Allstate's home office complex is located in Northbrook, Illinois. The complex consists of 10 buildings of approximately 1.96 million square feet of office space on a 204.39 acre site. The Northbrook complex serves as the headquarters for PP&C and ALIC.
1. Exposure to Catastrophe Losses - Management believes that the strategies -------------------------------- implemented by the Company to manage its exposure to catastrophes will greatly reduce the probability of severe losses in the future, that the implementation of certain described actions taken in Florida will reduce the Company's exposure to losses from hurricanes in that state, and that the Company's exposure to earthquake losses in California has been significantly reduced due to the introduction of the mini-earthquake policy which has higher deductibles, eliminates coverage for most non- dwelling structures and limits personal contents coverage, and will be further reduced as a result of the creation of the CEA (see "Catastrophe Losses," "Catastrophe Management," "Florida Hurricanes" and "California Earthquakes" at pages 36-38 of the 1996 Annual Report and "Catastrophe Exposure" in this Form 10-K). These beliefs are based in part on the efficacy of the techniques and the accuracy of the data used by the Company to predict the probability of catastrophes and the extent of losses to the Company resulting from catastrophes. Catastrophes may occur in the future which indicate that such techniques do not accurately predict the Company's losses from catastrophes, and the probability and extent of such losses to the Company may differ materially from that which would have been predicted by such techniques and data.
Management's expectation that the operations of the CEA will significantly reduce Allstate's exposure to earthquake exposure in California in the future depends in part on the CEA functioning as planned. The Company could be exposed to the threat or reality of additional material assessments beyond the $700 million noted under "California Earthquakes" at pages 37- 38 of the 1996 Annual Report and "Catastrophe Exposure" in this Form 10-K if the California legislature should decide, in the future, to revise the formula and impose such additional assessments.
6. Availability of Company's Line of Credit - The Company maintains a $1.50 ------------------------------------------- billion, five-year revolving line of credit as a potential source of funds to meet short-term liquidity requirements. In order to borrow on the line of credit, AIC is required to maintain a specified statutory surplus level and the Allstate debt to equity ratio (as defined in the credit agreement) must not exceed a designated level. Under "Capital Resources" on pages 50-51 of the 1996 Annual Report, the Company's states that its management expects to continue to meet such borrowing requirements in the future. The ability of AIC and Allstate to meet these requirements is dependent upon the economic well-being of AIC. Should AIC sustain significant losses from catastrophes, its and Allstate's ability to continue to meet the credit agreement requirements would be lessened. Consequently, Allstate's
The consolidated financial statements of the Company, including the notes to such statements, and other information on pages 57-88 of the 1996 Annual Report are incorporated herein by reference.