What changed in this filing

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Item 1. Financial Statements

2023-11-01 compared with 2023-08-01 · 301 added, 273 removed, 1717 unchanged (25% of the section changed)

3 unchanged sentences

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

June 30, Six months ended June 30,

September 30, Nine months ended September 30,

2023 2022 2023 2022

7 unchanged sentences

Property and casualty insurance claims and claims expense 10,237 10,073 32,290 27,262

Accident, health and other policy benefits 258 265 523 533

Accident, health and other policy benefits (including remeasurement (gains) losses of $ 0 , $( 4 ), $ 0 and $( 4 ))

262 252 785 785

Amortization of deferred policy acquisition costs 1,841 1,683 5,374 4,909

8 unchanged sentences

Net loss ( 4 ) ( 674 ) ( 1,700 ) ( 1,046 )

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

Net income (loss) attributable to noncontrolling interest 1 ( 15 ) ( 23 ) ( 34 )

Net loss attributable to Allstate ( 5 ) ( 659 ) ( 1,677 ) ( 1,012 )

7 unchanged sentences

See notes to condensed consolidated financial statements.

Second Quarter 2023 Form 10-Q 1

Third 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 June 30, Six months ended June 30,

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

2023 2022 2023 2022

Net loss $ ( 4 ) $ ( 674 ) $ ( 1,700 ) $ ( 1,046 )

Other comprehensive (loss) income, after-tax

Other comprehensive loss, after-tax

Unrealized net capital gains and losses ( 667 ) ( 789 ) ( 257 ) ( 3,527 )

2 unchanged sentences

Discount rate for reserve for future policy benefits

8 85 ( 1 ) 180

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

Other comprehensive loss, after-tax ( 656 ) ( 833 ) ( 178 ) ( 3,468 )

Comprehensive loss ( 660 ) ( 1,507 ) ( 1,878 ) ( 4,514 )

6 unchanged sentences

Condensed Consolidated Statements of Financial Position (unaudited)

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

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

Fixed income securities, at fair value (amortized cost, net $ 49,979 and $ 45,370 )

35 unchanged sentences

Discount rate for reserve for future policy benefits

Total accumulated other comprehensive income ( 1,914 ) ( 2,392 )

Total accumulated other comprehensive loss ( 2,570 ) ( 2,392 )

Total Allstate shareholders’ equity 14,593 17,488

3 unchanged sentences

See notes to condensed consolidated financial statements.

Second Quarter 2023 Form 10-Q 3

Third 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 June 30, Six months ended June 30,

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

2023 2022 2023 2022

8 unchanged sentences

Balance, beginning of period 3,786 3,740 3,788 3,722

Equity incentive plans activity 6 34 ( 2 ) 18

Equity incentive plans activity, net

Balance, end of period 3,811 3,765 3,811 3,765

17 unchanged sentences

Change in discount rate for reserve for future policy benefits

8 85 ( 1 ) 180

Balance, end of period ( 2,570 ) ( 3,042 ) ( 2,570 ) ( 3,042 )

3 unchanged sentences

Change in unrealized net capital gains and losses ( 2 ) ( 6 ) 2 ( 26 )

Noncontrolling loss ( 23 ) ( 9 ) ( 24 ) ( 19 )

Noncontrolling income (loss) 1 ( 15 ) ( 23 ) ( 34 )

Balance, end of period ( 146 ) ( 112 ) ( 146 ) ( 112 )

5 unchanged sentences

Condensed Consolidated Statements of Cash Flows (unaudited)

($ in millions) Six months ended June 30,

($ in millions) Nine months ended September 30,

Cash flows from operating activities

45 unchanged sentences

Net cash used in financing activities ( 985 ) ( 2,847 )

Net (decrease) increase in cash ( 37 ) 3

Net increase in cash 124 23

Cash at beginning of period 736 763

1 unchanged sentence

See notes to condensed consolidated financial statements.

Second Quarter 2023 Form 10-Q 5

Third 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 June 30, 2023 and for the three and six month periods ended June 30, 2023 and 2022 are unaudited.

The condensed consolidated financial statements and notes as of September 30, 2023 and for the three and nine month periods ended September 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.

Subsequent event

On November 1, 2023, the Company announced that it is pursuing the sale of the Allstate Health and Benefits businesses.

A sale would likely be completed in 2024.

Adopted accounting standard

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

retrospective approach to the transition date of January 1, 2021.

