What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-07-31 compared with 2024-05-01 · 317 added, 230 removed, 766 unchanged (42% of the section changed)

10 unchanged sentences

Macroeconomic factors have and may continue to impact the results of our operations, financial condition and liquidity, such as U.S.

government fiscal and monetary policies, the Russia/Ukraine and Israel/Hamas conflicts, supply chain disruptions, labor shortages and other macroeconomic factors that have increased inflation.

government fiscal and monetary policies, the Russia/Ukraine and Israel/Hamas conflicts, supply chain disruptions, labor shortages and other factors that have increased inflation.

These factors have affected our operations and may continue to affect our results of operations, financial condition and liquidity and should be considered when comparing the current period to prior periods.

25 unchanged sentences

• Income tax expense or benefit on reconciling items

First Quarter 2024 Form 10-Q 43

Second Quarter 2024 Form 10-Q 45

Consolidated net income (loss) applicable to common shareholders

($ in millions)

Consolidated net income applicable to common shareholders was $1.19 billion in the first quarter of 2024 compared to a loss of $346 million in the first quarter of 2023, primarily due to improved underwriting results.

For the twelve months ended March 31, 2024, return on Allstate common shareholders’ equity was 7.6%, an increase of 20.6 points from (13.0)% for the twelve months ended March 31, 2023.

Total revenue

Consolidated net income applicable to common shareholders was $301 million and $1.49 billion in the second quarter and first six months of 2024, respectively, compared to a loss of $1.39 billion and $1.74 billion in the second quarter and first six months of 2023, respectively, primarily due to improved underwriting results from increased earned premium and improved loss trends.

For the twelve months ended June 30, 2024, return on Allstate common shareholders’ equity was 19.3%.

Total revenues

($ in millions)

Total revenues increased 10.7% to $15.26 billion in the first quarter of 2024 compared to the first quarter of 2023, primarily due to an increase of 11.0% in property and casualty insurance premiums earned.

Total revenues increased 12.4% to $15.71 billion and increased 11.6% to $30.97 billion in the second quarter and first six months of 2024, respectively, compared to the same periods of 2023 due to higher average premium from rate increases and higher net investment income from fixed income securities.

Net investment income

($ in millions)

Net investment income increased $189 million to $764 million in the first quarter of 2024, primarily due to an increase in market-based income reflecting higher fixed income portfolio yields and investment balances, and higher performance-based valuation increases.

Net investment income increased $102 million to $712 million in the second quarter of 2024 primarily due to higher market-based investment results, partially offset by lower performance-based investment results.

Net investment income increased $291 million to $1.48 billion in the first six months of 2024 compared to the same period of 2023, primarily due to higher market-based and performance-based investment results.

Market-based results continue to benefit from portfolio repositioning into higher yielding fixed income securities and higher investment balances.

Financial highlights

Investments totaled $67.86 billion as of March 31, 2024, increasing from $66.68 billion as of December 31, 2023.

Allstate shareholders’ equity was $18.64 billion as of March 31, 2024, increasing from $17.77 billion as of December 31, 2023, primarily due to net income, partially offset by dividends to shareholders and higher unrealized net capital losses on investments.

Book value per diluted common share (ratio of Allstate common shareholders’ equity to total common shares outstanding and dilutive potential common shares outstanding) was $62.27, an increase of 6.2% from $58.65 as of March 31, 2023, and an increase of 4.8% from $59.39 as of December 31, 2023.

Return on average Allstate common shareholders’ equity for the twelve months ended March 31, 2024 was 7.6%, an increase of 20.6 points from (13.0)% for the twelve months ended March 31, 2023.

The increase was primarily due to net income applicable to common shareholders for the trailing twelve-month period ending March 31, 2024 compared to a net loss for the twelve-month period ending March 31, 2023.

Pension and other postretirement remeasurement gains and losses We recorded pension and other postretirement remeasurement gains of $2 million in the first quarter of 2024, primarily related to an increase in the liability discount rate, partially offset by unfavorable asset performance compared to expected return on plan assets.

Investments totaled $70.60 billion as of June 30, 2024, increasing from $66.68 billion as of December 31, 2023.

Allstate shareholders’ equity was $18.59 billion as of June 30, 2024, increasing from $17.77 billion as of December 31, 2023, primarily due to net income, partially offset by dividends to shareholders and higher unrealized net capital losses on investments.

Book value per diluted common share (ratio of Allstate common shareholders’ equity to total common

shares outstanding and dilutive potential common shares outstanding) was $62.14, an increase of 21.2% from $51.29 as of June 30, 2023, and an increase of 4.6% from $59.39 as of December 31, 2023.

Return on average Allstate common shareholders’ equity for the twelve months ended June 30, 2024 was 19.3%, an increase of 36.5 points from (17.2)% for the twelve months ended June 30, 2023.

The increase was primarily due to net income applicable to common shareholders for the trailing twelve-month period ending June 30, 2024 compared to a net loss for the twelve-month period ending June 30, 2023.

46 www.allstate.com

Summarized consolidated financial results

Three months ended March 31,

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

($ in millions) 2024 2023 2024 2023

16 unchanged sentences

Net income (loss) 347 (1,375) 1,545 (1,696)

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

Net income (loss) attributable to noncontrolling interest 16 (23) (4) (24)

Net income (loss) attributable to Allstate 331 (1,352) 1,549 (1,672)

2 unchanged sentences

Segment highlights

Allstate Protection underwriting income was $903 million in the first quarter of 2024 compared to underwriting loss of $998 million in the first quarter of 2023 due to increased premiums earned and lower catastrophe losses, partially offset by higher non-catastrophe losses and advertising costs.

We continue to execute a comprehensive approach to restore auto margins, by raising rates in states not currently achieving acceptable returns, reducing operating expenses and continuing to enhance claims processes to manage loss costs.

Allstate Protection underwriting loss was $142 million in the second quarter of 2024 compared to underwriting loss of $2.09 billion in the second quarter of 2023 and underwriting income totaled $761 million in the first six months of 2024 compared to an underwriting loss of $3.09 billion in the first six months of 2023, primarily due to increased premiums earned and lower catastrophe losses, partially offset by higher advertising costs.

As auto profitability improves, we are increasing advertising and removing underwriting restrictions to support growth.

Catastrophe losses decreased $960 million to $731 million in the first quarter of 2024 compared to the first quarter of 2023.

Premiums written increased 11.9% to $13.18 billion in the first quarter of 2024 compared to the same period of 2023, reflecting higher premiums in both Allstate and National General brands.

Protection Services adjusted net income was $54 million in the first quarter of 2024 compared to $34 million in the first quarter of 2023.

The increase was primarily due to gross margin improvement at Allstate Protection Plans and improved claim severity at Allstate Roadside.

Premiums and other revenue increased 12.1% or $75 million in the first quarter of 2024 compared to the same period of 2023, primarily due to Allstate Protection Plans.

Allstate Health and Benefits adjusted net income was $56 million in the first quarter of 2024 and 2023.

Premiums and contract charges increased 3.2% to $478 million in the first quarter of 2024 compared to the first quarter of 2023, primarily due to growth in group health and individual health, partially offset by a decline in employer voluntary benefits.

First Quarter 2024 Form 10-Q 45

Catastrophe losses were $2.12 billion and $2.85 billion in the second quarter and first six months of 2024, respectively, compared to $2.70 billion and $4.39 billion in the second quarter and first six months of 2023, respectively.

Premiums written increased 13.1% to $14.28 billion and increased 12.5% to $27.46 billion in the second quarter and first six months of 2024, respectively, compared to the same periods of 2023, reflecting higher premiums in both Allstate and National General brands.

Protection Services adjusted net income was $55 million in the second quarter of 2024 compared to $41 million in the second quarter of 2023, primarily due to revenue growth at Allstate Protection Plans.

Adjusted net income was $109 million the first six months of

2024 compared to $75 million in the first six months of 2023, primarily due to growth at Allstate Protection Plans and improved claim severity and lower expenses at Allstate Roadside.

Premiums and other revenue increased 12.3% to $711 million and increased 12.2% to $1.41 billion in the second quarter and first six months of 2024, respectively, compared to the same periods of 2023, primarily due to Allstate Protection Plans.

Allstate Health and Benefits adjusted net income was $58 million in the second quarter of 2024 compared to adjusted net income of $57 million in the second quarter of 2023, primarily due to an increase in group health and employer voluntary benefits, partially offset by a decline in individual health.

Adjusted net income was $114 million in the first six months of 2024 compared to $113 million in the first six months of 2023, primarily due to an increase in group health.

Premiums and contract charges increased 4.6% to $474 million in the second quarter of 2024 and increased 3.9% to $952 million in the first six months of 2024 compared to the same periods of 2023, primarily due to growth in group health and individual health.

The increase in the first six months of 2024 was partially offset by a decline in employer voluntary benefits.

Second Quarter 2024 Form 10-Q 47

Property-Liability Operations

41 unchanged sentences

Underwriting results

Three months ended March 31,

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

($ in millions, except ratios) 2024 2023 2024 2023

6 unchanged sentences

Restructuring and related charges (1)

(15) (26) (22) (47)

Amortization of purchased intangibles (51) (58) (102) (115)

Underwriting income (loss) $ 898 $ (1,001)

Underwriting (loss) income $ (145) $ (2,094) $ 753 $ (3,095)

Catastrophe losses

1 unchanged sentence

Catastrophe reserve reestimates (2)

(138) 31 (300) (11)

Total catastrophe losses $ 2,120 $ 2,696 $ 2,851 $ 4,387

Non-catastrophe reserve reestimates (2)

$ (64) $ 182 $ (53) $ 209

Prior year reserve reestimates (2)

(202) 213 (353) 198

GAAP operating ratios

1 unchanged sentence

Expense ratio (3)

21.3 20.5 20.9 20.8

Combined ratio 101.1 117.6 97.1 113.1

3 unchanged sentences

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

0.1 0.2 0.1 0.2

Effect of amortization of purchased intangibles on combined ratio 0.4 0.5 0.4 0.5

Effect of Run-off Property-Liability business on combined ratio — 0.1 — —

(1) Restructuring and related charges for 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.

(1) Restructuring and related charges for the second quarter and first six months of 2024 primarily relate to implementing a new phase of the organizational transformation component of the Transformative Growth plan.

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

1 unchanged sentence

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

First Quarter 2024 Form 10-Q 47

Second Quarter 2024 Form 10-Q 49

Segment Results Allstate Protection

1 unchanged sentence

Underwriting results

Three months ended March 31,

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

($ in millions) 2024 2023 2024 2023

7 unchanged sentences

Amortization of purchased intangibles (51) (58) (102) (115)

Underwriting income (loss) $ 903 $ (998)

Underwriting (loss) income $ (142) $ (2,092) $ 761 $ (3,090)

Catastrophe losses $ 2,120 $ 2,696 $ 2,851 $ 4,387

Underwriting income was $903 million in the first quarter of 2024 compared to underwriting loss of $998 million in the first quarter of 2023 due to increased premiums earned and lower catastrophe losses, partially offset by higher non-catastrophe losses and advertising costs.

Underwriting loss was $142 million in the second quarter of 2024 and underwriting income was $761 million in the first six months of 2024 compared to underwriting loss of $2.09 billion and $3.09 billion in the second quarter and first six months of 2023, respectively, due to increased premiums earned and lower catastrophe losses, partially offset by higher advertising costs.

As auto profitability improves, we are increasing advertising and removing underwriting restrictions to support growth.

1 unchanged sentence

($ in millions)

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

($ in millions)

50 www.allstate.com

Allstate Protection Segment Results

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

1 unchanged sentence

($ in millions) 2024 2023 2024 2023 2024 2023

Three months ended March 31,

Three months ended June 30,

$ 231 $ (546) $ 139 $ (132) $ 370 $ (678)

8 unchanged sentences

Total $ (189) $ (1,847) $ 43 $ (248) $ (142) $ (2,092)

Six months ended June 30,

$ 492 $ (878) $ 229 $ (146) $ 721 $ (1,024)

310 (1,703) (121) (138) 189 (1,841)

Other personal lines (51) (160) 3 1 (48) (159)

Commercial lines (213) (124) 5 3 (208) (121)

Other business lines (1)

63 46 37 4 100 50

Answer Financial 7 5

Total $ 601 $ (2,819) $ 153 $ (276) $ 761 $ (3,090)

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

48 www.allstate.com

Allstate Protection Segment Results

Second Quarter 2024 Form 10-Q 51

Segment Results Allstate Protection

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

5 unchanged sentences

($ in millions) 2024 2023 2024 2023 2024 2023

Three months ended March 31,

Three months ended June 30,

Auto $ 7,488 $ 6,821 $ 1,796 $ 1,448 $ 9,284 $ 8,269

4 unchanged sentences

Total premiums written $ 11,575 $ 10,525 $ 2,704 $ 2,095 $ 14,279 $ 12,620

Six months ended June 30,

Auto $ 14,887 $ 13,647 $ 3,754 $ 2,971 $ 18,641 $ 16,618

Homeowners 5,866 5,147 853 768 6,719 5,915

Other personal lines 1,197 1,113 308 110 1,505 1,223

Commercial lines 134 323 173 104 307 427

Other business lines — — 290 220 290 220

Total premiums written $ 22,084 $ 20,230 $ 5,378 $ 4,173 $ 27,462 $ 24,403

Premiums earned by brand and by line of business

1 unchanged sentence

($ in millions) 2024 2023 2024 2023 2024 2023

Three months ended March 31,

Three months ended June 30,

Auto $ 7,363 $ 6,772 $ 1,716 $ 1,349 $ 9,079 $ 8,121

4 unchanged sentences

Total premiums earned $ 10,897 $ 10,002 $ 2,442 $ 1,919 $ 13,339 $ 11,921

Six months ended June 30,

Auto $ 14,536 $ 13,432 $ 3,321 $ 2,597 $ 17,857 $ 16,029

Homeowners 5,628 5,025 781 668 6,409 5,693

Other personal lines 1,155 1,061 205 88 1,360 1,149

Commercial lines 182 336 145 98 327 434

Other business lines — — 286 251 286 251

Total premiums earned $ 21,501 $ 19,854 $ 4,738 $ 3,702 $ 26,239 $ 23,556

Reconciliation of premiums written to premiums earned

Three months ended March 31,

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

($ in millions) 2024 2023 2024 2023

1 unchanged sentence

(Increase) decrease in unearned premiums

(921) (753) (1,158) (880)

Other (19) 54 (65) 33

Total premiums earned $ 13,339 $ 11,921 $ 26,239 $ 23,556

52 www.allstate.com

Allstate Protection Segment Results

Policies in force by brand and by line of business

1 unchanged sentence

PIF (thousands) 2024 2023 2024 2023 2024 2023

As of March 31,

As of June 30,

Auto 19,877 20,821 5,247 4,699 25,124 25,520

3 unchanged sentences

Total 31,194 32,203 6,483 5,782 37,677 37,985

Auto insurance premiums written increased 12.1% or $1.01 billion in the first quarter of 2024 compared to the first quarter of 2023 primarily due to the following factors:

Auto insurance premiums written increased 12.3% or $1.02 billion in the second quarter of 2024 compared to the second quarter of 2023 and 12.2% or $2.02 billion in the first six months of 2024 compared to the first six months of 2023, primarily due to the following factors:

• Increased average premiums driven by rate increases.

In the three months ended March 31, 2024:

– Rate increases of 8.4% were taken for Allstate brand in 27 locations, resulting in total Allstate brand insurance premium impact of 2.4%

– Rate increases of 9.6% were taken for National General brand in 27 locations, resulting in total

National General brand insurance premium impact of 4.1%

• We expect to continue to pursue rate increases for both Allstate and National General brands in states currently not achieving acceptable returns to offset increases in loss costs throughout 2024

• PIF decreased 2.0% or 526 thousand to 25,207 thousand as of March 31, 2024 compared to March 31, 2023

• Renewal ratio increased 0.3 points in the first quarter compared to the first quarter of 2023

First Quarter 2024 Form 10-Q 49

Segment Results Allstate Protection

In the six months ended June 30, 2024:

– Rate increases of 7.9% were taken for Allstate brand in 42 locations, resulting in total estimated Allstate brand insurance premium impact of 3.4%

– Rate increases of 11.2% were taken for National General brand in 38 locations, resulting in total estimated National General brand insurance premium impact of 6.1%

• We expect to continue to pursue targeted rate increases for both Allstate and National General brands in states currently not achieving acceptable

returns to offset increases in loss costs throughout 2024

• PIF decreased 1.6% or 396 thousand to 25,124 thousand as of June 30, 2024 compared to June 30, 2023

• Renewal ratio increased 0.2 points and 0.3 points in the second quarter and the first six months of 2024, respectively, compared to the second quarter and first six months of 2023

• Increased new issued applications driven by growth in all channels

• The impact of the ongoing rate increases and underwriting restrictions have and may continue to

have an adverse effect on the renewal ratio, premiums and future PIF growth

• We have removed underwriting restrictions in areas that represent the majority of Allstate brand countrywide premiums, which is expected to increase premiums written and PIF

Auto premium measures and statistics

Three months ended March 31,

2024 2023 Change

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

2024 2023 Change 2024 2023 Change

New issued applications (thousands)

5 unchanged sentences

Allstate brand renewal ratio (%) 85.7 85.5 0.2 85.9 85.6 0.3

Homeowners insurance premiums written increased 13.4% or $340 million in the first quarter of 2024 compared to the first quarter of 2023 primarily due to the following factors:

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

• In the three months ended March 31, 2024, rate increases of 11.7% were taken for Allstate brand in 15 locations, resulting in total Allstate brand insurance premium impact of 3.4%

Homeowners insurance premiums written increased 13.7% or $464 million in the second quarter of 2024 compared to the second quarter of 2023 and increased 13.6% or $804 million in the first six months of 2024 compared to the first six months of 2023, primarily due to the following factors:

• Higher Allstate brand average premiums from implemented rate increases, combined with policies in force growth

• In the six months ended June 30, 2024, rate increases of 11.6% were taken for Allstate brand in 25 locations, resulting in total estimated Allstate brand insurance premium impact of 4.5%

• National General policy growth may be negatively impacted in future quarters as we improve certain underwriting margins to targeted levels through underwriting and rate actions.

In the three months ended March 31, 2024, rate increases of 14.0% were taken for National General brand in 12 locations, resulting in total National General brand insurance premium impact of 1.6%

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

In the six months ended June 30, 2024, rate increases of 14.4% were taken for National General brand in 22 locations,

resulting in total estimated National General brand insurance premium impact of 3.9%

• Increased new issued applications driven by growth in the exclusive agency and direct channels

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

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

We are no longer writing new homeowners business in California, New Jersey and Florida, and are non-renewing certain policies in Florida, which have and will continue to negatively impact premiums

• We may not be able to grow in certain states without regulatory or legislative reforms that enable customers to be provided coverage at appropriate risk adjusted returns

• The impact of the ongoing rate increases has and may continue to have an adverse effect on the renewal ratio, premiums and future PIF growth

Second Quarter 2024 Form 10-Q 53

Segment Results Allstate Protection

Homeowners premium measures and statistics

Three months ended March 31,

2024 2023 Change

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

2024 2023 Change 2024 2023 Change

New issued applications (thousands)

5 unchanged sentences

Allstate brand renewal ratio (%) 87.2 86.3 0.9 87.2 86.3 0.9

Other personal lines premiums written increased 20.4% or $112 million in the first quarter of 2024 compared to the first quarter of 2023 primarily due to increases in landlords policies for Allstate brand.

Other personal lines premiums written increased 25.2% or $170 million in the second quarter of 2024 compared to the second quarter of 2023 and increased 23.1% or $282 million in the first six months of 2024 compared to the first six months of 2023 primarily due to increases in involuntary auto policies purchased from other carriers for National General and landlords policies for Allstate brand.

We are no longer writing condominium new business in California and Florida, and we are non-renewing certain policies in Florida, which may negatively impact premiums.

Commercial lines premiums written decreased 30.8% or $70 million in the first quarter of 2024 compared to the first quarter of 2023 due to profitability actions taken to no longer offer coverage

to transportation network companies unless the contracts utilize telematics-based pricing and the Allstate brand exiting traditional commercial insurance in five states, which will continue to negatively impact premiums.

Other business lines premiums written increased 8.0% or $10 million in the first quarter of 2024 compared to the first quarter of 2023.

50 www.allstate.com

Allstate Protection Segment Results

Commercial lines premiums written decreased 25.0% or $50 million in the second quarter of 2024 compared to the second quarter of 2023 and decreased 28.1% or $120 million in the first six months of 2024 compared to the first six months of 2023 primarily due to the strategic decision for the Allstate brand to stop writing new business and non-renew

certain policies.

We are committed to offering comprehensive commercial products to customers through our exclusive agency and independent agency channels, with solutions offered by the National General brand and NEXT Insurance.

Other business lines premiums written increased 63.2% or $60 million in the second quarter of 2024 compared to the second quarter of 2023 and increased 31.8% or $70 million in the first six months of 2024 compared to the first six months of 2023 due to growth in the lender-placed business.

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

4 unchanged sentences

2024 2023 2024 2023 2024 2023

Three months ended March 31,

Three months ended June 30,

74.2 87.9 21.7 20.4 95.9 108.3

6 unchanged sentences

Impact of restructuring and related charges 0.1 0.2 0.1 0.2

Six months ended June 30,

Auto 74.8 85.7 21.2 20.7 96.0 106.4

Homeowners 75.6 111.9 21.5 20.4 97.1 132.3

Other personal lines 88.9 93.6 14.6 20.2 103.5 113.8

Commercial lines 136.4 103.7 27.2 24.2 163.6 127.9

Other business lines 46.8 47.4 18.2 32.7 65.0 80.1

Total 76.2 92.3 20.9 20.8 97.1 113.1

Impact of amortization of purchased intangibles 0.4 0.5 0.4 0.5

Impact of restructuring and related charges 0.1 0.2 0.1 0.2

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

54 www.allstate.com

Allstate Protection Segment Results

Loss ratios by line of business

2 unchanged sentences

2024 2023 2024 2023 2024 2023 2024 2023

Three months ended March 31,

Three months ended June 30,

Auto 74.2 87.9 3.9 4.2 (2.0) 1.2 (0.1) (0.2)

4 unchanged sentences

Total 79.8 97.0 15.9 22.6 (1.5) 1.8 (1.0) 0.3

(1) The ten-year average effect of catastrophe losses on the total combined ratio was 7.1 points in the first quarter of 2024.

Auto underwriting results

For the periods ended

Six months ended June 30,

Auto 74.8 85.7 2.6 2.7 (1.4) 0.5 (0.1) (0.3)

Homeowners 75.6 111.9 33.9 63.9 (5.9) 1.3 (4.3) 0.8

Other personal lines 88.9 93.6 13.4 24.0 8.3 0.5 (0.1) (1.1)

Commercial lines 136.4 103.7 1.8 3.9 48.3 7.4 (1.6) 0.7

Other business lines 46.8 47.4 10.1 7.2 1.4 4.4 — —

Total 76.2 92.3 10.9 18.6 (1.4) 0.8 (1.1) (0.1)

(1) The ten-year average effect of catastrophe losses on the total combined ratio was 13.5 points in the second quarter of 2024.

Auto underwriting quarterly results

($ in millions, except ratios) Q2

15 unchanged sentences

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

Auto loss ratio decreased 8.0 points in the first quarter of 2024 compared to the same period of 2023 driven by increased earned premiums.

Estimated report year 2024 incurred claim severity for Allstate brand increased compared to report year 2023 for major coverages due to higher part costs and labor rates for repairable vehicles, a higher mix of total losses, an increase in claims with attorney representation, higher medical consumption, and inflation.

Auto loss ratio decreased 13.7 and 10.9 points in the second quarter and first six months of 2024, respectively, compared to the same periods of 2023 driven by increased earned premiums.

Estimated report year 2024 incurred claim severity for Allstate brand increased compared to report year 2023 for major coverages due to higher repair costs, a higher mix of total losses, an increase in claims with attorney representation, higher medical consumption, and

Gross claim frequency decreased relative to the prior year.

We continue to enhance our claims practices to manage loss costs by increasing resources and expanding re-inspections, accelerating resolution of bodily injury claims, and negotiating improved vendor services and parts agreements.

First Quarter 2024 Form 10-Q 51

Segment Results Allstate Protection

Homeowners loss ratio decreased 38.2 points in the first quarter of 2024 compared to the same period of 2023, primarily due to lower catastrophe losses and increased premiums earned.

Gross claim frequency decreased in the first quarter of 2024 compared to the same period of 2023 due to fewer wind/hail and fire claims reported.

Paid claim severity increased in the first quarter of 2024 compared to the same period of 2023 due to inflationary loss cost pressure driven by increases in labor and materials costs.

Homeowners loss ratio decreased 34.7 and 36.3 points in the second quarter and first six months of 2024, respectively, compared to the same periods of 2023, primarily due to lower catastrophe losses and increased premiums earned.

Gross claim frequency decreased in the second quarter and first six months of 2024 compared to the same periods of 2023 due to fewer fire claims reported.

Paid claim severity increased in the second quarter and first six months of 2024 compared to the same periods of 2023 due to inflationary loss cost pressure driven by increases in labor and materials costs.

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

Other personal lines loss ratio decreased 8.2 points in the first quarter of 2024 compared to the first quarter of 2023 primarily due to increased premiums earned and lower catastrophe losses, partially offset by increased severity.

Commercial lines loss ratio increased 13.2 points in the first quarter of 2024 compared to the same period of 2023, primarily due to premiums earned decreasing as a result of profitability actions taken and higher unfavorable reserve reestimates related to the shared economy business.

Other business lines loss ratio increased 1.2 points in the first quarter of 2024 compared to the first quarter of 2023, primarily due to higher non-catastrophe losses and unfavorable prior year reserve reestimates.

Catastrophe losses decreased $960 million to $731 million in the first quarter of 2024 compared to the first quarter of 2023 primarily due to a decrease in number of events and lower losses per event compared to historically high levels in the prior year.

threshold of average claims in a specific area, occurring within a certain amount of time following the event.

Other personal lines loss ratio decreased 1.5 and 4.7 points in the second quarter and first six months of 2024, respectively, compared to the same periods of 2023 primarily due to increased premiums earned and lower catastrophe losses, partially offset by increased severity.

Second Quarter 2024 Form 10-Q 55

Segment Results Allstate Protection

Commercial lines loss ratio increased 53.4 and 32.7 points in the second quarter and first six months of 2024, respectively, compared to the same periods of 2023, primarily due to higher unfavorable reserve reestimates related to the shared economy business and premiums earned decreasing as a result of the strategic decision for the Allstate brand to stop writing new business and non-renew certain policies.

Other business lines loss ratio decreased 2.3 and 0.6 points in the second quarter and first six months of 2024, respectively, compared to the same periods of 2023, primarily due to increased premiums earned and favorable reserve development, partially offset by higher losses.

Catastrophe losses decreased $576 million to $2.12 billion in the second quarter of 2024 compared to the second quarter of 2023 and decreased $1.54 billion to $2.85 billion in the first six months of 2024 compared to the first six months of 2023, primarily due to lower losses per event compared to historically high levels in the prior year.

Favorable prior year reserve reestimates of $138 million and $300 million for the second quarter and first six months of 2024, respectively, were primarily due to reserve reestimates in homeowners lines for 2023 events.

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

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

6 unchanged sentences

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

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

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

Catastrophe losses by the type of event

Three months ended March 31,

($ in millions) Number of events 2024 Number of events 2023

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

($ in millions) Number of events 2024 Number of events 2023 Number of events 2024 Number of events 2023

Tornadoes 1 $ 53 1 $ 25 1 $ 53 3 $ 138

3 unchanged sentences

Prior year reserve reestimates (138) 31 (300) (11)

Prior quarter reserve reestimates 39 (244) — —

Total catastrophe losses 43 $ 2,120 42 $ 2,696 64 $ 2,851 70 $ 4,387

Catastrophe reinsurance The catastrophe reinsurance program is part of our catastrophe management strategy, which is intended to provide our shareholders with an acceptable return on the risks assumed in our personal lines business, reduce earnings variability, and provide protection to our customers.

Our current catastrophe reinsurance program supports our risk and return framework which incorporates our robust economic capital model and is

informed by catastrophe risk models including hurricanes, earthquakes and wildfires and adjusts based on premium and insured value growth.

As of March 31, 2024, the modeled 1-in-100 probable maximum loss for hurricane, wildfire and earthquake perils is approximately $2.5 billion, net of reinsurance.

Our current catastrophe reinsurance program supports our risk and return framework which incorporates our robust economic capital model and is informed by catastrophe risk models including hurricanes, earthquakes and wildfires and adjusts based on premium and insured value growth.

As of June 30, 2024, the modeled 1-in-100 probable

maximum loss for hurricane, wildfire and earthquake perils is approximately $2.9 billion, net of reinsurance.

We continually review our aggregate risk appetite and the cost and availability of reinsurance to optimize the risk and return profile of this exposure.

During the second quarter of 2024, we completed the placement of our 2024-2025 Florida Excess Catastrophe Reinsurance Program (“Florida program”) and the National General Lender Services Standalone Program.

Additionally, we placed one single-year term contract as part of our 2024-2025 Nationwide Excess Catastrophe Reinsurance Program, providing $90

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Allstate Protection Segment Results

We have placed coverage related to our 2024-2025 Nationwide Excess Catastrophe Reinsurance Program (the “Nationwide Program”), the National General Reciprocal Excess Catastrophe Program, the Kentucky Earthquake Excess Catastrophe Reinsurance Contract, and the Canada Catastrophe Excess Reinsurance Contract.

The Florida Excess Catastrophe Reinsurance Program and the National General Lender Services Program will be completed in the second quarter of 2024.

We are continuing to evaluate complimentary coverage that, if purchased, we expect to have in place by June 1, 2024.

Similar to our 2023 program, our 2024 program includes coverage for losses to personal lines property, personal lines automobile, commercial lines property or commercial lines automobile arising out of multiple perils, in addition to hurricanes and earthquakes.

The Nationwide Program provides coverage up to $7.90 billion of loss less retentions of $500 million to $1.00 billion, and is subject to the percentage of reinsurance placed in each of its agreements.

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

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

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

• Core traditional market multi-year and per occurrence agreements provide limits totaling $5.00 billion for catastrophe losses arising out of multiple perils and are comprised of the following:

– Multi-year contracts providing combined $3.25 billion of placed limits exhausting at $4.25 billion, with a 5% co-participation and one annual reinstatement.

One third of the contracts are structured with the first $250 million in excess of $500 million retained by the Company with remaining contracts attaching at a $1.00 billion retention.

– Two eight-year term contracts providing combined $236 million of placed limits, both with a 5% co-participation and one reinstatement of limits over each contract’s term.

– Five single-year contracts providing combined $1.52 billion of placed limits filling capacity around the multi-year and ILS placements, with two contracts providing one reinstatement of limits.

• ILS placements provide $1.95 billion of placed limits, with no reinstatement of limits, and are comprised of the following:

– Six contracts providing occurrence coverage of $1.30 billion of placed limits, reinsuring

losses in all states except Florida caused by named storms, earthquakes and fire following earthquakes, severe weather, wildfires, and other naturally occurring or man-made events determined to be a catastrophe by the Company.

– Two contracts providing occurrence and aggregate coverage of $325 million of placed limits, also provide that for each annual period beginning April 1, Allstate declared catastrophes to personal lines property and automobile business can be aggregated to erode the aggregate retention and qualify for coverage under the aggregate limits.

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

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

National General Reciprocal Excess Catastrophe Reinsurance Contracts are placed in the traditional market and provide $445 million of placed limits, subject to a $15 million retention, with one reinstatement of limits.

Kentucky Earthquake Excess Catastrophe Reinsurance Contract is placed in the traditional market and provides $27 million of placed limits, subject to a $2 million retention, with one reinstatement of limits.

Canada Catastrophe Excess of Loss Reinsurance Contract is placed in the traditional market and provides CAD 355 million of placed limits, subject to a CAD 75 million retention, with one reinstatement of limits.

The total cost of our property catastrophe reinsurance programs, excluding reinstatement premiums, during the first quarter of 2024 was $286 million compared to $219 million in the first quarter of 2023.

million of placed limit in excess of a $7.70 billion retention.

Florida program updates Our 2024 Florida program provides coverage for property policies of Castle Key Insurance Company and certain affiliate companies for Florida catastrophe events up to $890 million of loss less a $30 million retention.

The Florida program includes reinsurance agreements placed in the traditional market, the Florida Hurricane Catastrophe Fund (“FHCF”) and the insurance-linked securities (“ILS”) market as follows:

• Traditional market placements comprise reinsurance limits for losses to personal lines property in Florida arising out of multiple perils.

These contracts provide a combined $310 million of limits, with a portion of the traditional market placements providing coverage for perils not covered by the FHCF contracts, which only cover hurricanes.

• Three FHCF contracts provide $206 million of limits for qualifying losses to personal lines property in Florida caused by storms the National Hurricane Center declares to be hurricanes.

The three contracts are 90% placed.

• ILS placements provide $625 million of reinsurance limits for qualifying losses to personal lines property in Florida caused by a named storm event, a severe weather event, an earthquake event, a fire event, a volcanic eruption event, or a meteorite impact event.

National General Lender Services Standalone Program is placed in the traditional market and provides $265 million of coverage, subject to a $70 million retention, with one reinstatement of limits.

Inuring contracts include the National General FHCF contract providing $71 million of limits in excess of a $36 million retention, 90% placed.

For a complete summary of the 2024 reinsurance placement, please read this in conjunction with the discussion and analysis in Part I.

Management’s Discussion and Analysis - Allstate Protection Segment Results, Catastrophe Reinsurance of The Allstate Corporation Form 10-Q for the quarterly period ended March 31, 2024.

The total cost of our property catastrophe reinsurance programs, excluding reinstatement premiums, during the second quarter and first six months of 2024 was $296 million and $582 million, respectively, compared to $242 million and $461 million in the second quarter and first six months of 2023, respectively.

Catastrophe placement premiums reduce net written and earned premium with approximately 79% of the reduction related to homeowners premium.

Prior year reserve reestimates Favorable reserve reestimates, including catastrophes, were $155 million in the first quarter of 2024 primarily due to favorable reserve reestimates in homeowners lines and physical damage coverages in personal auto lines, partially offset by unfavorable reserve reestimates in other personal lines and commercial lines.

Prior year reserve reestimates Favorable reserve reestimates, including catastrophes, were $204 million and $359 million in the second quarter and first six months of 2024, respectively, primarily due to favorable reserve reestimates in homeowners lines and personal auto lines, partially offset by unfavorable reserve reestimates in commercial lines and other personal lines.

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

First Quarter 2024 Form 10-Q 53

Segment Results Allstate Protection

Prior year reserve reestimates

Three months ended March 31,

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

Prior year reserve

1 unchanged sentence

combined ratio (2)

Prior year reserve

reestimates (1)

combined ratio (2)

($ in millions, except ratios) 2024 2023 2024 2023 2024 2023 2024 2023

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

Expense ratio decreased 0.5 points in the first quarter of 2024 compared to the first quarter of 2023, primarily due to higher earned premium growth relative to fixed costs and lower employee-related costs, partially offset by an increase in advertising costs.

Second Quarter 2024 Form 10-Q 57

Segment Results Allstate Protection

Expense ratio increased 0.8 and 0.1 points in the second quarter and first six months of 2024, respectively, compared to the second quarter and first six months of 2023, primarily due to an increase in advertising costs, partially offset by higher earned premium growth relative to fixed costs.

Impact of specific costs and expenses on the expense ratio

Three months ended March 31,

($ in millions, except ratios) 2024 2023 Change

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

($ in millions, except ratios) 2024 2023 Change 2024 2023 Change

Amortization of DAC $ 1,673 $ 1,496 $ 177 $ 3,281 $ 2,948 $ 333

Advertising expense 402 113 289 685 271 414

Amortization of purchased intangibles 51 57 (6)

Other costs and expenses, net of other revenue 693 746 (53) 1,396 1,513 (117)

Amortization of purchased intangibles 51 58 (7) 102 115 (13)

Restructuring and related charges 15 26 (11) 22 47 (25)

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Advertising expense 3.0 0.9 2.1 2.6 1.2 1.4

Other costs and expenses 5.5 6.6 (1.1)

Other costs and expenses, net of other revenue

5.2 6.3 (1.1) 5.3 6.4 (1.1)

Subtotal 20.8 19.8 1.0 20.4 20.1 0.3

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Underwriting results

($ in millions) Three months ended March 31,

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

2024 2023 2024 2023

Claims and claims expense $ (2) $ (1) $ (6) $ (3)

Operating costs and expenses (1) (1) (2) (2)

Underwriting loss

Underwriting income (loss)

$ (3) $ (2) $ (8) $ (5)

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

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

($ in millions) June 30, 2024 December 31, 2023

Asbestos claims

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

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

($ in millions) June 30, 2024 December 31, 2023

Direct excess commercial insurance

22 unchanged sentences

Net reserves $ 1,400 $ 1,444

First Quarter 2024 Form 10-Q 55

Second Quarter 2024 Form 10-Q 59

Segment Results Run-off Property-Liability

Percentage of gross and ceded reserves by case and IBNR

March 31, 2024 December 31, 2023

Percentage of gross and ceded reserves by case and incurred but not reported (“IBNR”)

June 30, 2024 December 31, 2023

Case IBNR Case IBNR

8 unchanged sentences

Ceded 87 13 83 17

(1) Approximately 70% and 68% of gross case reserves as of March 31, 2024 and December 31, 2023, respectively, are subject to settlement agreements.

(2) Approximately 75% and 72% of ceded case reserves as of March 31, 2024 and December 31, 2023, respectively, are subject to settlement agreements.

(1) Approximately 64% and 68% of gross case reserves as of June 30, 2024 and December 31, 2023, respectively, are subject to settlement agreements.

(2) Approximately 70% and 72% of ceded case reserves as of June 30, 2024 and December 31, 2023, respectively, are subject to settlement agreements.

Gross payments from case reserves by type of exposure

($ in millions) Three months ended March 31,

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

2024 2023 2024 2023

Direct excess commercial insurance

$ 16 $ 9 $ 32 $ 32

(7) (4) (13) (9)

Assumed reinsurance coverage

Ceded (2) (2) (2) (3)

Direct primary commercial insurance

(1) In the first quarter of 2024 and 2023, 85% and 87% of payments, respectively, related to settlement agreements.

(2) In the first quarter of 2024 and 2023, 89% and 92% of payments, respectively, related to settlement agreements.

Total net reserves as of March 31, 2024, included $755 million or 53% of estimated IBNR reserves compared to $762 million or 53% of estimated IBNR reserves as of December 31, 2023.

Total gross payments were $23 million for the first quarter of 2024 compared to $29 million for the first quarter of 2023 .

Ceded (1) — (1) —

(1) In the second quarter and first six months of 2024 87% and 86% of payments related to settlement agreements, respectively, compared to 79% and 85% of the second quarter and first six months of 2023, respectively.

