ALLSTATE CORP 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Overview The following discussion highlights significant factors influencing the consolidated financial position and results of operations of The Allstate Corporation (referred to in this document as “we,” “our,” “us,” the “Company” or “Allstate”). It should be read in conjunction with the condensed consolidated financial statements and related notes thereto found under Part I. Item 1. contained herein, and with the discussion, analysis, consolidated financial statements and notes thereto in Part I. Item 1. and Part II. Item 7. and Item 8. 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. 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 The Russia-Ukraine war and related sanctions imposed as a result of this conflict have increased global economic and political uncertainty, including inflationary pressures and an increased risk of cybersecurity incidents. Allstate does not have operations or direct investments in Russia, Belarus or Ukraine, but we could experience significant indirect impacts on the investment portfolio, financial position, or results of operations. Corporate Strategy Our strategy has two components: 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 methods. The ultimate objective is to create continuous transformative growth in all businesses. In the personal property-liability businesses this has five key components: • Improving customer value • Expanding customer access • Increasing sophistication and investment in customer acquisition • Modernizing the technology ecosystem • 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 The measure of segment profit or loss used in evaluating performance is underwriting income for the Allstate Protection and Run-off Property-Liability segments and adjusted net income for the Protection Services, Allstate Health and Benefits and Corporate and Other segments. Underwriting income is calculated as premiums earned and other revenue, less claims and claims expense (“losses”), amortization of deferred policy acquisition costs (“DAC”), operating costs and expenses, amortization or impairment of purchased intangibles and restructuring and related charges, as determined using accounting principles generally accepted in the United States of America (“GAAP”). We use this measure in our evaluation of results of operations to analyze profitability. Adjusted net income is net income (loss) applicable to common shareholders, excluding: • Net gains and losses on investments and derivatives • Pension and other postretirement remeasurement gains and losses • 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 Highlights Consolidated net income (loss) applicable to common shareholders ($ in millions) 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 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 $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 $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 $53 million in the first quarter of 2023, primarily related to favorable asset performance compared to expected return on plan assets, partially offset by a decrease in the liability discount rate. Summarized consolidated financial results Three months ended March 31, ($ in millions) 2023 2022 Revenues Property and casualty insurance premiums $ 12,173 $ 10,981 Accident and health insurance premiums and contract charges 463 468 Other revenue 561 560 Net investment income 575 594 Net gains (losses) on investments and derivatives 14 (267) Total revenues 13,786 12,336 Costs and expenses Property and casualty insurance claims and claims expense (10,326) (7,822) Accident, health and other policy benefits (265) (268) Amortization of deferred policy acquisition costs (1,744) (1,608) Operating, restructuring and interest expenses (1,829) (1,997) Pension and other postretirement remeasurement gains (losses) 53 247 Amortization of purchased intangibles (81) (87) Total costs and expenses (14,192) (11,535) (Loss) income from operations before income tax expense (406) 801 Income tax benefit (expense) 85 (151) Net (loss) income (321) 650 Less: Net loss attributable to noncontrolling interest (1) (10) Net (loss) income attributable to Allstate (320) 660 Preferred stock dividends (26) (26) Net (loss) income applicable to common shareholders $ (346) $ 634 Segment highlights 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 Property-Liability Operations Property-Liability Operations Overview Property-Liability operations consist of two reportable segments: Allstate Protection and Run-off Property-Liability. These segments are consistent with the groupings of financial information that management uses to evaluate performance and to determine the allocation of resources. We do not allocate Property-Liability investment income, net gains and losses on investments and derivatives, or assets to the Allstate Protection and Run-off Property-Liability segments. Management reviews assets at the Property-Liability level for decision-making purposes. GAAP operating ratios are used to measure our profitability to enhance an investor’s understanding of our financial results and are calculated as follows: • Loss ratio: the ratio of claims and claims expense (loss adjustment expenses), to premiums earned. Loss ratios include the impact of catastrophe losses and prior year reserve reestimates. • Expense ratio: the ratio of amortization of DAC, operating costs and expenses, amortization or impairment of purchased intangibles and restructuring and related charges, less other revenue to premiums earned. • Combined ratio: the sum of the loss ratio and the expense ratio. We have also calculated the following impacts of specific items on the GAAP operating ratios because of the volatility of these items between periods. The impacts are calculated by taking the specific items noted below divided by Property-Liability premiums earned: • Effect of catastrophe losses on combined ratio: includes catastrophe losses and prior year reserve reestimates of catastrophe losses included in claims and claims expense • Effect of prior year reserve reestimates on combined ratio • Effect of amortization of purchased intangibles on combined ratio • Effect of restructuring and related charges on combined ratio • Effect of Run-off Property-Liability business on combined ratio: includes claims and claims expense, restructuring and related charges and operating costs and expenses in the Run-off Property-Liability segment Premium measures and statistics are used to analyze our premium trends and are calculated as follows: • PIF : policy counts are based on items rather than customers. A multi-car customer would generate multiple item (policy) counts, even if all cars were insured under one policy. Commercial lines PIF counts for shared economy agreements typically reflect contracts that cover multiple rather than individual drivers. Lender-placed policies are excluded from policy counts because relationships are with the lenders. • New issued applications : item counts of automobile or homeowner insurance applications for insurance policies that were issued during the period, regardless of whether the customer was previously insured by another Allstate brand. • Average premium-gross written (“average premium”): gross premiums written divided by issued item count. Gross premiums written include the impacts from discounts, surcharges and ceded reinsurance premiums and exclude the impacts from mid-term premium adjustments and premium refund accruals. Average premiums represent the appropriate policy term for each line. • Renewal ratio: renewal policy item counts issued during the period, based on contract effective dates, divided by the total policy item counts issued generally 6 months prior for auto or 12 months prior for homeowners. • Implemented rate changes: represents the impact in the locations (U.S. states, the District of Columbia or Canadian provinces) where rate changes were implemented during the period as a percentage of total brand prior year-end premiums written. Frequency and severity statistics , which are influenced by driving patterns, inflation and other factors, are provided to describe the trends in loss costs. Our reserving process incorporates changes in loss patterns, operational statistics and changes in claims reporting processes to determine our best estimate of recorded reserves. We use the following statistics to evaluate losses: • Gross claim frequency is calculated as annualized notice counts, excluding counts associated with catastrophe events, received in the period divided by the average of PIF with the applicable coverage during the period. 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. • Paid claim severity is calculated by dividing the sum of paid losses and loss expenses by claims closed with a payment during the period. • Percent change in frequency or paid claim severity statistics are calculated as the amount of increase or decrease in gross claim frequency or paid claim severity in the current period compared to the same period in the prior year, divided by the prior year gross claim frequency or paid claim severity. • Percent change in report year incurred claim severity statistic is calculated as the amount of increase or decrease in report year incurred claim severity recorded in the year-to-date period divided by the current estimate of the prior report year incurred claim severity. Underwriting results Three months ended March 31, ($ in millions, except ratios) 2023 2022 Premiums written $ 11,783 $ 10,761 Premiums earned $ 11,635 $ 10,498 Other revenue 353 347 Claims and claims expense (10,180) (7,702) Amortization of DAC (1,452) (1,348) Other costs and expenses (1,279) (1,445) Restructuring and related charges (1) (21) (12) Amortization of purchased intangibles (57) (58) Underwriting (loss) income $ (1,001) $ 280 Catastrophe losses Catastrophe losses, excluding reserve reestimates $ 1,733 $ 475 Catastrophe reserve reestimates (2) (42) (13) Total catastrophe losses $ 1,691 $ 462 Non-catastrophe reserve reestimates (2) 27 158 Prior year reserve reestimates (2) (15) 145 GAAP operating ratios Loss ratio 87.5 73.3 Expense ratio (3) 21.1 24.0 Combined ratio 108.6 97.3 Effect of catastrophe losses on combined ratio 14.5 4.4 Effect of prior year reserve reestimates on combined ratio (0.1) 1.4 Effect of catastrophe losses included in prior year reserve reestimates on combined ratio (0.4) (0.1) Effect of restructuring and related charges on combined ratio (1) 0.2 0.1 Effect of amortization of purchased intangibles on combined ratio 0.5 0.5 (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. (2) Favorable reserve reestimates are shown in parentheses. (3) Other revenue is deducted from operating costs and expenses in the expense ratio calculation. 52 www.allstate.com Allstate Protection Segment Results Allstate Protection Segment Underwriting results Three months ended March 31, ($ in millions) 2023 2022 Premiums written $ 11,783 $ 10,761 Premiums earned $ 11,635 $ 10,498 Other revenue 353 347 Claims and claims expense (10,178) (7,701) Amortization of DAC (1,452) (1,348) Other costs and expenses (1,278) (1,444) Restructuring and related charges (21) (12) Amortization of purchased intangibles (57) (58) Underwriting (loss) income $ (998) $ 282 Catastrophe losses $ 1,691 $ 462 Underwriting loss was $998 million in the first quarter of 2023 compared to underwriting income of $282 million in the first quarter of 2022, due to higher non-catastrophe losses, primarily for auto insurance, and higher catastrophe losses, partially offset by increased premiums. We are executing a comprehensive plan to improve auto insurance profitability, including broadly raising rates, reducing operating expenses and advertising, implementing underwriting restrictions in underperforming states and executing claims operating actions to manage loss costs. Change in underwriting results from prior year period - three months ended ($ in millions) Underwriting income (loss) by brand and by line of business Allstate brand National General Allstate Protection ($ in millions) 2023 2022 2023 2022 2023 2022 Three months ended March 31, Auto $ (332) $ (137) $ (14) $ (10) $ (346) $ (147) Homeowners (1) (508) 368 (26) 32 (534) 400 Other personal lines (90) 18 1 — (89) 18 Commercial lines (64) (19) 4 (3) (60) (22) Other business lines (1) 22 21 7 10 29 31 Answer Financial — — — — 2 2 Total $ (972) $ 251 $ (28) $ 29 $ (998) $ 282 (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 reporting period. Premiums are considered earned and are included in the financial results on a pro-rata basis over the policy period. The portion of premiums written applicable to the unexpired term of the policies is recorded as unearned premiums on our Condensed Consolidated Statements of Financial Position. Premiums written by brand and by line of business Allstate brand National General Allstate Protection ($ in millions) 2023 2022 2023 2022 2023 2022 Three months ended March 31, Auto $ 6,826 $ 6,308 $ 1,523 $ 1,254 $ 8,349 $ 7,562 Homeowners 2,210 2,020 324 261 2,534 2,281 Other personal lines 492 469 56 35 548 504 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 Premiums earned by brand and by line of business Allstate brand National General Allstate Protection ($ in millions) 2023 2022 2023 2022 2023 2022 Three months ended March 31, Auto $ 6,660 $ 6,073 $ 1,248 $ 1,008 $ 7,908 $ 7,081 Homeowners 2,488 2,210 322 280 2,810 2,490 Other personal lines 521 496 41 35 562 531 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 March 31, ($ in millions) 2023 2022 Total premiums written $ 11,783 $ 10,761 (Increase) decrease in unearned premiums (127) (258) Other (21) (5) Total premiums earned $ 11,635 $ 10,498 Policies in force by brand and by line of business Allstate brand National General Allstate Protection PIF (thousands) 2023 2022 2023 2022 2023 2022 Auto 21,142 21,968 4,591 4,103 25,733 26,071 Homeowners 6,621 6,536 641 629 7,262 7,165 Other personal lines 4,607 4,609 306 285 4,913 4,894 Commercial lines 199 208 108 104 307 312 Total 32,569 33,321 5,646 5,121 38,215 38,442 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 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 March 31, 2023 2022 Change New issued applications (thousands) Allstate Protection by brand Allstate brand 751 964 (22.1) % National General 783 718 9.1 % Total new issued applications 1,534 1,682 (8.8) % Allstate Protection by channel Exclusive agency channel 589 599 (1.7) % Direct channel 463 631 (26.6) % Independent agency channel 482 452 6.6 % Total new issued applications 1,534 1,682 (8.8) % Allstate brand average premium $ 726 $ 626 16.0 % Allstate brand renewal ratio (%) 85.7 87.5 (1.8) 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 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 March 31, 2023 2022 Change New issued applications (thousands) Allstate Protection by brand Allstate brand 230 235 (2.1) % National General 35 27 29.6 % Total new issued applications 265 262 1.1 % Allstate Protection by channel Exclusive agency channel 196 201 (2.5) % Direct channel 19 23 (17.4) % Independent agency channel 50 38 31.6 % Total new issued applications 265 262 1.1 % Allstate brand average premium $ 1,706 $ 1,554 9.8 % Allstate brand renewal ratio (%) 86.3 86.2 0.1 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 $5 million in the first quarter of 2023 compared to the first quarter of 2022. First Quarter 2023 Form 10-Q 55 Segment Results Allstate Protection GAAP operating ratios include loss ratio, expense ratio and combined ratio to analyze our profitability trends. Frequency and severity statistics are used to describe the trends in loss costs. Combined ratios by line of business Loss ratio Expense ratio (1) Combined ratio 2023 2022 2023 2022 2023 2022 Three months ended March 31, Auto 83.4 77.6 21.0 24.5 104.4 102.1 Homeowners 98.5 61.8 20.5 22.1 119.0 83.9 Other personal lines 93.8 72.1 22.0 24.5 115.8 96.6 Commercial lines 102.2 87.3 23.7 20.5 125.9 107.8 Other business lines 43.1 31.0 33.3 41.6 76.4 72.6 Total 87.5 73.3 21.1 24.0 108.6 97.3 Impact of amortization of purchased intangibles — — 0.5 0.5 0.5 0.5 Impact of restructuring and related charges — — 0.2 0.1 0.2 0.1 (1) Other revenue is deducted from operating costs and expenses in the expense ratio calculation. Loss ratios by line of business Loss ratio Effect of catastrophe losses (1) Effect of prior year reserve reestimates Effect of catastrophe losses included in prior year reserve reestimates 2023 2022 2023 2022 2023 2022 2023 2022 Three months ended March 31, Auto 83.4 77.6 1.2 0.6 (0.3) 2.0 (0.4) (0.1) Homeowners 98.5 61.8 51.6 15.4 (0.7) (0.3) (0.2) (0.4) Other personal lines 93.8 72.1 23.8 6.4 0.5 (1.3) (1.3) 0.8 Commercial lines 102.2 87.3 3.9 — 10.3 6.7 0.4 (0.4) Other business lines 43.1 31.0 4.9 1.8 0.8 (2.7) — 3.5 Total 87.5 73.3 14.5 4.4 (0.1) 1.4 (0.4) (0.1) (1) The ten-year average effect of catastrophe losses on the total combined ratio was 7.3 points in the first quarter of 2023. Auto underwriting results For the periods ended 2023 2022 2021 ($ 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 • Value of total losses due to higher used car prices • Labor and part cost increases • Changes in commuting activity • Driving behavior (e.g., speed, time of day) impacting severity and mix of claim types • 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. 56 www.allstate.com Allstate Protection Segment Results Allstate brand homeowners frequency and severity statistics (excluding catastrophe losses) (% change year-over-year) Three months ended March 31, 2023 Gross claim frequency 1.3 % Paid claim severity 10.9 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 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. 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. 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, wildfires or industrial accidents. The nature and level of catastrophes in any period cannot be reliably predicted. Loss estimates are generally based on claim adjuster inspections and the application of historical loss development factors. Our loss estimates are calculated in accordance with the coverage provided by our policies. The establishment of appropriate reserves, including reserves for catastrophe losses, is an inherently uncertain and complex process. Reserving for hurricane losses is complicated by the inability of insureds to promptly report losses, limitations placed on claims adjusting staff affecting their ability to inspect losses, determining whether losses are covered by our homeowners policy (generally for damage caused by wind or wind driven rain) or specifically excluded coverage caused by flood, exposure to mold damage, and the effects of numerous other considerations, including the timing of a catastrophe in relation to other events, such as at or near the end of a financial reporting period, which can affect the availability of information needed to estimate reserves for that reporting period. 