Allstate 2005 Annual Report Download - page 14

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How does Allstate deliver value and results?
We invest responsibly and
act with integrity.
Shareholders
count on
Allstate to act
with integrity
and initiative
—
the same
attributes that
help guide our
business —
when helping
the people and
communities
that we serve.
In twelve-and-a-half
years as a public
company, Allstate has
created significant
value by executing a
disciplined investment
strategy and managing
our risks with an
enterprise-wide view.
We generate addi-
tional returns through
prudent management of
our $118.3 billion
investment portfolio.
We invest share-
holders’ equity in areas
that drive profitable
growth and generate
solid returns. These
include product
innovation, marketing,
distribution and process
improvement. In 2005
shareholders’ equity was
$20.2 billion compared
to $21.8 billion in
2004, reflecting a net
return of capital to
shareholders through
dividends and share
repurchasing.
Allstate has a sophis-
ticated formula for
managing risks. By
viewing them strategi-
cally, we can determine
which risks to assume
and then the right
amount to assume in
order to achieve
attractive, reasonably
predictable returns.
That means under-
standing how natural
disasters, changing
economic conditions,
operational challenges
and market forces affect
our business. This
analysis helps us find
the right balance
between maintaining
liquidity and investing
capital to fuel growth
and reward investors.
Between 1994 and
the end of 2005, the
total shareholder return
on our stock has aver-
aged 17 percent on a
compound annual basis.
These returns exceed
both the Standard &
Poor’s Property &
Casualty and Standard
& Poor’s 500 indices.
Allstate also has a
proven track record of
returning free cash flow
to shareholders through
dividends and stock
repurchases. Our
dividend has increased
every year since 1993
and it reached an all-
time high of $1.28 per
share in 2005. Since
1993 we have also
repurchased more than
$11 billion in Allstate
stock.
Allstate’s reputation for
good governance and
financial transparency
creates additional value
by contributing to our
long-term financial per-
formance. We adopted
many of our current
corporate governance
practices long before
corporate scandal led
to regulatory change.
These include rigorous
CEO evaluations
and detailed board
evaluations.
Our practices and
our written policies—
which are described
online at allstate.com—
earn high marks from
independent governance
organizations and are
widely embraced
throughout our organi-
zation. Our senior
management team leads
by example, anchoring
our culture by maintain-
ing the highest personal
standards for integrity
and accountability.
Disciplined Risk Management,
Reliable Returns
Integrity in
Action
Allstate is supporting
new generations of
customers by helping
communities across
America grow and
prosper. These activities
express our core values
and boost Allstate’s
reputation as a responsi-
ble corporate citizen.
At the end of 2005,
our investment portfolio
included $27 billion
in municipal bonds in
urban areas that need
investment capital.
Allstate also supports
communities in need by
funding programs that
encourage employees,
agents and agency staff
to reach out to others.
In 2005, the $6 million
donated by Allstate to
help hurricane victims
in the Gulf states
included $2.6 million
in contributions from
Allstate employees and
agencies. Our people
also gave an additional
$2.8 million in 2005
to local charitable
organizations through
Strong Communities,
Empowered Customers
the Annual Giving
Campaign.
Each year, Allstate
funds The Allstate
Foundation, an inde-
pendent charitable
corporation. In 2005
The Allstate Foundation
awarded $16 million in
grants to 508 national
and regional not-for-
profit organizations.
These grants strengthen
communities in three
important ways: they
promote community
safety; create greater
economic empowerment;
and encourage tolerance,
inclusion and diversity.
In 2005 The Allstate
Foundation launched
new initiatives to
educate teens on the
importance of safe
driving, and to help
victims of domestic
violence transition to
safe, productive lives
free of violence.