What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2021-11-03 compared with 2021-08-04 · 295 added, 279 removed, 888 unchanged (39% of the section changed)

11 unchanged sentences

We continue to closely monitor and proactively adapt to developments and changing conditions.

Currently, it is not possible to reliably estimate the impact to our operations, but the effects could be material.

Currently, it is not possible to reliably estimate the impact to our operations, but the effects have been and could be material.

The Coronavirus has affected our operations and may continue to significantly affect our results of operations, financial condition and liquidity, including:

1 unchanged sentence

• Premium for transportation network products

• Claim severity costs, driving behavior and auto accident frequency

• Driving behavior and auto accident frequency

• Supply chain disruptions and labor shortages could increase the cost of settling claims

• Hospital and outpatient claim costs

4 unchanged sentences

This list is not inclusive of all potential impacts and should not be treated as such.

Within the MD&A we have included further disclosures related to the impacts of the Coronavirus on our 2021 results.

Within the MD&A we

have included further disclosures related to the impacts of the Coronavirus on our 2021 results.

Corporate Strategy

3 unchanged sentences

In the personal property-liability businesses this has four key components:

• Expanding customer access

• Improving customer value

• Expanding customer access

• Increasing customer acquisition sophistication and investment

9 unchanged sentences

52 www.allstate.com

Discontinued operations and held for sale During the first quarter of 2021, we announced the pending sales of Allstate Life Insurance Company (“ALIC”), Allstate Life Insurance Company of New York (“ALNY”) and certain affiliates for $3.0 billion in cash.

We are no longer accepting new proprietary life insurance applications through Allstate exclusive agents.

On October 1, 2021, we closed the sale of ALNY to Wilton Reassurance Company for $400 million.

On November 1, 2021, we closed the sale of ALIC and certain affiliates to entities managed by Blackstone for total proceeds of $4 billion, including purchase price of $2.8 billion as well as increases in statutory surplus.

A loss on disposition of $4 billion, after-tax, was recorded in the first quarter of 2021 related to these transactions.

The transactions are expected to close in 2021, subject to regulatory approvals and other customary closing conditions.

For the nine months ended September 30, 2021, the loss on disposition was $3.8 billion, after-tax, and reflects purchase price adjustments associated with certain pre-close transactions specified in the stock purchase agreements, changes in statutory capital and surplus prior to the closing dates and the closing date equity of the sold entities determined under GAAP, excluding unrealized gains and losses on fixed income securities.

Beginning in the first quarter of 2021, the assets and liabilities of the business were reclassified as held for sale and results are presented as discontinued operations.

This change was applied on a retrospective basis.

SafeAuto On June 1, 2021, we announced an agreement to acquire SafeAuto, a non-standard auto insurance carrier focused on providing state-minimum private-passenger auto insurance with coverage options in 28 states, for $270 million in cash.

The transaction is expected to close in 2021, subject to regulatory approval and customary closing conditions.

SafeAuto On June 1, 2021, we announced an agreement to acquire Safe Auto Insurance Group, Inc., a non-standard auto insurance carrier.

On October 1, 2021, we completed the acquisition for $262 million in cash.

See Note 3 of the condensed consolidated financial statements for further information on acquisitions and dispositions.

10 unchanged sentences

• Income tax expense or benefit on reconciling items

Second Quarter 2021 Form 10-Q 51

Third Quarter 2021 Form 10-Q 53

Consolidated net income

($ in millions)

Consolidated net income applicable to common shareholders increased 30.3% to $1.60 billion in the second quarter of 2021 compared to the same period of 2020 primarily due to higher property and casualty insurance premiums, higher net investment income and lower Shelter-in-Place Payback expense, partially offset by higher non-catastrophe losses.

Consolidated net income applicable to common shareholders decreased 89.2% to $187 million in first six months of 2021 compared to the same period of 2020 primarily due to a loss from discontinued operations and higher non-catastrophe losses.

Partially offsetting were higher net investment income, pension and other postretirement gains in 2021 compared to losses in 2020 and net realized capital gains.

For the twelve months ended June 30, 2021, return on Allstate common shareholders’ equity was 15.3%, a decrease of 2.9 points from 18.2% for the twelve months ended June 30, 2020.

Consolidated net income applicable to common shareholders decreased 54.9% to $508 million in the third quarter of 2021 compared to the same period of 2020 primarily due to higher non-catastrophe and catastrophe losses, lower realized capital gains, partially offset by higher property and casualty insurance premiums and higher net investment income.

Consolidated net income applicable to common shareholders decreased 75.7% to $695 million in the first nine months of 2021 compared to the same period of 2020 primarily due to a loss from discontinued operations and higher non-catastrophe losses.

Partially offsetting were higher property and casualty insurance premiums, net investment income, and pension and other postretirement gains in 2021 compared to losses in 2020.

For the twelve months ended September 30, 2021, return on Allstate common shareholders’ equity was 13.2%, a decrease of 5.7 points from 18.9% for the twelve months ended September 30, 2020.

Total revenue

( ($ in millions)

Total revenue increased 21.6% to $12.65 billion and 23.8% to $25.10 billion in the second quarter and first six months of 2021 , respectively, compared to the same periods of 2020, driven by 13.2% and 12.4% increase in property and casualty insurance premiums in the second quarter and first six months of 2021 , respectively, and higher net investment income.

Insurance premiums earned increased in Property-Liability, primarily due to the acquisition of National General, and in Protection Services.

Total revenue increased 16.9% to $12.48 billion and 21.4% to $37.58 billion in the third quarter and first nine months of 2021 , respectively, compared to the same periods of 2020, driven by 13.7% and 12.9% increase in property and casualty insurance premiums in the third quarter and first nine months of 2021 , respectively, and higher net investment income.

Insurance premiums earned increased in both Property-Liability, primarily due to the acquisition of National General, and Protection Services.

Net investment income

($ in millions)

Net investment income increased $754 million to $974 million in the second quarter of 2021 compared to the same period of 2020 and increased $1.22 billion to $1.68 billion in the first six months of 2021 compared to the same period of 2020.

Net investment income increased $300 million to $764 million in the third quarter of 2021 compared to the same period of 2020 and increased $1.52 billion to $2.45 billion in the first nine months of 2021 compared to the same period of 2020.

The increase in both periods was primarily due to increases in performance-based income results, mainly from limited partnerships.

1 unchanged sentence

Financial highlights

Investments totaled $62.57 billion as of June 30, 2021, increasing from $59.54 billion as of December 31, 2020.

Allstate shareholders’ equity As of June 30, 2021, Allstate shareholders’ equity was $28.21 billion.

Book value per diluted common share (ratio of Allstate common shareholders’ equity to total common shares outstanding and dilutive potential common shares outstanding) was $86.33, an increase of 9.0% from $79.21 as of June 30, 2020, and a decrease of 5.7% from $91.50 as of December 31, 2020.

Return on average Allstate common shareholders’ equity For the twelve months ended June 30, 2021, return on Allstate common shareholders’ equity was 15.3%, a decrease of 2.9 points from 18.2% for the twelve months ended June 30, 2020.

The decrease was primarily due to lower net income applicable to

common shareholders for the trailing twelve-month period ended June 30, 2021 and an increase in average Allstate common shareholders’ equity.

Pension and other postretirement remeasurement gains and losses We recorded pension and other postretirement remeasurement gains of $134 million in the second quarter of 2021 primarily related to favorable asset performance compared to the expected return on plan assets, partially offset by a decrease in the liability discount rate and changes in actuarial assumptions.

Pension and other postretirement remeasurement gains of $444 million in the first six months of 2021 primarily related to an increase in the liability discount rate and favorable asset performance compared to the expected return on plan assets.

Investments totaled $61.84 billion as of September 30, 2021, increasing from $59.54 billion as of December 31, 2020.

Allstate shareholders’ equity As of September 30, 2021, Allstate shareholders’ equity was $26.73 billion.

Book value per common share (ratio of Allstate common shareholders’ equity to total common shares outstanding and dilutive potential common shares outstanding) was $84.62, an increase of 2.7% from $82.39 as of September 30, 2020, and a decrease of 7.5% from $91.50 as of December 31, 2020.

Return on average Allstate common shareholders’ equity For the twelve months ended September 30, 2021, return on Allstate common shareholders’ equity was 13.2%, a decrease of 5.7 points from 18.9% for the twelve months ended September 30, 2020.

The decrease was primarily due to lower net income

applicable to common shareholders for the trailing twelve-month period ended September 30, 2021 and an increase in average Allstate common shareholders’ equity.

Pension and other postretirement remeasurement gains and losses We recorded pension and other postretirement remeasurement losses of $40 million in the third quarter of 2021 primarily related to unfavorable asset performance compared to the expected return on plan assets, partially offset by an increase in the liability discount rate.

Pension and other postretirement remeasurement gains of $404 million in the first nine months of 2021 primarily related to an increase in the liability discount rate and favorable asset performance compared to the expected return on plan assets.

Summarized consolidated financial results

Three months ended June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

($ in millions) 2021 2020 2021 2020

20 unchanged sentences

Net income 531 1,153 775 2,952

Net income attributable to noncontrolling interest 6 — — —

Net loss attributable to noncontrolling interest (7) — (7) —

Net income attributable to Allstate 538 1,153 782 2,952

1 unchanged sentence

Net income applicable to common shareholders $ 508 $ 1,126 $ 695 $ 2,863

Second Quarter 2021 Form 10-Q 53

Third Quarter 2021 Form 10-Q 55

Segment highlights

Allstate Protection underwriting income was $431 million in the second quarter of 2021, a decrease of $474 million from $905 million in the second quarter of 2020.

Underwriting income totaled $2.09 billion in the first six months of 2021, a $165 million decrease from $2.26 billion in the first six months of 2020.

The decrease in both periods was related to higher auto and home non-catastrophe losses, amortization of DAC and advertising expenses, partially offset by premiums from the acquisition of National General and lower Shelter-in-Place Payback expense.

Catastrophe losses were $952 million and $1.54 billion in the second quarter and first six months of 2021, respectively, compared to $1.19 billion and $1.40 billion in the second quarter and first six months of 2020, respectively.

Premiums written increased 12.5% to $10.32 billion in the second quarter of 2021 and 13.1% to $20.09 billion in the first six months of 2021 compared to the same periods of 2020, reflecting the acquisition of National General.

