Allstate 2015 Annual Report Download - page 202

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The total amount of other-than-temporary impairment losses included in accumulated other comprehensive income
at the time of impairment for fixed income securities, which were not included in earnings, are presented in the following
table. The amount excludes $233 million as of both December 31, 2015 and 2014, respectively, of net unrealized gains
related to changes in valuation of the fixed income securities subsequent to the impairment measurement date.
($ in millions) December 31,
2015
December 31,
2014
Municipal $ (9) $ (8)
Corporate (7) —
ABS (23) (2)
RMBS (102) (108)
CMBS (6) (5)
Total $ (147) $ (123)
Rollforwards of the cumulative credit losses recognized in earnings for fixed income securities held as of December
31 are as follows:
($ in millions) 2015 2014 2013
Beginning balance $ (380) $ (513) $ (617)
Additional credit loss for securities previously
other‑than‑temporarily impaired
(30) (6) (30)
Additional credit loss for securities not previously
other‑than‑temporarily impaired
(45) (18) (19)
Reduction in credit loss for securities disposed or collected 60 95 150
Reduction in credit loss for securities the Company has made
the decision to sell or more likely than not will be required to sell
— — 2
Change in credit loss due to accretion of increase in cash flows 3 3 1
Reduction in credit loss for securities sold in LBL disposition — 59 —
Ending balance $ (392) $ (380) $ (513)
The Company uses its best estimate of future cash flows expected to be collected from the fixed income security,
discounted at the security’s original or current effective rate, as appropriate, to calculate a recovery value and determine
whether a credit loss exists. The determination of cash flow estimates is inherently subjective and methodologies may
vary depending on facts and circumstances specific to the security. All reasonably available information relevant to the
collectability of the security, including past events, current conditions, and reasonable and supportable assumptions and
forecasts, are considered when developing the estimate of cash flows expected to be collected. That information generally
includes, but is not limited to, the remaining payment terms of the security, prepayment speeds, foreign exchange rates,
the financial condition and future earnings potential of the issue or issuer, expected defaults, expected recoveries, the
value of underlying collateral, vintage, geographic concentration of underlying collateral, available reserves or escrows,
current subordination levels, third party guarantees and other credit enhancements. Other information, such as industry
analyst reports and forecasts, sector credit ratings, financial condition of the bond insurer for insured fixed income
securities, and other market data relevant to the realizability of contractual cash flows, may also be considered. The
estimated fair value of collateral will be used to estimate recovery value if the Company determines that the security
is dependent on the liquidation of collateral for ultimate settlement. If the estimated recovery value is less than the
amortized cost of the security, a credit loss exists and an other-than-temporary impairment for the difference between
the estimated recovery value and amortized cost is recorded in earnings. The portion of the unrealized loss related to
factors other than credit remains classified in accumulated other comprehensive income. If the Company determines
that the fixed income security does not have sufficient cash flow or other information to estimate a recovery value for
the security, the Company may conclude that the entire decline in fair value is deemed to be credit related and the loss
is recorded in earnings.