What changed in this filing

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Item 1. Financial Statements

2024-05-01 compared with 2023-11-01 · 333 added, 695 removed, 1323 unchanged (44% of the section changed)

3 unchanged sentences

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

September 30, Nine months ended September 30,

2023 2022 2023 2022

Property and casualty insurance premiums $ 13,512 $ 12,173

6 unchanged sentences

Property and casualty insurance claims and claims expense 9,501 10,326

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

262 252 785 785

Accident, health and other policy benefits 296 265

Amortization of deferred policy acquisition costs 1,939 1,744

5 unchanged sentences

Total costs and expenses 13,795 14,192

Loss from operations before income tax expense ( 21 ) ( 910 ) ( 2,175 ) ( 1,420 )

Income tax benefit ( 17 ) ( 236 ) ( 475 ) ( 374 )

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

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

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

Income (loss) from operations before income tax expense 1,464 ( 406 )

Income tax expense (benefit) 266 ( 85 )

Net income (loss) 1,198 ( 321 )

Net loss attributable to noncontrolling interest ( 20 ) ( 1 )

Net income (loss) attributable to Allstate 1,218 ( 320 )

Preferred stock dividends 29 26

Net loss applicable to common shareholders $ ( 41 ) $ ( 685 ) $ ( 1,776 ) $ ( 1,091 )

Net income (loss) applicable to common shareholders $ 1,189 $ ( 346 )

Earnings per common share:

Net loss applicable to common shareholders per common share - Basic $ ( 0.16 ) $ ( 2.55 ) $ ( 6.76 ) $ ( 3.99 )

Net income (loss) applicable to common shareholders per common share - Basic $ 4.51 $ ( 1.31 )

Weighted average common shares - Basic 263.5 263.5

Net loss applicable to common shareholders per common share - Diluted $ ( 0.16 ) $ ( 2.55 ) $ ( 6.76 ) $ ( 3.99 )

Net income (loss) applicable to common shareholders per common share - Diluted $ 4.46 $ ( 1.31 )

Weighted average common shares - Diluted 266.5 263.5

See notes to condensed consolidated financial statements.

Third Quarter 2023 Form 10-Q 1

First Quarter 2024 Form 10-Q 1

Condensed Consolidated Financial Statements

1 unchanged sentence

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

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

2023 2022 2023 2022

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

Other comprehensive loss, after-tax

($ in millions) Three months ended March 31,

Net income (loss) $ 1,198 $ ( 321 )

Other comprehensive (loss) income, after-tax

Unrealized net capital gains and losses ( 215 ) 682

2 unchanged sentences

Discount rate for reserve for future policy benefits

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

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

Comprehensive loss attributable to noncontrolling interest ( 1 ) ( 21 ) ( 21 ) ( 60 )

Comprehensive loss attributable to Allstate $ ( 659 ) $ ( 1,486 ) $ ( 1,857 ) $ ( 4,454 )

Other comprehensive (loss) income, after-tax ( 183 ) 719

Comprehensive income 1,015 398

Comprehensive (loss) income attributable to noncontrolling interest ( 19 ) 4

Comprehensive income attributable to Allstate $ 1,034 $ 394

See notes to condensed consolidated financial statements.

3 unchanged sentences

Condensed Consolidated Statements of Financial Position (unaudited)

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

($ in millions, except par value data) March 31, 2024 December 31, 2023

Fixed income securities, at fair value (amortized cost, net $ 51,837 and $ 49,649 )

24 unchanged sentences

Commitments and Contingent Liabilities (Note 13)

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

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

Common stock, $ .01 par value, 2.0 billion shares authorized and 900 million issued, 264 million and 262 million shares outstanding

14 unchanged sentences

See notes to condensed consolidated financial statements.

Third Quarter 2023 Form 10-Q 3

First Quarter 2024 Form 10-Q 3

Condensed Consolidated Financial Statements

1 unchanged sentence

Condensed Consolidated Statements of Shareholders’ Equity (unaudited)

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

2023 2022 2023 2022

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

Preferred stock par value $ — $ —

Preferred stock additional capital paid-in 2,001 1,970

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

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

Preferred stock redemption — — ( 556 ) —

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

Common stock par value 9 9

5 unchanged sentences

Balance, beginning of period 49,716 50,970

Net loss ( 5 ) ( 659 ) ( 1,677 ) ( 1,012 )

Net income (loss) 1,218 ( 320 )

Dividends on common stock (declared per share of $ 0.92 and $ 0.89 )

18 unchanged sentences

Change in unrealized net capital gains and losses 1 5

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

Noncontrolling loss ( 20 ) ( 1 )

Balance, end of period ( 159 ) ( 121 )

5 unchanged sentences

Condensed Consolidated Statements of Cash Flows (unaudited)

($ in millions) Nine months ended September 30,

($ in millions) Three months ended March 31,

Cash flows from operating activities

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

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

Net income (loss) $ 1,198 $ ( 321 )

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

Depreciation, amortization and other non-cash items 132 177

31 unchanged sentences

Proceeds from issuance of debt — 744

Repayment of debt ( 750 ) —

Proceeds from issuance of preferred stock 587 —

Redemption of preferred stock ( 575 ) —

Redemption and repayment of debt

Contractholder fund deposits 34 33

5 unchanged sentences

Other ( 10 ) —

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

Net increase in cash 124 23

Net cash (used in) provided by financing activities ( 166 ) 121

Net increase (decrease) in cash 128 ( 74 )

Cash at beginning of period 722 736

1 unchanged sentence

See notes to condensed consolidated financial statements.

Third Quarter 2023 Form 10-Q 5

First Quarter 2024 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 September 30, 2023 and for the three and nine month periods ended September 30, 2023 and 2022 are unaudited.

The condensed consolidated financial statements and notes as of March 31, 2024 and for the three month periods ended March 31, 2024 and 2023 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.

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

These condensed consolidated financial statements and notes should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2023.

1 unchanged sentence

All significant intercompany accounts and transactions have been eliminated.

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.

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

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

Additionally, deferred policy acquisition costs (“DAC”) for all long-duration products 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.

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

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

($ in millions) January 1, 2021

Decrease in retained income $ 21

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

Total decrease in equity $ 298

The decrease in AOCI 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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Notes to Condensed Consolidated Financial Statements

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

Impact of adoption for reserve for future policy benefits

($ in millions)

Accident and health Traditional life Total

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

$ 728 $ 311 $ 1,039

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

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

Total adjustments 309 153 462

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

reinsurance recoverables (4)

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

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

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

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

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

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

Impact of adoption for DAC

($ in millions)

Accident and health Traditional life Interest- sensitive life Total

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

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

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

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

Third Quarter 2023 Form 10-Q 7

Notes to Condensed Consolidated Financial Statements

Impacts of the adoption on the financial statements

Condensed Consolidated Statements of Operations

reported Impact of change As

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

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

Total revenues 13,208 — 13,208

Costs and expenses

Accident, health and other policy benefits 263 ( 11 ) 252

Amortization of deferred policy acquisition costs 1,682 1 1,683

Total costs and expenses 14,128 ( 10 ) 14,118

Loss from operations before income tax expense ( 920 ) 10 ( 910 )

Income tax benefit ( 237 ) 1 ( 236 )

Net loss ( 683 ) 9 ( 674 )

Net loss attributable to Allstate ( 668 ) 9 ( 659 )

Net loss applicable to common shareholders $ ( 694 ) $ 9 $ ( 685 )

Earnings per common share:

