Allstate 2012 Annual Report Download - page 133

The impact of these reestimates on the Allstate brand underwriting (loss) income is shown in the table below.
($ in millions) 2011 2010 2009
Reserve reestimates $ (371) $ (181) $ (126)
Allstate brand underwriting (loss) income (666) 569 1,022
Reserve reestimates as a % of underwriting (loss) income 55.7% 31.8% 12.3%
Encompass brand Reserve reestimates in 2011 were related to higher than anticipated claim settlement costs. 2010
and 2009 Encompass brand reserve reestimates were related to lower than anticipated claim settlement costs.
The impact of these reestimates on the Encompass brand underwriting (loss) income is shown in the table below.
($ in millions) 2011 2010 2009
Reserve reestimates $ 15 $ (6) $ (10)
Encompass brand underwriting (loss) income (146) (43) 5
Reserve reestimates as a % of underwriting (loss) income (10.3)% 14.0% 200.0%
Discontinued Lines and Coverages We conduct an annual review in the third quarter of each year to evaluate and
establish asbestos, environmental and other discontinued lines reserves. Reserves are recorded in the reporting period
in which they are determined. Using established industry and actuarial best practices and assuming no change in the
regulatory or economic environment, this detailed and comprehensive methodology determines reserves based on
assessments of the characteristics of exposure (e.g. claim activity, potential liability, jurisdiction, products versus
non-products exposure) presented by policyholders.
Reserve reestimates for the Discontinued Lines and Coverages, as shown in the table below, were increased
primarily for asbestos in 2011, environmental in 2010 and other discontinued lines in 2009.
2011 2010 2009
($ in millions)
January 1 Reserve January 1 Reserve January 1 Reserve
reserves reestimate reserves reestimate reserves reestimate
Asbestos claims $ 1,100 $ 26 $ 1,180 $ 5 $ 1,228 $ (8)
Environmental claims 201 — 198 18 195 13
Other discontinued lines 478 (5) 500 5 508 19
Total Discontinued Lines and
Coverages $ 1,779 $ 21 $ 1,878 $ 28 $ 1,931 $ 24
Underwriting loss $ (25) $ (31) $ (32)
Reserve reestimates as a % of
underwriting loss (84.0)% (90.3)% (75.0)%
Reserve additions for asbestos in 2011 totaling $26 million were primarily for products related coverage due to
increases for the assumed reinsurance portion of discontinued lines where we are reliant on our ceding companies to
report claims. Reserve additions for asbestos in 2010 totaling $5 million were primarily for products related coverage.
Asbestos reserves reestimates in 2009 were $8 million favorable.
Normal environmental claim activity resulted in essentially no change in estimated reserves for 2011. The reserve
additions for environmental in 2010 and 2009 were primarily related to site-specific remediations where the clean-up
cost estimates and responsibility for the clean-up were more fully determined. IBNR now represents 64% of total net
environmental reserves, 2 points higher than as of December 31, 2010.
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