Exhibit 99.1
THE ALLSTATE CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
On April 1, 2014, The Allstate Corporation (the “Company”) completed the sale of Lincoln Benefit Life Company (“LBL”), LBL’s life insurance business generated through independent master brokerage agencies, and all of LBL’s deferred fixed annuity and long-term care insurance business (collectively, “Lincoln Benefit Life”).
The following Unaudited Pro Forma Consolidated Financial Statements are presented to comply with Article 11 of Regulation S-X. The Unaudited Pro Forma Consolidated Financial Statements do not purport to present what the Company’s results would have been had the disposition actually occurred on the dates indicated or to project what the Company’s results of operations will be for any future period.
The Unaudited Pro Forma Consolidated Statements of Operations have been prepared for informational purposes and to assist in the analysis of the Company’s disposition of Lincoln Benefit Life. This information should be read together with the historical consolidated financial statements and related notes of the Company included in its Annual Report on Form 10-K for the year ended December 31, 2013.
The Unaudited Pro Forma Consolidated Statement of Financial Position as of December 31, 2013 gives effect to the transaction described above as if it had occurred on December 31, 2013. The Unaudited Pro Forma Consolidated Statements of Operations for the year ended December 31, 2013 gives effect to the transaction described above as if it had occurred on January 1, 2013. The Unaudited Pro Forma Consolidated Financial Statements are derived from the historical consolidated financial statements of the Company and are based on assumptions that management believes are reasonable in the circumstances.
THE ALLSTATE CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS OF DECEMBER 31, 2013
($ in millions, except par value data) | | As
Reported | | Lincoln
Benefit Life
Pro Forma
Adjustments | | Pro
Forma |
Assets | | | | | | |
Investments | | | | | | |
Fixed income securities, at fair value (amortized cost $59,008) | $ | 60,910 | $ | -- | $ | 60,910 |
Equity securities, at fair value (cost $4,473) | | 5,097 | | -- | | 5,097 |
Mortgage loans | | 4,721 | | -- | | 4,721 |
Limited partnership interests | | 4,967 | | -- | | 4,967 |
Short-term, at fair value (amortized cost $2,393) | | 2,393 | | -- | | 2,393 |
Other | | 3,067 | | -- | | 3,067 |
Total investments | | 81,155 | | -- | | 81,155 |
Cash | | 675 | | 609 | | 1,284 |
Premium installment receivables, net | | 5,237 | | -- | | 5,237 |
Deferred policy acquisition costs | | 3,372 | | -- | | 3,372 |
Reinsurance recoverables, net | | 7,621 | | -- | | 7,621 |
Accrued investment income | | 624 | | -- | | 624 |
Property and equipment, net | | 1,024 | | -- | | 1,024 |
Goodwill | | 1,243 | | -- | | 1,243 |
Other assets | | 1,937 | | -- | | 1,937 |
Separate Accounts | | 5,039 | | -- | | 5,039 |
Assets held for sale | | 15,593 | | (15,593) | | -- |
Total assets | $ | 123,520 | $ | (14,984) | $ | 108,536 |
Liabilities | | | | | | |
Reserve for property-liability insurance claims and claims expense | $ | 21,857 | $ | -- | $ | 21,857 |
Reserve for life-contingent contract benefits | | 12,386 | | -- | | 12,386 |
Contractholder funds | | 24,304 | | -- | | 24,304 |
Unearned premiums | | 10,932 | | -- | | 10,932 |
Claim payments outstanding | | 631 | | -- | | 631 |
Deferred income taxes | | 635 | | -- | | 635 |
Other liabilities and accrued expenses | | 5,156 | | -- | | 5,156 |
Long-term debt | | 6,201 | | -- | | 6,201 |
Separate Accounts | | 5,039 | | -- | | 5,039 |
Liabilities held for sale | | 14,899 | | (14,899) | | -- |
Total liabilities | | 102,040 | | (14,899) | | 87,141 |
| | | | | | |
Equity | | | | | | |
Preferred stock and additional capital paid-in, $1 par value, 25 million shares authorized, 32.3 thousand shares issued and outstanding, $807.5 aggregate liquidation preference | | 780 | | -- | | 780 |
Common stock, $.01 par value, 2.0 billion shares authorized and 900 million issued, 449 million shares outstanding | | 9 | | -- | | 9 |
Additional capital paid-in | | 3,143 | | -- | | 3,143 |
Retained income | | 35,580 | | -- | | 35,580 |
Deferred ESOP expense | | (31) | | -- | | (31) |
Treasury stock, at cost (451 million shares) | | (19,047) | | -- | | (19,047) |
Accumulated other comprehensive income: | | | | | | |
Unrealized net capital gains and losses: | | | | | | |
Unrealized net capital gains and losses on fixed income securities | | 50 | | -- | | 50 |
Other unrealized net capital gains and losses | | 1,698 | | (123) | | 1,575 |
Unrealized adjustment to DAC, DSI and insurance reserves | | (102) | | 38 | | (64) |
Total unrealized net capital gains and losses | | 1,646 | | (85) | | 1,561 |
Unrealized foreign currency translation adjustments | | 38 | | -- | | 38 |
Unrecognized pension and other postretirement benefit cost | | (638) | | -- | | (638) |
Total accumulated other comprehensive income | | 1,046 | | (85) | | 961 |
Total shareholders’ equity | | 21,480 | | (85) | | 21,395 |
Total liabilities and shareholders’ equity | $ | 123,520 | $ | (14,984) | $ | 108,536 |
See notes to unaudited pro forma consolidated financial statements.