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

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

Nine months ended September 30, 2022

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

Total revenues 37,765 ( 2 ) 37,763

Costs and expenses

Accident, health and other policy benefits 801 ( 16 ) 785

Amortization of deferred policy acquisition costs 4,913 ( 4 ) 4,909

Total costs and expenses 39,203 ( 20 ) 39,183

Loss from operations before income tax expense ( 1,438 ) 18 ( 1,420 )

Income tax benefit ( 377 ) 3 ( 374 )

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

Net loss attributable to Allstate ( 1,027 ) 15 ( 1,012 )

Net loss applicable to common shareholders $ ( 1,106 ) $ 15 $ ( 1,091 )

Earnings per common share:

Net loss applicable to common shareholders per common share - Basic $ ( 4.04 ) $ 0.05 $ ( 3.99 )

Net loss applicable to common shareholders per common share - Diluted $ ( 4.04 ) $ 0.05 $ ( 3.99 )

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Notes to Condensed Consolidated Financial Statements

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

As reported Impact of change As adjusted

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

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

Other comprehensive loss, after-tax

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

Discount rate for reserve for future policy benefits

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 )

Nine months ended September 30, 2022

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

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 loss, after-tax

( 3,698 ) 230 ( 3,468 )

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

Comprehensive loss attributable to Allstate $ ( 4,699 ) $ 245 $ ( 4,454 )

Condensed Consolidated Statements of Financial Position (unaudited)

reported Impact of change As

($ in millions) December 31, 2022

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

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

Deferred income taxes 386 ( 4 ) 382

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

Total assets 97,957 32 97,989

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

Contractholder funds 897 ( 18 ) 879

Unearned premiums 22,311 ( 12 ) 22,299

Total liabilities 80,607 19 80,626

Retained income 50,954 16 50,970

Accumulated other comprehensive income (loss):

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

Discount rate for reserve for future policy benefits

— ( 1 ) ( 1 )

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

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

Total equity 17,350 13 17,363

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

Third Quarter 2023 Form 10-Q 9

Notes to Condensed Consolidated Financial Statements

Condensed Consolidated Statements of Shareholders’ Equity (unaudited)

reported Impact of change As

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

Retained income

Balance, beginning of period $ 52,412 $ — $ 52,412

Net loss ( 668 ) 9 ( 659 )

Balance, end of period 51,490 9 51,499

Accumulated other comprehensive income (loss)

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

Change in unrealized net capital gains and losses ( 789 ) — ( 789 )

Change in discount rate for reserve for future policy benefits

Balance, end of period ( 3,043 ) 1 ( 3,042 )

Total Allstate shareholders’ equity 17,673 10 17,683

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

Nine months ended September 30, 2022

Retained income

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

Net loss ( 1,027 ) 15 ( 1,012 )

Balance, end of period 51,490 9 51,499

Accumulated other comprehensive income (loss)

Balance, beginning of period 655 ( 229 ) 426

Change in unrealized net capital gains and losses ( 3,525 ) ( 2 ) ( 3,527 )

Change in discount rate for reserve for future policy benefits

Balance, end of period ( 3,043 ) 1 ( 3,042 )

Total Allstate shareholders’ equity 17,673 10 17,683

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

Condensed Consolidated Statements of Cash Flows (unaudited)

reported Impact of change As

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

Cash flows from operating activities

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

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

Policy benefits and other insurance reserves 3,520 ( 56 ) 3,464

Unearned premiums 2,256 ( 1 ) 2,255

Deferred policy acquisition costs ( 562 ) ( 5 ) ( 567 )

Reinsurance recoverables, net 56 43 99

Income taxes ( 559 ) 4 ( 555 )

Other operating assets and liabilities ( 381 ) — ( 381 )

Net cash provided by operating activities $ 4,151 $ — $ 4,151

Changes to significant accounting policies

Reserve for future policy benefits

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

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

The present value of contract benefits and

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

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

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

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

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

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

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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.

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.

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

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

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

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

The yield curve consists of U.S.

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

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

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

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

Deferred policy acquisition costs

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

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

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

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

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

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

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

The expected contract term and mortality, morbidity, and 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.

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

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

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

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.

Accounting for joint ventures In August 2023, the Financial Accounting Standards Board (“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

Segment reporting In November 2023, the FASB issued guidance expanding segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of reportable segments’ profit or loss and assets.

The guidance is effective for annual periods beginning after December 15, 2023 and interim periods beginning after December 15, 2024 and is to be applied retrospectively, with early adoption permitted.

The Company is currently evaluating the impact of adopting the guidance to its disclosures.

Income tax disclosures In December 2023, the FASB issued guidance enhancing various aspects of income tax disclosures.

The guidance requires a tabular reconciliation between statutory and effective income tax expense (benefit) with both amounts and percentages for a list of required categories.

For certain required categories where an individual category is at least five percent of the statutory tax amount, the required category must be further broken out by nature and, for foreign tax effects, jurisdiction.

Additionally, entities must disclose income taxes paid, net of refunds received, broken out between federal, state and foreign, and amounts paid, net of refunds received, to an individual jurisdiction when five percent or more of the total income taxes paid, net of refunds received.

All requirements in the guidance are annual in nature, and the guidance is effective for annual reporting periods beginning after December 15, 2024, with early adoption permitted.

The guidance only affects disclosures and will have no impact on the Company’s consolidated financial statements.

The Company is currently evaluating the impact of adopting the guidance to its disclosures.

Climate disclosures In March 2024, the Securities and Exchange Commission (“SEC”) adopted a final rule requiring registrants to disclose certain climate-related information in their registration statements and annual reports.

The rule requires the disclosure of qualitative and quantitative information, with certain information, such as financial statement effects of severe weather events, included in the notes to the audited financial statements.

Other disclosure requirements include material climate-related risks, processes to manage and govern those risks, disclosure of targets if the targets materially affect or are reasonably likely to materially affect the Company, and, if material, disclosure of certain greenhouse gas emissions.

On April 4, 2024, the SEC issued a voluntary stay of the final rule, pending the outcome of pending litigation.

The requirements will be applied prospectively and have phased-in effective dates.

For the Company, the Form 10-K for the year ended December 31, 2025, will be the first annual report with new climate-related disclosures.

The Company is currently evaluating the impact of adopting the final rule.

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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 September 30, Nine months ended September 30,

2023 2022 2023 2022

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

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

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

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

Net income (loss) $ 1,198 $ ( 321 )

Net loss attributable to noncontrolling interest ( 20 ) ( 1 )

Net income (loss) attributable to Allstate 1,218 ( 320 )

Preferred stock dividends

Net loss applicable to common shareholders $ ( 41 ) $ ( 685 ) $ ( 1,776 ) $ ( 1,091 )

Net income (loss) applicable to common shareholders $ 1,189 $ ( 346 )

Weighted average common shares outstanding

261.8 268.7 262.6 273.5

Effect of dilutive potential common shares (1) :

2 unchanged sentences

Weighted average common and dilutive potential common shares outstanding

261.8 268.7 262.6 273.5

Earnings per common share - Basic $ 4.51 $ ( 1.31 )

2 unchanged sentences

Anti-dilutive options excluded from diluted earnings per common share

3.1 2.4 3.0 1.6

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

1.5 2.9 1.9 3.3

(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.

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

Note 3 Reportable Segments

4 unchanged sentences

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.

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.