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 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 March 31, ($ in millions) Number of events 2023 Number of events 2022 Tornadoes 2 $ 133 1 $ 91 Wind/Hail 22 1,498 14 365 Freeze/other events 4 102 1 19 Prior year reserve reestimates (42) (13) Total catastrophe losses 28 $ 1,691 16 $ 462 First Quarter 2023 Form 10-Q 57 Segment Results Allstate Protection 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. 58 www.allstate.com Allstate Protection Segment Results Prior year reserve reestimates Favorable reserve reestimates were $17 million in the first quarter of 2023 primarily due to favorable catastrophe reserve reestimates in personal auto lines and favorable reserve reestimates, excluding catastrophes losses in homeowners lines, partially offset by unfavorable reserves, excluding catastrophes, for commercial insurance primarily related to business that is being exited. For a more detailed discussion on reinsurance and reserve reestimates, see Note 8 of the condensed consolidated financial statements. Prior year reserve reestimates Three months ended March 31, Prior year reserve reestimates (1) Effect on combined ratio (2) ($ in millions, except ratios) 2023 2022 2023 2022 Auto $ (25) $ 142 (0.2) 1.4 Homeowners (20) (7) (0.1) (0.1) Other personal lines 3 (7) — (0.1) Commercial lines 24 19 0.2 0.2 Other business lines 1 (3) — — Total Allstate Protection $ (17) $ 144 (0.1) 1.4 Allstate brand $ (54) $ 148 (0.4) 1.4 National General 37 (4) 0.3 — Total Allstate Protection $ (17) $ 144 (0.1) 1.4 (1) Favorable reserve reestimates are shown in parentheses. (2) Ratios are calculated using Allstate Protection premiums earned. 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 March 31, ($ in millions, except ratios) 2023 2022 Change Amortization of DAC $ 1,452 $ 1,348 $ 104 Advertising expense 158 343 (185) Amortization of purchased intangibles 57 58 (1) Other costs and expenses, net of other revenue 767 754 13 Restructuring and related charges 21 12 9 Total underwriting expenses $ 2,455 $ 2,515 $ (60) Premiums earned $ 11,635 $ 10,498 $ 1,137 Expense ratio Amortization of DAC 12.5 12.9 (0.4) Advertising expense 1.3 3.3 (2.0) Other costs and expenses 6.6 7.2 (0.6) Subtotal 20.4 23.4 (3.0) Amortization of purchased intangibles 0.5 0.5 — Restructuring and related charges 0.2 0.1 0.1 Total expense ratio 21.1 24.0 (2.9) First Quarter 2023 Form 10-Q 59 Segment Results Run-off Property-Liability Run-off Property-Liability Segment Underwriting results ($ in millions) Three months ended March 31, 2023 2022 Claims and claims expense $ (2) $ (1) Operating costs and expenses (1) (1) Underwriting loss $ (3) $ (2) Reserves for asbestos, environmental and other run-off claims before and after the effects of reinsurance ($ in millions) March 31, 2023 December 31, 2022 Asbestos claims Gross reserves $ 1,170 $ 1,190 Reinsurance (374) (379) Net reserves 796 811 Environmental claims Gross reserves 325 328 Reinsurance (61) (61) Net reserves 264 267 Other run-off claims Gross reserves 432 437 Reinsurance (64) (64) Net reserves 368 373 Total Gross reserves 1,927 1,955 Reinsurance (499) (504) Net reserves $ 1,428 $ 1,451 Reserves by type of exposure before and after the effects of reinsurance ($ in millions) March 31, 2023 December 31, 2022 Direct excess commercial insurance Gross reserves $ 1,083 $ 1,106 Reinsurance (379) (385) Net reserves 704 721 Assumed reinsurance coverage Gross reserves 613 618 Reinsurance (56) (56) Net reserves 557 562 Direct primary commercial insurance Gross reserves 147 148 Reinsurance (63) (62) Net reserves 84 86 Other run-off business Gross reserves 1 1 Reinsurance — — Net reserves 1 1 Unallocated loss adjustment expenses Gross reserves 83 82 Reinsurance (1) (1) Net reserves 82 81 Total Gross reserves 1,927 1,955 Reinsurance (499) (504) 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 March 31, 2023 December 31, 2022 Case IBNR Case IBNR Direct excess commercial insurance Gross reserves (1) 57 % 43 % 58 % 42 % Ceded (2) 62 38 63 37 Assumed reinsurance coverage Gross reserves 30 70 31 69 Ceded 32 68 33 67 Direct primary commercial insurance Gross reserves 58 42 57 43 Ceded 81 19 81 19 (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 March 31, 2023 2022 Direct excess commercial insurance Gross (1) $ 23 $ 18 Ceded (2) (5) (7) Assumed reinsurance coverage Gross 5 6 Ceded (1) (1) Direct primary commercial insurance Gross 1 1 Ceded — — (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 $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 March 31, 2023 2022 Premiums written $ 619 $ 630 Revenues Premiums $ 538 $ 483 Other revenue 84 94 Intersegment insurance premiums and service fees (1) 33 41 Net investment income 16 9 Costs and expenses Claims and claims expense (153) (123) Amortization of DAC (251) (221) Operating costs and expenses (221) (218) Restructuring and related charges (1) — Income tax expense on operations (11) (12) Less: noncontrolling interest — — Adjusted net income $ 34 $ 53 Allstate Protection Plans $ 28 $ 43 Allstate Dealer Services 7 9 Allstate Roadside 4 2 Arity (4) (1) Allstate Identity Protection (1) — Adjusted net income $ 34 $ 53 Allstate Protection Plans 136,591 139,992 Allstate Dealer Services 3,839 3,924 Allstate Roadside 536 518 Allstate Identity Protection 3,206 2,949 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 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. 62 www.allstate.com 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 $1 million in the first quarter of 2023 compared to the first quarter of 2022 from real estate costs related to facilities being vacated. First Quarter 2023 Form 10-Q 63 Segment Results Allstate Health and Benefits Allstate Health and Benefits Segment Effective January 1, 2023, we adopted the FASB guidance revising the accounting for certain long-duration insurance contracts in the Allstate Health and Benefits segment using the modified retrospective approach at the transition date of January 1, 2021. See Note 1 of the condensed consolidated financial statements for further information regarding the impact of the adopted accounting standard on our condensed consolidated financial statements. Summarized financial information Three months ended March 31, ($ in millions) 2023 2022 Revenues Accident and health insurance premiums and contract charges $ 463 $ 468 Other revenue 101 95 Net investment income 19 17 Costs and expenses Accident, health and other policy benefits (265) (268) Amortization of DAC (41) (39) Operating costs and expenses (203) (202) Restructuring and related charges (4) — Income tax expense on operations (14) (14) Adjusted net income $ 56 $ 57 Benefit ratio (1) 55.5 55.6 Employer voluntary benefits (2) 3,799 3,951 Group health (3) 127 114 Individual health (4) 413 419 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. (3) Group health includes health products and administrative services sold to employers. (4) Individual health includes short-term medical and other health products sold directly to individuals. Adjusted net income 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 $5 million in the first quarter of 2023 compared to the first quarter of 2022, primarily due to a decline in individual health and employer voluntary benefits, partially offset by growth in group health. Premiums and contract charges by line of business Three months ended March 31, ($ in millions) 2023 2022 Employer voluntary benefits $ 255 $ 263 Group health 107 94 Individual health 101 111 Premiums and contract charges $ 463 $ 468 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. 64 www.allstate.com Allstate Health and Benefits Segment Results Amortization of DAC increased 5.1% or $2 million in the first quarter of 2023 compared to the first quarter of 2022, primarily related to individual health, partially offset by employer voluntary benefits. Operating costs and expenses Three months ended March 31, ($ in millions) 2023 2022 Non-deferrable commissions $ 79 $ 81 General and administrative expenses 124 121 Total operating costs and expenses $ 203 $ 202 Operating costs and expenses increased $1 million in the first quarter of 2023 compared to the first quarter of 2022. First Quarter 2023 Form 10-Q 65 Investments Investments Portfolio composition and strategy by reporting segment (1) March 31, 2023 ($ in millions) Property-Liability Protection Services Allstate Health and Benefits Corporate and Other Total Fixed income securities (2) $ 37,940 $ 1,825 $ 1,591 $ 2,747 $ 44,103 Equity securities (3) 1,468 109 43 554 2,174 Mortgage loans, net 685 — 96 — 781 Limited partnership interests 7,955 — — 16 7,971 Short-term investments (4) 5,663 151 91 817 6,722 Other investments, net 1,601 — 120 3 1,724 Total $ 55,312 $ 2,085 $ 1,941 $ 4,137 $ 63,475 Percent to total 87.1 % 3.3 % 3.1 % 6.5 % 100.0 % Market-based $ 46,156 $ 2,085 $ 1,941 $ 4,134 $ 54,316 Performance-based 9,156 — — 3 9,159 Total $ 55,312 $ 2,085 $ 1,941 $ 4,137 $ 63,475 (1) Balances reflect the elimination of related party investments between segments. (2) Fixed income securities are carried at fair value. Amortized cost, net for these securities was $39.64 billion, $1.92 billion, $1.72 billion, $2.83 billion and $46.12 billion for Property-Liability, Protection Services, Allstate Health and Benefits, Corporate and Other, and in total, respectively. (3) Equity securities are carried at fair value. 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 $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 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. 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 with a majority being limited partnerships. These investments include investee level expenses, reflecting asset level operating expenses on directly held real estate and other consolidated investments. 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. 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 $240 million to regional banks primarily through investment grade corporate bonds. The investment portfolio had an insignificant exposure to Silicon Valley Bank, First Republic Bank and Signature Bank prior to their failures. Investments in Russia and Ukraine As of March 31, 2023, our investment portfolio does not have direct or indirect exposure to Russia, Belarus or Ukraine. 66 www.allstate.com Investments Portfolio composition by investment strategy March 31, 2023 ($ in millions) Market- based Performance-based Total Fixed income securities $ 44,015 $ 88 $ 44,103 Equity securities 1,765 409 2,174 Mortgage loans, net 781 — 781 Limited partnership interests 178 7,793 7,971 Short-term investments 6,722 — 6,722 Other investments, net 855 869 1,724 Total $ 54,316 $ 9,159 $ 63,475 Percent to total 85.6 % 14.4 % 100.0 % Unrealized net capital gains and losses Fixed income securities $ (2,016) $ (1) $ (2,017) Limited partnership interests — 4 4 Other (2) — (2) Total $ (2,018) $ 3 $ (2,015) Fixed income securities Fixed income securities by type Fair value as of ($ in millions) March 31, 2023 December 31, 2022 U.S. government and agencies $ 7,695 $ 7,898 Municipal 6,324 6,210 Corporate 28,036 26,263 Foreign government 1,091 957 Asset-backed securities (“ABS”) 957 1,157 Total fixed income securities $ 44,103 $ 42,485 Fixed income securities are rated by third-party credit rating agencies or are internally rated. The Securities Valuation Office (“SVO”) of the National Association of Insurance Commissioners (“NAIC”) evaluates the fixed income securities of insurers for regulatory reporting and capital assessment purposes. The NAIC assigns securities to one of six credit quality categories defined as “NAIC designations”. In general, securities with NAIC designations of 1 and 2 are considered investment grade and securities with NAIC designations of 3 through 6 are considered below investment grade. The rating is either received from the SVO based on availability of applicable ratings from rating agencies on the NAIC Nationally Recognized Statistical Rating Organizations (“NRSRO”) provider list, including Moody’s Investors Service (“Moody’s”), S&P Global Ratings (“S&P”), Fitch Ratings (“Fitch”), or a comparable internal rating. As a result of time lags between the funding of investments, the finalization of legal documents, and the completion of the SVO filing process, the portfolio includes certain securities that have not yet been designated by the SVO as of each balance sheet date and the categorization of these securities is based on the expected ratings indicated by internal analysis . As of 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. Market prices for certain securities may have credit spreads which imply higher or lower credit quality than the current third-party rating. Our initial investment decisions and ongoing monitoring procedures for fixed income securities are based on a due diligence process which includes, but is not limited to, an assessment of the credit quality, sector, structure, and liquidity risks of each issuer. Fixed income portfolio monitoring is a comprehensive process to identify and evaluate each fixed income security that may require a credit loss allowance. The process includes a quarterly review of all securities to identify instances where the fair value of a security compared to its amortized cost is below internally established thresholds. For further detail on our fixed income portfolio monitoring process, see Note 4 of the condensed consolidated financial statements. First Quarter 2023 Form 10-Q 67 Investments The following table presents total fixed income securities by the applicable NAIC designation and comparable S&P rating. Fair value and unrealized net capital gains (losses) for fixed income securities by credit rating March 31, 2023 NAIC 1 NAIC 2 NAIC 3 A and above BBB BB ($ in millions) Fair value Unrealized gain (loss) Fair value Unrealized gain (loss) Fair value Unrealized gain (loss) U.S. government and agencies $ 7,695 $ (131) $ — $ — $ — $ — Municipal 6,181 (168) 129 (10) 7 — Corporate Public 5,863 (207) 13,491 (768) 829 (70) Privately placed 1,778 (93) 3,010 (211) 1,487 (136) Total corporate 7,641 (300) 16,501 (979) 2,316 (206) Foreign government 1,090 (21) 1 — — — ABS 890 (19) 13 (1) 9 (1) Total fixed income securities $ 23,497 $ (639) $ 16,644 $ (990) $ 2,332 $ (207) NAIC 4 NAIC 5-6 Total B CCC and lower Fair value Unrealized gain (loss) Fair value Unrealized gain (loss) Fair value Unrealized gain (loss) U.S. government and agencies $ — $ — $ — $ — $ 7,695 $ (131) Municipal — — 7 3 6,324 (175) Corporate Public 166 (13) — — 20,349 (1,058) Privately placed 1,286 (142) 126 (29) 7,687 (611) Total corporate 1,452 (155) 126 (29) 28,036 (1,669) Foreign government — — — — 1,091 (21) ABS — — 45 — 957 (21) Total fixed income securities $ 1,452 $ (155) $ 178 $ (26) $ 44,103 $ (2,017) Municipal bonds , including tax-exempt and taxable securities, include general obligations of state and local issuers and revenue bonds. Corporate bonds include publicly traded and privately placed securities. Privately placed securities primarily consist of corporate issued senior debt securities that are negotiated with the borrower or are issued by public entities in unregistered form. ABS includes collateralized debt obligations, consumer and other ABS. Credit risk is managed by monitoring the performance of the underlying collateral. Many of the securities in the ABS portfolio have credit enhancement with features such as overcollateralization, subordinated structures, reserve funds, guarantees or insurance. ABS also includes residential mortgage-backed securities and commercial mortgage back securities. Equity securities of $2.17 billion primarily include common stocks, exchange traded and mutual funds, non-redeemable preferred stocks and real estate investment trust (“REIT”) equity investments. Certain exchange traded and mutual funds have fixed income securities as their underlying investments. Mortgage loans of $781 million mainly comprise loans secured by first mortgages on developed commercial real estate. Key considerations used to manage our exposure include property type and geographic diversification. For further detail on our mortgage loan portfolio, see Note 4 of the condensed consolidated financial statements. 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 $790 million of direct investments in real estate as of March 31, 2023. 68 www.allstate.com Investments Unrealized net capital gains (losses) March 31, December 31, ($ in millions) 2023 2022 U.S. government and agencies $ (131) $ (225) Municipal (175) (290) Corporate (1,669) (2,299) Foreign government (21) (40) ABS (21) (31) Fixed income securities (2,017) (2,885) Short-term investments — (1) Derivatives (2) (3) Equity method of accounting (“EMA”) limited partnerships 4 2 Unrealized net capital gains and losses, pre-tax $ (2,015) $ (2,887) First Quarter 2023 Form 10-Q 69 Investments Gross unrealized gains (losses) on fixed income securities by type and sector March 31, 2023 ($ in millions) Amortized cost, net Gross unrealized Fair value Gains Losses Corporate 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 Consumer goods (cyclical and non-cyclical) 6,315 28 (383) 5,960 Financial services 2,304 8 (143) 2,169 Energy Midstream 1,877 7 (74) 1,810 Independent/upstream 320 2 (19) 303 Integrated 52 — (3) 49 Other 238 1 (10) 229 Total energy 2,487 10 (106) 2,391 Technology 3,062 7 (229) 2,840 Transportation 1,008 2 (55) 955 Utilities 3,780 35 (170) 3,645 Other 322 — (54) 268 Total corporate fixed income portfolio 29,705 118 (1,787) 28,036 U.S. government and agencies 7,826 21 (152) 7,695 Municipal 6,499 65 (240) 6,324 Foreign government 1,112 3 (24) 1,091 ABS 978 4 (25) 957 Total fixed income securities $ 46,120 $ 211 $ (2,228) $ 44,103 December 31, 2022 ($ in millions) Amortized cost, net Gross unrealized Fair value Gains Losses Corporate 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 Consumer goods (cyclical and non-cyclical) 5,984 6 (531) 5,459 Financial services 2,243 4 (176) 2,071 Energy Midstream 1,725 1 (110) 1,616 Independent/upstream 354 1 (29) 326 Integrated 67 — (4) 63 Other 218 — (13) 205 Total energy 2,364 2 (156) 2,210 Technology 3,137 4 (298) 2,843 Transportation 959 1 (73) 887 Utilities 2,633 7 (203) 2,437 Other 360 — (61) 299 Total corporate fixed income portfolio 28,562 46 (2,345) 26,263 U.S. government and agencies 8,123 6 (231) 7,898 Municipal 6,500 36 (326) 6,210 Foreign government 997 — (40) 957 ABS 1,188 4 (35) 1,157 Total fixed income securities $ 45,370 $ 92 $ (2,977) $ 42,485 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. 