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Variable Interest Entities | 3 Months Ended
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Mar. 31, 2024
Organization, Consolidation and Presentation of Financial Statements [Abstract] |
Variable Interest Entities |
Note 7 | Variable Interest Entities
Consolidated VIEs primarily include Adirondack Insurance Exchange (“Adirondack”), a New York reciprocal insurer, and New Jersey Skylands Insurance Association (“Skylands”), a New Jersey reciprocal insurer. The Reciprocal Exchanges are insurance carriers organized as unincorporated associations. The Company does not own the equity of the Reciprocal Exchanges, which is owned by their respective policyholders. The results of the Reciprocal Exchanges are included in the Allstate Protection segment as the Company manages the business operations of the Reciprocal Exchanges and has the power to direct their activities that most significantly impact their economic performance. The Company receives a management fee for the services provided to the Reciprocal Exchanges totaling $10 million and $11 million for the three months ended March 31, 2024 and 2023, respectively. In addition, as of March 31, 2024 and December 31, 2023, the Company holds interests of $123 million in the form of surplus notes that provide capital to the Reciprocal Exchanges and would absorb expected losses. As of March 31, 2024, Adirondack’s capital was below levels required by insurance regulations. Due to ongoing operating losses and the inability of the Reciprocal Exchanges to obtain approval for premium rate increases that are commensurate with increases in claims and claims expense, the Company established a valuation allowance of $123 million related to the surplus notes during the three months ended March 31, 2024. In addition, the Company has a 100% quota share reinsurance agreement with Skylands to cede all of Skylands’ business to the Company and a 36.5% quota share reinsurance agreement with Adirondack. Claims and claims expense ceded to the Company were $12 million and $7 million for the three months ended March 31, 2024 and 2023, respectively. The Reciprocal Exchanges generated $61 million of earned premiums for the three months ended March 31, 2024 compared to $57 million for the three months ended March 31, 2023. Total costs and expenses were $87 million for the three months ended March 31, 2024 compared to $59 million for the three months ended March 31, 2023. In the event of dissolution, policyholders would share any residual unassigned surplus but are not subject to assessment for any deficit in unassigned surplus of the Reciprocal Exchanges. The assets of the Reciprocal Exchanges can be used only to settle the obligations of the Reciprocal Exchanges and general creditors have no recourse to the Company. The table below reflects the consolidated VIE results, which exclude all intercompany transactions including surplus notes and related accrued interest, management fees and intercompany reinsurance transactions.
Assets and liabilities of Reciprocal Exchanges included in the condensed consolidated statement of financial position (1) |  |
($ in millions) |  | March 31, 2024 |  | December 31, 2023 |  |
Assets |  |  |  |  |  |
Fixed income securities |  | $ | 241 |  |  | $ | 267 |  |  |
Short-term investments |  | 13 |  |  | 7 |  |  |
Deferred policy acquisition costs |  | 19 |  |  | 25 |  |  |
Premium installment and other receivables, net |  | 38 |  |  | 44 |  |  |
Reinsurance recoverables, net |  | 74 |  |  | 76 |  |  |
Other assets |  | 29 |  |  | 54 |  |  |
Total assets |  | 414 |  |  | 473 |  |  |
Liabilities |  |  |  |  |  |
Reserve for property and casualty insurance claims and claims expense |  | 227 |  |  | 201 |  |  |
Unearned premiums |  | 160 |  |  | 177 |  |  |
Other liabilities and expenses |  | 41 |  |  | 77 |  |  |
Total liabilities |  | $ | 428 |  |  | $ | 455 |  |  |
(1) Intercompany balances eliminated in consolidation |  |  |  |  |  |
Total assets |  | $ | (30) |  |  | $ | (26) |  |  |
Total liabilities |  | (201) |  |  | (189) |  |  |

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- Definition The entire disclosure for a variable interest entity (VIE), including but not limited to, judgments and assumptions in determining whether to consolidate and in identifying the primary beneficiary, gain (loss) recognized on the initial consolidation of the VIE, terms of arrangements, amounts and classification of the VIE's assets and liabilities, and the entity's maximum exposure to loss. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 810 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//810/tableOfContent + Details
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