Protection Services adjusted net income was $56 million in the second quarter of 2021 compared to $38 million in the second quarter of 2020.

Adjusted net income was $105 million in the first six months of 2021 compared to $75 million in the first six months of 2020.

The increase in both periods was primarily due to growth at Allstate Protection Plans and Allstate Identity Protection.

Allstate Health and Benefits adjusted net income was $62 million and $127 million in the second quarter and first six months of 2021, respectively, compared to $5 million and $29 million in the second quarter and first six months of 2020, respectively.

The increase in both periods was primarily due to the acquisition of National General’s group health and individual accident and health business, which resulted in higher premiums and contract charges and the addition of other revenue, partially offset by higher policy benefits and operating costs and expenses.

Results for the second quarter of 2020 included an after-tax charge of $32 million related to the write-off of previously capitalized software.

Premiums and contract charges increased 70.0% to $447 million in the second quarter of 2021 and 65.5% to $902 million in the first six months of 2021 compared to the same periods of 2020, primarily due to the addition of group health and individual accident and health business.

Allstate Protection underwriting loss was $421 million in the third quarter of 2021, compared to underwriting income of $887 million in the third quarter of 2020 primarily due to higher auto and home non-catastrophe losses, lower favorable catastrophe reserve reestimates driven by subrogation settlements in 2020 and increased underwriting expenses, partially offset by premiums from the acquisition of National General.

Underwriting income totaled $1.67 billion in the first nine months of 2021, a $1.47 billion decrease from $3.14 billion in the first nine months of 2020 primarily due to higher auto and home non-catastrophe and catastrophe losses and increased underwriting expenses, partially offset by premiums from the acquisition of National General and lower Shelter-in-Place Payback expense.

Catastrophe losses were $1.27 billion and $2.81 billion in the third quarter and first nine months of 2021, respectively, compared to $990 million and $2.39 billion in the third quarter and first nine months of 2020, respectively.

Premiums written increased 16.7% to $10.97 billion in the third quarter of 2021 and 14.4% to $31.06 billion in the first nine months of 2021 compared to the same periods of 2020, reflecting the acquisition of National General and higher Allstate brand homeowners premiums.

Protection Services adjusted net income was $45 million in the third quarter of 2021 compared to $40 million in the third quarter of 2020.

Adjusted net income was $150 million in the first nine months of 2021 compared to $115 million in the first nine months of 2020.

The increase in both periods was primarily due to growth, partially offset by higher operating costs and expenses related to investments in growth.

Premiums and other revenue increased 24.1% or $105 million in the third quarter of 2021 and 24.9% or $312 million in the first nine months of 2021 compared to the same periods of 2020, primarily due to Allstate Protection Plan’s growth through its U.S.

retail and international channels and the addition of LeadCloud and Transparent.ly, which were acquired as part of the National General acquisition.

Allstate Health and Benefits adjusted net income was $33 million in the third quarter of both 2021 and 2020.

Adjusted net income was $160 million in the first nine months of 2021 compared to $62 million in the first nine months of 2020 primarily due to the acquisition of National General’s group health and individual accident and health business, which resulted in higher premiums and contract charges and the addition of other revenue, partially offset by higher policy benefits and operating costs and expenses.

Premiums and contract charges increased 60.3% to $460 million in the third quarter of 2021 and 63.7% to $1.36 billion in the first nine months of 2021 compared to the same periods of 2020, primarily due to the addition of group health and individual accident and health business.

56 www.allstate.com

8 unchanged sentences

• Loss ratio :

the ratio of claims and claims expense to premiums earned.

the ratio of claims and claims expense (loss adjustment expenses), to premiums earned.

Loss ratios include the impact of catastrophe losses.

4 unchanged sentences

We have also calculated the following impacts of specific items on the GAAP operating ratios because of the volatility of these items between periods.

• Effect of catastrophe losses on combined ratio :

the ratio of catastrophe losses included in claims and claims expense to premiums earned.

This ratio includes prior year reserve reestimates of catastrophe losses.

• Effect of prior year reserve reestimates on combined ratio :

the ratio of prior year reserve reestimates included in claims and claims expense to premiums earned.

This ratio includes prior year reserve reestimates of catastrophe losses.

The impacts are calculated by taking the specific items noted below divided by Property-Liability premiums earned:

• Effect of catastrophe losses on combined ratio , includes catastrophe losses and prior year reserve reestimates of catastrophe losses, included in claims and claims expense

• Effect of prior year reserve reestimates on combined ratio , includes prior year reserve reestimates of catastrophe losses

• Effect of amortization of purchased intangibles on combined ratio

the ratio of amortization of purchased intangibles to premiums earned.

• Effect of restructuring and related charges on combined ratio

the ratio of restructuring and related charges to premiums earned.

• Effect of Run-off Property-Liability business on combined ratio :

the ratio of claims and claims expense, restructuring and related charges and operating costs and expenses in Run-off Property-Liability segment to Property-Liability premiums earned.

• Effect of Shelter-in-Place Payback expense on combined and expense ratios

• Effect of Run-off Property-Liability business on combined ratio , includes claims and claims expense, restructuring and related charges and operating costs and expenses in Run-off Property-Liability segment

Premium measures and statistics are used to analyze our premium trends and are calculated as follows:

17 unchanged sentences

• Percent change in frequency or severity statistics is calculated as the amount of increase or decrease in gross claim frequency or paid claim severity in the current period compared to the same period in the prior year divided by the prior year gross claim frequency or paid claim severity.

Second Quarter 2021 Form 10-Q 55

Third Quarter 2021 Form 10-Q 57

Property-Liability Operations

Underwriting results

Three months ended June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

($ in millions, except ratios) 2021 2020 2021 2020

8 unchanged sentences

(15) (187) (113) (199)

Underwriting income $ 429 $ 902 $ 2,086 $ 2,250

Underwriting (loss) income $ (534) $ 752 $ 1,552 $ 3,002

Catastrophe losses

20 unchanged sentences

Effect of Run-off Property-Liability business on combined ratio 1.2 1.5 0.4 0.6

(1) Restructuring and related charges for the second quarter and first six months of 2021 primarily related to future work environment or Transformative Growth.

(1) Restructuring and related charges for the third quarter and first nine months of 2021 primarily related to future work environment.

See Note 12 of the condensed consolidated financial statements for additional details.

(2) Favorable reserve reestimates are shown in parentheses.

(3) 2020 includes approximately $495 million of favorable reserve reestimates related to the PG&E Corporation and Southern California Edison subrogation settlements, which primarily impacted homeowners.

(4) Other revenue is deducted from operating costs and expenses in the expense ratio calculation.

5 unchanged sentences

Underwriting results

Three months ended June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

($ in millions) 2021 2020 2021 2020

7 unchanged sentences

Restructuring and related charges (16) (187) (113) (199)

Underwriting income $ 431 $ 905 $ 2,091 $ 2,256

Underwriting (loss) income $ (421) $ 887 $ 1,670 $ 3,143

Catastrophe losses $ 1,269 $ 990 $ 2,811 $ 2,387

Underwriting income decreased 52.4% or $474 million and 7.3% or $165 million in the second quarter and the first six months of 2021, respectively, compared to the same periods of 2020 primarily due to higher auto and home non-catastrophe losses, amortization of DAC and advertising expenses, partially offset by premiums from the acquisition of National General and lower Shelter-in-Place Payback expense.

Underwriting loss was $421 million in the third quarter of 2021 compared to underwriting income of $887 million in the third quarter of 2020 primarily due to higher auto and home non-catastrophe losses, lower favorable catastrophe reserve reestimates driven by subrogation settlements in 2020 and increased underwriting expenses, partially offset by premiums from the acquisition of National General.

Underwriting income decreased 46.9% or $1.47 billion in the first nine months of 2021, compared to the same period of 2020 primarily due to higher auto and home non-catastrophe and catastrophe losses and increased underwriting expenses, partially offset by premiums from the acquisition of National General and lower Shelter-in-Place Payback expense.

Change in underwriting results from the prior period - three months ended

($ in millions)

Change in underwriting results from the prior period - six months ended

($ in millions)

Second Quarter 2021 Form 10-Q 57

Third Quarter 2021 Form 10-Q 59

Segment Results Allstate Protection

Change in underwriting results from the prior period - nine months ended

($ in millions)

Underwriting income (loss) by brand and by line of business

1 unchanged sentence

($ in millions) 2021 2020 2021 2020 2021 2020

Three months ended June 30,

Three months ended September 30,

$ (123) $ 897 $ (36) $ 9 $ (159) $ 906

8 unchanged sentences

Total $ (311) $ 842 $ (112) $ 43 $ (421) $ 887

Six months ended June 30,

Nine months ended September 30,

$ 1,444 $ 2,522 $ 118 $ 39 $ 1,562 $ 2,561

14 unchanged sentences

The portion of premiums written applicable to the unexpired term of the policies is recorded as unearned premiums on our Condensed Consolidated Statements of Financial Position.

