Cover
Cover - shares | 3 Months Ended | |
Mar. 31, 2021 | Apr. 19, 2021 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2021 | |
Document Transition Report | false | |
Entity File Number | 1-11840 | |
Entity Registrant Name | ALLSTATE CORP | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 36-3871531 | |
Entity Address, Address Line One | 2775 Sanders Road | |
Entity Address, City or Town | Northbrook | |
Entity Address, State or Province | IL | |
Entity Address, Postal Zip Code | 60062 | |
City Area Code | 847 | |
Local Phone Number | 402-5000 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 299,338,684 | |
Entity Central Index Key | 0000899051 | |
10-K Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus (i.e. Q1,Q2,Q3,FY) | Q1 | |
Amendment Flag | false | |
Common stock par value | NEW YORK STOCK EXCHANGE, INC. | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Common Stock, par value $.01 per share | |
Trading Symbol | ALL | |
Security Exchange Name | NYSE | |
Common stock par value | CHICAGO STOCK EXCHANGE, INC | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Common Stock, par value $.01 per share | |
Trading Symbol | ALL | |
Security Exchange Name | CHX | |
Subordinated Debentures Due 2053 at 5.10 Percent | NEW YORK STOCK EXCHANGE, INC. | ||
Document Information [Line Items] | ||
Title of 12(b) Security | 5.100% Fixed-to-Floating Rate Subordinated Debentures due 2053 | |
Trading Symbol | ALL.PR.B | |
Security Exchange Name | NYSE | |
Series G Preferred Stock | NEW YORK STOCK EXCHANGE, INC. | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Depositary Shares represent 1/1,000th of a share of 5.625% Noncumulative Preferred Stock, Series G | |
Trading Symbol | ALL PR G | |
Security Exchange Name | NYSE | |
Series H Preferred Stock | NEW YORK STOCK EXCHANGE, INC. | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Depositary Shares represent 1/1,000th of a share of 5.100% Noncumulative Preferred Stock, Series H | |
Trading Symbol | ALL PR H | |
Security Exchange Name | NYSE | |
Series I Preferred Stock | NEW YORK STOCK EXCHANGE, INC. | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Depositary Shares represent 1/1,000th of a share of 4.750% Noncumulative Preferred Stock, Series I | |
Trading Symbol | ALL PR I | |
Security Exchange Name | NYSE |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (unaudited) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Revenues | ||
Net investment income | $ 708 | $ 246 |
Realized capital gains (losses) | 426 | (162) |
Total revenues | 12,451 | 9,866 |
Costs and expenses | ||
Property and casualty insurance claims and claims expense | 6,043 | 5,341 |
Shelter-in-Place Payback expense | 0 | 210 |
Accident and health insurance policy benefits | 233 | 141 |
Interest credited to contractholder funds | 9 | 9 |
Amortization of deferred policy acquisition costs | 1,523 | 1,365 |
Operating costs and expenses | 1,731 | 1,338 |
Pension and other postretirement remeasurement (gains) losses | (310) | 318 |
Restructuring and related charges | 51 | 4 |
Amortization of purchased intangibles | 53 | 28 |
Interest expense | 86 | 81 |
Total costs and expenses | 9,419 | 8,835 |
Income from operations before income tax expense | 3,032 | 1,031 |
Income tax expense | 626 | 194 |
Net income from continuing operations | 2,406 | 837 |
Loss from discontinued operations, net of tax | (3,793) | (288) |
Net (loss) income | (1,387) | 549 |
Less: Net loss attributable to noncontrolling interest | (6) | 0 |
Net (loss) income attributable to Allstate | (1,381) | 549 |
Less: Preferred stock dividends | 27 | 36 |
Net (loss) income applicable to common shareholders | $ (1,408) | $ 513 |
Basic | ||
Earnings per common share - Continuing operations basic (in dollars per share) | $ 7.88 | $ 2.52 |
Earnings per common share - Discontinued operations basic (in dollars per share) | (12.53) | (0.90) |
Earnings per common share - Basic (in dollars per share) | (4.65) | 1.62 |
Diluted | ||
Earnings per common share - Continuing operations diluted (in dollars per share) | 7.78 | 2.48 |
Earnings per common share - Discontinued operations diluted (in dollars per share) | (12.38) | (0.89) |
Earnings per common share - Diluted (in dollars per share) | $ (4.60) | $ 1.59 |
Weighted average common shares - Basic (in shares) | 302.5 | 317.4 |
Weighted average common shares - Diluted (in shares) | 306.4 | 322.4 |
Property and casualty insurance premiums | ||
Revenues | ||
Property and casualty insurance premiums | $ 10,307 | $ 9,235 |
Accident and health insurance premiums and contract charges | ||
Revenues | ||
Insurance premiums, commissions and fees | 455 | 282 |
Other revenue | ||
Revenues | ||
Insurance premiums, commissions and fees | $ 555 | $ 265 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (unaudited) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Statement of Comprehensive Income [Abstract] | ||
Net (loss) income | $ (1,387) | $ 549 |
Changes in: | ||
Unrealized net capital gains and losses | (1,500) | (1,357) |
Unrealized foreign currency translation adjustments | 34 | (39) |
Unamortized pension and other postretirement prior service credit | (15) | 4 |
Other comprehensive loss, after-tax | (1,481) | (1,392) |
Comprehensive loss | (2,868) | (843) |
Less: Comprehensive loss attributable to noncontrolling interest | (6) | 0 |
Comprehensive loss applicable to Allstate | $ (2,862) | $ (843) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Financial Position (unaudited) - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 |
Investments | ||
Fixed income securities, at fair value (amortized cost, net $39,437 and $40,034) | $ 40,594 | $ 42,565 |
Equity securities, at fair value (cost $2,655 and $2,740) | 3,154 | 3,168 |
Mortgage loans, net | 902 | 746 |
Limited partnership interests | 6,367 | 4,563 |
Short-term, at fair value (amortized cost $6,017 and $6,807) | 6,017 | 6,807 |
Other investments | 3,042 | 1,691 |
Total | 60,076 | 59,540 |
Cash | 709 | 311 |
Premium installment receivables, net | 7,921 | 6,463 |
Deferred policy acquisition costs | 4,129 | 3,774 |
Reinsurance and indemnification recoverables, net | 9,645 | 7,215 |
Accrued investment income | 347 | 371 |
Property and equipment, net | 1,002 | 1,057 |
Goodwill | 3,350 | 2,369 |
Other assets, net | 5,803 | 2,756 |
Assets held for sale | 36,829 | 42,131 |
Total assets | 129,811 | 125,987 |
Liabilities | ||
Reserve for property and casualty insurance claims and claims expense | 31,414 | 27,610 |
Reserve for future policy benefits | 1,219 | 1,028 |
Contractholder funds | 878 | 857 |
Unearned premiums | 18,177 | 15,946 |
Claim payments outstanding | 951 | 957 |
Deferred income taxes | 493 | 382 |
Other liabilities and accrued expenses | 8,508 | 7,840 |
Long-term debt | 7,996 | 7,825 |
Liabilities held for sale | 33,383 | 33,325 |
Total liabilities | 103,019 | 95,770 |
Commitments and Contingent Liabilities (Note 13) | ||
Equity | ||
Preferred stock and additional capital paid-in, $1 par value, 25 million shares authorized, 81.0 thousand shares issued and outstanding, $2,025 aggregate liquidation preference; $.01 par value, 8.0 million shares authorized, 200.0 thousand shares issued and outstanding, $200 aggregate liquidation preference for $200 in 2021 | 2,170 | 1,970 |
Common stock, $.01 par value, 2.0 billion shares authorized and 900 million issued, 300 million and 304 million shares outstanding | 9 | 9 |
Additional capital paid-in | 3,596 | 3,498 |
Retained income | 51,107 | 52,767 |
Treasury stock, at cost (600 million and 596 million shares) | (31,886) | (31,331) |
Unrealized net capital gains and losses: | ||
Other unrealized net capital gains and losses | 2,143 | 3,860 |
Unrealized adjustment to DAC, DSI and insurance reserves | (463) | (680) |
Unrealized net capital gains and losses, after-tax | 1,680 | 3,180 |
Unrealized foreign currency translation adjustments | 27 | (7) |
Unamortized pension and other postretirement prior service credit | 116 | 131 |
Total accumulated other comprehensive income (“AOCI”) | 1,823 | 3,304 |
Total Allstate shareholders’ equity | 26,819 | 30,217 |
Noncontrolling interest | (27) | 0 |
Total equity | 26,792 | 30,217 |
Total liabilities and equity | $ 129,811 | $ 125,987 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Financial Position (unaudited) (Parenthetical) - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 | Mar. 31, 2020 |
Fixed income securities, at fair value, amortized cost (in dollars) | $ 39,437 | $ 40,034 | |
Equity securities, at fair value, cost (in dollars) | 2,655 | 2,740 | |
Short-term, at fair value, amortized cost (in dollars) | $ 6,017 | $ 6,807 | |
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) | 81,000 | 81,000 | |
Preferred stock, shares outstanding (in shares) | 81,000 | 81,000 | |
Preferred stock, shares aggregate liquidation preference (in shares) | $ 2,025 | $ 2,025 | |
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) | 300,000,000 | 304,000,000 | |
Treasury stock, shares (in shares) | 600,000,000 | 596,000,000 | |
Preferred stock additional capital paid-in | |||
Preferred stock, par value (in dollars per share) | $ 0.01 | ||
Preferred stock, shares authorized (in shares) | 8,000,000 | ||
Preferred stock, shares issued (in shares) | 200,000 | ||
Preferred stock, shares outstanding (in shares) | 200,000 | ||
Preferred stock, shares aggregate liquidation preference (in shares) | $ 200 | $ 200 |
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 | Retained incomeCumulative effect of change in accounting principle | Treasury stock | Accumulated other comprehensive income (loss) | Noncontrolling Interest |
Increase (decrease) in equity | ||||||||||
Total equity | $ 2,248 | $ 3,463 | $ 48,074 | $ (88) | $ (29,746) | $ 1,950 | $ 0 | |||
Balance, beginning of period at Dec. 31, 2019 | 2,248 | 3,463 | 48,074 | (88) | (29,746) | 1,950 | 0 | |||
Increase (decrease) in equity | ||||||||||
Acquisition | 0 | 0 | ||||||||
Preferred stock redemption | (278) | |||||||||
Forward contract on accelerated share repurchase agreement | 75 | |||||||||
Equity incentive plans activity | (19) | |||||||||
Net (loss) income | $ 549 | 549 | 0 | |||||||
Dividends on common stock (declared per share of $0.81 and $0.54) | (173) | |||||||||
Dividends on preferred stock | (36) | |||||||||
Shares acquired | (511) | |||||||||
Shares reissued under equity incentive plans, net | 48 | |||||||||
Change in unrealized net capital gains and losses | (1,357) | (1,357) | ||||||||
Change in unrealized foreign currency translation adjustments | (39) | (39) | ||||||||
Change in unamortized pension and other postretirement prior service credit | 4 | 4 | ||||||||
Balance, end of period at Mar. 31, 2020 | 24,173 | $ 0 | 1,970 | $ 9 | 3,519 | 48,326 | (30,209) | 558 | 0 | |
Increase (decrease) in equity | ||||||||||
Total equity | 24,173 | 0 | 1,970 | 9 | 3,519 | 48,326 | (88) | (30,209) | 558 | 0 |
Total Allstate shareholders’ equity | 24,173 | |||||||||
Total equity | 24,173 | 0 | 1,970 | 9 | 3,519 | 48,326 | (30,209) | 558 | 0 | |
Total Allstate shareholders’ equity | 30,217 | |||||||||
Total equity | 30,217 | 1,970 | 3,498 | 52,767 | 0 | (31,331) | 3,304 | 0 | ||
Balance, beginning of period at Dec. 31, 2020 | 30,217 | 1,970 | 3,498 | 52,767 | 0 | (31,331) | 3,304 | 0 | ||
Increase (decrease) in equity | ||||||||||
Acquisition | 450 | (21) | ||||||||
Preferred stock redemption | (250) | |||||||||
Forward contract on accelerated share repurchase agreement | 113 | |||||||||
Equity incentive plans activity | (15) | |||||||||
Net (loss) income | (1,387) | (1,387) | (6) | |||||||
Dividends on common stock (declared per share of $0.81 and $0.54) | (246) | |||||||||
Dividends on preferred stock | (27) | |||||||||
Shares acquired | (601) | |||||||||
Shares reissued under equity incentive plans, net | 46 | |||||||||
Change in unrealized net capital gains and losses | (1,500) | (1,500) | ||||||||
Change in unrealized foreign currency translation adjustments | 34 | 34 | ||||||||
Change in unamortized pension and other postretirement prior service credit | (15) | (15) | ||||||||
Balance, end of period at Mar. 31, 2021 | 26,792 | 0 | 2,170 | 9 | 3,596 | 51,107 | (31,886) | 1,823 | (27) | |
Increase (decrease) in equity | ||||||||||
Total equity | 30,217 | 0 | 2,170 | 9 | 3,596 | 51,107 | $ 0 | (31,886) | 1,823 | (27) |
Total Allstate shareholders’ equity | 26,819 | |||||||||
Total equity | $ 26,792 | $ 0 | $ 2,170 | $ 9 | $ 3,596 | $ 51,107 | $ (31,886) | $ 1,823 | $ (27) |
Condensed Consolidated Statem_6
Condensed Consolidated Statements of Shareholders’ Equity (unaudited) (Parenthetical) - $ / shares | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Statement of Stockholders' Equity [Abstract] | ||
Dividends (in USD per share) | $ 0.81 | $ 0.54 |
Condensed Consolidated Statem_7
Condensed Consolidated Statements of Cash Flows (unaudited) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Cash flows from operating activities | ||
Net (loss) income | $ (1,387) | $ 549 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation, amortization and other non-cash items | 260 | 155 |
Realized capital (gains) losses | (505) | 462 |
Pension and other postretirement remeasurement (gains) losses | (310) | 318 |
Amortization of deferred gain on reinsurance | 2 | 1 |
Interest credited to contractholder funds | 94 | 132 |
Loss on disposition of operations | (3,998) | 0 |
Changes in: | ||
Policy benefits and other insurance reserves | 817 | (654) |
Unearned premiums | 33 | (272) |
Deferred policy acquisition costs | (26) | 38 |
Premium installment receivables, net | (124) | 26 |
Reinsurance recoverables, net | (1,201) | 24 |
Income taxes | 181 | 28 |
Other operating assets and liabilities | (440) | 222 |
Net cash provided by operating activities | 1,388 | 1,027 |
Proceeds from sales | ||
Fixed income securities | 10,290 | 12,114 |
Equity securities | 992 | 5,250 |
Limited partnership interests | 152 | 749 |
Other investments | 328 | 116 |
Investment collections | ||
Fixed income securities | 737 | 555 |
Mortgage loans | 134 | 118 |
Other investments | 109 | 61 |
Investment purchases | ||
Fixed income securities | (7,968) | (14,667) |
Equity securities | (539) | (1,619) |
Limited partnership interests | (322) | (357) |
Mortgage loans | 0 | (142) |
Other investments | (603) | (129) |
Change in short-term and other investments, net | 744 | (1,916) |
Purchases of property and equipment, net | (61) | (65) |
Acquisition of operations, net of cash acquired | (3,480) | 0 |
Net cash provided by investing activities | 513 | 68 |
Cash flows from financing activities | ||
Redemption and repayment of long-term debt | (422) | 0 |
Redemption of preferred stock | (250) | (288) |
Contractholder fund deposits | 252 | 246 |
Contractholder fund withdrawals | (374) | (471) |
Dividends paid on common stock | (164) | (159) |
Dividends paid on preferred stock | (27) | (29) |
Treasury stock purchases | (467) | (414) |
Shares reissued under equity incentive plans, net | 4 | 8 |
Other | (32) | 12 |
Net cash used in financing activities | (1,480) | (1,095) |
Net increase in cash, including cash classified as assets held for sale | 421 | 0 |
Cash from continuing operations at beginning of period | 311 | 273 |
Cash classified as assets held for sale at beginning of period | 66 | 65 |
Less: Cash classified as assets held for sale at end of period | 89 | 58 |
Cash from continuing operations at end of period | $ 709 | $ 280 |
General
General | 3 Months Ended |
Mar. 31, 2021 | |
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 (collectively referred to as the “Company” or “Allstate”) and variable interest entities in which the Company is considered a primary beneficiary. 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, 2021 and for the three month periods ended March 31, 2021 and 2020 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, 2020. 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. The Novel Coronavirus Pandemic or COVID-19 (“Coronavirus”) The Coronavirus resulted in governments worldwide enacting emergency measures to combat the spread of the virus. These measures, which have included the implementation of travel restrictions, government-imposed shelter-in-place orders, quarantine periods, social distancing, and restrictions on large gatherings, have caused material disruption to businesses globally, resulting in increased unemployment, a recession and increased economic uncertainty. Additionally, there is no way of predicting with certainty how long the pandemic might last, including the potential for restrictions being restored or new restrictions being implemented that could result in further economic volatility. The magnitude and duration of the global pandemic and the impact of actions taken by governmental authorities, businesses and consumers, including the availability, utilization rate and effectiveness of vaccines, to mitigate health risks create significant uncertainty. The Company continues to closely monitor and proactively adapt to developments and changing conditions. Currently, it is not possible to reliably estimate the length and severity of the pandemic or its impact to the Company’s operations, but the effects could be material and may continue, emerge, evolve or accelerate in 2021. Adopted accounting standards Simplifications to the Accounting for Income Taxes Effective January 1, 2021, the Company adopted the new Financial Accounting Standards Board (“FASB”) guidance which simplified the accounting for income taxes by eliminating certain exceptions and clarifying certain guidance. The adoption had an immaterial impact on the Company’s results of operations and financial position. Changes to the Disclosure Requirements for Defined Benefit Plans Effective January 1, 2021, the Company adopted new FASB guidance to modify certain annual disclosure requirements for defined benefit plans. New disclosures include 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 during the reporting period. Disclosures to be eliminated include amounts 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 the assumed health care cost trend rate on service and interest cost and on the accumulated benefit obligation. The impacts of adoption are to the Company’s annual disclosures only. Significant accounting policies Consolidation of Variable Interest Entities (“VIEs”) A VIE is a legal entity that does not have sufficient equity at risk to finance its activities without additional financial support or is structured such that equity investors lack the ability to make significant decisions relating to the entity’s operations through voting rights or do not participate in the gains and losses of the entity. The Company consolidates VIEs in which the Company is deemed the primary beneficiary. The primary beneficiary is the entity that has both (1) the power to direct the activities of the VIE that most significantly affect that entity’s economic performance and (2) the obligation to absorb losses or the right to receive benefits that could be potentially significant to the VIE. Discontinued Operations and Held for Sale A business is classified as held for sale when management having the authority to approve the action commits to a plan to sell the business, the sale is probable to occur during the next 12 months at a price that is reasonable in relation to its current fair value and certain other criteria are met. A business classified as held for sale is recorded at the lower of its carrying amount or estimated fair value less cost to sell. When the carrying amount of the business exceeds its estimated fair value less cost to sell, a loss is recognized and updated each reporting period as appropriate. The results of operations of business classified as held for sale are reported as discontinued operations if the disposal represents a strategic shift that will have a major effect on the entity’s operations and financial results. The disposal of a reportable segment generally qualifies for discontinued operations presentation. When a business is identified for discontinued operations reporting: • Results for prior periods are retrospectively reclassified as discontinued operations • Results of operations are reported in a single line, net of tax, in the Condensed Consolidated Statements of Operations • Assets and liabilities are reported as held for sale in the Condensed Consolidated Statements of Financial Position in the period in which the business is classified as held for sale Additional details by major classification of operating results and financial position are included in Note 3. Pending accounting standards Accounting for Long-Duration Insurance Contracts In August 2018, the FASB issued guidance revising the accounting for certain long-duration insurance contracts. As disclosed in Note 3, the Company entered into agreements to sell substantially all of its life and annuity business in scope of the new standard. The Company’s reserves and deferred policy acquisition costs (“DAC”) for certain voluntary and individual life and accident and health insurance products not held for sale are subject to the new guidance. Under the new guidance, measurement assumptions, including those for mortality, morbidity and policy terminations, will be required to be reviewed at least annually, and updated as appropriate. The effects of updating assumptions other than the discount rate are required to be measured on a retrospective basis and reported in net income. In addition, reserves under the new guidance are required to be discounted using an upper-medium grade fixed income instrument yield that is updated through OCI at each reporting date. Current GAAP requires the measurement of reserves to utilize assumptions set at policy issuance unless updated current assumptions indicate that recorded reserves are deficient. The new guidance also requires 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 lapse experience exceeds expected experience. The new guidance is effective for financial statements issued for reporting periods beginning after December 15, 2022 and restatement of prior periods presented is required. The new guidance will be applied to affected contracts and DAC on the basis of existing carrying amounts at the earliest period presented. The Company is evaluating the anticipated impacts of applying the new guidance to both retained income and AOCI and does not anticipate the financial statement impact of adopting the new guidance to be material to the Company’s results of operations or financial position, assuming the dispositions of Allstate Life Insurance Company and Allstate Life Insurance Company of New York are completed. |
Earnings per Common Share
Earnings per Common Share | 3 Months Ended |
Mar. 31, 2021 | |
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. 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. Computation of basic and diluted earnings per common share (In millions, except per share data) Three months ended March 31, 2021 2020 Numerator: Net income from continuing operations $ 2,406 $ 837 Less: Net loss attributable to noncontrolling interest (6) — Net income from continuing operations attributable to Allstate 2,412 837 Less: Preferred stock dividends 27 36 Net income from continuing operations applicable to common shareholders 2,385 801 Loss from discontinued operations, net of tax (3,793) (288) Net (loss) income applicable to common shareholders $ (1,408) $ 513 Denominator: Weighted average common shares outstanding 302.5 317.4 Effect of dilutive potential common shares: Stock options 2.5 3.3 Restricted stock units (non-participating) and performance stock awards 1.4 1.7 Weighted average common and dilutive potential common shares outstanding 306.4 322.4 Earnings per common share applicable to common shareholders Basic Continuing operations $ 7.88 $ 2.52 Discontinued operations (12.53) (0.90) Total $ (4.65) $ 1.62 Diluted Continuing operations $ 7.78 $ 2.48 Discontinued operations (12.38) (0.89) Total $ (4.60) $ 1.59 Anti-dilutive options excluded from diluted earnings per common share 2.2 0.8 |
Acquisition and Disposition
Acquisition and Disposition | 3 Months Ended |
Mar. 31, 2021 | |
Business Combinations [Abstract] | |
Acquisition and Disposition | Note 3 Acquisition and Dispositions Acquisition On January 4, 2021, the Company completed the acquisition of National General Holdings Corp. (“National General”), an insurance holding company serving customers predominantly through independent agents for property and casualty and accident and health products. National General provides personal and commercial automobile, homeowners, umbrella, recreational vehicle, motorcycle, lender-placed, health and other niche insurance products. This acquisition will increase the Company’s market share in personal property-liability and enhance its independent agent distribution platform. Assets and liabilities recognized in acquisition (1) ($ in millions) January 4, 2021 Assets Investments $ 4,957 Cash 402 Premiums and other receivables, net 1,545 Deferred acquisition costs (value of business acquired) 317 Reinsurance recoverables, net 1,219 Intangible assets 1,199 Other assets 734 Goodwill (2) 980 Total assets 11,353 Liabilities Reserve for property and casualty insurance claims and claims expense 2,774 Reserve for future policy benefits 189 Unearned premiums 2,245 Reinsurance payable 364 Debt (3) 592 Deferred tax liabilities 177 Other liabilities 701 Total liabilities $ 7,042 (1) The amounts reflect preliminary allocation of assets acquired and liabilities assumed. The acquisition date fair values of assets and liabilities, including insurance reserves and intangible assets, as well as the related estimated useful lives of intangibles, are preliminary estimates and are subject to revisions within one year of acquisition date. (2) $616 million, $29 million and $335 million of goodwill were allocated to the Allstate Protection, Protection Services and Allstate Health and Benefits segments, respectively, and is non-deductible for income tax purposes. Goodwill is primarily attributable to expected synergies and future growth opportunities. (3) Subsequent to the acquisition, the Company repaid $100 million of 7.625% Subordinated Notes and $72 million of Subordinated Debentures on February 3, 2021 and March 15, 2021, respectively. The Company had principal balance remaining of $417 million 6.750% Senior Notes due 2024 as of March 31, 2021, including a purchase accounting fair value adjustment of $67 million. Intangible assets by type ($ in millions) January 4, 2021 Distribution and customer relationships $ 795 Trade names 102 Licenses 97 Technology and other 205 Total $ 1,199 Intangible assets (reported in other assets in the Condensed Consolidated Statements of Financial Position), consist of capitalized costs, primarily of the estimated fair value of distribution, and customer relationships, trade names and licenses, technology and other assets. The estimated useful lives of these assets generally range from 3 to 10 years. The estimated fair value of distribution and customer relationship intangible assets was determined using an income approach that considered cash flows and profits expected to be generated by the acquired relationships, a weighted-average cost of capital discount rate reflecting the relative risk of achieving the anticipated cash flows, profits, the time value of money, and other relevant inputs. Technology and trade names were valued using estimated useful lives and market licensing rates discounted at a weighted-average cost of capital. Licenses are primarily insurance licenses which were valued using the median value of market transactions executed over an extended observation period. Licenses are considered to have an indefinite useful life and are reviewed for impairment at least annually or more frequently if circumstances arise that indicate an impairment may have occurred. An impairment is recognized if the carrying amount of the asset exceeds its estimated fair value. Intangible assets are carried at cost less accumulated amortization. Amortization expense is primarily calculated using accelerated amortization methods. Amortization expense on intangible assets was $23 million for the first three months of 2021 and we expect to recognize $228 million of amortization expense for the remainder of 2021. Estimated amortization expense of National General intangible assets for the next five years and thereafter ($ in millions) 2022 $ 218 2023 185 2024 135 2025 103 2026 70 Thereafter 140 Total amortization $ 851 Value of business acquired (reported in DAC in the Condensed Consolidated Statements of Financial Position) recognized in connection with the acquisition of National General represents the value of future profits expected to be earned over the lives of the contracts acquired determined using a weighted-average cost of capital discount and other relevant assumptions. These costs are amortized over the policy term of the contracts in force at the acquisition date, generally over six Other fair value purchase accounting adjustments included an increase in reserves of $74 million, a $13 million reduction to investments that were not held at fair value, and a net increase in current and deferred tax liabilities of $98 million. Preferred stock Subsequent to the acquisition, the Company redeemed all outstanding shares of 7.50% Non-Cumulative Preferred Stock, Series A, par value $0.01 per share, all outstanding Depositary shares, representing 1/40th of a Share of 7.50% Non-Cumulative Preferred Stock, Series B, and the underlying shares of 7.50% Non-Cumulative Preferred Stock, Series B, par value $0.01 per share, and all outstanding shares of Fixed/Floating Rate Non-Cumulative Convertible Preferred Stock, Series D, par value $0.01 per share for a total redemption payment of $250 million. Transactions costs (reported in operating costs and expenses in the Condensed Consolidated Statements of Operations) of $22 million related to the acquisition were expensed as incurred in the Corporate and Other segment. Dispositions On January 26, 2021, the Company entered into a Stock Purchase Agreement with Everlake US Holdings Company (formerly Antelope US Holdings Company), an affiliate of an investment fund associated with The Blackstone Group Inc. to sell Allstate Life Insurance Company and certain affiliates for approximately $2.8 billion in cash. On March 29, 2021, the Company entered into a Stock Purchase Agreement with Wilton Reassurance Company to sell Allstate Life Insurance Company of New York for $220 million in cash. A loss on disposition of approximately $4 billion, after-tax, was recorded in the first quarter of 2021 related to these transactions. The loss on disposition is related to the run-off annuity segment, whose returns have been low. The ultimate amount of the loss on sale will be impacted by purchase price adjustments associated with certain pre-close transactions specified in the stock purchase agreements, changes in statutory capital and surplus prior to the closing date and the closing date equity of the sold entities determined under GAAP, excluding unrealized gains and losses. The transactions are expected to close in the second half of 2021, subject to regulatory approvals and other customary closing conditions. In the first quarter of 2021, the assets and liabilities of the business are reclassified as held for sale and results are presented as discontinued operations. This change was applied on a retrospective basis. Financial results from discontinued operations Three months ended March 31, ($ in millions) 2021 2020 Revenues Life premiums and contract charges $ 340 $ 335 Net investment income 439 175 Realized capital gains (losses) 79 (300) Total revenues 858 210 Costs and expenses Life contract benefits 410 360 Interest credited to contractholder funds 85 123 Amortization of DAC 36 36 Operating costs and expenses 55 61 Restructuring and related charges 19 1 Total costs and expenses 605 581 Amortization of deferred gain on reinsurance 2 1 Income (loss) from discontinued operations before income tax expense 255 (370) Income tax expense (benefit) 50 (82) Income (loss) from discontinued operations, net of tax 205 (288) Loss on disposition of operations (4,418) — Income tax benefit (420) — Loss on disposition, net of tax (3,998) — Loss from discontinued operations, net of tax $ (3,793) $ (288) Major classes of assets and liabilities to be transferred in transactions ($ in millions) March 31, 2021 December 31, 2020 Assets Investments Fixed income securities, at fair value (amortized cost, net $23,511 and $21,417) $ 25,073 $ 23,789 Equity securities, at fair value (cost $1,191 and $1,113) 1,643 1,542 Mortgage loans, net 3,062 3,329 Limited partnership interests 1,942 3,046 Short-term, at fair value (amortized cost $1,652 and $993) 1,652 993 Other, net 936 1,998 Total investments 34,308 34,697 Cash 89 66 Deferred policy acquisitions costs 1,039 925 Reinsurance recoverables, net 1,982 2,005 Accrued investment income 248 229 Other assets 236 865 Separate accounts 3,339 3,344 Assets held for sale 41,241 42,131 Less: loss accrual 4,412 — Total assets held for sale $ 36,829 $ 42,131 Liabilities Reserve for future policy benefits $ 11,581 $ 11,740 Contractholder funds 16,112 16,356 Deferred income taxes 857 973 Other liabilities and accrued expenses 1,494 912 Separate accounts 3,339 3,344 Total liabilities held for sale $ 33,383 $ 33,325 Cash flows from discontinued operations Three months ended March 31, ($ in millions) 2021 2020 Net cash provided by operating activities from discontinued operations $ 64 $ 111 Net cash provided by investing activities from discontinued operations 88 85 |
Reportable Segments
Reportable Segments | 3 Months Ended |
Mar. 31, 2021 | |
Segment Reporting [Abstract] | |
Reportable Segments | Note 4 Reportable Segments Measuring segment profit or loss The measure of segment profit or loss used in evaluating performance is underwriting income for the Allstate Protection and Run-off Property-Liability (previously Discontinued Lines and Coverages) segments and adjusted net income for the Protection Services, Allstate Health and Benefits (previously Allstate Benefits) and Corporate and Other segments. National General results are included in the following segments: • Property and casualty - Allstate Protection • Accident and health - Allstate Health and Benefits • Technology solutions - Protection Services Underwriting income is calculated as premiums earned and other revenue, less claims and claims expenses (“losses”), Shelter-in-Place Payback expense, amortization of DAC, operating costs and expenses, amortization or impairment of purchased intangibles and restructuring and related charges as determined using GAAP. Adjusted net income is net income (loss) applicable to common shareholders, excluding: • Realized capital gains and losses, 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 • Business combination expenses and amortization or impairment of purchased intangibles • Income or loss from discontinued operations • 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 • Income tax expense or benefit on reconciling items A reconciliation of these measures to net income (loss) applicable to common shareholders is provided below. Reportable segments financial performance Three months ended March 31, ($ in millions) 2021 2020 Underwriting income (loss) by segment Allstate Protection $ 1,660 $ 1,351 Run-off Property-Liability (3) (3) Adjusted net income (loss) by segment, after-tax Protection Services 49 37 Allstate Health and Benefits 65 24 Corporate and Other (123) (107) Reconciling items Property-Liability net investment income 673 202 Realized capital gains (losses) 426 (162) Pension and other postretirement remeasurement gains (losses) 310 (318) Business combination expenses and amortization of purchased intangibles (56) (27) Income tax expense on reconciling items (622) (196) Total reconciling items 731 (501) Loss from discontinued operations (4,163) (370) Income tax benefit from discontinued operations 370 82 Total from discontinued operations $ (3,793) $ (288) Less: Net loss attributable to noncontrolling interest (6) — Net (loss) income applicable to common shareholders $ (1,408) $ 513 Reportable segments revenue information ($ in millions) Three months ended March 31, 2021 2020 Property-Liability Insurance premiums Auto $ 6,809 $ 6,155 Homeowners 2,392 2,037 Other personal lines 505 471 Commercial lines 190 218 Allstate Protection 9,896 8,881 Run-off Property-Liability — — Total Property-Liability insurance premiums 9,896 8,881 Other revenue 385 213 Net investment income 673 202 Realized capital gains (losses) 404 (103) Total Property-Liability 11,358 9,193 Protection Services Protection plans 260 206 Roadside assistance 47 51 Finance and insurance products 104 97 Intersegment premiums and service fees (1) 41 38 Other revenue (2) 90 52 Net investment income 10 10 Realized capital gains (losses) 10 (24) Total Protection Services 562 430 Allstate Health and Benefits Employer voluntary benefits 263 282 Group health 83 — Individual accident and health 109 — Other revenue 80 — Net investment income 19 20 Realized capital gains (losses) 2 (14) Total Allstate Health and Benefits 556 288 Corporate and Other Net investment income 6 14 Realized capital gains (losses) 10 (21) Total Corporate and Other 16 (7) Intersegment eliminations (1) (41) (38) Consolidated revenues $ 12,451 $ 9,866 (1) Intersegment insurance premiums and service fees are primarily related to Arity and Allstate Roadside and are eliminated in the condensed consolidated financial statements. (2) Other revenue is primarily related to Arity, Allstate Identity Protection, Allstate Dealer Services, and Allstate Protection Plans. |
Investments
Investments | 3 Months Ended |
Mar. 31, 2021 | |
Investments [Abstract] | |
Investments | Note 5 Investments Portfolio composition ($ in millions) March 31, 2021 December 31, 2020 Fixed income securities, at fair value $ 40,594 $ 42,565 Equity securities, at fair value 3,154 3,168 Mortgage loans, net 902 746 Limited partnership interests 6,367 4,563 Short-term investments, at fair value 6,017 6,807 Other, net 3,042 1,691 Total $ 60,076 $ 59,540 Amortized cost, gross unrealized gains (losses) and fair value for fixed income securities ($ in millions) Amortized cost, net Gross unrealized Fair value Gains Losses March 31, 2021 U.S. government and agencies $ 3,103 $ 26 $ (19) $ 3,110 Municipal 7,226 310 (36) 7,500 Corporate 27,145 1,045 (187) 28,003 Foreign government 977 16 (8) 985 ABS 934 11 (2) 943 MBS 52 1 — 53 Total fixed income securities $ 39,437 $ 1,409 $ (252) $ 40,594 December 31, 2020 U.S. government and agencies $ 2,058 $ 50 $ (1) $ 2,107 Municipal 7,100 480 (2) 7,578 Corporate 29,057 1,986 (26) 31,017 Foreign government 921 37 — 958 ABS 840 9 (3) 846 MBS 58 1 — 59 Total fixed income securities $ 40,034 $ 2,563 $ (32) $ 42,565 Scheduled maturities for fixed income securities ($ in millions) March 31, 2021 Amortized cost, net Fair value Due in one year or less $ 1,279 $ 1,291 Due after one year through five years 18,216 18,810 Due after five years through ten years 13,464 13,818 Due after ten years 5,492 5,679 38,451 39,598 ABS and MBS 986 996 Total $ 39,437 $ 40,594 Actual maturities may differ from those scheduled as a result of calls and make-whole payments by the issuers. ABS and MBS are shown separately because of potential prepayment of principal prior to contractual maturity dates. Net investment income ($ in millions) Three months ended March 31, 2021 2020 Fixed income securities $ 301 $ 298 Equity securities 14 10 Mortgage loans 10 9 Limited partnership interests 378 (77) Short-term investments 1 11 Other 41 31 Investment income, before expense 745 282 Investment expense (37) (36) Net investment income $ 708 $ 246 Realized capital gains (losses) by asset type ($ in millions) Three months ended March 31, 2021 2020 Fixed income securities $ 183 $ 374 Equity securities 164 (510) Mortgage loans 6 (10) Limited partnership interests 4 (86) Derivatives 11 78 Other 58 (8) Realized capital gains (losses) $ 426 $ (162) Realized capital gains (losses) by transaction type ($ in millions) Three months ended March 31, 2021 2020 Sales $ 246 $ 388 Credit losses 2 (37) Valuation of equity investments (1) 167 (591) Valuation and settlements of derivative instruments 11 78 Realized capital gains (losses) $ 426 $ (162) (1) Includes valuation of equity securities and certain limited partnership interests where the underlying assets are predominately public equity securities. Gross realized gains (losses) on sales of fixed income securities ($ in millions) Three months ended March 31, 2021 2020 Gross realized gains $ 245 $ 435 Gross realized losses (64) (59) The following table presents the net pre-tax appreciation (decline) recognized in net income of equity securities and limited partnership interests carried at fair value that are still held as of March 31, 2021 and 2020, respectively. Net appreciation (decline) recognized in net income ($ in millions) Three months ended March 31, 2021 2020 Equity securities $ 125 $ (417) Limited partnership interests carried at fair value 141 (28) Total $ 266 $ (445) Credit losses recognized in net income ($ in millions) Three months ended March 31, 2021 2020 Assets Fixed income securities: Corporate $ 1 $ (1) ABS 1 — MBS — (1) Total fixed income securities 2 (2) Mortgage loans 6 (9) Limited partnership interests — (5) Other investments Bank loans (6) (20) Total credit losses by asset type $ 2 $ (36) Liabilities Commitments to fund commercial mortgage loans, bank loans and agent loans — (1) Total $ 2 $ (37) Unrealized net capital gains and losses included in AOCI ($ in millions) Fair value Gross unrealized Unrealized net gains (losses) March 31, 2021 Gains Losses Fixed income securities $ 40,594 $ 1,409 $ (252) $ 1,157 Short-term investments 6,017 — — — Derivative instruments — — (3) (3) Equity method of accounting (“EMA”) limited partnerships (1) (1) Investments classified as held for sale 1,562 Unrealized net capital gains and losses, pre-tax 2,715 Amounts recognized for: Insurance reserves (2) (358) DAC and DSI (3) (228) Reclassification of noncontrolling interest 4 Amounts recognized (582) Deferred income taxes (453) Unrealized net capital gains and losses, after-tax $ 1,680 December 31, 2020 Fixed income securities $ 42,565 $ 2,563 $ (32) $ 2,531 Short-term investments 6,807 — — — Derivative instruments — — (3) (3) EMA limited partnerships (1) Investments classified as held for sale 2,369 Unrealized net capital gains and losses, pre-tax 4,896 Amounts recognized for: Insurance reserves (496) DAC and DSI (364) Amounts recognized (860) Deferred income taxes (856) Unrealized net capital gains and losses, after-tax $ 3,180 (1) Unrealized net capital gains and losses for limited partnership interests represent the Company’s share of EMA limited partnerships’ OCI. Fair value and gross unrealized gains and losses are not applicable. (2) The insurance reserves adjustment represents the amount by which the reserve balance would increase if the net unrealized gains in the applicable product portfolios were realized and reinvested at lower interest rates, resulting in a premium deficiency. This adjustment primarily relates to structured settlement annuities with life contingencies (a type of immediate fixed annuity), which are now classified as held for sale. (3) The DAC and DSI adjustment balance represents the amount by which the amortization of DAC and DSI would increase or decrease if the unrealized gains or losses in the respective product portfolios were realized. This adjustment relates to life insurance products, which are now primarily classified as held for sale. Change in unrealized net capital gains (losses) ($ in millions) Three months ended March 31, 2021 Fixed income securities $ (1,374) Short-term investments — Derivative instruments — EMA limited partnerships — Investments classified as held for sale (807) Total (2,181) Amounts recognized for: Insurance reserves 138 DAC and DSI 136 Reclassification of noncontrolling interest 4 Amounts recognized 278 Deferred income taxes 403 Decrease in unrealized net capital gains and losses, after-tax $ (1,500) Carrying value for limited partnership interests ($ in millions) March 31, 2021 December 31, 2020 EMA Fair Value Total EMA Fair Value Total Private equity $ 3,935 $ 1,295 $ 5,230 $ 2,667 $ 988 $ 3,655 Real estate 816 68 884 623 74 697 Other (1) 253 — 253 211 — 211 Total (2) $ 5,004 $ 1,363 $ 6,367 $ 3,501 $ 1,062 $ 4,563 (1) Other consists of certain limited partnership interests where the underlying assets are predominately public equity and debt securities. (2) Carrying value for limited partnership interests as of March 31, 2021 i ncludes certain investments which were classified as assets held for sale as of December 31, 2020 and transferred to continuing operations in the first quarter of 2021. Short-term investments Short-term investments, including money market funds, commercial paper, U.S. Treasury bills and other short-term investments, are carried at fair value. As of March 31, 2021 and December 31, 2020, the fair value of short-term investments totaled $6.02 billion and $6.81 billion, respectively. Other investments Other investments primarily consist of bank loans, real estate, policy loans, agent loans and derivatives. Bank loans are primarily senior secured corporate loans and are carried at amortized cost, net. Policy loans are carried at unpaid principal balances. Real estate is carried at cost less accumulated depreciation. Agent loans are loans issued to exclusive Allstate agents and are carried at amortized cost, net. Derivatives are carried at fair value. Other investments by asset type ($ in millions) March 31, 2021 December 31, 2020 Bank loans, net $ 1,260 $ 772 Real estate 871 659 Policy loans 164 181 Agent loans, net 607 — Derivatives 22 20 Other 118 59 Total (1) $ 3,042 $ 1,691 (1) Other investments as of March 31, 2021 i ncludes certain real estate, agent loans and other investments which were classified as assets held for sale as of December 31, 2020 and transferred to continuing operations in the first quarter of 2021. Portfolio monitoring and credit losses Fixed income securities The Company has a comprehensive portfolio monitoring process to identify and evaluate each fixed income security that may require a credit loss allowance . 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, any existing credit loss allowance would be written-off against the amortized cost basis of the asset along with any remaining unrealized losses, with incremental losses 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 based on the best estimate of future cash flows considering past events, current conditions and reasonable and supportable forecasts. The estimated future cash flows are discounted at the security’s current effective rate and is compared to the amortized cost of the security. 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 is 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, the financial condition and future earnings potential of the issue or issuer, expected defaults, expected recoveries, the value of underlying collateral, origination vintage year, 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, 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 Company does not expect to receive cash flows sufficient to recover the entire amortized cost basis of the fixed income security, a credit loss allowance is recorded in earnings for the shortfall in expected cash flows; however, the amortized cost, net of the credit loss allowance, may not be lower than the fair value of the security. 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. When a security is sold or otherwise disposed or when the security is deemed uncollectible and written off, the Company removes amounts previously recognized in the credit loss allowance. Recoveries after write-offs are recognized when received. Accrued interest excluded from the amortized cost of fixed income securities totaled $322 million and $351 million as of March 31, 2021 and December 31, 2020 and is reported within the accrued investment income line of the Condensed Consolidated Statements of Financial Position. The Company monitors accrued interest and writes off amounts when they are not expected to be received. The Company’s portfolio monitoring process includes a quarterly review of all securities to identify instances where the fair value of a security compared to its amortized cost is below internally established thresholds. The process also includes the monitoring of other credit loss indicators such as ratings, ratings downgrades and payment defaults. The securities identified, in addition to other securities for which the Company may have a concern, are evaluated for potential credit losses using all reasonably available information relevant to the collectability or recovery of the security. Inherent in the Company’s evaluation of credit losses for these securities are assumptions and estimates about the financial condition and future earnings potential of the issue or issuer. Some of the factors that may be considered in evaluating whether a decline in fair value requires a credit loss allowance are: 1) the financial condition, near-term and long-term prospects of the issue or issuer, including relevant industry specific market conditions and trends, geographic location and implications of rating agency actions and offering prices; 2) the specific reasons that a security is in an unrealized loss position, including overall market conditions which could affect liquidity; and 3) the extent to which the fair value has been less than amortized cost. Rollforward of credit loss allowance for fixed income securities Three months ended March 31, ($ in millions) 2021 2020 Beginning balance $ (3) $ — Credit losses on securities for which credit losses not previously reported — (4) Net decreases related to credit losses previously reported 2 — Reduction of allowance related to sales — — Ending balance (1) (2) $ (1) $ (4) (1) Allowance for fixed income securities as of March 31, 2021 comprised $1 million of ABS. Allowance for fixed income securities as of March 31, 2020 comprised $1 million and $3 million of corporate bonds and MBS, respectively. (2) Includes $1 million and $2 million of credit loss allowance for fixed income securities that are classified as held for sale as of March 31, 2021 and 2020, respectively. Gross unrealized losses and fair value by type and length of time held in a continuous unrealized loss position ($ 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, 2021 Fixed income securities U.S. government and agencies 108 $ 2,084 $ (19) — $ — $ — $ (19) Municipal 804 1,398 (36) 1 5 — (36) Corporate 1,003 6,715 (176) 25 121 (11) (187) Foreign government 64 289 (8) — — — (8) ABS 15 79 (2) 13 50 — (2) MBS 15 2 — 55 — — — Total fixed income securities 2,009 $ 10,567 $ (241) 94 $ 176 $ (11) $ (252) Investment grade fixed income securities 1,821 $ 9,206 $ (207) 69 $ 67 $ (1) $ (208) Below investment grade fixed income securities 188 1,361 (34) 25 109 (10) (44) Total fixed income securities 2,009 $ 10,567 $ (241) 94 $ 176 $ (11) $ (252) December 31, 2020 Fixed income securities U.S. government and agencies 26 $ 215 $ (1) — $ — $ — $ (1) Municipal 43 116 (2) — — — (2) Corporate 107 730 (21) 14 46 (5) (26) Foreign government 7 7 — — — — — ABS 21 157 (2) 12 43 (1) (3) MBS 11 — — 57 — — — Total fixed income securities 215 $ 1,225 $ (26) 83 $ 89 $ (6) $ (32) Investment grade fixed income securities 146 $ 855 $ (8) 66 $ 45 $ — $ (8) Below investment grade fixed income securities 69 370 (18) 17 44 (6) (24) Total fixed income securities 215 $ 1,225 $ (26) 83 $ 89 $ (6) $ (32) Gross unrealized losses by unrealized loss position and credit quality as of March 31, 2021 ($ in millions) Investment grade Below investment grade Total Fixed income securities with unrealized loss position less than 20% of amortized cost, net (1) (2) $ (207) $ (34) $ (241) Fixed income securities with unrealized loss position greater than or equal to 20% of amortized cost, net (3) (4) (1) (10) (11) Total unrealized losses $ (208) $ (44) $ (252) (1) Below investment grade fixed income securities include $30 million that have been in an unrealized loss position for less than twelve months. (2) Related to securities with an unrealized loss position less than 20% of amortized cost, net, the degree of which suggests that these securities do not pose a high risk of having credit losses. (3) No below investment grade fixed income securities have been in an unrealized loss position for a period of twelve or more consecutive months. (4) Evaluated based on factors such as discounted cash flows and the financial condition and near-term and long-term prospects of the issue or issuer and were determined to have adequate resources to fulfill contractual obligations. 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. The unrealized losses are expected to reverse as the securities approach maturity. ABS and MBS 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, 2021, 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. Loans The Company establishes a credit loss allowance for mortgage loans, bank loans and agent loans when they are originated or purchased, and for unfunded commitments unless they are unconditionally cancellable by the Company. The Company uses a probability of default and loss given default model for mortgage loans and bank loans to estimate current expected credit losses that considers all relevant information available including past events, current conditions, and reasonable and supportable forecasts over the life of an asset. The Company also considers such factors as historical losses, expected prepayments and various economic factors. For mortgage loans the Company considers origination vintage year and property level information such as debt service coverage, property type, property location and collateral value. For bank loans the Company considers the credit rating of the borrower, credit spreads and type of loan. After the reasonable and supportable forecast period, the Company’s model reverts to historical loss trends. Given the less complex and homogenous nature of agent loans, the Company estimates current expected credit losses using historical loss experience over the estimated life of the loans, adjusted for current conditions, reasonable and supportable forecasts and expected prepayments. Loans are evaluated on a pooled basis when they share similar risk characteristics. The Company monitors loans through a quarterly credit monitoring process to determine when they no longer share similar risk characteristics and are to be evaluated individually when estimating credit losses. Loans are written off against their corresponding allowances when there is no reasonable expectation of recovery. If a loan recovers after a write-off, the estimate of expected credit losses includes the expected recovery. Accrual of income is suspended for loans that are in default or when full and timely collection of principal and interest payments is not probable. Accrued income receivable is monitored for recoverability and when not expected to be collected is written off through net investment income. Cash receipts on loans on non-accrual status are generally recorded as a reduction of amortized cost. Accrued interest is excluded from the amortized cost of loans and is reported within the accrued investment income line of the Condensed Consolidated Statements of Financial Position. As of March 31, 2021, accrued interest totaled $4 million, $3 million and $2 million for mortgage loans, bank loans and agent loans, respectively. As of December 31, 2020, accrued interest totaled $2 million and $3 million for mortgage loans and bank loans, respectively. Mortgage loans When it is determined a mortgage loan shall be evaluated individually, the Company uses various methods to estimate credit losses on individual loans such as using collateral value less estimated costs to sell where applicable, including when foreclosure is probable or when repayment is expected to be provided substantially through the operation or sale of the collateral and the borrower is experiencing financial difficulty. When collateral value is used, the mortgage loans may not have a credit loss allowance when the fair value of the collateral exceeds the loan’s amortized cost. An alternative approach may be utilized to estimate credit losses using the present value of the loan’s expected future repayment cash flows discounted at the loan’s current effective interest rate. Individual loan credit loss allowances are adjusted for subsequent changes in the fair value of the collateral less costs to sell, when applicable, or present value of the loan’s expected future repayment cash flows. Debt service coverage ratio is considered a key credit quality indicator when mortgage loan credit loss allowances are estimated. Debt service coverage ratio represents the amount of estimated cash flow from the property available to the borrower to meet principal and interest payment obligations. Debt service coverage ratio estimates are updated annually or more frequently if conditions are warranted based on the Company’s credit monitoring process. Mortgage loans amortized cost by debt service coverage ratio distribution and year of origination ($ in millions) March 31, 2021 December 31, 2020 2016 and prior 2017 2018 2019 2020 Current Total Total Below 1.0 $ 15 $ — $ — $ — $ — $ — $ 15 $ — 1.0 - 1.25 29 — 13 23 10 — 75 46 1.26 - 1.50 105 36 24 130 — — 295 201 Above 1.50 134 45 119 166 67 — 531 507 Amortized cost before allowance $ 283 $ 81 $ 156 $ 319 $ 77 $ — $ 916 $ 754 Allowance (14) (8) Amortized cost, net $ 902 $ 746 Mortgage loans with a debt service coverage ratio below 1.0 that are not considered impaired primarily relate to situations 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 factors such as additional collateral, escrow balances or borrower guarantees. Payments on all mortgage loans were current as of March 31, 2021 and December 31, 2020. Rollforward of credit loss allowance for mortgage loans Three months ended March 31, ($ in millions) 2021 2020 Beginning balance $ (67) $ (3) Cumulative effect of change in accounting principle — (42) Net decreases (increases) related to credit losses 22 (40) Write-offs — — Ending balance (1) $ (45) $ (85) (1) Includes $31 million and $68 million of credit loss allowance for mortgage loans that are classified as held for sale as of March 31, 2021 and 2020, respectively. Bank loans When it is determined a bank loan shall be evaluated individually, the Company uses various methods to estimate credit losses on individual loans such as the present value of the loan’s expected future repayment cash flows discounted at the loan’s current effective interest rate. Credit ratings of the borrower are considered a key credit quality indicator when bank loan credit loss allowances are estimated. The ratings are updated quarterly and are either received from a nationally recognized rating agency or a comparable internal rating is derived if an externally provided rating is not available. The year of origination is determined to be the year in which the asset is acquired. Bank loans amortized cost by credit rating and year of origination ($ in millions) March 31, 2021 December 31, 2020 2016 and prior 2017 2018 2019 2020 Current Total Total BBB $ — $ 5 $ 7 $ 11 $ 8 $ 29 $ 60 $ 38 BB 9 22 30 42 36 172 311 168 B 13 68 86 77 139 389 772 456 CCC and below 11 28 32 55 27 13 166 161 Amortized cost before allowance $ 33 $ 123 $ 155 $ 185 $ 210 $ 603 $ 1,309 $ 823 Allowance (49) (51) Amortized cost, net $ 1,260 $ 772 Rollforward of credit loss allowance for bank loans ($ in millions) Three months ended March 31, 2021 2020 Beginning balance $ (67) $ — Cumulative effect of change in accounting principle — (53) Net increases related to credit losses (2) (27) Reduction of allowance related to sales 9 1 Write-offs — — Ending balance (1) $ (60) $ (79) (1) Includes $11 million and $22 million of credit loss allowance for bank loans that are classified as held for sale as of March 31, 2021 and 2020, respectively. Agent loans The Company monitors agent loans to determine when they should be removed from the pool and assessed for credit losses individually by using internal credit risk grades that classify the loans into risk categories. The categorization is based on relevant information about the ability of borrowers to service their debt, such as historical payment experience, current business trends, cash flow coverage and collateral quality. Internal credit risk grades are updated annually or more frequently if conditions are warranted based on the Company’s credit monitoring process. As of March 31, 2021, 85% of agent loans balance represents the top three highest credit quality categories. The allowance for agent loans totaled $6 million as of March 31, 2021. Agent loans were all classified as assets held for sale as of December 31, 2020 and transferred to continuing operations in the first quarter of 2021. |
Fair Value of Assets and Liabil
Fair Value of Assets and Liabilities | 3 Months Ended |
Mar. 31, 2021 | |
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: (1) 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. (2) 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 mortgage loans, bank loans, agent loans and policy loans and are only included in the fair value hierarchy disclosure when the individual investment is reported at fair value. 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 inputs and valuation techniques for Level 2 and Level 3 assets and liabilities measured at fair value on a recurring basis Level 2 measurements • Fixed income securities: U.S. government and agencies, municipal, corporate - public and 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. Corporate - privately placed: Privately placed are 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. Corporate - privately placed also includes redeemable preferred stock that are valued using quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields, underlying stock prices and credit spreads. ABS and MBS: 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. Certain ABS are valued based on non-binding broker quotes whose inputs have been corroborated to be market observable. Residential MBS include prepayment speeds as a primary input for valuation. • 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. • Assets held for sale: Comprise U.S. government and agencies, municipal, corporate, foreign government, ABS and MBS fixed income securities, equity securities, short-term investments and other investments. The valuation is based on the respective asset type as described above. • Liabilities held for sale: Comprise other liabilities, mainly free-standing exchange listed derivatives, that are not actively traded and are valued based on quoted prices for identical instruments in markets that are not active. 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 privately placed, ABS and MBS: Primarily valued based on non-binding broker quotes where the inputs have not been corroborated to be market observable. Other inputs for corporate fixed income securities 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. • 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, and quoted prices for identical or similar assets in markets that exhibit less liquidity relative to those markets supporting Level 2 fair value measurements. • Assets held for sale: Comprise municipal, corporate, ABS and MBS fixed income securities and equity securities. The valuation is based on the respective asset type as described above. • Liabilities held for sale: Comprise derivatives embedded in certain life and annuity contracts which 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. 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 without 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, 2021, the Company has commitments to invest $274 million in these limited partnership interests. Assets and liabilities measured at fair value March 31, 2021 ($ 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 $ 3,074 $ 36 $ — $ 3,110 Municipal — 7,482 18 7,500 Corporate - public — 18,818 43 18,861 Corporate - privately placed — 9,037 105 9,142 Foreign government — 985 — 985 ABS — 864 79 943 MBS — 30 23 53 Total fixed income securities 3,074 37,252 268 40,594 Equity securities 2,318 426 410 3,154 Short-term investments 3,530 2,487 — 6,017 Other investments — 39 3 $ (17) 25 Other assets 1 — — 1 Assets held for sale 6,380 25,319 170 (7) 31,862 Total recurring basis assets 15,303 65,523 851 (24) 81,653 Total assets at fair value $ 15,303 $ 65,523 $ 851 $ (24) $ 81,653 % of total assets at fair value 18.7 % 80.3 % 1.0 % — % 100.0 % Investments reported at NAV 1,363 Assets held for sale at NAV 562 Total $ 83,578 Liabilities Other liabilities $ (1) $ (21) $ — $ 13 $ (9) Liabilities held for sale — (97) (463) 4 (556) Total recurring basis liabilities (1) (118) (463) 17 (565) Total liabilities at fair value $ (1) $ (118) $ (463) $ 17 $ (565) % of total liabilities at fair value 0.2 % 20.9 % 81.9 % (3.0) % 100.0 % Assets and liabilities measured at fair value December 31, 2020 ($ 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 $ 2,061 $ 45 $ — $ 2,106 Municipal — 7,562 17 7,579 Corporate - public — 21,885 67 21,952 Corporate - privately placed — 9,002 63 9,065 Foreign government — 958 — 958 ABS — 794 52 846 MBS — 32 27 59 Total fixed income securities 2,061 40,278 226 42,565 Equity securities 2,468 396 304 3,168 Short-term investments 6,549 223 35 6,807 Other investments — 29 — $ (9) 20 Other assets 1 — — 1 Assets held for sale 6,488 23,103 267 (6) 29,852 Total recurring basis assets 17,567 64,029 832 (15) 82,413 Total assets at fair value $ 17,567 $ 64,029 $ 832 $ (15) $ 82,413 % of total assets at fair value 21.3 % 77.7 % 1.0 % — % 100.0 % Investments reported at NAV 1,062 Assets held for sale at NAV 762 Total $ 84,237 Liabilities Other liabilities $ — $ (34) $ — $ 18 $ (16) Liabilities held for sale — (119) (516) 9 (626) Total recurring basis liabilities — (153) (516) 27 (642) Total liabilities at fair value $ — $ (153) $ (516) $ 27 $ (642) % of total liabilities at fair value — % 23.8 % 80.4 % (4.2) % 100.0 % Quantitative information about the significant unobservable inputs used in Level 3 fair value measurements (1) ($ in millions) Fair value Valuation Unobservable Range Weighted March 31, 2021 Derivatives embedded in life and annuity contracts – Equity-indexed and forward starting options $ (435) Stochastic cash flow model Projected option cost 1.0 - 4.2% 2.83% December 31, 2020 Derivatives embedded in life and annuity contracts – Equity-indexed and forward starting options $ (483) Stochastic cash flow model Projected option cost 1.0 - 4.2% 2.80% (1) These were included in the liabilities held for sale as of March 31, 2021 and December 31, 2020. 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, 2021 and December 31, 2020, Level 3 fair value measurements of fixed income securities total $268 million and $226 million, respectively, and include $62 million and $69 million, respectively, of securities valued based on non-binding broker quotes where the inputs have not been corroborated to be market observable and $15 million and $18 million, respectively, of municipal fixed income securities that are not rated by third-party credit rating agencies. As the Company does not develop the Level 3 fair value unobservable inputs for these fixed income securities, they are not included in the table above. However, an increase (decrease) in credit spreads for fixed income securities valued based on non-binding broker quotes would result in a lower (higher) fair value, and an increase (decrease) in the credit rating of municipal bonds that are not rated by third-party credit rating agencies would result in a higher (lower) fair value. Rollforward of Level 3 assets and liabilities held at fair value during the three month period ended March 31, 2021 Balance as of Total gains (losses) included in: Transfers Transfers to (from) held for sale Balance as of March 31, 2021 ($ in millions) Net income OCI Into Level 3 Out of Level 3 Purchases Sales Issues Settlements Assets Fixed income securities: Municipal $ 17 $ — $ — $ — $ — $ — $ 3 $ — $ — $ (2) $ 18 Corporate - public 67 1 (3) — — (6) 17 (33) — — 43 Corporate - privately placed 63 — (1) 10 (7) 13 27 — — — 105 ABS 52 — — — (32) — 59 — — — 79 MBS 27 — — — — — — (4) — — 23 Total fixed income securities 226 1 (4) 10 (39) 7 106 (37) — (2) 268 Equity securities 304 16 — — — 92 5 (7) — — 410 Short-term investments 35 — — — — — — — — (35) — Other investments — — — — — — 3 — — — 3 Assets held for sale 267 1 — 3 (8) (99) 11 (3) — (2) 170 Total recurring Level 3 assets 832 18 (4) 13 (47) — 125 (47) — (39) 851 Liabilities Liabilities held for sale (516) 55 — — — — — — (8) 6 (463) Total recurring Level 3 liabilities $ (516) $ 55 $ — $ — $ — $ — $ — $ — $ (8) $ 6 $ (463) Rollforward of Level 3 assets and liabilities held at fair value during the three month period ended March 31, 2020 Balance as of Total gains (losses) included in: Transfers Balance ($ in millions) Net income OCI Into Level 3 Out of Level 3 Purchases Sales Issues Settlements Assets Fixed income securities: Municipal $ 22 $ — $ (1) $ — $ — $ — $ (1) $ — $ (1) $ 19 Corporate - public 36 — — — — — — — — 36 Corporate - privately placed 32 — — — — 1 — — — 33 ABS 49 — — 26 (49) 33 — — (27) 32 MBS 35 — — — — — — — — 35 Total fixed income securities 174 — (1) 26 (49) 34 (1) — (28) 155 Equity securities 255 (17) — — — 1 — — — 239 Short-term investments 25 — — — — 25 — — — 50 Assets held for sale 284 (12) (1) — (25) — (10) — (3) 233 Total recurring Level 3 assets 738 (29) (2) 26 (74) 60 (11) — (31) 677 Liabilities Liabilities held for sale (462) 48 — — — — — (8) 5 (417) Total recurring Level 3 liabilities $ (462) $ 48 $ — $ — $ — $ — $ — $ (8) $ 5 $ (417) Total Level 3 gains (losses) included in net income Three months ended March 31, ($ in millions) 2021 2020 Net investment income $ (1) $ (14) Realized capital gains (losses) 18 (3) Transfers into Level 3 during the three months ended March 31, 2021 and 2020 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, 2021 and 2020 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 and OCI for Level 3 assets and liabilities held as of March 31, ($ in millions) Three months ended March 31, 2021 2020 Assets Fixed income securities: Corporate - public $ 1 $ — Corporate - privately placed — — Total fixed income securities 1 — Equity securities $ 16 $ (17) Assets held for sale 1 (12) Total recurring Level 3 assets $ 18 $ (29) Liabilities Liabilities held for sale $ 55 $ 48 Total recurring Level 3 liabilities 55 48 Total included in net income $ 73 $ 19 Components of net income Net investment income $ (1) $ (14) Realized capital gains (losses) 18 (3) Assets Municipal $ — $ (1) Corporate - public (3) — Corporate - privately placed (1) — Assets held for sale — (1) Changes in unrealized net capital gains and losses reported in OCI $ (4) $ (2) Financial instruments not carried at fair value ($ in millions) March 31, 2021 December 31, 2020 Financial assets Fair value level Amortized cost, net Fair value Amortized cost, net Fair value Mortgage loans Level 3 $ 902 $ 948 $ 746 $ 792 Bank loans Level 3 1,260 1,286 772 803 Agent loans Level 3 607 606 — — Assets held for sale Level 3 3,278 3,484 4,206 4,440 Financial liabilities Fair value level Carrying value (1) Fair Carrying value (1) Fair value Contractholder funds on investment contracts Level 3 $ 33 $ 35 $ — $ — Long-term debt Level 2 7,577 9,046 7,825 9,489 Liability for collateral Level 2 1,096 1,096 914 914 Liabilities held for sale (2) Level 3 8,099 8,950 8,130 9,424 (1) Represents the amounts reported on the Condensed Consolidated Statements of Financial Position. (2) Includes certain liabilities for collateral measured at Level 2 fair value as of March 31, 2021 and December 31, 2020 . |
Derivative Financial Instrument
Derivative Financial Instruments | 3 Months Ended |
Mar. 31, 2021 | |
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, options, 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. 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. 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 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 and have been designated as fair value accounting hedges, net income includes the changes in the fair value of both the derivative instrument and the hedged risk. For cash flow hedges, gains and losses are amortized from AOCI and are reported in net income in the same period the forecasted transactions being hedged impact net income. 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. Assets and liabilities held for sale Asset-liability management is a risk management practice that is principally employed by the life and annuity business 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 life and annuity 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’s primary embedded derivatives are equity options in life and annuity product contracts, which provide returns linked to equity indices to contractholders. Summary of the volume and fair value positions of derivative instruments as of March 31, 2021 ($ 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 Futures Other assets n/a 614 $ — $ — $ — Equity and index contracts Options Other investments n/a 59 4 4 — Futures Other assets n/a 1,142 1 1 — Total return index contracts Total return swap agreements – fixed income Other investments $ 100 n/a — — — Foreign currency contracts Foreign currency forwards Other investments 20 n/a — — — Embedded derivative financial instruments Other embedded derivative financial instruments Other investments 750 n/a — — — Credit default contracts Credit default swaps – buying protection Other investments 33 n/a (2) — (2) Credit default swaps – selling protection Other investments 900 n/a 18 18 — Assets held for sale 15 2,485 155 155 — Total asset derivatives $ 1,818 4,300 $ 176 $ 178 $ (2) Liability derivatives Derivatives not designated as accounting hedging instruments Futures Other liabilities & accrued expenses n/a 3,560 $ (1) $ — $ (1) Equity and index contracts Futures Other liabilities & accrued expenses n/a 215 — — — Foreign currency contracts Foreign currency forwards Other liabilities & accrued expenses $ 543 n/a 5 17 (12) Credit default contracts Credit default swaps – buying protection Other liabilities & accrued expenses 100 n/a (7) — (7) Credit default swaps – selling protection Other liabilities & accrued expenses 5 n/a — — — Liabilities held for sale 2,340 2,670 (553) 7 (560) Total liability derivatives 2,988 6,445 (556) $ 24 $ (580) Total derivatives $ 4,806 10,745 $ (380) (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, 2020 ($ in millions, except number of contracts) Volume 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 Futures Other assets n/a 290 $ — $ — $ — Equity and index contracts Options Other investments n/a 56 6 6 — Futures Other assets n/a 905 1 1 — Foreign currency contracts Foreign currency forwards Other investments $ 291 n/a 4 9 (5) Embedded derivative financial instruments Other embedded derivative financial instruments Other investments 750 n/a — — — Credit default contracts Credit default swaps – buying protection Other investments 60 n/a (3) — (3) Credit default swaps – selling protection Other investments 750 n/a 13 13 — Assets held for sale 158 3,189 185 189 (4) Total asset derivatives $ 2,009 4,440 $ 206 $ 218 $ (12) Liability derivatives Derivatives not designated as accounting hedging instruments Interest rate contracts Futures Other liabilities & accrued expenses n/a 705 $ — $ — $ — Equity and index contracts Futures Other liabilities & accrued expenses n/a 666 — — — Total return index contracts Total return swap agreements – fixed income Other liabilities & accrued expenses $ 50 n/a — — — Foreign currency contracts Foreign currency forwards Other liabilities & accrued expenses 250 n/a (9) 1 (10) Credit default contracts Credit default swaps – buying protection Other liabilities & accrued expenses 638 n/a (16) — (16) Credit default swaps – selling protection Other liabilities & accrued expenses 4 n/a — — — Liabilities held for sale 2,240 2,737 (630) 1 (631) Total liability derivatives 3,182 4,108 (655) $ 2 $ (657) Total derivatives $ 5,191 8,548 $ (449) 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, 2021 Asset derivatives $ 17 $ (19) $ 2 $ — $ — $ — Liability derivatives (15) 19 (6) (2) — (2) December 31, 2020 Asset derivatives $ 10 $ (9) $ — $ 1 $ — $ 1 Liability derivatives (19) 9 9 (1) — (1) (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) Operating costs and expenses Total gain (loss) recognized in net income on derivatives Three months ended March 31, 2021 Interest rate contracts $ (1) $ — $ (1) Equity and index contracts (2) 16 14 Foreign currency contracts 10 — 10 Credit default contracts 4 — 4 Total $ 11 $ 16 $ 27 Three months ended March 31, 2020 Interest rate contracts $ 35 $ — $ 35 Equity and index contracts 33 (45) (12) Foreign currency contracts 25 — 25 Credit default contracts (10) — (10) Total return swaps - fixed income (9) — (9) Total return swaps - equity index 4 — 4 Total $ 78 $ (45) $ 33 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, 2021, counterparties pledged $10 million in collateral to the Company, and the Company pledged $6 million in cash and securities to counterparties which includes $4 million of collateral posted under MNAs for contracts containing credit-risk-contingent provisions that are in a liability position. The Company has not incurred any losses on derivative financial instruments due to counterparty nonperformance. Other derivatives, including futures and certain option contracts, are traded on organized exchanges which require margin deposits and guarantee the execution of trades, thereby mitigating any potential credit risk. Counterparty credit exposure represents the Company’s potential loss if all of the counterparties concurrently fail to perform under the contractual terms of the contracts and all collateral, if any, becomes worthless. This exposure is measured by the fair value of OTC derivative contracts with a positive fair value at the reporting date reduced by the effect, if any, of legally enforceable master netting agreements. OTC derivatives counterparty credit exposure by counterparty credit rating ($ in millions) March 31, 2021 December 31, 2020 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+ 1 $ 189 $ 8 $ — 1 $ 186 $ 4 $ — A 1 149 2 — — — — — Total 2 $ 338 $ 10 $ — 1 $ 186 $ 4 $ — (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. For certain exchange traded and cleared derivatives, margin deposits are required as well as daily cash settlements of margin accounts. As of March 31, 2021, the Company pledged $54 million and received $12 million in the form of margin deposits. Market risk is the risk that the Company will incur losses due to adverse changes in market rates and prices. Market risk exists for all of the derivative financial instruments the Company currently holds, as these instruments may become less valuable due to adverse changes in market conditions. To limit this risk, the Company’s senior management has established risk control limits. In addition, changes in fair value of the derivative financial instruments that the Company uses for risk management purposes are generally offset by the change in the fair value or cash flows of the hedged risk component of the related assets, liabilities or forecasted transactions. Certain of the Company’s derivative transactions contain credit-risk-contingent termination events and cross-default provisions. Credit-risk-contingent termination events allow the counterparties to terminate the derivative agreement or a specific trade on certain dates if AIC’s financial strength credit ratings by Moody’s or S&P fall below a certain level. Credit-risk-contingent cross-default provisions allow the counterparties to terminate the derivative agreement if the Company defaults by pre-determined threshold amounts on certain debt instruments. The following summarizes the fair value of derivative instruments with termination, cross-default or collateral credit-risk-contingent features that are in a liability position, as well as the fair value of assets and collateral that are netted against the liability in accordance with provisions within legally enforceable MNAs. ($ in millions) March 31, 2021 December 31, 2020 Gross liability fair value of contracts containing credit-risk-contingent features $ 13 $ 19 Gross asset fair value of contracts containing credit-risk-contingent features and subject to MNAs (7) (6) Collateral posted under MNAs for contracts containing credit-risk-contingent features (4) (13) Maximum amount of additional exposure for contracts with credit-risk-contingent features if all features were triggered concurrently $ 2 $ — Credit derivatives - selling protection A credit default swap (“CDS”) is a derivative instrument, representing an agreement between two parties to exchange the credit risk of a specified entity (or a group of entities), or an index based on the credit risk of a group of entities (all commonly referred to as the “reference entity” or a portfolio of “reference entities”), in return for a periodic premium. In selling protection, CDS are used to replicate fixed income securities and to complement the cash market when credit exposure to certain issuers is not available or when the derivative alternative is less expensive than the cash market alternative. CDS typically have a five-year term. CDS notional amounts by credit rating and fair value of protection sold ($ in millions) Notional amount AAA AA A BBB BB and lower Total Fair value March 31, 2021 Single name Corporate debt $ — $ — $ — $ — $ 5 $ 5 $ — Index Corporate debt 7 14 179 610 90 900 18 Total $ 7 $ 14 $ 179 $ 610 $ 95 $ 905 $ 18 December 31, 2020 Single name Corporate debt $ — $ — $ — $ — $ 4 $ 4 $ — Index Corporate debt 6 12 156 492 84 750 13 Total $ 6 $ 12 $ 156 $ 492 $ 88 $ 754 $ 13 In selling protection with CDS, the Company sells credit protection on an identified single name, a basket of names in a first-to-default (“FTD”) structure or credit derivative index (“CDX”) that is generally investment grade, and in return receives periodic premiums through expiration or termination of the agreement. With single name CDS, this premium or credit spread generally corresponds to the difference between the yield on the reference entity’s public fixed maturity cash instruments and swap rates at the time the agreement is executed. With a FTD basket, because of the additional credit risk inherent in a basket of named reference entities, the premium generally corresponds to a high proportion of the sum of the credit spreads of the names in the basket and the correlation between the names. CDX is utilized to take a position on multiple (generally 125) reference entities. Credit events are typically defined as bankruptcy, failure to pay, or restructuring, depending on the nature of the reference entities. If a credit event occurs, the Company settles with the counterparty, either through physical settlement or cash settlement. In a physical settlement, a reference asset is delivered by the buyer of protection to the Company, in exchange for cash payment at par, whereas in a cash settlement, the Company pays the difference between par and the prescribed value of the reference asset. When a credit event occurs in a single name or FTD basket (for FTD, the first credit event occurring for any one name in the basket), the contract terminates at the time of settlement. For CDX, the reference entity’s name incurring the credit event is removed from the index while the contract continues until expiration. The maximum payout on a CDS is the contract notional amount. A physical settlement may afford the Company with recovery rights as the new owner of the asset. The Company monitors risk associated with credit derivatives through individual name credit limits at both a credit derivative and a combined cash instrument/credit derivative level. The ratings of individual names for which protection has been sold are also monitored. |
Variable Interest Entities
Variable Interest Entities | 3 Months Ended |
Mar. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Variable Interest Entities | Note 8 Variable Interest Entities Consolidated VIEs, of which the Company is the primary beneficiary, include Adirondack Insurance Exchange, a New York reciprocal insurer, and New Jersey Skylands Insurance Association, a New Jersey reciprocal insurer (together “Reciprocal Exchanges”). The Reciprocal Exchanges are insurance carriers organized as unincorporated associations. The Company does not own the equity of the Reciprocal Exchanges, which is owned by their respective policyholders. The Company manages the business operations of the Reciprocal Exchanges and has the power to direct their activities that most significantly impact their economic performance. The Company receives a management fee for the services provided to the Reciprocal Exchanges. In addition, the Company holds surplus notes that provide capital to the Reciprocal Exchanges and would absorb any expected losses. The Company is therefore the primary beneficiary. In the event of dissolution, policyholders would share any residual unassigned surplus but are not subject to assessment for any deficit in unassigned surplus of the Reciprocal Exchanges. The assets of the Reciprocal Exchanges can be used only to settle the obligations of the Reciprocal Exchanges and general creditors have no recourse to the Company. The results of operations of the Reciprocal Exchanges are included in the Company’s Allstate Protection segment and generated $45 million of earned premiums in the first quarter of 2021. Assets and liabilities of consolidated VIEs ($ in millions) March 31, 2021 Assets Investments Fixed income securities, at fair value (amortized cost, net $286) $ 281 Short-term, at fair value (amortized cost $61) 61 Investments 342 Cash 8 Premium installment and other receivables, net 43 Reinsurance recoverables, net 112 Other assets 109 Total assets 614 Liabilities Reserve for property and casualty insurance claims and claims expense 223 Unearned premiums 189 Other liabilities and expenses 229 Total liabilities $ 641 |
Reserve for Property and Casual
Reserve for Property and Casualty Insurance Claims and Claims Expense | 3 Months Ended |
Mar. 31, 2021 | |
Reserve for Property-Liability Insurance Claims and Claims Expense [Abstract] | |
Reserve for Property and Liability Insurance Claims and Claims Expense | Note 9 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. When the Company experiences changes in the mix or type of claims or changing claim settlement patterns, it may need to apply actuarial judgment in the determination and selection of development factors to be more reflective of the new trends. For example, the Coronavirus has had a significant impact on driving patterns and auto frequency that may lead to historical development trends being less predictive of future loss development, potentially creating additional reserve variability. Generally, the initial reserves for a new accident year are established based on actual claim frequency and severity assumptions for different business segments, lines and coverages based on historical relationships to relevant inflation indicators. Reserves for prior accident years are statistically determined using several different actuarial estimation methods. Changes in auto claim frequency may result from changes in mix of business, the rate of distracted driving, miles driven or other macroeconomic factors. Changes in auto current year claim severity are generally influenced by inflation in the medical and auto repair sectors of the economy and the effectiveness and efficiency of claim practices. The Company mitigates these effects through various loss management programs. When such changes in claim data occur, actuarial judgment is used to determine appropriate development factors to establish reserves. As part of the reserving process, 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, Run-off Property-Liability 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 initial reporting period as it contains the greatest proportion of losses that have not been reported or settled. The Company also has uncertainty in the Run-off Property-Liability reserves that are based on events long since passed and are complicated by lack of historical data, legal interpretations, unresolved legal issues and legislative intent based on establishment of facts. 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, laws and regulations. Rollforward of the reserve for property and casualty insurance claims and claims expense Three months ended March 31, ($ in millions) 2021 2020 Balance as of January 1 $ 27,610 $ 27,712 Less recoverables (1) (7,033) (6,912) Net balance as of January 1 20,577 20,800 National General acquisition as of January 4, 2021 1,797 — Incurred claims and claims expense related to: Current year 6,284 5,333 Prior years (241) 8 Total incurred 6,043 5,341 Claims and claims expense paid related to: Current year (2,541) (2,352) Prior years (3,731) (3,554) Total paid (6,272) (5,906) Net balance as of March 31 22,145 20,235 Plus recoverables 9,269 6,913 Balance as of March 31 $ 31,414 $ 27,148 (1) Recoverables comprises reinsurance and indemnification recoverables. Incurred claims and claims expense represents the sum of paid losses, claim adjustment expenses and reserve changes in the period. This expense included losses from catastrophes of $590 million and $211 million in the three months ended March 31, 2021 and 2020, respectively, net of recoverables. Catastrophes are an inherent risk of the property and casualty insurance business that have contributed to, and will continue to contribute to, material year-to-year fluctuations in the Company’s results of operations and financial position. Prior year reserve reestimates included in claims and claims expense (1) Three months ended March 31, Non-catastrophe losses Catastrophe losses Total ($ in millions) 2021 2020 2021 (2) (3) 2020 2021 2020 Auto $ (17) $ 22 $ (19) $ (9) $ (36) $ 13 Homeowners 5 1 (208) (8) (203) (7) Other personal lines — (2) (18) (4) (18) (6) Commercial lines 13 5 2 1 15 6 Run-off Property-Liability 1 2 — — 1 2 Total prior year reserve reestimates $ 2 $ 28 $ (243) $ (20) $ (241) $ 8 (1) Favorable reserve reestimates are shown in parentheses. (2) Includes approximately $150 million of estimated recoveries related to Nationwide Aggregate Reinsurance Program cover for aggregate catastrophe losses occurring between April 1, 2020 and March 31, 2021, which primarily impacted homeowners reestimates. (3) Includes approximately $110 million favorable subrogation settlements arising from the Woolsey wildfire, which primarily impacted homeowners reestimates. |
Reinsurance and indemnification
Reinsurance and indemnification | 3 Months Ended |
Mar. 31, 2021 | |
Reinsurance Disclosures [Abstract] | |
Reinsurance and indemnification | Note 10 Reinsurance and indemnification Effects of reinsurance ceded and indemnification programs on property and casualty premiums earned and accident and health insurance premiums and contract charges ($ in millions) Three months ended March 31, 2021 2020 Property and casualty insurance premiums earned $ (508) $ (289) Accident and health insurance premiums and contract charges (24) (3) Effects of reinsurance ceded and indemnification programs on property and casualty insurance claims and claims expense and accident and health insurance policy benefits ($ in millions) Three months ended March 31, 2021 2020 Property and casualty insurance claims and claims expense (1) (2) $ (1,593) $ (131) Accident and health insurance policy benefits (29) (6) (1) Includes approximately $955 million of ceded losses, net of approximately $75 million of reinstatement premiums, related to the Nationwide Reinsurance Program for the three months ended March 31, 2021. (2) Includes $386 million and $47 million of ceded losses related to the Michigan Catastrophic Claims Association for the three months ended March 31, 2021 and 2020, respectively. Reinsurance and indemnification recoverables Reinsurance and indemnification recoverables, net ($ in millions) March 31, 2021 December 31, 2020 Property and casualty Paid and due from reinsurers and indemnitors $ 256 $ 101 Unpaid losses estimated (including IBNR) 9,269 7,033 Total property and casualty $ 9,525 $ 7,134 Allstate Health and Benefits 120 81 Total $ 9,645 $ 7,215 Rollforward of credit loss allowance for reinsurance recoverables ($ in millions) Three months ended March 31, 2021 2020 Property and casualty (1) (2) Beginning balance $ (59) $ (60) (Increase) decrease in the provision for credit losses (1) 1 Ending balance $ (60) $ (59) Allstate Health and Benefits Beginning balance $ (1) $ (1) Increase in the provision for credit losses — — Write-offs — — Ending balance $ (1) $ (1) (1) Primarily related to Run-off Property-Liability reinsurance ceded. (2) Indemnification recoverables are considered collectible based on the industry pool and facility enabling legislation. |
Capital Structure
Capital Structure | 3 Months Ended |
Mar. 31, 2021 | |
Capital Structure | |
Capital Structure | Note 11 Capital Structure Repayment of debt On March 29, 2021, the Company repaid, at maturity, $250 million of Floating Rate Senior Notes that bear interest at a floating rate equal to three-month LIBOR plus 0.43% per year. |
Company Restructuring
Company Restructuring | 3 Months Ended |
Mar. 31, 2021 | |
Restructuring and Related Activities [Abstract] | |
Company Restructuring | Note 12 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 $51 million and $4 million during the three months ended March 31, 2021 and 2020, respectively. Restructuring expenses in 2021 are primarily due to Transformative Growth to optimize and simplify the Company’s operating model and cost structure and costs related to the future work environment. In connection with Transformative Growth, the Company expects to incur restructuring and related charges totaling approximately $290 million, with $238 million recorded in 2020 and $17 million recorded in the first quarter of 2021. In connection with the future work environment, the Company expects to incur restructuring and related charges, primarily for real estate exit costs totaling approximately $110 million with $33 million recognized in the first quarter of 2021. These charges are primarily recorded in the Allstate Protection segment. The Company expects these actions will be completed in 2021. Employee costs related to the Transformative Growth program include severance and employee benefits primarily impacting claims, sales, service and support functions. Exit costs reflect real estate costs primarily related to accelerated amortization of right of use assets and related leasehold improvements at facilities to be vacated. Restructuring activity during the period ($ in millions) Employee costs Exit costs Total liability Restructuring liability as of December 31, 2020 $ 72 $ — $ 72 Expense incurred 2 53 55 Adjustments to liability (4) — (4) Payments and non-cash charges (29) (53) (82) Restructuring liability as of March 31, 2021 $ 41 $ — $ 41 |
Guarantees and Contingent Liabi
Guarantees and Contingent Liabilities | 3 Months Ended |
Mar. 31, 2021 | |
Guarantees and Contingent Liabilities | |
Guarantees and Contingent Liabilities | Note 13 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 in the last two years. Because of the Company’s participation, it may be exposed to losses that surpass the capitalization of these facilities or assessments from these facilities. Guarantees 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, 2021. 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 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 $85 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 coverage, seeking additional benefit payments, as well as applicable interest, penalties and fees. There is a pending class action, Revival Chiropractic v. Allstate Insurance Company, et al. (M.D. Fla. filed January 2019; appeal pending, 11th Circuit Court of Appeals), where the court denied class certification and plaintiff’s request to file a renewed motion for class certification. The Company is also defending litigation involving individual plaintiffs. The Company is defending putative class actions in various courts that raise challenges to the Company’s depreciation practices in homeowner property claims. In these lawsuits, plaintiffs generally allege that, when calculating actual cash value, the costs of “non-materials” such as labor, general contractor’s overhead and profit, and sales tax should not be subject to depreciation. The Company is currently defending the following lawsuits on this issue: Perry v. Allstate Indemnity Company, et al. (N.D. Ohio filed May 2016); Lado v. Allstate Vehicle and Property Insurance Company (S.D. Ohio filed March 2020); Maniaci v. Allstate Insurance Company (N.D. Ohio filed March 2020); Ferguson-Luke et al. v. Allstate Property and Casualty Insurance Company (N.D. Ohio filed April 2020); Huey v. Allstate Vehicle and Property Insurance Company (N.D. Miss. filed October 2019); Floyd, et al. v. Allstate Indemnity Company et al. (D.S.C. filed January 2020); Clark v. Allstate Vehicle and Property Insurance Company (Circuit Court of Independence Co., Ark. filed February 2016); Thaxton v. Allstate Indemnity Company (Madison Co., Ill. filed July 2020); Hester v. Allstate Vehicle and Property Insurance Company (St. Clair Co., Ill. filed June 2020). No classes have been certified in any of the other matters. The Company is defending putative class actions pending in multiple states alleging that the Company underpays total loss vehicle physical damage claims on auto policies. The allegedly systematic underpayments result from one or more of the following theories: (a) the third party valuation tool used by the Company as part of a comprehensive adjustment process is allegedly flawed, biased, or contrary to applicable law; (b) the Company allegedly does not pay sales tax, title fees, registration fees, and/or other specified fees that are allegedly mandatory under policy language or state legal authority; or (c) after paying for the value of the loss vehicle, then the Company allegedly is not entitled to retain the residual salvage value, and the Company allegedly must pay salvage value to the owner (or if the loss vehicle is retained by the owner, then the Company allegedly may not apply any offset for the salvage value). The following cases are currently pending against the Company: Olberg v. Allstate Insurance Company, Allstate Fire and Casualty Insurance Company, and CCC Information Services, Inc. (W.D. Wash., filed April 2018); Bloomgarden v. Allstate Fire and Casualty Insurance Company (S.D. Fla., filed July 2018, dismissed August 2019, refiled on September 2019, remanded to 17th Judicial Circuit, Broward County October 2020); Erby v. Allstate Fire and Casualty Insurance Company (E.D. Pa., filed October 2018); Kronenberg v. Allstate Insurance Company and Allstate Fire and Casualty Insurance Company (E.D. N.Y., filed December 2018); Ryan v. Allstate Fire and Casualty Insurance Company (7th Judicial Circuit, Volusia County, Fla.; filed May 2019, dismissed and refiled October 2019); Durgin v. Allstate Property and Casualty Insurance Company (W.D. LA, filed June 7, 2019); Anderson v. Allstate Insurance Company (20th Judicial Circuit, Collier County, Fla.; filed August 2019); Cody v. Allstate Fire and Casualty Insurance Company and Allstate County Mutual Insurance Company (N.D. Tex., filed August 2019); Saad v. National General Insurance Company (Superior Ct., Los Angeles County, Cal.; filed May 2020); Williams v. Esurance Property and Casualty Insurance Company (C.D. Cal,; filed September 2020); Cotton v. Allstate Fire and Casualty Insurance Company (Cir. Ct. of Cook County, Chancery Div., Ill.; filed October 2020); Romaniak v. Esurance Property and Casualty Insurance Company (N.D. Ohio, filed December 2020); Keita v. Esurance Property and Casualty Insurance Company (17th Judicial Circuit, Broward County, Fla.; filed March 2021). None of the courts in any of the pending matters has ruled on class certification. Other proceedings 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 but granted 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, plaintiffs agreed to consolidate the two actions and filed a consolidated amended complaint naming as defendants 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, 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 . Plaintiffs further allege that a senior officer and several outside directors engaged in stock option exercises allegedly while in possession of material nonpublic information. 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. On May 14, 2019, the court granted defendants’ motion to dismiss the complaint, but allowed plaintiffs leave to file a second consolidated amended complaint which they filed on September 17, 2019. Defendants moved to dismiss the complaint on November 1, 2019 for failure to make a demand on the Allstate Board. The court subsequently requested supplemental briefing on the motion which concluded on February 1, 2021. On February 24, 2021, the court dismissed the second amended consolidated complaint with prejudice. Plaintiffs filed a notice of appeal on March 26, 2021. 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. 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 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 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 defendants’ motion and stayed the case pending the final resolution of the consolidated Biefeldt/IBEW matter. Mims v. Wilson, et al., is an additional stockholder derivative action filed on February 12, 2020 in the United States District Court for the Northern District of Illinois. Plaintiff alleges that she previously made a demand on the Allstate board of directors and 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 vice chairman, and certain present or former members of the board of directors. The complaint alleges breaches of fiduciary duty and unjust enrichment based on allegations similar to those asserted in In re The Allstate Corp. Securities Litigation . On February 20, 2020, the Allstate board of directors appointed a special committee to investigate the allegations in plaintiff’s demand. The Company moved to dismiss the complaint on August 24, 2020 and on December 8, 2020, the court granted defendants’ motion, and dismissed the complaint with prejudice. On January 5, 2021, plaintiff filed a motion to alter the judgment and requested leave to file an amended complaint and defendants opposed the motion. On February 10, 2021, the court denied plaintiff’s motion to alter the judgment. No appeal was filed. In re The Allstate Corp. Securities Litigation is a certified 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 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. Plaintiffs further allege that a senior officer engaged in stock option exercises during that time allegedly while in possession of material nonpublic information about Allstate brand auto insurance claim frequency. The Company, its chairman, president and chief executive officer, and its former president are the named defendants. After the court denied their motion to dismiss on February 27, 2018, defendants answered the complaint, denying plaintiffs’ allegations that there was any misstatement or omission or other misconduct. On June 22, 2018, plaintiffs filed their motion for class certification. The court allowed the lead plaintiffs to amend their complaint to add the City of Providence Employee Retirement System as a proposed class representative and on September 12, 2018, the amended complaint was filed. On March 26, 2019, the court granted plaintiffs’ motion for class certification and certified a class consisting of all persons who purchased Allstate common stock between October 29, 2014 and August 3, 2015. On April 9, 2019, defendants filed with the U.S. Court of Appeals for the Seventh Circuit a petition for permission to appeal this ruling and the Seventh Circuit granted that petition on April 25, 2019. On July 16, 2020, the Seventh Circuit vacated the class certification order and remanded the matter for further consideration by the district court. Discovery in this matter concluded on October 5, 2020. On December 21, 2020, the district court again granted plaintiffs’ motion for class certification and certified a class consisting of all persons who purchased Allstate common stock between October 29, 2014 and August 3, 2015. On January 4, 2021, defendants filed with the Seventh Circuit a petition for permission to appeal this ruling. The petition was denied on January 28, 2021. The parties concluded briefing Daubert motions on April 22, 2021. |
