What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-08-03 compared with 2022-05-04 · 378 added, 255 removed, 804 unchanged (44% of the section changed)

8 unchanged sentences

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

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

These measures have moderated, but there is no way of predicting with certainty how long the pandemic might last.

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

1 unchanged sentence

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.

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

Total auto claim frequency has increased through the first six months 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.

2 unchanged sentences

• Rate increases and average gross premiums

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

• Premium for transportation network products

• Driving behavior and auto accident frequency

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

• Hospital and outpatient claim costs

5 unchanged sentences

Within the MD&A we have included further disclosures related to the impacts of the Coronavirus on our 2022 results.

Russia/Ukraine Conflict

The Russia-Ukraine war and related sanctions imposed as a result of this conflict have increased global economic and political uncertainty, including inflationary pressures and an increased risk of cybersecurity incidents.

Allstate does not have operations or direct investments in Russia, Belarus or Ukraine.

The conflict is evolving, but we have not experienced significant impacts to date on our investment portfolio, financial position, or results of operations.

Corporate Strategy

15 unchanged sentences

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

Second Quarter 2022 Form 10-Q 45

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

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

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

14 unchanged sentences

($ in millions)

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.

Consolidated net loss applicable to common shareholders was $1.04 billion and $412 million in the second quarter and first six months of 2022, respectively, compared to income of $1.60 billion and $187 million in the second quarter and first six months of 2021 primarily due to higher non-catastrophe losses and equity valuation decreases, partially offset by increased Property-Liability premiums earned and the loss from discontinued operations in the first six months of 2021.

For the twelve months ended June 30, 2022, return on Allstate common shareholders’ equity was 4.0%, a decrease of 11.3 points from 15.3% for the twelve months ended June 30, 2021.

Total revenue

($ in millions)

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.

Total revenue decreased 3.4% to $12.22 billion and decreased 2.2% to $24.56 billion in the second quarter and first six months of 2022, respectively, compared to the same periods of 2021, driven by net losses on investments and derivatives in 2022 compared to net gains in 2021 and decreases in net investment income, partially offset by 8.8% and 7.7% increases in property and casualty insurance premiums earned in the second quarter and first six months of 2022, respectively.

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

Net investment income

($ in millions)

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.

Net investment income decreased $412 million to $562 million in the second quarter of 2022 and decreased $526 million to $1.16 billion in the first six months of 2022 compared to the same periods of 2021.

The decrease in both periods was primarily due to lower performance-based investment results, mainly from limited partnerships.

The decrease in the second quarter was slightly offset by higher market-based fixed income portfolio yields.

Second Quarter 2022 Form 10-Q 47

Financial highlights

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

Investments totaled $61.06 billion as of June 30, 2022, decreasing from $64.70 billion as of December 31, 2021.

Allstate shareholders’ equity As of June 30, 2022, Allstate shareholders’ equity was $20.12 billion.

Book value per common share (ratio of Allstate common shareholders’ equity to total common shares outstanding and dilutive potential common shares outstanding) was $66.15, a decrease of 23.4% from $86.33 as of June 30, 2021, and a decrease of 18.9% from $81.52 as of December 31, 2021.

Return on average Allstate common shareholders’ equity For the twelve months ended June 30, 2022, return on Allstate common shareholders’ equity was 4.0%, a decrease of 11.3 points from 15.3% for the twelve months ended June 30, 2021.

The decrease was primarily due to lower net income applicable to common shareholders for the trailing twelve-month period ending June 30, 2022.

Pension and other postretirement remeasurement gains and losses We recorded pension and other postretirement remeasurement losses of $259 million and $12 million in the second quarter and first six months of 2022, respectively, primarily related to unfavorable asset performance compared to expected return on plan assets, partially offset by a reduction in the projected benefit obligation due to an increase in the liability discount rate and changes in other assumptions.

Summarized consolidated financial results

Three months ended March 31,

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

($ in millions) 2022 2021 2022 2021

7 unchanged sentences

Property and casualty insurance claims and claims expense (9,367) (7,207) (17,189) (13,250)

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

Accident, health and other policy benefits (269) (252) (538) (494)

4 unchanged sentences

Total costs and expenses (13,535) (10,849) (25,075) (20,268)

Income from operations before income tax expense 797 3,032

Income tax expense (151) (626)

Net income from continuing operations 646 2,406

(Loss) income from operations before income tax expense (1,315) 1,797 (518) 4,829

Income tax benefit (expense) 291 (362) 140 (988)

Net (loss) income from continuing operations (1,024) 1,435 (378) 3,841

Income (loss) from discontinued operations, net of tax — 196 — (3,597)

Net income (loss) 646 (1,387)

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

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

Net (loss) income (1,024) 1,631 (378) 244

Net (loss) income attributable to noncontrolling interest (9) 6 (19) —

Net (loss) income attributable to Allstate (1,015) 1,625 (359) 244

Preferred stock dividends (27) (30) (53) (57)

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

Segment highlights

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.

Net (loss) income applicable to common shareholders $ (1,042) $ 1,595 $ (412) $ 187

48 www.allstate.com

Segment highlights

Allstate Protection underwriting loss was $861 million in the second quarter of 2022, compared to underwriting income of $431 million in the second quarter of 2021.

Underwriting loss totaled $579 million in the first six months of 2022 compared to underwriting income of $2.09 billion in the first six months of 2021.

The decrease in both periods was primarily due to higher non-catastrophe losses, primarily in auto, and unfavorable non-catastrophe reserve reestimates, partially offset by increased premiums.

We are executing a comprehensive plan to improve profitability, including broadly raising auto and home insurance rates, reducing expenses, advertising and growth investments, implementing underwriting restrictions in underperforming states and executing claims operating actions to manage loss costs.

Catastrophe losses were $1.11 billion and $1.57 billion in the second quarter and first six months of 2022, respectively, compared to $952 million and $1.54 billion in the second quarter and first six months of 2021, respectively.

Premiums written increased 11.5% to $11.51 billion and 10.8% to $22.27 billion in the second quarter and first six months of 2022, respectively, compared to the same periods of 2021, reflecting higher premiums in both Allstate and National General brands.

Protection Services adjusted net income was $43 million in the second quarter of 2022 compared to $56 million in the second quarter of 2021.

Adjusted net income was $96 million in the first six months of 2022 compared to $105 million in the first six months of 2021.

The decrease in both periods was due to investments in geographic and product expansion at Allstate Protection Plans and increased severity at Allstate Roadside.

Premiums and other revenue increased 10.7% or $56 million in the second quarter of 2022 and 12.9% or $132 million in the first six months of 2022 compared to the same periods of 2021, primarily due to Allstate Protection Plans.

Allstate Health and Benefits adjusted net income was $65 million in the second quarter of 2022 compared to $62 million in the second quarter 2021, primarily due to an increase in group health revenues, partially offset by an increase in individual health claims.

Adjusted net income was $118 million in the first six months of 2022 compared to $127 million in the first six months of 2021, primarily due to increases in individual and group health claims, partially offset by lower employer voluntary benefits claim utilization.

Premiums and contract charges increased 4.3% to $466 million in the second quarter of 2022 and 3.7% to $935 million in the first six months of 2022 compared to the same periods of 2021, primarily due to growth in individual and group health.

Second Quarter 2022 Form 10-Q 49

Property-Liability Operations

20 unchanged sentences

• 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:

2 unchanged sentences

policy counts are based on items rather than customers.

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.

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.

• New issued applications :

17 unchanged sentences

• 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 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

• 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

50 www.allstate.com

Property-Liability Operations

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

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.

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

1 unchanged sentence

Underwriting results

Three months ended March 31,

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

($ in millions, except ratios) 2022 2021 2022 2021

3 unchanged sentences

Claims and claims expense (9,231) (7,103) (16,933) (13,048)

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

Amortization of DAC (1,355) (1,319) (2,703) (2,622)

1 unchanged sentence

Restructuring and related charges (1)

2 (66) (10) (98)

Amortization of purchased intangibles (59) (71) (117) (90)

3 unchanged sentences

Catastrophe reserve reestimates (2)

51 37 38 (206)

Total catastrophe losses $ 1,108 $ 952 $ 1,570 $ 1,542

Non-catastrophe reserve reestimates (2)

411 (20) 569 (18)

Prior year reserve reestimates (2)

462 17 607 (224)

GAAP operating ratios

1 unchanged sentence

Expense ratio (3)

23.0 24.7 23.5 24.0

Combined ratio 107.9 95.7 102.7 89.5

4 unchanged sentences

Effect of amortization of purchased intangibles on combined ratio 0.5 0.7 0.5 0.5

Effect of Shelter-in-Place Payback expense on combined and expense ratios — 0.3 — 0.1

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

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

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

See Note 11 of the condensed consolidated financial statements for additional details.

1 unchanged sentence

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

48 www.allstate.com

Allstate Protection Segment Results

Second Quarter 2022 Form 10-Q 51

Segment Results Allstate Protection

Allstate Protection Segment

Underwriting results

Three months ended March 31,

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

($ in millions) 2022 2021 2022 2021

3 unchanged sentences

Claims and claims expense (9,228) (7,102) (16,929) (13,046)

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

Amortization of DAC (1,355) (1,319) (2,703) (2,622)

2 unchanged sentences

Amortization of purchased intangibles (59) (71) (117) (90)

Underwriting income $ 282 $ 1,660

Underwriting (loss) income $ (861) $ 431 $ (579) $ 2,091

Catastrophe losses $ 1,108 $ 952 $ 1,570 $ 1,542

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

Underwriting loss was $861 million and $579 million in the second quarter and first six months of 2022, respectively, compared to underwriting income of $431 million and $2.09 billion in the second quarter and first six months of 2021, respectively, primarily due to higher non-catastrophe losses, primarily in auto, and unfavorable non-catastrophe reserve reestimates, partially offset by increased premiums.

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

($ in millions)

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

($ in millions)

52 www.allstate.com

Allstate Protection Segment Results

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

1 unchanged sentence

($ in millions) 2022 2021 2022 2021 2022 2021

Three months ended March 31,

Three months ended June 30,

$ (578) $ 364 $ — $ 30 $ (578) $ 394

9 unchanged sentences

Total $ (825) $ 414 $ (38) $ 15 $ (861) $ 431

Six months ended June 30,

$ (715) $ 1,567 $ (10) $ 154 $ (725) $ 1,721

Homeowners (2)

236 269 (12) (8) 224 261

Other personal lines 23 65 6 7 29 72

Commercial lines (164) (27) 7 — (157) (27)

Other business lines (3)

46 55 — — 46 55

Answer Financial — — — — 4 9

Total $ (574) $ 1,929 $ (9) $ 153 $ (579) $ 2,091

(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

(3) Other business lines represents commissions earned and other costs and expenses for Ivantage and non-proprietary life and annuity products.

