What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-05-04 compared with 2021-11-03 · 392 added, 516 removed, 667 unchanged (58% of the section changed)

4 unchanged sentences

of The Allstate Corporation annual report on Form 10-K for 2021, filed February 18, 2022.

Further analysis of our insurance segments is provided in the Property-Liability Operations and Segment Results sections, including Allstate Protection and Run-off Property-Liability (previously Discontinued Lines and Coverages), Protection Services and Allstate Health and Benefits (previously Allstate Benefits), of Management’s Discussion and Analysis (“MD&A”).

Further analysis of our insurance segments is provided in the Property-Liability Operations and Segment Results sections, including Allstate Protection and Run-off Property-Liability, Protection Services and Allstate Health and Benefits, of Management’s Discussion and Analysis (“MD&A”).

The segments are consistent with the way in which the chief operating decision maker reviews financial performance and makes decisions about the allocation of resources.

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The Coronavirus resulted in governments worldwide enacting emergency measures to combat the spread of the virus, including travel restrictions, government-imposed shelter-in-place orders, quarantine periods, social distancing, and restrictions on large gatherings.

These measures have moderated in 2021 as vaccines have become more widely available in the United States and Canada.

These measures have generally moderated, with periodic changes in response to local conditions.

There is no way of predicting with certainty how long the pandemic might last.

1 unchanged sentence

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:

Certain growth and profitability comparisons to the prior year were impacted, in part, by the effects the Coronavirus had on our prior year results.

Beginning in March 2020, when shelter-in-place orders and other restrictions were initiated, and throughout 2021, we experienced lower accident claim frequency and different claim patterns than historically experienced.

Claim frequency has increased through the first quarter of 2022 and during 2021, but remains below pre-pandemic levels.

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

The impact from the pandemic should be considered when comparing the current period to the prior period, including:

• Sales of new and retention of existing policies

• Rate increases and average gross premiums

• Premium for transportation network products

• Driving behavior and auto accident frequency

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

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

• Hospital and outpatient claim costs

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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 2022 results.

Corporate Strategy

1 unchanged sentence

increase personal property-liability market share and expand protection offerings by leveraging the Allstate brand, customer base and other core capabilities.

Transformative Growth is about creating business models, capabilities and culture to build growth businesses that deliver affordable, simple and connected protection solutions for consumers.

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

• Improving customer value

Transformative Growth is about creating a business model, capabilities and culture that continually transform to better serve customers.

This is done by providing affordable, simple and connected protection through multiple distribution partners.

The ultimate objective is to create continuous transformative growth in all businesses.

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

• Expanding customer access

• Increasing customer acquisition sophistication and investment

• Building new technology applications

• Improving customer value

• Increasing customer acquisition sophistication

• Modernizing the technology ecosystem

• Enhancing organizational capabilities

The protection businesses are being expanded by leveraging enterprise capabilities and resources such as distribution, brand, analytics, claims, investment expertise, talent and capital.

Enhancing strategic position in the independent agent channel On January 4, 2021, we completed the acquisition of National General Holdings Corp.

Acquisitions and Dispositions

Acquisitions On January 4, 2021, we completed the acquisition of National General Holdings Corp.

(“National General”), significantly enhancing our strategic position in the independent agency channel.

The transaction increased our market share in personal property-liability by over one percentage point and enhanced our independent agent-facing technology.

It will significantly expand our distribution footprint, leading us to be a top five personal lines carrier in the independent agency distribution channel.

As part of the acquisition, Allstate Independent Agency and Encompass organizations will be integrated into National General by:

• Migrating Encompass policyholders and business operations to National General and retiring Encompass’s technology

• Transitioning Allstate Independent Agent new business to National General as mid-market products roll out

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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.

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.

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 Safe Auto Insurance Group, Inc., a non-standard auto insurance carrier.

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

Discontinued operations and held for sale On October 1, 2021, we closed the sale of Allstate Life Insurance Company of New York (“ALNY”) to Wilton Reassurance Company for $400 million.

On November 1, 2021, we closed the sale of Allstate Life Insurance Company (“ALIC”) and certain affiliates to entities managed by Blackstone for total proceeds of $4 billion, including a pre-close dividend of $1.25 billion paid by ALIC.

In 2021 and prior periods, the assets and liabilities of the business were reclassified as held for sale and results were presented as discontinued operations.

First Quarter 2022 Form 10-Q 43

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

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The measure of segment profit or loss used in evaluating performance is underwriting income for the Allstate Protection and Run-off Property-Liability segments and adjusted net income for the Protection Services, Allstate Health and Benefits and Corporate and Other segments.

Underwriting income is calculated as premiums earned and other revenue, less claims and claims expense (“losses”), Shelter-in-Place Payback expense, amortization of deferred policy acquisition costs (“DAC”), operating costs and expenses, amortization or impairment of purchased intangibles and restructuring and related charges, as determined using accounting principles generally accepted in the United States of America (“GAAP”).

Underwriting income is calculated as premiums earned and other revenue, less claims and claims expense (“losses”), amortization of deferred policy acquisition costs (“DAC”), operating costs and expenses, amortization or impairment of purchased intangibles and restructuring and related charges, as determined using accounting principles generally accepted in the United States of America (“GAAP”).

We use this measure in our evaluation of results of operations to analyze profitability.

Adjusted net income is net income (loss) applicable to common shareholders, excluding:

• Realized capital gains and losses except for periodic settlements and accruals on non-hedge derivative instruments, which are reported with realized capital gains and losses but included in adjusted net income

• Net gains and losses on investments and derivatives

• Pension and other postretirement remeasurement gains and losses

1 unchanged sentence

• Income or loss from discontinued operations

• Gain or loss on disposition of operations

• Adjustments for other significant non-recurring, infrequent or unusual items, when (a) the nature of the charge or gain is such that it is reasonably unlikely to recur within two years, or (b) there has been no similar charge or gain within the prior two years

• Income tax expense or benefit on reconciling items

Third Quarter 2021 Form 10-Q 53

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Consolidated net income

($ in millions)

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.

Consolidated net income applicable to common shareholders was $630 million in the first quarter of 2022 compared to a loss of $1.41 billion in the same period of 2021 primarily due to a loss from discontinued operations in 2021, partially offset by lower Allstate Protection underwriting income and equity valuation decreases.

For the twelve months ended March 31, 2022, return on Allstate common shareholders’ equity was 15.4%, an increase of 0.3 points from 15.1% for the twelve months ended March 31, 2021.

Total revenue

( ($ in millions)

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.

Total revenue decreased 0.9% to $12.34 billion in the first quarter of 2022 compared to the same period of 2021, driven by net losses on investments and derivatives in 2022 compared to net gains in 2021, decreases in net investment income, offset by a 6.5% increase in property and casualty insurance premiums earned.

Insurance premiums earned increased in Property-Liability and Protection Services.

Net investment income

($ in millions)

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.

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Net investment income decreased $114 million to $594 million in the first quarter of 2022 compared to the same period of 2021, primarily due to lower performance-based investment results, mainly from limited partnerships, and lower market-based fixed income portfolio yields.

Financial highlights

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.

Investments totaled $61.77 billion as of March 31, 2022, decreasing from $64.70 billion as of December 31, 2021.

Allstate shareholders’ equity As of March 31, 2022, Allstate shareholders’ equity was $23.21 billion.

Book value per common share (ratio of Allstate common shareholders’ equity to total common shares outstanding and dilutive potential common shares outstanding) was $75.95, a decrease of 6.3% from $81.08 as of March 31, 2021, and a decrease of 6.8% from $81.52 as of December 31, 2021.

Return on average Allstate common shareholders’ equity For the twelve months ended March 31, 2022, return on Allstate common shareholders’ equity was 15.4%, an increase of 0.3 points from 15.1% for the twelve months ended March 31, 2021.

The increase was primarily due to a decrease in average Allstate common shareholders’ equity.

Pension and other postretirement remeasurement gains and losses We recorded pension and other postretirement remeasurement gains of $247 million in the first quarter of 2022 primarily related to an increase in the liability discount rate and changes in other assumptions, partially offset by unfavorable asset performance compared to the expected return on plan assets.

