ALLSTATE CORP 10-Q

Item 1. Financial Statements The Allstate Corporation and Subsidiaries Condensed Consolidated Statements of Operations (unaudited) (In millions, except per share data) Three months ended June 30, Six months ended June 30, 2024 2023 2024 2023 Revenues Property and casualty insurance premiums $ 13,952 $ 12,470 $ 27,464 $ 24,643 Accident and health insurance premiums and contract charges 474 453 952 916 Other revenue 679 597 1,348 1,158 Net investment income 712 610 1,476 1,185 Net gains (losses) on investments and derivatives ( 103 ) ( 151 ) ( 267 ) ( 137 ) Total revenues 15,714 13,979 30,973 27,765 Costs and expenses Property and casualty insurance claims and claims expense 10,801 11,727 20,302 22,053 Accident, health and other policy benefits 291 258 587 523 Amortization of deferred policy acquisition costs 2,001 1,789 3,940 3,533 Operating costs and expenses 2,019 1,786 3,904 3,502 Pension and other postretirement remeasurement (gains) losses ( 9 ) ( 40 ) ( 11 ) ( 93 ) Restructuring and related charges 13 27 23 54 Amortization of purchased intangibles 70 82 139 163 Interest expense 98 98 195 184 Total costs and expenses 15,284 15,727 29,079 29,919 Income (loss) from operations before income tax expense 430 ( 1,748 ) 1,894 ( 2,154 ) Income tax expense (benefit) 83 ( 373 ) 349 ( 458 ) Net income (loss) 347 ( 1,375 ) 1,545 ( 1,696 ) Less: Net income (loss) attributable to noncontrolling interest 16 ( 23 ) ( 4 ) ( 24 ) Net income (loss) attributable to Allstate 331 ( 1,352 ) 1,549 ( 1,672 ) Less: Preferred stock dividends 30 37 59 63 Net income (loss) applicable to common shareholders $ 301 $ ( 1,389 ) $ 1,490 $ ( 1,735 ) Earnings per common share: Net income (loss) applicable to common shareholders per common share - Basic $ 1.14 $ ( 5.29 ) $ 5.65 $ ( 6.59 ) Weighted average common shares - Basic 264.1 262.6 263.8 263.1 Net income (loss) applicable to common shareholders per common share - Diluted $ 1.13 $ ( 5.29 ) $ 5.58 $ ( 6.59 ) Weighted average common shares - Diluted 267.1 262.6 266.8 263.1 See notes to condensed consolidated financial statements. Second Quarter 2024 Form 10-Q 1 Condensed Consolidated Financial Statements The Allstate Corporation and Subsidiaries Condensed Consolidated Statements of Comprehensive Income (Loss) (unaudited) ($ in millions) Three months ended June 30, Six months ended June 30, 2024 2023 2024 2023 Net income (loss) $ 347 $ ( 1,375 ) $ 1,545 $ ( 1,696 ) Other comprehensive (loss) income, after-tax Changes in: Unrealized net capital gains and losses ( 119 ) ( 272 ) ( 334 ) 410 Unrealized foreign currency translation adjustments ( 23 ) 28 ( 15 ) 78 Unamortized pension and other postretirement prior service credit — ( 5 ) ( 1 ) ( 9 ) Discount rate for reserve for future policy benefits ( 1 ) 8 24 ( 1 ) Other comprehensive (loss) income, after-tax ( 143 ) ( 241 ) ( 326 ) 478 Comprehensive income (loss) 204 ( 1,616 ) 1,219 ( 1,218 ) Less: Comprehensive income (loss) attributable to noncontrolling interest 16 ( 24 ) ( 3 ) ( 20 ) Comprehensive income (loss) attributable to Allstate $ 188 $ ( 1,592 ) $ 1,222 $ ( 1,198 ) See notes to condensed consolidated financial statements. 2 www.allstate.com Condensed Consolidated Financial Statements The Allstate Corporation and Subsidiaries Condensed Consolidated Statements of Financial Position (unaudited) ($ in millions, except par value data) June 30, 2024 December 31, 2023 Assets Investments Fixed income securities, at fair value (amortized cost, net $ 53,788 and $ 49,649 ) $ 52,576 $ 48,865 Equity securities, at fair value (cost $ 2,003 and $ 2,244 ) 2,216 2,411 Mortgage loans, net 815 822 Limited partnership interests 8,730 8,380 Short-term, at fair value (amortized cost $ 5,290 and $ 5,145 ) 5,288 5,144 Other investments, net 979 1,055 Total investments 70,604 66,677 Cash 599 722 Premium installment receivables, net 10,762 10,044 Deferred policy acquisition costs 6,112 5,940 Reinsurance and indemnification recoverables, net 8,730 8,809 Accrued investment income 609 539 Deferred income taxes 212 219 Property and equipment, net 777 859 Goodwill 3,502 3,502 Other assets, net 6,461 6,051 Total assets 108,368 103,362 Liabilities Reserve for property and casualty insurance claims and claims expense 41,553 39,858 Reserve for future policy benefits 1,344 1,347 Contractholder funds 891 888 Unearned premiums 25,929 24,709 Claim payments outstanding 1,575 1,353 Other liabilities and accrued expenses 10,421 9,635 Debt 8,082 7,942 Total liabilities 89,795 85,732 Commitments and Contingent Liabilities (Note 14) Equity 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 2,001 2,001 Common stock, $ .01 par value, 2.0 billion shares authorized and 900 million issued, 264 million and 262 million shares outstanding 9 9 Additional capital paid-in 3,927 3,854 Retained income 50,718 49,716 Treasury stock, at cost ( 636 million and 638 million shares) ( 37,036 ) ( 37,110 ) Accumulated other comprehensive income (loss): Unrealized net capital gains and losses ( 938 ) ( 604 ) Unrealized foreign currency translation adjustments ( 113 ) ( 98 ) Unamortized pension and other postretirement prior service credit 12 13 Discount rate for reserve for future policy benefits 13 ( 11 ) Total accumulated other comprehensive loss ( 1,026 ) ( 700 ) Total Allstate shareholders’ equity 18,593 17,770 Noncontrolling interest ( 20 ) ( 140 ) Total equity 18,573 17,630 Total liabilities and equity $ 108,368 $ 103,362 See notes to condensed consolidated financial statements. Second Quarter 2024 Form 10-Q 3 Condensed Consolidated Financial Statements The Allstate Corporation and Subsidiaries Condensed Consolidated Statements of Shareholders’ Equity (unaudited) ($ in millions, except per share data) Three months ended June 30, Six months ended June 30, 2024 2023 2024 2023 Preferred stock par value $ — $ — $ — $ — Preferred stock additional capital paid-in Balance, beginning of period 2,001 1,970 2,001 1,970 Preferred stock issuance, net of issuance costs — 587 — 587 Preferred stock redemption — ( 556 ) — ( 556 ) Balance, end of period 2,001 2,001 2,001 2,001 Common stock par value 9 9 9 9 Common stock additional capital paid-in Balance, beginning of period 3,894 3,780 3,854 3,788 Equity incentive plans activity, net 33 6 73 ( 2 ) Balance, end of period 3,927 3,786 3,927 3,786 Retained income Balance, beginning of period 50,662 50,388 49,716 50,970 Net income (loss) 331 ( 1,352 ) 1,549 ( 1,672 ) Dividends on common stock (declared per share of $ 0.92 , $ 0.89 , $ 1.84 , and $ 1.78 ) ( 245 ) ( 233 ) ( 488 ) ( 469 ) Dividends on preferred stock ( 30 ) ( 37 ) ( 59 ) ( 63 ) Balance, end of period 50,718 48,766 50,718 48,766 Treasury stock Balance, beginning of period ( 37,044 ) ( 36,980 ) ( 37,110 ) ( 36,857 ) Shares acquired — ( 154 ) — ( 307 ) Shares reissued under equity incentive plans, net 8 3 74 33 Balance, end of period ( 37,036 ) ( 37,131 ) ( 37,036 ) ( 37,131 ) Accumulated other comprehensive income (loss) Balance, beginning of period ( 883 ) ( 1,673 ) ( 700 ) ( 2,392 ) Change in unrealized net capital gains and losses ( 119 ) ( 272 ) ( 334 ) 410 Change in unrealized foreign currency translation adjustments ( 23 ) 28 ( 15 ) 78 Change in unamortized pension and other postretirement prior service credit — ( 5 ) ( 1 ) ( 9 ) Change in discount rate for reserve for future policy benefits ( 1 ) 8 24 ( 1 ) Balance, end of period ( 1,026 ) ( 1,914 ) ( 1,026 ) ( 1,914 ) Total Allstate shareholders’ equity 18,593 15,517 18,593 15,517 Noncontrolling interest Balance, beginning of period ( 159 ) ( 121 ) ( 140 ) ( 125 ) Change in unrealized net capital gains and losses — ( 1 ) 1 4 Noncontrolling income (loss) 16 ( 23 ) ( 4 ) ( 24 ) Capital transaction for noncontrolling interest 123 — 123 — Balance, end of period ( 20 ) ( 145 ) ( 20 ) ( 145 ) Total equity $ 18,573 $ 15,372 $ 18,573 $ 15,372 See notes to condensed consolidated financial statements. 4 www.allstate.com Condensed Consolidated Financial Statements The Allstate Corporation and Subsidiaries Condensed Consolidated Statements of Cash Flows (unaudited) ($ in millions) Six months ended June 30, 2024 2023 Cash flows from operating activities Net income (loss) $ 1,545 $ ( 1,696 ) Adjustments to reconcile net income (loss) to net cash provided by operating activities Depreciation, amortization and other non-cash items 264 363 Net (gains) losses on investments and derivatives 267 137 Pension and other postretirement remeasurement (gains) losses ( 11 ) ( 93 ) Changes in: Policy benefits and other insurance reserves 1,750 2,917 Unearned premiums 1,262 1,032 Deferred policy acquisition costs ( 175 ) ( 162 ) Premium installment receivables, net ( 745 ) ( 532 ) Reinsurance recoverables, net 76 468 Income taxes 91 ( 538 ) Other operating assets and liabilities ( 299 ) ( 126 ) Net cash provided by operating activities 4,025 1,770 Cash flows from investing activities Proceeds from sales Fixed income securities 15,463 12,454 Equity securities 1,510 4,183 Limited partnership interests 248 516 Other investments 120 81 Investment collections Fixed income securities 1,002 992 Mortgage loans 10 36 Other investments 19 53 Investment purchases Fixed income securities ( 20,376 ) ( 15,875 ) Equity securities ( 1,257 ) ( 1,717 ) Limited partnership interests ( 560 ) ( 424 ) Mortgage loans ( 1 ) ( 100 ) Other investments ( 59 ) ( 140 ) Change in short-term and other investments, net 64 ( 986 ) Purchases of property and equipment, net ( 97 ) ( 141 ) Proceeds from sale of property and equipment 18 19 Net cash used in investing activities ( 3,896 ) ( 1,049 ) Cash flows from financing activities Proceeds from issuance of debt 495 743 Redemption and repayment of debt ( 350 ) ( 750 ) Proceeds from issuance of preferred stock — 587 Redemption of preferred stock — ( 575 ) Contractholder fund deposits 67 66 Contractholder fund withdrawals ( 16 ) ( 16 ) Dividends paid on common stock ( 476 ) ( 459 ) Dividends paid on preferred stock ( 59 ) ( 53 ) Treasury stock purchases — ( 307 ) Shares reissued under equity incentive plans, net 93 10 Other ( 6 ) ( 4 ) Net cash used in financing activities ( 252 ) ( 758 ) Net decrease in cash ( 123 ) ( 37 ) Cash at beginning of period 722 736 Cash at end of period $ 599 $ 699 See notes to condensed consolidated financial statements. Second Quarter 2024 Form 10-Q 5 Notes to Condensed Consolidated Financial Statements The Allstate Corporation and Subsidiaries Notes to Condensed Consolidated Financial Statements (Unaudited) Note 1 General Basis of presentation The accompanying condensed consolidated financial statements include the accounts of The Allstate Corporation (the “Corporation”) and its wholly owned subsidiaries, primarily Allstate Insurance Company (“AIC”), a property and casualty insurance company (collectively referred to as the “Company” or “Allstate”) and variable interest entities (“VIEs”) in which the Company is considered a primary beneficiary. These condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The condensed consolidated financial statements and notes as of June 30, 2024 and for the three and six month periods ended June 30, 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. The results of operations for the interim periods should not be considered indicative of results to be expected for the full year. All significant intercompany accounts and transactions have been eliminated. Pending accounting standards 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. 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. 6 www.allstate.com Notes to Condensed Consolidated Financial Statements Note 2 Earnings per Common Share Basic earnings per common share is computed using the weighted average number of common shares outstanding, including vested unissued participating restricted stock units. Diluted earnings per common share is computed using the weighted average number of common and dilutive potential common shares outstanding. For the Company, dilutive potential common shares consist of outstanding stock options, unvested non-participating restricted stock units and contingently issuable performance stock awards. The effect of dilutive potential common shares does not include the effect of options with an anti-dilutive effect on earnings per common share because their exercise prices exceed the average market price of Allstate common shares during the period or for which the unrecognized compensation cost would have an anti-dilutive effect. Computation of basic and diluted earnings per common share (In millions, except per share data) Three months ended June 30, Six months ended June 30, 2024 2023 2024 2023 Numerator: Net income (loss) $ 347 $ ( 1,375 ) $ 1,545 $ ( 1,696 ) Less: Net income (loss) attributable to noncontrolling interest 16 ( 23 ) ( 4 ) ( 24 ) Net income (loss) attributable to Allstate 331 ( 1,352 ) 1,549 ( 1,672 ) Less: Preferred stock dividends 30 37 59 63 Net income (loss) applicable to common shareholders $ 301 $ ( 1,389 ) $ 1,490 $ ( 1,735 ) Denominator: Weighted average common shares outstanding 264.1 262.6 263.8 263.1 Effect of dilutive potential common shares (1) : Stock options 2.5 — 2.5 — Restricted stock units (non-participating) and performance stock awards 0.5 — 0.5 — Weighted average common and dilutive potential common shares outstanding 267.1 262.6 266.8 263.1 Earnings per common share - Basic $ 1.14 $ ( 5.29 ) $ 5.65 $ ( 6.59 ) Earnings per common share - Diluted (1) $ 1.13 $ ( 5.29 ) $ 5.58 $ ( 6.59 ) Anti-dilutive options excluded from diluted earnings per common share 0.6 3.2 0.5 2.9 Weighted average dilutive potential common shares excluded due to net loss applicable to common shareholders (1) — 1.7 — 2.1 (1) As a result of the net loss reported for the three and six month periods ended June 30, 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 Measuring segment profit or loss The measure of segment profit or loss used in evaluating performance is underwriting income for the Allstate Protection and Run-off Property-Liability segments and adjusted net income for the Protection Services, Allstate Health and Benefits and Corporate and Other segments. Allstate Protection and Run-off Property Liability segments comprise Property-Liability. The Company does not allocate investment income, net gains and losses on investments and derivatives, or assets to the Allstate Protection and Run-off Property Liability segments. Management reviews assets at the Property-Liability, Protection Services, Allstate Health and Benefits, and Corporate and Other levels for decision-making purposes. Underwriting income is calculated as premiums earned and other revenue, less claims and claims expenses (“losses”), amortization of deferred policy acquisition costs (“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: • Net gains and losses on investments and derivatives • Pension and other postretirement remeasurement gains and losses • Amortization or impairment of purchased intangibles • Gain or loss on disposition • Adjustments for other significant non-recurring, infrequent or unusual items, when (a) the nature of the charge or gain is such that it is reasonably unlikely to recur within two years, or (b) there has been no similar charge or gain within the prior two years • Income tax expense or benefit on reconciling items Second Quarter 2024 Form 10-Q 7 Notes to Condensed Consolidated Financial Statements A reconciliation of these measures to net income (loss) applicable to common shareholders is provided below. Reportable segments financial performance Three months ended June 30, Six months ended June 30, ($ in millions) 2024 2023 2024 2023 Underwriting income (loss) by segment Allstate Protection $ ( 142 ) $ ( 2,092 ) $ 761 $ ( 3,090 ) Run-off Property-Liability ( 3 ) ( 2 ) ( 8 ) ( 5 ) Total Property-Liability ( 145 ) ( 2,094 ) 753 ( 3,095 ) Adjusted net income (loss) by segment, after-tax Protection Services 55 41 109 75 Allstate Health and Benefits 58 57 114 113 Corporate and Other ( 104 ) ( 111 ) ( 210 ) ( 200 ) Reconciling items Allstate Protection and Run-off Property-Liability net investment income 643 544 1,345 1,053 Net gains (losses) on investments and derivatives ( 103 ) ( 151 ) ( 267 ) ( 137 ) Pension and other postretirement remeasurement gains (losses) 9 40 11 93 Amortization of purchased intangibles (1) ( 19 ) ( 24 ) ( 37 ) ( 48 ) Gain (loss) on disposition 1 ( 8 ) 5 1 Non-recurring costs (2) — ( 90 ) — ( 90 ) Income tax (expense) benefit on Property-Liability and reconciling items (3) ( 78 ) 384 ( 337 ) 476 Total reconciling items 453 695 720 1,348 Less: Net income (loss) attributable to noncontrolling interest (4) 16 ( 23 ) ( 4 ) ( 24 ) Net income (loss) applicable to common shareholders $ 301 $ ( 1,389 ) $ 1,490 $ ( 1,735 ) (1) Excludes amortization of purchased intangibles in Property-Liability, which is already included above in underwriting income. (2) Relates to settlement costs for non-recurring litigation that is outside of the ordinary course of business. (3) 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. (4) Reflects net income (loss) attributable to noncontrolling interest in Property-Liability. 8 www.allstate.com Notes to Condensed Consolidated Financial Statements Reportable segments revenue information ($ in millions) Three months ended June 30, Six months ended June 30, 2024 2023 2024 2023 Property-Liability Insurance premiums Auto $ 9,079 $ 8,121 $ 17,857 $ 16,029 Homeowners 3,255 2,883 6,409 5,693 Other personal lines 701 587 1,360 1,149 Commercial lines 158 202 327 434 Other business lines 146 128 286 251 Allstate Protection 13,339 11,921 26,239 23,556 Run-off Property-Liability — — — — Total Property-Liability insurance premiums 13,339 11,921 26,239 23,556 Other revenue 441 389 871 742 Net investment income 643 544 1,345 1,053 Net gains (losses) on investments and derivatives ( 103 ) ( 135 ) ( 265 ) ( 123 ) Total Property-Liability 14,320 12,719 28,190 25,228 Protection Services Protection plans 453 373 892 734 Roadside assistance 34 48 81 97 Protection and insurance products 126 128 252 256 Intersegment premiums and service fees (1) 39 35 74 68 Other revenue 98 84 183 168 Net investment income 23 18 44 34 Net gains (losses) on investments and derivatives ( 1 ) ( 4 ) ( 6 ) ( 5 ) Total Protection Services 772 682 1,520 1,352 Allstate Health and Benefits Employer voluntary benefits 246 245 494 500 Group health 120 110 238 217 Individual health 108 98 220 199 Other revenue 121 101 255 202 Net investment income 25 21 48 40 Net gains (losses) on investments and derivatives — 1 2 3 Total Allstate Health and Benefits 620 576 1,257 1,161 Corporate and Other Other revenue 19 23 39 46 Net investment income 21 27 39 58 Net gains (losses) on investments and derivatives 1 ( 13 ) 2 ( 12 ) Total Corporate and Other 41 37 80 92 Intersegment eliminations (1) ( 39 ) ( 35 ) ( 74 ) ( 68 ) Consolidated revenues $ 15,714 $ 13,979 $ 30,973 $ 27,765 (1) Intersegment insurance premiums and service fees are primarily related to Arity and Allstate Roadside and are eliminated in the condensed consolidated financial statements. Second Quarter 2024 Form 10-Q 9 Notes to Condensed Consolidated Financial Statements Note 4 Investments Portfolio composition ($ in millions) June 30, 2024 December 31, 2023 Fixed income securities, at fair value $ 52,576 $ 48,865 Equity securities, at fair value 2,216 2,411 Mortgage loans, net 815 822 Limited partnership interests 8,730 8,380 Short-term investments, at fair value 5,288 5,144 Other investments, net 979 1,055 Total $ 70,604 $ 66,677 Amortized cost, gross unrealized gains (losses) and fair value for fixed income securities ($ in millions) Amortized cost, net Gross unrealized Fair value Gains Losses June 30, 2024 U.S. government and agencies $ 10,724 $ 34 $ ( 194 ) $ 10,564 Municipal 6,661 46 ( 169 ) 6,538 Corporate 33,443 191 ( 1,120 ) 32,514 Foreign government 1,299 5 ( 15 ) 1,289 ABS 1,661 16 ( 6 ) 1,671 Total fixed income securities $ 53,788 $ 292 $ ( 1,504 ) $ 52,576 December 31, 2023 U.S. government and agencies $ 8,624 $ 114 $ ( 119 ) $ 8,619 Municipal 6,049 109 ( 152 ) 6,006 Corporate 31,951 397 ( 1,143 ) 31,205 Foreign government 1,286 17 ( 13 ) 1,290 ABS 1,739 13 ( 7 ) 1,745 Total fixed income securities $ 49,649 $ 650 $ ( 1,434 ) $ 48,865 Scheduled maturities for fixed income securities ($ in millions) June 30, 2024 December 31, 2023 Amortized cost, net Fair value Amortized cost, net Fair value Due in one year or less $ 2,692 $ 2,655 $ 3,422 $ 3,374 Due after one year through five years 23,799 23,172 23,218 22,614 Due after five years through ten years 16,675 16,305 12,553 12,273 Due after ten years 8,961 8,773 8,717 8,859 52,127 50,905 47,910 47,120 ABS 1,661 1,671 1,739 1,745 Total $ 53,788 $ 52,576 $ 49,649 $ 48,865 Actual maturities may differ from those scheduled as a result of calls and make-whole payments by the issuers. ABS is shown separately because of potential prepayment of principal prior to contractual maturity dates. Net investment income ($ in millions) Three months ended June 30, Six months ended June 30, 2024 2023 2024 2023 Fixed income securities $ 571 $ 422 $ 1,097 $ 812 Equity securities 18 21 33 32 Mortgage loans 9 8 18 16 Limited partnership interests 103 122 302 256 Short-term investments 62 69 129 135 Other investments 25 39 46 80 Investment income, before expense 788 681 1,625 1,331 Investment expense ( 76 ) ( 71 ) ( 149 ) ( 146 ) Net investment income $ 712 $ 610 $ 1,476 $ 1,185 10 www.allstate.com Notes to Condensed Consolidated Financial Statements Net gains (losses) on investments and derivatives by asset type ($ in millions) Three months ended June 30, Six months ended June 30, 2024 2023 2024 2023 Fixed income securities $ ( 96 ) $ ( 132 ) $ ( 197 ) $ ( 268 ) Equity securities 14 21 76 188 Mortgage loans 1 ( 3 ) 1 ( 3 ) Limited partnership interests ( 13 ) ( 15 ) ( 5 ) 7 Derivatives ( 15 ) ( 7 ) ( 23 ) ( 59 ) Other investments 6 ( 15 ) 4 ( 2 ) Other (1) — — ( 123 ) — Net gains (losses) on investments and derivatives $ ( 103 ) $ ( 151 ) $ ( 267 ) $ ( 137 ) (1) Related to the loss for 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 detail. Net gains (losses) on investments and derivatives by transaction type ($ in millions) Three months ended June 30, Six months ended June 30, 2024 2023 2024 2023 Sales $ ( 90 ) $ ( 130 ) $ ( 201 ) $ ( 250 ) Credit losses ( 16 ) ( 37 ) ( 131 ) ( 49 ) Valuation change of equity investments (1) 18 23 88 221 Valuation change and settlements of derivatives ( 15 ) ( 7 ) ( 23 ) ( 59 ) Net gains (losses) on investments and derivatives $ ( 103 ) $ ( 151 ) $ ( 267 ) $ ( 137 ) (1) Includes valuation change of equity securities and certain limited partnership interests where the underlying assets are predominately public equity securities. Gross realized gains (losses) on sales of fixed income securities ($ in millions) Three months ended June 30, Six months ended June 30, 2024 2023 2024 2023 Gross realized gains $ 33 $ 28 $ 74 $ 74 Gross realized losses ( 124 ) ( 153 ) ( 270 ) ( 326 ) Net appreciation (decline) recognized in net income for assets that are still held ($ in millions) Three months ended June 30, Six months ended June 30, 2024 2023 2024 2023 Equity securities $ 18 $ 19 $ 78 $ 66 Limited partnership interests carried at fair value 17 32 47 48 Total $ 35 $ 51 $ 125 $ 114 Second Quarter 2024 Form 10-Q 11 Notes to Condensed Consolidated Financial Statements Credit losses recognized in net income ($ in millions) Three months ended June 30, Six months ended June 30, 2024 2023 2024 2023 Assets Fixed income securities: Corporate $ ( 5 ) $ ( 7 ) $ ( 1 ) $ ( 16 ) Total fixed income securities ( 5 ) ( 7 ) ( 1 ) ( 16 ) Mortgage loans 1 ( 3 ) 1 ( 3 ) Limited partnership interests ( 16 ) ( 16 ) ( 16 ) ( 16 ) Other investments Bank loans 2 ( 11 ) 5 ( 14 ) Real estate 2 — 2 — Other assets — — ( 123 ) — Total credit losses by asset type $ ( 16 ) $ ( 37 ) $ ( 132 ) $ ( 49 ) Liabilities Commitments to fund commercial mortgage loans and bank loans — — 1 — Total $ ( 16 ) $ ( 37 ) $ ( 131 ) $ ( 49 ) Unrealized net capital gains and losses included in accumulated other comprehensive income (“AOCI”) ($ in millions) Fair value Gross unrealized Unrealized net gains (losses) June 30, 2024 Gains Losses Fixed income securities $ 52,576 $ 292 $ ( 1,504 ) $ ( 1,212 ) Short-term investments 5,288 — ( 2 ) ( 2 ) Derivative instruments — — ( 2 ) ( 2 ) Limited partnership interests — Unrealized net capital gains and losses, pre-tax ( 1,216 ) Reclassification of noncontrolling interest 12 Deferred income taxes 266 Unrealized net capital gains and losses, after-tax $ ( 938 ) December 31, 2023 Fixed income securities $ 48,865 $ 650 $ ( 1,434 ) $ ( 784 ) Short-term investments 5,144 — ( 1 ) ( 1 ) Derivative instruments — — ( 2 ) ( 2 ) Limited partnership interests (1) ( 4 ) Unrealized net capital gains and losses, pre-tax ( 791 ) Reclassification of noncontrolling interest 13 Deferred income taxes 174 Unrealized net capital gains and losses, after-tax $ ( 604 ) (1) Unrealized net capital gains and losses for limited partnership interests represent the Company’s share of the equity method of accounting (“EMA”) limited partnerships’ OCI. Fair value and gross unrealized gains and losses are not applicable. Change in unrealized net capital gains (losses) ($ in millions) Six months ended June 30, 2024 Fixed income securities $ ( 428 ) Short-term investments ( 1 ) Derivative instruments — Limited partnership interests 4 Total ( 425 ) Reclassification of noncontrolling interest ( 1 ) Deferred income taxes 92 Change in unrealized net capital gains and losses, after-tax $ ( 334 ) 12 www.allstate.com Notes to Condensed Consolidated Financial Statements Carrying value for limited partnership interests ($ in millions) June 30, 2024 December 31, 2023 Private equity $ 7,426 $ 7,154 Real estate 1,142 1,085 Other (1) 162 141 Total $ 8,730 $ 8,380 (1) Other consists of certain limited partnership interests where the underlying assets are predominately public equity and debt securities. Short-term investments Short-term investments, including money market funds, commercial paper, U.S. Treasury bills and other short-term investments, are carried at fair value. As of June 30, 2024 and December 31, 2023, the fair value of short-term investments totaled $ 5.29 billion and $ 5.14 billion, respectively. Other investments Other investments primarily consist of bank loans, real estate, policy loans and derivatives. Bank loans are primarily senior secured corporate loans and are carried at amortized cost, net. Real estate is carried at cost less accumulated depreciation. Policy loans are carried at unpaid principal balances. Other investments by asset type ($ in millions) June 30, 2024 December 31, 2023 Bank loans, net $ 149 $ 224 Real estate 708 709 Policy loans 120 119 Other 2 3 Total $ 979 $ 1,055 Portfolio monitoring and credit losses Fixed income securities The Company has a comprehensive portfolio monitoring process to identify and evaluate each fixed income security that may require a credit loss allowance . For each fixed income security in an unrealized loss position, the Company assesses whether management with the appropriate authority has made the decision to sell or whether it is more likely than not the Company will be required to sell the security before recovery of the amortized cost basis for reasons such as liquidity, contractual or regulatory purposes. If a security meets either of these criteria, any existing credit loss allowance would be written-off against the amortized cost basis of the asset along with any remaining unrealized losses, with incremental losses recorded in earnings. If the Company has not made the decision to sell the fixed income security and it is not more likely than not the Company will be required to sell the fixed income security before recovery of its amortized cost basis, the Company evaluates whether it expects to receive cash flows sufficient to recover the entire amortized cost basis of the security. The Company calculates the estimated recovery value based on the best estimate of future cash flows considering past events, current conditions and reasonable and supportable forecasts. The estimated future cash flows are discounted at the security’s current effective rate and is compared to the amortized cost of the security. The determination of cash flow estimates is inherently subjective, and methodologies may vary depending on facts and circumstances specific to the security. All reasonably available information relevant to the collectability of the security is considered when developing the estimate of cash flows expected to be collected. That information generally includes, but is not limited to, the remaining payment terms of the security, prepayment speeds, the financial condition and future earnings potential of the issue or issuer, expected defaults, expected recoveries, the value of underlying collateral, origination vintage year, geographic concentration of underlying collateral, available reserves or escrows, current subordination levels, third-party guarantees and other credit enhancements. Other information, such as industry analyst reports and forecasts, credit ratings, financial condition of the bond insurer for insured fixed income securities, and other market data relevant to the realizability of contractual cash flows, may also be considered. The estimated fair value of collateral will be used to estimate recovery value if the Company determines that the security is dependent on the liquidation of collateral for ultimate settlement. If the Company does not expect to receive cash flows sufficient to recover the entire amortized cost basis of the fixed income security, a credit loss allowance is recorded in earnings for the shortfall in expected cash flows; however, the amortized cost, net of the credit loss allowance, may not be lower than the fair value of the security. The portion of the unrealized loss related to factors other than credit remains classified in AOCI. If the Company determines that the fixed income security does not have sufficient cash flow or other information to estimate a recovery value for the security, the Company may conclude that the entire decline in fair value is deemed to be credit related and the loss is recorded in earnings. When a security is sold or otherwise disposed or when the security is deemed uncollectible and written off, the Company removes amounts previously recognized in the credit loss allowance. Recoveries after write-offs are recognized when received. Accrued interest excluded from the amortized cost of fixed income securities totaled $ 570 million and $ 495 million Second Quarter 2024 Form 10-Q 13 Notes to Condensed Consolidated Financial Statements as of June 30, 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. The Company’s portfolio monitoring process includes a quarterly review of all securities to identify instances where the fair value of a security compared to its amortized cost is below internally established thresholds. The process also includes the monitoring of other credit loss indicators such as ratings, ratings downgrades and payment defaults. The securities identified, in addition to other securities for which the Company may have a concern, are evaluated for potential credit losses using all reasonably available information relevant to the collectability or recovery of the security. Inherent in the Company’s evaluation of credit losses for these securities are assumptions and estimates about the financial condition and future earnings potential of the issue or issuer. Some of the factors that may be considered in evaluating whether a decline in fair value requires a credit loss allowance are: 1) the financial condition, near-term and long-term prospects of the issue or issuer, including relevant industry specific market conditions and trends, geographic location and implications of rating agency actions and offering prices; 2) the specific reasons that a security is in an unrealized loss position, including overall market conditions which could affect liquidity; and 3) the extent to which the fair value has been less than amortized cost. Rollforward of credit loss allowance for fixed income securities Three months ended June 30, Six months ended June 30, ($ in millions) 2024 2023 2024 2023 Beginning balance $ ( 17 ) $ ( 22 ) $ ( 36 ) $ ( 13 ) Credit losses on securities for which credit losses not previously reported ( 4 ) ( 4 ) ( 7 ) ( 4 ) Net (increases) decreases related to credit losses previously reported ( 1 ) ( 3 ) 3 ( 12 ) (Increase) decrease of allowance related to sales and other — — 3 — Write-offs 3 — 18 — Ending balance $ ( 19 ) $ ( 29 ) $ ( 19 ) $ ( 29 ) Components of credit loss allowance as of June 30 Corporate bonds $ ( 18 ) $ ( 27 ) ABS ( 1 ) ( 2 ) Total $ ( 19 ) $ ( 29 ) 14 www.allstate.com Notes to Condensed Consolidated Financial Statements Gross unrealized losses and fair value by type and length of time held in a continuous unrealized loss position (1) ($ in millions) Less than 12 months 12 months or more Total unrealized losses Number of issues Fair value Unrealized losses Number of issues Fair value Unrealized losses June 30, 2024 Fixed income securities U.S. government and agencies 106 $ 3,935 $ ( 64 ) 135 $ 3,297 $ ( 130 ) $ ( 194 ) Municipal 629 2,063 ( 19 ) 1,525 2,060 ( 150 ) ( 169 ) Corporate 712 7,939 ( 119 ) 1,883 14,087 ( 1,001 ) ( 1,120 ) Foreign government 36 257 ( 2 ) 76 286 ( 13 ) ( 15 ) ABS 72 345 ( 2 ) 98 92 ( 4 ) ( 6 ) Total fixed income securities 1,555 $ 14,539 $ ( 206 ) 3,717 $ 19,822 $ ( 1,298 ) $ ( 1,504 ) Investment grade fixed income securities 1,462 $ 14,107 $ ( 196 ) 3,404 $ 17,754 $ ( 1,148 ) $ ( 1,344 ) Below investment grade fixed income securities 93 432 ( 10 ) 313 2,068 ( 150 ) ( 160 ) Total fixed income securities 1,555 $ 14,539 $ ( 206 ) 3,717 $ 19,822 $ ( 1,298 ) $ ( 1,504 ) December 31, 2023 Fixed income securities U.S. government and agencies 63 $ 2,554 $ ( 38 ) 117 $ 2,513 $ ( 81 ) $ ( 119 ) Municipal 271 400 ( 4 ) 1,784 2,245 ( 148 ) ( 152 ) Corporate 251 2,225 ( 48 ) 2,106 17,319 ( 1,095 ) ( 1,143 ) Foreign government 7 31 — 75 356 ( 13 ) ( 13 ) ABS 19 64 ( 1 ) 150 584 ( 6 ) ( 7 ) Total fixed income securities 611 $ 5,274 $ ( 91 ) 4,232 $ 23,017 $ ( 1,343 ) $ ( 1,434 ) Investment grade fixed income securities 568 $ 5,061 $ ( 83 ) 3,864 $ 20,429 $ ( 1,151 ) $ ( 1,234 ) Below investment grade fixed income securities 43 213 ( 8 ) 368 2,588 ( 192 ) ( 200 ) 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 $ 24 million and $ 32 million and unrealized losses of $ 6 million and $ 3 million with credit loss allowances of $ 4 million and $ 8 million as of June 30, 2024 and December 31, 2023, respectively. Gross unrealized losses by unrealized loss position and credit quality as of June 30, 2024 ($ in millions) Investment grade Below investment grade Total Fixed income securities with unrealized loss position less than 20% of amortized cost, net (1) $ ( 1,266 ) $ ( 134 ) $ ( 1,400 ) Fixed income securities with unrealized loss position greater than or equal to 20% of amortized cost, net (2) ( 78 ) ( 26 ) ( 104 ) Total unrealized losses $ ( 1,344 ) $ ( 160 ) $ ( 1,504 ) (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. (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. Investment grade is defined as a security having a National Association of Insurance Commissioners (“NAIC”) designation of 1 or 2, which is comparable to a rating of Aaa, Aa, A or Baa from Moody’s or AAA, AA, A or BBB from S&P Global Ratings (“S&P”), or a comparable internal rating if an externally provided rating is not available. Market prices for certain securities may have credit spreads which imply higher or lower credit quality than the current third-party rating. Unrealized losses on investment grade securities are principally related to an increase in market yields which may include increased risk-free interest rates or wider credit spreads since the time of initial purchase. The unrealized losses are expected to reverse as the securities approach maturity. ABS in an unrealized loss position were evaluated based on actual and projected collateral losses relative to the securities’ positions in the respective securitization trusts, security specific expectations of cash flows, and credit ratings. This evaluation also takes into consideration credit enhancement, measured in terms of (i) subordination from other classes of securities in the trust that are contractually obligated to absorb losses before the class of security the Company owns, and (ii) the expected impact of other structural features embedded in the securitization trust beneficial to the class of securities the Company owns, such as overcollateralization and excess spread. Municipal bonds in an unrealized loss position were evaluated based on the underlying credit Second Quarter 2024 Form 10-Q 15 Notes to Condensed Consolidated Financial Statements quality of the primary obligor, obligation type and quality of the underlying assets. As of June 30, 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 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. For bank loans, the Company considers the credit rating of the borrower, credit spreads and type of loan. After the reasonable and supportable forecast period, the Company’s model reverts to historical loss trends. Loans are evaluated on a pooled basis when they share similar risk characteristics. The Company monitors loans through a quarterly credit monitoring process to determine when they no longer share similar risk characteristics and are to be evaluated individually when estimating credit losses. Loans are written off against their corresponding allowances when there is no reasonable expectation of recovery. If a loan recovers after a write-off, the estimate of expected credit losses includes the expected recovery. Accrual of income is suspended for loans that are in default or when full and timely collection of principal and interest payments is not probable. Accrued income receivable is monitored for recoverability and when not expected to be collected is written off through net investment income. Cash receipts on loans on non-accrual status are generally recorded as a reduction of amortized cost. Accrued interest is excluded from the amortized cost of loans and is reported within the accrued investment income line of the Condensed Consolidated Statements of Financial Position. Accrued interest as of June 30, 2024 and December 31, 2023 was not significant for bank loans or mortgage loans. Mortgage loans When it is determined a mortgage loan shall be evaluated individually, the Company uses various methods to estimate credit losses on individual loans such as using collateral value less estimated costs to sell where applicable, including when foreclosure is probable or when repayment is expected to be provided substantially through the operation or sale of the collateral and the borrower is experiencing financial difficulty. When collateral value is used, the mortgage loans may not have a credit loss allowance when the fair value of the collateral exceeds the loan’s amortized cost. An alternative approach may be utilized to estimate credit losses using the present value of the loan’s expected future repayment cash flows discounted at the loan’s current effective interest rate. Individual loan credit loss allowances are adjusted for subsequent changes in the fair value of the collateral less costs to sell, when applicable, or present value of the loan’s expected future repayment cash flows. Debt service coverage ratio is considered a key credit quality indicator when mortgage loan credit loss allowances are estimated. Debt service coverage ratio represents the amount of estimated cash flow from the property available to the borrower to meet principal and interest payment obligations. Debt service coverage ratio estimates are updated annually or more frequently if conditions are warranted based on the Company’s credit monitoring process. Mortgage loans amortized cost by debt service coverage ratio distribution and year of origination June 30, 2024 December 31, 2023 ($ in millions) 2019 and prior 2020 2021 2022 2023 Current Total Total Below 1.0 $ — $ — $ — $ 13 $ — $ — $ 13 $ 13 1.0 - 1.25 39 — — — 2 — 41 41 1.26 - 1.50 74 10 — 30 66 — 180 133 Above 1.50 230 42 183 60 76 — 591 646 Amortized cost before allowance $ 343 $ 52 $ 183 $ 103 $ 144 $ — $ 825 $ 833 Allowance ( 10 ) ( 11 ) Amortized cost, net $ 815 $ 822 16 www.allstate.com Notes to Condensed Consolidated Financial Statements Mortgage loans with a debt service coverage ratio below 1.0 that are not considered impaired primarily relate to instances where the borrower has the financial capacity to fund the revenue shortfalls from the properties for the foreseeable term, the decrease in cash flows from the properties is considered temporary, or there are other risk mitigating circumstances such as additional collateral, escrow balances or borrower guarantees. Payments on all mortgage loans were current as of June 30, 2024 and December 31, 2023. Rollforward of credit loss allowance for mortgage loans Three months ended June 30, Six months ended June 30, ($ in millions) 2024 2023 2024 2023 Beginning balance $ ( 11 ) $ ( 7 ) $ ( 11 ) $ ( 7 ) Net (increases) decreases related to credit losses 1 ( 3 ) 1 ( 3 ) Write-offs — — — — Ending balance $ ( 10 ) $ ( 10 ) $ ( 10 ) $ ( 10 ) Bank loans When it is determined a bank loan shall be evaluated individually, the Company uses various methods to estimate credit losses on individual loans such as the present value of the loan’s expected future repayment cash flows discounted at the loan’s current effective interest rate. Credit ratings of the borrower are considered a key credit quality indicator when bank loan credit loss allowances are estimated. The ratings are either received from the Securities Valuation Office of the NAIC based on availability of applicable ratings from rating agencies on the NAIC credit rating provider list or a comparable internal rating. The year of origination is determined to be the year in which the asset is acquired. Bank loans amortized cost by credit rating and year of origination June 30, 2024 December 31, 2023 ($ in millions) 2019 and prior 2020 2021 2022 2023 Current Total Total NAIC 2 / BBB $ — $ 1 $ — $ — $ 1 $ 1 $ 3 $ 9 NAIC 3 / BB — — 1 — 5 12 18 38 NAIC 4 / B 24 1 8 3 49 39 124 153 NAIC 5-6 / CCC and below 8 — 2 — 2 3 15 46 Amortized cost before allowance $ 32 $ 2 $ 11 $ 3 $ 57 $ 55 $ 160 $ 246 Allowance ( 11 ) ( 22 ) Amortized cost, net $ 149 $ 224 Rollforward of credit loss allowance for bank loans ($ in millions) Three months ended June 30, Six months ended June 30, 2024 2023 2024 2023 Beginning balance $ ( 13 ) $ ( 52 ) $ ( 22 ) $ ( 57 ) Net (increases) decreases related to credit losses 2 ( 11 ) 5 ( 14 ) Reduction of allowance related to sales — 1 — 6 Write-offs — — 6 3 Ending balance $ ( 11 ) $ ( 62 ) $ ( 11 ) $ ( 62 ) Note 5 Fair Value of Assets and Liabilities Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The hierarchy for inputs used in determining fair value maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that observable inputs be used when available. Assets and liabilities recorded on the Condensed Consolidated Statements of Financial Position at fair value are categorized in the fair value hierarchy based on the observability of inputs to the valuation techniques as follows: Level 1: Assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that the Company can access. Level 2: Assets and liabilities whose values are based on the following: (a) Quoted prices for similar assets or liabilities in active markets; Second Quarter 2024 Form 10-Q 17 Notes to Condensed Consolidated Financial Statements (b) Quoted prices for identical or similar assets or liabilities in markets that are not active; or (c) Valuation models whose inputs are observable, directly or indirectly, for substantially the full term of the asset or liability. Level 3: Assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. Unobservable inputs reflect the Company’s estimates of the assumptions that market participants would use in valuing the assets and liabilities. The availability of observable inputs varies by instrument. In situations where fair value is based on internally developed pricing models or inputs that are unobservable in the market, the determination of fair value requires more judgment. The degree of judgment exercised by the Company in determining fair value is typically greatest for instruments categorized in Level 3. In many instances, valuation inputs used to measure fair value fall into different levels of the fair value hierarchy. The category level in the fair value hierarchy is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company uses prices and inputs that are current as of the measurement date, including during periods of market disruption. In periods of market disruption, the ability to observe prices and inputs may be reduced for many instruments. The Company is responsible for the determination of fair value and the supporting assumptions and methodologies. The Company gains assurance that assets and liabilities are appropriately valued through the execution of various processes and controls designed to ensure the overall reasonableness and consistent application of valuation methodologies, including inputs and assumptions, and compliance with accounting standards. 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 previous fair values received from valuation service 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. In addition, the Company may validate the reasonableness of fair values by comparing information obtained from valuation service providers or brokers to other third-party valuation sources for selected securities. The Company performs ongoing price validation procedures such as back-testing of actual sales, which corroborate the various inputs used in internal models to market observable data. When fair value determinations are expected to be more variable, the Company validates them through reviews by members of management who have relevant expertise and who are independent of those charged with executing investment transactions. The Company has two types of situations where investments are classified as Level 3 in the fair value hierarchy: (1) Specific inputs significant to the fair value estimation models are not market observable. This primarily occurs in the Company’s use of broker quotes to value certain securities where the inputs have not been corroborated to be market observable, and the use of valuation models that use significant non-market observable inputs. (2) Quotes continue to be received from independent third-party valuation service providers and all significant inputs are market observable; however, there has been a significant decrease in the volume and level of activity for the asset when compared to normal market activity such that the degree of market observability has declined to a point where categorization as a Level 3 measurement is considered appropriate. 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, 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. To a lesser extent, the Company uses the income approach which involves determining fair values from discounted cash flow methodologies. For the majority of Level 2 and Level 3 valuations, a combination of the market and income approaches is used. Summary of significant inputs and valuation techniques for Level 2 and Level 3 assets and liabilities measured at fair value on a recurring basis Level 2 measurements • Fixed income securities: U.S. government and agencies, municipal, corporate - public and foreign government: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields and credit spreads. Corporate - privately placed: Privately placed are valued using a discounted cash flow model that is widely accepted in the financial services industry 18 www.allstate.com Notes to Condensed Consolidated Financial Statements and uses market observable inputs and inputs derived principally from, or corroborated by, observable market data. The primary inputs to the discounted cash flow model include an interest rate yield curve, as well as published credit spreads for similar assets in markets that are not active that incorporate the credit quality and industry sector of the issuer. Corporate - privately placed also includes redeemable preferred stock that are valued using quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields, underlying stock prices and credit spreads. ABS: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields, collateral performance and credit spreads. Certain ABS are valued based on non-binding broker quotes whose inputs have been corroborated to be market observable. Residential mortgage-backed securities, included in ABS, use prepayment speeds as a primary input for valuation. • Equity securities: The primary inputs to the valuation include quoted prices or quoted net asset values for identical or similar assets in markets that are not active. • Short-term: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields and credit spreads. • Other investments: Free-standing exchange listed derivatives that are not actively traded are valued based on quoted prices for identical instruments in markets that are not active. Over-the-counter (“OTC”) derivatives, including interest rate swaps, foreign currency swaps, total return swaps, foreign exchange forward contracts, certain options and certain credit default swaps, are valued using models that rely on inputs such as interest rate yield curves, implied volatilities, index price levels, currency rates, and credit spreads that are observable for substantially the full term of the contract. The valuation techniques underlying the models are widely accepted in the financial services industry and do not involve significant judgment. Level 3 measurements • Fixed income securities: Municipal: Comprise municipal bonds that are not rated by third-party credit rating agencies. The primary inputs to the valuation of these municipal bonds include quoted prices for identical or similar assets that are not market observable, contractual cash flows, benchmark yields and credit spreads. Also included are municipal bonds valued based on non-binding broker quotes where the inputs have not been corroborated to be market observable and municipal bonds in default valued based on the present value of expected cash flows. Corporate - public and privately placed and ABS: Primarily valued based on non-binding broker quotes where the inputs have not been corroborated to be market observable. Other inputs for corporate fixed income securities include an interest rate yield curve, as well as published credit spreads for similar assets that incorporate the credit quality and industry sector of the issuer. • Equity securities: The primary inputs to the valuation include quoted prices or quoted net asset values for identical or similar assets that are not market observable. • Short-term: For certain short-term investments, amortized cost is used as the best estimate of fair value. • Other investments: 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 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 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. This derivative is categorized as Level 3 due to the significance of non-market observable inputs. 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 credit losses. Investments excluded from the fair value hierarchy Investments reported at net asset value (“NAV”) Limited partnerships carried at fair value, which do not have readily determinable fair values, use NAV provided by the investees and are excluded from the fair value hierarchy. These investments are generally not redeemable by the investees and generally cannot be sold without approval of the general partner. The Company receives distributions of income and proceeds from the liquidation of the underlying assets of the investees, which usually takes place in years 4-9 of the typical contractual life of 10 - 12 years. As of June 30, 2024, the Company has commitments to invest $ 171 million in these limited partnership interests. Second Quarter 2024 Form 10-Q 19 Notes to Condensed Consolidated Financial Statements Assets and liabilities measured at fair value June 30, 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 Assets Fixed income securities: U.S. government and agencies $ 10,551 $ 13 $ — $ 10,564 Municipal — 6,531 7 6,538 Corporate - public — 23,470 30 23,500 Corporate - privately placed — 8,964 50 9,014 Foreign government — 1,289 — 1,289 ABS — 1,600 71 1,671 Total fixed income securities 10,551 41,867 158 52,576 Equity securities (1) 1,451 222 393 2,066 Short-term investments 1,596 3,691 1 5,288 Other investments — 7 2 $ ( 7 ) 2 Other assets 2 — 121 123 Total recurring basis assets 13,600 45,787 675 ( 7 ) 60,055 Non-recurring basis — — 11 11 Total assets at fair value $ 13,600 $ 45,787 $ 686 $ ( 7 ) $ 60,066 % of total assets at fair value 22.7 % 76.2 % 1.1 % — % 100.0 % Investments reported at NAV 1,138 Total $ 61,204 Liabilities Other liabilities $ ( 3 ) $ ( 2 ) $ — $ — $ ( 5 ) Total recurring basis liabilities ( 3 ) ( 2 ) — — ( 5 ) Total liabilities at fair value $ ( 3 ) $ ( 2 ) $ — $ — $ ( 5 ) % of total liabilities at fair value 60.0 % 40.0 % — % — % 100.0 % (1) Excludes $ 150 million of preferred stock measured at cost. 20 www.allstate.com Notes to Condensed Consolidated Financial Statements Assets and liabilities measured at fair value December 31, 2023 ($ in millions) Quoted prices in active markets for identical assets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Counterparty and cash collateral netting Total Assets Fixed income securities: U.S. government and agencies $ 8,606 $ 13 $ — $ 8,619 Municipal — 5,995 11 6,006 Corporate - public — 23,272 26 23,298 Corporate - privately placed — 7,849 58 7,907 Foreign government — 1,290 — 1,290 ABS — 1,687 58 1,745 Total fixed income securities 8,606 40,106 153 48,865 Equity securities (1) 1,656 203 402 2,261 Short-term investments 1,676 3,467 1 5,144 Other investments — 3 2 $ ( 2 ) 3 Other assets 3 — 118 121 Total recurring basis assets 11,941 43,779 676 ( 2 ) 56,394 Non-recurring basis — — 15 15 Total assets at fair value $ 11,941 $ 43,779 $ 691 $ ( 2 ) $ 56,409 % of total assets at fair value 21.2 % 77.6 % 1.2 % — % 100.0 % Investments reported at NAV 1,165 Total $ 57,574 Liabilities Other liabilities $ ( 2 ) $ ( 10 ) $ — $ 8 $ ( 4 ) Total recurring basis liabilities ( 2 ) ( 10 ) — 8 ( 4 ) Total liabilities at fair value $ ( 2 ) $ ( 10 ) $ — $ 8 $ ( 4 ) % of total liabilities at fair value 50.0 % 250.0 % — % ( 200.0 ) % 100.0 % (1) Excludes $ 150 million of preferred stock measured at cost. As of June 30, 2024 and December 31, 2023, Level 3 fair value measurements of fixed income securities total $ 158 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 $ 7 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. Second 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 June 30, 2024 Balance as of March 31, 2024 Total gains (losses) included in: Transfers Balance as of June 30, 2024 ($ in millions) Net income OCI Into Level 3 Out of Level 3 Purchases Sales Issues Settlements Assets Fixed income securities: Municipal $ 8 $ — $ — $ — $ — $ — $ ( 1 ) $ — $ — $ 7 Corporate - public 23 1 ( 1 ) — — 11 ( 4 ) — — 30 Corporate - privately placed 54 ( 2 ) — — — — ( 2 ) — — 50 ABS 58 — — — — 14 — — ( 1 ) 71 Total fixed income securities 143 ( 1 ) ( 1 ) — — 25 ( 7 ) — ( 1 ) 158 Equity securities 408 ( 3 ) — — — 9 ( 21 ) — — 393 Short-term investments 21 — — — — 1 ( 20 ) — ( 1 ) 1 Other investments 2 — — — — — — — — 2 Other assets 120 1 — — — — — — — 121 Total recurring Level 3 assets $ 694 $ ( 3 ) $ ( 1 ) $ — $ — $ 35 $ ( 48 ) $ — $ ( 2 ) $ 675 Rollforward of Level 3 assets and liabilities held at fair value during the six month period ended June 30, 2024 Balance as of December 31, 2023 Total gains (losses) included in: Transfers Balance as of June 30, 2024 ($ in millions) Net income OCI Into Level 3 Out of Level 3 Purchases Sales Issues Settlements Assets Fixed income securities: Municipal $ 11 $ — $ — $ — $ — $ — $ ( 2 ) $ — $ ( 2 ) $ 7 Corporate - public 26 1 1 — — 11 ( 9 ) — — 30 Corporate - privately placed 58 ( 6 ) — — — — ( 2 ) — — 50 ABS 58 — — — — 14 — — ( 1 ) 71 Total fixed income securities 153 ( 5 ) 1 — — 25 ( 13 ) — ( 3 ) 158 Equity securities 402 6 — — — 9 ( 24 ) — — 393 Short-term investments 1 — — — — 21 ( 20 ) — ( 1 ) 1 Other investments 2 — — — — — — — — 2 Other assets 118 3 — — — — — — — 121 Total recurring Level 3 assets $ 676 $ 4 $ 1 $ — $ — $ 55 $ ( 57 ) $ — $ ( 4 ) $ 675 22 www.allstate.com Notes to Condensed Consolidated Financial Statements Rollforward of Level 3 assets and liabilities held at fair value during the three month period ended June 30, 2023 Balance as of March 31, 2023 Total gains (losses) included in: Transfers Balance as of June 30, 2023 ($ in millions) Net income OCI Into Level 3 Out of Level 3 Purchases Sales Issues Settlements Assets Fixed income securities: Municipal $ 17 $ 3 $ ( 1 ) $ — $ — $ — $ ( 6 ) $ — $ ( 1 ) $ 12 Corporate - public 29 — — — — — ( 3 ) — — 26 Corporate - privately placed 49 ( 7 ) 1 16 — 1 — — — 60 ABS 27 — — — — 7 — — — 34 Total fixed income securities 122 ( 4 ) — 16 — 8 ( 9 ) — ( 1 ) 132 Equity securities 358 7 — — — 28 ( 12 ) — — 381 Short-term investments 6 — — — — — — — — 6 Other investments 2 — — — — — — — — 2 Other assets 112 ( 8 ) — — — — — — — 104 Total recurring Level 3 assets $ 600 $ ( 5 ) $ — $ 16 $ — $ 36 $ ( 21 ) $ — $ ( 1 ) $ 625 Rollforward of Level 3 assets and liabilities held at fair value during the six month period ended June 30, 2023 Balance as of December 31, 2022 Total gains (losses) included in: Transfers Balance as of June 30, 2023 ($ in millions) Net income OCI Into Level 3 Out of Level 3 Purchases Sales Issues Settlements Assets Fixed income securities: Municipal $ 21 $ 3 $ ( 1 ) $ — $ — $ — $ ( 9 ) $ — $ ( 2 ) $ 12 Corporate - public 69 ( 1 ) 2 — — — ( 44 ) — — 26 Corporate - privately placed 55 ( 11 ) 1 16 — 1 ( 2 ) — — 60 ABS 28 — — — — 7 — — ( 1 ) 34 Total fixed income securities 173 ( 9 ) 2 16 — 8 ( 55 ) — ( 3 ) 132 Equity securities 333 7 — — — 70 ( 29 ) — — 381 Short-term investments 6 — — — — — — — — 6 Other investments 3 ( 1 ) — — — — — — — 2 Other assets 103 1 — — — — — — — 104 Total recurring Level 3 assets $ 618 $ ( 2 ) $ 2 $ 16 $ — $ 78 $ ( 84 ) $ — $ ( 3 ) $ 625 Total Level 3 gains (losses) included in net income Three months ended June 30, Six months ended June 30, ($ in millions) 2024 2023 2024 2023 Net investment income $ 1 $ 3 $ 1 $ ( 2 ) Net gains (losses) on investments and derivatives (1) ( 5 ) — — ( 1 ) Operating costs and expenses (1) 1 ( 8 ) 3 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 Level 3 during the three and six months ended June 30, 2024. Transfers into Level 3 during the three and six months ended June 30, 2023 included situations where securities were written down utilizing an internal price where the inputs have not been corroborated to be market observable resulting in the securities being classified as Level 3. There were no transfers out of Level 3 during the three and six months ended June 30, 2024 and 2023. Second Quarter 2024 Form 10-Q 23 Notes to Condensed Consolidated Financial Statements Valuation changes included in net income and OCI for Level 3 assets and liabilities still held Three months ended June 30, Six months ended June 30, ($ in millions) 2024 2023 2024 2023 Assets Fixed income securities: Corporate - public $ 1 $ — $ 1 $ — Corporate - privately placed ( 2 ) ( 7 ) ( 6 ) ( 11 ) Total fixed income securities ( 1 ) ( 7 ) ( 5 ) ( 11 ) Equity securities — 7 11 6 Other investments — — — ( 1 ) Other assets 1 ( 8 ) 3 1 Total recurring Level 3 assets $ — $ ( 8 ) $ 9 $ ( 5 ) Total included in net income $ — $ ( 8 ) $ 9 $ ( 5 ) Components of net income Net investment income $ 1 $ 3 $ 1 $ ( 2 ) Net gains (losses) on investments and derivatives ( 2 ) ( 3 ) 5 ( 4 ) Operating costs and expenses 1 ( 8 ) 3 1 Total included in net income $ — $ ( 8 ) $ 9 $ ( 5 ) Assets Corporate - public $ ( 1 ) $ — $ 1 $ 1 Corporate - privately placed — 1 — 1 Changes in unrealized net capital gains and losses reported in OCI $ ( 1 ) $ 1 $ 1 $ 2 Financial instruments not carried at fair value ($ in millions) June 30, 2024 December 31, 2023 Financial assets Fair value level Amortized cost, net Fair value Amortized cost, net Fair value Mortgage loans Level 3 $ 815 $ 762 $ 822 $ 769 Bank loans Level 3 149 161 224 238 Financial liabilities Fair value level Carrying value (1) Fair value Carrying value (1) Fair value Contractholder funds on investment contracts Level 3 $ 42 $ 42 $ 46 $ 46 Debt Level 2 8,082 7,690 7,942 7,655 Liability for collateral Level 2 2,001 2,001 1,891 1,891 (1) Represents the amounts reported on the Condensed Consolidated Statements of Financial Position. Note 6 Derivative Financial Instruments The Company uses derivatives for risk reduction and to increase investment portfolio returns through asset replication. Risk reduction activity is focused on managing the risks with certain assets and liabilities arising from the potential adverse impacts from changes in risk-free interest rates, changes in equity market valuations, increases in credit spreads and foreign currency fluctuations. Asset replication refers to the “synthetic” creation of assets through the use of derivatives. The Company replicates fixed income securities using a combination of a credit default swap, index total return swap, options, futures, or a foreign currency forward contract and one or more highly rated fixed income securities, primarily investment grade host bonds, to synthetically replicate the economic characteristics of one or more cash market securities. The Company replicates equity securities using futures, index total return swaps, and options to increase equity exposure. Property-Liability may use interest rate swaps, swaptions, futures and options to manage the interest rate risks of existing investments. These instruments are utilized to change the duration of the portfolio in order to offset the economic effect that interest rates would otherwise have on the fair value of its fixed income securities. Fixed income index total return swaps are used to offset valuation losses in the fixed income portfolio during periods of declining market values. Credit default swaps are typically used to mitigate the credit risk within the Property-Liability fixed income portfolio. Equity index total return swaps, futures and options are used by Property-Liability to offset valuation losses in the equity portfolio during periods of declining equity market values. In addition, 24 www.allstate.com Notes to Condensed Consolidated Financial Statements equity futures are used to hedge the market risk related to deferred compensation liability contracts. Forward contracts are primarily used by Property-Liability to hedge foreign currency risk associated with holding foreign currency denominated investments and foreign operations. 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. The notional amounts specified in the contracts are used to calculate the exchange of contractual payments under the agreements and are generally not representative of the potential for gain or loss on these agreements. However, the notional amounts specified in credit default swaps where the Company has sold credit protection represent the maximum amount of potential loss, assuming no recoveries. Fair value, which is equal to the carrying value, is the estimated amount that the Company would receive or pay to terminate the derivative contracts at the reporting date. The carrying value amounts for OTC derivatives are further adjusted for the effects, if any, of enforceable master netting agreements and are presented on a net basis, by counterparty agreement, in the Condensed Consolidated Statements of Financial Position. For those derivatives which qualify and have been designated as fair value accounting hedges, net income includes the changes in the fair value of both the derivative instrument and the hedged risk. For cash flow hedges, gains and losses are amortized from AOCI and are reported in net income in the same period the forecasted transactions being hedged impact net income. Non-hedge accounting is generally used for “portfolio” level hedging strategies where the terms of the individual hedged items do not meet the strict homogeneity requirements to permit the application of hedge accounting. For non-hedge derivatives, net income includes changes in fair value and accrued periodic settlements, when applicable. With the exception of non-hedge derivatives used for asset replication and non-hedge embedded derivatives, all of the Company’s derivatives are evaluated for their ongoing effectiveness as either accounting hedge or non-hedge derivative financial instruments on at least a quarterly basis. 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 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. There are no collateral requirements related to the contingent consideration. Second Quarter 2024 Form 10-Q 25 Notes to Condensed Consolidated Financial Statements Summary of the volume and fair value positions of derivative instruments as of June 30, 2024 ($ in millions, except number of contracts) Volume (1) Balance sheet location Notional amount Number of contracts Fair value, net Gross asset Gross liability Asset derivatives Derivatives not designated as accounting hedging instruments Interest rate contracts Futures Other assets n/a 3,538 $ 1 $ 1 $ — Equity and index contracts Options Other investments n/a 28 — — — Futures Other assets n/a 1,192 1 1 — Contingent consideration Other assets $ 250 n/a 121 121 — Total asset derivatives $ 250 4,758 $ 123 $ 123 $ — Liability derivatives Derivatives not designated as accounting hedging instruments Interest rate contracts Futures Other liabilities & accrued expenses n/a 10,307 $ ( 2 ) $ — $ ( 2 ) Equity and index contracts Options Other liabilities & accrued expenses n/a 17 — — — Futures Other liabilities & accrued expenses n/a 482 ( 1 ) — ( 1 ) Foreign currency contracts Foreign currency forwards Other liabilities & accrued expenses $ 616 n/a 5 7 ( 2 ) Credit default contracts Credit default swaps – buying protection Other liabilities & accrued expenses 30 n/a — — — Total liability derivatives 646 10,806 2 $ 7 $ ( 5 ) Total derivatives $ 896 15,564 $ 125 (1) Volume for OTC and cleared derivative contracts is represented by their notional amounts. Volume for exchange traded derivatives is represented by the number of contracts, which is the basis on which they are traded. (n/a = not applicable) 26 www.allstate.com Notes to Condensed Consolidated Financial Statements Summary of the volume and fair value positions of derivative instruments as of December 31, 2023 ($ in millions, except number of contracts) Volume (1) Balance sheet location Notional amount Number of contracts Fair value, net Gross asset Gross liability Asset derivatives Derivatives not designated as accounting hedging instruments Interest rate contracts Futures Other assets n/a 20,479 $ 2 $ 2 $ — Equity and index contracts Options Other investments n/a 32 — — — Futures Other assets n/a 1,305 1 1 — Foreign currency contracts Foreign currency forwards Other investments $ 278 n/a ( 2 ) 2 ( 4 ) Contingent consideration Other assets 250 n/a 118 118 — Credit default contracts Credit default swaps – buying protection Other investments 34 n/a ( 1 ) — ( 1 ) Total asset derivatives $ 562 21,816 $ 118 $ 123 $ ( 5 ) Liability derivatives Derivatives not designated as accounting hedging instruments Interest rate contracts Futures Other liabilities & accrued expenses n/a 2,175 $ ( 1 ) $ — $ ( 1 ) Equity and index contracts Futures Other liabilities & accrued expenses n/a 980 ( 1 ) — ( 1 ) Foreign currency contracts Foreign currency forwards Other liabilities & accrued expenses $ 306 n/a ( 3 ) 1 ( 4 ) Credit default contracts Credit default swaps – buying protection Other liabilities & accrued expenses 19 n/a ( 1 ) — ( 1 ) Total liability derivatives 325 3,155 ( 6 ) $ 1 $ ( 7 ) Total derivatives $ 887 24,971 $ 112 (1) Volume for OTC and cleared derivative contracts is represented by their notional amounts. Volume for exchange traded derivatives is represented by the number of contracts, which is the basis on which they are traded. (n/a = not applicable) Gross and net amounts for OTC derivatives (1) ($ in millions) Offsets Gross amount Counter-party netting Cash collateral (received) pledged Net amount on balance sheet Securities collateral (received) pledged Net amount June 30, 2024 Asset derivatives $ 7 $ ( 7 ) $ — $ — $ — $ — Liability derivatives ( 2 ) 7 ( 7 ) ( 2 ) — ( 2 ) December 31, 2023 Asset derivatives $ 3 $ ( 6 ) $ 4 $ 1 $ — $ 1 Liability derivatives ( 10 ) 6 2 ( 2 ) — ( 2 ) (1) All OTC derivatives are subject to enforceable master netting agreements. Second Quarter 2024 Form 10-Q 27 Notes to Condensed Consolidated Financial Statements Gains (losses) from valuation and settlements reported on derivatives not designated as accounting hedges ($ in millions) Net gains (losses) on investments and derivatives Operating costs and expenses Total gain (loss) recognized in net income on derivatives Three months ended June 30, 2024 Interest rate contracts $ ( 14 ) $ — $ ( 14 ) Equity and index contracts ( 4 ) — ( 4 ) Contingent consideration — 1 1 Foreign currency contracts 3 — 3 Total $ ( 15 ) $ 1 $ ( 14 ) Six months ended June 30, 2024 Interest rate contracts $ ( 21 ) $ — $ ( 21 ) Equity and index contracts ( 15 ) 14 ( 1 ) Contingent consideration — 3 3 Foreign currency contracts 14 — 14 Credit default contracts ( 1 ) — ( 1 ) Total $ ( 23 ) $ 17 $ ( 6 ) Three months ended June 30, 2023 Interest rate contracts $ 18 $ — $ 18 Equity and index contracts ( 20 ) 10 ( 10 ) Contingent consideration — ( 8 ) ( 8 ) Foreign currency contracts ( 4 ) — ( 4 ) Credit default contracts ( 1 ) — ( 1 ) Total $ ( 7 ) $ 2 $ ( 5 ) Six months ended June 30, 2023 Interest rate contracts $ ( 17 ) $ — $ ( 17 ) Equity and index contracts ( 16 ) 18 2 Contingent consideration — 1 1 Foreign currency contracts ( 11 ) — ( 11 ) Credit default contracts ( 15 ) — ( 15 ) Total $ ( 59 ) $ 19 $ ( 40 ) The Company manages its exposure to credit risk by utilizing highly rated counterparties, establishing risk control limits, executing legally enforceable master netting agreements (“MNAs”) and obtaining collateral where appropriate. The Company uses MNAs for OTC derivative transactions that permit either party to net payments due for transactions and collateral is either pledged or obtained when certain predetermined exposure limits are exceeded. OTC cash and securities collateral pledged ($ in millions) June 30, 2024 Pledged by the Company $ — Pledged to the Company (1) 7 (1) No collateral was posted under MNAs for contracts containing credit-risk-contingent provisions that are in a liability provision. The Company has not incurred any losses on derivative financial instruments due to counterparty nonperformance. Other derivatives, including futures and certain option contracts, are traded on organized exchanges which require margin deposits and guarantee the execution of trades, thereby mitigating any potential credit risk. Counterparty credit exposure represents the Company’s potential loss if all of the counterparties concurrently fail to perform under the contractual terms of the contracts and all collateral, if any, becomes worthless. 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. OTC derivatives counterparty credit exposure by counterparty credit rating ($ in millions) June 30, 2024 December 31, 2023 Rating (1) Number of counter- parties Notional amount (2) Credit exposure (2) Exposure, net of collateral (2) Number of counter- parties Notional amount (2) Credit exposure (2) Exposure, net of collateral (2) A+ 3 $ 458 $ 5 $ — — $ — $ — $ — Total 3 $ 458 $ 5 $ — — $ — $ — $ — (1) Allstate uses the lower of S&P’s or Moody’s long-term debt issuer ratings. (2) Only OTC derivatives with a net positive fair value are included for each counterparty. 28 www.allstate.com Notes to Condensed Consolidated Financial Statements For certain exchange traded and cleared derivatives, margin deposits are required as well as daily cash settlements of margin accounts. Exchange traded and cleared margin deposits ($ in millions) June 30, 2024 Pledged by the Company $ 79 Received by the Company — Market risk is the risk that the Company will incur losses due to adverse changes in market rates and prices. Market risk exists for all of the derivative financial instruments the Company currently holds, as these instruments may become less valuable due to adverse changes in market conditions. 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. Certain of the Company’s derivative transactions contain credit-risk-contingent termination events and cross-default provisions. Credit-risk-contingent termination events allow the counterparties to terminate the derivative agreement or a specific trade on certain dates if AIC’s financial strength credit ratings by Moody’s or S&P fall below a certain level. Credit-risk-contingent cross-default provisions allow the counterparties to terminate the derivative agreement if the Company defaults by pre-determined threshold amounts on certain debt instruments. The following table summarizes the fair value of derivative instruments with termination, cross-default or collateral credit-risk-contingent features that are in a liability position, as well as the fair value of assets and collateral that are netted against the liability in accordance with provisions within legally enforceable MNAs. ($ in millions) June 30, 2024 December 31, 2023 Gross liability fair value of contracts containing credit-risk-contingent features $ 2 $ 10 Gross asset fair value of contracts containing credit-risk-contingent features and subject to MNAs ( 2 ) ( 3 ) Collateral posted under MNAs for contracts containing credit-risk-contingent features — ( 5 ) Maximum amount of additional exposure for contracts with credit-risk-contingent features if all features were triggered concurrently $ — $ 2 Note 7 Variable Interest Entities 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 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 $ 11 million and $ 21 million for the three and six months ended June 30, 2024, respectively, compared to $ 12 million and $ 23 million for the three and six months ended June 30, 2023, respectively. In addition, as of June 30, 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 June 30, 2024, Adirondack’s capital was below levels required by insurance regulations and its December 31, 2023 statutory-basis audited financial statements included disclosure expressing substantial doubt about Adirondack’s ability to continue as a going concern. 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 recorded a loss for the carrying value of the surplus notes in the amount of $ 123 million in the first quarter of 2024. The loss has been reflected as a capital transaction attributable to noncontrolling interest as the Company expects 100 % of its interests in surplus notes to absorb expected losses of the Reciprocal Exchanges. In addition, the Company has a 100 % quota share reinsurance agreement with Skylands to cede all of Skylands’ business to the Company. Claims and claims expense ceded to the Company were $ 18 million and $ 30 million for the three and six months ended June 30, 2024, respectively, compared to $ 10 million and $ 17 million for the three and six months ended June 30, 2023, respectively. The Reciprocal Exchanges generated $ 61 million and $ 122 million of earned premiums for the three and six months ended June 30, 2024, respectively, compared to $ 57 million and $ 114 million for the three and six months ended June 30, 2023, respectively. Total costs and expenses were $ 58 million and $ 145 million for the three and six months ended June 30, 2024, respectively, compared to $ 85 million and $ 144 Second Quarter 2024 Form 10-Q 29 Notes to Condensed Consolidated Financial Statements million for the three and six months ended June 30, 2023, respectively. 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. Assets and liabilities of Reciprocal Exchanges included in the condensed consolidated statement of financial position (1) ($ in millions) June 30, 2024 December 31, 2023 Assets Fixed income securities $ 227 $ 267 Short-term investments 30 7 Deferred policy acquisition costs 17 25 Premium installment and other receivables, net 41 44 Reinsurance recoverables, net 75 76 Other assets 15 54 Total assets 405 473 Liabilities Reserve for property and casualty insurance claims and claims expense 226 201 Unearned premiums 160 177 Other liabilities and expenses 26 77 Total liabilities $ 412 $ 455 (1) Intercompany balances eliminated in consolidation Total assets $ ( 57 ) $ ( 26 ) Total liabilities ( 198 ) ( 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 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. Inflation and a higher mix of more complex repairs, combined with skilled labor shortages, have increased physical damage loss costs. Medical inflation, increased treatment trends, higher attorney representation, rising litigation costs and more severe accidents have contributed to higher third-party bodily injury loss costs. The Company has also digitized and modified claim processes to increase effectiveness and efficiency. These factors may lead to historical development trends being less predictive of future loss development, potentially creating additional reserve variability. Generally, the initial reserves for a new accident year are established based on claim frequency and severity assumptions for different business segments, lines and coverages based on historical relationships to relevant inflation indicators. Reserves for prior accident years are statistically determined using several different actuarial estimation methods. 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, changes in attorney represented and litigated claim behavior, the effectiveness and efficiency of claim settlements and changes in mix of claim types. When changes in claim data occur, actuarial judgment is used to determine appropriate development factors to establish reserves. The Company’s reserving process incorporates changes in loss patterns, operational statistics and changes in claims reporting processes to determine its best estimate of recorded reserves. As part of the reserving process, the Company may also supplement its claims processes by utilizing third-party adjusters, appraisers, engineers, inspectors, and other professionals and information sources to assess and settle catastrophe and non-catastrophe related claims. The effects of inflation are implicitly considered in the reserving process. Because reserves are estimates of unpaid portions of losses that have occurred, including incurred but not reported (“IBNR”) losses, the establishment of 30 www.allstate.com Notes to Condensed Consolidated Financial Statements appropriate reserves, including reserves for catastrophes, Run-off Property-Liability and reinsurance and indemnification recoverables, is an inherently uncertain and complex process. The ultimate cost of losses may vary materially from recorded amounts, which are based on management’s best estimates. The highest degree of uncertainty is associated with reserves for losses incurred in the initial reporting period as it contains the greatest proportion of losses that have not been reported or settled as well as heightened uncertainty for claims that involve litigation or take longer to settle during periods of rapidly increasing loss costs. The Company also has uncertainty in the Run-off Property-Liability reserves that are based on events long since passed and are complicated by lack of historical data, legal interpretations, unresolved legal issues and legislative intent based on establishment of facts. The Company regularly updates its reserve estimates as new information becomes available and as events unfold that may affect the resolution of unsettled claims. Changes in reserve estimates, which may be material, are reported in property and casualty insurance claims and claims expense in the Condensed Consolidated Statements of Operations in the period such changes are determined. Management believes that the reserve for property and casualty insurance claims and claims expense, net of recoverables, is appropriately established in the aggregate and adequate to cover the ultimate net cost of reported and unreported claims arising from losses which had occurred by the date of the Condensed Consolidated Statements of Financial Position based on available facts, laws and regulations. Rollforward of the reserve for property and casualty insurance claims and claims expense Six months ended June 30, ($ in millions) 2024 2023 Balance as of January 1 $ 39,858 $ 37,541 Less: Recoverables (1) 8,396 9,176 Net balance as of January 1 31,462 28,365 Incurred claims and claims expense related to: Current year 20,656 21,856 Prior years ( 354 ) 197 Total incurred 20,302 22,053 Claims and claims expense paid related to: Current year ( 9,087 ) ( 9,094 ) Prior years ( 9,465 ) ( 9,523 ) Total paid ( 18,552 ) ( 18,617 ) Net balance as of June 30 33,212 31,801 Plus: Recoverables 8,341 8,730 Balance as of June 30 $ 41,553 $ 40,531 (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 $ 2.85 billion and $ 4.39 billion in the six months ended June 30, 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. Second Quarter 2024 Form 10-Q 31 Notes to Condensed Consolidated Financial Statements Prior year reserve reestimates included in claims and claims expense (1) Non-catastrophe losses Catastrophe losses Total ($ in millions) 2024 2023 2024 2023 2024 2023 Three months ended June 30, Auto $ ( 171 ) $ 116 $ ( 9 ) $ ( 19 ) $ ( 180 ) $ 97 Homeowners ( 63 ) 41 ( 128 ) 53 ( 191 ) 94 Other personal lines 60 8 1 ( 5 ) 61 3 Commercial lines 109 6 ( 2 ) 2 107 8 Other business lines ( 1 ) 10 — — ( 1 ) 10 Run-off Property-Liability 2 1 — — 2 1 Protection Services ( 1 ) ( 1 ) — — ( 1 ) ( 1 ) Total prior year reserve reestimates $ ( 65 ) $ 181 $ ( 138 ) $ 31 $ ( 203 ) $ 212 Six months ended June 30, Auto $ ( 238 ) $ 119 $ ( 16 ) $ ( 47 ) $ ( 254 ) $ 72 Homeowners ( 103 ) 29 ( 277 ) 45 ( 380 ) 74 Other personal lines 115 18 ( 2 ) ( 12 ) 113 6 Commercial lines 163 29 ( 5 ) 3 158 32 Other business lines 4 11 — — 4 11 Run-off Property-Liability 6 3 — — 6 3 Protection Services ( 1 ) ( 1 ) — — ( 1 ) ( 1 ) Total prior year reserve reestimates $ ( 54 ) $ 208 $ ( 300 ) $ ( 11 ) $ ( 354 ) $ 197 (1) Favorable reserve reestimates are shown in parentheses. 32 www.allstate.com Notes to Condensed Consolidated Financial Statements Note 9 Reserve for Future Policy Benefits and Contractholder Funds Rollforward of reserve for future policy benefits (1) Six months ended June 30, Accident and health Traditional life Total ($ in millions) 2024 2023 2024 2023 2024 2023 Present value of expected net premiums Beginning balance $ 1,688 $ 1,464 $ 325 $ 238 $ 2,013 $ 1,702 Beginning balance at original discount rate 1,737 1,549 330 246 2,067 1,795 Effect of changes in cash flow assumptions ( 1 ) — — ( 12 ) ( 1 ) ( 12 ) Effect of actual variances from expected experience ( 27 ) ( 26 ) 13 19 ( 14 ) ( 7 ) Adjusted beginning balance 1,709 1,523 343 253 2,052 1,776 Issuances 344 259 56 18 400 277 Interest accrual 39 25 7 5 46 30 Net premiums collected ( 196 ) ( 186 ) ( 32 ) ( 25 ) ( 228 ) ( 211 ) Ending balance at original discount rate 1,896 1,621 374 251 2,270 1,872 Effect of changes in discount rate assumptions ( 79 ) ( 68 ) ( 8 ) ( 7 ) ( 87 ) ( 75 ) Ending balance 1,817 1,553 366 244 2,183 1,797 Present value of expected future policy benefits Beginning balance 2,453 2,229 657 524 3,110 2,753 Beginning balance at original discount rate 2,495 2,316 656 534 3,151 2,850 Effect of changes in cash flow assumptions ( 6 ) — — ( 12 ) ( 6 ) ( 12 ) Effect of actual variances from expected experience ( 25 ) ( 30 ) 8 20 ( 17 ) ( 10 ) Adjusted beginning balance 2,464 2,286 664 542 3,128 2,828 Issuances 344 256 57 18 401 274 Interest accrual 53 47 15 12 68 59 Benefit payments ( 210 ) ( 199 ) ( 19 ) ( 26 ) ( 229 ) ( 225 ) Ending balance at original discount rate 2,651 2,390 717 546 3,368 2,936 Effect of changes in discount rate assumptions ( 84 ) ( 64 ) ( 20 ) ( 7 ) ( 104 ) ( 71 ) Ending balance $ 2,567 $ 2,326 $ 697 $ 539 $ 3,264 $ 2,865 Net reserve for future policy benefits (1) $ 750 $ 773 $ 331 $ 295 $ 1,081 $ 1,068 Less: reinsurance recoverables 80 84 1 2 81 86 Net reserve for future policy benefits, after reinsurance recoverables $ 670 $ 689 $ 330 $ 293 $ 1,000 $ 982 (1) Excludes $ 263 million and $ 271 million of reserves related to short-duration and other contracts as of June 30, 2024 and 2023, respectively. Revenue and interest recognized in the condensed consolidated statements of operations ($ in millions) Six months ended June 30, 2024 2023 Revenues (1) Accident and health $ 436 $ 446 Traditional life 68 50 Total $ 504 $ 496 Interest expense (2) Accident and health $ 14 $ 22 Traditional life 8 7 Total $ 22 $ 29 (1) Total revenues reflects gross premiums used in the calculation for reserve for future policy benefits. Revenues included in Accident and health insurance premiums and contract charges on the Condensed Consolidated Statements of Operations reflect premium revenue recognized for traditional life insurance and long-duration and short-duration accident and health insurance contracts. (2) Total interest expense presented as part of Accident, health and other policy benefits on the Condensed Consolidated Statements of Operations. Second Quarter 2024 Form 10-Q 33 Notes to Condensed Consolidated Financial Statements The following table provides the amount of undiscounted and discounted expected gross premiums and expected future benefits and expenses for nonparticipating traditional and limited-payment contracts. As of June 30, 2024 2023 ($ in millions) Undiscounted Discounted Undiscounted Discounted Accident and health Expected future gross premiums $ 5,703 $ 3,867 $ 5,020 $ 3,602 Expected future benefits and expenses 3,854 2,567 3,350 2,326 Traditional life Expected future gross premiums 1,042 715 696 489 Expected future benefits and expenses 1,456 697 1,008 539 The following table provides the weighted-average duration and weighted-average interest rates for the reserve for future policy benefits. As of June 30, Accident and health Traditional life 2024 2023 2024 2023 Weighted-average duration (in years) 8.0 3.9 15.1 14.0 Weighted-average interest rates Interest accretion rate (discount rate at contract issuance) 5.04 % 5.08 % 5.37 % 5.46 % Current discount rate (upper-medium grade fixed income yield) 5.26 4.79 5.35 5.14 Significant assumptions To determine mortality and morbidity assumptions, the Company uses a combination of its historical experience and industry data. Mortality and morbidity are monitored throughout the year. Historical experience is obtained through annual Company experience studies in the third quarter that consider its historical claim patterns. The lapse assumption is determined based on historical lapses of the Company’s insurance contracts. For the six months ended June 30, 2024 and 2023, actual experience for lapses in accident and health products was higher than expected. For the six months ended June 30, 2024 and 2023, actual experience for lapses in traditional life products was lower than expected. Contractholder funds Contractholder funds activity Six months ended June 30, ($ in millions) 2024 2023 Beginning balance $ 888 $ 879 Deposits 67 66 Interest credited 17 17 Benefits ( 5 ) ( 6 ) Surrenders and partial withdrawals ( 11 ) ( 10 ) Contract charges ( 60 ) ( 60 ) Other adjustments ( 5 ) ( 5 ) Ending balance $ 891 $ 881 Components of contractholder funds Interest-sensitive life insurance $ 849 $ 833 Fixed annuities 42 48 Total $ 891 $ 881 Weighted-average crediting rate 4.20 % 4.27 % Net amount at risk (1) $ 11,165 $ 11,640 Cash surrender value 732 725 (1) Guaranteed benefit amounts in excess of the current account balances. 34 www.allstate.com Notes to Condensed Consolidated Financial Statements Account values: comparison of current crediting rate to guaranteed minimum crediting rate (1) ($ in millions) Range of guaranteed minimum crediting rates At guaranteed minimum 1 - 50 basis points above Total June 30, 2024 Less than 3.00 % $ — $ — $ — 3.00 % - 3.49 % — 37 37 3.50 % - 3.99 % 10 — 10 4.00 % - 4.49 % 438 — 438 4.50 % - 4.99 % 259 — 259 5.00 % or greater 66 — 66 Non-account balances (2) 81 Total $ 773 $ 37 $ 891 June 30, 2023 Less than 3.00 % $ — $ — $ — 3.00 % - 3.49 % — 23 23 3.50 % - 3.99 % 11 — 11 4.00 % - 4.49 % 433 — 433 4.50 % - 4.99 % 265 — 265 5.00 % or greater 69 — 69 Non-account balances (2) 80 Total $ 778 $ 23 $ 881 (1) Difference, in basis points, between rates being credited to contractholders and the respective guaranteed minimum crediting rates. (2) Non-account balances include unearned revenue and amounts related to policies where a claim is either in the course of settlement or incurred but not reported. 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. Note 10 Reinsurance and Indemnification Effects of reinsurance ceded and indemnification programs on property and casualty premiums earned and accident and health insurance premiums and contract charges ($ in millions) Three months ended June 30, Six months ended June 30, 2024 2023 2024 2023 Property and casualty insurance premiums earned $ ( 588 ) $ ( 495 ) $ ( 1,145 ) $ ( 941 ) Accident and health insurance premiums and contract charges ( 11 ) ( 10 ) ( 21 ) ( 19 ) Effects of reinsurance ceded and indemnification programs on property and casualty insurance claims and claims expense and accident, health and other policy benefits ($ in millions) Three months ended June 30, Six months ended June 30, 2024 2023 2024 2023 Property and casualty insurance claims and claims expense $ ( 284 ) $ 60 $ ( 516 ) $ ( 260 ) Accident, health and other policy benefits ( 8 ) ( 17 ) ( 14 ) ( 25 ) Reinsurance and indemnification recoverables Reinsurance and indemnification recoverables, net ($ in millions) June 30, 2024 December 31, 2023 Property and casualty Paid and due from reinsurers and indemnitors $ 229 $ 254 Unpaid losses estimated (including IBNR) 8,341 8,396 Total property and casualty $ 8,570 $ 8,650 Accident and health insurance 160 159 Total $ 8,730 $ 8,809 Second Quarter 2024 Form 10-Q 35 Notes to Condensed Consolidated Financial Statements Rollforward of credit loss allowance for reinsurance recoverables ($ in millions) Three months ended June 30, Six months ended June 30, 2024 2023 2024 2023 Property and casualty (1) (2) Beginning balance $ ( 64 ) $ ( 61 ) $ ( 62 ) $ ( 62 ) (Increase) decrease in the provision for credit losses — — ( 2 ) 1 Write-offs — — — — Ending balance $ ( 64 ) $ ( 61 ) $ ( 64 ) $ ( 61 ) Accident and health insurance Beginning balance $ ( 3 ) $ ( 3 ) $ ( 3 ) $ ( 3 ) Increase in the provision for credit losses — — — — Write-offs — — — — Ending balance $ ( 3 ) $ ( 3 ) $ ( 3 ) $ ( 3 ) (1) Primarily related to Run-off Property-Liability reinsurance ceded. (2) Indemnification recoverables are considered collectible based on the industry pool and facility enabling legislation. Note 11 Deferred Policy Acquisition Costs The following table shows a roll-forward of DAC on long-duration contracts in the Allstate Health and Benefits segment, along with a reconciliation to the Company’s total DAC balance. Deferred policy acquisition costs activity ($ in millions) Accident and health Traditional life Interest-sensitive life Total Six months ended June 30, 2024 Allstate Health and Benefits Long-duration contracts Beginning balance $ 321 $ 90 $ 100 $ 511 Acquisition costs deferred 51 27 9 87 Amortization charged to income ( 40 ) ( 10 ) ( 7 ) ( 57 ) Experience adjustment ( 9 ) ( 1 ) ( 1 ) ( 11 ) Total $ 323 $ 106 $ 101 530 Short-duration contracts 32 Allstate Protection 2,478 Protection Services 3,072 Ending balance $ 6,112 Six months ended June 30, 2023 Allstate Health and Benefits Long-duration contracts Beginning balance $ 322 $ 79 $ 101 $ 502 Acquisition costs deferred 25 13 7 45 Amortization charged to income ( 16 ) ( 7 ) ( 7 ) ( 30 ) Experience adjustment ( 13 ) — ( 1 ) ( 14 ) Total $ 318 $ 85 $ 100 503 Short-duration contracts 27 Allstate Protection 2,203 Protection Services 2,874 Ending balance $ 5,607 Note 12 Capital Structure 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. 36 www.allstate.com Notes to Condensed Consolidated Financial Statements Note 13 Company Restructuring The Company undertakes various programs to reduce expenses. These programs generally involve a reduction in staffing levels, and in certain cases, office closures. Restructuring and related charges primarily include the following costs related to these programs: • Employee - severance and relocation benefits • 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 $ 13 million and $ 27 million during the three months ended June 30, 2024 and 2023, respectively, and $ 23 million and $ 54 million during the six months ended June 30, 2024 and 2023, respectively. Restructuring expenses during the second quarter and first six months of 2024 primarily relate to implementing actions to achieve a new phase of the organizational transformation component of the Transformative Growth plan, which commenced in the second quarter of 2024. Organizational transformation includes streamlining the organization and outsourcing certain aspects of operations. The Company continues to identify ways to improve operating efficiency and reduce cost which may result in additional restructuring charges in the future. Organizational transformation ($ in millions) Expected program charges $ 24 2024 expenses ( 20 ) Remaining program charges $ 4 These charges are primarily recorded in the Allstate Protection segment. The Company expects these actions will be completed in the first half of 2025. Restructuring activity during the period ($ in millions) Employee costs Exit costs Total liability Restructuring liability as of December 31, 2023 $ 40 $ 1 $ 41 Expense incurred 25 9 34 Adjustments to liability ( 11 ) — ( 11 ) Payments and non-cash charges ( 21 ) ( 9 ) ( 30 ) Restructuring liability as of June 30, 2024 $ 33 $ 1 $ 34 As of June 30, 2024, the cumulative amount incurred to date for active programs related to employee severance, relocation benefits and exit expenses totaled $ 107 million for employee costs and $ 7 million for exit costs. Note 14 Guarantees and Contingent Liabilities Shared markets and state facility assessments The Company is required to participate in assigned risk plans, reinsurance facilities and joint underwriting associations in various states that provide insurance coverage to individuals or entities that otherwise are unable to purchase such coverage from private insurers. The Company routinely reviews its exposure to assessments from these plans, facilities and government programs. Underwriting results related to these arrangements, which tend to be adverse, have been immaterial to the Company’s results of operations in the last two years. Because of the Company’s participation, it may be exposed to losses that surpass the capitalization of these facilities or assessments from these facilities. Guarantees 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 indemnification clauses are often standard contractual terms and are entered into in the normal course of business based on an assessment that the risk of loss would be remote. The terms of the indemnifications vary in duration and nature. In many cases, the maximum obligation is not explicitly stated and the contingencies triggering the obligation to indemnify have not occurred and are not expected to occur. Consequently, the maximum amount of the obligation under such indemnifications is not determinable. Historically, the Company has not made any material payments pursuant to these obligations. Related to the sale of ALNY on October 1, 2021, AIC agreed to indemnify Wilton Reassurance Company in connection with certain representations, warranties and covenants of AIC, and certain liabilities specifically excluded from the transaction, subject to specific contractual limitations regarding AIC’s maximum obligation. Management does not believe these indemnifications will have a material effect on results of operations, cash flows or financial position of the Company. Related to the sale of ALIC and Allstate Assurance Company on November 1, 2021, AIC and Allstate Second Quarter 2024 Form 10-Q 37 Notes to Condensed Consolidated Financial Statements Financial Insurance Holdings Corporation (collectively, the “Sellers”) agreed to indemnify Everlake US Holdings Company in connection with certain representations, warranties and covenants of the Sellers, and certain liabilities specifically excluded from the transaction, subject to specific contractual limitations regarding the Sellers’ maximum obligation. Management does not believe these indemnifications will have a material effect on results of operations, cash flows or financial position of the Company. The aggregate liability balance related to all guarantees was not material as of June 30, 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 SEC, the Financial Industry Regulatory Authority, the U.S. Equal Employment Opportunity Commission, and the U.S. Department of Justice. The Company has established procedures and policies to facilitate compliance with laws and regulations, to foster prudent business operations, and to support financial reporting. The Company routinely reviews its practices to validate compliance with laws and regulations and with internal procedures and policies. As a result of these reviews, from time to time the Company may decide to modify some of its procedures and policies. Such modifications, and the reviews that led to them, may be accompanied by payments being made and costs being incurred. The ultimate changes and eventual effects of these actions on the Company’s business, if any, are uncertain. Legal and regulatory proceedings and inquiries 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; novel legal issues; variations between jurisdictions in which matters are being litigated, heard, or investigated; changes in assigned judges; differences or developments in applicable laws and judicial interpretations; judges reconsidering prior rulings; the length of time before many of these matters might be resolved by settlement, through litigation, or otherwise; adjustments with respect to anticipated trial schedules and other proceedings; developments in similar actions against other companies; the fact that some of the lawsuits are putative class actions in which a class has not been certified and in which the purported class may not be clearly defined; the fact that some of the lawsuits involve multi-state class actions in which the applicable law(s) for the claims at issue is in dispute and therefore unclear; and the challenging legal environment faced by corporations and insurance companies. The outcome of these matters may be affected by decisions, verdicts, and settlements, and the timing of such decisions, verdicts, and settlements, in other individual and class action lawsuits that involve the Company, other insurers, or other entities and by other legal, governmental, and regulatory actions that involve the Company, other insurers, or other entities. The outcome may also be affected by future state or federal legislation, the timing or substance of which cannot be predicted. In the lawsuits, plaintiffs seek a variety of remedies which may include equitable relief in the form of injunctive and other remedies and monetary relief in the form of contractual and extra-contractual damages. In some cases, the monetary damages sought may include punitive or treble damages. Often specific information about the relief sought, such as the amount of damages, is not available because plaintiffs have not requested specific relief in their pleadings. When specific monetary demands are made, they are often set just below a state court jurisdictional limit in order to seek the maximum amount available in state court, regardless of the specifics of the case, while still avoiding the risk of removal to federal court. In Allstate’s experience, monetary demands in pleadings bear little relation to the ultimate loss, if any, to the Company. In connection with regulatory examinations and proceedings, government authorities may seek various forms of relief, including penalties, restitution, and changes in business practices. The Company may not be advised of the nature and extent of relief sought until the final stages of the examination or proceeding. Accrual and disclosure policy The Company reviews its lawsuits, regulatory inquiries, and other legal proceedings on an ongoing basis and follows appropriate accounting guidance when making accrual and disclosure decisions. The Company establishes accruals for such matters at management’s best estimate when the Company assesses that it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. The Company does not establish accruals for such matters when the Company does not believe both that it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. The Company’s 38 www.allstate.com Notes to Condensed Consolidated Financial Statements 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. The Company does not include potential recoveries in its estimates of reasonably possible or probable losses. Legal fees are expensed as incurred. The Company continues to monitor its lawsuits, regulatory inquiries, and other legal proceedings for further developments that would make the loss contingency both probable and estimable, and accordingly accruable, or that could affect the amount of accruals that have been previously established. 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. When the Company assesses it is reasonably possible or probable that a loss has been incurred, it discloses the matter. When it is possible to estimate the reasonably possible loss or range of loss above the amount accrued, if any, for the matters disclosed, that estimate is aggregated and disclosed. Disclosure is not required when an estimate of the reasonably possible loss or range of loss cannot be made. For certain of the matters described below in the “Claims related proceedings” and “Other proceedings” subsections, the Company is able to estimate the reasonably possible loss or range of loss above the amount accrued, if any. In determining whether it is possible to estimate the reasonably possible loss or range of loss, the Company reviews and evaluates the disclosed matters, in conjunction with counsel, in light of potentially relevant factual and legal developments. These developments may include information learned through the discovery process, rulings on dispositive motions, settlement discussions, information obtained from other sources, experience from managing these and other matters, and other rulings by courts, arbitrators or others. When the Company possesses sufficient appropriate information to develop an estimate of the reasonably possible loss or range of loss above the amount accrued, if any, that estimate is aggregated and disclosed below. There may be other disclosed matters for which a loss is probable or reasonably possible, but such an estimate is not possible. Disclosure of the estimate of the reasonably possible loss or range of loss above the amount accrued, if any, for any individual matter would only be considered when there have been sufficient legal and factual developments such that the Company’s ability to resolve the matter would not be impaired by the disclosure of the individual estimate. 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 $ 69 million, pre-tax. 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. The matters underlying the estimate will change from time to time, and actual results may vary significantly from the current estimate. The estimate does not include matters or losses for which an estimate is not possible. Therefore, this estimate represents an estimate of possible loss only for certain matters meeting these criteria. It does not represent the Company’s maximum possible loss exposure. Information is provided below regarding the nature of all of the disclosed matters and, where specified, the amount, if any, of plaintiff claims associated with these loss contingencies. Due to the complexity and scope of the matters disclosed in the “Claims related proceedings” and “Other proceedings” subsections below and the many uncertainties that exist, the ultimate outcome of these matters cannot be predicted and in the Company’s judgment, a loss, in excess of amounts accrued, if any, is not probable. In the event of an unfavorable outcome in one or more of these matters, the ultimate liability may be in excess of amounts currently accrued, if any, and may be material to the Company’s operating results or cash flows for a particular quarterly or annual period. However, based on information currently known to it, management believes that the ultimate outcome of all matters described below, as they are resolved over time, is not likely to have a material effect on the financial position of the Company. Claims related proceedings The Company is defending various disputes in Florida that raise challenges to the Company’s practices, processes, and procedures relating to claims for personal injury protection benefits under Florida auto policies. Medical providers continue to pursue litigation under various theories that challenge the amounts that the Company pays under the personal injury protection coverage, seeking additional benefit payments, as well as applicable interest, penalties and fees. In one such lawsuit, Revival Chiropractic v. Allstate Insurance Company, et al. (M.D. Fla. filed January 2019), 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 held 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. 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. On May 24, 2024, the Eleventh Circuit entered an order dismissing plaintiff’s class certification appeal and directing the federal district court to enter summary judgment in favor of Second Quarter 2024 Form 10-Q 39 Notes to Condensed Consolidated Financial Statements Allstate. On July 2, 2024, the federal district court entered judgment in Allstate’s favor. 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. The Company is currently defending the following lawsuits on this issue: Sims, et al. v. Allstate Fire and Casualty Insurance Company, et al. (W.D. Tex. filed June 2022); Thompson, et al. v. Allstate Insurance Company (Circuit Court of Cole Co., Mo. filed June 2022); Hill v. Allstate Vehicle and Property Insurance Compan y (Circuit Court of Cole Co., Mo. filed October 2022); and Hernandez v. Allstate Vehicle and Property Insurance Company (D. Ariz. filed April 2023). No classes have been certified in any of these matters. The Company is defending putative class actions pending in multiple states alleging that the Company underpays total loss vehicle physical damage claims on auto policies. The alleged systematic underpayments result from the following theories: (a) the third-party valuation tool used by the Company as part of a comprehensive adjustment process is allegedly flawed, biased, or contrary to applicable law; 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 Company is currently defending the following lawsuits: Kronenberg v. Allstate Insurance Company and Allstate Fire and Casualty Insurance Company (E.D.N.Y. filed December 2018); Durgin v. Allstate Property and Casualty Insurance Company (W.D. La. filed June 2019); Golla v. Allstate Insurance Company (N.D. Ohio filed June 2023); Bibbs v. Allstate Insurance Company and Allstate Fire and Casualty Insurance Company (N.D. Ohio filed August 2023); Hail v. Allstate Property and Casualty Insurance Company (State Court of Habersham Co., Ga. filed December 2023); Katz v. Esurance Property and Casualty Insurance Company and National General Insurance Company (E.D.N.Y. filed February 2024); and Jarrett-Kelly v. Direct General Insurance Agency, Inc . (Circuit Court of Pulaski Co., Ark. filed May 2024). No classes have been certified in any of these matters. Settlements in principle have been reached in the following cases: Bass v. Imperial Fire and Casualty Insurance Company (W.D. La. filed February 2022); and Cummings v. Allstate Property and Casualty Insurance Company (M.D. La. filed April 2022). The Company is defending putative class actions in the U.S. District Court for the District of Arizona that allege underpayment of uninsured/underinsured motorist claims. The lawsuits are Dorazio v. Allstate Fire and Casualty Insurance Company and Loughran v. MIC General Insurance Corporation , each 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. Other proceedings The Company has an investigatory hearing before the California Insurance Commissioner concerning the private passenger automobile insurance rating practices of Allstate Insurance Company and Allstate Indemnity Company in California. The investigatory hearing is captioned: In the Matter of the Rating Practices of Allstate Insurance Company and Allstate Indemnity Company . Pursuant to the Notice of Hearing issued by the California Insurance Commissioner, the California Insurance Commissioner is investigating: (1) whether Allstate has potentially violated California insurance law by using illegal price optimization; (2) how Allstate implemented any such potentially illegal price optimization in its private passenger auto insurance rates and/or class plans; and (3) how such potentially illegal price optimization impacted Allstate’s private passenger auto insurance policyholders. Allstate and the California Department of Insurance have reached an agreement in principle to resolve the investigatory hearing. The Company is defending two putative class actions in the U.S. District Court for the Eastern District of California, Holland Hewitt v. Allstate Life Insurance Company filed May 2020, and Farley v. Lincoln Benefit Life Company (“LBL”) filed December 2020, following the sale of ALIC. 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. Plaintiffs claim that these statutes apply to life insurance policies that existed before the statutes’ effective date. The plaintiffs seek damages and injunctive relief. Similar litigation is pending against other insurance carriers. In August 2021, the California Supreme Court in McHugh v. Protective Life , a matter involving another insurer, determined that the statutory notice requirements apply to life insurance policies issued before the statutes’ effective date. The Company asserts various defenses to plaintiffs’ claims and to class certification. The Company is defending a lawsuit in the U.S. District Court for the Southern District of California, Chavez v. Allstate Northbrook Indemnity Company , filed February 2022, where plaintiffs generally allege that 40 www.allstate.com Notes to Condensed Consolidated Financial Statements Allstate’s Shelter In Place Payback program provided insufficient premium relief in response to the reduction in driving in California during the state’s COVID-19 stay-at-home restrictions in 2020 and 2021. Plaintiffs seek damages that include additional premium refunds and punitive damages. On June 25, 2024, the court issued an order granting plaintiffs’ motion for class certification. The Company continues to defend the litigation and oppose plaintiffs’ allegations. On July 24, 2024, the Department of Justice filed a civil suit in the U.S. District Court for the Western District of Pennsylvania against National General Holdings Corp., National General Insurance Company, National General Lender Services, Inc., and Newport Management Corp. The suit alleges that certain services that National General provided as a vendor to a large national bank for its collateral protection insurance program violated the Financial Institutions, Reform, Recovery, and Enforcement Act of 1989 (the “Act”), and it seeks civil monetary penalties available under the Act. Note 15 Benefit Plans For the second quarter and first six months of 2024, service cost includes a $ 38 million refund of premiums previously paid to the Pension Benefit Guaranty Corporation (“PBGC”). The PBGC insures defined benefit plans offered by private-sector employers. PBGC premiums are required to be paid annually and are calculated using a predefined calculation that includes interest rates to discount a plan’s vested benefits. During the second quarter of 2024, the Company’s defined benefit pension plan elected to use an alternative methodology to calculate the prescribed interest rate in determining premiums for plan year 2023, which resulted in a refund of $ 38 million in previously paid premiums. Components of net cost (benefit) for pension and other postretirement plans Three months ended June 30, Six months ended June 30, ($ in millions) 2024 2023 2024 2023 Pension benefits Service cost $ ( 7 ) $ 32 $ 26 $ 65 Interest cost 58 58 116 118 Expected return on plan assets ( 76 ) ( 79 ) ( 153 ) ( 156 ) Costs and expenses ( 25 ) 11 ( 11 ) 27 Remeasurement of projected benefit obligation ( 68 ) ( 68 ) ( 93 ) 55 Remeasurement of plan assets 60 30 85 ( 150 ) Remeasurement (gains) losses ( 8 ) ( 38 ) ( 8 ) ( 95 ) Pension net benefit $ ( 33 ) $ ( 27 ) $ ( 19 ) $ ( 68 ) Postretirement benefits Service cost $ — $ — $ — $ — Interest cost 3 2 5 5 Amortization of prior service credit ( 1 ) ( 6 ) ( 1 ) ( 12 ) Costs and expenses 2 ( 4 ) 4 ( 7 ) Remeasurement of projected benefit obligation ( 1 ) ( 2 ) ( 3 ) 2 Remeasurement of plan assets — — — — Remeasurement (gains) losses ( 1 ) ( 2 ) ( 3 ) 2 Postretirement net cost (benefit) $ 1 $ ( 6 ) $ 1 $ ( 5 ) Pension and postretirement benefits Costs and expenses $ ( 23 ) $ 7 $ ( 7 ) $ 20 Remeasurement (gains) losses ( 9 ) ( 40 ) ( 11 ) ( 93 ) Total net benefit $ ( 32 ) $ ( 33 ) $ ( 18 ) $ ( 73 ) 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. Second Quarter 2024 Form 10-Q 41 Notes to Condensed Consolidated Financial Statements Pension and postretirement benefits remeasurement gains and losses Three months ended June 30, Six months ended June 30, ($ in millions) 2024 2023 2024 2023 Remeasurement of projected benefit obligation (gains) losses: Discount rate $ ( 57 ) $ ( 73 ) $ ( 98 ) $ 51 Other assumptions ( 12 ) 3 2 6 Remeasurement of plan assets (gains) losses 60 30 85 ( 150 ) Remeasurement (gains) losses $ ( 9 ) $ ( 40 ) $ ( 11 ) $ ( 93 ) Remeasurement gains for the second quarter of 2024 primarily related to an increase in the liability discount rate and changes in other assumptions, partially offset by unfavorable asset performance compared to expected return on plan assets. Remeasurement gains in the first six months 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. The weighted average discount rate used to measure the pension benefit obligation increased to 5.62 % at June 30, 2024 compared to 5.45 % at March 31, 2024 and 5.35 % at December 31, 2023 resulting in gains for the second quarter and first six months of 2024. For the second quarter and first six months 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 higher public equity returns. Note 16 Supplemental Cash Flow Information Non-cash investing activities include $ 58 million and $ 53 million related to mergers and exchanges completed with equity securities, fixed income securities, bank loans, and limited partnerships for the six months ended June 30, 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 six months ended June 30, 2024. Non-cash investing activities include $ 15 million related to right-of-use real estate obtained in exchange for lease obligations and $ 51 million related to debt assumed by purchaser on sale of real estate for the six months ended June 30, 2023. Non-cash financing activities include $ 27 million and $ 37 million related to the issuance of Allstate common shares for vested equity awards for the six months ended June 30, 2024 and 2023, 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 $ 58 million and $ 66 million for the six months ended June 30, 2024 and 2023, respectively. Non-cash operating activities include $ 22 million and $ 6 million related to right-of-use assets obtained in exchange for lease obligations for the six months ended June 30, 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) Six months ended June 30, 2024 2023 Cash flows from operating activities Net change in proceeds managed Net change in fixed income securities $ 80 $ 202 Net change in short-term investments ( 190 ) 18 Operating cash flow (used) provided $ ( 110 ) $ 220 Net change in liabilities Liabilities for collateral, beginning of period $ ( 1,891 ) $ ( 2,011 ) Liabilities for collateral, end of period ( 2,001 ) ( 1,791 ) Operating cash flow provided (used) $ 110 $ ( 220 ) 42 www.allstate.com Notes to Condensed Consolidated Financial Statements Note 17 Other Comprehensive Income (Loss) Components of other comprehensive income (loss) on a pre-tax and after-tax basis ($ in millions) Three months ended June 30, 2024 2023 Pre-tax Tax After-tax Pre-tax Tax After-tax Unrealized net holding gains and losses arising during the period, net of related offsets $ ( 260 ) $ 56 $ ( 204 ) $ ( 472 ) $ 96 $ ( 376 ) Less: reclassification adjustment of realized capital gains and losses ( 108 ) 23 ( 85 ) ( 131 ) 27 ( 104 ) Unrealized net capital gains and losses ( 152 ) 33 ( 119 ) ( 341 ) 69 ( 272 ) Unrealized foreign currency translation adjustments ( 29 ) 6 ( 23 ) 36 ( 8 ) 28 Unamortized pension and other postretirement prior service credit (1) ( 1 ) 1 — ( 6 ) 1 ( 5 ) Discount rate for reserve for future policy benefits ( 1 ) — ( 1 ) 10 ( 2 ) 8 Other comprehensive (loss) income $ ( 183 ) $ 40 $ ( 143 ) $ ( 301 ) $ 60 $ ( 241 ) Six months ended June 30, 2024 2023 Pre-tax Tax After-tax Pre-tax Tax After-tax Unrealized net holding gains and losses arising during the period, net of related offsets $ ( 635 ) $ 136 $ ( 499 ) $ 257 $ ( 60 ) $ 197 Less: reclassification adjustment of realized capital gains and losses ( 209 ) 44 ( 165 ) ( 269 ) 56 ( 213 ) Unrealized net capital gains and losses ( 426 ) 92 ( 334 ) 526 ( 116 ) 410 Unrealized foreign currency translation adjustments ( 19 ) 4 ( 15 ) 99 ( 21 ) 78 Unamortized pension and other postretirement prior service credit (1) ( 2 ) 1 ( 1 ) ( 12 ) 3 ( 9 ) Discount rate for reserve for future policy benefits 31 ( 7 ) 24 ( 1 ) — ( 1 ) Other comprehensive (loss) income $ ( 416 ) $ 90 $ ( 326 ) $ 612 $ ( 134 ) $ 478 (1) Represents prior service credits reclassified out of other comprehensive income and amortized into operating costs and expenses. Second Quarter 2024 Form 10-Q 43 Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of The Allstate Corporation Results of Review of Interim Financial Information We have reviewed the accompanying condensed consolidated statement of financial position of The Allstate Corporation and subsidiaries (the “Company”) as of June 30, 2024, the related condensed consolidated statements of operations, comprehensive income (loss), and shareholders’ equity for the three-month and six-month periods ended June 30, 2024 and 2023, and of cash flows for the six-month periods ended June 30, 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, 2023, and the related consolidated statements of operations, comprehensive income (loss), shareholders’ equity, and cash flows for the year then ended (not presented herein); 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 This interim financial information is the responsibility of the Company's management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our reviews in accordance with standards of the PCAOB. A review of the interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. /s/ Deloitte & Touche LLP Chicago, Illinois July 31, 2024 44 www.allstate.com