What changed in this filing

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Item 1. Financial Statements

2022-11-02 compared with 2022-08-03 · 298 added, 274 removed, 1484 unchanged (28% of the section changed)

3 unchanged sentences

($ in millions, except per share data) Three months ended

June 30, Six months ended June 30,

September 30, Nine months ended September 30,

2022 2021 2022 2021

21 unchanged sentences

Net (loss) income ( 683 ) 531 ( 1,061 ) 775

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

Net loss attributable to noncontrolling interest ( 15 ) ( 7 ) ( 34 ) ( 7 )

Net (loss) income attributable to Allstate ( 668 ) 538 ( 1,027 ) 782

11 unchanged sentences

See notes to condensed consolidated financial statements.

Second Quarter 2022 Form 10-Q 1

Third Quarter 2022 Form 10-Q 1

Condensed Consolidated Financial Statements

The Allstate Corporation and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income (unaudited)

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

Condensed Consolidated Statements of Comprehensive Income (Loss) (unaudited)

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

2022 2021 2022 2021

Net (loss) income $ ( 683 ) $ 531 $ ( 1,061 ) $ 775

Other comprehensive (loss) income, after-tax

Other comprehensive loss, after-tax

Unrealized net capital gains and losses ( 789 ) ( 336 ) ( 3,525 ) ( 1,352 )

1 unchanged sentence

Unamortized pension and other postretirement prior service credit ( 8 ) ( 15 ) ( 38 ) ( 44 )

Other comprehensive (loss) income, after-tax ( 1,205 ) 467 ( 2,813 ) ( 1,014 )

Other comprehensive loss, after-tax ( 885 ) ( 372 ) ( 3,698 ) ( 1,386 )

Comprehensive (loss) income ( 1,568 ) 159 ( 4,759 ) ( 611 )

Comprehensive (loss) income attributable to noncontrolling interest ( 17 ) 5 ( 39 ) ( 1 )

Comprehensive loss attributable to noncontrolling interest ( 21 ) ( 7 ) ( 60 ) ( 8 )

Comprehensive (loss) income attributable to Allstate $ ( 1,547 ) $ 166 $ ( 4,699 ) $ ( 603 )

4 unchanged sentences

Condensed Consolidated Statements of Financial Position (unaudited)

($ in millions, except par value data) June 30, 2022 December 31, 2021

($ in millions, except par value data) September 30, 2022 December 31, 2021

Fixed income securities, at fair value (amortized cost, net $ 45,468 and $ 41,376 )

41 unchanged sentences

See notes to condensed consolidated financial statements.

Second Quarter 2022 Form 10-Q 3

Third Quarter 2022 Form 10-Q 3

Condensed Consolidated Financial Statements

1 unchanged sentence

Condensed Consolidated Statements of Shareholders’ Equity (unaudited)

($ in millions, except per share data) Three months ended June 30, Six months ended June 30,

($ in millions, except per share data) Three months ended September 30, Nine months ended September 30,

2022 2021 2022 2021

34 unchanged sentences

Change in unrealized net capital gains and losses ( 6 ) — ( 26 ) ( 1 )

Noncontrolling (loss) income ( 9 ) 6 ( 19 ) —

Noncontrolling loss ( 15 ) ( 7 ) ( 34 ) ( 7 )

Balance, end of period ( 112 ) ( 22 ) ( 112 ) ( 22 )

5 unchanged sentences

Condensed Consolidated Statements of Cash Flows (unaudited)

($ in millions) Six months ended June 30,

($ in millions) Nine months ended September 30,

Cash flows from operating activities

Net (loss) income $ ( 1,061 ) $ 775

Adjustments to reconcile net income to net cash provided by operating activities:

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation, amortization and other non-cash items 646 818

30 unchanged sentences

Acquisition of operations, net of cash acquired — ( 3,481 )

Net cash used in investing activities ( 138 ) ( 157 )

Net cash (used in) provided by investing activities ( 1,281 ) 289

Cash flows from financing activities

15 unchanged sentences

See notes to condensed consolidated financial statements.

Second Quarter 2022 Form 10-Q 5

Third Quarter 2022 Form 10-Q 5

Notes to Condensed Consolidated Financial Statements

5 unchanged sentences

These condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

The condensed consolidated financial statements and notes as of June 30, 2022 and for the three and six month periods ended June 30, 2022 and 2021 are unaudited.

The condensed consolidated financial statements and notes as of September 30, 2022 and for the three and nine month periods ended September 30, 2022 and 2021 are unaudited.

The condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring accruals) which are, in the opinion of management, necessary for the fair presentation of the financial position, results of operations and cash flows for the interim periods.

2 unchanged sentences

All significant intercompany accounts and transactions have been eliminated.

Subsequent Events

On October 18, 2022, Allstate closed the sale of its headquarters for $ 232 million resulting in a gain of approximately $ 99 million, pre-tax in the fourth quarter of 2022.

$ 16 million of the gain will be classified in Property-Liability net gains and losses on investments and derivatives and $ 83 million will be classified as other income within the Corporate and Other segment.

The Novel Coronavirus Pandemic or COVID-19 (“Coronavirus”)

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

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

These measures have moderated, but new variants of the Coronavirus could result in further economic volatility.

The Company continues to closely monitor and proactively adapt to developments and changing conditions.

3 unchanged sentences

As disclosed in Note 3, the Company sold substantially all of its life and annuity business in scope of the new standard.

The Company’s reserves and

deferred policy acquisition costs (“DAC”) for certain voluntary and individual life and accident and health insurance products are subject to the new guidance.

The Company’s reserves and deferred policy acquisition costs (“DAC”) for certain voluntary and individual life and accident and health insurance products are subject to the new guidance.

Under the new guidance, measurement assumptions, including those for mortality, morbidity and policy terminations, will be required to be reviewed at least annually, and updated as appropriate.

2 unchanged sentences

Current GAAP requires the measurement of reserves to utilize assumptions set at policy issuance unless updated current assumptions indicate that recorded reserves are deficient.

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Notes to Condensed Consolidated Financial Statements

The new guidance also requires DAC and other capitalized balances currently amortized in proportion to premiums or gross profits to be amortized on a constant level basis over the expected term for all long-duration insurance contracts.

2 unchanged sentences

The new guidance will be applied to affected contracts and DAC on the basis of existing carrying amounts at the earliest period presented.

In July 2022, the FASB issued an Exposure Draft of an Accounting Standards Update that would provide reporting entities with an accounting policy election to not apply the new guidance to insurance contracts in-force on the January 1, 2021 transition date but sold prior to the January 1, 2023 effective date provided certain conditions are met.

The Company is evaluating the anticipated impacts of applying the new guidance to both retained income and AOCI and does not anticipate the financial statement impact of adopting the new guidance to be material to the Company’s results of operations or financial position due to the 2021 dispositions of Allstate Life Insurance Company (“ALIC”), Allstate Life Insurance Company of New York (“ALNY”) and certain affiliates.

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In July 2022, the FASB issued an Exposure Draft of an Accounting Standards Update (“Exposure Draft”) that would provide reporting entities with an accounting policy election to not apply the new guidance to insurance contracts in-force on the January 1, 2021 transition date but sold prior to the January 1, 2023 effective date provided certain conditions are met.

The Company will adopt the new guidance effective January 1, 2023, using the modified retrospective approach and make the accounting policy election to not apply the new guidance to insurance contracts in-force on the transition date but sold prior to the effective date.

The total impact on equity of implementing the new guidance is expected to be a decrease of between $ 250 million and $ 350 million.

The expected decrease in equity includes the anticipated decrease in AOCI of between $ 235 million and $ 315 million primarily attributable to a change in the discount rate used in measuring the liability for future policy benefits for traditional life contracts and other long-term products with guaranteed terms from a portfolio-based rate at contract issuance to an upper-medium grade fixed income-based rate.

The expected decrease in equity also includes the anticipated decrease in retained income of between $ 15 million and $ 35 million which primarily relates to certain long-term contracts with guaranteed terms with net premium ratios that are required to be adjusted at the transition date.

The impact on equity, AOCI, and retained income excludes sold contracts that would meet the conditions included in the Exposure Draft.

The estimated impact to AOCI at transition date is expected to decline significantly at the effective date due to the increase in the discount rate between the transition date and effective date.

Third Quarter 2022 Form 10-Q 7

Notes to Condensed Consolidated Financial Statements

6 unchanged sentences

Computation of basic and diluted earnings per common share

(In millions, except per share data) Three months ended June 30, Six months ended June 30,

(In millions, except per share data) Three months ended September 30, Nine months ended September 30,

2022 2021 2022 2021

Net (loss) income from continuing operations $ ( 683 ) $ 206 $ ( 1,061 ) $ 4,047

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

Net loss attributable to noncontrolling interest ( 15 ) ( 7 ) ( 34 ) ( 7 )

Net (loss) income from continuing operations attributable to Allstate ( 668 ) 213 ( 1,027 ) 4,054

20 unchanged sentences

Weighted average dilutive potential common shares excluded due to net loss applicable to common shareholders (1)

(1) As a result of the net loss reported for the three and six month periods ended June 30, 2022, weighted average shares for basic earnings per share is also used for calculating diluted earnings per share because all dilutive potential common shares are anti-dilutive and are therefore excluded from the calculation.

Second Quarter 2022 Form 10-Q 7

(1) As a result of the net loss reported for the three and nine month periods ended September 30, 2022, weighted average shares for basic earnings per share is also used for calculating diluted earnings per share because all dilutive potential common shares are anti-dilutive and are therefore excluded from the calculation.

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Notes to Condensed Consolidated Financial Statements

22 unchanged sentences

(3) Subsequent to the acquisition, the Company repaid $ 100 million of 7.625 % Subordinated Notes and $ 72 million of Subordinated Debentures on February 3, 2021 and March 15, 2021, respectively.

As of June 30, 2022, the Company had principal balance remaining of $ 350 million 6.750 % Senior Notes due 2024, with a fair value adjustment of $ 36 million.

As of September 30, 2022, the Company had principal balance remaining of $ 350 million 6.750 % Senior Notes due in 2024, with a fair value adjustment of $ 31 million.

SafeAuto On October 1, 2021, the Company completed the acquisition of Safe Auto Insurance Group, Inc.

(“SafeAuto”), a non-standard auto insurance carrier focused on providing state-minimum private-passenger auto insurance direct to consumers with coverage options in 28 states for $ 267 million in cash.

Life and annuity business On October 1, 2021, the Company closed the sale of ALNY to Wilton Reassurance Company for $ 400 million.

On November 1, 2021, the Company closed the sale of 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.

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

On November 1, 2021, the Company 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 businesses were reclassified as held for sale and results were presented as discontinued operations.

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Third Quarter 2022 Form 10-Q 9

Notes to Condensed Consolidated Financial Statements

Financial results from discontinued operations

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

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

($ in millions) 2021 2021

15 unchanged sentences

Loss on disposition of operations 89 ( 4,048 )

Income tax expense (benefit) 254 ( 166 )

Income tax benefit ( 128 ) ( 294 )

Loss on disposition of operations, net of tax 217 ( 3,754 )

1 unchanged sentence

Cash flows from discontinued operations

Six months ended June 30,

Nine months ended September 30,

($ in millions) 2021

Net cash provided by operating activities from discontinued operations $ 888

Net cash provided by investing activities from discontinued operations 317

Net cash used in investing activities from discontinued operations ( 405 )

Note 4 Reportable Segments

15 unchanged sentences

A reconciliation of these measures to net income (loss) applicable to common shareholders is provided below.

Second Quarter 2022 Form 10-Q 9

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Notes to Condensed Consolidated Financial Statements

Reportable segments financial performance

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

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

($ in millions) 2022 2021 2022 2021

20 unchanged sentences

Income (loss) from discontinued operations — 235 — ( 3,435 )

Income tax benefit (expense) from discontinued operations — ( 297 ) — 73

Income tax benefit from discontinued operations — 90 — 163

Total from discontinued operations $ — $ 325 $ — $ ( 3,272 )

Net (loss) income attributable to noncontrolling interest (2)

Net loss attributable to noncontrolling interest (2)

( 15 ) ( 7 ) ( 35 ) ( 7 )

1 unchanged sentence

(1) Excludes amortization of purchased intangibles in Property-Liability, which is included above in underwriting income.

(2) Reflects net (loss) income attributable to noncontrolling interest in Property-Liability.

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(2) Reflects net loss attributable to noncontrolling interest in Property-Liability.

Third Quarter 2022 Form 10-Q 11

Notes to Condensed Consolidated Financial Statements

Reportable segments revenue information

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

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

2022 2021 2022 2021

17 unchanged sentences

Intersegment premiums and service fees (1)

39 46 118 133

Other revenue 84 85 269 263

20 unchanged sentences

(1) Intersegment insurance premiums and service fees are primarily related to Arity and Allstate Roadside and are eliminated in the condensed consolidated financial statements.

Second Quarter 2022 Form 10-Q 11

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Notes to Condensed Consolidated Financial Statements

1 unchanged sentence

Portfolio composition

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

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

Fixed income securities, at fair value $ 41,715 $ 42,136

7 unchanged sentences

($ in millions) Amortized cost, net Gross unrealized Fair

June 30, 2022

September 30, 2022

government and agencies $ 8,756 $ 1 $ ( 313 ) $ 8,444

12 unchanged sentences

Scheduled maturities for fixed income securities

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

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

Amortized cost, net Fair value Amortized cost, net Fair value

9 unchanged sentences

Net investment income

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

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

2022 2021 2022 2021

9 unchanged sentences

$ 690 $ 764 $ 1,846 $ 2,446

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Third Quarter 2022 Form 10-Q 13

Notes to Condensed Consolidated Financial Statements

Net gains (losses) on investments and derivatives by asset type

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

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

2022 2021 2022 2021

8 unchanged sentences

($ in millions)

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

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

2022 2021 2022 2021

7 unchanged sentences

Gross realized gains (losses) on sales of fixed income securities

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

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

2022 2021 2022 2021

1 unchanged sentence

Gross realized losses ( 181 ) ( 18 ) ( 748 ) ( 106 )

The following table presents the net pre-tax appreciation (decline) recognized in net income of equity securities and limited partnership interests carried at fair value that are still held as of June 30, 2022 and 2021, respectively.

Net appreciation (decline) recognized in net income

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

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

2022 2021 2022 2021

1 unchanged sentence

Limited partnership interests carried at fair value

( 36 ) 137 8 415

Total $ ( 245 ) $ 117 $ ( 763 ) $ 585

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Notes to Condensed Consolidated Financial Statements

Credit losses recognized in net income

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

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

2022 2021 2022 2021

1 unchanged sentence

Corporate $ ( 2 ) $ — $ ( 6 ) $ —

ABS ( 2 ) — ( 2 ) 1

Total fixed income securities ( 4 ) — ( 8 ) 1

7 unchanged sentences

Total $ ( 6 ) $ ( 12 ) $ ( 30 ) $ 2

Second Quarter 2022 Form 10-Q 13

Notes to Condensed Consolidated Financial Statements

Unrealized net capital gains and losses included in AOCI

2 unchanged sentences

gains (losses)

June 30, 2022 Gains Losses

September 30, 2022 Gains Losses

Fixed income securities $ 41,715 $ 12 $ ( 3,765 ) $ ( 3,753 )

19 unchanged sentences

Change in unrealized net capital gains (losses)

($ in millions) Six months ended June 30, 2022

($ in millions) Nine months ended September 30, 2022

Fixed income securities $ ( 4,513 )

6 unchanged sentences

Decrease in unrealized net capital gains and losses, after-tax $ ( 3,525 )

Third Quarter 2022 Form 10-Q 15

Notes to Condensed Consolidated Financial Statements

Carrying value for limited partnership interests

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

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

EMA Fair Value Total EMA Fair Value Total

4 unchanged sentences

(1) Other consists of certain limited partnership interests where the underlying assets are predominately public equity and debt securities.

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Notes to Condensed Consolidated Financial Statements

Short-term investments Short-term investments, including money market funds, commercial paper, U.S.

Treasury bills and other short-term investments, are carried at fair value.

As of June 30, 2022 and December 31, 2021, the fair value of short-term investments totaled $ 4.38 billion and $ 4.01 billion, respectively.

As of September 30, 2022 and December 31, 2021, the fair value of short-term investments totaled $ 4.03 billion and $ 4.01 billion, respectively.

Other investments Other investments primarily consist of bank loans, real estate, policy loans and derivatives.

4 unchanged sentences

Other investments by asset type

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

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

Bank loans, net $ 748 $ 1,574

12 unchanged sentences

The determination of cash flow estimates is inherently subjective, and methodologies may vary depending on facts and circumstances specific to the security.

All reasonably available information relevant to the collectability of the security is considered when developing the estimate of cash flows expected to be collected.

That information generally includes, but is not limited to, the remaining payment terms of the security, prepayment speeds, the financial condition and future earnings potential of the issue or issuer, expected defaults, expected recoveries, the value of underlying collateral, origination vintage year, geographic concentration of underlying collateral, available reserves or escrows, current subordination levels, third-party guarantees and other credit

enhancements.

All reasonably available information relevant

to the collectability of the security is considered when developing the estimate of cash flows expected to be collected.

Other information, such as industry analyst reports and forecasts, credit ratings, financial condition of the bond insurer for insured fixed income securities, and other market data relevant to the realizability of contractual cash flows, may also be considered.

4 unchanged sentences

If the Company determines that the fixed income security does not have sufficient cash flow or other information to estimate a recovery value for the security, the Company may conclude that the entire decline in fair value is deemed to be credit related and the loss is recorded in earnings.

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Notes to Condensed Consolidated Financial Statements

When a security is sold or otherwise disposed or when the security is deemed uncollectible and written off, the Company removes amounts previously recognized in the credit loss allowance.

Recoveries after write-offs are recognized when received.

Accrued interest excluded from the amortized cost of fixed income securities totaled $ 327 million and $ 311 million as of June 30, 2022 and December 31, 2021, respectively, and is reported within the accrued investment income line of the Condensed Consolidated Statements of Financial Position.

Accrued interest excluded from the amortized cost of fixed income securities totaled $ 359 million and $ 311 million as of September 30, 2022 and December 31, 2021, respectively, and is reported within the accrued investment income line of the Condensed Consolidated Statements of Financial Position.

The Company monitors accrued interest and writes off amounts when they are not expected to be received.

1 unchanged sentence

The process also includes the monitoring of other credit loss indicators such as ratings, ratings downgrades and payment defaults.

The securities identified, in addition to other securities for which the Company may have a concern, are evaluated for

Second Quarter 2022 Form 10-Q 15

Notes to Condensed Consolidated Financial Statements

potential credit losses using all reasonably available information relevant to the collectability or recovery of the security.

The securities

identified, in addition to other securities for which the Company may have a concern, are evaluated for potential credit losses using all reasonably available information relevant to the collectability or recovery of the security.

Inherent in the Company’s evaluation of credit losses for these securities are assumptions and estimates about the financial condition and future earnings potential of the issue or issuer.

Some of the factors that may be considered in evaluating whether a decline in fair value requires a credit loss allowance are:

1) the financial condition, near-term and long-term

prospects of the issue or issuer, including relevant industry specific market conditions and trends, geographic location and implications of rating agency actions and offering prices;

1) the financial condition, near-term and long-term prospects of the issue or issuer, including relevant industry specific market conditions and trends, geographic location and implications of rating agency actions and offering prices;

2) the specific reasons that a security is in an unrealized loss position, including overall market conditions which could affect liquidity;

1 unchanged sentence

Rollforward of credit loss allowance for fixed income securities

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

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

($ in millions) 2022 2021 2022 2021

Beginning balance $ ( 10 ) $ ( 2 ) $ ( 6 ) $ ( 3 )

Credit losses on securities for which credit losses not previously reported ( 2 ) — ( 2 ) —

Net (increases) decreases related to credit losses previously reported ( 2 ) — ( 6 ) 1

3 unchanged sentences

$ ( 13 ) $ ( 2 ) $ ( 13 ) $ ( 2 )

(1) Allowance for fixed income securities as of June 30, 2022 comprised $ 10 million of corporate bonds.

Allowance for fixed income securities as of June 30, 2021 comprised $ 1 million and $ 1 million of corporate bonds and ABS, respectively.

(2) Includes $ 1 million of credit loss allowance for fixed income securities that are classified as held for sale as of June 30, 2021.

(1) Allowance for fixed income securities as of September 30, 2022 comprised $ 11 million and $ 2 million of corporate bonds and ABS, respectively.

Allowance for fixed income securities as of September 30, 2021 comprised $ 1 million and $ 1 million of corporate bonds and ABS, respectively.

(2) Includes $ 1 million of credit loss allowance for fixed income securities that were classified as held for sale as of September 30, 2021.

Third Quarter 2022 Form 10-Q 17

Notes to Condensed Consolidated Financial Statements

Gross unrealized losses and fair value by type and length of time held in a continuous unrealized loss position

($ in millions) Less than 12 months 12 months or more Total

June 30, 2022

September 30, 2022

Fixed income securities

19 unchanged sentences

Total fixed income securities 2,207 $ 17,304 $ ( 223 ) 85 $ 227 $ ( 19 ) $ ( 242 )

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Notes to Condensed Consolidated Financial Statements

Gross unrealized losses by unrealized loss position and credit quality as of June 30, 2022

Gross unrealized losses by unrealized loss position and credit quality as of September 30, 2022

($ in millions) Investment

11 unchanged sentences

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

Unrealized losses on investment grade securities are principally related to an increase in market yields which may include increased risk-free interest rates or wider credit spreads since the time of initial purchase.

Unrealized losses on investment grade securities are principally related to an increase in market yields which may include increased risk-free interest rates or wider credit spreads since the time of

initial purchase.

The unrealized losses are expected to reverse as the securities approach maturity.

ABS in an unrealized loss position were evaluated based on actual and projected collateral losses relative to the securities’ positions in the respective securitization trusts, security specific expectations of cash flows, and credit ratings.

This evaluation also takes into consideration credit enhancement, measured in terms of (i) subordination from other classes of securities in the trust that are contractually obligated to absorb losses before the class of security the Company owns, and (ii) the expected impact of other structural features embedded in the securitization trust beneficial to the class of securities the Company owns, such as overcollateralization and excess spread.

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Notes to Condensed Consolidated Financial Statements

the Company owns, such as overcollateralization and excess spread.

Municipal bonds in an unrealized loss position were evaluated based on the underlying credit quality of the primary obligor, obligation type and quality of the underlying assets.

As of June 30, 2022, the Company has not made the decision to sell and it is not more likely than not the Company will be required to sell fixed income securities with unrealized losses before recovery of the amortized cost basis.

As of September 30, 2022, the Company has not made the decision to sell and it is not more likely than not the Company will be required to sell fixed income securities with unrealized losses before recovery of the amortized cost basis.

Loans The Company establishes a credit loss allowance for mortgage loans and bank loans when they are originated or purchased, and for unfunded commitments unless they are unconditionally cancellable by the Company.

The Company uses a probability of default and loss given default model for mortgage loans and bank loans to estimate current expected credit losses that considers all relevant

information available including past events, current conditions, and reasonable and supportable forecasts over the life of an asset.

The Company uses a probability of default and loss given default model for mortgage loans and bank loans to estimate current expected credit losses that considers all relevant information available including past events, current conditions, and reasonable and supportable forecasts over the life of an asset.

The Company also considers such factors as historical losses, expected prepayments and various economic factors.

7 unchanged sentences

Accrual of income is suspended for loans that are in default or when full and timely collection of principal and interest payments is not probable.

Accrued income receivable is monitored for recoverability and when not expected to be collected is written off through net investment income.

Accrued income receivable is monitored for recoverability and

when not expected to be collected is written off through net investment income.

Cash receipts on loans on non-accrual status are generally recorded as a reduction of amortized cost.

1 unchanged sentence

Accrued interest

($ in millions) June 30, December 31,

($ in millions) September 30, December 31,

Mortgage loans $ 3 $ 2

Bank Loans 4 4

Second Quarter 2022 Form 10-Q 17

Notes to Condensed Consolidated Financial Statements

Mortgage loans When it is determined a mortgage loan shall be evaluated individually, the Company uses various methods to estimate credit losses on individual loans such as using collateral value less estimated costs to sell where applicable, including when foreclosure is probable or when repayment is expected to be provided substantially through the operation or sale of the collateral and the borrower is experiencing financial difficulty.

6 unchanged sentences

Mortgage loans amortized cost by debt service coverage ratio distribution and year of origination

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

($ in millions) 2017 and prior 2018 2019 2020 2021 Current Total Total

6 unchanged sentences

Amortized cost, net $ 833 $ 821

Third Quarter 2022 Form 10-Q 19

Notes to Condensed Consolidated Financial Statements

Mortgage loans with a debt service coverage ratio below 1.0 that are not considered impaired primarily relate to situations where the borrower has the financial capacity to fund the revenue shortfalls from the properties for the foreseeable term, the decrease in cash flows from the properties is considered

temporary, or there are other risk mitigating factors such as additional collateral, escrow balances or borrower guarantees.

Payments on all mortgage loans were current as of June 30, 2022 and December 31, 2021.

Payments on all mortgage loans were current as of September 30, 2022 and December 31, 2021.

Rollforward of credit loss allowance for mortgage loans

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

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

($ in millions) 2022 2021 2022 2021

4 unchanged sentences

$ ( 6 ) $ ( 28 ) $ ( 6 ) $ ( 28 )

(1) Includes $ 23 million of credit loss allowance for mortgage loans that were classified as held for sale as of June 30, 2021.

(1) Includes $ 21 million of credit loss allowance for mortgage loans that were classified as held for sale as of September 30, 2021.

Bank loans When it is determined a bank loan shall be evaluated individually, the Company uses various methods to estimate credit losses on individual loans such as the present value of the loan’s expected future repayment cash flows discounted at the loan’s current effective interest rate.

2 unchanged sentences

The year of origination is determined to be the year in which the asset is acquired.

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Notes to Condensed Consolidated Financial Statements

Bank loans amortized cost by credit rating and year of origination

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

($ in millions) 2017 and prior 2018 2019 2020 2021 Current Total Total

7 unchanged sentences

Rollforward of credit loss allowance for bank loans

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

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

2022 2021 2022 2021

5 unchanged sentences

$ ( 52 ) $ ( 64 ) $ ( 52 ) $ ( 64 )

(1) Includes $ 8 million of credit loss allowance for bank loans that were classified as held for sale as of June 30, 2021.

(1) Includes $ 7 million of credit loss allowance for bank loans that were classified as held for sale as of September 30, 2021.

Note 6 Fair Value of Assets and Liabilities

1 unchanged sentence

The hierarchy for inputs used in determining fair value maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that observable inputs be used when available.

Assets and liabilities recorded on the Condensed Consolidated Statements of Financial Position at fair value are categorized in the fair value hierarchy based on the observability of inputs to the valuation techniques as follows:

Assets and liabilities recorded on the Condensed Consolidated Statements of Financial Position at fair value are categorized in the

fair value hierarchy based on the observability of inputs to the valuation techniques as follows:

Assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that the Company can access.

Assets and liabilities whose values are based on the following:

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Notes to Condensed Consolidated Financial Statements

(a) Quoted prices for similar assets or liabilities in active markets;

13 unchanged sentences

For fair values received from third parties or internally estimated, the Company’s processes and controls are designed to ensure that the valuation methodologies are appropriate and consistently applied, the inputs and assumptions are reasonable and consistent with the objective of determining fair value, and the fair values are accurately recorded.

For example, on a continuing basis, the Company assesses the reasonableness of individual fair values that have stale security prices or

Second Quarter 2022 Form 10-Q 19

Notes to Condensed Consolidated Financial Statements

that exceed certain thresholds as compared to previous fair values received from valuation service providers or brokers or derived from internal models.

For example, on a continuing basis, the Company assesses the reasonableness of individual fair values that have stale security prices or that exceed certain thresholds as compared to previous fair values received from valuation service providers or brokers or derived from internal models.

The Company performs procedures to understand and assess the methodologies, processes and controls of valuation service providers.

In addition, the Company may validate the reasonableness of fair values by comparing information obtained from valuation service providers or brokers to other third-party valuation sources for selected securities.

The Company performs ongoing price validation procedures such as back-testing of actual sales, which corroborate the various inputs used in internal models to market observable data.

The Company performs ongoing price validation procedures such as back-testing of actual

sales, which corroborate the various inputs used in internal models to market observable data.

When fair value determinations are expected to be more variable, the Company validates them through reviews by members of management who have relevant expertise and who are independent of those charged with executing investment transactions.

14 unchanged sentences

The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields and credit spreads.

Third Quarter 2022 Form 10-Q 21

Notes to Condensed Consolidated Financial Statements

Corporate - privately placed:

12 unchanged sentences

Over-the-counter (“OTC”) derivatives, including interest rate swaps, foreign currency swaps, total return swaps, foreign exchange forward contracts, certain options and certain credit default swaps, are valued using models that rely on inputs such as interest rate yield curves, implied volatilities, index price levels, currency rates, and credit spreads that are observable for substantially the full term of the contract.

The valuation techniques underlying the models are widely accepted in the financial

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Notes to Condensed Consolidated Financial Statements

services industry and do not involve significant judgment.

The valuation techniques underlying the models are widely accepted in the financial services industry and do not involve significant judgment.

Level 3 measurements

1 unchanged sentence

Comprise municipal bonds that are not rated by third-party credit rating agencies.

The primary inputs to the valuation of these municipal bonds include quoted prices for identical or similar assets in markets that exhibit less liquidity relative to those markets supporting Level 2 fair value measurements, contractual cash flows, benchmark yields and credit spreads.

Also included are municipal bonds valued based on non-binding broker quotes where the inputs have not been corroborated to be market observable and municipal bonds in default valued based on the present value of expected cash flows.

The primary inputs to the valuation of these municipal bonds include quoted prices for identical or similar assets that are not market observable, contractual cash flows, benchmark yields and credit spreads.

Also included are municipal bonds valued based on non-binding broker quotes where the inputs have

not been corroborated to be market observable and municipal bonds in default valued based on the present value of expected cash flows.

Corporate - public and privately placed and ABS:

2 unchanged sentences

• Equity securities:

The primary inputs to the valuation include quoted prices or quoted net asset values for identical or similar assets in markets that are less active relative to those markets supporting Level 2 fair value measurements.

The primary inputs to the valuation include quoted prices or quoted net asset values for identical or similar assets that are not market observable.

• Short-term:

15 unchanged sentences

These are categorized as Level 3 as a result of the significance of non-market observable inputs.

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Notes to Condensed Consolidated Financial Statements

Assets measured at fair value on a non-recurring basis

Comprise long-lived assets to be disposed of by sale, including real estate, that are written down to fair value less costs to sell and bank loans with individual credit loss allowance where amortized cost, net is equal to fair value based on broker quotes.

Comprise long-lived assets to be disposed of by sale, including real estate, that are written down to fair value less costs to sell.

Investments excluded from the fair value hierarchy

Limited partnerships carried at fair value, which do not have readily determinable fair values, use NAV provided by the investees and are excluded from the fair value hierarchy.

Limited partnerships carried at fair value, which do not have readily determinable fair values, use NAV provided by the investees and are excluded from the

fair value hierarchy.

These investments are generally not redeemable by the investees and generally cannot be sold without approval of the general partner.

The Company receives distributions of income and proceeds from the liquidation of the underlying assets of the investees, which usually takes place in years 4-9 of the typical contractual life of 10 - 12 years.

As of June 30, 2022, the Company has commitments to invest $ 223 million in these limited partnership interests.

Second Quarter 2022 Form 10-Q 21

Notes to Condensed Consolidated Financial Statements

As of September 30, 2022, the Company has commitments to invest $ 215 million in these limited partnership interests.

Assets and liabilities measured at fair value

June 30, 2022

September 30, 2022

($ in millions) Quoted prices in active markets for identical assets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Counterparty and cash collateral netting Total

21 unchanged sentences

% of total liabilities at fair value 18.7 % 66.7 % — % 14.6 % 100.0 %

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Third Quarter 2022 Form 10-Q 23

Notes to Condensed Consolidated Financial Statements

25 unchanged sentences

Quantitative information about the significant unobservable inputs used in Level 3 fair value measurements (1)

June 30, 2021

September 30, 2021

($ in millions) Fair value Valuation

2 unchanged sentences

Derivatives embedded in life and annuity contracts – Equity-indexed and forward starting options $ ( 455 ) Stochastic cash flow model Projected option cost 1.0 - 4.2 %

(1) These were included in the liabilities held for sale as of June 30, 2021.

(1) These were included in the liabilities held for sale as of September 30, 2021.

The embedded derivatives are equity-indexed and forward starting options in certain life and annuity products that provide customers with interest crediting rates based on the performance of the S&P 500.

1 unchanged sentence

These life and annuity products were included in the sales of ALIC, ALNY and certain affiliates.

As of June 30, 2022 and December 31, 2021, Level 3 fair value measurements of fixed income securities total $ 186 million and $ 144 million, respectively, and include $ 93 million and $ 41 million, respectively, of securities valued based on non-binding broker quotes

where the inputs have not been corroborated to be market observable and $ 17 million and $ 16 million, respectively, of municipal fixed income securities that are not rated by third-party credit rating agencies.

As of September 30, 2022 and December 31, 2021, Level 3 fair value measurements of fixed income securities total $ 206 million and $ 144 million, respectively, and include $ 70 million and $ 41 million, respectively, of securities valued based on non-binding broker quotes where the inputs have not been

corroborated to be market observable and $ 17 million and $ 16 million, respectively, of municipal fixed income securities that are not rated by third-party credit rating agencies.

As the Company does not develop the Level 3 fair value unobservable inputs for these fixed income securities, they are not included in the table above.

However, an increase (decrease) in credit spreads for fixed income securities valued based on non-binding broker quotes would result in a lower (higher) fair value, and an increase (decrease) in the credit rating of municipal bonds that are not rated by third-party credit rating agencies would result in a higher (lower) fair value.

Second Quarter 2022 Form 10-Q 23

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Notes to Condensed Consolidated Financial Statements

Rollforward of Level 3 assets and liabilities held at fair value during the three month period ended June 30, 2022

Rollforward of Level 3 assets and liabilities held at fair value during the three month period ended September 30, 2022

Balance as of

March 31, 2022 Total gains (losses) included in:

June 30, 2022 Total gains (losses) included in:

Transfers Balance as of

June 30, 2022

September 30, 2022

($ in millions) Net income OCI Into Level 3 Out of Level 3 Purchases Sales Issues Settlements

11 unchanged sentences

Total recurring Level 3 liabilities $ — $ — $ — $ — $ — $ — $ — $ — $ — $ —

Rollforward of Level 3 assets and liabilities held at fair value during the six month period ended June 30, 2022

Rollforward of Level 3 assets and liabilities held at fair value during the nine month period ended September 30, 2022

Balance as of

1 unchanged sentence

Transfers Balance as of

June 30, 2022

September 30, 2022

($ in millions) Net income OCI Into Level 3 Out of Level 3 Purchases Sales Issues Settlements

11 unchanged sentences

Total recurring Level 3 liabilities $ — $ — $ — $ — $ — $ — $ — $ — $ — $ —

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Third Quarter 2022 Form 10-Q 25

Notes to Condensed Consolidated Financial Statements

Rollforward of Level 3 assets and liabilities held at fair value during the three month period ended June 30, 2021

Rollforward of Level 3 assets and liabilities held at fair value during the three month period ended September 30, 2021

Balance as of

March 31, 2021 Total gains (losses) included in:

June 30, 2021 Total gains (losses) included in:

Transfers Transfers to (from) held for sale Balance as of

June 30, 2021

September 30, 2021

($ in millions) Net income OCI Into Level 3 Out of Level 3 Purchases Sales Issues Settlements

12 unchanged sentences

Total recurring Level 3 liabilities $ ( 490 ) $ 15 $ — $ — $ — $ — $ — $ — $ ( 9 ) $ 5 $ ( 479 )

Rollforward of Level 3 assets and liabilities held at fair value during the six month period ended June 30, 2021

Rollforward of Level 3 assets and liabilities held at fair value during the nine month period ended September 30, 2021

Balance as of

1 unchanged sentence

Transfers Transfers to (from) held for sale Balance as of

June 30, 2021

September 30, 2021

($ in millions) Net income OCI Into Level 3 Out of Level 3 Purchases Sales Issues Settlements

13 unchanged sentences

Total Level 3 gains (losses) included in net income

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

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

($ in millions) 2022 2021 2022 2021

1 unchanged sentence

Net gains (losses) on investments and derivatives ( 23 ) 26 56 66

Second Quarter 2022 Form 10-Q 25

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Notes to Condensed Consolidated Financial Statements

Transfers into Level 3 during the three and six months ended June 30, 2022 and June 30, 2021 included situations where a quote was not provided by the Company’s independent third-party valuation service provider and as a result the price was stale or had been replaced with a broker quote where the inputs had not been corroborated to be market observable resulting in the security being classified as Level 3.

Transfers out of Level 3 during the three and six months ended June 30, 2022 and 2021 included situations where a broker quote was used in the prior period and a quote became available from the Company’s independent third-party valuation service provider in the current period.

Transfers into Level 3 during the three and nine months ended September 30, 2022 and September 30, 2021 included situations where a quote was not provided by the Company’s independent third-party valuation service provider and as a result the price was stale or had been replaced with a broker quote where the inputs had not been corroborated to be market observable resulting in the security being classified as Level 3.

Transfers out of Level 3 during the three and nine months ended September 30, 2022 and 2021 included situations where a broker quote was used in the prior period and a quote became available from the Company’s independent third-party valuation service provider in the current period.

A quote utilizing the new pricing source was not available as of the prior period, and any gains or losses related to the change in valuation source for individual securities were not significant.

Valuation changes included in net income and OCI for Level 3 assets and liabilities held as of June 30,

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

Valuation changes included in net income and OCI for Level 3 assets and liabilities held as of September 30,

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

2022 2021 2022 2021

Municipal $ — $ 1 $ — $ —

Corporate - privately placed 1 — 1 —

Total fixed income securities 1 1 1 —

Equity securities $ ( 16 ) $ 9 $ 11 $ 22

12 unchanged sentences

Corporate - privately placed ( 1 ) 1 ( 2 ) 1

Assets held for sale — — — 1

Total recurring Level 3 assets $ ( 4 ) $ — $ ( 7 ) $ —

Changes in unrealized net capital gains and losses reported in OCI $ ( 4 ) $ — $ ( 7 ) $ —

Financial instruments not carried at fair value

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

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

Financial assets Fair value level Amortized cost, net Fair

8 unchanged sentences

(1) Represents the amounts reported on the Condensed Consolidated Statements of Financial Position.

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Third Quarter 2022 Form 10-Q 27

Notes to Condensed Consolidated Financial Statements

14 unchanged sentences

When derivatives meet specific criteria, they may be designated as accounting hedges and accounted for as fair value, cash flow, foreign currency fair value or foreign currency cash flow hedges.

The notional amounts specified in the contracts are used to calculate the exchange of contractual payments under the agreements and are generally not

representative of the potential for gain or loss on these agreements.

The notional amounts specified in the contracts are used to calculate the exchange of contractual payments under the agreements and are generally not representative of the potential for gain or loss on these

However, the notional amounts specified in credit default swaps where the Company has sold credit protection represent the maximum amount of potential loss, assuming no recoveries.

9 unchanged sentences

The contingent consideration meets the definition of a derivative and is accounted for on a fair value basis with periodic changes in fair value reflected in earnings.

As of June 30, 2022, the Company recorded $ 108 million in other assets related to this derivative.

For the three and six months ended June 30, 2022, the Company recorded gains of $ 31 million and $ 43 million, respectively, in operating costs and expenses related to valuation of this contingent consideration.

Second Quarter 2022 Form 10-Q 27

As of September 30, 2022, the Company recorded $ 104 million in other assets related to this derivative.

For the three and nine months ended September 30, 2022, the Company recorded a loss of $ 4 million and a gain of $ 39 million, respectively, in operating costs and expenses related to valuation of this contingent consideration.

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Notes to Condensed Consolidated Financial Statements

Summary of the volume and fair value positions of derivative instruments as of June 30, 2022

Summary of the volume and fair value positions of derivative instruments as of September 30, 2022

($ in millions, except number of contracts) Volume (1)

6 unchanged sentences

Options Other investments n/a 1,309 44 44 —

Futures Other assets n/a 336 — — —

Foreign currency contracts

16 unchanged sentences

Credit default swaps – buying protection Other liabilities & accrued expenses 55 n/a ( 1 ) — ( 1 )

Credit default swaps – selling protection Other liabilities & accrued expenses 450 n/a — — —

Total liability derivatives 744 7,853 23 $ 60 $ ( 37 )

3 unchanged sentences

(n/a = not applicable)

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Third Quarter 2022 Form 10-Q 29

Notes to Condensed Consolidated Financial Statements

36 unchanged sentences

Gross amount Counter-party netting Cash collateral (received) pledged Net amount on balance sheet Securities collateral (received) pledged Net amount

June 30, 2022

September 30, 2022

Asset derivatives $ 60 $ ( 64 ) $ 5 $ 1 $ — $ 1

4 unchanged sentences

(1) All OTC derivatives are subject to enforceable master netting agreements.

Second Quarter 2022 Form 10-Q 29

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Notes to Condensed Consolidated Financial Statements

1 unchanged sentence

($ in millions) Net gains (losses) on investments and derivatives Operating costs and expenses Total gain (loss) recognized in net income on derivatives

Three months ended June 30, 2022

Three months ended September 30, 2022

Interest rate contracts $ 260 $ — $ 260

3 unchanged sentences

Credit default contracts ( 10 ) — ( 10 )

Other contracts — ( 1 ) ( 1 )

Total $ 299 $ ( 19 ) $ 280

Six months ended June 30, 2022

Nine months ended September 30, 2022

Interest rate contracts $ 734 $ — $ 734

3 unchanged sentences

Credit default contracts 6 — 6

Other contracts — ( 1 ) ( 1 )

Total $ 889 $ ( 25 ) $ 864

Three months ended June 30, 2021

Three months ended September 30, 2021

Interest rate contracts $ 18 $ — $ 18

4 unchanged sentences

Total $ 46 $ ( 3 ) $ 43

Six months ended June 30, 2021

Nine months ended September 30, 2021

Interest rate contracts $ 19 $ — $ 19

7 unchanged sentences

OTC cash and securities collateral pledged

($ in millions) June 30, 2022

($ in millions) September 30, 2022

Pledged by the Company $ 5

Pledged to the Company (1)

(1) Includes no collateral posted under MNA’s for contracts containing credit-risk-contingent provisions that are in a liability provision.

(1) No collateral was posted under MNA’s for contracts containing credit-risk-contingent provisions that are in a liability provision.

The Company has not incurred any losses on derivative financial instruments due to counterparty nonperformance.

2 unchanged sentences

This exposure is measured by the fair value of OTC derivative contracts with a positive fair value at the reporting date reduced by the effect, if any, of legally enforceable master netting agreements.

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Third Quarter 2022 Form 10-Q 31

Notes to Condensed Consolidated Financial Statements

OTC derivatives counterparty credit exposure by counterparty credit rating

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

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

parties Notional

9 unchanged sentences

Exchange traded and cleared margin deposits

($ in millions) June 30, 2022

($ in millions) September 30, 2022

Pledged by the Company $ 162

8 unchanged sentences

The following table summarizes the fair value of derivative instruments with termination, cross-default or collateral credit-risk-contingent features that are in a liability position, as well as the fair value of assets and collateral that are netted against the liability in accordance with provisions within legally enforceable MNAs.

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

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

Gross liability fair value of contracts containing credit-risk-contingent features $ 11 $ 8

6 unchanged sentences

CDS typically have a five-year term.

Second Quarter 2022 Form 10-Q 31

As of September 30, 2022, there were no open CDS positions.

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Notes to Condensed Consolidated Financial Statements

2 unchanged sentences

AAA AA A BBB BB and

June 30, 2022

Corporate debt $ — $ — $ — $ — $ — $ — $ —

Corporate debt 7 11 72 277 83 450 —

Total $ 7 $ 11 $ 72 $ 277 $ 83 $ 450 $ —

December 31, 2021

15 unchanged sentences

The ratings of individual names for which protection has been sold are also monitored.

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Third Quarter 2022 Form 10-Q 33

Notes to Condensed Consolidated Financial Statements

5 unchanged sentences

The Company receives a management fee for the services provided to the Reciprocal Exchanges.

In addition, as of June 30, 2022 and December 31, 2021, the Company holds interests of $ 123 million in the form of surplus notes included in other liabilities and expenses on the Statement of Assets and Liabilities of the Reciprocal Exchanges that provide capital to the Reciprocal Exchanges and would absorb any expected losses.

The Company is therefore

the primary beneficiary.

In addition, as of September 30, 2022 and December 31, 2021, the Company holds interests of $ 123 million in the form of surplus notes included in other liabilities and expenses on the Statement of Assets and Liabilities of the Reciprocal Exchanges that provide capital to the Reciprocal Exchanges and would absorb any expected losses.

The Company is therefore the primary beneficiary.

In the event of dissolution, policyholders would share any residual unassigned surplus but are not subject to assessment for any deficit in unassigned surplus of the Reciprocal Exchanges.

The assets of the Reciprocal Exchanges can be used only to settle the obligations of the Reciprocal Exchanges and general creditors have no recourse to the Company.

The results of operations of the Reciprocal Exchanges are included in the Company’s Allstate Protection segment and generated $ 41 million and $ 83 million of earned premiums for the three and six months ended June 30, 2022, respectively, compared to $ 45 million and $ 90 million for the three and six months ended June 30, 2021, respectively.

Claims and claims expenses were $ 26 million and $ 60 million for the three and six months ended June 30, 2022, respectively, compared to $ 29 million and $ 67 million for the three and six months ended June 30, 2021, respectively.

The results of operations of the Reciprocal Exchanges are included in the Company’s Allstate Protection segment and generated $ 39 million and $ 122 million of earned premiums for the three and nine months ended September 30, 2022, respectively, compared to $ 47 million and $ 137 million for the three and nine months ended September 30, 2021, respectively.

Claims and claims expenses were $ 31 million and $ 91 million for the three and nine months ended September 30, 2022, respectively, compared to $ 38 million and $ 105 million for the three and nine months ended September 30, 2021, respectively.

Assets and liabilities of Reciprocal Exchanges

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

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

Fixed income securities $ 302 $ 324

14 unchanged sentences

For example, the Coronavirus has had a significant impact on driving patterns and auto frequency.

Supply chain disruptions have resulted in higher parts costs, used car values

and longer time to claim resolution, which have combined with labor shortages to increase physical damage loss costs.

Medical inflation, treatment trends and higher severity of claims with attorney representation have also increased liability losses.

Supply chain disruptions

have resulted in higher parts costs, used car values and longer time to claim resolution, which have combined with labor shortages to increase physical damage loss costs.

Medical inflation, treatment trends, attorney representation, litigation costs and more severe accidents have contributed to higher third-party bodily injury loss costs.

These factors may lead to historical development trends being less predictive of future loss development, potentially creating additional reserve variability.

1 unchanged sentence

Reserves for prior accident years are statistically determined using several different actuarial estimation methods.

Changes in auto claim frequency may result from changes in mix of business, the rate of distracted driving, miles driven or other macroeconomic factors.

Changes in auto current year claim severity are generally influenced by inflation in the medical and

Second Quarter 2022 Form 10-Q 33

Changes in auto claim frequency may result from changes in mix of business, driving behaviors, miles driven or other macroeconomic factors.

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Notes to Condensed Consolidated Financial Statements

auto repair sectors, the effectiveness and efficiency of claim practices and changes in mix of claim types.

in auto current year claim severity are generally influenced by inflation in the medical and auto repair sectors, the effectiveness and efficiency of claim practices and changes in mix of claim types.

The Company mitigates these effects through various loss management programs.

5 unchanged sentences

The highest degree of uncertainty is associated with reserves for losses incurred in the initial reporting

period as it contains the greatest proportion of losses that have not been reported or settled.

period as it contains the greatest proportion of losses that have not been reported or settled as well as heightened uncertainty for claims that involve litigation or take longer to settle during periods of rapidly increasing loss costs.

The Company also has uncertainty in the Run-off Property-Liability reserves that are based on events long since passed and are complicated by lack of historical data, legal interpretations, unresolved legal issues and legislative intent based on establishment of facts.

3 unchanged sentences

Rollforward of the reserve for property and casualty insurance claims and claims expense

Six months ended June 30,

Nine months ended September 30,

($ in millions) 2022 2021

12 unchanged sentences

Total paid ( 23,870 ) ( 20,637 )

Net balance as of June 30 25,326 22,571

Net balance as of September 30 26,973 23,251

Plus recoverables 9,556 10,035

Balance as of June 30 $ 34,276 $ 31,637

Balance as of September 30 $ 36,529 $ 33,286

(1) Recoverables comprises reinsurance and indemnification recoverables.

Incurred claims and claims expense represents the sum of paid losses, claim adjustment expenses and reserve changes in the period.

This expense included losses from catastrophes of $ 1.57 billion and $ 1.54 billion in the six months ended June 30, 2022 and 2021, respectively, net of recoverables.

This expense included losses from catastrophes of $ 2.33 billion and $ 2.81 billion in the nine months ended September 30, 2022 and 2021, respectively, net of recoverables.

Catastrophes are an inherent risk of the property and casualty insurance business that have contributed to, and will continue to contribute to, material year-to-year fluctuations in the Company’s results of operations and financial position.

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Third Quarter 2022 Form 10-Q 35

Notes to Condensed Consolidated Financial Statements

2 unchanged sentences

($ in millions)

Three months ended June 30,

2022 2021 2022

Three months ended September 30,

Auto $ 643 $ 77 $ ( 11 ) $ ( 5 ) $ 632 $ 72

3 unchanged sentences

Run-off Property-Liability (4)

120 113 — — 120 113

Protection Services — — — — — —

Total prior year reserve reestimates $ 875 $ 162 $ ( 9 ) $ ( 1 ) $ 866 $ 161

Six months ended June 30,

Nine months ended September 30,

Auto $ 1,069 $ 31 $ ( 58 ) $ ( 28 ) $ 1,011 $ 3

3 unchanged sentences

Run-off Property-Liability (4)

124 115 — — 124 115

Protection Services ( 3 ) ( 2 ) — — ( 3 ) ( 2 )

2 unchanged sentences

(1) Favorable reserve reestimates are shown in parentheses.

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

(3) Included approximately $ 50 million and $ 200 million of estimated recoveries related to Nationwide Aggregate Reinsurance Program cover for aggregate catastrophe losses occurring between April 1, 2020 and December 31, 2020, for the three and six months ended 2021, respectively, which primarily impacted homeowners reestimates.

(4) Included approximately $ 110 million favorable subrogation settlements arising from the Woolsey wildfire, which primarily impacted homeowners reestimates, for the six months ended 2021.

(2) Included approximately $ 40 million and $ 240 million of estimated recoveries related to Nationwide Aggregate Reinsurance Program cover for aggregate catastrophe losses occurring between April 1, 2020 and December 31, 2020, for the three and nine months ended 2021, respectively, which primarily impacted homeowners reestimates.

(3) Included approximately $ 110 million favorable subrogation settlements arising from the Woolsey wildfire, which primarily impacted homeowners reestimates, for the nine months ended 2021.

(4) The Company’s 2022 and 2021 annual reserve reviews, using established industry and actuarial practices, resulted in unfavorable reestimates of $ 118 million and $ 111 million, respectively .

Unfavorable reserve reestimates for personal auto are primarily from bodily injury and physical damage coverages.

Increases in injury coverages reflect recent data and updated assumptions related to severity of third-party bodily injury claims, increased claims with attorney representation, litigation costs and higher medical inflation.

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.

Delays in the receipt of third-party carrier claims also contributed to the adverse development of claims reported in prior years.

Note 10 Reinsurance and Indemnification

Effects of reinsurance ceded and indemnification programs on property and casualty premiums earned and accident and health insurance premiums and contract charges

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

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

2022 2021 2022 2021

2 unchanged sentences

Effects of reinsurance ceded and indemnification programs on property and casualty insurance claims and claims expense and accident, health and other policy benefits

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

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

2022 2021 2022 2021

3 unchanged sentences

( 5 ) ( 13 ) ( 21 ) ( 68 )

(1) Ceded losses incurred included $ 44 million and $ 450 million related to the Michigan Catastrophic Claims Association for the six months ended June 30, 2022 and 2021, respectively.

(2) Included approximately $ 675 million of ceded losses related to the Nationwide Catastrophe Reinsurance Program for the six months ended June 30, 2021.

Second Quarter 2022 Form 10-Q 35

(1) Ceded losses incurred included $ 100 million and $ 525 million related to the Michigan Catastrophic Claims Association for the nine months ended September 30, 2022 and 2021, respectively, and $ 305 million of expected reinsurance recoveries related to the Florida Excess Catastrophe Reinsurance Program for Hurricane Ian for the three and nine months ended September 30, 2022.

(2) Included approximately $ 1.40 billion and $ 185 million of ceded losses related to the Nationwide Catastrophe Reinsurance Program and the National Flood Insurance Program, respectively, for the nine months ended September 30, 2021.

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Notes to Condensed Consolidated Financial Statements

1 unchanged sentence

Reinsurance and indemnification recoverables, net

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

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

Property and casualty

5 unchanged sentences

Rollforward of credit loss allowance for reinsurance recoverables

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

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

2022 2021 2022 2021

11 unchanged sentences

(2) Indemnification recoverables are considered collectible based on the industry pool and facility enabling legislation.

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Notes to Condensed Consolidated Financial Statements

Note 11 Company Restructuring

4 unchanged sentences

• Exit - contract termination penalties and real estate costs primarily related to accelerated amortization of right-of-use assets and related leasehold improvements at facilities to be vacated

The expenses related to these activities are included in the Condensed Consolidated Statements of Operations as restructuring and related charges and totaled $ 1 million and $ 71 million during the three months ended June 30, 2022 and 2021, respectively, and $ 13 million and $ 122 million during the six months ended June 30, 2022 and 2021, respectively.

Restructuring expenses during the second quarter and first six months of 2022 are primarily due to the

future work environment.

The expenses related to these activities are included in the Condensed Consolidated Statements of Operations as restructuring and related charges and totaled $ 14 million and $ 23 million during the three months ended September 30, 2022 and 2021, respectively, and $ 27 million and $ 145 million during the nine months ended September 30, 2022 and 2021, respectively.

Restructuring expenses during the third quarter and first nine months of 2022 are primarily due to the

future work environment and employee costs.

The Company continues to identify ways to improve operating efficiency and reduce cost which may result in additional restructuring charges in the future.

9 unchanged sentences

The Company expects that the majority of these actions will be completed in 2022.

Third Quarter 2022 Form 10-Q 37

Notes to Condensed Consolidated Financial Statements

Restructuring activity during the period

4 unchanged sentences

Payments and non-cash charges ( 6 ) ( 17 ) ( 23 )

Restructuring liability as of June 30, 2022 $ 4 $ 7 $ 11

As of June 30, 2022, the cumulative amount incurred to date for active programs related to employee severance, relocation benefits and exit expenses totaled $ 4 million for employee costs and $ 140 million for exit costs.

Restructuring liability as of September 30, 2022 $ 18 $ 7 $ 25

As of September 30, 2022, the cumulative amount incurred to date for active programs related to employee severance, relocation benefits and exit expenses totaled $ 19 million for employee costs and $ 140 million for exit costs.

Note 12 Guarantees and Contingent Liabilities

5 unchanged sentences

In the normal course of business, the Company provides standard indemnifications to contractual counterparties in connection with numerous transactions, including acquisitions and divestitures.

The types of indemnifications typically provided include indemnifications for breaches of representations and warranties, taxes and certain

other liabilities, such as third-party lawsuits.

The types of indemnifications typically provided include indemnifications for breaches of representations and warranties, taxes and certain other liabilities, such as third-party lawsuits.

The indemnification clauses are often standard contractual terms and are entered into in the normal course of business based on an assessment that the risk of loss would be remote.

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Management does not believe these indemnifications will have a material effect on results of operations, cash flows or financial position of the Company.

Related to the sale of ALIC and Allstate Assurance Company on November 1, 2021, AIC and Allstate

Second Quarter 2022 Form 10-Q 37

Notes to Condensed Consolidated Financial Statements

Financial Insurance Holdings Corporation (collectively, the “Sellers”) agreed to indemnify Everlake US Holdings Company in connection with certain representations, warranties and covenants of the Sellers, and certain liabilities specifically excluded from the transaction, subject to specific contractual limitations regarding the Sellers’ maximum obligation.

Related to the sale of ALIC and Allstate Assurance Company on November 1, 2021, AIC and Allstate Financial Insurance Holdings Corporation (collectively, the “Sellers”) agreed to indemnify Everlake US Holdings Company in connection with certain representations, warranties and covenants of the Sellers, and certain liabilities specifically excluded from the transaction, subject to specific contractual limitations regarding the Sellers’ maximum obligation.

Management does not believe these indemnifications will have a material effect on results of operations, cash flows or financial position of the Company.

The aggregate liability balance related to all guarantees was not material as of June 30, 2022.

The aggregate liability balance related to all guarantees was not material as of September 30, 2022.

Regulation and compliance

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The Company routinely reviews its practices to validate compliance with laws and regulations and with internal procedures and policies.

As a result of these reviews, from time to time the Company may decide to modify some of its procedures and policies.

As a result of these reviews, from time to time the Company may decide to modify

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Notes to Condensed Consolidated Financial Statements

some of its procedures and policies.

Such modifications, and the reviews that led to them, may be accompanied by payments being made and costs being incurred.

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In Allstate’s experience, monetary demands in pleadings bear little relation to the ultimate loss, if any, to the Company.

In connection with regulatory examinations and proceedings, government authorities may seek various forms of relief, including penalties, restitution, and changes in business practices.

In connection with regulatory examinations and proceedings, government authorities may seek various

forms of relief, including penalties, restitution, and changes in business practices.

The Company may not be advised of the nature and extent of relief sought until the final stages of the examination or proceeding.

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The Company establishes accruals for such matters at management’s best estimate when the Company assesses that it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated.

The Company does not establish accruals for such matters when the Company does not believe both that it is probable that a loss has been incurred and the amount of the loss

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Notes to Condensed Consolidated Financial Statements

can be reasonably estimated.

The Company does not establish accruals for such matters when the Company does not believe both that it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated.

The Company’s assessment of whether a loss is reasonably possible or probable is based on its assessment of the ultimate outcome of the matter following all appeals.

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When the Company possesses sufficient appropriate information to develop an estimate of the reasonably possible loss or range of loss above the amount accrued, if any, that estimate is aggregated and disclosed below.

There may be other disclosed matters for which a loss is probable or reasonably possible, but such an estimate is not possible.

Third Quarter 2022 Form 10-Q 39

Notes to Condensed Consolidated Financial Statements

may be other disclosed matters for which a loss is probable or reasonably possible, but such an estimate is not possible.

Disclosure of the estimate of the reasonably possible loss or range of loss above the amount accrued, if any, for any individual matter would only be considered when there have been sufficient legal and factual developments such that the Company’s ability to resolve the matter would not be impaired by the disclosure of the individual estimate.

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This disclosure is not an indication of expected loss, if any.

Under accounting guidance, an event is “reasonably possible” if “the chance of the

future event or events occurring is more than remote but less than likely” and an event is “remote” if “the chance of the future event or events occurring is slight.” This estimate is based upon currently available information and is subject to significant judgment and a variety of assumptions and known and unknown uncertainties.

Under accounting guidance, an event is “reasonably possible” if “the chance of the future event or events occurring is more than remote but less than likely” and an event is “remote” if “the chance of the future event or events occurring is slight.” This estimate is based upon currently available information and is subject to significant judgment and a variety of assumptions and known and unknown uncertainties.

The matters underlying the estimate will change from time to time, and actual results may vary significantly from the current estimate.

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Fla., filed January 2019;

appeal pending, 11th Circuit Court of Appeals), where the federal district court denied class certification and plaintiff’s request to file a renewed motion for class certification.

appeal pending, 11th Circuit Court of

Appeals), where the federal district court denied class certification and plaintiff’s request to file a renewed motion for class certification.

In Revival , on June 2, 2022, the 11 th Circuit certified to the Florida Supreme Court Allstate’s appeal of the federal district court’s interpretation of the state personal injury protection statute.

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The Company is defending putative class actions in various courts that raise challenges to the Company’s depreciation practices in homeowner property claims.

In these lawsuits, plaintiffs generally allege that, when calculating actual cash value, the

Second Quarter 2022 Form 10-Q 39

Notes to Condensed Consolidated Financial Statements

costs of “non-materials” such as labor, general contractor’s overhead and profit, and sales tax should not be subject to depreciation.

In these lawsuits, plaintiffs generally allege that, when calculating actual cash value, the costs of “non-materials” such as labor, general contractor’s overhead and profit, and sales tax should not be subject to depreciation.

The Company is currently defending the following lawsuits on this issue:

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Ala., filed August 2021);

Allstate Vehicle and Property Insurance Company (W.D.

filed May 2022);

and Sims, et al.

Allstate Fire and Casualty Insurance Company, et al.

filed June 2022);

and Thompson, et al.

Allstate Insurance Company (Circuit Court of Cole Co., Mo.

filed June 2022).

No classes have been certified in any of these matters.

A class settlement received final approval by the court in Huey v.

Allstate Vehicle and Property Insurance Company (N.D.

Miss., filed October 2019), and a settlement-in-principle has been reached in Thaxton v.

Allstate Indemnity Company (Madison Co., Ill., filed July 2020);

and Hester v.

A settlement-in-principle has been reached in Thaxton v.

Allstate Indemnity Company (Madison Co., Ill., filed July 2020) and Hester v.

Allstate Vehicle and Property Insurance Company (St.

Clair Co., Ill., filed June 2020).

Clair Co., Ill.

filed June 2020).

The Company is defending putative class actions pending in multiple states alleging that the Company underpays total loss vehicle physical damage claims on auto policies.

7 unchanged sentences

Bloomgarden v.

Allstate Fire and Casualty Insurance Company (S.D.

Allstate Fire and Casualty Insurance

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Notes to Condensed Consolidated Financial Statements

Company (S.D.

Fla., filed July 2018, dismissed August 2019, refiled on September 2019, remanded to 17th Judicial Circuit, Broward Co.

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Ohio, filed December 2020);

Property and Casualty Insurance Company (E.D.

Esurance Property and Casualty Insurance Company (E.D.

Mo., filed February 2021);

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La., filed April 2022);

Esurance Property and Casualty Insurance Company (Cir.

of Cook Co, Ill., Chancery Div., filed September 2022);

Allstate Fire and Casualty Insurance Company (Cir.

of Cook Co., Ill., Chancery Div., filed September 2022).

None of the courts in any of the pending matters has ruled on class certification.

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and (3) how such potentially illegal price optimization impacted Allstate’s private passenger auto insurance policyholders.

Fact discovery has been completed in the investigatory hearing and an administrative hearing is scheduled to begin on November 9, 2022.

Fact discovery has been completed in the investigatory hearing.

The hearing is expected to be set for a date in December 2022.

In re The Allstate Corp.

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Plaintiffs seek an unspecified amount of damages, costs, attorney’s fees, and other relief as the court deems appropriate.

Plaintiffs allege that the Company and certain senior officers made allegedly material misstatements or omissions concerning claim frequency statistics and the reasons for a claim frequency increase for Allstate brand auto insurance between October 2014 and August 3, 2015.

brand auto insurance between October 2014 and August 3, 2015.

Plaintiffs further allege that a senior officer engaged in stock option exercises during that time allegedly while in possession of material nonpublic information about Allstate brand auto insurance claim frequency.

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A class was certified on March 26, 2019, vacated by the U.S.

Court of Appeals for the Seventh Circuit on July 16, 2020 and remanded for further consideration by the district

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Notes to Condensed Consolidated Financial Statements

Court of Appeals for the Seventh Circuit on July 16, 2020 and remanded for further consideration by the district court.

On December 21, 2020, the district court again granted plaintiffs’ motion for class certification and certified a class consisting of all persons who purchased Allstate common stock between October 29, 2014 and August 3, 2015.

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On July 26, 2022 the court entered its order granting summary judgment in part (as to plaintiffs’ claims relating to certain statements made in October 2014) and denying it as to the remainder of plaintiffs’ claims.

The court scheduled a pre-trial conference for August 24, 2022.

The court held a conference on August 24, 2022, ordering the parties to submit a joint pre-trial order by January 10, 2023.

A pre-trial conference was also scheduled for February 3, 2023.

The Company is continuing to defend two putative class actions in California federal court, Holland Hewitt v.

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No classes have been certified in these matters.

Company is also defending an individual action in California state court, Gilmore v.

Also pending is an individual action in California state court, Gilmore v.

Lincoln Benefit Life Company (San Diego Co., Cal., filed October 29, 2021).

6 unchanged sentences

The Company asserts various defenses to plaintiffs’ claims and to class certification.

Third Quarter 2022 Form 10-Q 41

Notes to Condensed Consolidated Financial Statements

Note 13 Benefit Plans

Components of net cost (benefit) for pension and other postretirement plans

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

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

($ in millions) 2022 2021 2022 2021

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Remeasurement (gains) losses ( 2 ) ( 3 ) ( 45 ) ( 13 )

Postretirement net (benefit) cost $ ( 22 ) $ 5 $ ( 50 ) $ ( 18 )

Postretirement net benefit $ ( 6 ) $ ( 6 ) $ ( 56 ) $ ( 24 )

Pension and postretirement benefits

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Total net cost (benefit) $ 69 $ ( 14 ) $ ( 6 ) $ ( 568 )

Differences between expected and actual returns on plan assets and changes in assumptions affect the Company’s pension and other postretirement obligations, plan assets and expenses.

Differences in actual experience and changes in other assumptions affect our pension and other postretirement obligations and expenses.

Differences between expected and actual returns on plan assets affect remeasurement (gains) losses.

Pension and other postretirement service cost, interest cost, expected return on plan assets and

amortization of prior service credit are reported in property and casualty insurance claims and claims expense, operating costs and expenses, net investment income and (if applicable) restructuring and related charges on the Condensed Consolidated Statements of Operations.

Second Quarter 2022 Form 10-Q 41

Notes to Condensed Consolidated Financial Statements

Pension and postretirement benefits remeasurement gains and losses

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

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

($ in millions) 2022 2021 2022 2021

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Remeasurement (gains) losses $ 79 $ 40 $ 91 $ ( 404 )

Remeasurement losses for the second quarter and first six months of 2022 are 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.

The weighted average discount rate used to measure the benefit obligation increased to 4.92 % at June 30, 2022 compared to 3.97 % at March 31, 2022 and 2.93 % at December 31, 2021 resulting in gains for the second quarter and first six months of 2022.

Remeasurement gains for other assumptions in the second quarter and first six months of 2022 are primarily related to an increase in the long-term lump sum interest rate.

For the second quarter and first six months of 2022, the actual return on plan assets was lower than the expected return due to higher interest rates, widening credit spreads and weak equity market performance.

Remeasurement losses for the third quarter of 2022 are 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.

Remeasurement losses in the first nine months of 2022 are 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, primarily related to an increase in the long-term lump sum interest rate.

The weighted average discount rate used to measure the benefit obligation increased to 5.72 % at September 30, 2022 compared to 4.92 % at June 30, 2022, 3.97 % at March 31, 2022 and 2.93 % at December 31, 2021 resulting in gains for the third quarter and first nine months of 2022.

For the third quarter and first nine months of 2022, the actual return on plan assets was lower than the expected return due to higher interest rates, widening credit spreads and weak equity market performance.

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Notes to Condensed Consolidated Financial Statements

Note 14 Supplemental Cash Flow Information

Non-cash investing activities include $ 51 million and $ 15 million related to mergers and exchanges completed with equity and fixed income securities, limited partnerships, and modifications of other investments for the six months ended June 30, 2022 and 2021, respectively.

Non-cash financing activities include $ 64 million and $ 51 million related to the issuance of Allstate common shares for vested equity awards for the six months ended June 30, 2022 and 2021, respectively.

Cash flows used in operating activities in the Condensed Consolidated Statements of Cash Flows include cash paid for operating leases related to amounts included in the measurement of lease liabilities of $ 83 million and $ 91 million for the six

months ended June 30, 2022 and 2021, respectively.

Non-cash operating activities include $ 16 million and $ 92 million related to right-of-use assets obtained in exchange for lease obligations for the six months ended June 30, 2022 and 2021, respectively.

Non-cash investing activities include $ 111 million and $ 31 million related to mergers and exchanges completed with equity and fixed income securities, bank loans, real estate, limited partnerships and modifications of other investments for the nine months ended September 30, 2022 and 2021, respectively.

Non-cash financing activities include $ 65 million and $ 52 million related to the issuance of Allstate common shares for vested equity awards for the nine months ended September 30, 2022 and 2021, respectively.

months ended September 30, 2022 and 2021, respectively.

Non-cash operating activities include $ 17 million and $ 96 million related to right-of-use assets obtained in exchange for lease obligations for the nine months ended September 30, 2022 and 2021, respectively.

Liabilities for collateral received in conjunction with the Company’s securities lending program and OTC and cleared derivatives are reported in other liabilities and accrued expenses or other investments.

The accompanying cash flows are included in cash flows from operating activities in the Condensed Consolidated Statements of Cash Flows along with the activities resulting from management of the proceeds, as follows:

($ in millions) Six months ended June 30,

($ in millions) Nine months ended September 30,

Net change in proceeds managed

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Operating cash flow provided $ 757 $ 567

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Third Quarter 2022 Form 10-Q 43

Notes to Condensed Consolidated Financial Statements

Note 15 Other Comprehensive Income

Note 15 Other Comprehensive Income (Loss)

Components of other comprehensive income (loss) on a pre-tax and after-tax basis

($ in millions) Three months ended June 30,

($ in millions) Three months ended September 30,

Pre-tax Tax After-tax Pre-tax Tax After-tax

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Other comprehensive (loss) income $ ( 1,123 ) $ 238 $ ( 885 ) $ ( 472 ) $ 100 $ ( 372 )

Six months ended June 30,

Nine months ended September 30,

Pre-tax Tax After-tax Pre-tax Tax After-tax

7 unchanged sentences

(1) Represents prior service credits reclassified out of other comprehensive income and amortized into operating costs and expenses.

Second Quarter 2022 Form 10-Q 43

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Report of Independent Registered Public Accounting Firm

3 unchanged sentences

Results of Review of Interim Financial Information

We have reviewed the accompanying condensed consolidated statement of financial position of The Allstate Corporation and subsidiaries (the “Company”) as of June 30, 2022, the related condensed consolidated statements of operations, comprehensive income and shareholders’ equity for the three-month and six-month periods ended June 30, 2022 and 2021, and cash flows for the six month periods ended June 30, 2022 and 2021, and the related notes (collectively referred to as the “condensed consolidated financial statements”).

We have reviewed the accompanying condensed consolidated statement of financial position of The Allstate Corporation and subsidiaries (the “Company”) as of September 30, 2022, the related condensed consolidated statements of operations, comprehensive income (loss) and shareholders’ equity for the three-month and nine-month periods ended September 30, 2022 and 2021, and cash flows for the nine month periods ended September 30, 2022 and 2021, and the related notes (collectively referred to as the “condensed consolidated financial statements”).

Based on our reviews, we are not aware of any material modifications that should be made to the accompanying condensed consolidated financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

12 unchanged sentences

Chicago, Illinois

August 3, 2022

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November 2, 2022

Third Quarter 2022 Form 10-Q 45

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 1. Financial Statements