First Quarter 2022 Form 10-Q 45

Summarized consolidated financial results

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

Three months ended March 31,

($ in millions) 2022 2021

3 unchanged sentences

Net investment income 594 708

Realized capital gains (losses) 105 319 818 597

Net gains (losses) on investments and derivatives (267) 426

Total revenues 12,337 12,451

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Property and casualty insurance claims and claims expense (7,822) (6,043)

Shelter-in-Place Payback expense — — (29) (948)

Accident and health insurance policy benefits (269) (128) (746) (392)

Interest credited to contractholder funds (8) (8) (25) (26)

Accident, health and other policy benefits (269) (242)

Amortization of deferred policy acquisition costs (1,612) (1,523)

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Income (loss) from discontinued operations, net of tax — (3,793)

Net income 531 1,153 775 2,952

Net income (loss) 646 (1,387)

Net loss attributable to noncontrolling interest (10) (6)

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

Net income (loss) attributable to Allstate 656 (1,381)

Preferred stock dividends (26) (27)

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

Third Quarter 2021 Form 10-Q 55

Net income (loss) applicable to common shareholders $ 630 $ (1,408)

Segment highlights

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.

Allstate Protection underwriting income was $282 million in the first quarter of 2022, compared to underwriting income of $1.66 billion in the first quarter of 2021 primarily due to higher auto non-catastrophe losses, partially offset by increased premiums.

Catastrophe losses were $462 million in the first quarter of 2022 compared to $590 million in the first quarter of 2021.

Premiums written increased 10.2% to $10.76 billion in the first quarter of 2022 compared to the same period of 2021, reflecting higher premiums in both Allstate and National General brands.

Protection Services adjusted net income was $53 million in the first quarter of 2022 compared to $49 million in the first quarter of 2021.

The increase was primarily due to restructuring charges in 2021 and higher revenue in Allstate Identity Protection, partially offset by higher operating costs at Allstate Protection Plans and Arity and higher severity and rescue volumes in Allstate Roadside.

Premiums and other revenue increased 15.2% or $76 million in the first quarter of 2022 compared to the same period of 2021, primarily due to Allstate Protection Plan’s growth through its U.S.

retail and international channels.

Allstate Health and Benefits adjusted net income was $53 million in the first quarter of 2022 compared to $65 million in the first quarter of 2021, primarily due to increases in individual and group health claims and favorable reserve reestimates in the prior year for group health, partially offset by lower employer voluntary benefits claim utilization.

Premiums and contract charges increased 3.1% to $469 million in the first quarter of 2022 compared to the same period of 2021, primarily due to growth in group health.

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These segments are consistent with the groupings of financial information that management uses to evaluate performance and to determine the allocation of resources.

We do not allocate Property-Liability investment income, realized capital gains and losses, or assets to the Allstate Protection and Run-off Property-Liability segments.

We do not allocate Property-Liability investment income, net gains and losses on investments and derivatives, or assets to the Allstate Protection and Run-off Property-Liability segments.

Management reviews assets at the Property-Liability level for decision-making purposes.

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

Loss ratios include the impact of catastrophe losses.

Loss ratios include the impact of catastrophe losses and prior year reserve reestimates.

• Expense ratio:

the ratio of amortization of DAC, operating costs and expenses, amortization or impairment of purchased intangibles, restructuring and related charges and Shelter-in-Place Payback expense, less other revenue to premiums earned.

the ratio of amortization of DAC, operating costs and expenses, amortization or impairment of purchased intangibles and restructuring and related charges and Shelter-in-Place Payback expense, less other revenue to premiums earned.

• Combined ratio:

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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 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

• Effect of amortization of purchased intangibles on combined ratio

• Effect of restructuring and related charges on combined ratio

• 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

• 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 the Run-off Property-Liability segment

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

1 unchanged sentence

A multi-car customer would generate multiple item (policy) counts, even if all cars were insured under one policy.

Commercial lines PIF counts for shared economy agreements typically reflect contracts that cover multiple rather than individual drivers.

Commercial lines PIF counts for shared economy agreements typically

reflect contracts that cover multiple rather than individual drivers.

• New issued applications :

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Renewal policy item counts issued during the period, based on contract effective dates, divided by the total policy item counts issued generally 6 months prior for auto or 12 months prior for homeowners.

• Implemented rate changes:

Represents the impact in the locations (U.S.

states, the District of Columbia or Canadian provinces) where rate changes were implemented during the period as a percentage of total brand prior year-end premiums written.

Frequency and severity statistics , which are influenced by driving patterns, inflation and other factors, are provided to describe the trends in loss costs.

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Gross claim frequency includes all actual notice counts, regardless of their current status (open or closed) or their ultimate disposition (closed with a payment or closed without payment).

• Report year incurred claim severity is calculated by dividing the sum of recorded estimated incurred losses and allocated loss adjustment expenses, excluding catastrophes, by the reported notice counts during that report year.

Report year incurred claim severity does not include incurred but not reported (“IBNR”) losses or benefits from subrogation and salvage.

• Paid claim severity is calculated by dividing the sum of paid losses and loss expenses by claims closed with a payment during the period.

• 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.

Third Quarter 2021 Form 10-Q 57

• Percent change in frequency or paid claim 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

First Quarter 2022 Form 10-Q 47

Property-Liability Operations

same period in the prior year, divided by the prior year gross claim frequency or paid claim severity.

• Percent change in report year incurred claim severity statistic is calculated as the amount of

increase or decrease in report year incurred claim severity recorded in the year-to-date period divided by the current estimate of the prior report year incurred claim severity.

Underwriting results

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

Three months ended March 31,

($ in millions, except ratios) 2022 2021

3 unchanged sentences

Claims and claims expense (7,702) (5,945)

Shelter-in-Place Payback expense — — (29) (948)

Amortization of DAC (1,348) (1,303)

1 unchanged sentence

Restructuring and related charges (1)

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

Amortization of purchased intangibles (58) (19)

Underwriting (loss) income $ 280 $ 1,657

2 unchanged sentences

Catastrophe reserve reestimates (2)

(1) (507) (207) (502)

Total catastrophe losses $ 462 $ 590

Non-catastrophe reserve reestimates (2)

162 70 144 63

Prior year reserve reestimates (2)

161 (437) (63) (439)

GAAP operating ratios

1 unchanged sentence

Expense ratio (3)

25.1 24.9 24.3 27.5

Combined ratio 97.3 83.3

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Effect of catastrophe losses included in prior year reserve reestimates on combined ratio (0.1) (2.5)

Effect of amortization of purchased intangibles on combined ratio 0.8 — 0.5 —

Effect of restructuring and related charges on combined ratio (1)

0.1 2.1 0.4 0.7

Effect of Shelter-in-Place Payback expense on combined and expense ratios — — 0.1 3.6

Effect of amortization of purchased intangibles on combined ratio 0.5 0.1

Effect of Run-off Property-Liability business on combined ratio — 0.1

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

(1) Restructuring and related charges for the first quarter of 2022 primarily related to future work environment.

See Note 11 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.

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

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Allstate Protection Segment

Allstate Protection consists of the Allstate brand, National General and Answer Financial.

The Encompass brand was combined into National General beginning in the first quarter of 2021 and results prior to 2021 reflect Encompass brand results only.

Underwriting results

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

Three months ended March 31,

($ in millions) 2022 2021

3 unchanged sentences

Claims and claims expense (7,701) (5,944)

Shelter-in-Place Payback expense — — (29) (948)

Amortization of DAC (1,348) (1,303)

1 unchanged sentence

Restructuring and related charges (12) (32)

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

Amortization of purchased intangibles (58) (19)

Underwriting income $ 282 $ 1,660

Catastrophe losses $ 462 $ 590

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)

Third Quarter 2021 Form 10-Q 59

Segment Results Allstate Protection

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

Underwriting income was $282 million in the first quarter of 2022 compared to underwriting income of $1.66 billion in the first quarter of 2021 primarily due to higher auto non-catastrophe losses, partially offset by increased premiums.

Change in underwriting results from the prior period

($ in millions)

2 unchanged sentences

($ in millions) 2022 2021 2022 2021 2022 2021

Three months ended September 30,

Three months ended March 31,

$ (137) $ 1,203 $ (10) $ 124 $ (147) $ 1,327

4 unchanged sentences

Commercial lines

Other business lines (3)

(19) (2) (3) — (22) (2)

Answer Financial — — — — 2 2

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

Nine months ended September 30,

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

Homeowners (2)

61 356 (77) 19 (16) 375

Other personal lines 112 170 — 5 112 175

Commercial lines (81) (20) — — (81) (20)

Other business lines (3)

2 unchanged sentences

Total $ 251 $ 1,515 $ 29 $ 138 $ 282 $ 1,660

(1) 2021 results include National General commercial lines insurance products.

(2) 2021 results include National General packaged policies, which include auto and other personal lines insurance products.

(1) 2021 results include certain National General commercial lines insurance products.

(2) 2021 results include National General packaged policies, which include auto, and commercial lines insurance products.

(3) Other business lines includes revenue and direct operating expenses for distribution of non-proprietary life and annuity products.

First Quarter 2022 Form 10-Q 49

Segment Results Allstate Protection

Premium measures and statistics include PIF, new issued applications, average premiums and renewal ratio to analyze our premium trends.

2 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.

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Allstate Protection Segment Results

Premiums written by brand and by line of business

1 unchanged sentence

($ in millions) 2022 2021 2022 2021 2022 2021

Three months ended September 30,

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

Homeowners 2,452 2,234 552 105 3,004 2,339

Other personal lines 543 521 41 21 584 542

Commercial lines 207 188 — — 207 188

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

Nine months ended September 30,

Three months ended March 31,

Auto $ 6,308 $ 6,060 $ 1,254 $ 952 $ 7,562 $ 7,012

6 unchanged sentences

($ in millions) 2022 2021 2022 2021 2022 2021

Three months ended September 30,

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

Homeowners 2,080 1,974 442 99 2,522 2,073

Other personal lines 481 466 40 20 521 486

Commercial lines 204 183 — — 204 183

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

Nine months ended September 30,

Three months ended March 31,

Auto $ 6,073 $ 6,014 $ 1,008 $ 795 $ 7,081 $ 6,809

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Reconciliation of premiums written to premiums earned

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

Three months ended March 31,

($ in millions) 2022 2021

1 unchanged sentence

(Increase) decrease in unearned premiums

(672) (470) (1,264) (449)

Other (5) 408

Total premiums earned $ 10,498 $ 9,896

(1) 2021 results include unearned premiums related to acquisition of National General.

Policies in force by brand and by line of business

6 unchanged sentences

Total 33,321 32,948 5,121 4,694 38,442 37,642

Third Quarter 2021 Form 10-Q 61

Segment Results Allstate Protection

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 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

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Allstate Protection Segment Results

Auto insurance premiums written increased 7.8% or $550 million in the first quarter of 2022 compared to the first quarter of 2021 primarily due to the following factors:

• Increased new issued applications driven by direct channel, including the acquisition of SafeAuto, and growth in the independent agency channel

• Increased average premiums driven by rate increases.

In the three months ended March 31, 2022, rate increases of 9.3% were taken for Allstate brand in 28 locations, resulting in total Allstate brand insurance premium impact of 3.6% and 4.6% were taken for National General brand in 24 locations, resulting in total National General brand insurance premium impact of 1.9%, to improve underwriting results given the higher inflationary trends adversely impacting loss costs

• Renewal ratio increased 0.8 points in the first quarter of 2022 compared to first quarter of 2021.

The impact of the ongoing rate actions may have an adverse effect on the renewal ratio in future periods

• PIF increased 2.4% or 618 thousand to 26,071 thousand as of March 31, 2022 compared to March 31, 2021 due to growth in National General, including SafeAuto acquisition, and Allstate brand

Auto premium measures and statistics

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

2021 2020 Change 2021 2020 Change

Three months ended March 31,

2022 2021 Change

New issued applications (thousands)

Agency channel

648 682 (5.0) % 1,957 2,018 (3.0) %

Direct channel 284 206 37.9 % 830 619 34.1 %

Allstate Protection by brand

Allstate brand 964 929 3.8 %

National General 516 14 NM 1,553 44 NM

National General 718 542 32.5 %

Total new issued applications 1,682 1,471 14.3 %

Allstate Protection by channel

Exclusive agency channel 599 613 (2.3) %

Direct channel 631 455 38.7 %

Independent agency channel 452 403 12.2 %

Total new issued applications 1,682 1,471 14.3 %

Allstate brand average premium $ 626 $ 607 3.1 %

Allstate brand renewal ratio (%) 87.5 86.7 0.8

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 3.4% for the trailing twelve months ended September 30, 2021 and inflation adjustments to premium due to higher insured home valuations

Homeowners insurance premiums written increased 15.3% or $318 million in the first quarter of 2022 compared to the first quarter of 2021 primarily due to the following factors:

• Higher Allstate brand average premiums from approved rate increases 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 September 30, Nine months ended September 30,

2021 2020 Change 2021 2020 Change

Three months ended March 31,

2022 2021 Change

New issued applications (thousands)

Agency channel 236 231 2.2 % 676 636 6.3 %

Direct channel 23 16 43.8 % 61 45 35.6 %

Allstate Protection by brand

Allstate brand 235 220 6.8 %

National General 28 9 NM 77 25 NM

National General 27 22 22.7 %

Total new issued applications 262 242 8.3 %

Allstate Protection by channel

Exclusive agency channel 201 195 3.1 %

Direct channel 23 16 43.8 %

Independent agency channel 38 31 22.6 %

Total new issued applications 262 242 8.3 %

Allstate brand average premium $ 1,554 $ 1,360 14.3 %

Allstate brand renewal ratio (%) 86.2 87.0 (0.8)

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.

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Allstate Protection Segment Results

Other personal lines premiums written increased 5.9% or $28 million in the first quarter of 2022 compared to the first quarter of 2021, primarily due to increases in condominiums, personal umbrella and landlords premiums for Allstate brand.

Commercial lines premiums written increased 49.2% or $97 million in the first quarter of 2022 compared to the first quarter of 2021, primarily due to increased average premium and higher miles driven in our shared economy business.

First Quarter 2022 Form 10-Q 51

Segment Results Allstate Protection

GAAP operating ratios include loss ratio, expense ratio and combined ratio to analyze our profitability trends.

4 unchanged sentences

2022 2021 2022 2021 2022 2021

Three months ended September 30,

Auto 76.9 59.7 25.4 25.7 102.3 85.4

Homeowners 85.9 80.4 25.1 22.8 111.0 103.2

Other personal lines 64.9 63.0 27.4 28.4 92.3 91.4

Commercial lines 104.4 83.6 22.1 24.1 126.5 107.7

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

Total 79.0 65.2 25.1 24.9 104.1 90.1

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

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

Impact of Allstate Special Payment plan bad debt expense (2)

Three months ended March 31,

77.6 57.2 24.5 23.3 102.1 80.5

Nine months ended September 30,

Auto 67.7 56.6 24.7 29.6 92.4 86.2

Impact of Shelter-in-Place Payback expense 0.1 — 0.1 5.1 0.1 5.1

Homeowners 60.4 64.9 23.8 23.9 84.2 88.8

1 unchanged sentence

Commercial lines 87.3 78.4 20.5 22.7 107.8 101.1

Impact of Shelter-in-Place Payback expense — — — 0.7 — 0.7

Total 73.3 60.0 24.0 23.2 97.3 83.2

Impact of amortization of purchased intangibles — — 0.5 0.1 0.5 0.1

Impact of Shelter-in-Place Payback expense — — 0.1 3.6 0.1 3.6

Impact of restructuring and related charges — — 0.1 0.3 0.1 0.3

Impact of Allstate Special Payment plan bad debt expense (2)

— — (0.1) 0.2 (0.1) 0.2

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

(2) Relates to the Allstate Special Payment plan offered in 2020 to customers as a result of the Coronavirus to provide more flexible payment options.

Approximately 70% of the higher bad debt expense was attributed to auto.

Loss ratios by line of business

2 unchanged sentences

2022 2021 2022 2021 2022 2021 2022 2021

Three months ended September 30,

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

Homeowners 85.9 80.4 38.0 39.1 0.7 (22.0) 0.1 (21.3)

Other personal lines 64.9 63.0 19.6 13.4 (12.7) (11.9) — (8.0)

Commercial lines 104.4 83.6 4.9 6.6 12.3 1.1 0.5 (1.1)

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

Nine months ended September 30,

Three months ended March 31,

Auto 77.6 57.2 0.6 0.4 2.0 (0.5) (0.1) (0.3)

3 unchanged sentences

Total 73.3 60.0 4.4 6.0 1.4 (2.5) (0.1) (2.5)

(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 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

(1) The ten-year average effect of catastrophe losses on the total combined ratio was 6.1 points in the first quarter of 2022 .

