Allstate 2015 Annual Report Download - page 3

Encompass and Answer Financial, as shown above, is
working. Property- liability policies in force grew by 1.3%
in 2015 and net written premiums were 4.2% higher than
2014, led by increases in Allstate brand auto insurance.
Allstate Benefits, our workplace distribution business,
hadexceptional growth of 11.1% or 332,000 policies.
• Maintain the underlying combined ratio*. In the first half
of 2015, we designed and implemented a comprehensive
auto insurance profit improvement plan which included
higher pricing, tighter underwriting standards and
expense reductions. When combined with the strength
ofthe homeowners insurance business, this resulted in
anunderlying combined ratio* of 88.7, which was within
thetarget range of 87 to 89 established at the beginning
ofthe year.
• Proactively manage investments. Achieving attractive
risk- adjusted returns on our $78billion portfolio is critical
to delivering value to customers and shareholders. Net
investment income was $3.2billion for the year. The total
return on the portfolio was 1.0% in 2015, which is below
the long-term target and reflects low interest rates, an
increase in credit spreads on the fixed income portfolio
andlackluster equity markets.
• Modernize the operating model. The expansion of
continuous improvement programs has improved
eectiveness, lowered costs and enabled employees
to fully leverage their skills and capabilities. Allstate
agencies are leveraging technology and building stronger
relationships with 16million households by becoming
trusted advisors.
• Build long-term growth platforms. The Allstate Drivewise®
and Esurance DriveSense® programs had more than 1million
active users at year-end 2015.
STRONG CASH RETURNS TO SHAREHOLDERS
Dividends of $483million were paid on common stock
representing an average yield of 1.8%. In addition, 10.2% of
the common shares outstanding at the beginning of the year
were repurchased at a cost of $2.8billion.
Total shareholder return for the year was a disappointing
negative 9.9% for 2015. In part, this reflects lower auto
insurance underwriting income and a lackluster equity
market as the S&P 500 return for the year was 1.4%. Over the
last five years, total shareholder return has been a strong
116.3%, exceeding the S&P 500 Index return of 79.8% and the
S&PProperty & Casualty Index return of 108.6%.
CREATING A 22ND CENTURY CORPORATION
We also continue to build for the future and are pursuing
the goal of creating a 22nd Century Corporation. Today,
corporations have attributes necessary to serve their societal
function, such as industrializing the global economy and
competing for capital. The 22nd Century Corporation will:
• Be defined more by its strategic platforms than its product
market share
• Have broader and more meaningful relationships with
customers, employees and business partners
• Be a force for positive change in society.
BUILDING STRATEGIC PLATFORMS
A strategic platform is a system of proprietary and
third-party …
• Capabilities
• Assets
• Information
• Shared intelligence
This system is integrated through technology interfaces
and rules for utilizing the platform. Companies such as eBay,
Apple, Google and Amazon leverage strategic platforms.
• Platforms are broad and flexible, and create multiple uses
for a range of cases by customers and partners.
• They are flexible and adaptable.
*For a definition of this term, please see the definitions of non-GAAP measures on pages 79 and 84.
Encompass products are
sold through independent
agencies that serve
brand-neutral customers
who prefer personal
service and support from
an independent agent.
Allstate brand products
are sold primarily through
Allstate exclusive agencies
and serve brand-sensitive
customers who prefer
local personal advice
and service.
Esurance brand
products are sold
directly to self-directed,
brand-sensitive
consumers online and
through call centers.
BRAND-NEUTRAL
BRAND-SENSITIVE
SELF-SERVE
LOCAL ADVICE AND ASSISTANCE
Answer Financial, an
independent personal lines
insurance agency, serves
self-directed, brand-neutral
consumers who want
a choice between
insurance carriers.