14. Company Restructuring
The Company undertakes various programs to reduce expenses. These programs generally involve a reduction in staffing levels, and in certain cases, office closures. Restructuring and related charges include employee termination and relocation benefits, and post-exit rent expenses in connection with these programs, and non-cash charges resulting from pension benefit payments made to agents in connection with the 1999 reorganization of Allstate's multiple agency programs to a single exclusive agency program. The expenses related to these activities are included in the Consolidated Statements of Operations as restructuring and related charges, and totaled $70 million, $34 million and $44 million in 2013, 2012 and 2011, respectively. Restructuring and related charges in 2013 primarily related to the technology organization, which is changing its organizational structure by leveraging centralization, global sourcing and automation to meet contemporary business needs; the closure of a contact center; exiting the annuity business; and claim office consolidation.
The following table presents changes in the restructuring liability in 2013.
| ($ in millions) |
Employee costs |
Exit costs |
Total liability |
|||||||
|---|---|---|---|---|---|---|---|---|---|---|
|
Balance as of December 31, 2012 |
$ | 6 | $ | 3 | $ | 9 | ||||
|
Expense incurred |
45 | 5 | 50 | |||||||
|
Adjustments to liability |
(2 | ) | — | (2 | ) | |||||
|
Payments applied against liability |
(28 | ) | (5 | ) | (33 | ) | ||||
| | | | | | | | | | | |
|
Balance as of December 31, 2013 |
$ | 21 | $ | 3 | $ | 24 | ||||
| | | | | | | | | | | |
| | | | | | | | | | | |
The payments applied against the liability for employee costs primarily reflect severance costs, and the payments for exit costs generally consist of post-exit rent expenses and contract termination penalties. As of December 31, 2013, the cumulative amount incurred to date for active programs totaled $115 million for employee costs and $54 million for exit costs.