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

5 unchanged sentences

($ in millions) 2022 2021 2022 2021 2022 2021

Three months ended March 31,

Three months ended June 30,

Auto $ 6,374 $ 5,952 $ 1,096 $ 866 $ 7,470 $ 6,818

3 unchanged sentences

Total premiums written $ 9,862 $ 9,008 $ 1,647 $ 1,315 $ 11,509 $ 10,323

Six months ended June 30,

Auto $ 12,682 $ 12,012 $ 2,350 $ 1,818 $ 15,032 $ 13,830

Homeowners 4,685 4,040 849 765 5,534 4,805

Other personal lines 1,045 976 68 79 1,113 1,055

Commercial lines 485 401 106 — 591 401

Total premiums written $ 18,897 $ 17,429 $ 3,373 $ 2,662 $ 22,270 $ 20,091

Second Quarter 2022 Form 10-Q 53

Segment Results Allstate Protection

Premiums earned by brand and by line of business

1 unchanged sentence

($ in millions) 2022 2021 2022 2021 2022 2021

Three months ended March 31,

Three months ended June 30,

Auto $ 6,253 $ 6,036 $ 1,095 $ 847 $ 7,348 $ 6,883

3 unchanged sentences

Total premiums earned $ 9,288 $ 8,746 $ 1,586 $ 1,263 $ 10,874 $ 10,009

Six months ended June 30,

Auto $ 12,326 $ 12,050 $ 2,103 $ 1,642 $ 14,429 $ 13,692

Homeowners 4,491 4,040 798 763 5,289 4,803

Other personal lines 1,006 951 70 73 1,076 1,024

Commercial lines 476 386 102 — 578 386

Total premiums earned $ 18,299 $ 17,427 $ 3,073 $ 2,478 $ 21,372 $ 19,905

Reconciliation of premiums written to premiums earned

Three months ended March 31,

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

($ in millions) 2022 2021 2022 2021

1 unchanged sentence

(Increase) decrease in unearned premiums

(599) (312) (857) (592)

Other (36) (2) (41) 406

8 unchanged sentences

Total 33,383 33,117 5,236 4,746 38,619 37,863

Auto insurance premiums written increased 9.6% or $652 million in the second quarter of 2022 compared to the second quarter of 2021 and 8.7% or $1.2 billion in the first six months of 2022 compared to the first six months of 2021, primarily due to the following factors:

• Increased average premiums driven by rate increases.

In the six months ended June 30, 2022, rate increases of 9.5% were taken for Allstate brand in 48 locations, resulting in total Allstate brand insurance premium impact of 6.1%, and 9.0% were taken for National General brand in 29 locations, resulting in total National General brand insurance premium impact of 4.7%, to improve underwriting results.

Rate increases may accelerate in the second half of 2022

• Renewal ratio increased 0.4 and 0.6 points in the second quarter and first six months of 2022, respectively, compared to the second quarter and first six months of 2021 and remains flat compared to prior quarter

• PIF increased 2.3% or 578 thousand to 26,192 thousand as of June 30, 2022 compared to June 30, 2021 due to growth in National General, including SafeAuto acquisition, and Allstate brand

• The impact of the ongoing rate actions may have an adverse effect on the renewal ratio and future PIF growth

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

54 www.allstate.com

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 March 31,

2022 2021 Change

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

2022 2021 Change 2022 2021 Change

New issued applications (thousands)

10 unchanged sentences

Allstate brand renewal ratio (%) 87.5 87.1 0.4 87.5 86.9 0.6

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:

Homeowners insurance premiums written increased 15.1% or $411 million in the second quarter of 2022 compared to the second quarter of 2021 and increased 15.2% or $729 million in the first six months of 2022 compared to the first six months 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

• Increased new issued applications driven by growth in the independent agency and direct channels

Homeowners premium measures and statistics

Three months ended March 31,

2022 2021 Change

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

2022 2021 Change 2022 2021 Change

New issued applications (thousands)

10 unchanged sentences

Allstate brand renewal ratio (%) 86.9 87.3 (0.4) 86.6 87.2 (0.6)

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

Other personal lines premiums written increased 5.2% or $30 million in the second quarter of 2022 compared to the second quarter of 2021 and increased 5.5% or $58 million in the first six months of 2022 compared to the first six months of 2021, primarily due to increases in condominiums, landlords and personal umbrella premiums for Allstate brand.

Commercial lines premiums written increased 45.6% or $93 million in the second quarter of 2022 compared to the second quarter of 2021 and increased 47.4% or $190 million in the first six months of 2022 compared to the first six months of 2021, primarily due to increased average premium and higher miles driven in our shared economy business.

Second Quarter 2022 Form 10-Q 55

Segment Results Allstate Protection

5 unchanged sentences

2022 2021 2022 2021 2022 2021

Three months ended March 31,

Three months ended June 30,

84.9 68.7 23.0 25.6 107.9 94.3

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

Homeowners 82.3 76.3 24.6 24.0 106.9 100.3

3 unchanged sentences

Impact of amortization of purchased intangibles — — 0.5 0.7 0.5 0.7

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

Impact of restructuring and related charges — — — 0.6 — 0.6

Impact of Allstate Special Payment plan bad debt expense — — — (0.1) — (0.1)

Six months ended June 30,

Auto 81.3 63.0 23.7 24.4 105.0 87.4

Impact of Shelter-in-Place Payback expense — — — 0.2 — 0.2

Homeowners 71.6 70.6 24.2 24.0 95.8 94.6

Other personal lines 73.5 68.1 23.8 24.9 97.3 93.0

Commercial lines 107.6 84.7 19.6 22.3 127.2 107.0

Total 79.2 65.5 23.5 24.0 102.7 89.5

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

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

Impact of restructuring and related charges — — — 0.5 — 0.5

Impact of Allstate Special Payment plan bad debt expense — — — (0.1) — (0.1)

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

3 unchanged sentences

2022 2021 2022 2021 2022 2021 2022 2021

Three months ended March 31,

Three months ended June 30,

Auto 84.9 68.7 1.5 2.2 3.3 (0.5) (0.5) (0.1)

3 unchanged sentences

Total 84.9 71.0 10.2 9.5 4.2 0.2 0.4 0.4

(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:

Six months ended June 30,

Auto 81.3 63.0 1.0 1.3 2.6 (0.5) (0.3) (0.2)

Homeowners 71.6 70.6 24.7 25.5 2.3 (3.6) 1.5 (3.6)

Other personal lines 73.5 68.1 9.8 11.7 (0.8) (1.6) 0.7 (1.4)

Commercial lines 107.6 84.7 1.4 3.9 19.2 8.5 — 0.5

Total 79.2 65.5 7.3 7.7 2.9 (1.1) 0.2 (1.0)

(1) The ten-year average effect of catastrophe losses on the total combined ratio was 11.4 points in the second quarter of 2022.

56 www.allstate.com

Allstate Protection Segment Results

Auto loss ratio increased 16.2 and 18.3 points in the second quarter and first six months of 2022, respectively, compared to the same periods 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

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

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

• Unfavorable non-catastrophe prior year reserve reestimates

• Unfavorable non-catastrophe prior year reserve reestimates in both physical damage and bodily injury coverages

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

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

• Unemployment levels

• Changes in commuting activity

• Supply chain disruptions and labor shortages

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

• Value of total losses due to higher used car prices

• Labor and part cost increases

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

• Unemployment levels

• Changes in commuting activity

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

Property damage gross claim frequency for Allstate brand increased 7.1% and 12.3% in the second quarter and first six months of 2022, respectively, compared to the same periods of 2021 due to factors including:

• Increases in miles driven compared to 2021 which was impacted by the pandemic

• While gross claim frequency has rebounded from the low in 2020, it is 15.5% 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.

Collision gross claim frequency for Allstate brand increased 5.1% and 9.8% in the second quarter and first six months of 2022, respectively, compared to the same periods of 2021.

While gross claim frequency has rebounded from the low in 2020, it is 9.4% below pre-pandemic levels of 2019.

Property damage estimated report year 2022 incurred claim severity for Allstate brand, excluding Esurance and Canada, increased approximately 12% compared to report year 2021 and also increased approximately 22% compared to the 2021 recorded severity as of June 30, 2021.

Collision estimated report year 2022 incurred claim severity for Allstate brand, excluding Esurance and Canada, increased approximately 16% compared to report year 2021 and also increased approximately 22% compared to the 2021 recorded severity as of June 30, 2021.

The increase in estimated report year 2022 incurred claim severity for both coverages is geographically widespread and is 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 9% compared to report year 2021 and also increased approximately 16% compared to the 2021 recorded severity as of June 30, 2021.

The increase is due to more severe auto accidents, higher consumption of medical treatment, increased severity of claims with attorney representation and higher medical care inflation.

Homeowners loss ratio increased 6.0 points in the second quarter compared to the same period of 2021 primarily due to higher catastrophe losses and severity, partially offset by increased premiums earned.

Homeowners loss ratio increased 1.0 point in the first six months of 2022, compared to the same period of 2021, primarily due to higher severity and unfavorable reserve reestimates compared to favorable reserve reestimates in 2021, partially offset by increased premiums earned.

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

(% change year-over-year)

Three months ended March 31, 2022

Three months ended June 30, 2022

Gross claim frequency (0.8) %

Paid claim severity 22.6

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.

Six months ended June 30, 2022

Gross claim frequency (2.7) %

Paid claim severity 24.0

Gross claim frequency decreased in the second quarter and first six months of 2022 compared to the same periods of 2021 primarily due to a decline in the wind/hail peril.

Paid claim severity increased in the second quarter and first six months of 2022 compared to the same periods 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 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.

Other personal lines loss ratio increased 6.9 and 5.4 points in the second quarter and first six months of 2022, respectively, compared to the same periods of 2021, primarily due to higher non-catastrophe losses, partially offset by increased premiums earned.

Commercial lines loss ratio increased 36.3 and 22.9 points in the second quarter and first six months of 2022, respectively, compared to the same periods of 2021, primarily due to higher auto severity and higher unfavorable non-catastrophe prior year reserve reestimates in the shared economy business, partially offset by increased premiums earned.

Second Quarter 2022 Form 10-Q 57

Segment Results Allstate Protection

Catastrophe losses increased 16.4% or $156 million in the second quarter of 2022 compared to the second quarter of 2021.

Catastrophe losses increased 1.8% or $28 million in the first six months of 2022 compared to the first six months of 2021.

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.

9 unchanged sentences

Catastrophe losses by the type of event

Three months ended March 31,

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

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

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

Hurricanes/Tropical storms — $ — 1 $ 6 — $ — 1 $ 6

Tornadoes 2 93 — — 3 158 1 17

Wind/Hail 32 966 22 877 46 1,328 33 1,166

Wildfires 4 28 — — 4 28 — —

Freeze/other events — — — — 1 18 1 613

1 unchanged sentence

Prior year aggregate reinsurance recoveries

(10) (47) (10) (199)

Current year aggregate reinsurance recoveries

— (11) — (54)

Prior quarter reserve reestimates (30) 43 — —

Total catastrophe losses 38 $ 1,108 23 $ 952 54 $ 1,570 36 $ 1,542

First Quarter 2022 Form 10-Q 53

Segment Results Allstate Protection

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.

Catastrophe reinsurance Our current catastrophe reinsurance program supports our risk tolerance framework which utilizes a modeled 1-in-100 annual aggregate limit for catastrophe losses from hurricanes, earthquakes and wildfires of $2.5 billion, net of reinsurance.

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

During the second quarter of 2022, we completed the placement of our 2022-2023 Florida Excess Catastrophe Reinsurance Program (“Florida program”), National General Lender Services Standalone Program and the National General Reciprocal Excess Catastrophe Reinsurance Contract.

Florida program updates Our 2022 Florida program provides coverage up to $1.83 billion of loss less a $40 million retention.

