2005   The Allstate   Summary
       Corporation    Annual
                      Report




                              ...
Front Cover
Compassion and
Commitment
Allstate employees and
agents showed true com-
passion and commitment
in the wake of...
Giving Back to the
Community




The Allstate Corporation
2005 Corporate Social
Responsibility Report
highlights the socia...
Financial Highlights

 Measuring our Performance




 Highlights: In 2005,             Net Income per               Operat...
Letter to Shareholders

 Rising to the Challenge




 Dear Fellow Shareholders:                                   Record R...
Letter to Shareholders

Managing an Unpredictable Market                                                                  ...
The Future: Building on our Strengths




             Innovation at Work                                      Value Drive...
Letter to Shareholders

75 Years and Growing




 Total Shareholder Returns                                      Dividends...
Preparing and Protecting America

How do we mitigate mega-catastrophe risk?                                               ...
Product Innovation
Allstate® Your Choice
Auto insurance is re-
inventing auto insurance
by rewarding safe driving
and offe...
How does Allstate keep its business growing?

 We compete vigorously                    A High Quality             Expande...
How does Allstate meet its customer commitments?

We’re creating loyal customers—                                         ...
Real Time Response
Members of Allstate's
dedicated National
Catastrophe Team
monitor storms before
they strike, develop
re...
How does Allstate deliver value and results?

We invest responsibly and                                                   ...
Providing a Helping Hand
                           Families in the New Orleans
                           area are gettin...
Financial Scorecard



                                Better                                                             ...
Leadership Team
                                                                                               George E. R...
allstate 2005 Summary Annual Report
allstate 2005 Summary Annual Report
allstate 2005 Summary Annual Report
allstate 2005 Summary Annual Report
allstate 2005 Summary Annual Report
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allstate 2005 Summary Annual Report

  1. 1. 2005 The Allstate Summary Corporation Annual Report 1. Manage catastrophic exposures? 2. Keep our business growing? How does Allstate: 3. Create loyal customers? 4. Deliver value and results?
  2. 2. Front Cover Compassion and Commitment Allstate employees and agents showed true com- passion and commitment in the wake of Hurricane Katrina. Kathleen and Lester Null fled their home in Meraux, Louisiana, just before the storm hit. Unable to find shelter after hours of driving, they made their way to the West Memphis, Arkansas, office of Allstate Agent David Tyler, who had posted signs throughout town offering to assist Allstate evacuees. Tyler, who ultimately helped more than 200 people, arranged for lodging as well as check-cashing and other services, and provided vital logistical and emotional support until their local agent could restore service to his agency. Tyler (far right) and claim adjuster Kim Eubanks (second from left) recently visited the Nulls’ damaged residence. As they surveyed the empty structure that used to be their home, Lester and Kathleen told the story of their unimagin- able loss and of the hope that came with the help of Agent Tyler. In Lester’s words,“I will thank that man until I die.”
  3. 3. Giving Back to the Community The Allstate Corporation 2005 Corporate Social Responsibility Report highlights the socially responsible measures that not only help create strong and vital commu- nities, but also help manage our risks and enhance our company's performance. The report is available online at www.allstate.com/csr.
  4. 4. Financial Highlights Measuring our Performance Highlights: In 2005, Net Income per Operating Income* Revenues Return on Equity Book Value per Diluted Shareholders’ Equity Allstate incurred In 2005, operating income Revenues rose 4.3 percent to Return on average Shareholders’ equity, which Diluted Share Share Excluding the Net $5.7 billion in losses Net income per diluted was $1.6 billion. This is a $35.4 billion in 2005. beginning and ending is the company’s total assets Impact of Unrealized Net share, which decreased 41.9 common measure used by Revenues indicate Allstate’s period shareholders’ equity, minus total liabilities, Capital Gains on Fixed primarily related to Income Securities* increased percent in 2005, divides net the investment community total premium and invest- which measures how well indicates the book value the three devastating income by the number of to analyze our results. ment results. Allstate used shareholders’ by 1.6 percent in 2005. of the ownership interest hurricanes in the Gulf weighted average diluted Operating income reveals equity to generate net This measure, commonly of Allstate shareholders. states. Nevertheless, shares outstanding. It trends in our insurance and income, decreased to used by insurance investors It declined 7.5 percent demonstrates net income financial services business 8.4 percent in 2005 from as a valuation technique, in 2005 to $20.2 billion we generated net during the year that is that may be obscured by 15.0 percent in 2004. is shareholders’ equity less from $21.8 billion in 2004, income of $1.8 attributable to each share business decisions and unrealized net capital gains reflecting a net return billion, which pro- of stock. economic developments on fixed income securities of capital to shareholders duced an 8.4 percent unrelated to the insurance divided by the number of through dividends and return on equity. underwriting process. diluted shares outstanding share repurchasing. on December 31. We also repurchased 43.8 million shares at (in dollars) (in billions) (in billions) (percent) (in dollars) (in billions) a cost of $2.5 billion. Our total shareholder $4.54 $3.1 $21.8 $35.4 15.0% $29.08 $28.62 return of 7.0 percent $33.9 outpaced the S&P $20.2 500 in 2005, as it has in each of the last five years, and as it has cumulatively since we became a public company in June 1993. $2.64 8.4% $1.6 *Measures we use that are not based on accounting principles generally accepted in the United States (non-GAAP) are defined and reconciled to the most directly comparable GAAP measure, and operating measures are defined in the “Definitions of non-GAAP and Operating Measures” section on page 17 of this report. 2004 2005 2004 2005 2004 2005 2004 2005 2004 2005 2004 2005
  5. 5. Letter to Shareholders Rising to the Challenge Dear Fellow Shareholders: Record Revenues, Focus on Profitable Increasing Total Lower Earnings Growth Shareholder In 2005 Allstate experienced Returns the worst hurricane season on record—and the costliest in Although Allstate gen- Property-Liability Financial premiums Amid a historic year erated record revenues continued to benefit and deposits* were in catastrophes, our your company’s 75-year in 2005, we incurred an from our focus on $14.4 billion, and its businesses once again unprecedented $5.7 profitable growth. operating income rewarded Allstate share- history. We sent 4,100 billion in catastrophe- Premiums written increased by 5.4 percent holders. We repurchased related costs as we increased by 3.2 percent to $581 million. $2.5 billion of our catastrophe specialists to helped customers from $26.5 billion in Overall, we’re making stock and paid an ravaged areas to do what rebuild their lives. 