Allstate 2008 Annual Report Download - page 208

Investments for which we had changed our intent to hold to recovery as of June 30, 2008 totaled $6.39 billion
and included $3.31 billion as part of the risk mitigation and return optimization programs, $2.39 billion of
securities as part of our enterprise-wide asset allocation program and $688 million related to individual securities.
The following table summarizes the activity related to investments for which we had changed our intent to hold.
($ in millions)
Carrying value as of June 30, 2008 $ 6,385
Re-designated as intent to hold to recovery as of October 1, 2008(1) (2,589)
Sales:
Risk mitigation and return optimization program(2) (1,237)
Enterprise asset allocation and other programs (1,705)
Net realized capital gains and losses on sales:
Risk mitigation and return optimization program(2) (104)
Enterprise asset allocation and other programs 46
Additional change in intent designations(3) 1,119
Write-downs(4) (831)
Other (88)
Carrying value as of December 31, 2008 $ 996
(1) Net unrealized capital losses on these re-designated investments were $289 million as of December 31, 2008.
(2) Net proceeds from the sales of risk mitigation and return optimization actions totaled $1.24 billion with an additional loss of
$104 million or 92% of fair values reported at June 30, 2008.
(3) Comprised $865 million and $254 million for which we changed our intent to hold in the third and fourth quarter of 2008,
respectively, due to unanticipated changes in facts and circumstances.
(4) Includes change in intent write-downs of $453 million and $241 million in the third and fourth quarter of 2008, respectively, and
impairment write-downs of $122 million and $15 million in the third and fourth quarter of 2008, respectively.
Our original objective in our June 30, 2008 risk mitigation and return optimization program was to reduce our
exposure to the identified investments in an orderly fashion prior to additional significant negative impacts.
Though we were able to complete a considerable portion of the reduction, approximately $1.24 billion of this
program, during the third and fourth quarters of 2008 the financial markets experienced additional and severe
dislocation. A series of events, which includes the effects of failures of large financial institutions and
intermediaries and various intervention by the government, significantly increased the level of uncertainty in the
market. These conditions drove significant volatility in the levels of liquidity and put additional and immediate
downward pressures on prices of certain of these investments in respect to our estimated intrinsic values. As a
result of these market conditions, which have worsened, we determined that we would not be able to sell certain
of these investments at our view of their intrinsic values.
Investments re-designated at October 1, 2008 as having the intent to hold to recovery due to our inability to
dispose of them for values equal to or greater than our view of their intrinsic value are presented in the following
table.
Amortized Amortized
Fair value at cost at Fair value at cost at
October 1, October 1, December 31, December 31,
($ in millions) 2008 2008 2008 2008
Corporate $ 618 $ 616 $ 578 $ 592
Finance sector(1) 607 603 469 537
ABS RMBS 591 589 462 610
Municipal 482 482 493 479
Alt-A 126 126 89 121
Prime 53 59 40 55
Corporate privately placed securities 40 40 24 27
Other 79 74 55 78
Total $2,596 $2,589 $2,210 $2,499
(1) Includes corporate, corporate privately placed securities and equity securities with financial sector exposure.
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MD&A