What changed in this filing

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Item 1. Financial Statements

2023-08-01 compared with 2023-05-03 · 477 added, 296 removed, 1513 unchanged (34% of the section changed)

3 unchanged sentences

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

June 30, Six months ended June 30,

2023 2022 2023 2022

Property and casualty insurance premiums $ 12,470 $ 11,362 $ 24,643 $ 22,343

14 unchanged sentences

Total costs and expenses 15,727 13,530 29,919 25,065

(Loss) income from operations before income tax expense ( 406 ) 801

Income tax (benefit) expense ( 85 ) 151

Net (loss) income ( 321 ) 650

Loss from operations before income tax expense ( 1,748 ) ( 1,311 ) ( 2,154 ) ( 510 )

Income tax benefit ( 373 ) ( 289 ) ( 458 ) ( 138 )

Net loss ( 1,375 ) ( 1,022 ) ( 1,696 ) ( 372 )

Net loss attributable to noncontrolling interest ( 23 ) ( 9 ) ( 24 ) ( 19 )

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

Net loss attributable to Allstate ( 1,352 ) ( 1,013 ) ( 1,672 ) ( 353 )

Preferred stock dividends 37 27 63 53

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

Net loss applicable to common shareholders $ ( 1,389 ) $ ( 1,040 ) $ ( 1,735 ) $ ( 406 )

Earnings per common share:

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

Net loss applicable to common shareholders per common share - Basic $ ( 5.29 ) $ ( 3.80 ) $ ( 6.59 ) $ ( 1.47 )

Weighted average common shares - Basic 262.6 273.8 263.1 275.9

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

Net loss applicable to common shareholders per common share - Diluted $ ( 5.29 ) $ ( 3.80 ) $ ( 6.59 ) $ ( 1.47 )

Weighted average common shares - Diluted 262.6 273.8 263.1 275.9

See notes to condensed consolidated financial statements.

First Quarter 2023 Form 10-Q 1

Second Quarter 2023 Form 10-Q 1

Condensed Consolidated Financial Statements

1 unchanged sentence

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

($ in millions) Three months ended March 31,

Net (loss) income $ ( 321 ) $ 650

Other comprehensive income (loss), after-tax

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

2023 2022 2023 2022

Net loss $ ( 1,375 ) $ ( 1,022 ) $ ( 1,696 ) $ ( 372 )

Other comprehensive (loss) income, after-tax

Unrealized net capital gains and losses ( 272 ) ( 1,144 ) 410 ( 2,738 )

2 unchanged sentences

Discount rate for reserve for future policy benefits

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

Comprehensive income (loss) 398 ( 864 )

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

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

8 85 ( 1 ) 180

Other comprehensive (loss) income, after-tax ( 241 ) ( 1,121 ) 478 ( 2,635 )

Comprehensive loss ( 1,616 ) ( 2,143 ) ( 1,218 ) ( 3,007 )

Comprehensive loss attributable to noncontrolling interest ( 24 ) ( 17 ) ( 20 ) ( 39 )

Comprehensive loss attributable to Allstate $ ( 1,592 ) $ ( 2,126 ) $ ( 1,198 ) $ ( 2,968 )

See notes to condensed consolidated financial statements.

3 unchanged sentences

Condensed Consolidated Statements of Financial Position (unaudited)

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

($ in millions, except par value data) June 30, 2023 December 31, 2022

Fixed income securities, at fair value (amortized cost, net $ 47,904 and $ 45,370 )

24 unchanged sentences

Commitments and Contingent Liabilities (Note 14)

Preferred stock and additional capital paid-in, $ 1 par value, 25 million shares authorized, 81.0 thousand shares issued and outstanding, $ 2,025 aggregate liquidation preference

Preferred stock and additional capital paid-in, $ 1 par value, 25 million shares authorized, 82.0 thousand and 81.0 thousand shares issued and outstanding, $ 2,050 and $ 2,025 aggregate liquidation preference

Common stock, $ .01 par value, 2.0 billion shares authorized and 900 million issued, 262 million and 263 million shares outstanding

3 unchanged sentences

( 37,131 ) ( 36,857 )

Accumulated other comprehensive income:

Accumulated other comprehensive income (loss):

Unrealized net capital gains and losses ( 1,845 ) ( 2,255 )

8 unchanged sentences

See notes to condensed consolidated financial statements.

First Quarter 2023 Form 10-Q 3

Second Quarter 2023 Form 10-Q 3

Condensed Consolidated Financial Statements

1 unchanged sentence

Condensed Consolidated Statements of Shareholders’ Equity (unaudited)

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

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

2023 2022 2023 2022

Preferred stock par value $ — $ — $ — $ —

Preferred stock additional capital paid-in

Balance, beginning of period 1,970 1,970 1,970 1,970

Preferred stock issuance, net of issuance costs 587 — 587 —

Preferred stock redemption ( 556 ) — ( 556 ) —

Balance, end of period 2,001 1,970 2,001 1,970

Common stock par value 9 9 9 9

5 unchanged sentences

Balance, beginning of period 50,388 53,686 50,970 53,288

Net (loss) income ( 320 ) 660

Net loss ( 1,352 ) ( 1,013 ) ( 1,672 ) ( 353 )

Dividends on common stock (declared per share of $ 0.89 , $ 0.85 , $ 1.78 and $ 1.70 )

7 unchanged sentences

Balance, end of period ( 37,131 ) ( 35,858 ) ( 37,131 ) ( 35,858 )

Accumulated other comprehensive income

Accumulated other comprehensive income (loss)

Balance, beginning of period ( 1,673 ) ( 1,088 ) ( 2,392 ) 426

3 unchanged sentences

Change in discount rate for reserve for future policy benefits

8 85 ( 1 ) 180

Balance, end of period ( 1,914 ) ( 2,209 ) ( 1,914 ) ( 2,209 )

11 unchanged sentences

Condensed Consolidated Statements of Cash Flows (unaudited)

($ in millions) Three months ended March 31,

($ in millions) Six months ended June 30,

Cash flows from operating activities

Net (loss) income $ ( 321 ) $ 650

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

Net loss $ ( 1,696 ) $ ( 372 )

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

Depreciation, amortization and other non-cash items 363 452

27 unchanged sentences

Purchases of property and equipment, net ( 141 ) ( 228 )

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

Proceeds from sale of property and equipment 19 —

Net cash used in investing activities ( 1,049 ) ( 138 )

Cash flows from financing activities

Proceeds from issuance of long-term debt 744 —

Redemption and repayment of debt ( 250 ) —

Proceeds from issuance of debt 743 —

Repayment of debt ( 750 ) —

Proceeds from issuance of preferred stock 587 —

Redemption of preferred stock ( 575 ) —

Contractholder fund deposits 66 69

5 unchanged sentences

Other ( 4 ) ( 63 )

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

Net cash used in financing activities ( 758 ) ( 1,964 )

Net (decrease) increase in cash ( 37 ) 3

2 unchanged sentences

See notes to condensed consolidated financial statements.

First Quarter 2023 Form 10-Q 5

Second Quarter 2023 Form 10-Q 5

Notes to Condensed Consolidated Financial Statements

5 unchanged sentences

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

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

The condensed consolidated financial statements and notes as of June 30, 2023 and for the three and six month periods ended June 30, 2023 and 2022 are unaudited.

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

3 unchanged sentences

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

Macroeconomic impacts

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

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

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

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

Adopted accounting standard

2 unchanged sentences

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.

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

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

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

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

5 unchanged sentences

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.

The decrease in AOCI was 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 transition date.

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

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22 unchanged sentences

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

Second Quarter 2023 Form 10-Q 7

Notes to Condensed Consolidated Financial Statements

Impacts of the adoption on the financial statements

Consolidated Statements of Operations

Three months ended March 31, 2022

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

Condensed Consolidated Statements of Operations

reported Impact of change As

($ in millions, except per share data) Three months ended June 30, 2022

Accident and health insurance premiums and contract charges $ 466 $ ( 1 ) $ 465

4 unchanged sentences

Total costs and expenses 13,535 ( 5 ) 13,530

Income from operations before income tax expense 797 4 801

Income tax expense 151 — 151

Net income 646 4 650

Net income attributable to Allstate 656 4 660

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

Loss from operations before income tax expense ( 1,315 ) 4 ( 1,311 )

Income tax benefit ( 291 ) 2 ( 289 )

Net loss ( 1,024 ) 2 ( 1,022 )

Net loss attributable to Allstate ( 1,015 ) 2 ( 1,013 )

Net loss applicable to common shareholders $ ( 1,042 ) $ 2 $ ( 1,040 )

Earnings per common share:

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

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

First Quarter 2023 Form 10-Q 7

Net loss applicable to common shareholders per common share - Basic $ ( 3.81 ) $ 0.01 $ ( 3.80 )

Net loss applicable to common shareholders per common share - Diluted $ ( 3.81 ) $ 0.01 $ ( 3.80 )

Six months ended June 30, 2022

Accident and health insurance premiums and contract charges $ 935 $ ( 2 ) $ 933

Total revenues 24,557 ( 2 ) 24,555

Costs and expenses

Accident, health and other policy benefits 538 ( 5 ) 533

Amortization of deferred policy acquisition costs 3,231 ( 5 ) 3,226

Total costs and expenses 25,075 ( 10 ) 25,065

Loss from operations before income tax expense ( 518 ) 8 ( 510 )

Income tax benefit ( 140 ) 2 ( 138 )

Net loss ( 378 ) 6 ( 372 )

Net loss attributable to Allstate ( 359 ) 6 ( 353 )

Net loss applicable to common shareholders $ ( 412 ) $ 6 $ ( 406 )

Earnings per common share:

Net loss applicable to common shareholders per common share - Basic $ ( 1.49 ) $ 0.02 $ ( 1.47 )

Net loss applicable to common shareholders per common share - Diluted $ ( 1.49 ) $ 0.02 $ ( 1.47 )

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Notes to Condensed Consolidated Financial Statements

Condensed Consolidated Statements of Comprehensive Income (unaudited)

Three months ended March 31, 2022

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

Net income $ 646 $ 4 $ 650

As reported Impact of change As adjusted

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

Net loss $ ( 1,024 ) $ 2 $ ( 1,022 )

Other comprehensive income (loss), after-tax

1 unchanged sentence

Discount rate for reserve for future policy benefits

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

Other comprehensive income (loss), after-tax ( 1,205 ) 84 ( 1,121 )

Comprehensive loss ( 2,229 ) 86 ( 2,143 )

Comprehensive loss attributable to Allstate $ ( 2,212 ) $ 86 $ ( 2,126 )

Six months ended June 30, 2022

Net loss $ ( 378 ) $ 6 $ ( 372 )

Other comprehensive income (loss), after-tax

Unrealized net capital gains and losses ( 2,736 ) ( 2 ) ( 2,738 )

Discount rate for reserve for future policy benefits

Other comprehensive income (loss), after-tax ( 2,813 ) 178 ( 2,635 )

Comprehensive loss ( 3,191 ) 184 ( 3,007 )

Comprehensive loss attributable to Allstate $ ( 3,152 ) $ 184 $ ( 2,968 )

Condensed Consolidated Statements of Financial Position (unaudited)

December 31, 2022

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

reported Impact of change As

($ in millions) December 31, 2022

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

8 unchanged sentences

Retained income 50,954 16 50,970

Accumulated other comprehensive income:

Accumulated other comprehensive income (loss):

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

5 unchanged sentences

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

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Second Quarter 2023 Form 10-Q 9

Notes to Condensed Consolidated Financial Statements

Condensed Consolidated Statements of Shareholders’ Equity (unaudited)

Three months ended March 31, 2022

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

reported Impact of change As

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

Retained income

Balance, beginning of period $ 53,688 $ ( 2 ) $ 53,686

Net income 656 4 660

Net loss ( 1,015 ) 2 ( 1,013 )

Balance, end of period 52,412 — 52,412

6 unchanged sentences

Total equity $ 20,024 $ ( 51 ) $ 19,973

Six months ended June 30, 2022

Retained income

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

Net loss ( 359 ) 6 ( 353 )

Balance, end of period 52,412 — 52,412

Accumulated other comprehensive income (loss)

Balance, beginning of period 655 ( 229 ) 426

Change in unrealized net capital gains and losses ( 2,736 ) ( 2 ) ( 2,738 )

Change in discount rate for reserve for future policy benefits

Balance, end of period ( 2,158 ) ( 51 ) ( 2,209 )

Total Allstate shareholders’ equity 20,115 ( 51 ) 20,064

Total equity $ 20,024 $ ( 51 ) $ 19,973

Condensed Consolidated Statements of Cash Flows (unaudited)

Three months ended March 31, 2022

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

reported Impact of change As

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

Cash flows from operating activities

Net income $ 646 $ 4 $ 650

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

Net loss $ ( 378 ) $ 6 $ ( 372 )

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

Policy benefits and other insurance reserves 1,223 ( 1 ) 1,222

9 unchanged sentences

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

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

The present value of contract benefits and

gross premiums are determined using the discount rate at contract inception.

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

2 unchanged sentences

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

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

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

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

Examples of insurance product types include whole life, term life,

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Notes to Condensed Consolidated Financial Statements

critical illness and disability.

Issue year is based on the issuance date of the contract to the policyholder, except in the case of contracts acquired in a business combination, where the issue date is based on the acquisition date of the business combination.

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

5 unchanged sentences

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

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

First Quarter 2023 Form 10-Q 9

Notes to Condensed Consolidated Financial Statements

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

The decrease (gain) or increase (loss) in the RFPB is reported as liability remeasurement gain or loss in net income and presented parenthetically as part of Accident, health and other policy benefits on the Condensed Consolidated Statements of Operations.

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

11 unchanged sentences

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

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

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

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

3 unchanged sentences

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

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

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

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

1 unchanged sentence

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

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Second Quarter 2023 Form 10-Q 11

Notes to Condensed Consolidated Financial Statements

6 unchanged sentences

Computation of basic and diluted earnings per common share

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

Net (loss) income $ ( 321 ) $ 650

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

2023 2022 2023 2022

Net loss $ ( 1,375 ) $ ( 1,022 ) $ ( 1,696 ) $ ( 372 )

Net loss attributable to noncontrolling interest ( 23 ) ( 9 ) ( 24 ) ( 19 )

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

Net loss attributable to Allstate ( 1,352 ) ( 1,013 ) ( 1,672 ) ( 353 )

Preferred stock dividends

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

Net loss applicable to common shareholders $ ( 1,389 ) $ ( 1,040 ) $ ( 1,735 ) $ ( 406 )

Weighted average common shares outstanding

262.6 273.8 263.1 275.9

Effect of dilutive potential common shares (1) :

2 unchanged sentences

Weighted average common and dilutive potential common shares outstanding

262.6 273.8 263.1 275.9

Earnings per common share - Basic $ ( 5.29 ) $ ( 3.80 ) $ ( 6.59 ) $ ( 1.47 )

2 unchanged sentences

Anti-dilutive options excluded from diluted earnings per common share

3.2 1.3 2.9 1.5

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

(1) As a result of the net loss reported for the three month period ended March 31, 2023, weighted average shares for basic earnings per share is also used for calculating diluted earnings per share because all dilutive potential common shares are anti-dilutive and are therefore excluded from the calculation.

1.7 3.2 2.1 3.5

(1) As a result of the net loss reported for the three and six month periods ended June 30, 2023 and 2022, weighted average shares for basic earnings per share is also used for calculating diluted earnings per share because all dilutive potential common shares are anti-dilutive and are therefore excluded from the calculation.

Note 3 Reportable Segments

1 unchanged sentence

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

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

Allstate Protection and Run-off Property Liability segments comprise Property-Liability.

The Company does not allocate 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, Protection Services, Allstate Health and Benefits, and Corporate and Other levels for decision-making purposes.

Underwriting income is calculated as premiums earned and other revenue, less claims and claims expenses (“losses”), amortization of DAC, operating

costs and expenses, amortization or impairment of purchased intangibles and restructuring and related charges as determined using GAAP.

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

6 unchanged sentences

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

First Quarter 2023 Form 10-Q 11

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Notes to Condensed Consolidated Financial Statements

Reportable segments financial performance

Three months ended March 31,

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

($ in millions) 2023 2022 2023 2022

2 unchanged sentences

Run-off Property-Liability

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

Total Property-Liability ( 2,094 ) ( 864 ) ( 3,095 ) ( 584 )

2 unchanged sentences

Allstate Health and Benefits

57 67 113 124

Corporate and Other ( 111 ) ( 107 ) ( 200 ) ( 218 )

6 unchanged sentences

Gain (loss) on disposition ( 8 ) 27 1 11

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

Non-recurring costs (2)

( 90 ) — ( 90 ) —

Income tax benefit on reconciling items 384 298 476 150

Total reconciling items 695 ( 189 ) 1,348 156

Net loss attributable to noncontrolling interest (3)

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

( 23 ) ( 10 ) ( 24 ) ( 20 )

Net loss applicable to common shareholders $ ( 1,389 ) $ ( 1,040 ) $ ( 1,735 ) $ ( 406 )

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

(2) Relates to settlement costs for non-recurring litigation that is outside of the ordinary course of business.

See Note 14 for additional details.

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

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Second Quarter 2023 Form 10-Q 13

Notes to Condensed Consolidated Financial Statements

Reportable segments revenue information

($ in millions) Three months ended March 31,

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

2023 2022 2023 2022

Property-Liability

29 unchanged sentences

Total Allstate Health and Benefits

576 561 1,161 1,134

Corporate and Other

7 unchanged sentences

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

First Quarter 2023 Form 10-Q 13

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Notes to Condensed Consolidated Financial Statements

1 unchanged sentence

Portfolio composition

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

($ in millions) June 30, 2023 December 31, 2022

Fixed income securities, at fair value $ 45,550 $ 42,485

7 unchanged sentences

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

March 31, 2023

June 30, 2023

government and agencies $ 7,957 $ 3 $ ( 231 ) $ 7,729

12 unchanged sentences

Scheduled maturities for fixed income securities

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

($ in millions) June 30, 2023 December 31, 2022

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

9 unchanged sentences

Net investment income

($ in millions) Three months ended March 31,

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

2023 2022 2023 2022

Fixed income securities $ 422 $ 299 $ 812 $ 566

7 unchanged sentences

Net investment income

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$ 610 $ 562 $ 1,185 $ 1,156

Second Quarter 2023 Form 10-Q 15

Notes to Condensed Consolidated Financial Statements

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

($ in millions) Three months ended March 31,

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

2023 2022 2023 2022

Fixed income securities $ ( 132 ) $ ( 326 ) $ ( 268 ) $ ( 478 )

7 unchanged sentences

($ in millions)

Three months ended March 31,

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

2023 2022 2023 2022

Sales $ ( 130 ) $ ( 303 ) $ ( 250 ) $ ( 430 )

1 unchanged sentence

Valuation change of equity investments (1)

23 ( 689 ) 221 ( 1,136 )

Valuation change and settlements of derivatives ( 7 ) 272 ( 59 ) 590

2 unchanged sentences

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

($ in millions) Three months ended March 31,

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

2023 2022 2023 2022

Gross realized gains $ 28 $ 27 $ 74 $ 93

1 unchanged sentence

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

($ in millions) Three months ended March 31,

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

2023 2022 2023 2022

Equity securities $ 19 $ ( 511 ) $ 66 $ ( 600 )

2 unchanged sentences

Credit losses recognized in net income

($ in millions) Three months ended March 31,

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

2023 2022 2023 2022

Fixed income securities:

2 unchanged sentences

Mortgage loans ( 3 ) — ( 3 ) ( 1 )

Limited partnership interests ( 16 ) ( 3 ) ( 16 ) ( 3 )

Other investments

3 unchanged sentences

Total $ ( 37 ) $ ( 13 ) $ ( 49 ) $ ( 24 )

First Quarter 2023 Form 10-Q 15

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Notes to Condensed Consolidated Financial Statements

3 unchanged sentences

gains (losses)

March 31, 2023 Gains Losses

June 30, 2023 Gains Losses

Fixed income securities $ 45,550 $ 103 $ ( 2,457 ) $ ( 2,354 )

3 unchanged sentences

Unrealized net capital gains and losses, pre-tax ( 2,357 )

Other unrealized net capital gains and losses, pre-tax (2)

Reclassification of noncontrolling interest 19

Deferred income taxes 493

6 unchanged sentences

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

Other unrealized net capital gains and losses, pre-tax (2)

Reclassification of noncontrolling interest 23

Deferred income taxes 609

2 unchanged sentences

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

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

Change in unrealized net capital gains (losses)

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

($ in millions) Six months ended June 30, 2023

Fixed income securities $ 531

2 unchanged sentences

Limited partnership interests ( 2 )

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

Reclassification of noncontrolling interest ( 4 )

Deferred income taxes ( 116 )

1 unchanged sentence

Carrying value for limited partnership interests

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

($ in millions) June 30, 2023 December 31, 2022

EMA Fair Value Total EMA Fair Value Total

6 unchanged sentences

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

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

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As of June 30, 2023 and December 31, 2022, the fair value of short-term investments totaled $ 5.14 billion and $ 4.17 billion, respectively.

Second Quarter 2023 Form 10-Q 17

Notes to Condensed Consolidated Financial Statements

5 unchanged sentences

Other investments by asset type

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

($ in millions) June 30, 2023 December 31, 2022

Bank loans, net $ 667 $ 686

23 unchanged sentences

Recoveries after write-offs are recognized when received.

Accrued interest excluded from the amortized cost of fixed income securities totaled $ 400 million and $ 389 million as of March 31, 2023 and December 31, 2022, respectively, and is reported within the accrued investment income line of the Condensed Consolidated Statements of Financial Position.

Accrued interest excluded from the amortized cost of fixed income securities totaled $ 435 million and $ 389 million as of June 30, 2023 and December 31, 2022, respectively, and is reported within the accrued investment income line of the Condensed Consolidated Statements of Financial Position.

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

4 unchanged sentences

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

First Quarter 2023 Form 10-Q 17

18 www.allstate.com

Notes to Condensed Consolidated Financial Statements

5 unchanged sentences

Rollforward of credit loss allowance for fixed income securities

Three months ended March 31,

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

($ in millions) 2023 2022 2023 2022

5 unchanged sentences

Ending balance $ ( 29 ) $ ( 10 ) $ ( 29 ) $ ( 10 )

Components of credit loss allowance

Components of credit loss allowance as of June 30

Corporate bonds $ ( 27 ) $ ( 10 )

2 unchanged sentences

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

March 31, 2023

June 30, 2023

Fixed income securities

19 unchanged sentences

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

18 www.allstate.com

Second Quarter 2023 Form 10-Q 19

Notes to Condensed Consolidated Financial Statements

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

Gross unrealized losses by unrealized loss position and credit quality as of June 30, 2023

($ in millions) Investment

16 unchanged sentences

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

As of March 31, 2023, the Company has not made the decision to sell and it is not more likely than not the Company will be required to sell fixed income securities with unrealized losses before recovery of the amortized cost basis.

As of June 30, 2023, the Company has not made the decision to sell and it is not more likely than not the Company will be required to sell fixed income securities with unrealized losses before recovery of the amortized cost basis.

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

14 unchanged sentences

Accrued interest

($ in millions) March 31, December 31,

($ in millions) June 30, December 31,

Mortgage loans $ 3 $ 3

Bank Loans 4 3

First Quarter 2023 Form 10-Q 19

20 www.allstate.com

Notes to Condensed Consolidated Financial Statements

8 unchanged sentences

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

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

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

8 unchanged sentences

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

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

Payments on all mortgage loans were current as of June 30, 2023 and December 31, 2022.

Rollforward of credit loss allowance for mortgage loans

Three months ended March 31,

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

($ in millions) 2023 2022 2023 2022

8 unchanged sentences

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

20 www.allstate.com

Second Quarter 2023 Form 10-Q 21

Notes to Condensed Consolidated Financial Statements

Bank loans amortized cost by credit rating and year of origination

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

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

7 unchanged sentences

Rollforward of credit loss allowance for bank loans

($ in millions) Three months ended March 31,

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

2023 2022 2023 2022

Beginning balance $ ( 52 ) $ ( 68 ) $ ( 57 ) $ ( 61 )

26 unchanged sentences

For example, on a continuing basis, the Company assesses the reasonableness of individual fair values that have stale security prices or that exceed certain thresholds as compared to

First Quarter 2023 Form 10-Q 21

22 www.allstate.com

Notes to Condensed Consolidated Financial Statements

34 unchanged sentences

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

22 www.allstate.com

Second Quarter 2023 Form 10-Q 23

Notes to Condensed Consolidated Financial Statements

21 unchanged sentences

Assets measured at fair value on a non-recurring basis

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

Comprise long-lived assets to be disposed of by sale, including real estate, that are written down to fair value less costs to sell and bank loans written down to fair value in connection with recognizing other-than-temporary impairments.

Investments excluded from the fair value hierarchy

2 unchanged sentences

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

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

First Quarter 2023 Form 10-Q 23

As of June 30, 2023, the Company has commitments to invest $ 197 million in these limited partnership interests.

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Notes to Condensed Consolidated Financial Statements

Assets and liabilities measured at fair value

March 31, 2023

June 30, 2023

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

21 unchanged sentences

% of total liabilities at fair value 66.7 % 233.3 % — % ( 200.0 ) % 100.0 %

24 www.allstate.com

Second Quarter 2023 Form 10-Q 25

Notes to Condensed Consolidated Financial Statements

24 unchanged sentences

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

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

As of June 30, 2023 and December 31, 2022, Level 3 fair value measurements of fixed income securities total $ 132 million and $ 173 million, respectively, and include $ 27 million and $ 70 million, respectively, of securities valued based on non-binding broker quotes where the inputs have not been corroborated to be market observable and $ 11 million and $ 21 million, respectively, of municipal fixed income securities that are not rated by third-party credit rating agencies.

As the Company does not develop the Level 3 fair value

1 unchanged sentence

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

First Quarter 2023 Form 10-Q 25

26 www.allstate.com

Notes to Condensed Consolidated Financial Statements

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

Rollforward of Level 3 assets and liabilities held at fair value during the three month period ended June 30, 2023

Balance as of

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

March 31, 2023 Total gains (losses)

Transfers Balance as of

March 31, 2023

June 30, 2023

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

10 unchanged sentences

Total recurring Level 3 assets $ 600 $ ( 5 ) $ — $ 16 $ — $ 36 $ ( 21 ) $ — $ ( 1 ) $ 625

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

Rollforward of Level 3 assets and liabilities held at fair value during the six month period ended June 30, 2023

Balance as of December 31, 2022 Total gains (losses)

Transfers Balance as of June 30, 2023

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

Fixed income securities:

Municipal $ 21 $ 3 $ ( 1 ) $ — $ — $ — $ ( 9 ) $ — $ ( 2 ) $ 12

Corporate - public 69 ( 1 ) 2 — — — ( 44 ) — — 26

Corporate - privately placed 55 ( 11 ) 1 16 — 1 ( 2 ) — — 60

ABS 28 — — — — 7 — — ( 1 ) 34

Total fixed income securities 173 ( 9 ) 2 16 — 8 ( 55 ) — ( 3 ) 132

Equity securities 333 7 — — — 70 ( 29 ) — — 381

Short-term investments 6 — — — — — — — — 6

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

Other assets 103 1 — — — — — — — 104

Total recurring Level 3 assets $ 618 $ ( 2 ) $ 2 $ 16 $ — $ 78 $ ( 84 ) $ — $ ( 3 ) $ 625

Second Quarter 2023 Form 10-Q 27

Notes to Condensed Consolidated Financial Statements

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

Balance as of

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

March 31, 2022 Total gains (losses)

Transfers Balance as of

March 31, 2022

June 30, 2022

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

10 unchanged sentences

Total recurring Level 3 assets $ 678 $ 54 $ ( 3 ) $ — $ ( 86 ) $ 91 $ ( 34 ) $ — $ ( 24 ) $ 676

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

Balance as of

December 31, 2021 Total gains (losses)

Transfers Balance as of June 30, 2022

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

Fixed income securities:

Municipal $ 18 $ — $ 1 $ — $ — $ 1 $ — $ — $ ( 2 ) $ 18

Corporate - public 20 — ( 3 ) — — 71 ( 9 ) — ( 2 ) 77

Corporate - privately placed 66 19 ( 2 ) — — 14 ( 24 ) — — 73

ABS 40 1 — — ( 28 ) 7 — — ( 2 ) 18

Total fixed income securities 144 20 ( 4 ) — ( 28 ) 93 ( 33 ) — ( 6 ) 186

Equity securities 349 29 — — — 2 ( 8 ) — — 372

Short-term investments 5 — — — — 23 — — ( 20 ) 8

Other investments 2 — — — — — — — — 2

Other assets 65 43 — — — — — — — 108

Total recurring Level 3 assets $ 565 $ 92 $ ( 4 ) $ — $ ( 28 ) $ 118 $ ( 41 ) $ — $ ( 26 ) $ 676

Total Level 3 gains (losses) included in net income

Three months ended March 31,

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

($ in millions) 2023 2022 2023 2022

1 unchanged sentence

Net gains (losses) on investments and derivatives ( 8 ) 50 — 79

Transfers into Level 3 during the three and six months ended June 30, 2023 included situations where securities were written down utilizing an internal price where the inputs have not been corroborated to be market observable resulting in the securities being classified as Level 3.

There were no transfers into Level 3 during the three and six months ended June 30, 2022.

There were no transfers out of Level 3 during the three and six months ended June 30, 2023.

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

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

28 www.allstate.com

Notes to Condensed Consolidated Financial Statements

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

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

Transfers out of Level 3 during the three months ended March 31, 2022 included situations where a broker quote was used in the prior period and a quote became available from the

Company’s independent third-party valuation service provider in the current period.

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

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

Three months ended March 31,

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

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

($ in millions) 2023 2022 2023 2022

11 unchanged sentences

Total included in net income $ ( 8 ) $ 35 $ ( 5 ) $ 73

Municipal $ — $ 1 $ — $ 1

Corporate - public — ( 1 ) 1 ( 3 )

2 unchanged sentences

Financial instruments not carried at fair value

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

($ in millions) June 30, 2023 December 31, 2022

Financial assets Fair value level Amortized cost, net Fair

12 unchanged sentences

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

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

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

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

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

1 unchanged sentence

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

Fixed income index total return

First Quarter 2023 Form 10-Q 27

Notes to Condensed Consolidated Financial Statements

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

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

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

1 unchanged sentence

In addition, equity futures are used to hedge the market risk related to deferred compensation liability contracts.

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

Forward contracts are primarily used by Property-Liability to hedge foreign currency risk associated with

Second Quarter 2023 Form 10-Q 29

Notes to Condensed Consolidated Financial Statements

holding foreign currency denominated investments and foreign operations.

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

3 unchanged sentences

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

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

in the Condensed Consolidated Statements of Financial Position.

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

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

9 unchanged sentences

Notes to Condensed Consolidated Financial Statements

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

Summary of the volume and fair value positions of derivative instruments as of June 30, 2023

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

6 unchanged sentences

Futures Other assets n/a 1,956 2 2 —

Foreign currency contracts

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

Contingent consideration Other assets $ 250 n/a 104 104 —

Credit default contracts

Credit default swaps – buying protection Other investments 51 n/a — 1 ( 1 )

Total asset derivatives $ 250 8,598 $ 106 $ 106 $ —

14 unchanged sentences

(n/a = not applicable)

First Quarter 2023 Form 10-Q 29

Notes to Condensed Consolidated Financial Statements

Summary of the volume and fair value positions of derivative instruments as of December 31, 2022

28 unchanged sentences

(n/a = not applicable)

Second Quarter 2023 Form 10-Q 31

Notes to Condensed Consolidated Financial Statements

Gross and net amounts for OTC derivatives (1)

1 unchanged sentence

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

March 31, 2023

June 30, 2023

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

4 unchanged sentences

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

30 www.allstate.com

Notes to Condensed Consolidated Financial Statements

Gains (losses) from valuation and settlements reported on derivatives not designated as accounting hedges

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

Three months ended March 31, 2023

Three months ended June 30, 2023

Interest rate contracts $ 18 $ — $ 18

4 unchanged sentences

Total $ ( 7 ) $ 2 $ ( 5 )

Three months ended March 31, 2022

Six months ended June 30, 2023

Interest rate contracts $ ( 17 ) $ — $ ( 17 )

4 unchanged sentences

Total $ ( 59 ) $ 19 $ ( 40 )

Three months ended June 30, 2022

Interest rate contracts $ 158 $ — $ 158

Equity and index contracts 53 ( 34 ) 19

Contingent consideration — 31 31

Foreign currency contracts 37 ( 2 ) 35

Credit default contracts 24 — 24

Total $ 272 $ ( 5 ) $ 267

Six months ended June 30, 2022

Interest rate contracts $ 474 $ — $ 474

Equity and index contracts 56 ( 47 ) 9

Contingent consideration — 43 43

Foreign currency contracts 44 ( 2 ) 42

Credit default contracts 16 — 16

Total $ 590 $ ( 6 ) $ 584

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

1 unchanged sentence

OTC cash and securities collateral pledged

($ in millions) March 31, 2023

($ in millions) June 30, 2023

Pledged by the Company $ 11

1 unchanged sentence

(1) $ 11 million of collateral was posted under MNAs for contracts containing credit-risk-contingent provisions that are in a liability provision.

32 www.allstate.com

Notes to Condensed Consolidated Financial Statements

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

3 unchanged sentences

OTC derivatives counterparty credit exposure by counterparty credit rating

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

($ in millions) June 30, 2023 December 31, 2022

parties Notional

9 unchanged sentences

Exchange traded and cleared margin deposits

($ in millions) March 31, 2023

($ in millions) June 30, 2023

Pledged by the Company $ 146

1 unchanged sentence

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

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

adverse changes in market conditions.

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

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

1 unchanged sentence

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

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

First Quarter 2023 Form 10-Q 31

Notes to Condensed Consolidated Financial Statements

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

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

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

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

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

($ in millions) June 30, 2023 December 31, 2022

Gross liability fair value of contracts containing credit-risk-contingent features $ 20 $ 21

8 unchanged sentences

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

In addition, as of March 31, 2023 and December 31, 2022, the Company holds interests of $ 123 million in the form of surplus notes included in other liabilities and expenses on the Statement of Assets and Liabilities of the Reciprocal Exchanges that provide capital to the Reciprocal Exchanges and would absorb any expected losses.

The Company is therefore

the primary beneficiary.

In addition, as of June 30, 2023 and December 31, 2022, the Company holds interests of $ 123 million in the form of surplus notes included in other liabilities and expenses on the Statement of Assets and Liabilities of the Reciprocal Exchanges that

Second Quarter 2023 Form 10-Q 33

Notes to Condensed Consolidated Financial Statements

provide capital to the Reciprocal Exchanges and would absorb any expected losses.

The Company is therefore the primary beneficiary.

In addition, the Company provides quota share reinsurance on the property business of the Reciprocal Exchanges.

1 unchanged sentence

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

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

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

The results of operations of the Reciprocal Exchanges are included in the Company’s Allstate Protection segment and generated $ 57 million and $ 114 million of earned premiums for the three and six months ended June 30, 2023, respectively, compared to $ 41 million and $ 83 million for the three and six months ended June 30, 2022, respectively.

Total costs and expenses were $ 85 million and $ 144 million for the three and six months ended June 30, 2023, respectively, compared to $ 55 million and $ 113 million for the three and six months ended June 30, 2022, respectively.

Assets and liabilities of Reciprocal Exchanges

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

($ in millions) June 30, 2023 December 31, 2022

Fixed income securities $ 269 $ 302

9 unchanged sentences

Total liabilities $ 606 $ 691

32 www.allstate.com

Notes to Condensed Consolidated Financial Statements

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

6 unchanged sentences

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

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

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

Generally, the initial reserves for a new accident year are established based on claim frequency and severity assumptions for different business segments,

lines and coverages based on historical relationships to relevant inflation indicators.

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

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

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

The Company mitigates these effects through various loss management programs.

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

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

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

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

1 unchanged sentence

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

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

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

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

34 www.allstate.com

Notes to Condensed Consolidated Financial Statements

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

The highest degree of uncertainty is associated with reserves for losses incurred in the initial reporting period as it contains the greatest proportion of losses that have not been reported or settled as well as heightened uncertainty for claims that involve litigation or take longer to settle during periods of rapidly increasing loss costs.

3 unchanged sentences

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

First Quarter 2023 Form 10-Q 33

Notes to Condensed Consolidated Financial Statements

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

Three months ended March 31,

Six months ended June 30,

($ in millions) 2023 2022

11 unchanged sentences

Total paid ( 18,617 ) ( 15,444 )

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

Net balance as of June 30 31,801 25,326

Plus recoverables 8,730 8,950

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

Balance as of June 30 $ 40,531 $ 34,276

(1) Recoverables comprises reinsurance and indemnification recoverables.

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

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

This expense included losses from catastrophes of $ 4.39 billion and $ 1.57 billion in the six months ended June 30, 2023 and 2022, respectively, net of recoverables.

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

Second Quarter 2023 Form 10-Q 35

Notes to Condensed Consolidated Financial Statements

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

3 unchanged sentences

2022 2023 2022

Three months ended March 31,

Three months ended June 30,

Auto $ 116 $ 275 $ ( 19 ) $ ( 38 ) $ 97 $ 237

4 unchanged sentences

Run-off Property-Liability 1 3 — — 1 3

Protection Services ( 1 ) ( 3 ) — — ( 1 ) ( 3 )

Total prior year reserve reestimates $ 181 $ 408 $ 31 $ 51 $ 212 $ 459

Six months ended June 30,

Auto $ 119 $ 426 $ ( 47 ) $ ( 47 ) $ 72 $ 379

Homeowners 29 54 45 74 74 128

Other personal lines 18 ( 16 ) ( 12 ) 7 6 ( 9 )

Commercial lines 29 111 3 — 32 111

Other business lines 11 ( 10 ) — 4 11 ( 6 )

Run-off Property-Liability

Protection Services ( 1 ) ( 3 ) — — ( 1 ) ( 3 )

Total prior year reserve reestimates

$ 208 $ 566 $ ( 11 ) $ 38 $ 197 $ 604

(1) Favorable reserve reestimates are shown in parentheses.

3 unchanged sentences

Rollforward of reserve for future policy benefits (1)

Three months ended March 31,

Six months ended June 30,

health Traditional

31 unchanged sentences

$ 689 $ 724 $ 293 $ 332 $ 982 $ 1,056

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

(1) Excludes $ 271 million and $ 281 million of reserves related to short-duration and other contracts as of June 30, 2023 and 2022, respectively.

Revenue and interest recognized in the condensed consolidated statements of operations

($ in millions) Three months ended March 31,

($ in millions) Six months ended June 30,

Accident and health $ 446 $ 494

8 unchanged sentences

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

First Quarter 2023 Form 10-Q 35

Second Quarter 2023 Form 10-Q 37

Notes to Condensed Consolidated Financial Statements

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

As of March 31,

As of June 30,

($ in millions) Undiscounted Discounted Undiscounted Discounted

6 unchanged sentences

Key assumptions used in calculating the reserve for future policy benefits

As of March 31,

As of June 30,

Accident and health Traditional life

9 unchanged sentences

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

As of March 31,

As of June 30,

Accident and health Traditional life

2023 2022 2023 2022

Lapses 90 % 111 % 92 % 95 %

Actual to expected lapses 102 % 104 % 93 % 91 %

Contractholder funds

Contractholder funds activity

Three months ended March 31,

Six months ended June 30,

($ in millions) 2023 2022

Balance, beginning of year $ 879 $ 890

Beginning balance $ 879 $ 890

Deposits 66 69

4 unchanged sentences

Other adjustments ( 5 ) ( 4 )

Balance, end of period $ 878 $ 891

Ending balance $ 881 $ 892

Components of contractholder funds

14 unchanged sentences

At guaranteed minimum 1 - 50 basis points above

March 31, 2023

June 30, 2023

Less than 3.00 %

6 unchanged sentences

Total $ 778 $ 23 $ 881

March 31, 2022

June 30, 2022

Less than 3.00 %

11 unchanged sentences

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

($ in millions) Three months ended March 31,

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

2023 2022 2023 2022

Property and casualty insurance premiums earned $ ( 495 ) $ ( 456 ) $ ( 941 ) $ ( 883 )

1 unchanged sentence

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

($ in millions) Three months ended March 31,

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

2023 2022 2023 2022

Property and casualty insurance claims and claims expense (1)

1 unchanged sentence

Accident, health and other policy benefits

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

( 17 ) ( 10 ) ( 25 ) ( 17 )

(1) Includes approximately $ 37 million of ceded losses related to the Nationwide Reinsurance Program for the six months ended June 30, 2023.

Reinsurance and indemnification recoverables

Reinsurance and indemnification recoverables, net

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

($ in millions) June 30, 2023 December 31, 2022

Property and casualty

4 unchanged sentences

Total $ 9,151 $ 9,619

First Quarter 2023 Form 10-Q 37

Second Quarter 2023 Form 10-Q 39

Notes to Condensed Consolidated Financial Statements

Rollforward of credit loss allowance for reinsurance recoverables

($ in millions) Three months ended March 31,

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

2023 2022 2023 2022

Property and casualty (1) (2)

Beginning balance $ ( 61 ) $ ( 66 ) $ ( 62 ) $ ( 66 )

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

Decrease in the provision for credit losses — — 1 —

Write-offs — — — —

11 unchanged sentences

life Interest-sensitive life Total

Three months ended March 31, 2023

Six months ended June 30, 2023

Accident and health insurance

7 unchanged sentences

Property and casualty 5,077

Balance, end of year $ 5,471

Three months ended March 31, 2022

Ending balance $ 5,607

Six months ended June 30, 2022

Accident and health insurance

Long-duration contracts

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

Beginning balance $ 339 $ 47 $ 90 $ 476

Acquisition costs deferred 20 22 16 58

4 unchanged sentences

Property and casualty 4,538

Balance, end of year $ 4,843

Ending balance $ 5,049

40 www.allstate.com

2 unchanged sentences

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.

On June 15, 2023, the Company repaid, at maturity, $ 500 million of 3.15 % Senior Notes.

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 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 $ 500 million senior debt maturity and for general corporate purposes.

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

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

The Company recognized $ 18 million of original issuance costs in preferred stock dividends on the Condensed Consolidated Statements of Operations and Condensed Consolidated Statements of Shareholders’ Equity.

Issuance of preferred stock On May 18, 2023, the Company issued 24,000 shares of Fixed Rate Noncumulative Preferred Stock, Series J, par value $ 1.00 per share and liquidation preference amount of $ 25,000 per share, and the corresponding depositary shares for gross proceeds of $ 600 million.

The preferred stock is perpetual and has no maturity date.

The preferred stock is redeemable at the Company’s option in whole or in part, on or after July 15, 2028 at a redemption price of $ 25,000 per share, plus declared and unpaid dividends.

Prior to July 15, 2028, the preferred stock is redeemable at the Company’s option, in whole but not in part, within 90 days after the occurrence of certain rating agency events at a redemption price equal to $ 25,500 per share, plus declared and unpaid dividends, or in whole but not in part, within 90 days after the occurrence of a regulatory capital event, at a redemption price equal to $ 25,000 per share, plus declared and unpaid dividends.

LIBOR-linked debt Interest on the 5.100 % Subordinated Debentures is payable quarterly at the stated fixed annual rate to January 14, 2023, or any earlier redemption date, and then at an annual rate equal to the three-month LIBOR plus 3.165 %.

Interest on the 5.750 % Subordinated Debentures is payable semi-annually at the stated fixed annual rate to August 14, 2023, or any earlier redemption date, and then quarterly at an annual rate equal to the three-month LIBOR plus 2.938 %.

The Company may elect to defer payment of interest on the Subordinated Debentures for one or more consecutive interest periods that do not exceed five years .

During a deferral period, interest will continue to accrue on the

Subordinated Debentures at the then-applicable rate and deferred interest will compound on each interest payment date.

If all deferred interest on the Subordinated Debentures is paid, the Company can again defer interest payments.

The administrator of LIBOR ceased the publication of the one week and two month U.S.

dollar (“USD”) LIBOR settings since December 31, 2021, and the remaining USD LIBOR settings ceased following the LIBOR publication on June 30, 2023.

The Subordinated Debentures allow for the use of an alternative methodology to determine the interest rate if LIBOR is no longer available.

The Federal Reserve Board adopted a final rule that implemented the Adjustable Interest Rate (LIBOR) Act on December 16, 2022.

This guidance impacts the alternative rate methodology utilized by the Subordinated Debentures.

Both Subordinated Debentures will replace the three-month LIBOR with the CME Term SOFR Reference Rate published for a three-month tenor plus a spread adjustment of 0.26161 % effective for interest paid under the terms of each of the Subordinated Debentures after June 30, 2023, as shown in the table below.

Interest rates for LIBOR-linked debt

($ in millions) 5.100 % Subordinated Debentures, due 2053

5.750 % Subordinated Debentures, due 2053

Debt outstanding $ 500 $ 800

Dividend accrual date (1)

July 15, 2023 August 15, 2023

Rate following commencement date 3-month SOFR + 3.165 % + .26161 %

3-month SOFR + 2.938 % + .26161 %

(1) First dividend accrual date following the last published three-month LIBOR rate on June 30, 2023.

Second Quarter 2023 Form 10-Q 41

Notes to Condensed Consolidated Financial Statements

Note 13 Company Restructuring

4 unchanged sentences

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

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

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

The expenses related to these activities are included in the Condensed Consolidated Statements of Operations as restructuring and related charges and

totaled $ 27 million and $ 1 million during the three months ended June 30, 2023 and 2022, respectively, and $ 54 million and $ 13 million during the six months ended June 30, 2023 and 2022, respectively.

Restructuring expenses during the second quarter and first six months of 2023 are primarily due to real estate costs related to facilities being vacated and employee costs related to global workforce enablement, including outsourcing various elements of operations.

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

5 unchanged sentences

Payments and non-cash charges ( 25 ) ( 45 ) ( 70 )

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

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

Restructuring liability as of June 30, 2023 $ 17 $ 1 $ 18

As of June 30, 2023, the cumulative amount incurred to date for active programs related to employee severance, relocation benefits and exit expenses totaled $ 28 million for employee costs and $ 174 million for exit costs.

Note 14 Guarantees and Contingent Liabilities

4 unchanged sentences

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

In the normal course of business, the Company provides standard indemnifications to contractual counterparties in connection with numerous

transactions, including acquisitions and divestitures.

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

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

1 unchanged sentence

The terms of the indemnifications vary in duration and nature.

In many cases, the maximum obligation is not explicitly stated and the contingencies triggering the obligation to indemnify have not occurred and are not expected to occur.

In many cases, the maximum obligation is not explicitly stated and the

contingencies triggering the obligation to indemnify have not occurred and are not expected to occur.

Consequently, the maximum amount of the obligation under such indemnifications is not determinable.

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

First Quarter 2023 Form 10-Q 39

Notes to Condensed Consolidated Financial Statements

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

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

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

1 unchanged sentence

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

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

The aggregate liability balance related to all guarantees was not material as of June 30, 2023.

42 www.allstate.com

Notes to Condensed Consolidated Financial Statements

Regulation and compliance

21 unchanged sentences

the fact that some of the lawsuits are putative class actions in which a class has not been certified and in which the purported class may not be clearly defined;

the fact that some of the lawsuits involve multi-state class actions in which the applicable law(s) for the claims at issue is in dispute and therefore unclear;

the fact that some of the

lawsuits involve multi-state class actions in which the applicable law(s) for the claims at issue is in dispute and therefore unclear;

and the challenging legal environment faced by corporations and insurance companies.

8 unchanged sentences

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

40 www.allstate.com

Notes to Condensed Consolidated Financial Statements

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

4 unchanged sentences

Legal fees are expensed as incurred.

The Company continues to monitor its lawsuits, regulatory inquiries, and other legal proceedings for further developments that would make the loss contingency both probable and estimable, and accordingly accruable, or that could affect the amount of accruals that have been previously established.

Second Quarter 2023 Form 10-Q 43

Notes to Condensed Consolidated Financial Statements

of accruals that have been previously established.

There may continue to be exposure to loss in excess of any amount accrued.

8 unchanged sentences

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

Disclosure of the estimate of the reasonably possible loss or range of loss above the amount accrued, if any, for any individual matter would

only be considered when there have been sufficient legal and factual developments such that the Company’s ability to resolve the matter would not be impaired by the disclosure of the individual estimate.

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

The Company currently estimates that the aggregate range of reasonably possible loss in excess of the amount accrued, if any, for the disclosed matters where such an estimate is possible is zero to $ 70 million, pre-tax.

4 unchanged sentences

Therefore, this estimate represents an estimate of possible loss only for certain matters meeting these criteria.

It does not represent the Company’s maximum possible loss exposure.

It does not represent

the Company’s maximum possible loss exposure.

Information is provided below regarding the nature of all of the disclosed matters and, where specified, the amount, if any, of plaintiff claims associated with these loss contingencies.

8 unchanged sentences

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

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

First Quarter 2023 Form 10-Q 41

Notes to Condensed Consolidated Financial Statements

personal injury protection statute.

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

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

4 unchanged sentences

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

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

filed February 2016);

Allstate Fire and Casualty Insurance Company, et al.

8 unchanged sentences

and Shumway, et al.

v Allstate Vehicle and Property Insurance Company (D.

Allstate Vehicle and

44 www.allstate.com

Notes to Condensed Consolidated Financial Statements

Property Insurance Company (D.

filed April 2023).

13 unchanged sentences

filed August 2021).

and Hester, et al.

The court granted final approval of a class-wide settlement in Hester, et al.

Allstate Vehicle and Property Insurance Company, et al .

Clair Co., Ill.

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

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

Allstate Indemnity Company (Madison Co., Ill.

1 unchanged sentence

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

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

The alleged systematic underpayments result from the following theories:

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

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

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

The following cases are currently pending against the Company:

5 unchanged sentences

Allstate Fire and Casualty Insurance Company (Cir.

Chancery Div.

Ill., Chancery Div.

filed October 2020);

9 unchanged sentences

filed September 2022);

Allstate Insurance Company (Ct.

of Common Pleas, Cuyahoga Co., Ohio filed June 2023);

Esurance Property and Casualty Insurance Company (E.D.

filed July 2023).

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

Other proceedings The Company is defending against an investigatory hearing before the California Insurance Commissioner concerning the private passenger automobile insurance rating practices of Allstate Insurance Company and Allstate Indemnity Company in California.

Other proceedings The Company has pending an investigatory hearing before the California Insurance Commissioner concerning the private passenger automobile insurance rating practices of Allstate Insurance Company and Allstate Indemnity Company in California.

The investigatory hearing is captioned:

In the Matter of the Rating Practices of Allstate Insurance Company and Allstate Indemnity Company .

Pursuant to the Notice of Hearing issued by the California Insurance Commissioner, the California Insurance Commissioner is investigating:

Pursuant to the Notice of Hearing issued by the California Insurance Commissioner, the California Insurance

Commissioner is investigating:

(1) whether Allstate has potentially violated California insurance law by using illegal price optimization;

1 unchanged sentence

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

Fact discovery has been completed in the investigatory hearing.

The hearing is scheduled for May 22, 2023.

Fact discovery was completed in the investigatory hearing.

Allstate and the California Department of Insurance have reached an agreement in principle to resolve the investigatory hearing.

The May 22, 2023 hearing was continued.

A new hearing date has not been set.

In re The Allstate Corp.

8 unchanged sentences

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

42 www.allstate.com

Notes to Condensed Consolidated Financial Statements

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

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

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

4 unchanged sentences

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

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

A pre-trial conference has not occurred.

Subsequently, on June 28, 2023, the parties reached an agreement in principle to settle the action, without

Second Quarter 2023 Form 10-Q 45

Notes to Condensed Consolidated Financial Statements

any admission of liability or wrongdoing.

The settlement is subject to final approval by the District Court and any appeals therefrom.

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

Allstate Life Insurance Company (E.D.

2020) and Farley v.

filed May 2020) and Farley v.

Lincoln Benefit Life Compan y (E.D.

1 unchanged sentence

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

This ruling is currently being challenged by the Company.

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

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

In these cases, plaintiffs generally allege that the defendants failed to comply with certain California statutes which address

contractual grace periods and lapse notice requirements for certain life insurance policies.

Plaintiffs claim that these statutes apply to life insurance policies that existed before the statutes’ effective date.

6 unchanged sentences

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

Three months ended March 31,

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

($ in millions) 2023 2022 2023 2022

8 unchanged sentences

Remeasurement (gains) losses ( 38 ) 278 ( 95 ) 55

Pension net benefit $ ( 41 ) $ ( 271 )

Pension net (benefit) cost $ ( 27 ) $ 246 $ ( 68 ) $ ( 25 )

Postretirement benefits

6 unchanged sentences

Remeasurement (gains) losses ( 2 ) ( 19 ) 2 ( 43 )

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

Postretirement net benefit $ ( 6 ) $ ( 22 ) $ ( 5 ) $ ( 50 )

Pension and postretirement benefits

1 unchanged sentence

Remeasurement (gains) losses ( 40 ) 259 ( 93 ) 12

Total net benefit $ ( 40 ) $ ( 299 )

Total net (benefit) cost $ ( 33 ) $ 224 $ ( 73 ) $ ( 75 )

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

1 unchanged sentence

Pension and other postretirement service cost, interest cost, expected return on plan assets and amortization of prior service credit are reported in property and casualty insurance claims and claims expense, operating costs and expenses, net investment income and (if applicable) restructuring and related charges on the Condensed Consolidated Statements of Operations.

First Quarter 2023 Form 10-Q 43

46 www.allstate.com

Notes to Condensed Consolidated Financial Statements

Pension and postretirement benefits remeasurement gains and losses

Three months ended March 31,

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

($ in millions) 2023 2022 2023 2022

4 unchanged sentences

Remeasurement (gains) losses $ ( 40 ) $ 259 $ ( 93 ) $ 12

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

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

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

Remeasurement gains for the second quarter of 2023 are primarily related to an increase in the liability discount rate, partially offset by unfavorable asset performance compared to expected return on plan assets.

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

The weighted average discount rate used to measure the pension benefit obligation increased to 5.50 % at June 30, 2023 compared to 5.33 % at March 31,

2023 and decreased compared to 5.64 % at December 31, 2022 resulting in gains for the second quarter and losses for the first six months of 2023.

For the second quarter of 2023, the actual return on plan assets was lower than the expected return due to lower fixed income valuations from higher market yields during the quarter partially offset by higher equity returns.

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

Note 16 Supplemental Cash Flow Information

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

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

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

Cash flows used in operating activities in the Condensed Consolidated Statements of Cash Flows include cash paid for operating leases related to amounts included in the measurement of lease liabilities of $ 33 million and $ 43 million for the three

months ended March 31, 2023 and 2022, respectively.

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

Non-cash investing activities include $ 53 million and $ 51 million related to mergers and exchanges completed with equity securities, fixed income securities, bank loans, real estate and limited partnerships for the six months ended June 30, 2023 and 2022, respectively.

Non-cash investing activities include $ 15 million related to right-of-use real estate obtained in exchange for lease obligations and $ 51 million related to debt assumed by purchaser on sale of real estate for the six months ended June 30, 2023.

Non-cash financing activities include $ 37 million and $ 64 million related to the issuance of Allstate common shares for vested equity awards for the six months ended June 30, 2023 and 2022, respectively.

months ended June 30, 2023 and 2022, respectively.

Non-cash operating activities include $ 6 million and $ 16 million related to right-of-use assets obtained in exchange for lease obligations for the six months ended June 30, 2023 and 2022, respectively.

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

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

($ in millions) Three months ended March 31,

($ in millions) Six months ended June 30,

Net change in proceeds managed

9 unchanged sentences

Operating cash flow (used) provided $ ( 220 ) $ 588

44 www.allstate.com

Second Quarter 2023 Form 10-Q 47

Notes to Condensed Consolidated Financial Statements

1 unchanged sentence

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

($ in millions) Three months ended March 31,

($ in millions) Three months ended June 30,

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

7 unchanged sentences

10 ( 2 ) 8 108 ( 23 ) 85

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

Other comprehensive (loss) income $ ( 301 ) $ 60 $ ( 241 ) $ ( 1,423 ) $ 302 $ ( 1,121 )

Six months ended June 30,

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

Unrealized net holding gains and losses arising during the period, net of related offsets $ 257 $ ( 60 ) $ 197 $ ( 3,922 ) $ 834 $ ( 3,088 )

reclassification adjustment of realized capital gains and losses ( 269 ) 56 ( 213 ) ( 443 ) 93 ( 350 )

Unrealized net capital gains and losses 526 ( 116 ) 410 ( 3,479 ) 741 ( 2,738 )

Unrealized foreign currency translation adjustments 99 ( 21 ) 78 ( 59 ) 12 ( 47 )

Unamortized pension and other postretirement prior service credit (1)

( 12 ) 3 ( 9 ) ( 38 ) 8 ( 30 )

Discount rate for reserve for future policy benefits ( 1 ) — ( 1 ) 228 ( 48 ) 180

Other comprehensive (loss) income $ 612 $ ( 134 ) $ 478 $ ( 3,348 ) $ 713 $ ( 2,635 )

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

First Quarter 2023 Form 10-Q 45

48 www.allstate.com

Report of Independent Registered Public Accounting Firm

3 unchanged sentences

Results of Review of Interim Financial Information

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

We have reviewed the accompanying condensed consolidated statement of financial position of The Allstate Corporation and subsidiaries (the “Company”) as of June 30, 2023, the related condensed consolidated statements of operations, comprehensive income (loss) and shareholders’ equity for the three and six month periods ended June 30, 2023 and 2022, and of cash flows for the six month periods ended June 30, 2023 and 2022, and the related notes (collectively referred to as the “interim financial information”).

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

5 unchanged sentences

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

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

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

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

5 unchanged sentences

Chicago, Illinois

46 www.allstate.com

August 1, 2023

Second Quarter 2023 Form 10-Q 49

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

What changed 10-Q

Item 1. Financial Statements