Auto loss ratio increased 20.4 points in the first quarter of 2022 compared to the same period of 2021, primarily due to:

• Higher gross claim frequency in all coverages, as miles driven has rebounded 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

• 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

• Increased severity for all coverages, driven by inflationary pressures and medical service utilization for bodily injury claims

• Unfavorable non-catastrophe prior year reserve reestimates

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

• Shelter-in-place and travel restrictions, which have moderated in 2021 as vaccines have become more widely available in the US and Canada

• Shelter-in-place and travel restrictions, which moderated in 2021 as vaccines became more widely available in the US and Canada

• Unemployment levels

1 unchanged sentence

• 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

1 unchanged sentence

• Labor and part cost increases

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

(% change year-over-year)

Three months ended September 30, 2021

Property damage gross claim frequency 16.6 %

Property damage paid claim severity 15.1

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 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.

Property damage gross claim frequency for Allstate brand increased 18.4% in the first quarter of

2022 compared to the same period of 2021 due to factors including:

• Increases in miles driven compared to 2021 which was impacted by the continuation of shelter-in-place restrictions due to the Coronavirus

• While gross claim frequency has rebounded from the low in 2020, it is 15.6% below pre-pandemic levels of 2019 as auto miles driven, particularly during peak commuting hours, remains lower than pre-pandemic levels

Property damage estimated report year 2022 incurred claim severity for Allstate brand, excluding Esurance and Canada, increased approximately 11% compared to report year 2021.

The current 2021 estimated report year incurred claim severity increased approximately 9% compared to 2020.

The increases are due to rising inflationary factors that began in the second quarter of 2021 impacting both repairable vehicles and total losses, including higher used car values, replacement part costs and labor rates, and higher costs to repair more sophisticated newer model vehicles.

Bodily injury estimated report year 2022 incurred claim severity for Allstate brand, excluding Esurance and Canada, increased approximately 8% compared to report year 2021.

The current 2021 estimated report year incurred claim severity increased approximately 5% compared to 2020.

The increases are due to higher consumption of medical treatment, increased severity

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Allstate Protection Segment Results

of claims with attorney representation and higher medical care inflation.

Homeowners loss ratio decreased 4.5 points in the first quarter of 2022 compared to the same period of 2021, primarily due to increased premiums earned and lower catastrophe losses, partially offset by higher severity.

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

(% change year-over-year)

Three months ended September 30, 2021

Gross claim frequency 3.4 %

Paid claim severity 15.0

Nine months ended September 30, 2021

Three months ended March 31, 2022

Gross claim frequency (4.6) %

Paid claim severity 25.4

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.

Gross claim frequency decreased in the first three months of 2022 compared to the same period of 2021 primarily due to declines in wind/hail and water perils.

Paid claim severity increased in the first quarter of 2022 compared to the same period of 2021 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 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

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Allstate Protection Segment Results

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.

Other personal lines loss ratio increased 4.0 points in the first quarter of 2022 compared to the same period of 2021, primarily due to higher non-catastrophe losses, partially offset by increased premiums earned.

Commercial lines loss ratio increased 8.9 points in the first quarter of 2022 compared to the same period of 2021 due to higher auto frequency and severity and higher unfavorable non-catastrophe prior year reserve reestimates in the shared economy business, partially offset by increased premiums earned.

Catastrophe losses decreased 21.7% or $128 million in the first quarter of 2022 compared to the prior year due to lower losses which was partially offset by the absence of reinsurance recoveries in 2022.

Reinsurance recoveries in 2021 related to the Nationwide Aggregate Reinsurance Program for aggregate catastrophe losses occurring between April 1, 2020 and December 31, 2020, which primarily impacted homeowners reestimates.

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 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

Hurricanes/Tropical storms 5 $ 747 6 $ 771 6 $ 754 6 $ 771

Three months ended March 31,

($ in millions) Number of events 2022 Number of events 2021

Tornadoes 1 $ 91 1 $ 13

Wind/Hail 14 365 11 277

Wildfires 4 49 12 293 4 48 13 295

Freeze/other events 1 19 1 586

Prior year reserve reestimates (13) (91)

Prior year aggregate reinsurance cover (38) — (237) —

Current year aggregate reinsurance cover (11) — (65) —

Prior quarter reserve reestimates 86 30 — —

Prior year aggregate reinsurance recoveries

Current year aggregate reinsurance recoveries

Total catastrophe losses 16 $ 462 13 $ 590

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

First Quarter 2022 Form 10-Q 53

Segment Results Allstate Protection

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.

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 earthquakes and wildfires, net of reinsurance, exceeding $2.5 billion.

We have completed the placement of our 2022-2023 Nationwide Excess Catastrophe Reinsurance Program (the “Nationwide Program”).

Similar to our 2021 program, our 2022 program includes coverage for losses to personal lines property, personal lines automobile, commercial lines property or commercial lines automobile arising out of multiple perils, in addition to hurricanes and earthquakes.

The Nationwide Program provides coverage up to $6.61 billion of losses less a $500 million retention, and is subject to the percentage of reinsurance placed in each of its agreements.

Property business in the state of Florida is excluded from this program.

Separate reinsurance agreements address the distinct needs of separately capitalized legal entities.

The Nationwide Program includes reinsurance agreements with both the traditional and Insurance - Linked securities markets as described below:

• The traditional market multi-year placements provide limits totaling $3.89 billion for catastrophe events arising out of multiple perils and are comprised of the following:

– $3.56 billion of placed limits attaching at $500 million, exhausting at $3.75 billion, with a 5% co-participation.

Coverage is provided in four contracts with one annual reinstatement of limits.

31.7% of the first $250 million in excess of $500 million is retained by Allstate.

– $331 million of placed limits in excess of a $3.75 billion retention, with a 5% co-participation.

Coverage is provided in two contracts, with one reinstatement of limits over each contract’s eight-year term.

• Insurance - Linked securities multi-year placements provide $1.45 billion of placed limits, with no reinstatement of limits, and are comprised of the following:

– Four contracts providing occurrence coverage of $850 million of placed limits, reinsuring losses in all states except Florida caused by named storms, earthquakes and fire following earthquakes, severe weather, wildfires, and other naturally occurring or man-made events determined to be a catastrophe by the Company.

– Three contracts providing occurrence and aggregate coverage of $425 million of placed limits, also provide that for each annual period beginning April 1, Allstate declared catastrophes to personal lines property and automobile business can be aggregated to erode the aggregate retention and qualify for coverage under the aggregate limits.

Recoveries are limited to our ultimate net loss from the reinsured event.

– One contract, providing aggregate coverage of $175 million of placed limits.

• Traditional single-year placements provide $640 million of placed limits, filling capacity around the traditional market and Insurance-Linked securities multi-year placements:

– Three contracts providing $465 million of placed limits between $5.94 billion and $6.61 billion of loss, with no reinstatement of limits.

– Two contracts providing $175 million of placed limits between $3.75 billion and $5.94 billion of loss, with no reinstatement limits.

The Kentucky earthquake agreement comprises a three-year term contract that reinsures personal lines property losses caused by earthquakes and fire following earthquakes in Kentucky and provides $28 million of limits, 95% placed, in excess of a $2 million retention.

The Florida Excess Catastrophe Program, National General Lender Services Program and National General Reciprocal Excess Catastrophe Program will be completed in the second quarter of 2022.

The total cost of our property catastrophe reinsurance programs, excluding reinstatement premiums, during the first quarter of 2022 was $144 million compared to $113 million in the first quarter of 2021.

Catastrophe placement premiums reduce net written and earned premium with approximately 74% related to homeowners.

Reserve reestimates were $144 million unfavorable in the first quarter of 2022 primarily due to strengthening of non-catastrophe reserves in auto and commercial lines, partially offset by favorable reserve reestimates in other personal lines and catastrophes.

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

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Allstate Protection Segment Results

Reserve reestimates

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

reestimate (1)

combined ratio (2)

reestimate (1)

Three months ended March 31,

reestimates (1)

combined ratio (2)

5 unchanged sentences

Total Allstate Protection $ 144 $ (242) 1.4 (2.5)

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

Allstate brand $ 148 $ (228) 1.4 (2.4)

1 unchanged sentence

Total Allstate Protection $ 144 $ (242) 1.4 (2.5)

$ 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.

(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.

Expense ratio increased 0.8 points in the first quarter of 2022 compared to the first quarter of 2021 primarily due to higher operating costs and amortization of intangibles, partially offset by lower impact of amortization of DAC.

Higher operating costs primarily related to employee-related costs and agent compensation.

Impact of specific costs and expenses on the expense ratio

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

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

Three months ended March 31,

($ in millions, except ratios) 2022 2021 Change

Amortization of DAC $ 1,348 $ 1,303 $ 45

3 unchanged sentences

Restructuring and related charges 12 32 (20)

Shelter-in-Place Payback expense — — — 29 948 (919)

Allstate Special Payment plan bad debt expense — 19 (19) (19) 66 (85)

Total underwriting expenses $ 2,515 $ 2,292 $ 223

7 unchanged sentences

Restructuring and related charges 0.1 0.3 (0.2)

Shelter-in-Place Payback expense — — — 0.1 3.6 (3.5)

Allstate Special Payment plan bad debt expense — 0.2 (0.2) (0.1) 0.2 (0.3)

Total expense ratio 24.0 23.2 0.8

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Run-off Property-Liability Segment Results

First Quarter 2022 Form 10-Q 55

Segment Results Run-off Property-Liability

Run-off Property-Liability Segment

Underwriting results

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

2021 2020 2021 2020

($ in millions) Three months ended March 31,

Claims and claims expense $ (1) $ (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 (1) (2)

Underwriting loss

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

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) September 30, 2021 December 31, 2020

($ in millions) March 31, 2022 December 31, 2021

Asbestos claims

13 unchanged sentences

Net reserves $ 1,404 $ 1,421

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) September 30, 2021 December 31, 2020

($ in millions) March 31, 2022 December 31, 2021

Direct excess commercial insurance

22 unchanged sentences

Net reserves $ 1,404 $ 1,421

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

September 30, 2021 December 31, 2020

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Run-off Property-Liability Segment Results

Percentage of gross and ceded reserves by case and IBNR

March 31, 2022 December 31, 2021

Case IBNR Case IBNR

8 unchanged sentences

Ceded 71 29 71 29

(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.

(1) Approximately 69% of gross case reserves as of March 31, 2022 are subject to settlement agreements.

(2) Approximately 76% of ceded case reserves as of March 31, 2022 are subject to settlement agreements.

Gross payments from case reserves by type of exposure

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

2021 2020 2021 2020

($ in millions) Three months ended March 31,

Direct excess commercial insurance

$ 12 $ 15 $ 46 $ 53

(6) (6) (21) (20)

Assumed reinsurance coverage

1 unchanged sentence

Direct primary commercial insurance

Gross (1) 4 5 7

Ceded 2 (3) (1) (4)

(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.

(1) In the first quarter of 2022 88% of payments related to settlement agreements.

(2) In the first quarter of 2022 93% of payments related to settlement agreements.

Total net reserves as of March 31, 2022, included $722 million or 51% of estimated IBNR reserves compared to $733 million or 52% of estimated IBNR reserves as of December 31, 2021.

Total gross payments were $25 million for the first quarter of 2022, primarily related to settlement agreements reached with several insureds on large claims, mainly asbestos 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 $7 million and $31 million for the third quarter and first nine months of 2021, respectively.

Third Quarter 2021 Form 10-Q 69

Reinsurance collections were $10 million for the first quarter of 2022.

First Quarter 2022 Form 10-Q 57

Segment Results Protection Services

Protection Services Segment

Protection Services include National General’s LeadCloud and Transparent.ly’s results within Arity starting in the first quarter of 2021.

These businesses provide marketing and integration platforms connecting data buyers and sellers.

Results prior to 2021 reflect historical Arity results only.

Summarized financial information

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

2021 2020 2021 2020

($ in millions) Three months ended March 31,

Premiums written $ 630 $ 583

2 unchanged sentences

Intersegment insurance premiums and service fees (1)

46 36 133 109

Net investment income 9 10

9 unchanged sentences

Allstate Roadside 2 4

Arity 1 (3) 4 (9)

Allstate Identity Protection — (10)

4 unchanged sentences

Allstate Identity Protection 2,949 2,702

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

Policies in force as of March 31 (in thousands) 147,383 140,748

(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.

Adjusted net income increased 8.2% or $4 million in the first quarter of 2022 compared to the first quarter of 2021, primarily due to restructuring charges in 2021 and higher revenue in Allstate Identity Protection, partially offset by higher operating costs at Allstate Protection Plans and Arity and higher severity and rescue volumes in Allstate Roadside.

Premiums written increased 8.1% or $47 million in the first quarter of 2022 compared to the first quarter of 2021, primarily due to growth at Allstate Protection Plans.

PIF increased 4.7% or 7 million in the first quarter of 2022 compared to the first quarter of 2021 due to continued growth at Allstate Protection Plans and Allstate Identity Protection.

Other revenue increased 4.4% or $4 million in the first quarter of 2022 compared to the first quarter of 2021, reflecting growth in Allstate Identity Protection.

Intersegment premiums and service fees in the first quarter of 2022 were comparable to the first quarter of 2021.

Claims and claims expense increased 19.4% or $20 million in the first quarter 2022 compared to the first quarter of 2021, 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 22.1% or $40 million in the first quarter of 2022 compared to the first quarter of 2021, primarily due to the growth experienced at Allstate Protection Plans and Allstate Dealer Services.

Operating costs and expenses increased 10.1% or $20 million in the first quarter of 2022 compared to the first quarter of 2021, primarily due to growth experienced at Allstate Protection Plans.

Restructuring and related charges decreased $9 million in the first quarter of 2022 compared to the first quarter of 2021, primarily due to a facility closure at Allstate Identity Protection in the first quarter of 2021.

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Protection Services Segment Results

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

Allstate Health and Benefits Segment Results

Allstate Health and Benefits Segment

Allstate Health and Benefits results include National General’s accident and health business, starting in the first quarter of 2021.

Results prior to 2021 reflect historical Allstate Benefits results only.

Summarized financial information

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

Three months ended March 31,

($ in millions) 2022 2021

3 unchanged sentences

Costs and expenses

Accident and health insurance policy benefits (269) (128) (746) (392)

Interest credited to contractholder funds (8) (8) (25) (26)

Accident, health and other policy benefits (269) (242)

Amortization of DAC (43) (39)

Operating costs and expenses (202) (190)

Restructuring and related charges (8) — (9) (1)

Income tax expense on operations (14) (18)

4 unchanged sentences

Group health (3)

Individual accident and health (4)

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.

Individual health (4)

Policies in force as of March 31 (in thousands) 4,484 4,522

(1) Benefit ratio is calculated as accident, health and other policy benefits less interest credited to contractholder funds of $8 million and $9 million as of March 31, 2022 and March 31, 2021, respectively, divided by premiums and contract charges.

(2) Employer voluntary benefits include supplemental life and health products offered through workplace enrollment.

(3) Group health includes health products sold to employers for use by their employees.

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

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 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.

(3) Group health includes health products and administrative services sold to employers.

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

Adjusted net income in the first quarter of 2022 decreased $12 million compared to the same period of 2021, primarily due to increases in individual and group health claims and favorable reserve reestimates in the prior year for group health, partially offset by lower employer voluntary benefits claim utilization.

Premiums and contract charges increased 3.1% or $14 million in the first quarter of 2022 compared to the same period of 2021, primarily due to growth in group health.

Premiums and contract charges by line of business

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

Three months ended March 31,

($ in millions) 2022 2021

1 unchanged sentence

Group health 94 83

Individual accident and health 119 — 333 —

Individual health 109 109

Premiums and contract charges $ 469 $ 455

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 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.

Other revenue increased $15 million in the first quarter of 2022 compared to the same period of 2021, primarily due to an increase in group health administrative fees.

Accident, health and other policy benefits increased $27 million in the first quarter of 2022 compared to the same period of 2021, primarily due to increased benefits utilization for individual health and group health and prior year favorable reserve reestimates for group health, slightly offset by lower utilization for employer voluntary benefits compared to the prior year quarter.

Benefit ratio increased to 55.7% in the first quarter of 2022 compared to 51.2% in the same period of 2021, primarily due to an increase in individual and group health claims and favorable reserve reestimates for group health in the prior year, partially offset by a lower benefit ratio for employer voluntary benefits products due to lower accident and health claim experience and lower life mortality compared to the prior year.

Amortization of DAC increased 10.3% or $4 million in the first quarter of 2022 compared to the same period of 2021, primarily related to individual health.

First Quarter 2022 Form 10-Q 59

Segment Results Allstate Health and Benefits

Operating costs and expenses

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

Three months ended March 31,

($ in millions) 2022 2021

2 unchanged sentences

Total operating costs and expenses $ 202 $ 190

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.

Operating costs and expenses increased $12 million in the first quarter of 2022 compared to the same period of 2021, primarily due to growth in group health.

Analysis of reserves

Reserve for future policy benefits

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

Traditional life insurance $ 305 $ 299

($ in millions) March 31, 2022 December 31, 2021

Traditional life insurance and other $ 318 $ 313

Accident and health insurance 956 960

Reserve for future policy benefits $ 1,274 $ 1,273

Third Quarter 2021 Form 10-Q 73

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Portfolio composition and strategy by reporting segment (1)

September 30, 2021

March 31, 2022

($ in millions) Property-Liability Protection Services

9 unchanged sentences

3,693 116 54 481 4,344

Other, net 3,140 — 144 2 3,286

Other investments, net 2,386 — 144 2 2,532

Total $ 52,773 $ 1,879 $ 2,096 $ 5,020 $ 61,768

7 unchanged sentences

(3) Equity securities are carried at fair value.

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.

The fair value of equity securities held as of March 31, 2022, was $862 million in excess of cost.

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

Equity securities include $1.02 billion of funds with underlying investments in fixed income securities as of March 31, 2022.

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

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.

Investments totaled $61.77 billion as of March 31, 2022, decreasing from $64.70 billion as of December 31, 2021, primarily due to lower fixed income and equity valuations, common share repurchases and dividends paid to shareholders, partially offset by positive operating cash flows.

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.

As strategies and market conditions evolve, the asset allocation may change, or assets may be moved between strategies.

Market-based strategy includes investments primarily in public fixed income and equity securities.

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.

As strategies and market conditions evolve, the asset allocation may change.

Market-based strategy 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.

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 with a majority being limited partnerships.

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

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.

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Supply chain disruptions, labor shortages and other macroeconomic factors have increased inflation, which may have an adverse impact on investment valuations and returns.

Investments in Russia and Ukraine As of March 31, 2022, we do not have any direct investments in Russia, Belarus or Ukraine.

We have indirect exposure of less than $1 million in Russia and Ukraine through broad-based, global funds managed by external asset managers.

First Quarter 2022 Form 10-Q 61

Portfolio composition by investment strategy

September 30, 2021

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

March 31, 2022

($ in millions) Market-

based Performance-based Total

Fixed income securities $ 40,641 $ 104 $ 40,745

3 unchanged sentences

Short-term investments 4,344 — 4,344

Other, net 2,338 948 3,286

Other investments, net 1,687 845 2,532

Total $ 52,943 $ 8,825 $ 61,768

2 unchanged sentences

Fixed income securities $ (1,283) $ 1 $ (1,282)

Limited partnership interests — 4 4

Short-term investments (1) — (1)

Other (3) — (3)

3 unchanged sentences

Fair value as of

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

($ in millions) March 31, 2022 December 31, 2021

government and agencies $ 6,485 $ 6,273

3 unchanged sentences

Asset-backed securities (“ABS”) 2,173 1,155

Mortgage-backed securities (“MBS”) 34 59

Total fixed income securities $ 40,745 $ 42,136

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

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.

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

As of March 31, 2022, 84.1% 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.

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 issuer.

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

1 unchanged sentence

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

Third Quarter 2021 Form 10-Q 75

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

September 30, 2021

March 31, 2022

A and above BBB BB

7 unchanged sentences

ABS 2,090 (17) 11 — 8 —

MBS 31 1 — — 2 —

Total fixed income securities $ 20,580 $ (476) $ 13,667 $ (537) $ 4,001 $ (154)

7 unchanged sentences

ABS 1 — 63 7 2,173 (10)

MBS 1 — — — 34 1

Total fixed income securities $ 2,180 $ (101) $ 317 $ (14) $ 40,745 $ (1,282)

1 unchanged sentence

Corporate bonds include publicly traded and privately placed securities.

Privately placed securities primarily consist of corporate issued senior debt securities that are negotiated with the borrower or are in unregistered form.

Privately placed securities primarily consist of corporate issued senior debt securities that are negotiated with the borrower or are issued by public entities in unregistered form.

ABS includes collateralized debt obligations, consumer and other ABS.

Credit risk is managed by monitoring the performance of the underlying collateral.

Many of the securities in the ABS portfolio have credit enhancement with features such as overcollateralization, subordinated structures, reserve funds, guarantees and/or insurance.

MBS includes residential mortgage-backed securities (“RMBS”) and commercial mortgage-backed securities (“CMBS”).

RMBS is subject to interest rate risk, but unlike other fixed income securities, is additionally subject to prepayment risk from the underlying residential mortgage loans.

RMBS consists of a U.S.

Agency portfolio having collateral issued or guaranteed by U.S.

government agencies and a non-agency portfolio consisting of securities collateralized by Prime, Alt-A and Subprime loans.

CMBS investments are primarily traditional conduit transactions collateralized by commercial mortgage loans and

typically are diversified across property types and geographical area.

Equity securities primarily include common stocks, exchange traded and mutual funds, non-redeemable preferred stocks and real estate investment trust (“REIT”) equity investments.

Many of the securities in the ABS portfolio have credit enhancement with features such as overcollateralization, subordinated structures, reserve funds, guarantees or insurance.

ABS also includes residential mortgage-backed securities and commercial mortgage back securities.

Equity securities of $5.32 billion primarily include common stocks, exchange traded and mutual funds, non-redeemable preferred stocks and real estate investment trust (“REIT”) equity investments.

Certain exchange traded and mutual funds have fixed income securities as their underlying investments.

Mortgage loans mainly comprise loans secured by first mortgages on developed commercial real estate.

Mortgage loans of $855 million mainly comprise loans secured by first mortgages on developed commercial real estate.

Key considerations used to manage our exposure include property type and geographic diversification.

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

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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Limited partnership interests include $6.52 billion of interests in private equity funds, $956 million of interests in real estate funds and $501 million of interests in other funds as of March 31, 2022.

We have commitments to invest additional amounts in limited partnership interests totaling $2.73 billion as of March 31, 2022.

Other investments include $1.52 billion of bank loans, net, and $750 million of direct investments in real estate as of March 31, 2022.

First Quarter 2022 Form 10-Q 63

Unrealized net capital gains (losses)

September 30, December 31,

March 31, December 31,

($ in millions) 2022 2021

4 unchanged sentences

Fixed income securities (1,282) 760

Short-term investments (1) —

Derivatives (3) (3)

EMA limited partnerships — (1)

Equity method of accounting (“EMA”) limited partnerships 4 (1)

Unrealized net capital gains and losses, pre-tax $ (1,282) $ 756

Third Quarter 2021 Form 10-Q 77

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

September 30, 2021

March 31, 2022

($ in millions) Amortized

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Consumer goods (cyclical and non-cyclical) $ 6,760 $ 30 $ (293) $ 6,497

Utilities 2,089 66 (19) 2,136

Communications 2,148 86 (14) 2,220

Banking 3,736 5 (158) 3,583

Technology 2,924 16 (138) 2,802

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

Utilities 2,004 4 (98) 1,910

Communications 2,256 12 (98) 2,170

Capital goods 2,453 10 (97) 2,366

Transportation 969 48 (6) 1,011

Financial services 1,919 8 (95) 1,832

Midstream 1,156 9 (33) 1,132

Integrated 172 12 (1) 183

Independent/upstream 343 7 (6) 344

Integrated 105 1 (1) 105

Other 165 1 (5) 161

1 unchanged sentence

Basic industry 1,152 11 (42) 1,121

Transportation 951 6 (29) 928

Other 410 — (25) 385

Total corporate fixed income portfolio 26,334 120 (1,118) 25,336

government and agencies 3,035 22 (15) 3,042

Municipal 5,805 54 (161) 5,698

government and agencies 6,613 3 (131) 6,485

Foreign government 1,092 1 (40) 1,053

ABS 2,183 11 (21) 2,173

MBS 33 1 — 34

Total fixed income securities $ 42,027 $ 189 $ (1,471) $ 40,745

1 unchanged sentence

($ in millions) Amortized

Gross unrealized Fair

cost, net Gross unrealized Fair

Consumer goods (cyclical and non-cyclical) $ 6,817 $ 176 $ (42) $ 6,951

Utilities 2,749 156 (2) 2,903

Communications 2,529 201 (4) 2,726

Banking 3,975 54 (31) 3,998

Technology 2,947 80 (23) 3,004

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

Utilities 2,009 43 (28) 2,024

Communications 2,077 58 (21) 2,114

Capital goods 2,615 75 (12) 2,678

Transportation 1,055 84 (11) 1,128

Financial services 1,936 41 (14) 1,963

Midstream 1,132 37 (4) 1,165

Integrated 270 27 — 297

Independent/upstream 312 18 (1) 329

Integrated 119 6 — 125

Other 224 6 (1) 229

1 unchanged sentence

Basic industry 1,249 56 (6) 1,299

Transportation 976 35 (5) 1,006

Other 446 3 (4) 445

4 unchanged sentences

ABS 1,143 14 (2) 1,155

MBS 58 1 — 59

Total fixed income securities $ 41,376 $ 1,002 $ (242) $ 42,136

1 unchanged sentence

Similarly, gross unrealized gains reflect a decrease in market yields since the time of initial purchase.

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First Quarter 2022 Form 10-Q 65

Equity securities by sector

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

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

Cost Over (under) cost Fair

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

Transportation 48 21 69 74 22 96

Utilities $ 80 $ 21 $ 101 $ 122 $ 23 $ 145

Capital goods 232 24 256 376 37 413

Basic industry 66 27 93 119 30 149

4 unchanged sentences

Total energy 122 51 173 159 23 182

Capital Goods 162 32 194 92 (4) 88

2,060 694 2,754 3,413 811 4,224

1 unchanged sentence

Equities 772 54 826 645 75 720

Other 20 1 21 — — —

Total funds 1,845 24 1,869 1,753 99 1,852

2 unchanged sentences

Net investment income

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

Three months ended March 31,

($ in millions) 2022 2021

4 unchanged sentences

Short-term investments 2 1

Other 50 29 139 91

Other investments 40 41

Investment income, before expense 645 745

1 unchanged sentence

Investee level expenses (16) (13)

Securities lending expense — — — (4)

Operating costs and expenses (35) (24)

9 unchanged sentences

Investment income, before expense $ 645 $ 745

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

Net investment income decreased $114 million in the first quarter of 2022 compared to the same period of 2021, primarily due to lower performance-based income results, mainly from limited partnerships, and lower market-based fixed income portfolio yields.

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Performance-based investment income

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

Three months ended March 31,

($ in millions) 2022 2021

3 unchanged sentences

Investee level expenses (1)

(11) (6) (33) (21)

Total performance-based income $ 306 $ 378

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

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 September 30, Nine months ended September 30,

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

Performance-based investment income decreased $72 million in the first quarter of 2022 compared to the first quarter of 2021, primarily due to lower valuation increases and lesser net gains on the sale of underlying investments compared to strong results in 2021.

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.

The company typically employs a lag in recording and recognizing changes in valuations of limited partnership interests due to the availability of investee financial statements.

Components of net gains (losses) on investments and derivatives and the related tax effect

Three months ended March 31,

($ in millions) 2022 2021

1 unchanged sentence

Credit losses (11) 2

Valuation of equity investments - appreciation (decline):

Valuation change of equity investments - appreciation (decline):

Equity securities (285) 181

1 unchanged sentence

Limited partnerships (1)

(15) 14 (1) (50)

Total valuation of equity investments (447) 167

Valuation and settlements of derivative instruments 46 (30) 54 62

Realized capital gains (losses), pre-tax 105 319 818 597

Income tax expense (21) (68) (179) (130)

Realized capital gains (losses), after-tax $ 84 $ 251 $ 639 $ 467

Valuation change and settlements of derivatives 318 11

Net gains (losses) on investments and derivatives, pre-tax (267) 426

Income tax benefit (expense) 56 (94)

Net gains (losses) on investments and derivatives, after-tax $ (211) $ 332

Property-Liability $ (161) $ 314

2 unchanged sentences

Corporate and Other (35) 8

Realized capital gains (losses), after-tax $ 84 $ 251 $ 639 $ 467

Net gains (losses) on investments and derivatives, after-tax $ (211) $ 332

Market-based $ (304) $ 337

Performance-based 37 89

Realized capital gains (losses), pre-tax $ 105 $ 319 $ 818 $ 597

Net gains (losses) on investments and derivatives, pre-tax $ (267) $ 426

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

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.

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Realized capital gains (losses) for performance-based investments

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

Net losses on investments and derivatives in the first quarter of 2022 related primarily to lower valuation on equity investments and losses on sales, partially offset by increased valuation change and settlements of derivatives.

Sales in the first quarter of 2022 related primarily to sales of fixed income securities in connection with ongoing portfolio management.

Valuation change and settlements of derivatives of $318 million in the first quarter of 2022 primarily comprised of gains on interest rate futures used as part of an interest rate risk reduction strategy to mitigate the impact of increases in interest rates.

First Quarter 2022 Form 10-Q 67

Net gains (losses) on performance-based investments and derivatives

Three months ended March 31,

($ in millions) 2022 2021

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Credit losses (4) —

Valuation of equity investments 23 4 60 3

Valuation and settlements of derivative instruments 16 (15) 23 7

Valuation change of equity investments 11 20

Valuation change and settlements of derivatives 7 10

Total performance-based $ 37 $ 89

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

Net gains on performance-based investments and derivatives in the first quarter of 2022 primarily related to gains on sales and increased valuation of equity investments.

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Capital Resources and Liquidity

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Capital resources

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

($ in millions) March 31, 2022 December 31, 2021

Preferred stock, common stock, treasury stock, retained income and other shareholders’ equity items $ 24,165 $ 24,524

Accumulated other comprehensive income 1,918 3,304

Accumulated other comprehensive (loss) income (953) 655

Total Allstate shareholders’ equity 23,212 25,179

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Ratio of debt to capital resources 25.6 24.1

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.

We do not have any other scheduled debt maturities in 2021.

Allstate shareholders’ equity decreased in the first three months of 2022, primarily due to unrealized capital losses on investments in 2022 compared to gains in 2021, common share repurchases and dividends paid to shareholders, partially offset by net income.

In the three months ended March 31, 2022, we paid dividends of $230 million and $26 million related to our common and preferred shares, respectively.

Debt maturities We do not have any scheduled debt maturities in 2022.

Debt maturities for each of the next five years

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Total long-term debt principal $ 7,991

(1) Reflects National General 6.750% Senior Notes.

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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Capital Resources and Liquidity

Common share repurchases As of March 31, 2022, there was $2.50 billion remaining in the $5.00 billion common share repurchase program that is expected to be completed by March 31, 2023.

During the first three months of 2022, we repurchased 6.4 million common shares, or 2.3% of total common shares outstanding at December 31, 2021, for $794 million.

Common shareholder dividends On January 3, 2022, we paid a common shareholder dividend of $0.81.

On February 18, 2022, we declared a common shareholder dividend of $0.85 payable on April 1, 2022.

Financial ratings and strength Our ratings are influenced by many factors including our operating and financial performance, asset quality, liquidity, overall portfolio mix, financial leverage (i.e., debt), exposure to risks such as catastrophes and the current level of operating leverage.

The preferred stock and subordinated debentures are viewed as having a common equity component by certain rating agencies and are given equity credit up to a pre-determined limit in our capital structure as determined by their respective methodologies.

These respective methodologies consider the existence of certain terms and features in the instruments such as the noncumulative dividend feature in the preferred stock.

In January 2021, Moody’s affirmed The Allstate Corporation’s (the “Corporation’s”) debt and short-term issuer ratings of A3 and P-2, respectively, and the insurance financial strength rating of Aa3 for Allstate Insurance Company (“AIC”).

The outlook for the ratings is stable.

In June 2021, S&P affirmed the Corporation’s debt and short-term issuer ratings of A- and A-2, respectively, and the insurance financial strength rating of AA- for AIC.

The outlook for the ratings is stable.

In July 2021, A.M.

Best affirmed the Corporation’s debt and short-term issuer ratings of a and AMB-1+, respectively, and the insurance financial strength rating of A+ for AIC.

The outlook for the ratings is stable.

These respective methodologies consider the existence of certain terms

and features in the instruments such as the noncumulative dividend feature in the preferred stock.

There have been no changes to any of our ratings from A.M.

Best, S&P or Moody’s since December 31, 2021.

Liquidity sources and uses We actively manage our financial position and liquidity levels in light of changing market, economic and business conditions.

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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 AIC.

The Corporation is party to an Amended and Restated Intercompany Liquidity Agreement (“Liquidity Agreement”) with certain subsidiaries, which includes, but is 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.

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

Third Quarter 2021 Form 10-Q 83

Parent company capital capacity Parent holding company deployable assets totaled $5.31 billion as of March 31, 2022, primarily comprised of cash and investments that are generally saleable within one quarter.

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

First Quarter 2022 Form 10-Q 69

Capital Resources and Liquidity

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

As of March 31, 2022, we held $12.11 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 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 were paid in the first three months of 2022 between the following companies:

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

Intercompany dividends

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AIH to the Corporation 3,131

ALIC to AIC 392

AHL to AFIHC 50

AFIHC to the Corporation 50

Based on the greater of 2021 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 2022 is estimated at $5.51 billion, less dividends paid during the preceding twelve months measured at that point in time.

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

As of March 31, 2022, we paid dividends of $3.13 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 September 30, 2021, we satisfied all the requirements with no current restrictions on the payment of preferred stock dividends.

As of March 31, 2022, 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 nine months of 2021, we did not defer interest payments on the subordinated debentures.

In the first three months of 2022, we did not defer interest payments on the subordinated debentures.

Additional resources to support liquidity are as follows:

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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 18.9% as of September 30, 2021.

This ratio was 19.3% as of March 31, 2022.

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.

There were no borrowings under the credit facility during 2022.

• 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 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.

• To cover short-term cash needs, the Corporation has access to a commercial paper facility with a borrowing capacity limited to any undrawn credit facility balance up to $750 million.

• As of March 31, 2022, 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 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.

We can use this shelf registration to issue an unspecified amount of debt securities, common stock (including 624 million shares of treasury stock as of March 31, 2022), 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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Recent Developments

The following updates the regulation disclosures included in Part I, Item 1.

Regulation in our annual report on Form 10-K for the year ended December 31, 2021.

Securities and Exchange Commission (“SEC”) proposed rule changes

Climate disclosures.

In March 2022, the SEC released its climate-related proposed regulation, requiring registrants to provide certain climate-related information in their registration statements and annual reports.

The proposed rule would require information about a registrant’s climate-related risks that are reasonably likely to have a material impact on its business, results of operations, or financial condition.

The required information about climate-related risks would also include disclosure of a registrant’s greenhouse gas emissions, which have become a commonly used metric to assess a registrant’s exposure to such risks.

In addition, under the proposed rule, certain climate-related financial metrics would be required in a registrant’s audited financial statements.

The Company is evaluating the anticipated impacts of the proposed guidance to its disclosures.

Cybersecurity risk management.

The SEC issued a proposed rule in March 2022 to mandate cybersecurity disclosures, including information such as:

management's and the board’s role and oversight of cybersecurity risks, policies and procedures and how risks and incidents are likely to impact the financial statements.

Additionally, certain incidents would have mandatory reporting on a Form 8-K.

The Company is evaluating the anticipated impacts of the proposed guidance to its disclosures.

Share repurchase disclosure modernization.

The SEC issued two proposed amendments in December 2021 that could impact both the administration of 10b5-1 plans used in part to execute the Company’s stock repurchases and disclosure of activity under those plans.

The proposals involve potential daily reporting of share repurchase activity, cooling off periods for both individual and corporate 10b5-1 plans (120 and 30 days, respectively) and a number of new 10Q and 10K disclosures that would be subject to SOX Section 302 Certifications.

The Company is evaluating the anticipated impacts of the proposed guidance to its disclosures.

First Quarter 2022 Form 10-Q 71

Forward-Looking Statements

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These statements are made subject to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995.

These forward-looking statements do not relate strictly to historical or current facts and may be identified by their use of words like “plans,” “seeks,” “expects,” “will,” “should,” “anticipates,” “estimates,” “intends,” “believes,” “likely,” “targets” and other words with similar meanings.

We believe these statements are based on reasonable estimates, assumptions and plans.

If the estimates, assumptions or plans underlying the forward-looking statements prove inaccurate or if other risks or uncertainties arise, actual results could differ materially from those communicated in these forward-looking statements.

Forward-looking statements do not relate strictly to historical or current facts and may be identified by their use of words like “plans,” “seeks,” “expects,” “will,” “should,” “anticipates,” “estimates,” “intends,” “believes,” “likely,” “targets” and other words with similar meanings.

These statements may address, among other things, our strategy for growth, catastrophe, exposure management, product development, investment results, regulatory approvals, market position, expenses, financial results, litigation, and reserves.

We believe that these statements are based on reasonable estimates, assumptions and plans.

Forward-looking statements speak only as of the date on which they are made, and we assume no obligation to update any forward-looking statements as a result of new information or future events or developments.

In addition, forward-looking statements are subject to certain risks or uncertainties that could cause actual results to differ materially from those communicated in these forward-looking statements.

Factors that could cause actual results to differ materially from those expressed in, or implied by, the forward-looking statements include risks related to:

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(3) limitations in analytical models used for loss cost estimates;

(4) price competition and changes in underwriting standards;

(4) price competition and changes in regulation and underwriting standards;

(5) actual claims costs exceeding current reserves;

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(7) our subjective determination of fair value and amount of credit losses for investments;

(8) changes in market interest rates or performance-based investment returns impacting our annuity business;

(9) changes in reserve estimates and amortization of deferred acquisition costs impacting our life, benefits and annuity businesses;

(8) our participation in indemnification programs, including state industry pools and facilities;

(11) inability to mitigate the capital impact associated with statutory reserving and capital requirements;

(9) inability to mitigate the impact associated with changes in capital requirements;

(10) a downgrade in financial strength ratings;

(13 ) changes in tax laws;

Business, Strategy and Operations (14) competition in the insurance industry and new or changing technologies;

Business, Strategy and Operations (11) competition in the industries in which we compete and new or changing technologies;

(12) implementation of our transformative growth strategy;

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(19) intellectual property infringement, misappropriation and third-party claims;

Macro, Regulatory and Risk Environment (23) conditions in the global economy and capital markets;

(24) a large-scale pandemic, such as the Coronavirus and its impacts, or occurrence of terrorism, military actions or social unrest;

(25) the failure in cyber or other information security controls, or the occurrence of events unanticipated in our disaster recovery processes and business continuity planning;

Macro, Regulatory and Risk Environment (20) conditions in the global economy and capital markets, including the economic impacts from the recent military conflict between Russia and Ukraine;

(21) a large-scale pandemic, the occurrence of terrorism, military actions or social unrest;

(22) the failure in cyber or other information security controls, as well as the occurrence of events unanticipated in our disaster recovery processes and business continuity planning;

(23) changing climate and weather conditions;

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(26) changes in or the application of accounting standards;

(30) loss of key vendor relationships or failure of a vendor to protect our data or confidential, proprietary and personal information;

(31) our ability to attract, develop and retain key personnel;

(27) loss of key vendor relationships or failure of a vendor to protect our data, confidential and proprietary information, or personal information of our customers, claimants or employees;

(28) our ability to attract, develop and retain talent;

and (29) misconduct or fraudulent acts by employees, agents and third parties.

Additional information concerning these and other factors may be found in our filings with the Securities and Exchange Commission, including the “Risk Factors” section in our most recent annual report on Form 10-K.

Forward- looking statements speak only as of the date on which they are made, and we assume no obligation to update or revise any forward-looking statement.

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