2004 to $27.4 billion progress in Allstate all-time high annual That’s a big number— in 2005. Our Allstate Financial and remain dividend of $1.28 per we do best: help customers more than five times brand standard auto focused on improving share, up 14 percent our annual average over business produced 2.9 returns that will deliver from 2004—a testa- recover. We also refined the last decade. Return percent unit growth, profitable growth. ment to our disciplined on equity fell 6.6 points while Allstate home- To that end, in March capital management. our risk management for 2005, compared to owners achieved 3.4 2006 we announced the Our stock price closed an increase of 0.8 points percent unit growth. decision to sell the 2005 at $54.07, a 4.5 models and continued to in 2004. Operating Total Property- Allstate Financial percent increase from execute our strategy to produce income per diluted Liability revenues, variable annuity business the $51.72 at the end of share* declined from including investment and enter into an 2004. We also delivered profitable growth. By focusing $4.41 in 2004 to $2.37 income, increased by exclusive distribution a total shareholder in 2005. 3.5 percent to a record arrangement, subject return of 7 percent. on our strengths, we fulfilled to regulatory approvals. Though these losses $29.3 billion. And, And, we maintained our This arrangement will slowed our short- excluding catastrophes, solid credit ratings from our commitments to policy allow our distribution term momentum, that top-line growth major rating agencies. channels to continue to the progress we made was generated while Under the circum- holders, invested in growth offer a full range of prod- implementing our continuing to improve stances, we’re very ucts, including variable “better, bigger, broader” our underwriting proud of these results. and rewarded our shareholders. annuities, while we strategy improved our margins. Our Property- They show that our dedicate our resources to ability to create long- Liability combined strategy is working, and better deploy capital to term value. ratio, excluding catas- that the market remains trophes* improved , a more focused product confident we can deliver Edward M. Liddy 2.1 points in 2005 portfolio where we have the attractive, steady Chairman and compared with 2004. scale and a significant long-term returns Chief Executive Officer In 2005, Allstate market presence today. shareholders expect. *See page 17. 1
  6. 6. Letter to Shareholders Managing an Unpredictable Market Allstate responded to the severe catastrophes of 2005 with speed, efficiency and compassion. We also worked to decrease our exposures and applied leadership Re-examining Risk Finding New and innovative Opportunities thinking to create a better business climate. Shareholders expect us wide basis, before the for named storms, Though we can’t control By staying close to our new ways to connect to ask tough questions 2005 hurricane earthquakes and fires the weather, we can customers and markets, with consumers. For about the exposures we season, we chose to following earthquakes and will mitigate the we’re growing our example, over the last face and manage them invest our reinsurance in all states except weather’s impact on our customer base in a five years we’ve doubled aggressively to deliver dollars in high-density Florida. We also pur- business. As a result, highly competitive our investment in multi- consistent earnings. In coastal areas where our chased as additional we expect our long-term market. We compete cultural advertising. the aftermath of financial exposure is protection from hurri- exposure will decline. aggressively for high We’re also aggressively Hurricanes Katrina, much higher—and canes in Florida $900 Moreover, we’re lifetime value insurance tapping such channels Rita and Wilma, two where the probability million of reinsurance in calling for public policy customers in multi-line as NASCAR, Olympic questions warranted of payback is greatest. excess of amounts recov- change and a more households. But it takes and college football close attention. Second, what will erable from the Florida rational approach to more than price to win. sponsorships and First, why were we do in the future to Hurricane Catastrophe how Americans prepare To attract and retain placing greater emphasis Allstate’s losses so mitigate this risk so we Fund. In some other for and protect them- profitable customers, on cable TV, the significant in Louisiana can continue to generate states, we’re purchasing selves against the we also continue to Internet and customer- and Mississippi? reliable earnings growth more reinsurance to devastating and highly develop our product experience activities. Katrina’s wide path and increase our returns reduce our exposures. unpredictable effects of mix to meet their needs and unusual severity on capital? Each major In other markets, catastrophes. and back these products meant high payouts we’re increasing rates In 2006 these efforts storm teaches us new with fast response, on the hundreds of and deductibles on our will expand and acceler- lessons—and makes us financial strength and thousands of homes homeowners policies ate. By re-examining better able to manage integrity. In addition, we insure there. and limiting new our catastrophe risk risks. We factor new we anticipate and Reinsurance could business writing. on an ongoing basis, data into our risk respond to demo- have softened the blow, In markets where we we can protect our management strategy, graphic, regulatory and as it did in Texas, for cannot adequately cover business and generate including recent find- market trends to find Hurricane Rita. When our risks, we may be more consistent share- ings that point to a we considered our expo- able to help customers holder returns. period of more frequent sures on an enterprise- and severe hurricanes. find alternative coverage We purchased country- while we focus instead wide reinsurance that on auto and financial will reimburse Allstate services products. for $2 billion of losses in excess of $2 billion 2
  7. 7. The Future: Building on our Strengths Innovation at Work Value Driven Investing in People Innovation anchors suc- Specifically, we started Value means different basis so we can refine Allstate maintains its Each year we invest cess for any company to apply even more things to different processes and commu- reputation for a high- heavily in helping our that wants to survive sophisticated tiered people. For Allstate, nications based on performance culture by employees achieve new and thrive over the pricing not only to auto, it means doing feedback from agents attracting and retaining professional designations long-term. Allstate is no but across our home- everything we can to and customers. the best talent in our and academic degrees. exception. Our success owners portfolio to more optimize financial Strategies like this save industry. We provide And because diversity reflects our commit- finely segment risks and returns for shareholders. money and support our force of nearly is a cornerstone of ment to product and help attract customers The 2005 hurricane top-line growth. 70,000 employees, Allstate’s success, process innovation and with higher lifetime season reinforced the Our strong balance agents and agency staff we also invest in and efficient business prac- value. And, our Next importance of manag- sheet gives us the with many opportuni- value our diverse work- tices, and we have many Generation Claim ing our business with flexibility to invest ties to expand their force, who serve our industry firsts to our Systems will combine even greater precision responsibly in growth. knowledge, acquire new diverse customer base credit. new technologies with and sophistication. With one of the skills and position and stockholders in In recent years we’ve fast, simple, customer- Our performance also country’s most recog- themselves for new a highly competitive taken our investment in focused processes. This makes us even more nizable brands as a career and business marketplace. In return, innovation to a new investment will help us committed to build on foundation, we are opportunities. For our people demonstrate level. For example, we lower our loss adjust- the key strengths that building profitable example, we launched exceptional commit- developed Allstate® ment expenses, better drive shareholder relationships based on a new field leadership ment to our customers Your Choice Auto insur- manage loss costs and returns by enhancing competitively priced structure designed to and work hard to ance to give customers boost customer reten- our business perform- products and services, provide agency owners help Allstate win in greater flexibility and tion and satisfaction. ance and corporate innovation and a better with specialized support the marketplace. choice of packages. Even as we look reputation. customer experience. to help them operate These package features ahead, we keep a keen Our scale provides As a company, we more efficiently and are helping us win eye on the market built-in economies value strong communi- profitably. profitable market share, variables that affect that generate value ties and show this especially as we combine our performance and for agents, customers commitment through them with increasingly adjust our strategy and shareholders. ongoing investment sophisticated under- accordingly. For exam- For example, it enables in municipal bonds, writing tools to deliver ple, we use technology us to roll out new employee volunteerism competitive pricing. and local knowledge to products on a regional and continued support Innovation is also guide expansion of our of The Allstate making our product agency base into high- Foundation. support structure more growth areas. efficient and profitable. 3
  8. 8. Letter to Shareholders 75 Years and Growing Total Shareholder Returns Dividends per Share 75 Years and Strong (in dollars, adjusted for stock split in 1998) Since IPO on 6/3/1993 Allstate is proud to and agents are deliver- we outline the many celebrate 75 years of ing our Good Hands® steps we took to keep 373% providing protection Promise with commit- our enterprise growing, 1.40 350 and security for genera- ment and zeal. meet our customer tions of Americans. We I am grateful for the commitments and 1.28 are excited to embark support of an experi- deliver value and 300 1.20 306% on our next 75 years, enced leadership team results. 1.12 and we do so from a that is guiding Allstate In 2006 we will focus 250 1.00 strong foundation. The toward a dynamic on several business pri- 243% 239% company is growing future. Several leaders orities that are critical .92 profitably despite record of your company, to our future. The .84 200 .80 catastrophe losses. Our including our long-time progress we make to .76 financial position is senior management reduce our catastrophe .68 solid. We’re improving team member Robert exposure, accelerate 150 .60 .60 our competitive position W. Pike, retired in profitable growth, pro- .54 by taking many 2005 after decades of tect our brand, manage .48 100 .40 .43 initiatives to reduce outstanding service. expenses and improve .39 .36 costs. Consumers are I thank them for their the customer experience responding to the many contributions to will make us an even S&P Insurance 50 .20 consistent brand Allstate’s success. They stronger and better S&P 500 .18 S&P P/C Allstate experience we deliver, have left their very company. 93* 94 95 96 97 98 99 00 01 02 03 04 05 our competitive but capable successors with *IPO as of 6/3/1993 disciplined pricing and high standards to meet. Total Shareholder Returns our innovative new In 2005 Allstate products. Employees drew on its many Edward M. Liddy S&P strengths to overcome Chairman and Allstate S&P P/C Insurance S&P 500 adversity and generate Chief Executive Officer 7% 15% 14% 5% 1 Year, 12/31/2004 –12/31/2005 solid shareholder 31% 27% 22% 16% 2 Years, 12/31/2003–12/31/2005 returns. I’ve addressed 56% 60% 48% 49% 3 Years, 12/31/2002–12/31/2005 our strategy for manag- 75% 43% 17% 16% 4 Years, 12/31/2001–12/31/2005 ing catastrophic events. 5 Years, 12/31/2000–12/31/2005 39% 31% 3% 3% In the pages that follow, 10 Years, 12/31/1995–12/31/2005 218% 150% 193% 136% 373% 239% 306% 243% Since IPO, 6/3/1993–12/31/2005 4
  9. 9. Preparing and Protecting America How do we mitigate mega-catastrophe risk? Protecting America Allstate advocates preparation, not rear- view reaction. It’s not a matter of insurance; Why should Why is Allstate What is Allstate’s How will this What can Americans be advocating a new solution? solution benefit consumers do it’s a matter of economic vitality. concerned? system? Allstate share- to protect The fact is that America is holders? themselves? not as prepared as it should be, We initiated Protecting Allstate is reducing Consumers can take For most families, Simply put, the current America.org, a broad its catastrophe expo- advantage of new educa- the home represents a system does not ade- and mega-catastrophes appear coalition that seeks to sure to protect its tion programs that will primary and growing quately help Americans to be increasing in better prepare and financial strength and help them prepare for source of equity and effectively prepare for protect Americans generate consistent catastrophes before they the foundation of and efficiently recover frequency and from natural disasters. earnings. In the strike. They can learn their long-term from catastrophes. The goal is to improve short-term, this how to: financial security. Insurance premiums severity. consumer education, strategy will require • Ensure their insurance Yet today, one third rise as carriers try to mitigation and the us to provide less coverage includes of Americans live in cover the costs of first response capability protection to fewer replacement costs areas prone to earth- mega-catastrophes and of police and fire homeowners. With • Follow their commu- quake risk, and more reinsurance coverage. departments. We are a new risk-sharing nity’s public escape than half live in Some homeowners find also advocating a new mechanism in place, plan in an emergency coastal counties. it difficult to secure risk-sharing mechanism we can protect more • Develop a simple This is a precarious insurance coverage at whereby private insurers consumers at afford- family communication place to be at a time any price. As a result, would continue to able prices and enable and response plan when seven major too many consumers provide protection to them to benefit • Access available hurricanes struck the and businesses lack the consumers but there from our world-class resources to speed the Gulf and Atlantic comprehensive cover- would be a limit to service and claims recovery process coasts in a 15-month age they need. And their potential losses. expertise. Bringing You can learn more by span in 2004-05, when disaster strikes, Losses above this the Good Hands® visiting Protecting and resulted in they have nowhere to amount would be Promise to life will America.org. Equally insured losses that turn for immediate covered by a privately enable us to grow important, I encourage ranked among the support. Taxpayers funded government- profitably and you, your family and top 10 catastrophes also suffer when the sponsored catastrophe maintain our record friends to contact your in Allstate’s history. government spends pool at the state and of outstanding legislators and ask them billions in emergency federal levels. This shareholder returns. to join the effort to help funds on people and structure would pro- protect you and our businesses that may vide more protection country from the devas- never fully recover. We at a lower cost to tating consequences of need a new approach consumers. natural catastrophes. that gives consumers Thomas J. Wilson the protection and President and support they need. Chief Operating Officer 5
  10. 10. Product Innovation Allstate® Your Choice Auto insurance is re- inventing auto insurance by rewarding safe driving and offering more choice to meet individual needs. Features include a safe- driving bonus, accident forgiveness, a safe-driving deductible and new-car expanded protection. Allstate customers John and Kitty Vautier, shown here with their teenage drivers Jennifer and John Jr., protect all their family cars with Allstate® Your Choice Auto insurance. 6
  11. 11. How does Allstate keep its business growing? We compete vigorously A High Quality Expanded Innovation Drives A Rewarding Future Portfolio Distribution Opportunity on multiple fronts. Our sophisticated tiered We never rest when it Growth also requires a Demographic trends consumers prepare for pricing models are comes to building on clear view of the market are making personal the future. In 2005, creating a more stable our already powerful opportunities ahead— investment more new sales of financial and profitable portfolio. distribution engine. In and a focused strategy important than ever— products by Allstate exclusive agencies* Our rating plans have 2005 we had a net gain for capturing them. and providing growth multiple tiers that allow of 555 new exclusive For example, new opportunities for increased 5.7 percent us to more precisely agencies, bringing technology is making Allstate Financial. to $2.4 billion and have align premium with our U.S. total to cars much safer, while Life expectancy is grown at a compound risk. We compete 12,428. We’re also demographic shifts increasing. Health- annual rate of 42.1 vigorously for high life- helping our existing and tougher laws are care costs are rising. percent since 2000. time value customers. agencies grow bigger, creating a larger pool of Pensions and Social The result: improved more efficient and more safe, responsible drivers. Security benefits are underwriting profits, profitable. For example, These trends present a under pressure. Tens better retention and our U.S. licensed sales favorable climate for of millions of baby stable margins. professionals increased innovative new products boomers are at or The Good Hands® Promise to approximately like Allstate® Your near retirement age. As part of our overall growth 29,800 in 2005 from Choice Auto insurance, Allstate has the strategy, we focus on delivering 28,500 in 2004. As a which gives consumers financial expertise, on the five planks of the Good result, we’re reaching the flexibility to match innovative products and Hands® Promise to help cus- more new households the price they pay to the distribution network tomers feel better protected while cross-selling our coverage they need. to meet the growing today and better prepared for broad product portfolio demand for financial tomorrow. to the 17 million house- services that help holds we already serve. Opportunities for Establish relationships Differentiation that value customers Provide a knowledgeable and experienced team Offer products and services to help meet customer needs Foundational Be easy to do business with Elements Have competitive prices *See page 17. 7
  12. 12. How does Allstate meet its customer commitments? We’re creating loyal customers— Allstate is attract- ing and retaining one experience at a time. customers by responding fast, improving the claim experience and building a larger and better equipped agent Connecting with First to Respond Staking a Claim Tools to Excel network. Customers to Excellence Allstate’s Good Hands® Customers appreciate Allstate handles more Our vast and growing Promise makes a strong Allstate’s scale and than six million claims network of exclusive commitment to resources most when in a typical year—not agencies gives us nurture and protect disasters strike. Before including catastrophes. immediate access to our customers. We’re Katrina reached land, This means millions of consumers and commu- extending this promise we mobilized 1,500 opportunities each year nities across the country. by making our agency, claim adjusters just to execute efficiently As these agencies grow online and customer outside the impact and help customers bigger, more efficient service channels easier zone. We also posi- recover after a loss. and more profitable, to access and more sat- tioned 24 Mobile We have been looking they’re better equipped isfying to experience. Response Units, all at every phase of the to meet the protection We’re also sharpening equipped with satellite claim process—from and financial services communications to capability that allowed customer record- needs of our target better align our target- us to relay claim keeping to check market. Today, Allstate ed audiences with information from distribution. And we agents benefit from an media channels—and field adjusters to head- have been making efficient new technology to ensure we consis- quarters systems before dozens of changes to platform that makes tently reinforce brand local phone service was improve the entire doing business easier. value. In 2005 greater restored. Allstate experience. They can also access the customer focus helped agents and employees market intelligence, increase customer also showed their marketing support and loyalty for the second dedication by attending training they need to year in a row. to customers first— break away from the even though more than retail competition. 800 had lost their own We are also making homes and businesses technology and process or were otherwise investments to grow our severely affected by independent channel, the storm. which serves a market representing one third of all insurance customers and $45 billion in annual premium dollars. 8
  13. 13. Real Time Response Members of Allstate's dedicated National Catastrophe Team monitor storms before they strike, develop response strategies and coordinate on- the-ground activity. Team members (left to right) include Steve Pressley, Claim Process Specialist; Jerry Jimenez and Wendy Carrick, Market Claim Managers; and Les Mertins, Claim Field Director. 9
  14. 14. How does Allstate deliver value and results? We invest responsibly and Shareholders count on act with integrity. Allstate to act with integrity and initiative— the same attributes that help guide our business— when helping Disciplined Risk Management, Integrity in Strong Communities, the people and Reliable Returns Action Empowered Customers communities that we serve. In twelve-and-a-half Allstate has a sophis- both the Standard & Allstate’s reputation for Allstate is supporting the Annual Giving years as a public ticated formula for Poor’s Property & good governance and new generations of Campaign. company, Allstate has managing risks. By Casualty and Standard financial transparency customers by helping Each year, Allstate created significant viewing them strategi- & Poor’s 500 indices. creates additional value communities across funds The Allstate value by executing a cally, we can determine Allstate also has a by contributing to our America grow and Foundation, an inde- disciplined investment which risks to assume proven track record of long-term financial per- prosper. These activities pendent charitable strategy and managing and then the right returning free cash flow formance. We adopted express our core values corporation. In 2005 our risks with an amount to assume in to shareholders through many of our current and boost Allstate’s The Allstate Foundation enterprise-wide view. order to achieve dividends and stock corporate governance reputation as a responsi- awarded $16 million in We generate addi- attractive, reasonably repurchases. Our practices long before ble corporate citizen. grants to 508 national tional returns through predictable returns. dividend has increased corporate scandal led At the end of 2005, and regional not-for- prudent management of That means under- every year since 1993 to regulatory change. our investment portfolio profit organizations. our $118.3 billion standing how natural and it reached an all- These include rigorous included $27 billion These grants strengthen investment portfolio. disasters, changing time high of $1.28 per CEO evaluations in municipal bonds in communities in three We invest share- economic conditions, share in 2005. Since and detailed board urban areas that need important ways: they holders’ equity in areas operational challenges 1993 we have also evaluations. investment capital. promote community that drive profitable and market forces affect repurchased more than Our practices and Allstate also supports safety; create greater growth and generate our business. This $11 billion in Allstate our written policies— communities in need by economic empowerment; solid returns. These analysis helps us find stock. which are described funding programs that and encourage tolerance, include product the right balance online at allstate.com— encourage employees, inclusion and diversity. innovation, marketing, between maintaining earn high marks from agents and agency staff In 2005 The Allstate distribution and process liquidity and investing independent governance to reach out to others. Foundation launched improvement. In 2005 capital to fuel growth organizations and are In 2005, the $6 million new initiatives to shareholders’ equity was and reward investors. widely embraced donated by Allstate to educate teens on the $20.2 billion compared Between 1994 and throughout our organi- help hurricane victims importance of safe to $21.8 billion in the end of 2005, the zation. Our senior in the Gulf states driving, and to help 2004, reflecting a net total shareholder return management team leads included $2.6 million victims of domestic return of capital to on our stock has aver- by example, anchoring in contributions from violence transition to shareholders through aged 17 percent on a our culture by maintain- Allstate employees and safe, productive lives dividends and share compound annual basis. ing the highest personal agencies. Our people free of violence. repurchasing. These returns exceed standards for integrity also gave an additional and accountability. $2.8 million in 2005 to local charitable organizations through 10
  15. 15. Providing a Helping Hand Families in the New Orleans area are getting help rebuilding their lives in the wake of Hurricane Katrina. Shikanah Brown (fore- ground) is one of dozens of pre-schoolers at the East St. Tammany Rainbow Child Care Center in Slidell, Louisiana, helped by The Allstate Foundation Hurricane Recovery Fund at the Greater New Orleans Foundation. The daycare center received $20,000 to rebuild its battered site. “It’s been a Godsend,” says Rainbow executive director Charlotte Champagne, shown talking with Shikanah’s mother Celeste and (to her right) Maya Rollins with son Jasper Williams. 11
