Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2019 | Apr. 15, 2019 | |
Document and Entity Information | ||
Entity Registrant Name | ALLSTATE CORP | |
Entity Central Index Key | 0000899051 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 333,106,827 | |
Entity Emerging Growth Company | false | |
Entity Small Business | false |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (unaudited) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Revenues | ||
Net investment income | $ 648 | $ 786 |
Realized capital gains and losses: | ||
Total other-than-temporary impairment (“OTTI”) losses | (16) | 0 |
OTTI losses reclassified to (from) other comprehensive income (OCI) | 2 | (1) |
Net OTTI losses recognized in earnings | (14) | (1) |
Sales and valuation changes on equity investments and derivatives | 676 | (133) |
Total realized capital gains and losses | 662 | (134) |
Total revenues | 10,990 | 9,770 |
Costs and expenses | ||
Property and casualty insurance claims and claims expense | 5,820 | 5,129 |
Life contract benefits | 497 | 504 |
Interest credited to contractholder funds | 162 | 161 |
Amortization of deferred policy acquisition costs | 1,364 | 1,273 |
Operating costs and expenses | 1,380 | 1,303 |
Pension and other postretirement remeasurement gains and losses | 15 | 14 |
Amortization of purchased intangibles | 32 | 22 |
Restructuring and related charges | 18 | 19 |
Interest expense | 83 | 83 |
Total costs and expenses | 9,371 | 8,508 |
Gain on disposition of operations | 1 | 1 |
Income from operations before income tax expense | 1,620 | 1,263 |
Income tax expense | 328 | 257 |
Net income | 1,292 | 1,006 |
Preferred stock dividends | 31 | 29 |
Net income applicable to common shareholders | $ 1,261 | $ 977 |
Earnings per common share | ||
Net income available to common shareholders per common share - Basic (in dollars per share) | $ 3.79 | $ 2.76 |
Weighted average common shares - Basic (in shares) | 332.6 | 354.1 |
Net income available to common shareholders per common share - Diluted (in dollars per share) | $ 3.74 | $ 2.71 |
Weighted average common shares - Diluted (in shares) | 337.5 | 359.9 |
Property and casualty insurance premiums | ||
Revenues | ||
Other revenue | $ 8,802 | $ 8,286 |
Life premiums and contract charges | ||
Revenues | ||
Other revenue | 628 | 616 |
Other revenue | ||
Revenues | ||
Other revenue | $ 250 | $ 216 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (unaudited) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 1,292 | $ 1,006 |
Changes in: | ||
Unrealized net capital gains and losses | 974 | (565) |
Unrealized foreign currency translation adjustments | 5 | (2) |
Unamortized pension and other postretirement prior service credit | (12) | (14) |
Other comprehensive income (loss), after-tax | 967 | (581) |
Comprehensive income | $ 2,259 | $ 425 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Financial Position (unaudited) - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 |
Investments | ||
Fixed income securities, at fair value (amortized cost $56,831 and $57,134) | $ 58,202 | $ 57,170 |
Equity securities, at fair value (cost $4,767 and $4,489) | 5,802 | 5,036 |
Mortgage loans | 4,681 | 4,670 |
Limited partnership interests | 7,493 | 7,505 |
Short-term, at fair value (amortized cost $4,157 and $3,027) | 4,157 | 3,027 |
Other | 3,786 | 3,852 |
Total investments | 84,121 | 81,260 |
Cash | 551 | 499 |
Premium installment receivables, net | 6,201 | 6,154 |
Deferred policy acquisition costs | 4,670 | 4,784 |
Reinsurance and indemnification recoverables, net | 9,374 | 9,565 |
Accrued investment income | 614 | 600 |
Property and equipment, net | 1,047 | 1,045 |
Goodwill | 2,547 | 2,530 |
Other assets | 3,659 | 3,007 |
Separate Accounts | 3,050 | 2,805 |
Total assets | 115,834 | 112,249 |
Liabilities | ||
Reserve for property and casualty insurance claims and claims expense | 27,544 | 27,423 |
Reserve for life-contingent contract benefits | 12,200 | 12,208 |
Contractholder funds | 18,161 | 18,371 |
Unearned premiums | 14,323 | 14,510 |
Claim payments outstanding | 891 | 1,007 |
Deferred income taxes | 817 | 425 |
Other liabilities and accrued expenses | 8,977 | 7,737 |
Long-term debt | 6,453 | 6,451 |
Separate Accounts | 3,050 | 2,805 |
Total liabilities | 92,416 | 90,937 |
Commitments and Contingent Liabilities (Note 11) | ||
Shareholders’ equity | ||
Preferred stock and additional capital paid-in, $1 par value, 25 million shares authorized, 79.8 thousand issued and outstanding, $1,995 aggregate liquidation preference | 1,930 | 1,930 |
Common stock, $.01 par value, 2.0 billion shares authorized and 900 million issued, 333 million and 332 million shares outstanding | 9 | 9 |
Additional capital paid-in | 3,291 | 3,310 |
Retained income | 45,148 | 44,033 |
Deferred Employee Stock Ownership Plan (“ESOP”) expense | (3) | (3) |
Treasury stock, at cost (567 million and 568 million shares) | (28,042) | (28,085) |
Unrealized net capital gains and losses: | ||
Unrealized net capital gains and losses on fixed income securities with OTTI | 73 | 75 |
Other unrealized net capital gains and losses | 1,003 | (51) |
Unrealized adjustment to DAC, DSI and insurance reserves | (104) | (26) |
Total unrealized net capital gains and losses | 972 | (2) |
Unrealized foreign currency translation adjustments | (44) | (49) |
Unamortized pension and other postretirement prior service credit | 157 | 169 |
Total accumulated other comprehensive income (“AOCI”) | 1,085 | 118 |
Total shareholders’ equity | 23,418 | 21,312 |
Total liabilities and shareholders’ equity | $ 115,834 | $ 112,249 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Financial Position (Parenthetical) - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Fixed income securities, at fair value, amortized cost (in dollars) | $ 56,831 | $ 57,134 |
Equity securities, at fair value, cost (in dollars) | 4,767 | 4,489 |
Short-term, at fair value, amortized cost (in dollars) | $ 4,157 | $ 3,027 |
Preferred stock, par value (in dollars per share) | $ 1 | $ 1 |
Preferred stock, shares authorized (in shares) | 25,000,000 | 25,000,000 |
Preferred stock, shares issued (in shares) | 79,800 | 79,800 |
Preferred stock, shares outstanding (in shares) | 79,800 | 79,800 |
Preferred stock, shares aggregate liquidation preference (in shares) | $ 1,995 | $ 1,995 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 2,000,000,000 | 2,000,000,000 |
Common stock, shares issued (in shares) | 900,000,000 | 900,000,000 |
Common stock, shares outstanding (in shares) | 333,000,000 | 332,000,000 |
Treasury Stock, shares (in shares) | 567,000,000 | 568,000,000 |
Condensed Consolidated Statem_5
Condensed Consolidated Statements of Shareholders’ Equity (unaudited) - USD ($) $ in Millions | Total | Preferred Stock | Preferred stock additional capital paid-in | Common stock par value | Common stock additional capital paid-in | Retained income | Deferred ESOP expense | Treasury stock | Accumulated other comprehensive income | Previously reported | Previously reportedRetained income | Previously reportedAccumulated other comprehensive income | Adjustment | AdjustmentRetained income | AdjustmentAccumulated other comprehensive income |
Balance, beginning of period at Dec. 31, 2017 | $ 1,746 | $ 3,313 | $ 41,579 | $ (25,982) | $ 1,889 | $ 43,162 | $ 306 | ||||||||
Balance, beginning of period (Impact of change) at Dec. 31, 2017 | $ (1,583) | $ 1,583 | |||||||||||||
Increase (decrease) in equity | |||||||||||||||
Preferred stock issuance | 557 | ||||||||||||||
Forward contract on accelerated share repurchase agreement | 45 | ||||||||||||||
Activity under equity incentive plans | 9 | ||||||||||||||
Net income | $ 1,006 | 1,006 | $ 975 | 975 | |||||||||||
Net income | Impact of change | $ 31 | 31 | |||||||||||||
Dividends on common stock (declared per share of $0.50 and $0.46) | (165) | (165) | |||||||||||||
Dividends on common stock (declared per share of $0.50 and $0.46) | Impact of change | 0 | ||||||||||||||
Dividends on preferred stock | (29) | (29) | |||||||||||||
Dividends on preferred stock | Impact of change | 0 | ||||||||||||||
Shares acquired | (333) | ||||||||||||||
Shares reissued under equity incentive plans, net | 35 | ||||||||||||||
Change in unrealized net capital gains and losses | (565) | (565) | (565) | (565) | |||||||||||
Change in unrealized net capital gains and losses | Impact of change | 0 | 0 | |||||||||||||
Change in unrealized foreign currency translation adjustments | (2) | (2) | (4) | (4) | |||||||||||
Change in unrealized foreign currency translation adjustments | Impact of change | 2 | 2 | |||||||||||||
Change in unamortized pension and other postretirement prior service credit | (14) | (14) | 23 | 23 | |||||||||||
Change in unamortized pension and other postretirement prior service credit | Impact of change | (37) | (37) | |||||||||||||
Balance, end of period at Mar. 31, 2018 | $ 23,273 | $ 0 | 2,303 | $ 9 | 3,367 | 43,479 | $ (3) | (26,280) | 398 | 23,277 | 45,031 | (1,150) | |||
Balance, end of period (Impact of change) at Mar. 31, 2018 | (4) | (1,552) | 1,548 | ||||||||||||
Increase (decrease) in equity | |||||||||||||||
Dividends (in USD per share) | $ 0.46 | ||||||||||||||
Balance, beginning of period at Dec. 31, 2018 | $ 21,312 | 1,930 | 3,310 | 44,033 | (28,085) | 118 | 45,708 | (1,557) | |||||||
Balance, beginning of period (Impact of change) at Dec. 31, 2018 | (1,675) | 1,675 | |||||||||||||
Increase (decrease) in equity | |||||||||||||||
Preferred stock issuance | 0 | ||||||||||||||
Forward contract on accelerated share repurchase agreement | 0 | ||||||||||||||
Activity under equity incentive plans | (19) | ||||||||||||||
Net income | 1,292 | 1,292 | 1,287 | 1,287 | |||||||||||
Net income | Impact of change | 5 | 5 | |||||||||||||
Dividends on common stock (declared per share of $0.50 and $0.46) | (167) | (167) | |||||||||||||
Dividends on common stock (declared per share of $0.50 and $0.46) | Impact of change | 0 | ||||||||||||||
Dividends on preferred stock | (31) | (31) | |||||||||||||
Dividends on preferred stock | Impact of change | 0 | ||||||||||||||
Shares acquired | 0 | ||||||||||||||
Shares reissued under equity incentive plans, net | 43 | ||||||||||||||
Change in unrealized net capital gains and losses | 974 | 974 | 974 | 974 | |||||||||||
Change in unrealized net capital gains and losses | Impact of change | 0 | 0 | |||||||||||||
Change in unrealized foreign currency translation adjustments | 5 | 5 | 7 | 7 | |||||||||||
Change in unrealized foreign currency translation adjustments | Impact of change | (2) | (2) | |||||||||||||
Change in unamortized pension and other postretirement prior service credit | (12) | (12) | 10 | 10 | |||||||||||
Change in unamortized pension and other postretirement prior service credit | Impact of change | 22 | 22 | |||||||||||||
Balance, end of period at Mar. 31, 2019 | $ 23,418 | $ 0 | $ 1,930 | $ 9 | $ 3,291 | $ 45,148 | $ (3) | $ (28,042) | $ 1,085 | $ 23,437 | $ 46,818 | $ (566) | |||
Balance, end of period (Impact of change) at Mar. 31, 2019 | $ (19) | $ (1,670) | $ 1,651 | ||||||||||||
Increase (decrease) in equity | |||||||||||||||
Dividends (in USD per share) | $ 0.50 |
Condensed Consolidated Statem_6
Condensed Consolidated Statements of Cash Flows (unaudited) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Cash flows from operating activities | ||
Net income | $ 1,292 | $ 1,006 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation, amortization and other non-cash items | 157 | 122 |
Realized capital gains and losses | (662) | 134 |
Pension and other postretirement remeasurement gains and losses | 15 | 14 |
Gain on disposition of operations | (1) | (1) |
Interest credited to contractholder funds | 162 | 161 |
Changes in: | ||
Policy benefits and other insurance reserves | (114) | (364) |
Unearned premiums | (201) | (204) |
Deferred policy acquisition costs | 33 | 10 |
Premium installment receivables, net | (39) | (58) |
Reinsurance recoverables, net | 179 | (12) |
Income taxes | 303 | 189 |
Other operating assets and liabilities | (410) | (371) |
Net cash provided by operating activities | 714 | 626 |
Proceeds from sales | ||
Fixed income securities | 9,034 | 10,619 |
Equity securities | 633 | 1,138 |
Limited partnership interests | 241 | 53 |
Other investments | 44 | 76 |
Investment collections | ||
Fixed income securities | 628 | 583 |
Mortgage loans | 104 | 46 |
Other investments | 68 | 122 |
Investment purchases | ||
Fixed income securities | (9,056) | (9,789) |
Equity securities | (871) | (1,535) |
Limited partnership interests | (282) | (415) |
Mortgage loans | (114) | (192) |
Other investments | (89) | (330) |
Change in short-term investments, net | (552) | (1,533) |
Change in other investments, net | 47 | (27) |
Purchases of property and equipment, net | (80) | (62) |
Acquisition of operations | (18) | (5) |
Net cash used in investing activities | (263) | (1,251) |
Cash flows from financing activities | ||
Proceeds from issuance of long-term debt | 0 | 498 |
Proceeds from issuance of preferred stock | 0 | 558 |
Contractholder fund deposits | 254 | 253 |
Contractholder fund withdrawals | (458) | (492) |
Dividends paid on common stock | (158) | (132) |
Dividends paid on preferred stock | (31) | (29) |
Treasury stock purchases | 0 | (270) |
Shares reissued under equity incentive plans, net | (5) | 10 |
Other | (1) | 62 |
Net cash (used in) provided by financing activities | (399) | 458 |
Net increase (decrease) in cash | 52 | (167) |
Cash at beginning of period | 499 | 617 |
Cash at end of period | $ 551 | $ 450 |
General
General | 3 Months Ended |
Mar. 31, 2019 | |
General [Abstract] | |
General | Note 1 General Basis of presentation The accompanying condensed consolidated financial statements include the accounts of The Allstate Corporation (the “Corporation”) and its wholly owned subsidiaries, primarily Allstate Insurance Company (“AIC”), a property and casualty insurance company with various property and casualty and life and investment subsidiaries, including Allstate Life Insurance Company (“ALIC”) (collectively referred to as the “Company” or “Allstate”). These condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The condensed consolidated financial statements and notes as of March 31, 2019 and for the three month periods ended March 31, 2019 and 2018 are unaudited. The condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring accruals) which are, in the opinion of management, necessary for the fair presentation of the financial position, results of operations and cash flows for the interim periods. These condensed consolidated financial statements and notes should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2018 . The results of operations for the interim periods should not be considered indicative of results to be expected for the full year. All significant intercompany accounts and transactions have been eliminated. To conform to the current year presentation, certain amounts in the prior year condensed consolidated financial statements and notes have been reclassified. Adopted accounting standards Accounting for Leases Effective January 1, 2019 the Company adopted new Financial Accounting Standards Board ("FASB") guidance related to accounting for leases. Upon adoption of the guidance under the optional transition method that allows application of the transition provisions at the adoption date instead of the earliest period presented, the Company recorded a $585 million lease liability equal to the present value of lease payments and a $488 million right-of-use (“ROU”) asset, which is the corresponding lease liability adjusted for qualifying accrued lease payments. The lease liability and ROU asset were reported as part of other liabilities and other assets on the Condensed Consolidated Statements of Financial Position. The impact of these changes at adoption had no impact on net income or shareholders’ equity. Prior periods were not restated under the new standard. The Company utilized practical expedients which do not require reassessment of existing contracts for the existence of a lease or reassessment of existing lease classifications. Upon adoption, the new guidance required sellers in a sale-leaseback transaction to recognize the entire gain from the sale of an underlying asset at the time the sale is recognized rather than over the leaseback term. The carrying value of unrecognized gains on sale-leaseback transactions executed prior to January 1, 2019 was $21 million , after-tax, and was recorded as an increase to retained income at the date of adoption. Accounting for Hedging Activities Effective January 1, 2019 the Company adopted new FASB guidance intended to better align hedge accounting with an organization’s risk management activities. The new guidance expands hedge accounting to nonfinancial and financial risk components and revises the measurement methodologies to better align with an organization’s risk management activities. Separate presentation of hedge ineffectiveness is eliminated with the intention to provide greater transparency to the full impact of hedging by requiring presentation of the results of the hedged item and hedging instrument in a single financial statement line item. In addition, the amendments were designed to reduce complexity by simplifying hedge effectiveness testing. The adoption had no impact on the Company’s results of operations or financial position. Changes to significant accounting policies for leases The Company has certain operating leases for office facilities, computer and office equipment, and transportation vehicles. The Company’s leases have remaining lease terms of 1 year to 11 years, some of which include options to extend the leases for up to 14 years, and some of which include options to terminate the leases within 60 days. The Company determines if an arrangement is a lease at inception. Leases with an initial term less than one year are not recorded on the balance sheet and the lease costs for these leases are recorded on a straight-line basis over the lease term. Operating leases with terms greater than one year, result in a lease liability recorded in other liabilities with a corresponding ROU asset recorded in other assets. As of March 31, 2019, the Company had $572 million in lease liabilities and $474 million in ROU assets. Operating lease liabilities are recognized at the commencement date based on the present value of future minimum lease payments over the lease term. ROU assets are recognized based on the corresponding lease liabilities adjusted for qualifying initial direct costs, prepaid or accrued lease payments and unamortized lease incentives. As most of the Company’s leases do not disclose the implicit interest rate, the Company uses collateralized incremental borrowing rates based on information available at lease commencement when determining the present value of future lease payments. The Company has lease agreements with lease and non-lease components, which are generally accounted for as a single lease. Lease terms may include options to extend or terminate the lease which are incorporated into the Company’s measurements when it is reasonably certain that the Company will exercise the option. Operating lease costs are recognized on a straight-line basis over the lease term and include interest expense on the lease liability and amortization of the ROU asset. Variable lease costs are expensed as incurred and include maintenance costs and real estate taxes. Lease costs are reported in operating costs and expenses and totaled $41 million , including $7 million of variable lease costs in first quarter 2019. Other information related to operating leases As of March 31, 2019 Weighted average remaining lease term (years) 6 Weighted average discount rate 3.27 % Maturity of lease liabilities ($ in millions) Operating leases 2019 (1) $ 85 2020 135 2021 104 2022 86 2023 71 2024 55 Thereafter 104 Total lease payments (2) $ 640 Less: interest (68 ) Present value of lease liabilities $ 572 (1) Excludes maturity of lease liabilities for the three months ended March 31, 2019. (2) Excludes operating leases that have not yet commenced of $11 million as of March 31, 2019. Pending accounting standards Measurement of Credit Losses on Financial Instruments In June 2016, the FASB issued guidance which revises the credit loss recognition criteria for certain financial assets measured at amortized cost, including reinsurance recoverables. The new guidance replaces the existing incurred loss recognition model with an expected loss recognition model. The objective of the expected credit loss model is for a reporting entity to recognize its estimate of expected credit losses for affected financial assets in a valuation allowance that when deducted from the amortized cost basis of the related financial assets results in a net carrying value of affected financial assets at the amount expected to be collected. The reporting entity must consider all relevant information available when estimating expected credit losses, including details about past events, current conditions, and reasonable and supportable forecasts over the life of an asset. Financial assets may be evaluated individually or on a pooled basis when they share similar risk characteristics. The measurement of credit losses for available-for-sale debt securities measured at fair value is not affected except that credit losses recognized are limited to the amount by which fair value is below amortized cost and the carrying value adjustment is recognized through a valuation allowance which may change over time but once recorded cannot subsequently be reduced to an amount below zero. The guidance is effective for reporting periods beginning after December 15, 2019, and for most affected instruments must be adopted using a modified retrospective approach, with a cumulative effect adjustment recorded to beginning retained income. The impact of adoption is not expected to be material to the Company’s results of operations or financial position. Changes to the Disclosure Requirements for Defined Benefit Plans In August 2018, the FASB issued amendments to modify certain disclosure requirements for defined benefit plans. Disclosure additions relate to the weighted-average interest crediting rates for cash balance plans and other plans with interest crediting rates and explanations for significant gains and losses related to changes in the benefit obligation for the period. Disclosures to be removed include those that identify amounts that are expected to be reclassified out of AOCI and into the income statement in the coming year and the anticipated impact of a one-percentage point change in assumed health care cost trend rate on service and interest cost and on the accumulated benefit obligation. The amendments are effective for annual reporting periods beginning after December 15, 2020. The impacts of adoption are to the Company’s disclosures only. Accounting for Long-Duration Insurance Contracts In August 2018, the FASB issued guidance revising the accounting for certain long-duration insurance contracts. The new guidance changes the measurement of the Company’s reserves for traditional life, life-contingent immediate annuities and certain voluntary accident and health insurance products. Under the new guidance, measurement assumptions, including those for mortality, morbidity and policy terminations, will be required to be reviewed and updated at least annually. The effect of updating measurement assumptions other than the discount rate are required to be measured on a retrospective basis and reported in net income. In addition, cash flows under the new guidance are required to be discounted using an upper-medium grade fixed income instrument yield required to be updated through OCI at each reporting date. These changes will replace current GAAP, which utilizes assumptions set at policy issuance until such time as the assumptions result in reserves that are deficient when compared to reserves computed using current assumptions. Under current GAAP, premium deficiency reserves are recognized when a reserve deficiency is computed using current assumptions. The new guidance requires deferred policy acquisition costs (“DAC”) and other capitalized balances currently amortized in proportion to premiums or gross profits to be amortized on a constant level basis over the expected term for all long-duration insurance contracts. DAC will not be subject to loss recognition testing but will be reduced when actual experience exceeds expected experience. The new guidance will no longer require adjustments to DAC and deferred sales inducement costs (“DSI”) related to unrealized gains and losses on investment securities supporting the related business. Market risk benefit product features are required to be measured at fair value with changes in fair value recorded in net income with the exception of changes in the fair value attributable to changes in the reporting entity’s own credit risk, which are required to be recognized in OCI. Substantially all of the Company’s market risk benefits are reinsured and therefore these impacts are not expected to be material to the Company. The new guidance is to be included in the comparable financial statements issued in reporting periods beginning after December 15, 2020, thereby requiring restatement of prior periods presented. Early adoption is permitted. The new guidance will be applied to affected contracts and DAC on the basis of existing carrying amounts at the earliest period presented or retrospectively using actual historical experience as of contract inception. The new guidance for market risk benefits is required to be adopted retrospectively. The Company is evaluating the anticipated impacts of applying the new guidance to both retained income and AOCI. While the requirements of the new guidance represent a material change from existing GAAP, the underlying economics of the business and related cash flows are unchanged. The Company has not completed its evaluation of the specific impacts of adopting the new guidance, but anticipates the financial statement impact of migrating from existing GAAP to that required by the new guidance to be material, largely attributed to the impact of transitioning from an original investment-based discount rate to one based on an upper-medium grade fixed income investment yield and updates to mortality assumptions previously locked in at issuance and subject to premium deficiency testing. The Company expects the most significant impacts will occur in the run-off annuity segment. The revised accounting for DAC will be applied prospectively using the new model and any DAC effects existing in AOCI as a result of applying existing GAAP at the date of adoption will be reversed. Codification Improvements related to Credit Losses, Derivatives and Hedging, and Financial Instruments In April 2019, the FASB issued Codification Improvements related to Credit Losses, Derivatives and Hedging, and Financial Instruments. The guidance for Credit Losses and Financial Instruments is effective for reporting periods beginning after December 15, 2019. The guidance for Derivatives and Hedging is effective January 1, 2020. The Company is in the process of evaluating the impact of adoption, which is not expected to be material to the Company’s results of operations or financial position. Change in accounting principle The Company changed its accounting principle for recognizing actuarial gains and losses and expected return on plan assets for its pension and other postretirement plans to a more preferable policy under U.S. GAAP. Under the new principle, remeasurement of projected benefit obligation and plan assets are immediately recognized in earnings and are referred to as pension and other postretirement remeasurement gains and losses on the Condensed Consolidated Statements of Operations. Previously, actuarial gains and losses and differences between the expected and actual returns on plan assets were recognized as a component of AOCI, and were subject to amortization into earnings in future periods. This change has been applied on a retrospective basis . The Company’s policy is to remeasure its pension and postretirement plans on a quarterly basis. D ifferences between expected and actual returns and changes in assumptions affect our pension and other postretirement obligations, plan assets and expenses. The primary factors contributing to pension and other postretirement remeasurement gains and losses are 1) changes in the discount rate used to value pension and postretirement obligations as of the measurement date, 2) differences between the expected and the actual return on plan assets, 3) changes in demographic assumptions, including mortality, and 4) participant experience different from demographic assumptions. The Company also changed its policy for recognizing expected returns on plan assets by eliminating the permitted accounting practice allowing the five-year smoothing of equity returns and moving to an unadjusted fair value method. The Company believes that immediately recognizing remeasurement of projected benefit obligation and plan assets in earnings is preferable as it provides greater transparency of the Company’s economic obligations in accounting results and better aligns with fair value accounting principles by recognizing the effects of economic and interest rate changes on pension and other postretirement plan assets and liabilities in the year in which the gains and losses are incurred. These changes have been applied on a retrospective basis and as of January 1, 2018 resulted in a cumulative effect decrease to retained income of $1.58 billion , with a corresponding offset to AOCI and had no impact on total shareholders’ equity. Pension and other postretirement service cost, interest cost, expected return on plan assets and amortization of prior service credits are allocated to the Company’s reportable segments. The pension and other postretirement remeasurement gains and losses are now reported in the Corporate and Other segment. The impacts of the adjustments on the financial statements are summarized in the following tables. Condensed Consolidated Statements of Operations (unaudited) Previous accounting principle Impact of change As reported ($ in millions, except per share data) Three months ended March 31, 2019 Property and casualty insurance claims and claims expense $ 5,829 $ (9 ) $ 5,820 Operating costs and expenses 1,388 (8 ) 1,380 Pension and other postretirement remeasurement gains and losses — 15 15 Restructuring and related charges 22 (4 ) 18 Total costs and expenses 9,377 (6 ) 9,371 Income from operations before income tax expense 1,614 6 1,620 Income tax expense 327 1 328 Net income 1,287 5 1,292 Net income applicable to common shareholders $ 1,256 $ 5 $ 1,261 Earnings per common share: Net income applicable to common shareholders per common share - Basic $ 3.78 $ 0.01 $ 3.79 Net income applicable to common shareholders per common share - Diluted $ 3.72 $ 0.02 $ 3.74 Condensed Consolidated Statements of Operations (unaudited) Previously reported Impact of change As adjusted ($ in millions, except per share data) Three months ended March 31, 2018 Property and casualty insurance claims and claims expense $ 5,149 $ (20 ) $ 5,129 Operating costs and expenses 1,333 (30 ) 1,303 Pension and other postretirement remeasurement gains and losses — 14 14 Restructuring and related charges 22 (3 ) 19 Total costs and expenses 8,547 (39 ) 8,508 Income from operations before income tax expense 1,224 39 1,263 Income tax expense 249 8 257 Net income 975 31 1,006 Net income applicable to common shareholders $ 946 $ 31 $ 977 Earnings per common share: Net income applicable to common shareholders per common share - Basic $ 2.67 $ 0.09 $ 2.76 Net income applicable to common shareholders per common share - Diluted $ 2.63 $ 0.08 $ 2.71 Condensed Consolidated Statements of Comprehensive Income (unaudited) Previous accounting principle Impact of change As reported ($ in millions) Three months ended March 31, 2019 Net income $ 1,287 $ 5 $ 1,292 Other comprehensive income (loss), after-tax Changes in: Unrealized net capital gains and losses 974 — 974 Unrealized foreign currency translation adjustments 7 (2 ) 5 Unrecognized pension and other postretirement benefit cost (1) 10 (22 ) (12 ) Other comprehensive income (loss), after-tax 991 (24 ) 967 Comprehensive income $ 2,278 $ (19 ) $ 2,259 (1) Financial statement line item has been updated to “ Unamortized pension and other postretirement prior service credit ”. Condensed Consolidated Statements of Comprehensive Income (unaudited) Previously reported Impact of change As adjusted ($ in millions) Three months ended March 31, 2018 Net income $ 975 $ 31 $ 1,006 Other comprehensive loss, after-tax Changes in: Unrealized net capital gains and losses (565 ) — (565 ) Unrealized foreign currency translation adjustments (4 ) 2 (2 ) Unrecognized pension and other postretirement benefit cost 23 (37 ) (14 ) Other comprehensive loss, after-tax (546 ) (35 ) (581 ) Comprehensive income $ 429 $ (4 ) $ 425 Condensed Consolidated Statements of Financial Position (unaudited) Previous accounting principle Impact of change As reported ($ in millions) March 31, 2019 Deferred income taxes $ 822 $ (5 ) $ 817 Other liabilities and accrued expenses 8,953 24 8,977 Total liabilities 92,397 19 92,416 Retained income 46,818 (1,670 ) 45,148 Unrealized foreign currency translation adjustments (57 ) 13 (44 ) Unrecognized pension and other postretirement benefit cost (1) (1,481 ) 1,638 157 Total AOCI (566 ) 1,651 1,085 Total shareholders’ equity $ 23,437 $ (19 ) $ 23,418 Condensed Consolidated Statements of Financial Position (unaudited) Previously reported Impact of change As adjusted ($ in millions) December 31, 2018 Retained income $ 45,708 $ (1,675 ) $ 44,033 Unrealized foreign currency translation adjustments (64 ) 15 (49 ) Unrecognized pension and other postretirement benefit cost (1,491 ) 1,660 169 Total AOCI $ (1,557 ) $ 1,675 $ 118 Condensed Consolidated Statements of Shareholders’ Equity (unaudited) Previous accounting principle Impact of change As reported ($ in millions) Three months ended March 31, 2019 Retained income Balance, beginning of period $ 45,708 $ (1,675 ) $ 44,033 Cumulative effect of change in accounting principle 21 — 21 Net income 1,287 5 1,292 Dividends on common stock (167 ) — (167 ) Dividends on preferred stock (31 ) — (31 ) Balance, end of period 46,818 (1,670 ) 45,148 Accumulated other comprehensive income (loss) Balance, beginning of period (1,557 ) 1,675 118 Cumulative effect of change in accounting principle — — — Change in unrealized net capital gains and losses 974 — 974 Change in unrealized foreign currency translation adjustments 7 (2 ) 5 Change in unrecognized pension and other postretirement benefit cost (1) 10 (22 ) (12 ) Balance, end of period (566 ) 1,651 1,085 Total shareholders’ equity $ 23,437 $ (19 ) $ 23,418 (1) Financial statement line item has been updated to “ Change in unamortized pension and other postretirement prior service credit ”. Condensed Consolidated Statements of Shareholders’ Equity (unaudited) Previously reported Impact of change As adjusted ($ in millions) Three months ended March 31, 2018 Retained income Balance, beginning of period $ 43,162 $ (1,583 ) $ 41,579 Cumulative effect of change in accounting principle 1,088 — 1,088 Net income 975 31 1,006 Dividends on common stock (165 ) — (165 ) Dividends on preferred stock (29 ) — (29 ) Balance, end of period 45,031 (1,552 ) 43,479 Accumulated other comprehensive income (loss) Balance, beginning of period 306 1,583 1,889 Cumulative effect of change in accounting principle (910 ) — (910 ) Change in unrealized net capital gains and losses (565 ) — (565 ) Change in unrealized foreign currency translation adjustments (4 ) 2 (2 ) Change in unrecognized pension and other postretirement benefit cost 23 (37 ) (14 ) Balance, end of period (1,150 ) 1,548 398 Total shareholders’ equity $ 23,277 $ (4 ) $ 23,273 Condensed Consolidated Statements of Cash Flows (unaudited) Previous accounting principle Impact of change As reported ($ in millions) Three months ended March 31, 2019 Cash flows from operating activities Net income $ 1,287 $ 5 $ 1,292 Adjustments to reconcile net income to net cash provided by operating activities: Pension and other postretirement remeasurement gains and losses — 15 15 Income taxes 302 1 303 Other operating assets and liabilities (389 ) (21 ) (410 ) Net cash provided by operating activities $ 714 $ — $ 714 Condensed Consolidated Statements of Cash Flows (unaudited) Previously reported Impact of change As adjusted ($ in millions) Three months ended March 31, 2018 Cash flows from operating activities Net income $ 975 $ 31 $ 1,006 Adjustments to reconcile net income to net cash provided by operating activities: Pension and other postretirement remeasurement gains and losses — 14 14 Income taxes 181 8 189 Other operating assets and liabilities (318 ) (53 ) (371 ) Net cash provided by operating activities $ 626 $ — $ 626 |
Earnings per Common Share
Earnings per Common Share | 3 Months Ended |
Mar. 31, 2019 | |
Earnings Per Share [Abstract] | |
Earnings per Common Share | Note 2 Earnings per Common Share Basic earnings per common share is computed using the weighted average number of common shares outstanding, including vested unissued participating restricted stock units. Diluted earnings per common share is computed using the weighted average number of common and dilutive potential common shares outstanding. For the Company, dilutive potential common shares consist of outstanding stock options and unvested non-participating restricted stock units and contingently issuable performance stock awards. Computation of basic and diluted earnings per common share ($ in millions, except per share data) Three months ended March 31, 2019 2018 Numerator: Net income $ 1,292 $ 1,006 Less: Preferred stock dividends 31 29 Net income applicable to common shareholders $ 1,261 $ 977 Denominator: Weighted average common shares outstanding 332.6 354.1 Effect of dilutive potential common shares: Stock options 3.1 4.1 Restricted stock units (non-participating) and performance stock awards 1.8 1.7 Weighted average common and dilutive potential common shares outstanding 337.5 359.9 Earnings per common share - Basic $ 3.79 $ 2.76 Earnings per common share - Diluted $ 3.74 $ 2.71 The effect of dilutive potential common shares does not include the effect of options with an anti-dilutive effect on earnings per common share because their exercise prices exceed the average market price of Allstate common shares during the period or for which the unrecognized compensation cost would have an anti-dilutive effect. Options to purchase 4.0 million and 1.0 million Allstate common shares were outstanding for the three month periods ended March 31, 2019 and 2018 |
Acquisitions
Acquisitions | 3 Months Ended |
Mar. 31, 2019 | |
Business Combinations [Abstract] | |
Acquisitions | Note 3 Acquisitions iCracked On February 12, 2019, the Company acquired iCracked Inc. (“iCracked”) which offers on-site, on-demand repair services for smartphones and tablets in North America, supporting SquareTrade’s operations. In conjunction with the iCracked acquisition, the Company recorded goodwill of $17 million . PlumChoice On November 30, 2018, the Company acquired PlumChoice, Inc. (“PlumChoice”) for $30 million in cash to provide technical support services to SquareTrade’s customers and small businesses. In conjunction with the PlumChoice acquisition, the Company recorded goodwill of $23 million . InfoArmor On October 5, 2018, the Company acquired InfoArmor, Inc. (“InfoArmor”), a leading provider of identity protection in the employee benefits market, for $525 million in cash. InfoArmor primarily offers identity protection to employees and their family members through voluntary benefit programs at over 1,400 firms, including more than 100 of the Fortune 500 companies. Starting in the fourth quarter of 2018, the Service Businesses segment includes the results of InfoArmor. In connection with the InfoArmor acquisition, the Company recorded goodwill of $318 million and intangible assets of $257 million . The intangible assets include $225 million and $32 million |
Reportable Segments
Reportable Segments | 3 Months Ended |
Mar. 31, 2019 | |
Segment Reporting [Abstract] | |
Reportable Segments | Note 4 Reportable Segments Change in accounting principle As discussed in Note 1, the Company changed its accounting principle for recognizing actuarial gains and losses and expected return on plan assets for its pension and other postretirement plans to a more preferable policy under U.S. GAAP. Under the new principle, remeasurement of projected benefit obligation and plan assets are immediately recognized through earnings and are referred to as pension and other postretirement remeasurement gains and losses on the Condensed Consolidated Statements of Operations. This change has been applied on a retrospective basis . See Note 1 for further information regarding the impact of the change in accounting principle on the consolidated financial statements. Measuring segment profit or loss The measure of segment profit or loss used in evaluating performance is underwriting income for the Allstate Protection and Discontinued Lines and Coverages segments and adjusted net income for the Service Businesses, Allstate Life, Allstate Benefits, Allstate Annuities, and Corporate and Other segments. A reconciliation of these measures to net income applicable to common shareholders is provided below. Underwriting income is calculated as premiums earned and other revenue, less claims and claims expenses (“losses”), amortization of DAC, operating costs and expenses, amortization of purchased intangible assets and restructuring and related charges as determined using GAAP. Adjusted net income is net income applicable to common shareholders, excluding: • Realized capital gains and losses, after-tax, except for periodic settlements and accruals on non-hedge derivative instruments, which are reported with realized capital gains and losses but included in adjusted net income • Pension and other postretirement remeasurement gains and losses, after-tax • Valuation changes on embedded derivatives not hedged, after-tax • Amortization of DAC and DSI, to the extent they resulted from the recognition of certain realized capital gains and losses or valuation changes on embedded derivatives not hedged, after-tax • Business combination expenses and the amortization of purchased intangible assets, after-tax • Gain (loss) on disposition of operations, after-tax • Adjustments for other significant non-recurring, infrequent or unusual items, when (a) the nature of the charge or gain is such that it is reasonably unlikely to recur within two years, or (b) there has been no similar charge or gain within the prior two years Reportable segments revenue information ($ in millions) Three months ended March 31, 2019 2018 Property-Liability Insurance premiums Auto $ 5,930 $ 5,591 Homeowners 1,935 1,848 Other personal lines 459 444 Commercial lines 183 136 Allstate Protection 8,507 8,019 Discontinued Lines and Coverages — — Total property-liability insurance premiums 8,507 8,019 Other revenue 176 174 Net investment income 291 337 Realized capital gains and losses 497 (95 ) Total Property-Liability 9,471 8,435 Service Businesses Consumer product protection plans 145 123 Roadside assistance 63 64 Finance and insurance products 87 80 Intersegment premiums and service fees (1) 33 29 Other revenue 47 16 Net investment income 9 5 Realized capital gains and losses 8 (4 ) Total Service Businesses 392 313 Allstate Life Traditional life insurance premiums 154 146 Interest-sensitive life insurance contract charges 183 181 Other revenue 27 26 Net investment income 127 122 Realized capital gains and losses (5 ) (3 ) Total Allstate Life 486 472 Allstate Benefits Traditional life insurance premiums 9 9 Accident and health insurance premiums 250 248 Interest-sensitive life insurance contract charges 29 29 Net investment income 19 19 Realized capital gains and losses 4 (2 ) Total Allstate Benefits 311 303 Allstate Annuities Fixed annuities contract charges 3 3 Net investment income 190 290 Realized capital gains and losses 156 (29 ) Total Allstate Annuities 349 264 Corporate and Other Net investment income 12 13 Realized capital gains and losses 2 (1 ) Total Corporate and Other 14 12 Intersegment eliminations (1) (33 ) (29 ) Consolidated revenues $ 10,990 $ 9,770 (1) Intersegment insurance premiums and service fees are primarily related to Arity and Allstate Roadside Services and are eliminated in the condensed consolidated financial statements. Reportable segments financial performance Three months ended March 31, ($ in millions) 2019 2018 Property-Liability Allstate Protection $ 703 $ 1,008 Discontinued Lines and Coverages (3 ) (3 ) Total underwriting income 700 1,005 Net investment income 291 337 Income tax expense on operations (202 ) (277 ) Realized capital gains and losses, after-tax 393 (75 ) Property-Liability net income applicable to common shareholders 1,182 990 Service Businesses Adjusted net income (loss) 11 (3 ) Realized capital gains and losses, after-tax 7 (3 ) Amortization of purchased intangible assets, after-tax (24 ) (16 ) Service Businesses net loss applicable to common shareholders (6 ) (22 ) Allstate Life Adjusted net income 73 71 Realized capital gains and losses, after-tax (4 ) (2 ) DAC and DSI amortization related to realized capital gains and losses, after-tax (2 ) (2 ) Allstate Life net income applicable to common shareholders 67 67 Allstate Benefits Adjusted net income 31 29 Realized capital gains and losses, after-tax 3 (2 ) Allstate Benefits net income applicable to common shareholders 34 27 Allstate Annuities Adjusted net (loss) income (25 ) 35 Realized capital gains and losses, after-tax 124 (23 ) Valuation changes on embedded derivatives not hedged, after-tax (3 ) 4 Gain on disposition of operations, after-tax 1 1 Allstate Annuities net income applicable to common shareholders 97 17 Corporate and Other Adjusted net loss (103 ) (90 ) Realized capital gains and losses, after-tax 1 (1 ) Pension and other postretirement remeasurement gains and losses, after-tax (11 ) (11 ) Corporate and Other net loss applicable to common shareholders (113 ) (102 ) Consolidated net income applicable to common shareholders $ 1,261 $ 977 |
Investments
Investments | 3 Months Ended |
Mar. 31, 2019 | |
Investments [Abstract] | |
Investments | Note 5 Investments Amortized cost, gross unrealized gains (losses) and fair value for fixed income securities ($ in millions) Amortized cost Gross unrealized Fair value Gains Losses March 31, 2019 U.S. government and agencies $ 3,775 $ 119 $ (2 ) $ 3,892 Municipal 8,879 393 (8 ) 9,264 Corporate 41,943 998 (242 ) 42,699 Foreign government 732 21 (1 ) 752 Asset-backed securities (“ABS”) 1,060 7 (9 ) 1,058 Residential mortgage-backed securities (“RMBS”) 354 89 (1 ) 442 Commercial mortgage-backed securities (“CMBS”) 67 7 (1 ) 73 Redeemable preferred stock 21 1 — 22 Total fixed income securities $ 56,831 $ 1,635 $ (264 ) $ 58,202 December 31, 2018 U.S. government and agencies $ 5,386 $ 137 $ (6 ) $ 5,517 Municipal 8,963 249 (43 ) 9,169 Corporate 40,536 490 (890 ) 40,136 Foreign government 739 13 (5 ) 747 ABS 1,049 6 (10 ) 1,045 RMBS 377 89 (2 ) 464 CMBS 63 8 (1 ) 70 Redeemable preferred stock 21 1 — 22 Total fixed income securities $ 57,134 $ 993 $ (957 ) $ 57,170 Scheduled maturities for fixed income securities ($ in millions) As of March 31, 2019 Amortized cost Fair value Due in one year or less $ 3,309 $ 3,324 Due after one year through five years 26,701 26,996 Due after five years through ten years 16,622 16,946 Due after ten years 8,718 9,363 55,350 56,629 ABS, RMBS and CMBS 1,481 1,573 Total $ 56,831 $ 58,202 Actual maturities may differ from those scheduled as a result of calls and make-whole payments by the issuers. ABS, RMBS and CMBS are shown separately because of the potential for prepayment of principal prior to contractual maturity dates. Net investment income ($ in millions) Three months ended March 31, 2019 2018 Fixed income securities $ 538 $ 508 Equity securities 30 34 Mortgage loans 53 51 Limited partnership interests 9 180 Short-term investments 26 12 Other 63 66 Investment income, before expense 719 851 Investment expense (71 ) (65 ) Net investment income $ 648 $ 786 Realized capital gains (losses) by asset type ($ in millions) Three months ended March 31, 2019 2018 Fixed income securities $ 64 $ (43 ) Equity securities 553 (93 ) Limited partnership interests 72 10 Derivatives (46 ) (8 ) Other 19 — Realized capital gains and losses $ 662 $ (134 ) Realized capital gains (losses) by transaction type ($ in millions) Three months ended March 31, 2019 2018 Impairment write-downs $ (14 ) $ (1 ) Change in intent write-downs — — Net OTTI losses recognized in earnings (14 ) (1 ) Sales 95 (42 ) Valuation of equity investments (1) 627 (83 ) Valuation and settlements of derivative instruments (46 ) (8 ) Realized capital gains and losses $ 662 $ (134 ) (1) Includes valuation of equity securities and certain limited partnership interests where the underlying assets are predominately public equity securities. Sales of fixed income securities resulted in gross gains of $126 million and $45 million and gross losses of $60 million and $87 million during the three months ended March 31, 2019 and March 31, 2018 , respectively. The following table presents the net pre-tax appreciation (decline) during 2019 and 2018 of equity securities and limited partnership interests carried at fair value still held as of March 31, 2019 and March 31, 2018 recognized in net income. Net appreciation (decline) recognized in net income ($ in millions) Three months ended March 31, 2019 2018 Equity securities $ 496 $ (49 ) Limited partnership interests carried at fair value (33 ) 78 Total $ 463 $ 29 OTTI losses by asset type ($ in millions) Three months ended Three months ended March 31, 2019 March 31, 2018 Gross Included in OCI Net Gross Included in OCI Net Fixed income securities: Corporate (2 ) 2 — — — — ABS (2 ) 1 (1 ) — — — RMBS — (1 ) (1 ) — — — CMBS — — — — (1 ) (1 ) Total fixed income securities (4 ) 2 (2 ) — (1 ) (1 ) Limited partnership interests (1 ) — (1 ) — — — Other (11 ) — (11 ) — — — OTTI losses $ (16 ) $ 2 $ (14 ) $ — $ (1 ) $ (1 ) OTTI losses included in AOCI at the time of impairment for fixed income securities which were not included in earnings ($ in millions) March 31, 2019 December 31, 2018 Municipal $ (5 ) $ (5 ) Corporate (3 ) (2 ) ABS (11 ) (10 ) RMBS (64 ) (67 ) CMBS (2 ) (2 ) Total $ (85 ) $ (86 ) The amounts exclude $178 million and $180 million as of March 31, 2019 and December 31, 2018 , respectively, of net unrealized gains related to changes in valuation of the fixed income securities subsequent to the impairment measurement date. Rollforward of the cumulative credit losses recognized in earnings for fixed income securities held as of March 31, ($ in millions) Three months ended March 31, 2019 2018 Beginning balance $ (204 ) $ (226 ) Additional credit loss for securities previously other-than-temporarily impaired (2 ) (1 ) Reduction in credit loss for securities disposed or collected 4 15 Ending balance $ (202 ) $ (212 ) The Company uses its best estimate of future cash flows expected to be collected from the fixed income security, discounted at the security’s original or current effective rate, as appropriate, to calculate a recovery value and determine whether a credit loss exists. The determination of cash flow estimates is inherently subjective and methodologies may vary depending on facts and circumstances specific to the security. All reasonably available information relevant to the collectability of the security, including past events, current conditions, and reasonable and supportable assumptions and forecasts, are considered when developing the estimate of cash flows expected to be collected. That information generally includes, but is not limited to, the remaining payment terms of the security, prepayment speeds, foreign exchange rates, the financial condition and future earnings potential of the issue or issuer, expected defaults, expected recoveries, the value of underlying collateral, vintage, geographic concentration of underlying collateral, available reserves or escrows, current subordination levels, third party guarantees and other credit enhancements. Other information, such as industry analyst reports and forecasts, sector credit ratings, financial condition of the bond insurer for insured fixed income securities, and other market data relevant to the realizability of contractual cash flows, may also be considered. The estimated fair value of collateral will be used to estimate recovery value if the Company determines that the security is dependent on the liquidation of collateral for ultimate settlement. If the estimated recovery value is less than the amortized cost of the security, a credit loss exists and an OTTI for the difference between the estimated recovery value and amortized cost is recorded in earnings. The portion of the unrealized loss related to factors other than credit remains classified in AOCI. If the Company determines that the fixed income security does not have sufficient cash flow or other information to estimate a recovery value for the security, the Company may conclude that the entire decline in fair value is deemed to be credit related and the loss is recorded in earnings. Unrealized net capital gains and losses included in AOCI ($ in millions) Fair value Gross unrealized Unrealized net gains (losses) March 31, 2019 Gains Losses Fixed income securities $ 58,202 $ 1,635 $ (264 ) $ 1,371 Short-term investments 4,157 — — — Derivative instruments — — (3 ) (3 ) Unrealized net capital gains and losses, pre-tax 1,368 Amounts recognized for: Insurance reserves (1) (8 ) DAC and DSI (2) (124 ) Amounts recognized (132 ) Deferred income taxes (264 ) Unrealized net capital gains and losses, after-tax $ 972 (1) The insurance reserves adjustment represents the amount by which the reserve balance would increase if the net unrealized gains in the applicable product portfolios were realized and reinvested at lower interest rates, resulting in a premium deficiency. This adjustment primarily relates to structured settlement annuities with life contingencies (a type of immediate fixed annuities). (2) 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. Unrealized net capital gains and losses included in AOCI ($ in millions) Fair value Gross unrealized Unrealized net gains (losses) December 31, 2018 Gains Losses Fixed income securities $ 57,170 $ 993 $ (957 ) $ 36 Short-term investments 3,027 — — — Derivative instruments — — (3 ) (3 ) Unrealized net capital gains and losses, pre-tax 33 Amounts recognized for: Insurance reserves — DAC and DSI (33 ) Amounts recognized (33 ) Deferred income taxes (2 ) Unrealized net capital gains and losses, after-tax $ (2 ) Change in unrealized net capital gains (losses) ($ in millions) Three months ended March 31, 2019 Fixed income securities $ 1,335 Derivative instruments — Total 1,335 Amounts recognized for: Insurance reserves (8 ) DAC and DSI (91 ) Amounts recognized (99 ) Deferred income taxes (262 ) Increase in unrealized net capital gains and losses, after-tax $ 974 Portfolio monitoring The Company has a comprehensive portfolio monitoring process to identify and evaluate each fixed income security whose carrying value may be other-than-temporarily impaired . For each fixed income security in an unrealized loss position, the Company assesses whether management with the appropriate authority has made the decision to sell or whether it is more likely than not the Company will be required to sell the security before recovery of the amortized cost basis for reasons such as liquidity, contractual or regulatory purposes. If a security meets either of these criteria, the security’s decline in fair value is considered other than temporary and is recorded in earnings. If the Company has not made the decision to sell the fixed income security and it is not more likely than not the Company will be required to sell the fixed income security before recovery of its amortized cost basis, the Company evaluates whether it expects to receive cash flows sufficient to recover the entire amortized cost basis of the security. The Company calculates the estimated recovery value by discounting the best estimate of future cash flows at the security’s original or current effective rate, as appropriate, and compares this to the amortized cost of the security. If the Company does not expect to receive cash flows sufficient to recover the entire amortized cost basis of the fixed income security, the credit loss component of the impairment is recorded in earnings, with the remaining amount of the unrealized loss related to other factors recognized in OCI. The Company’s portfolio monitoring process includes a quarterly review of all securities to identify instances where the fair value of a security compared to its amortized cost is below established thresholds. The process also includes the monitoring of other impairment indicators such as ratings, ratings downgrades and payment defaults. The securities identified, in addition to other securities for which the Company may have a concern, are evaluated for potential OTTI using all reasonably available information relevant to the collectability or recovery of the security. Inherent in the Company’s evaluation of OTTI for these securities are assumptions and estimates about the financial condition and future earnings potential of the issue or issuer. Some of the factors that may be considered in evaluating whether a decline in fair value is other than temporary are: 1) the financial condition, near-term and long-term prospects of the issue or issuer, including relevant industry specific market conditions and trends, geographic location and implications of rating agency actions and offering prices; 2) the specific reasons that a security is in an unrealized loss position, including overall market conditions which could affect liquidity; and 3) the length of time and extent to which the fair value has been less than amortized cost. Gross unrealized losses and fair value by type and length of time held in a continuous unrealized loss position ($ in millions) Less than 12 months 12 months or more Total unrealized losses Number of issues Fair value Unrealized losses Number of issues Fair value Unrealized losses March 31, 2019 Fixed income securities U.S. government and agencies 9 $ 112 $ — 39 $ 259 $ (2 ) $ (2 ) Municipal 102 208 — 600 742 (8 ) (8 ) Corporate 304 3,249 (42 ) 807 10,382 (200 ) (242 ) Foreign government — — — 11 218 (1 ) (1 ) ABS 36 283 (4 ) 34 146 (5 ) (9 ) RMBS 81 12 — 194 49 (1 ) (1 ) CMBS 4 11 (1 ) 1 — — (1 ) Total fixed income securities 536 $ 3,875 $ (47 ) 1,686 $ 11,796 $ (217 ) $ (264 ) Investment grade fixed income securities 404 $ 3,077 $ (22 ) 1,550 $ 10,853 $ (170 ) $ (192 ) Below investment grade fixed income securities 132 798 (25 ) 136 943 (47 ) (72 ) Total fixed income securities 536 $ 3,875 $ (47 ) 1,686 $ 11,796 $ (217 ) $ (264 ) December 31, 2018 Fixed income securities U.S. government and agencies 11 $ 55 $ — 38 $ 364 $ (6 ) $ (6 ) Municipal 943 1,633 (10 ) 1,147 1,554 (33 ) (43 ) Corporate 1,735 19,243 (543 ) 645 8,374 (347 ) (890 ) Foreign government 7 20 (1 ) 27 412 (4 ) (5 ) ABS 64 454 (5 ) 28 161 (5 ) (10 ) RMBS 166 30 — 195 52 (2 ) (2 ) CMBS 3 7 — 2 — (1 ) (1 ) Redeemable preferred stock 1 — — — — — — Total fixed income securities 2,930 $ 21,442 $ (559 ) 2,082 $ 10,917 $ (398 ) $ (957 ) Investment grade fixed income securities 2,348 $ 17,485 $ (331 ) 2,021 $ 10,626 $ (360 ) $ (691 ) Below investment grade fixed income securities 582 3,957 (228 ) 61 291 (38 ) (266 ) Total fixed income securities 2,930 $ 21,442 $ (559 ) 2,082 $ 10,917 $ (398 ) $ (957 ) As of March 31, 2019 , $231 million of the $264 million unrealized losses are related to securities with an unrealized loss position less than 20% of amortized cost, the degree of which suggests that these securities do not pose a high risk of being other-than-temporarily impai red. Of the $ 231 million , $ 179 million are related to unrea lized losses on investment grade fixed income securities. Of the remaining $52 million , $21 million have been in an unrealized loss position for less than 12 months. Investment grade is defined as a security having a rating of Aaa, Aa, A or Baa from Moody’s, a rating of AAA, AA, A or BBB from S&P Global Ratings (“S&P”), a comparable rating from another nationally recognized rating agency, or a comparable internal rating if an externally provided rating is not available. Market prices for certain securities may have credit spreads which imply higher or lower credit quality than the current third party rating. Unrealized losses on investment grade securities are principally related to an increase in market yields which may include increased risk-free interest rates and/or wider credit spreads since the time of initial purchase. T he unrealized losses are expected to reverse as the securities approach maturity . As of March 31, 2019 , the remaining $ 33 million of unrealized losses are related to securities in unrealized loss positions greater than or equal to 20% of amortized cost. Investment grade fixed income securities comprising $ 13 million of these unrealized losses were evaluated based on factors such as discounted cash flows and the financial condition and near-term and long-term prospects of the issue or issuer and were determined to have adequate resources to fulfill contractual obligations. Of the $ 33 million , $ 20 million are related to below investment grade fixed income securities. Of these amounts, $2 million are related to below investment grade fixed income securities that had been in an unrealized loss position greater than or equal to 20% of amortized cost for a period of twelve or more consecutive months as of March 31, 2019 . ABS, RMBS and CMBS in an unrealized loss position were evaluated based on actual and projected collateral losses relative to the securities’ positions in the respective securitization trusts, security specific expectations of cash flows, and credit ratings. This evaluation also takes into consideration credit enhancement, measured in terms of (i) subordination from other classes of securities in the trust that are contractually obligated to absorb losses before the class of security the Company owns, and (ii) the expected impact of other structural features embedded in the securitization trust beneficial to the class of securities the Company owns, such as overcollateralization and excess spread. Municipal bonds in an unrealized loss position were evaluated based on the underlying credit quality of the primary obligor, obligation type and quality of the underlying assets. As of March 31, 2019 , the Company has not made the decision to sell and it is not more likely than not the Company will be required to sell fixed income securities with unrealized losses before recovery of the amortized cost basis. Limited partnerships Investments in limited partnership interests include interests in private equity funds, real estate funds and other funds. As of March 31, 2019 and December 31, 2018 , the carrying value of equity method of accounting limited partnerships totaled $5.76 billion and $5.73 billion , respectively, and limited partnerships carried at fair value totaled $1.74 billion and $1.78 billion , respectively. Mortgage loans Mortgage loans are evaluated for impairment on a specific loan basis through a quarterly credit monitoring process and review of key credit quality indicators. Mortgage loans are considered impaired when it is probable that the Company will not collect the contractual principal and interest. Valuation allowances are established for impaired loans to reduce the carrying value to the fair value of the collateral less costs to sell or the present value of the loan’s expected future repayment cash flows discounted at the loan’s original effective interest rate. Impaired mortgage loans may not have a valuation allowance when the fair value of the collateral less costs to sell is higher than the carrying value. Valuation allowances are adjusted for subsequent changes in the fair value of the collateral less costs to sell or present value of the loan’s expected future repayment cash flows. Mortgage loans are charged off against their corresponding valuation allowances when there is no reasonable expectation of recovery. The impairment evaluation is non-statistical in respect to the aggregate portfolio but considers facts and circumstances attributable to each loan. It is not considered probable that additional impairment losses, beyond those identified on a specific loan basis, have been incurred as of March 31, 2019 . Accrual of income is suspended for mortgage loans that are in default or when full and timely collection of principal and interest payments is not probable. Cash receipts on mortgage loans on non-accrual status are generally recorded as a reduction of carrying value. Debt service coverage ratio is considered a key credit quality indicator when mortgage loans are evaluated for impairment. Debt service coverage ratio represents the amount of estimated cash flows from the property available to the borrower to meet principal and interest payment obligations. Debt service coverage ratio estimates are updated annually or more frequently if conditions are warranted based on the Company’s credit monitoring process. Carrying value of non-impaired mortgage loans summarized by debt service coverage ratio distribution ($ in millions) March 31, 2019 December 31, 2018 Debt service coverage ratio distribution Fixed rate mortgage loans Variable rate mortgage loans Total Fixed rate mortgage loans Variable rate mortgage loans Total Below 1.0 $ 22 $ 31 $ 53 $ 6 $ 31 $ 37 1.0 - 1.25 256 — 256 273 — 273 1.26 - 1.50 1,157 — 1,157 1,192 — 1,192 Above 1.50 3,110 101 3,211 3,063 101 3,164 Total non-impaired mortgage loans $ 4,545 $ 132 $ 4,677 $ 4,534 $ 132 $ 4,666 Mortgage loans with a debt service coverage ratio below 1.0 that are not considered impaired primarily relate to instances where the borrower has the financial capacity to fund the revenue shortfalls from the properties for the foreseeable term, the decrease in cash flows from the properties is considered temporary, or there are other risk mitigating circumstances such as additional collateral, escrow balances or borrower guarantees. Net carrying value of impaired mortgage loans ($ in millions) March 31, 2019 December 31, 2018 Impaired mortgage loans with a valuation allowance $ 4 $ 4 Impaired mortgage loans without a valuation allowance — — Total impaired mortgage loans $ 4 $ 4 Valuation allowance on impaired mortgage loans $ 3 $ 3 The valuation allowance on impaired loans had no activity for the three months ended March 31, 2019 and 2018. The average balance of impaired loans was $4 million for both the three months ended March 31, 2019 and 2018 . Payments on all mortgage loans were current as of March 31, 2019 and December 31, 2018 . Short-term investments Short-term investments, including commercial paper, money market funds, U.S. Treasury bills and other short-term investments, are carried at fair value. As of March 31, 2019 and December 31, 2018 , the fair value of short-term investments totaled $4.16 billion and $3.03 billion , respectively. Other investments Other investments primarily consist of bank loans, policy loans, real estate, agent loans and derivatives. Bank loans are primarily senior secured corporate loans and are carried at amortized cost. Policy loans are carried at unpaid principal balances. Real estate is carried at cost less accumulated depreciation. Agent loans are loans issued to exclusive Allstate agents and are carried at unpaid principal balances, net of valuation allowances and unamortized deferred fees or costs. Derivatives are carried at fair value. Other investments by asset type ($ in millions) March 31, 2019 December 31, 2018 Bank loans $ 1,300 $ 1,350 Policy loans 885 891 Real estate 776 791 Agent loans 639 620 Derivatives and other 186 200 Total $ 3,786 $ 3,852 |
Fair Value of Assets and Liabil
Fair Value of Assets and Liabilities | 3 Months Ended |
Mar. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Assets and Liabilities | Note 6 Fair Value of Assets and Liabilities Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The hierarchy for inputs used in determining fair value maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that observable inputs be used when available. Assets and liabilities recorded on the Condensed Consolidated Statements of Financial Position at fair value are categorized in the fair value hierarchy based on the observability of inputs to the valuation techniques as follows: Level 1: Assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that the Company can access. Level 2: Assets and liabilities whose values are based on the following: (a) Quoted prices for similar assets or liabilities in active markets; (b) Quoted prices for identical or similar assets or liabilities in markets that are not active; or (c) Valuation models whose inputs are observable, directly or indirectly, for substantially the full term of the asset or liability. Level 3: Assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. Unobservable inputs reflect the Company’s estimates of the assumptions that market participants would use in valuing the assets and liabilities. The availability of observable inputs varies by instrument. In situations where fair value is based on internally developed pricing models or inputs that are unobservable in the market, the determination of fair value requires more judgment. The degree of judgment exercised by the Company in determining fair value is typically greatest for instruments categorized in Level 3. In many instances, valuation inputs used to measure fair value fall into different levels of the fair value hierarchy. The category level in the fair value hierarchy is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company uses prices and inputs that are current as of the measurement date, including during periods of market disruption. In periods of market disruption, the ability to observe prices and inputs may be reduced for many instruments. The Company is responsible for the determination of fair value and the supporting assumptions and methodologies. The Company gains assurance that assets and liabilities are appropriately valued through the execution of various processes and controls designed to ensure the overall reasonableness and consistent application of valuation methodologies, including inputs and assumptions, and compliance with accounting standards. For fair values received from third parties or internally estimated, the Company’s processes and controls are designed to ensure that the valuation methodologies are appropriate and consistently applied, the inputs and assumptions are reasonable and consistent with the objective of determining fair value, and the fair values are accurately recorded. For example, on a continuing basis, the Company assesses the reasonableness of individual fair values that have stale security prices or that exceed certain thresholds as compared to previous fair values received from valuation service providers or brokers or derived from internal models. The Company performs procedures to understand and assess the methodologies, processes and controls of valuation service providers. In addition, the Company may validate the reasonableness of fair values by comparing information obtained from valuation service providers or brokers to other third party valuation sources for selected securities. The Company performs ongoing price validation procedures such as back-testing of actual sales, which corroborate the various inputs used in internal models to market observable data. When fair value determinations are expected to be more variable, the Company validates them through reviews by members of management who have relevant expertise and who are independent of those charged with executing investment transactions. The Company has two types of situations where investments are classified as Level 3 in the fair value hierarchy. The first is where specific inputs significant to the fair value estimation models are not market observable. This primarily occurs in the Company’s use of broker quotes to value certain securities where the inputs have not been corroborated to be market observable, and the use of valuation models that use significant non-market observable inputs. The second situation where the Company classifies securities in Level 3 is where quotes continue to be received from independent third-party valuation service providers and all significant inputs are market observable; however, there has been a significant decrease in the volume and level of activity for the asset when compared to normal market activity such that the degree of market observability has declined to a point where categorization as a Level 3 measurement is considered appropriate. The indicators considered in determining whether a significant decrease in the volume and level of activity for a specific asset has occurred include the level of new issuances in the primary market, trading volume in the secondary market, the level of credit spreads over historical levels, applicable bid-ask spreads, and price consensus among market participants and other pricing sources. Certain assets are not carried at fair value on a recurring basis, including investments such as mortgage loans, bank loans, agent loans and policy loans. Accordingly, such investments are only included in the fair value hierarchy disclosure when the investment is subject to remeasurement at fair value after initial recognition and the resulting remeasurement is reflected in the condensed consolidated financial statements. In determining fair value, the Company principally uses the market approach which generally utilizes market transaction data for the same or similar instruments. To a lesser extent, the Company uses the income approach which involves determining fair values from discounted cash flow methodologies. For the majority of Level 2 and Level 3 valuations, a combination of the market and income approaches is used. Summary of significant valuation techniques for assets and liabilities measured at fair value on a recurring basis Level 1 measurements • Fixed income securities: Comprise certain U.S. Treasury fixed income securities. Valuation is based on unadjusted quoted prices for identical assets in active markets that the Company can access. • Equity securities: Comprise actively traded, exchange-listed equity securities. Valuation is based on unadjusted quoted prices for identical assets in active markets that the Company can access. • Short-term: Comprise U.S. Treasury bills valued based on unadjusted quoted prices for identical assets in active markets that the Company can access and actively traded money market funds that have daily quoted net asset values for identical assets that the Company can access. • Separate account assets: Comprise actively traded mutual funds that have daily quoted net asset values that are readily determinable for identical assets that the Company can access. Net asset values for the actively traded mutual funds in which the separate account assets are invested are obtained daily from the fund managers. Level 2 measurements • Fixed income securities: U.S. government and agencies: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields and credit spreads. Municipal: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields and credit spreads. Corporate - public: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields and credit spreads. Corporate - privately placed: Valued using a discounted cash flow model that is widely accepted in the financial services industry and uses market observable inputs and inputs derived principally from, or corroborated by, observable market data. The primary inputs to the discounted cash flow model include an interest rate yield curve, as well as published credit spreads for similar assets in markets that are not active that incorporate the credit quality and industry sector of the issuer. Foreign government: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields and credit spreads. ABS - collateralized debt obligations (“CDO”) and ABS - consumer and other: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields, prepayment speeds, collateral performance and credit spreads. Certain ABS - CDO and ABS - consumer and other are valued based on non-binding broker quotes whose inputs have been corroborated to be market observable. RMBS: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields, prepayment speeds, collateral performance and credit spreads. CMBS: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields, collateral performance and credit spreads. Redeemable preferred stock: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields, underlying stock prices and credit spreads. • Equity securities: The primary inputs to the valuation include quoted prices or quoted net asset values for identical or similar assets in markets that are not active. • Short-term: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields and credit spreads. • Other investments: Free-standing exchange listed derivatives that are not actively traded are valued based on quoted prices for identical instruments in markets that are not active. Over-the-counter (“OTC”) derivatives, including interest rate swaps, foreign currency swaps, total return swaps, foreign exchange forward contracts, certain options and certain credit default swaps, are valued using models that rely on inputs such as interest rate yield curves, implied volatilities, index price levels, currency rates, and credit spreads that are observable for substantially the full term of the contract. The valuation techniques underlying the models are widely accepted in the financial services industry and do not involve significant judgment. Level 3 measurements • Fixed income securities: Municipal: Comprise municipal bonds that are not rated by third party credit rating agencies. The primary inputs to the valuation of these municipal bonds include quoted prices for identical or similar assets in markets that exhibit less liquidity relative to those markets supporting Level 2 fair value measurements, contractual cash flows, benchmark yields and credit spreads. Also included are municipal bonds valued based on non-binding broker quotes where the inputs have not been corroborated to be market observable and municipal bonds in default valued based on the present value of expected cash flows. Corporate - public and Corporate - privately placed: Primarily valued based on non-binding broker quotes where the inputs have not been corroborated to be market observable. Other inputs include an interest rate yield curve, as well as published credit spreads for similar assets that incorporate the credit quality and industry sector of the issuer. ABS - CDO, ABS - consumer and other, and CMBS: Valued based on non-binding broker quotes received from brokers who are familiar with the investments and where the inputs have not been corroborated to be market observable. • Equity securities: The primary inputs to the valuation include quoted prices or quoted net asset values for identical or similar assets in markets that exhibit less liquidity relative to those markets supporting Level 2 fair value measurements. • Short-term: For certain short-term investments, amortized cost is used as the best estimate of fair value. • Other investments: Certain OTC derivatives, such as interest rate caps, certain credit default swaps and certain options (including swaptions), are valued using models that are widely accepted in the financial services industry. These are categorized as Level 3 as a result of the significance of non-market observable inputs such as volatility. Other primary inputs include interest rate yield curves and credit spreads. • Contractholder funds: Derivatives embedded in certain life and annuity contracts are valued internally using models widely accepted in the financial services industry that determine a single best estimate of fair value for the embedded derivatives within a block of contractholder liabilities. The models primarily use stochastically determined cash flows based on the contractual elements of embedded derivatives, projected option cost and applicable market data, such as interest rate yield curves and equity index volatility assumptions. These are categorized as Level 3 as a result of the significance of non-market observable inputs. Assets and liabilities measured at fair value on a non-recurring basis Mortgage loans written-down to fair value in connection with recognizing impairments are valued based on the fair value of the underlying collateral less costs to sell. Bank loans written-down to fair value are valued based on broker quotes from brokers familiar with the loans and current market conditions or based on internal valuation models. Investments excluded from the fair value hierarchy Limited partnerships carried at fair value , which do not have readily determinable fair values, use NAV provided by the investees and are excluded from the fair value hierarchy. These investments are generally not redeemable by the investees and generally cannot be sold withou t approval of the general partner. The Company receives distributions of income and proceeds from the liquidation of the underlying assets of the investees, which usually takes place in years 4-9 of the typical contractual life of 10 - 12 years. As of March 31, 2019 , the Company has commitments to invest $635 million in these limited partnership interests. Assets and liabilities measured at fair value As of March 31, 2019 ($ in millions) Quoted prices in active markets for identical assets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Counterparty and cash collateral netting Total Assets Fixed income securities: U.S. government and agencies $ 3,498 $ 394 $ — $ 3,892 Municipal — 9,196 68 9,264 Corporate - public — 30,982 90 31,072 Corporate - privately placed — 11,537 90 11,627 Foreign government — 752 — 752 ABS - CDO — 250 6 256 ABS - consumer and other — 721 81 802 RMBS — 442 — 442 CMBS — 38 35 73 Redeemable preferred stock — 22 — 22 Total fixed income securities 3,498 54,334 370 58,202 Equity securities 5,149 350 303 5,802 Short-term investments 1,981 2,136 40 4,157 Other investments: Free-standing derivatives — 124 1 $ (27 ) 98 Separate account assets 3,050 — — 3,050 Other assets 1 — — 1 Total recurring basis assets 13,679 56,944 714 (27 ) 71,310 Non-recurring basis (1) — — 39 39 Total assets at fair value $ 13,679 $ 56,944 $ 753 $ (27 ) $ 71,349 % of total assets at fair value 19.2 % 79.8 % 1.0 % — % 100.0 % Investments reported at NAV 1,738 Total $ 73,087 Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ — $ — $ (251 ) $ (251 ) Other liabilities: Free-standing derivatives (2 ) (51 ) — $ 7 (46 ) Total recurring basis liabilities $ (2 ) $ (51 ) $ (251 ) $ 7 $ (297 ) % of total liabilities at fair value 0.7 % 17.2 % 84.5 % (2.4 )% 100.0 % (1) Includes $3 million of limited partnerships and $36 million of bank loans written-down to fair value in connection with recognizing OTTI impairments. Assets and liabilities measured at fair value As of December 31, 2018 ($ in millions) Quoted prices in active markets for identical assets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Counterparty and cash collateral netting Total Assets Fixed income securities: U.S. government and agencies $ 5,085 $ 432 $ — $ 5,517 Municipal — 9,099 70 9,169 Corporate - public — 29,200 70 29,270 Corporate - privately placed — 10,776 90 10,866 Foreign government — 747 — 747 ABS - CDO — 263 6 269 ABS - consumer and other — 713 63 776 RMBS — 464 — 464 CMBS — 44 26 70 Redeemable preferred stock — 22 — 22 Total fixed income securities 5,085 51,760 325 57,170 Equity securities 4,364 331 341 5,036 Short-term investments 1,338 1,659 30 3,027 Other investments: Free-standing derivatives — 139 1 $ (23 ) 117 Separate account assets 2,805 — — 2,805 Other assets 2 — — 2 Total recurring basis assets $ 13,594 $ 53,889 $ 697 $ (23 ) $ 68,157 % of total assets at fair value 19.9 % 79.1 % 1.0 % — % 100.0 % Investments reported at NAV 1,779 Total $ 69,936 Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ — $ — $ (224 ) $ (224 ) Other liabilities: Free-standing derivatives (1 ) (62 ) — $ 6 (57 ) Total recurring basis liabilities $ (1 ) $ (62 ) $ (224 ) $ 6 $ (281 ) % of total liabilities at fair value 0.3 % 22.1 % 79.7 % (2.1 )% 100.0 % Quantitative information about the significant unobservable inputs used in Level 3 fair value measurements ($ in millions) Fair value Valuation technique Unobservable input Range Weighted average March 31, 2019 Derivatives embedded in life and annuity contracts – Equity-indexed and forward starting options $ (220 ) Stochastic cash flow model Projected option cost 1.0 - 2.2% 1.74% December 31, 2018 Derivatives embedded in life and annuity contracts – Equity-indexed and forward starting options $ (185 ) Stochastic cash flow model Projected option cost 1.0 - 2.2% 1.74% The embedded derivatives are equity-indexed and forward starting options in certain life and annuity products that provide customers with interest crediting rates based on the performance of the S&P 500. If the projected option cost increased (decreased), it would result in a higher (lower) liability fair value. As of March 31, 2019 and December 31, 2018 , Level 3 fair value measurements of fixed income securities total $370 million and $325 million , respectively, and include $127 million and $105 million , respectively, of securities valued based on non-binding broker quotes where the inputs have not been corroborated to be market observable and $41 million and $44 million , respectively, of municipal fixed income securities that are not rated by third party credit rating agencies. The Company does not develop the unobservable inputs used in measuring fair value; therefore, these are not included in the table above. However, an increase (decrease) in credit spreads for fixed income securities valued based on non-binding broker quotes would result in a lower (higher) fair value, and an increase (decrease) in the credit rating of municipal bonds that are not rated by third party credit rating agencies would result in a higher (lower) fair value. Rollforward of Level 3 assets and liabilities at fair value during the three month period ended March 31, 2019 Balance as of December 31, 2018 Total gains (losses) included in: Transfers into Level 3 Transfers out of Level 3 ($ in millions) Net income (1) OCI Assets Fixed income securities: Municipal $ 70 $ — $ 1 $ — $ — Corporate - public 70 — 1 — — Corporate - privately placed 90 (2 ) 2 15 — ABS - CDO 6 — — — — ABS - consumer and other 63 — — — (47 ) CMBS 26 — — 3 — Total fixed income securities 325 (2 ) 4 18 (47 ) Equity securities 341 28 — — — Short-term investments 30 — — — — Free-standing derivatives, net 1 — — — — Total recurring Level 3 assets $ 697 $ 26 $ 4 $ 18 $ (47 ) Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ (224 ) $ (28 ) $ — $ — $ — Total recurring Level 3 liabilities $ (224 ) $ (28 ) $ — $ — $ — Purchases Sales Issues Settlements Balance as of March 31, 2019 Assets Fixed income securities: Municipal $ — $ (2 ) $ — $ (1 ) $ 68 Corporate - public 20 — — (1 ) 90 Corporate - privately placed — (13 ) — (2 ) 90 ABS - CDO — — — — 6 ABS - consumer and other 78 (10 ) — (3 ) 81 CMBS 6 — — — 35 Total fixed income securities 104 (25 ) — (7 ) 370 Equity securities 2 (68 ) — — 303 Short-term investments 10 — — — 40 Free-standing derivatives, net — — — — 1 (2) Total recurring Level 3 assets $ 116 $ (93 ) $ — $ (7 ) $ 714 Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ — $ — $ — $ 1 $ (251 ) Total recurring Level 3 liabilities $ — $ — $ — $ 1 $ (251 ) (1) The effect to net income totals $(2) million and is reported in the Condensed Consolidated Statements of Operations as follows: $26 million in realized capital gains and losses, $(36) million in interest credited to contractholder funds and $8 million in life contract benefits. (2) Comprises $1 million of assets. Rollforward of Level 3 assets and liabilities at fair value during the three month period ended March 31, 2018 Balance as of December 31, 2017 Total gains (losses) included in: Transfers into Level 3 Transfers out of Level 3 ($ in millions) Net income (1) OCI Assets Fixed income securities: Municipal $ 101 $ 1 $ (1 ) $ — $ (2 ) Corporate - public 108 — (1 ) 4 (5 ) Corporate - privately placed 224 — (1 ) — (19 ) ABS - CDO 99 — — — (89 ) ABS - consumer and other 48 — 1 5 — CMBS 26 — — — — Total fixed income securities 606 1 (2 ) 9 (115 ) Equity securities 210 3 — — — Short-term investments 20 — — — — Free-standing derivatives, net 1 — — — — Total recurring Level 3 assets $ 837 $ 4 $ (2 ) $ 9 $ (115 ) Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ (286 ) $ 23 $ — $ — $ — Total recurring Level 3 liabilities $ (286 ) $ 23 $ — $ — $ — Purchases Sales Issues Settlements Balance as of March 31, 2018 Assets Fixed income securities: Municipal $ — $ (2 ) $ — $ (1 ) $ 96 Corporate - public — (26 ) — (3 ) 77 Corporate - privately placed 13 — — (2 ) 215 ABS - CDO — — — — 10 ABS - consumer and other 45 (35 ) — (2 ) 62 CMBS 1 — — — 27 Total fixed income securities 59 (63 ) — (8 ) 487 Equity securities 30 (1 ) — — 242 Short-term investments 25 (45 ) — — — Free-standing derivatives, net — — — — 1 (2) Total recurring Level 3 assets $ 114 $ (109 ) $ — $ (8 ) $ 730 Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ — $ — $ (1 ) $ 2 $ (262 ) Total recurring Level 3 liabilities $ — $ — $ (1 ) $ 2 $ (262 ) (1) The effect to net income totals $27 million and is reported in the Condensed Consolidated Statements of Operations as follows: $4 million in realized capital gains and losses, $19 million in interest credited to contractholder funds and $4 million in life contract benefits. (2) Comprises $1 million of assets. Transfers between level categorizations may occur due to changes in the availability of market observable inputs, which generally are caused by changes in market conditions such as liquidity, trading volume or bid-ask spreads. Transfers between level categorizations may also occur due to changes in the valuation source, including situations where a fair value quote is not provided by the Company’s independent third-party valuation service provider resulting in the price becoming stale or replaced with a broker quote whose inputs have not been corroborated to be market observable. This situation will result in the transfer of a security into Level 3. Transfers in and out of level categorizations are reported as having occurred at the beginning of the quarter in which the transfer occurred. Therefore, for all transfers into Level 3, all realized and changes in unrealized gains and losses in the quarter of transfer are reflected in the Level 3 rollforward table. There were no transfers between Level 1 and Level 2 during the three months ended March 31, 2019 or 2018 . Transfers into Level 3 during the three months ended March 31, 2019 and 2018 included situations where a quote was not provided by the Company’s independent third-party valuation service provider and as a result the price was stale or had been replaced with a broker quote where the inputs had not been corroborated to be market observable resulting in the security being classified as Level 3. Transfers out of Level 3 during the three months ended March 31, 2019 and 2018 included situations where a broker quote was used in the prior period and a quote became available from the Company’s independent third-party valuation service provider in the current period. A quote utilizing the new pricing source was not available as of the prior period, and any gains or losses related to the change in valuation source for individual securities were not significant. Valuation changes included in net income for Level 3 assets and liabilities held as of March 31, ($ in millions) Three months ended March 31, 2019 2018 Assets Equity securities $ 4 $ 2 Total recurring Level 3 assets $ 4 $ 2 Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ (28 ) $ 23 Total recurring Level 3 liabilities $ (28 ) $ 23 The amounts in the table above represent the change in unrealized gains and losses included in net income for the period of time that the asset or liability was held and determined to be in Level 3. These gains and losses result in $(24) million of net income for the three months ended March 31, 2019 and are reported as follows: $4 million in realized capital gains and losses, $8 million in life contract benefits and $(36) million in interest credited to contractholder funds. These gains and losses result in $25 million of net income for the three months ended March 31, 2018 and are reported as follows: $2 million in realized capital gains and losses, $19 million in interest credited to contractholder funds and $4 million in life contract benefits. Financial assets Carrying values and fair value estimates of financial instruments not carried at fair value ($ in millions) March 31, 2019 December 31, 2018 Fair value level Carrying value Fair value Carrying value Fair value Mortgage loans Level 3 $ 4,681 $ 4,787 $ 4,670 $ 4,703 Bank loans Level 3 1,300 1,271 1,350 1,298 Agent loans Level 3 639 639 620 617 Financial liabilities Carrying values and fair value estimates of financial instruments not carried at fair value ($ in millions) March 31, 2019 December 31, 2018 Fair value level Carrying value Fair value Carrying value Fair value Contractholder funds on investment contracts Level 3 $ 9,015 $ 9,626 $ 9,250 $ 9,665 Long-term debt Level 2 6,453 6,985 6,451 6,708 Liability for collateral Level 2 1,973 1,973 1,458 1,458 |
Derivative Financial Instrument
Derivative Financial Instruments | 3 Months Ended |
Mar. 31, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Financial Instruments | Note 7 Derivative Financial Instruments The Company uses derivatives for risk reduction and to increase investment portfolio returns through asset replication. Risk reduction activity is focused on managing the risks with certain assets and liabilities arising from the potential adverse impacts from changes in risk-free interest rates, changes in equity market valuations, increases in credit spreads and foreign currency fluctuations. Asset replication refers to the “synthetic” creation of assets through the use of derivatives. The Company replicates fixed income securities using a combination of a credit default swap, index total return swap, or a foreign currency forward contract and one or more highly rated fixed income securities, primarily investment grade host bonds, to synthetically replicate the economic characteristics of one or more cash market securities. The Company replicates equity securities using futures, index total return swaps, and options to increase equity exposure. Property-Liability may use interest rate swaps, swaptions, futures and options to manage the interest rate risks of existing investments. These instruments are utilized to change the duration of the portfolio in order to offset the economic effect that interest rates would otherwise have on the fair value of its fixed income securities. Fixed income index total return swaps are used to offset valuation losses in the fixed income portfolio during periods of declining market values. Credit default swaps are typically used to mitigate the credit risk within the Property-Liability fixed income portfolio. Equity index total return swaps, futures and options are used by Property-Liability to offset valuation losses in the equity portfolio during periods of declining equity market values. In addition, equity futures are used to hedge the market risk related to deferred compensation liability contracts. Forward contracts are primarily used by Property-Liability to hedge foreign currency risk associated with holding foreign currency denominated investments and foreign operations. Asset-liability management is a risk management strategy that is principally employed by Allstate Life and Allstate Annuities to balance the respective interest-rate sensitivities of its assets and liabilities. Depending upon the attributes of the assets acquired and liabilities issued, derivative instruments such as interest rate swaps, caps, swaptions and futures are utilized to change the interest rate characteristics of existing assets and liabilities to ensure the relationship is maintained within specified ranges and to reduce exposure to rising or falling interest rates. Fixed income index total return swaps are used to offset valuation losses in the portfolio during periods of declining market values. Credit default swaps are typically used to mitigate the credit risk within the Allstate Life and Allstate Annuities fixed income portfolios. Futures and options are used for hedging the equity exposure contained in equity indexed life and annuity product contracts that offer equity returns to contractholders. In addition, the Company uses equity index total return swaps, options and futures to offset valuation losses in the equity portfolio during periods of declining equity market values. Foreign currency swaps and forwards are primarily used to reduce the foreign currency risk associated with holding foreign currency denominated investments. The Company also has derivatives embedded in non-derivative host contracts that are required to be separated from the host contracts and accounted for at fair value with changes in fair value of embedded derivatives reported in net income. The Company’s primary embedded derivatives are equity options in life and annuity product contracts, which provide returns linked to equity indices to contractholders. When derivatives meet specific criteria, they may be designated as accounting hedges and accounted for as fair value, cash flow, foreign currency fair value or foreign currency cash flow hedges. The Company designates certain investment risk transfer reinsurance agreements as fair value hedges when the hedging instrument is highly effective in offsetting the risk of changes in the fair value of the hedged item. The fair value of hedged liability is reported in contractholder funds in the Condensed Consolidated Statements of Financial Position. The impact from results of the fair value hedge is reported in interest credited to contractholder funds in the Condensed Consolidated Statements of Operations. The notional amounts specified in the contracts are used to calculate the exchange of contractual payments under the agreements and are generally not representative of the potential for gain or loss on these agreements. However, the notional amounts specified in credit default swaps where the Company has sold credit protection represent the maximum amount of potential loss, assuming no recoveries. Fair value, which is equal to the carrying value, is the estimated amount that the Company would receive or pay to terminate the derivative contracts at the reporting date. The carrying value amounts for OTC derivatives are further adjusted for the effects, if any, of enforceable master netting agreements and are presented on a net basis, by counterparty agreement, in the Condensed Consolidated Statements of Financial Position. For those derivatives which qualify for fair value hedge accounting, net income includes the changes in the fair value of both the derivative instrument and the hedged risk, and therefore reflects any hedging ineffectiveness. Non-hedge accounting is generally used for “portfolio” level hedging strategies where the terms of the individual hedged items do not meet the strict homogeneity requirements to permit the application of hedge accounting. For non-hedge derivatives, net income includes changes in fair value and accrued periodic settlements, when applicable. With the exception of non-hedge derivatives used for asset replication and non-hedge embedded derivatives, all of the Company’s derivatives are evaluated for their ongoing effectiveness as either accounting hedge or non-hedge derivative financial instruments on at least a quarterly basis. The Company had one derivative used in fair value hedging relationships for the three months ended March 31, 2019 and 2018. The Company had no derivatives used in cash flow hedging relationships for the three months ended March 31, 2019 and had one foreign currency contract designated as a cash flow hedge during the three months ended March 31, 2018. Losses deferred in AOCI on foreign currency derivatives during the term of the cash flow hedge were $3 million and $1 million as of March 31, 2019 and 2018, respectively. Amortization of net losses from AOCI is expected to be less than $1 million during the next twelve months. Summary of the volume and fair value positions of derivative instruments as of March 31, 2019 ($ in millions, except number of contracts) Volume (1) Balance sheet location Notional amount Number of contracts Fair value, net Gross asset Gross liability Asset derivatives Derivatives designated as fair value accounting hedging instruments Other Other assets $ 3 n/a $ — $ — $ — Derivatives not designated as accounting hedging instruments Interest rate contracts Interest rate cap agreements Other investments 4 n/a — — — Futures Other assets — 1,025 — — — Equity and index contracts Options Other investments — 7,040 95 95 — Futures Other assets — 1,615 1 1 — Total return index contracts Total return swap agreements – fixed income Other investments 3 n/a — — — Total return swap agreements – equity index Other investments 93 n/a 1 1 — Foreign currency contracts Foreign currency forwards Other investments 229 n/a 9 10 (1 ) Credit default contracts Credit default swaps – buying protection Other investments 112 n/a (2 ) 2 (4 ) Credit default swaps – selling protection Other investments 8 n/a — — — Total asset derivatives $ 452 9,680 $ 104 $ 109 $ (5 ) Liability derivatives Derivatives not designated as accounting hedging instruments Interest rate contracts Interest rate swaption agreements Other liabilities & accrued expenses $ 10 n/a $ — $ — $ — Interest rate cap agreements Other liabilities & accrued expenses 32 n/a 1 1 — Futures Other liabilities & accrued expenses — 2,510 (1 ) — (1 ) Equity and index contracts Options Other liabilities & accrued expenses — 5,090 (33 ) — (33 ) Futures Other liabilities & accrued expenses — 869 (1 ) — (1 ) Total return index contracts Total return swap agreements – fixed income Other liabilities & accrued expenses 17 n/a 1 1 — Foreign currency contracts Foreign currency forwards Other liabilities & accrued expenses 334 n/a 12 14 (2 ) Embedded derivative financial instruments Guaranteed accumulation benefits Contractholder funds 179 n/a (19 ) — (19 ) Guaranteed withdrawal benefits Contractholder funds 221 n/a (12 ) — (12 ) Equity-indexed and forward starting options in life and annuity product contracts Contractholder funds 1,778 n/a (220 ) — (220 ) Credit default contracts Credit default swaps – buying protection Other liabilities & accrued expenses 623 n/a (10 ) 1 (11 ) Credit default swaps – selling protection Other liabilities & accrued expenses 1 n/a — — — Total liability derivatives 3,195 8,469 (282 ) $ 17 $ (299 ) Total derivatives $ 3,647 18,149 $ (178 ) (1) Volume for OTC and cleared derivative contracts is represented by their notional amounts. Volume for exchange traded derivatives is represented by the number of contracts, which is the basis on which they are traded. (n/a = not applicable) Summary of the volume and fair value positions of derivative instruments as of December 31, 2018 ($ in millions, except number of contracts) Volume (1) Balance sheet location Notional amount Number of contracts Fair value, net Gross asset Gross liability Asset derivatives Derivatives not designated as accounting hedging instruments Interest rate contracts Interest rate cap agreements Other investments $ 6 n/a $ — $ — $ — Futures Other assets — 1,330 1 1 — Equity and index contracts Options Other investments — 11,131 115 115 — Futures Other assets — 1,453 1 1 — Total return index contracts Total return swap agreements – fixed income Other investments 7 n/a — — — Total return swap agreements – equity index Other investments 61 n/a (2 ) — (2 ) Foreign currency contracts Foreign currency forwards Other investments 258 n/a 10 11 (1 ) Credit default contracts Credit default swaps – buying protection Other investments 136 n/a (1 ) 2 (3 ) Other contracts Other Other assets 2 n/a — — — Total asset derivatives $ 470 13,914 $ 124 $ 130 $ (6 ) Liability derivatives Derivatives not designated as accounting hedging instruments Interest rate contracts Interest rate cap agreements Other liabilities & accrued expenses $ 31 n/a $ 1 $ 1 $ — Futures Other liabilities & accrued expenses — 1,300 (1 ) — (1 ) Equity and index contracts Options and futures Other liabilities & accrued expenses — 10,956 (50 ) — (50 ) Total return index contracts Total return swap agreements – fixed income Other liabilities & accrued expenses 38 n/a (1 ) — (1 ) Total return swap agreements – equity index Other liabilities & accrued expenses 71 n/a (4 ) — (4 ) Foreign currency contracts Foreign currency forwards Other liabilities & accrued expenses 341 n/a 10 11 (1 ) Embedded derivative financial instruments Guaranteed accumulation benefits Contractholder funds 169 n/a (25 ) — (25 ) Guaranteed withdrawal benefits Contractholder funds 210 n/a (14 ) — (14 ) Equity-indexed and forward starting options in life and annuity product contracts Contractholder funds 1,770 n/a (185 ) — (185 ) Credit default contracts Credit default swaps – buying protection Other liabilities & accrued expenses 40 n/a — — — Credit default swaps – selling protection Other liabilities & accrued expenses 5 n/a — — — Total liability derivatives 2,675 12,256 (269 ) $ 12 $ (281 ) Total derivatives $ 3,145 26,170 $ (145 ) (1) Volume for OTC and cleared derivative contracts is represented by their notional amounts. Volume for exchange traded derivatives is represented by the number of contracts, which is the basis on which they are traded. (n/a = not applicable) Gross and net amounts for OTC derivatives (1) ($ in millions) Offsets Gross amount Counter-party netting Cash collateral (received) pledged Net amount on balance sheet Securities collateral (received) pledged Net amount March 31, 2019 Asset derivatives $ 29 $ (22 ) $ (5 ) $ 2 $ — $ 2 Liability derivatives (8 ) 22 (15 ) (1 ) — (1 ) December 31, 2018 Asset derivatives $ 25 $ (18 ) $ (5 ) $ 2 $ — $ 2 Liability derivatives (12 ) 18 (12 ) (6 ) — (6 ) (1) All OTC derivatives are subject to enforceable master netting agreements. Gains (losses) from valuation and settlements reported on derivatives not designated as accounting hedges ($ in millions) Realized capital gains (losses) Life contract benefits Interest credited to contractholder funds Operating costs and expenses Total gain (loss) recognized in net income on derivatives Three months ended March 31, 2019 Interest rate contracts $ 7 $ — $ — $ — $ 7 Equity and index contracts (71 ) — 31 21 (19 ) Embedded derivative financial instruments — 8 (35 ) — (27 ) Foreign currency contracts 5 — — — 5 Credit default contracts (4 ) — — — (4 ) Total return swaps - fixed income 2 — — — 2 Total return swaps - equity 15 — — — 15 Total $ (46 ) $ 8 $ (4 ) $ 21 $ (21 ) Three months ended March 31, 2018 Equity and index contracts $ (2 ) $ — $ (4 ) $ (3 ) $ (9 ) Embedded derivative financial instruments — 4 20 — 24 Foreign currency contracts (7 ) — — 1 (6 ) Credit default contracts 1 — — — 1 Total $ (8 ) $ 4 $ 16 $ (2 ) $ 10 The Company manages its exposure to credit risk by utilizing highly rated counterparties, establishing risk control limits, executing legally enforceable master netting agreements (“MNAs”) and obtaining collateral where appropriate. The Company uses MNAs for OTC derivative transactions that permit either party to net payments due for transactions and collateral is either pledged or obtained when certain predetermined exposure limits are exceeded. As of March 31, 2019 , counterparties pledged $21 million in collateral to the Company, and the Company pledged $1 million in collateral to counterparties under MNAs for contracts containing credit-risk-contingent provisions that are in a liability position. The Company has not incurred any losses on derivative financial instruments due to counterparty nonperformance. Other derivatives, including futures and certain option contracts, are traded on organized exchanges which require margin deposits and guarantee the execution of trades, thereby mitigating any potential credit risk. Counterparty credit exposure represents the Company’s potential loss if all of the counterparties concurrently fail to perform under the contractual terms of the contracts and all collateral, if any, becomes worthless. This exposure is measured by the fair value of OTC derivative contracts with a positive fair value at the reporting date reduced by the effect, if any, of legally enforceable master netting agreements. For certain exchange traded and cleared derivatives, margin deposits are required as well as daily cash settlements of margin accounts. As of March 31, 2019 , the Company pledged $136 million in the form of margin deposits. OTC derivatives counterparty credit exposure by counterparty credit rating ($ in millions) March 31, 2019 December 31, 2018 Rating (1) Number of counter- parties Notional amount (2) Credit exposure (2) Exposure, net of collateral (2) Number of counter- parties Notional amount (2) Credit exposure (2) Exposure, net of collateral (2) A+ 4 $ 748 $ 21 $ 1 3 $ 643 $ 19 $ 1 A 1 116 1 1 2 121 1 — Total 5 $ 864 $ 22 $ 2 5 $ 764 $ 20 $ 1 (1) Allstate uses the lower of S&P’s or Moody’s long term debt issuer ratings. (2) Only OTC derivatives with a net positive fair value are included for each counterparty. Market risk is the risk that the Company will incur losses due to adverse changes in market rates and prices. Market risk exists for all of the derivative financial instruments the Company currently holds, as these instruments may become less valuable due to adverse changes in market conditions. To limit this risk, the Company’s senior management has established risk control limits. In addition, changes in fair value of the derivative financial instruments that the Company uses for risk management purposes are generally offset by the change in the fair value or cash flows of the hedged risk component of the related assets, liabilities or forecasted transactions. Certain of the Company’s derivative instruments contain credit-risk-contingent termination events, cross-default provisions and credit support annex agreements. Credit-risk-contingent termination events allow the counterparties to terminate the derivative agreement or a specific trade on certain dates if AIC’s, ALIC’s or Allstate Life Insurance Company of New York’s (“ALNY”) financial strength credit ratings by Moody’s or S&P fall below a certain level. Credit-risk-contingent cross-default provisions allow the counterparties to terminate the derivative agreement if the Company defaults by pre-determined threshold amounts on certain debt instruments. Credit-risk-contingent credit support annex agreements specify the amount of collateral the Company must post to counterparties based on AIC’s, ALIC’s or ALNY’s financial strength credit ratings by Moody’s or S&P, or in the event AIC, ALIC or ALNY are no longer rated by either Moody’s or S&P. The following summarizes the fair value of derivative instruments with termination, cross-default or collateral credit-risk-contingent features that are in a liability position, as well as the fair value of assets and collateral that are netted against the liability in accordance with provisions within legally enforceable MNAs. ($ in millions) As of March 31, 2019 As of December 31, 2018 Gross liability fair value of contracts containing credit-risk-contingent features $ 8 $ 11 Gross asset fair value of contracts containing credit-risk-contingent features and subject to MNAs (7 ) (5 ) Collateral posted under MNAs for contracts containing credit-risk-contingent features (1 ) (2 ) Maximum amount of additional exposure for contracts with credit-risk-contingent features if all features were triggered concurrently $ — $ 4 |
Reserve for Property and Liabil
Reserve for Property and Liability Insurance Claims and Claims Expense | 3 Months Ended |
Mar. 31, 2019 | |
Reserve for Property-Liability Insurance Claims and Claims Expense [Abstract] | |
Reserve for Property and Liability Insurance Claims and Claims Expense | Note 8 Reserve for Property and Casualty Insurance Claims and Claims Expense The Company establishes reserves for claims and claims expense on reported and unreported claims of insured losses. The Company’s reserving process takes into account known facts and interpretations of circumstances and factors including the Company’s experience with similar cases, actual claims paid, historical trends involving claim payment patterns and pending levels of unpaid claims, loss management programs, product mix and contractual terms, changes in law and regulation, judicial decisions, and economic conditions. In the normal course of business, the Company may also supplement its claims processes by utilizing third party adjusters, appraisers, engineers, inspectors, and other professionals and information sources to assess and settle catastrophe and non-catastrophe related claims. The effects of inflation are implicitly considered in the reserving process. Because reserves are estimates of unpaid portions of losses that have occurred, including incurred but not reported (“IBNR”) losses, the establishment of appropriate reserves, including reserves for catastrophes, Discontinued Lines and Coverages and reinsurance and indemnification recoverables, is an inherently uncertain and complex process. The ultimate cost of losses may vary materially from recorded amounts, which are based on management’s best estimates. The highest degree of uncertainty is associated with reserves for losses incurred in the current reporting period as it contains the greatest proportion of losses that have not been reported or settled. The Company regularly updates its reserve estimates as new information becomes available and as events unfold that may affect the resolution of unsettled claims. Changes in prior year reserve estimates, which may be material, are reported in property and casualty insurance claims and claims expense in the Condensed Consolidated Statements of Operations in the period such changes are determined. Management believes that the reserve for property and casualty insurance claims and claims expense, net of recoverables, is appropriately established in the aggregate and adequate to cover the ultimate net cost of reported and unreported claims arising from losses which had occurred by the date of the Condensed Consolidated Statements of Financial Position based on available facts, technology, laws and regulations. Allstate’s reserves for asbestos claims were $847 million and $866 million , net of recoverables of $389 million and $400 million , as of March 31, 2019 and December 31, 2018 , respectively. Reserves for environmental claims were $167 million and $170 million , net of recoverables of $39 million and $39 million , as of March 31, 2019 and December 31, 2018 , respectively. Rollforward of the reserve for property and casualty insurance claims and claims expense Three months ended March 31, ($ in millions) 2019 2018 Balance as of January 1 $ 27,423 $ 26,325 Less recoverables (1) (7,155 ) (6,471 ) Net balance as of January 1 20,268 19,854 Incurred claims and claims expense related to: Current year 5,808 5,180 Prior years 12 (51 ) Total incurred 5,820 5,129 Claims and claims expense paid related to: Current year (2,270 ) (2,240 ) Prior years (3,294 ) (3,115 ) Total paid (5,564 ) (5,355 ) Net balance as of March 31 20,524 19,628 Plus recoverables 7,020 6,487 Balance as of March 31 $ 27,544 $ 26,115 (1) Recoverables comprises reinsurance and indemnification recoverables. Incurred claims and claims expense represents the sum of paid losses and reserve changes in the period. This expense includes losses from catastrophes of $680 million and $361 million in the three months ended March 31, 2019 and 2018 , respectively, net of recoverables. Catastrophes are an inherent risk of the property and casualty insurance business that have contributed to, and will continue to contribute to, material year-to-year fluctuations in the Company’s results of operations and financial position. During the three months ended March 31, 2019 , incurred claims and claims expense included $12 million of unfavorable prior year reserve reestimates, decreasing net income. This $12 million unfavorable prior year reserve reestimates included $53 million of unfavorable prior year reserve reestimates related to catastrophes, partially offset by f avorable prior year reserve reestimates excluding catastrophes of $41 million . Favorable prior year reserve reestimates excluding catastrophes is comprised of net decreases in reserves of $55 million , primarily due to continued favorable personal lines auto injury coverage development , offset by net increases of $14 million , related to homeowner, commercial lines and discontinued lines and coverages of $7 million , $5 million and $2 million , respectively. Unfavorable catastrophe loss reestimates of $53 million , net of recoverables, included $46 million of unfavorable reestimates related to ho meowners and $7 million of unfavorable reestimates, primarily related to other personal lines. The unfavorable catastrophe reestimates included $15 million |
Reinsurance
Reinsurance | 3 Months Ended |
Mar. 31, 2019 | |
Reinsurance Disclosures [Abstract] | |
Reinsurance | Note 9 Reinsurance Effects of reinsurance ceded on property and casualty premiums earned and life premiums and contract charges ($ in millions) Three months ended March 31, 2019 2018 Property and casualty insurance premiums earned $ (260 ) $ (239 ) Life premiums and contract charges (63 ) (72 ) Effects of reinsurance ceded on property and casualty insurance claims and claims expense, life contract benefits and interest credited to contractholder funds ($ in millions) Three months ended March 31, 2019 2018 Property and casualty insurance claims and claims expense $ (91 ) $ (187 ) Life contract benefits (23 ) (49 ) Interest credited to contractholder funds (3 ) (4 ) Reinsurance Recoverables As of March 31, 2019, the Company had $9.37 billion of reinsurance and indemnification recoverables, including $796 million of reinsurance recoverables for its life insurance business . Of the $796 million , the Company had $63 million of reinsurance recoverables, net of an allowance for estimated uncollectible amounts, related to a third party reinsurer Scottish Re (U.S.), Inc. On December 14, 2018, the Delaware Insurance Commissioner placed Scottish Re (U.S.), Inc. under regulatory supervision. On March 6, 2019, the Chancery Court of the State of Delaware entered a Rehabilitation and Injunction Order |
Company Restructuring
Company Restructuring | 3 Months Ended |
Mar. 31, 2019 | |
Restructuring and Related Activities [Abstract] | |
Company Restructuring | Note 10 Company Restructuring The Company undertakes various programs to reduce expenses. These programs generally involve a reduction in staffing levels, and in certain cases, office closures. Restructuring and related charges primarily include the following costs related to these programs: • Employee - severance and relocation benefits • Exit - contract termination penalties The expenses related to these activities are included in the Condensed Consolidated Statements of Operations as restructuring and related charges, and totaled $18 million and $19 million during the three months ended March 31, 2019 and 2018 , respectively. Restructuring expenses in 2019 primarily related to realignment of certain employees to centralized talent centers. Restructuring activity during the period ($ in millions) Employee costs Exit costs Total liability Restructuring liability as of December 31, 2018 $ 29 $ 15 $ 44 Expense incurred 16 — 16 Adjustments to liability 2 — 2 Payments (11 ) (4 ) (15 ) Restructuring liability as of March 31, 2019 $ 36 $ 11 $ 47 As of March 31, 2019 , the cumulative amount incurred to date for active programs related to employee severance, relocation benefits and post-exit rent expenses totaled $96 million for employee costs and $8 million |
Guarantees and Contingent Liabi
Guarantees and Contingent Liabilities | 3 Months Ended |
Mar. 31, 2019 | |
Guarantees and Contingent Liabilities | |
Guarantees and Contingent Liabilities | Note 11 Guarantees and Contingent Liabilities Shared markets and state facility assessments The Company is required to participate in assigned risk plans, reinsurance facilities and joint underwriting associations in various states that provide insurance coverage to individuals or entities that otherwise are unable to purchase such coverage from private insurers. The Company routinely reviews its exposure to assessments from these plans, facilities and government programs. Underwriting results related to these arrangements, which tend to be adverse, have been immaterial to the Company’s results of operations. Because of the Company’s participation, it may be exposed to losses that surpass the capitalization of these facilities and/or assessments from these facilities. Guarantees Related to the sale of Lincoln Benefit Life Company on April 1, 2014, ALIC agreed to indemnify Resolution Life Holdings, Inc. in connection with certain representations, warranties and covenants of ALIC, and certain liabilities specifically excluded from the transaction, subject to specific contractual limitations regarding ALIC’s maximum obligation. Management does not believe these indemnifications will have a material effect on results of operations, cash flows or financial position of the Company. Related to the disposal through reinsurance of substantially all of its variable annuity business to Prudential in 2006, the Company and its consolidated subsidiaries, ALIC and ALNY, have agreed to indemnify Prudential for certain pre-closing contingent liabilities (including extra-contractual liabilities of ALIC and ALNY and liabilities specifically excluded from the transaction) that ALIC and ALNY have agreed to retain. In addition, the Company, ALIC and ALNY will each indemnify Prudential for certain post-closing liabilities that may arise from the acts of ALIC, ALNY and their agents, including certain liabilities arising from ALIC’s and ALNY’s provision of transition services. The reinsurance agreements contain no limitations or indemnifications with regard to insurance risk transfer and transferred all of the future risks and responsibilities for performance on the underlying variable annuity contracts to Prudential, including those related to benefit guarantees. Management does not believe this agreement will have a material effect on results of operations, cash flows or financial position of the Company. In the normal course of business, the Company provides standard indemnifications to contractual counterparties in connection with numerous transactions, including acquisitions and divestitures. The types of indemnifications typically provided include indemnifications for breaches of representations and warranties, taxes and certain other liabilities, such as third party lawsuits. The indemnification clauses are often standard contractual terms and are entered into in the normal course of business based on an assessment that the risk of loss would be remote. The terms of the indemnifications vary in duration and nature. In many cases, the maximum obligation is not explicitly stated and the contingencies triggering the obligation to indemnify have not occurred and are not expected to occur. Consequently, the maximum amount of the obligation under such indemnifications is not determinable. Historically, the Company has not made any material payments pursuant to these obligations. The aggregate liability balance related to all guarantees was not material as of March 31, 2019 . Regulation and compliance The Company is subject to extensive laws, regulations, administrative directives, and regulatory actions. From time to time, regulatory authorities or legislative bodies seek to influence and restrict premium rates, require premium refunds to policyholders, require reinstatement of terminated policies, prescribe rules or guidelines on how affiliates compete in the marketplace, restrict the ability of insurers to cancel or non-renew policies, require insurers to continue to write new policies or limit their ability to write new policies, limit insurers’ ability to change coverage terms or to impose underwriting standards, impose additional regulations regarding agency and broker compensation, regulate the nature of and amount of investments, impose fines and penalties for unintended errors or mistakes, impose additional regulations regarding cybersecurity and privacy, and otherwise expand overall regulation of insurance products and the insurance industry. In addition, the Company is subject to laws and regulations administered and enforced by federal agencies, international agencies, and other organizations, including but not limited to the Securities and Exchange Commission (“SEC”), the Financial Industry Regulatory Authority, the U.S. Equal Employment Opportunity Commission, and the U.S. Department of Justice. The Company has established procedures and policies to facilitate compliance with laws and regulations, to foster prudent business operations, and to support financial reporting. The Company routinely reviews its practices to validate compliance with laws and regulations and with internal procedures and policies. As a result of these reviews, from time to time the Company may decide to modify some of its procedures and policies. Such modifications, and the reviews that led to them, may be accompanied by payments being made and costs being incurred. The ultimate changes and eventual effects of these actions on the Company’s business, if any, are uncertain. Legal and regulatory proceedings and inquiries The Company and certain subsidiaries are involved in a number of lawsuits, regulatory inquiries, and other legal proceedings arising out of various aspects of its business. Background These matters raise difficult and complicated factual and legal issues and are subject to many uncertainties and complexities, including the underlying facts of each matter; novel legal issues; variations between jurisdictions in which matters are being litigated, heard, or investigated; changes in assigned judges; differences or developments in applicable laws and judicial interpretations; judges reconsidering prior rulings; the length of time before many of these matters might be resolved by settlement, through litigation, or otherwise; adjustments with respect to anticipated trial schedules and other proceedings; developments in similar actions against other companies; the fact that some of the lawsuits are putative class actions in which a class has not been certified and in which the purported class may not be clearly defined; the fact that some of the lawsuits involve multi-state class actions in which the applicable law(s) for the claims at issue is in dispute and therefore unclear; and the challenging legal environment faced by corporations and insurance companies. The outcome of these matters may be affected by decisions, verdicts, and settlements, and the timing of such decisions, verdicts, and settlements, in other individual and class action lawsuits that involve the Company, other insurers, or other entities and by other legal, governmental, and regulatory actions that involve the Company, other insurers, or other entities. The outcome may also be affected by future state or federal legislation, the timing or substance of which cannot be predicted. In the lawsuits, plaintiffs seek a variety of remedies which may include equitable relief in the form of injunctive and other remedies and monetary relief in the form of contractual and extra-contractual damages. In some cases, the monetary damages sought may include punitive or treble damages. Often specific information about the relief sought, such as the amount of damages, is not available because plaintiffs have not requested specific relief in their pleadings. When specific monetary demands are made, they are often set just below a state court jurisdictional limit in order to seek the maximum amount available in state court, regardless of the specifics of the case, while still avoiding the risk of removal to federal court. In Allstate’s experience, monetary demands in pleadings bear little relation to the ultimate loss, if any, to the Company. In connection with regulatory examinations and proceedings, government authorities may seek various forms of relief, including penalties, restitution, and changes in business practices. The Company may not be advised of the nature and extent of relief sought until the final stages of the examination or proceeding. Accrual and disclosure policy The Company reviews its lawsuits, regulatory inquiries, and other legal proceedings on an ongoing basis and follows appropriate accounting guidance when making accrual and disclosure decisions. The Company establishes accruals for such matters at management’s best estimate when the Company assesses that it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. The Company does not establish accruals for such matters when the Company does not believe both that it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. The Company’s assessment of whether a loss is reasonably possible or probable is based on its assessment of the ultimate outcome of the matter following all appeals. The Company does not include potential recoveries in its estimates of reasonably possible or probable losses. Legal fees are expensed as incurred. The Company continues to monitor its lawsuits, regulatory inquiries, and other legal proceedings for further developments that would make the loss contingency both probable and estimable, and accordingly accruable, or that could affect the amount of accruals that have been previously established. There may continue to be exposure to loss in excess of any amount accrued. Disclosure of the nature and amount of an accrual is made when there have been sufficient legal and factual developments such that the Company’s ability to resolve the matter would not be impaired by the disclosure of the amount of accrual. When the Company assesses it is reasonably possible or probable that a loss has been incurred, it discloses the matter. When it is possible to estimate the reasonably possible loss or range of loss above the amount accrued, if any, for the matters disclosed, that estimate is aggregated and disclosed. Disclosure is not required when an estimate of the reasonably possible loss or range of loss cannot be made. For certain of the matters described below in the “Claims related proceedings” and “Other proceedings” subsections, the Company is able to estimate the reasonably possible loss or range of loss above the amount accrued, if any. In determining whether it is possible to estimate the reasonably possible loss or range of loss, the Company reviews and evaluates the disclosed matters, in conjunction with counsel, in light of potentially relevant factual and legal developments. These developments may include information learned through the discovery process, rulings on dispositive motions, settlement discussions, information obtained from other sources, experience from managing these and other matters, and other rulings by courts, arbitrators or others. When the Company possesses sufficient appropriate information to develop an estimate of the reasonably possible loss or range of loss above the amount accrued, if any, that estimate is aggregated and disclosed below. There may be other disclosed matters for which a loss is probable or reasonably possible, but such an estimate is not possible. Disclosure of the estimate of the reasonably possible loss or range of loss above the amount accrued, if any, for any individual matter would only be considered when there have been sufficient legal and factual developments such that the Company’s ability to resolve the matter would not be impaired by the disclosure of the individual estimate. The Company currently estimates that the aggregate range of reasonably possible loss in excess of the amount accrued, if any, for the disclosed matters where such an estimate is possible is zero to $100 million , pre-tax. This disclosure is not an indication of expected loss, if any. Under accounting guidance, an event is “reasonably possible” if “the chance of the future event or events occurring is more than remote but less than likely” and an event is “remote” if “the chance of the future event or events occurring is slight.” This estimate is based upon currently available information and is subject to significant judgment and a variety of assumptions, and known and unknown uncertainties. The matters underlying the estimate will change from time to time, and actual results may vary significantly from the current estimate. The estimate does not include matters or losses for which an estimate is not possible. Therefore, this estimate represents an estimate of possible loss only for certain matters meeting these criteria. It does not represent the Company’s maximum possible loss exposure. Information is provided below regarding the nature of all of the disclosed matters and, where specified, the amount, if any, of plaintiff claims associated with these loss contingencies. Due to the complexity and scope of the matters disclosed in the “Claims related proceedings” and “Other proceedings” subsections below and the many uncertainties that exist, the ultimate outcome of these matters cannot be predicted and in the Company’s judgment, a loss, in excess of amounts accrued, if any, is not probable. In the event of an unfavorable outcome in one or more of these matters, the ultimate liability may be in excess of amounts currently accrued, if any, and may be material to the Company’s operating results or cash flows for a particular quarterly or annual period. However, based on information currently known to it, management believes that the ultimate outcome of all matters described below, as they are resolved over time, is not likely to have a material effect on the financial position of the Company. Claims related proceedings The Company is managing various disputes in Florida that raise challenges to the Company’s practices, processes, and procedures relating to claims for personal injury protection benefits under Florida auto policies. Medical providers continue to pursue litigation under various theories that challenge the amounts that the Company pays under the personal injury protection benefits. There are pending putative class actions and litigation involving individual plaintiffs. The Company is vigorously asserting both procedural and substantive defenses to these lawsuits. Other proceedings T he case of Jack Jimenez, et al. v. Allstate Insurance Company was filed in the United States District Court for the Central District of California on September 30, 2010. Plaintiffs allege off-the-clock wage and hour claims and other California Labor Code violations resulting from purported unpaid overtime. Plaintiffs seek recovery of unpaid compensation, liquidated damages, penalties, and attorneys’ fees and costs. The court certified a class that includes all adjusters in the state of California, except auto field adjusters, from September 29, 2006 to final judgment. Allstate’s appeals to the Ninth Circuit Court of Appeals and then to the U.S. Supreme Court did not result in decertification. No trial date is calendared. The stockholder derivative actions described below are disclosed pursuant to SEC disclosure requirements for these types of matters. The putative class action alleging violations of the federal securities laws is disclosed because it involves similar allegations to those made in the stockholder derivative actions. Biefeldt / IBEW Consolidated Action. Two separately filed stockholder derivative actions have been consolidated into a single proceeding that is pending in the Circuit Court for Cook County, Illinois, Chancery Division. The original complaint in the first-filed of those actions, Biefeldt v. Wilson, et al. , was filed on August 3, 2017, in that court by a plaintiff alleging that she is a stockholder of the Company. On June 29, 2018, the court granted defendants’ motion to dismiss that complaint for failure to make a pre-suit demand on the Allstate board before instituting the suit, but granted the plaintiff permission to file an amended complaint. The original complaint in IBEW Local No. 98 Pension Fund v. Wilson, et al. , was filed on April 12, 2018, in the same court by another plaintiff alleging to be a stockholder of the Company. After the court issued its dismissal decision in the Biefeldt action, the plaintiffs agreed to consolidate the two actions and filed a consolidated amended complaint naming the Company’s chairman, president and chief executive officer, its former president, and certain present or former members of the board of directors. In that complaint, the plaintiffs allege that the directors and officer defendants breached their fiduciary duties to the Company in connection with allegedly material misstatements or omissions concerning the Company’s automobile insurance claim frequency statistics and the reasons for a claim frequency increase for Allstate brand auto insurance between October 2014 and August 3, 2015. The factual allegations are substantially similar to those at issue in In re The Allstate Corp. Securities Litigation . The plaintiffs further allege that a senior officer and several outside directors engaged in stock option exercises allegedly while in possession of material nonpublic information. The plaintiffs seek, on behalf of the Company, an unspecified amount of damages and various forms of equitable relief. Defendants moved to dismiss the consolidated complaint on September 24, 2018 for failure to make a demand on the Allstate board. The motion to dismiss was fully briefed as of December 10, 2018. The court heard argument on the motion on March 7, 2019 and continued the argument hearing to May 14, 2019. In Sundquist v. Wilson, et al ., another plaintiff alleging to be a stockholder of the Company filed a stockholder derivative complaint in the United States District Court for the Northern District of Illinois on May 21, 2018. The plaintiff seeks, on behalf of the Company, an unspecified amount of damages and various forms of equitable relief. The complaint names as defendants the Company’s chairman, president and chief executive officer, its former president, its former chief financial officer, who is now the Company’s vice chairman, and certain present or former members of the board of directors. The complaint alleges breaches of fiduciary duty based on allegations similar to those asserted in In re The Allstate Corp. Securities Litigation as well as state law “misappropriation” claims based on stock option transactions by the Company’s chairman, president and chief executive officer, its former chief financial officer, who is now the Company’s vice chairman, and certain members of the board of directors. Defendants moved to dismiss and/or stay the complaint on August 7, 2018. On December 4, 2018, the court granted the defendants’ motion and stayed the case pending the resolution of the consolidated Biefeldt/IBEW matter. In re The Allstate Corp. Securities Litigation is a putative class action filed on November 11, 2016 in the United States District Court for the Northern District of Illinois against the Company and two of its officers asserting claims under the federal securities laws. Plaintiffs allege that they purchased Allstate common stock during the putative class period and suffered damages as the result of the conduct alleged. Plaintiffs seek an unspecified amount of damages, costs, attorney’s fees, and other relief as the court deems appropriate. Plaintiffs allege that the Company and certain senior officers made allegedly material misstatements or omissions concerning claim frequency statistics and the reasons for a claim frequency increase for Allstate brand auto insurance between October 2014 and August 3, 2015. |
Benefit Plans
Benefit Plans | 3 Months Ended |
Mar. 31, 2019 | |
Retirement Benefits [Abstract] | |
Benefit Plans | Note 12 Benefit Plans Change in accounting principle As discussed in Note 1, the Company changed its accounting principle for recognizing actuarial gains and losses and expected return on plan assets for its pension and other postretirement plans to a more preferable policy under U.S. GAAP. Under the new principle, remeasurement of projected benefit obligation and plan assets are immediately recognized through earnings and are referred to as pension and other postretirement remeasurement gains and losses on the Condensed Consolidated Statements of Operations. This change has been applied on a retrospective basis . See Note 1 for further information regarding the impact of the change in accounting principle on the condensed consolidated financial statements. Components of net cost (benefit) for pension and other postretirement plans Three months ended March 31, ($ in millions) 2019 2018 Pension benefits Service cost $ 28 $ 28 Interest cost 65 61 Expected return on plan assets (93 ) (113 ) Amortization of prior service credit (14 ) (14 ) Costs and expenses (14 ) (38 ) Remeasurement of projected benefit obligation 387 (190 ) Remeasurement of plan assets (391 ) 212 Remeasurement gains and losses (4 ) 22 Total net benefit $ (18 ) $ (16 ) Postretirement benefits Service cost $ 2 $ 2 Interest cost 4 4 Amortization of prior service credit (1 ) (5 ) Costs and expenses 5 1 Remeasurement of projected benefit obligation 19 (8 ) Remeasurement of plan assets — — Remeasurement gains and losses 19 (8 ) Total net cost (benefit) $ 24 $ (7 ) |
Supplemental Cash Flow Informat
Supplemental Cash Flow Information | 3 Months Ended |
Mar. 31, 2019 | |
Supplemental Cash Flow Information [Abstract] | |
Supplemental Cash Flow Information | Note 13 Supplemental Cash Flow Information Non-cash investing activities include $128 million and $18 million related to mergers and exchanges completed with equity securities, fixed income securities and limited partnerships, and modifications of certain mortgage loans and other investments for the three months ended March 31, 2019 and 2018 , respectively. Non-cash financing activities include $46 million and $27 million related to the issuance of Allstate common shares for vested equity awards for the three months ended March 31, 2019 and 2018 , respectively. Cash flows used in operating activities in the Condensed Consolidated Statements of Cash Flows include cash paid for operating leases related to amounts included in the measurement of lease liabilities of $37 million for the three months ended March 31, 2019 . Non-cash operating activities include $502 million related to ROU assets obtained in exchange for lease obligations, including $488 million related to the adoption of new guidance related to accounting for leases, for the three months ended March 31, 2019 . Liabilities for collateral received in conjunction with the Company’s securities lending program and over-the-counter and cleared derivatives are reported in other liabilities and accrued expenses or other investments. The accompanying cash flows are included in cash flows from operating activities in the Condensed Consolidated Statements of Cash Flows along with the activities resulting from management of the proceeds, as follows: ($ in millions) Three months ended March 31, 2019 2018 Net change in proceeds managed Net change in fixed income securities $ 60 $ 32 Net change in short-term investments (575 ) 55 Operating cash flow (used) provided $ (515 ) $ 87 Net change in liabilities Liabilities for collateral, beginning of period $ (1,458 ) $ (1,124 ) Liabilities for collateral, end of period (1,973 ) (1,037 ) Operating cash flow provided (used) $ 515 $ (87 ) |
Other Comprehensive Income
Other Comprehensive Income | 3 Months Ended |
Mar. 31, 2019 | |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |
Other Comprehensive Income | Note 14 Other Comprehensive Income Components of other comprehensive income (loss) on a pre-tax and after-tax basis ($ in millions) Three months ended March 31, 2019 2018 Pre-tax Tax After-tax Pre-tax Tax After-tax Unrealized net holding gains and losses arising during the period, net of related offsets $ 1,287 $ (273 ) $ 1,014 $ (740 ) $ 155 $ (585 ) Less: reclassification adjustment of realized capital gains and losses 51 (11 ) 40 (25 ) 5 (20 ) Unrealized net capital gains and losses 1,236 (262 ) 974 (715 ) 150 (565 ) Unrealized foreign currency translation adjustments 6 (1 ) 5 (3 ) 1 (2 ) Unamortized pension and other postretirement prior service credit arising during the period — — — — — — Less: reclassification adjustment of prior service credit amortized into operating costs and expenses 15 (3 ) 12 19 (5 ) 14 Unamortized pension and other postretirement prior service credit (15 ) 3 (12 ) (19 ) 5 (14 ) Other comprehensive income (loss) $ 1,227 $ (260 ) $ 967 $ (737 ) $ 156 $ (581 ) |
General (Policies)
General (Policies) | 3 Months Ended |
Mar. 31, 2019 | |
General [Abstract] | |
Basis of presentation | Basis of presentation The accompanying condensed consolidated financial statements include the accounts of The Allstate Corporation (the “Corporation”) and its wholly owned subsidiaries, primarily Allstate Insurance Company (“AIC”), a property and casualty insurance company with various property and casualty and life and investment subsidiaries, including Allstate Life Insurance Company (“ALIC”) (collectively referred to as the “Company” or “Allstate”). These condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The condensed consolidated financial statements and notes as of March 31, 2019 and for the three month periods ended March 31, 2019 and 2018 are unaudited. The condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring accruals) which are, in the opinion of management, necessary for the fair presentation of the financial position, results of operations and cash flows for the interim periods. These condensed consolidated financial statements and notes should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2018 . The results of operations for the interim periods should not be considered indicative of results to be expected for the full year. All significant intercompany accounts and transactions have been eliminated. |
New Accounting Pronouncements | Adopted accounting standards Accounting for Leases Effective January 1, 2019 the Company adopted new Financial Accounting Standards Board ("FASB") guidance related to accounting for leases. Upon adoption of the guidance under the optional transition method that allows application of the transition provisions at the adoption date instead of the earliest period presented, the Company recorded a $585 million lease liability equal to the present value of lease payments and a $488 million right-of-use (“ROU”) asset, which is the corresponding lease liability adjusted for qualifying accrued lease payments. The lease liability and ROU asset were reported as part of other liabilities and other assets on the Condensed Consolidated Statements of Financial Position. The impact of these changes at adoption had no impact on net income or shareholders’ equity. Prior periods were not restated under the new standard. The Company utilized practical expedients which do not require reassessment of existing contracts for the existence of a lease or reassessment of existing lease classifications. Upon adoption, the new guidance required sellers in a sale-leaseback transaction to recognize the entire gain from the sale of an underlying asset at the time the sale is recognized rather than over the leaseback term. The carrying value of unrecognized gains on sale-leaseback transactions executed prior to January 1, 2019 was $21 million , after-tax, and was recorded as an increase to retained income at the date of adoption. Accounting for Hedging Activities Effective January 1, 2019 the Company adopted new FASB guidance intended to better align hedge accounting with an organization’s risk management activities. The new guidance expands hedge accounting to nonfinancial and financial risk components and revises the measurement methodologies to better align with an organization’s risk management activities. Separate presentation of hedge ineffectiveness is eliminated with the intention to provide greater transparency to the full impact of hedging by requiring presentation of the results of the hedged item and hedging instrument in a single financial statement line item. In addition, the amendments were designed to reduce complexity by simplifying hedge effectiveness testing. The adoption had no impact on the Company’s results of operations or financial position. Changes to significant accounting policies for leases The Company has certain operating leases for office facilities, computer and office equipment, and transportation vehicles. The Company’s leases have remaining lease terms of 1 year to 11 years, some of which include options to extend the leases for up to 14 years, and some of which include options to terminate the leases within 60 days. The Company determines if an arrangement is a lease at inception. Leases with an initial term less than one year are not recorded on the balance sheet and the lease costs for these leases are recorded on a straight-line basis over the lease term. Operating leases with terms greater than one year, result in a lease liability recorded in other liabilities with a corresponding ROU asset recorded in other assets. As of March 31, 2019, the Company had $572 million in lease liabilities and $474 million in ROU assets. Operating lease liabilities are recognized at the commencement date based on the present value of future minimum lease payments over the lease term. ROU assets are recognized based on the corresponding lease liabilities adjusted for qualifying initial direct costs, prepaid or accrued lease payments and unamortized lease incentives. As most of the Company’s leases do not disclose the implicit interest rate, the Company uses collateralized incremental borrowing rates based on information available at lease commencement when determining the present value of future lease payments. The Company has lease agreements with lease and non-lease components, which are generally accounted for as a single lease. Lease terms may include options to extend or terminate the lease which are incorporated into the Company’s measurements when it is reasonably certain that the Company will exercise the option. Operating lease costs are recognized on a straight-line basis over the lease term and include interest expense on the lease liability and amortization of the ROU asset. Variable lease costs are expensed as incurred and include maintenance costs and real estate taxes. Lease costs are reported in operating costs and expenses and totaled $41 million , including $7 million of variable lease costs in first quarter 2019. Other information related to operating leases As of March 31, 2019 Weighted average remaining lease term (years) 6 Weighted average discount rate 3.27 % Maturity of lease liabilities ($ in millions) Operating leases 2019 (1) $ 85 2020 135 2021 104 2022 86 2023 71 2024 55 Thereafter 104 Total lease payments (2) $ 640 Less: interest (68 ) Present value of lease liabilities $ 572 (1) Excludes maturity of lease liabilities for the three months ended March 31, 2019. (2) Excludes operating leases that have not yet commenced of $11 million as of March 31, 2019. Pending accounting standards Measurement of Credit Losses on Financial Instruments In June 2016, the FASB issued guidance which revises the credit loss recognition criteria for certain financial assets measured at amortized cost, including reinsurance recoverables. The new guidance replaces the existing incurred loss recognition model with an expected loss recognition model. The objective of the expected credit loss model is for a reporting entity to recognize its estimate of expected credit losses for affected financial assets in a valuation allowance that when deducted from the amortized cost basis of the related financial assets results in a net carrying value of affected financial assets at the amount expected to be collected. The reporting entity must consider all relevant information available when estimating expected credit losses, including details about past events, current conditions, and reasonable and supportable forecasts over the life of an asset. Financial assets may be evaluated individually or on a pooled basis when they share similar risk characteristics. The measurement of credit losses for available-for-sale debt securities measured at fair value is not affected except that credit losses recognized are limited to the amount by which fair value is below amortized cost and the carrying value adjustment is recognized through a valuation allowance which may change over time but once recorded cannot subsequently be reduced to an amount below zero. The guidance is effective for reporting periods beginning after December 15, 2019, and for most affected instruments must be adopted using a modified retrospective approach, with a cumulative effect adjustment recorded to beginning retained income. The impact of adoption is not expected to be material to the Company’s results of operations or financial position. Changes to the Disclosure Requirements for Defined Benefit Plans In August 2018, the FASB issued amendments to modify certain disclosure requirements for defined benefit plans. Disclosure additions relate to the weighted-average interest crediting rates for cash balance plans and other plans with interest crediting rates and explanations for significant gains and losses related to changes in the benefit obligation for the period. Disclosures to be removed include those that identify amounts that are expected to be reclassified out of AOCI and into the income statement in the coming year and the anticipated impact of a one-percentage point change in assumed health care cost trend rate on service and interest cost and on the accumulated benefit obligation. The amendments are effective for annual reporting periods beginning after December 15, 2020. The impacts of adoption are to the Company’s disclosures only. Accounting for Long-Duration Insurance Contracts In August 2018, the FASB issued guidance revising the accounting for certain long-duration insurance contracts. The new guidance changes the measurement of the Company’s reserves for traditional life, life-contingent immediate annuities and certain voluntary accident and health insurance products. Under the new guidance, measurement assumptions, including those for mortality, morbidity and policy terminations, will be required to be reviewed and updated at least annually. The effect of updating measurement assumptions other than the discount rate are required to be measured on a retrospective basis and reported in net income. In addition, cash flows under the new guidance are required to be discounted using an upper-medium grade fixed income instrument yield required to be updated through OCI at each reporting date. These changes will replace current GAAP, which utilizes assumptions set at policy issuance until such time as the assumptions result in reserves that are deficient when compared to reserves computed using current assumptions. Under current GAAP, premium deficiency reserves are recognized when a reserve deficiency is computed using current assumptions. The new guidance requires deferred policy acquisition costs (“DAC”) and other capitalized balances currently amortized in proportion to premiums or gross profits to be amortized on a constant level basis over the expected term for all long-duration insurance contracts. DAC will not be subject to loss recognition testing but will be reduced when actual experience exceeds expected experience. The new guidance will no longer require adjustments to DAC and deferred sales inducement costs (“DSI”) related to unrealized gains and losses on investment securities supporting the related business. Market risk benefit product features are required to be measured at fair value with changes in fair value recorded in net income with the exception of changes in the fair value attributable to changes in the reporting entity’s own credit risk, which are required to be recognized in OCI. Substantially all of the Company’s market risk benefits are reinsured and therefore these impacts are not expected to be material to the Company. The new guidance is to be included in the comparable financial statements issued in reporting periods beginning after December 15, 2020, thereby requiring restatement of prior periods presented. Early adoption is permitted. The new guidance will be applied to affected contracts and DAC on the basis of existing carrying amounts at the earliest period presented or retrospectively using actual historical experience as of contract inception. The new guidance for market risk benefits is required to be adopted retrospectively. The Company is evaluating the anticipated impacts of applying the new guidance to both retained income and AOCI. While the requirements of the new guidance represent a material change from existing GAAP, the underlying economics of the business and related cash flows are unchanged. The Company has not completed its evaluation of the specific impacts of adopting the new guidance, but anticipates the financial statement impact of migrating from existing GAAP to that required by the new guidance to be material, largely attributed to the impact of transitioning from an original investment-based discount rate to one based on an upper-medium grade fixed income investment yield and updates to mortality assumptions previously locked in at issuance and subject to premium deficiency testing. The Company expects the most significant impacts will occur in the run-off annuity segment. The revised accounting for DAC will be applied prospectively using the new model and any DAC effects existing in AOCI as a result of applying existing GAAP at the date of adoption will be reversed. Codification Improvements related to Credit Losses, Derivatives and Hedging, and Financial Instruments In April 2019, the FASB issued Codification Improvements related to Credit Losses, Derivatives and Hedging, and Financial Instruments. The guidance for Credit Losses and Financial Instruments is effective for reporting periods beginning after December 15, 2019. The guidance for Derivatives and Hedging is effective January 1, 2020. The Company is in the process of evaluating the impact of adoption, which is not expected to be material to the Company’s results of operations or financial position. Change in accounting principle The Company changed its accounting principle for recognizing actuarial gains and losses and expected return on plan assets for its pension and other postretirement plans to a more preferable policy under U.S. GAAP. Under the new principle, remeasurement of projected benefit obligation and plan assets are immediately recognized in earnings and are referred to as pension and other postretirement remeasurement gains and losses on the Condensed Consolidated Statements of Operations. Previously, actuarial gains and losses and differences between the expected and actual returns on plan assets were recognized as a component of AOCI, and were subject to amortization into earnings in future periods. This change has been applied on a retrospective basis . The Company’s policy is to remeasure its pension and postretirement plans on a quarterly basis. D ifferences between expected and actual returns and changes in assumptions affect our pension and other postretirement obligations, plan assets and expenses. The primary factors contributing to pension and other postretirement remeasurement gains and losses are 1) changes in the discount rate used to value pension and postretirement obligations as of the measurement date, 2) differences between the expected and the actual return on plan assets, 3) changes in demographic assumptions, including mortality, and 4) participant experience different from demographic assumptions. The Company also changed its policy for recognizing expected returns on plan assets by eliminating the permitted accounting practice allowing the five-year smoothing of equity returns and moving to an unadjusted fair value method. The Company believes that immediately recognizing remeasurement of projected benefit obligation and plan assets in earnings is preferable as it provides greater transparency of the Company’s economic obligations in accounting results and better aligns with fair value accounting principles by recognizing the effects of economic and interest rate changes on pension and other postretirement plan assets and liabilities in the year in which the gains and losses are incurred. These changes have been applied on a retrospective basis and as of January 1, 2018 resulted in a cumulative effect decrease to retained income of $1.58 billion , with a corresponding offset to AOCI and had no impact on total shareholders’ equity. Pension and other postretirement service cost, interest cost, expected return on plan assets and amortization of prior service credits are allocated to the Company’s reportable segments. The pension and other postretirement remeasurement gains and losses are now reported in the Corporate and Other segment. The impacts of the adjustments on the financial statements are summarized in the following tables. Condensed Consolidated Statements of Operations (unaudited) Previous accounting principle Impact of change As reported ($ in millions, except per share data) Three months ended March 31, 2019 Property and casualty insurance claims and claims expense $ 5,829 $ (9 ) $ 5,820 Operating costs and expenses 1,388 (8 ) 1,380 Pension and other postretirement remeasurement gains and losses — 15 15 Restructuring and related charges 22 (4 ) 18 Total costs and expenses 9,377 (6 ) 9,371 Income from operations before income tax expense 1,614 6 1,620 Income tax expense 327 1 328 Net income 1,287 5 1,292 Net income applicable to common shareholders $ 1,256 $ 5 $ 1,261 Earnings per common share: Net income applicable to common shareholders per common share - Basic $ 3.78 $ 0.01 $ 3.79 Net income applicable to common shareholders per common share - Diluted $ 3.72 $ 0.02 $ 3.74 Condensed Consolidated Statements of Operations (unaudited) Previously reported Impact of change As adjusted ($ in millions, except per share data) Three months ended March 31, 2018 Property and casualty insurance claims and claims expense $ 5,149 $ (20 ) $ 5,129 Operating costs and expenses 1,333 (30 ) 1,303 Pension and other postretirement remeasurement gains and losses — 14 14 Restructuring and related charges 22 (3 ) 19 Total costs and expenses 8,547 (39 ) 8,508 Income from operations before income tax expense 1,224 39 1,263 Income tax expense 249 8 257 Net income 975 31 1,006 Net income applicable to common shareholders $ 946 $ 31 $ 977 Earnings per common share: Net income applicable to common shareholders per common share - Basic $ 2.67 $ 0.09 $ 2.76 Net income applicable to common shareholders per common share - Diluted $ 2.63 $ 0.08 $ 2.71 Condensed Consolidated Statements of Comprehensive Income (unaudited) Previous accounting principle Impact of change As reported ($ in millions) Three months ended March 31, 2019 Net income $ 1,287 $ 5 $ 1,292 Other comprehensive income (loss), after-tax Changes in: Unrealized net capital gains and losses 974 — 974 Unrealized foreign currency translation adjustments 7 (2 ) 5 Unrecognized pension and other postretirement benefit cost (1) 10 (22 ) (12 ) Other comprehensive income (loss), after-tax 991 (24 ) 967 Comprehensive income $ 2,278 $ (19 ) $ 2,259 (1) Financial statement line item has been updated to “ Unamortized pension and other postretirement prior service credit ”. Condensed Consolidated Statements of Comprehensive Income (unaudited) Previously reported Impact of change As adjusted ($ in millions) Three months ended March 31, 2018 Net income $ 975 $ 31 $ 1,006 Other comprehensive loss, after-tax Changes in: Unrealized net capital gains and losses (565 ) — (565 ) Unrealized foreign currency translation adjustments (4 ) 2 (2 ) Unrecognized pension and other postretirement benefit cost 23 (37 ) (14 ) Other comprehensive loss, after-tax (546 ) (35 ) (581 ) Comprehensive income $ 429 $ (4 ) $ 425 Condensed Consolidated Statements of Financial Position (unaudited) Previous accounting principle Impact of change As reported ($ in millions) March 31, 2019 Deferred income taxes $ 822 $ (5 ) $ 817 Other liabilities and accrued expenses 8,953 24 8,977 Total liabilities 92,397 19 92,416 Retained income 46,818 (1,670 ) 45,148 Unrealized foreign currency translation adjustments (57 ) 13 (44 ) Unrecognized pension and other postretirement benefit cost (1) (1,481 ) 1,638 157 Total AOCI (566 ) 1,651 1,085 Total shareholders’ equity $ 23,437 $ (19 ) $ 23,418 Condensed Consolidated Statements of Financial Position (unaudited) Previously reported Impact of change As adjusted ($ in millions) December 31, 2018 Retained income $ 45,708 $ (1,675 ) $ 44,033 Unrealized foreign currency translation adjustments (64 ) 15 (49 ) Unrecognized pension and other postretirement benefit cost (1,491 ) 1,660 169 Total AOCI $ (1,557 ) $ 1,675 $ 118 Condensed Consolidated Statements of Shareholders’ Equity (unaudited) Previous accounting principle Impact of change As reported ($ in millions) Three months ended March 31, 2019 Retained income Balance, beginning of period $ 45,708 $ (1,675 ) $ 44,033 Cumulative effect of change in accounting principle 21 — 21 Net income 1,287 5 1,292 Dividends on common stock (167 ) — (167 ) Dividends on preferred stock (31 ) — (31 ) Balance, end of period 46,818 (1,670 ) 45,148 Accumulated other comprehensive income (loss) Balance, beginning of period (1,557 ) 1,675 118 Cumulative effect of change in accounting principle — — — Change in unrealized net capital gains and losses 974 — 974 Change in unrealized foreign currency translation adjustments 7 (2 ) 5 Change in unrecognized pension and other postretirement benefit cost (1) 10 (22 ) (12 ) Balance, end of period (566 ) 1,651 1,085 Total shareholders’ equity $ 23,437 $ (19 ) $ 23,418 (1) Financial statement line item has been updated to “ Change in unamortized pension and other postretirement prior service credit ”. Condensed Consolidated Statements of Shareholders’ Equity (unaudited) Previously reported Impact of change As adjusted ($ in millions) Three months ended March 31, 2018 Retained income Balance, beginning of period $ 43,162 $ (1,583 ) $ 41,579 Cumulative effect of change in accounting principle 1,088 — 1,088 Net income 975 31 1,006 Dividends on common stock (165 ) — (165 ) Dividends on preferred stock (29 ) — (29 ) Balance, end of period 45,031 (1,552 ) 43,479 Accumulated other comprehensive income (loss) Balance, beginning of period 306 1,583 1,889 Cumulative effect of change in accounting principle (910 ) — (910 ) Change in unrealized net capital gains and losses (565 ) — (565 ) Change in unrealized foreign currency translation adjustments (4 ) 2 (2 ) Change in unrecognized pension and other postretirement benefit cost 23 (37 ) (14 ) Balance, end of period (1,150 ) 1,548 398 Total shareholders’ equity $ 23,277 $ (4 ) $ 23,273 Condensed Consolidated Statements of Cash Flows (unaudited) Previous accounting principle Impact of change As reported ($ in millions) Three months ended March 31, 2019 Cash flows from operating activities Net income $ 1,287 $ 5 $ 1,292 Adjustments to reconcile net income to net cash provided by operating activities: Pension and other postretirement remeasurement gains and losses — 15 15 Income taxes 302 1 303 Other operating assets and liabilities (389 ) (21 ) (410 ) Net cash provided by operating activities $ 714 $ — $ 714 Condensed Consolidated Statements of Cash Flows (unaudited) Previously reported Impact of change As adjusted ($ in millions) Three months ended March 31, 2018 Cash flows from operating activities Net income $ 975 $ 31 $ 1,006 Adjustments to reconcile net income to net cash provided by operating activities: Pension and other postretirement remeasurement gains and losses — 14 14 Income taxes 181 8 189 Other operating assets and liabilities (318 ) (53 ) (371 ) Net cash provided by operating activities $ 626 $ — $ 626 |
Fair Value Measurement | Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The hierarchy for inputs used in determining fair value maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that observable inputs be used when available. Assets and liabilities recorded on the Condensed Consolidated Statements of Financial Position at fair value are categorized in the fair value hierarchy based on the observability of inputs to the valuation techniques as follows: Level 1: Assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that the Company can access. Level 2: Assets and liabilities whose values are based on the following: (a) Quoted prices for similar assets or liabilities in active markets; (b) Quoted prices for identical or similar assets or liabilities in markets that are not active; or (c) Valuation models whose inputs are observable, directly or indirectly, for substantially the full term of the asset or liability. Level 3: Assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. Unobservable inputs reflect the Company’s estimates of the assumptions that market participants would use in valuing the assets and liabilities. The availability of observable inputs varies by instrument. In situations where fair value is based on internally developed pricing models or inputs that are unobservable in the market, the determination of fair value requires more judgment. The degree of judgment exercised by the Company in determining fair value is typically greatest for instruments categorized in Level 3. In many instances, valuation inputs used to measure fair value fall into different levels of the fair value hierarchy. The category level in the fair value hierarchy is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company uses prices and inputs that are current as of the measurement date, including during periods of market disruption. In periods of market disruption, the ability to observe prices and inputs may be reduced for many instruments. The Company is responsible for the determination of fair value and the supporting assumptions and methodologies. The Company gains assurance that assets and liabilities are appropriately valued through the execution of various processes and controls designed to ensure the overall reasonableness and consistent application of valuation methodologies, including inputs and assumptions, and compliance with accounting standards. For fair values received from third parties or internally estimated, the Company’s processes and controls are designed to ensure that the valuation methodologies are appropriate and consistently applied, the inputs and assumptions are reasonable and consistent with the objective of determining fair value, and the fair values are accurately recorded. For example, on a continuing basis, the Company assesses the reasonableness of individual fair values that have stale security prices or that exceed certain thresholds as compared to previous fair values received from valuation service providers or brokers or derived from internal models. The Company performs procedures to understand and assess the methodologies, processes and controls of valuation service providers. In addition, the Company may validate the reasonableness of fair values by comparing information obtained from valuation service providers or brokers to other third party valuation sources for selected securities. The Company performs ongoing price validation procedures such as back-testing of actual sales, which corroborate the various inputs used in internal models to market observable data. When fair value determinations are expected to be more variable, the Company validates them through reviews by members of management who have relevant expertise and who are independent of those charged with executing investment transactions. The Company has two types of situations where investments are classified as Level 3 in the fair value hierarchy. The first is where specific inputs significant to the fair value estimation models are not market observable. This primarily occurs in the Company’s use of broker quotes to value certain securities where the inputs have not been corroborated to be market observable, and the use of valuation models that use significant non-market observable inputs. The second situation where the Company classifies securities in Level 3 is where quotes continue to be received from independent third-party valuation service providers and all significant inputs are market observable; however, there has been a significant decrease in the volume and level of activity for the asset when compared to normal market activity such that the degree of market observability has declined to a point where categorization as a Level 3 measurement is considered appropriate. The indicators considered in determining whether a significant decrease in the volume and level of activity for a specific asset has occurred include the level of new issuances in the primary market, trading volume in the secondary market, the level of credit spreads over historical levels, applicable bid-ask spreads, and price consensus among market participants and other pricing sources. Certain assets are not carried at fair value on a recurring basis, including investments such as mortgage loans, bank loans, agent loans and policy loans. Accordingly, such investments are only included in the fair value hierarchy disclosure when the investment is subject to remeasurement at fair value after initial recognition and the resulting remeasurement is reflected in the condensed consolidated financial statements. In determining fair value, the Company principally uses the market approach which generally utilizes market transaction data for the same or similar instruments. To a lesser extent, the Company uses the income approach which involves determining fair values from discounted cash flow methodologies. For the majority of Level 2 and Level 3 valuations, a combination of the market and income approaches is used. Summary of significant valuation techniques for assets and liabilities measured at fair value on a recurring basis Level 1 measurements • Fixed income securities: Comprise certain U.S. Treasury fixed income securities. Valuation is based on unadjusted quoted prices for identical assets in active markets that the Company can access. • Equity securities: Comprise actively traded, exchange-listed equity securities. Valuation is based on unadjusted quoted prices for identical assets in active markets that the Company can access. • Short-term: Comprise U.S. Treasury bills valued based on unadjusted quoted prices for identical assets in active markets that the Company can access and actively traded money market funds that have daily quoted net asset values for identical assets that the Company can access. • Separate account assets: Comprise actively traded mutual funds that have daily quoted net asset values that are readily determinable for identical assets that the Company can access. Net asset values for the actively traded mutual funds in which the separate account assets are invested are obtained daily from the fund managers. Level 2 measurements • Fixed income securities: U.S. government and agencies: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields and credit spreads. Municipal: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields and credit spreads. Corporate - public: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields and credit spreads. Corporate - privately placed: Valued using a discounted cash flow model that is widely accepted in the financial services industry and uses market observable inputs and inputs derived principally from, or corroborated by, observable market data. The primary inputs to the discounted cash flow model include an interest rate yield curve, as well as published credit spreads for similar assets in markets that are not active that incorporate the credit quality and industry sector of the issuer. Foreign government: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields and credit spreads. ABS - collateralized debt obligations (“CDO”) and ABS - consumer and other: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields, prepayment speeds, collateral performance and credit spreads. Certain ABS - CDO and ABS - consumer and other are valued based on non-binding broker quotes whose inputs have been corroborated to be market observable. RMBS: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields, prepayment speeds, collateral performance and credit spreads. CMBS: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields, collateral performance and credit spreads. Redeemable preferred stock: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields, underlying stock prices and credit spreads. • Equity securities: The primary inputs to the valuation include quoted prices or quoted net asset values for identical or similar assets in markets that are not active. • Short-term: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields and credit spreads. • Other investments: Free-standing exchange listed derivatives that are not actively traded are valued based on quoted prices for identical instruments in markets that are not active. Over-the-counter (“OTC”) derivatives, including interest rate swaps, foreign currency swaps, total return swaps, foreign exchange forward contracts, certain options and certain credit default swaps, are valued using models that rely on inputs such as interest rate yield curves, implied volatilities, index price levels, currency rates, and credit spreads that are observable for substantially the full term of the contract. The valuation techniques underlying the models are widely accepted in the financial services industry and do not involve significant judgment. Level 3 measurements • Fixed income securities: Municipal: Comprise municipal bonds that are not rated by third party credit rating agencies. The primary inputs to the valuation of these municipal bonds include quoted prices for identical or similar assets in markets that exhibit less liquidity relative to those markets supporting Level 2 fair value measurements, contractual cash flows, benchmark yields and credit spreads. Also included are municipal bonds valued based on non-binding broker quotes where the inputs have not been corroborated to be market observable and municipal bonds in default valued based on the present value of expected cash flows. Corporate - public and Corporate - privately placed: Primarily valued based on non-binding broker quotes where the inputs have not been corroborated to be market observable. Other inputs include an interest rate yield curve, as well as published credit spreads for similar assets that incorporate the credit quality and industry sector of the issuer. ABS - CDO, ABS - consumer and other, and CMBS: Valued based on non-binding broker quotes received from brokers who are familiar with the investments and where the inputs have not been corroborated to be market observable. • Equity securities: The primary inputs to the valuation include quoted prices or quoted net asset values for identical or similar assets in markets that exhibit less liquidity relative to those markets supporting Level 2 fair value measurements. • Short-term: For certain short-term investments, amortized cost is used as the best estimate of fair value. • Other investments: Certain OTC derivatives, such as interest rate caps, certain credit default swaps and certain options (including swaptions), are valued using models that are widely accepted in the financial services industry. These are categorized as Level 3 as a result of the significance of non-market observable inputs such as volatility. Other primary inputs include interest rate yield curves and credit spreads. • Contractholder funds: Derivatives embedded in certain life and annuity contracts are valued internally using models widely accepted in the financial services industry that determine a single best estimate of fair value for the embedded derivatives within a block of contractholder liabilities. The models primarily use stochastically determined cash flows based on the contractual elements of embedded derivatives, projected option cost and applicable market data, such as interest rate yield curves and equity index volatility assumptions. These are categorized as Level 3 as a result of the significance of non-market observable inputs. Assets and liabilities measured at fair value on a non-recurring basis Mortgage loans written-down to fair value in connection with recognizing impairments are valued based on the fair value of the underlying collateral less costs to sell. Bank loans written-down to fair value are valued based on broker quotes from brokers familiar with the loans and current market conditions or based on internal valuation models. Investments excluded from the fair value hierarchy Limited partnerships carried at fair value , which do not have readily determinable fair values, use NAV provided by the investees and are excluded from the fair value hierarchy. These investments are generally not redeemable by the investees and generally cannot be sold withou t approval of the general partner. The Company receives distributions of income and proceeds from the liquidation of the underlying assets of the investees, which usually takes place in years 4-9 of the typical contractual life of 10 - 12 |
General (Tables)
General (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
General [Abstract] | |
Lease, Cost | Other information related to operating leases As of March 31, 2019 Weighted average remaining lease term (years) 6 Weighted average discount rate 3.27 % |
Operating Lease, Liability, Maturity | Maturity of lease liabilities ($ in millions) Operating leases 2019 (1) $ 85 2020 135 2021 104 2022 86 2023 71 2024 55 Thereafter 104 Total lease payments (2) $ 640 Less: interest (68 ) Present value of lease liabilities $ 572 (1) Excludes maturity of lease liabilities for the three months ended March 31, 2019. (2) Excludes operating leases that have not yet commenced of $11 million |
Schedule Changes in Accounting Principles | The impacts of the adjustments on the financial statements are summarized in the following tables. Condensed Consolidated Statements of Operations (unaudited) Previous accounting principle Impact of change As reported ($ in millions, except per share data) Three months ended March 31, 2019 Property and casualty insurance claims and claims expense $ 5,829 $ (9 ) $ 5,820 Operating costs and expenses 1,388 (8 ) 1,380 Pension and other postretirement remeasurement gains and losses — 15 15 Restructuring and related charges 22 (4 ) 18 Total costs and expenses 9,377 (6 ) 9,371 Income from operations before income tax expense 1,614 6 1,620 Income tax expense 327 1 328 Net income 1,287 5 1,292 Net income applicable to common shareholders $ 1,256 $ 5 $ 1,261 Earnings per common share: Net income applicable to common shareholders per common share - Basic $ 3.78 $ 0.01 $ 3.79 Net income applicable to common shareholders per common share - Diluted $ 3.72 $ 0.02 $ 3.74 Condensed Consolidated Statements of Operations (unaudited) Previously reported Impact of change As adjusted ($ in millions, except per share data) Three months ended March 31, 2018 Property and casualty insurance claims and claims expense $ 5,149 $ (20 ) $ 5,129 Operating costs and expenses 1,333 (30 ) 1,303 Pension and other postretirement remeasurement gains and losses — 14 14 Restructuring and related charges 22 (3 ) 19 Total costs and expenses 8,547 (39 ) 8,508 Income from operations before income tax expense 1,224 39 1,263 Income tax expense 249 8 257 Net income 975 31 1,006 Net income applicable to common shareholders $ 946 $ 31 $ 977 Earnings per common share: Net income applicable to common shareholders per common share - Basic $ 2.67 $ 0.09 $ 2.76 Net income applicable to common shareholders per common share - Diluted $ 2.63 $ 0.08 $ 2.71 Condensed Consolidated Statements of Comprehensive Income (unaudited) Previous accounting principle Impact of change As reported ($ in millions) Three months ended March 31, 2019 Net income $ 1,287 $ 5 $ 1,292 Other comprehensive income (loss), after-tax Changes in: Unrealized net capital gains and losses 974 — 974 Unrealized foreign currency translation adjustments 7 (2 ) 5 Unrecognized pension and other postretirement benefit cost (1) 10 (22 ) (12 ) Other comprehensive income (loss), after-tax 991 (24 ) 967 Comprehensive income $ 2,278 $ (19 ) $ 2,259 (1) Financial statement line item has been updated to “ Unamortized pension and other postretirement prior service credit ”. Condensed Consolidated Statements of Comprehensive Income (unaudited) Previously reported Impact of change As adjusted ($ in millions) Three months ended March 31, 2018 Net income $ 975 $ 31 $ 1,006 Other comprehensive loss, after-tax Changes in: Unrealized net capital gains and losses (565 ) — (565 ) Unrealized foreign currency translation adjustments (4 ) 2 (2 ) Unrecognized pension and other postretirement benefit cost 23 (37 ) (14 ) Other comprehensive loss, after-tax (546 ) (35 ) (581 ) Comprehensive income $ 429 $ (4 ) $ 425 Condensed Consolidated Statements of Financial Position (unaudited) Previous accounting principle Impact of change As reported ($ in millions) March 31, 2019 Deferred income taxes $ 822 $ (5 ) $ 817 Other liabilities and accrued expenses 8,953 24 8,977 Total liabilities 92,397 19 92,416 Retained income 46,818 (1,670 ) 45,148 Unrealized foreign currency translation adjustments (57 ) 13 (44 ) Unrecognized pension and other postretirement benefit cost (1) (1,481 ) 1,638 157 Total AOCI (566 ) 1,651 1,085 Total shareholders’ equity $ 23,437 $ (19 ) $ 23,418 Condensed Consolidated Statements of Financial Position (unaudited) Previously reported Impact of change As adjusted ($ in millions) December 31, 2018 Retained income $ 45,708 $ (1,675 ) $ 44,033 Unrealized foreign currency translation adjustments (64 ) 15 (49 ) Unrecognized pension and other postretirement benefit cost (1,491 ) 1,660 169 Total AOCI $ (1,557 ) $ 1,675 $ 118 Condensed Consolidated Statements of Shareholders’ Equity (unaudited) Previous accounting principle Impact of change As reported ($ in millions) Three months ended March 31, 2019 Retained income Balance, beginning of period $ 45,708 $ (1,675 ) $ 44,033 Cumulative effect of change in accounting principle 21 — 21 Net income 1,287 5 1,292 Dividends on common stock (167 ) — (167 ) Dividends on preferred stock (31 ) — (31 ) Balance, end of period 46,818 (1,670 ) 45,148 Accumulated other comprehensive income (loss) Balance, beginning of period (1,557 ) 1,675 118 Cumulative effect of change in accounting principle — — — Change in unrealized net capital gains and losses 974 — 974 Change in unrealized foreign currency translation adjustments 7 (2 ) 5 Change in unrecognized pension and other postretirement benefit cost (1) 10 (22 ) (12 ) Balance, end of period (566 ) 1,651 1,085 Total shareholders’ equity $ 23,437 $ (19 ) $ 23,418 (1) Financial statement line item has been updated to “ Change in unamortized pension and other postretirement prior service credit ”. Condensed Consolidated Statements of Shareholders’ Equity (unaudited) Previously reported Impact of change As adjusted ($ in millions) Three months ended March 31, 2018 Retained income Balance, beginning of period $ 43,162 $ (1,583 ) $ 41,579 Cumulative effect of change in accounting principle 1,088 — 1,088 Net income 975 31 1,006 Dividends on common stock (165 ) — (165 ) Dividends on preferred stock (29 ) — (29 ) Balance, end of period 45,031 (1,552 ) 43,479 Accumulated other comprehensive income (loss) Balance, beginning of period 306 1,583 1,889 Cumulative effect of change in accounting principle (910 ) — (910 ) Change in unrealized net capital gains and losses (565 ) — (565 ) Change in unrealized foreign currency translation adjustments (4 ) 2 (2 ) Change in unrecognized pension and other postretirement benefit cost 23 (37 ) (14 ) Balance, end of period (1,150 ) 1,548 398 Total shareholders’ equity $ 23,277 $ (4 ) $ 23,273 Condensed Consolidated Statements of Cash Flows (unaudited) Previous accounting principle Impact of change As reported ($ in millions) Three months ended March 31, 2019 Cash flows from operating activities Net income $ 1,287 $ 5 $ 1,292 Adjustments to reconcile net income to net cash provided by operating activities: Pension and other postretirement remeasurement gains and losses — 15 15 Income taxes 302 1 303 Other operating assets and liabilities (389 ) (21 ) (410 ) Net cash provided by operating activities $ 714 $ — $ 714 Condensed Consolidated Statements of Cash Flows (unaudited) Previously reported Impact of change As adjusted ($ in millions) Three months ended March 31, 2018 Cash flows from operating activities Net income $ 975 $ 31 $ 1,006 Adjustments to reconcile net income to net cash provided by operating activities: Pension and other postretirement remeasurement gains and losses — 14 14 Income taxes 181 8 189 Other operating assets and liabilities (318 ) (53 ) (371 ) Net cash provided by operating activities $ 626 $ — $ 626 |
Earnings per Common Share (Tabl
Earnings per Common Share (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Earnings Per Share [Abstract] | |
Computation of basic and diluted earnings per common share | Computation of basic and diluted earnings per common share ($ in millions, except per share data) Three months ended March 31, 2019 2018 Numerator: Net income $ 1,292 $ 1,006 Less: Preferred stock dividends 31 29 Net income applicable to common shareholders $ 1,261 $ 977 Denominator: Weighted average common shares outstanding 332.6 354.1 Effect of dilutive potential common shares: Stock options 3.1 4.1 Restricted stock units (non-participating) and performance stock awards 1.8 1.7 Weighted average common and dilutive potential common shares outstanding 337.5 359.9 Earnings per common share - Basic $ 3.79 $ 2.76 Earnings per common share - Diluted $ 3.74 $ 2.71 |
Reportable Segments (Tables)
Reportable Segments (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Segment Reporting [Abstract] | |
Schedule of business segments revenue disclosures | Reportable segments revenue information ($ in millions) Three months ended March 31, 2019 2018 Property-Liability Insurance premiums Auto $ 5,930 $ 5,591 Homeowners 1,935 1,848 Other personal lines 459 444 Commercial lines 183 136 Allstate Protection 8,507 8,019 Discontinued Lines and Coverages — — Total property-liability insurance premiums 8,507 8,019 Other revenue 176 174 Net investment income 291 337 Realized capital gains and losses 497 (95 ) Total Property-Liability 9,471 8,435 Service Businesses Consumer product protection plans 145 123 Roadside assistance 63 64 Finance and insurance products 87 80 Intersegment premiums and service fees (1) 33 29 Other revenue 47 16 Net investment income 9 5 Realized capital gains and losses 8 (4 ) Total Service Businesses 392 313 Allstate Life Traditional life insurance premiums 154 146 Interest-sensitive life insurance contract charges 183 181 Other revenue 27 26 Net investment income 127 122 Realized capital gains and losses (5 ) (3 ) Total Allstate Life 486 472 Allstate Benefits Traditional life insurance premiums 9 9 Accident and health insurance premiums 250 248 Interest-sensitive life insurance contract charges 29 29 Net investment income 19 19 Realized capital gains and losses 4 (2 ) Total Allstate Benefits 311 303 Allstate Annuities Fixed annuities contract charges 3 3 Net investment income 190 290 Realized capital gains and losses 156 (29 ) Total Allstate Annuities 349 264 Corporate and Other Net investment income 12 13 Realized capital gains and losses 2 (1 ) Total Corporate and Other 14 12 Intersegment eliminations (1) (33 ) (29 ) Consolidated revenues $ 10,990 $ 9,770 (1) |
Schedule of business segments net income disclosures | Reportable segments financial performance Three months ended March 31, ($ in millions) 2019 2018 Property-Liability Allstate Protection $ 703 $ 1,008 Discontinued Lines and Coverages (3 ) (3 ) Total underwriting income 700 1,005 Net investment income 291 337 Income tax expense on operations (202 ) (277 ) Realized capital gains and losses, after-tax 393 (75 ) Property-Liability net income applicable to common shareholders 1,182 990 Service Businesses Adjusted net income (loss) 11 (3 ) Realized capital gains and losses, after-tax 7 (3 ) Amortization of purchased intangible assets, after-tax (24 ) (16 ) Service Businesses net loss applicable to common shareholders (6 ) (22 ) Allstate Life Adjusted net income 73 71 Realized capital gains and losses, after-tax (4 ) (2 ) DAC and DSI amortization related to realized capital gains and losses, after-tax (2 ) (2 ) Allstate Life net income applicable to common shareholders 67 67 Allstate Benefits Adjusted net income 31 29 Realized capital gains and losses, after-tax 3 (2 ) Allstate Benefits net income applicable to common shareholders 34 27 Allstate Annuities Adjusted net (loss) income (25 ) 35 Realized capital gains and losses, after-tax 124 (23 ) Valuation changes on embedded derivatives not hedged, after-tax (3 ) 4 Gain on disposition of operations, after-tax 1 1 Allstate Annuities net income applicable to common shareholders 97 17 Corporate and Other Adjusted net loss (103 ) (90 ) Realized capital gains and losses, after-tax 1 (1 ) Pension and other postretirement remeasurement gains and losses, after-tax (11 ) (11 ) Corporate and Other net loss applicable to common shareholders (113 ) (102 ) Consolidated net income applicable to common shareholders $ 1,261 $ 977 |
Investments (Tables)
Investments (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Investments [Abstract] | |
Schedule for fixed income securities at amortized cost, gross unrealized gains and losses and fair value | Amortized cost, gross unrealized gains (losses) and fair value for fixed income securities ($ in millions) Amortized cost Gross unrealized Fair value Gains Losses March 31, 2019 U.S. government and agencies $ 3,775 $ 119 $ (2 ) $ 3,892 Municipal 8,879 393 (8 ) 9,264 Corporate 41,943 998 (242 ) 42,699 Foreign government 732 21 (1 ) 752 Asset-backed securities (“ABS”) 1,060 7 (9 ) 1,058 Residential mortgage-backed securities (“RMBS”) 354 89 (1 ) 442 Commercial mortgage-backed securities (“CMBS”) 67 7 (1 ) 73 Redeemable preferred stock 21 1 — 22 Total fixed income securities $ 56,831 $ 1,635 $ (264 ) $ 58,202 December 31, 2018 U.S. government and agencies $ 5,386 $ 137 $ (6 ) $ 5,517 Municipal 8,963 249 (43 ) 9,169 Corporate 40,536 490 (890 ) 40,136 Foreign government 739 13 (5 ) 747 ABS 1,049 6 (10 ) 1,045 RMBS 377 89 (2 ) 464 CMBS 63 8 (1 ) 70 Redeemable preferred stock 21 1 — 22 Total fixed income securities $ 57,134 $ 993 $ (957 ) $ 57,170 |
Schedule for fixed income securities based on contractual maturities | Scheduled maturities for fixed income securities ($ in millions) As of March 31, 2019 Amortized cost Fair value Due in one year or less $ 3,309 $ 3,324 Due after one year through five years 26,701 26,996 Due after five years through ten years 16,622 16,946 Due after ten years 8,718 9,363 55,350 56,629 ABS, RMBS and CMBS 1,481 1,573 Total $ 56,831 $ 58,202 |
Schedule of net investment income | Net investment income ($ in millions) Three months ended March 31, 2019 2018 Fixed income securities $ 538 $ 508 Equity securities 30 34 Mortgage loans 53 51 Limited partnership interests 9 180 Short-term investments 26 12 Other 63 66 Investment income, before expense 719 851 Investment expense (71 ) (65 ) Net investment income $ 648 $ 786 |
Schedule of realized capital gains and losses by asset type | Realized capital gains (losses) by asset type ($ in millions) Three months ended March 31, 2019 2018 Fixed income securities $ 64 $ (43 ) Equity securities 553 (93 ) Limited partnership interests 72 10 Derivatives (46 ) (8 ) Other 19 — Realized capital gains and losses $ 662 $ (134 ) |
Schedule of realized capital gains and losses by transaction type | Realized capital gains (losses) by transaction type ($ in millions) Three months ended March 31, 2019 2018 Impairment write-downs $ (14 ) $ (1 ) Change in intent write-downs — — Net OTTI losses recognized in earnings (14 ) (1 ) Sales 95 (42 ) Valuation of equity investments (1) 627 (83 ) Valuation and settlements of derivative instruments (46 ) (8 ) Realized capital gains and losses $ 662 $ (134 ) (1) |
Valuation changes included in net income for investments | The following table presents the net pre-tax appreciation (decline) during 2019 and 2018 of equity securities and limited partnership interests carried at fair value still held as of March 31, 2019 and March 31, 2018 recognized in net income. Net appreciation (decline) recognized in net income ($ in millions) Three months ended March 31, 2019 2018 Equity securities $ 496 $ (49 ) Limited partnership interests carried at fair value (33 ) 78 Total $ 463 $ 29 |
Schedule of other-than-temporary impairment losses by asset type | OTTI losses by asset type ($ in millions) Three months ended Three months ended March 31, 2019 March 31, 2018 Gross Included in OCI Net Gross Included in OCI Net Fixed income securities: Corporate (2 ) 2 — — — — ABS (2 ) 1 (1 ) — — — RMBS — (1 ) (1 ) — — — CMBS — — — — (1 ) (1 ) Total fixed income securities (4 ) 2 (2 ) — (1 ) (1 ) Limited partnership interests (1 ) — (1 ) — — — Other (11 ) — (11 ) — — — OTTI losses $ (16 ) $ 2 $ (14 ) $ — $ (1 ) $ (1 ) |
Schedule of other-than-temporary impairment losses on fixed income securities included in Accumulated Other Comprehensive Income | OTTI losses included in AOCI at the time of impairment for fixed income securities which were not included in earnings ($ in millions) March 31, 2019 December 31, 2018 Municipal $ (5 ) $ (5 ) Corporate (3 ) (2 ) ABS (11 ) (10 ) RMBS (64 ) (67 ) CMBS (2 ) (2 ) Total $ (85 ) $ (86 ) |
Schedule of credit losses on fixed income securities recognized in earnings | Rollforward of the cumulative credit losses recognized in earnings for fixed income securities held as of March 31, ($ in millions) Three months ended March 31, 2019 2018 Beginning balance $ (204 ) $ (226 ) Additional credit loss for securities previously other-than-temporarily impaired (2 ) (1 ) Reduction in credit loss for securities disposed or collected 4 15 Ending balance $ (202 ) $ (212 ) |
Schedule of unrealized net capital gains and losses | Unrealized net capital gains and losses included in AOCI ($ in millions) Fair value Gross unrealized Unrealized net gains (losses) March 31, 2019 Gains Losses Fixed income securities $ 58,202 $ 1,635 $ (264 ) $ 1,371 Short-term investments 4,157 — — — Derivative instruments — — (3 ) (3 ) Unrealized net capital gains and losses, pre-tax 1,368 Amounts recognized for: Insurance reserves (1) (8 ) DAC and DSI (2) (124 ) Amounts recognized (132 ) Deferred income taxes (264 ) Unrealized net capital gains and losses, after-tax $ 972 (1) The insurance reserves adjustment represents the amount by which the reserve balance would increase if the net unrealized gains in the applicable product portfolios were realized and reinvested at lower interest rates, resulting in a premium deficiency. This adjustment primarily relates to structured settlement annuities with life contingencies (a type of immediate fixed annuities). (2) 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. Unrealized net capital gains and losses included in AOCI ($ in millions) Fair value Gross unrealized Unrealized net gains (losses) December 31, 2018 Gains Losses Fixed income securities $ 57,170 $ 993 $ (957 ) $ 36 Short-term investments 3,027 — — — Derivative instruments — — (3 ) (3 ) Unrealized net capital gains and losses, pre-tax 33 Amounts recognized for: Insurance reserves — DAC and DSI (33 ) Amounts recognized (33 ) Deferred income taxes (2 ) Unrealized net capital gains and losses, after-tax $ (2 ) |
Schedule of change in unrealized net capital gains and losses | Change in unrealized net capital gains (losses) ($ in millions) Three months ended March 31, 2019 Fixed income securities $ 1,335 Derivative instruments — Total 1,335 Amounts recognized for: Insurance reserves (8 ) DAC and DSI (91 ) Amounts recognized (99 ) Deferred income taxes (262 ) Increase in unrealized net capital gains and losses, after-tax $ 974 |
Schedule of gross unrealized losses and fair value of available for sale securities by length of time | Gross unrealized losses and fair value by type and length of time held in a continuous unrealized loss position ($ in millions) Less than 12 months 12 months or more Total unrealized losses Number of issues Fair value Unrealized losses Number of issues Fair value Unrealized losses March 31, 2019 Fixed income securities U.S. government and agencies 9 $ 112 $ — 39 $ 259 $ (2 ) $ (2 ) Municipal 102 208 — 600 742 (8 ) (8 ) Corporate 304 3,249 (42 ) 807 10,382 (200 ) (242 ) Foreign government — — — 11 218 (1 ) (1 ) ABS 36 283 (4 ) 34 146 (5 ) (9 ) RMBS 81 12 — 194 49 (1 ) (1 ) CMBS 4 11 (1 ) 1 — — (1 ) Total fixed income securities 536 $ 3,875 $ (47 ) 1,686 $ 11,796 $ (217 ) $ (264 ) Investment grade fixed income securities 404 $ 3,077 $ (22 ) 1,550 $ 10,853 $ (170 ) $ (192 ) Below investment grade fixed income securities 132 798 (25 ) 136 943 (47 ) (72 ) Total fixed income securities 536 $ 3,875 $ (47 ) 1,686 $ 11,796 $ (217 ) $ (264 ) December 31, 2018 Fixed income securities U.S. government and agencies 11 $ 55 $ — 38 $ 364 $ (6 ) $ (6 ) Municipal 943 1,633 (10 ) 1,147 1,554 (33 ) (43 ) Corporate 1,735 19,243 (543 ) 645 8,374 (347 ) (890 ) Foreign government 7 20 (1 ) 27 412 (4 ) (5 ) ABS 64 454 (5 ) 28 161 (5 ) (10 ) RMBS 166 30 — 195 52 (2 ) (2 ) CMBS 3 7 — 2 — (1 ) (1 ) Redeemable preferred stock 1 — — — — — — Total fixed income securities 2,930 $ 21,442 $ (559 ) 2,082 $ 10,917 $ (398 ) $ (957 ) Investment grade fixed income securities 2,348 $ 17,485 $ (331 ) 2,021 $ 10,626 $ (360 ) $ (691 ) Below investment grade fixed income securities 582 3,957 (228 ) 61 291 (38 ) (266 ) Total fixed income securities 2,930 $ 21,442 $ (559 ) 2,082 $ 10,917 $ (398 ) $ (957 ) |
Carrying value of non-impaired fixed and variable rate mortgage loans by debt service coverage ratio distribution | Carrying value of non-impaired mortgage loans summarized by debt service coverage ratio distribution ($ in millions) March 31, 2019 December 31, 2018 Debt service coverage ratio distribution Fixed rate mortgage loans Variable rate mortgage loans Total Fixed rate mortgage loans Variable rate mortgage loans Total Below 1.0 $ 22 $ 31 $ 53 $ 6 $ 31 $ 37 1.0 - 1.25 256 — 256 273 — 273 1.26 - 1.50 1,157 — 1,157 1,192 — 1,192 Above 1.50 3,110 101 3,211 3,063 101 3,164 Total non-impaired mortgage loans $ 4,545 $ 132 $ 4,677 $ 4,534 $ 132 $ 4,666 |
Net carrying value of impaired mortgage loans | Net carrying value of impaired mortgage loans ($ in millions) March 31, 2019 December 31, 2018 Impaired mortgage loans with a valuation allowance $ 4 $ 4 Impaired mortgage loans without a valuation allowance — — Total impaired mortgage loans $ 4 $ 4 Valuation allowance on impaired mortgage loans $ 3 $ 3 |
Schedule of other investments by type | Other investments by asset type ($ in millions) March 31, 2019 December 31, 2018 Bank loans $ 1,300 $ 1,350 Policy loans 885 891 Real estate 776 791 Agent loans 639 620 Derivatives and other 186 200 Total $ 3,786 $ 3,852 |
Fair Value of Assets and Liab_2
Fair Value of Assets and Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Schedule of assets and liabilities that are measured at fair value on a recurring and non-recurring basis | Assets and liabilities measured at fair value As of March 31, 2019 ($ in millions) Quoted prices in active markets for identical assets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Counterparty and cash collateral netting Total Assets Fixed income securities: U.S. government and agencies $ 3,498 $ 394 $ — $ 3,892 Municipal — 9,196 68 9,264 Corporate - public — 30,982 90 31,072 Corporate - privately placed — 11,537 90 11,627 Foreign government — 752 — 752 ABS - CDO — 250 6 256 ABS - consumer and other — 721 81 802 RMBS — 442 — 442 CMBS — 38 35 73 Redeemable preferred stock — 22 — 22 Total fixed income securities 3,498 54,334 370 58,202 Equity securities 5,149 350 303 5,802 Short-term investments 1,981 2,136 40 4,157 Other investments: Free-standing derivatives — 124 1 $ (27 ) 98 Separate account assets 3,050 — — 3,050 Other assets 1 — — 1 Total recurring basis assets 13,679 56,944 714 (27 ) 71,310 Non-recurring basis (1) — — 39 39 Total assets at fair value $ 13,679 $ 56,944 $ 753 $ (27 ) $ 71,349 % of total assets at fair value 19.2 % 79.8 % 1.0 % — % 100.0 % Investments reported at NAV 1,738 Total $ 73,087 Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ — $ — $ (251 ) $ (251 ) Other liabilities: Free-standing derivatives (2 ) (51 ) — $ 7 (46 ) Total recurring basis liabilities $ (2 ) $ (51 ) $ (251 ) $ 7 $ (297 ) % of total liabilities at fair value 0.7 % 17.2 % 84.5 % (2.4 )% 100.0 % (1) Includes $3 million of limited partnerships and $36 million of bank loans written-down to fair value in connection with recognizing OTTI impairments. Assets and liabilities measured at fair value As of December 31, 2018 ($ in millions) Quoted prices in active markets for identical assets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Counterparty and cash collateral netting Total Assets Fixed income securities: U.S. government and agencies $ 5,085 $ 432 $ — $ 5,517 Municipal — 9,099 70 9,169 Corporate - public — 29,200 70 29,270 Corporate - privately placed — 10,776 90 10,866 Foreign government — 747 — 747 ABS - CDO — 263 6 269 ABS - consumer and other — 713 63 776 RMBS — 464 — 464 CMBS — 44 26 70 Redeemable preferred stock — 22 — 22 Total fixed income securities 5,085 51,760 325 57,170 Equity securities 4,364 331 341 5,036 Short-term investments 1,338 1,659 30 3,027 Other investments: Free-standing derivatives — 139 1 $ (23 ) 117 Separate account assets 2,805 — — 2,805 Other assets 2 — — 2 Total recurring basis assets $ 13,594 $ 53,889 $ 697 $ (23 ) $ 68,157 % of total assets at fair value 19.9 % 79.1 % 1.0 % — % 100.0 % Investments reported at NAV 1,779 Total $ 69,936 Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ — $ — $ (224 ) $ (224 ) Other liabilities: Free-standing derivatives (1 ) (62 ) — $ 6 (57 ) Total recurring basis liabilities $ (1 ) $ (62 ) $ (224 ) $ 6 $ (281 ) % of total liabilities at fair value 0.3 % 22.1 % 79.7 % (2.1 )% 100.0 % |
Summary of quantitative information about the significant unobservable inputs | Quantitative information about the significant unobservable inputs used in Level 3 fair value measurements ($ in millions) Fair value Valuation technique Unobservable input Range Weighted average March 31, 2019 Derivatives embedded in life and annuity contracts – Equity-indexed and forward starting options $ (220 ) Stochastic cash flow model Projected option cost 1.0 - 2.2% 1.74% December 31, 2018 Derivatives embedded in life and annuity contracts – Equity-indexed and forward starting options $ (185 ) Stochastic cash flow model Projected option cost 1.0 - 2.2% 1.74% |
Schedule of the rollforward of Level 3 assets and liabilities held at fair value on a recurring basis | Rollforward of Level 3 assets and liabilities at fair value during the three month period ended March 31, 2019 Balance as of December 31, 2018 Total gains (losses) included in: Transfers into Level 3 Transfers out of Level 3 ($ in millions) Net income (1) OCI Assets Fixed income securities: Municipal $ 70 $ — $ 1 $ — $ — Corporate - public 70 — 1 — — Corporate - privately placed 90 (2 ) 2 15 — ABS - CDO 6 — — — — ABS - consumer and other 63 — — — (47 ) CMBS 26 — — 3 — Total fixed income securities 325 (2 ) 4 18 (47 ) Equity securities 341 28 — — — Short-term investments 30 — — — — Free-standing derivatives, net 1 — — — — Total recurring Level 3 assets $ 697 $ 26 $ 4 $ 18 $ (47 ) Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ (224 ) $ (28 ) $ — $ — $ — Total recurring Level 3 liabilities $ (224 ) $ (28 ) $ — $ — $ — Purchases Sales Issues Settlements Balance as of March 31, 2019 Assets Fixed income securities: Municipal $ — $ (2 ) $ — $ (1 ) $ 68 Corporate - public 20 — — (1 ) 90 Corporate - privately placed — (13 ) — (2 ) 90 ABS - CDO — — — — 6 ABS - consumer and other 78 (10 ) — (3 ) 81 CMBS 6 — — — 35 Total fixed income securities 104 (25 ) — (7 ) 370 Equity securities 2 (68 ) — — 303 Short-term investments 10 — — — 40 Free-standing derivatives, net — — — — 1 (2) Total recurring Level 3 assets $ 116 $ (93 ) $ — $ (7 ) $ 714 Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ — $ — $ — $ 1 $ (251 ) Total recurring Level 3 liabilities $ — $ — $ — $ 1 $ (251 ) (1) The effect to net income totals $(2) million and is reported in the Condensed Consolidated Statements of Operations as follows: $26 million in realized capital gains and losses, $(36) million in interest credited to contractholder funds and $8 million in life contract benefits. (2) Comprises $1 million of assets. Rollforward of Level 3 assets and liabilities at fair value during the three month period ended March 31, 2018 Balance as of December 31, 2017 Total gains (losses) included in: Transfers into Level 3 Transfers out of Level 3 ($ in millions) Net income (1) OCI Assets Fixed income securities: Municipal $ 101 $ 1 $ (1 ) $ — $ (2 ) Corporate - public 108 — (1 ) 4 (5 ) Corporate - privately placed 224 — (1 ) — (19 ) ABS - CDO 99 — — — (89 ) ABS - consumer and other 48 — 1 5 — CMBS 26 — — — — Total fixed income securities 606 1 (2 ) 9 (115 ) Equity securities 210 3 — — — Short-term investments 20 — — — — Free-standing derivatives, net 1 — — — — Total recurring Level 3 assets $ 837 $ 4 $ (2 ) $ 9 $ (115 ) Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ (286 ) $ 23 $ — $ — $ — Total recurring Level 3 liabilities $ (286 ) $ 23 $ — $ — $ — Purchases Sales Issues Settlements Balance as of March 31, 2018 Assets Fixed income securities: Municipal $ — $ (2 ) $ — $ (1 ) $ 96 Corporate - public — (26 ) — (3 ) 77 Corporate - privately placed 13 — — (2 ) 215 ABS - CDO — — — — 10 ABS - consumer and other 45 (35 ) — (2 ) 62 CMBS 1 — — — 27 Total fixed income securities 59 (63 ) — (8 ) 487 Equity securities 30 (1 ) — — 242 Short-term investments 25 (45 ) — — — Free-standing derivatives, net — — — — 1 (2) Total recurring Level 3 assets $ 114 $ (109 ) $ — $ (8 ) $ 730 Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ — $ — $ (1 ) $ 2 $ (262 ) Total recurring Level 3 liabilities $ — $ — $ (1 ) $ 2 $ (262 ) (1) The effect to net income totals $27 million and is reported in the Condensed Consolidated Statements of Operations as follows: $4 million in realized capital gains and losses, $19 million in interest credited to contractholder funds and $4 million in life contract benefits. (2) Comprises $1 million |
Schedule of gains and losses included in net income for Level 3 assets and liabilities still held at the balance sheet date | Valuation changes included in net income for Level 3 assets and liabilities held as of March 31, ($ in millions) Three months ended March 31, 2019 2018 Assets Equity securities $ 4 $ 2 Total recurring Level 3 assets $ 4 $ 2 Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ (28 ) $ 23 Total recurring Level 3 liabilities $ (28 ) $ 23 |
Schedule of carrying values and fair value estimates of financial instruments not carried at fair value | Financial assets Carrying values and fair value estimates of financial instruments not carried at fair value ($ in millions) March 31, 2019 December 31, 2018 Fair value level Carrying value Fair value Carrying value Fair value Mortgage loans Level 3 $ 4,681 $ 4,787 $ 4,670 $ 4,703 Bank loans Level 3 1,300 1,271 1,350 1,298 Agent loans Level 3 639 639 620 617 Financial liabilities Carrying values and fair value estimates of financial instruments not carried at fair value ($ in millions) March 31, 2019 December 31, 2018 Fair value level Carrying value Fair value Carrying value Fair value Contractholder funds on investment contracts Level 3 $ 9,015 $ 9,626 $ 9,250 $ 9,665 Long-term debt Level 2 6,453 6,985 6,451 6,708 Liability for collateral Level 2 1,973 1,973 1,458 1,458 |
Derivative Financial Instrume_2
Derivative Financial Instruments (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Volume and fair value positions of derivative instruments and location in the Consolidated Statement of Financial Position | Summary of the volume and fair value positions of derivative instruments as of March 31, 2019 ($ in millions, except number of contracts) Volume (1) Balance sheet location Notional amount Number of contracts Fair value, net Gross asset Gross liability Asset derivatives Derivatives designated as fair value accounting hedging instruments Other Other assets $ 3 n/a $ — $ — $ — Derivatives not designated as accounting hedging instruments Interest rate contracts Interest rate cap agreements Other investments 4 n/a — — — Futures Other assets — 1,025 — — — Equity and index contracts Options Other investments — 7,040 95 95 — Futures Other assets — 1,615 1 1 — Total return index contracts Total return swap agreements – fixed income Other investments 3 n/a — — — Total return swap agreements – equity index Other investments 93 n/a 1 1 — Foreign currency contracts Foreign currency forwards Other investments 229 n/a 9 10 (1 ) Credit default contracts Credit default swaps – buying protection Other investments 112 n/a (2 ) 2 (4 ) Credit default swaps – selling protection Other investments 8 n/a — — — Total asset derivatives $ 452 9,680 $ 104 $ 109 $ (5 ) Liability derivatives Derivatives not designated as accounting hedging instruments Interest rate contracts Interest rate swaption agreements Other liabilities & accrued expenses $ 10 n/a $ — $ — $ — Interest rate cap agreements Other liabilities & accrued expenses 32 n/a 1 1 — Futures Other liabilities & accrued expenses — 2,510 (1 ) — (1 ) Equity and index contracts Options Other liabilities & accrued expenses — 5,090 (33 ) — (33 ) Futures Other liabilities & accrued expenses — 869 (1 ) — (1 ) Total return index contracts Total return swap agreements – fixed income Other liabilities & accrued expenses 17 n/a 1 1 — Foreign currency contracts Foreign currency forwards Other liabilities & accrued expenses 334 n/a 12 14 (2 ) Embedded derivative financial instruments Guaranteed accumulation benefits Contractholder funds 179 n/a (19 ) — (19 ) Guaranteed withdrawal benefits Contractholder funds 221 n/a (12 ) — (12 ) Equity-indexed and forward starting options in life and annuity product contracts Contractholder funds 1,778 n/a (220 ) — (220 ) Credit default contracts Credit default swaps – buying protection Other liabilities & accrued expenses 623 n/a (10 ) 1 (11 ) Credit default swaps – selling protection Other liabilities & accrued expenses 1 n/a — — — Total liability derivatives 3,195 8,469 (282 ) $ 17 $ (299 ) Total derivatives $ 3,647 18,149 $ (178 ) (1) Volume for OTC and cleared derivative contracts is represented by their notional amounts. Volume for exchange traded derivatives is represented by the number of contracts, which is the basis on which they are traded. (n/a = not applicable) Summary of the volume and fair value positions of derivative instruments as of December 31, 2018 ($ in millions, except number of contracts) Volume (1) Balance sheet location Notional amount Number of contracts Fair value, net Gross asset Gross liability Asset derivatives Derivatives not designated as accounting hedging instruments Interest rate contracts Interest rate cap agreements Other investments $ 6 n/a $ — $ — $ — Futures Other assets — 1,330 1 1 — Equity and index contracts Options Other investments — 11,131 115 115 — Futures Other assets — 1,453 1 1 — Total return index contracts Total return swap agreements – fixed income Other investments 7 n/a — — — Total return swap agreements – equity index Other investments 61 n/a (2 ) — (2 ) Foreign currency contracts Foreign currency forwards Other investments 258 n/a 10 11 (1 ) Credit default contracts Credit default swaps – buying protection Other investments 136 n/a (1 ) 2 (3 ) Other contracts Other Other assets 2 n/a — — — Total asset derivatives $ 470 13,914 $ 124 $ 130 $ (6 ) Liability derivatives Derivatives not designated as accounting hedging instruments Interest rate contracts Interest rate cap agreements Other liabilities & accrued expenses $ 31 n/a $ 1 $ 1 $ — Futures Other liabilities & accrued expenses — 1,300 (1 ) — (1 ) Equity and index contracts Options and futures Other liabilities & accrued expenses — 10,956 (50 ) — (50 ) Total return index contracts Total return swap agreements – fixed income Other liabilities & accrued expenses 38 n/a (1 ) — (1 ) Total return swap agreements – equity index Other liabilities & accrued expenses 71 n/a (4 ) — (4 ) Foreign currency contracts Foreign currency forwards Other liabilities & accrued expenses 341 n/a 10 11 (1 ) Embedded derivative financial instruments Guaranteed accumulation benefits Contractholder funds 169 n/a (25 ) — (25 ) Guaranteed withdrawal benefits Contractholder funds 210 n/a (14 ) — (14 ) Equity-indexed and forward starting options in life and annuity product contracts Contractholder funds 1,770 n/a (185 ) — (185 ) Credit default contracts Credit default swaps – buying protection Other liabilities & accrued expenses 40 n/a — — — Credit default swaps – selling protection Other liabilities & accrued expenses 5 n/a — — — Total liability derivatives 2,675 12,256 (269 ) $ 12 $ (281 ) Total derivatives $ 3,145 26,170 $ (145 ) (1) |
Schedule of gross and net amount for the Company's OTC derivatives subject to enforceable master netting arrangements | Gross and net amounts for OTC derivatives (1) ($ in millions) Offsets Gross amount Counter-party netting Cash collateral (received) pledged Net amount on balance sheet Securities collateral (received) pledged Net amount March 31, 2019 Asset derivatives $ 29 $ (22 ) $ (5 ) $ 2 $ — $ 2 Liability derivatives (8 ) 22 (15 ) (1 ) — (1 ) December 31, 2018 Asset derivatives $ 25 $ (18 ) $ (5 ) $ 2 $ — $ 2 Liability derivatives (12 ) 18 (12 ) (6 ) — (6 ) (1) |
Gains and losses from valuation, settlements, and hedge ineffectiveness, fair value hedges and derivatives not designated as hedges | Gains (losses) from valuation and settlements reported on derivatives not designated as accounting hedges ($ in millions) Realized capital gains (losses) Life contract benefits Interest credited to contractholder funds Operating costs and expenses Total gain (loss) recognized in net income on derivatives Three months ended March 31, 2019 Interest rate contracts $ 7 $ — $ — $ — $ 7 Equity and index contracts (71 ) — 31 21 (19 ) Embedded derivative financial instruments — 8 (35 ) — (27 ) Foreign currency contracts 5 — — — 5 Credit default contracts (4 ) — — — (4 ) Total return swaps - fixed income 2 — — — 2 Total return swaps - equity 15 — — — 15 Total $ (46 ) $ 8 $ (4 ) $ 21 $ (21 ) Three months ended March 31, 2018 Equity and index contracts $ (2 ) $ — $ (4 ) $ (3 ) $ (9 ) Embedded derivative financial instruments — 4 20 — 24 Foreign currency contracts (7 ) — — 1 (6 ) Credit default contracts 1 — — — 1 Total $ (8 ) $ 4 $ 16 $ (2 ) $ 10 |
Counterparty credit exposure by counterparty credit rating | OTC derivatives counterparty credit exposure by counterparty credit rating ($ in millions) March 31, 2019 December 31, 2018 Rating (1) Number of counter- parties Notional amount (2) Credit exposure (2) Exposure, net of collateral (2) Number of counter- parties Notional amount (2) Credit exposure (2) Exposure, net of collateral (2) A+ 4 $ 748 $ 21 $ 1 3 $ 643 $ 19 $ 1 A 1 116 1 1 2 121 1 — Total 5 $ 864 $ 22 $ 2 5 $ 764 $ 20 $ 1 (1) Allstate uses the lower of S&P’s or Moody’s long term debt issuer ratings. (2) |
Derivative instruments with credit features in a liability position, including fair value of assets and collateral netted against the liability | ($ in millions) As of March 31, 2019 As of December 31, 2018 Gross liability fair value of contracts containing credit-risk-contingent features $ 8 $ 11 Gross asset fair value of contracts containing credit-risk-contingent features and subject to MNAs (7 ) (5 ) Collateral posted under MNAs for contracts containing credit-risk-contingent features (1 ) (2 ) Maximum amount of additional exposure for contracts with credit-risk-contingent features if all features were triggered concurrently $ — $ 4 |
Reserve for Property and Liab_2
Reserve for Property and Liability Insurance Claims and Claims Expense (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Reserve for Property-Liability Insurance Claims and Claims Expense [Abstract] | |
Schedule of liability for unpaid claims and claims adjustment expense | Rollforward of the reserve for property and casualty insurance claims and claims expense Three months ended March 31, ($ in millions) 2019 2018 Balance as of January 1 $ 27,423 $ 26,325 Less recoverables (1) (7,155 ) (6,471 ) Net balance as of January 1 20,268 19,854 Incurred claims and claims expense related to: Current year 5,808 5,180 Prior years 12 (51 ) Total incurred 5,820 5,129 Claims and claims expense paid related to: Current year (2,270 ) (2,240 ) Prior years (3,294 ) (3,115 ) Total paid (5,564 ) (5,355 ) Net balance as of March 31 20,524 19,628 Plus recoverables 7,020 6,487 Balance as of March 31 $ 27,544 $ 26,115 (1) |
Reinsurance (Tables)
Reinsurance (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Reinsurance Disclosures [Abstract] | |
Schedule of reductions to premiums and contract charges due to reinsurance premium ceded amounts | Effects of reinsurance ceded on property and casualty premiums earned and life premiums and contract charges ($ in millions) Three months ended March 31, 2019 2018 Property and casualty insurance premiums earned $ (260 ) $ (239 ) Life premiums and contract charges (63 ) (72 ) |
Schedule of reductions to costs and expenses due to reinsurance ceded amounts | Effects of reinsurance ceded on property and casualty insurance claims and claims expense, life contract benefits and interest credited to contractholder funds ($ in millions) Three months ended March 31, 2019 2018 Property and casualty insurance claims and claims expense $ (91 ) $ (187 ) Life contract benefits (23 ) (49 ) Interest credited to contractholder funds (3 ) (4 ) |
Company Restructuring (Tables)
Company Restructuring (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Restructuring and Related Activities [Abstract] | |
Schedule of changes in the restructuring liability | Restructuring activity during the period ($ in millions) Employee costs Exit costs Total liability Restructuring liability as of December 31, 2018 $ 29 $ 15 $ 44 Expense incurred 16 — 16 Adjustments to liability 2 — 2 Payments (11 ) (4 ) (15 ) Restructuring liability as of March 31, 2019 $ 36 $ 11 $ 47 |
Benefit Plans (Tables)
Benefit Plans (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Retirement Benefits [Abstract] | |
Company's pension and postretirement benefit plans | Components of net cost (benefit) for pension and other postretirement plans Three months ended March 31, ($ in millions) 2019 2018 Pension benefits Service cost $ 28 $ 28 Interest cost 65 61 Expected return on plan assets (93 ) (113 ) Amortization of prior service credit (14 ) (14 ) Costs and expenses (14 ) (38 ) Remeasurement of projected benefit obligation 387 (190 ) Remeasurement of plan assets (391 ) 212 Remeasurement gains and losses (4 ) 22 Total net benefit $ (18 ) $ (16 ) Postretirement benefits Service cost $ 2 $ 2 Interest cost 4 4 Amortization of prior service credit (1 ) (5 ) Costs and expenses 5 1 Remeasurement of projected benefit obligation 19 (8 ) Remeasurement of plan assets — — Remeasurement gains and losses 19 (8 ) Total net cost (benefit) $ 24 $ (7 ) |
Supplemental Cash Flow Inform_2
Supplemental Cash Flow Information (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Supplemental Cash Flow Information [Abstract] | |
Schedule of supplemental cash flow information from collateralized securities received | The accompanying cash flows are included in cash flows from operating activities in the Condensed Consolidated Statements of Cash Flows along with the activities resulting from management of the proceeds, as follows: ($ in millions) Three months ended March 31, 2019 2018 Net change in proceeds managed Net change in fixed income securities $ 60 $ 32 Net change in short-term investments (575 ) 55 Operating cash flow (used) provided $ (515 ) $ 87 Net change in liabilities Liabilities for collateral, beginning of period $ (1,458 ) $ (1,124 ) Liabilities for collateral, end of period (1,973 ) (1,037 ) Operating cash flow provided (used) $ 515 $ (87 ) |
Other Comprehensive Income (Tab
Other Comprehensive Income (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |
Other comprehensive income (loss) on a pre-tax and after-tax basis | Components of other comprehensive income (loss) on a pre-tax and after-tax basis ($ in millions) Three months ended March 31, 2019 2018 Pre-tax Tax After-tax Pre-tax Tax After-tax Unrealized net holding gains and losses arising during the period, net of related offsets $ 1,287 $ (273 ) $ 1,014 $ (740 ) $ 155 $ (585 ) Less: reclassification adjustment of realized capital gains and losses 51 (11 ) 40 (25 ) 5 (20 ) Unrealized net capital gains and losses 1,236 (262 ) 974 (715 ) 150 (565 ) Unrealized foreign currency translation adjustments 6 (1 ) 5 (3 ) 1 (2 ) Unamortized pension and other postretirement prior service credit arising during the period — — — — — — Less: reclassification adjustment of prior service credit amortized into operating costs and expenses 15 (3 ) 12 19 (5 ) 14 Unamortized pension and other postretirement prior service credit (15 ) 3 (12 ) (19 ) 5 (14 ) Other comprehensive income (loss) $ 1,227 $ (260 ) $ 967 $ (737 ) $ 156 $ (581 ) |
General - Additional Informatio
General - Additional Information (Details) - USD ($) | 3 Months Ended | |||||
Mar. 31, 2019 | Jan. 01, 2019 | Dec. 31, 2018 | Mar. 31, 2018 | Jan. 01, 2018 | Dec. 31, 2017 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Stockholders' Equity Attributable to Parent | $ 23,418,000,000 | $ 21,312,000,000 | $ 23,273,000,000 | |||
Lease liabilities | 572,000,000 | |||||
Right-of-Use asset | 474,000,000 | |||||
Operating lease, cost | 41,000,000 | |||||
Variable lease, cost | $ 7,000,000 | |||||
Operating lease, renewal term | 14 years | |||||
Operating lease, option to terminate | 60 days | |||||
Accounting Standards Update 2016-02 | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Lease liabilities | $ 585,000,000 | |||||
Right-of-Use asset | 488,000,000 | |||||
Retained income | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Stockholders' Equity Attributable to Parent | $ 45,148,000,000 | 44,033,000,000 | 43,479,000,000 | $ 41,579,000,000 | ||
Cumulative effect of change in accounting principle | 21,000,000 | $ 1,088,000,000 | ||||
Retained income | Accounting Standards Update 2016-02 | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Cumulative effect of change in accounting principle | 21,000,000 | |||||
Accumulated other comprehensive income | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Stockholders' Equity Attributable to Parent | $ 1,085,000,000 | 118,000,000 | 398,000,000 | 1,889,000,000 | ||
Cumulative effect of change in accounting principle | 0 | (910,000,000) | ||||
Minimum | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Operating lease, term of contract | 1 year | |||||
Maximum | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Operating lease, term of contract | 11 years | |||||
Adjustment | Impact of change | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Stockholders' Equity Attributable to Parent | $ (19,000,000) | 0 | (4,000,000) | |||
Adjustment | Impact of change | Retained income | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Stockholders' Equity Attributable to Parent | (1,670,000,000) | (1,675,000,000) | (1,552,000,000) | (1,583,000,000) | ||
Cumulative effect of change in accounting principle | 0 | 0 | ||||
Adjustment | Impact of change | Accumulated other comprehensive income | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Stockholders' Equity Attributable to Parent | $ 1,651,000,000 | 1,580,000,000 | $ 1,675,000,000 | $ 1,548,000,000 | $ 1,583,000,000 | |
Cumulative effect of change in accounting principle | $ 0 | $ 0 |
General - Other information rel
General - Other information related to operating leases (Details) | Mar. 31, 2019 |
General [Abstract] | |
Weighted average remaining lease term (years) | 6 years |
Weighted average discount rate | 3.27% |
General - Maturity of lease lia
General - Maturity of lease liabilities (Details) $ in Millions | Mar. 31, 2019USD ($) |
General [Abstract] | |
2019 | $ 85 |
2020 | 135 |
2021 | 104 |
2022 | 86 |
2023 | 71 |
2024 | 55 |
Thereafter | 104 |
Total lease payments (2) | 640 |
Less: interest | (68) |
Present value of lease liabilities | 572 |
Pending leases | $ 11 |
General - Statement of Operatio
General - Statement of Operations (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Property and casualty insurance claims and claims expense | $ 5,820 | $ 5,129 |
Operating costs and expenses | 1,380 | 1,303 |
Pension and other postretirement remeasurement gains and losses | 15 | 14 |
Restructuring and related charges | 18 | 19 |
Total costs and expenses | 9,371 | 8,508 |
Gain on disposition of operations | (1) | (1) |
Income from operations before income tax expense | 1,620 | 1,263 |
Income tax expense | 328 | 257 |
Net income | 1,292 | 1,006 |
Preferred stock dividends | 31 | 29 |
Net income applicable to common shareholders | $ 1,261 | $ 977 |
Net income available to common shareholders per common share - Basic (in dollars per share) | $ 3.79 | $ 2.76 |
Net income available to common shareholders per common share - Diluted (in dollars per share) | $ 3.74 | $ 2.71 |
Previously reported | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Property and casualty insurance claims and claims expense | $ 5,829 | $ 5,149 |
Operating costs and expenses | 1,388 | 1,333 |
Pension and other postretirement remeasurement gains and losses | 0 | 0 |
Restructuring and related charges | 22 | 22 |
Total costs and expenses | 9,377 | 8,547 |
Income from operations before income tax expense | 1,614 | 1,224 |
Income tax expense | 327 | 249 |
Net income | 1,287 | 975 |
Net income applicable to common shareholders | $ 1,256 | $ 946 |
Net income available to common shareholders per common share - Basic (in dollars per share) | $ 3.78 | $ 2.67 |
Net income available to common shareholders per common share - Diluted (in dollars per share) | $ 3.72 | $ 2.63 |
Impact of change | Adjustment | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Property and casualty insurance claims and claims expense | $ (9) | $ (20) |
Operating costs and expenses | (8) | (30) |
Pension and other postretirement remeasurement gains and losses | (15) | 14 |
Restructuring and related charges | (4) | (3) |
Total costs and expenses | (6) | (39) |
Income from operations before income tax expense | 6 | 39 |
Income tax expense | 1 | 8 |
Net income | 5 | 31 |
Net income applicable to common shareholders | $ 5 | $ 31 |
Net income available to common shareholders per common share - Basic (in dollars per share) | $ 0.01 | $ 0.09 |
Net income available to common shareholders per common share - Diluted (in dollars per share) | $ 0.02 | $ 0.08 |
General - Statement of Comprehe
General - Statement of Comprehensive Income (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Net income | $ 1,292 | $ 1,006 |
Unrealized net capital gains and losses | 974 | (565) |
Unrealized foreign currency translation adjustments | 5 | (2) |
Change in unamortized pension and other postretirement prior service credit | (12) | (14) |
Other comprehensive income (loss), after-tax | 967 | (581) |
Comprehensive income | 2,259 | 425 |
Previously reported | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Net income | 1,287 | 975 |
Unrealized net capital gains and losses | 974 | (565) |
Unrealized foreign currency translation adjustments | 7 | (4) |
Change in unamortized pension and other postretirement prior service credit | 10 | 23 |
Other comprehensive income (loss), after-tax | 991 | (546) |
Comprehensive income | 2,278 | 429 |
Impact of change | Adjustment | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Net income | 5 | 31 |
Unrealized net capital gains and losses | 0 | 0 |
Unrealized foreign currency translation adjustments | (2) | 2 |
Change in unamortized pension and other postretirement prior service credit | 22 | (37) |
Other comprehensive income (loss), after-tax | (24) | (35) |
Comprehensive income | $ (19) | $ (4) |
General - Statement of Financia
General - Statement of Financial Position (Details) - USD ($) | Mar. 31, 2019 | Jan. 01, 2019 | Dec. 31, 2018 | Mar. 31, 2018 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Deferred income taxes | $ 817,000,000 | $ 425,000,000 | ||
Other liabilities and accrued expenses | 8,977,000,000 | 7,737,000,000 | ||
Liabilities | 92,416,000,000 | 90,937,000,000 | ||
Retained income | 45,148,000,000 | 44,033,000,000 | ||
Unrealized foreign currency translation adjustments | (44,000,000) | (49,000,000) | ||
Unamortized pension and other postretirement prior service cost | 157,000,000 | 169,000,000 | ||
Total accumulated other comprehensive income (“AOCI”) | 1,085,000,000 | 118,000,000 | ||
Stockholders' Equity Attributable to Parent | 23,418,000,000 | 21,312,000,000 | $ 23,273,000,000 | |
Previously reported | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Deferred income taxes | 822,000,000 | |||
Other liabilities and accrued expenses | 8,953,000,000 | |||
Liabilities | 92,397,000,000 | |||
Retained income | 46,818,000,000 | 45,708,000,000 | ||
Unrealized foreign currency translation adjustments | (57,000,000) | (64,000,000) | ||
Unamortized pension and other postretirement prior service cost | (1,481,000,000) | (1,491,000,000) | ||
Total accumulated other comprehensive income (“AOCI”) | (566,000,000) | (1,557,000,000) | ||
Stockholders' Equity Attributable to Parent | 23,437,000,000 | 23,277,000,000 | ||
Impact of change | Adjustment | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Deferred income taxes | (5,000,000) | |||
Other liabilities and accrued expenses | 24,000,000 | |||
Liabilities | 19,000,000 | |||
Retained income | (1,670,000,000) | (1,675,000,000) | ||
Unrealized foreign currency translation adjustments | 13,000,000 | 15,000,000 | ||
Unamortized pension and other postretirement prior service cost | (1,638,000,000) | 1,660,000,000 | ||
Total accumulated other comprehensive income (“AOCI”) | 1,651,000,000 | $ 1,675,000,000 | ||
Stockholders' Equity Attributable to Parent | $ (19,000,000) | $ 0 | $ (4,000,000) |
General - Statement of Sharehol
General - Statement of Shareholders' Equity (Details) - USD ($) $ in Millions | 3 Months Ended | |||
Mar. 31, 2019 | Mar. 31, 2018 | Jan. 01, 2019 | Jan. 01, 2018 | |
Increase (decrease) in equity | ||||
Balance, beginning of period | $ 21,312 | |||
Net income | 1,292 | $ 1,006 | ||
Unrealized net capital gains and losses | 974 | (565) | ||
Unrealized foreign currency translation adjustments | 5 | (2) | ||
Change in unamortized pension and other postretirement prior service credit | (12) | (14) | ||
Balance, end of period | 23,418 | 23,273 | ||
Retained income | ||||
Increase (decrease) in equity | ||||
Balance, beginning of period | 44,033 | 41,579 | ||
Cumulative effect of change in accounting principle | $ 21 | $ 1,088 | ||
Net income | 1,292 | 1,006 | ||
Dividends on common stock | (167) | (165) | ||
Dividends on preferred stock | (31) | (29) | ||
Balance, end of period | 45,148 | 43,479 | ||
Accumulated other comprehensive income | ||||
Increase (decrease) in equity | ||||
Balance, beginning of period | 118 | 1,889 | ||
Cumulative effect of change in accounting principle | 0 | (910) | ||
Unrealized net capital gains and losses | 974 | (565) | ||
Unrealized foreign currency translation adjustments | 5 | (2) | ||
Change in unamortized pension and other postretirement prior service credit | (12) | (14) | ||
Balance, end of period | 1,085 | 398 | ||
Previously reported | ||||
Increase (decrease) in equity | ||||
Net income | 1,287 | 975 | ||
Unrealized net capital gains and losses | 974 | (565) | ||
Unrealized foreign currency translation adjustments | 7 | (4) | ||
Change in unamortized pension and other postretirement prior service credit | 10 | 23 | ||
Balance, end of period | 23,437 | 23,277 | ||
Previously reported | Retained income | ||||
Increase (decrease) in equity | ||||
Balance, beginning of period | 45,708 | 43,162 | ||
Cumulative effect of change in accounting principle | 21 | 1,088 | ||
Net income | 1,287 | 975 | ||
Dividends on common stock | (167) | (165) | ||
Dividends on preferred stock | (31) | (29) | ||
Balance, end of period | 46,818 | 45,031 | ||
Previously reported | Accumulated other comprehensive income | ||||
Increase (decrease) in equity | ||||
Balance, beginning of period | (1,557) | 306 | ||
Cumulative effect of change in accounting principle | 0 | (910) | ||
Unrealized net capital gains and losses | 974 | (565) | ||
Unrealized foreign currency translation adjustments | 7 | (4) | ||
Change in unamortized pension and other postretirement prior service credit | 10 | 23 | ||
Balance, end of period | (566) | (1,150) | ||
Adjustment | Impact of change | ||||
Increase (decrease) in equity | ||||
Net income | 5 | 31 | ||
Unrealized net capital gains and losses | 0 | 0 | ||
Unrealized foreign currency translation adjustments | (2) | 2 | ||
Change in unamortized pension and other postretirement prior service credit | 22 | (37) | ||
Balance, end of period | (19) | (4) | ||
Adjustment | Impact of change | Retained income | ||||
Increase (decrease) in equity | ||||
Balance, beginning of period | (1,675) | (1,583) | ||
Cumulative effect of change in accounting principle | 0 | 0 | ||
Net income | 5 | 31 | ||
Dividends on common stock | 0 | 0 | ||
Dividends on preferred stock | 0 | 0 | ||
Balance, end of period | (1,670) | (1,552) | ||
Adjustment | Impact of change | Accumulated other comprehensive income | ||||
Increase (decrease) in equity | ||||
Balance, beginning of period | 1,675 | 1,583 | ||
Cumulative effect of change in accounting principle | $ 0 | $ 0 | ||
Unrealized net capital gains and losses | 0 | 0 | ||
Unrealized foreign currency translation adjustments | (2) | 2 | ||
Change in unamortized pension and other postretirement prior service credit | 22 | (37) | ||
Balance, end of period | $ 1,651 | $ 1,548 |
General - Statement of Cash Flo
General - Statement of Cash Flows (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Net income | $ 1,292 | $ 1,006 |
Pension and other postretirement remeasurement gains and losses | 15 | 14 |
Income taxes | 303 | 189 |
Other operating assets and liabilities | (410) | (371) |
Net cash provided by operating activities | 714 | 626 |
Previously reported | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Net income | 1,287 | 975 |
Pension and other postretirement remeasurement gains and losses | 0 | 0 |
Income taxes | 302 | 181 |
Other operating assets and liabilities | (389) | (318) |
Net cash provided by operating activities | 714 | 626 |
Impact of change | Adjustment | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Net income | 5 | 31 |
Pension and other postretirement remeasurement gains and losses | (15) | 14 |
Income taxes | 1 | 8 |
Other operating assets and liabilities | 21 | (53) |
Net cash provided by operating activities | $ 0 | $ 0 |
General - Reportable Segments (
General - Reportable Segments (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Net income (loss) applicable to common shareholders | $ 1,261 | $ 977 |
Property-Liability | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Net income (loss) applicable to common shareholders | 1,182 | 990 |
Service Businesses | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Net income (loss) applicable to common shareholders | (6) | (22) |
Underwriting income or Adjusted net income (loss) | 11 | |
Allstate Life | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Net income (loss) applicable to common shareholders | 67 | 67 |
Underwriting income or Adjusted net income (loss) | 73 | |
Allstate Benefits | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Net income (loss) applicable to common shareholders | 34 | 27 |
Underwriting income or Adjusted net income (loss) | 31 | |
Allstate Annuities | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Net income (loss) applicable to common shareholders | 97 | 17 |
Underwriting income or Adjusted net income (loss) | (25) | |
Corporate and Other | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Net income (loss) applicable to common shareholders | (113) | (102) |
Underwriting income or Adjusted net income (loss) | (103) | |
Previously reported | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Net income (loss) applicable to common shareholders | 1,256 | 946 |
Impact of change | Adjustment | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Net income (loss) applicable to common shareholders | $ 5 | $ 31 |
Earnings per Common Share - Com
Earnings per Common Share - Computation earnings per common share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Numerator: | ||
Net income | $ 1,292 | $ 1,006 |
Less: Preferred stock dividends | 31 | 29 |
Net income applicable to common shareholders | $ 1,261 | $ 977 |
Denominator: | ||
Weighted average common shares outstanding (in shares) | 332.6 | 354.1 |
Effect of dilutive potential common shares: | ||
Stock options (in shares) | 3.1 | 4.1 |
Restricted stock units (non-participating) and performance stock awards (in shares) | 1.8 | 1.7 |
Weighted average common and dilutive potential common shares outstanding (in shares) | 337.5 | 359.9 |
Earnings per common share - Basic (in dollars per share) | $ 3.79 | $ 2.76 |
Earnings per common share - Diluted (in dollars per share) | $ 3.74 | $ 2.71 |
Earnings per Common Share Earni
Earnings per Common Share Earnings per Common Share - Narrative (Details) - shares shares in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Earnings Per Share [Abstract] | ||
Antidilutive stock options, exercise price exceeds market price (in shares) | 4 | 1 |
Acquisitions (Details)
Acquisitions (Details) - USD ($) $ in Millions | Nov. 30, 2018 | Oct. 05, 2018 | Mar. 31, 2019 | Feb. 12, 2019 | Dec. 31, 2018 |
Business Acquisition [Line Items] | |||||
Goodwill | $ 2,547 | $ 2,530 | |||
iCracked | |||||
Business Acquisition [Line Items] | |||||
Goodwill | $ 17 | ||||
PlumChoice, Inc | |||||
Business Acquisition [Line Items] | |||||
Goodwill | $ 23 | ||||
Payments to acquire businesses | $ 30 | ||||
InfoArmor | |||||
Business Acquisition [Line Items] | |||||
Goodwill | $ 318 | ||||
Payments to acquire businesses | 525 | ||||
Intangible assets | 257 | ||||
Customer Relationships | InfoArmor | |||||
Business Acquisition [Line Items] | |||||
Intangible assets | 225 | ||||
Technology-Based Intangible Assets | InfoArmor | |||||
Business Acquisition [Line Items] | |||||
Intangible assets | $ 32 |
Reportable Segments - Revenue i
Reportable Segments - Revenue information (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Segment Reporting Information | ||
Net investment income | $ 648 | $ 786 |
Realized capital gains and losses | 662 | (134) |
Total revenues | 10,990 | 9,770 |
Other revenue | ||
Segment Reporting Information | ||
Other revenue | 250 | 216 |
Property-Liability | ||
Segment Reporting Information | ||
Net investment income | 291 | 337 |
Operating Segments | Property-Liability | ||
Segment Reporting Information | ||
Other revenue | 8,507 | 8,019 |
Net investment income | 291 | 337 |
Realized capital gains and losses | 497 | (95) |
Total revenues | 9,471 | 8,435 |
Operating Segments | Property-Liability | Auto | ||
Segment Reporting Information | ||
Other revenue | 5,930 | 5,591 |
Operating Segments | Property-Liability | Homeowners | ||
Segment Reporting Information | ||
Other revenue | 1,935 | 1,848 |
Operating Segments | Property-Liability | Other personal lines | ||
Segment Reporting Information | ||
Other revenue | 459 | 444 |
Operating Segments | Property-Liability | Commercial lines | ||
Segment Reporting Information | ||
Other revenue | 183 | 136 |
Operating Segments | Property-Liability | Other revenue | ||
Segment Reporting Information | ||
Other revenue | 176 | 174 |
Operating Segments | Allstate Protection | ||
Segment Reporting Information | ||
Other revenue | 8,507 | 8,019 |
Operating Segments | Discontinued Lines and Coverages | ||
Segment Reporting Information | ||
Other revenue | 0 | 0 |
Operating Segments | Service Businesses | ||
Segment Reporting Information | ||
Intersegment premiums and service fees | 33 | 29 |
Net investment income | 9 | 5 |
Realized capital gains and losses | 8 | (4) |
Total revenues | 392 | 313 |
Operating Segments | Service Businesses | Other revenue | ||
Segment Reporting Information | ||
Other revenue | 47 | 16 |
Operating Segments | Service Businesses | Consumer product protection plans | ||
Segment Reporting Information | ||
Other revenue | 145 | 123 |
Operating Segments | Service Businesses | Roadside assistance | ||
Segment Reporting Information | ||
Other revenue | 63 | 64 |
Operating Segments | Service Businesses | Finance and insurance products | ||
Segment Reporting Information | ||
Other revenue | 87 | 80 |
Operating Segments | Allstate Life | ||
Segment Reporting Information | ||
Net investment income | 127 | 122 |
Realized capital gains and losses | (5) | (3) |
Total revenues | 486 | 472 |
Operating Segments | Allstate Life | Other revenue | ||
Segment Reporting Information | ||
Other revenue | 27 | 26 |
Operating Segments | Allstate Life | Traditional life insurance premiums | ||
Segment Reporting Information | ||
Other revenue | 154 | 146 |
Operating Segments | Allstate Life | Interest-sensitive life insurance contract charges | ||
Segment Reporting Information | ||
Other revenue | 183 | 181 |
Operating Segments | Allstate Benefits | ||
Segment Reporting Information | ||
Net investment income | 19 | 19 |
Realized capital gains and losses | 4 | (2) |
Total revenues | 311 | 303 |
Operating Segments | Allstate Benefits | Traditional life insurance premiums | ||
Segment Reporting Information | ||
Other revenue | 9 | 9 |
Operating Segments | Allstate Benefits | Accident and health insurance premiums | ||
Segment Reporting Information | ||
Other revenue | 250 | 248 |
Operating Segments | Allstate Benefits | Interest-sensitive life insurance contract charges | ||
Segment Reporting Information | ||
Other revenue | 29 | 29 |
Operating Segments | Allstate Annuities | ||
Segment Reporting Information | ||
Net investment income | 190 | 290 |
Realized capital gains and losses | 156 | (29) |
Total revenues | 349 | 264 |
Operating Segments | Allstate Annuities | Fixed annuities contract charges | ||
Segment Reporting Information | ||
Other revenue | 3 | 3 |
Operating Segments | Corporate and Other | ||
Segment Reporting Information | ||
Net investment income | 12 | 13 |
Realized capital gains and losses | 2 | (1) |
Total revenues | 14 | 12 |
Intersegment Eliminations | ||
Segment Reporting Information | ||
Total revenues | $ (33) | $ (29) |
Reportable Segments - Financial
Reportable Segments - Financial performance (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Segment Reporting Information | ||
Net investment income | $ 648 | $ 786 |
Net income applicable to common shareholders | 1,261 | 977 |
Allstate Protection | ||
Segment Reporting Information | ||
Underwriting income (loss) | 703 | 1,008 |
Discontinued Lines and Coverages | ||
Segment Reporting Information | ||
Underwriting income (loss) | (3) | (3) |
Property-Liability | ||
Segment Reporting Information | ||
Underwriting income (loss) | 700 | 1,005 |
Net investment income | 291 | 337 |
Income tax expense on operations | (202) | (277) |
Realized capital gains and losses, after-tax | 393 | (75) |
Net income applicable to common shareholders | 1,182 | 990 |
Service Businesses | ||
Segment Reporting Information | ||
Adjusted net income (loss) | 11 | |
Realized capital gains and losses, after-tax | 7 | (3) |
Amortization of purchased intangible assets, after-tax | (24) | (16) |
Net income applicable to common shareholders | (6) | (22) |
Allstate Life | ||
Segment Reporting Information | ||
Adjusted net income (loss) | 73 | |
Realized capital gains and losses, after-tax | (4) | (2) |
DAC and DSI amortization related to realized capital gains and losses, after-tax | (2) | (2) |
Net income applicable to common shareholders | 67 | 67 |
Allstate Benefits | ||
Segment Reporting Information | ||
Adjusted net income (loss) | 31 | |
Realized capital gains and losses, after-tax | 3 | (2) |
Net income applicable to common shareholders | 34 | 27 |
Allstate Annuities | ||
Segment Reporting Information | ||
Adjusted net income (loss) | (25) | |
Realized capital gains and losses, after-tax | 124 | (23) |
Valuation changes on embedded derivatives not hedged, after-tax | (3) | 4 |
Gain on disposition of operations, after-tax | 1 | 1 |
Net income applicable to common shareholders | 97 | 17 |
Corporate and Other | ||
Segment Reporting Information | ||
Adjusted net income (loss) | (103) | |
Realized capital gains and losses, after-tax | 1 | (1) |
Pension and other postretirement remeasurement gains and losses, after-tax | (11) | (11) |
Net income applicable to common shareholders | $ (113) | $ (102) |
Investments - Amortized cost, g
Investments - Amortized cost, gross unrealized gains and losses and fair value for fixed income securities (Details) - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 |
Schedule of Available for Sale Securities | ||
Amortized cost | $ 56,831 | $ 57,134 |
Gross unrealized, Gains | 1,635 | 993 |
Gross unrealized, Losses | (264) | (957) |
Fair value | 58,202 | 57,170 |
U.S. government and agencies | ||
Schedule of Available for Sale Securities | ||
Amortized cost | 3,775 | 5,386 |
Gross unrealized, Gains | 119 | 137 |
Gross unrealized, Losses | (2) | (6) |
Fair value | 3,892 | 5,517 |
Municipal | ||
Schedule of Available for Sale Securities | ||
Amortized cost | 8,879 | 8,963 |
Gross unrealized, Gains | 393 | 249 |
Gross unrealized, Losses | (8) | (43) |
Fair value | 9,264 | 9,169 |
Corporate | ||
Schedule of Available for Sale Securities | ||
Amortized cost | 41,943 | 40,536 |
Gross unrealized, Gains | 998 | 490 |
Gross unrealized, Losses | (242) | (890) |
Fair value | 42,699 | 40,136 |
Foreign government | ||
Schedule of Available for Sale Securities | ||
Amortized cost | 732 | 739 |
Gross unrealized, Gains | 21 | 13 |
Gross unrealized, Losses | (1) | (5) |
Fair value | 752 | 747 |
Asset-backed securities (“ABS”) | ||
Schedule of Available for Sale Securities | ||
Amortized cost | 1,060 | 1,049 |
Gross unrealized, Gains | 7 | 6 |
Gross unrealized, Losses | (9) | (10) |
Fair value | 1,058 | 1,045 |
Residential mortgage-backed securities (“RMBS”) | ||
Schedule of Available for Sale Securities | ||
Amortized cost | 354 | 377 |
Gross unrealized, Gains | 89 | 89 |
Gross unrealized, Losses | (1) | (2) |
Fair value | 442 | 464 |
Commercial mortgage-backed securities (“CMBS”) | ||
Schedule of Available for Sale Securities | ||
Amortized cost | 67 | 63 |
Gross unrealized, Gains | 7 | 8 |
Gross unrealized, Losses | (1) | (1) |
Fair value | 73 | 70 |
Redeemable preferred stock | ||
Schedule of Available for Sale Securities | ||
Amortized cost | 21 | 21 |
Gross unrealized, Gains | 1 | 1 |
Gross unrealized, Losses | 0 | 0 |
Fair value | $ 22 | $ 22 |
Investments - Scheduled maturit
Investments - Scheduled maturities for fixed income securities (Details) - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 |
Amortized cost | ||
Due in one year or less | $ 3,309 | |
Due after one year through five years | 26,701 | |
Due after five years through ten years | 16,622 | |
Due after ten years | 8,718 | |
Subtotal | 55,350 | |
ABS, RMBS and CMBS | 1,481 | |
Amortized cost | 56,831 | $ 57,134 |
Fair value | ||
Due in one year or less | 3,324 | |
Due after one year through five years | 26,996 | |
Due after five years through ten years | 16,946 | |
Due after ten years | 9,363 | |
Subtotal | 56,629 | |
ABS, RMBS and CMBS | 1,573 | |
Total fixed income securities | $ 58,202 | $ 57,170 |
Investments - Net investment in
Investments - Net investment income (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Net Investment Income: | ||
Investment income, before expense | $ 719 | $ 851 |
Investment expense | (71) | (65) |
Net investment income | 648 | 786 |
Fixed income securities | ||
Net Investment Income: | ||
Investment income, before expense | 538 | 508 |
Equity securities | ||
Net Investment Income: | ||
Investment income, before expense | 30 | 34 |
Mortgage loans | ||
Net Investment Income: | ||
Investment income, before expense | 53 | 51 |
Limited partnership interests | ||
Net Investment Income: | ||
Investment income, before expense | 9 | 180 |
Short-term investments | ||
Net Investment Income: | ||
Investment income, before expense | 26 | 12 |
Other | ||
Net Investment Income: | ||
Investment income, before expense | $ 63 | $ 66 |
Investments - Narrative (Detail
Investments - Narrative (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Investment [Line Items] | |||
Gross gains on fixed income securities | $ 126,000,000 | ||
Gross loss on fixed income securities | 60,000,000 | ||
Gross gains on fixed income and equity securities | $ 45,000,000 | ||
Gross loss on fixed income and equity securities | (87,000,000) | ||
Net unrealized gains related to changes in valuation of fixed income securities subsequent to impairment measurement date | 178,000,000 | $ 180,000,000 | |
Unrealized losses related to securities with unrealized loss position less than 20% of cost or amortized cost | (231,000,000) | ||
Unrealized losses related to securities with unrealized loss position greater than or equal to 20% of cost or amortized cost | (33,000,000) | ||
Limited partnership interests | 7,493,000,000 | 7,505,000,000 | |
Short-term investments | 4,157,000,000 | 3,027,000,000 | |
Fixed income and equity securities | |||
Investment [Line Items] | |||
Unrealized losses | (264,000,000) | ||
Investment grade fixed income securities | |||
Investment [Line Items] | |||
Unrealized losses related to securities with unrealized loss position less than 20% of cost or amortized cost | (179,000,000) | ||
Unrealized losses related to securities with unrealized loss position greater than or equal to 20% of cost or amortized cost | (13,000,000) | ||
Below investment grade fixed income securities | |||
Investment [Line Items] | |||
Unrealized losses related to securities with unrealized loss position less than 20% of cost or amortized cost | (52,000,000) | ||
Unrealized losses having loss of less than twenty percent, less than 12 months | 21,000,000 | ||
Unrealized losses related to securities with unrealized loss position greater than or equal to 20% of cost or amortized cost | (20,000,000) | ||
Unrealized losses related to securities with unrealized loss position greater than 20% of cost or amortized cost, unrealized loss position of 12 or more consecutive months | 2,000,000 | ||
EMA limited partnerships | |||
Investment [Line Items] | |||
Limited partnership interests | 5,760,000,000 | 5,730,000,000 | |
Carrying value | Cost-method Investments | |||
Investment [Line Items] | |||
Cost method limited partnerships | 1,740,000,000 | $ 1,780,000,000 | |
Mortgage loans, non-impaired | |||
Investment [Line Items] | |||
Allowance for credit losses, period increase (decrease) | 0 | 0 | |
Average impaired mortgage loans | $ 4,000,000 | $ 4,000,000 |
Investments - Realized capital
Investments - Realized capital gains and losses by asset type (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Realized capital gains and losses by asset type | ||
Realized capital gains and losses | $ 662 | $ (134) |
Fixed income securities | ||
Realized capital gains and losses by asset type | ||
Realized capital gains and losses | 64 | (43) |
Equity securities | ||
Realized capital gains and losses by asset type | ||
Realized capital gains and losses | 553 | (93) |
Limited partnership interests | ||
Realized capital gains and losses by asset type | ||
Realized capital gains and losses | 72 | 10 |
Derivatives | ||
Realized capital gains and losses by asset type | ||
Realized capital gains and losses | (46) | (8) |
Other | ||
Realized capital gains and losses by asset type | ||
Realized capital gains and losses | $ 19 | $ 0 |
Investments - Realized capita_2
Investments - Realized capital gains and losses by transaction type (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Investments [Abstract] | ||
Impairment write-downs | $ (14) | $ (1) |
Change in intent write-downs | 0 | 0 |
Net OTTI losses recognized in earnings | (14) | (1) |
Sales | 95 | (42) |
Valuation of equity investments | 627 | (83) |
Valuation and settlements of derivative instruments | (46) | (8) |
Total realized capital gains and losses | $ 662 | $ (134) |
Investments - Valuation changes
Investments - Valuation changes included in net income for investments (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Investment [Line Items] | ||
Total | $ 463 | $ 29 |
Equity securities | ||
Investment [Line Items] | ||
Total | 496 | (49) |
Limited partnership interests | ||
Investment [Line Items] | ||
Total | $ (33) | $ 78 |
Investments - OTTI losses by as
Investments - OTTI losses by asset type (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Realized capital gains and losses by asset type | ||
Gross | $ (16) | $ 0 |
Included in OCI | 2 | (1) |
Net | (14) | (1) |
Corporate | ||
Realized capital gains and losses by asset type | ||
Gross | (2) | 0 |
Included in OCI | 2 | 0 |
Net | 0 | 0 |
Asset-backed securities (“ABS”) | ||
Realized capital gains and losses by asset type | ||
Gross | (2) | 0 |
Included in OCI | 1 | 0 |
Net | (1) | 0 |
Residential mortgage-backed securities (“RMBS”) | ||
Realized capital gains and losses by asset type | ||
Gross | 0 | 0 |
Included in OCI | (1) | 0 |
Net | (1) | 0 |
Commercial mortgage-backed securities (“CMBS”) | ||
Realized capital gains and losses by asset type | ||
Gross | 0 | 0 |
Included in OCI | 0 | (1) |
Net | 0 | (1) |
Fixed income securities | ||
Realized capital gains and losses by asset type | ||
Gross | (4) | 0 |
Included in OCI | 2 | (1) |
Net | (2) | (1) |
Limited partnership interests | ||
Realized capital gains and losses by asset type | ||
Gross | (1) | 0 |
Included in OCI | 0 | 0 |
Net | (1) | 0 |
Other | ||
Realized capital gains and losses by asset type | ||
Gross | (11) | 0 |
Included in OCI | 0 | 0 |
Net | $ (11) | $ 0 |
Investments - OTTI losses inclu
Investments - OTTI losses included in AOCI at the time of impairment for fixed income securities (Details) - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 |
Investments [Abstract] | ||
Net unrealized gains related to changes in valuation of fixed income securities subsequent to impairment measurement date | $ 178 | $ 180 |
Other-than Impairment Losses Included in Accumulated Other Comprehensive Income | ||
Amount of other-than-temporary impairment losses included in accumulated other comprehensive income for fixed income securities, not included in earnings | (85) | (86) |
Municipal | ||
Other-than Impairment Losses Included in Accumulated Other Comprehensive Income | ||
Amount of other-than-temporary impairment losses included in accumulated other comprehensive income for fixed income securities, not included in earnings | (5) | (5) |
Corporate | ||
Other-than Impairment Losses Included in Accumulated Other Comprehensive Income | ||
Amount of other-than-temporary impairment losses included in accumulated other comprehensive income for fixed income securities, not included in earnings | (3) | (2) |
Asset-backed securities (“ABS”) | ||
Other-than Impairment Losses Included in Accumulated Other Comprehensive Income | ||
Amount of other-than-temporary impairment losses included in accumulated other comprehensive income for fixed income securities, not included in earnings | (11) | (10) |
Residential mortgage-backed securities (“RMBS”) | ||
Other-than Impairment Losses Included in Accumulated Other Comprehensive Income | ||
Amount of other-than-temporary impairment losses included in accumulated other comprehensive income for fixed income securities, not included in earnings | (64) | (67) |
Commercial mortgage-backed securities (“CMBS”) | ||
Other-than Impairment Losses Included in Accumulated Other Comprehensive Income | ||
Amount of other-than-temporary impairment losses included in accumulated other comprehensive income for fixed income securities, not included in earnings | $ (2) | $ (2) |
Investments - Rollforward of th
Investments - Rollforward of the cumulative credit losses recognized in earnings for fixed income securities (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Credit Losses on Fixed Income Securities | ||
Beginning balance | $ (204) | $ (226) |
Additional credit loss for securities previously other-than-temporarily impaired | (2) | (1) |
Reduction in credit loss for securities disposed or collected | 4 | 15 |
Ending balance | $ (202) | $ (212) |
Investments - Unrealized net ca
Investments - Unrealized net capital gains and losses included in AOCI (Details) - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 |
Fair value | ||
Fixed income securities: | $ 58,202 | $ 57,170 |
Short-term investments | 4,157 | 3,027 |
Derivative instruments | 0 | 0 |
Gross unrealized Gains | ||
Fixed income securities | 1,635 | 993 |
Short-term investments | 0 | 0 |
Derivative instruments | 0 | 0 |
Gross unrealized Losses | ||
Fixed income securities | (264) | (957) |
Short-term investments | 0 | 0 |
Derivative instruments | (3) | (3) |
Unrealized net gains (losses) | ||
Fixed income securities | 1,371 | 36 |
Short-term investments | 0 | 0 |
Derivative instruments | (3) | (3) |
Unrealized net capital gains and losses, pre-tax | 1,368 | 33 |
Amount recognized for: | ||
Insurance reserves | (8) | 0 |
DAC and DSI | (124) | (33) |
Amounts recognized | (132) | (33) |
Deferred income taxes | (264) | (2) |
Total unrealized net capital gains and losses | $ 972 | $ (2) |
Investments - Change in unreali
Investments - Change in unrealized net capital gains and losses (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Change in Unrealized Gain (Loss) Recognized in Accumulated Other Comprehensive Income (Loss) | |
Change in unrealized net capital gains and losses | $ 1,335 |
Amount recognized for: | |
Insurance reserves | (8) |
DAC and DSI | (91) |
Amounts recognized | (99) |
Deferred income taxes | (262) |
Increase in unrealized net capital gains and losses, after-tax | 974 |
Fixed income securities | |
Change in Unrealized Gain (Loss) Recognized in Accumulated Other Comprehensive Income (Loss) | |
Change in unrealized net capital gains and losses | 1,335 |
Derivatives | |
Change in Unrealized Gain (Loss) Recognized in Accumulated Other Comprehensive Income (Loss) | |
Change in unrealized net capital gains and losses | $ 0 |
Investments - Gross unrealized
Investments - Gross unrealized losses and fair value by the type and length of time held in continuous unrealized loss position (Details) $ in Millions | Mar. 31, 2019USD ($)contract | Dec. 31, 2018USD ($)contract |
U.S. government and agencies | ||
Less than 12 months | ||
Number of issues | contract | 9 | 11 |
Fair value | $ 112 | $ 55 |
Unrealized losses | $ 0 | $ 0 |
12 months or more | ||
Number of issues | contract | 39 | 38 |
Fair value | $ 259 | $ 364 |
Unrealized losses | (2) | (6) |
Total unrealized losses | ||
Total unrealized losses | $ (2) | $ (6) |
Municipal | ||
Less than 12 months | ||
Number of issues | contract | 102 | 943 |
Fair value | $ 208 | $ 1,633 |
Unrealized losses | $ 0 | $ (10) |
12 months or more | ||
Number of issues | contract | 600 | 1,147 |
Fair value | $ 742 | $ 1,554 |
Unrealized losses | (8) | (33) |
Total unrealized losses | ||
Total unrealized losses | $ (8) | $ (43) |
Corporate | ||
Less than 12 months | ||
Number of issues | contract | 304 | 1,735 |
Fair value | $ 3,249 | $ 19,243 |
Unrealized losses | $ (42) | $ (543) |
12 months or more | ||
Number of issues | contract | 807 | 645 |
Fair value | $ 10,382 | $ 8,374 |
Unrealized losses | (200) | (347) |
Total unrealized losses | ||
Total unrealized losses | $ (242) | $ (890) |
Foreign government | ||
Less than 12 months | ||
Number of issues | contract | 0 | 7 |
Fair value | $ 0 | $ 20 |
Unrealized losses | $ 0 | $ (1) |
12 months or more | ||
Number of issues | contract | 11 | 27 |
Fair value | $ 218 | $ 412 |
Unrealized losses | (1) | (4) |
Total unrealized losses | ||
Total unrealized losses | $ (1) | $ (5) |
Asset-backed securities (“ABS”) | ||
Less than 12 months | ||
Number of issues | contract | 36 | 64 |
Fair value | $ 283 | $ 454 |
Unrealized losses | $ (4) | $ (5) |
12 months or more | ||
Number of issues | contract | 34 | 28 |
Fair value | $ 146 | $ 161 |
Unrealized losses | (5) | (5) |
Total unrealized losses | ||
Total unrealized losses | $ (9) | $ (10) |
Residential mortgage-backed securities (“RMBS”) | ||
Less than 12 months | ||
Number of issues | contract | 81 | 166 |
Fair value | $ 12 | $ 30 |
Unrealized losses | $ 0 | $ 0 |
12 months or more | ||
Number of issues | contract | 194 | 195 |
Fair value | $ 49 | $ 52 |
Unrealized losses | (1) | (2) |
Total unrealized losses | ||
Total unrealized losses | $ (1) | $ (2) |
Commercial mortgage-backed securities (“CMBS”) | ||
Less than 12 months | ||
Number of issues | contract | 4 | 3 |
Fair value | $ 11 | $ 7 |
Unrealized losses | $ (1) | $ 0 |
12 months or more | ||
Number of issues | contract | 1 | 2 |
Fair value | $ 0 | $ 0 |
Unrealized losses | 0 | (1) |
Total unrealized losses | ||
Total unrealized losses | $ (1) | $ (1) |
Redeemable preferred stock | ||
Less than 12 months | ||
Number of issues | contract | 1 | |
Fair value | $ 0 | |
Unrealized losses | $ 0 | |
12 months or more | ||
Number of issues | contract | 0 | |
Fair value | $ 0 | |
Unrealized losses | 0 | |
Total unrealized losses | ||
Total unrealized losses | $ 0 | |
Fixed income securities | ||
Less than 12 months | ||
Number of issues | contract | 536 | 2,930 |
Fair value | $ 3,875 | $ 21,442 |
Unrealized losses | $ (47) | $ (559) |
12 months or more | ||
Number of issues | contract | 1,686 | 2,082 |
Fair value | $ 11,796 | $ 10,917 |
Unrealized losses | (217) | (398) |
Total unrealized losses | ||
Total unrealized losses | $ (264) | $ (957) |
Investment grade fixed income securities | ||
Less than 12 months | ||
Number of issues | contract | 404 | 2,348 |
Fair value | $ 3,077 | $ 17,485 |
Unrealized losses | $ (22) | $ (331) |
12 months or more | ||
Number of issues | contract | 1,550 | 2,021 |
Fair value | $ 10,853 | $ 10,626 |
Unrealized losses | (170) | (360) |
Total unrealized losses | ||
Total unrealized losses | $ (192) | $ (691) |
Below investment grade fixed income securities | ||
Less than 12 months | ||
Number of issues | contract | 132 | 582 |
Fair value | $ 798 | $ 3,957 |
Unrealized losses | $ (25) | $ (228) |
12 months or more | ||
Number of issues | contract | 136 | 61 |
Fair value | $ 943 | $ 291 |
Unrealized losses | (47) | (38) |
Total unrealized losses | ||
Total unrealized losses | $ (72) | $ (266) |
Investments - Carrying value of
Investments - Carrying value of non-impaired mortgage loans summarized by debt service coverage ratio distribution (Details) - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 |
Financing Receivable, Impaired [Line Items] | ||
Total | $ 4,681 | $ 4,670 |
Mortgage loans, non-impaired | ||
Financing Receivable, Impaired [Line Items] | ||
Fixed rate mortgage loans | 4,545 | 4,534 |
Variable rate mortgage loans | 132 | 132 |
Total | 4,677 | 4,666 |
Below 1.0 | Mortgage loans, non-impaired | ||
Financing Receivable, Impaired [Line Items] | ||
Fixed rate mortgage loans | 22 | 6 |
Variable rate mortgage loans | 31 | 31 |
Total | 53 | 37 |
1.0 - 1.25 | Mortgage loans, non-impaired | ||
Financing Receivable, Impaired [Line Items] | ||
Fixed rate mortgage loans | 256 | 273 |
Variable rate mortgage loans | 0 | 0 |
Total | 256 | 273 |
1.26 - 1.50 | Mortgage loans, non-impaired | ||
Financing Receivable, Impaired [Line Items] | ||
Fixed rate mortgage loans | 1,157 | 1,192 |
Variable rate mortgage loans | 0 | 0 |
Total | 1,157 | 1,192 |
Above 1.50 | Mortgage loans, non-impaired | ||
Financing Receivable, Impaired [Line Items] | ||
Fixed rate mortgage loans | 3,110 | 3,063 |
Variable rate mortgage loans | 101 | 101 |
Total | $ 3,211 | $ 3,164 |
Investments - Net carrying valu
Investments - Net carrying value of impaired mortgage loans (Details) - Mortgage loans, non-impaired - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 |
Net carrying value of impaired mortgage loans | ||
Impaired mortgage loans with a valuation allowance | $ 4 | $ 4 |
Impaired mortgage loans without a valuation allowance | 0 | 0 |
Total impaired mortgage loans | 4 | 4 |
Valuation allowance on impaired mortgage loans | $ 3 | $ 3 |
Investments - Other investments
Investments - Other investments by type (Details) - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 |
Schedule of Investments [Line Items] | ||
Other | $ 3,786 | $ 3,852 |
Bank loans | ||
Schedule of Investments [Line Items] | ||
Other | 1,300 | 1,350 |
Policy loans | ||
Schedule of Investments [Line Items] | ||
Other | 885 | 891 |
Real estate | ||
Schedule of Investments [Line Items] | ||
Other | 776 | 791 |
Agent loans | ||
Schedule of Investments [Line Items] | ||
Other | 639 | 620 |
Derivatives and other | ||
Schedule of Investments [Line Items] | ||
Other | $ 186 | $ 200 |
Fair Value of Assets and Liab_3
Fair Value of Assets and Liabilities - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Fair value of assets and liabilities measured on recurring and non-recurring basis | |||
Fair value | $ 58,202 | $ 57,170 | |
Total realized and unrealized gains (losses) included in net income, recurring Level 3 assets and liabilities | 2 | $ (27) | |
Significant unobservable inputs (Level 3) | |||
Fair value of assets and liabilities measured on recurring and non-recurring basis | |||
Assets at fair value | 753 | ||
Recurring | Significant unobservable inputs (Level 3) | |||
Fair value of assets and liabilities measured on recurring and non-recurring basis | |||
Fair value | 370 | 325 | |
Assets at fair value | 714 | 697 | |
Fixed Income Securities Valued Based on Nonbinding Broker Quotes | |||
Fair value of assets and liabilities measured on recurring and non-recurring basis | |||
Assets at fair value | 127 | 105 | |
Municipal Not Rated by Third Party Credit Rating Agencies | |||
Fair value of assets and liabilities measured on recurring and non-recurring basis | |||
Assets at fair value | 41 | $ 44 | |
Gain (Loss) on Investments | |||
Fair value of assets and liabilities measured on recurring and non-recurring basis | |||
Total realized and unrealized gains (losses) included in net income, recurring Level 3 assets and liabilities | (24) | (25) | |
Realized capital gains (losses) | |||
Fair value of assets and liabilities measured on recurring and non-recurring basis | |||
Change in unrealized gain (loss) | 4 | 2 | |
Life contract benefits | |||
Fair value of assets and liabilities measured on recurring and non-recurring basis | |||
Change in unrealized gain (loss) | 8 | 4 | |
Interest credited to contractholder funds | |||
Fair value of assets and liabilities measured on recurring and non-recurring basis | |||
Change in unrealized gain (loss) | (36) | $ 19 | |
Limited partnership interests | |||
Fair value of assets and liabilities measured on recurring and non-recurring basis | |||
Commitments to invest in limited partnership interests | $ 635 | ||
Limited partnership interests | Minimum | |||
Fair value of assets and liabilities measured on recurring and non-recurring basis | |||
Investment assets, useful life | 10 years | ||
Limited partnership interests | Maximum | |||
Fair value of assets and liabilities measured on recurring and non-recurring basis | |||
Investment assets, useful life | 12 years |
Fair Value of Assets and Liab_4
Fair Value of Assets and Liabilities - Assets and liabilities measured at fair value on a recurring and non-recurring basis (Details) - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 | Mar. 31, 2018 |
Assets | |||
Fixed income securities: | $ 58,202 | $ 57,170 | |
Short-term investments | 4,157 | 3,027 | |
Other investments: Free-standing derivatives | 1 | $ 1 | |
Separate account assets | 3,050 | 2,805 | |
Counterparty and cash collateral netting | $ (27) | $ (23) | |
% of total assets at fair value | 0.00% | 0.00% | |
Total | $ 73,087 | $ 69,936 | |
Liabilities | |||
Counterparty and cash collateral netting | $ 7 | $ 6 | |
Counterparty and cash collateral netting as a percent of liabilities measured at fair value | (2.40%) | (2.10%) | |
U.S. government and agencies | |||
Assets | |||
Fixed income securities: | $ 3,892 | $ 5,517 | |
Municipal | |||
Assets | |||
Fixed income securities: | 9,264 | 9,169 | |
Foreign government | |||
Assets | |||
Fixed income securities: | 752 | 747 | |
Residential mortgage-backed securities (“RMBS”) | |||
Assets | |||
Fixed income securities: | 442 | 464 | |
Commercial mortgage-backed securities (“CMBS”) | |||
Assets | |||
Fixed income securities: | 73 | 70 | |
Redeemable preferred stock | |||
Assets | |||
Fixed income securities: | 22 | $ 22 | |
Quoted prices in active markets for identical assets (Level 1) | |||
Assets | |||
Total assets at fair value | $ 13,679 | ||
% of total assets at fair value | 19.20% | 19.90% | |
Liabilities | |||
Total recurring basis liabilities | $ (2) | $ (1) | |
Liabilities as a percent of liabilities measured at fair value | 0.70% | 0.30% | |
Significant other observable inputs (Level 2) | |||
Assets | |||
Total assets at fair value | $ 56,944 | ||
% of total assets at fair value | 79.80% | 79.10% | |
Liabilities | |||
Total recurring basis liabilities | $ (51) | $ (62) | |
Liabilities as a percent of liabilities measured at fair value | 17.20% | 22.10% | |
Significant unobservable inputs (Level 3) | |||
Assets | |||
Total assets at fair value | $ 753 | ||
% of total assets at fair value | 1.00% | 1.00% | |
Liabilities | |||
Total recurring basis liabilities | $ (251) | $ (224) | |
Liabilities as a percent of liabilities measured at fair value | 84.50% | 79.70% | |
Investments reported at NAV | |||
Assets | |||
Investments reported at NAV | $ 1,738 | $ 1,779 | |
Recurring | |||
Assets | |||
Other investments: Free-standing derivatives, Counterparty and cash collateral netting | (27) | (23) | |
Liabilities | |||
Counterparty and cash collateral netting | 7 | 6 | |
Recurring | Quoted prices in active markets for identical assets (Level 1) | |||
Assets | |||
Fixed income securities: | 3,498 | 5,085 | |
Equity securities | 5,149 | 4,364 | |
Short-term investments | 1,981 | 1,338 | |
Other investments: Free-standing derivatives | 0 | 0 | |
Separate account assets | 3,050 | 2,805 | |
Other assets | 1 | 2 | |
Total assets at fair value | 13,679 | 13,594 | |
Liabilities | |||
Other liabilities: Free-standing derivatives | (2) | (1) | |
Recurring | Quoted prices in active markets for identical assets (Level 1) | U.S. government and agencies | |||
Assets | |||
Fixed income securities: | 3,498 | 5,085 | |
Recurring | Quoted prices in active markets for identical assets (Level 1) | Municipal | |||
Assets | |||
Fixed income securities: | 0 | 0 | |
Recurring | Quoted prices in active markets for identical assets (Level 1) | Corporate - public | |||
Assets | |||
Fixed income securities: | 0 | 0 | |
Recurring | Quoted prices in active markets for identical assets (Level 1) | Corporate - privately placed | |||
Assets | |||
Fixed income securities: | 0 | 0 | |
Recurring | Quoted prices in active markets for identical assets (Level 1) | Foreign government | |||
Assets | |||
Fixed income securities: | 0 | 0 | |
Recurring | Quoted prices in active markets for identical assets (Level 1) | ABS - CDO | |||
Assets | |||
Fixed income securities: | 0 | 0 | |
Recurring | Quoted prices in active markets for identical assets (Level 1) | ABS - consumer and other | |||
Assets | |||
Fixed income securities: | 0 | 0 | |
Recurring | Quoted prices in active markets for identical assets (Level 1) | Residential mortgage-backed securities (“RMBS”) | |||
Assets | |||
Fixed income securities: | 0 | 0 | |
Recurring | Quoted prices in active markets for identical assets (Level 1) | Commercial mortgage-backed securities (“CMBS”) | |||
Assets | |||
Fixed income securities: | 0 | 0 | |
Recurring | Quoted prices in active markets for identical assets (Level 1) | Redeemable preferred stock | |||
Assets | |||
Fixed income securities: | 0 | 0 | |
Recurring | Significant other observable inputs (Level 2) | |||
Assets | |||
Fixed income securities: | 54,334 | 51,760 | |
Equity securities | 350 | 331 | |
Short-term investments | 2,136 | 1,659 | |
Other investments: Free-standing derivatives | 124 | 139 | |
Separate account assets | 0 | 0 | |
Other assets | 0 | 0 | |
Total assets at fair value | 56,944 | 53,889 | |
Liabilities | |||
Other liabilities: Free-standing derivatives | (51) | (62) | |
Recurring | Significant other observable inputs (Level 2) | U.S. government and agencies | |||
Assets | |||
Fixed income securities: | 394 | 432 | |
Recurring | Significant other observable inputs (Level 2) | Municipal | |||
Assets | |||
Fixed income securities: | 9,196 | 9,099 | |
Recurring | Significant other observable inputs (Level 2) | Corporate - public | |||
Assets | |||
Fixed income securities: | 30,982 | 29,200 | |
Recurring | Significant other observable inputs (Level 2) | Corporate - privately placed | |||
Assets | |||
Fixed income securities: | 11,537 | 10,776 | |
Recurring | Significant other observable inputs (Level 2) | Foreign government | |||
Assets | |||
Fixed income securities: | 752 | 747 | |
Recurring | Significant other observable inputs (Level 2) | ABS - CDO | |||
Assets | |||
Fixed income securities: | 250 | 263 | |
Recurring | Significant other observable inputs (Level 2) | ABS - consumer and other | |||
Assets | |||
Fixed income securities: | 721 | 713 | |
Recurring | Significant other observable inputs (Level 2) | Residential mortgage-backed securities (“RMBS”) | |||
Assets | |||
Fixed income securities: | 442 | 464 | |
Recurring | Significant other observable inputs (Level 2) | Commercial mortgage-backed securities (“CMBS”) | |||
Assets | |||
Fixed income securities: | 38 | 44 | |
Recurring | Significant other observable inputs (Level 2) | Redeemable preferred stock | |||
Assets | |||
Fixed income securities: | 22 | 22 | |
Recurring | Significant unobservable inputs (Level 3) | |||
Assets | |||
Fixed income securities: | 370 | 325 | |
Equity securities | 303 | 341 | |
Short-term investments | 40 | 30 | |
Other investments: Free-standing derivatives | 1 | 1 | |
Separate account assets | 0 | 0 | |
Other assets | 0 | 0 | |
Total assets at fair value | 714 | 697 | |
Liabilities | |||
Other liabilities: Free-standing derivatives | 0 | 0 | |
Recurring | Significant unobservable inputs (Level 3) | U.S. government and agencies | |||
Assets | |||
Fixed income securities: | 0 | 0 | |
Recurring | Significant unobservable inputs (Level 3) | Municipal | |||
Assets | |||
Fixed income securities: | 68 | 70 | |
Recurring | Significant unobservable inputs (Level 3) | Corporate - public | |||
Assets | |||
Fixed income securities: | 90 | 70 | |
Recurring | Significant unobservable inputs (Level 3) | Corporate - privately placed | |||
Assets | |||
Fixed income securities: | 90 | 90 | |
Recurring | Significant unobservable inputs (Level 3) | Foreign government | |||
Assets | |||
Fixed income securities: | 0 | 0 | |
Recurring | Significant unobservable inputs (Level 3) | ABS - CDO | |||
Assets | |||
Fixed income securities: | 6 | 6 | |
Recurring | Significant unobservable inputs (Level 3) | ABS - consumer and other | |||
Assets | |||
Fixed income securities: | 81 | 63 | |
Recurring | Significant unobservable inputs (Level 3) | Residential mortgage-backed securities (“RMBS”) | |||
Assets | |||
Fixed income securities: | 0 | 0 | |
Recurring | Significant unobservable inputs (Level 3) | Commercial mortgage-backed securities (“CMBS”) | |||
Assets | |||
Fixed income securities: | 35 | 26 | |
Recurring | Significant unobservable inputs (Level 3) | Redeemable preferred stock | |||
Assets | |||
Fixed income securities: | 0 | 0 | |
Non-recurring | Quoted prices in active markets for identical assets (Level 1) | |||
Assets | |||
Total assets at fair value | 0 | ||
Non-recurring | Significant other observable inputs (Level 2) | |||
Assets | |||
Total assets at fair value | 0 | ||
Non-recurring | Significant unobservable inputs (Level 3) | |||
Assets | |||
Total assets at fair value | 39 | ||
Derivatives embedded in life and annuity contracts | Recurring | Quoted prices in active markets for identical assets (Level 1) | |||
Liabilities | |||
Contractholder funds: Derivatives embedded in life and annuity contracts | 0 | 0 | |
Derivatives embedded in life and annuity contracts | Recurring | Significant other observable inputs (Level 2) | |||
Liabilities | |||
Contractholder funds: Derivatives embedded in life and annuity contracts | 0 | 0 | |
Derivatives embedded in life and annuity contracts | Recurring | Significant unobservable inputs (Level 3) | |||
Liabilities | |||
Contractholder funds: Derivatives embedded in life and annuity contracts | (251) | $ (224) | |
Fair value | |||
Assets | |||
Total assets at fair value | $ 71,349 | ||
% of total assets at fair value | 100.00% | 100.00% | |
Liabilities | |||
Total recurring basis liabilities | $ (297) | $ (281) | |
Liabilities as a percent of liabilities measured at fair value | 100.00% | 100.00% | |
Fair value | Recurring | |||
Assets | |||
Fixed income securities: | $ 58,202 | $ 57,170 | |
Equity securities | 5,802 | 5,036 | |
Short-term investments | 4,157 | 3,027 | |
Other investments: Free-standing derivatives | 98 | 117 | |
Separate account assets | 3,050 | 2,805 | |
Other assets | 1 | 2 | |
Total assets at fair value | 71,310 | 68,157 | |
Liabilities | |||
Other liabilities: Free-standing derivatives | (46) | (57) | |
Fair value | Recurring | U.S. government and agencies | |||
Assets | |||
Fixed income securities: | 3,892 | 5,517 | |
Fair value | Recurring | Municipal | |||
Assets | |||
Fixed income securities: | 9,264 | 9,169 | |
Fair value | Recurring | Corporate - public | |||
Assets | |||
Fixed income securities: | 31,072 | 29,270 | |
Fair value | Recurring | Corporate - privately placed | |||
Assets | |||
Fixed income securities: | 11,627 | 10,866 | |
Fair value | Recurring | Foreign government | |||
Assets | |||
Fixed income securities: | 752 | 747 | |
Fair value | Recurring | ABS - CDO | |||
Assets | |||
Fixed income securities: | 256 | 269 | |
Fair value | Recurring | ABS - consumer and other | |||
Assets | |||
Fixed income securities: | 802 | 776 | |
Fair value | Recurring | Residential mortgage-backed securities (“RMBS”) | |||
Assets | |||
Fixed income securities: | 442 | 464 | |
Fair value | Recurring | Commercial mortgage-backed securities (“CMBS”) | |||
Assets | |||
Fixed income securities: | 73 | 70 | |
Fair value | Recurring | Redeemable preferred stock | |||
Assets | |||
Fixed income securities: | 22 | 22 | |
Fair value | Non-recurring | |||
Assets | |||
Total assets at fair value | 39 | ||
Liabilities | |||
Limited partnership interests | 3 | ||
Bank loans | 36 | ||
Fair value | Derivatives embedded in life and annuity contracts | Recurring | |||
Liabilities | |||
Contractholder funds: Derivatives embedded in life and annuity contracts | (251) | (224) | |
Fixed Income Securities Valued Based on Nonbinding Broker Quotes | |||
Assets | |||
Total assets at fair value | 127 | 105 | |
Municipal Not Rated by Third Party Credit Rating Agencies | |||
Assets | |||
Total assets at fair value | $ 41 | $ 44 |
Fair Value of Assets and Liab_5
Fair Value of Assets and Liabilities - Quantitative information about the significant unobservable inputs used in level 3 fair value measurements (Details) - Equity-indexed and forward starting options in life and annuity product contracts - Significant unobservable inputs (Level 3) $ in Millions | Mar. 31, 2019USD ($) | Dec. 31, 2018USD ($) |
Quantitative information about the significant unobservable inputs | ||
Fair value | $ (220) | $ (185) |
Projected option cost | Weighted Average | ||
Quantitative information about the significant unobservable inputs | ||
Measurement Input | 0.0174 | 0.0174 |
Projected option cost | Maximum | ||
Quantitative information about the significant unobservable inputs | ||
Measurement Input | 0.022 | 0.022 |
Projected option cost | Minimum | ||
Quantitative information about the significant unobservable inputs | ||
Measurement Input | 0.010 | 0.010 |
Fair Value of Assets and Liab_6
Fair Value of Assets and Liabilities - Rollforward of level 3 assets and liabilities held at fair value on a recurring basis during the period (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Fair Value Assets Measured on Recurring Basis Unobservable Input Reconciliation Calculation Rollforward | ||
Balance at beginning of period | $ 697 | $ 837 |
Total gains (losses) included in: net income | 26 | 4 |
Total gains (losses) included in: OCI | 4 | (2) |
Transfers into Level 3 | 18 | 9 |
Transfers out of Level 3 | (47) | (115) |
Purchases | 116 | 114 |
Sales | (93) | (109) |
Issues | 0 | 0 |
Settlements | (7) | (8) |
Balance at end of period | 714 | 730 |
Fair Value Liabilities Measured on Recurring Basis Unobservable Input Reconciliation Calculation | ||
Balance at the beginning of the period | (224) | (286) |
Total gains (losses) included in: net income | (28) | 23 |
Total gains (losses) included in: OCI | 0 | 0 |
Transfers into Level 3 | 0 | 0 |
Transfers out of Level 3 | 0 | 0 |
Purchases | 0 | 0 |
Sales | 0 | 0 |
Issues | 0 | (1) |
Settlements | 1 | 2 |
Balance at the end of the period | (251) | (262) |
Fair value assets and liabilities measured on recurring basis, gain (loss) included in earnings | ||
Total realized and unrealized gains (losses) included in net income, recurring Level 3 assets and liabilities | (2) | 27 |
Free-standing derivatives | 1 | 1 |
Realized capital gains (losses) | ||
Fair Value Assets Measured on Recurring Basis Unobservable Input Reconciliation Calculation Rollforward | ||
Total gains (losses) included in: net income | 26 | 4 |
Fair value assets and liabilities measured on recurring basis, gain (loss) included in earnings | ||
Change in unrealized gain (loss) | 4 | 2 |
Interest credited to contractholder funds | ||
Fair Value Assets Measured on Recurring Basis Unobservable Input Reconciliation Calculation Rollforward | ||
Total gains (losses) included in: net income | 19 | |
Fair value assets and liabilities measured on recurring basis, gain (loss) included in earnings | ||
Change in unrealized gain (loss) | (36) | 19 |
Life contract benefits | ||
Fair value assets and liabilities measured on recurring basis, gain (loss) included in earnings | ||
Change in unrealized gain (loss) | 8 | 4 |
Municipal | ||
Fair Value Assets Measured on Recurring Basis Unobservable Input Reconciliation Calculation Rollforward | ||
Balance at beginning of period | 70 | 101 |
Total gains (losses) included in: net income | 0 | 1 |
Total gains (losses) included in: OCI | 1 | (1) |
Transfers into Level 3 | 0 | 0 |
Transfers out of Level 3 | 0 | (2) |
Purchases | 0 | 0 |
Sales | (2) | (2) |
Issues | 0 | 0 |
Settlements | (1) | (1) |
Balance at end of period | 68 | 96 |
Corporate - public | ||
Fair Value Assets Measured on Recurring Basis Unobservable Input Reconciliation Calculation Rollforward | ||
Balance at beginning of period | 70 | 108 |
Total gains (losses) included in: net income | 0 | 0 |
Total gains (losses) included in: OCI | 1 | (1) |
Transfers into Level 3 | 0 | 4 |
Transfers out of Level 3 | 0 | (5) |
Purchases | 20 | 0 |
Sales | 0 | (26) |
Issues | 0 | 0 |
Settlements | (1) | (3) |
Balance at end of period | 90 | 77 |
Corporate - privately placed | ||
Fair Value Assets Measured on Recurring Basis Unobservable Input Reconciliation Calculation Rollforward | ||
Balance at beginning of period | 90 | 224 |
Total gains (losses) included in: net income | (2) | 0 |
Total gains (losses) included in: OCI | 2 | (1) |
Transfers into Level 3 | 15 | 0 |
Transfers out of Level 3 | 0 | (19) |
Purchases | 0 | 13 |
Sales | (13) | 0 |
Issues | 0 | 0 |
Settlements | (2) | (2) |
Balance at end of period | 90 | 215 |
ABS - CDO | ||
Fair Value Assets Measured on Recurring Basis Unobservable Input Reconciliation Calculation Rollforward | ||
Balance at beginning of period | 6 | 99 |
Total gains (losses) included in: net income | 0 | 0 |
Total gains (losses) included in: OCI | 0 | 0 |
Transfers into Level 3 | 0 | 0 |
Transfers out of Level 3 | 0 | (89) |
Purchases | 0 | 0 |
Sales | 0 | 0 |
Issues | 0 | 0 |
Settlements | 0 | 0 |
Balance at end of period | 6 | 10 |
ABS - consumer and other | ||
Fair Value Assets Measured on Recurring Basis Unobservable Input Reconciliation Calculation Rollforward | ||
Balance at beginning of period | 63 | 48 |
Total gains (losses) included in: net income | 0 | 0 |
Total gains (losses) included in: OCI | 0 | 1 |
Transfers into Level 3 | 0 | 5 |
Transfers out of Level 3 | (47) | 0 |
Purchases | 78 | 45 |
Sales | (10) | (35) |
Issues | 0 | 0 |
Settlements | (3) | (2) |
Balance at end of period | 81 | 62 |
Commercial mortgage-backed securities (“CMBS”) | ||
Fair Value Assets Measured on Recurring Basis Unobservable Input Reconciliation Calculation Rollforward | ||
Balance at beginning of period | 26 | 26 |
Total gains (losses) included in: net income | 0 | 0 |
Total gains (losses) included in: OCI | 0 | 0 |
Transfers into Level 3 | 3 | 0 |
Transfers out of Level 3 | 0 | 0 |
Purchases | 6 | 1 |
Sales | 0 | 0 |
Issues | 0 | 0 |
Settlements | 0 | 0 |
Balance at end of period | 35 | 27 |
Fixed income securities | ||
Fair Value Assets Measured on Recurring Basis Unobservable Input Reconciliation Calculation Rollforward | ||
Balance at beginning of period | 325 | 606 |
Total gains (losses) included in: net income | (2) | 1 |
Total gains (losses) included in: OCI | 4 | (2) |
Transfers into Level 3 | 18 | 9 |
Transfers out of Level 3 | (47) | (115) |
Purchases | 104 | 59 |
Sales | (25) | (63) |
Issues | 0 | 0 |
Settlements | (7) | (8) |
Balance at end of period | 370 | 487 |
Equity securities | ||
Fair Value Assets Measured on Recurring Basis Unobservable Input Reconciliation Calculation Rollforward | ||
Balance at beginning of period | 341 | 210 |
Total gains (losses) included in: net income | 28 | 3 |
Total gains (losses) included in: OCI | 0 | 0 |
Transfers into Level 3 | 0 | 0 |
Transfers out of Level 3 | 0 | 0 |
Purchases | 2 | 30 |
Sales | (68) | (1) |
Issues | 0 | 0 |
Settlements | 0 | 0 |
Balance at end of period | 303 | 242 |
Short-term investments | ||
Fair Value Assets Measured on Recurring Basis Unobservable Input Reconciliation Calculation Rollforward | ||
Balance at beginning of period | 30 | 20 |
Total gains (losses) included in: net income | 0 | 0 |
Total gains (losses) included in: OCI | 0 | 0 |
Transfers into Level 3 | 0 | 0 |
Transfers out of Level 3 | 0 | 0 |
Purchases | 10 | 25 |
Sales | 0 | (45) |
Issues | 0 | 0 |
Settlements | 0 | 0 |
Balance at end of period | 40 | 0 |
Free-standing derivatives, net | ||
Fair Value Assets Measured on Recurring Basis Unobservable Input Reconciliation Calculation Rollforward | ||
Balance at beginning of period | 1 | 1 |
Total gains (losses) included in: net income | 0 | 0 |
Total gains (losses) included in: OCI | 0 | 0 |
Transfers into Level 3 | 0 | 0 |
Transfers out of Level 3 | 0 | 0 |
Purchases | 0 | 0 |
Sales | 0 | 0 |
Issues | 0 | 0 |
Settlements | 0 | 0 |
Balance at end of period | 1 | 1 |
Derivatives embedded in life and annuity contracts | ||
Fair Value Liabilities Measured on Recurring Basis Unobservable Input Reconciliation Calculation | ||
Balance at the beginning of the period | (224) | (286) |
Total gains (losses) included in: net income | (28) | 23 |
Total gains (losses) included in: OCI | 0 | 0 |
Transfers into Level 3 | 0 | 0 |
Transfers out of Level 3 | 0 | 0 |
Purchases | 0 | 0 |
Sales | 0 | 0 |
Issues | 0 | (1) |
Settlements | 1 | 2 |
Balance at the end of the period | $ (251) | $ (262) |
Fair Value of Assets and Liab_7
Fair Value of Assets and Liabilities - Change in unrealized gains and losses included in net income for level 3 assets and liabilities (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Gains (losses) included in net income for Level 3 assets and liabilities: | ||
Recurring Level 3 assets | $ 4 | $ 2 |
Gains (losses) for Level 3 liabilities still held at the balance sheet date, included in earnings | (28) | 23 |
Derivatives embedded in life and annuity contracts | ||
Gains (losses) included in net income for Level 3 assets and liabilities: | ||
Gains (losses) for Level 3 liabilities still held at the balance sheet date, included in earnings | (28) | 23 |
Equity securities | ||
Gains (losses) included in net income for Level 3 assets and liabilities: | ||
Recurring Level 3 assets | $ 4 | $ 2 |
Fair Value of Assets and Liab_8
Fair Value of Assets and Liabilities - Carrying values and fair value estimates of financial instruments not carried at fair value (Details) - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 | Mar. 31, 2018 | Dec. 31, 2017 |
Financial assets | ||||
Mortgage loans | $ 4,681 | $ 4,670 | ||
Financial liabilities | ||||
Long-term debt | 6,453 | 6,451 | ||
Liability for collateral | 1,973 | 1,458 | $ 1,037 | $ 1,124 |
Significant unobservable inputs (Level 3) | Carrying value | ||||
Financial assets | ||||
Mortgage loans | 4,681 | 4,670 | ||
Bank loans | 1,300 | 1,350 | ||
Agent loans | 639 | 620 | ||
Financial liabilities | ||||
Contractholder funds on investment contracts | 9,015 | 9,250 | ||
Significant unobservable inputs (Level 3) | Fair value | ||||
Financial assets | ||||
Mortgage loans | 4,787 | 4,703 | ||
Bank loans | 1,271 | 1,298 | ||
Agent loans | 639 | 617 | ||
Financial liabilities | ||||
Contractholder funds on investment contracts | 9,626 | 9,665 | ||
Significant other observable inputs (Level 2) | Carrying value | ||||
Financial liabilities | ||||
Long-term debt | 6,453 | 6,451 | ||
Liability for collateral | 1,973 | 1,458 | ||
Significant other observable inputs (Level 2) | Fair value | ||||
Financial liabilities | ||||
Long-term debt | 6,985 | 6,708 | ||
Liability for collateral | $ 1,973 | $ 1,458 |
Derivative Financial Instrume_3
Derivative Financial Instruments - Narrative (Details) $ in Millions | 3 Months Ended | ||
Mar. 31, 2019USD ($)contract | Mar. 31, 2018USD ($)contract | Dec. 31, 2018USD ($)contract | |
Derivative Instruments, Gain (Loss) | |||
Derivative, mumber of instruments held | contract | 18,149 | 26,170 | |
Loss on foreign currency cash flow hedge | $ 3 | $ 1 | |
Cash flow hedge losses to be reclassified from AOCI during the next twelve months (less than) | 1 | ||
Cash and securities pledged as collateral by counterparties | 21 | ||
Securities pledged as collateral to counterparties | 1 | ||
Collateral posted under MNAs for contracts containing credit-risk-contingent features | 1 | $ 2 | |
Cash and securities pledged in the form of margin deposits | $ 136 | ||
Derivatives designated as fair value accounting hedging instruments | |||
Derivative Instruments, Gain (Loss) | |||
Derivative, mumber of instruments held | contract | 1 | 1 | |
Number of foreign currency derivatives held | contract | 0 | 1 |
Derivative Financial Instrume_4
Derivative Financial Instruments - Summary of the volume and fair value positions of derivative instruments (Details) $ in Millions | Mar. 31, 2019USD ($)contract | Dec. 31, 2018USD ($)contract | Mar. 31, 2018contract |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||
Cash and securities pledged in the form of margin deposits | $ 136 | ||
Derivatives, Fair Value | |||
Total asset derivatives, notional amount | 452 | $ 470 | |
Total liability derivatives, notional amount | 3,195 | 2,675 | |
Total derivatives, notional amount | $ 3,647 | $ 3,145 | |
Total asset derivatives, number of contracts | contract | 9,680 | 13,914 | |
Total liability derivatives, number of contracts | contract | 8,469 | 12,256 | |
Total derivatives, Number of contracts | contract | 18,149 | 26,170 | |
Derivative assets net amount on balance sheet | $ 104 | $ 124 | |
Asset derivatives gross amount | 109 | 130 | |
Asset derivatives, gross liability | (5) | (6) | |
Derivative liabilities net amount on balance sheet | (282) | (269) | |
Total derivatives, fair value, net | (178) | (145) | |
Liability derivatives, gross asset | 17 | 12 | |
Liability derivatives gross amount | $ (299) | $ (281) | |
Derivatives designated as fair value accounting hedging instruments | |||
Derivatives, Fair Value | |||
Total derivatives, Number of contracts | contract | 1 | 1 | |
Other assets | Derivatives not designated as accounting hedging instruments | |||
Derivatives, Fair Value | |||
Total asset derivatives, number of contracts | contract | 1,025 | 1,330 | |
Interest rate swaption agreements | Other liabilities & accrued expenses | Derivatives not designated as accounting hedging instruments | |||
Derivatives, Fair Value | |||
Total liability derivatives, notional amount | $ 10 | ||
Derivative liabilities net amount on balance sheet | 0 | ||
Liability derivatives, gross asset | 0 | ||
Liability derivatives gross amount | 0 | ||
Interest rate cap agreements | Other investments | Derivatives not designated as accounting hedging instruments | |||
Derivatives, Fair Value | |||
Total asset derivatives, notional amount | 4 | $ 6 | |
Derivative assets net amount on balance sheet | 0 | 0 | |
Asset derivatives gross amount | 0 | 0 | |
Asset derivatives, gross liability | 0 | 0 | |
Interest rate cap agreements | Other liabilities & accrued expenses | Derivatives not designated as accounting hedging instruments | |||
Derivatives, Fair Value | |||
Total liability derivatives, notional amount | 32 | 31 | |
Derivative liabilities net amount on balance sheet | 1 | 1 | |
Liability derivatives, gross asset | 1 | 1 | |
Liability derivatives gross amount | 0 | 0 | |
Futures | Other assets | Derivatives not designated as accounting hedging instruments | |||
Derivatives, Fair Value | |||
Total asset derivatives, notional amount | 0 | 0 | |
Derivative assets net amount on balance sheet | 0 | 1 | |
Asset derivatives gross amount | 0 | 1 | |
Asset derivatives, gross liability | 0 | 0 | |
Futures | Other liabilities & accrued expenses | Derivatives not designated as accounting hedging instruments | |||
Derivatives, Fair Value | |||
Total liability derivatives, notional amount | $ 0 | $ 0 | |
Total liability derivatives, number of contracts | contract | 2,510 | 1,300 | |
Derivative liabilities net amount on balance sheet | $ (1) | $ (1) | |
Liability derivatives, gross asset | 0 | 0 | |
Liability derivatives gross amount | (1) | (1) | |
Options | Other investments | Derivatives not designated as accounting hedging instruments | |||
Derivatives, Fair Value | |||
Total asset derivatives, notional amount | $ 0 | $ 0 | |
Total asset derivatives, number of contracts | contract | 7,040 | 11,131 | |
Derivative assets net amount on balance sheet | $ 95 | $ 115 | |
Asset derivatives gross amount | 95 | 115 | |
Asset derivatives, gross liability | 0 | 0 | |
Futures | Other assets | Derivatives not designated as accounting hedging instruments | |||
Derivatives, Fair Value | |||
Total asset derivatives, notional amount | $ 0 | $ 0 | |
Total asset derivatives, number of contracts | contract | 1,615 | 1,453 | |
Derivative assets net amount on balance sheet | $ 1 | $ 1 | |
Asset derivatives gross amount | 1 | 1 | |
Asset derivatives, gross liability | 0 | 0 | |
Futures | Other liabilities & accrued expenses | Derivatives not designated as accounting hedging instruments | |||
Derivatives, Fair Value | |||
Total liability derivatives, notional amount | $ 0 | ||
Total liability derivatives, number of contracts | contract | 869 | ||
Derivative liabilities net amount on balance sheet | $ (1) | ||
Liability derivatives, gross asset | 0 | ||
Liability derivatives gross amount | (1) | ||
Total return swap agreements – fixed income | Other investments | Derivatives not designated as accounting hedging instruments | |||
Derivatives, Fair Value | |||
Total asset derivatives, notional amount | 3 | 7 | |
Derivative assets net amount on balance sheet | 0 | 0 | |
Asset derivatives gross amount | 0 | 0 | |
Asset derivatives, gross liability | 0 | 0 | |
Total return swap agreements – fixed income | Other liabilities & accrued expenses | Derivatives not designated as accounting hedging instruments | |||
Derivatives, Fair Value | |||
Total liability derivatives, notional amount | 17 | 38 | |
Derivative liabilities net amount on balance sheet | 1 | (1) | |
Liability derivatives, gross asset | 1 | 0 | |
Liability derivatives gross amount | 0 | (1) | |
Total return swap agreements – equity index | Other investments | Derivatives not designated as accounting hedging instruments | |||
Derivatives, Fair Value | |||
Total asset derivatives, notional amount | 93 | 61 | |
Derivative assets net amount on balance sheet | 1 | (2) | |
Asset derivatives gross amount | 1 | 0 | |
Asset derivatives, gross liability | 0 | (2) | |
Total return swap agreements – equity index | Other liabilities & accrued expenses | Derivatives not designated as accounting hedging instruments | |||
Derivatives, Fair Value | |||
Total liability derivatives, notional amount | 71 | ||
Derivative liabilities net amount on balance sheet | (4) | ||
Liability derivatives, gross asset | 0 | ||
Liability derivatives gross amount | (4) | ||
Options | Other liabilities & accrued expenses | Derivatives not designated as accounting hedging instruments | |||
Derivatives, Fair Value | |||
Total liability derivatives, notional amount | $ 0 | $ 0 | |
Total liability derivatives, number of contracts | contract | 5,090 | 10,956 | |
Derivative liabilities net amount on balance sheet | $ (33) | $ (50) | |
Liability derivatives, gross asset | 0 | 0 | |
Liability derivatives gross amount | (33) | (50) | |
Foreign currency forwards | Other investments | Derivatives not designated as accounting hedging instruments | |||
Derivatives, Fair Value | |||
Total asset derivatives, notional amount | 229 | 258 | |
Derivative assets net amount on balance sheet | 9 | 10 | |
Asset derivatives gross amount | 10 | 11 | |
Asset derivatives, gross liability | (1) | (1) | |
Foreign currency forwards | Other liabilities & accrued expenses | Derivatives not designated as accounting hedging instruments | |||
Derivatives, Fair Value | |||
Total liability derivatives, notional amount | 334 | 341 | |
Derivative liabilities net amount on balance sheet | 12 | 10 | |
Liability derivatives, gross asset | 14 | 11 | |
Liability derivatives gross amount | (2) | (1) | |
Guaranteed accumulation benefits | Contractholder funds | Derivatives not designated as accounting hedging instruments | |||
Derivatives, Fair Value | |||
Total liability derivatives, notional amount | 179 | 169 | |
Derivative liabilities net amount on balance sheet | (19) | (25) | |
Liability derivatives, gross asset | 0 | 0 | |
Liability derivatives gross amount | (19) | (25) | |
Guaranteed withdrawal benefits | Contractholder funds | Derivatives not designated as accounting hedging instruments | |||
Derivatives, Fair Value | |||
Total liability derivatives, notional amount | 221 | 210 | |
Derivative liabilities net amount on balance sheet | (12) | (14) | |
Liability derivatives, gross asset | 0 | 0 | |
Liability derivatives gross amount | (12) | (14) | |
Equity-indexed and forward starting options in life and annuity product contracts | Contractholder funds | Derivatives not designated as accounting hedging instruments | |||
Derivatives, Fair Value | |||
Total liability derivatives, notional amount | 1,778 | 1,770 | |
Derivative liabilities net amount on balance sheet | (220) | (185) | |
Liability derivatives, gross asset | 0 | 0 | |
Liability derivatives gross amount | (220) | (185) | |
Credit default swaps – buying protection | Other investments | Derivatives not designated as accounting hedging instruments | |||
Derivatives, Fair Value | |||
Total asset derivatives, notional amount | 112 | 136 | |
Derivative assets net amount on balance sheet | (2) | (1) | |
Asset derivatives gross amount | 2 | 2 | |
Asset derivatives, gross liability | (4) | (3) | |
Credit default swaps – buying protection | Other liabilities & accrued expenses | Derivatives not designated as accounting hedging instruments | |||
Derivatives, Fair Value | |||
Total liability derivatives, notional amount | 623 | 40 | |
Derivative liabilities net amount on balance sheet | (10) | 0 | |
Liability derivatives, gross asset | 1 | 0 | |
Liability derivatives gross amount | (11) | 0 | |
Credit default swaps – selling protection | Other investments | Derivatives not designated as accounting hedging instruments | |||
Derivatives, Fair Value | |||
Total asset derivatives, notional amount | 8 | ||
Derivative assets net amount on balance sheet | 0 | ||
Asset derivatives gross amount | 0 | ||
Asset derivatives, gross liability | 0 | ||
Credit default swaps – selling protection | Other liabilities & accrued expenses | Derivatives not designated as accounting hedging instruments | |||
Derivatives, Fair Value | |||
Total liability derivatives, notional amount | 1 | 5 | |
Derivative liabilities net amount on balance sheet | 0 | 0 | |
Liability derivatives, gross asset | 0 | 0 | |
Liability derivatives gross amount | 0 | 0 | |
Other | Other assets | Derivatives designated as fair value accounting hedging instruments | |||
Derivatives, Fair Value | |||
Total asset derivatives, notional amount | 3 | ||
Derivative assets net amount on balance sheet | 0 | ||
Asset derivatives gross amount | 0 | ||
Asset derivatives, gross liability | $ 0 | ||
Other | Other assets | Derivatives not designated as accounting hedging instruments | |||
Derivatives, Fair Value | |||
Total asset derivatives, notional amount | 2 | ||
Derivative assets net amount on balance sheet | 0 | ||
Asset derivatives gross amount | 0 | ||
Asset derivatives, gross liability | $ 0 |
Derivative Financial Instrume_5
Derivative Financial Instruments - Gross and net amounts for OTC derivatives (Details) - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 |
Asset derivatives | ||
Asset derivatives gross amount | $ 109 | $ 130 |
Asset derivatives, gross liability | (5) | (6) |
Derivative assets net amount on balance sheet | 104 | 124 |
Liability derivatives | ||
Liability derivatives gross amount | (299) | (281) |
Liability derivatives, gross asset | 17 | 12 |
Derivative liabilities net amount on balance sheet | (282) | (269) |
OTC derivatives | ||
Asset derivatives | ||
Asset derivatives gross amount | 29 | 25 |
Asset derivatives, gross liability | (22) | (18) |
Derivative, collateral, right to reclaim cash | (5) | (5) |
Derivative assets net amount on balance sheet | 2 | 2 |
Derivative assets received under securities collateral | 0 | 0 |
Derivative asset, fair value, amount offset against collateral | 2 | 2 |
Liability derivatives | ||
Liability derivatives gross amount | (8) | (12) |
Liability derivatives, gross asset | 22 | 18 |
Derivative liability offsets under cash collateral pledged | (15) | (12) |
Derivative liabilities net amount on balance sheet | (1) | (6) |
Derivative liabilities received under securities collateral | 0 | 0 |
Derivative liability, fair value, amount offset against collateral | $ (1) | $ (6) |
Derivative Financial Instrume_6
Derivative Financial Instruments - Gains and losses from valuation and settlements reported on derivatives not designated as accounting hedges (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Derivative Instruments, Gain (Loss) | ||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | $ (21) | $ 10 |
Realized capital gains (losses) | ||
Derivative Instruments, Gain (Loss) | ||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | (46) | (8) |
Life contract benefits | ||
Derivative Instruments, Gain (Loss) | ||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 8 | 4 |
Interest credited to contractholder funds | ||
Derivative Instruments, Gain (Loss) | ||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | (4) | 16 |
Operating costs and expenses | ||
Derivative Instruments, Gain (Loss) | ||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 21 | (2) |
Interest rate contracts | ||
Derivative Instruments, Gain (Loss) | ||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 7 | |
Interest rate contracts | Realized capital gains (losses) | ||
Derivative Instruments, Gain (Loss) | ||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 7 | |
Interest rate contracts | Life contract benefits | ||
Derivative Instruments, Gain (Loss) | ||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 0 | |
Interest rate contracts | Interest credited to contractholder funds | ||
Derivative Instruments, Gain (Loss) | ||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 0 | |
Interest rate contracts | Operating costs and expenses | ||
Derivative Instruments, Gain (Loss) | ||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 0 | |
Equity and index contracts | ||
Derivative Instruments, Gain (Loss) | ||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | (19) | (9) |
Equity and index contracts | Realized capital gains (losses) | ||
Derivative Instruments, Gain (Loss) | ||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | (71) | (2) |
Equity and index contracts | Life contract benefits | ||
Derivative Instruments, Gain (Loss) | ||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 0 | 0 |
Equity and index contracts | Interest credited to contractholder funds | ||
Derivative Instruments, Gain (Loss) | ||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 31 | (4) |
Equity and index contracts | Operating costs and expenses | ||
Derivative Instruments, Gain (Loss) | ||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 21 | (3) |
Embedded derivative financial instruments | ||
Derivative Instruments, Gain (Loss) | ||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | (27) | 24 |
Embedded derivative financial instruments | Realized capital gains (losses) | ||
Derivative Instruments, Gain (Loss) | ||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 0 | 0 |
Embedded derivative financial instruments | Life contract benefits | ||
Derivative Instruments, Gain (Loss) | ||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 8 | 4 |
Embedded derivative financial instruments | Interest credited to contractholder funds | ||
Derivative Instruments, Gain (Loss) | ||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | (35) | 20 |
Embedded derivative financial instruments | Operating costs and expenses | ||
Derivative Instruments, Gain (Loss) | ||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 0 | 0 |
Foreign currency contracts | ||
Derivative Instruments, Gain (Loss) | ||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 5 | (6) |
Foreign currency contracts | Realized capital gains (losses) | ||
Derivative Instruments, Gain (Loss) | ||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 5 | (7) |
Foreign currency contracts | Life contract benefits | ||
Derivative Instruments, Gain (Loss) | ||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 0 | 0 |
Foreign currency contracts | Interest credited to contractholder funds | ||
Derivative Instruments, Gain (Loss) | ||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 0 | 0 |
Foreign currency contracts | Operating costs and expenses | ||
Derivative Instruments, Gain (Loss) | ||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 0 | 1 |
Credit default contracts | ||
Derivative Instruments, Gain (Loss) | ||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | (4) | 1 |
Credit default contracts | Realized capital gains (losses) | ||
Derivative Instruments, Gain (Loss) | ||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | (4) | 1 |
Credit default contracts | Life contract benefits | ||
Derivative Instruments, Gain (Loss) | ||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 0 | 0 |
Credit default contracts | Interest credited to contractholder funds | ||
Derivative Instruments, Gain (Loss) | ||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 0 | 0 |
Credit default contracts | Operating costs and expenses | ||
Derivative Instruments, Gain (Loss) | ||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 0 | $ 0 |
Total return swaps - fixed income | ||
Derivative Instruments, Gain (Loss) | ||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 2 | |
Total return swaps - fixed income | Realized capital gains (losses) | ||
Derivative Instruments, Gain (Loss) | ||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 2 | |
Total return swaps - fixed income | Life contract benefits | ||
Derivative Instruments, Gain (Loss) | ||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 0 | |
Total return swaps - fixed income | Interest credited to contractholder funds | ||
Derivative Instruments, Gain (Loss) | ||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 0 | |
Total return swaps - fixed income | Operating costs and expenses | ||
Derivative Instruments, Gain (Loss) | ||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 0 | |
Total return swaps - equity | ||
Derivative Instruments, Gain (Loss) | ||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 15 | |
Total return swaps - equity | Realized capital gains (losses) | ||
Derivative Instruments, Gain (Loss) | ||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 15 | |
Total return swaps - equity | Life contract benefits | ||
Derivative Instruments, Gain (Loss) | ||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 0 | |
Total return swaps - equity | Interest credited to contractholder funds | ||
Derivative Instruments, Gain (Loss) | ||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 0 | |
Total return swaps - equity | Operating costs and expenses | ||
Derivative Instruments, Gain (Loss) | ||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | $ 0 |
Derivative Financial Instrume_7
Derivative Financial Instruments - OTC derivatives counterparty credit exposure by counterparty credit rating (Details) $ in Millions | Mar. 31, 2019USD ($)counter-party | Dec. 31, 2018USD ($)counter-party |
Credit Derivatives | ||
Number of counter- parties | counter-party | 5 | 5 |
Notional amount | $ 864 | $ 764 |
Credit exposure | 22 | 20 |
Exposure, net of collateral | $ 2 | $ 1 |
A plus | ||
Credit Derivatives | ||
Number of counter- parties | counter-party | 4 | 3 |
Notional amount | $ 748 | $ 643 |
Credit exposure | 21 | 19 |
Exposure, net of collateral | $ 1 | $ 1 |
A | ||
Credit Derivatives | ||
Number of counter- parties | counter-party | 1 | 2 |
Notional amount | $ 116 | $ 121 |
Credit exposure | 1 | 1 |
Exposure, net of collateral | $ 1 | $ 0 |
Derivative Financial Instrume_8
Derivative Financial Instruments - Fair value of instruments with credit-risk-contingent features (Details) - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Gross liability fair value of contracts containing credit-risk-contingent features | $ 8 | $ 11 |
Gross asset fair value of contracts containing credit-risk-contingent features and subject to MNAs | (7) | (5) |
Collateral posted under MNAs for contracts containing credit-risk-contingent features | (1) | (2) |
Maximum amount of additional exposure for contracts with credit-risk-contingent features if all features were triggered concurrently | $ 0 | $ 4 |
Reserve for Property and Liab_3
Reserve for Property and Liability Insurance Claims and Claims Expense - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Increase (decrease) in claims and claims expense | |||
Reserves for asbestos claims | $ 847 | $ 866 | |
Reinsurance recoverables for asbestos claims | 389 | 400 | |
Reserves for environmental claims | 167 | 170 | |
Reinsurance recoverables for environmental claims | 39 | $ 39 | |
Prior years claims and claims adjust expense, favorable (unfavorable) | (12) | ||
Auto | |||
Increase (decrease) in claims and claims expense | |||
Prior years claims and claims adjust expense, favorable (unfavorable) | 55 | ||
Catastrophe | |||
Increase (decrease) in claims and claims expense | |||
Total incurred | 680 | $ 361 | |
Prior years claims and claims adjust expense, favorable (unfavorable) | (53) | ||
Catastrophe | Homeowners | |||
Increase (decrease) in claims and claims expense | |||
Prior years claims and claims adjust expense, favorable (unfavorable) | (15) | ||
Reserve Adjustments | Other personal lines | |||
Increase (decrease) in claims and claims expense | |||
Prior years claims and claims adjust expense, favorable (unfavorable) | (14) | ||
Reserve Adjustments | Discontinued Lines and Coverages | |||
Increase (decrease) in claims and claims expense | |||
Prior years claims and claims adjust expense, favorable (unfavorable) | (2) | ||
Reserve Adjustments | Commercial lines | |||
Increase (decrease) in claims and claims expense | |||
Prior years claims and claims adjust expense, favorable (unfavorable) | (5) | ||
Reserve Adjustments | Homeowners | |||
Increase (decrease) in claims and claims expense | |||
Prior years claims and claims adjust expense, favorable (unfavorable) | (7) | ||
Non Catastrophe Reestimates | |||
Increase (decrease) in claims and claims expense | |||
Prior years claims and claims adjust expense, favorable (unfavorable) | 41 | ||
Non Catastrophe Reestimates | Auto | |||
Increase (decrease) in claims and claims expense | |||
Prior years claims and claims adjust expense, favorable (unfavorable) | (7) | ||
Non Catastrophe Reestimates | Homeowners | |||
Increase (decrease) in claims and claims expense | |||
Prior years claims and claims adjust expense, favorable (unfavorable) | $ (46) |
Reserve for Property and Liab_4
Reserve for Property and Liability Insurance Claims and Claims Expense - Rollforward of the reserve for property and casualty insurance claims and claims expense (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Incurred claims and claims expense related to: | ||
Prior years | $ 12 | |
Property-Liability | ||
Activity in the reserve for property-liability insurance claims and claims expense: | ||
Balance as of January 1 | 27,423 | $ 26,325 |
Less recoverables | (7,155) | (6,471) |
Net balance as of January 1 | 20,268 | 19,854 |
Incurred claims and claims expense related to: | ||
Current year | 5,808 | 5,180 |
Prior years | 12 | (51) |
Total incurred | 5,820 | 5,129 |
Claims and claims expense paid related to: | ||
Current year | (2,270) | (2,240) |
Prior years | (3,294) | (3,115) |
Total paid | (5,564) | (5,355) |
Net balance as of March 31 | 20,524 | 19,628 |
Plus recoverables | 7,020 | 6,487 |
Balance as of March 31 | $ 27,544 | $ 26,115 |
Reinsurance - Premiums earned a
Reinsurance - Premiums earned and life premiums and contract charges (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Property and casualty insurance premiums | ||
Reinsurance | ||
Property and casualty insurance premiums earned | $ (260) | $ (239) |
Life premiums | ||
Reinsurance | ||
Life premiums and contract charges | $ (63) | $ (72) |
Reinsurance - Claims expense, l
Reinsurance - Claims expense, life contract benefits and interest credited to contractholder funds (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Property and casualty insurance claims and claims expense | ||
Reductions to costs and expenses due to reinsurance ceded amounts | ||
Ceded losses incurred | $ (91) | $ (187) |
Life contract benefits | ||
Reductions to costs and expenses due to reinsurance ceded amounts | ||
Ceded losses incurred | (23) | (49) |
Interest credited to contractholder funds | ||
Reductions to costs and expenses due to reinsurance ceded amounts | ||
Ceded losses incurred | $ (3) | $ (4) |
Reinsurance Reinsurance - Addit
Reinsurance Reinsurance - Additional Information (Details) $ in Millions | Mar. 31, 2019USD ($) |
Reinsurance | |
Reinsurance recoverables | $ 9,370 |
Scottish Re | |
Reinsurance | |
Reinsurance recoverables | 63 |
Life contract benefits | |
Reinsurance | |
Reinsurance recoverables | $ 796 |
Company Restructuring - Narrati
Company Restructuring - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Restructuring Cost and Reserve [Line Items] | ||
Restructuring and related charges | $ 18 | $ 19 |
Employee costs | ||
Restructuring Cost and Reserve [Line Items] | ||
Cumulative amount incurred to date for active programs | 96 | |
Exit costs | ||
Restructuring Cost and Reserve [Line Items] | ||
Cumulative amount incurred to date for active programs | $ 8 |
Company Restructuring - Changes
Company Restructuring - Changes in the restructuring liability (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Restructuring Reserve | |
Restructuring liability as of December 31, 2018 | $ 44 |
Expense incurred | 16 |
Adjustments to liability | 2 |
Payments | (15) |
Restructuring liability as of March 31, 2019 | 47 |
Employee costs | |
Restructuring Reserve | |
Restructuring liability as of December 31, 2018 | 29 |
Expense incurred | 16 |
Adjustments to liability | 2 |
Payments | (11) |
Restructuring liability as of March 31, 2019 | 36 |
Exit costs | |
Restructuring Reserve | |
Restructuring liability as of December 31, 2018 | 15 |
Expense incurred | 0 |
Adjustments to liability | 0 |
Payments | (4) |
Restructuring liability as of March 31, 2019 | $ 11 |
Guarantees and Contingent Lia_2
Guarantees and Contingent Liabilities (Details) | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Minimum | |
Proceedings: | |
Loss contingencies, reasonably possible pretax loss exposure in excess of the amount accrued | $ 0 |
Maximum | |
Proceedings: | |
Loss contingencies, reasonably possible pretax loss exposure in excess of the amount accrued | $ 100,000,000 |
Benefit Plans (Details)
Benefit Plans (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Components of net periodic cost | ||
Remeasurement gains and losses | $ 15 | $ 14 |
Pension benefits | ||
Components of net periodic cost | ||
Service cost | 28 | 28 |
Interest cost | 65 | 61 |
Expected return on plan assets | (93) | (113) |
Amortization of prior service credit | (14) | (14) |
Costs and expenses | (14) | (38) |
Remeasurement of projected benefit obligation | 387 | (190) |
Remeasurement gains and losses | (4) | 22 |
Remeasurement of plan assets | (391) | 212 |
Total net cost (benefit) | (18) | (16) |
Postretirement benefits | ||
Components of net periodic cost | ||
Service cost | 2 | 2 |
Interest cost | 4 | 4 |
Amortization of prior service credit | (1) | (5) |
Costs and expenses | 5 | 1 |
Remeasurement of projected benefit obligation | 19 | (8) |
Remeasurement gains and losses | 19 | (8) |
Remeasurement of plan assets | 0 | 0 |
Total net cost (benefit) | $ 24 | $ (7) |
Supplemental Cash Flow Inform_3
Supplemental Cash Flow Information - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Transfer from Investments | $ 128 | $ 18 |
Non-cash financing activities related to the issuance of shares for vested restricted stock units | 46 | $ 27 |
Operating lease, payments | 37 | |
ROU asset obtained in exchange for operating lease liability | 502 | |
Accounting Standards Update 2016-02 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
ROU asset obtained in exchange for operating lease liability | $ 488 |
Supplemental Cash Flow Inform_4
Supplemental Cash Flow Information - Activities resulting from management of proceeds (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Net change in proceeds managed | ||
Net change in fixed income securities | $ 60 | $ 32 |
Net change in short-term investments | (575) | 55 |
Operating cash flow (used) provided | (515) | 87 |
Change in Liabilities for Collateral [Roll Forward] | ||
Liabilities for collateral, beginning of period | (1,458) | (1,124) |
Liabilities for collateral, end of period | (1,973) | (1,037) |
Operating cash flow provided (used) | $ 515 | $ (87) |
Other Comprehensive Income (Det
Other Comprehensive Income (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Pre-tax | ||
Other comprehensive income (loss) | $ 1,227 | $ (737) |
Tax | ||
Other comprehensive income (loss) | (260) | 156 |
After-tax | ||
Other comprehensive income (loss) | 967 | (581) |
Unrealized net holding gains and losses arising during the period, net of related offsets | ||
Pre-tax | ||
Unrealized net holding during the period | 1,287 | (740) |
Less: reclassification adjustment | 51 | (25) |
Other comprehensive income (loss) | 1,236 | (715) |
Tax | ||
Unrealized net holding during the period | (273) | 155 |
Less: reclassification adjustment | (11) | 5 |
Other comprehensive income (loss) | (262) | 150 |
After-tax | ||
Unrealized net holding during the period | 1,014 | (585) |
Less: reclassification adjustment | 40 | (20) |
Other comprehensive income (loss) | 974 | (565) |
Unrealized foreign currency translation adjustments | ||
Pre-tax | ||
Other comprehensive income (loss) | 6 | (3) |
Tax | ||
Other comprehensive income (loss) | (1) | 1 |
After-tax | ||
Other comprehensive income (loss) | 5 | (2) |
Unamortized pension and other postretirement prior service credit | ||
Pre-tax | ||
Unrealized net holding during the period | 0 | 0 |
Less: reclassification adjustment | 15 | 19 |
Other comprehensive income (loss) | (15) | (19) |
Tax | ||
Unrealized net holding during the period | 0 | 0 |
Less: reclassification adjustment | (3) | (5) |
Other comprehensive income (loss) | 3 | 5 |
After-tax | ||
Unrealized net holding during the period | 0 | 0 |
Less: reclassification adjustment | 12 | 14 |
Other comprehensive income (loss) | $ (12) | $ (14) |