Allstate 2008 Annual Report Download - page 207

Management’s Discussion and Analysis
of Financial Condition and Results of Operations–(Continued)
Change in intent write-downs totaling $1.75 billion in 2008 included $1.56 billion for fixed income securities,
$120 million for equity securities, $74 million for mortgage loans and $3 million for other investments compared to
$84 million for fixed income securities, $32 million for equity securities, $30 million for mortgage loans and
$1 million for other investments in 2007. The change in intent write-downs in 2008 were a result of our risk
mitigation and return optimization programs, enterprise asset allocations and ongoing comprehensive reviews of
our portfolios.
Change in intent write-downs for year ended December 31, 2008 are presented in the table below.
Fair value of($ in millions)
SFAS outstanding
No. 157 change in intent Net realized
Criteria Security type level assets capital loss(3)
Risk mitigation
Targeted reductions(1) in commercial CRE CDO 3 $ 27 $ (331)
real estate exposure where it is
anticipated that future downside risk CMBS 2 — (22)
remains. Considerations included 3 29 (203)
position held in the capital structure,
vintage year, illiquidity and Mortgage loans 3 127 (73)
deteriorating fundamentals.
Targeted reductions(1) in residential real
estate where management believes there Prime 2 — (9)
is a risk of future material declines in 3 — (11)
price in the event of continued
deterioration in the economy. Alt-A 3 34 (138)
Considerations included position held in
the capital structure, projected ABS RMBS 3 51 (281)
performance of the collateral, and
expected internal rates of return.
Targeted reductions(1) in financial Financial sector 2 14 (178)
sector exposure included securities 3 — (33)
issued by certain regional banks and
certain large financial institutions.
Other 2 4 (18)
Total risk mitigation 286 (1,297)
Individual identification 705 (283)
Enterprise-wide asset allocation 5 (164)
Other —(8)
To t al $996 $ (1,752)(2)
(1) Targeted reductions are made from identified specific investments.
(2) Change in intent write-downs on our illiquid portfolios were $997 million.
(3) Change in intent write-downs are related to the risk mitigation targeted reduction for this security type for the year and not for the
outstanding change in intent assets at December 31, 2008.
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MD&A