# EDGAR Filing Document

**Accession Number:** 0000797152
**File Stem:** 0000797152-23-000003
**Filing Date:** 2023-2
**Character Count:** 23791
**Document Hash:** bb8308c2792bcc57896215cfe51008ba
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0000797152-23-000003.hdr.sgml**: 20230228

**ACCESSION NUMBER**: 0000797152-23-000003

**CONFORMED SUBMISSION TYPE**: X-17A-5

**PUBLIC DOCUMENT COUNT**: 2

**CONFORMED PERIOD OF REPORT**: 20221231

**FILED AS OF DATE**: 20230228

**DATE AS OF CHANGE**: 20230228

**EFFECTIVENESS DATE**: 20230228

**PERIOD START**: 20220101

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** ALLSTATE FINANCIAL SERVICES, LLC
- **CENTRAL INDEX KEY:** 0000797152
- **IRS NUMBER:** 470826838
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** X-17A-5
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 008-36365
- **FILM NUMBER:** 23686231

**BUSINESS ADDRESS:**
- **STREET 1:** 2920 S 84TH STREET
- **CITY:** LINCOLN
- **STATE:** NE
- **ZIP:** 68506
- **BUSINESS PHONE:** 402-975-6278

**MAIL ADDRESS:**
- **STREET 1:** PO BOX 83271
- **CITY:** LINCOLN
- **STATE:** NE
- **ZIP:** 68501-3271

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** ALLSTATE FINANCIAL SERVICES LLC                         /BD
- **DATE OF NAME CHANGE:** 20020222

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** LSA SECURITIES INC
- **DATE OF NAME CHANGE:** 20000411

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** LSA SECURITIES INC/                                     /BD
- **DATE OF NAME CHANGE:** 19990225

## Full

Allstate Financial

Services, LLC

(SEC I.D. No. 8-36365)

Financial Statement as of

December 31, 2022 and Report of

Independent Registered Public Accounting Firm

File pursuant to Rule 17a-5(e)(3) under the Securities and

Exchange Act of 1934 as a PUBLIC Document.

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**Allstate Financial Services, LLC**

**Table of Contents&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Page**

Report of Independent Registered Public Accounting Firm&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1

Financial Statement as of December 31, 2022:

&nbsp;&nbsp;&nbsp;&nbsp;Statement of Financial Condition&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2

&nbsp;&nbsp;&nbsp;&nbsp;Notes to Financial Statement&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3-7

------

**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

To the Board of Managers and the Member of

Allstate Financial Services, LLC

Lincoln, Nebraska

**Opinion on the Financial Statement** 

We have audited the accompanying statement of financial condition of Allstate Financial Services, LLC (the "Company") as of December 31, 2022, and the related notes (collectively referred to as the "financial statement"). In our opinion, the financial statement presents fairly, in all material respects, the financial position of the Company as of December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

**Basis for Opinion** 

The financial statement is the responsibility of the Company's management. Our responsibility is to express an opinion on this financial statement based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free of material misstatement, whether due to error or fraud.

Our audit included performing procedures to assess the risks of material misstatement of the financial statement, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statement. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statement. We believe that our audit of the financial statement provides a reasonable basis for our opinion.

/s/ DELOITTE & TOUCHE LLP

Chicago, Illinois

February 28, 2023

We have served as the Company's auditor since 2000.

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**Allstate Financial Services, LLC**

**Statement of Financial Condition**

**As of December 31, 2022**

---

| | |
|:---|:---|
| **Assets:** | |
| Investments |  |
| &nbsp;&nbsp; Fixed income securities at fair value (amortized cost $3,773,372) | $3566226 |
| **&nbsp;&nbsp;&nbsp;&nbsp; Total investments** | 3566226 |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash and cash equivalents | 28428054 |
| &nbsp;&nbsp;&nbsp;&nbsp;Commissions receivable, net | 5358604 |
| &nbsp;&nbsp;&nbsp;&nbsp;Deferred income taxes | 97328 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other assets | 1384764 |
| **&nbsp;&nbsp;&nbsp;&nbsp; Total assets** | $38834976 |
| **Liabilities and member's equity** |  |
| **Liabilities:** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Commissions payable | $7565953 |
| &nbsp;&nbsp;&nbsp;&nbsp;Payable to affiliates | 12095803 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts payable and accrued expenses | 2569663 |
| &nbsp;&nbsp;&nbsp;&nbsp;Income taxes payable to affiliate | 2779605 |
| **&nbsp;&nbsp;&nbsp;&nbsp; Total liabilities** | 25011024 |
| Member's equity | 13823952 |
| **Total liabilities and member's equity** | $38834976 |

---

See notes to financial statement.

------

**Allstate Financial Services, LLC**

**Notes to Financial Statement**

**December 31, 2022**

**1. General**

**Basis of presentation** - The accompanying financial statement includes the accounts of Allstate Financial Services, LLC (the "Company"), a limited liability company wholly owned by Allstate Insurance Company ("Allstate"), a wholly owned subsidiary of Allstate Insurance Holdings ("Allstate Holdings"), a wholly owned subsidiary of The Allstate Corporation (the "Corporation"). The financial statement has been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP"). The Company operates as a single segment entity based on the manner in which the Company uses financial information to evaluate business performance and to determine the allocation of resources.

**Risks and uncertainties -** The Novel Coronavirus Pandemic or COVID-19 ("Coronavirus") resulted in governments worldwide enacting emergency measures to combat the spread of the virus, including travel restrictions, government-imposed shelter-in-place orders, quarantine periods, social distancing, and restrictions on large gatherings. These measures moderated significantly, but new variants of the Coronavirus could result in further economic volatility. The Company continues to closely monitor and proactively adapt to developments and changing conditions.

**Use of estimates** - The preparation of the financial statement in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statement and accompanying notes. Actual results could differ from those estimates.

**Nature of operations -** The Company, a Delaware limited liability company, is a broker-dealer registered with the Securities and Exchange Commission ("SEC") and is a member of the Financial Industry Regulatory Authority, Inc. ("FINRA").

The Company is a non-clearing broker-dealer and offers and sells mutual funds, variable annuities, variable universal life, non-registered annuities, life insurance, and accident and health insurance issued by unaffiliated providers. These products are sold by Allstate agents and exclusive financial specialists (collectively, "Allstate agents") registered with the Company and affiliated with the Corporation. Allstate agents are authorized to sell products issued by unaffiliated providers in all 50 states and the District of Columbia. Transactions related to mutual funds are cleared on a fully disclosed basis through a third party broker-dealer or directly through mutual fund providers. The Company derives revenue from commission income and pays commissions to these Allstate agents and incurs other expenses associated with Company operations.

**Regulation** - On June 30, 2020, the SEC enacted Regulation Best Interest ("Reg BI"). The rule requires broker-dealers and their registered representatives to act in the best interest of the customer when recommending investments and other security transactions. The Company is in compliance with the requirements of Reg BI. The standard could impact the products provided by the Company and the Allstate agents sales process, sales volume, and producer compensation arrangements.

In 2023 the SEC is proposing an expansion of Regulation Best Execution to cover all securities, including digital assets. Best Execution policies require a broker-dealer to execute customers' trades at the most favorable terms available. The SEC has established approximately a 90 day comment period for all proposed changes ending on March 31, 2023.

**Subsequent events -** Subsequent events were evaluated through February 28, 2023, the date the financial statements were issued.

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**2. Summary of Significant Accounting Policies**

**Investments -** Fixed income securities include U.S. Treasury bonds which are carried at fair value.

**Cash and cash equivalents** - Cash equivalents include highly liquid investments with original maturities of less than ninety days.

**Commission refunds** - The Company recognizes a credit loss allowance for uncollectible commission receivables due from providers. The allowance is netted against the commission receivable, which represents the amounts expected to be collected on the Statement of Financial Condition. Credit loss allowances are estimates of expected credit losses, and are established considering all relevant information available, including past events, current conditions, and reasonable and supportable forecasts over the life of the commission receivable. The were no credit loss allowances for uncollectible commission receivables as of December 31, 2022.

For life contract providers, the Company receives annualized commissions based on first year premium. Upon cancellation of a contract in the first year, the Company must refund a pro-rata portion of the annualized commission revenue to the product providers. The commission revenue refund is not predicated on recovering the commissions paid to the Allstate Agents. The Company estimates its commission revenue refund liability for policy cancellations based on historical life products persistency rates, agent compensation rates and agent termination rates. As of December 31, 2022, a refund liability of $31,509 was recorded as a component of accounts payable and accrued expenses on the Statement of Financial Condition.

Commission refunds are due from Allstate agents on contracts that are canceled or unsettled. As of December 31, 2022, gross commission refunds receivable totaled $313,318 and are included in other assets on the Statement of Financial Condition. The Company records a credit loss allowance for uncollectible commission refunds receivable from Allstate agents established by considering all relevant information available, including past events, current conditions, and reasonable and supportable forecasts over the life of the commission receivable, based on the contractual relationship between the agent and the Company, historical recovery rates and the period of time that the amount has been due. The provision for uncollectible commission refunds receivable from Allstate agents as of December 31, 2022 was $209,067 and is recorded in other assets on the Statement of Financial Condition.

**Commission payable** - The Company also offers Allstate agents a bonus based on their quarterly asset production. Bonuses are accrued and paid quarterly based on the writing agent's transactional gross dealer concessions for certain deposits to mutual funds, and deferred and variable annuity contracts. As of December 31, 2022, the bonus accrual balance of $946,233 was included in commissions payable on the Statement of Financial Condition.

**Income taxes** - The income tax provision is calculated under the liability method. Deferred tax assets and liabilities are recorded based upon the difference between the financial statement and tax bases of assets and liabilities at the enacted tax rates.

**3. Fair Value of Assets and Liabilities** 

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The hierarchy for inputs used in determining fair value maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that observable inputs be used when available. Assets and liabilities recorded on the Statement of Financial Condition at fair value are categorized in the fair value hierarchy based on the observability of inputs to the valuation techniques as follows:

*Level 1:* Assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that the Company can access.

------

*Level 2:* Assets and liabilities whose values are based on the following:

(a) Quoted prices for similar assets or liabilities in active markets;

(b) Quoted prices for identical or similar assets or liabilities in markets that are not active; or

(c) Valuation models whose inputs are observable, directly or indirectly, for substantially the full term of the asset or liability.

*Level 3:* Assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. Unobservable inputs reflect the Company's estimates of the assumptions that market participants would use in valuing the assets and liabilities.

In determining fair value, the Company principally uses the market approach which generally utilizes market transaction data for the same or similar instruments. All investments during the reporting period consist of U.S. Treasury fixed income securities that have daily quoted prices for identical assets in active markets that the Company can access and are categorized as Level 1 as of December 31, 2022.

The Company held $3,566,226 of U.S. Treasury fixed income securities.

The fair value of all other financial assets and liabilities approximates their carrying value as they are short-term in nature.

**4. Net Capital Requirements**

As a registered broker-dealer, the Company is subject to the Alternative Standard promulgated under the SEC Uniform Net Capital Rule 15c3-1 (the "Rule"), which requires the maintenance of minimum net capital, as defined under the Rule, equivalent to the greater of $250,000 or 2% of aggregate customer debits, as defined under the Rule.

As of December 31, 2022, the Company had net capital, as defined under the Rule, of $9,973,109, which was $9,723,109 in excess of required net capital of $250,000. The Company did not have any aggregate customer debits, as defined under the Rule.

**5. Income Taxes**

As a limited liability company, the Company's 2022 income will be reported on Allstate's income tax return as the Company's sole member. Allstate will join the Corporation and its other eligible domestic subsidiaries (the "Allstate Group") in the filing of a consolidated federal income tax return and is a party to a federal income tax allocation agreement (the "Tax Sharing Agreement"). Under the Tax Sharing Agreement, the Company will settle its share of Allstate's 2022 tax liability or benefit with Allstate. Effectively, this results in the Company's annual income tax provision being computed, with adjustments, as if the Company filed a separate return.

The Internal Revenue Service ("IRS") has completed its exam of the Allstate Group's tax years prior to 2017. Currently, Allstate Group is under exam for the 2017 and 2018 tax years. The Company believes that adequate provision has been made for any potential adjustments that may result from IRS examinations or any other tax authorities related to all open tax years.

The Inflation Reduction Act of 2022 ("Act") which contains several tax-related provisions, was signed into law in August 2022. The Act created a 15% corporate alternative minimum Tax ("CAMT") on certain large corporations, effective beginning in 2023. The controlled group of corporations of which the Company is a member has determined that it is considered an "applicable corporation" under the rules of CAMT, and as such, the controlled group is expected to be required to perform the CAMT computations. The controlled group of which the Company is a member has not determined as of the reporting date if it will be liable for CAMT in 2023. Therefore, the year-end 2022 financial statement does not include an estimated impact of the CAMT, because a reasonable estimate cannot be made.

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The Company had no liability for unrecognized tax benefits as of December 31, 2022 and believes that the unrecognized tax benefits balance will not materially change within the next twelve months.

The components of the deferred income tax assets as of December 31, 2022 are as follows:

---

| | |
|:---|:---|
| Commission refunds | $50520 |
| Contingent liabilities | 3308 |
| Unrealized loss | 43500 |
| Total deferred tax assets | $97328 |

---

Although realization is not assured, management believes it is more likely than not that the deferred tax assets will be realized based on the assumption that certain levels of income will be achieved in the consolidated tax return.

**6. Related-Party Transactions**

**Fee income -** The Company has a marketing coordination and administrative services agreement with Allstate and a master services and expense agreement with Allstate and its affiliates. As part of these agreements, the Company receives fee income for administrative and supervisory services related to the sale of financial products by Allstate agents. As of December 31, 2022 there was no fee income due to the Company.

**Expenses -** The Company uses services performed by Allstate and other affiliates, and business facilities owned or leased and operated by Allstate in conducting its business activities. In addition, the Company shares the services of employees with Allstate. The Company reimburses its affiliates for the operating expenses incurred on behalf of the Company. The Company is charged for the cost of these operating expenses based on the level of services provided. As of December 31, 2022, $1,937,042 was payable for these expenses and is included as payable to affiliates on the Statement of Financial Condition.

**Other** - Allstate serves as the primary paymaster for several of its subsidiaries and affiliates, including the Company. In addition, certain affiliates of Allstate make payments on behalf of the Company. Disbursements made by Allstate and its affiliates on behalf of the Company include commission payments to Allstate agents, employee compensation and related expenses, and goods and services provided by external vendors. The Company settles related party transactions with Allstate and its affiliates monthly, on a one-month lag. As of December 31, 2022, $10,158,761 was recorded as a payable to affiliates related to these transactions.

**Distributions -** The Company issued distributions totaling $14,500,000 to Allstate.

**7. Commitments and Contingent Liabilities** 

The Company's agreement with its clearing broker contains a clause that indemnifies the clearing broker from losses on transactions in which the customer fails to satisfy its terms. The Company's liability under these agreements is not determinable until such transactions occur. Upon occurrence, these transactions are settled immediately. As a result, no contingent liability is accrued for these transactions. Historically, the Company has not made material payments pursuant to this agreement.

The Company reviews its lawsuits, regulatory inquiries, and other legal proceedings on an ongoing basis and follows appropriate accounting guidance when making accrual and disclosure decisions. The Company establishes accruals for such matters at management's best estimate when the Company assesses that it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. The Company does not establish accruals for such matters when the Company does not believe both that it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. The Company's assessment of whether a loss is reasonably possible or probable is based on its assessment of the ultimate outcome of the matter following all appeals. The Company does not include potential recoveries in its estimates of reasonably possible or probable losses. Legal fees are expensed as incurred.

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The Company continues to monitor its lawsuits, regulatory inquiries, and other legal proceedings for further developments that would make the loss contingency both probable and estimable, and accordingly accruable, or that could affect the amount of accruals that have been previously established. There may continue to be exposure to loss in excess of any amount accrued. Disclosure of the nature and amount of an accrual is made when there have been sufficient legal and factual developments such that the Company's ability to resolve the matter would not be impaired by the disclosure of the amount of accrual.

### UNITED STATES SECURITIES AND EXCHANGE COMMISSION
**Washington, D.C. 20549**

## FORM X-17A-5

### ANNUAL AUDITED REPORT

### Filer Information

**Filer CIK:** 0000797152

**Filer CCC:** XXXXXXXX

**Is this a LIVE or TEST filing?:** LIVE

**Would you like a Return Copy?:** No

### Submission Information

**Report Period Begin Date:** 01-01-2022

**Report Period End Date:** 12-31-2022

**Type of Registrant:** Broker-dealer

**Any material weaknesses identified?:** No

### Registrant Identification

**Name of Broker-Dealer:** Allstate Financial Services LLC

**Business Address:** 2920 South 84th Street, Lincoln, NE, 68506

**Contact Person:** Todd Moore

**Contact Phone:** 8477123437

### Independent Public Accountant Identification

**Accountant Name:** Deloitte and Touche LLP

**Accountant Address:** 111 South Wacker Drive, Chicago, IL, 60606

**Accountant Type:** Certified Public Accountant

### OATH OR AFFIRMATION

I, **Mary K. Nelson**, swear (or affirm) that, to the best of my knowledge and belief, the accompanying financial statements and supporting schedules pertaining to the firm of **Allstate Financial Services LLC**, as of **12-31-2022**, are true and correct.

**Signature:** Mary K. Nelson

**Title:** President and CEO

**Notarized:** Yes