60 www.allstate.com

Allstate Protection Segment Results

Premiums written by brand and by line of business

1 unchanged sentence

($ in millions) 2021 2020 2021 2020 2021 2020

Three months ended June 30,

Three months ended September 30,

Auto $ 6,153 $ 6,192 $ 1,018 $ 134 $ 7,171 $ 6,326

3 unchanged sentences

Total premiums written $ 9,355 $ 9,135 $ 1,611 $ 260 $ 10,966 $ 9,395

Six months ended June 30,

Nine months ended September 30,

Auto $ 18,165 $ 18,337 $ 2,836 $ 388 $ 21,001 $ 18,725

3 unchanged sentences

Total premiums written $ 26,784 $ 26,414 $ 4,273 $ 745 $ 31,057 $ 27,159

58 www.allstate.com

Allstate Protection Segment Results

Premiums earned by brand and by line of business

1 unchanged sentence

($ in millions) 2021 2020 2021 2020 2021 2020

Three months ended June 30,

Three months ended September 30,

Auto $ 6,009 $ 6,081 $ 903 $ 129 $ 6,912 $ 6,210

3 unchanged sentences

Total premiums earned $ 8,774 $ 8,704 $ 1,385 $ 248 $ 10,159 $ 8,952

Six months ended June 30,

Nine months ended September 30,

Auto $ 18,059 $ 18,138 $ 2,545 $ 399 $ 20,604 $ 18,537

4 unchanged sentences

Reconciliation of premiums written to premiums earned

Three months ended June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

($ in millions) 2021 2020 2021 2020

13 unchanged sentences

Total 33,219 32,988 4,740 753 37,959 33,741

Second Quarter 2021 Form 10-Q 59

Third Quarter 2021 Form 10-Q 61

Segment Results Allstate Protection

Auto insurance premiums written increased 10.1% or $628 million in the second quarter of 2021 compared to the second quarter of 2020 and increased 11.5% or 1.43 billion in the first six months of 2021 compared to the first six months of 2020, primarily due to the following factors:

Auto insurance premiums written increased 13.4% or $845 million in the third quarter of 2021 compared to the third quarter of 2020 and increased 12.2% or 2.28 billion in the first nine months of 2021 compared to the first nine months of 2020, primarily due to the following factors:

• Acquisition of National General

• Increased new issued applications in the Allstate brand driven by increased advertising and higher close ratio

• Decreased Allstate brand average premium reflecting approved rate decreases of approximately 3% for the trailing twelve months ended June 30, 2021

– Targeted rate increases due to higher inflationary trends will be implemented, as necessary, to maintain target returns

• PIF increased 14.1% or 3,163 thousand to 25,614 thousand as of June 30, 2021 compared to June 30, 2020 due to the acquisition of National General

– PIF increased by 161 thousand as of June 30, 2021 compared to March 31, 2021, with increases in both Allstate brand and National General

• Increased new issued applications in the Allstate brand driven by increased advertising and higher close rates

• Decreased Allstate brand average premium reflecting approved rate decreases of approximately 3% for the trailing twelve months ended September 30, 2021

• Rate increases are being implemented broadly to improve underwriting results given the higher inflationary trends adversely impacting loss costs

• PIF increased 14.7% or 3,294 thousand to 25,654 thousand as of September 30, 2021 compared to September 30, 2020 due to the acquisition of National General

– PIF increased by 40 thousand as of September 30, 2021 compared to June 30, 2021, with increases in both Allstate brand and National General

Auto premium measures and statistics

Three months ended June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

2021 2020 Change 2021 2020 Change

8 unchanged sentences

Allstate brand renewal ratio (%) 87.2 87.9 (0.7) 87.0 87.6 (0.6)

Homeowners insurance premiums written increased 19.2% or $438 million in the second quarter of 2021 compared to the second quarter of 2020 and increased 19.6% or $789 million in the first six months of 2021 compared to the first six months of 2020, primarily due to the following factors:

Homeowners insurance premiums written increased 28.4% or $665 million in the third quarter of 2021 compared to the third quarter of 2020 and increased 22.9% or $1.45 billion in the first nine months of 2021 compared to the first nine months of 2020, primarily due to the following factors:

• Acquisition of National General

• Higher Allstate brand average premiums from approved rate increases of approximately 3.5% for the trailing twelve months ended June 30, 2021 and inflation in insured home valuations

• Higher Allstate brand average premiums from approved rate increases of approximately 3.4% for the trailing twelve months ended September 30, 2021 and inflation adjustments to premium due to higher insured home valuations

• Increased new issued applications in the Allstate brand driven by higher quote volumes and improved close rates

Homeowners premium measures and statistics

Three months ended June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

2021 2020 Change 2021 2020 Change

4 unchanged sentences

National General 28 9 NM 77 25 NM

New issued applications 292 238 22.7 % 534 450 18.7 %

Total new issued applications 287 256 12.1 % 814 706 15.3 %

Allstate brand average premium $ 1,443 $ 1,334 8.2 % $ 1,406 $ 1,324 6.2 %

Allstate brand renewal ratio (%) 87.1 87.8 (0.7) 87.1 87.6 (0.5)

Other personal lines premiums written increased 9.7% or $51 million in the second quarter of 2021 compared to the second quarter of 2020 and increased 10.1% or $97 million in the first six months of 2021 compared to the first six months of 2020.

The increase in both periods was primarily due to the acquisition of National General and increases in condominiums, personal umbrella and renters premiums for Allstate brand.

Commercial lines premiums written increased 20.0% or $34 million in the second quarter of 2021 compared to the second quarter of 2020 and increased 2.6% or $10 million in the first six months of 2021 compared to the first six months of 2020.

Other personal lines premiums written increased 7.7% or $42 million in the third quarter of 2021 compared to the third quarter of 2020 and increased 9.3% or $139 million in the first nine months of 2021 compared to the first nine months of 2020.

The increase in both periods was primarily due to the acquisition of National General and increases in condominiums and personal umbrella premiums for Allstate brand.

Commercial lines premiums written increased 10.1% or $19 million in the third quarter of 2021 compared to the third quarter of 2020 and increased 5.0% or $29 million in the first nine months of 2021 compared to the first nine months of 2020.

The increase in both periods was primarily due to the addition of a large transportation network company, higher miles driven in our shared economy business as the impacts of the Coronavirus decrease and an increase in average premiums.

PIF for the shared economy agreements typically reflect contracts that cover multiple insureds as opposed to individual insureds.

62 www.allstate.com

6 unchanged sentences

2021 2020 2021 2020 2021 2020

Three months ended June 30,

Three months ended September 30,

Auto 76.9 59.7 25.4 25.7 102.3 85.4

Impact of Shelter-in-Place Payback expense — — 0.4 11.9 0.4 11.9

Homeowners 85.9 80.4 25.1 22.8 111.0 103.2

4 unchanged sentences

Impact of amortization of purchased intangibles — — 0.8 — 0.8 —

Impact of Shelter-in-Place Payback expense — — 0.3 8.3 0.3 8.3

Impact of restructuring and related charges — — 0.2 2.1 0.2 2.1

1 unchanged sentence

— — — 0.2 — 0.2

Six months ended June 30,

Nine months ended September 30,

Auto 67.7 56.6 24.7 29.6 92.4 86.2

17 unchanged sentences

2021 2020 2021 2020 2021 2020 2021 2020

Three months ended June 30,

Three months ended September 30,

Auto 76.9 59.7 2.9 1.6 1.0 (0.9) (0.1) (0.4)

3 unchanged sentences

Total 79.0 65.2 12.5 11.1 0.4 (6.4) — (5.7)

Six months ended June 30,

Nine months ended September 30,

Auto 67.7 56.6 1.9 1.4 — (0.5) (0.1) (0.2)

3 unchanged sentences

Total 70.1 60.7 9.4 8.9 (0.6) (2.2) (0.7) (1.9)

(1) The ten-year average effect of catastrophe losses on the total combined ratio was 11.7 points in the second quarter of 2021 .

Second Quarter 2021 Form 10-Q 61

(1) The ten-year average effect of catastrophe losses on the total combined ratio was 7.3 points in the third quarter of 2021 .

Third Quarter 2021 Form 10-Q 63

Segment Results Allstate Protection

Auto loss ratio increased 20.8 and 7.9 points in the second quarter and first six months of 2021, respectively, compared to the same periods of 2020, primarily due to:

Auto loss ratio increased 17.2 and 11.1 points in the third quarter and first nine months of 2021, respectively, compared to the same periods of 2020, primarily due to:

• Higher gross claim frequency in all coverages, as miles driven continue to rebound toward pre-pandemic levels

• While frequency increased relative to the prior year quarter, it remains below pre-pandemic levels

• Increased severity, primarily for property damage, collision and bodily injury coverages, driven by inflationary pressures and accident type mix

• Partially offset by higher premiums earned

• Prior quarter development impact of 2.2 points on the third quarter 2021 loss ratio for reserve strengthening of first and second quarter 2021 claims

The impacts of the Coronavirus affect frequency and severity statistics including:

2 unchanged sentences

• Changes in commuting activity

• Supply chain disruptions and labor shortages

• Shifts in the frequency environment may impact the speed claims are settled

• Driving behavior (e.g., speed, time of day) impacting mix of claim types

• Value of total losses due to higher used car prices

• Labor and part cost increases

• Changes in limits purchased

Allstate brand frequency and paid claim severity statistics (excluding catastrophe losses)

(% change year-over-year)

Three months ended June 30, 2021

Three months ended September 30, 2021

Property damage gross claim frequency 16.6 %

Property damage paid claim severity 15.1

Six months ended June 30, 2021

Nine months ended September 30, 2021

Property damage gross claim frequency 10.1 %

Property damage paid claim severity 5.6

Property damage gross claim frequency increased in the second quarter and the first six months of 2021 compared to the same periods of 2020 due to factors including:

• Increases in miles driven compared to the second quarter of 2020 which was significantly impacted by the implementation of shelter-in-place restrictions due to the Coronavirus

• Gross claim frequency decreased 21.0% and 24.8% in the second quarter and first six months of 2021, respectively, when compared to pre-pandemic levels of 2019 as auto miles driven, particularly during peak commuting hours, is lower

Property damage paid claim severity decreased in the second quarter of 2021 and increased in the first six months of 2021 compared to the same periods of 2020.

• Results in both periods were impacted by the Coronavirus, including more restrictive shelter-in-place orders in the second quarter of 2020

• When compared to pre-pandemic levels of 2019, property damage paid claim severity increased 14.6% and 14.3% in the second quarter and first six months of 2021, respectively, or an average annual increase of approximately 7.0%.

The increase in both periods is due to rising inflationary impacts in both used car values and replacement part costs, including higher costs to repair more sophisticated newer model vehicles and increased costs associated with total losses

Collision severity trends increased in the second quarter and the first six months of 2021 compared to the same periods of 2020 due to inflationary pressures from higher used car values and replacement part costs.

Bodily injury severity trends increased in the second quarter and the first six months of 2021 compared to the same periods of 2020 due to injury mix and higher medical care inflation.

Homeowners loss ratio decreased 8.5 points in the second quarter of 2021 compared to the second quarter of 2020, primarily due to increased premiums earned and lower catastrophe losses, partially offset by increased non-catastrophe claim frequency and severity.

Homeowners loss ratio increased 3.7 points in the first six months of 2021 compared to the first six months of 2020, primarily due to higher frequency and severity.