THE ALLSTATE CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED 2013
($ in millions, except per share data) | | As Reported | | Lincoln
Benefit Life
Pro Forma
Adjustments | | Pro Forma |
Revenues | | | | | | |
Property-liability insurance premiums | $ | 27,618 | $ | -- | | $27,618 |
Life and annuity premiums and contract charges | | 2,352 | | (341) | | 2,011 |
Net investment income | | 3,943 | | (538) | | 3,405 |
Realized capital gains and losses: | | | | | | |
Total other-than-temporary impairment losses | | (207) | | -- | | (207) |
Portion of loss recognized in other comprehensive income | | (8) | | -- | | (8) |
Net other-than-temporary impairment losses recognized in earnings | | (215) | | -- | | (215) |
Sales and other realized capital gains and losses | | 809 | | -- | | 809 |
Total realized capital gains and losses | | 594 | | -- | | 594 |
| | 34,507 | | (879) | | 33,628 |
Costs and expenses | | | | | | |
Property-liability insurance claims and claims expense | | 17,911 | | -- | | 17,911 |
Life and annuity contract benefits | | 1,917 | | (217) | | 1,700 |
Interest credited to contractholder funds | | 1,278 | | (376) | | 902 |
Amortization of deferred policy acquisition costs | | 4,002 | | (22) | | 3,980 |
Operating costs and expenses | | 4,387 | | (47) | | 4,340 |
Restructuring and related charges | | 70 | | -- | | 70 |
Loss on extinguishment of debt | | 491 | | -- | | 491 |
Interest expense | | 367 | | -- | | 367 |
| | 30,423 | | (662) | | 29,761 |
| | | | | | |
Loss on disposition of operations | | (688) | | -- | | (688) |
| | | | | | |
Income from operations before income tax expense | | 3,396 | | (217) | | 3,179 |
| | | | | | |
Income tax expense | | 1,116 | | (74) | | 1,042 |
| | | | | | |
Net income | | 2,280 | | (143) | | 2,137 |
| | | | | | |
Preferred stock dividends | | 17 | | -- | | 17 |
| | | | | | |
Net income available to common shareholders | $ | 2,263 | $ | (143) | $ | 2,120 |
| | | | | | |
| | | | | | |
Earnings per common share: | | | | | | |
| | | | | | |
Net income available to common shareholders per common share - Basic | $ | 4.87 | $ | (0.30) | $ | 4.57 |
| | | | | | |
Weighted average common shares - Basic | | 464.4 | | -- | | 464.4 |
| | | | | | |
Net income available to common shareholders per common share - Diluted | $ | 4.81 | $ | (0.30) | $ | 4.51 |
| | | | | | |
Weighted average common shares - Diluted | | 470.3 | | -- | | 470.3 |
See notes to unaudited pro forma consolidated financial statements.
THE ALLSTATE CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
The accompanying Unaudited Pro Forma Consolidated Statement of Financial Position reflects the historical consolidated statement of financial position of The Allstate Corporation as presented in the Annual Report on Form 10-K for the year ended December 31, 2013, with adjustments to eliminate the assets, liabilities and equity attributable to the Lincoln Benefit Life business being sold and add the estimated cash proceeds using a December 31, 2013 valuation. The actual cash proceeds will be based on the actual valuation as of the closing date of April 1, 2014.
The accompanying Unaudited Pro Forma Consolidated Statements of Operations reflect the historical consolidated statements of operations of The Allstate Corporation as presented in the Annual Report on Form 10-K for the year ended December 31, 2013, with adjustments to eliminate the revenues and expenses attributable to the Lincoln Benefit Life business being sold for the period presented. Since the invested assets were not separately identifiable prior to July 2013, the net investment income amount attributable to the Lincoln Benefit Life business being sold for 2013 was estimated using the average pre-tax yield for the Allstate Life Insurance Company investment portfolios supporting the product groups being sold applied to the average reserves relating to the business being sold plus interest on policy loans sold less estimated investment expenses. Realized capital gains and losses were not allocated to the Lincoln Benefit Life business being sold since the invested assets were not separately identifiable prior to July 2013.