(2) In the second quarter and first six months of 2024 96% and 93% of payments related to settlement agreements, respectively, compared to 74% and 87% of the second quarter and first six months of 2023, respectively.

Total net reserves as of June 30, 2024, included $698 million or 50% of estimated IBNR reserves compared to $762 million or 53% of estimated IBNR reserves as of December 31, 2023.

Total gross payments were $39 million and $62 million for the second quarter and first six months of 2024, respectively, compared to $24 million and $53 million for the second quarter and first six months of 2023, respectively .

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

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

Reinsurance collections were $11 million for the first quarter of 2024 compared to $15 million for the first quarter of 2023.

Reinsurance collections were $15 million and $26 million for the second quarter and first six months of 2024, respectively, compared to $9 million and $24 million for the second quarter and first six months of 2023, respectively.

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2 unchanged sentences

Summarized financial information

($ in millions) Three months ended March 31,

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

2024 2023 2024 2023

Premiums written $ 676 $ 658 $ 1,303 $ 1,277

9 unchanged sentences

Income tax expense on operations (19) (15) (36) (26)

noncontrolling interest — —

Adjusted net income $ 55 $ 41 $ 109 $ 75

5 unchanged sentences

Adjusted net income $ 55 $ 41 $ 109 $ 75

Policies in force

Allstate Protection Plans 151,172 138,172

2 unchanged sentences

Allstate Identity Protection 2,510 3,222

Policies in force as of March 31 (in thousands) 155,440 144,172

Policies in force as of June 30 (in thousands) 158,019 145,764

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

Adjusted net income increased 58.8% or $20 million in the first quarter of 2024 compared to the first quarter of 2023, due to gross margin improvement at Allstate Protection Plans and improved claim severity at Allstate Roadside.

Premiums written increased 1.3% or $8 million in the first quarter of 2024 compared to the first quarter of 2023, primarily due to growth at Allstate Protection Plans, partially offset by lower sales at Allstate Dealer Services.

PIF increased 7.8% or 11 million as of March 31, 2024 compared to March 31, 2023 due to growth at Allstate Protection Plans.

Other revenue increased 1.2% or $1 million in the first quarter of 2024 compared to the first quarter of 2023, primarily due to higher advertising and Mobility Intelligence product sales at Arity.

Intersegment premiums and service fees increased 6.1% or $2 million in the first quarter of 2024 compared to the first quarter of 2023, driven by increased hardware revenue at Arity.

Claims and claims expense increased 3.3% or $5 million in the first quarter 2024 compared to the first quarter of 2023, primarily driven by growth at Allstate Protection Plans, partially offset by lower claim severity at Allstate Roadside.

Amortization of DAC increased 15.1% or $38 million in the first quarter of 2024 compared to the first quarter of 2023, driven by growth at Allstate Protection Plans.

Operating costs and expenses increased 5.9% or $13 million in the first quarter of 2024 compared to the first quarter of 2023, primarily due to growth at Allstate Protection Plans.

First Quarter 2024 Form 10-Q 57

Segment Results Allstate Health and Benefits

Adjusted net income increased 34.1% or $14 million in the second quarter of 2024 compared to the second quarter of 2023, primarily due to revenue growth at Allstate Protection Plans.

Adjusted net income increased 45.3% or $34 million in the first six months of 2024 compared to the same period of 2023, due to growth at Allstate Protection Plans and improved claim severity and lower expenses at Allstate Roadside.

Premiums written increased 2.7% or $18 million in the second quarter of 2024 and increased 2.0% or $26 million in the first six months of 2024 compared to the same periods of 2023, primarily due to growth at Allstate Protection Plans, partially offset by lower sales at Allstate Dealer Services and Allstate Roadside.

PIF increased 8.4% or 12 million as of June 30, 2024 compared to June 30, 2023 due to growth at Allstate Protection Plans.

Other revenue increased 16.7% or $14 million in the second quarter of 2024 and increased 8.9% or $15 million in the first six months of 2024 compared to the same periods of 2023, primarily due to higher revenue from increased customer advertising at Arity.

Intersegment premiums and service fees increased 11.4% or $4 million in the second quarter of 2024 and increased 8.8% or $6 million in the first six months of 2024 compared to the same periods of 2023, driven by increased software revenue at Arity.

Second Quarter 2024 Form 10-Q 61

Segment Results Protection Services

Claims and claims expense increased 2.6% or $4 million in the second quarter 2024 and increased 2.9% or $9 million in the first six months of 2024 compared to the same periods of 2023, primarily driven by growth at Allstate Protection Plans, partially offset by lower claim severity at Allstate Roadside.

Amortization of DAC increased 14.3% or $37 million in the second quarter of 2024 and increased 14.7% or $75 million in the first six months of 2024 compared to the same periods of 2023, driven by growth at Allstate Protection Plans.

Operating costs and expenses increased 12.8% or $28 million in the second quarter of 2024 and increased 9.3% or $41 million in the first six months of 2024 compared to the same periods of 2023, primarily due to growth at Allstate Protection Plans and Arity, partially offset by lower expenses at Allstate Roadside.

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Allstate Health and Benefits Segment Results

Allstate Health and Benefits Segment

Summarized financial information

Three months ended March 31,

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

($ in millions) 2024 2023 2024 2023

10 unchanged sentences

Benefit ratio (1)

59.7 55.0 59.9 55.2

Policies in force

Employer voluntary benefits (2)

1 unchanged sentence

Individual health (4)

Policies in force as of March 31 (in thousands) 4,193 4,339

(1) Benefit ratio is calculated as accident, health and other policy benefits less interest credited to contractholder funds of $9 million and $8 million for the three months ended March 31, 2024 and 2023, respectively, divided by premiums and contract charges.

Policies in force as of June 30 (in thousands) 4,181 4,273

(1) Benefit ratio is calculated as accident, health and other policy benefits less interest credited to contractholder funds of $8 million and $9 million for the three months ended June 30, 2024 and 2023, respectively, and $17 million for both the six months ended June 30, 2024 and 2023, divided by premiums and contract charges.

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

1 unchanged sentence

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

Adjusted net income in the first quarter of 2024 was comparable to the first quarter of 2023 due to an increase in individual health, offset by a decline in employer voluntary benefits.

Premiums and contract charges increased 3.2% or $15 million in the first quarter of 2024 compared to the first quarter of 2023, primarily due to growth in group health and individual health, partially offset by a decline in employer voluntary benefits.

Adjusted net income increased $1 million in the second quarter of 2024 compared to the same period of 2023, primarily due to an increase in group health and employer voluntary benefits, partially offset by a decline in individual health.

Adjusted net income increased $1 million in the first six months of 2024 compared to the same period of 2023, primarily due to an increase in group health.

Premiums and contract charges increased 4.6% or $21 million in the second quarter of 2024 and increased 3.9% or $36 million in the first six months of 2024 compared to the same periods of 2023, primarily due to growth in group health and individual health.

The increase in the first six months of 2024 was partially offset by a decline in employer voluntary benefits.

Premiums and contract charges by line of business

Three months ended March 31,

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

($ in millions) 2024 2023 2024 2023

3 unchanged sentences

Premiums and contract charges $ 474 $ 453 $ 952 $ 916

Other revenue increased $33 million in the first quarter of 2024 compared to the first quarter of 2023, primarily due to an increase in individual health and group health administrative fees.

Accident, health and other policy benefits increased 11.7% or $31 million in the first quarter of 2024 compared to the first quarter of 2023, primarily from growth in group health and individual health and higher benefit utilization.

Other revenue increased $20 million in the second quarter of 2024 and increased $53 million in the first six months of 2024 compared to the same periods of 2023, primarily due to an increase in individual health and group health administrative fees.

Accident, health and other policy benefits increased 12.8% or $33 million in the second quarter of 2024 and increased 12.2% or $64 million in the first six months of 2024 compared to the same periods of 2023, primarily from growth in group health and individual health and higher benefit utilization.

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

Benefit ratio increased 4.5 points to 60.0 in the first quarter of 2024 compared to 55.5 in the first quarter of 2023 primarily due to higher benefit utilization across all lines of business.

Amortization of DAC increased 2.4% or $1 million in the first quarter of 2024 compared to the first quarter of 2023.

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Allstate Health and Benefits Segment Results

Second Quarter 2024 Form 10-Q 63

Segment Results Allstate Health and Benefits

Benefit ratio increased 4.7 points to 59.7 in the second quarter of 2024 compared to 55.0 in the second quarter of 2023 and increased 4.7 points to 59.9 in the first six months of 2024 compared to 55.2 in the same period of 2023, primarily due to higher benefit utilization in individual health and group health.

Amortization of DAC decreased 5.9% or $2 million in the second quarter of 2024 and decreased 1.3% or $1 million in the first six months of 2024 compared to the same periods of 2023.

Operating costs and expenses

Three months ended March 31,

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

($ in millions) 2024 2023 2024 2023

2 unchanged sentences

Total operating costs and expenses $ 224 $ 210 $ 449 $ 413

Operating costs and expenses increased $22 million in the first quarter of 2024 compared to the first quarter of 2023, primarily due to growth in individual health and group health and investments in the business.

First Quarter 2024 Form 10-Q 59

Operating costs and expenses increased $14 million in the second quarter of 2024 and increased $36 million in the first six months of 2024 compared to the same periods of 2023, primarily due to growth in individual health and group health.

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Portfolio composition and strategy by reporting segment (1)

March 31, 2024

June 30, 2024

($ in millions) Property-Liability Protection Services

19 unchanged sentences

(3) Equity securities are carried at fair value.

The fair value of equity securities held as of March 31, 2024, was $211 million in excess of cost.

The fair value of equity securities held as of June 30, 2024, was $213 million in excess of cost.

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

Equity securities include $913 million of funds with underlying investments in fixed income securities as of March 31, 2024.

Equity securities include $715 million of funds with underlying investments in fixed income securities as of June 30, 2024.

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

Investments totaled $67.86 billion as of March 31, 2024, increasing from $66.68 billion as of December 31, 2023, primarily due to positive operating cash flows, partially offset by dividends to shareholders and lower fixed income valuations.

Investments totaled $70.60 billion as of June 30, 2024, increasing from $66.68 billion as of December 31, 2023, primarily due to positive operating cash flows, partially offset by lower fixed income valuations and dividends to shareholders.

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

3 unchanged sentences

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

Investments in the Middle East As of March 31, 2024, we have approximately $42 million investment exposure in the Middle East, of which approximately $39 million is held in Israel, which is primarily indirect exposure through foreign funds managed by external asset managers.

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Portfolio composition by investment strategy

March 31, 2024

June 30, 2024

($ in millions) Market-

13 unchanged sentences

Total $ (1,216) $ — $ (1,216)

Second Quarter 2024 Form 10-Q 65

Fixed income securities

1 unchanged sentence

Fair value as of

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

($ in millions) June 30, 2024 December 31, 2023

government and agencies $ 10,564 $ 8,619

10 unchanged sentences

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

As of March 31, 2024, 91.4% of the consolidated fixed income securities portfolio was rated investment grade.

As of June 30, 2024, 91.4% of the consolidated fixed income securities portfolio was rated investment grade.

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

4 unchanged sentences

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

First Quarter 2024 Form 10-Q 61

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

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

March 31, 2024

June 30, 2024

NAIC 1 NAIC 2 NAIC 3

31 unchanged sentences

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

Limited partnership interests include $7.27 billion of interests in private equity funds, $1.14 billion of interests in real estate funds and $158 million of interests in other funds as of March 31, 2024.

We have commitments to invest additional amounts in limited partnership interests totaling $3.01 billion as of March 31, 2024.

Other investments include $164 million of bank loans, net, and $717 million of direct investments in real estate as of March 31, 2024.

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Limited partnership interests include $7.43 billion of interests in private equity funds, $1.14 billion of interests in real estate funds and $162 million of interests in other funds as of June 30, 2024.

We have commitments to invest additional amounts in limited partnership interests totaling $2.99 billion as of June 30, 2024.

Other investments include $149 million of bank loans, net, and $708 million of direct investments in real estate as of June 30, 2024.

Second Quarter 2024 Form 10-Q 67

Unrealized net capital gains (losses)

March 31, December 31,

June 30, December 31,

($ in millions) 2024 2023

11 unchanged sentences

Gross unrealized Fair

March 31, 2024

June 30, 2024

$ 4,125 $ 24 $ (100) $ 4,049

33 unchanged sentences

Total fixed income securities $ 49,649 $ 650 $ (1,434) $ 48,865

First Quarter 2024 Form 10-Q 63

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

1 unchanged sentence

Equity securities by sector

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

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

2 unchanged sentences

Basic industry

11 2 13 9 2 11

Capital goods

77 (23) 54 77 (27) 50

Energy 32 6 38 32 3 35

Financial services

210 15 225 210 12 222

Equities 285 36 321 258 12 270

2 unchanged sentences

Total funds 1,077 25 1,102 1,354 2 1,356

Transportation 13 22 35 16 23 39

173 15 188 179 21 200

179 84 263 138 50 188

Utilities 57 3 60 59 1 60

1 unchanged sentence

Total equity securities $ 2,003 $ 213 $ 2,216 $ 2,244 $ 167 $ 2,411

(1) As of March 31, 2024, other is generally comprised of consumer goods, technology, REITs, financial services and communications sectors.

(1) As of June 30, 2024, other is generally comprised of consumer goods and communications sectors.

Net investment income

Three months ended March 31,

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

($ in millions) 2024 2023 2024 2023

20 unchanged sentences

Investment income, before expense $ 788 $ 681 $ 1,625 $ 1,331

Net investment income increased $189 million in the first quarter of 2024 compared to the same period of 2023, primarily due to higher market-based and performance-based investment results.

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Net investment income increased $102 million in the second quarter of 2024, primarily due to higher market-based investment results, partially offset by lower performance-based investment results.

Net investment income increased $291 million in the first six months of 2024 compared to the same period of 2023, due to higher market-based and performance-based investment results.

Market-based results continue to benefit from portfolio repositioning into higher yielding fixed income securities and higher investment balances.

Second Quarter 2024 Form 10-Q 69

Performance-based investment income

Three months ended March 31,

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

($ in millions) 2024 2023 2024 2023

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Investee level expenses (1)

(14) (16) (24) (32)

Total performance-based income $ 107 $ 127 $ 308 $ 253

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

Performance-based investment income increased $75 million in the first quarter of 2024 compared to the same period of 2023, primarily due to higher private equity valuation increases.

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

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

Performance-based investment income decreased $20 million in the second quarter of 2024 compared to the same period of 2023 primarily due to lower real estate investments results.

Performance-based investment income increased $55 million in the first six months of 2024 compared to the same period of 2023, primarily due to higher private equity valuation increases.

Performance-based investment results and income can vary significantly between periods and are influenced by economic conditions, equity market performance, comparable public company earnings multiples, capitalization rates, operating performance of the underlying investments and the timing of asset sales.

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

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

Three months ended March 31,

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

($ in millions) 2024 2023 2024 2023

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Credit losses (1)

(16) (37) (131) (49)

Valuation change of equity investments - appreciation (decline):

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Net gains (losses) on investments and derivatives, pre-tax (103) (151) (267) (137)

Income tax benefit (expense) 36 (6)

Income tax benefit 22 35 58 29

Net gains (losses) on investments and derivatives, after-tax $ (81) $ (116) $ (209) $ (108)

Property-Liability (1)

$ (81) $ (104) $ (208) $ (98)

Protection Services (1) (3) (4) (4)

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Net gains (losses) on investments and derivatives, pre-tax $ (103) $ (151) $ (267) $ (137)

(1) Includes $123 million loss related to the valuation allowance established for the surplus notes issued by Adirondack Insurance Exchange and New Jersey Skylands Insurance Association (together “Reciprocal Exchanges”).

(1) Includes $123 million loss for the six months ended 2024 related to the carrying value of the surplus notes issued by Adirondack Insurance Exchange and New Jersey Skylands Insurance Association (together “Reciprocal Exchanges”).

See Note 7 for further details.

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

Net losses on investments and derivatives in the first quarter of 2024 related primarily to a valuation allowance established for surplus notes issued by the Reciprocal Exchanges and losses on sales of fixed income securities, partially offset by valuation gains on equity securities.

Net losses on sales in the first quarter of 2024 related primarily to sales of fixed income securities in connection with ongoing portfolio management.

Net losses on valuation change and settlements of derivatives of $8 million in the first quarter of 2024 primarily related to net losses on equity futures used to manage equity exposure and net losses on interest rate futures used to manage duration, partially offset by gains on foreign currency contracts used to manage foreign currency risk.

First Quarter 2024 Form 10-Q 65

Net losses on investments and derivatives in the second quarter of 2024 primarily related to losses on sales of fixed income securities, partially offset by valuation gains on equity securities.

Net losses in the first six months of 2024 primarily related to losses on sales of fixed income securities and a loss recognized related to surplus notes issued by the Reciprocal Exchanges, partially offset by valuation gains on equity securities.

Net losses on sales in the second quarter and first six months of 2024 related primarily to sales of fixed income securities in connection with ongoing portfolio management.

Net losses on valuation change and settlements of derivatives of $15 million and $23 million in the second quarter and first six months of 2024, respectively, primarily related to net losses on interest rate futures used to manage duration and net losses on equity

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futures used to manage equity exposure, partially offset by gains on foreign currency contracts used to manage foreign currency risk.

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

Three months ended March 31,

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

($ in millions) 2024 2023 2024 2023

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Total performance-based $ (4) $ (27) $ 17 $ (10)

Net gains on performance-based investments and derivatives in the first quarter of 2024, primarily related to increased valuation of equity investments and valuation change and settlements of derivatives.

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Net losses on performance-based investments and derivatives in the second quarter of 2024 primarily included a credit loss related to real estate, partially offset by increased valuation of equity investments.

Net gains on performance-based investments and derivatives in the first six months of 2024, primarily related to increased valuation of equity investments and valuation change and settlements of derivatives, partially offset by a credit loss related to real estate.

Second Quarter 2024 Form 10-Q 71

Capital Resources and Liquidity

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Capital resources

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

($ in millions) June 30, 2024 December 31, 2023

Preferred stock, common stock, treasury stock, retained income and other shareholders’ equity items $ 19,619 $ 18,470

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Ratio of debt to capital resources 30.3 30.9

Allstate shareholders’ equity increased in the first three months of 2024, primarily due to net income, partially offset by dividends to shareholders and higher unrealized net capital losses on investments.

In the three months ended March 31, 2024, we paid dividends of $233 million and $29 million related to our common and preferred shares, respectively.

Debt maturities We have $350 million of debt that is scheduled to mature in May 2024.

Allstate shareholders’ equity increased in the first six months of 2024, primarily due to net income, partially offset by dividends to shareholders and higher unrealized net capital losses on investments.

In the six months ended June 30, 2024, we paid dividends of $476 million and $59 million related to our common and preferred shares, respectively.

Repayment of debt On May 15, 2024, the Company repaid, at maturity, $350 million of 6.75% Senior Notes.

Issuance of debt On June 24, 2024, the Company issued $500 million of 5.05% Senior Notes due 2029.

Interest on the Senior Notes is payable semi-annually in arrears on June 24 and December 24 of each year, beginning on December 24, 2024.

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 for general corporate purposes.

Debt maturities

Debt maturities for each of the next five years

and thereafter (excluding issuance costs and other)

and thereafter (excluding issuance costs)

($ in millions)

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Common share repurchases On March 31, 2024, our $5.00 billion share repurchase authorization expired with $472 million remaining.

In the first quarter of 2024, we did not repurchase any shares under the program.

A new common share repurchase program has not been authorized as of March 31, 2024.

Common shareholder dividends On January 2, 2024, we paid a common shareholder dividend of $0.89.

On February 23, 2024, we declared a common shareholder dividend of $0.92 payable on April 1, 2024.

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

A new common share repurchase program has not been authorized as of June 30, 2024.

Common shareholder dividends On January 2, 2024 and April 1, 2024, we paid a common shareholder dividend of $0.89 and $0.92, respectively.

On May 14, 2024, we declared a common shareholder dividend of $0.92 payable on July 1, 2024.

operating leverage.

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

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

There have been no changes to any of our ratings from A.M.

Best, S&P or Moody’s since December 31, 2023.

In May 2024, S&P affirmed the Corporation’s debt and short-term issuer ratings of BBB+ and A-2, respectively, and the insurance financial strength rating of A+ for AIC.

The outlook for the ratings is stable.

Since December 31, 2023, A.M.

Best and Moody’s have not affirmed or changed any of the Corporation’s ratings.

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

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

The amount of intercompany loans available to the Corporation’s subsidiaries is at the discretion of the Corporation.

The amount of intercompany loans

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Capital Resources and Liquidity

available to the Corporation’s subsidiaries is at the discretion of the Corporation.

The maximum amount of loans the Corporation will have outstanding to all its eligible subsidiaries at any given point in time is limited to $1.00 billion.

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

Parent company capital capacity At the parent holding company level, we have deployable assets totaling $3.17 billion as of March 31, 2024, primarily comprised of cash and short-term, fixed income and equity securities that are generally saleable within one quarter.

Parent company capital capacity At the parent holding company level, we have deployable assets totaling $2.99 billion as of June 30, 2024, primarily comprised of cash and short-term, fixed income and equity securities that are generally saleable within one quarter.

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

First Quarter 2024 Form 10-Q 67

Capital Resources and Liquidity

As of March 31, 2024, we held $16.86 billion of cash, U.S.

As of June 30, 2024, we held $17.95 billion of cash, U.S.

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

No intercompany dividends from insurance companies were paid in the first three months of 2024.

Intercompany dividends of $18 million were paid from North Light Specialty Insurance Company to AIC in the first six months of 2024.

Based on the greater of 2023 statutory net income or 10% of statutory surplus, the maximum amount of dividends that AIC will be able to pay, without prior Illinois Department of Insurance approval, at a given point in time through February 2025, is estimated at $1.20 billion, less dividends paid during the preceding twelve months measured at that point in time.

In the first three months of 2024, no dividends have been paid.

In the first six months of 2024, no dividends have been paid.

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

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

In the first three months of 2024, we did not defer interest payments on the subordinated debentures.

In the first six months of 2024, we did not defer interest payments on the subordinated debentures.

Additional resources to support liquidity are as follows:

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

This ratio was 22.5% as of March 31, 2024.

This ratio was 22.8% as of June 30, 2024.

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

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

• As of March 31, 2024, there were no balances outstanding for the credit facility or the commercial paper facility and therefore the remaining borrowing capacity was $750 million.

• As of June 30, 2024, there were no balances outstanding for the credit facility or the commercial paper facility and therefore the remaining borrowing capacity was $750 million.

• The Corporation has access to a universal shelf registration statement with the Securities and Exchange Commission that was filed on April 30, 2024 and expires in 2027.

We can use this shelf registration to issue an unspecified amount of debt securities, common stock (including 636 million shares of treasury stock as of March 31, 2024), preferred stock, depositary shares, warrants, stock purchase contracts and stock purchase units.

We can use this shelf registration to issue an unspecified amount of debt securities, common stock (including 636 million shares of treasury stock as of June 30, 2024), preferred stock, depositary shares, warrants, stock purchase contracts and stock purchase units.

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

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Second Quarter 2024 Form 10-Q 73

Forward-Looking Statements

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

(29) restrictive regulations and regulatory reforms in the U.S.

(29) restrictive regulations and regulatory reforms and uncertainty around the interpretation and implementation of regulations in the U.S.

and internationally;

5 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis