What changed in this filing

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Item 1. Financial Statements

2023-05-03 compared with 2022-11-02 · 650 added, 623 removed, 1159 unchanged (52% of the section changed)

3 unchanged sentences

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

September 30, Nine months ended September 30,

2022 2021 2022 2021

Property and casualty insurance premiums $ 12,173 $ 10,981

6 unchanged sentences

Property and casualty insurance claims and claims expense 10,326 7,822

Shelter-in-Place Payback expense — — — 29

Accident, health and other policy benefits 265 268

8 unchanged sentences

Income tax (benefit) expense ( 85 ) 151

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

Income (loss) from discontinued operations, net of tax — 325 — ( 3,272 )

Net (loss) income ( 321 ) 650

3 unchanged sentences

Net (loss) income applicable to common shareholders $ ( 346 ) $ 634

Earnings per common share applicable to common shareholders

Continuing operations $ ( 2.58 ) $ 0.62 $ ( 4.04 ) $ 13.31

Discontinued operations — 1.11 — ( 10.98 )

Total $ ( 2.58 ) $ 1.73 $ ( 4.04 ) $ 2.33

Continuing operations $ ( 2.58 ) $ 0.62 $ ( 4.04 ) $ 13.11

Discontinued operations — 1.09 — ( 10.81 )

Total $ ( 2.58 ) $ 1.71 $ ( 4.04 ) $ 2.30

Earnings per common share:

Net (loss) income applicable to common shareholders per common share - Basic $ ( 1.31 ) $ 2.28

Weighted average common shares - Basic 263.5 278.1

Net (loss) income applicable to common shareholders per common share - Diluted $ ( 1.31 ) $ 2.25

Weighted average common shares - Diluted 263.5 281.8

See notes to condensed consolidated financial statements.

Third Quarter 2022 Form 10-Q 1

First Quarter 2023 Form 10-Q 1

Condensed Consolidated Financial Statements

1 unchanged sentence

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

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

2022 2021 2022 2021

($ in millions) Three months ended March 31,

Net (loss) income $ ( 321 ) $ 650

Other comprehensive loss, after-tax

Other comprehensive income (loss), after-tax

Unrealized net capital gains and losses 682 ( 1,594 )

1 unchanged sentence

Unamortized pension and other postretirement prior service credit ( 4 ) ( 15 )

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

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

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

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

Discount rate for reserve for future policy benefits

Other comprehensive income (loss), after-tax 719 ( 1,514 )

Comprehensive income (loss) 398 ( 864 )

Comprehensive income (loss) attributable to noncontrolling interest 4 ( 22 )

Comprehensive income (loss) attributable to Allstate $ 394 $ ( 842 )

See notes to condensed consolidated financial statements.

3 unchanged sentences

Condensed Consolidated Statements of Financial Position (unaudited)

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

($ in millions, except par value data) March 31, 2023 December 31, 2022

Fixed income securities, at fair value (amortized cost, net $ 46,120 and $ 45,370 )

20 unchanged sentences

Claim payments outstanding 1,333 1,268

Deferred income taxes — 833

Other liabilities and accrued expenses 9,114 9,353

Long-term debt 7,967 7,976

Debt 8,452 7,964

Total liabilities 82,258 80,626

10 unchanged sentences

Unamortized pension and other postretirement prior service credit 25 29

Total accumulated other comprehensive income (“AOCI”) ( 3,043 ) 655

Discount rate for reserve for future policy benefits

Total accumulated other comprehensive income ( 1,673 ) ( 2,392 )

Total Allstate shareholders’ equity 17,494 17,488

3 unchanged sentences

See notes to condensed consolidated financial statements.

Third Quarter 2022 Form 10-Q 3

First Quarter 2023 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 September 30, Nine months ended September 30,

2022 2021 2022 2021

($ in millions, except per share data) Three months ended March 31,

Preferred stock par value $ — $ —

Preferred stock additional capital paid-in 1,970 1,970

Balance, beginning of period 1,970 2,170 1,970 1,970

Acquisition — — — 450

Preferred stock redemption — ( 200 ) — ( 450 )

Balance, end of period 1,970 1,970 1,970 1,970

Common stock par value 9 9

1 unchanged sentence

Balance, beginning of period 3,788 3,722

Forward contract on accelerated share repurchase agreement — — — 113

Equity incentive plans activity ( 8 ) ( 16 )

17 unchanged sentences

Change in unamortized pension and other postretirement prior service credit ( 4 ) ( 15 )

Change in discount rate for reserve for future policy benefits

Balance, end of period ( 1,673 ) ( 1,088 )

2 unchanged sentences

Balance, beginning of period ( 125 ) ( 52 )

Acquisition — — — ( 14 )

Change in unrealized net capital gains and losses 5 ( 12 )

7 unchanged sentences

Condensed Consolidated Statements of Cash Flows (unaudited)

($ in millions) Nine months ended September 30,

($ in millions) Three months ended March 31,

Cash flows from operating activities

4 unchanged sentences

Pension and other postretirement remeasurement (gains) losses ( 53 ) ( 247 )

Amortization of deferred gain on reinsurance — ( 5 )

Loss on disposition of operations, net of tax — 3,754

Policy benefits and other insurance reserves 1,080 ( 111 )

24 unchanged sentences

Purchases of property and equipment, net ( 79 ) ( 130 )

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

Net cash (used in) provided by investing activities ( 796 ) 981

Cash flows from financing activities

Redemption and repayment of long-term debt — ( 422 )

Redemption of preferred stock — ( 450 )

Proceeds from issuance of long-term debt 744 —

Redemption and repayment of debt ( 250 ) —

Contractholder fund deposits 33 34

5 unchanged sentences

Other — ( 30 )

Net cash used in financing activities ( 2,847 ) ( 4,065 )

Net increase in cash, including cash classified as assets held for sale 23 469

Cash from continuing operations at beginning of period 763 311

Cash classified as assets held for sale at beginning of period — 66

Cash classified as assets held for sale at end of period — 156

Cash from continuing operations at end of period $ 786 $ 690

Net cash provided by (used in) financing activities 121 ( 1,046 )

Net (decrease) increase in cash ( 74 ) 367

Cash at beginning of period 736 763

Cash at end of period $ 662 $ 1,130

See notes to condensed consolidated financial statements.

Third Quarter 2022 Form 10-Q 5

First Quarter 2023 Form 10-Q 5

Notes to Condensed Consolidated Financial Statements

3 unchanged sentences

Basis of presentation

The accompanying condensed consolidated financial statements include the accounts of The Allstate Corporation (the “Corporation”) and its wholly owned subsidiaries, primarily Allstate Insurance Company (“AIC”), a property and casualty insurance company with various property and casualty and investment subsidiaries (collectively referred to as the “Company” or “Allstate”) and variable interest entities (“VIEs”) in which the Company is considered a primary beneficiary.

The accompanying condensed consolidated financial statements include the accounts of The Allstate Corporation (the “Corporation”) and its wholly owned subsidiaries, primarily Allstate Insurance Company (“AIC”), a property and casualty insurance company (collectively referred to as the “Company” or “Allstate”) and variable interest entities (“VIEs”) in which the Company is considered a primary beneficiary.

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 September 30, 2022 and for the three and nine month periods ended September 30, 2022 and 2021 are unaudited.

The condensed consolidated financial statements and notes as of March 31, 2023 and for the three month periods ended March 31, 2023 and 2022 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 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.

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

Pending accounting standard

Accounting for Long-Duration Insurance Contracts In August 2018, the Financial Accounting Standards Board (”FASB”) issued guidance revising the accounting for certain long-duration insurance contracts.

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.

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.

The effects of updating assumptions other than the discount rate are required to be measured on a retrospective basis and reported in net income.

To reflect the application of the new guidance to all in-scope long-duration insurance contracts, certain amounts in the condensed consolidated financial statements and notes for 2022 have been recast.

Macroeconomic impacts

The Novel Coronavirus Pandemic or COVID-19 (“Coronavirus”) and subsequent U.S.

government fiscal and monetary policies have and may continue to effect economic activity through longer-term impacts such as supply chain disruptions, labor shortages and other macroeconomic factors that have increased inflation and affected our operations.

These factors may continue to significantly affect results of operations, financial condition and liquidity.

The impact from the pandemic and the ongoing effects should be considered when comparing the current period to prior periods.

Adopted accounting standard

Accounting for Long-Duration Insurance Contracts Effective January 1, 2023, the Company adopted the Financial Accounting Standards Board (”FASB”) guidance revising the accounting for certain long-duration insurance contracts using the modified retrospective approach to the transition date of January 1, 2021.

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

In addition, reserves under the new guidance are required to be discounted using an upper-medium grade fixed income instrument yield that is updated through other comprehensive income (“OCI”) at each reporting date.

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

Additionally, deferred policy acquisition costs (“DAC”) for all long-duration products will be amortized on a simplified basis.

Also, the Company’s reserve for future policy benefits and DAC will be subject to new disclosure guidance.

In addition, the Company met the conditions included in Accounting Standards Update No.

2022-05, Transition for Sold Contracts , and elected to not apply the new guidance for contracts that were part of the 2021 sales of Allstate Life Insurance Company (“ALIC”) and Allstate Life Insurance Company of New York (“ALNY”).

After-tax cumulative effect of change in accounting principle on transition date

($ in millions) January 1, 2021

Decrease in retained income $ 21

Decrease in accumulated other comprehensive income (“AOCI”) 277

Total decrease in equity $ 298

The decrease in AOCI is primarily attributable to a change in the discount rate used in measuring the reserve 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 at the reporting date.

The decrease in retained income primarily relates to certain cohorts of long-term contracts whose expected net premiums exceeded expected gross premiums which resulted in an increase in reserves and a decrease in retained income equal to the present value of expected future benefits less the present value of expected future premiums at the transition date.

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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.

DAC will not be subject to loss recognition testing but will be reduced when actual lapse experience exceeds expected experience.

The new guidance is effective for financial statements issued for reporting periods beginning after December 15, 2022 and restatement of prior periods presented is required.

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 (“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

Transition disclosures The following tables summarize the balance of and changes in the reserve for future policy benefits and DAC on January 1, 2021 upon the adoption of the guidance.

Impact of adoption for reserve for future policy benefits

( $ in millions) Accident and health Traditional life Total

Pre-adoption 12/31/2020 balance (1)

$ 728 $ 311 $ 1,039

Effect of the remeasurement of the reserve at upper-medium grade fixed income-based rate (2)

Adjustments for contracts with net premiums in excess of gross premiums (3)

Total adjustments 309 153 462

Post-adoption 1/1/2021 balance 1,037 464 1,501

reinsurance recoverables (4)

Post-adoption 1/1/2021 balance, after reinsurance recoverables $ 878 $ 461 $ 1,339

(1) Traditional life includes $ 11 million in reserves related to riders of traditional life insurance products reclassified from contractholder funds.

(2) Adjustment reflected with a corresponding decrease to AOCI.

(3) Adjustment reflected with a corresponding decrease to retained income.

(4) Represents post-adoption January 1, 2021 balance of reinsurance recoverables.

Adjustments to reinsurance recoverables for accident and health products increased January 1, 2021 AOCI by $ 33 million due to the remeasurement of the reserve at upper-medium grade fixed income based rate and increased January 1, 2021 retained income by $ 51 million due to adjustments for contracts with net premiums in excess of gross premiums.

Impact of adoption for DAC

( $ in millions) Accident and health Traditional life Interest- sensitive life Total

Pre-adoption 12/31/2020 balance $ 343 $ 32 $ 95 $ 470

Adjustment for removal of impact of unrealized gains or losses (1)

Post-adoption 1/1/2021 balance $ 343 $ 32 $ 97 $ 472

(1) Adjustment reflected with a corresponding increase to AOCI.

Impacts of the adoption on the financial statements

Consolidated Statements of Operations

Three months ended March 31, 2022

($ in millions, except per share data) As reported Impact of change As adjusted

Accident and health insurance premiums and contract charges $ 469 $ ( 1 ) $ 468

Total revenues 12,337 ( 1 ) 12,336

Costs and expenses

Accident, health and other policy benefits 269 ( 1 ) 268

Amortization of deferred policy acquisition costs 1,612 ( 4 ) 1,608

Total costs and expenses 11,540 ( 5 ) 11,535

Income from operations before income tax expense 797 4 801

Income tax expense 151 — 151

Net income 646 4 650

Net income attributable to Allstate 656 4 660

Net income applicable to common shareholders $ 630 $ 4 $ 634

Earnings per common share:

Net income applicable to common shareholders per common share - Basic $ 2.27 $ 0.01 $ 2.28

Net income applicable to common shareholders per common share - Diluted $ 2.24 $ 0.01 $ 2.25

First Quarter 2023 Form 10-Q 7

Notes to Condensed Consolidated Financial Statements

Condensed Consolidated Statements of Comprehensive Income (unaudited)

Three months ended March 31, 2022

($ in millions) As reported Impact of change As adjusted

Net income $ 646 $ 4 $ 650

Other comprehensive income (loss), after-tax

Unrealized net capital gains and losses ( 1,593 ) ( 1 ) ( 1,594 )

Discount rate for reserve for future policy benefits

Other comprehensive loss, after-tax ( 1,608 ) 94 ( 1,514 )

Comprehensive loss ( 962 ) 98 ( 864 )

Comprehensive loss attributable to Allstate $ ( 940 ) $ 98 $ ( 842 )

Condensed Consolidated Statements of Financial Position (unaudited)

December 31, 2022

($ in millions) As reported Impact of change As adjusted

Deferred policy acquisition costs $ 5,418 $ 24 $ 5,442

Reinsurance and indemnification recoverables, net 9,606 13 9,619

Deferred income taxes 386 ( 4 ) 382

Other assets, net 5,905 ( 1 ) 5,904

Total assets 97,957 32 97,989

Reserve for future policy benefits 1,273 49 1,322

Contractholder funds 897 ( 18 ) 879

Unearned premiums 22,311 ( 12 ) 22,299

Total liabilities 80,607 19 80,626

Retained income 50,954 16 50,970

Accumulated other comprehensive income:

Unrealized net capital gains and losses ( 2,253 ) ( 2 ) ( 2,255 )

Discount rate for reserve for future policy benefits

— ( 1 ) ( 1 )

Total AOCI ( 2,389 ) ( 3 ) ( 2,392 )

Total Allstate shareholders’ equity 17,475 13 17,488

Total equity 17,350 13 17,363

Total liabilities and equity $ 97,957 $ 32 $ 97,989

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Notes to Condensed Consolidated Financial Statements

Condensed Consolidated Statements of Shareholders’ Equity (unaudited)

Three months ended March 31, 2022

($ in millions) As reported Impact of change As adjusted

Retained income

Balance, beginning of period $ 53,294 $ ( 6 ) $ 53,288

Net income 656 4 660

Balance, end of period 53,688 ( 2 ) 53,686

Accumulated other comprehensive income (loss)

Balance, beginning of period 655 ( 229 ) 426

Change in unrealized net capital gains and losses ( 1,593 ) ( 1 ) ( 1,594 )

Change in discount rate for reserve for future policy benefits

Balance, end of period ( 953 ) ( 135 ) ( 1,088 )

Total Allstate shareholders’ equity 23,212 ( 137 ) 23,075

Total equity $ 23,138 $ ( 137 ) $ 23,001

Condensed Consolidated Statements of Cash Flows (unaudited)

Three months ended March 31, 2022

($ in millions) As reported Impact of change As adjusted

Cash flows from operating activities

Net income $ 646 $ 4 $ 650

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

Policy benefits and other insurance reserves ( 113 ) 2 ( 111 )

Unearned premiums 392 ( 2 ) 390

Deferred policy acquisition costs ( 99 ) ( 4 ) ( 103 )

Reinsurance recoverables, net 334 ( 1 ) 333

Income taxes 92 1 93

Other operating assets and liabilities ( 574 ) — ( 574 )

Net cash provided by operating activities $ 432 $ — $ 432

Changes to significant accounting policies

Reserve for future policy benefits

Long-duration voluntary accident and health insurance and traditional life insurance contracts The reserve for future policy benefits (“RFPB”) is calculated using the net premium reserving model, which uses the present value of insurance contract benefits less the present value of net premiums.

Under the net premium reserving model, the Company computes a net premium ratio which is the present value of insurance contract benefits divided by the present value of gross premiums.

The present value of contract benefits and gross premiums are determined using the discount rate at contract inception.

The net premium ratio is applied to premiums due on a periodic basis to compute the RFPB.

The net premium ratio is recomputed at least annually using both actual historical cash flows and future cash flows anticipated over the life of cohort of contracts subject to measurement.

Assumptions including mortality, morbidity, and lapses affect the timing and amount of estimated cash flows used to calculate the RFPB.

The Company has grouped contracts into cohorts based on product type and issue year.

Examples of insurance product types include whole life, term life, critical illness and disability.

Issue year is based on the issuance date of the contract to the policyholder,

except in the case of contracts acquired in a business combination, where the issue date is based on the acquisition date of the business combination.

The RFPB is calculated for contracts in force at the end of each period, which results in the Company recognizing the effects of actual experience in the period it occurs.

Annually, in the third quarter, the Company obtains historical premiums and benefits information and evaluates future cash flow assumptions that include mortality, morbidity, and terminations, and updates cash flow assumptions as necessary.

The Company has elected to not update the expense assumption when annually reviewing and updating future cash flow assumptions.

Actual premiums and benefits and any updates to future cash flow assumptions are incorporated into the calculation of an updated net premium ratio.

Updates for actual premiums and benefits and changes to future cash flow assumptions will result in a liability remeasurement gain or loss that is recognized in net income.

The first step to determining the liability remeasurement gain or loss is to calculate the RFPB using revised net premiums discounted at the locked-in discount rate set at contract issuance.

The result of the first step is then compared to the carrying amount of the RFPB before the updates for actual experience and changes to future cash flow assumptions.

The decrease (gain) or increase (loss) in the RFPB is reported as liability

First Quarter 2023 Form 10-Q 9

Notes to Condensed Consolidated Financial Statements

remeasurement gain or loss in net income and presented parenthetically as part of Accident, health and other policy benefits on the Consolidated Statements of Operations.

The updated net premium ratio is used in future quarters to measure the RFPB until the next annual update or an earlier date if the Company determines it is necessary to revise future cash flow assumptions based on available evidence, including actual experience .

The discount rate assumption is determined using a yield curve approach.

The yield curve consists of U.S.

dollar-denominated senior unsecured fixed-income securities issued by U.S.

companies that have an A credit rating based on the ratings provided by nationally recognized rating agencies that include Moody’s, Standard & Poor’s, and Fitch.

For points on the yield curve that do not have observable yields, the Company uses linear interpolation w hich calculates the unobservable yield based on the two nearest observable yields, except for any points beyond the last observable yield at 30 years, where interest rates are held constant with the last observable point on the yield curve.

The Company updates the current discount rate quarterly and the change in the RFPB resulting from the updated current discount rate is recognized in OCI.

Deferred policy acquisition costs

Deferred policy acquisition costs are related directly to the successful acquisition of new or renewal insurance contracts and are deferred and recognized as an expense over the life of the related contracts.

These costs are principally agent and broker remuneration, premium taxes and certain underwriting expenses.

All other acquisition costs are expensed as incurred and included in operating costs and expenses .

Long-duration voluntary accident and health insurance, traditional life insurance contracts, and interest-sensitive life insurance contracts Voluntary accident and health insurance and traditional life insurance contracts are grouped by product and issue year into cohorts consistent with the cohorts used to calculate the RFPB.

Interest-sensitive life insurance contracts are grouped into cohorts by issue year, and the issue year is determined based on contract issue date.

DAC is amortized on a constant level basis over the expected contract term and is included in Amortization of deferred policy acquisition costs on the Consolidated Statements of Operations.

The constant level basis used for all cohorts is based on policies-in-force.

The expected contract term and mortality, morbidity, and termination assumptions are used to calculate both DAC amortization and the RFPB.

If actual contract terminations are greater than expected terminations for any cohort, each affected cohort’s DAC balance will be reduced in the current period based on the difference between the actual and expected terminations.

No adjustments to DAC amortization are recorded if actual contract terminations are less than expected terminations for any cohort.

If the Company makes an update to any of its mortality, morbidity, or termination assumptions, the Company will use the assumptions prospectively to amortize any cohort’s remaining DAC over the remaining expected contract term.

The costs assigned to the right to receive future cash flows from certain business purchased from other insurers are also classified as DAC in the Consolidated Statements of Financial Position.

The costs capitalized represent the present value of future profits expected to be earned over the lives of the contracts acquired.

The Company amortizes the present value of future profits using the same methodology and assumptions as the amortization of DAC.

The present value of future profits is subject to premium deficiency testing.

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Notes to Condensed Consolidated Financial Statements

Note 2 Earnings per Common Share

5 unchanged sentences

Computation of basic and diluted earnings per common share

(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

(In millions, except per share data) Three months ended March 31,

Net (loss) income $ ( 321 ) $ 650

Net loss attributable to noncontrolling interest ( 1 ) ( 10 )

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

Net (loss) income attributable to Allstate ( 320 ) 660

Preferred stock dividends

Net (loss) income from continuing operations applicable to common shareholders ( 694 ) 183 ( 1,106 ) 3,967

Income (loss) from discontinued operations, net of tax — 325 — ( 3,272 )

Net (loss) income applicable to common shareholders $ ( 346 ) $ 634

Weighted average common shares outstanding

268.7 293.1 273.5 298.1

Effect of dilutive potential common shares (1) :

2 unchanged sentences

Weighted average common and dilutive potential common shares outstanding

Earnings per common share - Basic $ ( 1.31 ) $ 2.28

Earnings per common share - Diluted (1)

$ ( 1.31 ) $ 2.25

Earnings per common share applicable to common shareholders

Continuing operations $ ( 2.58 ) $ 0.62 $ ( 4.04 ) $ 13.31

Discontinued operations — 1.11 — ( 10.98 )

Total $ ( 2.58 ) $ 1.73 $ ( 4.04 ) $ 2.33

Continuing operations $ ( 2.58 ) $ 0.62 $ ( 4.04 ) $ 13.11

Discontinued operations — 1.09 — ( 10.81 )

Total $ ( 2.58 ) $ 1.71 $ ( 4.04 ) $ 2.30

Anti-dilutive options excluded from diluted earnings per common share

2.4 0.6 1.6 1.3

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 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

Note 3 Acquisitions and Dispositions

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

(“National General”), an insurance holding company serving customers predominantly through independent agents for property and casualty and accident and health products.

Assets and liabilities recognized in the National General acquisition (1)

($ in millions) January 4, 2021

Investments $ 4,962

Premiums and other receivables, net 1,539

Deferred acquisition costs (value of business acquired) 317

Reinsurance recoverables, net 1,212

Intangible assets 1,199

Other assets 734

Total assets 11,401

Reserve for property and casualty insurance claims and claims expense 2,765

Reserve for future policy benefits 186

Unearned premiums 2,245

Reinsurance payable 363

Deferred tax liabilities 162

Other liabilities 776

Total liabilities $ 7,090

(1) The amounts reflect allocation of assets acquired and liabilities assumed.

(2) $ 675 million, $ 20 million and $ 343 million of goodwill were allocated to the Allstate Protection, Protection Services and Allstate Health and Benefits segments, respectively, and is non-deductible for income tax purposes.

Goodwill is primarily attributable to expected synergies and future growth opportunities.

(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 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 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.

Third Quarter 2022 Form 10-Q 9

Notes to Condensed Consolidated Financial Statements

Financial results from discontinued operations

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

($ in millions) 2021 2021

Life premiums and contract charges $ 331 $ 1,007

Net investment income 427 1,251

Net gains (losses) on investments and derivatives 4 193

Total revenues 762 2,451

Costs and expenses

Life contract benefits 411 1,207

Interest credited to contractholder funds 127 371

Amortization of DAC 27 84

Operating costs and expenses 45 151

Restructuring and related charges 7 30

Total costs and expenses 617 1,843

Amortization of deferred gain on reinsurance 1 5

Income from discontinued operations before income tax expense 146 613

Income tax expense 38 131

Income from discontinued operations, net of tax 108 482

Loss on disposition of operations 89 ( 4,048 )

Income tax benefit ( 128 ) ( 294 )

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

Income (loss) from discontinued operations, net of tax $ 325 $ ( 3,272 )

Cash flows from discontinued operations

Nine months ended September 30,

($ in millions) 2021

Net cash provided by operating activities from discontinued operations $ 888

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

(1) As a result of the net loss reported for the three month period ended March 31, 2023, 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.

Note 3 Reportable Segments

1 unchanged sentence

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

National General results are included in the following segments:

• Property and casualty - Allstate Protection

• Accident and health - Allstate Health and Benefits

• Technology solutions - Protection Services

Underwriting income is calculated as premiums earned and other revenue, less claims and claims expenses (“losses”), Shelter-in-Place Payback expense, amortization of DAC, operating costs and expenses, amortization or impairment of purchased intangibles and restructuring and related charges as determined using GAAP.

Underwriting income is calculated as premiums earned and other revenue, less claims and claims expenses (“losses”), amortization of DAC, operating costs and expenses, amortization or impairment of purchased intangibles and restructuring and related charges as determined using GAAP.

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

1 unchanged sentence

• Pension and other postretirement remeasurement gains and losses

• Business combination expenses and the amortization or impairment of purchased intangibles

• Income or loss from discontinued operations

• Gain or loss on disposition of operations

• Amortization or impairment of purchased intangibles

• Gain or loss on disposition

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

1 unchanged sentence

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

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First Quarter 2023 Form 10-Q 11

Notes to Condensed Consolidated Financial Statements

Reportable segments financial performance

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

Three months ended March 31,

($ in millions) 2023 2022

2 unchanged sentences

Run-off Property-Liability

( 122 ) ( 113 ) ( 127 ) ( 118 )

Total Property-Liability ( 1,001 ) 280

2 unchanged sentences

Allstate Health and Benefits

54 33 172 160

Corporate and Other ( 89 ) ( 111 )

3 unchanged sentences

Pension and other postretirement remeasurement gains (losses) 53 247

Business combination expenses and amortization of purchased intangibles (1)

Amortization of purchased intangibles (1)

( 24 ) ( 29 )

Business combination fair value adjustment — — — 6

Gain (loss) on disposition of operations ( 5 ) — 6 —

Gain (loss) on disposition 9 ( 16 )

Income tax benefit (expense) on reconciling items 92 ( 148 )

Total reconciling items 653 345

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

Income tax benefit from discontinued operations — 90 — 163

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

Net loss attributable to noncontrolling interest (2)

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

Net (loss) income applicable to common shareholders $ ( 346 ) $ 634

1 unchanged sentence

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

Third Quarter 2022 Form 10-Q 11

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Notes to Condensed Consolidated Financial Statements

Reportable segments revenue information

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

2022 2021 2022 2021

($ in millions) Three months ended March 31,

Property-Liability

4 unchanged sentences

Commercial lines 232 283

Other business lines 123 113

Allstate Protection 11,635 10,498

10 unchanged sentences

Intersegment premiums and service fees (1)

39 46 118 133

Other revenue 84 94

10 unchanged sentences

Total Allstate Health and Benefits

564 562 1,700 1,671

Corporate and Other

7 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.

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First Quarter 2023 Form 10-Q 13

Notes to Condensed Consolidated Financial Statements

1 unchanged sentence

Portfolio composition

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

($ in millions) March 31, 2023 December 31, 2022

Fixed income securities, at fair value $ 44,103 $ 42,485

7 unchanged sentences

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

September 30, 2022

March 31, 2023

government and agencies $ 7,826 $ 21 $ ( 152 ) $ 7,695

12 unchanged sentences

Scheduled maturities for fixed income securities

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

($ in millions) March 31, 2023 December 31, 2022

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

9 unchanged sentences

Net investment income

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

2022 2021 2022 2021

($ in millions) Three months ended March 31,

Fixed income securities $ 390 $ 267

7 unchanged sentences

Net investment income

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

Third Quarter 2022 Form 10-Q 13

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Notes to Condensed Consolidated Financial Statements

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

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

2022 2021 2022 2021

($ in millions) Three months ended March 31,

Fixed income securities $ ( 136 ) $ ( 152 )

7 unchanged sentences

($ in millions)

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

2022 2021 2022 2021

Three months ended March 31,

Sales $ ( 120 ) $ ( 127 )

1 unchanged sentence

Valuation change of equity investments (1)

( 285 ) ( 9 ) ( 1,421 ) 321

Valuation change and settlements of derivatives ( 52 ) 318

2 unchanged sentences

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

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

2022 2021 2022 2021

($ in millions) Three months ended March 31,

Gross realized gains $ 46 $ 66

Gross realized losses ( 173 ) ( 218 )

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 September 30, 2022 and 2021, respectively.

Net appreciation (decline) recognized in net income

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

2022 2021 2022 2021

Net appreciation (decline) recognized in net income for assets that are still held

($ in millions) Three months ended March 31,

Equity securities $ 20 $ ( 92 )

Limited partnership interests carried at fair value

( 36 ) 137 8 415

Total $ 36 $ ( 54 )

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Notes to Condensed Consolidated Financial Statements

Credit losses recognized in net income

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

2022 2021 2022 2021

($ in millions) Three months ended March 31,

Fixed income securities:

Corporate $ ( 9 ) $ —

ABS ( 2 ) — ( 2 ) 1

Total fixed income securities ( 9 ) —

Mortgage loans — ( 1 )

Limited partnership interests ( 1 ) — ( 4 ) —

Other investments

Bank loans ( 3 ) ( 10 )

Agent loans — 1 — —

Total credit losses by asset type $ ( 12 ) $ ( 11 )

1 unchanged sentence

Total $ ( 12 ) $ ( 11 )

First Quarter 2023 Form 10-Q 15

Notes to Condensed Consolidated Financial Statements

Unrealized net capital gains and losses included in AOCI

2 unchanged sentences

gains (losses)

September 30, 2022 Gains Losses

March 31, 2023 Gains Losses

Fixed income securities $ 44,103 $ 211 $ ( 2,228 ) $ ( 2,017 )

1 unchanged sentence

Derivative instruments — — ( 2 ) ( 2 )

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

Limited partnership interests (1)

Unrealized net capital gains and losses, pre-tax ( 2,015 )

6 unchanged sentences

Derivative instruments — — ( 3 ) ( 3 )

EMA limited partnerships (1)

Limited partnership interests (1)

Unrealized net capital gains and losses, pre-tax ( 2,887 )

2 unchanged sentences

Unrealized net capital gains and losses, after-tax $ ( 2,255 )

(1) Unrealized net capital gains and losses for limited partnership interests represent the Company’s share of EMA limited partnerships’ OCI.

(1) Unrealized net capital gains and losses for limited partnership interests represent the Company’s share of the equity method of accounting (“EMA”) limited partnerships’ OCI.

Fair value and gross unrealized gains and losses are not applicable.

(2) Includes amounts recognized for the reclassification of unrealized gains and losses related to noncontrolling interest and the amount by which the amortization of DAC would increase or decrease if the unrealized gains or losses in the respective product portfolios were realized.

(2) Includes amounts recognized for the reclassification of unrealized gains and losses related to noncontrolling interest.

Change in unrealized net capital gains (losses)

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

($ in millions) Three months ended March 31, 2023

Fixed income securities $ 868

1 unchanged sentence

Derivative instruments 1

EMA limited partnerships 8

Total ( 4,506 )

Limited partnership interests 2

Other unrealized net capital gains and losses, pre-tax ( 5 )

Deferred income taxes ( 185 )

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

Increase in unrealized net capital gains and losses, after-tax $ 682

Carrying value for limited partnership interests

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

($ in millions) March 31, 2023 December 31, 2022

EMA Fair Value Total EMA Fair Value Total

6 unchanged sentences

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

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.

As of March 31, 2023 and December 31, 2022, the fair value of short-term investments totaled $ 6.72 billion and $ 4.17 billion, respectively.

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Notes to Condensed Consolidated Financial Statements

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) September 30, 2022 December 31, 2021

($ in millions) March 31, 2023 December 31, 2022

Bank loans, net $ 698 $ 686

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.

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.

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.

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.

The estimated fair value of collateral will be used to estimate recovery value if the Company determines that the security is dependent on the liquidation of collateral for ultimate settlement.

3 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 $ 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.

Accrued interest excluded from the amortized cost of fixed income securities totaled $ 400 million and $ 389 million as of March 31, 2023 and December 31, 2022, 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 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:

Some of the factors that may be considered in evaluating whether a

First Quarter 2023 Form 10-Q 17

Notes to Condensed Consolidated Financial Statements

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;

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

2) the specific reasons that

a security is in an unrealized loss position, including overall market conditions which could affect liquidity;

and 3) the extent to which the fair value has been less than amortized cost.

Rollforward of credit loss allowance for fixed income securities

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

Three months ended March 31,

($ in millions) 2023 2022

1 unchanged sentence

Credit losses on securities for which credit losses not previously reported — —

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

Net increases related to credit losses previously reported ( 9 ) —

Reduction of allowance related to sales — —

1 unchanged sentence

Ending balance $ ( 22 ) $ ( 6 )

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

(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

Components of credit loss allowance

Corporate bonds $ ( 20 ) $ ( 6 )

Total $ ( 22 ) $ ( 6 )

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

September 30, 2022

March 31, 2023

Fixed income securities

19 unchanged sentences

Total fixed income securities 5,480 $ 28,529 $ ( 1,791 ) 1,552 $ 9,547 $ ( 1,186 ) $ ( 2,977 )

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

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Notes to Condensed Consolidated Financial Statements

Gross unrealized losses by unrealized loss position and credit quality as of March 31, 2023

($ in millions) Investment

7 unchanged sentences

(2) Related to securities with an unrealized loss position less than 20% of amortized cost, net, the degree of which suggests that these securities do not pose a high risk of having credit losses.

(3) No below investment grade fixed income securities have been in an unrealized loss position for a period of twelve or more consecutive months.

(3) Below investment grade fixed income securities include $ 104 million that have been in an unrealized loss position for a period of twelve or more consecutive months.

(4) Evaluated based on factors such as discounted cash flows and the financial condition and near-term and long-term prospects of the issue or issuer and were determined to have adequate resources to fulfill contractual obligations.

1 unchanged sentence

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

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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 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.

As of March 31, 2023, 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) September 30, December 31,

($ in millions) March 31, December 31,

Mortgage loans $ 3 $ 3

Bank Loans 4 3

First Quarter 2023 Form 10-Q 19

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.

1 unchanged sentence

An alternative approach may be utilized to estimate credit losses using the present value of the loan’s expected future repayment cash flows discounted at the loan’s current effective interest rate.

Individual loan credit loss allowances are adjusted for subsequent changes in the fair value of the collateral less costs to sell, when applicable, or present value of the loan’s expected future repayment cash flows.

Individual loan credit loss allowances are adjusted

for subsequent changes in the fair value of the collateral less costs to sell, when applicable, or present value of the loan’s expected future repayment cash flows.

Debt service coverage ratio is considered a key credit quality indicator when mortgage loan credit loss allowances are estimated.

2 unchanged sentences

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

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

($ in millions) 2018 and prior 2019 2020 2021 2022 Current Total Total

6 unchanged sentences

Amortized cost, net $ 781 $ 762

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 September 30, 2022 and December 31, 2021.

Payments on all mortgage loans were current as of March 31, 2023 and December 31, 2022.

Rollforward of credit loss allowance for mortgage loans

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

Three months ended March 31,

($ in millions) 2023 2022

Beginning balance $ ( 7 ) $ ( 6 )

Net (increases) decreases related to credit losses 1 2 — 39

Net increases related to credit losses — ( 1 )

Write-offs — —

1 unchanged sentence

$ ( 7 ) $ ( 7 )

(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

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

($ in millions) 2018 and prior 2019 2020 2021 2022 Current Total Total

7 unchanged sentences

Rollforward of credit loss allowance for bank loans

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

2022 2021 2022 2021

($ in millions) Three months ended March 31,

Beginning balance $ ( 57 ) $ ( 61 )

4 unchanged sentences

$ ( 52 ) $ ( 68 )

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

Note 5 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 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

First Quarter 2023 Form 10-Q 21

Notes to Condensed Consolidated Financial Statements

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:

4 unchanged sentences

Certain ABS are valued based on non-binding broker quotes whose inputs have been corroborated to be market observable.

Residential MBS, included in ABS, use prepayment speeds as a primary input for valuation.

Residential mortgage-backed securities (“MBS”), included in ABS, use prepayment speeds as a primary input for valuation.

• Equity securities:

5 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 services industry and do not involve significant judgment.

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.

Level 3 measurements

2 unchanged sentences

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.

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:

13 unchanged sentences

This derivative is categorized as Level 3 due to the significance of non-market observable inputs.

• Assets held for sale:

Comprise municipal, corporate and ABS fixed income securities and equity securities.

The valuation is based on the respective asset type as described above.

• Liabilities held for sale:

Comprise derivatives embedded in certain life and annuity contracts which are valued internally using models widely accepted in the financial services industry that determine a single best estimate of fair value for the embedded derivatives within a block of contractholder liabilities.

The models primarily use stochastically determined cash flows based on the contractual elements of embedded derivatives, projected option cost and applicable market data, such as interest rate yield curves and equity index volatility assumptions.

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

1 unchanged sentence

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

As of March 31, 2023, the Company has commitments to invest $ 204 million in these limited partnership interests.

First Quarter 2023 Form 10-Q 23

Notes to Condensed Consolidated Financial Statements

Assets and liabilities measured at fair value

September 30, 2022

March 31, 2023

($ 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 100.0 % 320.0 % — % ( 320.0 ) % 100.0 %

Third Quarter 2022 Form 10-Q 23

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Notes to Condensed Consolidated Financial Statements

24 unchanged sentences

% of total liabilities at fair value 20.0 % 500.0 % — % ( 420.0 ) % 100.0 %

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

September 30, 2021

($ in millions) Fair value Valuation

technique Unobservable

input Range Weighted

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 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.

If the projected option cost increased (decreased), it would result in a higher (lower) liability fair value.

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

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.

As of March 31, 2023 and December 31, 2022, Level 3 fair value measurements of fixed income securities total $ 122 million and $ 173 million, respectively, and include $ 30 million and $ 70 million, respectively, of securities valued based on non-binding broker quotes where the inputs have not been corroborated to be market observable and $ 16 million and $ 21 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.

24 www.allstate.com

First Quarter 2023 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 September 30, 2022

Rollforward of Level 3 assets and liabilities held at fair value during the three month period ended March 31, 2023

Balance as of

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

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

Transfers Balance as of

September 30, 2022

March 31, 2023

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

10 unchanged sentences

Total recurring Level 3 assets $ 618 $ 3 $ 2 $ — $ — $ 42 $ ( 63 ) $ — $ ( 2 ) $ 600

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

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

Rollforward of Level 3 assets and liabilities held at fair value during the three month period ended March 31, 2022

Balance as of

1 unchanged sentence

Transfers Balance as of

September 30, 2022

March 31, 2022

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

10 unchanged sentences

Total recurring Level 3 assets $ 565 $ 38 $ ( 1 ) $ — $ ( 28 ) $ 113 $ ( 7 ) $ — $ ( 2 ) $ 678

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

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 September 30, 2021

Balance as of

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

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

September 30, 2021

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

Fixed income securities:

Municipal $ 18 $ — $ ( 1 ) $ — $ — $ — $ — $ — $ — $ — $ 17

Corporate - public 20 — — — — ( 1 ) — — — — 19

Corporate - privately placed 84 1 1 — ( 22 ) ( 2 ) 104 ( 7 ) — ( 5 ) 154

ABS 33 — — 1 — — 5 — — ( 30 ) 9

Total fixed income securities 155 1 — 1 ( 22 ) ( 3 ) 109 ( 7 ) — ( 35 ) 199

Equity securities 405 31 — — — — 27 ( 87 ) — — 376

Short-term investments — — — — — — 14 — — — 14

Other investments 3 — — — — — — ( 1 ) — — 2

Assets held for sale 164 1 — — ( 20 ) 3 — — — ( 2 ) 146

Total recurring Level 3 assets 727 33 — 1 ( 42 ) — 150 ( 95 ) — ( 37 ) 737

Liabilities held for sale ( 490 ) 15 — — — — — — ( 9 ) 5 ( 479 )

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

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

Balance as of

December 31, 2020 Total gains (losses) included in:

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

September 30, 2021

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

Fixed income securities:

Municipal $ 17 $ — $ — $ — $ — $ — $ 3 $ — $ — $ ( 3 ) $ 17

Corporate - public 67 1 ( 2 ) — — ( 7 ) 13 ( 53 ) — — 19

Corporate - privately placed 63 — 2 8 — 14 103 ( 31 ) — ( 5 ) 154

ABS 79 1 — — ( 32 ) — 57 ( 42 ) — ( 54 ) 9

Total fixed income securities 226 2 — 8 ( 32 ) 7 176 ( 126 ) — ( 62 ) 199

Equity securities 304 63 — — — 101 40 ( 132 ) — — 376

Short-term investments 35 — — — — — 14 — — ( 35 ) 14

Other investments — — — — — — 3 ( 1 ) — — 2

Assets held for sale 267 3 — 5 ( 13 ) ( 108 ) 3 ( 6 ) — ( 5 ) 146

Total recurring Level 3 assets 832 68 — 13 ( 45 ) — 236 ( 265 ) — ( 102 ) 737

Liabilities held for sale ( 516 ) 46 — — — — — — ( 25 ) 16 ( 479 )

Total recurring Level 3 liabilities $ ( 516 ) $ 46 $ — $ — $ — $ — $ — $ — $ ( 25 ) $ 16 $ ( 479 )

Total Level 3 gains (losses) included in net income

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

Three months ended March 31,

($ in millions) 2023 2022

3 unchanged sentences

Notes to Condensed Consolidated Financial Statements

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.

There were no transfers into Level 3 during the three months ended March 31, 2023 and 2022.

There were no transfers out of Level 3 during the three months ended March 31, 2023.

Transfers out of Level 3 during the three months ended March 31, 2022 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 September 30,

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

2022 2021 2022 2021

Municipal $ — $ 1 $ — $ —

Valuation changes included in net income and OCI for Level 3 assets and liabilities held as of March 31,

Three months ended March 31,

($ in millions) 2023 2022

Fixed income securities:

Corporate - privately placed $ ( 4 ) $ —

1 unchanged sentence

Equity securities ( 1 ) 25

Other investments ( 1 ) —

Other assets 9 12

Assets held for sale — 1 — 3

Total recurring Level 3 assets $ 3 $ 37

Liabilities held for sale $ — $ 15 $ — $ 46

Total recurring Level 3 liabilities — 15 — 46

Total included in net income $ 3 $ 37

3 unchanged sentences

Total included in net income $ 3 $ 37

Municipal $ — $ ( 1 ) $ 1 $ —

Corporate - public $ 1 $ ( 2 )

Corporate - privately placed — 1

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

Changes in unrealized net capital gains and losses reported in OCI $ 1 $ ( 1 )

Financial instruments not carried at fair value

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

($ in millions) March 31, 2023 December 31, 2022

Financial assets Fair value level Amortized cost, net Fair

5 unchanged sentences

Contractholder funds on investment contracts Level 3 $ 48 $ 48 $ 50 $ 50

Long-term debt Level 2 7,967 7,383 7,976 9,150

Debt Level 2 8,452 8,089 7,964 7,449

Liability for collateral Level 2 1,807 1,807 2,011 2,011

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

Third Quarter 2022 Form 10-Q 27

Notes to Condensed Consolidated Financial Statements

Note 6 Derivative Financial Instruments

2 unchanged sentences

Asset replication refers to the “synthetic” creation of assets through the use of derivatives.

The Company replicates fixed income securities using a combination of a credit default swap, index total return swap, options, or a foreign currency forward contract and one or more highly rated fixed income securities, primarily investment grade host bonds, to synthetically replicate the economic characteristics of one or more cash market securities.

The Company replicates fixed income securities using a combination of a credit default swap, index total return swap, options, futures, or a foreign currency forward contract

and one or more highly rated fixed income securities, primarily investment grade host bonds, to synthetically replicate the economic characteristics of one or more cash market securities.

The Company replicates equity securities using futures, index total return swaps, and options to increase equity exposure.

1 unchanged sentence

These instruments are utilized to change the duration of the portfolio in order to offset the economic effect that interest rates would otherwise have on the fair value of its fixed income securities.

Fixed income index total return swaps are used to offset valuation losses in the fixed income portfolio during periods of declining market values.

Fixed income index total return

First Quarter 2023 Form 10-Q 27

Notes to Condensed Consolidated Financial Statements

swaps are used to offset valuation losses in the fixed income portfolio during periods of declining market values.

Credit default swaps are typically used to mitigate the credit risk within the Property-Liability fixed income portfolio.

2 unchanged sentences

Forward contracts are primarily used by Property-Liability to hedge foreign currency risk associated with holding foreign currency denominated investments and foreign operations.

The Company also has derivatives embedded in non-derivative host contracts that are required to be separated from the host contracts and accounted for at fair value with changes in fair value of embedded derivatives reported in net income.

In 2022, the Company also had derivatives embedded in non-derivative host contracts that were required to be separated from the host contracts and accounted for at fair value with changes in fair value of embedded derivatives reported in net income.

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

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.

Fair value, which is equal to the carrying value, is the estimated amount that the Company would receive or pay to terminate the derivative contracts at the reporting date.

The carrying value amounts for OTC derivatives are further adjusted for the effects, if any, of enforceable master netting agreements and are presented on a net basis, by counterparty agreement, in the Condensed Consolidated Statements of Financial Position.

The carrying value amounts for OTC derivatives are further adjusted for the effects, if any, of enforceable master netting agreements and are presented on a net basis, by counterparty agreement,

in the Condensed Consolidated Statements of Financial Position.

For those derivatives which qualify and have been designated as fair value accounting hedges, net income includes the changes in the fair value of both the derivative instrument and the hedged risk.

3 unchanged sentences

With the exception of non-hedge derivatives used for asset replication and non-hedge embedded derivatives, all of the Company’s derivatives are evaluated for their ongoing effectiveness as either accounting hedge or non-hedge derivative financial instruments on at least a quarterly basis.

In connection with the sale of ALIC and certain affiliates, the sale agreement includes a provision related to contingent consideration that may be earned over a ten-year period commencing on January 1, 2026 and ending January 1, 2035.

In connection with the sale of ALIC and certain affiliates in 2021, the sale agreement included a provision related to contingent consideration that may be earned over a ten-year period with the first potential payment date commencing on January 1, 2026 and a final potential payment date of January 1, 2035.

The contingent consideration is determined annually based on the average 10-year Treasury rate over the preceding 3-year period compared to a designated rate.

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 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.

There are no collateral requirements related to the contingent consideration.

28 www.allstate.com

Notes to Condensed Consolidated Financial Statements

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

Summary of the volume and fair value positions of derivative instruments as of March 31, 2023

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

5 unchanged sentences

Equity and index contracts

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

Futures Other assets n/a 1,116 2 2 —

1 unchanged sentence

Foreign currency forwards Other investments $ 453 n/a ( 9 ) 5 ( 14 )

Embedded derivative financial instruments Other investments 750 n/a — — —

Contingent consideration Other assets 250 n/a 112 112 —

7 unchanged sentences

Equity and index contracts

Options Other liabilities & accrued expenses n/a 1,210 ( 16 ) — ( 16 )

Futures Other liabilities & accrued expenses n/a 680 ( 2 ) — ( 2 )

8 unchanged sentences

(n/a = not applicable)

Third Quarter 2022 Form 10-Q 29

First Quarter 2023 Form 10-Q 29

Notes to Condensed Consolidated Financial Statements

7 unchanged sentences

Equity and index contracts

Options Other investments n/a 61 5 5 —

Futures Other assets n/a 343 — — —

1 unchanged sentence

Foreign currency forwards Other investments $ 354 n/a 1 14 ( 13 )

Embedded derivative financial instruments Other investments 750 n/a — — —

Contingent consideration Other assets 250 n/a 103 103 —

1 unchanged sentence

Credit default swaps – buying protection Other investments 24 n/a — 1 ( 1 )

Credit default swaps – selling protection Other investments 250 n/a 6 6 —

Total asset derivatives $ 628 24,723 $ 107 $ 121 $ ( 14 )

9 unchanged sentences

Credit default swaps – buying protection Other liabilities & accrued expenses 525 n/a ( 3 ) 1 ( 4 )

Credit default swaps – selling protection Other liabilities & accrued expenses 5 n/a — — —

Total liability derivatives 808 2,853 ( 4 ) $ 8 $ ( 12 )

6 unchanged sentences

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

September 30, 2022

March 31, 2023

Asset derivatives $ 10 $ ( 19 ) $ 19 $ 10 $ — $ 10

8 unchanged sentences

($ 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 September 30, 2022

Three months ended March 31, 2023

Interest rate contracts $ ( 35 ) $ — $ ( 35 )

3 unchanged sentences

Credit default contracts ( 14 ) — ( 14 )

Other contracts — ( 1 ) ( 1 )

Total $ ( 52 ) $ 17 $ ( 35 )

Nine months ended September 30, 2022

Three months ended March 31, 2022

Interest rate contracts $ 316 $ — $ 316

3 unchanged sentences

Credit default contracts ( 8 ) — ( 8 )

Other contracts — ( 1 ) ( 1 )

Total $ 318 $ ( 1 ) $ 317

Three months ended September 30, 2021

Interest rate contracts $ 18 $ — $ 18

Equity and index contracts 10 ( 3 ) 7

Foreign currency contracts 15 — 15

Credit default contracts 1 — 1

Total return swaps - fixed income 2 — 2

Total $ 46 $ ( 3 ) $ 43

Nine months ended September 30, 2021

Interest rate contracts $ 19 $ — $ 19

Equity and index contracts 2 27 29

Foreign currency contracts 23 — 23

Credit default contracts 6 — 6

Total return swaps - fixed income 4 — 4

Total $ 54 $ 27 $ 81

The Company manages its exposure to credit risk by utilizing highly rated counterparties, establishing risk control limits, executing legally enforceable master netting agreements (“MNAs”) and obtaining collateral where appropriate.

1 unchanged sentence

OTC cash and securities collateral pledged

($ in millions) September 30, 2022

($ in millions) March 31, 2023

Pledged by the Company $ 19

Pledged to the Company (1)

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

(1) $ 1 million of collateral was posted under MNAs 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.

Third Quarter 2022 Form 10-Q 31

Notes to Condensed Consolidated Financial Statements

OTC derivatives counterparty credit exposure by counterparty credit rating

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

($ in millions) March 31, 2023 December 31, 2022

parties Notional

9 unchanged sentences

Exchange traded and cleared margin deposits

($ in millions) September 30, 2022

($ in millions) March 31, 2023

Pledged by the Company $ 146

1 unchanged sentence

Market risk is the risk that the Company will incur losses due to adverse changes in market rates and prices.

Market risk exists for all of the derivative financial instruments the Company currently holds, as these instruments may become less valuable due to adverse changes in market conditions.

Market risk exists for all of the derivative financial instruments the Company currently holds, as these instruments may become less valuable due to

adverse changes in market conditions.

To limit this risk, the Company’s senior management has established risk control limits.

1 unchanged sentence

Certain of the Company’s derivative transactions contain credit-risk-contingent termination events and cross-default provisions.

Credit-risk-contingent termination events allow the counterparties to terminate the derivative agreement or a specific trade on certain dates if AIC’s financial strength credit ratings by Moody’s or S&P fall below a certain level.

Credit-risk-contingent termination events allow the counterparties to terminate the derivative agreement or a specific trade on certain dates if AIC’s financial strength credit

First Quarter 2023 Form 10-Q 31

Notes to Condensed Consolidated Financial Statements

ratings by Moody’s or S&P fall below a certain level.

Credit-risk-contingent cross-default provisions allow the counterparties to terminate the derivative agreement if the Company defaults by pre-determined threshold amounts on certain debt instruments.

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) September 30, 2022 December 31, 2021

($ in millions) March 31, 2023 December 31, 2022

Gross liability fair value of contracts containing credit-risk-contingent features $ 4 $ 21

2 unchanged sentences

Maximum amount of additional exposure for contracts with credit-risk-contingent features if all features were triggered concurrently $ — $ —

Credit derivatives - selling protection

A credit default swap (“CDS”) is a derivative instrument, representing an agreement between two parties to exchange the credit risk of a specified entity (or a group of entities), or an index based on the credit risk of a group of entities (all commonly referred to as the “reference entity” or a portfolio of “reference entities”), in return for a periodic premium.

In selling protection, CDS are used to replicate fixed income securities and to complement the cash market when credit exposure to certain issuers is not available or when the derivative alternative is less expensive than the cash market alternative.

CDS typically have a five-year term.

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

32 www.allstate.com

Notes to Condensed Consolidated Financial Statements

CDS notional amounts by credit rating and fair value of protection sold

($ in millions) Notional amount

AAA AA A BBB BB and

December 31, 2021

Corporate debt $ — $ — $ — $ — $ 5 $ 5 $ —

Corporate debt 2 4 46 190 8 250 6

Total $ 2 $ 4 $ 46 $ 190 $ 13 $ 255 $ 6

In selling protection with CDS, the Company sells credit protection on an identified single name, a basket of names in a first-to-default (“FTD”) structure or credit derivative index (“CDX”) that is generally investment grade, and in return receives periodic premiums through expiration or termination of the agreement.

With single name CDS, this premium or credit spread generally corresponds to the difference between the yield on the reference entity’s public fixed maturity cash instruments and swap rates at the time the agreement is executed.

With a FTD basket, because of the additional credit risk inherent in a basket of named reference entities, the premium generally corresponds to a high proportion of the sum of the credit spreads of the names in the basket and the correlation between the names.

CDX is utilized to take a position on multiple (generally 125) reference entities.

Credit events are typically defined as bankruptcy, failure to pay, or restructuring, depending on the nature of the reference entities.

If a credit event occurs, the Company settles with the counterparty, either through physical settlement or cash settlement.

In a physical settlement, a reference asset is delivered by the buyer of protection to the Company, in exchange for cash payment at par, whereas in a cash settlement, the Company pays the difference between par and the prescribed value of the reference asset.

When a credit event occurs in a single name or FTD basket (for FTD, the first credit event occurring for any one name in the basket), the contract terminates at the time of settlement.

For CDX, the reference entity’s name incurring the credit event is removed from the index while the contract continues until expiration.

The maximum payout on a CDS is the contract notional amount.

A physical settlement may afford the Company with recovery rights as the new owner of the asset.

The Company monitors risk associated with credit derivatives through individual name credit limits at both a credit derivative and a combined cash instrument/credit derivative level.

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

Third Quarter 2022 Form 10-Q 33

Notes to Condensed Consolidated Financial Statements

Note 7 Variable Interest Entities

4 unchanged sentences

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

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 addition, as of March 31, 2023 and December 31, 2022, 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, the Company provides quota share reinsurance on the property business of the Reciprocal Exchanges.

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 $ 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.

The results of operations of the Reciprocal Exchanges are included in the Company’s Allstate Protection segment and generated $ 57 million of earned premiums for the three months ended March 31, 2023 compared to $ 42 million for the three months ended March 31, 2022.

Claims and claims expenses were $ 40 million for the three months ended March 31, 2023 compared to $ 34 million for the three months ended March 31, 2022.

Assets and liabilities of Reciprocal Exchanges

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

($ in millions) March 31, 2023 December 31, 2022

Fixed income securities $ 285 $ 302

9 unchanged sentences

Total liabilities $ 611 $ 691

32 www.allstate.com

Notes to Condensed Consolidated Financial Statements

Note 8 Reserve for Property and Casualty Insurance Claims and Claims Expense

1 unchanged sentence

The Company’s reserving process takes into account known facts and interpretations of circumstances and factors including the Company’s experience with similar cases, actual claims paid, historical trends involving claim payment patterns and pending levels of unpaid claims, loss management programs, product mix and contractual terms, changes in law and regulation, judicial decisions, and economic conditions.

When the Company experiences changes in the mix or type of claims or changing claim settlement patterns, it applies actuarial judgment in the determination and selection of development factors to be more reflective of the new trends.

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.

When the Company experiences changes in the mix or type of claims or changing claim settlement patterns or data, it applies actuarial judgment in the determination and selection of development factors to develop reserve liabilities.

Supply chain disruptions and inflation have resulted in higher part 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.

The Company has also digitized and modified claim processes to increase effectiveness and efficiency.

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

Generally, the initial reserves for a new accident year are established based on actual claim frequency and severity assumptions for different business segments, lines and coverages based on historical relationships to relevant inflation indicators.

Generally, the initial reserves for a new accident year are established based on claim frequency and severity assumptions for different business segments, lines and coverages based on historical relationships to relevant inflation indicators.

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, driving behaviors, miles driven or other macroeconomic factors.

34 www.allstate.com

Notes to Condensed Consolidated Financial Statements

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.

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

Changes 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.

When such changes in claim data occur, actuarial judgment is used to determine appropriate development factors to establish reserves.

The Company’s reserving process incorporates changes in loss patterns, operational statistics and changes in claims reporting processes to determine its best estimate of recorded reserves.

As part of the reserving process, the Company may also supplement its claims processes by utilizing third-party adjusters, appraisers, engineers, inspectors, and other professionals and information sources to assess and settle catastrophe and non-catastrophe related claims.

The effects of inflation are implicitly considered in the reserving process.

Because reserves are estimates of unpaid portions of losses that have occurred, including incurred but not reported (“IBNR”) losses, the establishment of appropriate reserves, including reserves for catastrophes, Run-off Property-Liability and reinsurance and indemnification recoverables, is an inherently uncertain and complex process.

Because reserves are estimates of unpaid portions of losses that have occurred, including IBNR losses, the establishment of appropriate reserves, including reserves for catastrophes, Run-off Property-Liability and reinsurance and indemnification recoverables, is an inherently uncertain and complex process.

The ultimate cost of losses may vary materially from recorded amounts, which are based on management’s best estimates.

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 as well as heightened uncertainty for claims that involve litigation or take longer to settle during periods of rapidly increasing loss costs.

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 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.

2 unchanged sentences

Management believes that the reserve for property and casualty insurance claims and claims expense, net of recoverables, is appropriately established in the aggregate and adequate to cover the ultimate net cost of reported and unreported claims arising from losses which had occurred by the date of the Condensed Consolidated Statements of Financial Position based on available facts, laws and regulations.

First Quarter 2023 Form 10-Q 33

Notes to Condensed Consolidated Financial Statements

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

Nine months ended September 30,

Three months ended March 31,

($ in millions) 2023 2022

3 unchanged sentences

Net balance as of January 1 28,365 23,581

National General acquisition as of January 4, 2021 — 1,797

Incurred claims and claims expense related to:

6 unchanged sentences

Total paid ( 9,158 ) ( 7,486 )

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

Net balance as of March 31 29,533 23,917

Plus recoverables 9,111 9,074

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

Balance as of March 31 $ 38,644 $ 32,991

(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 $ 2.33 billion and $ 2.81 billion in the nine months ended September 30, 2022 and 2021, respectively, net of recoverables.

This expense included losses from catastrophes of $ 1.69 billion and $ 462 million in the three months ended March 31, 2023 and 2022, 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.

Third Quarter 2022 Form 10-Q 35

Notes to Condensed Consolidated Financial Statements

Prior year reserve reestimates included in claims and claims expense (1)

2 unchanged sentences

2023 2022 2023

Three months ended September 30,

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

Homeowners 51 14 4 3 55 17

Other personal lines ( 2 ) ( 66 ) ( 3 ) — ( 5 ) ( 66 )

Commercial lines 63 24 1 1 64 25

Run-off Property-Liability (4)

2022 2023 2022

Protection Services — — — — — —

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

Nine months ended September 30,

Three months ended March 31,

Auto $ 3 $ 151 $ ( 28 ) $ ( 9 ) $ ( 25 ) $ 142

2 unchanged sentences

Commercial lines 23 20 1 ( 1 ) 24 19

Other business lines 1 ( 7 ) — 4 1 ( 3 )

Run-off Property-Liability 2 1 — — 2 1

124 115 — — 124 115

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

Total prior year reserve reestimates $ 27 $ 158 $ ( 42 ) $ ( 13 ) $ ( 15 ) $ 145

$ 1,441 $ 142 $ 29 $ ( 207 ) $ 1,470 $ ( 65 )

(1) Favorable reserve reestimates are shown in parentheses.

(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.

34 www.allstate.com

Notes to Condensed Consolidated Financial Statements

Note 9 Reserve for Future Policy Benefits and Contractholder Funds

Rollforward of reserve for future policy benefits (1)

Three months ended March 31,

health Traditional

($ in millions) 2023 2022 2023 2022 2023 2022

Present value of expected net premiums

Beginning balance $ 1,464 $ 1,785 $ 238 $ 254 $ 1,702 $ 2,039

Beginning balance at original discount rate 1,549 1,604 246 215 1,795 1,819

Effect of changes in cash flow assumptions — — — — — —

Effect of actual variances from expected experience ( 42 ) ( 49 ) 5 20 ( 37 ) ( 29 )

Adjusted beginning balance 1,507 1,555 251 235 1,758 1,790

Issuances 199 173 17 4 216 177

Interest accrual 12 12 3 2 15 14

Net premiums collected ( 95 ) ( 103 ) ( 12 ) ( 11 ) ( 107 ) ( 114 )

Lapses and withdrawals — — — — — —

Ending balance at original discount rate 1,623 1,637 259 230 1,882 1,867

Effect of changes in discount rate assumptions ( 62 ) 65 ( 5 ) 20 ( 67 ) 85

Ending balance 1,561 1,702 254 250 1,815 1,952

Present value of expected future policy benefits

Beginning balance 2,229 2,796 524 673 2,753 3,469

Beginning balance at original discount rate 2,316 2,426 534 511 2,850 2,937

Effect of changes in cash flow assumptions — — — — — —

Effect of actual variances from expected experience ( 47 ) ( 53 ) 4 19 ( 43 ) ( 34 )

Adjusted beginning balance 2,269 2,373 538 530 2,807 2,903

Issuances 199 172 16 4 215 176

Interest accrual 19 19 6 5 25 24

Benefit payments ( 99 ) ( 110 ) ( 12 ) ( 8 ) ( 111 ) ( 118 )

Lapses and withdrawals — — — — — —

Ending balance at original discount rate 2,388 2,454 548 531 2,936 2,985

Effect of changes in discount rate assumptions ( 53 ) 175 ( 1 ) 94 ( 54 ) 269

Ending balance $ 2,335 $ 2,629 $ 547 $ 625 $ 2,882 $ 3,254

Net reserve for future policy benefits (1)

$ 774 $ 927 $ 293 $ 375 $ 1,067 $ 1,302

reinsurance recoverables 76 139 2 2 78 141

Net reserve for future policy benefits, after reinsurance recoverables

$ 698 $ 788 $ 291 $ 373 $ 989 $ 1,161

(1) Excludes $ 271 million and $ 264 million of reserves related to short-duration and other contracts as of March 31, 2023 and 2022, respectively.

Revenue and interest recognized in the condensed consolidated statements of operations

($ in millions) Three months ended March 31,

Accident and health $ 225 $ 253

Traditional life 25 22

Total $ 250 $ 275

Interest expense (2)

Accident and health $ 7 $ 7

Traditional life 3 3

Total $ 10 $ 10

(1) Total revenues reflects gross premiums used in the calculation for reserve for future policy benefits.

Revenues included in Accident and health insurance premiums and contract charges on the Condensed Consolidated Statements of Operations reflect premium revenue recognized for traditional life insurance and long-duration and short-duration accident and health insurance contracts.

(2) Total interest expense presented as part of Accident, health and other policy benefits on the Condensed Consolidated Statements of Operations.

First Quarter 2023 Form 10-Q 35

Notes to Condensed Consolidated Financial Statements

The following table provides the amount of undiscounted and discounted expected gross premiums and expected future benefits and expenses for nonparticipating traditional and limited-payment contracts.

As of March 31,

($ in millions) Undiscounted Discounted Undiscounted Discounted

Accident and health

Expected future gross premiums $ 5,068 $ 3,671 $ 5,219 $ 4,137

Expected future benefits and expenses 3,351 2,335 3,453 2,629

Traditional life

Expected future gross premiums 721 500 652 500

Expected future benefits and expenses 1,008 547 972 625

Key assumptions used in calculating the reserve for future policy benefits

As of March 31,

Accident and health Traditional life

2023 2022 2023 2022

Weighted-average duration (in years) 4.1 4.2 14.1 13.9

Weighted-average interest rates

Interest accretion rate (discount rate at contract issuance) 5.09 % 6.69 % 5.50 % 5.70 %

Current discount rate (upper-medium grade fixed income yield) 4.58 2.76 5.03 3.54

Significant assumptions To determine mortality and morbidity assumptions, the Company uses a combination of Company historical experience and industry data.

Mortality and morbidity are monitored throughout the year.

Historical experience is obtained through annual Company experience studies in the third quarter that consider the Company’s historical claim patterns.

The lapse assumption is determined based on historical lapses of the Company’s insurance contracts.

The following table summarizes the ratio of actual to expected lapses used in the determination of the reserve for future policy benefits.

As of March 31,

Accident and health Traditional life

2023 2022 2023 2022

Lapses 90 % 111 % 92 % 95 %

Contractholder funds

Contractholder funds activity

Three months ended March 31,

($ in millions) 2023 2022

Balance, beginning of year $ 879 $ 890

Deposits 33 35

Interest credited 8 8

Benefits ( 4 ) ( 3 )

Surrenders and partial withdrawals ( 5 ) ( 5 )

Contract charges ( 30 ) ( 28 )

Other adjustments ( 3 ) ( 6 )

Balance, end of period $ 878 $ 891

Components of contractholder funds

Interest-sensitive life insurance $ 830 $ 837

Fixed annuities 48 54

Total $ 878 $ 891

Weighted-average crediting rate 4.27 % 4.29 %

Net amount at risk (1)

$ 11,780 $ 12,101

Cash surrender value $ 722 $ 728

(1) Guaranteed benefit amounts in excess of the current account balances.

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Notes to Condensed Consolidated Financial Statements

Account values:

comparison of current crediting rate to guaranteed minimum crediting rate (1)

($ in millions)

Range of guaranteed minimum crediting rates

At guaranteed minimum 1 - 50 basis points above

March 31, 2023

Less than 3 %

3.00 % - 3.49 %

3.50 % - 3.99 %

4.00 % - 4.49 %

4.50 % - 4.99 %

5 % or greater

Non-account balances (2)

Total $ 777 $ 20 $ 878

March 31, 2022

Less than 3 %

3.00 % - 3.49 %

3.50 % - 3.99 %

4.00 % - 4.49 %

4.50 % - 4.99 %

5 % or greater

Non-account balances (2)

Total $ 793 $ 6 $ 891

(1) Difference, in basis points, between rates being credited to contractholders and the respective guaranteed minimum crediting rates.

(2) Non-account balances include unearned revenue and amounts related to policies where a claim is either in the course of settlement or incurred but not reported.

A claim on a life insurance policy results in the accrual of interest at a rate and over a period of time that is specified by state insurance regulations.

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 September 30, Nine months ended September 30,

2022 2021 2022 2021

($ in millions) Three months ended March 31,

Property and casualty insurance premiums earned $ ( 446 ) $ ( 427 )

1 unchanged sentence

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 September 30, Nine months ended September 30,

2022 2021 2022 2021

($ in millions) Three months ended March 31,

Property and casualty insurance claims and claims expense (1)

1 unchanged sentence

Accident, health and other policy benefits

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

(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) Includes approximately $ 58 million of ceded losses offset by approximately $ 18 million of reinstatement premiums, related to the Nationwide Reinsurance Program for the first quarter of 2023.

Reinsurance and indemnification recoverables

Reinsurance and indemnification recoverables, net

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

($ in millions) March 31, 2023 December 31, 2022

Property and casualty

4 unchanged sentences

Total $ 9,528 $ 9,619

First Quarter 2023 Form 10-Q 37

Notes to Condensed Consolidated Financial Statements

Rollforward of credit loss allowance for reinsurance recoverables

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

2022 2021 2022 2021

($ in millions) Three months ended March 31,

Property and casualty (1) (2)

Beginning balance $ ( 62 ) $ ( 66 )

Increase in the provision for credit losses ( 5 ) ( 6 ) ( 5 ) ( 7 )

Decrease (increase) in the provision for credit losses 1 —

Write-offs — —

7 unchanged sentences

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

Note 11 Deferred Policy Acquisition Costs

Deferred policy acquisition costs activity

($ in millions) Accident and health Traditional

life Interest-sensitive life Total

Three months ended March 31, 2023

Accident and health insurance

Long-duration contracts

Beginning balance $ 322 $ 79 $ 101 $ 502

Acquisition costs deferred 13 6 4 23

Amortization charged to income ( 9 ) ( 3 ) ( 4 ) ( 16 )

Experience adjustment ( 9 ) — — ( 9 )

Total $ 317 $ 82 $ 101 500

Short-duration contracts 28

Property and casualty 4,943

Balance, end of year $ 5,471

Three months ended March 31, 2022

Accident and health insurance

Long-duration contracts

Balance, beginning of year $ 339 $ 47 $ 90 $ 476

Acquisition costs deferred 12 11 8 31

Amortization charged to income ( 7 ) ( 2 ) ( 3 ) ( 12 )

Experience adjustment ( 14 ) — — ( 14 )

Total $ 330 $ 56 $ 95 481

Short-duration contracts 20

Property and casualty 4,342

Balance, end of year $ 4,843

38 www.allstate.com

Notes to Condensed Consolidated Financial Statements

Note 12 Capital Structure

Repayment of debt On March 29, 2023, the Company repaid, at maturity, $ 250 million of Floating Rate Senior Notes that bear interest at a floating rate equal to three-month London Interbank Offered Rate (“LIBOR”) plus 0.63 % per year.

Issuance of debt On March 31, 2023, the Company issued $ 750 million of 5.250 % Senior Notes due 2033.

Interest on the Senior Notes is payable semi-annually in arrears on March 30 and September 30 of each year, beginning on September 30, 2023.

The Senior Notes are redeemable at any time at the

applicable redemption price prior to the maturity date.

The net proceeds of this issuance were used to repay the $ 250 million senior debt maturity and for general corporate purposes.

Subsequent event On April 17, 2023, the Company redeemed all 23,000 shares of Fixed Rate Noncumulative Preferred Stock, Series G, par value $ 1.00 per share and liquidation preference amount of $ 25,000 per share, and the corresponding depositary shares for a total redemption payment of $ 575 million .

Note 13 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 $ 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 expenses related to these activities are included in the Condensed Consolidated Statements of Operations as restructuring and related charges and totaled $ 27 million and $ 12 million during the three months ended March 31, 2023 and 2022, respectively.

Restructuring expenses during the first quarter of 2023 are primarily due to real estate costs related to facilities being vacated.

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

Future work environment

($ in millions)

Expected program charges $ 110

2021 expenses ( 131 )

2022 expenses ( 13 )

Change in estimated program costs 44

Remaining program charges $ 10

These charges are primarily recorded in the Allstate Protection segment.

Exit costs of this program reflect real estate costs primarily related to accelerated amortization of right-of-use assets and related leasehold improvements at facilities to be vacated.

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 ( 16 ) ( 28 ) ( 44 )

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.

Restructuring liability as of March 31, 2023 $ 15 $ 2 $ 17

As of March 31, 2023, the cumulative amount incurred to date for active programs related to employee severance, relocation benefits and exit expenses totaled $ 23 million for employee costs and $ 169 million for exit costs.

Note 14 Guarantees and Contingent Liabilities

4 unchanged sentences

Because of the Company’s participation, it may be exposed to losses that surpass the capitalization of these facilities or assessments from these facilities.

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

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.

4 unchanged sentences

Historically, the Company has not made any material payments pursuant to these obligations.

Related to the sale of ALNY on October 1, 2021, AIC agreed to indemnify Wilton Reassurance Company in connection with certain representations, warranties and covenants of AIC, and certain liabilities specifically excluded from the transaction, subject to specific contractual limitations regarding AIC’s maximum obligation.

First Quarter 2023 Form 10-Q 39

Notes to Condensed Consolidated Financial Statements

excluded from the transaction, subject to specific contractual limitations regarding AIC’s 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.

1 unchanged sentence

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 September 30, 2022.

The aggregate liability balance related to all guarantees was not material as of March 31, 2023.

Regulation and compliance

6 unchanged sentences

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

38 www.allstate.com

Notes to Condensed Consolidated Financial Statements

some of its 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.

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

21 unchanged sentences

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.

40 www.allstate.com

Notes to Condensed Consolidated Financial Statements

Accrual and disclosure policy The Company reviews its lawsuits, regulatory inquiries, and other legal proceedings on an ongoing basis and follows appropriate accounting guidance when making accrual and disclosure decisions.

14 unchanged sentences

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.

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.

There 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.

The Company currently estimates that the aggregate range of reasonably possible loss in excess of the amount accrued, if any, for the disclosed matters where such an estimate is possible is zero to $ 148 million, pre-tax.

11 unchanged sentences

Medical providers continue to pursue litigation under various theories that challenge the amounts that the Company pays under the personal injury protection coverage, seeking additional benefit payments, as well as applicable interest, penalties and fees.

There is a pending putative class action, Revival Chiropractic v.

There is a pending lawsuit, Revival Chiropractic v.

Allstate Insurance Company, et al.

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.

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.

filed January 2019;

appeal pending, 11 th 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

First Quarter 2023 Form 10-Q 41

Notes to Condensed Consolidated Financial Statements

personal injury protection statute.

The 11 th Circuit is holding determination on plaintiff’s class certification appeal pending the outcome of the Florida Supreme Court certification.

The oral argument before the Florida Supreme Court was on March 8, 2023.

The Company is also defending litigation involving individual plaintiffs.

2 unchanged sentences

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

Allstate Vehicle and Property Insurance Company (Circuit Court of Independence Co., Ark.

filed February 2016);

Allstate Fire and Casualty Insurance Company, et al.

filed June 2022);

Thompson, et al.

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

filed June 2022);

Allstate Vehicle and Property Insurance Compan y (Circuit Court of Cole Co., Mo.

filed October 2022);

Allstate Vehicle and Property Insurance Company (D.

filed April 2023);

and Shumway, et al.

v Allstate Vehicle and Property Insurance Company (D.

filed April 2023).

No classes have been certified in any of these matters.

The court granted preliminary approval of a class-wide settlement in the following cases:

Allstate Indemnity Company, et al .

7 unchanged sentences

Ohio filed April 2020);

Allstate Vehicle and Property Insurance Company (Circuit Court of Independence Co., Ark., filed February 2016);

Mitchell, et al.

Allstate Vehicle and Property Insurance Company, et al .

Ala., filed August 2021);

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 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.

filed August 2021);

and Hester, et al.

Allstate Vehicle and Property Insurance Company, et al .

Clair Co., Ill.

filed June 2020).

filed June 2020) (as part of the proposed class-wide settlement, the plaintiff and defendant in Thaxton v.

Allstate Indemnity Company (Madison Co., Ill.

filed July 2020) were added to the Hester complaint).

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.

The allegedly systematic underpayments result from one or more of the following theories:

The alleged systematic underpayments result from one or more of the following theories:

(a) the third party valuation tool used by the Company as part of a comprehensive adjustment process is allegedly flawed, biased, or contrary to applicable law;

(b) the Company allegedly does not pay sales tax, title fees, registration fees, and/or other specified fees that are allegedly mandatory under policy language or state legal authority;

or (c) after paying for the value of the loss vehicle, then the Company allegedly is not entitled to retain the residual salvage value, and the Company allegedly must pay salvage value to the owner (or if the loss vehicle is retained by the owner, then the Company allegedly may not apply any offset for the salvage value).

or (b) the Company allegedly does not pay sales tax, title fees, registration fees, and/or other specified fees that are allegedly mandatory under policy language or state legal authority.

The following cases are currently pending against the Company:

Allstate Insurance Company, Allstate Fire and Casualty Insurance Company, and CCC Information Services, Inc .

Wash., filed April 2018);

Bloomgarden v.

Allstate Fire and Casualty Insurance

40 www.allstate.com

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.

October 2020);

Allstate Fire and Casualty Insurance Company (E.D.

Pa., filed October 2018);

Kronenberg v.

Allstate Insurance Company and Allstate Fire and Casualty Insurance Company (E.D.N.Y., filed December 2018);

Allstate Insurance Company and Allstate Fire and Casualty Insurance Company (E.D.N.Y.

filed December 2018);

Allstate Property and Casualty Insurance Company (W.D.

La., filed June 2019);

Esurance Property and Casualty Insurance Company (C.D.

Cal., filed September 2020);

filed June 2019);

Allstate Fire and Casualty Insurance Company (Cir.

Ill., Chancery Div., filed October 2020);

Esurance Property and Casualty Insurance Company (N.D.

Ohio, filed December 2020);

Esurance Property and Casualty Insurance Company (E.D.

Mo., filed February 2021);

Chancery Div.

filed October 2020);

Imperial Fire and Casualty Insurance Company (W.D.

La., filed February 2022);

filed February 2022);

Allstate Property and Casualty Insurance Company (M.D.

La., filed April 2022);

filed April 2022);

Esurance Property and Casualty Insurance Company (Cir.

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

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).

of Cook Co., Ill., Chancery Div.

filed September 2022).

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

7 unchanged sentences

Fact discovery has been completed in the investigatory hearing.

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

The hearing is scheduled for May 22, 2023.

In re The Allstate Corp.

2 unchanged sentences

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.

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.

3 unchanged sentences

The court allowed the lead plaintiffs to amend their complaint to add the City of Providence Employee Retirement System as a proposed class representative and on September 12, 2018, the amended complaint was filed.

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

42 www.allstate.com

Notes to Condensed Consolidated Financial Statements

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 court.

3 unchanged sentences

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 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.

On January 10, 2023, the parties filed a joint pre-trial order.

There is no date currently set for a pre-trial conference.

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

Allstate Life Insurance Company (E.D.

Cal., filed May 2020) and Farley v.

2020) and Farley v.

Lincoln Benefit Life Compan y (E.D.

Cal., filed Dec.

2020), following the sale of ALIC.

No classes have been certified in these matters.

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

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

On April 19, 2023, the court certified a class in Farley.

There has been no ruling on plaintiff’s motion for class certification in Hewitt.

In these cases, plaintiffs generally allege that the defendants failed to comply with certain California statutes which address contractual grace periods and lapse notice requirements for certain life insurance policies.

5 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 15 Benefit Plans

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

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

Three months ended March 31,

($ in millions) 2023 2022

8 unchanged sentences

Remeasurement (gains) losses ( 57 ) ( 223 )

Pension net cost (benefit) $ 75 $ ( 8 ) $ 50 $ ( 544 )

Pension net benefit $ ( 41 ) $ ( 271 )

Postretirement benefits

6 unchanged sentences

Remeasurement (gains) losses 4 ( 24 )

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

Postretirement net cost (benefit) $ 1 $ ( 28 )

Pension and postretirement benefits

1 unchanged sentence

Remeasurement (gains) losses ( 53 ) ( 247 )

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

Total net benefit $ ( 40 ) $ ( 299 )

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.

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.

First Quarter 2023 Form 10-Q 43

Notes to Condensed Consolidated Financial Statements

Pension and postretirement benefits remeasurement gains and losses

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

Three months ended March 31,

($ in millions) 2023 2022

4 unchanged sentences

Remeasurement (gains) losses $ ( 53 ) $ ( 247 )

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.

42 www.allstate.com

Notes to Condensed Consolidated Financial Statements

Remeasurement gains for the first quarter of 2023 are primarily related to favorable asset performance compared to expected return on plan assets, partially offset by a decrease in the liability discount rate.

The weighted average discount rate used to measure the pension benefit obligation decreased to 5.33 % at March 31, 2023 compared to 5.64 % at December 31, 2022, resulting in losses for the first quarter of 2023.

For the first quarter of 2023, the actual return on plan assets was higher than the expected return due to higher fixed income valuations from lower market yields and positive equity returns.

Note 16 Supplemental Cash Flow Information

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.

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 $ 127 million and $ 137 million for the nine

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.

Non-cash investing activities include $ 36 million and $ 21 million related to mergers and exchanges completed with equity securities, fixed income securities, bank loans, and limited partnerships for the three months ended March 31, 2023 and 2022, respectively.

Non-cash investing activities include $ 17 million related to right-of-use real estate obtained in exchange for lease obligations and $ 51 million related to debt assumed by purchaser on sale of real estate for the three months ended March 31, 2023.

Non-cash financing activities include $ 35 million and $ 60 million related to the issuance of Allstate common shares for vested equity awards for the three months ended March 31, 2023 and 2022, respectively.

months ended March 31, 2023 and 2022, respectively.

Non-cash operating activities include $ 4 million and $ 8 million related to right-of-use assets obtained in exchange for lease obligations for the three months ended March 31, 2023 and 2022, 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) Nine months ended September 30,

($ in millions) Three months ended March 31,

Net change in proceeds managed

1 unchanged sentence

Net change in short-term investments 93 ( 63 )

Operating cash flow (used) ( 758 ) ( 579 )

Operating cash flow provided (used) 204 ( 63 )

Net change in cash — 3

4 unchanged sentences

Liabilities for collateral, end of period ( 1,807 ) ( 1,504 )

Operating cash flow provided $ 757 $ 567

Third Quarter 2022 Form 10-Q 43

Operating cash flow (used) provided $ ( 204 ) $ 60

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Notes to Condensed Consolidated Financial Statements

1 unchanged sentence

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

($ in millions) Three months ended September 30,

($ in millions) Three months ended March 31,

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

5 unchanged sentences

( 6 ) 2 ( 4 ) ( 19 ) 4 ( 15 )

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

Nine months ended September 30,

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

Unrealized net holding gains and losses arising during the period, net of related offsets $ ( 5,081 ) $ 1,080 $ ( 4,001 ) $ ( 1,350 ) $ 288 $ ( 1,062 )

reclassification adjustment of realized capital gains and losses ( 602 ) 126 ( 476 ) 367 ( 77 ) 290

Unrealized net capital gains and losses ( 4,479 ) 954 ( 3,525 ) ( 1,717 ) 365 ( 1,352 )

Unrealized foreign currency translation adjustments ( 171 ) 36 ( 135 ) 13 ( 3 ) 10

Unamortized pension and other postretirement prior service credit (1)

Discount rate for reserve for future policy benefits

( 11 ) 2 ( 9 ) 120 ( 25 ) 95

Other comprehensive (loss) income $ ( 4,697 ) $ 999 $ ( 3,698 ) $ ( 1,760 ) $ 374 $ ( 1,386 )

Other comprehensive income (loss) $ 913 $ ( 194 ) $ 719 $ ( 1,925 ) $ 411 $ ( 1,514 )

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

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First Quarter 2023 Form 10-Q 45

Report of Independent Registered Public Accounting Firm

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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 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.

We have reviewed the accompanying condensed consolidated statement of financial position of The Allstate Corporation and subsidiaries (the “Company”) as of March 31, 2023, the related condensed consolidated statements of operations, comprehensive income (loss), shareholders’ equity and cash flows for the three month periods ended March 31, 2023 and 2022, and the related notes (collectively referred to as the “interim financial information”).

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

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated statement of financial position of the Company as of December 31, 2022, and the related consolidated statements of operations, comprehensive income (loss), shareholders’ equity, and cash flows for the year then ended prior to the retrospective adjustment for a change in the Company’s method of accounting for reserve for future policy benefits and deferred policy acquisition costs for long-duration insurance contracts (not presented herein);

and in our report dated February 16, 2023, we expressed an unqualified opinion on those consolidated financial statements.

In our opinion, the information set forth in the accompanying condensed consolidated statement of financial position as of December 31, 2021, is fairly stated, in all material respects, in relation to the consolidated statement of financial position from which it has been derived.

We also audited the adjustments described in Note 1 that were applied to retrospectively adjust the December 31, 2022, consolidated statement of financial position of the Company (not presented herein).

In our opinion, such adjustments are appropriate and have been properly applied to the previously issued consolidated statement of financial position in deriving the accompanying retrospectively adjusted condensed consolidated statement of financial position as of December 31, 2022.

Basis for Review Results

These condensed consolidated financial statements are the responsibility of the Company's management.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

This interim financial information is the responsibility of the Company's management.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our reviews in accordance with standards of the PCAOB.

A review of the condensed consolidated financial statements consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters.

A review of the interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters.

It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole.

2 unchanged sentences

Chicago, Illinois

November 2, 2022

Third Quarter 2022 Form 10-Q 45

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

What changed 10-Q

Item 1. Financial Statements