What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2023-05-03 compared with 2022-11-02 · 339 added, 487 removed, 729 unchanged (53% of the section changed)

4 unchanged sentences

of The Allstate Corporation annual report on Form 10-K for 2022, filed February 16, 2023.

Certain amounts have been reclassified to conform to current year presentation.

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

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

Subsequent event

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, but excluded from adjusted net income, the measure of segment profit or loss.

The sale will reduce real estate expenses and further advance Allstate’s multi-year Transformative Growth initiative.

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.

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

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

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

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

Total auto claim frequency has increased through the first nine months of 2022 and during 2021, but remains below pre-pandemic levels.

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

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

• Sales of new and retention of existing policies

• Rate changes and average gross premiums

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

• Premium for transportation network products

• Driving behavior and auto accident frequency

• Hospital and outpatient claim costs

• Investment valuations and returns

• Bad debt and credit allowance exposure

• Consumer utilization of Milewise ® , our pay-per-mile insurance product

• Retail sales in Allstate Protection Plans

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

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

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.

Over the past several quarters, inflation continued to remain elevated, which led to increases in interest rates by the Federal Reserve and a widening of credit spreads reflecting ongoing recession concerns.

Many foreign governmental authorities and central banks have also responded to inflationary pressure, generally through more restrictive monetary policy, such as increasing target interest rates.

These actions and other ongoing impacts from the pandemic could create significant economic uncertainty.

Market volatility resulting from these factors and from disruptions in the banking industry have and may continue to impact our investment valuations and returns.

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

Within the MD&A we have included further disclosures related to macroeconomic impacts on our 2023 results.

Russia/Ukraine Conflict

3 unchanged sentences

Our strategy has two components:

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

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

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

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

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

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

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

• Expanding customer access

• Improving customer value

• Increasing customer acquisition sophistication

• Expanding customer access

• Increasing sophistication and investment in customer acquisition

• Modernizing the technology ecosystem

• Enhancing organizational capabilities

46 www.allstate.com

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

Acquisitions and Dispositions

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

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

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

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

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

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

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

• Driving organizational transformation

We are expanding protection services businesses utilizing enterprise capabilities and resources such as the Allstate brand, distribution, analytics, claims, investment expertise, talent and capital.

First Quarter 2023 Form 10-Q 47

Measuring segment profit or loss

5 unchanged sentences

• 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

• Income tax expense or benefit on reconciling items

Third Quarter 2022 Form 10-Q 47

Consolidated net income

Consolidated net income (loss) applicable to common shareholders

($ in millions)

Consolidated net loss applicable to common shareholders was $694 million and $1.11 billion in the third quarter and first nine months of 2022, respectively, compared to income of $508 million and $695 million in the third quarter and first nine months of 2021, respectively, primarily due to higher losses, excluding catastrophes, and equity valuation decreases, partially offset by increased Property-Liability premiums earned and the loss on the sale of the life and annuities business in the first nine months of 2021.

For the twelve months ended September 30, 2022, return on Allstate common shareholders’ equity was (1.6)%, a decrease of 14.8% from 13.2% for the twelve months ended September 30, 2021.

Consolidated net loss applicable to common shareholders was $346 million in the first quarter of 2023 compared to income of $634 million in the first quarter of 2022, primarily due to higher losses driven by severity and frequency and higher catastrophe losses, partially offset by increased Property-Liability premiums earned.

For the twelve months ended March 31, 2023, return on Allstate common shareholders’ equity was (13.0)%, a decrease of 28.6 points from 15.6% for the twelve months ended March 31, 2022.

Total revenue

($ in millions)

Total revenue increased 5.8% to $13.21 billion and increased 0.5% to $37.77 billion in the third quarter and first nine months of 2022, respectively, compared to the same periods of 2021.

The increase in both periods is due to increases of 9.9% and 8.4% in property and casualty insurance premiums earned in the third quarter and first nine months of 2022, respectively, partially offset by net losses on investments and derivatives in 2022 compared to net gains in 2021 and decreases in net investment income.

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

Total revenue increased 11.8% to $13.79 billion in the first quarter of 2023 compared to the first quarter of 2022 due to an increase of 10.9% in property and casualty insurance premiums earned in the first quarter of 2023 compared to the first quarter of 2022 and net gains on investments and derivatives in 2023 compared to net losses in 2022.

Net investment income

($ in millions)

Net investment income decreased $74 million to $690 million in the third quarter of 2022 and decreased $600 million to $1.85 billion in the first nine months of 2022 compared to the same periods of 2021.

The decrease in both periods was primarily due to lower performance-based investment results, mainly from limited partnerships, partially offset by higher market-based fixed income portfolio yields.

Net investment income decreased $19 million to $575 million in the first quarter of 2023 compared to the first quarter of 2022, primarily due to lower performance-based investment results, mainly from limited partnerships, largely offset by higher market-based income.

Market-based reflects higher fixed income portfolio yields and balance.

48 www.allstate.com

Financial highlights

Investments totaled $61.01 billion as of September 30, 2022, decreasing from $64.70 billion as of December 31, 2021.

Allstate shareholders’ equity As of September 30, 2022, Allstate shareholders’ equity was $17.67 billion.

Book value per common share (ratio of Allstate common shareholders’ equity to total common shares outstanding and dilutive potential common shares outstanding) was $58.35, a decrease of 31.0% from $84.62 as of September 30, 2021, and a decrease of 28.4% from $81.52 as of December 31, 2021.

Return on average Allstate common shareholders’ equity For the twelve months ended September 30, 2022, return on Allstate common shareholders’ equity was (1.6)%, a decrease of 14.8 points from 13.2% for the twelve months ended September 30, 2021.

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

Pension and other postretirement remeasurement gains and losses We recorded pension and other postretirement remeasurement losses of $79 million in the third quarter of 2022, 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.

We recorded losses of $91 million in the first nine months of 2022, 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.

Investments totaled $63.48 billion as of March 31, 2023, increasing from $61.83 billion as of December 31, 2022.

Allstate shareholders’ equity was $17.49 billion as of March 31, 2023 and December 31, 2022.

Book value per diluted common share (ratio of Allstate common shareholders’ equity to total common shares outstanding and dilutive potential common shares outstanding) was $58.65, a decrease of 22.3% from $75.46 as of March 31, 2022, and an increase of 0.9% from $58.12 as of December 31, 2022.

Return on average Allstate common shareholders’ equity For the twelve months ended March 31, 2023, return on Allstate common shareholders’ equity was (13.0)%, a decrease of 28.6 points from 15.6% for the twelve months ended March 31, 2022.

The decrease was primarily due to lower net income applicable to common shareholders for the trailing twelve-month period ending March 31, 2023.

Pension and other postretirement remeasurement gains and losses We recorded pension and other postretirement remeasurement gains of $53 million in the first quarter of 2023, primarily related to favorable asset performance compared to expected return on plan assets, partially offset by a decrease in the liability discount rate.

Summarized consolidated financial results

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

Three months ended March 31,

($ in millions) 2023 2022

7 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)

6 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

Third Quarter 2022 Form 10-Q 49

Segment highlights

Allstate Protection underwriting loss was $1.17 billion in the third quarter of 2022 compared to underwriting loss of $421 million in the third quarter of 2021.

Underwriting loss totaled $1.75 billion in the first nine months of 2022 compared to underwriting income of $1.67 billion in the first nine months of 2021.

The decrease in both periods was primarily due to higher losses and unfavorable reserve reestimates, both excluding catastrophes, primarily for auto insurance, partially offset by increased premiums.

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

At this time, we will no longer write new homeowners and condominium business in the state of California, although we will offer continuing coverage to existing customers.

Additional actions are likely in personal auto insurance.

Commercial insurance is being exited in five states and coverage to transportation network companies will not be offered unless it utilizes telematics-based pricing.

We expect these actions will negatively impact premiums starting in the fourth quarter.

Catastrophe losses were $763 million and $2.33 billion in the third quarter and first nine months of 2022, respectively, compared to $1.27 billion and $2.81 billion in the third quarter and first nine months of 2021, respectively.

Premiums written increased 9.8% to $12.04 billion and 10.5% to $34.31 billion in the third quarter and first nine months of 2022, respectively, compared to the same periods of 2021, reflecting higher premiums in both Allstate and National General brands.

Protection Services adjusted net income was $35 million in the third quarter of 2022 compared to $45 million in the third quarter of 2021, primarily due to a prior year restructuring benefit and higher current year technology expenses at Allstate Identity Protection.

Adjusted net income was $131 million in the first nine months of 2022 compared to $150 million in the first nine months of 2021, primarily related to investments in growth at Allstate Protection Plans and lower revenue at Arity.

Premiums and other revenue increased 8.7% or $47 million in the third quarter of 2022 and 11.4% or $179 million in the first nine months of 2022 compared to the same periods of 2021, primarily due to Allstate Protection Plans.

Allstate Health and Benefits adjusted net income was $54 million in the third quarter of 2022 compared to $33 million in the third quarter 2021, primarily due to lower individual health and employer voluntary benefits claims as well as lower restructuring charges compared to the prior year quarter.

Adjusted net income was $172 million in the first nine months of 2022 compared to $160 million in the first nine months of 2021, primarily due to increases in group health and employer voluntary benefits revenues, partially offset by higher group and individual health claims utilization.

Premiums and contract charges increased 0.7% to $463 million in the third quarter of 2022 and 2.6% to $1.40 billion in the first nine months of 2022 compared to the same periods of 2021, primarily due to growth in group health and employer voluntary benefits.

Allstate Protection underwriting loss was $998 million in the first quarter of 2023 compared to underwriting income of $282 million in the first quarter of 2022.

The decrease was primarily due to higher non-catastrophe losses, primarily for auto insurance, and higher catastrophe losses, partially offset by increased premiums.

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

Catastrophe losses were $1.69 billion in the first quarter of 2023 compared to $462 million in the first quarter of 2022.

Premiums written increased 9.5% to $11.78 billion in the first quarter of 2023 compared to the same period of 2022, reflecting higher premiums in both Allstate and National General brands.

Protection Services adjusted net income was $34 million in the first quarter of 2023 compared to $53 million in the first quarter of 2022, due to Allstate Protection Plans higher appliance and furniture claim severity, a shift in business mix and lower third-party advertising sales by Arity.

The decrease was partially offset by growth in new business at Allstate Protection Plans.

First Quarter 2023 Form 10-Q 49

Premiums and other revenue increased 7.8% or $45 million in the first quarter of 2023 compared to the same period of 2022, primarily due to Allstate Protection Plans.

Allstate Health and Benefits adjusted net income was $56 million in the first quarter of 2023 compared to $57 million in the first quarter 2022, primarily due to a decline in employer voluntary benefits, partially offset by growth in group health.

Premiums and contract charges decreased 1.1% to $463 million in the first quarter of 2023 compared to the same period of 2022, primarily due to a decline in individual health and employer voluntary benefits, partially offset by growth in group health.

Adopted accounting standard

Accounting for Long-Duration Insurance Contracts Effective January 1, 2023, we 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.

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

Our 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.

See Note 1 of the condensed consolidated financial statements for further information regarding the impact of the adopted accounting standard on our condensed consolidated financial statements.

50 www.allstate.com

11 unchanged sentences

• Expense ratio:

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

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

• Combined ratio:

7 unchanged sentences

• Effect of restructuring and related charges on combined ratio

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

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

4 unchanged sentences

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

Lender-placed policies are excluded from policy counts because relationships are with the lenders.

• New issued applications :

14 unchanged sentences

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

First Quarter 2023 Form 10-Q 51

Property-Liability Operations

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

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

Third Quarter 2022 Form 10-Q 51

Property-Liability Operations

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

2 unchanged sentences

Underwriting results

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

Three months ended March 31,

($ in millions, except ratios) 2023 2022

3 unchanged sentences

Claims and claims expense (10,180) (7,702)

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

Amortization of DAC (1,452) (1,348)

1 unchanged sentence

Restructuring and related charges (1)

(14) (15) (24) (113)

Amortization of purchased intangibles (57) (58)

3 unchanged sentences

Catastrophe reserve reestimates (2)

(9) (1) 29 (207)

Total catastrophe losses $ 1,691 $ 462

Non-catastrophe reserve reestimates (2)

875 162 1,444 144

Prior year reserve reestimates (2)

866 161 1,473 (63)

GAAP operating ratios

1 unchanged sentence

Expense ratio (3)

22.6 25.1 23.2 24.3

Combined ratio 108.6 97.3

3 unchanged sentences

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

0.1 0.1 0.1 0.4

Effect of amortization of purchased intangibles on combined ratio 0.5 0.5

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

Effect of Run-off Property-Liability business on combined ratio 1.1 1.2 0.4 0.4

(1) Restructuring and related charges for the third quarter and first nine months of 2022 primarily related to future work environment and employee costs.

(1) Restructuring and related charges for the first quarter of 2023 are primarily for real estate costs related to facilities being vacated.

See Note 13 of the condensed consolidated financial statements for additional details.

5 unchanged sentences

Underwriting results

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

Three months ended March 31,

($ in millions) 2023 2022

3 unchanged sentences

Claims and claims expense (10,178) (7,701)

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

Amortization of DAC (1,452) (1,348)

4 unchanged sentences

Catastrophe losses $ 1,691 $ 462

Underwriting loss was $1.17 billion in the third quarter of 2022 compared to underwriting loss of $421 million in the third quarter of 2021.

Underwriting loss totaled $1.75 billion in first nine months of 2022 compared to underwriting income of $1.67 billion in the first nine months of 2021.

The decrease in both periods was primarily due to higher losses and unfavorable reserve reestimates, both excluding catastrophes, primarily for auto insurance, partially offset by increased premiums.

Underwriting loss was $998 million in the first quarter of 2023 compared to underwriting income of $282 million in the first quarter of 2022, due to higher non-catastrophe losses, primarily for auto insurance, and higher catastrophe losses, partially offset by increased premiums.

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

($ in millions)

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

($ in millions)

Third Quarter 2022 Form 10-Q 53

Segment Results Allstate Protection

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

1 unchanged sentence

($ in millions) 2023 2022 2023 2022 2023 2022

Three months ended September 30,

Three months ended March 31,

$ (332) $ (137) $ (14) $ (10) $ (346) $ (147)

9 unchanged sentences

Total $ (972) $ 251 $ (28) $ 29 $ (998) $ 282

Nine months ended September 30,

$ (1,937) $ 1,444 $ (103) $ 118 $ (2,040) $ 1,562

Homeowners (2)

504 61 (35) (77) 469 (16)

Other personal lines 20 112 (1) — 19 112

Commercial lines (280) (81) 6 — (274) (81)

Other business lines (3)

70 82 — — 70 82

Answer Financial — — — — 7 11

Total $ (1,623) $ 1,618 $ (133) $ 41 $ (1,749) $ 1,670

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

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

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

(1) Other business lines represents commissions earned and other costs and expenses for Ivantage and non-proprietary life and annuity products, and lender-placed products and related services.

In the first quarter of 2023, National General lender-placed products and related services results were reclassified from homeowners to other business lines.

Historical results have been updated to conform with this presentation.

First Quarter 2023 Form 10-Q 53

Segment Results Allstate Protection

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

Premiums written is the amount of premiums charged for policies issued during a fiscal period.

Premiums written is the amount of premiums charged for policies issued during a reporting period.

Premiums are considered earned and are included in the financial results on a pro-rata basis over the policy period.

3 unchanged sentences

($ in millions) 2023 2022 2023 2022 2023 2022

Three months ended September 30,

Auto $ 6,704 $ 6,153 $ 1,156 $ 1,018 $ 7,860 $ 7,171

Homeowners 2,803 2,452 483 552 3,286 3,004

Other personal lines 564 543 42 41 606 584

Commercial lines 233 207 52 — 285 207

Total premiums written $ 10,304 $ 9,355 $ 1,733 $ 1,611 $ 12,037 $ 10,966

Nine months ended September 30,

Three months ended March 31,

Auto $ 6,826 $ 6,308 $ 1,523 $ 1,254 $ 8,349 $ 7,562

2 unchanged sentences

Commercial lines 177 238 50 56 227 294

Other business lines — — 125 120 125 120

Total premiums written $ 9,705 $ 9,035 $ 2,078 $ 1,726 $ 11,783 $ 10,761

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Allstate Protection Segment Results

Premiums earned by brand and by line of business

1 unchanged sentence

($ in millions) 2023 2022 2023 2022 2023 2022

Three months ended September 30,

Auto $ 6,416 $ 6,009 $ 1,129 $ 903 $ 7,545 $ 6,912

Homeowners 2,350 2,080 426 442 2,776 2,522

Other personal lines 505 481 35 40 540 521

Commercial lines 246 204 50 — 296 204

Total premiums earned $ 9,517 $ 8,774 $ 1,640 $ 1,385 $ 11,157 $ 10,159

Nine months ended September 30,

Three months ended March 31,

Auto $ 6,660 $ 6,073 $ 1,248 $ 1,008 $ 7,908 $ 7,081

2 unchanged sentences

Commercial lines 183 232 49 51 232 283

Other business lines — — 123 113 123 113

Total premiums earned $ 9,852 $ 9,011 $ 1,783 $ 1,487 $ 11,635 $ 10,498

Reconciliation of premiums written to premiums earned

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

Three months ended March 31,

($ in millions) 2023 2022

1 unchanged sentence

(Increase) decrease in unearned premiums

(852) (672) (1,709) (1,264)

Other (21) (5)

8 unchanged sentences

Total 32,569 33,321 5,646 5,121 38,215 38,442

Auto insurance premiums written increased 9.6% or $689 million in the third quarter of 2022 compared to the third quarter of 2021 and 9.0% or $1.89 billion in the first nine months of 2022 compared to the first nine months of 2021, primarily due to the following factors:

Auto insurance premiums written increased 10.4% or $787 million in the first quarter of 2023 compared to the first quarter of 2022, primarily due to the following factors:

• Increased average premiums driven by rate increases.

In the nine months ended September 30, 2022, rate increases of 14.7% were taken for Allstate brand in 52 locations, resulting in total Allstate brand insurance premium impact of 10.8%, and 9.1% were taken for National General brand in 36 locations, resulting in total National General brand insurance premium impact of 5.9%, to improve underwriting results.

Allstate expects to continue to pursue rate increases for the balance of 2022 and into 2023 to improve auto insurance profitability

• Renewal ratio decreased 0.2 in the third quarter and increased 0.3 points in the first nine months of 2022, respectively, compared to the third quarter and first nine months of 2021

• PIF increased 1.9% or 477 thousand to 26,131 thousand as of September 30, 2022 compared to September 30, 2021 due to growth in National General, including the SafeAuto acquisition

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

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

Third Quarter 2022 Form 10-Q 55

Segment Results Allstate Protection

In the three months ended March 31, 2023, rate increases of 8.4% were taken for Allstate brand in 28 locations, resulting in total Allstate brand insurance premium impact of 1.7%

• Rate increases of 5.6% were taken for National General brand in 28 locations, resulting in total National General brand insurance premium impact of 1.9%

• We expect to continue to pursue rate increases for both Allstate and National General brands

throughout 2023 to improve auto insurance profitability

• PIF decreased 1.3% or 338 thousand to 25,733 thousand as of March 31, 2023 compared to March 31, 2022

• Renewal ratio decreased 1.8 points

• Decreased new issued applications driven by the direct and exclusive agency channels, partially offset by growth in the independent agency channel

• The impact of the ongoing rate increases and temporary reductions in advertising have and may continue to have an adverse effect on the renewal ratio and future PIF growth

54 www.allstate.com

Allstate Protection Segment Results

Auto premium measures and statistics

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

2022 2021 Change 2022 2021 Change

Three months ended March 31,

2023 2022 Change

New issued applications (thousands)

10 unchanged sentences

Allstate brand renewal ratio (%) 85.7 87.5 (1.8)

Homeowners insurance premiums written increased 9.4% or $282 million in the third quarter of 2022 compared to the third quarter of 2021 and increased 12.9% or $1.01 billion in the first nine months of 2022 compared to the first nine months of 2021, primarily due to the following factors:

Homeowners insurance premiums written increased 11.1% or $253 million in the first quarter of 2023 compared to the first quarter of 2022, primarily due to the following factors:

• Higher Allstate brand average premiums from inflation in insured home replacement costs and implemented rate increases, combined with policies in force growth.

National General premiums and policies in force declined in the third quarter of 2022 as we improve underwriting margins to targeted levels

• Increased new issued applications driven by growth in the independent agency channel in the third quarter and first nine months of 2022 and direct channel in the first nine months of 2022 compared to the same periods of 2021

• Growth is being reduced in states and lines of business that are underperforming.

At this time, we will no longer write new homeowners and condominium business in the state of California, although we will offer continuing coverage to existing customers.

We expect this action will negatively impact premiums starting in the fourth quarter

National General policy growth is expected to be negatively impacted in future quarters as we improve underwriting margins to targeted levels through underwriting and rate actions

• Increased new issued applications driven by growth in the independent agency channel

• Policy growth is being reduced in states and lines of business that are underperforming.

We are no longer writing new homeowners business in California and Florida, and we may take further actions, which have and will continue to negatively impact premiums

Homeowners premium measures and statistics

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

2022 2021 Change 2022 2021 Change

Three months ended March 31,

2023 2022 Change

New issued applications (thousands)

10 unchanged sentences

Allstate brand renewal ratio (%) 86.3 86.2 0.1

Other personal lines premiums written increased 3.8% or $22 million in the third quarter of 2022 compared to the third quarter of 2021 and increased 4.9% or $80 million in the first nine months of 2022 compared to the first nine months of 2021, primarily due to increases in landlords, condominiums and personal umbrella premiums for Allstate brand.

Commercial lines premiums written increased 37.7% or $78 million in the third quarter of 2022 compared to the third quarter of 2021 and increased

44.1% or $268 million in the first nine months of 2022 compared to the first nine months of 2021, primarily due to higher miles driven and increased average premium in our shared economy business in part due to higher rates.

Commercial insurance is being exited in five states and coverage to transportation network companies will not be offered unless it utilizes telematics-based pricing.

We expect these actions will negatively impact premiums starting in the fourth quarter.

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Allstate Protection Segment Results

Other personal lines premiums written increased 8.7% or $44 million in the first quarter of 2023 compared to the first quarter of 2022, primarily due to increases in landlords for Allstate brand.

Starting in the fourth quarter of 2022, we no longer write condominium new business in California and Florida and we may take further actions to reduce certain exposure in Florida, which will continue to negatively impact premiums.

Commercial lines premiums written decreased 22.8% or $67 million in the first quarter of 2023 compared to the first quarter of 2022, due to profitability actions taken to no longer offer coverage to transportation network companies unless the

contracts utilize telematics-based pricing and the Allstate brand exiting traditional commercial insurance in five states, with non-renewals for those states beginning later in 2023.

Other business lines premiums written increased 4.2% or $5 million in the first quarter of 2023 compared to the first quarter of 2022.

First Quarter 2023 Form 10-Q 55

Segment Results Allstate Protection

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

4 unchanged sentences

2023 2022 2023 2022 2023 2022

Three months ended September 30,

Three months ended March 31,

83.4 77.6 21.0 24.5 104.4 102.1

2 unchanged sentences

Commercial lines 102.2 87.3 23.7 20.5 125.9 107.8

Total 88.0 79.0 22.5 25.1 110.5 104.1

Impact of amortization of purchased intangibles — — 0.6 0.8 0.6 0.8

Impact of restructuring and related charges — — 0.1 0.2 0.1 0.2

Nine months ended September 30,

Auto 86.1 67.7 23.2 24.7 109.3 92.4

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

Homeowners 69.9 75.9 24.3 24.3 94.2 100.2

Other personal lines 74.4 67.0 24.4 25.8 98.8 92.8

Commercial lines 112.0 91.5 19.4 22.2 131.4 113.7

Other business lines 43.1 31.0 33.3 41.6 76.4 72.6

Total 87.5 73.3 21.1 24.0 108.6 97.3

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

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

Impact of restructuring and related charges — — 0.2 0.1 0.2 0.1

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

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

3 unchanged sentences

2023 2022 2023 2022 2023 2022 2023 2022

Three months ended September 30,

Auto 95.3 76.9 4.4 2.9 8.4 1.0 (0.1) (0.1)

Homeowners 66.9 85.9 14.1 38.0 2.0 0.7 0.2 0.1

Other personal lines 76.1 64.9 5.7 19.6 (0.9) (12.7) (0.6) —

Commercial lines 120.6 104.4 3.4 4.9 21.6 12.3 0.4 0.5

Total 88.0 79.0 6.8 12.5 6.7 0.4 (0.1) —

Nine months ended September 30,

Three months ended March 31,

Auto 83.4 77.6 1.2 0.6 (0.3) 2.0 (0.4) (0.1)

2 unchanged sentences

Commercial lines 102.2 87.3 3.9 — 10.3 6.7 0.4 (0.4)

Other business lines 43.1 31.0 4.9 1.8 0.8 (2.7) — 3.5

Total 87.5 73.3 14.5 4.4 (0.1) 1.4 (0.4) (0.1)

(1) The ten-year average effect of catastrophe losses on the total combined ratio was 7.5 points in the third quarter of 2022.

Third Quarter 2022 Form 10-Q 57

Segment Results Allstate Protection

Auto loss ratio increased 18.4 points in both the third quarter and first nine months of 2022 compared to the same periods of 2021, primarily due to:

• Higher gross claim frequency in all coverages, as miles driven has rebounded toward pre-pandemic levels.

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

• Increased severity for all coverages, driven by inflationary pressures in both physical damage and bodily injury claims

• Unfavorable prior year reserve reestimates, excluding catastrophes, in both bodily injury and physical damage coverages

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

(1) The ten-year average effect of catastrophe losses on the total combined ratio was 7.3 points in the first quarter of 2023.

Auto underwriting results

For the periods ended

2023 2022 2021

($ in millions, except ratios) Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1

Underwriting income (loss) (346) (974) (1,315) (578) (147) (300) (159) 394 1,327

Loss ratio 83.4 90.6 95.3 84.9 77.6 78.9 76.9 68.7 57.2

Effect of prior year non-catastrophe reserve reestimates (0.1) 2.3 8.5 3.8 2.1 2.1 1.1 (0.4) (0.2)

Frequency and severity are influenced by:

• Supply chain disruptions and labor shortages

1 unchanged sentence

• Labor and part cost increases

• Unemployment levels

• Changes in commuting activity

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

Property damage gross claim frequency for Allstate brand increased 3.5% and 9.1% in the third quarter and first nine months of 2022, respectively, compared to the same periods of 2021 due to factors including:

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

• While gross claim frequency has rebounded from the low in 2020, it is 13.8% and 15.0% below pre-pandemic levels of 2019 for the third quarter and first nine months of 2022, respectively

Collision gross claim frequency for Allstate brand increased 0.1% and 6.2% in the third quarter and first nine months of 2022, respectively, compared to the same periods of 2021.

While gross claim frequency has rebounded from the low in 2020, it is 9.3% and 10.0% below pre-pandemic levels of 2019 for the third quarter and first nine months of 2022, respectively.

Property damage estimated report year 2022 incurred claim severity for Allstate brand, excluding Esurance and Canada, increased approximately 17% compared to report year 2021 and also increased approximately 27% compared to the 2021 recorded severity as of September 30, 2021.

Collision estimated report year 2022 incurred claim severity for Allstate brand, excluding Esurance and Canada, increased approximately 17% compared to report year 2021 and also increased approximately 20% compared to the 2021 recorded severity as of September 30, 2021.

The increase in estimated report year 2022 incurred claim severity for both coverages is geographically widespread and is due to rising inflationary factors and supply chain shortages impacting both repairable vehicles and total losses,

including higher used car values, replacement part costs and labor rates and length of time to claim resolution.

Bodily injury estimated report year 2022 incurred claim severity for Allstate brand, excluding Esurance and Canada, increased approximately 12% compared to report year 2021 and also increased approximately 16% compared to the 2021 recorded severity as of September 30, 2021.

The increase is due to recent data and updated assumptions related to more severe accidents, increased claims with attorney representation, litigation costs, higher medical consumption and inflation.

Homeowners loss ratio decreased 19.0 points and 6.0 points in the third quarter and first nine months of 2022, respectively, compared to the same periods of 2021, primarily due to lower catastrophe losses and increased premiums earned, partially offset by higher severity.

• Organizational and process changes impacting claim opening and closing practices and shifts in timing, if any, can impact comparisons to prior periods

The quarterly auto loss ratio has been more variable due to these and additional factors discussed below.

Auto loss ratio increased 5.8 points in the first quarter compared to the same period of 2022.

Estimated report year 2023 incurred claim severity for Allstate brand, excluding Esurance and Canada, increased 9% to 11% for all major coverages compared to the prior year due to higher part costs and labor rates for repairable vehicles, a higher mix of total losses, an increase in claims with attorney representation and higher medical consumption and inflation.

Gross claim frequency increased in all coverages, but remains below pre-pandemic levels.

Homeowners loss ratio increased 36.7 points in the first quarter of 2023 compared to the same period of 2022, primarily due to higher catastrophe losses and severity, partially offset by increased premiums earned.

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Allstate Protection Segment Results

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

(% change year-over-year)

Three months ended September 30, 2022

Gross claim frequency (2.9) %

Paid claim severity 18.8

Nine months ended September 30, 2022

Three months ended March 31, 2023

Gross claim frequency 1.3 %

Paid claim severity 10.9

Gross claim frequency decreased in the third quarter and first nine months of 2022 compared to the same periods of 2021 primarily due to a decline in the wind/hail and water perils.

Paid claim severity increased in the third quarter and first nine months of 2022 compared to the same periods of 2021 due to inflationary loss cost pressure driven by increases in labor and materials costs and time to repair.

Gross claim frequency increased in the first quarter compared to the same period of 2022 primarily due to wind/hail perils.

Paid claim severity increased in the first quarter of 2023 compared to the same period of 2022 due to inflationary loss cost pressure driven by increases in labor and materials costs.

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

Other personal lines loss ratio increased 11.2 and 7.4 points in the third quarter and first nine months of 2022, respectively, compared to the same periods of 2021, primarily due to higher losses, excluding catastrophes, partially offset by lower catastrophe losses and increased premiums earned.

Commercial lines loss ratio increased 16.2 and 20.5 points in the third quarter and first nine months of 2022, respectively, compared to the same periods of 2021, primarily due to higher unfavorable prior year reserve reestimates, excluding catastrophes, primarily in commercial auto bodily injury coverage, and higher auto severity, partially offset by increased premiums earned.

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Allstate Protection Segment Results

Catastrophe losses decreased 39.9% or $506 million in the third quarter of 2022 compared to the third quarter of 2021.

Catastrophe losses decreased 17.0% or $478 million in the first nine months of 2022 compared to the first nine months of 2021.

Hurricane Ian estimated gross catastrophe losses, excluding National Flood Insurance Program (“NFIP”) claim expenses, totaled $671 million, pre-tax, which will be reduced by $305 million in anticipated reinsurance recoveries for a net estimated loss of $366 million.

Approximately 75% of Hurricane Ian net estimated losses relate to auto coverages.

Auto policyholders generally have coverage for physical damage due to flood if they have purchased optional auto comprehensive coverage.

Homeowners policies specifically exclude coverage for losses caused by flood.

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

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

Other personal lines loss ratio increased 21.7 points in the first quarter of 2023, compared to the same period of 2022, primarily due to higher catastrophes losses, partially offset by increased premiums earned.

Commercial lines loss ratio increased 14.9 points in the first quarter of 2023 compared to the same period of 2022, primarily due to premiums earned decreasing as a result of profitability actions and continued elevated frequency and severity.

Other business lines loss ratio increased 12.1 points in the first quarter of 2023 compared to the same period of 2022, primarily due to higher catastrophe and non-catastrophe losses.

Catastrophe losses increased $1.23 billion to $1.69 billion in the first quarter of 2023 compared to the first quarter of 2022, primarily related to five wind events in March.

within a certain amount of time following the event.

Catastrophes are caused by various natural events including high winds, winter storms and freezes, tornadoes, hailstorms, wildfires, tropical storms, tsunamis, hurricanes, earthquakes and volcanoes.

We are also exposed to man-made catastrophic events, such as certain types of terrorism, civil unrest or industrial accidents.

We are also exposed to man-made catastrophic events, such as certain types of terrorism, civil unrest, wildfires or industrial accidents.

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

4 unchanged sentences

In these situations, we may need to adapt our practices to accommodate these circumstances in order to determine a best estimate of our losses from a catastrophe.

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

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

Catastrophe losses by the type of event

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

Three months ended March 31,

($ in millions) Number of events 2023 Number of events 2022

Number of events 2022 Number of events 2021 (2)

Hurricanes/Tropical storms (1)

1 $ 378 5 $ 747 1 $ 378 6 $ 754

Tornadoes 2 $ 133 1 $ 91

Wind/Hail 22 1,498 14 365

Wildfires 4 19 4 49 8 50 4 48

Freeze/other events 4 102 1 19

Prior year reserve reestimates (42) (13)

Prior year aggregate reinsurance recoveries

(5) (38) (15) (237)

Current year aggregate reinsurance recoveries

— (11) — (65)

Prior quarter reserve reestimates (71) 86 — —

Total catastrophe losses 28 $ 1,691 16 $ 462

(1) 2022 includes $12 million of claims expenses related to the National Flood Insurance Program.

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

Third Quarter 2022 Form 10-Q 59

First Quarter 2023 Form 10-Q 57

Segment Results Allstate Protection

Catastrophe reinsurance The total cost of our property catastrophe reinsurance programs, excluding reinstatement premiums, during the third quarter and first nine months of 2022 was $211 million and $528 million, respectively, compared to $109 million and $345 million in the third quarter and first nine months of 2021, respectively.

Catastrophe reinsurance

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

We have completed the placement of our 2023-2024 Nationwide Excess Catastrophe Reinsurance Program (the “Nationwide Program”), the National General Reciprocal Excess Catastrophe Program, the Kentucky Earthquake Excess Catastrophe Reinsurance Contract, and the Canada Catastrophe Excess Reinsurance Contract.

The Florida Excess Catastrophe Reinsurance Program and the National General Lender Services Program will be completed in the second quarter of 2023.

Similar to our 2022 program, our 2023 program includes coverage for losses to personal lines property, personal lines automobile, commercial lines property or commercial lines automobile arising out of multiple perils, in addition to hurricanes and earthquakes.

The Nationwide Program provides coverage up to $6.92 billion of losses less a $500 million retention, and is subject to the percentage of reinsurance placed in each of its agreements.

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

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

The Nationwide Program includes reinsurance agreements with both the traditional and insurance-linked securities (“ILS”) markets as described below:

• Core traditional market multi-year and per occurrence agreements provide limits totaling $4.56 billion for catastrophe losses arising out of multiple perils and are comprised of the following:

– $3.94 billion of placed limits exhausting at $4.75 billion, with a 5% co-participation and one annual reinstatement:

– 31.6% of the coverage is provided in four multi-year contracts attaching at $500 million.

– 31.7% of the coverage is provided in four multi-year contracts with the first $250 million in excess of $500 million retained by Allstate.

– 31.7% of the coverage is provided in one single-year contract attaching at $250 million in excess of a $750 million retention and four multi-year contracts attaching at $1.00 billion.

– One single-year contract providing $500 million of placed limits in excess of a $4.25 billion retention, 95% placed.

– $105 million of placed limits in excess of a $4.75 billion retention and $131 million of placed limits in excess of a $5.54 billion retention, both with a 5% co-participation and

one reinstatement of limits over each contract’s eight-year term.

– $375 million of placed limits in single-year placements filling capacity around the multi-year and ILS placements:

– One contract providing $95 million of placed limits in excess of a $4.75 billion retention, with two limits available in any one contract year.

– One contract providing $260 million of placed limits in excess of a $4.75 billion retention, with no annual reinstatement.

– One contract providing $20 million of placed limits in excess of a $6.82 billion retention, with no annual reinstatement.

• ILS placements provide $1.78 billion of placed limits, with no reinstatement of limits, and are comprised of the following:

– Six contracts providing occurrence coverage of $1.05 billion of placed limits, reinsuring losses in all states except Florida caused by named storms, earthquakes and fire following earthquakes, severe weather, wildfires, and other naturally occurring or man-made events determined to be a catastrophe by the Company.

– Three contracts providing occurrence and aggregate coverage of $405 million of placed limits, also provide that for each annual period beginning April 1, Allstate declared catastrophes to personal lines property and automobile business can be aggregated to erode the aggregate retention and qualify for coverage under the aggregate limits.

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

– Two contracts, providing aggregate coverage of $325 million of placed limits.

National General Reciprocal Excess Catastrophe Reinsurance Contracts are placed in the traditional market and provide $600 million of coverage, subject to a $20 million retention, with one reinstatement of limits.

Kentucky Earthquake Excess Catastrophe Reinsurance Contract is placed in the traditional market and provides two limits of $28 million, subject to a $2 million retention.

Canada Catastrophe Excess of Loss Reinsurance Contract is placed in the traditional market and provides CAD 275 million of coverage, subject to a CAD 75 million retention, with one reinstatement of limits.

The total cost of our property catastrophe reinsurance programs, excluding reinstatement premiums, during the first quarter of 2023 was $219 million, compared to $144 million in the first quarter of 2022.

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

Prior year reserve reestimates Unfavorable reserve reestimates were $746 million and $1.35 billion in the third quarter and first nine months of 2022, respectively, primarily due to strengthening of reserves, excluding catastrophes, in personal auto, primarily from bodily injury and physical damage coverages.

Increases in injury coverages reflect recent data and updated assumptions related to severity with 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.

Unfavorable reserve reestimates for homeowners were driven by losses, excluding catastrophes.

Unfavorable reserve reestimates for commercial auto during the third quarter were primarily from bodily injury coverage.

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Allstate Protection Segment Results

Prior year reserve reestimates Favorable reserve reestimates were $17 million in the first quarter of 2023 primarily due to favorable catastrophe reserve reestimates in personal auto lines and favorable reserve reestimates, excluding catastrophes losses in homeowners lines, partially offset by unfavorable reserves, excluding catastrophes, for commercial

insurance primarily related to business that is being exited.

For a more detailed discussion on reinsurance and reserve reestimates, see Note 8 of the condensed consolidated financial statements.

Prior year reserve reestimates

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

reestimates (1)

combined ratio (2)

Three months ended March 31,

Prior year reserve

reestimates (1)

5 unchanged sentences

Commercial lines 24 19 0.2 0.2

Other business lines 1 (3) — —

Total Allstate Protection $ (17) $ 144 (0.1) 1.4

4 unchanged sentences

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

60 www.allstate.com

Allstate Protection Segment Results

Expense ratio decreased 2.6 and 1.1 points in the third quarter and first nine months of 2022, respectively, compared to the third quarter and first nine months of 2021, primarily due to lower advertising costs and the impact of amortization of DAC.

The expense ratio for the first nine months of 2022 was partially offset by higher operating costs, primarily due to employee-related costs.

Expense ratio decreased 2.9 points in the first quarter of 2023 compared to the first quarter of 2022, primarily due to lower advertising costs and higher earned premium growth relative to fixed costs.

Impact of specific costs and expenses on the expense ratio

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

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

Three months ended March 31,

($ in millions, except ratios) 2023 2022 Change

Amortization of DAC $ 1,452 $ 1,348 $ 104

3 unchanged sentences

Restructuring and related charges 21 12 9

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

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

Total underwriting expenses $ 2,455 $ 2,515 $ (60)

7 unchanged sentences

Restructuring and related charges 0.2 0.1 0.1

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

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

Total expense ratio 21.1 24.0 (2.9)

Third Quarter 2022 Form 10-Q 61

First Quarter 2023 Form 10-Q 59

Segment Results Run-off Property-Liability

1 unchanged sentence

Underwriting results

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

2022 2021 2022 2021

($ in millions) Three months ended March 31,

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

Asbestos claims

$ (34) $ (64) $ (34) $ (64)

Environmental claims

(56) (40) (56) (40)

Other run-off lines (30) (9) (34) (11)

Total claims and claims expense

(120) (113) (124) (115)

Operating costs and expenses (1) (1)

Underwriting loss

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

Annual reserve review In the third quarter of 2022 and 2021, we performed our annual reserve review using established industry and actuarial best practices.

The annual review resulted in unfavorable reserve reestimates totaling $118 million and $111 million in 2022 and 2021, respectively.

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

The reserve reestimates in 2022 primarily related to new reported information and defense costs for asbestos and higher than expected reported losses for environmental and other run-off exposures.

The reserve reestimates in 2021 primarily related to new reported information for asbestos and

environmental and higher than expected reported losses for environmental and other run-off exposures.

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

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

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

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

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

Asbestos claims

13 unchanged sentences

Net reserves $ 1,428 $ 1,451

62 www.allstate.com

Run-off Property-Liability Segment Results

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

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

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

Direct excess commercial insurance

22 unchanged sentences

Net reserves $ 1,428 $ 1,451

60 www.allstate.com

Run-off Property-Liability Segment Results

Percentage of gross and ceded reserves by case and IBNR

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Case IBNR Case IBNR

8 unchanged sentences

Ceded 81 19 81 19

(1) Approximately 64% of gross case reserves as of September 30, 2022 are subject to settlement agreements.

(2) Approximately 68% of ceded case reserves as of September 30, 2022 are subject to settlement agreements.

Third Quarter 2022 Form 10-Q 63

Segment Results Run-off Property-Liability

(1) Approximately 65% and 64% of gross case reserves as of March 31, 2023 and December 31, 2022, respectively, are subject to settlement agreements.

(2) Approximately 69% and 70% of ceded case reserves as of March 31, 2023 and December 31, 2022, respectively, are subject to settlement agreements.

Gross payments from case reserves by type of exposure

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

2022 2021 2022 2021

($ in millions) Three months ended March 31,

Direct excess commercial insurance

$ 9 $ 12 37 $ 46

(3) (6) (13) (21)

Assumed reinsurance coverage

1 unchanged sentence

Direct primary commercial insurance

Ceded — 2 (1) (1)

(1) In the third quarter and first nine months of 2022, 75% and 82% of payments related to settlement agreements.

(2) In the third quarter and first nine months of 2022, 88% and 90% of payments related to settlement agreements.

Total net reserves as of September 30, 2022, included $769 million or 52% of estimated IBNR reserves compared to $733 million or 52% of estimated IBNR reserves as of December 31, 2021.

Total gross payments were $25 million and $66 million for the third quarter and first nine months of 2022, respectively, primarily related to asbestos claims, mainly from settlement agreements reached with

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

(1) In the first quarter of 2023 and 2022 , 87% and 88% of payments, respectively, related to settlement agreements.

(2) In the first quarter of 2023 and 2022 , 92% and 93% of payments, respectively, related to settlement agreements.

Total net reserves as of March 31, 2023, included $762 million or 53% of estimated IBNR reserves compared to $765 million or 53% of estimated IBNR reserves as of December 31, 2022.

Total gross payments were $29 million for the first quarter of 2023 compared to $25 million for the first quarter of 2022.

Payments primarily related to settlement agreements reached with several insureds on large claims, mainly asbestos related losses, where the scope of coverages has been agreed upon.

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

Reinsurance collections were $6 million and $27 million for the third quarter and first nine months of 2022, respectively.

64 www.allstate.com

Protection Services Segment Results

Reinsurance collections were $15 million for the first quarter of 2023 compared to $10 million for the first quarter of 2022.

First Quarter 2023 Form 10-Q 61

Segment Results Protection Services

Protection Services Segment

Summarized financial information

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

2022 2021 2022 2021

($ in millions) Three months ended March 31,

Premiums written $ 619 $ 630

2 unchanged sentences

Intersegment insurance premiums and service fees (1)

39 46 118 133

Net investment income 16 9

17 unchanged sentences

Allstate Identity Protection 3,206 2,949

Policies in force as of September 30 (in thousands) 142,079 149,519

Policies in force as of March 31 (in thousands) 144,172 147,383

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

Adjusted net income decreased 22.2% or $10 million in the third quarter of 2022 compared to the third quarter of 2021, primarily due to a prior year restructuring benefit and higher current year technology expenses at Allstate Identity Protection.

Adjusted net income decreased 12.7% or $19 million in the first nine months of 2022 compared to the same period of 2021, primarily driven by investments in growth at Allstate Protection Plans and lower revenue at Arity.

Premiums written increased 0.9% or $6 million in the third quarter of 2022 and increased 1.6% or $31 million in the first nine months of 2022 compared to the same periods of 2021, primarily due to international growth at Allstate Protection Plans, partially offset by a decrease in North American sales at both Allstate Protection Plans and Allstate Dealer Services.

PIF decreased 5.0% or 7 million as of September 30, 2022 compared to September 30, 2021 primarily related to a decline in Allstate Protection Plans.

Other revenue decreased 1.2% or $1 million in the third quarter of 2022 compared to the third quarter of 2021, primarily due to lower Arity revenue.

Other revenue increased 2.3% or $6 million in the first nine months of 2022 compared to the same period of 2021, reflecting growth at Allstate Identity Protection partially offset by lower revenue at Arity.

Intersegment premiums and service fees decreased 15.2% or $7 million in the third quarter of 2022 and decreased 11.3% or $15 million in the first nine months of 2022 compared to the same periods of 2021, driven by decreased Arity device sales due to a shift from Drivewise® devices to a mobile program.

Third Quarter 2022 Form 10-Q 65

Segment Results Protection Services

Claims and claims expense increased 15.6% or $19 million in the third quarter 2022 compared to the third quarter of 2021, primarily due to higher claim severity at Allstate Protection Plans.

Claims and claims expense increased 17.4% or $58 million in the first nine months of 2022 compared to the same period of 2021, primarily due to higher levels of claims at Allstate Protection Plans driven by growth in the business and higher severity at both Allstate Protection Plans and Allstate Roadside.

Amortization of DAC increased 14.6% or $30 million in the third quarter of 2022 and increased 17.9% or $104 million in the first nine months of 2022 compared to the same periods of 2021, driven by Allstate Protection Plans and Allstate Dealer Services business growth.

Operating costs and expenses increased 2.4% or $5 million in the third quarter of 2022 and increased 5.7% or $35 million in the first nine months of 2022 compared to the same periods of 2021, primarily due to investments in technology and geographic and product expansion at Allstate Protection Plans and Allstate Identity Protection, partially offset by lower expenses at Arity.

Restructuring and related charges increased $2 million in the third quarter of 2022 compared to the same period of 2021.

Restructuring and related charges decreased $11 million in the first nine months of 2022 compared to the same period of 2021, primarily due to a facility closure at Allstate Identity Protection in the first quarter of 2021 and accelerated lease costs at Allstate Protections Plans in the third quarter of 2021.

Adjusted net income decreased 35.8% or $19 million in the first quarter of 2023 compared to the first quarter of 2022, due to Allstate Protection Plans higher appliance and furniture claim severity, a shift in business mix and lower third-party advertising sales by Arity.

The decrease was partially offset by growth in new business at Allstate Protection Plans.

Premiums written decreased 1.7% or $11 million in the first quarter of 2023 compared to the first quarter of 2022, primarily due to a decrease in sales at Allstate Dealer Services and lower rescue volumes at Allstate Roadside, partially offset by growth at Allstate Protection Plans.

PIF decreased 2.2% or 3 million as of March 31, 2023 compared to March 31, 2022 due to a decline in Allstate Protection Plans.

Other revenue decreased 10.6% or $10 million in the first quarter of 2023 compared to the first quarter

of 2022, primarily due to lower revenue from reductions in customer advertising at Arity.

Intersegment premiums and service fees decreased 19.5% or $8 million in the first quarter of 2023 compared to the first quarter of 2022, driven by decreased device sales for the Drivewise® offering at Arity due to a shift from devices to a mobile phone program.

Claims and claims expense increased 24.4% or $30 million in the first quarter 2023 compared to the first quarter of 2022, primarily due to higher levels of claims at Allstate Protection Plans driven by growth in the business and higher severity at both Allstate Protection Plans and Allstate Dealer Services.

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Allstate Health and Benefits Segment Results

Protection Services Segment Results

Amortization of DAC increased 13.6% or $30 million in the first quarter of 2023 compared to the first quarter of 2022, driven by business growth at both Allstate Protection Plans and Allstate Dealer Services.

Operating costs and expenses increased 1.4% or $3 million in the first quarter of 2023 compared to the first quarter of 2022, primarily due to investments in technology at Allstate Protection Plans and Allstate Identity Protection.

Restructuring and related charges increased $1 million in the first quarter of 2023 compared to the first quarter of 2022 from real estate costs related to facilities being vacated.

First Quarter 2023 Form 10-Q 63

Segment Results Allstate Health and Benefits

Allstate Health and Benefits Segment

Effective January 1, 2023, we adopted the FASB guidance revising the accounting for certain long-duration insurance contracts in the Allstate Health and Benefits segment using the modified retrospective approach at the transition date of January 1, 2021.

See Note 1 of the condensed consolidated financial statements for further information regarding the impact of the adopted accounting standard on our condensed consolidated financial statements.

Summarized financial information

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

Three months ended March 31,

($ in millions) 2023 2022

10 unchanged sentences

Benefit ratio (1)

55.1 58.5 55.5 54.8

Employer voluntary benefits (2)

1 unchanged sentence

Individual health (4)

Policies in force as of September 30 (in thousands) 4,320 4,378

(1) Benefit ratio is calculated as accident, health and other policy benefits less interest credited to contractholder funds of $8 million for both the three months ended September 30, 2022 and 2021, and $25 million for both the nine months ended September 30, 2022 and 2021, divided by premiums and contract charges.

Policies in force as of March 31 (in thousands) 4,339 4,484

(1) Benefit ratio is calculated as accident, health and other policy benefits less interest credited to contractholder funds of $8 million for both the three months ended March 31, 2023 and 2022, divided by premiums and contract charges.

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

1 unchanged sentence

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

Adjusted net income increased $21 million in the third quarter of 2022 compared to the third quarter of 2021, primarily due to lower individual health and employer voluntary benefits claims as well as lower restructuring charges compared to the prior year quarter.

Adjusted net income increased $12 million in the first nine months of 2022, compared to the same period of 2021, primarily due to increases in group health and employer voluntary benefits revenues, partially offset by higher group and individual health claims utilization.

Premiums and contract charges increased 0.7% or $3 million in the third quarter of 2022 and increased 2.6% or $36 million in the first nine months of 2022 compared to the same periods of 2021, primarily due to growth in group health and employer voluntary benefits.

Adjusted net income decreased $1 million in the first quarter of 2023 compared to the first quarter of 2022, primarily due to a decline in employer voluntary benefits, partially offset by growth in group health.

Premiums and contract charges decreased 1.1% or $5 million in the first quarter of 2023 compared to the first quarter of 2022, primarily due to a decline in individual health and employer voluntary benefits, partially offset by growth in group health.

Premiums and contract charges by line of business

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

Three months ended March 31,

($ in millions) 2023 2022

3 unchanged sentences

Premiums and contract charges $ 463 $ 468

Other revenue increased $5 million and $29 million in the third quarter and first nine months of 2022, respectively, compared to the same periods of 2021, primarily due to an increase in group health administrative fees.

Accident, health and other policy benefits decreased 5.1% or $14 million in the third quarter of 2022 compared to the third quarter of 2021, primarily due to lower benefit utilization in individual health and

employer voluntary benefits.

Accident, health and other policy benefits increased 3.9% or $30 million in the first nine months of 2022 compared to the same period of 2021, primarily due to increased benefits utilization for group and individual health products, offset by employer voluntary benefits.

Benefit ratio decreased to 55.1 in the third quarter of 2022 compared to 58.5 in the third quarter of 2021, primarily due to a lower benefit ratio for individual

Third Quarter 2022 Form 10-Q 67

Segment Results Allstate Health and Benefits

health products and lower life mortality in employer voluntary benefits.

Benefit ratio increased to 55.5 in the first nine months of 2022 compared to 54.8 in the same period of 2021, primarily due to a higher benefit ratio in group and individual health, partially offset by lower accident and health claims in employer voluntary benefits.

Amortization of DAC increased 6.7% or $2 million in the third quarter of 2022 and increased 9.9% or $10 million in the first nine months of 2022 compared to the same periods of 2021, primarily related to employer voluntary benefits and individual health.

Other revenue increased $6 million in the first quarter of 2023 compared to the first quarter of 2022, primarily due to an increase in group health administrative fees.

Accident, health and other policy benefits decreased 1.1% or $3 million in the first quarter of 2023 compared to the first quarter of 2022, primarily due to lower benefit utilization in group and individual health, partially offset by increased contract benefits for employer voluntary benefits and growth in group health.

Accident, health and other policy benefits include changes in the reserve for future policy benefits, expected development on reported claims, and reserves for incurred but not reported claims as shown in Note 9.

Benefit ratio decreased 0.1 point to 55.5 in the first quarter of 2023 compared to 55.6 in the first quarter of 2022.

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Allstate Health and Benefits Segment Results

Amortization of DAC increased 5.1% or $2 million in the first quarter of 2023 compared to the first quarter of 2022, primarily related to individual health, partially offset by employer voluntary benefits.

Operating costs and expenses

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

Three months ended March 31,

($ in millions) 2023 2022

2 unchanged sentences

Total operating costs and expenses $ 203 $ 202

Operating costs and expenses increased $1 million and $12 million in the third quarter and first nine months of 2022, respectively, compared to the same periods of 2021, primarily due to growth and higher employee related expenses.

Analysis of reserves

Reserve for future policy benefits

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

Traditional life insurance and other $ 314 $ 313

Accident and health insurance 962 960

Reserve for future policy benefits $ 1,276 $ 1,273

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Operating costs and expenses increased $1 million in the first quarter of 2023 compared to the first quarter of 2022.

First Quarter 2023 Form 10-Q 65

Portfolio composition and strategy by reporting segment (1)

September 30, 2022

March 31, 2023

($ in millions) Property-Liability Protection Services

19 unchanged sentences

(3) Equity securities are carried at fair value.

The fair value of equity securities held as of September 30, 2022, was $71 million in excess of cost.

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

Equity securities include $1.11 billion of funds with underlying investments in fixed income securities as of September 30, 2022.

The fair value of equity securities held as of March 31, 2023, was $27 million in excess of cost.

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

Equity securities include $1.05 billion of funds with underlying investments in fixed income securities as of March 31, 2023.

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

Investments totaled $61.01 billion as of September 30, 2022, decreasing from $64.70 billion as of December 31, 2021, primarily due to lower fixed income and equity valuations, common share repurchases and dividends paid to shareholders, partially offset by positive operating cash flows.

Investments totaled $63.48 billion as of March 31, 2023, increasing from $61.83 billion as of December 31, 2022, primarily due to higher fixed income and equity valuations and positive operating cash flows, partially offset by common share repurchases and dividends paid to shareholders.

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

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

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

Performance-based strategy seeks to deliver attractive risk-adjusted returns and supplement market risk with idiosyncratic risk primarily through investments in private equity, including infrastructure investments, and real estate, most of which were limited partnerships.

These investments include investee level expenses, reflecting asset level

operating expenses on directly held real estate and other consolidated investments.

Market-based strategy seeks to deliver predictable earnings aligned to business needs and provide flexibility to adjust investment risk profile based on enterprise objectives and market opportunities primarily through public and private fixed income investments and public equity securities.

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

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

Many governmental authorities and central banks have begun to respond to inflationary pressure, generally through more restrictive monetary policy, such as increasing target interest rates.

These actions and other ongoing impacts from the pandemic could create significant economic uncertainty.

Market volatility resulting from these factors has and may continue to impact our investment valuations and returns.

Investments in Russia and Ukraine As of September 30, 2022, we do not have any direct investments in Russia, Belarus or Ukraine.

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

Third Quarter 2022 Form 10-Q 69

As inflation remained elevated, the Federal Reserve significantly increased interest rates and credit spreads widened reflecting ongoing recession concerns.

These factors along with other ongoing impacts from the pandemic and from disruptions in the banking industry, could create significant economic uncertainty and the resulting market volatility may continue to impact our investment valuations and returns.

As of March 31, 2023, we have exposure of approximately $240 million to regional banks primarily through investment grade corporate bonds.

The investment portfolio had an insignificant exposure to Silicon Valley Bank, First Republic Bank and Signature Bank prior to their failures.

Investments in Russia and Ukraine As of March 31, 2023, our investment portfolio does not have direct or indirect exposure to Russia, Belarus or Ukraine.

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Portfolio composition by investment strategy

September 30, 2022

March 31, 2023

($ in millions) Market-

11 unchanged sentences

Limited partnership interests — 4 4

Short-term investments (1) — (1)

Other (2) — (2)

3 unchanged sentences

Fair value as of

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

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

government and agencies $ 7,695 $ 7,898

10 unchanged sentences

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

As of September 30, 2022, 89.4% of the consolidated fixed income securities portfolio was rated investment grade.

As of March 31, 2023, 91.0% of the consolidated fixed income securities portfolio was rated investment grade.

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

4 unchanged sentences

For further detail on our fixed income portfolio monitoring process, see Note 4 of the condensed consolidated financial statements.

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First Quarter 2023 Form 10-Q 67

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

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

September 30, 2022

March 31, 2023

NAIC 1 NAIC 2 NAIC 3

31 unchanged sentences

For further detail on our mortgage loan portfolio, see Note 4 of the condensed consolidated financial statements.

Limited partnership interests include $6.57 billion of interests in private equity funds, $919 million of interests in real estate funds and $421 million of interests in other funds as of September 30, 2022.

We have commitments to invest additional amounts in limited partnership interests totaling $2.69 billion as of September 30, 2022.

Other investments include $748 million of bank loans, net, and $774 million of direct investments in real estate as of September 30, 2022.

Third Quarter 2022 Form 10-Q 71

Limited partnership interests include $6.75 billion of interests in private equity funds, $1.05 billion of interests in real estate funds and $178 million of interests in other funds as of March 31, 2023.

We have commitments to invest additional amounts in limited partnership interests totaling $2.70 billion as of March 31, 2023.

Other investments include $698 million of bank loans, net, and $790 million of direct investments in real estate as of March 31, 2023.

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Unrealized net capital gains (losses)

September 30, December 31,

March 31, December 31,

($ in millions) 2023 2022

3 unchanged sentences

Foreign government (21) (40)

ABS (21) (31)

Fixed income securities (2,017) (2,885)

3 unchanged sentences

Unrealized net capital gains and losses, pre-tax $ (2,015) $ (2,887)

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First Quarter 2023 Form 10-Q 69

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

September 30, 2022

March 31, 2023

($ in millions) Amortized

Gross unrealized Fair

Consumer goods (cyclical and non-cyclical) $ 6,185 $ — $ (692) $ 5,493

Technology 3,098 — (353) 2,745

Banking $ 4,534 $ 12 $ (244) $ 4,302

Basic industry 999 3 (60) 942

Capital goods 2,465 10 (142) 2,333

Communications 2,429 3 (201) 2,231

Utilities 2,423 — (241) 2,182

Consumer goods (cyclical and non-cyclical) 6,315 28 (383) 5,960

Financial services 2,304 8 (143) 2,169

4 unchanged sentences

Total energy 2,487 10 (106) 2,391

Basic industry 1,008 1 (96) 913

Technology 3,062 7 (229) 2,840

Transportation 1,008 2 (55) 955

Utilities 3,780 35 (170) 3,645

Other 322 — (54) 268

8 unchanged sentences

cost, net Gross unrealized Fair

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

Technology 2,947 80 (23) 3,004

Banking $ 5,153 $ 16 $ (314) $ 4,855

Basic industry 1,019 2 (75) 946

Capital goods 2,288 3 (197) 2,094

Communications 2,422 1 (261) 2,162

Utilities 2,009 43 (28) 2,024

Consumer goods (cyclical and non-cyclical) 5,984 6 (531) 5,459

Financial services 2,243 4 (176) 2,071

4 unchanged sentences

Total energy 2,364 2 (156) 2,210

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

Technology 3,137 4 (298) 2,843

Transportation 959 1 (73) 887

Utilities 2,633 7 (203) 2,437

Other 360 — (61) 299

5 unchanged sentences

Total fixed income securities $ 45,370 $ 92 $ (2,977) $ 42,485

In general, the gross unrealized losses are related to an increase in market yields which may include increased risk-free interest rates and wider credit spreads since the time of initial purchase.

Gross unrealized losses are related to an increase in market yields which may include increased risk-free interest rates and wider credit spreads since the time of initial purchase.

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

Third Quarter 2022 Form 10-Q 73

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Equity securities by sector

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

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

Cost Over (under) cost Fair

Capital Goods $ 198 $ (20) $ 178 $ 376 $ 37 $ 413

Banking $ 40 $ 33 $ 73 $ 135 $ 56 $ 191

Basic Industry 13 2 15 57 16 73

Utilities 73 7 80 122 23 145

Transportation 51 14 65 74 22 96

Midstream 34 (1) 33 39 7 46

Capital Goods 85 (36) 49 196 3 199

Independent/upstream 9 1 10 30 12 42

Integrated 8 3 11 39 26 65

Midstream 30 (2) 28 33 (2) 31

Other 1 1 2 8 8 16

Total energy 48 3 51 110 44 154

1,790 245 2,035 3,413 811 4,224

Fixed income 1,227 (116) 1,111 1,108 24 1,132

Equities 210 (10) 200 904 (19) 885

Fixed income 1,116 (68) 1,048 1,067 (84) 983

Other 3 — 3 3 — 3

Total funds 1,329 (78) 1,251 1,974 (103) 1,871

Utilities 49 1 50 67 12 79

Transportation 20 13 33 48 19 67

563 89 652 1,666 267 1,933

Total equity securities $ 2,147 $ 27 $ 2,174 $ 4,253 $ 314 $ 4,567

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

(1) As of March 31, 2023, other is generally comprised of consumer goods, technology, REITs, financial services and communications sectors.

Net investment income

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

Three months ended March 31,

($ in millions) 2023 2022

20 unchanged sentences

Investment income, before expense $ 650 $ 645

Net investment income decreased $74 million and $600 million in the third quarter and first nine months of 2022, respectively, compared to the same periods of 2021, primarily due to lower performance-based results, mainly from limited partnerships, partially offset by higher market-based fixed income portfolio yields.

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Net investment income decreased $19 million in the first quarter of 2023, compared to the same period of 2022, as higher market-based results from increased fixed income portfolio yields and to a lesser extent, the reinvestment of proceeds from sales of equity securities into fixed income securities with higher yields were more than offset by lower performance-based results, mainly from limited partnerships.

First Quarter 2023 Form 10-Q 71

Performance-based investment income

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

Three months ended March 31,

($ in millions) 2023 2022

3 unchanged sentences

Investee level expenses (1)

(13) (11) (40) (33)

Total performance-based income $ 126 $ 306

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

Performance-based investment income decreased $102 million and $587 million in the third quarter and first nine months of 2022, respectively, compared to strong results in the same periods of 2021, primarily due to lower valuation increases, partially offset by net gains on the sale of underlying investments.

Three individual investments generated 97% of the performance-based investment income in the third quarter.

Performance-based investment results and income can vary significantly between periods and are

influenced by economic conditions, equity market performance, comparable public company earnings multiples, capitalization rates, operating performance of the underlying investments and the timing of asset sales.

(1) Investee level expenses include asset level operating expenses on directly held real estate and other consolidated investments reported in investment expense.

Performance-based investment income decreased $180 million in the first quarter of 2023, compared to the same period of 2022, primarily due to lower valuation increases.

Performance-based investment results and income can vary significantly between periods and are influenced by economic conditions, equity market

performance, comparable public company earnings multiples, capitalization rates, operating performance of the underlying investments and the timing of asset sales.

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

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

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

Three months ended March 31,

($ in millions) 2023 2022

5 unchanged sentences

Limited partnerships (1)

(46) (15) (199) (1)

Total valuation of equity investments 198 (447)

1 unchanged sentence

Net gains (losses) on investments and derivatives, pre-tax 14 (267)

Income tax benefit (expense) 35 (21) 251 (179)

Income tax (expense) benefit (6) 56

Net gains (losses) on investments and derivatives, after-tax $ 8 $ (211)

8 unchanged sentences

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

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

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

Valuation change and settlements of derivatives of $299 million and $889 million in the third quarter and first nine months of 2022, respectively, primarily comprised of gains on interest rate futures used as part of an interest rate risk reduction strategy to mitigate the impact of increases in interest rates and gains on foreign currency contracts due to the strengthening of the U.S dollar.

Third Quarter 2022 Form 10-Q 75

Net gains on investments and derivatives in the first quarter of 2023 related primarily to higher valuation on equity investments, partially offset by losses on sales and decreased valuation change and settlements of derivatives.

Net losses on sales in the first quarter of 2023 related primarily to sales of fixed income securities in connection with ongoing portfolio management.

Net losses on valuation change and settlements of derivatives of $52 million in the first quarter of 2023, primarily comprised of losses on interest rate futures used to mitigate the impact of increases in interest rates and losses on credit default swap buy protection due to tightening credit spreads on the underlying credit names.

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

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

Three months ended March 31,

($ in millions) 2023 2022

4 unchanged sentences

Total performance-based $ 17 $ 37

Net losses on performance-based investments and derivatives in the third quarter of 2022 primarily related to decreased valuation of equity investments, partially offset by increased valuation change and settlements of derivatives.

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

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Net gains on performance-based investments and derivatives in the first quarter of 2023 primarily related to increased valuation of equity investments, partially offset by decreased valuation change and settlements of derivatives.

First Quarter 2023 Form 10-Q 73

Capital Resources and Liquidity

2 unchanged sentences

Capital resources

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

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

Preferred stock, common stock, treasury stock, retained income and other shareholders’ equity items $ 19,167 $ 19,880

Accumulated other comprehensive (loss) income (3,043) 655

Accumulated other comprehensive loss (1,673) (2,392)

Total Allstate shareholders’ equity 17,494 17,488

3 unchanged sentences

Ratio of debt to capital resources 32.6 31.3

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

In the nine months ended September 30, 2022, we paid dividends of $698 million and $79 million related to our common and preferred shares, respectively.

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

Allstate shareholders’ equity increased in the first three months of 2023, primarily due to lower unrealized net capital losses on investments, partially offset by a net loss, dividends paid to shareholders and common share repurchases.

In the three months ended March 31, 2023, we paid dividends of $224 million and $26 million related to our common and preferred shares, respectively.

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 $25,000 per share, and the corresponding depositary shares for a total redemption payment of $575 million.

Debt maturities

Debt maturities for each of the next five years

3 unchanged sentences

Total long-term debt principal $ 8,491

Common share repurchases As of September 30, 2022, there was $1.16 billion remaining in the $5.00 billion common share repurchase program.

We expect the program to be completed after March 31, 2023, as we moderate the pace of share repurchases.

During the first nine months of 2022, we repurchased 17.0 million common shares, or 6.1% of total common shares outstanding at December 31, 2021, for $2.14 billion.

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

On July 19, 2022, we declared a common shareholder dividend of $0.85 payable on October 3, 2022.

Common share repurchases As of March 31, 2023, there was $649 million remaining in the $5.00 billion common share repurchase program.

During the first three months of 2023, we repurchased 1.2 million common shares, or 0.5% of total common shares outstanding at December 31, 2022, for $153 million.

Common shareholder dividends On January 3, 2023, we paid a common shareholder dividend of $0.85.

On February 17, 2023, we declared a common shareholder dividend of $0.89 payable on April 3, 2023.

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

The preferred stock and subordinated debentures are viewed as having a common equity component by certain rating agencies

and are given equity credit up to a pre-determined limit in our capital structure as determined by their respective methodologies.

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

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

In May 2022, Moody’s affirmed The Allstate Corporation’s (the “Corporation’s”) debt and short-term issuer ratings of A3 and P-2, respectively, and the insurance financial strength rating of Aa3 for Allstate Insurance Company (“AIC”).

The outlook for the ratings is stable.

In June 2022, S&P affirmed the Corporation’s debt and short-term issuer ratings of A- and A-2, respectively, and the insurance financial strength rating of AA- for AIC.

The outlook for the ratings is stable.

In August 2022, A.M.

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

The outlook for the ratings is stable.

In March 2023, Moody’s affirmed the A3 and P-2 senior debt and short-term issuer ratings of The Allstate Corporation’s (the “Corporation’s”) and the Aa3 insurance financial strength ratings of Allstate Insurance Company (“AIC”).

The rating outlook for Allstate was changed from stable to negative.

In March 2023, A.M.

Best placed under review with negative implications the B+ insurance financial strength rating of the members of Castle Key Group (Castle Key Insurance Company, Castle Key Indemnity Company, Encompass Floridian Insurance Company, Encompass Floridian Indemnity Company).

There have been no changes to our ratings from S&P since December 31, 2022.

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Capital Resources and Liquidity

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

6 unchanged sentences

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

Third Quarter 2022 Form 10-Q 77

Capital Resources and Liquidity

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

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

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

2 unchanged sentences

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

Parent company capital capacity Parent holding company deployable assets totaled $4.47 billion as of September 30, 2022, primarily comprised of cash and investments that are generally saleable within one quarter.

Parent company capital capacity At the parent holding company level, we have deployable assets totaling $4.16 billion as of March 31, 2023, primarily comprised of cash and investments that are generally saleable within one quarter.

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

As of September 30, 2022, we held $13.38 billion of cash, U.S.

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

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

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

Intercompany dividends

($ in millions)

AIC to AIH 4,203

AIH to the Corporation 4,201

AHL to AFIHC 50

AFIHC to the Corporation 47

As of March 31, 2023, we held $16.72 billion of cash, U.S.

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

No intercompany dividends from insurance companies were paid in the first quarter of 2023.

Based on the greater of 2022 statutory net income or 10% of statutory surplus, the maximum amount of dividends that AIC will be able to pay, without prior Illinois Department of Insurance approval, at a given point in time through February 2024, is estimated at $1.22 billion, less dividends paid during the preceding twelve months measured at that point in time.

As of September 30, 2022, we paid dividends of $4.20 billion.

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

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

As of September 30, 2022, we satisfied all the requirements with no current restrictions on the payment of preferred stock dividends.

As of March 31, 2023, we paid no dividends.

Dividends may not be paid or declared on our common stock and shares of common stock may not be repurchased unless the full dividends for the latest

completed dividend period on our preferred stock have been declared and paid or provided for.

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

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

In the first three months of 2023, we did not defer interest payments on the subordinated debentures.

Additional resources to support liquidity are as follows:

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

This ratio was 21.6% as of September 30, 2022.

This ratio was 24.2% as of March 31, 2023.

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

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

• As of September 30, 2022, there were no balances outstanding for the credit facility or the commercial paper facility and therefore the remaining borrowing capacity was $750 million.

• As of March 31, 2023, there were no balances outstanding for the credit facility or the commercial paper facility and therefore the remaining borrowing capacity was $750 million.

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

We can use this shelf registration to issue an unspecified amount of debt securities, common stock (including 634 million shares of treasury stock as of September 30, 2022), preferred stock, depositary shares, warrants, stock purchase contracts, stock purchase units and securities of trust subsidiaries.

We can use this shelf registration to issue an unspecified amount of debt securities, common stock (including 637 million shares of treasury stock as of March 31, 2023), preferred stock, depositary shares, warrants, stock purchase contracts, stock purchase units and securities of trust subsidiaries.

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

78 www.allstate.com

Recent Developments

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

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

Climate disclosures.

In March 2022, the Securities and Exchange Commission (“SEC”) released its climate-related proposed regulation, requiring registrants to provide certain climate-related information in their registration statements and annual reports.

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

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

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

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

Cybersecurity risk management.

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

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

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

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

Share repurchase disclosure modernization.

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

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

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

Inflation Reduction Act of 2022.

The Inflation Reduction Act of 2022 (“Act”), which contains several tax-related provisions, was signed into law in August 2022.

The Act creates a 15% corporate alternative minimum tax on certain large corporations and an excise tax of 1% on stock repurchases by publicly traded U.S.

corporations, effective for repurchases after December 31, 2022.

The excise tax on stock repurchases will be classified as an additional cost of the stock acquired included in treasury stock in shareholders' equity.

The Company is evaluating the anticipated impacts of the enacted legislation.

Third Quarter 2022 Form 10-Q 79

First Quarter 2023 Form 10-Q 75

Forward-Looking Statements

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

(5) actual claims costs exceeding current reserves;

(6) market risk and declines in credit quality of our investment portfolio;

(5) actual claim costs exceeding current reserves;

(6) market risk, inflation, and declines in credit quality of our investment portfolios;

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

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

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

Macro, Regulatory and Risk Environment (20) conditions in the global economy and capital markets;

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

1 unchanged sentence

(23) changing climate and weather conditions;

(24) evolving environmental, social and governance standards and expectations;

(25) restrictive regulations and regulatory reforms, including limitations on rate increases and requirements to underwrite business and participate in loss sharing arrangements;

1 unchanged sentence

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

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

(28) vendor-related business disruptions or failure of a vendor to provide and protect data, confidential and proprietary information, or personal information of our customers, claimants or employees;

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

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis