Allstate Anticipates Settlement Charge Of $100 Mln - $125 Mln In Q4

(RTTNews) - Allstate Corp. (ALL), Thursday said it expects to report a fourth-quarter after-tax settlement charge of $100 to $125 million, in the annual remeasurement of its pension obligations as of December 31. The company said that the charge will impact operating income, but does not affect underwriting income or combined ratios.

In line with the announced changes to employee pension benefit plans, the company's third quarter reports included a settlement charge of $49 million, after-tax, and indicated that the fourth quarter might include an additional settlement charge of a comparable or greater amount.

Settlement charges are non-cash charges that accelerate the recognition of unrecognized pension benefit cost that would have been incurred in subsequent periods when plan payments, primarily lump sums from qualified pension plans, exceed a threshold of service and interest cost for the period, the company said.

From 2014, the employees will earn future pension benefits under a new cash balance formula rather than the current formulas. The changes added $599 million of book value in the third quarter of 2013 and will reduce future expenses, Allstate said in a statement.