Property damage gross claim frequency increased in the third quarter and the first nine months of 2021 compared to the same periods of 2020 due to factors including:

• Increases in miles driven compared to the third quarter of 2020 which was impacted by the continuation of shelter-in-place restrictions due to the Coronavirus

Gross claim frequency decreased 16.8% and 22.1% in the third quarter and first nine months of 2021, respectively, when compared to pre-pandemic levels of 2019 as auto miles driven, particularly during peak commuting hours, is lower.

Property damage paid claim severity increased in the third quarter and the first nine months of 2021 compared to the same periods of 2020.

• When compared to pre-pandemic levels of 2019, property damage paid claim severity increased 24.2% and 17.8% in the third quarter and first nine months of 2021, respectively, or an average annual increase of approximately 12.0% and 9.0%, respectively

• The increases are due to rising inflationary impacts in both used car values and replacement part costs, including higher costs to repair more sophisticated newer model vehicles and increased costs associated with total losses

Collision severity trends increased in the third quarter and the first nine months of 2021 compared to the same periods of 2020 due to inflationary pressures from higher used car values that increases total losses and parts and labor costs associated with repairs.

Bodily injury severity trends increased in the third quarter and the first nine months of 2021 compared to the same periods of 2020 due to injury mix and higher medical care inflation.

Homeowners loss ratio increased 5.5 and 4.5 points in the third quarter and first nine months of 2021 compared to the same periods of 2020, respectively, primarily due to increased non-catastrophe claim frequency and severity and lower favorable catastrophe reserve reestimates driven by subrogation settlements in 2020, partially offset by increased premiums earned.

Allstate brand homeowners frequency and severity statistics (excluding catastrophe losses)

(% change year-over-year)

Three months ended June 30, 2021

Three months ended September 30, 2021

Gross claim frequency 3.4 %

Paid claim severity 15.0

Six months ended June 30, 2021

Nine months ended September 30, 2021

Gross claim frequency 10.4 %

Paid claim severity 8.4

Gross claim frequency increased in the second quarter and first six months of 2021 compared to the same periods of 2020 primarily due to increases in wind/hail, water and fire.

Paid claim severity increased in the second quarter and first six months of 2021 compared to the same periods of 2020 due to inflationary loss cost pressure driven by increases in labor and materials costs.

Gross claim frequency increased in the third quarter of 2021 compared to the third quarter of 2020, primarily due to increases in water perils.

Gross claim frequency increased in the first nine months of 2021 compared to the same period of 2020 primarily due to increases in wind/hail, water and fire perils.

Paid claim severity increased in the third quarter and first nine months of 2021 compared to the same periods of 2020 due to inflationary loss cost pressure driven by increases in labor and materials costs.

Homeowner paid claim severity can be impacted by both the mix of perils and the magnitude of specific losses paid during the quarter.

Other personal lines loss ratio increased 2.9 and 8.3 points in the second quarter and first six months of 2021, respectively, compared to the same periods of 2020, primarily due to higher non-catastrophe losses, partially offset by increased premiums earned.

Commercial lines loss ratio increased 12.2 and 6.2 points in the second quarter and the first six months of 2021, respectively, compared to the same periods of 2020 due to higher auto frequency and severity, partially offset by increased premiums earned.

Other personal lines loss ratio increased 1.9 and 6.2 points in the third quarter and first nine months of 2021, respectively, compared to the same periods of 2020, primarily due to higher non-catastrophe losses, partially offset by increased premiums earned.

Commercial lines loss ratio increased 20.8 and 11.3 points in the third quarter and the first nine months of

64 www.allstate.com

Allstate Protection Segment Results

Catastrophe losses decreased 19.7% or $234 million in the second quarter of 2021 compared to the second quarter of 2020.

Catastrophe losses increased 10.4% or $145 million in the first six months of 2021 compared to the first six months of 2020.

2021, respectively, compared to the same periods of 2020 due to higher auto frequency and severity and higher unfavorable non-catastrophe prior year reserves reestimates, partially offset by increased premiums earned.

Catastrophe losses increased 28.2% or $279 million in the third quarter of 2021 compared to the third quarter of 2020.

Catastrophe losses increased 17.8% or $424 million in the first nine months of 2021 compared to the first nine months of 2020.

Catastrophe losses in the third quarter of 2021, included gross and net losses related to Hurricane Ida of $1.5 billion and $689 million, respectively.

Net losses include reinsurance recoveries of $986 million and reinstatement premiums of $181 million.

We define a “catastrophe” as an event that produces pre-tax losses before reinsurance in excess of $1 million and involves multiple first party policyholders, or a winter weather event that produces a number of claims in excess of a preset, per-event threshold of average claims in a specific area, occurring within a certain amount of time following the event.

2 unchanged sentences

The nature and level of catastrophes in any period cannot be reliably predicted.

Loss estimates are generally based on claim adjuster inspections and the application of historical loss development factors.

Loss estimates are generally based on claim adjuster inspections and the application of historical

loss development factors.

Our loss estimates are calculated in accordance with the coverage provided by our policies.

2 unchanged sentences

Over time, we have limited our aggregate insurance exposure to catastrophe losses in certain regions of the country that are subject to high levels of natural catastrophes, limited by our participation in various state facilities.

In the third quarter of 2021, our catastrophe reinsurance program risk tolerance framework that targets less than a 1% likelihood of annual aggregate catastrophe losses from hurricanes, earthquakes and wildfires, excluding other catastrophe losses, net of reinsurance, increased from $2 billion to $2.5 billion, reflecting the addition of wildfires to the target.

Catastrophe reinsurance The total cost of our property catastrophe reinsurance programs, excluding reinstatement premiums, during the third quarter and first nine months of 2021 were $109 million and $345 million, respectively, compared to $106 million and $310 million in the third quarter and first nine months of 2020.

The increases were driven by higher Nationwide and Florida program costs due to program expansion for growth in policies, including National General exposures.

Catastrophe placement premiums are a reduction of premium with approximately 70% related to homeowners.

Catastrophe losses by the type of event

Three months ended June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

($ in millions) Number of events 2021 Number of events 2020 Number of events 2021 Number of events 2020

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Total catastrophe losses (1)

Catastrophe reinsurance Our current catastrophe reinsurance program supports our risk tolerance framework that targets less than a 1% likelihood of annual aggregate catastrophe losses from hurricanes and earthquakes, net of reinsurance, exceeding $2 billion.

Our program provides reinsurance protection for catastrophes resulting from multiple perils, including, but not limited to, hurricanes, windstorms, hail, tornadoes, fires following earthquakes, earthquakes and wildfires.

These reinsurance agreements are part of our catastrophe management strategy, which is intended to provide our shareholders with an acceptable return on the risks assumed in our property business, and to reduce variability of earnings, while providing protection to our customers.

During the second quarter of 2021, we completed placements of our 2021-2022 Nationwide Excess Catastrophe Reinsurance Program (“Nationwide Program”) with the Single-year term contract and the 2021-1 Excess Catastrophe Reinsurance Contract layers, the Florida program that is designed to address the distinct needs of our separately capitalized

companies in that state, and National General Lender Services and Reciprocal reinsurance contracts.

Single-Year Term Contract layer is placed in the traditional market and provides $132 million of coverage, subject to a $3.75 billion retention, with no reinstatement of limits.

2021-1 Excess Catastrophe Reinsurance Contract layer is placed in the Insurance Linked Securities (“ILS”) market and provides $400 million of coverage, 62.5% placed, in excess of a minimum of $3.75 billion retention.

Florida program updates Our 2021 Florida program provides coverage up to $1.24 billion of loss less a $40 million retention.

The Florida program includes reinsurance agreements placed with the traditional market, the Florida Hurricane Catastrophe Fund (“FHCF”), and the ILS market as follows:

• The traditional market placement comprises reinsurance limits for losses to personal lines property in Florida arising out of multiple perils.

The Excess contracts, which form a part of the traditional market placement, with $939 million of limits, subject to a $100 million retention, provide

Second Quarter 2021 Form 10-Q 63

45 $ 1,269 42 $ 990 81 $ 2,811 78 $ 2,387

(1) Includes $173 million and $256 million of reinstatement premiums for the three and nine months ended September 30, 2021, related to the Nationwide Catastrophe Reinsurance Program, primarily due to Hurricane Ida

Third Quarter 2021 Form 10-Q 65

Segment Results Allstate Protection

coverage for perils not covered by the FHCF contracts, which only cover hurricanes.

• Three FHCF contracts provide $313 million of limits for qualifying losses to personal lines property in Florida caused by storms the National Hurricane Center declares to be hurricanes.

Two contracts are 90% placed and one contract is 100% placed.

• The ILS placement provides $275 million of reinsurance limits, 73% placed, for qualifying losses to personal lines property in Florida caused by a named storm event, a severe weather event, an earthquake event, a fire event, a volcanic eruption event, or a meteorite impact event.

National General Lender Services Standalone Program is placed in the traditional market and provides $190 million of coverage, subject to a $50 million retention, with one reinstatement of limits.

National General Reciprocal Excess Catastrophe Reinsurance Contract is placed in the traditional market and provides $545 million of coverage, subject to a $20 million retention, with one reinstatement of limits.

For a complete summary of the 2021 reinsurance placement, please read this in conjunction with the discussion and analysis in Part I.

Management’s Discussion and Analysis - Allstate Protection Segment Results, Catastrophe Reinsurance of The Allstate Corporation Form 10-Q for the quarterly period ended March 31, 2021.

The total cost of our property catastrophe reinsurance programs during the second quarter and first six months of 2021 were $128 million and $241 million, respectively, compared to $105 million and $204 million in the second quarter and first six months of 2020.

The increases were due to increases in the Nationwide and Florida program costs due to program expansion for growth in policies, including National General exposures.

Catastrophe placement premiums are a reduction of premium with approximately 75% related to homeowners.

Reserve reestimates were unfavorable in the second quarter of 2021 primarily due to strengthening of reserves in homeowners and commercial lines.

Reserve reestimates were favorable in the first six months of 2021 due to approximately $200 million of estimated recoveries related to our aggregate reinsurance cover and approximately $110 million of subrogation settlements arising from the Woolsey wildfire, partially offset by strengthening of reserves in commercial lines.

Reserve reestimates were unfavorable in the third quarter of 2021 primarily due to strengthening of reserves in auto and commercial lines, partially offset by favorable reserve reestimates in other personal lines.

Reserve reestimates were favorable in the first nine months of 2021 due to estimated recoveries related to our aggregate reinsurance coverage and subrogation settlements arising from the Woolsey wildfire, partially offset by strengthening of reserves in commercial lines.

