Allstate 2014 Annual Report Download - page 238

unreported claims arising from losses which had occurred by the date of the Consolidated Statements of Financial
Position based on available facts, technology, laws and regulations.
For further discussion of asbestos and environmental reserves, see Note 14.
9. Reserve for Life-Contingent Contract Benefits and Contractholder Funds
As of December 31, the reserve for life-contingent contract benefits consists of the following:
($ in millions) 2014 2013
Immediate fixed annuities:
Structured settlement annuities $ 6,682 $ 6,645
Other immediate fixed annuities 2,250 2,283
Traditional life insurance 2,521 2,542
Accident and health insurance 830 816
Other 97 100
Total reserve for life-contingent contract benefits $ 12,380 $ 12,386
The following table highlights the key assumptions generally used in calculating the reserve for life-contingent
contract benefits:
Product Mortality Interest rate Estimation method
Structured settlement U.S. population with projected calendar Interest rate Present value of
annuities year improvements; mortality rates adjusted assumptions range contractually specified
for each impaired life based on reduction in from 2.7% to 9.0% future benefits
life expectancy
Other immediate fixed 1983 group annuity mortality table with Interest rate Present value of
annuities internal modifications; 1983 individual assumptions range expected future
annuity mortality table; Annuity 2000 from 0% to 11.5% benefits based on
mortality table with internal modifications; historical experience
Annuity 2000 mortality table; 1983
individual annuity mortality table with
internal modifications
Traditional life insurance Actual company experience plus loading Interest rate Net level premium
assumptions range reserve method using
from 2.5% to 11.3% the Company’s
withdrawal experience
rates; includes
reserves for unpaid
claims
Accident and health Actual company experience plus loading Interest rate Unearned premium;
insurance assumptions range additional contract
from 3.0% to 7.0% reserves for mortality
risk and unpaid
claims
Other:
Variable annuity Annuity 2012 mortality table with internal Interest rate Projected benefit ratio
guaranteed modifications assumptions range applied to cumulative
minimum from 2.6% to 5.8% assessments
death benefits (1)
(1) In 2006, the Company disposed of substantially all of its variable annuity business through reinsurance agreements with The Prudential Insurance
Company of America, a subsidiary of Prudential Financial, Inc. (collectively ‘‘Prudential’’).
To the extent that unrealized gains on fixed income securities would result in a premium deficiency had those gains
actually been realized, a premium deficiency reserve is recorded for certain immediate annuities with life contingencies.
A liability of $28 million is included in the reserve for life-contingent contract benefits with respect to this deficiency as
of December 31, 2014. The offset to this liability is recorded as a reduction of the unrealized net capital gains included in
accumulated other comprehensive income. The liability was zero as of December 31, 2013.
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