UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): April 30, 2021
THE ALLSTATE CORP ORATION
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||||||||||||
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code (847 ) 402-5000
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbols | Name of each exchange on which registered | ||||||
| Common Stock, par value $0.01 per share | ALL | New York Stock Exchange Chicago Stock Exchange | ||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
| Emerging growth company | |||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ____
Section 8 – Other Events
Item 8.01. Other Events.
Attached as Exhibit 99.1 to this report is certain historical unaudited financial and other information relating to the previously announced sales of the Registrant’s subsidiaries, Allstate Life Insurance Company and Allstate Life Insurance Company of New York. These transactions are expected to close in the second half of 2021, subject to regulatory approvals and other customary closing conditions.
Section 9 – Financial Statements and Exhibits
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
| Exhibit No. | Description | |||||||
| 99.1 | ||||||||
| 104 | Cover Page Interactive Data File (formatted as inline XBRL). | |||||||
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| THE ALLSTATE CORPORATION | ||||||||||||||
| (Registrant) | ||||||||||||||
| By: | /s/ Daniel G. Gordon | |||||||||||||
| Name: | Daniel G. Gordon | |||||||||||||
| Title: | Vice President, Assistant General | |||||||||||||
| Counsel and Assistant Secretary | ||||||||||||||
| Date: | April 30, 2021 | |||||||||||||
3
Exhibit 99.1
The Allstate Corporation and Subsidiaries
Unaudited Pro Forma Condensed Consolidated Financial Statements
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 (“ALIC”) 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 (“ALNY”) for $220 million in cash.
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 ultimate amount of the loss on these sales 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 dates 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.
The divestitures are considered a material strategic shift for the Corporation as ALIC and ALNY comprised the reportable segments of Allstate Life and Allstate Annuities. The divestitures qualify as discontinued operations and all prior periods will be recast to remove Allstate Life and Allstate Annuities segment results from the Corporation’s continuing operations.
The unaudited pro forma condensed consolidated financial statements have been derived from historical financial statements prepared in accordance with U.S. generally accepted accounting principles and are:
(1)Presented based on information currently available
(2)Intended for informational purposes only
(3)Are 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 financial statements and accompanying notes 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.
The unaudited pro forma condensed consolidated financial statements as of and for the years ended do not reflect future events that are not directly attributable to the divestitures and that may occur after execution of the agreement. Future results may vary significantly from the results reflected in the unaudited pro forma condensed consolidated financial statements.
The unaudited pro forma condensed consolidated financial statements, filed as Exhibit 99.1 to the Current Report on Form 8-K, should be read in conjunction with the accompanying notes. In addition, the unaudited pro forma condensed consolidated financial statements were derived in part from, and should be read in conjunction with, the historical consolidated financial statements included in the Corporation’s annual report on Form 10-K for the year ended December 31, 2020.
The unaudited pro forma condensed consolidated financial statements also include “forward-looking statements” that anticipate results based on our estimates, assumptions and plans that are subject to uncertainty. These statements are made subject to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. Factors that could cause actual results to differ materially from those expressed in, or implied by, the forward-looking statements may be found in our filings with the U.S. Securities and Exchange Commission, including the “Risk Factors” section in our most recent annual report on Form 10-K. Forward-looking statements are as of the date on which they are made, and we assume no obligation to update or revise any forward-looking statement.
The unaudited pro forma condensed consolidated financial statements have 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 financial statements do not include adjustments to reflect any potential synergies that may be achievable, or dis-synergy costs that may occur, in connection with the divestitures.