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

15 unchanged sentences

Impact of adoption for reserve for future policy benefits

( $ in millions) Accident and health Traditional life Total

($ in millions)

Accident and health Traditional life Total

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

12 unchanged sentences

Impact of adoption for DAC

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

($ in millions)

Accident and health Traditional life Interest- sensitive life Total

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

2 unchanged sentences

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

Second Quarter 2023 Form 10-Q 7

Third Quarter 2023 Form 10-Q 7

Notes to Condensed Consolidated Financial Statements

2 unchanged sentences

reported Impact of change As

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

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

Accident and health insurance premiums and contract charges $ 463 $ — $ 463

12 unchanged sentences

Net loss applicable to common shareholders per common share - Diluted $ ( 2.58 ) $ 0.03 $ ( 2.55 )

Six months ended June 30, 2022

Nine months ended September 30, 2022

Accident and health insurance premiums and contract charges $ 1,398 $ ( 2 ) $ 1,396

14 unchanged sentences

Notes to Condensed Consolidated Financial Statements

Condensed Consolidated Statements of Comprehensive Income (unaudited)

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

As reported Impact of change As adjusted

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

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

Net loss $ ( 683 ) $ 9 $ ( 674 )

Other comprehensive income (loss), after-tax

Other comprehensive loss, after-tax

Unrealized net capital gains and losses ( 789 ) — ( 789 )

Discount rate for reserve for future policy benefits

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

Other comprehensive loss, after-tax

( 885 ) 52 ( 833 )

Comprehensive loss ( 1,568 ) 61 ( 1,507 )

Comprehensive loss attributable to Allstate $ ( 1,547 ) $ 61 $ ( 1,486 )

Six months ended June 30, 2022

Nine months ended September 30, 2022

Net loss $ ( 1,061 ) $ 15 $ ( 1,046 )

Other comprehensive income (loss), after-tax

Other comprehensive loss, after-tax

Unrealized net capital gains and losses ( 3,525 ) ( 2 ) ( 3,527 )

Discount rate for reserve for future policy benefits

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

Other comprehensive loss, after-tax

( 3,698 ) 230 ( 3,468 )

Comprehensive loss ( 4,759 ) 245 ( 4,514 )

21 unchanged sentences

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

Second Quarter 2023 Form 10-Q 9

Third Quarter 2023 Form 10-Q 9

Notes to Condensed Consolidated Financial Statements

1 unchanged sentence

reported Impact of change As

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

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

Retained income

9 unchanged sentences

Total equity $ 17,561 $ 10 $ 17,571

Six months ended June 30, 2022

Nine months ended September 30, 2022

Retained income

11 unchanged sentences

reported Impact of change As

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

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

Cash flows from operating activities

24 unchanged sentences

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

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

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

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

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

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

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

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

16 unchanged sentences

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

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

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

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

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

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

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

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

If the Company makes an update to any of its mortality, morbidity, or lapse 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 Condensed Consolidated Statements of Financial Position.

2 unchanged sentences

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

Second Quarter 2023 Form 10-Q 11

Pending accounting standard

In August 2023, the FASB issued guidance requiring a joint venture to initially measure assets contributed and liabilities assumed at fair value as of the formation date.

The new guidance will be applied prospectively for joint ventures with a formation date on or after January 1, 2025.

The impact of the adoption is not expected to be material to the Company’s results of operations or financial position.

Third 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 June 30, Six months ended June 30,

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

2023 2022 2023 2022

Net loss $ ( 4 ) $ ( 674 ) $ ( 1,700 ) $ ( 1,046 )

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

Net income (loss) attributable to noncontrolling interest 1 ( 15 ) ( 23 ) ( 34 )

Net loss attributable to Allstate ( 5 ) ( 659 ) ( 1,677 ) ( 1,012 )

15 unchanged sentences

1.5 2.9 1.9 3.3

(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.

(1) As a result of the net loss reported for the three and nine month periods ended September 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

17 unchanged sentences

Reportable segments financial performance

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

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

($ in millions) 2023 2022 2023 2022

17 unchanged sentences

Non-recurring costs (2)

( 90 ) — ( 90 ) —

Income tax benefit on reconciling items 25 246 501 396

Total reconciling items 389 598 1,737 754

Net loss attributable to noncontrolling interest (3)

Net income (loss) attributable to noncontrolling interest (3)

2 ( 15 ) ( 22 ) ( 35 )

3 unchanged sentences

See Note 14 for additional details.

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

Second Quarter 2023 Form 10-Q 13

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

Third Quarter 2023 Form 10-Q 13

Notes to Condensed Consolidated Financial Statements

Reportable segments revenue information

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

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

2023 2022 2023 2022

18 unchanged sentences

Intersegment premiums and service fees (1)

34 39 102 118

Other revenue 75 84 243 269

24 unchanged sentences

Portfolio composition

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

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

Fixed income securities, at fair value $ 46,771 $ 42,485

7 unchanged sentences

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

June 30, 2023

September 30, 2023

government and agencies $ 8,629 $ 1 $ ( 385 ) $ 8,245

12 unchanged sentences

Scheduled maturities for fixed income securities

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

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

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

Amortized cost, net Fair

Due in one year or less $ 3,536 $ 3,476 $ 2,870 $ 2,836

8 unchanged sentences

Net investment income

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

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

2023 2022 2023 2022

9 unchanged sentences

$ 689 $ 690 $ 1,874 $ 1,846

Second Quarter 2023 Form 10-Q 15

Third 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 June 30, Six months ended June 30,

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

2023 2022 2023 2022

8 unchanged sentences

($ in millions)

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

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

2023 2022 2023 2022

7 unchanged sentences

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

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

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

2023 2022 2023 2022

2 unchanged sentences

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

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

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

2023 2022 2023 2022

1 unchanged sentence

Limited partnership interests carried at fair value

19 ( 36 ) 67 8

Total $ ( 13 ) $ ( 245 ) $ 98 $ ( 763 )

Credit losses recognized in net income

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

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

2023 2022 2023 2022

1 unchanged sentence

Corporate $ ( 7 ) $ ( 2 ) $ ( 23 ) $ ( 6 )

ABS — ( 2 ) — ( 2 )

Total fixed income securities ( 7 ) ( 4 ) ( 23 ) ( 8 )

12 unchanged sentences

gains (losses)

June 30, 2023 Gains Losses

September 30, 2023 Gains Losses

Fixed income securities $ 46,771 $ 29 $ ( 3,237 ) $ ( 3,208 )

18 unchanged sentences

Change in unrealized net capital gains (losses)

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

($ in millions) Nine months ended September 30, 2023

Fixed income securities $ ( 323 )

2 unchanged sentences

Limited partnership interests ( 3 )

Total ( 325 )

Reclassification of noncontrolling interest ( 2 )

Deferred income taxes 70

Increase in unrealized net capital gains and losses, after-tax $ 410

Decrease in unrealized net capital gains and losses, after-tax $ ( 257 )

Carrying value for limited partnership interests

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

($ in millions) September 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 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

As of September 30, 2023 and December 31, 2022, the fair value of short-term investments totaled $ 3.37 billion and $ 4.17 billion, respectively.

Third Quarter 2023 Form 10-Q 17

Notes to Condensed Consolidated Financial Statements

5 unchanged sentences

Other investments by asset type

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

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

Bank loans, net $ 679 $ 686

23 unchanged sentences

Recoveries after write-offs are recognized when received.

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.

Accrued interest excluded from the amortized cost of fixed income securities totaled $ 492 million and $ 389 million as of September 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.

12 unchanged sentences

Rollforward of credit loss allowance for fixed income securities

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

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

($ in millions) 2023 2022 2023 2022

1 unchanged sentence

Credit losses on securities for which credit losses not previously reported ( 8 ) ( 2 ) ( 12 ) ( 2 )

Net increases related to credit losses previously reported ( 3 ) ( 4 ) ( 12 ) ( 4 )

Reduction of allowance related to sales — — — —

Net (increases) decreases related to credit losses previously reported 1 ( 2 ) ( 11 ) ( 6 )

(Increase) decrease of allowance related to sales and other

( 1 ) 1 ( 1 ) 1

Write-offs — — — —

Ending balance $ ( 37 ) $ ( 13 ) $ ( 37 ) $ ( 13 )

Components of credit loss allowance as of June 30

Components of credit loss allowance as of September 30

Corporate bonds $ ( 34 ) $ ( 11 )

ABS ( 3 ) ( 2 )

Total $ ( 37 ) $ ( 13 )

1 unchanged sentence

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

June 30, 2023

September 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 )

Second Quarter 2023 Form 10-Q 19

(1) Includes fixed income securities with fair values of $ 37 million and $ 10 million and unrealized losses of $ 7 million and $ 5 million with credit loss allowances of $ 15 million and $ 11 million as of September 30, 2023 and December 31, 2022, respectively.

Third Quarter 2023 Form 10-Q 19

Notes to Condensed Consolidated Financial Statements

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

Gross unrealized losses by unrealized loss position and credit quality as of September 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 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.

As of September 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) June 30, December 31,

($ in millions) September 30, December 31,

Mortgage loans $ 3 $ 3

11 unchanged sentences

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

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

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

6 unchanged sentences

Amortized cost, net $ 830 $ 762

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

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

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

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

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

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

Rollforward of credit loss allowance for mortgage loans

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

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

($ in millions) 2023 2022 2023 2022

Beginning balance $ ( 10 ) $ ( 7 ) $ ( 7 ) $ ( 6 )

Net increases related to credit losses ( 3 ) — ( 3 ) ( 1 )

Net (increases) decreases related to credit losses ( 1 ) 1 ( 4 ) —

Write-offs — — — —

5 unchanged sentences

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

Second Quarter 2023 Form 10-Q 21

Third Quarter 2023 Form 10-Q 21

Notes to Condensed Consolidated Financial Statements

Bank loans amortized cost by credit rating and year of origination

June 30, 2023 December 31, 2022

September 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 June 30, Six months ended June 30,

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

2023 2022 2023 2022

55 unchanged sentences

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

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

Residential mortgage-backed securities, included in ABS, use prepayment speeds as a primary input for valuation.

• Equity securities:

6 unchanged sentences

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

Second Quarter 2023 Form 10-Q 23

Third Quarter 2023 Form 10-Q 23

Notes to Condensed Consolidated Financial Statements

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

As of September 30, 2023, the Company has commitments to invest $ 182 million in these limited partnership interests.

24 www.allstate.com

1 unchanged sentence

Assets and liabilities measured at fair value

June 30, 2023

September 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 33.3 % 111.1 % — % ( 44.4 ) % 100.0 %

Second Quarter 2023 Form 10-Q 25

Third 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 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

unobservable inputs for these fixed income securities, they are not included in the table above.

As of September 30, 2023 and December 31, 2022, Level 3 fair value measurements of fixed income securities total $ 133 million and $ 173 million, respectively, and include $ 26 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 unobservable inputs for these fixed income securities, they are not included in the table above.

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

1 unchanged sentence

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, 2023

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

Balance as of

March 31, 2023 Total gains (losses)

June 30, 2023 Total gains (losses)

Transfers Balance as of

June 30, 2023

September 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 $ 625 $ 24 $ ( 2 ) $ — $ — $ 14 $ ( 14 ) $ — $ — $ 647

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

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

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

Transfers Balance as of June 30, 2023

Transfers Balance as of September 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 $ 618 $ 22 $ — $ 16 $ — $ 92 $ ( 98 ) $ — $ ( 3 ) $ 647

Second Quarter 2023 Form 10-Q 27

Third 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

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

Balance as of

March 31, 2022 Total gains (losses)

June 30, 2022 Total gains (losses)

Transfers Balance as of

June 30, 2022

September 30, 2022

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

10 unchanged sentences

Total recurring Level 3 assets $ 676 $ ( 19 ) $ ( 1 ) $ 2 $ ( 1 ) $ 56 $ ( 66 ) $ — $ ( 2 ) $ 645

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

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

Balance as of

December 31, 2021 Total gains (losses)

Transfers Balance as of June 30, 2022

Transfers Balance as of September 30, 2022

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

11 unchanged sentences

Total Level 3 gains (losses) included in net income

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

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

($ in millions) 2023 2022 2023 2022

1 unchanged sentence

Net gains (losses) on investments and derivatives 25 ( 23 ) 25 56

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.

There were no transfers into Level 3 during the three months ended September 30, 2023.

Transfers into Level 3 during the nine months ended September 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.

Transfers into Level 3 during the three and nine months ended September 30, 2022 included situations where a quote was not provided by the Company’s independent third-party valuation service provider and as a result the price was stale or had been replaced with a broker quote where the inputs had not been

corroborated to be market observable resulting in the security being classified as Level 3.

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

Transfers out of Level 3 during the three and nine months ended September 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.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements

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,

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

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

($ in millions) 2023 2022 2023 2022

16 unchanged sentences

Financial instruments not carried at fair value

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

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

Financial assets Fair value level Amortized cost, net Fair

21 unchanged sentences

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

Second Quarter 2023 Form 10-Q 29

Third Quarter 2023 Form 10-Q 29

Notes to Condensed Consolidated Financial Statements

17 unchanged sentences

Notes to Condensed Consolidated Financial Statements

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

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

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

6 unchanged sentences

Futures Other assets n/a 1,451 1 1 —

Foreign currency contracts

Foreign currency forwards Other investments $ 267 n/a 3 5 ( 2 )

Contingent consideration Other assets 250 n/a 113 113 —

Credit default contracts

Credit default swaps – buying protection Other investments 37 n/a — — —

Total asset derivatives $ 554 11,577 $ 118 $ 120 $ ( 2 )

14 unchanged sentences

(n/a = not applicable)

Third Quarter 2023 Form 10-Q 31

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

June 30, 2023

September 30, 2023

Asset derivatives $ 20 $ ( 17 ) $ 1 $ 4 $ — $ 4

4 unchanged sentences

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

32 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 June 30, 2023

Three months ended September 30, 2023

Interest rate contracts $ 5 $ — $ 5

4 unchanged sentences

Total $ 31 $ ( 1 ) $ 30

Six months ended June 30, 2023

Nine months ended September 30, 2023

Interest rate contracts $ ( 12 ) $ — $ ( 12 )

4 unchanged sentences

Total $ ( 28 ) $ 18 $ ( 10 )

Three months ended June 30, 2022

Three months ended September 30, 2022

Interest rate contracts $ 260 $ — $ 260

3 unchanged sentences

Credit default contracts ( 10 ) — ( 10 )

Other contracts — ( 1 ) ( 1 )

Total $ 299 $ ( 19 ) $ 280

Six months ended June 30, 2022

Nine months ended September 30, 2022

Interest rate contracts $ 734 $ — $ 734

3 unchanged sentences

Credit default contracts 6 — 6

Other contracts — ( 1 ) ( 1 )

Total $ 889 $ ( 25 ) $ 864

2 unchanged sentences

OTC cash and securities collateral pledged

($ in millions) June 30, 2023

($ in millions) September 30, 2023

Pledged by the Company $ 4

Pledged to the Company (1)

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

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Notes to Condensed Consolidated Financial Statements

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

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

2 unchanged sentences

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

Third Quarter 2023 Form 10-Q 33

Notes to Condensed Consolidated Financial Statements

OTC derivatives counterparty credit exposure by counterparty credit rating

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

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

parties Notional

9 unchanged sentences

Exchange traded and cleared margin deposits

($ in millions) June 30, 2023

($ in millions) September 30, 2023

Pledged by the Company $ 178

8 unchanged sentences

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

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

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

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

8 unchanged sentences

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

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.

In addition, as of September 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 provide capital to the Reciprocal Exchanges and would absorb any expected losses.

The Company is therefore the primary beneficiary.

2 unchanged sentences

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 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.

34 www.allstate.com

Notes to Condensed Consolidated Financial Statements

The results of operations of the Reciprocal Exchanges are included in the Company’s Allstate Protection segment and generated $ 59 million and $ 173 million of earned premiums for the three and nine months ended September 30, 2023, respectively, compared to $ 39 million and $ 122 million for the three and nine months ended September 30, 2022, respectively.

Total costs and expenses were $ 58 million and $ 202 million for the three and nine months ended September 30, 2023, respectively, compared to $ 61 million and $ 174 million for the three and nine months ended September 30, 2022, respectively.

Assets and liabilities of Reciprocal Exchanges

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

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

Fixed income securities $ 262 $ 302

11 unchanged sentences

The Company establishes reserves for claims and claims expense on reported and unreported claims of insured losses.

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

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

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

3 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.

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 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 settlements and changes in mix of claim types.

4 unchanged sentences

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

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

The highest degree of uncertainty is associated with reserves for losses incurred in the initial reporting period as it contains the greatest proportion of losses that have not been reported or settled as well as heightened uncertainty for claims that involve litigation

Third Quarter 2023 Form 10-Q 35

Notes to Condensed Consolidated Financial Statements

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

or take longer to settle during periods of rapidly increasing loss costs.

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

The Company regularly updates its reserve estimates as new information becomes available and as events unfold that may affect the resolution of unsettled claims.

Changes in reserve estimates, which may be material, are reported in property and casualty insurance claims and claims expense in the Condensed Consolidated Statements of Operations in the period such changes are determined.

Changes in reserve estimates, which may be material, are reported in property and casualty

insurance claims and claims expense in the Condensed Consolidated Statements of Operations in the period such changes are determined.

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.

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

Six months ended June 30,

Nine months ended September 30,

($ in millions) 2023 2022

11 unchanged sentences

Total paid ( 28,650 ) ( 23,870 )

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

Net balance as of September 30 32,005 26,973

Plus recoverables 8,654 9,556

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

Balance as of September 30 $ 40,659 $ 36,529

(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 $ 4.39 billion and $ 1.57 billion in the six months ended June 30, 2023 and 2022, respectively, net of recoverables.

This expense included losses from catastrophes of $ 5.57 billion and $ 2.33 billion in the nine months ended September 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

36 www.allstate.com

Notes to Condensed Consolidated Financial Statements

4 unchanged sentences

2022 2023 2022

Three months ended June 30,

Three months ended September 30,

Auto $ 27 $ 643 $ 6 $ ( 11 ) $ 33 $ 632

4 unchanged sentences

Run-off Property-Liability (2)

82 120 — — 82 120

Protection Services — — — — — —

Total prior year reserve reestimates $ 166 $ 875 $ 17 $ ( 9 ) $ 183 $ 866

Six months ended June 30,

Nine months ended September 30,

Auto $ 146 $ 1,069 $ ( 41 ) $ ( 58 ) $ 105 $ 1,011

4 unchanged sentences

Run-off Property-Liability (2)

85 124 — — 85 124

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

2 unchanged sentences

(1) Favorable reserve reestimates are shown in parentheses.

36 www.allstate.com

(2) The Company’s 2023 and 2022 annual reserve reviews, using established industry and actuarial practices, resulted in unfavorable reestimates of $ 80 million and $ 118 million, respectively .

Third Quarter 2023 Form 10-Q 37

Notes to Condensed Consolidated Financial Statements

1 unchanged sentence

Rollforward of reserve for future policy benefits (1)

Six months ended June 30,

Nine months ended September 30,

health Traditional

9 unchanged sentences

Net premiums collected ( 260 ) ( 254 ) ( 37 ) ( 34 ) ( 297 ) ( 288 )

Lapses and withdrawals — — — — — —

Ending balance at original discount rate 1,699 1,549 308 228 2,007 1,777

10 unchanged sentences

Benefit payments ( 297 ) ( 294 ) ( 30 ) ( 53 ) ( 327 ) ( 347 )

Lapses and withdrawals — — — — — —

Ending balance at original discount rate 2,459 2,323 623 507 3,082 2,830

6 unchanged sentences

$ 665 $ 690 $ 294 $ 274 $ 959 $ 964

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

(1) Excludes $ 266 million and $ 277 million of reserves related to short-duration and other contracts as of September 30, 2023 and 2022, respectively.

Revenue and interest recognized in the condensed consolidated statements of operations

($ in millions) Six months ended June 30,

($ in millions) Nine months ended September 30,

Accident and health $ 600 $ 629

8 unchanged sentences

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

Second Quarter 2023 Form 10-Q 37

38 www.allstate.com

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 June 30,

As of September 30,

($ in millions) Undiscounted Discounted Undiscounted Discounted

6 unchanged sentences

Key assumptions used in calculating the reserve for future policy benefits

As of June 30,

As of September 30,

Accident and health Traditional life

4 unchanged sentences

Current discount rate (upper-medium grade fixed income yield) 5.28 4.73 5.56 5.38

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

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

Mortality and morbidity are monitored throughout the year.

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

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

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

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

As of June 30,

The Company performed the annual review of the mortality, morbidity and lapse experience assumptions in the third quarter of 2023 and 2022 resulting in an increase of less than $1 million and a decrease of $ 4 million, respectively, to the reserve for future policy benefits.

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

As of September 30,

Accident and health Traditional life

2023 2022 2023 2022

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

Actual to expected experience

n/a n/a 95 % 238 %

Morbidity 92 % 94 % n/a n/a

Lapses 116 % 123 % 89 % 75 %

n/a = not applicable

Third Quarter 2023 Form 10-Q 39

Notes to Condensed Consolidated Financial Statements

Contractholder funds

Contractholder funds activity

Six months ended June 30,

Nine months ended September 30,

($ in millions) 2023 2022

16 unchanged sentences

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

38 www.allstate.com

Notes to Condensed Consolidated Financial Statements

Account values:

3 unchanged sentences

At guaranteed minimum 1 - 50 basis points above

June 30, 2023

September 30, 2023

Less than 3.00 %

6 unchanged sentences

Total $ 779 $ 27 $ 884

June 30, 2022

September 30, 2022

Less than 3.00 %

9 unchanged sentences

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

40 www.allstate.com

Notes to Condensed Consolidated Financial Statements

Note 10 Reinsurance and Indemnification

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

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

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

2023 2022 2023 2022

2 unchanged sentences

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

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

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

2023 2022 2023 2022

3 unchanged sentences

( 7 ) 39 ( 32 ) 22

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

(1) Includes approximately $ 60 million of ceded losses related to the Nationwide Reinsurance Program for the nine months ended September 30, 2023.

Ceded losses for the three and nine months ended September 30, 2022 included $ 305 million of expected reinsurance recoveries related to the Florida Excess Catastrophe Reinsurance Program for Hurricane Ian.

Reinsurance and indemnification recoverables

Reinsurance and indemnification recoverables, net

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

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

Property and casualty

4 unchanged sentences

Total $ 9,083 $ 9,619

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 June 30, Six months ended June 30,

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

2023 2022 2023 2022

1 unchanged sentence

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

Decrease in the provision for credit losses — — 1 —

(Increase) decrease in the provision for credit losses — ( 5 ) 1 ( 5 )

Write-offs — 9 — 9

7 unchanged sentences

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

Third Quarter 2023 Form 10-Q 41

Notes to Condensed Consolidated Financial Statements

Note 11 Deferred Policy Acquisition Costs

2 unchanged sentences

life Interest-sensitive life Total

Six months ended June 30, 2023

Nine months ended September 30, 2023

Accident and health insurance

8 unchanged sentences

Ending balance $ 5,824

Six months ended June 30, 2022

Nine months ended September 30, 2022

Accident and health insurance

23 unchanged sentences

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 %.

LIBOR-linked debt Interest on the 5.100 % Subordinated Debentures was 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 was 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 .

3 unchanged sentences

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.

dollar (“USD”) LIBOR settings 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.

1 unchanged sentence

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.

Both Subordinated Debentures replaced 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

5 unchanged sentences

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

3-month SOFR + 2.938 % + .26161 %

+ 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

Third Quarter 2023 Form 10-Q 43

Notes to Condensed Consolidated Financial Statements

5 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 $ 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 expenses related to these activities are included in the Condensed Consolidated Statements of Operations as restructuring and related charges and totaled $ 87 million and $ 14 million during the three months ended September 30, 2023 and 2022, respectively, and $ 141 million and $ 27 million during the nine months ended September 30, 2023 and 2022, respectively.

Restructuring expenses during the third quarter of 2023 primarily relate to implementing actions to

achieve the organizational transformation component of the Transformative Growth plan designed to streamline the organization and outsource operations.

Restructuring expenses during the first nine months of 2023 primarily relate to the organizational transformation and real estate costs related to facilities being vacated.

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

Organizational transformation

($ in millions)

Expected program charges $ 95

2023 expenses

Remaining program charges $ 19

These charges are primarily recorded in the Allstate Protection segment.

The Company expects these actions will be completed in 2024.

Restructuring activity during the period

4 unchanged sentences

Payments and non-cash charges ( 35 ) ( 56 ) ( 91 )

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.

Restructuring liability as of September 30, 2023 $ 83 $ 1 $ 84

As of September 30, 2023, the cumulative amount incurred to date for active programs related to employee severance, relocation benefits and exit expenses totaled $ 91 million for employee costs and $ 185 million for exit costs.

Note 14 Guarantees and Contingent Liabilities

5 unchanged sentences

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

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

The types of indemnifications typically provided include indemnifications for breaches of

representations and warranties, taxes and certain other liabilities, such as third-party lawsuits.

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

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.

2 unchanged sentences

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

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

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

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

44 www.allstate.com

Notes to Condensed Consolidated Financial Statements

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

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

Regulation and compliance

11 unchanged sentences

The Company and certain subsidiaries are involved in a number of lawsuits, regulatory inquiries, and other legal proceedings arising out of various aspects of its business.

Background These matters raise difficult and complicated factual and legal issues and are subject to many uncertainties and complexities, including the underlying facts of each matter;

Background These matters raise difficult and complicated factual and legal issues and are subject to

many uncertainties and complexities, including the underlying facts of each matter;

novel legal issues;

7 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.

10 unchanged sentences

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

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

The Company does not establish accruals for such matters when the

Third Quarter 2023 Form 10-Q 45

Notes to Condensed Consolidated Financial Statements

Company does not believe both that it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated.

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

1 unchanged sentence

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

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.

10 unchanged sentences

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 $ 67 million, pre-tax.

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

This disclosure is not an indication of

expected loss, if any.

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

2 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.

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The Company is also defending litigation involving individual plaintiffs.

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

The Company is defending putative class actions in various courts that raise challenges to the

46 www.allstate.com

Notes to Condensed Consolidated Financial Statements

Company’s depreciation practices in homeowner property claims.

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

5 unchanged sentences

filed June 2022);

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

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

filed October 2022);

1 unchanged sentence

filed April 2023);

and Shumway, et al.

Allstate Vehicle and

44 www.allstate.com

Notes to Condensed Consolidated Financial Statements

Property Insurance Company (D.

filed April 2023).

and Hernandez v.

Allstate Vehicle and Property Insurance Company (D.

filed April 2023) (the Shumway plaintiff was substituted with Hernandez).

No classes have been certified in any of these matters.

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

The court granted final approval of a class-wide settlement in:

Allstate Indemnity Company, et al.

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filed August 2021).

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 class-wide settlement, the plaintiff and defendant in Thaxton v.

Allstate Indemnity Company (Madison Co., Ill.

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

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

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filed June 2019);

Allstate Fire and Casualty Insurance Company (Cir.

Ill., Chancery Div.

filed October 2020);

Imperial Fire and Casualty Insurance Company (W.D.

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filed April 2022);

Esurance Property and Casualty Insurance Company (Cir.

of Cook Co, Ill., Chancery Div.

filed September 2022);

Allstate Fire and Casualty Insurance Company (Cir.

of Cook Co., Ill., Chancery Div.

filed September 2022);

Allstate Insurance Company (Ct.

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

Esurance Property and Casualty Insurance Company (E.D.

filed July 2023).

Allstate Insurance Company (N.D.

Ohio filed June 2023);

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

Ohio filed August 2023).

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

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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:

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;

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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

Third Quarter 2023 Form 10-Q 47

Notes to Condensed Consolidated Financial Statements

any admission of liability or wrongdoing.

Subsequently, on June 28, 2023, the parties reached an agreement in principle to settle the action, without any admission of liability or wrongdoing.

On September 26, 2023, an order was entered by the district court granting preliminary approval of the class settlement.

The settlement is subject to final approval by the district court and any appeals therefrom.

The final approval hearing is scheduled for December 19, 2023.

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

4 unchanged sentences

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.

On September 28, 2023, the Ninth Circuit accepted Lincoln Benefit Life Company’s petition to appeal the district court’s class certification ruling.

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.

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

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

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

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

($ in millions) 2023 2022 2023 2022

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Remeasurement (gains) losses 158 81 63 136

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

Pension net cost $ 172 $ 75 $ 104 $ 50

Postretirement benefits

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Remeasurement (gains) losses 149 79 56 91

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

Total net cost (benefit) $ 160 $ 69 $ 87 $ ( 6 )

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

4 unchanged sentences

Pension and postretirement benefits remeasurement gains and losses

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

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

($ in millions) 2023 2022 2023 2022

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Remeasurement (gains) losses $ 149 $ 79 $ 56 $ 91

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.

Remeasurement losses for the third quarter and first nine months of 2023 are primarily related to unfavorable asset performance compared to expected return on plan assets, partially offset by an increase in the liability discount rate.

The weighted average discount rate used to measure the pension benefit obligation increased to 6.16 % at September 30, 2023 compared to 5.50 % at June 30, 2023, 5.33 % at March 31, 2023 and 5.64 % at December 31, 2022 resulting in gains for the third quarter and the first nine months of 2023.

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

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

Note 16 Supplemental Cash Flow Information

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.

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 $ 66 million and $ 83 million for the six

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.

Non-cash investing activities include $ 54 million and $ 111 million related to mergers and exchanges completed with equity securities, fixed income securities, bank loans, real estate and limited partnerships for the nine months ended September 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 $ 123 million related to debt assumed by purchaser on sale of real estate for the nine months ended September 30, 2023.

Non-cash financing activities include $ 38 million and $ 65 million related to the issuance of Allstate common shares for vested equity awards for the nine months ended September 30, 2023 and 2022, respectively.

months ended September 30, 2023 and 2022, respectively.

Non-cash operating activities include $ 26 million and $ 17 million related to right-of-use assets obtained in exchange for lease obligations for the nine months ended September 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) Six months ended June 30,

($ in millions) Nine months ended September 30,

Net change in proceeds managed

9 unchanged sentences

Operating cash flow (used) provided $ ( 265 ) $ 757

Second Quarter 2023 Form 10-Q 47

Third Quarter 2023 Form 10-Q 49

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 June 30,

($ in millions) Three months ended September 30,

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

8 unchanged sentences

Other comprehensive (loss) income $ ( 839 ) $ 183 $ ( 656 ) $ ( 1,057 ) $ 224 $ ( 833 )

Six months ended June 30,

Nine months ended September 30,

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

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Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of

To the Shareholders and the Board of Directors of

The Allstate Corporation

Northbrook, Illinois 60062

Results of Review of Interim Financial Information

We have reviewed the accompanying condensed consolidated statement of financial position of The Allstate Corporation and subsidiaries (the “Company”) as of June 30, 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”).

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

13 unchanged sentences

Chicago, Illinois

August 1, 2023

Second Quarter 2023 Form 10-Q 49

November 1, 2023

Third Quarter 2023 Form 10-Q 51

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