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Variable Interest Entities | 9 Months Ended
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Sep. 30, 2024
Organization, Consolidation and Presentation of Financial Statements [Abstract] |
Variable Interest Entities |
Note 8 | 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 received a management fee for the services provided to the Reciprocal Exchanges totaling $2 million and $23 million for the three and nine months ended September 30, 2024, respectively, compared to $14 million and $37 million for the three and nine months ended September 30, 2023, respectively. In addition, as of September 30, 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 absorb expected losses. Due to ongoing operating losses, the Company recorded a loss for the carrying value of the surplus notes in the amount of $123 million in the first quarter of 2024. The loss has been reflected as a capital transaction attributable to noncontrolling interest as the Company expects 100% of its interests in surplus notes to absorb expected losses of the Reciprocal Exchanges. Adirondack and Skylands are withdrawing from writing substantially all business. As the reciprocal insurers are dissolved, policyholders will 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 New York State Department of Financial Services has approved the withdrawal plan for Adirondack to non-renew or cancel all policies effective as of December 31, 2024. National General Holdings Corp. entered into a $15 million line of credit agreement with Adirondack to pay claims if it is unable to pay, which will expire after a final reserve study is conducted to determine if additional funding is needed as of December 31, 2027. As of September 30, 2024, there is no outstanding balance on the line of credit. Additionally, the Company waived all fees payable by Adirondack after July 1, 2024, excluding Loss Adjustment Expenses associated with individual claims. The New Jersey Department of Banking and Insurance has acknowledged the withdrawal plan filed on behalf of Skylands to withdraw from providing personal lines insurance, except dwelling fire and watercraft policies, beginning December 14, 2024. Skylands has a 100% quota share reinsurance agreement with the Company to cede all of Skylands’ business to the Company. Claims and claims expense ceded to the Company were $(6) million and $24 million for the three and nine months ended September 30, 2024, respectively, compared to $10 million and $27 million for the three and nine months ended September 30, 2023, respectively. The Reciprocal Exchanges generated $48 million and $170 million of earned premiums for the three and nine months ended September 30, 2024, respectively, compared to $59 million and $173 million for the three and nine months ended September 30, 2023, respectively. Total costs and expenses were $62 million and $207 million for the three and nine months ended September 30, 2024, respectively, compared to $58 million and $202 million for the three and nine months ended September 30, 2023, respectively. The table below reflects the consolidated VIE results, which exclude all intercompany transactions including surplus notes and related accrued interest, management fees and intercompany reinsurance transactions.
Assets and liabilities of Reciprocal Exchanges included in the condensed consolidated statement of financial position (1) |  |
($ in millions) |  | September 30, 2024 |  | December 31, 2023 |  |
Assets |  |  |  |  |  |
Fixed income securities |  | $ | 121 |  |  | $ | 267 |  |  |
Short-term investments |  | 96 |  |  | 7 |  |  |
Deferred policy acquisition costs |  | 12 |  |  | 25 |  |  |
Premium installment and other receivables, net |  | 32 |  |  | 44 |  |  |
Reinsurance recoverables, net |  | 68 |  |  | 76 |  |  |
Other assets |  | 10 |  |  | 54 |  |  |
Total assets |  | 339 |  |  | 473 |  |  |
Liabilities |  |  |  |  |  |
Reserve for property and casualty insurance claims and claims expense |  | 224 |  |  | 201 |  |  |
Unearned premiums |  | 117 |  |  | 177 |  |  |
Other liabilities and expenses |  | 16 |  |  | 77 |  |  |
Total liabilities |  | $ | 357 |  |  | $ | 455 |  |  |
(1) Intercompany balances eliminated in consolidation |  |  |  |  |  |
Total assets |  | $ | (42) |  |  | $ | (26) |  |  |
Total liabilities |  | (193) |  |  | (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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