Audit Committee Matters

Proposal 4

Ratification of Deloitte & Touche LLP as the Independent Registered Public Accountant for 2019

The Board recommends a vote FOR ratification of Deloitte & Touche LLP for 2019.

The audit committee has established strong practices to evaluate the qualifications, compensation, performance, and independence of the independent registered public accountant both on an ongoing basis throughout the year and through the completion of an annual evaluation. Additional information regarding the audit committee’s duties and responsibilities is available in the committee’s charter located under the Governance section of Allstate’s investor relations website at www.allstateinvestors.com. Deloitte & Touche LLP has been Allstate’s independent registered public accountant since Allstate became a publicly traded entity in 1993.

As a starting point for the annual evaluation, a survey of management and the audit committee is administered by a Deloitte & Touche LLP partner who is not affiliated with the Allstate account. The survey assesses Allstate’s general satisfaction with the quality and efficiency of the services provided. Results are reported to the audit committee for its discussion and analysis.

In addition, the audit committee reviews and discusses the results of the firm’s reports on its quality controls and external assessments, including results of inspections conducted by the Public Company Accounting Oversight Board (PCAOB).

Rotation of the independent registered public accounting firm is explicitly considered each year by the committee in addition to the regular mandated rotation of audit partners. The committee and its chair approve the selection of Deloitte & Touche LLP’s lead engagement partner.

The audit committee has adopted a policy regarding its pre-approval of all audit and permissible non-audit services provided by the independent registered public accountant. The policy identifies the basic principles that must be considered by the audit committee in approving services to ensure that the registered public accountant’s independence is not impaired, describes the type of audit, audit-related, tax and other services that may be provided, and lists the non-audit services that may not be performed. The independent registered public accountant or management submits to the audit committee detailed schedules with all of the proposed services within each category, together with the estimated fees. Each specific service requires approval before service can begin.

Prior to requesting approval from the audit committee, the registered public accountant and management consider and conclude that the services are permissible in that they: (1) do not place the registered public accountant in the position of auditing their own work, (2) do not result in the registered public accountant’s personnel acting as management or an employee of Allstate, (3) do not place the registered public accountant in a position of being an advocate for Allstate, (4) do not create a mutual or conflicting interest between the registered public accountant and Allstate and (5) are not based on a contingent fee arrangement. The audit committee’s policy delegates to the chair the authority to grant approvals, but the decisions of the chair must be reported to the audit committee at its next regularly scheduled meeting. All services provided by Deloitte & Touche LLP in 2017 and 2018 were approved in accordance with this pre-approval policy.

Based on the results of the annual evaluation, the audit committee has appointed Deloitte & Touche LLP as Allstate’s independent registered public accountant for 2019. The factors considered by the audit committee include:

  • Focus on independence, objectivity, and professional skepticism;
  • Insurance and technical expertise and capability in handling the breadth and complexity of Allstate’s operations and industry;
  • Professionalism and responsiveness;
  • Sharing industry insights, trends, and latest practices;
  • Quality and efficiency of the work performed;
  • Quality of discussions and feedback sessions;
  • External data on audit quality and performance, including the results from the PCAOB; and
  • Reasonableness of fees.
The audit committee and the Board believe it is in the best interests of Allstate and its stockholders to continue to retain Deloitte & Touche LLP as Allstate’s independent registered public accountant.

The audit committee oversees and is ultimately responsible for the negotiation of audit fees associated with the retention of Deloitte & Touche LLP. The following fees have been, or are anticipated to be, billed by Deloitte & Touche LLP, the member firms of Deloitte Touche Tohmatsu, and their respective affiliates, for professional services rendered to Allstate for the fiscal years ending December 31, 2017, and December 31, 2018.

 
2017(5)
2018
Audit fees(1)
$10,544,000
$10,606,000
Audit-related fees(2)
$601,000
$818,000
Tax fees(3)
$308,000
$351,000
All other fees(4)
$13,000
$475,000
Total fees
$11,466,000
$12,250,000
  1. Fees for audits of annual financial statements, reviews of quarterly financial statements, statutory audits, attest services, comfort letters, consents, and review of documents filed with the SEC. The amount disclosed does not reflect reimbursements expected to be received for certain separate account audit fees from the managing entity in the amounts of $189,000 and $165,000 for 2017 and 2018, respectively.
  2. Audit-related fees relate to professional services, such as accounting consultations relating to new accounting standards and audits, Service Organization Controls (SOC) audit reports and other attest services for non-consolidated affiliates (i.e., employee benefit plans, various trusts, etc.) and are set forth below.
      2017 2018
    Audits and other attest services for non-consolidated entities $346,000 $358,000
    Other audit-related fees $255,000 $460,000
    Total audit-related fees $601,000 $818,000
  3. Tax fees include income tax return preparation, compliance assistance, tax studies and research, and international tax planning.
  4. “All other fees” includes all fees paid that are not audit, audit-related, or tax services. These fees relate to advisory services.
  5. Fees for 2017 were adjusted to reflect lower than anticipated services performed after the proxy statement was filed.

Representatives of Deloitte & Touche LLP will be present at the 2019 Annual Meeting to respond to questions and may make a statement if they choose. If stockholders fail to ratify the appointment, the audit committee will reconsider the appointment, but no assurance can be given that the audit committee will be able to change the appointment while enabling timely completion of the 2019 audited financial statements.

Audit Committee Report

Deloitte & Touche LLP (Deloitte) was Allstate’s independent registered public accountant for the year ended December 31, 2018.

The audit committee reviewed and discussed with management the audited financial statements for the fiscal year ended December 31, 2018.

The committee discussed with Deloitte the matters required to be discussed by Auditing Standard No. 1301, as adopted by the Public Company Accounting Oversight Board. The committee received the written disclosures and letter from Deloitte that is required by applicable requirements of the Public Company Accounting Oversight Board regarding Deloitte’s communications with the committee concerning independence and has discussed with Deloitte its independence.

Based on these reviews and discussions and other information considered by the committee in its judgment, the committee recommended to the Board of Directors that the audited financial statements be included in Allstate’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018, for filing with the Securities and Exchange Commission, and furnished to stockholders with this Notice of Annual Meeting and Proxy Statement. 

KERMIT R. CRAWFORD (CHAIR)
MICHAEL L. ESKEW
SIDDHARTH N. MEHTA
GREGG M. SHERRILL