Benefit Plans
Benefit Plans | 3 Months Ended |
Mar. 31, 2021 | |
Retirement Benefits [Abstract] | |
Benefit Plans | Note 14 Benefit Plans Components of net cost (benefit) for pension and other postretirement plans Three months ended March 31, ($ in millions) 2021 2020 Pension benefits Service cost $ 26 $ 28 Interest cost 46 56 Expected return on plan assets (117) (104) Amortization of prior service credit (13) (14) Costs and expenses (58) (34) Remeasurement of projected benefit obligation (512) (116) Remeasurement of plan assets 221 434 Remeasurement (gains) losses (291) 318 Pension net (benefit) cost $ (349) $ 284 Postretirement benefits Service cost $ — $ 1 Interest cost 2 3 Amortization of prior service credit (6) (1) Costs and expenses (4) 3 Remeasurement of projected benefit obligation (19) — Remeasurement of plan assets — — Remeasurement (gains) losses (19) — Postretirement net (benefit) cost $ (23) $ 3 Pension and postretirement benefits Costs and expenses $ (62) $ (31) Remeasurement (gains) losses (310) 318 Total net (benefit) cost $ (372) $ 287 Differences between expected and actual returns on plan assets and changes in assumptions affect the Company’s pension and other postretirement obligations, plan assets and expenses. Pension and other postretirement service cost, interest cost, expected return on plan assets and amortization of prior service credit are reported in property and casualty insurance claims and claims expense, operating costs and expenses, net investment income and (if applicable) restructuring and related charges on the Condensed Consolidated Statement of Operations. Pension and postretirement benefits remeasurement gains and losses Three months ended March 31, ($ in millions) 2021 2020 Remeasurement of projected benefit obligation (gains) losses: Discount rate $ (417) $ (36) Other assumptions (114) (80) Remeasurement of plan assets (gains) losses 221 434 Remeasurement (gains) losses $ (310) $ 318 Remeasurement gains for the first quarter of 2021 primarily related to an increase in the discount rate and changes in actuarial assumptions, partially offset by unfavorable asset performance compared to the expected return on plan assets. The weighted average discount rate used to measure the benefit obligation increased to 3.13% at March 31, 2021 compared to 2.51% at December 31, 2020 resulting in gains for the first quarter of 2021. Remeasurement gains for other assumptions in the first quarter of 2021 are primarily related to an increase in the long-term lump sum interest rate, partially offset by a remeasurement loss from an increase in the long-term cash balance interest crediting rate. For the first quarter of 2021, the actual return on plan assets was lower than the expected return due to higher market yields resulting in lower fixed income valuations partially offset by strong equity performance. |
Supplemental Cash Flow Informat
Supplemental Cash Flow Information | 3 Months Ended |
Mar. 31, 2021 | |
Supplemental Cash Flow Information [Abstract] | |
Supplemental Cash Flow Information | Note 15 Supplemental Cash Flow Information Non-cash investing activities include $14 million and $20 million related to mergers and exchanges completed with equity securities for the three months ended March 31, 2021 and 2020, respectively. Non-cash financing activities include $50 million and $51 million related to the issuance of Allstate common shares for vested equity awards for the three months ended March 31, 2021 and 2020, 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 $46 million and $39 million for the three months ended March 31, 2021 and 2020, respectively. Non-cash operating activities include $103 million and $31 million related to right-of-use (“ROU”) assets obtained in exchange for lease obligations for the three months ended March 31, 2021 and 2020, respectively. Liabilities for collateral received in conjunction with the Company’s securities lending program and OTC and cleared derivatives are reported in other liabilities and accrued expenses or other investments. The accompanying cash flows are included in cash flows from operating activities in the Condensed Consolidated Statements of Cash Flows along with the activities resulting from management of the proceeds, as follows: ($ in millions) Three months ended March 31, 2021 2020 Net change in proceeds managed Net change in short-term investments $ (183) $ 370 Operating cash flow (used) provided (183) 370 Net change in cash 1 — Net change in proceeds managed $ (182) $ 370 Cash flows from operating activities Net change in liabilities Liabilities for collateral, beginning of period $ (914) $ (1,298) Liabilities for collateral, end of period (1,096) (928) Operating cash flow provided (used) $ 182 $ (370) |
Other Comprehensive Income
Other Comprehensive Income | 3 Months Ended |
Mar. 31, 2021 | |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |
Other Comprehensive Income | Note 16 Other Comprehensive Income Components of other comprehensive income (loss) on a pre-tax and after-tax basis ($ in millions) Three months ended March 31, 2021 2020 Pre-tax Tax After-tax Pre-tax Tax After-tax Unrealized net holding gains and losses arising during the period, net of related offsets $ (1,718) $ 364 $ (1,354) $ (1,433) $ 303 $ (1,130) Less: reclassification adjustment of realized capital gains and losses 185 (39) 146 287 (60) 227 Unrealized net capital gains and losses (1,903) 403 (1,500) (1,720) 363 (1,357) Unrealized foreign currency translation adjustments 43 (9) 34 (49) 10 (39) Unamortized pension and other postretirement prior service credit (1) (19) 4 (15) 6 (2) 4 Other comprehensive (loss) income $ (1,879) $ 398 $ (1,481) $ (1,763) $ 371 $ (1,392) (1) Represents prior service credits reclassified out of other comprehensive income and amortized into operating costs and expenses. |
General (Policies)
General (Policies) | 3 Months Ended |
Mar. 31, 2021 | |
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 (collectively referred to as the “Company” or “Allstate”) and variable interest entities in which the Company is considered a primary beneficiary. 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, 2021 and for the three month periods ended March 31, 2021 and 2020 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, 2020. 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 Simplifications to the Accounting for Income Taxes Effective January 1, 2021, the Company adopted the new Financial Accounting Standards Board (“FASB”) guidance which simplified the accounting for income taxes by eliminating certain exceptions and clarifying certain guidance. The adoption had an immaterial impact on the Company’s results of operations and financial position. Changes to the Disclosure Requirements for Defined Benefit Plans Effective January 1, 2021, the Company adopted new FASB guidance to modify certain annual disclosure requirements for defined benefit plans. New disclosures include 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 during the reporting period. Disclosures to be eliminated include amounts 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 the assumed health care cost trend rate on service and interest cost and on the accumulated benefit obligation. The impacts of adoption are to the Company’s annual disclosures only. Significant accounting policies Consolidation of Variable Interest Entities (“VIEs”) A VIE is a legal entity that does not have sufficient equity at risk to finance its activities without additional financial support or is structured such that equity investors lack the ability to make significant decisions relating to the entity’s operations through voting rights or do not participate in the gains and losses of the entity. The Company consolidates VIEs in which the Company is deemed the primary beneficiary. The primary beneficiary is the entity that has both (1) the power to direct the activities of the VIE that most significantly affect that entity’s economic performance and (2) the obligation to absorb losses or the right to receive benefits that could be potentially significant to the VIE. Discontinued Operations and Held for Sale A business is classified as held for sale when management having the authority to approve the action commits to a plan to sell the business, the sale is probable to occur during the next 12 months at a price that is reasonable in relation to its current fair value and certain other criteria are met. A business classified as held for sale is recorded at the lower of its carrying amount or estimated fair value less cost to sell. When the carrying amount of the business exceeds its estimated fair value less cost to sell, a loss is recognized and updated each reporting period as appropriate. The results of operations of business classified as held for sale are reported as discontinued operations if the disposal represents a strategic shift that will have a major effect on the entity’s operations and financial results. The disposal of a reportable segment generally qualifies for discontinued operations presentation. When a business is identified for discontinued operations reporting: • Results for prior periods are retrospectively reclassified as discontinued operations • Results of operations are reported in a single line, net of tax, in the Condensed Consolidated Statements of Operations • Assets and liabilities are reported as held for sale in the Condensed Consolidated Statements of Financial Position in the period in which the business is classified as held for sale Additional details by major classification of operating results and financial position are included in Note 3. Pending accounting standards Accounting for Long-Duration Insurance Contracts In August 2018, the FASB issued guidance revising the accounting for certain long-duration insurance contracts. As disclosed in Note 3, the Company entered into agreements to sell substantially all of its life and annuity business in scope of the new standard. The Company’s reserves and deferred policy acquisition costs (“DAC”) for certain voluntary and individual life and accident and health insurance products not held for sale are subject to the new guidance. Under the new guidance, measurement assumptions, including those for mortality, morbidity and policy terminations, will be required to be reviewed at least annually, and updated as appropriate. The effects of updating assumptions other than the discount rate are required to be measured on a retrospective basis and reported in net income. In addition, reserves under the new guidance are required to be discounted using an upper-medium grade fixed income instrument yield that is updated through OCI at each reporting date. Current GAAP requires the measurement of reserves to utilize assumptions set at policy issuance unless updated current assumptions indicate that recorded reserves are deficient. The new guidance also requires 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 lapse experience exceeds expected experience. The new guidance is effective for financial statements issued for reporting periods beginning after December 15, 2022 and restatement of prior periods presented is required. The new guidance will be applied to affected contracts and DAC on the basis of existing carrying amounts at the earliest period presented. The Company is evaluating the anticipated impacts of applying the new guidance to both retained income and AOCI and does not anticipate the financial statement impact of adopting the new guidance to be material to the Company’s results of operations or financial position, assuming the dispositions of Allstate Life Insurance Company and Allstate Life Insurance Company of New York are completed. |
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 |
Earnings per Common Share (Tabl
Earnings per Common Share (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
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, 2021 2020 Numerator: Net income from continuing operations $ 2,406 $ 837 Less: Net loss attributable to noncontrolling interest (6) — Net income from continuing operations attributable to Allstate 2,412 837 Less: Preferred stock dividends 27 36 Net income from continuing operations applicable to common shareholders 2,385 801 Loss from discontinued operations, net of tax (3,793) (288) Net (loss) income applicable to common shareholders $ (1,408) $ 513 Denominator: Weighted average common shares outstanding 302.5 317.4 Effect of dilutive potential common shares: Stock options 2.5 3.3 Restricted stock units (non-participating) and performance stock awards 1.4 1.7 Weighted average common and dilutive potential common shares outstanding 306.4 322.4 Earnings per common share applicable to common shareholders Basic Continuing operations $ 7.88 $ 2.52 Discontinued operations (12.53) (0.90) Total $ (4.65) $ 1.62 Diluted Continuing operations $ 7.78 $ 2.48 Discontinued operations (12.38) (0.89) Total $ (4.60) $ 1.59 Anti-dilutive options excluded from diluted earnings per common share 2.2 0.8 |
Acquisition and Disposition (Ta
Acquisition and Disposition (Table) | 3 Months Ended |
Mar. 31, 2021 | |
Business Combinations [Abstract] | |
Schedule of recognized identified assets acquired and liabilities assumed | Assets and liabilities recognized in acquisition (1) ($ in millions) January 4, 2021 Assets Investments $ 4,957 Cash 402 Premiums and other receivables, net 1,545 Deferred acquisition costs (value of business acquired) 317 Reinsurance recoverables, net 1,219 Intangible assets 1,199 Other assets 734 Goodwill (2) 980 Total assets 11,353 Liabilities Reserve for property and casualty insurance claims and claims expense 2,774 Reserve for future policy benefits 189 Unearned premiums 2,245 Reinsurance payable 364 Debt (3) 592 Deferred tax liabilities 177 Other liabilities 701 Total liabilities $ 7,042 (1) The amounts reflect preliminary allocation of assets acquired and liabilities assumed. The acquisition date fair values of assets and liabilities, including insurance reserves and intangible assets, as well as the related estimated useful lives of intangibles, are preliminary estimates and are subject to revisions within one year of acquisition date. (2) $616 million, $29 million and $335 million of goodwill were allocated to the Allstate Protection, Protection Services and Allstate Health and Benefits segments, respectively, and is non-deductible for income tax purposes. Goodwill is primarily attributable to expected synergies and future growth opportunities. |
Schedule of indefinite-lived intangible assets | Intangible assets by type ($ in millions) January 4, 2021 Distribution and customer relationships $ 795 Trade names 102 Licenses 97 Technology and other 205 Total $ 1,199 |
Schedule of finite-lived intangible assets, future amortization expense | Estimated amortization expense of National General intangible assets for the next five years and thereafter ($ in millions) 2022 $ 218 2023 185 2024 135 2025 103 2026 70 Thereafter 140 Total amortization $ 851 |
Schedule of disposal groups, including discontinued operations | Financial results from discontinued operations Three months ended March 31, ($ in millions) 2021 2020 Revenues Life premiums and contract charges $ 340 $ 335 Net investment income 439 175 Realized capital gains (losses) 79 (300) Total revenues 858 210 Costs and expenses Life contract benefits 410 360 Interest credited to contractholder funds 85 123 Amortization of DAC 36 36 Operating costs and expenses 55 61 Restructuring and related charges 19 1 Total costs and expenses 605 581 Amortization of deferred gain on reinsurance 2 1 Income (loss) from discontinued operations before income tax expense 255 (370) Income tax expense (benefit) 50 (82) Income (loss) from discontinued operations, net of tax 205 (288) Loss on disposition of operations (4,418) — Income tax benefit (420) — Loss on disposition, net of tax (3,998) — Loss from discontinued operations, net of tax $ (3,793) $ (288) Major classes of assets and liabilities to be transferred in transactions ($ in millions) March 31, 2021 December 31, 2020 Assets Investments Fixed income securities, at fair value (amortized cost, net $23,511 and $21,417) $ 25,073 $ 23,789 Equity securities, at fair value (cost $1,191 and $1,113) 1,643 1,542 Mortgage loans, net 3,062 3,329 Limited partnership interests 1,942 3,046 Short-term, at fair value (amortized cost $1,652 and $993) 1,652 993 Other, net 936 1,998 Total investments 34,308 34,697 Cash 89 66 Deferred policy acquisitions costs 1,039 925 Reinsurance recoverables, net 1,982 2,005 Accrued investment income 248 229 Other assets 236 865 Separate accounts 3,339 3,344 Assets held for sale 41,241 42,131 Less: loss accrual 4,412 — Total assets held for sale $ 36,829 $ 42,131 Liabilities Reserve for future policy benefits $ 11,581 $ 11,740 Contractholder funds 16,112 16,356 Deferred income taxes 857 973 Other liabilities and accrued expenses 1,494 912 Separate accounts 3,339 3,344 Total liabilities held for sale $ 33,383 $ 33,325 Cash flows from discontinued operations Three months ended March 31, ($ in millions) 2021 2020 Net cash provided by operating activities from discontinued operations $ 64 $ 111 Net cash provided by investing activities from discontinued operations 88 85 |
Reportable Segments (Tables)
Reportable Segments (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Segment Reporting [Abstract] | |
Schedule of business segments net income disclosures | Reportable segments financial performance Three months ended March 31, ($ in millions) 2021 2020 Underwriting income (loss) by segment Allstate Protection $ 1,660 $ 1,351 Run-off Property-Liability (3) (3) Adjusted net income (loss) by segment, after-tax Protection Services 49 37 Allstate Health and Benefits 65 24 Corporate and Other (123) (107) Reconciling items Property-Liability net investment income 673 202 Realized capital gains (losses) 426 (162) Pension and other postretirement remeasurement gains (losses) 310 (318) Business combination expenses and amortization of purchased intangibles (56) (27) Income tax expense on reconciling items (622) (196) Total reconciling items 731 (501) Loss from discontinued operations (4,163) (370) Income tax benefit from discontinued operations 370 82 Total from discontinued operations $ (3,793) $ (288) Less: Net loss attributable to noncontrolling interest (6) — Net (loss) income applicable to common shareholders $ (1,408) $ 513 |
Schedule of business segments revenue disclosures | Reportable segments revenue information ($ in millions) Three months ended March 31, 2021 2020 Property-Liability Insurance premiums Auto $ 6,809 $ 6,155 Homeowners 2,392 2,037 Other personal lines 505 471 Commercial lines 190 218 Allstate Protection 9,896 8,881 Run-off Property-Liability — — Total Property-Liability insurance premiums 9,896 8,881 Other revenue 385 213 Net investment income 673 202 Realized capital gains (losses) 404 (103) Total Property-Liability 11,358 9,193 Protection Services Protection plans 260 206 Roadside assistance 47 51 Finance and insurance products 104 97 Intersegment premiums and service fees (1) 41 38 Other revenue (2) 90 52 Net investment income 10 10 Realized capital gains (losses) 10 (24) Total Protection Services 562 430 Allstate Health and Benefits Employer voluntary benefits 263 282 Group health 83 — Individual accident and health 109 — Other revenue 80 — Net investment income 19 20 Realized capital gains (losses) 2 (14) Total Allstate Health and Benefits 556 288 Corporate and Other Net investment income 6 14 Realized capital gains (losses) 10 (21) Total Corporate and Other 16 (7) Intersegment eliminations (1) (41) (38) Consolidated revenues $ 12,451 $ 9,866 (1) Intersegment insurance premiums and service fees are primarily related to Arity and Allstate Roadside and are eliminated in the condensed consolidated financial statements. (2) Other revenue is primarily related to Arity, Allstate Identity Protection, Allstate Dealer Services, and Allstate Protection Plans. |
Investments (Tables)
Investments (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Investments [Abstract] | |
Portfolio composition | Portfolio composition ($ in millions) March 31, 2021 December 31, 2020 Fixed income securities, at fair value $ 40,594 $ 42,565 Equity securities, at fair value 3,154 3,168 Mortgage loans, net 902 746 Limited partnership interests 6,367 4,563 Short-term investments, at fair value 6,017 6,807 Other, net 3,042 1,691 Total $ 60,076 $ 59,540 |
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, net Gross unrealized Fair value Gains Losses March 31, 2021 U.S. government and agencies $ 3,103 $ 26 $ (19) $ 3,110 Municipal 7,226 310 (36) 7,500 Corporate 27,145 1,045 (187) 28,003 Foreign government 977 16 (8) 985 ABS 934 11 (2) 943 MBS 52 1 — 53 Total fixed income securities $ 39,437 $ 1,409 $ (252) $ 40,594 December 31, 2020 U.S. government and agencies $ 2,058 $ 50 $ (1) $ 2,107 Municipal 7,100 480 (2) 7,578 Corporate 29,057 1,986 (26) 31,017 Foreign government 921 37 — 958 ABS 840 9 (3) 846 MBS 58 1 — 59 Total fixed income securities $ 40,034 $ 2,563 $ (32) $ 42,565 |
Schedule for fixed income securities based on contractual maturities | Scheduled maturities for fixed income securities ($ in millions) March 31, 2021 Amortized cost, net Fair value Due in one year or less $ 1,279 $ 1,291 Due after one year through five years 18,216 18,810 Due after five years through ten years 13,464 13,818 Due after ten years 5,492 5,679 38,451 39,598 ABS and MBS 986 996 Total $ 39,437 $ 40,594 |
Schedule of net investment income | Net investment income ($ in millions) Three months ended March 31, 2021 2020 Fixed income securities $ 301 $ 298 Equity securities 14 10 Mortgage loans 10 9 Limited partnership interests 378 (77) Short-term investments 1 11 Other 41 31 Investment income, before expense 745 282 Investment expense (37) (36) Net investment income $ 708 $ 246 |
Schedule of realized capital gains and losses by asset type | Realized capital gains (losses) by asset type ($ in millions) Three months ended March 31, 2021 2020 Fixed income securities $ 183 $ 374 Equity securities 164 (510) Mortgage loans 6 (10) Limited partnership interests 4 (86) Derivatives 11 78 Other 58 (8) Realized capital gains (losses) $ 426 $ (162) |
Schedule of realized capital gains and losses by transaction type | Realized capital gains (losses) by transaction type ($ in millions) Three months ended March 31, 2021 2020 Sales $ 246 $ 388 Credit losses 2 (37) Valuation of equity investments (1) 167 (591) Valuation and settlements of derivative instruments 11 78 Realized capital gains (losses) $ 426 $ (162) (1) Includes valuation of equity securities and certain limited partnership interests where the underlying assets are predominately public equity securities. |
Gross realized gains (losses) on sales of fixed income securities | Gross realized gains (losses) on sales of fixed income securities ($ in millions) Three months ended March 31, 2021 2020 Gross realized gains $ 245 $ 435 Gross realized losses (64) (59) |
Valuation changes included in net income for investments | Net appreciation (decline) recognized in net income ($ in millions) Three months ended March 31, 2021 2020 Equity securities $ 125 $ (417) Limited partnership interests carried at fair value 141 (28) Total $ 266 $ (445) |
Schedule of credit losses on fixed income securities recognized in earnings | Credit losses recognized in net income ($ in millions) Three months ended March 31, 2021 2020 Assets Fixed income securities: Corporate $ 1 $ (1) ABS 1 — MBS — (1) Total fixed income securities 2 (2) Mortgage loans 6 (9) Limited partnership interests — (5) Other investments Bank loans (6) (20) Total credit losses by asset type $ 2 $ (36) Liabilities Commitments to fund commercial mortgage loans, bank loans and agent loans — (1) Total $ 2 $ (37) |
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, 2021 Gains Losses Fixed income securities $ 40,594 $ 1,409 $ (252) $ 1,157 Short-term investments 6,017 — — — Derivative instruments — — (3) (3) Equity method of accounting (“EMA”) limited partnerships (1) (1) Investments classified as held for sale 1,562 Unrealized net capital gains and losses, pre-tax 2,715 Amounts recognized for: Insurance reserves (2) (358) DAC and DSI (3) (228) Reclassification of noncontrolling interest 4 Amounts recognized (582) Deferred income taxes (453) Unrealized net capital gains and losses, after-tax $ 1,680 December 31, 2020 Fixed income securities $ 42,565 $ 2,563 $ (32) $ 2,531 Short-term investments 6,807 — — — Derivative instruments — — (3) (3) EMA limited partnerships (1) Investments classified as held for sale 2,369 Unrealized net capital gains and losses, pre-tax 4,896 Amounts recognized for: Insurance reserves (496) DAC and DSI (364) Amounts recognized (860) Deferred income taxes (856) Unrealized net capital gains and losses, after-tax $ 3,180 (1) Unrealized net capital gains and losses for limited partnership interests represent the Company’s share of EMA limited partnerships’ OCI. Fair value and gross unrealized gains and losses are not applicable. (2) The insurance reserves adjustment represents the amount by which the reserve balance would increase if the net unrealized gains in the applicable product portfolios were realized and reinvested at lower interest rates, resulting in a premium deficiency. This adjustment primarily relates to structured settlement annuities with life contingencies (a type of immediate fixed annuity), which are now classified as held for sale. (3) The DAC and DSI adjustment balance represents the amount by which the amortization of DAC and DSI would increase or decrease if the unrealized gains or losses in the respective product portfolios were realized. This adjustment relates to life insurance products, which are now primarily classified as held for sale. |
Schedule of change in unrealized net capital gains and losses | Change in unrealized net capital gains (losses) ($ in millions) Three months ended March 31, 2021 Fixed income securities $ (1,374) Short-term investments — Derivative instruments — EMA limited partnerships — Investments classified as held for sale (807) Total (2,181) Amounts recognized for: Insurance reserves 138 DAC and DSI 136 Reclassification of noncontrolling interest 4 Amounts recognized 278 Deferred income taxes 403 Decrease in unrealized net capital gains and losses, after-tax $ (1,500) |
Carrying value for limited partnership interests | Carrying value for limited partnership interests ($ in millions) March 31, 2021 December 31, 2020 EMA Fair Value Total EMA Fair Value Total Private equity $ 3,935 $ 1,295 $ 5,230 $ 2,667 $ 988 $ 3,655 Real estate 816 68 884 623 74 697 Other (1) 253 — 253 211 — 211 Total (2) $ 5,004 $ 1,363 $ 6,367 $ 3,501 $ 1,062 $ 4,563 (1) Other consists of certain limited partnership interests where the underlying assets are predominately public equity and debt securities. (2) Carrying value for limited partnership interests as of March 31, 2021 i ncludes certain investments which were classified as assets held for sale as of December 31, 2020 and transferred to continuing operations in the first quarter of 2021. |
Schedule of other investments by type | Other investments by asset type ($ in millions) March 31, 2021 December 31, 2020 Bank loans, net $ 1,260 $ 772 Real estate 871 659 Policy loans 164 181 Agent loans, net 607 — Derivatives 22 20 Other 118 59 Total (1) $ 3,042 $ 1,691 (1) Other investments as of March 31, 2021 i ncludes certain real estate, agent loans and other investments which were classified as assets held for sale as of December 31, 2020 and transferred to continuing operations in the first quarter of 2021. |
Allowance for credit loss | Rollforward of credit loss allowance for fixed income securities Three months ended March 31, ($ in millions) 2021 2020 Beginning balance $ (3) $ — Credit losses on securities for which credit losses not previously reported — (4) Net decreases related to credit losses previously reported 2 — Reduction of allowance related to sales — — Ending balance (1) (2) $ (1) $ (4) (1) Allowance for fixed income securities as of March 31, 2021 comprised $1 million of ABS. Allowance for fixed income securities as of March 31, 2020 comprised $1 million and $3 million of corporate bonds and MBS, respectively. (2) Includes $1 million and $2 million of credit loss allowance for fixed income securities that are classified as held for sale as of March 31, 2021 and 2020, respectively. Rollforward of credit loss allowance for mortgage loans Three months ended March 31, ($ in millions) 2021 2020 Beginning balance $ (67) $ (3) Cumulative effect of change in accounting principle — (42) Net decreases (increases) related to credit losses 22 (40) Write-offs — — Ending balance (1) $ (45) $ (85) (1) Includes $31 million and $68 million of credit loss allowance for mortgage loans that are classified as held for sale as of March 31, 2021 and 2020, respectively. Rollforward of credit loss allowance for bank loans ($ in millions) Three months ended March 31, 2021 2020 Beginning balance $ (67) $ — Cumulative effect of change in accounting principle — (53) Net increases related to credit losses (2) (27) Reduction of allowance related to sales 9 1 Write-offs — — Ending balance (1) $ (60) $ (79) (1) Includes $11 million and $22 million of credit loss allowance for bank loans that are classified as held for sale as of March 31, 2021 and 2020, respectively. |
Schedule of gross unrealized losses and fair value of available for sale securities by length of time | Gross unrealized losses and fair value by type and length of time held in a continuous unrealized loss position ($ 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, 2021 Fixed income securities U.S. government and agencies 108 $ 2,084 $ (19) — $ — $ — $ (19) Municipal 804 1,398 (36) 1 5 — (36) Corporate 1,003 6,715 (176) 25 121 (11) (187) Foreign government 64 289 (8) — — — (8) ABS 15 79 (2) 13 50 — (2) MBS 15 2 — 55 — — — Total fixed income securities 2,009 $ 10,567 $ (241) 94 $ 176 $ (11) $ (252) Investment grade fixed income securities 1,821 $ 9,206 $ (207) 69 $ 67 $ (1) $ (208) Below investment grade fixed income securities 188 1,361 (34) 25 109 (10) (44) Total fixed income securities 2,009 $ 10,567 $ (241) 94 $ 176 $ (11) $ (252) December 31, 2020 Fixed income securities U.S. government and agencies 26 $ 215 $ (1) — $ — $ — $ (1) Municipal 43 116 (2) — — — (2) Corporate 107 730 (21) 14 46 (5) (26) Foreign government 7 7 — — — — — ABS 21 157 (2) 12 43 (1) (3) MBS 11 — — 57 — — — Total fixed income securities 215 $ 1,225 $ (26) 83 $ 89 $ (6) $ (32) Investment grade fixed income securities 146 $ 855 $ (8) 66 $ 45 $ — $ (8) Below investment grade fixed income securities 69 370 (18) 17 44 (6) (24) Total fixed income securities 215 $ 1,225 $ (26) 83 $ 89 $ (6) $ (32) |
Carrying value of non-impaired fixed and variable rate mortgage loans by debt service coverage ratio distribution | Gross unrealized losses by unrealized loss position and credit quality as of March 31, 2021 ($ in millions) Investment grade Below investment grade Total Fixed income securities with unrealized loss position less than 20% of amortized cost, net (1) (2) $ (207) $ (34) $ (241) Fixed income securities with unrealized loss position greater than or equal to 20% of amortized cost, net (3) (4) (1) (10) (11) Total unrealized losses $ (208) $ (44) $ (252) (1) Below investment grade fixed income securities include $30 million that have been in an unrealized loss position for less than twelve months. (2) Related to securities with an unrealized loss position less than 20% of amortized cost, net, the degree of which suggests that these securities do not pose a high risk of having credit losses. (3) No below investment grade fixed income securities have been in an unrealized loss position for a period of twelve or more consecutive months. (4) Evaluated based on factors such as discounted cash flows and the financial condition and near-term and long-term prospects of the issue or issuer and were determined to have adequate resources to fulfill contractual obligations. |
Mortgage loans amortized cost by debt service coverage ratio distribution and year of origination | Mortgage loans amortized cost by debt service coverage ratio distribution and year of origination ($ in millions) March 31, 2021 December 31, 2020 2016 and prior 2017 2018 2019 2020 Current Total Total Below 1.0 $ 15 $ — $ — $ — $ — $ — $ 15 $ — 1.0 - 1.25 29 — 13 23 10 — 75 46 1.26 - 1.50 105 36 24 130 — — 295 201 Above 1.50 134 45 119 166 67 — 531 507 Amortized cost before allowance $ 283 $ 81 $ 156 $ 319 $ 77 $ — $ 916 $ 754 Allowance (14) (8) Amortized cost, net $ 902 $ 746 |
