (22) (16) Net other-than-temporary impairment losses recognized in earnings (1) (13) (12) (41) (52) Sales (5) (42) 141 148 129 208 Valuation of equity investments (5) (83) - - - - Valuation and settlements of derivative instruments - 1 (12) (1) (10) Total $ (126) $ 129 $ 124 $ 87 $ 146 Performance-Based ("PB") (6) Investment Position Interest-bearing investments $ 115 $ 120 $ 130 $ 129 $ 108 Equity securities 168 138 98 96 107 LP and other alternative investments 7,426 6,676 6,443 6,137 5,959 Total $ 7,709 $ 6,934 $ 6,671 $ 6,362 $ 6,174 Investment income Interest-bearing investments $ 3 $ 3 $ 2 $ 2 $ 1 Equity securities - - - 4 9 LP and other alternative investments 194 303 233 265 130 Investment income, before expense 197 306 235 271 140 Investee level expenses (16) (10) (8) (8) (9) Income for yield calculation $ 181 $ 296 $ 227 $ 263 $ 131 Performance-based pre-tax yield 9.9 % 17.4 % 14.0 % 16.8 % 8.7 % Realized capital gains and losses (pre-tax) by transaction type Impairment write-downs $ - $ - $ (16) $ (9) $ (7) Change in intent write-downs - - - - - Net other-than-temporary impairment losses recognized in earnings - - (16) (9) (7) Sales - 5 - 10 - Valuation of equity investments - - - - - Valuation and settlements of derivative instruments (8) (7) (5) (7) (5) Total $ (8) $ (2) $ (21) $ (6) $ (12) (1) (2) (3) (4) (5) (6) Market-based strategy seeks to deliver predictable earnings aligned to business needs and take advantage of short-term opportunities primarily through public and private fixed income investments and public equity securities. Market-based investments include publicly traded equity securities classified as limited partnerships. When calculating the pre-tax yields, investee level expenses are netted against income for directly held real estate and other consolidated investments. Performance-based strategy seeks to deliver attractive risk-adjusted returns and supplement market risk with idiosyncratic risk primarily through investments in private equity and real estate. The Allstate Corporation Investment Position and Results by Strategy As of or for the three months ended Due to the adoption of the recognition and measurement accounting standard, equity securities are reported at fair value with changes in fair value recognized in valuation of equity investments, and are no longer included in impairment write-downs, change in intent write-downs and sales. Equity securities may include investments in exchange traded and mutual funds whose underlying investments are fixed income securities. The Allstate Corporation 1Q18 Supplement 47
($ in millions) Property- Service Allstate Allstate Allstate Corporate Liability Businesses Life Benefits Annuities and Other Total Market-based ("MB") (1) Investment Position Interest-bearing investments $ 32,508 $ 830 $ 10,999 $ 1,688 $ 18,075 $ 3,834 $ 67,934 Equity securities (2) 5,138 136 7 97 1,430 10 6,818 LP and other alternative investments (3) 588 - - - 239 1 828 Total $ 38,234 $ 966 $ 11,006 $ 1,785 $ 19,744 $ 3,845 $ 75,580 Investment income Interest-bearing investments $ 254 $ 4 $ 127 $ 19 $ 200 $ 15 $ 619 Equity securities 26 1 - - 7 - 34 LP and other alternative investments 1 - - - - - 1 Investment income, before expense 281 5 127 19 207 15 654 Investee level expenses (4) (2) - - - - - (2) Income for yield calculation $ 279 $ 5 $ 127 $ 19 $ 207 $ 15 $ 652 Market-based pre-tax yield 2.9 % 2.1 % 4.8 % 4.5 % 4.3 % 2.1 % 3.5 % Realized capital gains and losses (pre-tax) by transaction type Impairment write-downs (5) $ - $ - $ - $ - $ (1) $ - $ (1) Change in intent write-downs (5) - - - - - - - Net other-than-temporary impairment losses recognized in earnings - - - - (1) - (1) Sales (5) (35) (1) (2) - (3) (1) (42) Valuation of equity investments (5) (55) (3) (1) (2) (22) - (83) Valuation and settlements of derivative instruments (1) - - - 1 - - Total $ (91) $ (4) $ (3) $ (2) $ (25) $ (1) $ (126) Performance-based ("PB") (6) Investment Position Interest-bearing investments $ 93 $ - $ - $ - $ 22 $ - $ 115 Equity securities 101 - - - 67 - 168 LP and other alternative investments 4,029 - - - 3,397 - 7,426 Total $ 4,223 $ - $ - $ - $ 3,486 $ - $ 7,709 Investment income Interest-bearing investments $ 2 $ - $ - $ - $ 1 $ - $ 3 Equity securities - - - - - - - LP and other alternative investments 93 - - - 101 - 194 Investment income, before expense 95 - - - 102 - 197 Investee level expenses (11) - - - (5) - (16) Income for yield calculation $ 84 $ - $ - $ - $ 97 $ - $ 181 Performance-based pre-tax yield 8.4 % N/A N/A N/A 11.6 % N/A 9.9 % Realized capital gains and losses (pre-tax) by transaction type Impairment write-downs $ - $ - $ - $ - $ - $ - $ - Change in intent write-downs - - - - - - - Net other-than-temporary impairment losses recognized in earnings - - - - - - - Sales - - - - - - - Valuation of equity investments - - - - - - - Valuation and settlements of derivative instruments (4) - - - (4) - (8) Total $ (4) $ - $ - $ - $ (4) $ - $ (8) (1) (2) (3) (4) (5) (6) When calculating the pre-tax yields, investee level expenses are netted against income for directly held real estate and other consolidated investments. Performance-based strategy seeks to deliver attractive risk-adjusted returns and supplement market risk with idiosyncratic risk primarily through investments in private equity and real estate. The Allstate Corporation Investment Position and Results by Strategy by Segment As of or for the three months ended March 31, 2018 Market-based strategy seeks to deliver predictable earnings aligned to business needs and take advantage of short-term opportunities primarily through public and private fixed income investments and public equity securities. Market-based investments include publicly traded equity securities classified as limited partnerships. Due to the adoption of the recognition and measurement accounting standard, equity securities are reported at fair value with changes in fair value recognized in valuation of equity investments, and are no longer included in impairment write-downs, change in intent write-downs and sales. Equity securities may include investments in exchange traded and mutual funds whose underlying investments are fixed income securities. The Allstate Corporation 1Q18 Supplement 48
($ in millions) March 31, Dec. 31, Sept. 30, June 30, March 31, 2018 2017 2017 2017 2017 Investment position Limited partnerships Private equity $ 5,437 $ 4,752 $ 4,650 $ 4,333 $ 4,139 Real estate 1,212 1,293 1,296 1,320 1,325 PB - limited partnerships 6,649 6,045 5,946 5,653 5,464 Non-LP Private equity 249 210 170 171 161 Real estate 811 679 555 538 549 PB - non-LP 1,060 889 725 709 710 Total Private equity 5,686 4,962 4,820 4,504 4,300 Real estate 2,023 1,972 1,851 1,858 1,874 Total PB $ 7,709 $ 6,934 $ 6,671 $ 6,362 $ 6,174 Investment income Limited partnerships Private equity $ 177 $ 219 $ 183 $ 209 $ 114 Real estate 3 74 40 44 6 PB - limited partnerships 180 293 223 253 120 Non-LP Private equity 2 3 2 5 9 Real estate 15 10 10 13 11 PB - non-LP 17 13 12 18 20 Total Private equity 179 222 185 214 123 Real estate 18 84 50 57 17 Total PB $ 197 $ 306 $ 235 $ 271 $ 140 Investee level expenses $ (16) $ (10) $ (8) $ (8) $ (9) Realized capital gains and losses Limited partnerships Private equity $ - $ (3) $ (17) $ (8) $ (10) Real estate - 2 - 4 1 PB - limited partnerships - (1) (17) (4) (9) Non-LP Private equity (8) (7) (4) (11) (4) Real estate - 6 - 9 1 PB - non-LP (8) (1) (4) (2) (3) Total Private equity (8) (10) (21) (19) (14) Real estate - 8 - 13 2 Total PB $ (8) $ (2) $ (21) $ (6) $ (12) Pre-Tax Yield 9.9 % 17.4 % 14.0 % 16.8 % 8.7 % Internal Rate of Return (1) 10 Year 9.0 % 8.6 % 8.5 % 8.3 % 9.5 % 5 Year 13.0 12.8 12.7 11.9 11.9 (1) The internal rate of return ("IRR") is one of the measures we use to evaluate the performance of these investments. The IRR represents the rate of return on the investments considering the cash flows paid and received and, until the investment is fully liquidated, the estimated value of investment holdings at the end of the measurement period. The calculated IRR for any measurement period is highly influenced by the values of the portfolio at the beginning and end of the period, which reflect the estimated fair values of the investments as of such dates. As a result, the IRR can vary significantly for different measurement periods based on macroeconomic or other events that impact the estimated beginning or ending portfolio value, such as the global financial crisis. Our IRR calculation method may differ from those used by other investors. The timing of the recognition of income in the financial statements may differ significantly from the cash distributions and changes in the value of these investments. The Allstate Corporation Performance-Based Investments As of or for the three months ended The Allstate Corporation 1Q18 Supplement 49