  16. 16. Financial Scorecard Better Bigger Broader For Allstate, trans- Net Income per Operating Income per Return on Equity Revenue Operating Income Premiums and Deposits parency means giving Return on equity measures This measure indicates This measure reveals This measure is used to Diluted Share Diluted Share This “bottom line” This is a common measure how well Allstate used Allstate’s total premium and trends in our insurance analyze the production investors clear and easy measure demonstrates used by the investment shareholders’ equity to investment results. In 2005, and financial services trends for Allstate Financial access to all the infor- net income during the year community to analyze our generate net income. Allstate generated record business that may be sales. It shows the progress mation they need to that is attributable to each results. Operating income revenue. obscured by business on meeting the goal of assess our performance. share of stock. This num- reveals trends in our insur- decisions and economic becoming a broader-based This financial scorecard ber declined in 2005 as ance and financial services developments unrelated company. severe catastrophe losses business that may be obscured to the insurance under- demonstrates our reduced net income. by business decisions and writing process. progress in executing economic developments our “better, bigger, unrelated to the insurance broader” strategy. underwriting process. Better (in dollars) (in dollars) (percent) (in billions) (in billions) (in billions) We’re striving to become more efficient and profitable 35.4 in our operations and 3.1 4.54 33.9 in our relationships with $4.50 $4.50 15.0 $18.0 $33.0 $3.0 4.41 15.0 customers. 32.1 14.2 15.9 Bigger 29.6 2.7 14.4 28.9 Our goal is to drive top line 3.83 13.2 2.5 3.75 3.75 12.5 15.0 27.5 3.77 growth in a way that also 11.6 delivers bottom line profits. 13.1 10.8 Broader 11.8 2.1 2.0 3.00 3.00 10.0 12.0 22.0 We seek to expand in 10.6 9.8 the personal lines, life 2.92 2.64 insurance, retirement 9.3 8.4 and investment products 1.6 2.37 marketplace. 1.5 2.25 2.25 7.5 9.0 16.5 1.5 2.06 6.7 6.5 1.60 1.60 1.0 1.50 1.50 5.0 6.0 11.0 0.5 .75 .75 2.5 3.0 5.5 2.7 2.8 2.3 2.0 1.3 ’01 ’02 ’03 ’04 ’05 ’01 ’02 ’03 ’04 ’05 ’01 ’02 ’03 ’04 ’05 ’01 ’02 ’03 ’04 ’05 ’01 ’02 ’03 ’04 ’05 ’01 ’02 ’03 ’04 ’05 Non-proprietary channels Proprietary channel 12
  17. 17. Leadership Team George E. Ruebenson Catherine S. Brune Casey J. Sylla Thomas J. Wilson Eric A. Simonson Joan H.Walker From left to right: Senior Vice President and Joseph V.Tripodi Senior Vice President, President, Allstate Financial President and Senior Vice President and Senior Vice President, Property-Casualty Claim Senior Vice President and Chief Information Officer Drives increasing returns Chief Operating Officer Chief Investment Officer Corporate Relations Service Organization Chief Marketing Officer Sets and implements and profitable growth by Leads the implementation of Manages Allstate’s invest- Stewards Allstate’s corporate Oversees a highly efficient Leverages Allstate’s market- an integrated, business- providing top-tier financial Allstate strategies that drive ment portfolios to generate image and reputation claim service organization ing power and highly valued aligned technology strategy products through Allstate profitable growth, customer attractive levels of risk- and sets and directs the that is continuously evolv- Good Hands® Promise to that supports business agencies and third-party loyalty and innovation. adjusted income and total company’s external and ing to better meet the needs strengthen and broaden objectives, protects and financial services return in support of overall internal communication Michael J. Roche of customers and agents. customer relationships and delivers information and professionals. financial objectives. strategy. attract new customers. enhances customer service. Senior Vice President, Michael J. McCabe Edward M. Liddy Ronald D. McNeil Allstate Protection Technology Dan Hale Joan M. Crockett Senior Vice President and Chairman and and Administration Senior Vice President, General Counsel Senior Vice President and Senior Vice President, Chief Executive Officer Leads all aspects of Protection Distribution Guides Allstate’s strategy to Chief Financial Officer Human Resources Sets and directs the corporate Protection technology Optimizes performance ensure sound compliance Develops financial strategy Develops and implements strategy that is transforming management and Allstate’s of Allstate’s distinct and and governance practices and ensures sound gover- workforce strategies to Allstate into a high-perform- agency and customer powerful distribution net- and to foster a healthy legal, nance practices, rigorous attract, retain and motivate ance insurance and financial support functions. works to deliver products economic, legislative and financial and risk manage- the best talent to drive services company. and services that meet regulatory environment. ment controls, appropriate business strategy. customers’ needs. reporting transparency and disciplined capital management. 13

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