Allstate’s purpose is to protect people from life’s uncertainties and prepare them for the future so they can realize their hopes and dreams. Allstate is primarily engaged in the property and casualty insurance business in the United States and Canada. Among Allstate’s other offerings are life, accident and health insurance, identity protection, and protection plans for electronic devices. Allstate helps families protect the things that are most important to them. Our business aims to help build resilient communities, not only through our products and services, but also through our commitment to corporate responsibility.
Founded in 1931, Allstate became a publicly traded company in 1993 and fully independent in 1995, when it was spun off from Sears Holdings Corp. Today, we are one of the largest publicly held personal lines property and casualty insurers in America. We are listed on the New York Stock Exchange under the trading symbol ALL and are widely known through our slogan: “You’re in good hands with Allstate.®”
Allstate has a history of strong corporate governance guided by three primary principles: dialogue, transparency and responsiveness. The Board has enhanced governance policies over time to align with best practices, drive sustained stockholder value and serve the interests of stockholders. For in-depth information about our governance practices, please see our 2020 Proxy Statement.
Governance of Sustainability
Our Board of Directors is responsible for the overall performance of Allstate, including sustainability. The CEO and select executive leaders provide counsel, strategic oversight and direction to the Corporate Responsibility and Sustainability team, which is in Allstate’s Corporate Brand department. This team — in partnership with The Allstate Foundation and the corporate citizenship team — manages sustainability, environmental reporting, strategic philanthropy, corporate sponsorships and grants, employee engagement and companywide volunteer service. The team regularly reports to senior executives on sustainability trends and initiatives. In addition, the Corporate Responsibility and Sustainability team briefs the Board of Directors on Allstate’s corporate responsibility efforts.
Allstate has maintained a Sustainability Council since 2007. Its members identify key risks and opportunities related to sustainable business practices. The council meets three times annually to review existing and emerging environmental and social issues, identify opportunities and strategies to address these issues, and encourage employee engagement with the company’s sustainability strategy. The Sustainability Council is led by a vice president in Corporate Brand and represents each of the following departments within Allstate:
- Allstate Brand Operations
- Accounting Services
- Administration and Real Estate
- Allstate Technology, Services & Ventures
- Business Transformation
- Catastrophe Modeling and Analytics
- Corporate Strategy
- Enterprise Risk and Return Management
- Human Resources
- Investor Relations
- Law and Regulation
- Life and Retirement
- Marketing, Innovation and Corporate Brand
- Sourcing and Procurement Solutions
Allstate is focused on long-term value creation and protection. Financial capital is core to our business, and we responsibly manage our financial input and output to serve stakeholders and enable the company to thrive. Human capital is one of our most important assets. Our people are fundamental to how we do business and how we build resilient communities. Intellectual capital, specifically our data analytics and specialized insights, sets us apart from other companies in evaluating risk and serving customers. We have made acquisitions to expand the protection we provide to customers, including their data and identities. Social capital enables us to be a pillar in the communities we serve, by protecting customers and by giving back to the community. Manufactured capital, such as the buildings we occupy and the technology we use, makes our everyday functions possible. Natural capital considerations help us determine risk and impact on the environment. Collectively, we use these capitals — financial, human, intellectual, social, manufactured and natural — to serve customers and strengthen communities. These capitals are our framework for value creation and protection.
Allstate’s operational value chain includes stakeholders such as customers, employees, agents, building operations and suppliers. Our operations impact stakeholders such as: employees, consumers, customers, opinion leaders, policy makers, NGOs, regulators and the environment. For information about our reportable business segments and related market presence, please see Item 1 of our 2019 10-K.
Risks and Opportunities
Through this report, we outline our material topics and related accountability for managing risks and opportunities. We are increasingly focused on megatrends that represent long-term risks and opportunities for our business. These trends include climate change impacts, pandemics like COVID-19, technology and digitalization advancements, and the future of transportation. Our Transformative Growth Plan, as outlined in our Strategy section below, will enable us to address these risks and opportunities directly through the continued growth and enhancement of our business.