($ in millions) March 31, Dec. 31, Sept. 30, June 30, March 31, 2018 2017 2017 2017 2017 Investment position Underlying investment Private equity $ 5,437 $ 4,752 $ 4,650 $ 4,333 $ 4,139 Real estate 1,212 1,293 1,296 1,320 1,325 Other 785 695 654 553 518 Total $ 7,434 $ 6,740 $ 6,600 $ 6,206 $ 5,982 Accounting basis Equity method ("EMA") $ 5,771 $ 5,413 $ 5,261 $ 4,937 $ 4,689 Fair value (1) 1,663 1,327 1,339 1,269 1,293 Total $ 7,434 $ 6,740 $ 6,600 $ 6,206 $ 5,982 Approximate cumulative pre-tax appreciation (2) $ 1,347 $ 854 $ 858 $ 787 $ 611 Investment income Underlying investment Private equity $ 177 $ 219 $ 183 $ 209 $ 114 Real estate 3 74 40 44 6 Other - - - - - Total $ 180 $ 293 $ 223 $ 253 $ 120 Accounting basis Equity method $ 103 $ 246 $ 159 $ 202 $ 83 Fair value (1) 77 47 64 51 37 Total (3) Total $ 180 $ 293 $ 223 $ 253 $ 120 (1) (2) The Allstate Corporation Limited Partnership Interests As of or for the three months ended Beginning January 1, 2018, due to the adoption of the recognition and measurement accounting standard, limited partnerships previously reported using the cost method are now reported at fair value with changes in fair value recognized in net investment income. Prior periods continue to reflect cost method. At March 31, 2018, approximate cumulative pre-tax appreciation includes limited partnerships accounted for under EMA and at fair value. Prior periods included EMA limited partnerships only. The Allstate Corporation 1Q18 Supplement 50
• realized capital gains and losses, after-tax, except for periodic settlements and accruals on non-hedge derivative instruments, which are reported with realized capital gains and losses but included in adjusted net income, • valuation changes on embedded derivatives not hedged, after-tax, • amortization of deferred policy acquisition costs ("DAC") and deferred sales inducements (“DSI”), to the extent they resulted from the recognition of certain realized capital gains and losses or valuation changes on embedded derivatives not hedged, after-tax, • business combination expenses and the amortization of purchased intangible assets, after-tax, • gain (loss) on disposition of operations, after-tax, and • adjustments for other significant non-recurring, infrequent or unusual items, when (a) the nature of the charge or gain is such that it is reasonably unlikely to recur within two years, or (b) there has been no similar charge or gain within the prior two years. Average underlying loss (incurred pure premium) and expense is calculated as the underlying combined ratio (a non-GAAP measure) multiplied by the GAAP quarterly earned premium, which is annualized (multiplied by 4) (“average premium”). We believe that this measure is useful to investors and it is used by management for the same reasons noted above for the underlying combined ratio. A reconciliation of average underlying loss and expense is provided in the schedule, "Allstate Brand Auto and Homeowners Underlying Loss and Expense". Definitions of Non-GAAP Measures We believe that investors’ understanding of Allstate’s performance is enhanced by our disclosure of the following non-GAAP measures. Our methods for calculating these measures may differ from those used by other companies and therefore comparability may be limited. Adjusted net income is net income applicable to common shareholders, excluding: Net income applicable to common shareholders is the GAAP measure that is most directly comparable to adjusted net income. We use adjusted net income as an important measure to evaluate our results of operations. We believe that the measure provides investors with a valuable measure of the Company's ongoing performance because it reveals trends in our insurance and financial service business that may be obscured by the net effect of realized capital gains and losses, valuation changes on embedded derivatives not hedged, business combination expenses and the amortization of purchased intangible assets, gain (loss) on disposition of operations and adjustments for other significant non-recurring, infrequent or unusual items. Realized capital gains and losses, valuation changes on embedded derivatives not hedged and gain (loss) on disposition of operations may vary significantly between periods and are generally driven by business decisions and external economic developments such as capital market conditions, the timing of which is unrelated to the insurance underwriting process. Consistent with our intent to protect results or earn additional income, adjusted net income includes periodic settlements and accruals on certain derivative instruments that are reported in realized capital gains and losses because they do not qualify for hedge accounting or are not designated as hedges for accounting purposes. These instruments are used for economic hedges and to replicate fixed income securities, and by including them in adjusted net income, we are appropriately reflecting their trends in our performance and in a manner consistent with the economically hedged investments, product attributes (e.g. net investment income and interest credited to contractholder funds) or replicated investments. Business combination expenses are excluded because they are non-recurring in nature and the amortization of purchased intangible assets is excluded because it relates to the acquisition purchase price and is not indicative of our underlying insurance business results or trends. Non-recurring items are excluded because, by their nature, they are not indicative of our business or economic trends. Accordingly, adjusted net income excludes the effect of items that tend to be highly variable from period to period and highlights the results from ongoing operations and the underlying profitability of our business. A byproduct of excluding these items to determine adjusted net income is the transparency and understanding of their significance to net income variability and profitability while recognizing these or similar items may recur in subsequent periods. Adjusted net income is used by management along with the other components of net income applicable to common shareholders to assess our performance. We use adjusted measures of adjusted net income in incentive compensation. Therefore, we believe it is useful for investors to evaluate net income applicable to common shareholders, adjusted net income and their components separately and in the aggregate when reviewing and evaluating our performance. We note that investors, financial analysts, financial and business media organizations and rating agencies utilize adjusted net income results in their evaluation of our and our industry's financial performance and in their investment decisions, recommendations and communications as it represents a reliable, representative and consistent measurement of the industry and the Company and management's performance. We note that the price to earnings multiple commonly used by insurance investors as a forward-looking valuation technique uses adjusted net income as the denominator. Adjusted net income should not be considered a substitute for net income applicable to common shareholders and does not reflect the overall profitability of our business. A reconciliation of adjusted net income to net income applicable to common shareholders is provided in the schedule, "Contribution to Income". Combined ratio excluding the effect of catastrophes, prior year reserve reestimates and the amortization of purchased intangible assets ("underlying combined ratio") is a non-GAAP ratio, which is computed as the difference between four GAAP operating ratios: the combined ratio, the effect of catastrophes on the combined ratio, the effect of prior year non-catastrophe reserve reestimates on the combined ratio, the effect of amortization of purchased intangible assets on the combined ratio. We believe that this ratio is useful to investors and it is used by management to reveal the trends in our Property-Liability business that may be obscured by catastrophe losses, prior year reserve reestimates, amortization of purchased intangible assets. Catastrophe losses cause our loss trends to vary significantly between periods as a result of their incidence of occurrence and magnitude, and can have a significant impact on the combined ratio. Prior year reserve reestimates are caused by unexpected loss development on historical reserves. Amortization of purchased intangible assets relates to the acquisition purchase price and is not indicative of our underlying insurance business results or trends. We believe it is useful for investors to evaluate these components separately and in the aggregate when reviewing our underwriting performance. We also provide it to facilitate a comparison to our outlook on the underlying combined ratio. The most directly comparable GAAP measure is the combined ratio. The underlying combined ratio should not be considered a substitute for the combined ratio and does not reflect the overall underwriting profitability of our business. A reconciliation of the underlying combined ratio to combined ratio is provided in the schedules "Property-Liability Results", "Historical Property-Liability Results", "Allstate Brand Profitability Measures", "Esurance Brand Profitability Measures and Statistics", "Encompass Brand Profitability Measures and Statistics", "Auto Profitability Measures by Brand", "Homeowners Profitability Measures by Brand" and "Other Personal Lines Profitability Measures by Brand", and "SquareTrade Profitability Measures". The Allstate Corporation 1Q18 Supplement 51
Definitions of Non-GAAP Measures (continued) Underlying loss ratio is a non-GAAP ratio, which is computed as the difference between three GAAP operating ratios: the loss ratio, the effect of catastrophes on the combined ratio and the effect of prior year non-catastrophe reserve reestimates on the combined ratio. We believe that this ratio is useful to investors and it is used by management to reveal the trends that may be obscured by catastrophe losses and prior year reserve reestimates. Catastrophe losses cause our loss trends to vary significantly between periods as a result of their incidence of occurrence and magnitude, and can have a significant impact on the combined ratio. Prior year reserve reestimates are caused by unexpected loss development on historical reserves. We believe it is useful for investors to evaluate these components separately and in the aggregate when reviewing our underwriting performance. The most directly comparable GAAP measure is the loss ratio. The underlying loss ratio should not be considered a substitute for the loss ratio and does not reflect the overall loss ratio of our business. A reconciliation of underlying loss ratio is provided in the schedules "Property-Liability Results", "Historical Property-Liability Results", "Allstate Brand Profitability Measures", "Esurance Brand Profitability Measures and Statistics", "Encompass Brand Profitability Measures and Statistics", "Auto Profitability Measures by Brand", "Homeowners Profitability Measures by Brand" and "Other Personal Lines Profitability Measures by Brand". Adjusted net income return on adjusted equity is a ratio that uses a non-GAAP measure. It is calculated by dividing the rolling 12-month adjusted net income by the equity balance, after excluding the effect of unrealized net capital gains and losses and goodwill. Return on equity is the most directly comparable GAAP measure. We use equity excluding the effect of unrealized net capital gains and losses and goodwill for the denominator as a representation of equity primarily attributable to the Company’s earned and realized business operations. Unrealized net capital gains and losses are excluded because they vary significantly between periods due to external economic developments such as capital market conditions like changes in equity prices and interest rates, the amount and timing of which are unrelated to the insurance underwriting process. Goodwill is excluded because it relates to the acquisition purchase price and is not indicative of our underlying business results. We believe it is useful for investors to have adjusted net income return on adjusted equity when evaluating our performance as it represents a reliable, representative and consistent measurement of the company and management’s utilization of capital. Adjusted net income return on adjusted equity should not be considered a substitute for return on equity and does not reflect the overall profitability of our business. A reconciliation of return on equity and adjusted net income return on adjusted equity can be found in the schedules, "Allstate Life Return on Equity", "Allstate Benefits Return on Equity" and "Allstate Annuities Return on Equity". Adjusted net income return on common shareholders' equity is a ratio that uses a non-GAAP measure. It is calculated by dividing the rolling 12-month adjusted net income by the average of common shareholders’ equity at the beginning and at the end of the 12-months, after excluding the effect of unrealized net capital gains and losses. Return on common shareholders' equity is the most directly comparable GAAP measure. We use adjusted net income as the numerator for the same reasons we use adjusted net income, as discussed above. We use average common shareholders' equity excluding the effect of unrealized net capital gains and losses for the denominator as a representation of common shareholders’ equity primarily attributable to the Company’s earned and realized business operations because it eliminates the effect of items that are unrealized and vary significantly between periods due to external economic developments such as capital market conditions like changes in equity prices and interest rates, the amount and timing of which are unrelated to the insurance underwriting process. We use it to supplement our evaluation of net income applicable to common shareholders and return on common shareholders' equity because it excludes the effect of items that tend to be highly variable from period to period. We believe that this measure is useful to investors and that it provides a valuable tool for investors when considered along with return on common shareholders' equity because it eliminates the after-tax effects of realized and unrealized net capital gains and losses that can fluctuate significantly from period to period and that are driven by economic developments, the magnitude and timing of which are generally not influenced by management. In addition, it eliminates non-recurring items that are not indicative of our ongoing business or economic trends. A byproduct of excluding the items noted above to determine adjusted net income return on common shareholders' equity from return on common shareholders' equity is the transparency and understanding of their significance to return on common shareholders' equity variability and profitability while recognizing these or similar items may recur in subsequent periods. We use adjusted measures of adjusted net income return on common shareholders' equity in incentive compensation. Therefore, we believe it is useful for investors to have adjusted net income return on common shareholders' equity and return on common shareholders' equity when evaluating our performance. We note that investors, financial analysts, financial and business media organizations and rating agencies utilize adjusted net income return on common shareholders' equity results in their evaluation of our and our industry’s financial performance and in their investment decisions, recommendations and communications as it represents a reliable, representative and consistent measurement of the industry and the company and management’s utilization of capital. Adjusted net income return on common shareholders' equity should not be considered a substitute for return on common shareholders' equity and does not reflect the overall profitability of our business. A reconciliation of return on common shareholders' equity and adjusted net income return on common shareholders' equity can be found in the schedule, "Return on Common Shareholders' Equity". Adjusted net income, excluding purchase accounting adjustments, is a non-GAAP measure, which is computed as net income (loss) applicable to common shareholders, excluding amortization of purchased intangible assets, after-tax, and realized capital gains and losses, after-tax, and adjusted for the after-tax income statement effects of acquisition-related purchase accounting fair value adjustments to unearned premiums, contractual liability insurance policy premium expenses, and commissions paid to retailers. Net income (loss) applicable to shareholders is the GAAP measure that is most directly comparable to adjusted net income, excluding purchase accounting adjustments. We use adjusted net income, excluding purchase accounting adjustments, as an important measure to evaluate SquareTrade’s results of operations. We believe that the measure provides investors with a valuable measure of SquareTrade’s ongoing performance because it reveals trends that may be obscured by the amortization of purchased intangible assets, the acquisition-related purchase accounting fair value adjustments, and the net effects of realized capital gains and losses. Amortization of purchased intangible assets is excluded because it relates to the acquisition purchase price and is not indicative of our business results or trends. We adjust for the effects of acquisition-related purchase accounting fair value adjustments because they relate to the acquisition and their effects are not indicative of the underlying business results and trends. Realized capital gains and losses may vary significantly between periods and are generally driven by business decisions and external economic developments such as capital market conditions, the timing of which is unrelated to SquareTrade’s operations. Adjusted net income, excluding purchase accounting adjustments, highlights the results from ongoing operations and the underlying profitability of our business and is used by management along with the other components of net income applicable to common shareholders to assess our performance. We believe it is useful for investors to evaluate net income applicable to common shareholders, adjusted net income, excluding purchase accounting adjustments, and their components separately and in the aggregate when reviewing and evaluating SquareTrade’s performance. Adjusted net income, excluding purchase accounting adjustments, should not be considered a substitute for net income applicable to common shareholders and does not reflect the overall profitability of our business. A reconciliation of net income (loss) applicable to common shareholders to adjusted net income, excluding purchase accounting adjustments, is provided in the schedule, "SquareTrade Results". Book value per common share, excluding the impact of unrealized net capital gains and losses on fixed income securities, is a ratio that uses a non-GAAP measure. It is calculated by dividing common shareholders’ equity after excluding the impact of unrealized net capital gains and losses on fixed income securities and related DAC, DSI and life insurance reserves by total common shares outstanding plus dilutive potential common shares outstanding. We use the trend in book value per common share, excluding the impact of unrealized net capital gains and losses on fixed income securities, in conjunction with book value per common share to identify and analyze the change in net worth attributable to management efforts between periods. We believe the non-GAAP ratio is useful to investors because it eliminates the effect of items that can fluctuate significantly from period to period and are generally driven by economic developments, primarily capital market conditions, the magnitude and timing of which are generally not influenced by management, and we believe it enhances understanding and comparability of performance by highlighting underlying business activity and profitability drivers. We note that book value per common share, excluding the impact of unrealized net capital gains and losses on fixed income securities, is a measure commonly used by insurance investors as a valuation technique. Book value per common share is the most directly comparable GAAP measure. Book value per common share, excluding the impact of unrealized net capital gains and losses on fixed income securities, should not be considered a substitute for book value per common share, and does not reflect the recorded net worth of our business. A reconciliation of book value per common share, excluding the impact of unrealized net capital gains on fixed income securities, and book value per common share can be found in the schedule, "Book Value per Common Share". The Allstate Corporation 1Q18 Supplement 52
2014 2015 2016 2017 Q1 2018 % change in gross claim frequency (3) 0.5% 6.3% 3.1% -5.3% -3.8% Gross claim frequency indexed to 2013 (2) 100.5% 106.8% 110.1% 104.3% 100.3% % change in paid claim severity (3) 4.1% 4.4% 4.1% 4.5% 6.7% Paid claim severity indexed to 2013 (4) 104.1% 108.7% 113.1% 118.2% 126.1% (1) (2) (3) (4) The Allstate Corporation Allstate Brand Auto Claim Frequency Analysis (1) Property Damage % Change in Gross Claim Frequency and Paid Claim Severity Indexed to 2013 Frequency statistics exclude counts associated with catastrophe events. Gross claim frequency and paid claim severity indexed to 2013 equals the current year gross claim frequency or paid claim severity plus 100%, times the prior year indexed amount beginning with 100% in 2013 rounded. Gross claim frequency is calculated as annualized notice counts received in the period divided by the average of policies in force with the applicable coverage during the period. Gross claim frequency includes all actual notice counts, regardless of their current status (open or closed) or their ultimate disposition (closed with a payment or closed without payment). The percent change in gross claim frequency is calculated as the amount of increase or decrease in the gross claim frequency in the current period compared to the prior period shown above; divided by the prior period gross claim frequency. The percent change in Q1 2018 is calculated using the gross claim frequency for the three months ended March 31, 2018 compared to the same amounts for the twelve months ended December 31, 2017. Paid claim severity is calculated by dividing the sum of paid losses and loss expenses by claims closed with a payment during the period. The percent change in paid claim severity is calculated as the amount of increase or decrease in the paid claim severity in the current period compared to the prior period shown above; divided by the prior period paid claim severity. The percent change in Q1 2018 is calculated using the paid claim severity for the three months ended March 31, 2018 compared to the same amounts for the twelve months ended December 31, 2017. 95% 100% 105% 110% 115% 120% 125% 130% 2013 2014 2015 2016 2017 Q1 2018 Property Damage Statistics Indexed to 2013 % change in gross claim frequency % change in paid claim severity 53