For a more detailed discussion on reinsurance and reserve reestimates, see Note 9 of the condensed consolidated financial statements.

Reserve reestimates

Three months ended June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

reestimate (1)

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Total Allstate Protection (3)

$ 48 $ (572) 0.4 (6.4) $ (178) $ (578) (0.6) (2.2)

Allstate brand $ 40 $ (529) 0.4 (5.9) $ (176) $ (532) (0.6) (2.0)

1 unchanged sentence

Total Allstate Protection (3)

$ 48 $ (572) 0.4 (6.4) $ (178) $ (578) (0.6) (2.2)

(1) Favorable reserve reestimates are shown in parentheses.

(2) Ratios are calculated using Allstate Protection premiums earned.

64 www.allstate.com

Allstate Protection Segment Results

Expense ratio decreased 7.1 and 4.8 points in the second quarter and first six months of 2021, respectively, compared to the same periods of 2020, primarily due to the following:

• Lower Shelter-in-Place Payback expense and a reduction in bad debt expense related to 2020 Special Payment Plan enrollments

• Lower operating expenses

• Partially offset by increased amortization of DAC, advertising expense, amortization of purchased intangibles and restructuring and related charges

(3) 2020 includes approximately $495 million of favorable reserve reestimates related to subrogation settlements, which primarily impacted homeowners.

The favorable reserve reestimates decreased the combined ratio by 5.5 points and 1.9 points in the third quarter and first nine months of 2020, respectively.

Expense ratio increased 0.2 points in the third quarter of 2021 compared to the third quarter of 2020 primarily due to higher advertising expenses and operating costs, increased amortization of purchased intangibles and DAC, partially offset by lower restructuring and related charges.

The expense ratio decreased 3.2 points in the first nine months of 2021 compared to the same period of 2020, primarily due to lower Shelter-in-Place Payback expense, operating costs and expenses, restructuring and related charges, partially offset by increased advertising and amortization of purchased intangibles and DAC.

Impact of specific costs and expenses on the expense ratio

Three months ended June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

($ in millions, except ratios) 2021 2020 Change 2021 2020 Change

18 unchanged sentences

Total expense ratio 25.1 24.9 0.2 24.3 27.5 (3.2)

Second Quarter 2021 Form 10-Q 65

Segment Results Run-off Property-Liability

66 www.allstate.com

Run-off Property-Liability Segment Results

Run-off Property-Liability Segment

Underwriting results

($ in millions) Three months ended June 30, Six months ended June 30,

($ in millions) Three months ended September 30, Nine months ended September 30,

2021 2020 2021 2020

Claims and claims expense

Operating costs and expenses (1)

Asbestos claims

$ (64) $ (78) $ (64) $ (78)

Environmental claims

(40) (44) (40) (44)

Other run-off lines (9) (13) (11) (17)

Total claims and claims expense

(113) (135) (115) (139)

Operating costs and expenses — — (3) (2)

Underwriting loss

$ (113) $ (135) $ (118) $ (141)

(1) Includes $781 thousand of restructuring and related charges for the second quarter of 2021.

Annual reserve review In the third quarter of 2021 and 2020, we performed our annual reserve review using established industry and actuarial best practices.

The annual review resulted in unfavorable reserve reestimates totaling $111 million and $132 million in 2021 and 2020.

The reserve reestimates are included as part of claims and claims expense.

The reserve reestimates in 2021 primarily related to new reported information for asbestos and environmental and higher than expected reported losses for environmental and other run-off exposures.

The reserve reestimates in 2020 primarily related to new reported information, court decisions and policy buyback settlements for asbestos exposures and higher than expected reported losses for environmental and other run-off exposures.

We believe that our reserves are appropriately established based on available facts, technology, laws, regulations, and assessments of other pertinent factors and characteristics of exposure (e.g., claim activity, potential liability, jurisdiction, products versus non-products exposure) presented by individual policyholders, assuming no change in the legal, legislative or economic environment.

However, as we progress with the resolution of disputed claims in the courts and arbitrations and with negotiations and settlements, our reported losses may be more variable.

Reserves for asbestos, environmental and other run-off claims before and after the effects of reinsurance

($ in millions) June 30, 2021 December 31, 2020

($ in millions) September 30, 2021 December 31, 2020

Asbestos claims

13 unchanged sentences

Net reserves $ 1,460 $ 1,408

Third Quarter 2021 Form 10-Q 67

Segment Results Run-off Property-Liability

Reserves by type of exposure before and after the effects of reinsurance

($ in millions) June 30, 2021 December 31, 2020

($ in millions) September 30, 2021 December 31, 2020

Direct excess commercial insurance

22 unchanged sentences

Net reserves $ 1,460 $ 1,408

66 www.allstate.com

Run-off Property-Liability Segment Results

Percentage of gross and ceded reserves by case and incurred but not reported (“IBNR”)

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Case IBNR Case IBNR

8 unchanged sentences

Ceded 62 38 79 21

(1) Approximately 63% of gross case reserves as of June 30, 2021 are subject to settlement agreements.

(2) Approximately 70% of ceded case reserves as of June 30, 2021 are subject to settlement agreements.

(1) Approximately 62% of gross case reserves as of September 30, 2021 are subject to settlement agreements.

(2) Approximately 70% of ceded case reserves as of September 30, 2021 are subject to settlement agreements.

Gross payments from case reserves by type of exposure

($ in millions) Three months ended June 30, Six months ended June 30,

($ in millions) Three months ended September 30, Nine months ended September 30,

2021 2020 2021 2020

7 unchanged sentences

Ceded 2 (3) (1) (4)

(1) In the second quarter and first six months of 2021 , 73% and 74% of payments related to settlement agreements.

(2) In the second quarter and first six months of 2021 , 79% and 79% of payments related to settlement agreements.

Total net reserves as of June 30, 2021, included $639 million or 47% of estimated IBNR reserves compared to $695 million or 49% of estimated IBNR reserves as of December 31, 2020.

Total gross payments were $29 million and $62 million for the second quarter and first six months of 2021, respectively.

Payments for the second quarter and first six months of 2021 primarily related to settlement agreements reached with several insureds

on large claims, mainly asbestos related losses, where the scope of coverages has been agreed upon.

(1) In the third quarter and first nine months of 2021 , 66% and 72% of payments related to settlement agreements.

(2) In the third quarter and first nine months of 2021 , 53% and 71% of payments related to settlement agreements.

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Run-off Property-Liability Segment Results

Total net reserves as of September 30, 2021, included $744 million or 51% of estimated IBNR reserves compared to $695 million or 49% of estimated IBNR reserves as of December 31, 2020.

Total gross payments were $22 million and $84 million for the third quarter and first nine months of 2021, respectively.

Payments for the third quarter and first nine months of 2021 primarily related to asbestos claims, mainly settlement agreements reached with

several insureds on large claims where the scope of coverages has been agreed upon.

The claims associated with these settlement agreements are expected to be substantially paid out over the next several years as qualified claims are submitted by these insureds.

Reinsurance collections were $11 million and $24 million for the second quarter and first six months of 2021, respectively.

Second Quarter 2021 Form 10-Q 67

Reinsurance collections were $7 million and $31 million for the third quarter and first nine months of 2021, respectively.

Third Quarter 2021 Form 10-Q 69

Segment Results Protection Services

4 unchanged sentences

Summarized financial information

($ in millions) Three months ended June 30, Six months ended June 30,

($ in millions) Three months ended September 30, Nine months ended September 30,

2021 2020 2021 2020

3 unchanged sentences

Intersegment insurance premiums and service fees (1)

46 36 133 109

Net investment income 10 12 32 33

16 unchanged sentences

Allstate Identity Protection 3,197 2,490

Policies in force as of June 30 (in thousands) 147,046 127,276

(1) Primarily related to Arity and Allstate Roadside Services and are eliminated in our condensed consolidated financial statements.

Adjusted net income increased 47.4% or $18 million in the second quarter of 2021 and increased 40.0% or $30 million in the first six months of 2021 compared to the same periods of 2020, primarily due to growth at Allstate Protection Plans and Allstate Identity Protection.

Adjusted net income in the first six months of 2021 was also impacted by restructuring charges at Allstate Identity Protection in the first quarter of 2021.

Premiums written increased 48.2% or $225 million in the second quarter of 2021 and increased 50.7% or $429 million in the first six months of 2021 compared to the same periods of 2020, primarily due to growth at Allstate Protection Plans, increased auto industry sales at Allstate Dealer Services and lower volumes in the second quarter of 2020 at Allstate Dealer Services and Allstate Roadside from the impacts of the pandemic.

PIF increased 15.5% or 20 million to 147 million as of June 30, 2021 compared to June 30, 2020 due to continued growth at Allstate Protection Plans and Allstate Identity Protection.

Other revenue increased 72.5% or $37 million in the second quarter of 2021 and increased 72.8% or $75 million in the first six months of 2021 compared to the same periods of 2020, reflecting the addition of LeadCloud and Transparent.ly, which were acquired as part of the National General acquisition.

Intersegment premiums and service fees increased 31.4% or $11 million in the second quarter of 2021 and increased 19.2% or $14 million in the first six months of 2021 compared to the same periods of 2020, primarily related to increased device sales through Arity driven by growth in the Allstate Brand Milewise® product and growth in automotive rescue services provided by Allstate Roadside for Allstate Brand auto customers.

Policies in force as of September 30 (in thousands) 149,519 132,954

(1) Primarily related to Arity and Allstate Roadside and are eliminated in our condensed consolidated financial statements.

Adjusted net income increased 12.5% or $5 million in the third quarter of 2021 and increased 30.4% or $35 million in the first nine months of 2021 compared to the same periods of 2020, primarily due to growth, partially offset by higher operating costs and expenses related to investments in growth.

Premiums written increased 34.2% or $166 million in the third quarter of 2021 and increased 44.7% or $595 million in the first nine months of 2021 compared to the same periods of 2020, primarily due to growth at Allstate Protection Plans and increased sales at Allstate Dealer Services.

PIF increased 12.5% or 17 million to 150 million as of September 30, 2021 compared to September 30, 2020 due to continued growth at Allstate Protection Plans and Allstate Identity Protection.

