Allstate 2008 Annual Report Download - page 238

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. General
Basis of presentation
The accompanying consolidated financial statements include the accounts of The Allstate Corporation and its
wholly owned subsidiaries, primarily Allstate Insurance Company (‘‘AIC’’), a property-liability insurance company
with various property-liability and life and investment subsidiaries, including Allstate Life Insurance Company
(‘‘ALIC’’) (collectively referred to as the ‘‘Company’’ or ‘‘Allstate’’). These consolidated financial statements have
been prepared in conformity with accounting principles generally accepted in the United States of America
(‘‘GAAP’’). All significant intercompany accounts and transactions have been eliminated.
To conform to the current year presentation, certain amounts in the prior years’ consolidated financial
statements and notes have been reclassified.
The preparation of financial statements in conformity with GAAP requires management to make estimates
and assumptions that affect the amounts reported in the consolidated financial statements and accompanying
notes. Actual results could differ from those estimates.
Nature of operations
Allstate is engaged, principally in the United States, in the property-liability insurance, life insurance,
retirement and investment product business. Allstate’s primary business is the sale of private passenger auto and
homeowners insurance. The Company also sells several other personal property and casualty insurance products,
life insurance, annuities, funding agreements, and select commercial property and casualty coverages. Allstate
primarily distributes its products through exclusive agencies, financial specialists and independent agencies.
The Allstate Protection segment principally sells private passenger auto and homeowners insurance, with
earned premiums accounting for approximately 92% of Allstate’s 2008 consolidated revenues. Allstate was the
country’s second largest insurer for both private passenger auto and homeowners insurance as of December 31,
2007. Allstate Protection, through several companies, is authorized to sell certain property-liability products in all
50 states, the District of Columbia and Puerto Rico. The Company is also authorized to sell certain insurance
products in Canada. For 2008, the top geographic locations for premiums earned by the Allstate Protection
segment were California, New York, Texas, Florida and Pennsylvania. No other jurisdiction accounted for more than
5% of premiums earned for Allstate Protection.
Allstate has exposure to catastrophes, an inherent risk of the property-liability insurance business, which
have contributed, and will continue to contribute, to material year-to-year fluctuations in the Company’s results of
operations and financial position (see Note 7). The nature and level of catastrophic loss caused by natural events
(high winds, winter storms, tornadoes, hailstorms, wildfires, tropical storms, hurricanes, earthquakes and
volcanoes) experienced in any period cannot be predicted and could be material to results of operations and
financial position. The Company considers the greatest areas of potential catastrophe losses due to hurricanes to
generally be major metropolitan centers in counties along the eastern and gulf coasts of the United States. The
Company considers the greatest areas of potential catastrophe losses due to earthquakes and fires following
earthquakes to be major metropolitan areas near fault lines in the states of California, Oregon, Washington, South
Carolina, Missouri, Kentucky and Tennessee. The Company also has exposure to asbestos, environmental and
other discontinued lines claims (see Note 13).
The Allstate Financial segment sells life insurance, retirement and investment products and voluntary accident
and health insurance to individual and institutional customers. The principal individual products are fixed
annuities; interest-sensitive, traditional and variable life insurance; and voluntary accident and health insurance.
The principal institutional product is funding agreements backing medium-term notes issued to institutional and
individual investors. Banking products and services are also offered to customers through the Allstate Bank.
Allstate Financial, through several companies, is authorized to sell life insurance and retirement products in
all 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands and Guam. For 2008, the top geographic
locations for statutory premiums and annuity considerations for the Allstate Financial segment were Delaware,
California, Florida and New York. No other jurisdiction accounted for more than 5% of statutory premiums and
annuity considerations for Allstate Financial. Allstate Financial distributes its products to individuals through
multiple distribution channels, including Allstate exclusive agencies, which include exclusive financial specialists,
independent agents (including master brokerage agencies and workplace enrolling agents), financial service firms,
such as banks and broker-dealers and specialized structured settlement brokers. Allstate Bank products can also
be obtained directly through a toll-free number.
128
Notes