1
The Allstate Corporation and Subsidiaries
Unaudited Pro Forma Condensed Consolidated Statement of Financial Position
| As of December 31, 2020 | ||||||||||||||||||||||||||||||||
| ($ in millions, except par value data) | Historical Allstate (a) | Divestitures (b) | Transaction accounting adjustments | Notes | Pro forma Allstate | |||||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||||
| Investments | ||||||||||||||||||||||||||||||||
| Fixed income securities, at estimated fair value | $ | 66,354 | $ | (23,789) | $ | — | $ | 42,565 | ||||||||||||||||||||||||
| Equity securities, at estimated fair value | 4,710 | (1,542) | — | 3,168 | ||||||||||||||||||||||||||||
| Mortgage loans | 4,075 | (3,329) | — | 746 | ||||||||||||||||||||||||||||
| Limited partnership interests | 7,609 | (3,046) | — | 4,563 | ||||||||||||||||||||||||||||
| Short-term, at estimated fair value | 7,800 | (993) | — | 6,807 | ||||||||||||||||||||||||||||
| Other | 3,689 | (1,998) | — | 1,691 | ||||||||||||||||||||||||||||
| Total investments | 94,237 | (34,697) | — | 59,540 | ||||||||||||||||||||||||||||
| Cash | 377 | (66) | — | 311 | ||||||||||||||||||||||||||||
| Premium installment receivables, net | 6,479 | (16) | — | 6,463 | ||||||||||||||||||||||||||||
| Deferred policy acquisition costs | 4,700 | (925) | — | 3,775 | ||||||||||||||||||||||||||||
| Reinsurance and indemnification recoverables, net | 9,220 | (2,005) | — | 7,215 | ||||||||||||||||||||||||||||
| Accrued investment income | 600 | (229) | — | 371 | ||||||||||||||||||||||||||||
| Property and equipment, net | 1,057 | — | — | 1,057 | ||||||||||||||||||||||||||||
| Goodwill | 2,544 | (175) | — | 2,369 | ||||||||||||||||||||||||||||
| Other assets | 3,429 | (674) | — | 2,755 | ||||||||||||||||||||||||||||
| Separate Accounts | 3,344 | (3,344) | — | — | ||||||||||||||||||||||||||||
| Total assets | $ | 125,987 | $ | (42,131) | $ | — | $ | 83,856 | ||||||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||||||||
| Reserve for property and casualty insurance claims and claims expense | $ | 27,610 | $ | — | $ | — | $ | 27,610 | ||||||||||||||||||||||||
| Reserve for life-contingent contract benefits | 12,768 | (11,740) | — | 1,028 | ||||||||||||||||||||||||||||
| Contractholder funds | 17,213 | (16,356) | — | 857 | ||||||||||||||||||||||||||||
| Unearned premiums | 15,949 | (3) | — | 15,946 | ||||||||||||||||||||||||||||
| Claim payments outstanding | 957 | — | — | 957 | ||||||||||||||||||||||||||||
| Deferred income taxes | 1,355 | (973) | — | 382 | ||||||||||||||||||||||||||||
| Other liabilities and accrued expenses | 8,749 | (909) | — | 7,840 | ||||||||||||||||||||||||||||
| Long-term debt | 7,825 | — | — | 7,825 | ||||||||||||||||||||||||||||
| Separate Accounts | 3,344 | (3,344) | — | — | ||||||||||||||||||||||||||||
| Total liabilities | 95,770 | (33,325) | — | 62,445 | ||||||||||||||||||||||||||||
| Shareholders’ equity | ||||||||||||||||||||||||||||||||
| Preferred stock and additional capital paid-in, $1 par value; $2,025 aggregate liquidation preference | 1,970 | — | — | 1,970 | ||||||||||||||||||||||||||||
| Common stock, $.01 par value | 9 | — | — | 9 | ||||||||||||||||||||||||||||
| Additional capital paid-in | 3,498 | (2,582) | — | 916 | ||||||||||||||||||||||||||||
| Retained income | 52,767 | (5,028) | — | 47,739 | ||||||||||||||||||||||||||||
| Treasury stock, at cost (596 million shares) | (31,331) | — | — | (31,331) | ||||||||||||||||||||||||||||
| Accumulated other comprehensive income: | ||||||||||||||||||||||||||||||||
| Unrealized net capital gains and losses | 3,180 | (1,193) | — | 1,987 | ||||||||||||||||||||||||||||
| Unrealized foreign currency translation adjustments | (7) | (3) | — | (10) | ||||||||||||||||||||||||||||
| Unamortized pension and other postretirement prior service credit | 131 | — | — | 131 | ||||||||||||||||||||||||||||
| Total accumulated other comprehensive income (“AOCI”) | 3,304 | (1,196) | — | 2,108 | ||||||||||||||||||||||||||||
| Total shareholders’ equity | 30,217 | (8,806) | — | 21,411 | ||||||||||||||||||||||||||||
| Total liabilities and shareholders’ equity | $ | 125,987 | $ | (42,131) | $ | — | $ | 83,856 | ||||||||||||||||||||||||
See accompanying notes to unaudited pro forma condensed consolidated financial statements.
2
The Allstate Corporation and Subsidiaries
Unaudited Pro Forma Condensed Consolidated Statements of Operations
| For the year-ended December 31, 2020 | ||||||||||||||||||||||||||||||||
| ($ in millions, except par value data) | Historical Allstate (a) | Divestitures (b) | Transaction accounting adjustments | Notes | Pro forma Allstate | |||||||||||||||||||||||||||
| Revenues | ||||||||||||||||||||||||||||||||
| Property and casualty insurance premiums | $ | 37,073 | $ | — | $ | — | $ | 37,073 | ||||||||||||||||||||||||
| Life premiums and contract charges | 2,444 | (1,350) | — | 1,094 | ||||||||||||||||||||||||||||
| Other revenue | 1,065 | (121) | 121 | (c) | 1,065 | |||||||||||||||||||||||||||
| Net investment income | 2,853 | (1,263) | — | 1,590 | ||||||||||||||||||||||||||||
| Realized capital gains and losses | 1,356 | (269) | — | 1,087 | ||||||||||||||||||||||||||||
| Total revenues | 44,791 | (3,003) | 121 | 41,909 | ||||||||||||||||||||||||||||
| Costs and expenses | ||||||||||||||||||||||||||||||||
| Property and casualty insurance claims and claims expense | 22,001 | — | — | 22,001 | ||||||||||||||||||||||||||||
| Shelter-in-Place Payback expense | 948 | — | — | 948 | ||||||||||||||||||||||||||||
| Life contract benefits | 2,243 | (1,727) | — | 516 | ||||||||||||||||||||||||||||
| Interest credited to contractholder funds | 638 | (605) | — | 33 | ||||||||||||||||||||||||||||
| Amortization of deferred policy acquisition costs | 5,630 | (153) | — | 5,477 | ||||||||||||||||||||||||||||
| Operating costs and expenses | 5,732 | (354) | 116 | (c) | 5,494 | |||||||||||||||||||||||||||
| Pension and other postretirement remeasurement gains and losses | (51) | — | — | (51) | ||||||||||||||||||||||||||||
| Restructuring and related charges | 259 | (8) | 2 | (c) | 253 | |||||||||||||||||||||||||||
| Amortization of purchased intangibles | 118 | — | — | 118 | ||||||||||||||||||||||||||||
| Interest expense | 318 | — | — | 318 | ||||||||||||||||||||||||||||
| Total costs and expenses | 37,836 | (2,847) | 118 | 35,107 | ||||||||||||||||||||||||||||
| Gain on disposition of operations | 4 | (4) | — | — | ||||||||||||||||||||||||||||
| Income from operations before income tax expense | 6,959 | (160) | 3 | 6,802 | ||||||||||||||||||||||||||||
| Income tax expense | 1,383 | (10) | — | 1,373 | ||||||||||||||||||||||||||||
| Net income | 5,576 | (150) | 3 | 5,429 | ||||||||||||||||||||||||||||
| Preferred stock dividends | 115 | — | — | 115 | ||||||||||||||||||||||||||||
| Net income applicable to common shareholders | $ | 5,461 | $ | (150) | $ | 3 | $ | 5,314 | ||||||||||||||||||||||||
| Earnings per common share | ||||||||||||||||||||||||||||||||
| Net income applicable to common shareholders per common share - Basic | $ | 17.53 | $ | (0.48) | $ | 0.01 | $ | 17.06 | ||||||||||||||||||||||||
| Weighted average common shares - Basic | 311.6 | — | — | 311.6 | ||||||||||||||||||||||||||||
| Net income applicable to common shareholders per common share - Diluted | $ | 17.31 | $ | (0.48) | $ | 0.01 | $ | 16.84 | ||||||||||||||||||||||||
| Weighted average common shares - Diluted | 315.5 | — | — | 315.5 | ||||||||||||||||||||||||||||
See accompanying notes to unaudited pro forma condensed consolidated financial statements.
3
The Allstate Corporation and Subsidiaries
Unaudited Pro Forma Condensed Consolidated Statements of Operations
| For the year-ended December 31, 2019 | ||||||||||||||||||||||||||||||||
| ($ in millions, except par value data) | Historical Allstate (a) | Divestitures (b) | Transaction accounting adjustments | Notes | Pro forma Allstate | |||||||||||||||||||||||||||
| Revenues | ||||||||||||||||||||||||||||||||
| Property and casualty insurance premiums | $ | 36,076 | $ | — | $ | — | $ | 36,076 | ||||||||||||||||||||||||
| Life premiums and contract charges | 2,501 | (1,356) | — | 1,145 | ||||||||||||||||||||||||||||
| Other revenue | 1,054 | (125) | 125 | (c) | 1,054 | |||||||||||||||||||||||||||
| Net investment income | 3,159 | (1,431) | — | 1,728 | ||||||||||||||||||||||||||||
| Realized capital gains and losses | 1,885 | (347) | — | 1,538 | ||||||||||||||||||||||||||||
| Total revenues | 44,675 | (3,259) | 125 | 41,541 | ||||||||||||||||||||||||||||
| Costs and expenses | ||||||||||||||||||||||||||||||||
| Property and casualty insurance claims and claims expense | 23,976 | — | — | 23,976 | ||||||||||||||||||||||||||||
| Life contract benefits | 2,039 | (1,438) | — | 601 | ||||||||||||||||||||||||||||
| Interest credited to contractholder funds | 640 | (606) | — | 34 | ||||||||||||||||||||||||||||
| Amortization of deferred policy acquisition costs | 5,533 | (180) | — | 5,353 | ||||||||||||||||||||||||||||
| Operating costs and expenses | 5,690 | (383) | 115 | (c) | 5,422 | |||||||||||||||||||||||||||
| Pension and other postretirement remeasurement gains and losses | 114 | — | — | 114 | ||||||||||||||||||||||||||||
| Restructuring and related charges | 41 | (3) | 1 | (c) | 39 | |||||||||||||||||||||||||||
| Amortization of purchased intangibles | 126 | — | — | 126 | ||||||||||||||||||||||||||||
| Impairment of purchased intangibles | 106 | — | — | 106 | ||||||||||||||||||||||||||||
| Interest expense | 327 | — | — | 327 | ||||||||||||||||||||||||||||
| Total costs and expenses | 38,592 | (2,610) | 116 | 36,098 | ||||||||||||||||||||||||||||
| Gain on disposition of operations | 6 | (6) | — | — | ||||||||||||||||||||||||||||
| Income from operations before income tax expense | 6,089 | (655) | 9 | 5,443 | ||||||||||||||||||||||||||||
| Income tax expense | 1,242 | (126) | — | 1,116 | ||||||||||||||||||||||||||||
| Net income | 4,847 | (529) | 9 | 4,327 | ||||||||||||||||||||||||||||
| Preferred stock dividends | 169 | — | — | 169 | ||||||||||||||||||||||||||||
| Net income applicable to common shareholders | $ | 4,678 | $ | (529) | $ | 9 | $ | 4,158 | ||||||||||||||||||||||||
| Earnings per common share | ||||||||||||||||||||||||||||||||
| Net income applicable to common shareholders per common share - Basic | $ | 14.25 | $ | (1.61) | $ | 0.03 | $ | 12.67 | ||||||||||||||||||||||||
| Weighted average common shares - Basic | 328.2 | — | — | 328.2 | ||||||||||||||||||||||||||||
| Net income applicable to common shareholders per common share - Diluted | $ | 14.03 | $ | (1.59) | $ | 0.03 | $ | 12.47 | ||||||||||||||||||||||||
| Weighted average common shares - Diluted | 333.5 | — | — | 333.5 | ||||||||||||||||||||||||||||
See accompanying notes to unaudited pro forma condensed consolidated financial statements.
4
The Allstate Corporation and Subsidiaries
Unaudited Pro Forma Condensed Consolidated Statements of Operations
| For the year-ended December 31, 2018 | ||||||||||||||||||||||||||||||||
| ($ in millions, except par value data) | Historical Allstate (a) | Divestitures (b) | Transaction accounting adjustments | Notes | Pro forma Allstate | |||||||||||||||||||||||||||
| Revenues | ||||||||||||||||||||||||||||||||
| Property and casualty insurance premiums | $ | 34,048 | $ | — | $ | — | $ | 34,048 | ||||||||||||||||||||||||
| Life premiums and contract charges | 2,465 | (1,330) | — | 1,135 | ||||||||||||||||||||||||||||
| Other revenue | 939 | (119) | 119 | (c) | 939 | |||||||||||||||||||||||||||
| Net investment income | 3,240 | (1,601) | — | 1,639 | ||||||||||||||||||||||||||||
| Realized capital gains and losses | (877) | 180 | — | (697) | ||||||||||||||||||||||||||||
| Total revenues | 39,815 | (2,870) | 119 | 37,064 | ||||||||||||||||||||||||||||
| Costs and expenses | ||||||||||||||||||||||||||||||||
| Property and casualty insurance claims and claims expense | 22,778 | — | — | 22,778 | ||||||||||||||||||||||||||||
| Life contract benefits | 1,973 | (1,378) | — | 595 | ||||||||||||||||||||||||||||
| Interest credited to contractholder funds | 654 | (619) | — | 35 | ||||||||||||||||||||||||||||
| Amortization of deferred policy acquisition costs | 5,222 | (139) | — | 5,083 | ||||||||||||||||||||||||||||
| Operating costs and expenses | 5,594 | (392) | 111 | (c) | 5,313 | |||||||||||||||||||||||||||
| Pension and other postretirement remeasurement gains and losses | 468 | — | — | 468 | ||||||||||||||||||||||||||||
| Restructuring and related charges | 67 | (3) | — | 64 | ||||||||||||||||||||||||||||
| Amortization of purchased intangibles | 105 | — | — | 105 | ||||||||||||||||||||||||||||
| Interest expense | 332 | — | — | 332 | ||||||||||||||||||||||||||||
| Total costs and expenses | 37,193 | (2,531) | 111 | 34,773 | ||||||||||||||||||||||||||||
| Gain on disposition of operations | 6 | (6) | — | — | ||||||||||||||||||||||||||||
| Income from operations before income tax expense | 2,628 | (345) | 8 | 2,291 | ||||||||||||||||||||||||||||
| Income tax expense | 468 | (9) | — | 459 | ||||||||||||||||||||||||||||
| Net income | 2,160 | (336) | 8 | 1,832 | ||||||||||||||||||||||||||||
| Preferred stock dividends | 148 | — | — | 148 | ||||||||||||||||||||||||||||
| Net income applicable to common shareholders | $ | 2,012 | $ | (336) | $ | 8 | $ | 1,684 | ||||||||||||||||||||||||
| Earnings per common share | ||||||||||||||||||||||||||||||||
| Net income applicable to common shareholders per common share - Basic | $ | 5.78 | $ | (0.97) | $ | 0.02 | $ | 4.83 | ||||||||||||||||||||||||
| Weighted average common shares - Basic | 347.8 | — | — | 347.8 | ||||||||||||||||||||||||||||
| Net income applicable to common shareholders per common share - Diluted | $ | 5.70 | $ | (0.95) | $ | 0.02 | $ | 4.77 | ||||||||||||||||||||||||
| Weighted average common shares - Diluted | 353.2 | — | — | 353.2 | ||||||||||||||||||||||||||||
See accompanying notes to unaudited pro forma condensed consolidated financial statements.
5
The Allstate Corporation and Subsidiaries
Notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements
Note 1. Basis of presentation
The allocation of corporate support and expenses included may differ from expenses that would have been included on a stand-alone basis. The pro forma condensed consolidated statements of operations do not reflect the estimated loss related to the divestitures.
(a)Reflects the Corporation’s historical US GAAP condensed consolidated financial statements, as reported, before transaction accounting adjustments related to the divestitures for the years ended December 31, 2020, 2019 and 2018.
(b)Reflects the ALIC and ALNY historical results, and comprised the reportable segments of Allstate Life and Allstate Annuities, for the years ended December 31, 2020, 2019 and 2018.
Note 2. Transaction accounting adjustments
(c)Represents income received and operating expenses incurred in connection with sales of non-proprietary life and annuity products offered by Allstate exclusive agents and exclusive financial specialist. This business will remain at the Corporation.
6