Allstate 2008 Annual Report Download - page 288

As disclosed in Note 3, DAC and DSI balances were reduced during 2006 related to the disposal through
reinsurance agreements of substantially all of the variable annuity business.
DSI activity for Allstate Financial, which primarily relates to fixed annuities, for the years ended December 31
was as follows:
2008 2007 2006
($ in millions)
Balance, beginning of year $295 $225 $237
Impact of adoption of SOP 05-1(1) —(2)—
Disposition of operation(2) — — (70)
Sales inducements deferred 47 64 105
Amortization charged to income (53) (57) (48)
Effect of unrealized gains and losses 164 65 1
Balance, end of year $453 $295 $225
(1) The adoption of SOP 05-1 resulted in a $2 million adjustment to unamortized DSI related to the impact on future estimated gross profits
from the changes in accounting for certain costs associated with contract continuations that no longer qualify for deferral (see Note 2).
(2) In 2006, DSI was reduced related to the disposition through reinsurance agreements of substantially all of Allstate Financial’s variable
annuity business (see Note 3).
11. Capital Structure
Debt outstanding
Total debt outstanding at December 31 consisted of the following:
2008 2007
($ in millions)
Federal Home Loan Bank (‘‘FHLB’’) advances, due 2018 $ 19 $ —
7.20% Senior Notes, due 2009(1) 750 750
6.125% Senior Notes, due 2012(1) 350 350
5.00% Senior Notes, due 2014(1) 650 650
6.125% Senior Notes, due 2032(1) 250 250
5.350% Senior Notes due 2033(1) 400 400
5.55% Senior Notes due 2035(1) 800 800
5.95% Senior Notes, due 2036(1) 650 650
6.125% Junior Subordinated Debentures, due 2067 500 500
6.50% Junior Subordinated Debentures, due 2067 500 500
7.50% Debentures, due 2013 250 250
6.75% Senior Debentures, due 2018 250 250
6.90% Senior Debentures, due 2038 250 250
Synthetic lease VIE obligations, floating rates, due 2011 40 40
Total long-term debt 5,659 5,640
Short-term debt(2) ——
Total debt $5,659 $5,640
(1) Senior Notes are subject to redemption at the Company’s option in whole or in part at any time at the greater of either 100% of the
principal amount plus accrued and unpaid interest to the redemption date or the discounted sum of the present values of the remaining
scheduled payments of principal and interest and accrued and unpaid interest to the redemption date.
(2) The Company classifies any borrowings, which have a maturity of twelve months or less at inception as short-term debt.
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Notes