Enterprise Risk and Return Management (ERRM)
The Risk and Return Committee (RRC) of the Board oversees our Enterprise Risk and Return Management (ERRM) framework as well as management’s design and implementation of ERRM, including integration with strategy and operations. The framework is further supported by strong organizational commitment at the senior management level, which includes an executive management committee structure, an enterprise chief risk officer (CRO) and business unit CROs.
Allstate uses a principle-based approach to ERRM focusing on measurement, transparency and dialogue. We regularly measure, monitor and report on the major categories of enterprise risk: insurance, financial, investment, operational and strategic. Our risk-return principles define how we operate and guide decision-making. These principles state that our priority is to protect solvency, comply with laws, maintain a supportive political and regulatory environment, act with integrity, and protect information assets and technology. Building on this foundation, we strive to increase strategic value and optimize risk and return.
The Enterprise Risk and Return Council (ERRC) is Allstate’s senior risk management committee that establishes risk and return targets, determines economic capital levels and directs integrated strategies and actions from an enterprise perspective. The ERRC is made up of Allstate’s CEO, vice chair, chief investment officer, general counsel, treasurer, area of responsibility (AOR) presidents, and enterprise and AOR risk and financial officers. The ERRC reviews enterprise principles, guidelines and limits for Allstate’s significant risks, and monitors the strategies and actions management has taken to control these risks. The Board of Directors and the Risk and Return and Audit committees oversee ERRM. For further information on our risk factors, please see pages 21-29 of our 2019 10-K.
Allstate’s strategy has two components: increase personal property-liability market share and expand protection businesses, including Service Businesses, Allstate Life and Allstate Benefits. Allstate has thrived for 89 years by adapting to serve customers. We have implemented a multi-year Transformative Growth Plan to better serve customers in a changing world. The plan will ensure Allstate remains a strong competitor and local agencies continue to provide high value to customers.
The Transformative Growth Plan builds on our success by leveraging the Allstate brand, people and technology to improve our long-term competitive position and accelerate growth. The plan has three components:
Expand customer access — Consumers can now access Allstate branded property-liability products through Allstate agencies, contact centers and online. Access will be expanded to enable consumers to select a method of interaction. All consumers will have the opportunity to decide if they want access to an Allstate agency, so we will no longer need to use both the Allstate and Esurance brands for direct sales, and Esurance will be integrated into the Allstate brand in the second half of 2020.
Improve customer value — Property-liability products will be redesigned to be more affordable, simple and connected. Insurance pricing will utilize sophisticated rating algorithms, such as telematics, and reflect the service model a customer chooses. Centralized customer service capabilities are being expanded to improve consistency, reduce costs and enable Allstate agencies to focus on acquiring new customers and developing relationships with existing customers. We will improve our expense position by focusing on reducing spending while eliminating redundancies. Simplification efforts will continue to eliminate the need for manual work and optimize our operating model.
Increase investments in marketing and technology — Investments in marketing the Allstate brand will be increased by reallocating Esurance spending. New technology ecosystems are being built to support increased connectivity, new products and operational adaptability. This plan is focused on the customer experience, providing a circle of protection through people and technology, along with increased connectivity, combined with distribution, product and technology enhancements.
We are expanding protection businesses utilizing enterprise capabilities and resources such as distribution, analytics, claims, investment expertise, talent and capital. We’ll further enhance our Customer Value Proposition using innovative growth platforms (such as telematics and identity protection) and broad distribution, including Allstate exclusive agencies, contact centers, online, retailers, workplace benefits brokers, auto dealers, original equipment manufacturers and telecom providers.
Performance, Outlook and Basis of Presentation
Allstate demonstrated strong performance in 2019 across our material topics. Individual sections of this report explain our performance in greater detail.
Our outlook for the short, medium and long term is shaped by our understanding of risks and opportunities for our business. In 2019, we launched the Transformative Growth Plan, outlined above, to ensure the ongoing success of our business.
Basis of Presentation
Our report leverages the Integrated Reporting Framework of the International Integrated Reporting Council and is prepared in accordance with the Global Reporting Initiative (GRI), Core option. Our Materiality and Stakeholder Engagement section has more information on how we determined the content of this report. All information represents our 2019 fiscal year, unless otherwise noted.