The Florida program includes reinsurance agreements placed in the traditional market, the Florida Hurricane Catastrophe Fund

(“FHCF”), and the Insurance-Linked Securities (“ILS”) market as follows:

• Traditional market placements comprise reinsurance limits for losses to personal lines property in Florida arising out of multiple perils.

These contracts provide a combined $1.30 billion of limits, with a portion of the traditional market placements providing coverage for perils not covered by the FHCF contracts, which only cover hurricanes.

• Two FHCF contracts provide $394 million of limits for qualifying losses to personal lines property in Florida caused by storms the National Hurricane Center declares to be hurricanes.

The two contracts are 90% placed.

• ILS placements provide $488 million of reinsurance limits for qualifying losses to personal lines property in Florida caused by a named storm event, a severe weather event, an earthquake event, a fire event, a volcanic eruption event, or a meteorite impact event.

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Allstate Protection Segment Results

National General Lender Services Standalone Program is placed in the traditional market and provides $225 million of coverage, subject to a $50 million retention, with one reinstatement of limits.

National General Reciprocal Excess Catastrophe Reinsurance Contracts are placed in the traditional market and provides $690 million of coverage, subject to a $20 million retention, with one reinstatement of limits.

Canada Catastrophe Excess of Loss Reinsurance Contract is placed in the traditional market and provides CAD 175 million of coverage, subject to a CAD 50 million retention, with one reinstatement of limits.

For a complete summary of the 2022 reinsurance placement, please read this in conjunction with the discussion and analysis in Part I.

Management’s Discussion and Analysis - Allstate Protection Segment Results, Catastrophe Reinsurance of The Allstate Corporation Form 10-Q for the quarterly period ended March 31, 2022.

The total cost of our property catastrophe reinsurance programs, excluding reinstatement premiums, during the second quarter and first six months of 2022 was $173 million and $317 million, respectively, compared to $128 million and $241 million in the second quarter and first six months of 2021, respectively.

Catastrophe placement premiums reduce

net written and earned premium with approximately 73% related to homeowners.

Reserve reestimates Unfavorable reserve reestimates were $459 million and $603 million in the second quarter and first six months of 2022, respectively, primarily due to strengthening of non-catastrophe reserves in personal auto, primarily from physical damage and bodily injury coverages.

Increases in physical damage reflect the ongoing inflationary factors and supply chain shortages impacting used vehicle and parts prices, labor rates and length of claim resolution, which contributed to the adverse development of claims reported in prior years but settled in 2022.

Increases in injury coverages reflect the ongoing impacts of more severe auto accidents, increased medical inflation, higher consumption of medical treatment and the increased prevalence and severity of claims with attorney representation.

Unfavorable reserve reestimates for homeowners were driven by catastrophe and non-catastrophe losses.

Unfavorable reserve reestimates for commercial auto during the second quarter are primarily from shared economy business written in states which Allstate has exited.

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

Reserve reestimates

Three months ended March 31,

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

reestimates (1)

combined ratio (2)

reestimates (1)

combined ratio (2)

($ in millions, except ratios) 2022 2021 2022 2021 2022 2021 2022 2021

9 unchanged sentences

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

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.

Second Quarter 2022 Form 10-Q 59

Segment Results Allstate Protection

Expense ratio decreased 1.7 and 0.5 points in the second quarter and first six months of 2022, respectively, compared to the second quarter and first six months of 2021, primarily due to lower advertising costs, restructuring and related charges and the impact of amortization of DAC, partially offset by higher operating costs.

Higher operating costs are primarily due to employee-related costs.

Impact of specific costs and expenses on the expense ratio

Three months ended March 31,

($ in millions, except ratios) 2022 2021 Change

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

($ in millions, except ratios) 2022 2021 Change 2022 2021 Change

Amortization of DAC $ 1,355 $ 1,319 $ 36 $ 2,703 $ 2,622 $ 81

3 unchanged sentences

Restructuring and related charges (2) 65 (67) 10 97 (87)

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

Allstate Special Payment plan bad debt expense — (14) 14 — (19) 19

Total underwriting expenses $ 2,507 $ 2,476 $ 31 $ 5,022 $ 4,768 $ 254

7 unchanged sentences

Restructuring and related charges — 0.6 (0.6) — 0.5 (0.5)

Shelter-in-Place Payback expense — 0.3 (0.3) — 0.1 (0.1)

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

Total expense ratio 23.0 24.7 (1.7) 23.5 24.0 (0.5)

First Quarter 2022 Form 10-Q 55

Segment Results Run-off Property-Liability

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Run-off Property-Liability Segment Results

Run-off Property-Liability Segment

Underwriting results

($ in millions) Three months ended March 31,

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

2022 2021 2022 2021

Claims and claims expense $ (3) $ (1) $ (4) $ (2)

1 unchanged sentence

Underwriting loss

$ (3) $ (2) $ (5) $ (5)

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

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

($ in millions) June 30, 2022 December 31, 2021

Asbestos claims

14 unchanged sentences

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

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

($ in millions) June 30, 2022 December 31, 2021

Direct excess commercial insurance

22 unchanged sentences

Net reserves $ 1,392 $ 1,421

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Run-off Property-Liability Segment Results

Second Quarter 2022 Form 10-Q 61

Segment Results Run-off Property-Liability

Percentage of gross and ceded reserves by case and IBNR

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Case IBNR Case IBNR

8 unchanged sentences

Ceded 71 29 71 29

(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.

(1) Approximately 63% of gross case reserves as of June 30, 2022 are subject to settlement agreements.

(2) Approximately 69% of ceded case reserves as of June 30, 2022 are subject to settlement agreements.

Gross payments from case reserves by type of exposure

($ in millions) Three months ended March 31,

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

2022 2021 2022 2021

Direct excess commercial insurance

$ 10 $ 16 28 $ 34

(3) (7) (10) (15)

Assumed reinsurance coverage

1 unchanged sentence

Direct primary commercial insurance

(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.

Ceded (1) (2) (1) (3)

Other run-off business

Gross — — — —

Ceded — — — —

(1) In the second quarter and first six months of 2022, 77% and 84% of payments related to settlement agreements.

(2) In the second quarter and first six months of 2022, 85% and 91% of payments related to settlement agreements.

Total net reserves as of June 30, 2022, included $652 million or 47% of estimated IBNR reserves compared to $733 million or 52% of estimated IBNR reserves as of December 31, 2021.

Total gross payments were $16 million and $41 million for the second quarter and first six months of 2022, respectively.

Payments for the second quarter and first six months 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 $10 million for the first quarter of 2022.

First Quarter 2022 Form 10-Q 57

Segment Results Protection Services

Reinsurance collections were $11 million and $21 million for the second quarter and first six months of 2022, respectively.

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Protection Services Segment Results

Protection Services Segment

Summarized financial information

($ in millions) Three months ended March 31,

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

2022 2021 2022 2021

Premiums written $ 670 $ 692 $ 1,300 $ 1,275

9 unchanged sentences

Income tax expense on operations (16) (15) (28) (27)

noncontrolling interest 1 — 1 —

Adjusted net income $ 43 $ 56 $ 96 $ 105

2 unchanged sentences

Allstate Roadside 1 2 3 6

Arity (1) 1 (2) 3

Allstate Identity Protection (1) 1 (1) (9)

4 unchanged sentences

Allstate Identity Protection 2,961 3,041

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

Policies in force as of June 30 (in thousands) 144,693 147,046

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

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.

Adjusted net income decreased 23.2% or $13 million in the second quarter of 2022 and decreased 8.6% or $9 million in the first six months of 2022 compared to the same periods of 2021, primarily driven by investments in geographic and product expansion at Allstate Protection Plans and increased severity at Allstate Roadside.

Premiums written decreased 3.2% or $22 million in the second quarter of 2022 primarily due to a decline in sales at Allstate Dealer Services and Allstate Protection Plans.

Premiums written increased 2.0% or $25 million in the first six months of 2022, compared to the same periods of 2021, primarily due to growth at Allstate Roadside and Allstate Protection Plans.

PIF decreased 1.6% or 2 million as of June 30, 2022 compared to June 30, 2021 due to a decline in Allstate Protection Plans.

Other revenue increased 3.4% or $3 million in the second quarter of 2022 and increased 3.9% or $7 million in the first six months of 2022 compared to the same periods of 2021, reflecting growth at Allstate Identity Protection.

Intersegment premiums and service fees decreased 17.4% or $8 million in the second quarter of 2022 and decreased 9.2% or $8 million in the first six months of 2022, compared to the same periods of 2021 driven by decreased Arity device sales due to a shift from Drivewise® devices to a mobile program.

Claims and claims expense increased 17.4% or $19 million in the second quarter 2022 and increased 18.4% or $39 million in the first six months of 2022 compared to the same periods of 2021, primarily due to higher levels of claims at Allstate Protection Plans driven by growth of the business and increased claims cost at Allstate Roadside due to higher severity and rescue volumes.

Second Quarter 2022 Form 10-Q 63

Segment Results Protection Services

Amortization of DAC increased 17.5% or $34 million in the second quarter of 2022 and increased 19.7% or $74 million in the first six months of 2022 compared to the same periods of 2021, driven by Allstate Protection Plans and Allstate Dealer Services business growth.

Operating costs and expenses increased 4.9% or $10 million in the second quarter of 2022 and increased 7.5% or $30 million in the first six months of 2022 compared to the same periods of 2021, primarily due to investments in geographic and product expansion at Allstate Protection Plans and Allstate Identity Protection.

Restructuring and related charges decreased $4 million in the second quarter of 2022 and decreased $13 million in the first six months of 2022 compared to the same periods of 2021, primarily due to a facility closure at Allstate Identity Protection in the first quarter of 2021.

64 www.allstate.com

2 unchanged sentences

Summarized financial information

Three months ended March 31,

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

($ in millions) 2022 2021 2022 2021

6 unchanged sentences

Operating costs and expenses (185) (186) (387) (376)

Restructuring and related charges (2) (1) (2) (1)

Income tax expense on operations (17) (16) (31) (34)

5 unchanged sentences

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.

Policies in force as of June 30 (in thousands) 4,368 4,452

(1) Benefit ratio is calculated as accident, health and other policy benefits less interest credited to contractholder funds of $9 million and $8 million for the three months ended June 30, 2022 and 2021, respectively, and $17 million for both the six months ended June 30, 2022 and 2021 , divided by premiums and contract charges.

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

1 unchanged sentence

(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.

Adjusted net income increased $3 million in the second quarter of 2022 compared to the second quarter of 2021, primarily due to an increase in group health revenues, partially offset by an increase in individual health claims.

Adjusted net income decreased $9 million in the first six months of 2022, compared to the same period of 2021, primarily due to increases in individual and group health claims, partially offset by lower employer voluntary benefits claim utilization.

Premiums and contract charges increased 4.3% or $19 million in the second quarter of 2022 and increased 3.7% or $33 million in the first six months of 2022 compared to the same periods of 2021, primarily due to growth in individual and group health.

Premiums and contract charges by line of business

Three months ended March 31,

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

($ in millions) 2022 2021 2022 2021

3 unchanged sentences

Premiums and contract charges $ 466 $ 447 $ 935 $ 902

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

Other revenue increased $9 million and $24 million in the second quarter and first six months of 2022, respectively, compared to the same periods of 2021, primarily due to an increase in group health administrative fees.

Accident, health and other policy benefits increased 6.7% or $17 million in the second quarter of 2022 and increased 8.9% or $44 million in the first six months of 2022 compared to the same periods of 2021, primarily due to increased benefits utilization for

individual health and group health, partially offset by lower utilization for employer voluntary benefits.

Benefit ratio increased to 55.8 and 55.7 in the second quarter and the first six months of 2022, respectively, compared to 54.6 and 52.9 in the same periods of 2021, primarily due to an increase in individual and group health claims, partially offset by a lower benefit ratio for employer voluntary benefits products due to lower accident and health claim

Second Quarter 2022 Form 10-Q 65

Segment Results Allstate Health and Benefits

experience and lower life mortality compared to the prior year.

Amortization of DAC increased 12.5% or $4 million in the second quarter of 2022 and increased 11.3% or

$8 million in the first six months of 2022 compared to the same periods of 2021, primarily related to employer voluntary benefits.

Operating costs and expenses

Three months ended March 31,

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

($ in millions) 2022 2021 2022 2021

2 unchanged sentences

Total operating costs and expenses $ 185 $ 186 $ 387 $ 376

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.

Operating costs and expenses decreased $1 million in the second quarter of 2022 compared to the second quarter of 2021, primarily due to a decrease in employer voluntary benefits.

Operating costs and expenses increased $11 million in the first six months 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) March 31, 2022 December 31, 2021

($ in millions) June 30, 2022 December 31, 2021

Traditional life insurance and other $ 326 $ 313

3 unchanged sentences

Portfolio composition and strategy by reporting segment (1)

March 31, 2022

June 30, 2022

($ in millions) Property-Liability Protection Services

19 unchanged sentences

(3) Equity securities are carried at fair value.

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

The fair value of equity securities held as of June 30, 2022, was $271 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.

Equity securities include $1.08 billion of funds with underlying investments in fixed income securities as of June 30, 2022.

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

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.

Investments totaled $61.06 billion as of June 30, 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.

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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.

investments, and real estate, most of which were 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.

Macroeconomic 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, which creates significant uncertainty.

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.

Investments in Russia and Ukraine As of June 30, 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

Second Quarter 2022 Form 10-Q 67

Portfolio composition by investment strategy

March 31, 2022

June 30, 2022

($ in millions) Market-

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Limited partnership interests — 7 7

Short-term investments (1) — (1)

Other (3) — (3)

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Fair value as of

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

($ in millions) June 30, 2022 December 31, 2021

government and agencies $ 8,745 $ 6,273

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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.

The Securities Valuation Office (“SVO”) of the National Association of Insurance Commissioners (“NAIC”) evaluates the fixed income securities of insurers for regulatory reporting and capital assessment purposes.

The NAIC assigns securities to one of six credit quality categories defined as “NAIC designations.” In general, securities with NAIC designations of 1 and 2 are considered investment grade and securities with NAIC designations of 3 through 6 are considered below investment grade.

The rating is either received from the SVO based on availability of applicable ratings from rating agencies on the NAIC Nationally Recognized Statistical Rating Organizations (“NRSRO”) provider list, including Moody’s Investors Service (“Moody’s”), S&P Global Ratings (“S&P”), Fitch Ratings (“Fitch”), or a comparable internal rating.

As a result of time lags between the funding of investments, the finalization of legal documents, and the completion of the SVO filing process, the portfolio includes certain securities that have not yet been designated by the SVO as of each balance sheet date and the categorization of these securities is based on the expected ratings indicated by internal analysis .

As of June 30, 2022, 88.8% of the consolidated fixed income securities portfolio was rated investment grade.

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 issuer.

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.

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The following table presents total fixed income securities by the applicable NAIC designation and comparable S&P rating.

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

March 31, 2022

June 30, 2022

NAIC 1 NAIC 2 NAIC 3

A and above BBB BB

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Total fixed income securities $ 22,682 $ (817) $ 13,989 $ (1,166) $ 2,897 $ (447)

B CCC and lower Total

NAIC 4 NAIC 5-6 Total

B CCC and lower

government and agencies $ — $ — $ — $ — $ 8,745 $ (133)

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

Limited partnership interests include $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

Limited partnership interests include $6.58 billion of interests in private equity funds, $928 million of interests in real estate funds and $437 million of interests in other funds as of June 30, 2022.

We have commitments to invest additional amounts in limited partnership interests totaling $2.64 billion as of June 30, 2022.

Other investments include $868 million of bank loans, net, and $741 million of direct investments in real estate as of June 30, 2022.

Second Quarter 2022 Form 10-Q 69

Unrealized net capital gains (losses)

March 31, December 31,

June 30, December 31,

($ in millions) 2022 2021

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

March 31, 2022

June 30, 2022

($ in millions) Amortized

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Consumer goods (cyclical and non-cyclical) $ 6,217 $ 4 $ (588) $ 5,633

Banking 3,736 5 (158) 3,583

Technology 2,978 1 (263) 2,716

Utilities 2,004 4 (98) 1,910

Communications 2,256 12 (98) 2,170

Banking 4,092 1 (259) 3,834

Capital goods 2,276 1 (226) 2,051

Communications 2,190 — (221) 1,969

Utilities 2,215 2 (170) 2,047

Financial services 2,015 1 (169) 1,847

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Total corporate fixed income portfolio 26,335 14 (2,257) 24,092

Municipal 5,805 54 (161) 5,698

government and agencies 8,878 8 (141) 8,745

Municipal 6,177 18 (284) 5,911

Foreign government 1,021 — (49) 972

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

Banking 3,975 54 (31) 3,998

Technology 2,947 80 (23) 3,004

Utilities 2,009 43 (28) 2,024

Communications 2,077 58 (21) 2,114

Banking 3,975 54 (31) 3,998

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

Communications 2,077 58 (21) 2,114

Utilities 2,009 43 (28) 2,024

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

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

First Quarter 2022 Form 10-Q 65

Second Quarter 2022 Form 10-Q 71

Equity securities by sector

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

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

Cost Over (under) cost Fair

Transportation 48 21 69 74 22 96

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

Capital Goods 198 (9) 189 376 37 413

Basic Industry $ 64 $ 8 $ 72 $ 119 $ 30 $ 149

Utilities 76 13 89 122 23 145

Transportation 49 13 62 74 22 96

Midstream 38 2 40 39 7 46

Integrated 51 24 75 62 8 70

Independent/upstream 32 10 42 44 5 49

Integrated 41 18 59 62 8 70

Other 7 5 12 14 3 17

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Net investment income

Three months ended March 31,

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

($ in millions) 2022 2021 2022 2021

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Investee level expenses (14) (11) (30) (24)

Securities lending expense (3) — (3) —

Operating costs and expenses (39) (30) (74) (54)

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Investment income, before expense $ 618 $ 1,015 $ 1,263 $ 1,760

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.

Net investment income decreased $412 million and $526 million in the second quarter and first six months of 2022, respectively, compared to the same periods of 2021, primarily due to lower performance-based results, mainly from limited partnerships.

The decrease in the second quarter was slightly offset by higher market-based fixed income portfolio yields.

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Performance-based investment income

Three months ended March 31,

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

($ in millions) 2022 2021 2022 2021

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Investee level expenses (1)

(13) (10) (27) (22)

Total performance-based income $ 236 $ 649 $ 542 $ 1,027

(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.

Performance-based investment income decreased $413 million and $485 million in the second quarter and first six months of 2022, respectively, compared to strong results in the same periods of 2021, primarily due to lower valuation increases and net gains on the sale of underlying investments.

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,

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

($ in millions) 2022 2021 2022 2021

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Limited partnerships (1)

(53) 11 (153) 14

Total valuation of equity investments (689) 163 (1,136) 330

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

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 losses on investments and derivatives in the second quarter and first six months 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 second quarter and first six months of 2022 related primarily to sales of fixed income securities in connection with ongoing portfolio management.

Valuation change and settlements of derivatives of $272 million and $590 million in the second quarter and first six months of 2022, respectively, 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 and gains on equity futures and options used to mitigate the impact of declining equity markets.

Second Quarter 2022 Form 10-Q 73

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

Three months ended March 31,

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

($ in millions) 2022 2021 2022 2021

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Total performance-based $ 45 $ 39 $ 82 $ 128

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.

Net gains on performance-based investments and derivatives in the second quarter and first six months of 2022 primarily related to increased valuation change and settlements of derivatives and gains on sales, partially offset by decreased valuation of equity investments.

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Capital resources

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

($ in millions) June 30, 2022 December 31, 2021

Preferred stock, common stock, treasury stock, retained income and other shareholders’ equity items $ 22,273 $ 24,524

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Ratio of debt to capital resources 28.4 24.1

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.

Allstate shareholders’ equity decreased in the first six months of 2022, primarily due to net unrealized capital losses on investments in 2022 compared to gains at December 31, 2021, common share repurchases, dividends paid to shareholders and a net loss.

In the six months ended June 30, 2022, we paid dividends of $466 million and $53 million related to our common and preferred shares, respectively.

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

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Total long-term debt principal $ 7,991

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.

Common share repurchases As of June 30, 2022, there was $1.82 billion remaining in the $5.00 billion common share repurchase program that is expected to be completed by March 31, 2023.

During the first six months of 2022, we repurchased 11.6 million common shares, or 4.1% of total common shares outstanding at December 31, 2021, for $1.48 billion.

Common shareholder dividends On January 3, 2022 and April 1, 2022, we paid a common shareholder dividend of $0.81 and $0.85, respectively.

On May 23, 2022, we declared a common shareholder dividend of $0.85 payable on July 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.

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

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

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 May 2022, 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 2022, 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.

There have been no changes to our ratings for A.M.

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

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

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

Second Quarter 2022 Form 10-Q 75

Capital Resources and Liquidity

discretion of the Corporation.

The maximum amount of loans the Corporation will have outstanding to all its eligible subsidiaries at any given point in time is limited to $1.00 billion.

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

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.

Parent company capital capacity Parent holding company deployable assets totaled $5.13 billion as of June 30, 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

As of March 31, 2022, we held $12.11 billion of cash, U.S.

As of June 30, 2022, we held $13.52 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 three months of 2022 between the following companies:

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

Intercompany dividends were paid in the first six months of 2022 between the following companies:

AIC, Allstate Insurance Holdings, LLC (“AIH”), the Corporation, American Heritage Life Insurance Company (“AHL”) and Allstate Financial Insurance Holdings Corporation (“AFIHC”).

Intercompany dividends

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AIH to the Corporation 3,949

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 March 31, 2022, we paid dividends of $3.13 billion.

AHL to AFIHC 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 through February 2023 is estimated at $5.51 billion, less dividends paid during the preceding twelve months measured at that point in time.

As of June 30, 2022, we paid dividends of $3.95 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 March 31, 2022, we satisfied all the requirements with no current restrictions on the payment of preferred stock dividends.

As of June 30, 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 three months of 2022, we did not defer interest payments on the subordinated debentures.

In the first six 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 19.3% as of March 31, 2022.

This ratio was 20.5% as of June 30, 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.

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• 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.

• As of June 30, 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 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.

We can use this shelf registration to issue an unspecified amount of debt securities, common stock (including 629 million shares of treasury stock as of June 30, 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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The Company is evaluating the anticipated impacts of the proposed guidance to its disclosures.

First Quarter 2022 Form 10-Q 71

Second Quarter 2022 Form 10-Q 77

Forward-Looking Statements

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis