ALLAllstate

In the table on page 145 you present more than one profit measure for each of your segments; underwriting income for your Property-Liability segments and adjusted net income for all your other segments as the first measure and net income applicable to common shareholders for each segment as the second measure.

Rest of the question

ASC 280-10-50-22 requires disclosure of a single measure of segment profit or loss and ASC 280-10-50-28 indicates that when more than one segment profit measure is utilized the one with the measurement principles most consistent with GAAP becomes the segment measure of profit or loss. As a result, please address the following: • Tell us which of the two sets of measures is your single measure of segment profit or loss and explain why, referencing the authoritative literature you rely upon to support your position. • Provide us proposed draft footnote disclosure to be included in future periodic reports that presents only that single measure of segment profit or loss and reconciles this measure to your consolidated income measure as required by ASC 280-10-50-30b. • Tell us whether you intend to continue to disclose the second measure in your Management's Discussion and Analysis and, to the extent you anticipate doing so, represent to us that you will identify it as a non-GAAP measure and provide all the disclosures required by Item 10(e)(1)(i) of Regulation S-K.

As noted on page 143, we define the segment measure as follows: “The measure of segment profit or loss used in evaluating performance is underwriting income for the Allstate Protection and Discontinued Lines and Coverages segments and adjusted net income for the Protection Services, Allstate Life, Allstate Benefits, Allstate Annuities, and Corporate and Other segments.”

As noted in the definition on page 145, we also provide a reconciliation of the segment profit or loss measures to net income applicable to common shareholders.

Rest of the answer

The reconciliations were not intended to introduce a second segment measure, and we will remove segment level net income attributable to common shareholders from future filings.

•Provide us proposed draft footnote disclosure to be included in future periodic reports that presents only that single measure of segment profit or loss and reconciles this measure to your consolidated income measure as required by ASC 280-10-50-30b.

Please see the proposed disclosure below. We will provide each segment profit or loss measure along with a reconciliation to net income applicable to common shareholders in total.

Reportable segments financial performance

For the years ended December 31,

($ in millions) 2020 2019 2018

Underwriting income (loss) by segment

Allstate Protection $ 4,566 $ 2,912 $ 2,343

Discontinued Lines and Coverages (144) (108) (90)

Adjusted net income (loss) by segment, after-tax

Protection Services 153 38 8

Allstate Life 194 261 295

Allstate Benefits 96 115 124

Allstate Annuities (53) 10 131

Corporate and Other (428) (438) (406)

Reconciling items

Property-Liability net investment income 1,421 1,533 1,464

Realized capital gains (losses) 1,356 1,885 (877)

Business combination expenses and amortization of purchased intangibles (106) (123) (103)

Impairment of purchased intangibles — (54) —

Valuation changes on embedded derivatives that are not hedged (46) (19) 4

DAC and DSI amortization related to realized capital gains and losses and valuation changes on embedded derivatives that are not hedged 10 (6) (9)

Premium deficiency for immediate annuities (225) — —

Gain on disposition of operations 4 5 5

Pension and other postretirement remeasurement gains (losses) 51 (114) (468)

Curtailment gains (losses) 9 — —

Tax Legislation benefit — — 34

Income tax (expense) benefit (1,397) (1,219) (443)

Consolidated net income applicable to common shareholders $ 5,461 $ 4,678 $ 2,012

•Tell us whether you intend to continue to disclose the second measure in your Management's Discussion and Analysis and, to the extent you anticipate doing so, represent to us that you will identify it as a non-GAAP measure and provide all the disclosures required by Item 10(e)(1)(i) of Regulation S-K.

We will discontinue disclosure of net income applicable to common shareholders for reporting segments.

Read in the reply ↗

Please represent to us that in future earnings releases furnished on Forms 8-K you will revise your non-GAAP reconciliations on page 10 of this release to show each reconciling item before taxes and separately present and explain the aggregate income tax impact of the reconciling items. See Question 102.11 of the Compliance and Disclosure Interpretations for Non-GAAP Financial Measures.

In future filings starting in the first quarter of 2021 we will show the impact of reconciling items before tax and the income taxes impact as a separate line in the reconciliation below.

The following tables reconcile net income applicable to common shareholders and adjusted net income.

Twelve months ended December 31,

Consolidated Per diluted common share

2020 2019 2020 2019

Net income applicable to common shareholders $ 5,461 $ 4,678 $ 17.31 $ 14.03

Realized capital (gains) losses (1,356) (1,885) (4.30) (5.65)

Pension and other postretirement remeasurement (gains) losses (51) 114

Rest of the answer

(0.16) 0.34

Curtailment (gains) losses (9) — (0.03) —

Valuation changes on embedded derivatives that are not hedged 46 19 0.14 0.06

DAC and DSI amortization relating to realized capital gains and losses and valuation changes on embedded derivatives that are not hedged (10) 6 (0.03) 0.02

Read in the reply ↗

It is apparent that the prior period development as well as the incurred and paid claims presented in your three claims development tables beginning on page 171 are significantly different from those amounts recorded on your financial statements as presented in your rollforward of the claims reserve on page 169.

Rest of the question

This appears to be the case even when adjusting for amounts disclosed or derived from your Management's Discussion and Analysis for the lines of business that you exclude from your claims development tables (i.e., other personal lines, commercial lines, Service Businesses segment and Discontinued Lines and Coverages segment). Please tell us: • Why your claims development tables for your auto liability and damages coverages appear to depict favorable prior year claims development of $594 million in 2017 when you disclose only $490 million of favorable development on page 66; • Why your claims development tables for your homeowners' line depicts favorable prior year claims development of $86 million in 2017 when you disclose $131 million of favorable development on page 66; • Why your auto and homeowners lines appear to have significantly higher levels of claims and claims expense in 2017 (derived from your earned premium information on page 42 and your loss ratio information on page 43) than that depicted in your claims development tables; • Why your claims development tables present only approximately $16.5 billion of your approximately $21.2 billion of net claims payments in 2017 as depicted in the rollforward on page 169; and • Your consideration for disclosing the information in response to the previous bullets along with clarifying information related to your lines not included in the claims development tables in an effort to provide meaningful information to investors to facilitate analyses of the amount, timing and uncertainty of cash flows and the related development of claims reserve estimates consistent with the objective outlined in paragraph BC2 of ASU 2015-09.

There are two primary differences between the information included in our loss development tables in Note 8, Reserve for Property and Casualty Insurance Claims and Claims Expense and the amounts recorded in our financial statements represented in the rollforward of reserve for property and casualty insurance claims and claims expense on page 169.

•

Claims development for years before 2013 - Pursuant to paragraph 944-40-50-4B of the Financial Accounting Standards Board ("FASB") Accounting Standards Codification (“ASC”) Topic 944 Financial Services - Insurance, disclosures about claims

Rest of the answer

development by accident year should present information for the number of years for which claims incurred typically remain outstanding, but need not exceed 10 years including the most recent reporting period presented. The Company has provided five year loss development tables for auto insurance - liability and physical damage coverages and homeowners insurance as claims are substantially settled in five years. Providing five years of development is meaningful information for our users as reserve reestimates beyond five years represent approximately 0.1% of our 2017 incurred losses. Derived from pages 171 - 173 of the 2017 Form 10-K, the percentage of incurred claims to be paid out after five years for auto insurance - liability coverage, auto insurance - physical damage coverage and homeowners insurance is approximately 7%, zero and 2%, respectively. Claims development for years not included in the loss development tables typically represent reserve adjustments for claims subject to litigation, claims associated with auto unlimited personal injury protection or claims associated with homeowners bodily injury coverage.

Unallocated loss adjustment expenses (“ULAE”) - Pursuant to the illustrations in ASC 944-40-55-9E, allocated loss adjustment expenses (“ALAE”) are included in the loss development tables, whereas ULAE are included as a reconciling item in the reserve reconciliation table on page 174 of the 2017 Form 10-K. While the FASB did not define the components of ALAE and ULAE, ALAE represent claims handling expenses that have been assigned to an individual claim file and ULAE represent all other claims handling expenses that have not been assigned to a claim file.

We believe our presentation provides our readers meaningful information to facilitate analysis of the amount, timing and uncertainty of cash flows and the related development of claims reserve estimates of our business. In response to each of your bullets below, we have included reconciliations to our reported numbers.

Why your claims development tables for your auto liability and damages coverages appear to depict favorable prior year claims development of $594 million in 2017 when you disclose only $490 million of favorable development on page 66;

The following table provides a reconciliation of prior period development for auto insurance liability and physical damage coverage on pages 171-172 of the 2017 Form 10-K compared to the amounts reported in MD&A on page 66.

Auto - prior period development - (favorable)/unfavorable

December 31, 2017

Note 8 - Prior period development (2017 10-K pages 171-172)

Liability coverage

$

(505

)

Physical damage coverage

(89

Total

(594

Reconciling items

Prior year reserve reestimates for pre-2013 accident years (1)

Prior year reserve reestimates for ULAE

ULAE reserve reestimates

(43

ULAE for house counsel (2)

135

Other

(3

MD&A - prior period development (page 66 of 2017 10-K)

(490

(1)

Represents 0.2% of the average accident year auto insurance incurred losses.

(2)

Represents a portion of ULAE for house counsel included in the incurred development tables. Prospectively, we will remove all ULAE house counsel impacts from the development tables as they are included in the ULAE reconciliation table on page 174.

Why your claims development tables for your homeowners' line depicts favorable prior year claims development of $86 million in 2017 when you disclose $131 million of favorable development on page 66;

The following table provides a reconciliation of prior period development for homeowners insurance on page 173 of the 2017 Form 10-K compared to the MD&A on page 66.

Homeowners - prior period development - (favorable)/unfavorable

Note 8 - Prior period development (2017 10-K page 173)

Homeowners insurance

(86

(36

(8

(1

(131

Represents 1.0% of the average accident year homeowners insurance incurred losses. The favorable change primarily relates to reestimates of homeowners bodily injury reserves as severity trends developed better than anticipated.

Why your auto and homeowners lines appear to have significantly higher levels of claims and claims expense in 2017 (derived from your earned premium information on page 42 and your loss ratio information on page 43) than that depicted in your claims development tables;

The following table provides a reconciliation of claims and claims expense for auto and homeowners derived from earned premium and loss ratios from pages 42 and 43 of the 2017 Form 10-K compared to the claims development tables on pages 171 - 173. As previously mentioned, ULAE reserves are not included in our loss development tables and are presented as a reconciling item in the reserve reconciliation table on page 174 of the 2017 Form 10-K. ULAE expenses are the most significant component of our loss ratio which is not required to be included in the paid and incurred development tables.

Claims and claims expense

Auto

Homeowners

Earned premium (2017 10-K page 42)

21,878

7,310

Loss ratio (2017 10-K page 43)

68.9

67.2

Derived loss incurred

15,066

4,910

Incurred claims and allocated claims adjustment expenses

(2017 10-K pages 171 - 173)

13,158

4,404

Prior year reserve reestimates for pre-2013 accident years

ULAE incurred

1,914

546

Other (1)

(21

(4

Loss incurred

Primarily relates to foreign currency translation adjustments on incurred losses for our Canadian operations.

Why your claims development tables present only approximately $16.5 billion of your approximately $21.2 billion of net claims payments in 2017 as depicted in the rollforward on page 169; and

The following table provides a reconciliation of net claims payments derived from the claims development tables on pages 171-173 of the 2017 Form 10-K to the rollforward on page 169. Consistent with our prior responses, the difference is attributable to claims paid from before 2013 and ULAE paid and also includes paid claims for lines of insurance other than auto insurance - liability and physical damage coverages and homeowners insurance.

Current year claims and claims expense paid

Note 8 - Paid claims (derived from 2017 10-K pages 171 - 173)

16,491

2017 claim payments for

Other lines not included in incurred and paid claims development tables

Other personal lines claims (1)

991

Commercial lines claims

336

Service businesses

289

Discontinued lines and coverages claims

129

Claims paid for accident years before 2013

397

ULAE paid

2,634

(109

Note 8 - Paid claims (2017 10-K page 169)

21,158

Other Personal Lines represents an accumulation of twenty-two separate coverages, including renter, condominium, landlord and other personal lines products, that have different development characteristics. No product separately accounts for more than 4% of total net reserves.

Your consideration for disclosing the information in response to the previous bullets along with clarifying information related to your lines not included in the claims development tables in an effort to provide meaningful information to investors to facilitate analyses of the amount, timing and uncertainty of cash flows and the related development of claims reserve estimates consistent with the objective outlined in paragraph BC2 of ASU 2015-09.

We will enhance our 2018 Form 10-K reserve for property and casualty insurance claims and claims expense note disclosures to add information to allow users to reconcile claims presented in the development tables to the amounts reported in our financial statements. The following tables include proposed modifications or additions to our development tables with the new information highlighted below.

New table - Total claims and claims expense incurred and paid

We plan to add a new table below the rollforward of reserve for property and casualty insurance claims and claims expense to supplement the loss development tables to provide the components of the current period total incurred and total paid.

Rollforward of reserve for property and casualty insurance claims and claims expense

($ in millions)

2017

2016

2015

Balance as of January 1

25,250

23,869

22,923

Less reinsurance recoverables

6,184

5,892

5,694

Net balance as of January 1

19,066

17,977

17,229

SquareTrade acquisition as of January 3, 2017

—

Incurred claims and claims expense related to:

Current year

22,432

22,238

20,953

Prior years

(503

(17

Total incurred

21,929

22,221

21,034

Claims and claims expense paid related to:

14,194

14,222

13,660

6,964

6,910

6,626

Total paid

21,132

20,286

Net balance as of December 31

19,854

Plus reinsurance recoverables

6,471

Balance as of December 31

26,325

Total claims and claims expense incurred and paid

Incurred

Paid

Allstate Protection

Auto insurance - Liability coverage

8,116

7,369

Auto insurance - Physical damage coverage

5,042

4,980

4,142

Total auto and homeowners insurance

17,562

Other personal lines

988

Commercial lines

333

Service Businesses

Discontinued Lines and Coverages

ULAE

2,676

Claims incurred and paid from before 2013

(25

Loss development tables - We will add the prior year reserve reestimates to the incurred claims and allocated claim adjustment expense, net of reinsurance development tables included in the reserve for property and casualty insurance claims and claims expense note of our 2018 Form 10-K, showing the reconciling items to allow users to reconcile the amounts reported in our 2018 Form 10-K MD&A.

Auto Insurance - Liability Coverage

($ in millions, except number of reported claims)

Incurred claims and allocated claim adjustment expenses, net of reinsurance

IBNR reserves plus expected development on reported claims

Cumulative number of reported claims

For the years ended December 31,

As of December 31, 2017

Accident year

(unaudited)

Prior year reserve reestimates

2013

2014

7,461

7,429

7,446

7,387

7,317

(70

513

2,114,149

7,889

7,955

7,882

7,785

(97

951

2,194,476

8,896

8,816

8,721

(95

1,828

2,380,096

9,169

8,926

(243

3,149

2,387,023

8,621

5,465

2,112,379

41,370

Reconciliation to total prior year reserve reestimates recognized by line

104

Total prior year reserve reestimates

(389

Auto Insurance - Physical Damage Coverage

3,894

3,866

3,854

3,844

3,842

(2

4,308

4,296

4,270

4,273

4,663

4,688

4,676

(12

5,136

5,058

(78

5,131

22,980

(101

Homeowners Insurance

3,098

3,170

3,163

3,142

3,121

3,608

3,651

3,653

3,621

(32

3,572

3,622

3,560

(62

3,972

4,001

4,490

18,793

The company acknowledges that:

the company is responsible for the adequacy and accuracy of the disclosures in the filing;

staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and the company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

Read in the reply ↗

We acknowledge your response to our previous comment. Please tell us how your net liability for unallocated loss adjustment expenses (ULAE) on unpaid claims of $978 million at December 31, 2017, as depicted in the reconciliation on page 174, is adequate.

Rest of the question

In this regard, we note that this liability represents 5.2% of the total net liabilities for all lines of business depicted in that table while the ULAE incurred and paid in 2017 represent 13.9% and 14.4% of the total net amounts incurred and paid, respectively, as depicted in the reconciliation you provide at the bottom of page 4 of your response. Tell us why ULAE represents only 5.2% of your total net liabilities at December 31, 2017 while you appear to have incurred ULAE at a rate of 13.9% during 2017.

The Company’s ULAE reserve is established based on claims handling unit costs that vary by line and coverage and are developed based on historical experience and incorporating anticipated impacts from changes in claims handling practices (i.e., technology and process improvements). The method we utilize is a generally accepted actuarial method that has been part of the Casualty Actuarial Society literature for many years. The method involves estimating the future pattern of reported claims as well as the number of pending claims in each future year.

Rest of the answer

The method allows us to explicitly measure ULAE reserves for pending claims based on their stage in the claims process at each balance sheet reporting date. We believe utilizing this generally accepted actuarial method provides a reasonable and appropriate estimate of ULAE reserves at each balance sheet reporting date.

The ULAE reserve has consistently been a smaller percentage of total net reserve liabilities as compared to the percentage of ULAE incurred or paid to the total net incurred or paid loss amounts over the past several years due to three inter-related factors as described below:

1)

Claims Closed Without Payment - In each reporting period, a number of claims are initially opened and must be investigated, but do not ultimately result in a loss payment, for example because the loss amount is less than the policy’s deductible. These claims produce significant ULAE expenses (generally incurred in the first few weeks after the claim is reported), but are closed without a loss payment. These costs are a component of the ratio of ULAE paid to total net paid losses and increase the ratio.

2)

Claims Payment Timing - The ULAE payout pattern is more accelerated than the payout pattern for direct loss and allocated loss adjustment expense payments. For auto liability coverage claims, which represent approximately 65% of the total net reserve liability as of December 31, 2017, approximately 40% of claim costs are paid within the same report year whereas the remaining 60% of payments are made in a subsequent report year. A significant portion of the ULAE is paid during the opening and investigation of the claim. Thus, the amount of ULAE paid in subsequent years for maintaining pending claims and resolving and closing claims is a smaller portion of the initial ULAE reserve. This results in a lower ULAE remaining reserve to total net reserve liability ratio at each balance sheet reporting date.

3)

Claims Mix - Pending claims primarily relate to liability coverage claims, since the majority of physical damage claims are closed during the year they are reported. As noted above, auto liability coverage claims have a longer-tail, causing the percentage of ULAE reserves compared to the overall loss costs to become smaller over time as the ULAE costs are paid on an accelerated basis. Approximately 95% of auto insurance physical damage coverage claims are evaluated and closed within the same report year, causing a significant portion of ULAE to be incurred and paid within the same report year. Therefore, the mix of ULAE payments in any report year includes a large portion attributable to auto physical damage claims while approximately 60% of the ULAE reserve liability at any balance sheet reporting date is comprised of longer dated liability coverages. This results in an increase in the ULAE incurred or paid to total net incurred or paid ratio as compared to a ULAE remaining reserve to total net reserve liability ratio at each balance sheet reporting date.

As you can see from the preceding discussion, there are several inter-related factors that result in a lower ratio of ULAE reserves remaining to total net reserve liabilities at any balance sheet reporting date. If you have any questions regarding this response letter, please contact Ken Marcotte, Vice President Financial Reporting, at (847) 402-7165 or myself at (847) 402-9281.

Read in the reply ↗