70 www.allstate.com Investments Equity securities by sector March 31, 2023 December 31, 2022 ($ in millions) Cost Over (under) cost Fair value Cost Over (under) cost Fair value Banking $ 40 $ 33 $ 73 $ 135 $ 56 $ 191 Basic Industry 13 2 15 57 16 73 Capital Goods 85 (36) 49 196 3 199 Energy 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 Funds 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 Other (1) 563 89 652 1,666 267 1,933 Total equity securities $ 2,147 $ 27 $ 2,174 $ 4,253 $ 314 $ 4,567 (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 March 31, ($ in millions) 2023 2022 Fixed income securities $ 390 $ 267 Equity securities 11 36 Mortgage loans 8 8 Limited partnership interests 134 292 Short-term investments 66 2 Other investments 41 40 Investment income, before expense 650 645 Investment expense Investee level expenses (17) (16) Securities lending expense (21) — Operating costs and expenses (37) (35) Total investment expense (75) (51) Net investment income $ 575 $ 594 Property-Liability $ 509 $ 558 Protection Services 16 9 Allstate Health and Benefits 19 17 Corporate and Other 31 10 Net investment income $ 575 $ 594 Market-based $ 508 $ 325 Performance-based 142 320 Investment income, before expense $ 650 $ 645 Net investment income decreased $19 million in the first quarter of 2023, compared to the same period of 2022, as higher market-based results from increased fixed income portfolio yields and to a lesser extent, the reinvestment of proceeds from sales of equity securities into fixed income securities with higher yields were more than offset by lower performance-based results, mainly from limited partnerships. First Quarter 2023 Form 10-Q 71 Investments Performance-based investment income Three months ended March 31, ($ in millions) 2023 2022 Private equity $ 105 $ 248 Real estate 37 72 Total performance-based income before investee level expenses $ 142 $ 320 Investee level expenses (1) (16) (14) Total performance-based income $ 126 $ 306 (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 $180 million in the first quarter of 2023, compared to the same period of 2022, primarily due to lower valuation increases. Performance-based investment results and income can vary significantly between periods and are influenced by economic conditions, equity market performance, comparable public company earnings multiples, capitalization rates, operating performance of the underlying investments and the timing of asset sales. The Company typically employs a lag in recording and recognizing changes in valuations of limited partnership interests due to the availability of investee financial statements. Components of net gains (losses) on investments and derivatives and the related tax effect Three months ended March 31, ($ in millions) 2023 2022 Sales $ (120) $ (127) Credit losses (12) (11) Valuation change of equity investments - appreciation (decline): Equity securities 148 (285) Equity fund investments in fixed income securities 19 (62) Limited partnerships (1) 31 (100) Total valuation of equity investments 198 (447) Valuation change and settlements of derivatives (52) 318 Net gains (losses) on investments and derivatives, pre-tax 14 (267) Income tax (expense) benefit (6) 56 Net gains (losses) on investments and derivatives, after-tax $ 8 $ (211) Property-Liability $ 6 $ (161) Protection Services (1) (10) Allstate Health and Benefits 2 (5) Corporate and Other 1 (35) Net gains (losses) on investments and derivatives, after-tax $ 8 $ (211) Market-based $ (3) $ (304) Performance-based 17 37 Net gains (losses) on investments and derivatives, pre-tax $ 14 $ (267) (1) Relates to limited partnerships where the underlying assets are predominately public equity securities. 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 $52 million in the first quarter of 2023, primarily comprised of losses on interest rate futures used to mitigate the impact of increases in interest rates and losses on credit default swap buy protection due to tightening credit spreads on the underlying credit names. 72 www.allstate.com Investments Net gains (losses) on performance-based investments and derivatives Three months ended March 31, ($ in millions) 2023 2022 Sales $ 8 $ 23 Credit losses (3) (4) Valuation change of equity investments 19 11 Valuation change and settlements of derivatives (7) 7 Total performance-based $ 17 $ 37 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 Capital Resources and Liquidity Capital resources consist of shareholders’ equity and debt, representing funds deployed or available to be deployed to support business operations or for general corporate purposes. Capital resources ($ 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 (1,673) (2,392) Total Allstate shareholders’ equity 17,494 17,488 Debt 8,452 7,964 Total capital resources $ 25,946 $ 25,452 Ratio of debt to Allstate shareholders’ equity 48.3 % 45.5 % Ratio of debt to capital resources 32.6 31.3 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 $575 million. Debt maturities Debt maturities for each of the next five years and thereafter (excluding issuance costs and other) ($ in millions) 2023 $ 500 2024 350 2025 600 2026 550 2027 — 2028 — Thereafter 6,491 Total long-term debt principal $ 8,491 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. 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 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. 74 www.allstate.com 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. Liquidity is managed at both the entity and enterprise level across the Company and is assessed on both base and stressed level liquidity needs. We believe we have sufficient liquidity to meet these needs. Additionally, we have existing intercompany agreements in place that facilitate liquidity management across the Company to enhance flexibility. The Corporation is party to an Amended and Restated Intercompany Liquidity Agreement (“Liquidity Agreement”) with certain subsidiaries, which includes, but is not limited to AIC. The Liquidity Agreement allows for short-term advances of funds to be made between parties for liquidity and other general corporate purposes. The Liquidity Agreement does not establish a commitment to advance funds on the part of any party. AIC serves as a lender and borrower, certain other subsidiaries serve only as borrowers, and the Corporation serves only as a lender. 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. The amount of intercompany loans available to the Corporation’s subsidiaries is at the discretion of the Corporation. The maximum amount of loans the Corporation will have outstanding to all its eligible subsidiaries at any given point in time is limited to $1.00 billion. The Corporation may use commercial paper borrowings, bank lines of credit and securities lending to fund intercompany borrowings. Parent company capital capacity 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 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 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 three months of 2023, we did not defer interest payments on the subordinated debentures. Additional resources to support liquidity are as follows: • The Corporation and AIC have access to a $750 million unsecured revolving credit facility that is available for short-term liquidity requirements. The maturity date of this facility is November 2027. The facility is fully subscribed among 11 lenders with the largest commitment being $95 million. The commitments of the lenders are several and no lender is responsible for any other lender’s commitment if such lender fails to make a loan under the facility. This facility contains an increase provision that would allow up to an additional $500 million of borrowing, subject to the lenders’ commitment. 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 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. There were no borrowings under the credit facility during 2023. • To cover short-term cash needs, the Corporation has access to a commercial paper facility with a borrowing capacity limited to any undrawn credit facility balance up to $750 million. • As of March 31, 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 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. First Quarter 2023 Form 10-Q 75 Forward-Looking Statements This report contains “forward-looking statements” that anticipate results based on our estimates, assumptions and plans that are subject to uncertainty. These statements are made subject to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements do not relate strictly to historical or current facts and may be identified by their use of words like “plans,” “seeks,” “expects,” “will,” “should,” “anticipates,” “estimates,” “intends,” “believes,” “likely,” “targets” and other words with similar meanings. These statements may address, among other things, our strategy for growth, catastrophe exposure management, product development, investment results, regulatory approvals, market position, expenses, financial results, litigation and reserves. We believe that these statements are based on reasonable estimates, assumptions and plans. Forward-looking statements speak only as of the date on which they are made, and we assume no obligation to update any forward-looking statements as a result of new information or future events or developments. In addition, forward-looking statements are subject to certain risks or uncertainties that could cause actual results to differ materially from those communicated in these forward-looking statements. Factors that could cause actual results to differ materially from those expressed in, or implied by, the forward-looking statements include risks related to: Insurance and Financial Services (1) unexpected increases in claim frequency and severity; (2 ) catastrophes and severe weather events; (3) limitations in analytical models used for loss cost estimates; (4) price competition and changes in regulation and underwriting standards; (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; (8) our participation in indemnification programs, including state industry pools and facilities; (9) inability to mitigate the impact associated with changes in capital requirements; (10) a downgrade in financial strength ratings; Business, Strategy and Operations (11) competition in the industries in which we compete and new or changing technologies; (12) implementation of our Transformative Growth strategy; (13) our catastrophe management strategy; (14) restrictions on our subsidiaries’ ability to pay dividends; (15) restrictions under terms of certain of our securities on our ability to pay dividends or repurchase our stock; (16) the availability of reinsurance at current levels and prices; (17) counterparty risk related to reinsurance; (18) acquisitions and divestitures of businesses; (19) intellectual property infringement, misappropriation and third-party claims; 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; (22) the failure in cyber or other information security controls, as well as the occurrence of events unanticipated in our disaster recovery processes and business continuity planning; (23) changing climate and weather conditions; (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; (26) losses from legal and regulatory actions; (27) changes in or the application of accounting standards; (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; and (30) misconduct or fraudulent acts by employees, agents and third parties. Additional information concerning these and other factors may be found in our filings with the Securities and Exchange Commission, including the “Risk Factors” section in our most recent annual report on Form 10-K.