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First Quarter 2024 Form 10-Q 7

Notes to Condensed Consolidated Financial Statements

Reportable segments financial performance

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

Three months ended March 31,

($ in millions) 2024 2023

2 unchanged sentences

Run-off Property-Liability

( 83 ) ( 122 ) ( 88 ) ( 127 )

Total Property-Liability 898 ( 1,001 )

2 unchanged sentences

Allstate Health and Benefits

69 63 182 187

Corporate and Other ( 106 ) ( 89 )

Reconciling items

Property-Liability net investment income 627 632 1,680 1,696

Allstate Protection and Run-off Property-Liability net investment income

Net gains (losses) on investments and derivatives ( 164 ) 14

3 unchanged sentences

Gain (loss) on disposition 4 9

Non-recurring costs (2)

Income tax benefit on reconciling items 25 246 501 396

Income tax (expense) benefit on reconciling items (2)

Total reconciling items 267 653

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

2 ( 15 ) ( 22 ) ( 35 )

Net loss applicable to common shareholders $ ( 41 ) $ ( 685 ) $ ( 1,776 ) $ ( 1,091 )

Net loss attributable to noncontrolling interest (3)

Net income (loss) applicable to common shareholders $ 1,189 $ ( 346 )

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

Third Quarter 2023 Form 10-Q 13

(2) The tax computation of the reporting segments and income tax benefit (expense) on reconciling items to net income (loss) are computed discretely based on the tax law of the jurisdictions applicable to the reporting entities.

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

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Notes to Condensed Consolidated Financial Statements

Reportable segments revenue information

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

2023 2022 2023 2022

($ in millions) Three months ended March 31,

Property-Liability

15 unchanged sentences

Roadside assistance 47 49

Finance and insurance products 126 124 382 362

Protection and insurance products

Intersegment premiums and service fees (1)

34 39 102 118

Other revenue 85 84

10 unchanged sentences

Total Allstate Health and Benefits

585 564 1,746 1,698

Corporate and Other

7 unchanged sentences

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

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First Quarter 2024 Form 10-Q 9

Notes to Condensed Consolidated Financial Statements

1 unchanged sentence

Portfolio composition

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

($ in millions) March 31, 2024 December 31, 2023

Fixed income securities, at fair value $ 50,777 $ 48,865

7 unchanged sentences

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

September 30, 2023

March 31, 2024

government and agencies $ 10,142 $ 56 $ ( 168 ) $ 10,030

12 unchanged sentences

Scheduled maturities for fixed income securities

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

($ in millions) March 31, 2024 December 31, 2023

Amortized cost, net Fair

10 unchanged sentences

Net investment income

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

2023 2022 2023 2022

($ in millions) Three months ended March 31,

Fixed income securities $ 526 $ 390

7 unchanged sentences

Net investment income

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

Third Quarter 2023 Form 10-Q 15

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Notes to Condensed Consolidated Financial Statements

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

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

2023 2022 2023 2022

($ in millions) Three months ended March 31,

Fixed income securities $ ( 101 ) $ ( 136 )

Equity securities 62 167

Mortgage loans ( 1 ) 1 ( 4 ) —

Limited partnership interests 8 22

2 unchanged sentences

Net gains (losses) on investments and derivatives $ ( 164 ) $ 14

(1) Related to the valuation allowance established for the surplus notes issued by Adirondack Insurance Exchange and New Jersey Skylands Insurance Association (together “Reciprocal Exchanges”).

See Note 7 for further detail.

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

($ in millions)

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

2023 2022 2023 2022

Three months ended March 31,

Sales $ ( 111 ) $ ( 120 )

1 unchanged sentence

Valuation change of equity investments (1)

( 34 ) ( 285 ) 187 ( 1,421 )

Valuation change and settlements of derivatives ( 8 ) ( 52 )

2 unchanged sentences

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

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

2023 2022 2023 2022

($ in millions) Three months ended March 31,

Gross realized gains $ 41 $ 46

1 unchanged sentence

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

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

2023 2022 2023 2022

($ in millions) Three months ended March 31,

Equity securities $ 61 $ 20

Limited partnership interests carried at fair value

19 ( 36 ) 67 8

Total $ 91 $ 36

Credit losses recognized in net income

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

2023 2022 2023 2022

($ in millions) Three months ended March 31,

Fixed income securities:

Corporate $ 4 $ ( 9 )

ABS — ( 2 ) — ( 2 )

Total fixed income securities 4 ( 9 )

Mortgage loans ( 1 ) 1 ( 4 ) —

Limited partnership interests ( 9 ) ( 1 ) ( 25 ) ( 4 )

Other investments

3 unchanged sentences

Total $ ( 115 ) $ ( 12 )

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First Quarter 2024 Form 10-Q 11

Notes to Condensed Consolidated Financial Statements

Unrealized net capital gains and losses included in AOCI

Unrealized net capital gains and losses included in Accumulated Other Comprehensive Income (“AOCI”)

($ in millions) Fair

1 unchanged sentence

gains (losses)

September 30, 2023 Gains Losses

March 31, 2024 Gains Losses

Fixed income securities $ 50,777 $ 408 $ ( 1,468 ) $ ( 1,060 )

18 unchanged sentences

Change in unrealized net capital gains (losses)

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

($ in millions) Three months ended March 31, 2024

Fixed income securities $ ( 276 )

5 unchanged sentences

Deferred income taxes 59

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

Change in unrealized net capital gains and losses, after-tax

Carrying value for limited partnership interests

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

($ in millions) March 31, 2024 December 31, 2023

EMA Fair Value Total EMA Fair Value Total

6 unchanged sentences

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

As of September 30, 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

As of March 31, 2024 and December 31, 2023, the fair value of short-term investments totaled $ 4.32 billion and $ 5.14 billion, respectively.

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Notes to Condensed Consolidated Financial Statements

5 unchanged sentences

Other investments by asset type

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

($ in millions) March 31, 2024 December 31, 2023

Bank loans, net $ 164 $ 224

2 unchanged sentences

Derivatives 1 1

Other 103 108

Total $ 1,004 $ 1,055

18 unchanged sentences

Recoveries after write-offs are recognized when received.

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.

Accrued interest excluded from the amortized cost of fixed income securities totaled $ 527 million and $ 495 million as of March 31, 2024 and December 31, 2023, 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

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First Quarter 2024 Form 10-Q 13

Notes to Condensed Consolidated Financial Statements

5 unchanged sentences

Rollforward of credit loss allowance for fixed income securities

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

Three months ended March 31,

($ in millions) 2024 2023

3 unchanged sentences

(Increase) decrease of allowance related to sales and other

( 1 ) 1 ( 1 ) 1

Write-offs 15 —

Ending balance $ ( 17 ) $ ( 22 )

Components of credit loss allowance as of September 30

Components of credit loss allowance as of March 31

Corporate bonds $ ( 16 ) $ ( 20 )

3 unchanged sentences

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

September 30, 2023

March 31, 2024

Fixed income securities

19 unchanged sentences

Total fixed income securities 611 $ 5,274 $ ( 91 ) 4,232 $ 23,017 $ ( 1,343 ) $ ( 1,434 )

(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

(1) Includes fixed income securities with fair values of $ 3 million and $ 32 million and unrealized losses of zero and $ 3 million with credit loss allowances of $ 1 million and $ 8 million as of March 31, 2024 and December 31, 2023, respectively.

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Notes to Condensed Consolidated Financial Statements

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

Gross unrealized losses by unrealized loss position and credit quality as of March 31, 2024

($ in millions) Investment

5 unchanged sentences

Total unrealized losses $ ( 1,294 ) $ ( 174 ) $ ( 1,468 )

(1) Below investment grade fixed income securities include $ 25 million that have been in an unrealized loss position for less than twelve months.

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

(3) Below investment grade fixed income securities include $ 94 million that have been in an unrealized loss position for a period of twelve or more consecutive months.

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

6 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 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.

As of March 31, 2024, the Company has not made the decision to sell and it is not more likely than not the Company will be required to sell fixed income securities with unrealized losses before recovery of the amortized cost basis.

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

The Company uses a probability of default and loss given default model for mortgage loans and bank loans to estimate current expected credit losses that considers all relevant

information available including past events, current conditions, and reasonable and supportable forecasts over the life of an asset.

The Company uses a probability of default and loss given default model for mortgage loans and bank loans to estimate current expected credit losses that considers all relevant information available including past events, current conditions, and reasonable and supportable forecasts over the life of an asset.

The Company also considers such factors as historical losses, expected prepayments and various economic factors.

For mortgage loans, the Company considers origination vintage year and property level information such as debt service coverage, property type, property location and collateral value.

mortgage loans, the Company considers origination vintage year and property level information such as debt service coverage, property type, property location and collateral value.

For bank loans, the Company considers the credit rating of the borrower, credit spreads and type of loan.

9 unchanged sentences

Accrued interest

($ in millions) September 30, December 31,

($ in millions) March 31, December 31,

Mortgage loans $ 3 $ 3

Bank Loans 3 3

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First Quarter 2024 Form 10-Q 15

Notes to Condensed Consolidated Financial Statements

8 unchanged sentences

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

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

($ in millions) 2019 and prior 2020 2021 2022 2023 Current Total Total

8 unchanged sentences

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.

Payments on all mortgage loans were current as of March 31, 2024 and December 31, 2023.

Rollforward of credit loss allowance for mortgage loans

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

Three months ended March 31,

($ in millions) 2024 2023

Beginning balance $ ( 11 ) $ ( 7 )

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

Net increases related to credit losses — —

Write-offs — —

5 unchanged sentences

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

Third Quarter 2023 Form 10-Q 21

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Notes to Condensed Consolidated Financial Statements

Bank loans amortized cost by credit rating and year of origination

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

($ in millions) 2019 and prior 2020 2021 2022 2023 Current Total Total

7 unchanged sentences

Rollforward of credit loss allowance for bank loans

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

2023 2022 2023 2022

($ in millions) Three months ended March 31,

Beginning balance $ ( 22 ) $ ( 57 )

Net increases related to credit losses ( 2 ) ( 2 ) ( 16 ) ( 18 )

Net (increases) decreases related to credit losses 3 ( 3 )

Reduction of allowance related to sales — 5

23 unchanged sentences

For fair values received from third parties or internally estimated, the Company’s processes and controls are designed to ensure that the valuation methodologies are appropriate and consistently applied, the inputs and assumptions are reasonable and consistent with the objective of determining fair value, and the fair values are accurately recorded.

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

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

First Quarter 2024 Form 10-Q 17

Notes to Condensed Consolidated Financial Statements

previous fair values received from valuation service providers or brokers or derived from internal models.

providers or brokers or derived from internal models.

The Company performs procedures to understand and assess the methodologies, processes and controls of valuation service providers.

8 unchanged sentences

The indicators considered in determining whether a significant decrease in the volume and level of activity for a specific asset has occurred include the level of new issuances in the primary market, trading volume in the secondary market, the level of credit spreads over historical levels, applicable bid-ask spreads, and price consensus among market participants and other pricing sources.

Certain assets are not carried at fair value on a recurring basis, including mortgage loans, bank loans and policy loans and are only included in the fair value hierarchy disclosure when the individual investment is reported at fair value.

Certain assets are not carried at fair value on a recurring basis, including mortgage loans, bank loans, real estate and policy loans and are only included in the fair value hierarchy disclosure when the individual investment is reported at fair value.

In determining fair value, the Company principally uses the market approach which generally utilizes market transaction data for the same or similar instruments.

21 unchanged sentences

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

Third Quarter 2023 Form 10-Q 23

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Notes to Condensed Consolidated Financial Statements

13 unchanged sentences

• Other investments:

Certain OTC derivatives, such as interest rate caps, certain credit default swaps and certain options (including swaptions), are valued using models that are widely accepted in the financial services industry.

Certain options (including swaptions) are valued using models that are widely accepted in the financial services industry.

These are categorized as Level 3 as a result of the significance of non-market observable inputs such as volatility.

Other primary inputs include interest rate yield curves and credit spreads, and quoted prices for identical or similar assets in markets that exhibit less liquidity relative to those markets supporting Level 2 fair value measurements.

Other primary inputs include interest rate yield curves and quoted prices for identical or similar assets in markets that exhibit less liquidity relative to those markets supporting Level 2 fair value measurements.

• Other assets:

Includes the contingent consideration provision in the sale agreement for ALIC which meets the definition of a derivative.

Includes the contingent consideration provision in the sale agreement for Allstate Life Insurance Company (“ALIC”) which meets the definition of a derivative.

This derivative is valued internally using a model that includes stochastically determined cash flows and inputs that include spot and forward interest rates, volatility, corporate credit spreads and a liquidity discount.

1 unchanged sentence

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

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As of March 31, 2024, the Company has commitments to invest $ 172 million in these limited partnership interests.

First Quarter 2024 Form 10-Q 19

Notes to Condensed Consolidated Financial Statements

Assets and liabilities measured at fair value

September 30, 2023

March 31, 2024

($ 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

8 unchanged sentences

Equity securities (1)

1,607 218 408

Short-term investments 2,120 2,177 21 4,318

11 unchanged sentences

% of total liabilities at fair value 66.7 % 133.3 % — % ( 100.0 ) % 100.0 %

Third Quarter 2023 Form 10-Q 25

(1) Excludes $ 150 million of preferred stock measured at cost.

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Notes to Condensed Consolidated Financial Statements

11 unchanged sentences

Equity securities (1)

1,656 203 402

Short-term investments 1,676 3,467 1

11 unchanged sentences

% of total liabilities at fair value 50.0 % 250.0 % — % ( 200.0 ) % 100.0 %

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.

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Notes to Condensed Consolidated Financial Statements

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

Balance as of

June 30, 2023 Total gains (losses)

Transfers Balance as of

September 30, 2023

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

Fixed income securities:

Municipal $ 12 $ — $ — $ — $ — $ — $ ( 1 ) $ — $ — $ 11

Corporate - public 26 — ( 1 ) — — — — — — 25

Corporate - privately placed 60 — ( 1 ) — — — — — — 59

ABS 34 — — — — 4 — — — 38

Total fixed income securities 132 — ( 2 ) — — 4 ( 1 ) — — 133

Equity securities 381 15 — — — — ( 13 ) — — 383

Short-term investments 6 — — — — 10 — — — 16

Other investments 2 — — — — — — — — 2

Other assets 104 9 — — — — — — — 113

Total recurring Level 3 assets $ 625 $ 24 $ ( 2 ) $ — $ — $ 14 $ ( 14 ) $ — $ — $ 647

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 September 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 ) $ — $ — $ — $ ( 10 ) $ — $ ( 2 ) $ 11

Corporate - public 69 ( 1 ) 1 — — — ( 44 ) — — 25

Corporate - privately placed 55 ( 11 ) — 16 — 1 ( 2 ) — — 59

ABS 28 — — — — 11 — — ( 1 ) 38

Total fixed income securities 173 ( 9 ) — 16 — 12 ( 56 ) — ( 3 ) 133

Equity securities 333 22 — — — 70 ( 42 ) — — 383

Short-term investments 6 — — — — 10 — — — 16

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

Other assets 103 10 — — — — — — — 113

Total recurring Level 3 assets $ 618 $ 22 $ — $ 16 $ — $ 92 $ ( 98 ) $ — $ ( 3 ) $ 647

Third Quarter 2023 Form 10-Q 27

(1) Excludes $ 150 million of preferred stock measured at cost.

