The Allstate Corporation and Subsidiaries
Unaudited Pro Forma Condensed Consolidated Financial Statements
On November 1, 2021, the Company completed the sale of Allstate Life Insurance Company (“ALIC”) and certain affiliates to Everlake US Holdings Company, an affiliate of an investment fund associated with The Blackstone Group Inc.
On October 1, 2021, the Company completed the sale of Allstate Life Insurance Company of New York (“ALNY”) to Wilton Reassurance Company.
The combined divestitures of ALIC and ALNY is herein referred to as “the divestitures”. A loss on disposition of $4 billion, after-tax, was recorded in the first quarter of 2021 related to these transactions. The loss on disposition was $3.8 billion, after-tax, and reflects 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 dates and the closing date equity of the sold entities determined under GAAP, excluding unrealized gains and losses on fixed income securities.
The unaudited pro forma condensed consolidated statement of financial position has been derived from historical financial statements prepared in accordance with U.S. generally accepted accounting principles and is:
(1)Presented based on information currently available
(2)Intended for informational purposes only
(3)Is not intended to reflect the results of operations or the financial position of the Corporation that would have resulted had the divestitures been effective as of and during the periods presented or the results that may be obtained by the Corporation in the future
The unaudited pro forma condensed consolidated statement of financial position gives effect to the divestitures as if they occurred on June 30, 2021 and are filed as Exhibit 99.1 to the Current Report on Form 8-K and should be read in conjunction with the accompanying notes.
The unaudited pro forma condensed consolidated statement of financial position has been prepared in accordance with Regulation S-X Article 11, Pro Forma Financial Information, as amended by the final rule, Amendments to Financial Disclosures About Acquired and Disposed Businesses, as adopted by the SEC on May 21, 2020. The unaudited pro forma condensed consolidated statement of financial position does not include adjustments to reflect any potential synergies that may be achievable, or dis-synergy costs that may occur, in connection with the divestitures.
The unaudited pro forma condensed consolidated statement of financial position was derived in part from, and should be read in conjunction with the Corporation’s:
•Quarterly Reports on Form 10-Q for the three and six months ended March 31, 2021 and June 30, 2021, respectively
•Form 8-K and Exhibit 99.1, filed on April 30, 2021, including the unaudited pro forma condensed consolidated financial statements that give effect to the divestitures as if they occurred on December 31, 2020 for purposes of the unaudited pro forma condensed consolidated statement of financial position and January 1, 2018 for purposes of the unaudited pro forma condensed consolidated statements of operations for the years ended December 31, 2020, 2019 and 2018
As of the first quarter of 2021, the assets and liabilities and the results of operations of the divestitures have been reflected in the Company’s historical consolidated financial statements as discontinued operations. As such, the assets and liabilities related to the businesses sold have been segregated and classified in the historical Consolidated Statement of Financial Position as “held for sale,” and the operating results have been presented outside of income from continuing operations in the Consolidated Statements of Operations as a part of “Income (loss) from discontinued operations, net of tax.”
The unaudited pro forma condensed consolidated statement of financial position should be read in conjunction with the Corporation’s Annual report on Form 10-K for the year ended December 31, 2020.
The unaudited pro forma condensed consolidated statement of financial position is presented based on information available upon closing of the divestitures and is not reflective of the Company’s financial position had the transactions occurred on June 30, 2021.
Additionally, any unaudited pro forma condensed consolidated financial statements included here or in our previously filed Form 8-K on April 30, 2021 do not reflect future events that are not directly attributable to these divestitures. Actual results during future periods may vary significantly from the results reflected in the unaudited pro forma condensed consolidated financial statements.
The Allstate Corporation and Subsidiaries
Unaudited Pro Forma Condensed Consolidated Statement of Financial Position | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | As of June 30, 2021 |
| ($ in millions, except par value data) | | Historical Allstate | | Divestitures | | Transaction accounting adjustments | | Notes | | Pro forma Allstate |
| | (As reported) | | | | | | | | (As adjusted) |
| Assets | | | | | | | | | | |
| Investments | | | | | | | | | | |
| Fixed income securities, at estimated fair value | | $ | 42,825 | | | $ | — | | | $ | — | | | | | $ | 42,825 | |
| Equity securities, at estimated fair value | | 3,059 | | | — | | | (1,225) | | | (a) | | 1,834 | |
| Mortgage loans | | 786 | | | — | | | — | | | | | 786 | |
| Limited partnership interests | | 7,073 | | | — | | | — | | | | | 7,073 | |
| Short-term, at estimated fair value | | 5,516 | | | — | | | — | | | | | 5,516 | |
| Other | | 3,311 | | | — | | | — | | | | | 3,311 | |
| Total investments | | 62,570 | | | — | | | (1,225) | | | | | 61,345 | |
| Cash | | 656 | | | — | | | 4,384 | | | (b) | | 5,040 | |
| Premium installment receivables, net | | 8,146 | | | — | | | — | | | | | 8,146 | |
| Deferred policy acquisition costs | | 4,374 | | | — | | | — | | | | | 4,374 | |
| Reinsurance and indemnification recoverables, net | | 9,497 | | | — | | | — | | | | | 9,497 | |
| Accrued investment income | | 350 | | | — | | | — | | | | | 350 | |
| Property and equipment, net | | 1,026 | | | — | | | — | | | | | 1,026 | |
| Goodwill | | 3,349 | | | — | | | — | | | | | 3,349 | |
| Other assets | | 5,706 | | | — | | | 27 | | | (c) | | 5,733 | |
| Assets held for sale | | 36,969 | | | (41,090) | | | 4,121 | | | (d) | | — | |
| Total assets | | $ | 132,643 | | | $ | (41,090) | | | $ | 7,307 | | | | | $ | 98,860 | |
| Liabilities | | | | | | | | | | |
| Reserve for property and casualty insurance claims and claims expense | | $ | 31,637 | | | $ | — | | | $ | — | | | | | $ | 31,637 | |
| Reserve for future policy benefits | | 1,239 | | | — | | | — | | | | | 1,239 | |
| Contractholder funds | | 858 | | | — | | | — | | | | | 858 | |
| Unearned premiums | | 18,756 | | | — | | | — | | | | | 18,756 | |
| Claim payments outstanding | | 1,040 | | | — | | | — | | | | | 1,040 | |
| Deferred income taxes | | 758 | | | — | | | — | | | | | 758 | |
| Other liabilities and accrued expenses | | 9,392 | | | — | | | — | | | | | 9,392 | |
| Long-term debt | | 7,996 | | | — | | | — | | | | | 7,996 | |
| Liabilities held for sale | | 32,775 | | | (32,775) | | | — | | | | | — | |
| Total liabilities | | 104,451 | | | (32,775) | | | — | | | | | 71,676 | |
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| Shareholders’ equity | | | | | | | | | | |
| Preferred stock and additional capital paid-in | | 2,170 | | | — | | | — | | | | | 2,170 | |
| Common stock | | 9 | | | — | | | — | | | | | 9 | |
| Additional capital paid-in | | 3,668 | | | — | | | — | | | | | 3,668 | |
| Retained income | | 52,464 | | | (7,307) | | | 7,307 | | | (e) | | 52,464 | |
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| Treasury stock, at cost | | (32,394) | | | — | | | — | | | | | (32,394) | |
| Accumulated other comprehensive income: | | | | | | | | | | |
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| Unrealized net capital gains and losses | | 2,164 | | | (1,003) | | | — | | | | | 1,161 | |
| Unrealized foreign currency translation adjustments | | 24 | | | (5) | | | — | | | | | 19 | |
| Unamortized pension and other postretirement prior service credit | | 102 | | | — | | | — | | | | | 102 | |
| Total accumulated other comprehensive income | | 2,290 | | | (1,008) | | | — | | | | | 1,282 | |
| Noncontrolling interest | | (15) | | | — | | | | | | | (15) | |
| Total equity | | 28,192 | | | (8,315) | | | 7,307 | | | | | 27,184 | |
| Total liabilities and equity | | $ | 132,643 | | | $ | (41,090) | | | $ | 7,307 | | | | | $ | 98,860 | |
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See accompanying notes to unaudited pro forma condensed consolidated statement of financial position.
The Allstate Corporation and Subsidiaries
Notes to the Unaudited Pro Forma Condensed Consolidated Statement of Financial Position
Transaction accounting adjustments
(a)Represents additional investments in the divestitures that were sold prior to the sales transactions.
(b)Represents the cash received as well as cash dividends received from the divestitures prior to the sale.
(c)Represents the reclassification of the remaining accruals related to the disposed business out of the assets held for sale.
(d)Represents the reversal of the accrual for loss on disposition.
(e)Represents the reclassification of retained income included in the divestitures column into the retained income of the Company.