Bank loans amortized cost by credit quality and year of origination | Bank loans amortized cost by credit rating and year of origination ($ in millions) March 31, 2021 December 31, 2020 2016 and prior 2017 2018 2019 2020 Current Total Total BBB $ — $ 5 $ 7 $ 11 $ 8 $ 29 $ 60 $ 38 BB 9 22 30 42 36 172 311 168 B 13 68 86 77 139 389 772 456 CCC and below 11 28 32 55 27 13 166 161 Amortized cost before allowance $ 33 $ 123 $ 155 $ 185 $ 210 $ 603 $ 1,309 $ 823 Allowance (49) (51) Amortized cost, net $ 1,260 $ 772 |
Fair Value of Assets and Liab_2
Fair Value of Assets and Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
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 March 31, 2021 ($ 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 $ 3,074 $ 36 $ — $ 3,110 Municipal — 7,482 18 7,500 Corporate - public — 18,818 43 18,861 Corporate - privately placed — 9,037 105 9,142 Foreign government — 985 — 985 ABS — 864 79 943 MBS — 30 23 53 Total fixed income securities 3,074 37,252 268 40,594 Equity securities 2,318 426 410 3,154 Short-term investments 3,530 2,487 — 6,017 Other investments — 39 3 $ (17) 25 Other assets 1 — — 1 Assets held for sale 6,380 25,319 170 (7) 31,862 Total recurring basis assets 15,303 65,523 851 (24) 81,653 Total assets at fair value $ 15,303 $ 65,523 $ 851 $ (24) $ 81,653 % of total assets at fair value 18.7 % 80.3 % 1.0 % — % 100.0 % Investments reported at NAV 1,363 Assets held for sale at NAV 562 Total $ 83,578 Liabilities Other liabilities $ (1) $ (21) $ — $ 13 $ (9) Liabilities held for sale — (97) (463) 4 (556) Total recurring basis liabilities (1) (118) (463) 17 (565) Total liabilities at fair value $ (1) $ (118) $ (463) $ 17 $ (565) % of total liabilities at fair value 0.2 % 20.9 % 81.9 % (3.0) % 100.0 % Assets and liabilities measured at fair value December 31, 2020 ($ 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 $ 2,061 $ 45 $ — $ 2,106 Municipal — 7,562 17 7,579 Corporate - public — 21,885 67 21,952 Corporate - privately placed — 9,002 63 9,065 Foreign government — 958 — 958 ABS — 794 52 846 MBS — 32 27 59 Total fixed income securities 2,061 40,278 226 42,565 Equity securities 2,468 396 304 3,168 Short-term investments 6,549 223 35 6,807 Other investments — 29 — $ (9) 20 Other assets 1 — — 1 Assets held for sale 6,488 23,103 267 (6) 29,852 Total recurring basis assets 17,567 64,029 832 (15) 82,413 Total assets at fair value $ 17,567 $ 64,029 $ 832 $ (15) $ 82,413 % of total assets at fair value 21.3 % 77.7 % 1.0 % — % 100.0 % Investments reported at NAV 1,062 Assets held for sale at NAV 762 Total $ 84,237 Liabilities Other liabilities $ — $ (34) $ — $ 18 $ (16) Liabilities held for sale — (119) (516) 9 (626) Total recurring basis liabilities — (153) (516) 27 (642) Total liabilities at fair value $ — $ (153) $ (516) $ 27 $ (642) % of total liabilities at fair value — % 23.8 % 80.4 % (4.2) % 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 (1) ($ in millions) Fair value Valuation Unobservable Range Weighted March 31, 2021 Derivatives embedded in life and annuity contracts – Equity-indexed and forward starting options $ (435) Stochastic cash flow model Projected option cost 1.0 - 4.2% 2.83% December 31, 2020 Derivatives embedded in life and annuity contracts – Equity-indexed and forward starting options $ (483) Stochastic cash flow model Projected option cost 1.0 - 4.2% 2.80% (1) These were included in the liabilities held for sale as of March 31, 2021 and December 31, 2020. |
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 held at fair value during the three month period ended March 31, 2021 Balance as of Total gains (losses) included in: Transfers Transfers to (from) held for sale Balance as of March 31, 2021 ($ in millions) Net income OCI Into Level 3 Out of Level 3 Purchases Sales Issues Settlements Assets Fixed income securities: Municipal $ 17 $ — $ — $ — $ — $ — $ 3 $ — $ — $ (2) $ 18 Corporate - public 67 1 (3) — — (6) 17 (33) — — 43 Corporate - privately placed 63 — (1) 10 (7) 13 27 — — — 105 ABS 52 — — — (32) — 59 — — — 79 MBS 27 — — — — — — (4) — — 23 Total fixed income securities 226 1 (4) 10 (39) 7 106 (37) — (2) 268 Equity securities 304 16 — — — 92 5 (7) — — 410 Short-term investments 35 — — — — — — — — (35) — Other investments — — — — — — 3 — — — 3 Assets held for sale 267 1 — 3 (8) (99) 11 (3) — (2) 170 Total recurring Level 3 assets 832 18 (4) 13 (47) — 125 (47) — (39) 851 Liabilities Liabilities held for sale (516) 55 — — — — — — (8) 6 (463) Total recurring Level 3 liabilities $ (516) $ 55 $ — $ — $ — $ — $ — $ — $ (8) $ 6 $ (463) Rollforward of Level 3 assets and liabilities held at fair value during the three month period ended March 31, 2020 Balance as of Total gains (losses) included in: Transfers Balance ($ in millions) Net income OCI Into Level 3 Out of Level 3 Purchases Sales Issues Settlements Assets Fixed income securities: Municipal $ 22 $ — $ (1) $ — $ — $ — $ (1) $ — $ (1) $ 19 Corporate - public 36 — — — — — — — — 36 Corporate - privately placed 32 — — — — 1 — — — 33 ABS 49 — — 26 (49) 33 — — (27) 32 MBS 35 — — — — — — — — 35 Total fixed income securities 174 — (1) 26 (49) 34 (1) — (28) 155 Equity securities 255 (17) — — — 1 — — — 239 Short-term investments 25 — — — — 25 — — — 50 Assets held for sale 284 (12) (1) — (25) — (10) — (3) 233 Total recurring Level 3 assets 738 (29) (2) 26 (74) 60 (11) — (31) 677 Liabilities Liabilities held for sale (462) 48 — — — — — (8) 5 (417) Total recurring Level 3 liabilities $ (462) $ 48 $ — $ — $ — $ — $ — $ (8) $ 5 $ (417) Total Level 3 gains (losses) included in net income Three months ended March 31, ($ in millions) 2021 2020 Net investment income $ (1) $ (14) Realized capital gains (losses) 18 (3) |
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 and OCI for Level 3 assets and liabilities held as of March 31, ($ in millions) Three months ended March 31, 2021 2020 Assets Fixed income securities: Corporate - public $ 1 $ — Corporate - privately placed — — Total fixed income securities 1 — Equity securities $ 16 $ (17) Assets held for sale 1 (12) Total recurring Level 3 assets $ 18 $ (29) Liabilities Liabilities held for sale $ 55 $ 48 Total recurring Level 3 liabilities 55 48 Total included in net income $ 73 $ 19 Components of net income Net investment income $ (1) $ (14) Realized capital gains (losses) 18 (3) Assets Municipal $ — $ (1) Corporate - public (3) — Corporate - privately placed (1) — Assets held for sale — (1) Changes in unrealized net capital gains and losses reported in OCI $ (4) $ (2) |
Schedule of carrying values and fair value estimates of financial instruments not carried at fair value | Financial instruments not carried at fair value ($ in millions) March 31, 2021 December 31, 2020 Financial assets Fair value level Amortized cost, net Fair value Amortized cost, net Fair value Mortgage loans Level 3 $ 902 $ 948 $ 746 $ 792 Bank loans Level 3 1,260 1,286 772 803 Agent loans Level 3 607 606 — — Assets held for sale Level 3 3,278 3,484 4,206 4,440 Financial liabilities Fair value level Carrying value (1) Fair Carrying value (1) Fair value Contractholder funds on investment contracts Level 3 $ 33 $ 35 $ — $ — Long-term debt Level 2 7,577 9,046 7,825 9,489 Liability for collateral Level 2 1,096 1,096 914 914 Liabilities held for sale (2) Level 3 8,099 8,950 8,130 9,424 (1) Represents the amounts reported on the Condensed Consolidated Statements of Financial Position. (2) Includes certain liabilities for collateral measured at Level 2 fair value as of March 31, 2021 and December 31, 2020 . |
Derivative Financial Instrume_2
Derivative Financial Instruments (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
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, 2021 ($ 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 Futures Other assets n/a 614 $ — $ — $ — Equity and index contracts Options Other investments n/a 59 4 4 — Futures Other assets n/a 1,142 1 1 — Total return index contracts Total return swap agreements – fixed income Other investments $ 100 n/a — — — Foreign currency contracts Foreign currency forwards Other investments 20 n/a — — — Embedded derivative financial instruments Other embedded derivative financial instruments Other investments 750 n/a — — — Credit default contracts Credit default swaps – buying protection Other investments 33 n/a (2) — (2) Credit default swaps – selling protection Other investments 900 n/a 18 18 — Assets held for sale 15 2,485 155 155 — Total asset derivatives $ 1,818 4,300 $ 176 $ 178 $ (2) Liability derivatives Derivatives not designated as accounting hedging instruments Futures Other liabilities & accrued expenses n/a 3,560 $ (1) $ — $ (1) Equity and index contracts Futures Other liabilities & accrued expenses n/a 215 — — — Foreign currency contracts Foreign currency forwards Other liabilities & accrued expenses $ 543 n/a 5 17 (12) Credit default contracts Credit default swaps – buying protection Other liabilities & accrued expenses 100 n/a (7) — (7) Credit default swaps – selling protection Other liabilities & accrued expenses 5 n/a — — — Liabilities held for sale 2,340 2,670 (553) 7 (560) Total liability derivatives 2,988 6,445 (556) $ 24 $ (580) Total derivatives $ 4,806 10,745 $ (380) (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, 2020 ($ in millions, except number of contracts) Volume 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 Futures Other assets n/a 290 $ — $ — $ — Equity and index contracts Options Other investments n/a 56 6 6 — Futures Other assets n/a 905 1 1 — Foreign currency contracts Foreign currency forwards Other investments $ 291 n/a 4 9 (5) Embedded derivative financial instruments Other embedded derivative financial instruments Other investments 750 n/a — — — Credit default contracts Credit default swaps – buying protection Other investments 60 n/a (3) — (3) Credit default swaps – selling protection Other investments 750 n/a 13 13 — Assets held for sale 158 3,189 185 189 (4) Total asset derivatives $ 2,009 4,440 $ 206 $ 218 $ (12) Liability derivatives Derivatives not designated as accounting hedging instruments Interest rate contracts Futures Other liabilities & accrued expenses n/a 705 $ — $ — $ — Equity and index contracts Futures Other liabilities & accrued expenses n/a 666 — — — Total return index contracts Total return swap agreements – fixed income Other liabilities & accrued expenses $ 50 n/a — — — Foreign currency contracts Foreign currency forwards Other liabilities & accrued expenses 250 n/a (9) 1 (10) Credit default contracts Credit default swaps – buying protection Other liabilities & accrued expenses 638 n/a (16) — (16) Credit default swaps – selling protection Other liabilities & accrued expenses 4 n/a — — — Liabilities held for sale 2,240 2,737 (630) 1 (631) Total liability derivatives 3,182 4,108 (655) $ 2 $ (657) Total derivatives $ 5,191 8,548 $ (449) |
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, 2021 Asset derivatives $ 17 $ (19) $ 2 $ — $ — $ — Liability derivatives (15) 19 (6) (2) — (2) December 31, 2020 Asset derivatives $ 10 $ (9) $ — $ 1 $ — $ 1 Liability derivatives (19) 9 9 (1) — (1) (1) All OTC derivatives are subject to enforceable master netting agreements. |
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) Operating costs and expenses Total gain (loss) recognized in net income on derivatives Three months ended March 31, 2021 Interest rate contracts $ (1) $ — $ (1) Equity and index contracts (2) 16 14 Foreign currency contracts 10 — 10 Credit default contracts 4 — 4 Total $ 11 $ 16 $ 27 Three months ended March 31, 2020 Interest rate contracts $ 35 $ — $ 35 Equity and index contracts 33 (45) (12) Foreign currency contracts 25 — 25 Credit default contracts (10) — (10) Total return swaps - fixed income (9) — (9) Total return swaps - equity index 4 — 4 Total $ 78 $ (45) $ 33 |
Counterparty credit exposure by counterparty credit rating | OTC derivatives counterparty credit exposure by counterparty credit rating ($ in millions) March 31, 2021 December 31, 2020 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+ 1 $ 189 $ 8 $ — 1 $ 186 $ 4 $ — A 1 149 2 — — — — — Total 2 $ 338 $ 10 $ — 1 $ 186 $ 4 $ — (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. |
Derivative instruments with credit features in a liability position, including fair value of assets and collateral netted against the liability | ($ in millions) March 31, 2021 December 31, 2020 Gross liability fair value of contracts containing credit-risk-contingent features $ 13 $ 19 Gross asset fair value of contracts containing credit-risk-contingent features and subject to MNAs (7) (6) Collateral posted under MNAs for contracts containing credit-risk-contingent features (4) (13) Maximum amount of additional exposure for contracts with credit-risk-contingent features if all features were triggered concurrently $ 2 $ — |
Schedule of derivative CDS notional amount by credit rating and fair value of protection sold | CDS notional amounts by credit rating and fair value of protection sold ($ in millions) Notional amount AAA AA A BBB BB and lower Total Fair value March 31, 2021 Single name Corporate debt $ — $ — $ — $ — $ 5 $ 5 $ — Index Corporate debt 7 14 179 610 90 900 18 Total $ 7 $ 14 $ 179 $ 610 $ 95 $ 905 $ 18 December 31, 2020 Single name Corporate debt $ — $ — $ — $ — $ 4 $ 4 $ — Index Corporate debt 6 12 156 492 84 750 13 Total $ 6 $ 12 $ 156 $ 492 $ 88 $ 754 $ 13 |
Variable Interest Entities (Tab
Variable Interest Entities (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of variable interest entities | Assets and liabilities of consolidated VIEs ($ in millions) March 31, 2021 Assets Investments Fixed income securities, at fair value (amortized cost, net $286) $ 281 Short-term, at fair value (amortized cost $61) 61 Investments 342 Cash 8 Premium installment and other receivables, net 43 Reinsurance recoverables, net 112 Other assets 109 Total assets 614 Liabilities Reserve for property and casualty insurance claims and claims expense 223 Unearned premiums 189 Other liabilities and expenses 229 Total liabilities $ 641 |
Reserve for Property and Casu_2
Reserve for Property and Casualty Insurance Claims and Claims Expense (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
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) 2021 2020 Balance as of January 1 $ 27,610 $ 27,712 Less recoverables (1) (7,033) (6,912) Net balance as of January 1 20,577 20,800 National General acquisition as of January 4, 2021 1,797 — Incurred claims and claims expense related to: Current year 6,284 5,333 Prior years (241) 8 Total incurred 6,043 5,341 Claims and claims expense paid related to: Current year (2,541) (2,352) Prior years (3,731) (3,554) Total paid (6,272) (5,906) Net balance as of March 31 22,145 20,235 Plus recoverables 9,269 6,913 Balance as of March 31 $ 31,414 $ 27,148 (1) Recoverables comprises reinsurance and indemnification recoverables. Prior year reserve reestimates included in claims and claims expense (1) Three months ended March 31, Non-catastrophe losses Catastrophe losses Total ($ in millions) 2021 2020 2021 (2) (3) 2020 2021 2020 Auto $ (17) $ 22 $ (19) $ (9) $ (36) $ 13 Homeowners 5 1 (208) (8) (203) (7) Other personal lines — (2) (18) (4) (18) (6) Commercial lines 13 5 2 1 15 6 Run-off Property-Liability 1 2 — — 1 2 Total prior year reserve reestimates $ 2 $ 28 $ (243) $ (20) $ (241) $ 8 (1) Favorable reserve reestimates are shown in parentheses. (2) Includes approximately $150 million of estimated recoveries related to Nationwide Aggregate Reinsurance Program cover for aggregate catastrophe losses occurring between April 1, 2020 and March 31, 2021, which primarily impacted homeowners reestimates. (3) Includes approximately $110 million favorable subrogation settlements arising from the Woolsey wildfire, which primarily impacted homeowners reestimates. |
Reinsurance and indemnificati_2
Reinsurance and indemnification (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Reinsurance Disclosures [Abstract] | |
Schedule of reductions to costs and expenses due to reinsurance ceded amounts | Effects of reinsurance ceded and indemnification programs on property and casualty premiums earned and accident and health insurance premiums and contract charges ($ in millions) Three months ended March 31, 2021 2020 Property and casualty insurance premiums earned $ (508) $ (289) Accident and health insurance premiums and contract charges (24) (3) Effects of reinsurance ceded and indemnification programs on property and casualty insurance claims and claims expense and accident and health insurance policy benefits ($ in millions) Three months ended March 31, 2021 2020 Property and casualty insurance claims and claims expense (1) (2) $ (1,593) $ (131) Accident and health insurance policy benefits (29) (6) (1) Includes approximately $955 million of ceded losses, net of approximately $75 million of reinstatement premiums, related to the Nationwide Reinsurance Program for the three months ended March 31, 2021. |
Schedule of reinsurance recoverable for paid and unpaid claims | Reinsurance and indemnification recoverables Reinsurance and indemnification recoverables, net ($ in millions) March 31, 2021 December 31, 2020 Property and casualty Paid and due from reinsurers and indemnitors $ 256 $ 101 Unpaid losses estimated (including IBNR) 9,269 7,033 Total property and casualty $ 9,525 $ 7,134 Allstate Health and Benefits 120 81 Total $ 9,645 $ 7,215 |
Rollforward of credit loss allowance for reinsurance recoverables | Rollforward of credit loss allowance for reinsurance recoverables ($ in millions) Three months ended March 31, 2021 2020 Property and casualty (1) (2) Beginning balance $ (59) $ (60) (Increase) decrease in the provision for credit losses (1) 1 Ending balance $ (60) $ (59) Allstate Health and Benefits Beginning balance $ (1) $ (1) Increase in the provision for credit losses — — Write-offs — — Ending balance $ (1) $ (1) (1) Primarily related to Run-off Property-Liability reinsurance ceded. (2) Indemnification recoverables are considered collectible based on the industry pool and facility enabling legislation. |
Company Restructuring (Tables)
Company Restructuring (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
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, 2020 $ 72 $ — $ 72 Expense incurred 2 53 55 Adjustments to liability (4) — (4) Payments and non-cash charges (29) (53) (82) Restructuring liability as of March 31, 2021 $ 41 $ — $ 41 |
Benefit Plans (Tables)
Benefit Plans (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
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) 2021 2020 Pension benefits Service cost $ 26 $ 28 Interest cost 46 56 Expected return on plan assets (117) (104) Amortization of prior service credit (13) (14) Costs and expenses (58) (34) Remeasurement of projected benefit obligation (512) (116) Remeasurement of plan assets 221 434 Remeasurement (gains) losses (291) 318 Pension net (benefit) cost $ (349) $ 284 Postretirement benefits Service cost $ — $ 1 Interest cost 2 3 Amortization of prior service credit (6) (1) Costs and expenses (4) 3 Remeasurement of projected benefit obligation (19) — Remeasurement of plan assets — — Remeasurement (gains) losses (19) — Postretirement net (benefit) cost $ (23) $ 3 Pension and postretirement benefits Costs and expenses $ (62) $ (31) Remeasurement (gains) losses (310) 318 Total net (benefit) cost $ (372) $ 287 Differences between expected and actual returns on plan assets and changes in assumptions affect the Company’s pension and other postretirement obligations, plan assets and expenses. Pension and other postretirement service cost, interest cost, expected return on plan assets and amortization of prior service credit are reported in property and casualty insurance claims and claims expense, operating costs and expenses, net investment income and (if applicable) restructuring and related charges on the Condensed Consolidated Statement of Operations. Pension and postretirement benefits remeasurement gains and losses Three months ended March 31, ($ in millions) 2021 2020 Remeasurement of projected benefit obligation (gains) losses: Discount rate $ (417) $ (36) Other assumptions (114) (80) Remeasurement of plan assets (gains) losses 221 434 Remeasurement (gains) losses $ (310) $ 318 |
Supplemental Cash Flow Inform_2
Supplemental Cash Flow Information (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Supplemental Cash Flow Information [Abstract] | |
Schedule of supplemental cash flow information from collateralized securities received | ($ in millions) Three months ended March 31, 2021 2020 Net change in proceeds managed Net change in short-term investments $ (183) $ 370 Operating cash flow (used) provided (183) 370 Net change in cash 1 — Net change in proceeds managed $ (182) $ 370 Cash flows from operating activities Net change in liabilities Liabilities for collateral, beginning of period $ (914) $ (1,298) Liabilities for collateral, end of period (1,096) (928) Operating cash flow provided (used) $ 182 $ (370) |
Other Comprehensive Income (Tab
Other Comprehensive Income (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
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, 2021 2020 Pre-tax Tax After-tax Pre-tax Tax After-tax Unrealized net holding gains and losses arising during the period, net of related offsets $ (1,718) $ 364 $ (1,354) $ (1,433) $ 303 $ (1,130) Less: reclassification adjustment of realized capital gains and losses 185 (39) 146 287 (60) 227 Unrealized net capital gains and losses (1,903) 403 (1,500) (1,720) 363 (1,357) Unrealized foreign currency translation adjustments 43 (9) 34 (49) 10 (39) Unamortized pension and other postretirement prior service credit (1) (19) 4 (15) 6 (2) 4 Other comprehensive (loss) income $ (1,879) $ 398 $ (1,481) $ (1,763) $ 371 $ (1,392) (1) Represents prior service credits reclassified out of other comprehensive income and amortized into operating costs and expenses. |
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, 2021 | Mar. 31, 2020 | |
Numerator: | ||
Net income from continuing operations | $ 2,406 | $ 837 |
Less: Net loss attributable to noncontrolling interest | (6) | 0 |
Net income from continuing operations attributable to Allstate | 2,412 | 837 |
Less: Preferred stock dividends | 27 | 36 |
Net income from continuing operations applicable to common shareholders | 2,385 | 801 |
Loss from discontinued operations, net of tax | (3,793) | (288) |
Net (loss) income applicable to common shareholders | $ (1,408) | $ 513 |
Denominator: | ||
Weighted average common shares - Basic (in shares) | 302.5 | 317.4 |
Effect of dilutive potential common shares: | ||
Stock options (in shares) | 2.5 | 3.3 |
Restricted stock units (non-participating) and performance stock awards (in shares) | 1.4 | 1.7 |
Weighted average common and dilutive potential common shares outstanding (in shares) | 306.4 | 322.4 |
Basic | ||
Earnings per common share - Continuing operations basic (in dollars per share) | $ 7.88 | $ 2.52 |
Earnings per common share - Discontinued operations basic (in dollars per share) | (12.53) | (0.90) |
Earnings per common share - Basic (in dollars per share) | (4.65) | 1.62 |
Diluted | ||
Earnings per common share - Continuing operations diluted (in dollars per share) | 7.78 | 2.48 |
Earnings per common share - Discontinued operations diluted (in dollars per share) | (12.38) | (0.89) |
Earnings per common share - Diluted (in dollars per share) | $ (4.60) | $ 1.59 |
Anti-dilutive options excluded from diluted earnings per common share (in shares) | 2.2 | 0.8 |
Acquisition and Disposition - A
Acquisition and Disposition - Assets and liabilities recognized in acquisition (Details) - USD ($) $ in Millions | Mar. 31, 2021 | Jan. 04, 2021 | Dec. 31, 2020 |
Assets | |||
Goodwill | $ 3,350 | $ 2,369 | |
National General Holdings Corp. | |||
Assets | |||
Investments | $ 4,957 | ||
Cash | 402 | ||
Premiums and other receivables, net | 1,545 | ||
Deferred acquisition costs (value of business acquired) | 317 | ||
Reinsurance recoverables, net | 1,219 | ||
Intangible assets | 1,199 | ||
Other assets | 734 | ||
Goodwill | 980 | ||
Total assets | 11,353 | ||
Liabilities | |||
Reserve for property and casualty insurance claims and claims expense | 2,774 | ||
Reserve for future policy benefits | 189 | ||
Unearned premiums | 2,245 | ||
Reinsurance payable | 364 | ||
Debt | 592 | ||
Deferred tax liabilities | 177 | ||
Other liabilities | 701 | ||
Total liabilities | $ 7,042 |
Acquisition and Disposition - I
Acquisition and Disposition - Intangible asset by type (Details) - National General Holdings Corp. $ in Millions | Jan. 04, 2021USD ($) |
Business Acquisition [Line Items] | |
Intangible assets | $ 1,199 |
Distribution and customer relationships | |
Business Acquisition [Line Items] | |
Intangible assets | 795 |
Trade names | |
Business Acquisition [Line Items] | |
Intangible assets | 102 |
Licenses | |
Business Acquisition [Line Items] | |
Intangible assets | 97 |
Technology and other | |
Business Acquisition [Line Items] | |
Intangible assets | $ 205 |
Acquisition and Disposition - N
Acquisition and Disposition - Narrative (Details) - USD ($) $ / shares in Units, $ in Millions | Mar. 15, 2021 | Feb. 03, 2021 | Jan. 26, 2021 | Jan. 04, 2021 | Mar. 31, 2021 | Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2021 | Mar. 29, 2021 | Dec. 31, 2020 |
Business Acquisition [Line Items] | ||||||||||
Goodwill | $ 3,350 | $ 3,350 | $ 2,369 | |||||||
Long-term debt | 7,996 | 7,996 | 7,825 | |||||||
Amortization of intangible assets | 53 | $ 28 | ||||||||
Redemption of preferred stock | $ 250 | |||||||||
Proceeds from affiliates | $ 2,800 | |||||||||
Definitive agreement with Wilton Reassurance | $ 220 | |||||||||
Loss on disposition of operations | $ 3,998 | $ 0 | ||||||||
Noncumulative Preferred Stock | Series A | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Preferred stock, redemption price par value (in dollars per share) | $ 0.01 | $ 0.01 | ||||||||
Preferred stock, dividend rate, percentage | 7.50% | |||||||||
Noncumulative Preferred Stock | Series B | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Preferred stock, redemption price par value (in dollars per share) | $ 0.01 | 0.01 | ||||||||
Preferred stock, dividend rate, percentage | 7.50% | |||||||||
Non-Cumulative Convertible Preferred Stock | Series D | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Preferred stock, redemption price par value (in dollars per share) | $ 0.01 | $ 0.01 | ||||||||
Discontinued Operations, Held-for-sale | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Amortized cost, net | $ 23,511 | $ 23,511 | 21,417 | |||||||
Equity securities, at fair value, cost | 1,191 | 1,191 | 1,113 | |||||||
Other short term Investments, amortized cost | 1,652 | 1,652 | $ 993 | |||||||
Subordinated Debt | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Repaid of subordinated notes | $ 72 | $ 100 | ||||||||
Subsequent acquisition (in percentage) | 7.625% | |||||||||
Long-term debt | $ 417 | $ 417 | ||||||||
Senior Notes | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Subsequent acquisition (in percentage) | 6.75% | 6.75% | ||||||||
National General Holdings Corp. | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Goodwill | $ 980 | |||||||||
Purchase accounting fair value adjustment | $ 67 | |||||||||
Amortization of intangible assets | 23 | |||||||||
Amortization expense for the remainder of 2021 | $ 228 | 228 | ||||||||
Amortization expense of present value of future profits | 134 | |||||||||
Fair value purchase accounting adjustments, increase in reserves | 74 | |||||||||
Fair value purchase accounting adjustments, reduction in investments | 13 | |||||||||
Fair value purchase accounting adjustments, increase in current and deferred tax liabilities | 98 | |||||||||
Business acquisition, transaction costs | 22 | $ 22 | ||||||||
National General Holdings Corp. | Forecast | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Amortization expense of present value of future profits | $ 183 | |||||||||
National General Holdings Corp. | Minimum | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Finite-lived intangible asset, useful life (in years) | 3 years | 6 months | ||||||||
National General Holdings Corp. | Maximum | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Finite-lived intangible asset, useful life (in years) | 10 years | 12 months | ||||||||
National General Holdings Corp. | Allstate Protection | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Goodwill | $ 616 | |||||||||
Present value of future profits | $ 317 | $ 317 | ||||||||
National General Holdings Corp. | Protection Services | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Goodwill | 29 | |||||||||
National General Holdings Corp. | Allstate Health and Benefits | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Goodwill | $ 335 |
Acquisition and Disposition -_2
Acquisition and Disposition - Amortization expense (Details) - National General Holdings Corp. $ in Millions | Jan. 04, 2021USD ($) |
Business Acquisition [Line Items] | |
2022 | $ 218 |
2023 | 185 |
2024 | 135 |
2025 | 103 |
2026 | 70 |
Thereafter | 140 |
Total amortization | $ 851 |
Acquisition and Disposition - F
Acquisition and Disposition - Financial results from discontinued operations (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Costs and expenses | ||
Income tax expense (benefit) | $ 370 | $ 82 |
Loss from discontinued operations, net of tax | (3,793) | (288) |
Loss from discontinued operations, net of tax | (3,793) | (288) |
Discontinued Operations, Held-for-sale | ||
Revenues | ||
Life premiums and contract charges | 340 | 335 |
Net investment income | 439 | 175 |
Realized capital gains (losses) | 79 | (300) |
Total revenues | 858 | 210 |
Costs and expenses | ||
Life contract benefits | 410 | 360 |
Interest credited to contractholder funds | 85 | 123 |
Amortization of DAC | 36 | 36 |
Operating costs and expenses | 55 | 61 |
Restructuring and related charges | 19 | 1 |
Total costs and expenses | 605 | 581 |
Amortization of deferred gain on reinsurance | 2 | 1 |
Income (loss) from discontinued operations before income tax expense | 255 | (370) |
Income tax expense (benefit) | 50 | (82) |
Loss from discontinued operations, net of tax | 205 | (288) |
Loss on disposition of operations | (4,418) | 0 |
Income tax benefit | (420) | 0 |
Loss on disposition, net of tax | (3,998) | 0 |
Loss from discontinued operations, net of tax | $ 205 | $ (288) |
Acquisition and Disposition - M
Acquisition and Disposition - Major classes of assets and liabilities to be transferred to buyer (Details) - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 |
Investments | ||
Assets held for sale | $ 36,829 | $ 42,131 |
Liabilities | ||
Liabilities held for sale | 33,383 | 33,325 |
Discontinued Operations, Held-for-sale | ||
Investments | ||
Fixed income securities, at fair value (amortized cost, net $23,511 and $21,417) | 25,073 | 23,789 |
Equity securities, at fair value (cost $1,191 and $1,113) | 1,643 | 1,542 |
Mortgage loans, net | 3,062 | 3,329 |
Limited partnership interests | 1,942 | 3,046 |
Short-term, at fair value (amortized cost $1,652 and $993) | 1,652 | 993 |
Other, net | 936 | 1,998 |
Total investments | 34,308 | 34,697 |
Cash | 89 | 66 |
Deferred policy acquisitions costs | 1,039 | 925 |
Reinsurance recoverables, net | 1,982 | 2,005 |
Accrued investment income | 248 | 229 |
Other assets | 236 | 865 |
Separate accounts | 3,339 | 3,344 |
Assets held for sale | 41,241 | 42,131 |
Less: loss accrual | 4,412 | 0 |
Assets held for sale | 36,829 | 42,131 |
Liabilities | ||
Reserve for future policy benefits | 11,581 | 11,740 |
Contractholder funds | 16,112 | 16,356 |
Deferred income taxes | 857 | 973 |
Other liabilities and accrued expenses | 1,494 | 912 |
Separate accounts | 3,339 | 3,344 |
Liabilities held for sale | $ 33,383 | $ 33,325 |
Acquisition and Disposition - C
Acquisition and Disposition - Cash flows from discontinued operations (Details) - Discontinued Operations, Held-for-sale - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Net cash provided by operating activities from discontinued operations | $ 64 | $ 111 |
Net cash provided by investing activities from discontinued operations | $ 88 | $ 85 |
Reportable Segments - Financial
Reportable Segments - Financial performance (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Segment Reporting Information | ||
Adjusted net income | $ 731 | $ (501) |
Net investment income | 708 | 246 |
Realized capital gains (losses) | 426 | (162) |
Pension and other postretirement remeasurement (gains) losses | (310) | 318 |
Business combination expenses and amortization of purchased intangibles | (56) | (27) |
Income tax expense | (622) | (196) |
Loss from discontinued operations | (4,163) | (370) |
Income tax benefit from discontinued operations | (370) | (82) |
Loss from discontinued operations, net of tax | (3,793) | (288) |
Less: Net loss attributable to noncontrolling interest | (6) | 0 |
Net (loss) income applicable to common shareholders | (1,408) | 513 |
Allstate Protection | ||
Segment Reporting Information | ||
Underwriting income (loss) | 1,660 | 1,351 |
Run-off Property-Liability | ||
Segment Reporting Information | ||
Underwriting income (loss) | (3) | (3) |
Protection Services | ||
Segment Reporting Information | ||
Adjusted net income | 49 | 37 |
Allstate Health and Benefits | ||
Segment Reporting Information | ||
Adjusted net income | 65 | 24 |
Net investment income | 19 | 20 |
Realized capital gains (losses) | 2 | (14) |
Corporate and Other | ||
Segment Reporting Information | ||
Adjusted net income | (123) | (107) |
Property-Liability | ||
Segment Reporting Information | ||
Net investment income | 673 | 202 |
Realized capital gains (losses) | $ 404 | $ (103) |
Reportable Segments - Revenue i
Reportable Segments - Revenue information (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Segment Reporting Information | ||
Net investment income | $ 708 | $ 246 |
Realized capital gains (losses) | 426 | (162) |
Consolidated revenues | 12,451 | 9,866 |
Property-Liability | ||
Segment Reporting Information | ||
Property and casualty insurance premiums | 9,896 | 8,881 |
Net investment income | 673 | 202 |
Realized capital gains (losses) | 404 | (103) |
Consolidated revenues | 11,358 | 9,193 |
Property-Liability | Auto | ||
Segment Reporting Information | ||
Property and casualty insurance premiums | 6,809 | 6,155 |
Property-Liability | Homeowners | ||
Segment Reporting Information | ||
Property and casualty insurance premiums | 2,392 | 2,037 |
Property-Liability | Other personal lines | ||
Segment Reporting Information | ||
Property and casualty insurance premiums | 505 | 471 |
Property-Liability | Commercial lines | ||
Segment Reporting Information | ||
Property and casualty insurance premiums | 190 | 218 |
Allstate Protection | ||
Segment Reporting Information | ||
Property and casualty insurance premiums | 9,896 | 8,881 |
Run-off Property-Liability | ||
Segment Reporting Information | ||
Property and casualty insurance premiums | 0 | 0 |
Protection Services | ||
Segment Reporting Information | ||
Intersegment premiums and service fees | 41 | 38 |
Net investment income | 10 | 10 |
Realized capital gains (losses) | 10 | (24) |
Consolidated revenues | 562 | 430 |
Protection Services | Protection plans | ||
Segment Reporting Information | ||
Insurance premiums, commissions and fees | 260 | 206 |
Protection Services | Roadside assistance | ||
Segment Reporting Information | ||
Insurance premiums, commissions and fees | 47 | 51 |
Protection Services | Finance and insurance products | ||
Segment Reporting Information | ||
Insurance premiums, commissions and fees | 104 | 97 |
Allstate Health and Benefits | ||
Segment Reporting Information | ||
Net investment income | 19 | 20 |
Realized capital gains (losses) | 2 | (14) |
Consolidated revenues | 556 | 288 |
Allstate Health and Benefits | Employer voluntary benefits | ||
Segment Reporting Information | ||
Insurance premiums, commissions and fees | 263 | 282 |
Allstate Health and Benefits | Group health | ||
Segment Reporting Information | ||
Insurance premiums, commissions and fees | 83 | 0 |
Allstate Health and Benefits | Individual accident and health | ||
Segment Reporting Information | ||
Insurance premiums, commissions and fees | 109 | 0 |
Operating Segments | Property-Liability | ||
Segment Reporting Information | ||
Insurance premiums, commissions and fees | 385 | 213 |
Operating Segments | Protection Services | ||
Segment Reporting Information | ||
Insurance premiums, commissions and fees | 90 | 52 |
Operating Segments | Allstate Health and Benefits | ||
Segment Reporting Information | ||
Insurance premiums, commissions and fees | 80 | 0 |
Operating Segments | Corporate and Other | ||
Segment Reporting Information | ||
Net investment income | 6 | 14 |
Realized capital gains (losses) | 10 | (21) |
Consolidated revenues | 16 | (7) |
Intersegment Eliminations | ||
Segment Reporting Information | ||
Consolidated revenues | $ (41) | $ (38) |
Investments - Portfolio composi
Investments - Portfolio composition (Details) - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 |
Investments [Abstract] | ||
Fixed income securities, at fair value | $ 40,594 | $ 42,565 |
Equity securities, at fair value | 3,154 | 3,168 |
Mortgage loans, net | 902 | 746 |
Limited partnership interests | 6,367 | 4,563 |
Short-term investments, at fair value | 6,017 | 6,807 |
Other, net | 3,042 | 1,691 |
Total | $ 60,076 | $ 59,540 |
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, 2021 | Dec. 31, 2020 |
Schedule of Available for Sale Securities | ||
Amortized cost, net | $ 39,437 | $ 40,034 |
Gross unrealized, Gains | 1,409 | 2,563 |
Gross unrealized, Losses | (252) | (32) |
Fixed income securities, at fair value | 40,594 | 42,565 |
U.S. government and agencies | ||
Schedule of Available for Sale Securities | ||
Amortized cost, net | 3,103 | 2,058 |
Gross unrealized, Gains | 26 | 50 |
Gross unrealized, Losses | (19) | (1) |
Fixed income securities, at fair value | 3,110 | 2,107 |
Municipal | ||
Schedule of Available for Sale Securities | ||
Amortized cost, net | 7,226 | 7,100 |
Gross unrealized, Gains | 310 | 480 |
Gross unrealized, Losses | (36) | (2) |
Fixed income securities, at fair value | 7,500 | 7,578 |
Corporate | ||
Schedule of Available for Sale Securities | ||
Amortized cost, net | 27,145 | 29,057 |
Gross unrealized, Gains | 1,045 | 1,986 |
Gross unrealized, Losses | (187) | (26) |
Fixed income securities, at fair value | 28,003 | 31,017 |
Foreign government | ||
Schedule of Available for Sale Securities | ||
Amortized cost, net | 977 | 921 |
Gross unrealized, Gains | 16 | 37 |
Gross unrealized, Losses | (8) | 0 |
Fixed income securities, at fair value | 985 | 958 |
ABS | ||
Schedule of Available for Sale Securities | ||
Amortized cost, net | 934 | 840 |
Gross unrealized, Gains | 11 | 9 |
Gross unrealized, Losses | (2) | (3) |
Fixed income securities, at fair value | 943 | 846 |
MBS | ||
Schedule of Available for Sale Securities | ||
Amortized cost, net | 52 | 58 |
Gross unrealized, Gains | 1 | 1 |
Gross unrealized, Losses | 0 | 0 |
Fixed income securities, at fair value | $ 53 | $ 59 |
Investments - Scheduled maturit
Investments - Scheduled maturities for fixed income securities (Details) - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 |
Amortized cost, net | ||
Due in one year or less | $ 1,279 | |
Due after one year through five years | 18,216 | |
Due after five years through ten years | 13,464 | |
Due after ten years | 5,492 | |
Subtotal | 38,451 | |
ABS and MBS | 986 | |
Amortized cost, net | 39,437 | $ 40,034 |
Fair value | ||
Due in one year or less | 1,291 | |
Due after one year through five years | 18,810 | |
Due after five years through ten years | 13,818 | |
Due after ten years | 5,679 | |
Subtotal | 39,598 | |
ABS and MBS | 996 | |
Total | $ 40,594 | $ 42,565 |
Investments - Net investment in
Investments - Net investment income (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Net Investment Income: | ||
Investment income, before expense | $ 745 | $ 282 |
Investment expense | (37) | (36) |
Net investment income | 708 | 246 |
Fixed income securities | ||
Net Investment Income: | ||
Investment income, before expense | 301 | 298 |
Equity securities | ||
Net Investment Income: | ||
Investment income, before expense | 14 | 10 |
Mortgage loans | ||
Net Investment Income: | ||
Investment income, before expense | 10 | 9 |
Limited partnership interests | ||
Net Investment Income: | ||
Investment income, before expense | 378 | (77) |
Short-term investments | ||
Net Investment Income: | ||
Investment income, before expense | 1 | 11 |
Other | ||
Net Investment Income: | ||
Investment income, before expense | $ 41 | $ 31 |
Investments - Realized capital
Investments - Realized capital gains and losses by asset type (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Realized capital gains and losses by asset type | ||
Realized capital gains (losses) | $ 426 | $ (162) |
Fixed income securities | ||
Realized capital gains and losses by asset type | ||
Realized capital gains (losses) | 183 | 374 |
Equity securities | ||
Realized capital gains and losses by asset type | ||
Realized capital gains (losses) | 164 | (510) |
Mortgage loans | ||
Realized capital gains and losses by asset type | ||
Realized capital gains (losses) | 6 | (10) |
Limited partnership interests | ||
Realized capital gains and losses by asset type | ||
Realized capital gains (losses) | 4 | (86) |
Derivatives | ||
Realized capital gains and losses by asset type | ||
Realized capital gains (losses) | 11 | 78 |
Other | ||
Realized capital gains and losses by asset type | ||
Realized capital gains (losses) | $ 58 | $ (8) |
Investments - Realized capita_2
Investments - Realized capital gains and losses by transaction type (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Investments [Abstract] | ||
Sales | $ 246 | $ 388 |
Credit Losses | 2 | (37) |
Valuation of equity investments | 167 | (591) |
Valuation and settlements of derivative instruments | 11 | 78 |
Realized capital gains (losses) | $ 426 | $ (162) |
Investments - Gross realized ga
Investments - Gross realized gains (losses) on sales of fixed income securities (Details) - Assets held for sale - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Schedule of Available for Sale Securities | ||
Gross realized gains | $ 245 | $ 435 |
Gross realized losses | $ (64) | $ (59) |
Investments - Net appreciation
Investments - Net appreciation (decline) recognized in net income (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Debt and Equity Securities, FV-NI [Line Items] | ||
Total | $ 266 | $ (445) |
Equity securities | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Total | 125 | (417) |
Limited partnership interests carried at fair value | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Total | $ 141 | $ (28) |
Investments - OTTI losses by as
Investments - OTTI losses by asset type (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Realized capital gains and losses by asset type | ||
Fixed income securities | $ 2 | $ (37) |
Total credit losses by asset type | 2 | (36) |
Commitments to fund commercial mortgage loans, bank loans and agent loans | 0 | (1) |
Fixed income securities | ||
Realized capital gains and losses by asset type | ||
Fixed income securities | 2 | (2) |
Corporate | ||
Realized capital gains and losses by asset type | ||
Fixed income securities | 1 | (1) |
ABS | ||
Realized capital gains and losses by asset type | ||
Fixed income securities | 1 | 0 |
MBS | ||
Realized capital gains and losses by asset type | ||
Fixed income securities | 0 | (1) |
Mortgage loans | ||
Realized capital gains and losses by asset type | ||
Total credit losses by asset type | 6 | (9) |
Limited partnership interests | ||
Realized capital gains and losses by asset type | ||
Total credit losses by asset type | 0 | (5) |
Bank loans, net | ||
Realized capital gains and losses by asset type | ||
Total credit losses by asset type | $ (6) | $ (20) |
Investments - Unrealized net ca
Investments - Unrealized net capital gains and losses included in AOCI (Details) - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 |
Fair value | ||
Fixed income securities, at fair value | $ 40,594 | $ 42,565 |
Short-term investments | 6,017 | 6,807 |
Derivative instruments | 0 | 0 |
Gross unrealized Gains | ||
Fixed income securities | 1,409 | 2,563 |
Short-term investments | 0 | 0 |
Derivative instruments | 0 | 0 |
Gross unrealized Losses | ||
Fixed income securities | (252) | (32) |
Short-term investments | 0 | 0 |
Derivative instruments | (3) | (3) |
Unrealized net gains (losses) | ||
Fixed income securities | 1,157 | 2,531 |
Short-term investments | 0 | 0 |
Derivative instruments | (3) | (3) |
EMA limited partnerships | (1) | (1) |
Investments classified as held for sale | 1,562 | 2,369 |
Unrealized net capital gains and losses, pre-tax | 2,715 | 4,896 |
Amount recognized for: | ||
Insurance reserves | (358) | (496) |
DAC and DSI | (228) | (364) |
Reclassification of noncontrolling interest | 4 | |
Amounts recognized | (582) | (860) |
Deferred income taxes | (453) | (856) |
Unrealized net capital gains and losses, after-tax | $ 1,680 | $ 3,180 |
Investments - Change in unreali
Investments - Change in unrealized net capital gains and losses (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2021USD ($) | |
Change in Unrealized Gain (Loss) Recognized in Accumulated Other Comprehensive Income (Loss) | |
Change in unrealized net capital gains and losses | $ (2,181) |
Amount recognized for: | |
Insurance reserves | 138 |
DAC and DSI | 136 |
Reclassification of noncontrolling interest | 4 |
Amounts recognized | 278 |
Deferred income taxes | 403 |
Increase in unrealized net capital gains and losses, after-tax | (1,500) |
EMA limited partnerships | |
Change in Unrealized Gain (Loss) Recognized in Accumulated Other Comprehensive Income (Loss) | |
Change in unrealized net capital gains and losses | 0 |
Investments classified as held for sale | |
Change in Unrealized Gain (Loss) Recognized in Accumulated Other Comprehensive Income (Loss) | |
Change in unrealized net capital gains and losses | (807) |
Fixed income securities | |
Change in Unrealized Gain (Loss) Recognized in Accumulated Other Comprehensive Income (Loss) | |
Change in unrealized net capital gains and losses | (1,374) |
Short-term investments | |
Change in Unrealized Gain (Loss) Recognized in Accumulated Other Comprehensive Income (Loss) | |
Change in unrealized net capital gains and losses | 0 |
Derivative instruments | |
Change in Unrealized Gain (Loss) Recognized in Accumulated Other Comprehensive Income (Loss) | |
Change in unrealized net capital gains and losses | $ 0 |
Investments - Carrying value fo
Investments - Carrying value for limited partnership interests (Details) - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 |
Debt and Equity Securities, FV-NI [Line Items] | ||
Limited partnership interests | $ 6,367 | $ 4,563 |
EMA limited partnerships | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Limited partnership interests | 5,004 | 3,501 |
Limited partnership interests | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Limited partnership interests | 1,363 | 1,062 |
Private equity | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Limited partnership interests | 5,230 | 3,655 |
Private equity | EMA limited partnerships | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Limited partnership interests | 3,935 | 2,667 |
Private equity | Limited partnership interests | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Limited partnership interests | 1,295 | 988 |
Real estate | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Limited partnership interests | 884 | 697 |
Real estate | EMA limited partnerships | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Limited partnership interests | 816 | 623 |
Real estate | Limited partnership interests | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Limited partnership interests | 68 | 74 |
Other investments | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Limited partnership interests | 253 | 211 |
Other investments | EMA limited partnerships | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Limited partnership interests | 253 | 211 |
Other investments | Limited partnership interests | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Limited partnership interests | $ 0 | $ 0 |
Investments - Narrative (Detail
Investments - Narrative (Details) - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 |
Investments [Line Items] | ||
Short-term investments | $ 6,017 | $ 6,807 |
Accrued investment income | 347 | 371 |
Agent loans, net | ||
Investments [Line Items] | ||
Accrued investment income | $ 2 | |
High credit quality, percentage | 85.00% | |
Allowance | $ (6) | |
Fixed income securities | ||
Investments [Line Items] | ||
Accrued investment income | 322 | 351 |
Mortgage loans | ||
Investments [Line Items] | ||
Accrued investment income | 4 | 2 |
Bank loans, net | ||
Investments [Line Items] | ||
Accrued investment income | $ 3 | $ 3 |
Investments - Other investments
Investments - Other investments by type (Details) - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 |
Investments [Line Items] | ||
Other investments | $ 3,042 | $ 1,691 |
Bank loans, net | ||
Investments [Line Items] | ||
Other investments | 1,260 | 772 |
Real estate | ||
Investments [Line Items] | ||
Other investments | 871 | 659 |
Policy loans | ||
Investments [Line Items] | ||
Other investments | 164 | 181 |
Agent loans, net | ||
Investments [Line Items] | ||
Other investments | 607 | 0 |
Derivatives | ||
Investments [Line Items] | ||
Other investments | 22 | 20 |
Other investments | ||
Investments [Line Items] | ||
Other investments | $ 118 | $ 59 |
Investments - Rollforward of cr
Investments - Rollforward of credit loss allowance for fixed income securities (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Fixed income securities | ||
Credit Losses on Fixed Income Securities | ||
Beginning balance | $ (3) | $ 0 |
Credit losses on securities for which credit losses not previously reported | 0 | (4) |
Net decreases related to credit losses previously reported | 2 | 0 |
Reduction of allowance related to sales | 0 | 0 |
Ending balance | (1) | (4) |
Fixed income securities | 1 | 4 |
Fixed income securities | Discontinued Operations, Held-for-sale | ||
Credit Losses on Fixed Income Securities | ||
Ending balance | (1) | (2) |
Fixed income securities | 1 | 2 |
Corporate | ||
Credit Losses on Fixed Income Securities | ||
Ending balance | (1) | |
Fixed income securities | 1 | |
ABS | ||
Credit Losses on Fixed Income Securities | ||
Ending balance | (1) | |
Fixed income securities | $ 1 | |
MBS | ||
Credit Losses on Fixed Income Securities | ||
Ending balance | (3) | |
Fixed income securities | $ 3 |
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, 2021USD ($)contract | Dec. 31, 2020USD ($)contract |
U.S. government and agencies | ||
Less than 12 months | ||
Number of issues | contract | 108 | 26 |
Fair value | $ 2,084 | $ 215 |
Unrealized losses | $ (19) | $ (1) |
12 months or more | ||
Number of issues | contract | 0 | 0 |
Fair value | $ 0 | $ 0 |
Unrealized losses | 0 | 0 |
Total unrealized losses | ||
Total unrealized losses | $ (19) | $ (1) |
Municipal | ||
Less than 12 months | ||
Number of issues | contract | 804 | 43 |
Fair value | $ 1,398 | $ 116 |
Unrealized losses | $ (36) | $ (2) |
12 months or more | ||
Number of issues | contract | 1 | 0 |
Fair value | $ 5 | $ 0 |
Unrealized losses | 0 | 0 |
Total unrealized losses | ||
Total unrealized losses | $ (36) | $ (2) |
Corporate | ||
Less than 12 months | ||
Number of issues | contract | 1,003 | 107 |
Fair value | $ 6,715 | $ 730 |
Unrealized losses | $ (176) | $ (21) |
12 months or more | ||
Number of issues | contract | 25 | 14 |
Fair value | $ 121 | $ 46 |
Unrealized losses | (11) | (5) |
Total unrealized losses | ||
Total unrealized losses | $ (187) | $ (26) |
Foreign government | ||
Less than 12 months | ||
Number of issues | contract | 64 | 7 |
Fair value | $ 289 | $ 7 |
Unrealized losses | $ (8) | $ 0 |
12 months or more | ||
Number of issues | contract | 0 | 0 |
Fair value | $ 0 | $ 0 |
Unrealized losses | 0 | 0 |
Total unrealized losses | ||
Total unrealized losses | $ (8) | $ 0 |
ABS | ||
Less than 12 months | ||
Number of issues | contract | 15 | 21 |
Fair value | $ 79 | $ 157 |
Unrealized losses | $ (2) | $ (2) |
12 months or more | ||
Number of issues | contract | 13 | 12 |
Fair value | $ 50 | $ 43 |
Unrealized losses | 0 | (1) |
Total unrealized losses | ||
Total unrealized losses | $ (2) | $ (3) |
MBS | ||
Less than 12 months | ||
Number of issues | contract | 15 | 11 |
Fair value | $ 2 | $ 0 |
Unrealized losses | $ 0 | $ 0 |
12 months or more | ||
Number of issues | contract | 55 | 57 |
Fair value | $ 0 | $ 0 |
Unrealized losses | 0 | 0 |
Total unrealized losses | ||
Total unrealized losses | $ 0 | $ 0 |
Fixed income securities | ||
Less than 12 months | ||
Number of issues | contract | 2,009 | 215 |
Fair value | $ 10,567 | $ 1,225 |
Unrealized losses | $ (241) | $ (26) |
12 months or more | ||
Number of issues | contract | 94 | 83 |
Fair value | $ 176 | $ 89 |
Unrealized losses | (11) | (6) |
Total unrealized losses | ||
Total unrealized losses | $ (252) | $ (32) |
Investment grade fixed income securities | ||
Less than 12 months | ||
Number of issues | contract | 1,821 | 146 |
Fair value | $ 9,206 | $ 855 |
Unrealized losses | $ (207) | $ (8) |
12 months or more | ||
Number of issues | contract | 69 | 66 |
Fair value | $ 67 | $ 45 |
Unrealized losses | (1) | 0 |
Total unrealized losses | ||
Total unrealized losses | $ (208) | $ (8) |
Below investment grade fixed income securities | ||
Less than 12 months | ||
Number of issues | contract | 188 | 69 |
Fair value | $ 1,361 | $ 370 |
Unrealized losses | $ (34) | $ (18) |
12 months or more | ||
Number of issues | contract | 25 | 17 |
Fair value | $ 109 | $ 44 |
Unrealized losses | (10) | (6) |
Total unrealized losses | ||
Total unrealized losses | $ (44) | $ (24) |
Investments - Gross unrealize_2
Investments - Gross unrealized losses by unrealized loss position and credit quality (Details) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Investment grade fixed income securities | ||
Investments [Line Items] | ||
Fixed income securities with unrealized loss position less than 20% of amortized cost, net | $ (207,000,000) | |
Fixed income securities with unrealized loss position greater than or equal to 20% of amortized cost, net | (1,000,000) | |
Total unrealized losses | 208,000,000 | $ 8,000,000 |
Below investment grade fixed income securities | ||
Investments [Line Items] | ||
Fixed income securities with unrealized loss position less than 20% of amortized cost, net | (34,000,000) | |
Fixed income securities with unrealized loss position greater than or equal to 20% of amortized cost, net | (10,000,000) | |
Total unrealized losses | 44,000,000 | 24,000,000 |
Unrealized losses having loss of less than twenty percent, less than 12 months | (30,000,000) | |
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 | 0 | |
Fixed income securities | ||
Investments [Line Items] | ||
Fixed income securities with unrealized loss position less than 20% of amortized cost, net | (241,000,000) | |
Fixed income securities with unrealized loss position greater than or equal to 20% of amortized cost, net | (11,000,000) | |
Total unrealized losses | $ 252,000,000 | $ 32,000,000 |
Investments - Mortgage loans am
Investments - Mortgage loans amortized cost by debt service coverage ratio distribution and year of origination (Details) - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 |
Debt and Equity Securities, FV-NI [Line Items] | ||
Mortgage loans, net | $ 902 | $ 746 |
Mortgage loans | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 916 | 754 |
Allowance | (14) | (8) |
Mortgage loans, net | 902 | 746 |
Mortgage loans | 2016 and prior | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 283 | |
Mortgage loans | 2017 | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 81 | |
Mortgage loans | 2018 | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 156 | |
Mortgage loans | 2019 | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 319 | |
Mortgage loans | 2020 | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 77 | |
Mortgage loans | Current | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 0 | |
Below 1.0 | Mortgage loans | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 15 | 0 |
Below 1.0 | Mortgage loans | 2016 and prior | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 15 | |
Below 1.0 | Mortgage loans | 2017 | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 0 | |
Below 1.0 | Mortgage loans | 2018 | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 0 | |
Below 1.0 | Mortgage loans | 2019 | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 0 | |
Below 1.0 | Mortgage loans | 2020 | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 0 | |
Below 1.0 | Mortgage loans | Current | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 0 | |
1.0 - 1.25 | Mortgage loans | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 75 | 46 |
1.0 - 1.25 | Mortgage loans | 2016 and prior | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 29 | |
1.0 - 1.25 | Mortgage loans | 2017 | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 0 | |
1.0 - 1.25 | Mortgage loans | 2018 | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 13 | |
1.0 - 1.25 | Mortgage loans | 2019 | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 23 | |
1.0 - 1.25 | Mortgage loans | 2020 | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 10 | |
1.0 - 1.25 | Mortgage loans | Current | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 0 | |
1.26 - 1.50 | Mortgage loans | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 295 | 201 |
1.26 - 1.50 | Mortgage loans | 2016 and prior | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 105 | |
1.26 - 1.50 | Mortgage loans | 2017 | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 36 | |
1.26 - 1.50 | Mortgage loans | 2018 | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 24 | |
1.26 - 1.50 | Mortgage loans | 2019 | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 130 | |
1.26 - 1.50 | Mortgage loans | 2020 | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 0 | |
1.26 - 1.50 | Mortgage loans | Current | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 0 | |
Above 1.50 | Mortgage loans | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 531 | $ 507 |
Above 1.50 | Mortgage loans | 2016 and prior | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 134 | |
Above 1.50 | Mortgage loans | 2017 | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 45 | |
Above 1.50 | Mortgage loans | 2018 | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 119 | |
Above 1.50 | Mortgage loans | 2019 | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 166 | |
Above 1.50 | Mortgage loans | 2020 | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 67 | |
Above 1.50 | Mortgage loans | Current | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | $ 0 |
Investments - Rollforward of _2
Investments - Rollforward of credit loss allowance for mortgage loans (Details) - Mortgage loans - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Credit Losses on Fixed Income Securities | ||
Beginning balance | $ (67) | $ (3) |
Net increases related to credit losses | 22 | (40) |
Write-offs | 0 | 0 |
Ending balance | (45) | (85) |
Discontinued Operations, Held-for-sale | ||
Credit Losses on Fixed Income Securities | ||
Ending balance | (31) | (68) |
Cumulative effect of change in accounting principle | ||
Credit Losses on Fixed Income Securities | ||
Beginning balance | $ 0 | $ (42) |
Investments - Bank loans amorti
Investments - Bank loans amortized cost by credit quality and year of origination (Details) - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 |
Schedule of Available for Sale Securities | ||
Mortgage loans, net | $ 902 | $ 746 |
Bank loans, net | ||
Schedule of Available for Sale Securities | ||
Amortized cost before allowance | 1,309 | 823 |
Allowance | (49) | (51) |
Mortgage loans, net | 1,260 | 772 |
BBB | Bank loans, net | ||
Schedule of Available for Sale Securities | ||
Amortized cost before allowance | 60 | 38 |
BB | Bank loans, net | ||
Schedule of Available for Sale Securities | ||
Amortized cost before allowance | 311 | 168 |
B | Bank loans, net | ||
Schedule of Available for Sale Securities | ||
Amortized cost before allowance | 772 | 456 |
CCC and below | Bank loans, net | ||
Schedule of Available for Sale Securities | ||
Amortized cost before allowance | 166 | $ 161 |
2016 and prior | Bank loans, net | ||
Schedule of Available for Sale Securities | ||
Amortized cost before allowance | 33 | |
2016 and prior | BBB | Bank loans, net | ||
Schedule of Available for Sale Securities | ||
Amortized cost before allowance | 0 | |
2016 and prior | BB | Bank loans, net | ||
Schedule of Available for Sale Securities | ||
Amortized cost before allowance | 9 | |
2016 and prior | B | Bank loans, net | ||
Schedule of Available for Sale Securities | ||
Amortized cost before allowance | 13 | |
2016 and prior | CCC and below | Bank loans, net | ||
Schedule of Available for Sale Securities | ||
Amortized cost before allowance | 11 | |
2017 | Bank loans, net | ||
Schedule of Available for Sale Securities | ||
Amortized cost before allowance | 123 | |
2017 | BBB | Bank loans, net | ||
Schedule of Available for Sale Securities | ||
Amortized cost before allowance | 5 | |
2017 | BB | Bank loans, net | ||
Schedule of Available for Sale Securities | ||
Amortized cost before allowance | 22 | |
2017 | B | Bank loans, net | ||
Schedule of Available for Sale Securities | ||
Amortized cost before allowance | 68 | |
2017 | CCC and below | Bank loans, net | ||
Schedule of Available for Sale Securities | ||
Amortized cost before allowance | 28 | |
2018 | Bank loans, net | ||
Schedule of Available for Sale Securities | ||
Amortized cost before allowance | 155 | |
2018 | BBB | Bank loans, net | ||
Schedule of Available for Sale Securities | ||
Amortized cost before allowance | 7 | |
2018 | BB | Bank loans, net | ||
Schedule of Available for Sale Securities | ||
Amortized cost before allowance | 30 | |
2018 | B | Bank loans, net | ||
Schedule of Available for Sale Securities | ||
Amortized cost before allowance | 86 | |
2018 | CCC and below | Bank loans, net | ||
Schedule of Available for Sale Securities | ||
Amortized cost before allowance | 32 | |
2019 | Bank loans, net | ||
Schedule of Available for Sale Securities | ||
Amortized cost before allowance | 185 | |
2019 | BBB | Bank loans, net | ||
Schedule of Available for Sale Securities | ||
Amortized cost before allowance | 11 | |
2019 | BB | Bank loans, net | ||
Schedule of Available for Sale Securities | ||
Amortized cost before allowance | 42 | |
2019 | B | Bank loans, net | ||
Schedule of Available for Sale Securities | ||
Amortized cost before allowance | 77 | |
2019 | CCC and below | Bank loans, net | ||
Schedule of Available for Sale Securities | ||
Amortized cost before allowance | 55 | |
2020 | Bank loans, net | ||
Schedule of Available for Sale Securities | ||
Amortized cost before allowance | 210 | |
2020 | BBB | Bank loans, net | ||
Schedule of Available for Sale Securities | ||
Amortized cost before allowance | 8 | |
2020 | BB | Bank loans, net | ||
Schedule of Available for Sale Securities | ||
Amortized cost before allowance | 36 | |
2020 | B | Bank loans, net | ||
Schedule of Available for Sale Securities | ||
Amortized cost before allowance | 139 | |
2020 | CCC and below | Bank loans, net | ||
Schedule of Available for Sale Securities | ||
Amortized cost before allowance | 27 | |
Current | Bank loans, net | ||
Schedule of Available for Sale Securities | ||
Amortized cost before allowance | 603 | |
Current | BBB | Bank loans, net | ||
Schedule of Available for Sale Securities | ||
Amortized cost before allowance | 29 | |
Current | BB | Bank loans, net | ||
Schedule of Available for Sale Securities | ||
Amortized cost before allowance | 172 | |
Current | B | Bank loans, net | ||
Schedule of Available for Sale Securities | ||
Amortized cost before allowance | 389 | |
Current | CCC and below | Bank loans, net | ||
Schedule of Available for Sale Securities | ||
Amortized cost before allowance | $ 13 |
Investments - Rollforward of _3
Investments - Rollforward of credit loss allowance for bank loans (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Credit Losses on Fixed Income Securities | ||
Investments | Note 5 Investments Portfolio composition ($ in millions) March 31, 2021 December 31, 2020 Fixed income securities, at fair value $ 40,594 $ 42,565 Equity securities, at fair value 3,154 3,168 Mortgage loans, net 902 746 Limited partnership interests 6,367 4,563 Short-term investments, at fair value 6,017 6,807 Other, net 3,042 1,691 Total $ 60,076 $ 59,540 Amortized cost, gross unrealized gains (losses) and fair value for fixed income securities ($ in millions) Amortized cost, net Gross unrealized Fair value Gains Losses March 31, 2021 U.S. government and agencies $ 3,103 $ 26 $ (19) $ 3,110 Municipal 7,226 310 (36) 7,500 Corporate 27,145 1,045 (187) 28,003 Foreign government 977 16 (8) 985 ABS 934 11 (2) 943 MBS 52 1 — 53 Total fixed income securities $ 39,437 $ 1,409 $ (252) $ 40,594 December 31, 2020 U.S. government and agencies $ 2,058 $ 50 $ (1) $ 2,107 Municipal 7,100 480 (2) 7,578 Corporate 29,057 1,986 (26) 31,017 Foreign government 921 37 — 958 ABS 840 9 (3) 846 MBS 58 1 — 59 Total fixed income securities $ 40,034 $ 2,563 $ (32) $ 42,565 Scheduled maturities for fixed income securities ($ in millions) March 31, 2021 Amortized cost, net Fair value Due in one year or less $ 1,279 $ 1,291 Due after one year through five years 18,216 18,810 Due after five years through ten years 13,464 13,818 Due after ten years 5,492 5,679 38,451 39,598 ABS and MBS 986 996 Total $ 39,437 $ 40,594 Actual maturities may differ from those scheduled as a result of calls and make-whole payments by the issuers. ABS and MBS are shown separately because of potential prepayment of principal prior to contractual maturity dates. Net investment income ($ in millions) Three months ended March 31, 2021 2020 Fixed income securities $ 301 $ 298 Equity securities 14 10 Mortgage loans 10 9 Limited partnership interests 378 (77) Short-term investments 1 11 Other 41 31 Investment income, before expense 745 282 Investment expense (37) (36) Net investment income $ 708 $ 246 Realized capital gains (losses) by asset type ($ in millions) Three months ended March 31, 2021 2020 Fixed income securities $ 183 $ 374 Equity securities 164 (510) Mortgage loans 6 (10) Limited partnership interests 4 (86) Derivatives 11 78 Other 58 (8) Realized capital gains (losses) $ 426 $ (162) Realized capital gains (losses) by transaction type ($ in millions) Three months ended March 31, 2021 2020 Sales $ 246 $ 388 Credit losses 2 (37) Valuation of equity investments (1) 167 (591) Valuation and settlements of derivative instruments 11 78 Realized capital gains (losses) $ 426 $ (162) (1) Includes valuation of equity securities and certain limited partnership interests where the underlying assets are predominately public equity securities. Gross realized gains (losses) on sales of fixed income securities ($ in millions) Three months ended March 31, 2021 2020 Gross realized gains $ 245 $ 435 Gross realized losses (64) (59) The following table presents the net pre-tax appreciation (decline) recognized in net income of equity securities and limited partnership interests carried at fair value that are still held as of March 31, 2021 and 2020, respectively. Net appreciation (decline) recognized in net income ($ in millions) Three months ended March 31, 2021 2020 Equity securities $ 125 $ (417) Limited partnership interests carried at fair value 141 (28) Total $ 266 $ (445) Credit losses recognized in net income ($ in millions) Three months ended March 31, 2021 2020 Assets Fixed income securities: Corporate $ 1 $ (1) ABS 1 — MBS — (1) Total fixed income securities 2 (2) Mortgage loans 6 (9) Limited partnership interests — (5) Other investments Bank loans (6) (20) Total credit losses by asset type $ 2 $ (36) Liabilities Commitments to fund commercial mortgage loans, bank loans and agent loans — (1) Total $ 2 $ (37) Unrealized net capital gains and losses included in AOCI ($ in millions) Fair value Gross unrealized Unrealized net gains (losses) March 31, 2021 Gains Losses Fixed income securities $ 40,594 $ 1,409 $ (252) $ 1,157 Short-term investments 6,017 — — — Derivative instruments — — (3) (3) Equity method of accounting (“EMA”) limited partnerships (1) (1) Investments classified as held for sale 1,562 Unrealized net capital gains and losses, pre-tax 2,715 Amounts recognized for: Insurance reserves (2) (358) DAC and DSI (3) (228) Reclassification of noncontrolling interest 4 Amounts recognized (582) Deferred income taxes (453) Unrealized net capital gains and losses, after-tax $ 1,680 December 31, 2020 Fixed income securities $ 42,565 $ 2,563 $ (32) $ 2,531 Short-term investments 6,807 — — — Derivative instruments — — (3) (3) EMA limited partnerships (1) Investments classified as held for sale 2,369 Unrealized net capital gains and losses, pre-tax 4,896 Amounts recognized for: Insurance reserves (496) DAC and DSI (364) Amounts recognized (860) Deferred income taxes (856) Unrealized net capital gains and losses, after-tax $ 3,180 (1) Unrealized net capital gains and losses for limited partnership interests represent the Company’s share of EMA limited partnerships’ OCI. Fair value and gross unrealized gains and losses are not applicable. (2) The insurance reserves adjustment represents the amount by which the reserve balance would increase if the net unrealized gains in the applicable product portfolios were realized and reinvested at lower interest rates, resulting in a premium deficiency. This adjustment primarily relates to structured settlement annuities with life contingencies (a type of immediate fixed annuity), which are now classified as held for sale. (3) The DAC and DSI adjustment balance represents the amount by which the amortization of DAC and DSI would increase or decrease if the unrealized gains or losses in the respective product portfolios were realized. This adjustment relates to life insurance products, which are now primarily classified as held for sale. Change in unrealized net capital gains (losses) ($ in millions) Three months ended March 31, 2021 Fixed income securities $ (1,374) Short-term investments — Derivative instruments — EMA limited partnerships — Investments classified as held for sale (807) Total (2,181) Amounts recognized for: Insurance reserves 138 DAC and DSI 136 Reclassification of noncontrolling interest 4 Amounts recognized 278 Deferred income taxes 403 Decrease in unrealized net capital gains and losses, after-tax $ (1,500) Carrying value for limited partnership interests ($ in millions) March 31, 2021 December 31, 2020 EMA Fair Value Total EMA Fair Value Total Private equity $ 3,935 $ 1,295 $ 5,230 $ 2,667 $ 988 $ 3,655 Real estate 816 68 884 623 74 697 Other (1) 253 — 253 211 — 211 Total (2) $ 5,004 $ 1,363 $ 6,367 $ 3,501 $ 1,062 $ 4,563 (1) Other consists of certain limited partnership interests where the underlying assets are predominately public equity and debt securities. (2) Carrying value for limited partnership interests as of March 31, 2021 i ncludes certain investments which were classified as assets held for sale as of December 31, 2020 and transferred to continuing operations in the first quarter of 2021. Short-term investments Short-term investments, including money market funds, commercial paper, U.S. Treasury bills and other short-term investments, are carried at fair value. As of March 31, 2021 and December 31, 2020, the fair value of short-term investments totaled $6.02 billion and $6.81 billion, respectively. Other investments Other investments primarily consist of bank loans, real estate, policy loans, agent loans and derivatives. Bank loans are primarily senior secured corporate loans and are carried at amortized cost, net. Policy loans are carried at unpaid principal balances. Real estate is carried at cost less accumulated depreciation. Agent loans are loans issued to exclusive Allstate agents and are carried at amortized cost, net. Derivatives are carried at fair value. Other investments by asset type ($ in millions) March 31, 2021 December 31, 2020 Bank loans, net $ 1,260 $ 772 Real estate 871 659 Policy loans 164 181 Agent loans, net 607 — Derivatives 22 20 Other 118 59 Total (1) $ 3,042 $ 1,691 (1) Other investments as of March 31, 2021 i ncludes certain real estate, agent loans and other investments which were classified as assets held for sale as of December 31, 2020 and transferred to continuing operations in the first quarter of 2021. Portfolio monitoring and credit losses Fixed income securities The Company has a comprehensive portfolio monitoring process to identify and evaluate each fixed income security that may require a credit loss allowance . 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, any existing credit loss allowance would be written-off against the amortized cost basis of the asset along with any remaining unrealized losses, with incremental losses 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 based on the best estimate of future cash flows considering past events, current conditions and reasonable and supportable forecasts. The estimated future cash flows are discounted at the security’s current effective rate and is compared to the amortized cost of the security. 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 is 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, the financial condition and future earnings potential of the issue or issuer, expected defaults, expected recoveries, the value of underlying collateral, origination vintage year, 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, 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 Company does not expect to receive cash flows sufficient to recover the entire amortized cost basis of the fixed income security, a credit loss allowance is recorded in earnings for the shortfall in expected cash flows; however, the amortized cost, net of the credit loss allowance, may not be lower than the fair value of the security. 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. When a security is sold or otherwise disposed or when the security is deemed uncollectible and written off, the Company removes amounts previously recognized in the credit loss allowance. Recoveries after write-offs are recognized when received. Accrued interest excluded from the amortized cost of fixed income securities totaled $322 million and $351 million as of March 31, 2021 and December 31, 2020 and is reported within the accrued investment income line of the Condensed Consolidated Statements of Financial Position. The Company monitors accrued interest and writes off amounts when they are not expected to be received. The Company’s portfolio monitoring process includes a quarterly review of all securities to identify instances where the fair value of a security compared to its amortized cost is below internally established thresholds. The process also includes the monitoring of other credit loss indicators such as ratings, ratings downgrades and payment defaults. The securities identified, in addition to other securities for which the Company may have a concern, are evaluated for potential credit losses using all reasonably available information relevant to the collectability or recovery of the security. Inherent in the Company’s evaluation of credit losses for these securities are assumptions and estimates about the financial condition and future earnings potential of the issue or issuer. Some of the factors that may be considered in evaluating whether a decline in fair value requires a credit loss allowance are: 1) the financial condition, near-term and long-term prospects of the issue or issuer, including relevant industry specific market conditions and trends, geographic location and implications of rating agency actions and offering prices; 2) the specific reasons that a security is in an unrealized loss position, including overall market conditions which could affect liquidity; and 3) the extent to which the fair value has been less than amortized cost. Rollforward of credit loss allowance for fixed income securities Three months ended March 31, ($ in millions) 2021 2020 Beginning balance $ (3) $ — Credit losses on securities for which credit losses not previously reported — (4) Net decreases related to credit losses previously reported 2 — Reduction of allowance related to sales — — Ending balance (1) (2) $ (1) $ (4) (1) Allowance for fixed income securities as of March 31, 2021 comprised $1 million of ABS. Allowance for fixed income securities as of March 31, 2020 comprised $1 million and $3 million of corporate bonds and MBS, respectively. (2) Includes $1 million and $2 million of credit loss allowance for fixed income securities that are classified as held for sale as of March 31, 2021 and 2020, respectively. Gross unrealized losses and fair value by type and length of time held in a continuous unrealized loss position ($ 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, 2021 Fixed income securities U.S. government and agencies 108 $ 2,084 $ (19) — $ — $ — $ (19) Municipal 804 1,398 (36) 1 5 — (36) Corporate 1,003 6,715 (176) 25 121 (11) (187) Foreign government 64 289 (8) — — — (8) ABS 15 79 (2) 13 50 — (2) MBS 15 2 — 55 — — — Total fixed income securities 2,009 $ 10,567 $ (241) 94 $ 176 $ (11) $ (252) Investment grade fixed income securities 1,821 $ 9,206 $ (207) 69 $ 67 $ (1) $ (208) Below investment grade fixed income securities 188 1,361 (34) 25 109 (10) (44) Total fixed income securities 2,009 $ 10,567 $ (241) 94 $ 176 $ (11) $ (252) December 31, 2020 Fixed income securities U.S. government and agencies 26 $ 215 $ (1) — $ — $ — $ (1) Municipal 43 116 (2) — — — (2) Corporate 107 730 (21) 14 46 (5) (26) Foreign government 7 7 — — — — — ABS 21 157 (2) 12 43 (1) (3) MBS 11 — — 57 — — — Total fixed income securities 215 $ 1,225 $ (26) 83 $ 89 $ (6) $ (32) Investment grade fixed income securities 146 $ 855 $ (8) 66 $ 45 $ — $ (8) Below investment grade fixed income securities 69 370 (18) 17 44 (6) (24) Total fixed income securities 215 $ 1,225 $ (26) 83 $ 89 $ (6) $ (32) Gross unrealized losses by unrealized loss position and credit quality as of March 31, 2021 ($ in millions) Investment grade Below investment grade Total Fixed income securities with unrealized loss position less than 20% of amortized cost, net (1) (2) $ (207) $ (34) $ (241) Fixed income securities with unrealized loss position greater than or equal to 20% of amortized cost, net (3) (4) (1) (10) (11) Total unrealized losses $ (208) $ (44) $ (252) (1) Below investment grade fixed income securities include $30 million that have been in an unrealized loss position for less than twelve months. (2) Related to securities with an unrealized loss position less than 20% of amortized cost, net, the degree of which suggests that these securities do not pose a high risk of having credit losses. (3) No below investment grade fixed income securities have been in an unrealized loss position for a period of twelve or more consecutive months. (4) Evaluated based on factors such as discounted cash flows and the financial condition and near-term and long-term prospects of the issue or issuer and were determined to have adequate resources to fulfill contractual obligations. 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. The unrealized losses are expected to reverse as the securities approach maturity. ABS and MBS 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, 2021, 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. Loans The Company establishes a credit loss allowance for mortgage loans, bank loans and agent loans when they are originated or purchased, and for unfunded commitments unless they are unconditionally cancellable by the Company. The Company uses a probability of default and loss given default model for mortgage loans and bank loans to estimate current expected credit losses that considers all relevant information available including past events, current conditions, and reasonable and supportable forecasts over the life of an asset. The Company also considers such factors as historical losses, expected prepayments and various economic factors. For mortgage loans the Company considers origination vintage year and property level information such as debt service coverage, property type, property location and collateral value. For bank loans the Company considers the credit rating of the borrower, credit spreads and type of loan. After the reasonable and supportable forecast period, the Company’s model reverts to historical loss trends. Given the less complex and homogenous nature of agent loans, the Company estimates current expected credit losses using historical loss experience over the estimated life of the loans, adjusted for current conditions, reasonable and supportable forecasts and expected prepayments. Loans are evaluated on a pooled basis when they share similar risk characteristics. The Company monitors loans through a quarterly credit monitoring process to determine when they no longer share similar risk characteristics and are to be evaluated individually when estimating credit losses. Loans are written off against their corresponding allowances when there is no reasonable expectation of recovery. If a loan recovers after a write-off, the estimate of expected credit losses includes the expected recovery. Accrual of income is suspended for loans that are in default or when full and timely collection of principal and interest payments is not probable. Accrued income receivable is monitored for recoverability and when not expected to be collected is written off through net investment income. Cash receipts on loans on non-accrual status are generally recorded as a reduction of amortized cost. Accrued interest is excluded from the amortized cost of loans and is reported within the accrued investment income line of the Condensed Consolidated Statements of Financial Position. As of March 31, 2021, accrued interest totaled $4 million, $3 million and $2 million for mortgage loans, bank loans and agent loans, respectively. As of December 31, 2020, accrued interest totaled $2 million and $3 million for mortgage loans and bank loans, respectively. Mortgage loans When it is determined a mortgage loan shall be evaluated individually, the Company uses various methods to estimate credit losses on individual loans such as using collateral value less estimated costs to sell where applicable, including when foreclosure is probable or when repayment is expected to be provided substantially through the operation or sale of the collateral and the borrower is experiencing financial difficulty. When collateral value is used, the mortgage loans may not have a credit loss allowance when the fair value of the collateral exceeds the loan’s amortized cost. An alternative approach may be utilized to estimate credit losses using the present value of the loan’s expected future repayment cash flows discounted at the loan’s current effective interest rate. Individual loan credit loss allowances are adjusted for subsequent changes in the fair value of the collateral less costs to sell, when applicable, or present value of the loan’s expected future repayment cash flows. Debt service coverage ratio is considered a key credit quality indicator when mortgage loan credit loss allowances are estimated. Debt service coverage ratio represents the amount of estimated cash flow from the property available to the borrower to meet principal and interest payment obligations. Debt service coverage ratio estimates are updated annually or more frequently if conditions are warranted based on the Company’s credit monitoring process. Mortgage loans amortized cost by debt service coverage ratio distribution and year of origination ($ in millions) March 31, 2021 December 31, 2020 2016 and prior 2017 2018 2019 2020 Current Total Total Below 1.0 $ 15 $ — $ — $ — $ — $ — $ 15 $ — 1.0 - 1.25 29 — 13 23 10 — 75 46 1.26 - 1.50 105 36 24 130 — — 295 201 Above 1.50 134 45 119 166 67 — 531 507 Amortized cost before allowance $ 283 $ 81 $ 156 $ 319 $ 77 $ — $ 916 $ 754 Allowance (14) (8) Amortized cost, net $ 902 $ 746 Mortgage loans with a debt service coverage ratio below 1.0 that are not considered impaired primarily relate to situations 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 factors such as additional collateral, escrow balances or borrower guarantees. Payments on all mortgage loans were current as of March 31, 2021 and December 31, 2020. Rollforward of credit loss allowance for mortgage loans Three months ended March 31, ($ in millions) 2021 2020 Beginning balance $ (67) $ (3) Cumulative effect of change in accounting principle — (42) Net decreases (increases) related to credit losses 22 (40) Write-offs — — Ending balance (1) $ (45) $ (85) (1) Includes $31 million and $68 million of credit loss allowance for mortgage loans that are classified as held for sale as of March 31, 2021 and 2020, respectively. Bank loans When it is determined a bank loan shall be evaluated individually, the Company uses various methods to estimate credit losses on individual loans such as the present value of the loan’s expected future repayment cash flows discounted at the loan’s current effective interest rate. Credit ratings of the borrower are considered a key credit quality indicator when bank loan credit loss allowances are estimated. The ratings are updated quarterly and are either received from a nationally recognized rating agency or a comparable internal rating is derived if an externally provided rating is not available. The year of origination is determined to be the year in which the asset is acquired. Bank loans amortized cost by credit rating and year of origination ($ in millions) March 31, 2021 December 31, 2020 2016 and prior 2017 2018 2019 2020 Current Total Total BBB $ — $ 5 $ 7 $ 11 $ 8 $ 29 $ 60 $ 38 BB 9 22 30 42 36 172 311 168 B 13 68 86 77 139 389 772 456 CCC and below 11 28 32 55 27 13 166 161 Amortized cost before allowance $ 33 $ 123 $ 155 $ 185 $ 210 $ 603 $ 1,309 $ 823 Allowance (49) (51) Amortized cost, net $ 1,260 $ 772 Rollforward of credit loss allowance for bank loans ($ in millions) Three months ended March 31, 2021 2020 Beginning balance $ (67) $ — Cumulative effect of change in accounting principle — (53) Net increases related to credit losses (2) (27) Reduction of allowance related to sales 9 1 Write-offs — — Ending balance (1) $ (60) $ (79) (1) Includes $11 million and $22 million of credit loss allowance for bank loans that are classified as held for sale as of March 31, 2021 and 2020, respectively. Agent loans The Company monitors agent loans to determine when they should be removed from the pool and assessed for credit losses individually by using internal credit risk grades that classify the loans into risk categories. The categorization is based on relevant information about the ability of borrowers to service their debt, such as historical payment experience, current business trends, cash flow coverage and collateral quality. Internal credit risk grades are updated annually or more frequently if conditions are warranted based on the Company’s credit monitoring process. As of March 31, 2021, 85% of agent loans balance represents the top three highest credit quality categories. The allowance for agent loans totaled $6 million as of March 31, 2021. Agent loans were all classified as assets held for sale as of December 31, 2020 and transferred to continuing operations in the first quarter of 2021. | |
Bank loans, net | ||
Credit Losses on Fixed Income Securities | ||
Beginning balance | $ (67) | $ 0 |
Net increases related to credit losses | (2) | (27) |
Reduction of allowance related to sales | 9 | 1 |
Write-offs | 0 | 0 |
Ending balance | (60) | (79) |
Bank loans, net | Discontinued Operations, Held-for-sale | ||
Credit Losses on Fixed Income Securities | ||
Ending balance | (11) | (22) |
Cumulative effect of change in accounting principle | Bank loans, net | ||
Credit Losses on Fixed Income Securities | ||
Beginning balance | $ 0 | $ (53) |
Fair Value of Assets and Liab_3
Fair Value of Assets and Liabilities - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Dec. 31, 2020 | |
Fair value of assets and liabilities measured on recurring and non-recurring basis | ||
Fixed income securities, at fair value | $ 40,594 | $ 42,565 |
Significant unobservable inputs (Level 3) | ||
Fair value of assets and liabilities measured on recurring and non-recurring basis | ||
Assets at fair value | 851 | 832 |
Recurring basis | Significant unobservable inputs (Level 3) | ||
Fair value of assets and liabilities measured on recurring and non-recurring basis | ||
Fixed income securities, at fair value | 268 | 226 |
Assets at fair value | 851 | 832 |
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 | 62 | 69 |
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 | 15 | $ 18 |
Limited partnership interests | ||
Fair value of assets and liabilities measured on recurring and non-recurring basis | ||
Commitments to invest in limited partnership interests | $ 274 | |
Limited partnership interests | Minimum | ||
Fair value of assets and liabilities measured on recurring and non-recurring basis | ||
Investment assets, useful life (in years) | 10 years | |
Limited partnership interests | Maximum | ||
Fair value of assets and liabilities measured on recurring and non-recurring basis | ||
Investment assets, useful life (in years) | 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, 2021 | Dec. 31, 2020 |
Assets | ||
Fixed income securities, at fair value | $ 40,594 | $ 42,565 |
Equity securities, at fair value | 3,154 | 3,168 |
Short-term investments, at fair value | 6,017 | 6,807 |
Other investments | 3,042 | 1,691 |
Assets held for sale | 36,829 | 42,131 |
Assets held for sale | (7) | (6) |
Counterparty and cash collateral netting | $ (24) | $ (15) |
Assets as a percent of assets measured at fair value | 0.00% | 0.00% |
Total | $ 83,578 | $ 84,237 |
Liabilities | ||
Liabilities held for sale | (33,383) | (33,325) |
Counterparty and cash collateral netting | 17 | 27 |
Liabilities held for sale counterparty and cash collateral netting | $ 4 | $ 9 |
Liabilities as a percent of liabilities measured at fair value | (3.00%) | (4.20%) |
U.S. government and agencies | ||
Assets | ||
Fixed income securities, at fair value | $ 3,110 | $ 2,107 |
Municipal | ||
Assets | ||
Fixed income securities, at fair value | 7,500 | 7,578 |
Foreign government | ||
Assets | ||
Fixed income securities, at fair value | 985 | 958 |
ABS | ||
Assets | ||
Fixed income securities, at fair value | 943 | 846 |
MBS | ||
Assets | ||
Fixed income securities, at fair value | 53 | 59 |
Quoted prices in active markets for identical assets (Level 1) | ||
Assets | ||
Total assets at fair value | $ 15,303 | $ 17,567 |
Assets as a percent of assets measured at fair value | 18.70% | 21.30% |
Liabilities | ||
Total recurring basis liabilities | $ (1) | $ 0 |
Liabilities as a percent of liabilities measured at fair value | 0.20% | 0.00% |
Significant other observable inputs (Level 2) | ||
Assets | ||
Total assets at fair value | $ 65,523 | $ 64,029 |
Assets as a percent of assets measured at fair value | 80.30% | 77.70% |
Liabilities | ||
Total recurring basis liabilities | $ (118) | $ (153) |
Liabilities as a percent of liabilities measured at fair value | 20.90% | 23.80% |
Significant unobservable inputs (Level 3) | ||
Assets | ||
Total assets at fair value | $ 851 | $ 832 |
Assets as a percent of assets measured at fair value | 1.00% | 1.00% |
Liabilities | ||
Total recurring basis liabilities | $ (463) | $ (516) |
Liabilities as a percent of liabilities measured at fair value | 81.90% | 80.40% |
Fair Value Net Asset Value | ||
Assets | ||
Assets held for sale | $ 562 | $ 762 |
Investments reported at NAV | 1,363 | 1,062 |
Recurring basis | ||
Assets | ||
Other investments | (17) | (9) |
Liabilities | ||
Other liabilities | 13 | 18 |
Counterparty and cash collateral netting | 17 | 27 |
Recurring basis | Quoted prices in active markets for identical assets (Level 1) | ||
Assets | ||
Fixed income securities, at fair value | 3,074 | 2,061 |
Equity securities, at fair value | 2,318 | 2,468 |
Short-term investments, at fair value | 3,530 | 6,549 |
Other investments | 0 | 0 |
Other assets | 1 | 1 |
Assets held for sale | 6,380 | 6,488 |
Total assets at fair value | 15,303 | 17,567 |
Liabilities | ||
Other liabilities | (1) | 0 |
Liabilities held for sale | 0 | 0 |
Total recurring basis liabilities | (1) | 0 |
Recurring basis | Quoted prices in active markets for identical assets (Level 1) | U.S. government and agencies | ||
Assets | ||
Fixed income securities, at fair value | 3,074 | 2,061 |
Recurring basis | Quoted prices in active markets for identical assets (Level 1) | Municipal | ||
Assets | ||
Fixed income securities, at fair value | 0 | 0 |
Recurring basis | Quoted prices in active markets for identical assets (Level 1) | Corporate - public | ||
Assets | ||
Fixed income securities, at fair value | 0 | 0 |
Recurring basis | Quoted prices in active markets for identical assets (Level 1) | Corporate - privately placed | ||
Assets | ||
Fixed income securities, at fair value | 0 | 0 |
Recurring basis | Quoted prices in active markets for identical assets (Level 1) | Foreign government | ||
Assets | ||
Fixed income securities, at fair value | 0 | 0 |
Recurring basis | Quoted prices in active markets for identical assets (Level 1) | ABS | ||
Assets | ||
Fixed income securities, at fair value | 0 | 0 |
Recurring basis | Quoted prices in active markets for identical assets (Level 1) | MBS | ||
Assets | ||
Fixed income securities, at fair value | 0 | 0 |
Recurring basis | Significant other observable inputs (Level 2) | ||
Assets | ||
Fixed income securities, at fair value | 37,252 | 40,278 |
Equity securities, at fair value | 426 | 396 |
Short-term investments, at fair value | 2,487 | 223 |
Other investments | 39 | 29 |
Other assets | 0 | 0 |
Assets held for sale | 25,319 | 23,103 |
Total assets at fair value | 65,523 | 64,029 |
Liabilities | ||
Other liabilities | (21) | (34) |
Liabilities held for sale | (97) | (119) |
Total recurring basis liabilities | (118) | (153) |
Recurring basis | Significant other observable inputs (Level 2) | U.S. government and agencies | ||
Assets | ||
Fixed income securities, at fair value | 36 | 45 |
Recurring basis | Significant other observable inputs (Level 2) | Municipal | ||
Assets | ||
Fixed income securities, at fair value | 7,482 | 7,562 |
Recurring basis | Significant other observable inputs (Level 2) | Corporate - public | ||
Assets | ||
Fixed income securities, at fair value | 18,818 | 21,885 |
Recurring basis | Significant other observable inputs (Level 2) | Corporate - privately placed | ||
Assets | ||
Fixed income securities, at fair value | 9,037 | 9,002 |
Recurring basis | Significant other observable inputs (Level 2) | Foreign government | ||
Assets | ||
Fixed income securities, at fair value | 985 | 958 |
Recurring basis | Significant other observable inputs (Level 2) | ABS | ||
Assets | ||
Fixed income securities, at fair value | 864 | 794 |
Recurring basis | Significant other observable inputs (Level 2) | MBS | ||
Assets | ||
Fixed income securities, at fair value | 30 | 32 |
Recurring basis | Significant unobservable inputs (Level 3) | ||
Assets | ||
Fixed income securities, at fair value | 268 | 226 |
Equity securities, at fair value | 410 | 304 |
Short-term investments, at fair value | 0 | 35 |
Other investments | 3 | 0 |
Other assets | 0 | 0 |
Assets held for sale | 170 | 267 |
Total assets at fair value | 851 | 832 |
Liabilities | ||
Other liabilities | 0 | 0 |
Liabilities held for sale | (463) | (516) |
Total recurring basis liabilities | (463) | (516) |
Recurring basis | Significant unobservable inputs (Level 3) | U.S. government and agencies | ||
Assets | ||
Fixed income securities, at fair value | 0 | 0 |
Recurring basis | Significant unobservable inputs (Level 3) | Municipal | ||
Assets | ||
Fixed income securities, at fair value | 18 | 17 |
Recurring basis | Significant unobservable inputs (Level 3) | Corporate - public | ||
Assets | ||
Fixed income securities, at fair value | 43 | 67 |
Recurring basis | Significant unobservable inputs (Level 3) | Corporate - privately placed | ||
Assets | ||
Fixed income securities, at fair value | 105 | 63 |
Recurring basis | Significant unobservable inputs (Level 3) | Foreign government | ||
Assets | ||
Fixed income securities, at fair value | 0 | |
Fair value | ||
Assets | ||
Total assets at fair value | $ 81,653 | $ 82,413 |
Assets as a percent of assets measured at fair value | 100.00% | 100.00% |
Liabilities | ||
Total recurring basis liabilities | $ (565) | $ (642) |
Liabilities as a percent of liabilities measured at fair value | 100.00% | 100.00% |
Fair value | Significant unobservable inputs (Level 3) | ||
Assets | ||
Assets held for sale | $ 3,484 | $ 4,440 |
Liabilities | ||
Liabilities held for sale | (8,950) | (9,424) |
Fair value | Recurring basis | ||
Assets | ||
Fixed income securities, at fair value | 40,594 | 42,565 |
Equity securities, at fair value | 3,154 | 3,168 |
Short-term investments, at fair value | 6,017 | 6,807 |
Other investments | 25 | 20 |
Other assets | 1 | 1 |
Assets held for sale | 31,862 | 29,852 |
Total assets at fair value | 81,653 | 82,413 |
Liabilities | ||
Other liabilities | (9) | (16) |
Liabilities held for sale | (556) | (626) |
Total recurring basis liabilities | (565) | (642) |
Fair value | Recurring basis | U.S. government and agencies | ||
Assets | ||
Fixed income securities, at fair value | 3,110 | 2,106 |
Fair value | Recurring basis | Municipal | ||
Assets | ||
Fixed income securities, at fair value | 7,500 | 7,579 |
Fair value | Recurring basis | Corporate - public | ||
Assets | ||
Fixed income securities, at fair value | 18,861 | 21,952 |
Fair value | Recurring basis | Corporate - privately placed | ||
Assets | ||
Fixed income securities, at fair value | 9,142 | 9,065 |
Fair value | Recurring basis | Foreign government | ||
Assets | ||
Fixed income securities, at fair value | 985 | 958 |
Fair value | Recurring basis | ABS | ||
Assets | ||
Fixed income securities, at fair value | 943 | 846 |
Fair value | Recurring basis | MBS | ||
Assets | ||
Fixed income securities, at fair value | 53 | 59 |
Fair value | Recurring basis | Significant unobservable inputs (Level 3) | Foreign government | ||
Assets | ||
Fixed income securities, at fair value | 0 | |
Fair value | Recurring basis | Significant unobservable inputs (Level 3) | ABS | ||
Assets | ||
Fixed income securities, at fair value | 79 | 52 |
Fair value | Recurring basis | Significant unobservable inputs (Level 3) | MBS | ||
Assets | ||
Fixed income securities, at fair value | $ 23 | $ 27 |
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, 2021USD ($) | Dec. 31, 2020USD ($) |
Quantitative information about the significant unobservable inputs | ||
Fair value | $ (435) | $ (483) |
Projected option cost | Minimum | ||
Quantitative information about the significant unobservable inputs | ||
Weighted average | 0.010 | 0.010 |
Projected option cost | Maximum | ||
Quantitative information about the significant unobservable inputs | ||
Weighted average | 0.042 | 0.042 |
Projected option cost | Weighted Average | ||
Quantitative information about the significant unobservable inputs | ||
Weighted average | 0.0283 | 0.0280 |
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, 2021 | Mar. 31, 2020 | |
Assets | ||
Balance at beginning of period | $ 832 | $ 738 |
Total gains (losses) included in: net income | 18 | (29) |
Total gains (losses) included in: OCI | (4) | (2) |
Transfers into Level 3 | 13 | 26 |
Transfers out of Level 3 | (47) | (74) |
Transfers to (from) held for sale | 0 | |
Purchases | 125 | 60 |
Sales | (47) | (11) |
Issues | 0 | 0 |
Settlements | (39) | (31) |
Balance at end of period | 851 | 677 |
Liabilities | ||
Balance at the beginning of the period | (516) | (462) |
Total gains (losses) included in: net income | 55 | 48 |
Total gains (losses) included in: OCI | 0 | 0 |
Transfers into Level 3 | 0 | 0 |
Transfers out of Level 3 | 0 | 0 |
Transfers to (from) held for sale | 0 | |
Purchases | 0 | 0 |
Sales | 0 | 0 |
Issues | (8) | (8) |
Settlements | 6 | 5 |
Balance at the end of the period | (463) | (417) |
Net investment income | ||
Total Level 3 gains (losses) included in net income | ||
Gain (loss) included in earnings | (1) | (14) |
Realized capital gains (losses) | ||
Total Level 3 gains (losses) included in net income | ||
Gain (loss) included in earnings | 18 | (3) |
Liabilities held for sale | ||
Liabilities | ||
Balance at the beginning of the period | (516) | (462) |
Total gains (losses) included in: net income | 55 | 48 |
Total gains (losses) included in: OCI | 0 | 0 |
Transfers into Level 3 | 0 | 0 |
Transfers out of Level 3 | 0 | 0 |
Transfers to (from) held for sale | 0 | |
Purchases | 0 | 0 |
Sales | 0 | 0 |
Issues | (8) | (8) |
Settlements | 6 | 5 |
Balance at the end of the period | (463) | (417) |
Municipal | ||
Assets | ||
Balance at beginning of period | 17 | 22 |
Total gains (losses) included in: net income | 0 | 0 |
Total gains (losses) included in: OCI | 0 | (1) |
Transfers into Level 3 | 0 | 0 |
Transfers out of Level 3 | 0 | 0 |
Transfers to (from) held for sale | 0 | |
Purchases | 3 | 0 |
Sales | 0 | (1) |
Issues | 0 | 0 |
Settlements | (2) | (1) |
Balance at end of period | 18 | 19 |
Corporate - public | ||
Assets | ||
Balance at beginning of period | 67 | 36 |
Total gains (losses) included in: net income | 1 | 0 |
Total gains (losses) included in: OCI | (3) | 0 |
Transfers into Level 3 | 0 | 0 |
Transfers out of Level 3 | 0 | 0 |
Transfers to (from) held for sale | (6) | |
Purchases | 17 | 0 |
Sales | (33) | 0 |
Issues | 0 | 0 |
Settlements | 0 | 0 |
Balance at end of period | 43 | 36 |
Corporate - privately placed | ||
Assets | ||
Balance at beginning of period | 63 | 32 |
Total gains (losses) included in: net income | 0 | 0 |
Total gains (losses) included in: OCI | (1) | 0 |
Transfers into Level 3 | 10 | 0 |
Transfers out of Level 3 | (7) | 0 |
Transfers to (from) held for sale | 13 | |
Purchases | 27 | 1 |
Sales | 0 | 0 |
Issues | 0 | 0 |
Settlements | 0 | 0 |
Balance at end of period | 105 | 33 |
ABS | ||
Assets | ||
Balance at beginning of period | 52 | 49 |
Total gains (losses) included in: net income | 0 | 0 |
Total gains (losses) included in: OCI | 0 | 0 |
Transfers into Level 3 | 0 | 26 |
Transfers out of Level 3 | (32) | (49) |
Transfers to (from) held for sale | 0 | |
Purchases | 59 | 33 |
Sales | 0 | 0 |
Issues | 0 | 0 |
Settlements | 0 | (27) |
Balance at end of period | 79 | 32 |
MBS | ||
Assets | ||
Balance at beginning of period | 27 | 35 |
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 |
Transfers to (from) held for sale | 0 | |
Purchases | 0 | 0 |
Sales | (4) | 0 |
Issues | 0 | 0 |
Settlements | 0 | 0 |
Balance at end of period | 23 | 35 |
Fixed income securities | ||
Assets | ||
Balance at beginning of period | 226 | 174 |
Total gains (losses) included in: net income | 1 | 0 |
Total gains (losses) included in: OCI | (4) | (1) |
Transfers into Level 3 | 10 | 26 |
Transfers out of Level 3 | (39) | (49) |
Transfers to (from) held for sale | 7 | |
Purchases | 106 | 34 |
Sales | (37) | (1) |
Issues | 0 | 0 |
Settlements | (2) | (28) |
Balance at end of period | 268 | 155 |
Equity securities | ||
Assets | ||
Balance at beginning of period | 304 | 255 |
Total gains (losses) included in: net income | 16 | (17) |
Total gains (losses) included in: OCI | 0 | 0 |
Transfers into Level 3 | 0 | 0 |
Transfers out of Level 3 | 0 | 0 |
Transfers to (from) held for sale | 92 | |
Purchases | 5 | 1 |
Sales | (7) | 0 |
Issues | 0 | 0 |
Settlements | 0 | 0 |
Balance at end of period | 410 | 239 |
Short-term investments | ||
Assets | ||
Balance at beginning of period | 35 | 25 |
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 |
Transfers to (from) held for sale | 0 | |
Purchases | 0 | 25 |
Sales | 0 | 0 |
Issues | 0 | 0 |
Settlements | (35) | 0 |
Balance at end of period | 0 | 50 |
Other investments | ||
Assets | ||
Balance at beginning of period | 0 | |
Total gains (losses) included in: net income | 0 | |
Total gains (losses) included in: OCI | 0 | |
Transfers into Level 3 | 0 | |
Transfers out of Level 3 | 0 | |
Transfers to (from) held for sale | 0 | |
Purchases | 3 | |
Sales | 0 | |
Issues | 0 | |
Settlements | 0 | |
Balance at end of period | 3 | |
Assets held for sale | ||
Assets | ||
Balance at beginning of period | 267 | 284 |
Total gains (losses) included in: net income | 1 | (12) |
Total gains (losses) included in: OCI | 0 | (1) |
Transfers into Level 3 | 3 | 0 |
Transfers out of Level 3 | (8) | (25) |
Transfers to (from) held for sale | (99) | |
Purchases | 11 | 0 |
Sales | (3) | (10) |
Issues | 0 | 0 |
Settlements | (2) | (3) |
Balance at end of period | $ 170 | $ 233 |
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, 2021 | Mar. 31, 2020 | |
Gains (losses) included in net income for Level 3 assets and liabilities: | ||
Fair value assets measured on recurring basis, change in unrealized gain (loss) included in earnings | $ 18 | $ (29) |
Gains (losses) for Level 3 liabilities still held at the balance sheet date, included in earnings | 55 | 48 |
Gains (losses) for Level 3 assets and liabilities still held at the balance sheet date, included in earnings | 73 | 19 |
Changes in unrealized net capital gains and losses reported in OCI | (4) | (2) |
Net investment income | ||
Gains (losses) included in net income for Level 3 assets and liabilities: | ||
Gains (losses) for Level 3 assets still held at the balance sheet date | (1) | (14) |
Realized capital gains (losses) | ||
Gains (losses) included in net income for Level 3 assets and liabilities: | ||
Gains (losses) for Level 3 assets still held at the balance sheet date | 18 | (3) |
Liabilities held for sale | ||
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 | 55 | 48 |
Municipal | ||
Gains (losses) included in net income for Level 3 assets and liabilities: | ||
Changes in unrealized net capital gains and losses reported in OCI | 0 | (1) |
Corporate - public | ||
Gains (losses) included in net income for Level 3 assets and liabilities: | ||
Fair value assets measured on recurring basis, change in unrealized gain (loss) included in earnings | 1 | 0 |
Changes in unrealized net capital gains and losses reported in OCI | (3) | 0 |
Corporate - privately placed | ||
Gains (losses) included in net income for Level 3 assets and liabilities: | ||
Fair value assets measured on recurring basis, change in unrealized gain (loss) included in earnings | 0 | 0 |
Changes in unrealized net capital gains and losses reported in OCI | (1) | 0 |
Fixed income securities | ||
Gains (losses) included in net income for Level 3 assets and liabilities: | ||
Fair value assets measured on recurring basis, change in unrealized gain (loss) included in earnings | 1 | 0 |
Equity securities | ||
Gains (losses) included in net income for Level 3 assets and liabilities: | ||
Fair value assets measured on recurring basis, change in unrealized gain (loss) included in earnings | 16 | (17) |
Assets held for sale | ||
Gains (losses) included in net income for Level 3 assets and liabilities: | ||
Fair value assets measured on recurring basis, change in unrealized gain (loss) included in earnings | 1 | (12) |
Changes in unrealized net capital gains and losses reported in OCI | $ 0 | $ (1) |
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, 2021 | Dec. 31, 2020 | Mar. 31, 2020 | Dec. 31, 2019 |
Financial assets | ||||
Mortgage loans, net | $ 902 | $ 746 | ||
Assets held for sale | 36,829 | 42,131 | ||
Financial liabilities | ||||
Long-term debt | 7,996 | 7,825 | ||
Liability for collateral | 1,096 | 914 | $ 928 | $ 1,298 |
Liabilities held for sale | 33,383 | 33,325 | ||
Significant unobservable inputs (Level 3) | Amortized cost, net | ||||
Financial assets | ||||
Mortgage loans, net | 902 | 746 | ||
Bank loans | 1,260 | 772 | ||
Agent loans | 607 | 0 | ||
Assets held for sale | 3,278 | 4,206 | ||
Financial liabilities | ||||
Contractholder funds on investment contracts | 33 | 0 | ||
Liabilities held for sale | 8,099 | 8,130 | ||
Significant unobservable inputs (Level 3) | Fair value | ||||
Financial assets | ||||
Mortgage loans, net | 948 | 792 | ||
Bank loans | 1,286 | 803 | ||
Agent loans | 606 | 0 | ||
Assets held for sale | 3,484 | 4,440 | ||
Financial liabilities | ||||
Contractholder funds on investment contracts | 35 | 0 | ||
Liabilities held for sale | 8,950 | 9,424 | ||
Significant other observable inputs (Level 2) | Amortized cost, net | ||||
Financial liabilities | ||||
Long-term debt | 7,577 | 7,825 | ||
Liability for collateral | 1,096 | 914 | ||
Significant other observable inputs (Level 2) | Fair value | ||||
Financial liabilities | ||||
Long-term debt | 9,046 | 9,489 | ||
Liability for collateral | $ 1,096 | $ 914 |
Derivative Financial Instrume_3
Derivative Financial Instruments - Narrative (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Dec. 31, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Potential recoveries | $ 0 | |
Cash and securities pledged as collateral by counterparties | 10,000,000 | |
Securities pledged as collateral to counterparties | 6,000,000 | |
Collateral posted under MNAs for contracts containing credit-risk-contingent features | (4,000,000) | $ (13,000,000) |
Cash and securities pledged in the form of margin deposits | 54,000,000 | |
Margin deposit liabilities | $ 12,000,000 |
Derivative Financial Instrume_4
Derivative Financial Instruments - Summary of the volume and fair value positions of derivative instruments (Details) $ in Millions | Mar. 31, 2021USD ($)contract | Dec. 31, 2020USD ($)contract |
Derivatives, Fair Value | ||
Total asset derivatives, notional amount | $ 1,818 | $ 2,009 |
Total liability derivatives, notional amount | 2,988 | 3,182 |
Total derivatives, notional amount | $ 4,806 | $ 5,191 |
Total asset derivatives, number of contracts | contract | 4,300 | 4,440 |
Total liability derivatives, number of contracts | contract | 6,445 | 4,108 |
Total derivatives, Number of contracts | contract | 10,745 | 8,548 |
Net amount on balance sheet | $ 176 | $ 206 |
Net amount on balance sheet | (556) | (655) |
Total derivatives, fair value, net | (380) | (449) |
Asset derivatives gross amount | 178 | 218 |
Liability derivatives, gross asset | 24 | 2 |
Asset derivatives, gross liability | (2) | (12) |
Liability derivatives gross amount | (580) | (657) |
Liabilities held for sale | ||
Derivatives, Fair Value | ||
Total liability derivatives, notional amount | $ 2,340 | $ 2,240 |
Total liability derivatives, number of contracts | contract | 2,670 | 2,737 |
Net amount on balance sheet | $ (553) | $ (630) |
Liability derivatives, gross asset | 7 | 1 |
Liability derivatives gross amount | (560) | (631) |
Assets held for sale | ||
Derivatives, Fair Value | ||
Total asset derivatives, notional amount | $ 15 | $ 158 |
Total asset derivatives, number of contracts | contract | 2,485 | 3,189 |
Net amount on balance sheet | $ 155 | $ 185 |
Asset derivatives gross amount | 155 | 189 |
Asset derivatives, gross liability | $ 0 | $ (4) |
Other liabilities & accrued expenses | Derivatives not designated as accounting hedging instruments | ||
Derivatives, Fair Value | ||
Total liability derivatives, number of contracts | contract | 3,560 | |
Net amount on balance sheet | $ (1) | |
Liability derivatives, gross asset | 0 | |
Liability derivatives gross amount | $ (1) | |
Futures | Other assets | Derivatives not designated as accounting hedging instruments | ||
Derivatives, Fair Value | ||
Total asset derivatives, number of contracts | contract | 614 | 290 |
Net amount on balance sheet | $ 0 | $ 0 |
Asset derivatives gross amount | 0 | 0 |
Asset derivatives, gross liability | $ 0 | $ 0 |
Futures | Other liabilities & accrued expenses | Derivatives not designated as accounting hedging instruments | ||
Derivatives, Fair Value | ||
Total liability derivatives, number of contracts | contract | 705 | |
Net amount on balance sheet | $ 0 | |
Liability derivatives, gross asset | 0 | |
Liability derivatives gross amount | $ 0 | |
Options | Other investments | Derivatives not designated as accounting hedging instruments | ||
Derivatives, Fair Value | ||
Total asset derivatives, number of contracts | contract | 59 | 56 |
Net amount on balance sheet | $ 4 | $ 6 |
Asset derivatives gross amount | 4 | 6 |
Asset derivatives, gross liability | $ 0 | $ 0 |
Futures | Other assets | Derivatives not designated as accounting hedging instruments | ||
Derivatives, Fair Value | ||
Total asset derivatives, number of contracts | contract | 1,142 | 905 |
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, number of contracts | contract | 215 | 666 |
Net amount on balance sheet | $ 0 | $ 0 |
Liability derivatives, gross asset | 0 | 0 |
Liability derivatives gross amount | 0 | 0 |
Total return swap agreements – fixed income | Other investments | ||
Derivatives, Fair Value | ||
Total asset derivatives, notional amount | 100 | |
Net amount on balance sheet | 0 | |
Asset derivatives gross amount | 0 | |
Asset derivatives, gross liability | 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 | 50 | |
Net amount on balance sheet | 0 | |
Liability derivatives, gross asset | 0 | |
Liability derivatives gross amount | 0 | |
Foreign currency forwards | Other investments | Derivatives not designated as accounting hedging instruments | ||
Derivatives, Fair Value | ||
Total asset derivatives, notional amount | 20 | 291 |
Net amount on balance sheet | 0 | 4 |
Asset derivatives gross amount | 0 | 9 |
Asset derivatives, gross liability | 0 | (5) |
Foreign currency forwards | Other liabilities & accrued expenses | Derivatives not designated as accounting hedging instruments | ||
Derivatives, Fair Value | ||
Total liability derivatives, notional amount | 543 | 250 |
Net amount on balance sheet | 5 | (9) |
Liability derivatives, gross asset | 17 | 1 |
Liability derivatives gross amount | (12) | (10) |
Other embedded derivative financial instruments | Other investments | ||
Derivatives, Fair Value | ||
Total asset derivatives, notional amount | 750 | |
Net amount on balance sheet | 0 | |
Asset derivatives gross amount | 0 | |
Asset derivatives, gross liability | 0 | |
Credit default swaps – buying protection | Other investments | Derivatives not designated as accounting hedging instruments | ||
Derivatives, Fair Value | ||
Total asset derivatives, notional amount | 33 | 60 |
Net amount on balance sheet | (2) | (3) |
Asset derivatives gross amount | 0 | 0 |
Asset derivatives, gross liability | (2) | (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 | 100 | 638 |
Net amount on balance sheet | (7) | (16) |
Liability derivatives, gross asset | 0 | 0 |
Liability derivatives gross amount | (7) | (16) |
Credit default swaps – selling protection | Other investments | Derivatives not designated as accounting hedging instruments | ||
Derivatives, Fair Value | ||
Total asset derivatives, notional amount | 900 | 750 |
Net amount on balance sheet | 18 | 13 |
Asset derivatives gross amount | 18 | 13 |
Asset derivatives, gross liability | 0 | 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 | 5 | 4 |
Net amount on balance sheet | 0 | 0 |
Liability derivatives, gross asset | 0 | 0 |
Liability derivatives gross amount | $ 0 | $ 0 |
Derivative Financial Instrume_5
Derivative Financial Instruments - Gross and net amounts for OTC derivatives (Details) - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 |
Asset derivatives | ||
Asset derivatives gross amount | $ 178 | $ 218 |
Asset derivatives, gross liability | (2) | (12) |
Derivative assets net amount on balance sheet | 176 | 206 |
Liability derivatives | ||
Liability derivatives gross amount | (580) | (657) |
Liability derivatives, gross asset | 24 | 2 |
Net amount on balance sheet | (556) | (655) |
OTC derivatives | ||
Asset derivatives | ||
Asset derivatives gross amount | 17 | 10 |
Asset derivatives, gross liability | (19) | (9) |
Derivative, collateral, right to reclaim cash | 2 | 0 |
Derivative assets net amount on balance sheet | 0 | 1 |
Derivative assets received under securities collateral | 0 | 0 |
Derivative asset, fair value, amount offset against collateral | 0 | 1 |
Liability derivatives | ||
Liability derivatives gross amount | (15) | (19) |
Liability derivatives, gross asset | 19 | 9 |
Derivative liability offsets under cash collateral pledged | (6) | 9 |
Net amount on balance sheet | (2) | (1) |
Derivative liabilities received under securities collateral | 0 | 0 |
Derivative liability, fair value, amount offset against collateral | $ (2) | $ (1) |
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, 2021 | Mar. 31, 2020 | |
Derivative Instruments, Gain (Loss) | ||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | $ 27 | $ 33 |
Realized capital gains (losses) | ||
Derivative Instruments, Gain (Loss) | ||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 11 | 78 |
Operating costs and expenses | ||
Derivative Instruments, Gain (Loss) | ||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 16 | (45) |
Interest rate contracts | ||
Derivative Instruments, Gain (Loss) | ||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | (1) | 35 |
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 | (1) | 35 |
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 | 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 | 14 | (12) |
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 | (2) | 33 |
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 | 16 | (45) |
Foreign currency contracts | ||
Derivative Instruments, Gain (Loss) | ||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 10 | 25 |
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 | 10 | 25 |
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 | 0 |
Credit default contracts | ||
Derivative Instruments, Gain (Loss) | ||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 4 | (10) |
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 | (10) |
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 | (9) | |
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 | (9) | |
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 index | ||
Derivative Instruments, Gain (Loss) | ||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 4 | |
Total return swaps - equity index | 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 | |
Total return swaps - equity index | 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, 2021USD ($)counter-party | Dec. 31, 2020USD ($)counter-party |
Credit Derivatives | ||
Number of counter- parties | counter-party | 2 | 1 |
Notional amount | $ 338 | $ 186 |
Credit exposure | 10 | 4 |
Exposure, net of collateral | $ 0 | $ 0 |
A+ | ||
Credit Derivatives | ||
Number of counter- parties | counter-party | 1 | 1 |
Notional amount | $ 189 | $ 186 |
Credit exposure | 8 | 4 |
Exposure, net of collateral | $ 0 | $ 0 |
A | ||
Credit Derivatives | ||
Number of counter- parties | counter-party | 1 | 0 |
Notional amount | $ 149 | $ 0 |
Credit exposure | 2 | 0 |
Exposure, net of collateral | $ 0 | $ 0 |
Derivative Financial Instrume_8
Derivative Financial Instruments - Fair value of instruments with credit-risk-contingent features (Details) - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Gross liability fair value of contracts containing credit-risk-contingent features | $ 13 | $ 19 |
Gross asset fair value of contracts containing credit-risk-contingent features and subject to MNAs | (7) | (6) |
Collateral posted under MNAs for contracts containing credit-risk-contingent features | (4) | (13) |
Maximum amount of additional exposure for contracts with credit-risk-contingent features if all features were triggered concurrently | $ 2 | $ 0 |
Derivative Financial Instrume_9
Derivative Financial Instruments - CDS notional amount by credit rating and fair value of protection sold (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Dec. 31, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Term of credit default swaps (in years) | 5 years | |
Derivative [Line Items] | ||
Notional amount | $ 4,806 | $ 5,191 |
Credit default contracts | ||
Derivative [Line Items] | ||
Notional amount | 905 | 754 |
Fair value | 18 | 13 |
Single name | Corporate | Credit default contracts | ||
Derivative [Line Items] | ||
Notional amount | 5 | 4 |
Fair value | 0 | 0 |
Index | Corporate | Credit default contracts | ||
Derivative [Line Items] | ||
Notional amount | 900 | 750 |
Fair value | 18 | 13 |
AAA | Credit default contracts | ||
Derivative [Line Items] | ||
Notional amount | 7 | 6 |
AAA | Single name | Corporate | Credit default contracts | ||
Derivative [Line Items] | ||
Notional amount | 0 | 0 |
AAA | Index | Corporate | Credit default contracts | ||
Derivative [Line Items] | ||
Notional amount | 7 | 6 |
AA | Credit default contracts | ||
Derivative [Line Items] | ||
Notional amount | 14 | 12 |
AA | Single name | Corporate | Credit default contracts | ||
Derivative [Line Items] | ||
Notional amount | 0 | 0 |
AA | Index | Corporate | Credit default contracts | ||
Derivative [Line Items] | ||
Notional amount | 14 | 12 |
A | Credit default contracts | ||
Derivative [Line Items] | ||
Notional amount | 179 | 156 |
A | Single name | Corporate | Credit default contracts | ||
Derivative [Line Items] | ||
Notional amount | 0 | 0 |
A | Index | Corporate | Credit default contracts | ||
Derivative [Line Items] | ||
Notional amount | 179 | 156 |
BBB | Credit default contracts | ||
Derivative [Line Items] | ||
Notional amount | 610 | 492 |
BBB | Single name | Corporate | Credit default contracts | ||
Derivative [Line Items] | ||
Notional amount | 0 | 0 |
BBB | Index | Corporate | Credit default contracts | ||
Derivative [Line Items] | ||
Notional amount | 610 | 492 |
BB and lower | Credit default contracts | ||
Derivative [Line Items] | ||
Notional amount | 95 | 88 |
BB and lower | Single name | Corporate | Credit default contracts | ||
Derivative [Line Items] | ||
Notional amount | 5 | 4 |
BB and lower | Index | Corporate | Credit default contracts | ||
Derivative [Line Items] | ||
Notional amount | $ 90 | $ 84 |
Variable Interest Entities - (D
Variable Interest Entities - (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Dec. 31, 2020 | |
Variable Interest Entity [Line Items] | ||
Fixed income securities, at fair value, amortized cost (in dollars) | $ 39,437 | $ 40,034 |
Short-term, at fair value, amortized cost (in dollars) | 6,017 | $ 6,807 |
Variable Interest Entity, Primary Beneficiary | ||
Variable Interest Entity [Line Items] | ||
Fixed income securities, at fair value, amortized cost (in dollars) | 286 | |
Short-term, at fair value, amortized cost (in dollars) | 61 | |
Variable Interest Entity, Primary Beneficiary | Allstate Protection | ||
Variable Interest Entity [Line Items] | ||
Property and casualty insurance premiums | $ 45 |
Variable Interest Entities - As
Variable Interest Entities - Assets and liabilities of consolidated VIEs (Details) - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 |
Investments | ||
Fixed income securities, at fair value | $ 40,594 | $ 42,565 |
Short-term investments, at fair value | 6,017 | 6,807 |
Total | 60,076 | 59,540 |
Cash | 709 | 311 |
Premium installment receivables, net | 7,921 | 6,463 |
Reinsurance and indemnification recoverables, net | 9,645 | 7,215 |
Other assets, net | 5,803 | 2,756 |
Total assets | 129,811 | 125,987 |
Liabilities | ||
Reserve for property and casualty insurance claims and claims expense | 31,414 | 27,610 |
Unearned premiums | 18,177 | 15,946 |
Total liabilities | 103,019 | $ 95,770 |
Variable Interest Entity, Primary Beneficiary | ||
Investments | ||
Fixed income securities, at fair value | 281 | |
Short-term investments, at fair value | 61 | |
Total | 342 | |
Cash | 8 | |
Premium installment receivables, net | 43 | |
Reinsurance and indemnification recoverables, net | 112 | |
Other assets, net | 109 | |
Total assets | 614 | |
Liabilities | ||
Reserve for property and casualty insurance claims and claims expense | 223 | |
Unearned premiums | 189 | |
Other liabilities and expenses | 229 | |
Total liabilities | $ 641 |
Reserve for Property and Casu_3
Reserve for Property and Casualty Insurance Claims and Claims Expense - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Increase (decrease) in claims and claims expense | ||
Prior years | $ 241 | $ (8) |
Catastrophe | ||
Increase (decrease) in claims and claims expense | ||
Incurred expense (adjustment) | (590) | (211) |
Prior years | 243 | $ 20 |
Southern California Edison | Fire | ||
Increase (decrease) in claims and claims expense | ||
Prior years | $ (110) |
Reserve for Property and Casu_4
Reserve for Property and Casualty 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, 2021 | Mar. 31, 2020 | |
Incurred claims and claims expense related to: | ||
Prior years | $ (241) | $ 8 |
National General | ||
Activity in the reserve for property-liability insurance claims and claims expense: | ||
National General acquisition as of January 4, 2021 | 1,797 | 0 |
Property-Liability | ||
Activity in the reserve for property-liability insurance claims and claims expense: | ||
Balance as of January 1 | 27,610 | 27,712 |
Less recoverables | (7,033) | (6,912) |
Net balance as of January 1 | 20,577 | 20,800 |
Incurred claims and claims expense related to: | ||
Current year | 6,284 | 5,333 |
Prior years | (241) | 8 |
Total incurred | 6,043 | 5,341 |
Claims and claims expense paid related to: | ||
Current year | (2,541) | (2,352) |
Prior years | (3,731) | (3,554) |
Total paid | (6,272) | (5,906) |
Net balance as of March 31 | 22,145 | 20,235 |
Plus recoverables | 9,269 | 6,913 |
Balance as of March 31 | $ 31,414 | $ 27,148 |
Reserve for Property and Casu_5
Reserve for Property and Casualty Insurance Claims and Claims Expense - Prior year reserve reestimates included in claims and claims expense (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Increase (decrease) in claims and claims expense | ||
Prior years | $ (241) | $ 8 |
Auto | ||
Increase (decrease) in claims and claims expense | ||
Prior years | (36) | 13 |
Homeowners | ||
Increase (decrease) in claims and claims expense | ||
Prior years | (203) | (7) |
Other personal lines | ||
Increase (decrease) in claims and claims expense | ||
Prior years | (18) | (6) |
Commercial lines | ||
Increase (decrease) in claims and claims expense | ||
Prior years | 15 | 6 |
Run-off Property-Liability | ||
Increase (decrease) in claims and claims expense | ||
Prior years | 1 | 2 |
Non-catastrophe losses | ||
Increase (decrease) in claims and claims expense | ||
Prior years | 2 | 28 |
Non-catastrophe losses | Auto | ||
Increase (decrease) in claims and claims expense | ||
Prior years | (17) | 22 |
Non-catastrophe losses | Homeowners | ||
Increase (decrease) in claims and claims expense | ||
Prior years | 5 | 1 |
Non-catastrophe losses | Other personal lines | ||
Increase (decrease) in claims and claims expense | ||
Prior years | 0 | (2) |
Non-catastrophe losses | Commercial lines | ||
Increase (decrease) in claims and claims expense | ||
Prior years | 13 | 5 |
Non-catastrophe losses | Run-off Property-Liability | ||
Increase (decrease) in claims and claims expense | ||
Prior years | 1 | 2 |
Catastrophe | ||
Increase (decrease) in claims and claims expense | ||
Prior years | (243) | (20) |
Catastrophe | Nationwide Aggregate Reinsurance Program | ||
Increase (decrease) in claims and claims expense | ||
Prior years | 150 | |
Catastrophe | Auto | ||
Increase (decrease) in claims and claims expense | ||
Prior years | (19) | (9) |
Catastrophe | Homeowners | ||
Increase (decrease) in claims and claims expense | ||
Prior years | (208) | (8) |
Catastrophe | Other personal lines | ||
Increase (decrease) in claims and claims expense | ||
Prior years | (18) | (4) |
Catastrophe | Commercial lines | ||
Increase (decrease) in claims and claims expense | ||
Prior years | 2 | 1 |
Catastrophe | Run-off Property-Liability | ||
Increase (decrease) in claims and claims expense | ||
Prior years | 0 | $ 0 |
Fire | Southern California Edison | ||
Increase (decrease) in claims and claims expense | ||
Prior years | $ 110 |
Reinsurance and indemnificati_3
Reinsurance and indemnification - Premiums earned and life premiums and contract charges (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Property and casualty insurance premiums | ||
Reinsurance | ||
Property and casualty insurance premiums earned | $ (508) | $ (289) |
Life premiums | ||
Reinsurance | ||
Accident and health insurance premiums and contract charges | $ (24) | $ (3) |
Reinsurance and indemnificati_4
Reinsurance and indemnification - Claims expense, life contract benefits and interest credited to contractholder funds (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
Reductions to costs and expenses due to reinsurance ceded amounts | |||
Unearned premiums | $ 18,177 | $ 15,946 | |
Property and casualty insurance claims and claims expense | |||
Reductions to costs and expenses due to reinsurance ceded amounts | |||
Ceded losses incurred | (1,593) | $ (131) | |
Accident and health insurance policy benefits | |||
Reductions to costs and expenses due to reinsurance ceded amounts | |||
Ceded losses incurred | (29) | (6) | |
Michigan Catastrophic Claim Association | Property and casualty insurance claims and claims expense | |||
Reductions to costs and expenses due to reinsurance ceded amounts | |||
Ceded losses incurred | 386 | $ 47 | |
Nationwide Reinsurance Program | |||
Reductions to costs and expenses due to reinsurance ceded amounts | |||
Unearned premiums | 75 | ||
Nationwide Reinsurance Program | Property and casualty insurance claims and claims expense | |||
Reductions to costs and expenses due to reinsurance ceded amounts | |||
Ceded losses incurred | $ 955 |
Reinsurance and indemnificati_5
Reinsurance and indemnification - Reinsurance and indemnification recoverables, net (Details) - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 |
Reinsurance | ||
Reinsurance and indemnification recoverables, net | $ 9,645 | $ 7,215 |
Property-Liability | ||
Reinsurance | ||
Paid and due from reinsurers and indemnitors | 256 | 101 |
Unpaid losses estimated (including IBNR) | 9,269 | 7,033 |
Reinsurance and indemnification recoverables, net | 9,525 | 7,134 |
Allstate Health and Benefits | ||
Reinsurance | ||
Reinsurance and indemnification recoverables, net | $ 120 | $ 81 |
Reinsurance and indemnificati_6
Reinsurance and indemnification - Rollforward of credit loss allowance for reinsurance recoverables (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Property-Liability | ||
Reinsurance Recoverable, Allowance for Credit Loss [Roll Forward] | ||
Reinsurance Recoverable, Allowance for Credit Loss, Beginning Balance | $ (59) | $ (60) |
Increase (decrease) in the provision for credit losses | (1) | 1 |
Reinsurance Recoverable, Allowance for Credit Loss, Ending Balance | (60) | (59) |
Allstate Health and Benefits | ||
Reinsurance Recoverable, Allowance for Credit Loss [Roll Forward] | ||
Reinsurance Recoverable, Allowance for Credit Loss, Beginning Balance | (1) | (1) |
Increase (decrease) in the provision for credit losses | 0 | 0 |
Write-offs | 0 | 0 |
Reinsurance Recoverable, Allowance for Credit Loss, Ending Balance | $ (1) | $ (1) |
Capital Structure (Details)
Capital Structure (Details) - Senior Notes $ in Millions | Mar. 29, 2021USD ($) |
Debt outstanding: | |
Repayments of debt | $ 250 |
London Interbank Offered Rate (LIBOR) | |
Debt outstanding: | |
Bear interest at floating rate | 0.43% |
Company Restructuring - Narrati
Company Restructuring - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
Restructuring Cost and Reserve [Line Items] | |||
Restructuring and related charges | $ 51 | $ 4 | |
Employee costs | |||
Restructuring Cost and Reserve [Line Items] | |||
Cumulative amount incurred to date for active programs | 220 | ||
Exit costs | |||
Restructuring Cost and Reserve [Line Items] | |||
Cumulative amount incurred to date for active programs | 105 | ||
Transformative Growth Plan | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring and related charges | 17 | $ 238 | |
Restructuring and related charges approximately | 290 | ||
Future Work Environment | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring and related charges | 33 | ||
Restructuring and related charges approximately | $ 110 |
Company Restructuring - Changes
Company Restructuring - Changes in the restructuring liability (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2021USD ($) | |
Restructuring Reserve | |
Restructuring liability as of December 31, 2020 | $ 72 |
Expense incurred | 55 |
Adjustments to liability | (4) |
Payments and non-cash charges | (82) |
Restructuring liability as of March 31, 2021 | 41 |
Employee costs | |
Restructuring Reserve | |
Restructuring liability as of December 31, 2020 | 72 |
Expense incurred | 2 |
Adjustments to liability | (4) |
Payments and non-cash charges | (29) |
Restructuring liability as of March 31, 2021 | 41 |
Exit costs | |
Restructuring Reserve | |
Restructuring liability as of December 31, 2020 | 0 |
Expense incurred | 53 |
Adjustments to liability | 0 |
Payments and non-cash charges | (53) |
Restructuring liability as of March 31, 2021 | $ 0 |
Guarantees and Contingent Lia_2
Guarantees and Contingent Liabilities (Details) | 3 Months Ended |
Mar. 31, 2021USD ($) | |
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 | $ 85,000,000 |
Benefit Plans - Components of n
Benefit Plans - Components of net cost (benefit) for pension and other postretirement plans (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Components of net periodic cost | ||
Costs and expenses | $ (62) | $ (31) |
Remeasurement (gains) losses | (310) | 318 |
Pension net (benefit) cost | (372) | 287 |
Pension benefits | ||
Components of net periodic cost | ||
Service cost | 26 | 28 |
Interest cost | 46 | 56 |
Expected return on plan assets | (117) | (104) |
Amortization of prior service credit | (13) | (14) |
Costs and expenses | (58) | (34) |
Remeasurement of projected benefit obligation | (512) | (116) |
Remeasurement of plan assets | 221 | 434 |
Remeasurement (gains) losses | (291) | 318 |
Pension net (benefit) cost | (349) | 284 |
Postretirement benefits | ||
Components of net periodic cost | ||
Service cost | 0 | 1 |
Interest cost | 2 | 3 |
Amortization of prior service credit | (6) | (1) |
Costs and expenses | (4) | 3 |
Remeasurement of projected benefit obligation | (19) | 0 |
Remeasurement of plan assets | 0 | 0 |
Remeasurement (gains) losses | (19) | 0 |
Pension net (benefit) cost | $ (23) | $ 3 |
Benefit Plans - Pension and pos
Benefit Plans - Pension and postretirement benefits remeasurement gains and losses (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Retirement Benefits [Abstract] | ||
Discount rate | $ (417) | $ (36) |
Other assumptions | (114) | (80) |
Remeasurement of plan assets (gains) losses | 221 | 434 |
Pension and other postretirement remeasurement (gains) losses | $ (310) | $ 318 |
Benefit Plans - Narrative (Deta
Benefit Plans - Narrative (Details) | Mar. 31, 2021 | Dec. 31, 2020 |
Pension benefits | ||
Components of net periodic cost | ||
Discount rate | 3.13% | 2.51% |
Supplemental Cash Flow Inform_3
Supplemental Cash Flow Information - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Supplemental Cash Flow Information [Abstract] | ||
Transfer from investments | $ 14 | $ 20 |
Non-cash financing activities related to the issuance of shares for vested restricted stock units | 50 | 51 |
Operating lease, payments | 46 | 39 |
ROU asset obtained in exchange for operating lease liability | $ 103 | $ 31 |
Supplemental Cash Flow Inform_4
Supplemental Cash Flow Information - Activities resulting from management of proceeds (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Net change in proceeds managed | ||
Net change in short-term investments | $ (183) | $ 370 |
Operating cash flow (used) provided | (183) | 370 |
Net change in cash | 1 | 0 |
Net change in proceeds managed | (182) | 370 |
Change in Liabilities for Collateral [Roll Forward] | ||
Liabilities for collateral, beginning of period | (914) | (1,298) |
Liabilities for collateral, end of period | (1,096) | (928) |
Operating cash flow provided (used) | $ 182 | $ (370) |
Other Comprehensive Income (Det
Other Comprehensive Income (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Pre-tax | ||
Other comprehensive income (loss) | $ (1,879) | $ (1,763) |
Tax | ||
Other comprehensive income (loss) | 398 | 371 |
After-tax | ||
Other comprehensive income (loss) | (1,481) | (1,392) |
Unrealized net capital gains and losses | ||
Pre-tax | ||
Unrealized net holding gains and losses arising during the period, net of related offsets | (1,718) | (1,433) |
Less: reclassification adjustment of realized capital gains and losses | 185 | 287 |
Other comprehensive income (loss) | (1,903) | (1,720) |
Tax | ||
Unrealized net holding gains and losses arising during the period, net of related offsets | 364 | 303 |
Less: reclassification adjustment of realized capital gains and losses | (39) | (60) |
Other comprehensive income (loss) | 403 | 363 |
After-tax | ||
Unrealized net holding gains and losses arising during the period, net of related offsets | (1,354) | (1,130) |
Less: reclassification adjustment of realized capital gains and losses | 146 | 227 |
Other comprehensive income (loss) | (1,500) | (1,357) |
Unrealized foreign currency translation adjustments | ||
Pre-tax | ||
Other comprehensive income (loss) | 43 | (49) |
Tax | ||
Other comprehensive income (loss) | (9) | 10 |
After-tax | ||
Other comprehensive income (loss) | 34 | (39) |
Unamortized pension and other postretirement prior service credit | ||
Pre-tax | ||
Other comprehensive income (loss) | (19) | 6 |
Tax | ||
Other comprehensive income (loss) | 4 | (2) |
After-tax | ||
Other comprehensive income (loss) | $ (15) | $ 4 |