As of March 31, 2024 and December 31, 2023, Level 3 fair value measurements of fixed income securities total $ 143 million and $ 153 million, respectively, and include $ 23 million and $ 26 million, respectively, of securities valued based on non-binding broker quotes where the inputs have not been corroborated to be market observable and $ 8 million and $ 11 million, respectively, of municipal fixed income securities that are not rated by third-party credit rating agencies.

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 2024 Form 10-Q 21

Notes to Condensed Consolidated Financial Statements

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

Rollforward of Level 3 assets and liabilities held at fair value during the three month period ended March 31, 2024

Balance as of

June 30, 2022 Total gains (losses)

December 31, 2023 Total gains (losses)

Transfers Balance as of

September 30, 2022

March 31, 2024

($ 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 $ 7 $ 2 $ — $ — $ 20 $ ( 9 ) $ — $ ( 2 ) $ 694

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

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

Balance as of

December 31, 2022 Total gains (losses)

Transfers Balance as of September 30, 2022

Transfers Balance as of

March 31, 2023

($ 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 September 30, Nine months ended September 30,

Three months ended March 31,

($ in millions) 2024 2023

1 unchanged sentence

Net gains (losses) on investments and derivatives (1)

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.

Operating costs and expenses (1)

(1) Prior to the first quarter of 2024, level 3 gains (losses) included in operating costs and expenses were reported in this table within net gains (losses) on investments and derivatives.

Historical results have been updated to conform with this presentation.

There were no transfers into or out of Level 3 during the three months ended March 31, 2024 and 2023.

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Notes to Condensed Consolidated Financial Statements

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,

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

Three months ended March 31,

($ in millions) 2024 2023

10 unchanged sentences

Net gains (losses) on investments and derivatives 5 ( 1 )

Operating costs and expenses

Total included in net income $ 7 $ 3

Municipal $ — $ — $ — $ 1

Corporate - public 2 1

Corporate - privately placed ( 1 ) ( 1 ) — ( 2 )

Changes in unrealized net capital gains and losses reported in OCI $ 2 $ 1

Financial instruments not carried at fair value

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

($ in millions) March 31, 2024 December 31, 2023

Financial assets Fair value level Amortized cost, net Fair

20 unchanged sentences

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

Third Quarter 2023 Form 10-Q 29

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

First Quarter 2024 Form 10-Q 23

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.

When derivatives meet specific criteria, they may be designated as accounting hedges and accounted for as fair value, cash flow, foreign currency fair value or foreign currency cash flow hedges.

9 unchanged sentences

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

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

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

The contingent consideration meets the definition of a derivative and is accounted for on a fair value basis with periodic changes in fair value reflected in earnings.

2 unchanged sentences

Notes to Condensed Consolidated Financial Statements

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

Summary of the volume and fair value positions of derivative instruments as of March 31, 2024

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

5 unchanged sentences

Equity and index contracts

Options Other investments n/a 16 — — —

Futures Other assets n/a 913 — — —

10 unchanged sentences

Equity and index contracts

Options Other liabilities & accrued expenses n/a 16 — — —

Futures Other liabilities & accrued expenses n/a 736 — — —

8 unchanged sentences

(n/a = not applicable)

Third Quarter 2023 Form 10-Q 31

First Quarter 2024 Form 10-Q 25

Notes to Condensed Consolidated Financial Statements

7 unchanged sentences

Equity and index contracts

Options Other investments n/a 32 — — —

Futures Other assets n/a 1,305 1 1 —

23 unchanged sentences

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

September 30, 2023

March 31, 2024

Asset derivatives $ 5 $ ( 4 ) $ — $ 1 $ — $ 1

8 unchanged sentences

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

Three months ended September 30, 2023

Interest rate contracts $ 5 $ — $ 5

Equity and index contracts 10 ( 10 ) —

Contingent consideration — 9 9

Foreign currency contracts 17 — 17

Credit default contracts ( 1 ) — ( 1 )

Total $ 31 $ ( 1 ) $ 30

Nine months ended September 30, 2023

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

Equity and index contracts ( 6 ) 8 2

Contingent consideration — 10 10

Foreign currency contracts 6 — 6

Credit default contracts ( 16 ) — ( 16 )

Total $ ( 28 ) $ 18 $ ( 10 )

Three months ended September 30, 2022

Three months ended March 31, 2024

Interest rate contracts $ ( 7 ) $ — $ ( 7 )

3 unchanged sentences

Credit default contracts ( 1 ) — ( 1 )

Other contracts — ( 1 ) ( 1 )

Total $ ( 8 ) $ 16 $ 8

Nine months ended September 30, 2022

Three months ended March 31, 2023

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

3 unchanged sentences

Credit default contracts ( 14 ) — ( 14 )

Other contracts — ( 1 ) ( 1 )

Total $ ( 52 ) $ 17 $ ( 35 )

2 unchanged sentences

OTC cash and securities collateral pledged

($ in millions) September 30, 2023

($ in millions) March 31, 2024

Pledged by the Company $ 2

Pledged to the Company (1)

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

(1) $ 1 million 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) September 30, 2023 December 31, 2022

($ in millions) March 31, 2024 December 31, 2023

parties Notional

3 unchanged sentences

A+ 2 $ 445 $ 2 $ — — $ — $ — $ —

A — — — — 1 192 7 —

Total 2 $ 445 $ 2 $ — — $ — $ — $ —

3 unchanged sentences

Exchange traded and cleared margin deposits

($ in millions) September 30, 2023

($ in millions) March 31, 2024

Pledged by the Company $ 67

2 unchanged sentences

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.

To limit this risk,

the Company’s senior management has established risk control limits.

In addition, changes in fair value of the derivative financial instruments that the Company uses for risk management purposes are generally offset by the change in the fair value or cash flows of the hedged risk component of the related assets, liabilities or forecasted transactions.

First Quarter 2024 Form 10-Q 27

Notes to Condensed Consolidated Financial Statements

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

2 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) September 30, 2023 December 31, 2022

($ in millions) March 31, 2024 December 31, 2023

Gross liability fair value of contracts containing credit-risk-contingent features $ 3 $ 10

3 unchanged sentences

Note 7 Variable Interest Entities

Consolidated VIEs, of which the Company is the primary beneficiary, primarily include Adirondack Insurance Exchange, a New York reciprocal insurer, and New Jersey Skylands Insurance Association, a New Jersey reciprocal insurer (together “Reciprocal Exchanges”).

Consolidated VIEs primarily include Adirondack Insurance Exchange (“Adirondack”), a New York reciprocal insurer, and New Jersey Skylands Insurance Association (“Skylands”), a New Jersey reciprocal insurer.

The Reciprocal Exchanges are insurance carriers organized as unincorporated associations.

The Company does not own the equity of the Reciprocal Exchanges, which is owned by their respective policyholders.

The Company manages the business operations of the Reciprocal Exchanges and has the power to direct their activities that most significantly impact their economic performance.

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

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.

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

The results of the Reciprocal Exchanges are included in the Allstate Protection segment as the Company manages the business operations of the Reciprocal Exchanges and has the power to direct their activities that most significantly impact their economic performance.

The Company receives a management fee for the services provided to the Reciprocal Exchanges totaling $ 10 million and $ 11 million for the three months ended March 31, 2024 and 2023, respectively.

In addition, as of March 31, 2024 and December 31, 2023, the Company holds interests of $ 123 million in the form of surplus notes that provide capital to the Reciprocal Exchanges and would absorb expected losses.

As of March 31, 2024, Adirondack’s capital was below levels required by insurance regulations.

Due to ongoing operating losses and the inability of the Reciprocal Exchanges to obtain approval for premium rate increases that are commensurate with increases in claims and claims expense, the Company established a valuation allowance of $ 123 million related to the surplus notes during the three months ended March 31, 2024.

In addition, the Company has a 100 % quota share reinsurance agreement with Skylands to cede all of Skylands’ business to the Company and a 36.5 % quota share reinsurance agreement with Adirondack.

Claims and claims expense ceded to the Company were $ 12 million and $ 7 million for the three months ended March 31, 2024 and 2023, respectively.

The Reciprocal Exchanges generated $ 61 million of earned premiums for the three months ended March 31, 2024 compared to $ 57 million for the three months ended March 31, 2023.

Total costs and expenses were $ 87 million for the three months ended March 31, 2024 compared to $ 59 million for the three months ended March 31, 2023.

In the event of dissolution, policyholders would share any residual unassigned surplus but are not subject to assessment for any deficit in unassigned surplus of the Reciprocal Exchanges.

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

The table below reflects the consolidated VIE results, which exclude all intercompany transactions including surplus notes and related accrued interest, management fees and intercompany reinsurance transactions.

28 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) September 30, 2023 December 31, 2022

Assets and liabilities of Reciprocal Exchanges included in the condensed consolidated statement of financial position (1)

($ in millions) March 31, 2024 December 31, 2023

Fixed income securities $ 241 $ 267

9 unchanged sentences

Total liabilities $ 428 $ 455

(1) Intercompany balances eliminated in consolidation

Total assets $ ( 30 ) $ ( 26 )

Total liabilities ( 201 ) ( 189 )

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

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 laws and regulations, judicial decisions, and economic conditions.

The Company’s reserving process considers 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.

4 unchanged sentences

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 settlements and changes in mix of claim types.

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

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

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

4 unchanged sentences

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

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.

First Quarter 2024 Form 10-Q 29

Notes to Condensed Consolidated Financial Statements

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

Nine months ended September 30,

Three months ended March 31,

($ in millions) 2024 2023

Balance as of January 1 $ 39,858 $ 37,541

Less recoverables (1)

( 9,176 ) ( 9,479 )

Recoverables (1)

Net balance as of January 1 31,462 28,365

7 unchanged sentences

Total paid ( 9,153 ) ( 9,158 )

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

Plus recoverables 8,654 9,556

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

Net balance as of March 31 31,810 29,533

Balance as of March 31 $ 40,143 $ 38,644

(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 $ 5.57 billion and $ 2.33 billion in the nine months ended September 30, 2023 and 2022, respectively, net of recoverables.

This expense included losses from catastrophes of $ 731 million and $ 1.69 billion in the three months ended March 31, 2024 and 2023, 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.

36 www.allstate.com

Notes to Condensed Consolidated Financial Statements

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

3 unchanged sentences

2023 2024 2023

Three months ended September 30,

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

Homeowners 46 50 16 3 62 53

Other personal lines ( 3 ) ( 2 ) ( 11 ) ( 3 ) ( 14 ) ( 5 )

Commercial lines 13 63 6 1 19 64

Other business lines 1 1 — 1 1 2

Run-off Property-Liability (2)

82 120 — — 82 120

Protection Services — — — — — —

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

Nine months ended September 30,

Three months ended March 31,

Auto $ ( 67 ) $ 3 $ ( 7 ) $ ( 28 ) $ ( 74 ) $ ( 25 )

4 unchanged sentences

Run-off Property-Liability

85 124 — — 85 124

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

Total prior year reserve reestimates $ 11 $ 27 $ ( 162 ) $ ( 42 ) $ ( 151 ) $ ( 15 )

$ 374 $ 1,441 $ 6 $ 29 $ 380 $ 1,470

(1) Favorable reserve reestimates are shown in parentheses.

(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

30 www.allstate.com

Notes to Condensed Consolidated Financial Statements

1 unchanged sentence

Rollforward of reserve for future policy benefits (1)

Nine months ended September 30,

Three months ended March 31,

health Traditional

29 unchanged sentences

$ 667 $ 698 $ 318 $ 291 $ 985 $ 989

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

(1) Excludes $ 259 million and $ 271 million of reserves related to short-duration and other contracts as of March 31, 2024 and 2023, respectively.

Revenue and interest recognized in the condensed consolidated statements of operations

($ in millions) Nine months ended September 30,

($ in millions) Three months ended March 31,

Accident and health $ 221 $ 225

8 unchanged sentences

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

38 www.allstate.com

First Quarter 2024 Form 10-Q 31

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 September 30,

As of March 31,

($ in millions) Undiscounted Discounted Undiscounted Discounted

6 unchanged sentences

Key assumptions used in calculating the reserve for future policy benefits

As of September 30,

As of March 31,

Accident and health Traditional life

8 unchanged sentences

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

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 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

For the first quarter of 2024, actual experience for lapses in accident and health products was higher than expected.

For the first quarter of 2023, actual experience for lapses in accident and health products was lower than expected.

For the first quarter of 2024 and 2023, actual experience for lapses in traditional life products was lower than expected.

Contractholder funds

Contractholder funds activity

Nine months ended September 30,

Three months ended March 31,

($ in millions) 2024 2023

16 unchanged sentences

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

32 www.allstate.com

Notes to Condensed Consolidated Financial Statements

Account values:

3 unchanged sentences

At guaranteed minimum 1 - 50 basis points above

September 30, 2023

March 31, 2024

Less than 3.00 %

6 unchanged sentences

Total $ 774 $ 34 $ 890

September 30, 2022

March 31, 2023

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 September 30, Nine months ended September 30,

2023 2022 2023 2022

($ in millions) Three months ended March 31,

Property and casualty insurance premiums earned $ ( 557 ) $ ( 446 )

1 unchanged sentence

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

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

2023 2022 2023 2022

($ in millions) Three months ended March 31,

Property and casualty insurance claims and claims expense

1 unchanged sentence

Accident, health and other policy benefits

( 7 ) 39 ( 32 ) 22

(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) September 30, 2023 December 31, 2022

($ in millions) March 31, 2024 December 31, 2023

Property and casualty

4 unchanged sentences

Total $ 8,726 $ 8,809

First Quarter 2024 Form 10-Q 33

Notes to Condensed Consolidated Financial Statements

Rollforward of credit loss allowance for reinsurance recoverables

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

2023 2022 2023 2022

($ in millions) Three months ended March 31,

Property and casualty (1) (2)

10 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

Nine months ended September 30, 2023

Three months ended March 31, 2024

Accident and health insurance

8 unchanged sentences

Ending balance $ 5,946

Nine months ended September 30, 2022

Three months ended March 31, 2023

Accident and health insurance

10 unchanged sentences

Notes to Condensed Consolidated Financial Statements

Note 12 Capital Structure

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

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 net proceeds of this issuance were used to repay the $ 500 million senior debt maturity and for general corporate purposes.

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 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 .

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 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 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

($ 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 %

+ 2.938 % + .26161 %

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

Third Quarter 2023 Form 10-Q 43

Notes to Condensed Consolidated Financial Statements

Note 12 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 $ 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 expenses related to these activities are included in the Condensed Consolidated Statements of Operations as restructuring and related charges and totaled $ 10 million and $ 27 million during the three months ended March 31, 2024 and 2023, respectively.

Restructuring expenses during the first quarter of 2024 primarily relate to implementing actions to streamline the organization and outsource operations, 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 ( 12 ) ( 5 ) ( 17 )

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.

Restructuring liability as of March 31, 2024 $ 33 $ 1 $ 34

As of March 31, 2024, the cumulative amount incurred to date for active programs related to employee severance, relocation benefits and exit expenses totaled $ 105 million for employee costs and $ 79 million for exit costs.

Note 13 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.

5 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.

44 www.allstate.com

Notes to Condensed Consolidated Financial Statements

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 September 30, 2023.

The aggregate liability balance related to all guarantees was not material as of March 31, 2024.

Regulation and compliance

The Company is subject to extensive laws, regulations, administrative directives, and regulatory actions.

From time to time, regulatory authorities or legislative bodies seek to influence and restrict premium rates, require premium refunds to policyholders, require reinstatement of terminated policies, prescribe rules or guidelines on how affiliates compete in the marketplace, restrict the ability of insurers to cancel or non-renew policies, require insurers to continue to write new policies or limit their ability to write new policies, limit insurers’ ability to change coverage terms or to impose underwriting standards, impose additional regulations regarding agency and broker compensation, regulate the nature of and amount of investments, impose fines and penalties for unintended errors or mistakes, impose additional regulations regarding cybersecurity and privacy, and otherwise expand overall regulation of insurance products and the insurance industry.

In addition, the Company is subject to laws and regulations administered and enforced by federal agencies, international agencies, and other organizations, including but not limited to the Securities and Exchange Commission (“SEC”), the Financial Industry Regulatory Authority, the U.S.

From time to time, regulatory authorities or

First Quarter 2024 Form 10-Q 35

Notes to Condensed Consolidated Financial Statements

legislative bodies seek to influence and restrict premium rates, require premium refunds to policyholders, require reinstatement of terminated policies, prescribe rules or guidelines on how affiliates compete in the marketplace, restrict the ability of insurers to cancel or non-renew policies, require insurers to continue to write new policies or limit their ability to write new policies, limit insurers’ ability to change coverage terms or to impose underwriting standards, impose additional regulations regarding agency and broker compensation, regulate the nature of and amount of investments, impose fines and penalties for unintended errors or mistakes, impose additional regulations regarding cybersecurity and privacy, and otherwise expand overall regulation of insurance products and the insurance industry.

In addition, the Company is subject to laws and regulations administered and enforced by federal agencies, international agencies, and other organizations, including but not limited to the SEC, the Financial Industry Regulatory Authority, the U.S.

Equal Employment Opportunity Commission, and the U.S.

7 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;

20 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

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 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’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.

3 unchanged sentences

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

Disclosure of the nature and amount of an accrual is made 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 amount of accrual.

Disclosure of the nature and amount of an accrual is made when there have been sufficient legal and factual developments such that the

36 www.allstate.com

Notes to Condensed Consolidated Financial Statements

Company’s ability to resolve the matter would not be impaired by the disclosure of the amount of accrual.

When the Company assesses it is reasonably possible or probable that a loss has been incurred, it discloses the matter.

8 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 $ 87 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.

12 unchanged sentences

filed January 2019;

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

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

appeal pending, Eleventh 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 Eleventh 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 Eleventh Circuit is holding determination on plaintiff’s class certification appeal pending the outcome of the Florida Supreme Court certification.

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

The Company is also defending litigation involving individual plaintiffs.

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.

On April 25, 2024, the Florida Supreme Court issued a decision in the Company’s favor, finding that the Company’s practice with respect to its payment of certain medical provider charges is consistent with the Company’s policy language and with the state personal injury protection statute.

While this appeal has been pending, the Company has been managing 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.

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 Company (Circuit Court of Cole Co., Mo.

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

filed October 2022);

Allstate Vehicle and Property Insurance Company (D.

filed April 2023);

and Hernandez v.

Allstate Vehicle and Property Insurance Company (D.

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

First Quarter 2024 Form 10-Q 37

Notes to Condensed Consolidated Financial Statements

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

No classes have been certified in any of these matters.

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

Allstate Indemnity Company, et al.

Ohio filed May 2016);

Allstate Vehicle and Property Insurance Company (S.D.

Ohio filed March 2020);

Allstate Insurance Company (N.D.

Ohio filed March 2020);

Ferguson-Luke, et al.

Allstate Property and Casualty Insurance Company (N.D.

Ohio filed April 2020);

Mitchell, et al.

Allstate Vehicle and Property Insurance Company, et al.

filed August 2021).

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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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:

The Company is currently defending the following lawsuits:

Kronenberg v.

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filed June 2019);

Imperial Fire and Casualty Insurance Company (W.D.

filed February 2022);

Allstate Property and Casualty Insurance Company (M.D.

filed April 2022);

Allstate Insurance Company (N.D.

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Ohio filed August 2023);

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

Allstate Property and Casualty Insurance Company (State Court of Habersham Co., Ga.

filed December 2023);

Esurance Property and Casualty Insurance Company and National General Insurance Company (E.D.N.Y.

filed February 2024).

No classes have been certified in any of these matters.

Settlements in principle have been reached in the following cases:

Imperial Fire and Casualty Insurance Company (W.D.

filed February 2022);

and Cummings v.

Allstate Property and Casualty Insurance Company (M.D.

filed April 2022).

The Company is defending putative class actions in Arizona federal court that are alleging underpayment of uninsured/underinsured motorist claims.

The lawsuits are Dorazio v.

Allstate Fire and Casualty Insurance Company (D.

filed December 2022) and Loughran v.

MIC General Insurance Corporation (D.

filed December 2022).

The plaintiffs allege that uninsured/underinsured motorist coverages must be stacked where the defendants allegedly did not include specified policy language and did not provide specified notice to policyholders.

No classes have been certified in these matters.

In July 2023, the Arizona Supreme Court issued a ruling in Franklin v.

CSAA General Insurance , a matter involving another insurer.

The Franklin decision held, under the factual circumstances of that case, that stacking of uninsured/underinsured motorist coverages was required because the insurer did not include specified policy language and did not issue specified notice.

The Company is currently defending its insureds against plaintiffs’ bodily injury lawsuit stemming from a 2018 automobile accident, Equihua v.

Chausse and Nash (Superior Court of Los Angeles Co., Cal.

On August 18, 2021, a jury returned a verdict against the insureds.

The Company then moved to intervene in the lawsuit on September 9, 2021 and together with the insureds, sought to vacate the

judgment and to obtain a new trial.

On November 2, 2021, the trial court denied the post-trial motions to vacate the judgment and for a new trial and the Company’s motion to intervene.

The Company and the insureds subsequently filed an appeal with the California Court of Appeal, Second District, which affirmed judgment in favor of plaintiffs on November 6, 2023.

On December 18, 2023, the insureds filed a petition for review with the California Supreme Court.

On February 14, 2024, the California Supreme Court entered an order denying the petition for review.

The Company satisfied the judgment on March 19, 2024.

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.

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

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;

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In re The Allstate Corp.

Securities Litigation is a certified class action filed on November 11, 2016 in the United States District Court for the Northern District of Illinois against the Company and two of its officers asserting claims under the federal securities laws.

Plaintiffs allege that they purchased Allstate common stock during the class period and suffered damages as the result of the conduct alleged.

Plaintiffs seek an unspecified amount of damages, costs, attorney’s fees, and other relief as the court deems appropriate.

Plaintiffs allege that the Company and certain senior officers made allegedly material misstatements or omissions concerning claim frequency statistics and the reasons for a claim frequency increase for Allstate brand auto insurance between October 2014 and August 3, 2015.

Plaintiffs further allege that a senior officer engaged in stock option exercises during that time allegedly while in possession of material nonpublic information about Allstate brand auto insurance claim frequency.

The Company, its chairman, president and chief executive officer, and its former president are the named defendants.

Securities Litigation was a certified class action filed on November 11, 2016, in the United States District Court for the Northern District of Illinois against the Company and two of its officers asserting claims under the federal securities laws.

Plaintiffs alleged that they purchased Allstate common stock during the class period and suffered damages as the result of the conduct alleged.

Plaintiffs sought an unspecified amount of damages, costs, attorney’s fees, and other relief.

Plaintiffs alleged that the Company and certain senior officers made allegedly material misstatements or omissions concerning claim frequency statistics and the reasons for a claim frequency increase for Allstate brand auto insurance between October 2014 and August 3, 2015.

Plaintiffs further alleged that a senior officer engaged in stock option exercises during that time allegedly while in possession of material nonpublic information about Allstate brand auto insurance claim frequency.

The Company, its chairman, president and chief executive officer, and its former president were the named defendants.

After the court denied their motion to dismiss on February 27, 2018, defendants answered the complaint, denying plaintiffs’ allegations that there was any misstatement or omission or other misconduct.

On June 22, 2018, plaintiffs filed their motion for class certification.

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.

On September 12, 2018, the lead plaintiffs amended the complaint to add the

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Notes to Condensed Consolidated Financial Statements

City of Providence Employee Retirement System as a proposed class representative.

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

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On July 26, 2022, the court entered its order granting summary judgment in part (as to plaintiffs’ claims relating to certain statements made in October 2014) and denying it as to the remainder of plaintiffs’ claims.

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

A pre-trial conference has not occurred.

Third Quarter 2023 Form 10-Q 47

Notes to Condensed Consolidated Financial Statements

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.

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

The district court granted preliminary approval of the class settlement on September 26, 2023, and granted final approval of the class settlement on December 19, 2023.

The settlement became final after the expiration of the time for filing an appeal of the district court’s approval order.

No appeal of the district court’s approval order was filed, and the settlement is now final.

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

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filed May 2020) and Farley v.

Lincoln Benefit Life Compan y (E.D.

Lincoln Benefit Life Company (E.D.

2020), following the sale of ALIC.

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

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.

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

LBL is appealing the district court’s order in the Ninth Circuit Court of Appeals.

On March 27, 2024, the Magistrate Judge issued his Findings and Recommendations denying class certification in Hewitt.

Plaintiffs filed their objection to the Magistrate’s recommendation.

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.

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

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

Three months ended March 31,

($ in millions) 2024 2023

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Remeasurement (gains) losses — ( 57 )

Pension net cost $ 172 $ 75 $ 104 $ 50

Pension net cost (benefit) $ 14 $ ( 41 )

Postretirement benefits

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Remeasurement (gains) losses ( 2 ) 4

Postretirement net benefit $ ( 12 ) $ ( 6 ) $ ( 17 ) $ ( 56 )

Postretirement net cost $ — $ 1

Pension and postretirement benefits

2 unchanged sentences

Total net cost (benefit) $ 14 $ ( 40 )

First Quarter 2024 Form 10-Q 39

Notes to Condensed Consolidated Financial Statements

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

Differences between expected and actual returns on plan assets affect remeasurement (gains) losses.

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

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Notes to Condensed Consolidated Financial Statements

Pension and other postretirement service cost, interest cost, expected return on plan assets and

amortization of prior service credit are reported in property and casualty insurance claims and claims expense, operating costs and expenses, net investment income and (if applicable) restructuring and related charges on the Condensed Consolidated Statements of Operations.

Pension and postretirement benefits remeasurement gains and losses

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

Three months ended March 31,

($ in millions) 2024 2023

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Remeasurement (gains) losses $ ( 2 ) $ ( 53 )

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.

Remeasurement gains for the first quarter of 2024 are primarily related to an increase in the liability discount rate, partially offset by unfavorable asset performance compared to expected return on plan assets.

The weighted average discount rate used to measure the pension benefit obligation increased to

5.45 % at March 31, 2024 compared to 5.35 % at December 31, 2023, resulting in gains for the first quarter of 2024.

For the first quarter of 2024, 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 strong public equity returns.

Note 15 Supplemental Cash Flow Information

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.

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 $ 101 million and $ 127 million for the nine

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.

Non-cash investing activities include $ 34 million and $ 36 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, 2024 and 2023, respectively.

Non-cash investing activities include $ 18 million related to right-of-use property and equipment obtained in exchange for lease obligations for the three months ended March 31, 2024.

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 $ 26 million and $ 35 million related to the issuance of Allstate common shares for vested equity awards for the three months ended March 31, 2024 and 2023, respectively.

Non-cash operating activities include $ 10 million and $ 4 million related to right-of-use assets obtained in exchange for lease obligations for the three months ended March 31, 2024 and 2023, respectively.

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

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

($ in millions) Nine months ended September 30,

($ in millions) Three months ended March 31,

Cash flows from operating activities

Net change in proceeds managed

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Net change in short-term investments ( 127 ) 93

Operating cash flow provided (used) 265 ( 758 )

Net change in cash — 1

Net change in proceeds managed $ 265 $ ( 757 )

Cash flows from operating activities

Operating cash flow (used) provided $ ( 158 ) $ 204

Net change in liabilities

1 unchanged sentence

Liabilities for collateral, end of period ( 2,049 ) ( 1,807 )

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

Third Quarter 2023 Form 10-Q 49

Operating cash flow provided (used) $ 158 $ ( 204 )

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Notes to Condensed Consolidated Financial Statements

1 unchanged sentence

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

($ in millions) Three months ended September 30,

($ in millions) Three months ended March 31,

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

8 unchanged sentences

Other comprehensive (loss) income $ ( 233 ) $ 50 $ ( 183 ) $ 913 $ ( 194 ) $ 719

Nine months ended September 30,

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

Unrealized net holding gains and losses arising during the period, net of related offsets $ ( 717 ) $ 152 $ ( 565 ) $ ( 5,083 ) $ 1,080 $ ( 4,003 )

reclassification adjustment of realized capital gains and losses ( 390 ) 82 ( 308 ) ( 602 ) 126 ( 476 )

Unrealized net capital gains and losses ( 327 ) 70 ( 257 ) ( 4,481 ) 954 ( 3,527 )

Unrealized foreign currency translation adjustments 81 ( 17 ) 64 ( 171 ) 36 ( 135 )

Unamortized pension and other postretirement prior service credit (1)

( 18 ) 4 ( 14 ) ( 47 ) 9 ( 38 )

Discount rate for reserve for future policy benefits 37 ( 8 ) 29 294 ( 62 ) 232

Other comprehensive (loss) income $ ( 227 ) $ 49 $ ( 178 ) $ ( 4,405 ) $ 937 $ ( 3,468 )

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

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First Quarter 2024 Form 10-Q 41

Report of Independent Registered Public Accounting Firm

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Results of Review of Interim Financial Information

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

We have reviewed the accompanying condensed consolidated statement of financial position of The Allstate Corporation and subsidiaries (the “Company”) as of March 31, 2024, the related condensed consolidated statements of operations, comprehensive income (loss), shareholders’ equity and cash flows for the three months ended March 31, 2024 and 2023, and the related notes (collectively referred to as the “interim financial information”).

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

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

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

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

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

and in our report dated February 21, 2024, we expressed an unqualified opinion on those consolidated financial statements and included an explanatory paragraph regarding a change in accounting principle for the measurement and disclosure of long-duration insurance contracts.

In our opinion, the information set forth in the accompanying condensed consolidated statement of financial position as of December 31, 2023, is fairly stated, in all material respects, in relation to the consolidated statement of financial position from which it has been derived.

Basis for Review Results

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Chicago, Illinois

November 1, 2023

Third Quarter 2023 Form 10-Q 51

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

What changed 10-Q

Item 1. Financial Statements