Other revenue increased 63.5% or $33 million in the third quarter of 2021 and increased 69.7% or $108 million in the first nine months of 2021 compared to the same periods of 2020, reflecting the addition of LeadCloud and Transparent.ly, which were acquired as part of the National General acquisition.

Intersegment premiums and service fees increased 27.8% or $10 million in the third quarter of 2021 and increased 22.0% or $24 million in the first nine months of 2021 compared to the same periods of 2020, primarily related to increased device sales through Arity driven by growth in the Allstate brand Milewise® product and growth in automotive rescue services provided by Allstate Roadside for Allstate brand auto customers.

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Protection Services Segment Results

Claims and claims expense increased 28.2% or $24 million in the second quarter 2021 and increased 19.8% or $35 million in the first six months of 2021 compared to the same periods of 2020, primarily due to higher levels of claims at Allstate Protection Plans driven by growth of the business and increased claims at Allstate Roadside due to higher severity and rescue volumes.

Amortization of DAC increased 21.3% or $34 million in the second quarter of 2021 and increased 19.8% or $62 million in the first six months of 2021 compared to the same periods of 2020, primarily due to the growth experienced at Allstate Protection Plans and Allstate Dealer Services.

Operating costs and expenses increased 24.5% or $40 million in the second quarter of 2021 and increased 23.8% or $77 million in the first six months of 2021 compared to the same periods of 2020, primarily due to higher operating costs at Arity due to the addition of LeadCloud and Transparent.ly and growth experienced at Allstate Protection Plans.

Restructuring and related charges increased $1 million in the second quarter of 2021 and increased $10 million in the first six months of 2021 compared to the same periods of 2020, primarily due to a facility closure at Allstate Identity Protection in the first quarter of 2021.

Second Quarter 2021 Form 10-Q 69

Claims and claims expense increased 14.0% or $15 million in the third quarter 2021 and increased 17.6% or $50 million in the first nine months of 2021 compared to the same periods of 2020, primarily due to higher levels of claims at Allstate Protection Plans driven by growth of the business and increased claims at Allstate Roadside due to higher severity and rescue volumes.

Amortization of DAC increased 21.9% or $37 million in the third quarter of 2021 and increased 20.5% or $99 million in the first nine months of 2021 compared to the same periods of 2020, primarily due to the growth experienced at Allstate Protection Plans and Allstate Dealer Services.

Operating costs and expenses increased 30.6% or $49 million in the third quarter of 2021 and increased 26.0% or $126 million in the first nine months of 2021 compared to the same periods of 2020, primarily due to higher operating costs at Arity driven by the addition of LeadCloud and Transparent.ly and growth experienced at Allstate Protection Plans.

Restructuring and related charges in the third quarter of 2021 were comparable to the third quarter of 2020 and increased $11 million in the first nine months of 2021 compared to the first nine months of 2020, primarily due to a facility closure at Allstate Identity Protection in the first quarter of 2021 and accelerated lease costs at Allstate Protection Plans.

Third Quarter 2021 Form 10-Q 71

Segment Results Allstate Health and Benefits

3 unchanged sentences

Summarized financial information

Three months ended June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

($ in millions) 2021 2020 2021 2020

15 unchanged sentences

Individual accident and health (4)

Policies in force as of June 30 (in thousands) 4,452 4,410

Policies in force as of September 30 (in thousands) 4,378 4,092

(1) Benefit ratio is calculated as accident and health insurance policy benefits divided by premiums and contract charges.

2 unchanged sentences

(4) Individual accident and health includes short-term medical and supplemental products sold directly to individuals.

Adjusted net income increased $57 million and $98 million in the second quarter and the first six months of 2021, respectively, compared to the same periods of 2020, primarily due to the acquisition of National General’s group health and individual accident and health business, which resulted in higher premiums and contract charges and the addition of other revenue, partially offset by higher policy benefits and operating costs and expenses.

Results for the second quarter of 2020 included an after-tax charge of $32

Adjusted net income in the third quarter of 2021 was comparable to the third quarter of 2020.

Adjusted net income increased $98 million in the first nine months of 2021 compared to the first nine months of 2020, primarily due to the acquisition of National General’s group health and individual accident and health business, which resulted in higher premiums and contract charges and the addition of other revenue, partially offset by higher policy benefits and operating costs and expenses.

Results for the first nine months of 2020 included an after-tax charge of $32

million related to the write-off of previously capitalized software.

Premiums and contract charges increased 70.0% or $184 million in the second quarter of 2021 and increased 65.5% or $357 million in the first six months of 2021 compared to the same periods of 2020, primarily due to the addition of group health and individual accident and health business.

Premiums and contract charges increased 60.3% or $173 million in the third quarter of 2021 and increased 63.7% or $530 million in the first nine months of 2021 compared to the same periods of 2020, primarily due to the addition of group health and individual accident and health business.

Premiums and contract charges by line of business

Three months ended June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

($ in millions) 2021 2020 2021 2020

3 unchanged sentences

Premiums and contract charges $ 460 $ 287 $ 1,362 $ 832

Other revenue of $83 million and $163 million in the second quarter and first six months of 2021, respectively, reflects National General’s commission revenue, group health administrative fees, agency fees and technology fees.

Accident and health insurance policy benefits increased 98.4% or $121 million in the second quarter of 2021 and increased 80.7% or $213 million in the first six months of 2021, respectively, compared to the same periods of 2020, primarily due to the addition of the group health and individual accident and health products.

Other revenue of $85 million and $248 million in the third quarter and first nine months of 2021, respectively, reflects National General’s commission revenue, group health administrative fees, agency fees and technology fees.

Accident and health insurance policy benefits increased $141 million in the third quarter of 2021 and increased 90.3% or $354 million in the first nine months of 2021 compared to the same periods of 2020, primarily due to the addition of the group health and individual accident and health products and increased benefit utilization compared to the prior year quarter.

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Allstate Health and Benefits Segment Results

Benefit ratio increased to 54.6 and 52.9 in the second quarter and the first six months of 2021 compared to 46.8 and 48.4 in the same periods of 2020, primarily due to a higher benefit ratio associated with group health products added in 2021 and a higher benefit ratio for employer voluntary benefit products due to lower claim experience in the prior year, primarily driven by the impacts of the pandemic on benefit utilization.

This was partially offset by a lower benefit ratio associated with individual accident and health products added in 2021.

Amortization of DAC decreased 8.6% or $3 million in the second quarter of 2021 and decreased 11.3% or $9 million in the first six months of 2021 compared to the same periods of 2020, primarily due to lower health product lapses for employer voluntary benefits.

Benefit ratio increased to 58.5 and 54.8 in the third quarter and the first nine months of 2021 compared to 44.6 and 47.1 in the same periods of 2020, primarily due to a higher benefit ratio associated with group health products added in 2021 and a higher benefit ratio for employer voluntary benefit products due to lower claim experience in the prior year, primarily driven by the impacts of the pandemic on benefit utilization.

Amortization of DAC decreased 49.2% or $29 million in the third quarter of 2021 and decreased 27.3% or $38 million in the first nine months of 2021 compared to the same periods of 2020, primarily due to unfavorable adjustments associated with our annual review of assumptions in 2020 compared to favorable adjustments in 2021, and lower health product lapses for employer voluntary benefits.

Our annual comprehensive review of assumptions underlying estimated future gross profits for our interest-sensitive life contracts resulted in a deceleration of DAC amortization (increase to income) of $2 million of the unamortized DAC asset balance in the third quarter of 2021 compared to $28 million acceleration of DAC amortization (decrease to income) in the third quarter of 2020.

In 2020, DAC amortization acceleration primarily related to lower projected investment returns, partially offset by favorable projected mortality.

Operating costs and expenses

Three months ended June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

($ in millions) 2021 2020 2021 2020

2 unchanged sentences

Total operating costs and expenses $ 206 $ 68 $ 582 $ 253

Operating costs and expenses increased $76 million in the second quarter of 2021 and increased $191 million in the first six months of 2021 compared to the same periods of 2020, primarily due to the addition of the group health and individual accident and health business in 2021, partially offset by a write-off of capitalized software costs associated with a billing system in the prior year.

Operating costs and expenses increased $138 million in the third quarter of 2021 and increased $329 million in the first nine months of 2021 compared to the same periods of 2020, primarily due to the addition of the group health and individual accident and health business in 2021.

Results for the first nine months of 2020 included a write-off of capitalized software costs associated with a billing system.

Analysis of reserves

Reserve for future policy benefits

($ in millions) June 30, 2021 December 31, 2020

($ in millions) September 30, 2021 December 31, 2020

Traditional life insurance $ 305 $ 299

1 unchanged sentence

Reserve for future policy benefits $ 1,263 $ 1,028

Second Quarter 2021 Form 10-Q 71

Third Quarter 2021 Form 10-Q 73

Portfolio composition and strategy by reporting segment (1)

June 30, 2021

September 30, 2021

($ in millions) Property-Liability Protection Services

19 unchanged sentences

(3) Equity securities are carried at fair value.

The fair value of equity securities held as of June 30, 2021, was $522 million in excess of cost.

These net gains were primarily concentrated in equity index funds and the banking and technology sectors.

Equity securities include $993 million of funds with underlying investments in fixed income securities as of June 30, 2021.

The fair value of equity securities held as of September 30, 2021, was $868 million in excess of cost.

These net gains were primarily concentrated in the consumer goods, technology and banking sectors.

Equity securities include $962 million of funds with underlying investments in fixed income securities as of September 30, 2021.

(4) Short-term investments are carried at fair value.

Investments totaled $62.57 billion as of June 30, 2021, increasing from $59.54 billion as of December 31, 2020, primarily due to positive operating cash flows, partially offset by common share repurchases and dividends paid to shareholders.

Investments totaled $61.84 billion as of September 30, 2021, increasing from $59.54 billion as of December 31, 2020, primarily due to positive operating cash flows, partially offset by common share repurchases and dividends paid to shareholders.

Portfolio composition by investment strategy We utilize two primary strategies to manage risks and returns and to position our portfolio to take advantage of market opportunities while attempting to mitigate adverse effects.

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It seeks to deliver predictable earnings aligned to business needs and take advantage of short-term opportunities primarily through public and private fixed income investments and public equity securities.

As long as market yields remain below the current portfolio yield, market-based portfolio yield is expected to decline resulting in lower net investment income for the market-based portfolio in future periods.

