Allstate 2008 Annual Report Download - page 262

Realized capital gains and losses by transaction type for the years ended December 31 are as follows:
2008 2007 2006
($ in millions)
Sales(1) $ (464) $1,483 $ 491
Impairment write-downs(2) (1,983) (163) (47)
Change in intent write-downs(1)(3) (1,752) (147) (112)
Valuation of derivative instruments (1,280) (77) 26
EMA LP income(4) (97) — —
Settlement of derivative instruments 486 139 (72)
Realized capital gains and losses,
pre-tax (5,090) 1,235 286
Income tax benefit (expense) 1,779 (437) (100)
Realized capital gains and losses,
after-tax $(3,311) $ 798 $ 186
(1) To conform to the current year presentation, certain amounts in the prior years have been reclassified.
(2) Impairment write-downs reflect issue specific other-than-temporary declines in fair value, including instances where we could not
reasonably assert that the recovery period would be temporary.
(3) Change in intent write-downs reflects instances where we cannot assert a positive intent to hold until recovery.
(4) Subsequent to October 1, 2008, income from investments in limited partnership interests accounted for utilizing the equity method of
accounting is reported in realized capital gains and losses.
Gross gains of $816 million, $261 million and $272 million and gross losses of $583 million, $286 million and
$314 million were realized on sales of fixed income securities during 2008, 2007 and 2006, respectively.
Unrealized net capital gains and losses
Unrealized net capital gains and losses included in accumulated other comprehensive income are as follows:
Gross unrealized
Fair Unrealized net
value Gains Losses gains (losses)
($ in millions)
At December 31, 2008
Fixed income securities $68,608 $2,545 $(11,041) $(8,496)
Equity securities 2,805 112 (444) (332)
Short-term investments 8,906 4 (1) 3
Derivative instruments(1) 15 25 (14) 11
Unrealized net capital gains and losses, pre-tax (8,814)
Amounts recognized for:
Insurance reserves(2) (378)
DAC and DSI(3) 3,500
Amounts recognized 3,122
Deferred income taxes 1,954
Unrealized net capital gains and losses, after-tax $(3,738)
(1) Included in the fair value of derivative securities are $4 million classified as assets and $(11) million classified as liabilities.
(2) The insurance reserves adjustment represents the amount by which the reserve balance would increase if the net unrealized gains in the
applicable product portfolios were realized and reinvested at current lower interest rates, resulting in a premium deficiency. Although we
evaluate premium deficiencies on the combined performance of our life insurance and immediate annuities with life contingencies, the
adjustment primarily relates to structured settlement annuities with life contingencies, in addition to annuity buy-outs and certain payout
annuities with life contingencies.
(3) The DAC and DSI adjustment represents the amount by which the amortization of DAC and DSI would increase or decrease if the
unrealized gains or losses in the respective product portfolios were realized.
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Notes