Allstate 2011 Annual Report Download - page 246

Total debt outstanding by maturity as of December 31 consisted of the following:
($ in millions) 2010 2009
Due within one year or less $ 42 $ —
Due after one year through 5 years 1,550 1,592
Due after 5 years through 10 years 966 968
Due after 10 years through 20 years — —
Due after 20 years 3,350 3,350
Total debt $ 5,908 $ 5,910
In May 2009, the Company issued $300 million of 6.20% Senior Notes due 2014 and $700 million of 7.45% Senior
Notes due 2019. The proceeds of this issuance were used for general corporate purposes, including to facilitate the
repayment of the $750 million of 7.20% Senior Notes that matured on December 1, 2009.
The Company has outstanding $500 million of Series A 6.50% and $500 million of Series B 6.125% Fixed-to-Floating
Rate Junior Subordinated Debentures (together the ‘‘Debentures’’). The scheduled maturity dates for the Debentures
are May 15, 2057 and May 15, 2037 for Series A and Series B, respectively, with a final maturity date of May 15, 2067. The
Debentures may be redeemed (i) in whole or in part, at any time on or after May 15, 2037 or May 15, 2017 for Series A
and Series B, respectively, at their principal amount plus accrued and unpaid interest to the date of redemption, or (ii) in
certain circumstances, in whole or in part, prior to May 15, 2037 and May 15, 2017 for Series A and Series B,
respectively, at their principal amount plus accrued and unpaid interest to the date of redemption or, if greater, a
make-whole price.
Interest on the Debentures is payable semi-annually at the stated fixed annual rate to May 15, 2037 and May 15,
2017 for Series A and Series B, respectively, and then payable quarterly at an annual rate equal to the three-month
LIBOR plus 2.12% and 1.935% for Series A and Series B, respectively. The Company may elect at one or more times to
defer payment of interest on the Debentures for one or more consecutive interest periods that do not exceed 10 years.
Interest compounds during such deferral periods at the rate in effect for each period. The interest deferral feature
obligates the Company in certain circumstances to issue common stock or certain other types of securities if it cannot
otherwise raise sufficient funds to make the required interest payments. The Company has reserved 75 million shares of
its authorized and unissued common stock to satisfy this obligation.
In connection with the issuance of the Debentures, the Company entered into replacement capital covenants.
These covenants are not intended for the benefit of the holders of the Debentures and may not be enforced by them.
Rather, they are for the benefit of holders of one or more other designated series of the Company’s indebtedness,
initially the 6.90% Senior Debentures due 2038. Pursuant to these covenants, the Company has agreed that it will not
repay, redeem, or purchase the Debentures on or before May 15, 2067 and May 15, 2047 for Series A and Series B,
respectively, unless, subject to certain limitations, the Company has received proceeds in specified amounts from the
issuance of specified securities. These covenants terminate in 2067 and 2047 for Series A and Series B, respectively, or
earlier upon the occurrence of certain events, including an acceleration of the Debentures of the particular series due to
the occurrence of an event of default. An event of default, as defined by the supplemental indentures, includes default
in the payment of interest or principal and bankruptcy proceedings.
The Company is the primary beneficiary of a consolidated VIE used to acquire up to 38 automotive collision repair
stores (‘‘synthetic lease’’). In 2006, the Company renewed the synthetic lease for a five-year term at a floating rate due
2011. The Company’s Consolidated Statements of Financial Position include $42 million of property and equipment, net,
and long-term debt as of both December 31, 2010 and 2009.
The Allstate Bank received a $10 million long-term advance from the FHLB in April 2008, and another $10 million
advance in September 2008. The FHLB advances are secured with fixed income securities pledged to the FHLB. During
2010, 2009 and 2008, $2 million, $1 million and $1 million was repaid on the advances, respectively.
To manage short-term liquidity, the Company maintains a commercial paper program and a credit facility as a
potential source of funds. These include a $1.00 billion unsecured revolving credit facility and a commercial paper
program with a borrowing limit of $1.00 billion. The credit facility has an initial term of five years expiring in 2012 with two
optional one-year extensions that can be exercised at the end of any of the remaining anniversary years of the facility
upon approval of existing or replacement lenders providing more than two-thirds of the commitments to lend. This
facility also contains an increase provision that would allow up to an additional $500 million of borrowing provided the
increased portion could be fully syndicated at a later date among existing or new lenders. This facility has a financial
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Notes