Performance-based strategy seeks to deliver attractive risk-adjusted returns and supplement market risk with idiosyncratic risk primarily through investments in private equity and real estate.

These investments include investee level expenses, reflecting asset level operating expenses on directly held real estate and other consolidated investments.

Low interest rate environment In July 2021, the Federal Open Market Committee (“FOMC”) maintained the target range for federal funds at 0 percent to 1/4 percent.

The FOMC noted progress on vaccinations will likely continue to reduce the effects of the public health crisis on the economy, but risks to the economic outlook remain.

The FOMC expects to maintain this

target range until labor market conditions have reached levels consistent with the Committee’s assessments of maximum employment and inflation has risen to 2 percent and is on track to moderately exceed 2 percent for some time.

Interest-bearing investments are comprised of fixed income securities, mortgage loans, short-term investments and other investments, including bank and agent loans.

Coronavirus impacts Ongoing uncertainty related to the future path of the pandemic created market volatility that impacted valuations, liquidity, prospects and risks of fixed income securities, equity securities and performance-based investments, primarily limited partnership interests, during 2020.

Fixed income securities in certain sectors such as energy, automotive, retail, travel, lodging and airlines were negatively impacted.

Fixed income and equity security values generally increased since the first quarter of 2020.

Future investment results will be influenced by the magnitude and duration of the global pandemic and the impact of actions taken by governmental authorities, businesses and consumers, including the availability, utilization rate and effectiveness of vaccines, to mitigate health risks, which creates significant uncertainty.

Coronavirus impacts Future investment results will be influenced by the magnitude and duration of the global pandemic and the impact of actions taken by governmental authorities, businesses and consumers, including the availability, utilization rate and effectiveness of vaccines, to mitigate health risks, which creates significant uncertainty.

Supply chain disruptions and labor shortages could increase inflation, which may have an adverse impact on investment valuations and returns.

74 www.allstate.com

Portfolio composition by investment strategy

June 30, 2021

September 30, 2021

($ in millions) Market-based Performance-based Total

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Fixed income securities $ 1,177 $ 1 $ 1,178

Limited partnership interests — (1) (1)

Other (3) — (3)

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Fair value as of

($ in millions) June 30, 2021 December 31, 2020

($ in millions) September 30, 2021 December 31, 2020

government and agencies $ 3,042 $ 2,107

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Fixed income securities are rated by third-party credit rating agencies and/or are internally rated.

As of June 30, 2021, 85.1% of the consolidated fixed income securities portfolio was rated investment grade, which is defined as a security having a rating of Aaa, Aa, A or Baa from Moody’s, a rating of AAA, AA, A or BBB from S&P, a comparable rating from another nationally recognized rating agency, or a comparable internal rating if an externally provided rating is not available.

As of September 30, 2021, 83.8% of the consolidated fixed income securities portfolio was rated investment grade, which is defined as a security having a rating of Aaa, Aa, A or Baa from Moody’s, a rating of AAA, AA, A or BBB from S&P, a comparable rating from another nationally recognized rating agency, or a comparable internal rating if an externally provided rating is not available.

Credit ratings below these designations are considered lower credit quality or below investment grade, which includes high yield bonds.

Market prices for certain securities may have credit spreads which imply higher or lower credit quality than the current third-party rating.

Our initial investment decisions and ongoing monitoring procedures for fixed income securities are

based on a due diligence process which includes, but is not limited to, an assessment of the credit quality, sector, structure, and liquidity risks of each issue.

Our initial investment decisions and ongoing monitoring procedures for fixed income

securities are based on a due diligence process which includes, but is not limited to, an assessment of the credit quality, sector, structure, and liquidity risks of each issue.

Fixed income portfolio monitoring is a comprehensive process to identify and evaluate each fixed income security that may require a credit loss allowance.

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For further detail on our fixed income portfolio monitoring process, see Note 5 of the condensed consolidated financial statements.

Second Quarter 2021 Form 10-Q 73

Third Quarter 2021 Form 10-Q 75

Fair value and unrealized net capital gains (losses) for fixed income securities by credit rating

June 30, 2021

September 30, 2021

A and above BBB BB

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For further detail on our mortgage loan portfolio, see Note 5 of the condensed consolidated financial statements.

Limited partnership interests include $5.86 billion of interests in private equity funds, $939 million of interests in real estate funds and $271 million of interests in other funds as of June 30, 2021.

We have commitments to invest additional amounts in limited partnership interests totaling $2.47 billion as of June 30, 2021.

Other investments include $822 million of direct investments in real estate as of June 30, 2021.

Limited partnership interests include $6.18 billion of interests in private equity funds, $962 million of interests in real estate funds and $441 million of interests in other funds as of September 30, 2021.

We have commitments to invest additional amounts in limited partnership interests totaling $2.50 billion as of September 30, 2021.

Other investments include $849 million of direct investments in real estate as of September 30, 2021.

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Unrealized net capital gains (losses)

June 30, December 31,

September 30, December 31,

($ in millions) 2021 2020

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Unrealized net capital gains and losses, pre-tax $ 1,175 $ 2,527

Second Quarter 2021 Form 10-Q 75

Third Quarter 2021 Form 10-Q 77

Gross unrealized gains (losses) on fixed income securities by type and sector

June 30, 2021

September 30, 2021

($ in millions) Amortized

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Technology 2,858 114 (10) 2,962

Transportation 1,028 58 (6) 1,080

Financial services 1,871 59 (7) 1,923

Energy 1,697 95 (4) 1,788

Capital goods 2,588 102 (7) 2,683

Transportation 969 48 (6) 1,011

Midstream 1,091 48 (2) 1,137

Integrated 172 12 (1) 183

Independent/upstream 244 20 — 264

Other 158 7 (1) 164

Total energy 1,665 87 (4) 1,748

Basic industry 1,281 71 (2) 1,350

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Total fixed income securities $ 38,811 $ 1,330 $ (152) $ 39,989

Gross unrealized gains (losses) on fixed income securities by type and sector

December 31, 2020

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Technology 2,443 191 (1) 2,633

Transportation 1,055 84 (11) 1,128

Financial services 1,785 116 (2) 1,899

Energy 1,690 129 (4) 1,815

Capital goods 2,906 205 — 3,111

Transportation 1,055 84 (11) 1,128

Midstream 1,095 72 (1) 1,166

Integrated 270 27 — 297

Independent/upstream 186 21 (1) 206

Other 139 9 (2) 146

Total energy 1,690 129 (4) 1,815

Basic industry 1,512 136 — 1,648

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Equity securities by sector

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

($ in millions) Cost Over (under) cost Fair

Cost Over (under) cost Fair

Capital Goods $ 116 $ (10) $ 106 $ 92 $ (4) $ 88

Utilities $ 52 $ 15 $ 67 $ 37 $ 3 $ 40

Basic Industry 31 10 41 29 10 39

Transportation 34 15 49 24 7 31

Energy 67 16 83 84 (1) 83

Basic Industry 44 21 65 29 10 39

Midstream 40 7 47 65 (2) 63

Integrated 19 8 27 10 — 10

Independent/upstream 14 6 20 7 — 7

Other 6 3 9 2 1 3

Total energy 79 24 103 84 (1) 83

Capital Goods 162 32 194 92 (4) 88

1,270 646 1,916 823 211 1,034

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Equities 373 78 451 847 147 994

Other 7 — 7 — — —

Total funds 1,298 115 1,413 1,651 202 1,853

Total equity securities $ 2,939 $ 868 $ 3,807 $ 2,740 $ 428 $ 3,168

(1) Other is comprised of communications, financial services, consumer goods, REITs, technology and banking sectors.

(1) Other is comprised of communications, REITs, financial services, banking, technology and consumer goods sectors.

Net investment income

Three months ended June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

($ in millions) 2021 2020 2021 2020

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Investment income, before expense $ 801 $ 494 $ 2,561 $ 1,027

Net investment income increased $754 million and $1.22 billion in the second quarter and first six months of 2021, respectively, compared to the same periods of 2020, primarily due to increases in performance-based income results, mainly from limited partnerships.

Second Quarter 2021 Form 10-Q 77

Net investment income increased $300 million and $1.52 billion in the third quarter and first nine months of 2021, respectively, compared to the same periods of 2020, primarily due to increases in performance-based income results, mainly from limited partnerships.

Third Quarter 2021 Form 10-Q 79

Performance-based investment income

Three months ended June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

($ in millions) 2021 2020 2021 2020

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(1) Investee level expenses include depreciation and asset level operating expenses reported in investment expense.

Performance-based investment income increased $759 million and $1.22 billion in the second quarter and the first six months of 2021, respectively, compared to the same periods of 2020, primarily due to increased valuations, gains on sales of underlying investments and lower 2020 results from declines in the equity market and lower valuations related to the Coronavirus.

Performance-based investment income in the first six months of 2021 includes income generated by certain investments which were classified as assets held for sale in 2020.

Performance-based investment income increased $308 million and $1.53 billion in the third quarter and the first nine months of 2021, respectively, compared to the same periods of 2020, primarily due to increased valuations and a decline in the equity market and lower valuations in 2020.

Performance-based investment income in the first nine months of 2021 includes income generated by certain investments which were classified as assets held for sale in 2020.

Performance-based investment results and income can vary significantly between periods and are influenced by economic conditions, equity market performance, comparable public company earnings multiples, capitalization rates, operating performance of the underlying investments and the timing of asset sales.

Components of realized capital gains (losses) and the related tax effect

Three months ended June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

($ in millions) 2021 2020 2021 2020

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(1) Relates to limited partnerships where the underlying assets are predominately public equity securities.

Realized capital gains in the second quarter and first six months of 2021 related primarily to increased valuation of equity investments, gains on sales of fixed income securities in connection with ongoing portfolio management and gains on sales of real estate investments.

Realized capital gains in the third quarter of 2021 related primarily to gains on sales of fixed income securities and increased valuation and settlements of derivative instruments.

Realized capital gains in the first nine months of 2021 related primarily to gains on sales of fixed income securities and real estate investments, increased valuation of equity investments and increased valuation and settlements of derivative instruments.

Sales in the third quarter and first nine months of 2021 related primarily to sales of fixed income securities in connection with ongoing portfolio management.

Sales in the first nine months of 2021 also included sales of real estate investments.

Valuation and settlements of derivative instruments in the third quarter and first nine months of 2021 primarily comprised of gains on foreign currency contracts due to the strengthening of the U.S.

dollar and gains on interest rate futures used to increase asset duration.

80 www.allstate.com

Realized capital gains (losses) for performance-based investments

Three months ended June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

($ in millions) 2021 2020 2021 2020

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Total performance-based $ 31 $ (14) $ 159 $ 7

Realized capital gains for performance-based investments in the second quarter and first six months of 2021 primarily related to gains on sales of real estate investments and increased valuation of equity investments.

Second Quarter 2021 Form 10-Q 79

Realized capital gains for performance-based investments in the third quarter of 2021 primarily related to increased valuation of equity investments and increased valuation and settlements of derivative instruments.

Realized capital gains for performance-based investments in the first nine months of 2021 primarily related to gains on sales of real estate investments and increased valuation of equity investments.

Third Quarter 2021 Form 10-Q 81

Capital Resources and Liquidity

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Capital resources

($ in millions) June 30, 2021 December 31, 2020

($ in millions) September 30, 2021 December 31, 2020

Preferred stock, common stock, treasury stock, retained income and other shareholders’ equity items $ 24,811 $ 26,913

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Ratio of debt to capital resources 23.0 20.6

Allstate shareholders’ equity decreased in the first six months of 2021, primarily due to common share repurchases, decreased unrealized capital gains on investments and dividends paid to shareholders, partially offset by net income.

In the six months ended June 30, 2021, we paid dividends of $409 million and $57 million related to our common and preferred shares, respectively.

Allstate shareholders’ equity decreased in the first nine months of 2021, primarily due to common share repurchases, decreased unrealized capital gains on investments and dividends paid to shareholders, partially offset by net income.

In the nine months ended September 30, 2021, we paid dividends of $650 million and $87 million related to our common and preferred shares, respectively.

Debt maturities $250 million of floating rate senior notes matured on March 29, 2021.

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(1) Reflects National General 6.750% Senior Notes.

Common share repurchases As of June 30, 2021, there was $397 million remaining on the $3.00 billion common share repurchase program which is expected to be completed by the end of August 2021.

On August 4, 2021, the Board authorized a new $5.00 billion common share repurchase program that is expected to be completed by March 31, 2023.

During the first six months of 2021, we repurchased 9.6 million common shares, or 3.2% of total common shares outstanding at December 31, 2020, for $1.16 billion.

Common shareholder dividends On January 4, 2021 and April 1, 2021 we paid a common shareholder dividend of $0.54 and $0.81, respectively.

On May 25, 2021 and July 15, 2021, we declared a common shareholder dividend of $0.81 payable on July 1, 2021 and October 1, 2021, respectively.

Common share repurchases In August 2021, the Board authorized a new $5.00 billion common share repurchase program that is expected to be completed by March 31, 2023.

We also completed the $3.00 billion common share repurchase program that commenced in February 2020.

In August 2021, we entered into an accelerated share repurchase program (“ASR agreement”) with JPMorgan Chase Bank, National Association to purchase $750 million of our outstanding common stock.

Under the ASR agreement, we paid $750 million upfront and initially acquired 4.7 million shares.

The ASR agreement concluded on September 17, 2021, and we repurchased a total of 5.6 million shares at an average price of $133.39.

As of September 30, 2021, there was $4.17 billion remaining in the $5.00 billion program.

During the first nine months of 2021, we repurchased 18.8 million common shares, or 6.2% of total common shares outstanding at December 31, 2020, for $2.39 billion.

Common shareholder dividends On January 4, 2021, April 1, 2021 and July 1, 2021, we paid a common shareholder dividend of $0.54, $0.81 and $0.81, respectively.

On July 15, 2021, we declared a common shareholder dividend of $0.81 payable on October 1, 2021.

Redemption of preferred stock On July 15, 2021, we redeemed all outstanding Depositary shares, representing 1/40th of a share of National General’s 7.50% Noncumulative Preferred Stock, Series C, and the underlying shares of 7.50% Noncumulative Preferred Stock, Series C, par value $0.01 per share for a total redemption payment of $200 million.

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Additionally, we have existing intercompany agreements in place that facilitate liquidity management across the Company to enhance flexibility.

The Corporation is party to an Amended and Restated Intercompany Liquidity Agreement (“Liquidity Agreement”) with certain subsidiaries, which include but are not limited to Allstate Life Insurance Company (“ALIC”) and AIC.

The Corporation is party to an Amended and Restated Intercompany Liquidity Agreement (“Liquidity Agreement”) with certain subsidiaries, which include but are not limited to AIC.

The Liquidity Agreement allows for short-term advances of funds to be made between parties for liquidity and other general corporate purposes.

The Liquidity Agreement does not establish a commitment to advance funds on the part of any party.

ALIC and AIC each serve as a lender and borrower, certain other subsidiaries serve only as borrowers, and the Corporation serves only as a lender.

AIC also has a capital support agreement with ALIC.

Under the capital support agreement, AIC is committed to providing capital to ALIC to maintain an adequate capital level.

AIC serves as a lender and borrower, certain other subsidiaries serve only as borrowers, and the Corporation serves only as a lender.

The maximum amount of potential funding under each of these agreements is $1.00 billion.

In addition to the Liquidity Agreement, the Corporation also has an intercompany loan agreement with certain of its subsidiaries, which include, but are not limited to, AIC and ALIC.

In addition to the Liquidity Agreement, the Corporation also has an intercompany loan agreement with certain of its subsidiaries, which includes, but is not limited to AIC.

The amount of intercompany loans available to the Corporation’s subsidiaries is at the discretion of the Corporation.

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The Corporation may use commercial paper borrowings, bank lines of credit and securities lending to fund intercompany borrowings.

Second Quarter 2021 Form 10-Q 81

Third Quarter 2021 Form 10-Q 83

Capital Resources and Liquidity

Parent company capital capacity Parent holding company deployable assets totaled $4.30 billion as of June 30, 2021, primarily comprised of cash and investments that are generally saleable within one quarter.

Parent company capital capacity Parent holding company deployable assets totaled $3.41 billion as of September 30, 2021, primarily comprised of cash and investments that are generally saleable within one quarter.

The substantial earnings capacity of the operating subsidiaries is the primary source of capital generation for the Corporation.

As of June 30, 2021, we held $7.60 billion of cash, U.S.

As of September 30, 2021, we held $6.70 billion of cash, U.S.

government and agencies fixed income securities, and public equity securities which we would expect to be able to liquidate within one week.

Intercompany dividends were paid in the first six months of 2021 between the following companies:

AIC, Allstate Insurance Holdings, LLC (“AIH”), the Corporation and ALIC.

Intercompany dividends were paid in the first nine months of 2021 between the following companies:

AIC, Allstate Insurance Holdings, LLC (“AIH”), the Corporation, ALIC and Allstate Financial Insurance Holdings Corporation (“AFIHC”).

Intercompany dividends

($ in millions) June 30, 2021

($ in millions)

AIC to AIH $ 4,643

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ALIC to AIC 392

AHL to AFIHC 50

AFIHC to the Corporation 50

Based on the greater of 2020 statutory net income or 10% of statutory surplus, the maximum amount of dividends that AIC will be able to pay, without prior Illinois Department of Insurance approval, at a given point in time in 2021 is estimated at $5.95 billion, less dividends paid during the preceding twelve months measured at that point in time.

As of June 30, 2021, we paid dividends of $4.39 billion.

As of September 30, 2021, we paid dividends of $4.64 billion.

Dividends may not be paid or declared on our common stock and shares of common stock may not be repurchased unless the full dividends for the latest completed dividend period on our preferred stock have been declared and paid or provided for.

We are prohibited from declaring or paying dividends on our Series G preferred stock if we fail to meet specified capital adequacy, net income or shareholders’ equity levels, except out of the net proceeds of common stock issued during the 90 days prior to the date of declaration.

As of June 30, 2021, we satisfied all the requirements with no current restrictions on the payment of preferred stock dividends.

As of September 30, 2021, we satisfied all the requirements with no current restrictions on the payment of preferred stock dividends.

The terms of our outstanding subordinated debentures also prohibit us from declaring or paying any dividends or distributions on our common or preferred stock or redeeming, purchasing, acquiring, or making liquidation payments on our common stock or preferred stock if we have elected to defer interest payments on the subordinated debentures, subject to certain limited exceptions.

In the first six months of 2021, we did not defer interest payments on the subordinated debentures.

In the first nine months of 2021, we did not defer interest payments on the subordinated debentures.

Additional resources to support liquidity are as follows:

• The Corporation, AIC and ALIC have access to a $750 million unsecured revolving credit facility that is available for short-term liquidity requirements.

• The Corporation and AIC have access to a $750 million unsecured revolving credit facility that is available for short-term liquidity requirements.

The maturity date of this facility is November 2025.

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This facility has a financial covenant requiring that we not exceed a 37.5% debt to capitalization ratio as defined in the agreement.

This ratio was 18.4% as of June 30, 2021.

This ratio was 18.9% as of September 30, 2021.

Although the right to borrow under the facility is not subject to a minimum rating requirement, the costs of maintaining the facility and borrowing under it are based on the ratings of our senior unsecured, unguaranteed long-term debt.

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• The Corporation has access to a commercial paper facility with a borrowing limit equal to our undrawn credit facility balance of $750 million to cover short-term cash needs.

• As of June 30, 2021, there were no balances outstanding for the credit facility or the commercial paper facility and therefore the remaining borrowing capacity was $750 million.

• As of September 30, 2021, there were no balances outstanding for the credit facility or the commercial paper facility and therefore the remaining borrowing capacity was $750 million.

• The Corporation has access to a universal shelf registration statement with the Securities and Exchange Commission that expires in 2024.

We can use this shelf registration to issue an unspecified amount of debt securities, common stock (including 603 million shares of treasury stock as of June 30, 2021), preferred stock, depositary shares, warrants, stock purchase contracts, stock purchase units and securities of trust subsidiaries.

We can use this shelf registration to issue an unspecified amount of debt securities, common stock (including 612 million shares of treasury stock as of September 30, 2021), preferred stock, depositary shares, warrants, stock purchase contracts, stock purchase units and securities of trust subsidiaries.

The specific terms of any securities we issue under this registration statement will be provided in the applicable prospectus supplements.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis