Allstate Memo



FOR IMMEDIATE RELEASE

Contact: Michael Trevino

Media Relations

(847) 402-5600

Robert Block

Phil Dorn

Investor Relations

(847) 402-2800

Allstate reports 2001 first quarter results

NORTHBROOK, Ill., April 19, 2001 -- The Allstate Corporation (NYSE: ALL) today reported that operating income per diluted share for the first quarter of 2001 increased 26.7 percent to $.76 from $.60 in the first quarter of 2000.  The growth was driven by the Property-Liability business.

“We are pleased with several aspects of our first quarter’s performance,” said Chairman, President and CEO Edward M. Liddy. “The core premium growth rate trends in the Allstate agency standard auto insurance business are encouraging with a 4.9% increase over the same quarter last year. Renewal ratios in the standard book have also increased. As anticipated, we experienced declines in our non-standard book due to the underwriting and pricing measures adopted last year. As a result of the actions we have taken, we continue to see improved frequencies in this line.

“While catastrophe losses were significantly lower than in the first quarter of last year, many regions were impacted by weather-related losses, especially due to the effects of heavy snow fall. We estimate that these losses adversely impacted our combined ratio by approximately 1.5 to 2.0 points, which equates to a $.07 to $.10 impact on operating earnings per share.

“The Allstate Good Hands℠ Network continues to make progress. There is no doubt that the new technology platforms we have been using have resulted in a more responsive offering for our customers, and increased customer contacts and sales for our agents. We recently introduced a new feature to our Internet offering, which enables customers to receive faster quotes. This feature has been well received, and we are accelerating the rollout of the functionality across the network. During the quarter, we signed a service agreement to market our auto, homeowners, renters and condominium insurance products at InsWeb’s online marketplace.”

Operating income increased 19.2 percent to $552 million in the first quarter of 2001, compared to $463 million in the first quarter of 2000.  The 2001 results included $5 million in after-tax restructuring charges, compared to $18 million after-tax in the first quarter of 2000. Consolidated revenues for the first quarter were $7.13 billion (reflecting realized capital losses of $33 million after-tax), a decrease of 2.1 percent from the 2000 first quarter revenue of $7.29 billion (which included realized capital gains of $109 million after-tax).  Consolidated net income for the quarter was $500 million or $.68 per diluted share, compared to $561 million or $.73 per diluted share for the same period in 2000, reflecting increased operating income, offset by realized capital losses during 2001 due to market conditions and changes in the valuation of derivative instruments resulting from new accounting standards adopted in 2001.

Property-Liability Business

Property-Liability written premiums for the first quarter of 2001 were $5.44 billion versus $5.38 billion during the same period of 2000.  Property-Liability revenues in the first quarter of 2001 were $5.95 billion compared to $6.08 billion for the 2000 first quarter. Operating income for the quarter was $445 million versus 2000 first quarter operating income of $342 million, an increase of 30.1 percent.  Operating income was impacted by $4 million in after-tax restructuring charges in the first quarter of 2001, compared to $17 million after-tax in the first quarter of 2000. The operating income increase reflects higher premiums in the standard auto and homeowners lines and lower catastrophe losses, partially offset by decreased non-standard auto premiums, higher weather-related losses and higher auto loss costs. 

“We continue to see improving pricing levels in our Property-Liability business across many parts of the country,” commented Liddy. “So far this year, standard auto rate actions have been approved in 24 states with a projected average increase of 3.0% on an annual basis, and non-standard rate actions have been approved in 16 states with a projected average increase of 8.5% annually. Likewise, homeowners rate actions have been approved in 20 states this year with a projected average increase of 8.3% annually. This is compared to last year’s rate actions which had only slight impacts to premium overall.”

The combined ratio for the quarter was 98.0, compared to the 2000 first quarter ratio of 99.7.  Excluding catastrophe losses and restructuring charges, the combined ratio was 96.4, compared to the 2000 first quarter ratio of 92.2.  Property-Liability realized capital gains were $17 million after-tax in the first quarter of 2001, compared to realized capital gains of $119 million after-tax for the same period in 2000.  Net income was $459 million for the quarter, compared to $461 million for the same period in the previous year.

Allstate Financial Business

“Given the volatile state of the capital markets, which impacted sales of our fixed and variable annuity products, Allstate Financial’s results were good,” Liddy said.

For the first quarter of 2001, Allstate Financial revenues were $1.16 billion, compared to $1.20 billion for the same period in the previous year - relatively unchanged despite changes in the mix of products sold. Allstate Financial operating income for the quarter was $127 million compared to $127 million for the same period in 2000, due to increased investment margins, offset by higher mortality expenses and lower margins from fee-based products. Net income for the first quarter of 2001 was $69 million (reflecting realized capital losses of $52 million after-tax ), compared to $131 million the first quarter of 2000 (which included realized capital gains of $4 million after-tax). Statutory premiums and deposits were $2.87 billion in the quarter compared to $3.01 billion in the first quarter of 2000, as sales of variable and fixed annuities decreased in 2001 compared to 2000 primarily due to market conditions.

The Allstate Corporation (NYSE: ALL) is the nation’s largest publicly held personal lines insurer. Widely known through its “You’re In Good Hands With Allstate®” slogan, Allstate provides insurance products to more than 14 million households and has approximately 13,000 exclusive agents in the U.S. and Canada. Customers can access Allstate products and services through Allstate agents, or in select states at and 1-800-Allstate. Encompass and Deerbrook Insurance brand property and casualty products are sold exclusively through independent agents. Allstate Financial Group includes the businesses that provide life insurance and investment products.

The Allstate Corporation prepares an interim investor supplement, containing standard information that is not available at the time of the earnings release. A supplement will be posted to the company’s website in approximately 10 days, and can be accessed by going to the Allstate web site at  and clicking on “About Allstate.” From there, go to the “Find Financial Information” button.

Summary of results for the quarter ended March 31, 2001:

|Consolidated Highlights |

| |Quarter Ended |

| |March 31 |

|($ in millions, except per-share amounts) |Est. 2001 |2000 |Change |

| |$ |$ |% |

|Consolidated Revenues |7,131 |7,286 |(2.1) |

|Operating Income before Restructuring Charges | | | |

| |557 |481 |15.8 |

|Operating Income Per Share (Diluted) before Restructuring Charges | | | |

| |.76 |.62 |22.6 |

|Restructuring Charges After-tax |5 |18 |(72.2) |

|Operating Income |552 |463 |19.2 |

|Operating Income Per Share (Diluted) |.76 |.60 |26.7 |

|Realized Capital Gains (Losses) After-tax |(33) |109 |(130.3) |

|Dividends on Preferred Securities of Subsidiary Trusts | | | |

| |(10) |(11) |(9.1) |

|Cumulative effect of a change in accounting principle, after-tax | | | |

| |(9) |-- |-- |

|Net Income |500 |561 |(10.9) |

|Net Income Per Share (Diluted) |.68 |.73 |(6.8) |

|Weighted Average Shares Outstanding (Diluted) | | | |

| |730.3 |772.1 |(5.4) |

• For the first quarter of 2001, consolidated revenues were $7.13 billion, compared to $7.29 billion in the first quarter of 2000, due to increased net investment income, offset by decreased realized capital gains.

• Consolidated operating income increased 19.2 percent during the first quarter of 2001 to $552 million or $.76 per share, on a diluted basis, compared to prior year first quarter operating income of $463 million or $.60 per diluted share. This increase was due to increased standard auto and homeowners premiums and lower catastrophe losses, partially offset by decreased non-standard auto premiums, higher weather-related losses and higher auto loss costs. Operating income was impacted by $5 million in after-tax restructuring charges in the first quarter of 2001, and $18 million in after-tax restructuring charges in the first quarter of 2000.

• Property-Liability written premiums totaled $5.44 billion during the first quarter of 2001 versus $5.38 billion during the same period in 2000. Excluding the impacts of Encompass Insurance, Property-Liability written premiums totaled $5.02 billion during the first quarter of 2001, an increase from $4.95 billion during the same period of 2000, due to growth in standard auto and homeowners, partially offset by decreases in non-standard auto due to planned profitability actions.

• Allstate Financial operating income was $127 million in the first quarter of 2001, compared to $127 million in the same period of 2000, due to increased investment margins, offset by higher mortality expenses compared to the positive mortality impact in the same period last year, and lower margins from fee-based products.

• The adoption of Statements of Financial Accounting Standards (SFAS) Nos. 133 and 138 on January 1, 2001, negatively impacted consolidated net income by $9 million after-tax in the first quarter. SFAS Nos. 133 and 138 comprise a single, integrated accounting framework for derivative instruments and hedging activities, including specific methodologies for the valuation of derivative instruments.

• Consolidated realized capital losses totaled $33 million after-tax in the first quarter of 2001, compared to consolidated realized capital gains of $109 million after-tax in the same period of 2000. This decrease was due to market conditions impacting portfolio trading in the normal course of business, the valuation of derivative instruments and investment write-downs.

• At March 31, 2001, the Company held $56 million of securities issued by PG&E Corporation and its subsidiaries, which includes Pacific Gas and Electric Company, of which $15 million was unsecured. None of these securities are currently in default with respect to principal or interest payments.

• During the first quarter of 2001, the company acquired approximately 5.7 million shares of its stock at a cost of $221 million as part of the current stock repurchase program. The total cost of shares repurchased under this program is $1.56 billion.

|Property-Liability Highlights |

| |Quarter Ended March 31 |

|($ in millions, except ratios) |Est. 2001 |2000 |Change |

| |$ |$ |% |

|Property-Liability Premiums Written |5,440 |5,379 |1.1 |

|Property-Liability Revenues |5,946 |6,079 |(2.2) |

|Operating Income before Restructuring Charges |449 |359 |25.1 |

|Restructuring Charges After-tax |4 |17 |(76.5) |

|Operating Income |445 |342 |30.1 |

|Realized Capital Gains After-tax |17 |119 |(85.7) |

|Cumulative effect of a change in accounting principle, after-tax | | | |

| |(3) |-- |-- |

|Net Income |459 |461 |(0.4) |

|Catastrophes After-tax |53 |248 |(78.6) |

|Combined Ratio before impacts of catastrophes and restructuring charges | | | |

| |96.4 |92.2 |4.2 pts |

|Impact of catastrophes | | | |

|Impact of restructuring |1.5 |7.0 |(5.5) pts |

| |0.1 |0.5 |(0.4) pts |

|Combined Ratio | | | |

| |98.0 |99.7 |(1.7) pts |

|Allstate Financial Highlights |

| |Quarter Ended March 31 |

|($ in millions) |Est. 2001 |2000 |Change |

| |$ |$ |% |

|Statutory Premiums and Deposits |2,867 |3,009 |(4.7) |

|Allstate Financial GAAP Revenues |1,161 |1,200 |(3.3) |

|Operating Income before Restructuring Charges |128 |128 |-- |

|Restructuring Charges After-tax |1 |1 |-- |

|Operating Income |127 |127 |-- |

|Realized Capital Gains (Losses) After-tax |(52) |4 |-- |

|Cumulative effect of a change in accounting principle, after-tax | | | |

| |(6) |-- |-- |

|Net Income |69 |131 |(47.3) |

|Investments including Separate Accounts |56,543 |50,875 |11.1 |

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Allstate Insurance Company Street City, State Zip T 888.555.1234 F 888.555.1256 E someone@

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