ALLSTATE CORP | 2013 | FY | 3


($ in millions)
  2013   2012   2011  

Interest expense recognized by ESOP

  $ 2   $ 2   $ 2  

Less: dividends accrued on ESOP shares

    (3 )   (2 )   (2 )

Cost of shares allocated

    7     2     2  
               

Compensation expense

    6     2     2  

Reduction of defined contribution due to ESOP

    46     10     9  
               

ESOP benefit

  $ (40 ) $ (8 ) $ (7 )
               
               

all:ScheduleOfESOPTableTextBlock

($ in millions)





 

  Quoted prices
in active
markets for
identical
assets
(Level 1)
  Significant
other
observable
inputs
(Level 2)
  Significant
unobservable
inputs
(Level 3)
  Balance
as of
December 31,
2013
 

Equity securities:

                         

U.S.

  $   $ 2,124   $ 78   $ 2,202  

International

    160     182     159     501  

Fixed income securities:

                         

U.S. government and agencies

    608     52         660  

Foreign government

        44         44  

Municipal

            18     18  

Corporate

        1,433     18     1,451  

RMBS

        83         83  

Short-term investments

    54     344         398  

Limited partnership interests:

                         

Real estate funds (1)

            197     197  

Private equity funds (2)

            211     211  

Hedge funds (3)

            9     9  

Cash and cash equivalents

    25             25  

Free-standing derivatives:

                         

Assets

    1     3         4  

Liabilities

    (1 )           (1 )
                   

Total plan assets at fair value

  $ 847   $ 4,265   $ 690     5,802  
                     
                     

% of total plan assets at fair value

    14.6 %   73.5 %   11.9 %   100.0 %

Securities lending obligation (4)

                     
(290

)

Other net plan assets (5)

                      90  
                         

Total reported plan assets

                    $ 5,602  
                         
                         

(1)
Real estate funds held by the pension plans are primarily invested in U.S. commercial real estate.
(2)
Private equity funds held by the pension plans are primarily comprised of North American buyout funds.
(3)
Hedge funds held by the pension plans primarily comprise fund of funds investments in diversified pools of capital across funds with underlying strategies such as convertible arbitrage, equity market neutral, fixed income arbitrage, global macro, commodity trading advisors, long short equity, short biased equity, and event driven.
(4)
The securities lending obligation represents the plan's obligation to return securities lending collateral received under a securities lending program. The terms of the program allow both the plan and the counterparty the right and ability to redeem/return the securities loaned on short notice. Due to its relatively short-term nature, the outstanding balance of the obligation approximates fair value.
(5)
Other net plan assets represent interest and dividends receivable and net receivables related to settlements of investment transactions, such as purchases and sales.

       

($ in millions)





 

  Quoted prices
in active
markets for
identical
assets
(Level 1)
  Significant
other
observable
inputs
(Level 2)
  Significant
unobservable
inputs
(Level 3)
  Balance
as of
December 31,
2012
 

Equity securities:

                         

U.S.

  $ 13   $ 2,042   $ 68   $ 2,123  

International

    136     198     246     580  

Fixed income securities:

                         

U.S. government and agencies

    799     78         877  

Foreign government

        32         32  

Municipal

            129     129  

Corporate

        994     10     1,004  

RMBS

        95         95  

Short-term investments

    56     424         480  

Limited partnership interests:

                         

Real estate funds

            214     214  

Private equity funds

            199     199  

Hedge funds

            80     80  

Cash and cash equivalents

    17             17  

Free-standing derivatives:

                         

Assets

                 

Liabilities

                 
                   

Total plan assets at fair value

  $ 1,021   $ 3,863   $ 946     5,830  
                     
                     

% of total plan assets at fair value

    17.5 %   66.3 %   16.2 %   100.0 %

Securities lending obligation

                     
(463

)

Other net plan assets

                      31  
                         

Total reported plan assets

                    $ 5,398  
                         
                         

all:ScheduleOfFairValueOfPlanAssetsByMeasurementLevelsTableTextBlock

 
  Target asset
allocation
  Actual percentage
of plan assets
 
Asset category
  2013   2013   2012  

Equity securities

    40 - 50 %   49 %   50 %

Fixed income securities

    43 - 52     41     38  

Limited partnership interests

    12 - 18     7     9  

Short-term investments and other

        3     3  
                 

Total (1)

          100 %   100 %
                 
                 

(1)
Securities lending collateral reinvestment is excluded from target and actual percentage of plan assets.

