Allstate 2011 Annual Report Download - page 256

A reconciliation of the statutory federal income tax rate to the effective income tax rate on income from operations
for the years ended December 31 is as follows:
2010 2009 2008
Statutory federal income tax rate – expense (benefit) 35.0% 35.0% (35.0)%
Tax-exempt income (15.6) (20.2) (9.4)
Adjustment to prior year tax liabilities (0.2) (2.7) (0.4)
Other (1.6) (0.4) 0.2
Valuation allowance — 19.9 0.1
Effective income tax rate — expense (benefit) 17.6% 31.6% (44.5)%
15. Statutory Financial Information
Allstate’s domestic property-liability and life insurance subsidiaries prepare their statutory-basis financial
statements in conformity with accounting practices prescribed or permitted by the insurance department of the
applicable state of domicile. Prescribed statutory accounting practices include a variety of publications of the NAIC, as
well as state laws, regulations and general administrative rules. Permitted statutory accounting practices encompass all
accounting practices not so prescribed.
All states require domiciled insurance companies to prepare statutory-basis financial statements in conformity with
the NAIC Accounting Practices and Procedures Manual, subject to any deviations prescribed or permitted by the
applicable insurance commissioner and/or director.
Statutory accounting practices differ from GAAP primarily since they require charging policy acquisition and
certain sales inducement costs to expense as incurred, establishing life insurance reserves based on different actuarial
assumptions, and valuing certain investments and establishing deferred taxes on a different basis.
Statutory net income and capital and surplus of Allstate’s domestic insurance subsidiaries, determined in
accordance with statutory accounting practices prescribed or permitted by insurance regulatory authorities are as
follows:
Net income Capital and surplus
($ in millions)
2010 2009 2008 2010 2009
Amounts by major business type:
Property-Liability (1) $ 1,064 $ 1,318 $ 624 $ 12,185 $ 11,679
Allstate Financial (430) (911) (1,983) 3,454 3,588
Amount per statutory accounting practices $ 634 $ 407 $ (1,359) $ 15,639 $ 15,267
(1) The Property-Liability statutory capital and surplus balances exclude wholly-owned subsidiaries included in the Allstate Financial segment.
There were no permitted practices utilized as of December 31, 2010 or 2009.
Dividends
The ability of the Company to pay dividends is dependent on business conditions, income, cash requirements of the
Company, receipt of dividends from AIC and other relevant factors. The payment of shareholder dividends by AIC
without the prior approval of the state insurance regulator is limited to formula amounts based on net income and
capital and surplus, determined in conformity with statutory accounting practices, as well as the timing and amount of
dividends paid in the preceding twelve months. AIC paid dividends of $1.30 billion in 2010, which was less than the
maximum amount allowed under Illinois insurance law without the prior approval of the Illinois Department of Insurance
(‘‘IL DOI’’) based on 2009 formula amounts. The maximum amount of dividends AIC will be able to pay without prior
IL DOI approval at a given point in time during 2011 is $1.54 billion, less dividends paid during the preceding twelve
months measured at that point in time.
Notification and approval of intercompany lending activities is also required by the IL DOI for transactions that
exceed a level that is based on a formula using statutory admitted assets and statutory surplus.
16. Benefit Plans
Pension and other postretirement plans
Defined benefit pension plans cover most full-time employees, certain part-time employees and employee-agents.
Benefits under the pension plans are based upon the employee’s length of service and eligible annual compensation. A
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Notes