us-gaap:ScheduleOfAllocationOfPlanAssetsTableTextBlock

($ in millions)
 

  Pension
benefits
  Postretirement
benefits
 

Net actuarial loss (gain)

  $ 115   $ (22 )

Prior service credit

    (58 )   (23 )

us-gaap:ScheduleOfAmountsInAccumulatedOtherComprehensiveIncomeLossToBeRecognizedOverNextFiscalYearTableTextBlock

  Pension benefits   Postretirement benefits  
($ in millions)
  2013   2012   2011   2013   2012   2011  

Discount rate

    4.60 %   5.25 %   6.00 %   3.75 %   5.25 %   6.00 %

Rate of increase in compensation levels

    3.5     4.5     4.0-4.5     n/a     n/a     n/a  

Expected long-term rate of return on plan assets

    7.75     8.5     8.5     n/a     n/a     n/a  

       Weighted average assumptions used to determine benefit obligations as of December 31 are listed in the following table.

 
  Pension benefits   Postretirement benefits  
 
  2013   2012   2013   2012  

Discount rate

    5.00 %   4.00 %   4.85 %   4.25 %

Rate of increase in compensation levels

    3.5     3.5     n/a     n/a  

us-gaap:ScheduleOfAssumptionsUsedTableTextBlock

 

 

($ in millions)
  2013   2012  

Fair value of plan assets, beginning of year

  $ 5,398   $ 4,675  

Actual return on plan assets

    566     594  

Employer contribution

    561     439  

Benefits paid

    (892 )   (312 )

Translation adjustment and other

    (31 )   2  
           

Fair value of plan assets, end of year

  $ 5,602   $ 5,398  
           
           

us-gaap:ScheduleOfChangesInFairValueOfPlanAssetsTableTextBlock

($ in millions)
 

  Pension benefits   Postretirement
benefits
 
 
  2013   2012   2013   2012  

Benefit obligation, beginning of year

  $ 6,727   $ 5,831   $ 803   $ 716  

Service cost

    140     152     12     13  

Interest cost

    265     298     28     36  

Participant contributions

    1     1     18     20  

Actuarial (gain) loss

    (406 )   756     (32 )   76  

Benefits paid (1)

    (892 )   (312 )   (57 )   (59 )

Plan amendments

    (506 )            

Translation adjustment and other

    (31 )   1     (5 )   1  

Curtailment gain

    (1 )       (285 )    
                   

Benefit obligation, end of year

  $ 5,297   $ 6,727   $ 482   $ 803  
                   
                   

(1)
Benefits paid include lump sum distributions, a portion of which may trigger settlement accounting treatment.

us-gaap:ScheduleOfChangesInProjectedBenefitObligationsTableTextBlock

 

 

($ in millions)
   
  Actual return on plan assets:    
   
   
 
 
  Balance as of
December 31,
2012
  Relating to
assets sold
during the
period
  Relating to
assets still
held at the
reporting
date
  Purchases,
sales and
settlements,
net
  Net transfers
in and/or
(out) of
Level 3
  Balance as of
December 31,
2013
 

Equity securities:

                                     

U.S.

  $ 68   $   $ 10   $   $   $ 78  

International

    246     3     8     (98 )       159  

Fixed income securities:

                                     

Municipal

    129     7     1     (119 )       18  

Corporate

    10     5         3         18  

Limited partnership interests:

                                     

Real estate funds

    214         11     (28 )       197  

Private equity funds

    199         (2 )   14         211  

Hedge funds

    80             (71 )       9  
                           

Total Level 3 plan assets

  $ 946   $ 15   $ 28   $ (299 ) $   $ 690  
                           
                           

       

($ in millions)
   
  Actual return on plan assets:    
   
   
 
 
  Balance as of
December 31,
2011
  Relating to
assets sold
during the
period
  Relating to
assets still
held at the
reporting
date
  Purchases,
sales and
settlements,
net
  Net transfers
in and/or
(out) of
Level 3
  Balance as of
December 31,
2012
 

Equity securities:

                                     

U.S.

  $ 64   $   $ 7   $ (3 ) $   $ 68  

International

    245         1             246  

Fixed income securities:

                                     

Municipal

    163     5     (2 )   (37 )       129  

Corporate

    9     1                 10  

Limited partnership interests:

                                     

Real estate funds

    192     16     2     4         214  

Private equity funds

    186     8     (6 )   11         199  

Hedge funds

    79         1             80  
                           

Total Level 3 plan assets

  $ 938   $ 30   $ 3   $ (25 ) $   $ 946  
                           
                           

       

($ in millions)
   
  Actual return on plan assets:    
   
   
 
 
  Balance as of
December 31,
2010
  Relating to
assets sold
during the
period
  Relating to
assets still
held at the
reporting
date
  Purchases,
sales and
settlements,
net
  Net transfers
in and/or
(out) of
Level 3
  Balance as of
December 31,
2011
 

Equity securities:

                                     

U.S.

  $ 6   $   $ (2 ) $ 60   $   $ 64  

International

    253         (5 )   (3 )       245  

Fixed income securities:

                                     

Municipal

    222         1     (60 )       163  

Corporate

    10     1         (2 )       9  

RMBS

    48     (8 )   8     (30 )   (18 )    

Limited partnership interests:

                                     

Real estate funds

    167     (1 )   29     (3 )       192  

Private equity funds

    166     1     22     (3 )       186  

Hedge funds

    120     43     (43 )   (41 )       79  
                           

Total Level 3 plan assets

  $ 992   $ 36   $ 10   $ (82 ) $ (18 ) $ 938  
                           
                           

us-gaap:ScheduleOfEffectOfSignificantUnobservableInputsChangesInPlanAssetsTableTextBlock

Estimated future benefit payments expected to be paid in the next 10 years, based on the assumptions used to measure the Company's benefit obligation as of December 31, 2013, are presented in the table below.

($ in millions)
 

  Pension
benefits
  Postretirement
benefits
 

2014

  $ 355   $ 35  

2015

    367     36  

2016

    390     29  

2017

    420     30  

2018

    438     32  

2019-2023

    2,481     188  
           

Total benefit payments

  $ 4,451   $ 350  
           
           

us-gaap:ScheduleOfExpectedBenefitPaymentsTableTextBlock

 

 

 
  Pension benefits   Postretirement benefits  
($ in millions)
  2013   2012   2011   2013   2012   2011  

Service cost

  $ 140   $ 152   $ 151   $ 12   $ 13   $ 11  

Interest cost

    265     298     322     28     36     37  

Expected return on plan assets

    (394 )   (393 )   (367 )            

Amortization of:

                                     

Prior service credit

    (28 )   (2 )   (2 )   (23 )   (23 )   (23 )

Net actuarial loss (gain)

    235     178     154     (16 )   (20 )   (30 )

Settlement loss

    277     33     46             1  

Curtailment gain

                (181 )        
                           

Net periodic cost (credit)

  $ 495   $ 266   $ 304   $ (180 ) $ 6   $ (4 )
                           
                           

us-gaap:ScheduleOfNetBenefitCostsTableTextBlock

($ in millions)
 

  Pension
benefits
  Postretirement
benefits
 
 
  2013   2012   2013   2012  

Fair value of plan assets

  $ 5,602   $ 5,398   $   $  

Less: Benefit obligation

    5,297     6,727     482     803  
                   

Funded status

  $ 305   $ (1,329 ) $ (482 ) $ (803 )
                   
                   

Items not yet recognized as a component of net periodic cost:

   
 
   
 
   
 
   
 
 

Net actuarial loss (gain)

  $ 1,794   $ 2,892   $ (236 ) $ (115 )

Prior service credit

    (480 )   (1 )   (106 )   (129 )
                   

Unrecognized pension and other postretirement benefit cost, pre-tax

   
1,314
   
2,891
   
(342

)
 
(244

)

Deferred income tax

    (460 )   (1,012 )   126     94  
                   

Unrecognized pension and other postretirement benefit cost

  $ 854   $ 1,879   $ (216 ) $ (150 )
                   
                   

us-gaap:ScheduleOfNetFundedStatusTableTextBlock

($ in millions)
 

  Pension
benefits
  Postretirement
benefits
 

Items not yet recognized as a component of net periodic cost —
December 31, 2012

  $ 2,891   $ (244 )

Net actuarial gain arising during the period

    (579 )   (32 )

Net actuarial (loss) gain amortized to net periodic benefit cost

    (512 )   16  

Prior service credit arising during the period

    (506 )    

Prior service credit amortized to net periodic benefit cost

    28     23  

Plan curtailment

        (104 )

Translation adjustment and other

    (8 )   (1 )
           

Items not yet recognized as a component of net periodic cost —
December 31, 2013

  $ 1,314   $ (342 )
           
           

us-gaap:ScheduleOfNetPeriodicBenefitCostNotYetRecognizedTableTextBlock