ALLSTATE CORP 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Overview The following discussion highlights significant factors influencing the consolidated financial position and results of operations of The Allstate Corporation (referred to in this document as “we,” “our,” “us,” the “Company” or “Allstate”). It should be read in conjunction with the condensed consolidated financial statements and related notes thereto found under Part I. Item 1. contained herein, and with the discussion, analysis, consolidated financial statements and notes thereto in Part I. Item 1. and Part II. Item 7. and Item 8. of The Allstate Corporation annual report on Form 10-K for 2023, filed February 21, 2024. Further analysis of our insurance segments is provided in the Property-Liability Operations and Segment Results sections, including Allstate Protection and Run-off Property-Liability, Protection Services and Allstate Health and Benefits, of Management’s Discussion and Analysis (“MD&A”). The segments are consistent with the way in which the chief operating decision maker reviews financial performance and makes decisions about the allocation of resources. On November 1, 2023, we announced that we are pursuing the sale of the Health and Benefits business. We continue to pursue the sale of the business but have not completed the sale process. Macroeconomic Impacts Macroeconomic factors have and may continue to impact the results of our operations, financial condition and liquidity, such as U.S. government fiscal and monetary policies, the Russia/Ukraine and Israel/Hamas conflicts, supply chain disruptions, labor shortages and other factors that have increased inflation. These factors have affected our operations and may continue to affect our results of operations, financial condition and liquidity and should be considered when comparing the current period to prior periods. This is not inclusive of all potential impacts and should not be treated as such. Within the MD&A, we have included further disclosures related to macroeconomic impacts on our 2024 results. Corporate Strategy Our strategy has two components: increase personal property-liability market share and expand protection offerings by leveraging the Allstate brand, customer base and capabilities. Transformative Growth is about creating a business model, capabilities and culture that continually transform to better serve customers. This is done by providing affordable, simple and connected protection through multiple distribution methods. The ultimate objective is to enhance customer value to drive growth in all businesses. In the personal property-liability businesses, this has five key components: • Improving customer value • Expanding customer access • Increasing sophistication and investment in customer acquisition • Deploying new technology ecosystem • Driving organizational transformation We are expanding protection services businesses utilizing enterprise capabilities and resources such as the Allstate brand, distribution, analytics, claims, investment expertise, talent and capital. 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. We use these measures in our evaluation of results of operations to analyze profitability. Underwriting income is calculated as premiums earned and other revenue, less claims and claims expense (“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 accounting principles generally accepted in the United States of America (“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 45 Highlights Consolidated net income (loss) applicable to common shareholders ($ in millions) Q1 Q2 Consolidated net income applicable to common shareholders was $301 million and $1.49 billion in the second quarter and first six months of 2024, respectively, compared to a loss of $1.39 billion and $1.74 billion in the second quarter and first six months of 2023, respectively, primarily due to improved underwriting results from increased earned premium and improved loss trends. For the twelve months ended June 30, 2024, return on Allstate common shareholders’ equity was 19.3%. Total revenues ($ in millions) Total revenues increased 12.4% to $15.71 billion and increased 11.6% to $30.97 billion in the second quarter and first six months of 2024, respectively, compared to the same periods of 2023 due to higher average premium from rate increases and higher net investment income from fixed income securities. Net investment income ($ in millions) Net investment income increased $102 million to $712 million in the second quarter of 2024 primarily due to higher market-based investment results, partially offset by lower performance-based investment results. Net investment income increased $291 million to $1.48 billion in the first six months of 2024 compared to the same period of 2023, primarily due to higher market-based and performance-based investment results. Market-based results continue to benefit from portfolio repositioning into higher yielding fixed income securities and higher investment balances. Financial highlights Investments totaled $70.60 billion as of June 30, 2024, increasing from $66.68 billion as of December 31, 2023. Allstate shareholders’ equity was $18.59 billion as of June 30, 2024, increasing from $17.77 billion as of December 31, 2023, primarily due to net income, partially offset by dividends to shareholders and higher unrealized net capital losses on investments. Book value per diluted common share (ratio of Allstate common shareholders’ equity to total common shares outstanding and dilutive potential common shares outstanding) was $62.14, an increase of 21.2% from $51.29 as of June 30, 2023, and an increase of 4.6% from $59.39 as of December 31, 2023. Return on average Allstate common shareholders’ equity for the twelve months ended June 30, 2024 was 19.3%, an increase of 36.5 points from (17.2)% for the twelve months ended June 30, 2023. The increase was primarily due to net income applicable to common shareholders for the trailing twelve-month period ending June 30, 2024 compared to a net loss for the twelve-month period ending June 30, 2023. 46 www.allstate.com Summarized consolidated financial results Three months ended June 30, Six months ended June 30, ($ in millions) 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, restructuring and interest expenses (2,130) (1,911) (4,122) (3,740) Pension and other postretirement remeasurement gains (losses) 9 40 11 93 Amortization of purchased intangibles (70) (82) (139) (163) 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) Preferred stock dividends (30) (37) (59) (63) Net income (loss) applicable to common shareholders $ 301 $ (1,389) $ 1,490 $ (1,735) Segment highlights Allstate Protection underwriting loss was $142 million in the second quarter of 2024 compared to underwriting loss of $2.09 billion in the second quarter of 2023 and underwriting income totaled $761 million in the first six months of 2024 compared to an underwriting loss of $3.09 billion in the first six months of 2023, primarily due to increased premiums earned and lower catastrophe losses, partially offset by higher advertising costs. As auto profitability improves, we are increasing advertising and removing underwriting restrictions to support growth. Catastrophe losses were $2.12 billion and $2.85 billion in the second quarter and first six months of 2024, respectively, compared to $2.70 billion and $4.39 billion in the second quarter and first six months of 2023, respectively. Premiums written increased 13.1% to $14.28 billion and increased 12.5% to $27.46 billion in the second quarter and first six months of 2024, respectively, compared to the same periods of 2023, reflecting higher premiums in both Allstate and National General brands. Protection Services adjusted net income was $55 million in the second quarter of 2024 compared to $41 million in the second quarter of 2023, primarily due to revenue growth at Allstate Protection Plans. Adjusted net income was $109 million the first six months of 2024 compared to $75 million in the first six months of 2023, primarily due to growth at Allstate Protection Plans and improved claim severity and lower expenses at Allstate Roadside. Premiums and other revenue increased 12.3% to $711 million and increased 12.2% to $1.41 billion in the second quarter and first six months of 2024, respectively, compared to the same periods of 2023, primarily due to Allstate Protection Plans. Allstate Health and Benefits adjusted net income was $58 million in the second quarter of 2024 compared to adjusted net income of $57 million in the second quarter of 2023, primarily due to an increase in group health and employer voluntary benefits, partially offset by a decline in individual health. Adjusted net income was $114 million in the first six months of 2024 compared to $113 million in the first six months of 2023, primarily due to an increase in group health. Premiums and contract charges increased 4.6% to $474 million in the second quarter of 2024 and increased 3.9% to $952 million in the first six months of 2024 compared to the same periods of 2023, primarily due to growth in group health and individual health. The increase in the first six months of 2024 was partially offset by a decline in employer voluntary benefits. Second Quarter 2024 Form 10-Q 47 Property-Liability Operations Property-Liability Operations Overview Property-Liability operations consist of two reportable segments: Allstate Protection and Run-off Property-Liability. These segments are consistent with the groupings of financial information that management uses to evaluate performance and to determine the allocation of resources. We do not allocate Property-Liability 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 level for decision-making purposes. GAAP operating ratios are used to measure our profitability to enhance an investor’s understanding of our financial results and are calculated as follows: • Loss ratio: the ratio of claims and claims expense (loss adjustment expenses), to premiums earned. Loss ratios include the impact of catastrophe losses and prior year reserve reestimates. • Expense ratio: the ratio of amortization of DAC, operating costs and expenses, amortization or impairment of purchased intangibles and restructuring and related charges, less other revenue to premiums earned. • Combined ratio: the sum of the loss ratio and the expense ratio. We have also calculated the following impacts of specific items on the GAAP operating ratios because of the volatility of these items between periods. The impacts are calculated by taking the specific items noted below divided by Property-Liability premiums earned: • Effect of catastrophe losses on combined ratio: includes catastrophe losses and prior year reserve reestimates of catastrophe losses included in claims and claims expense • Effect of prior year reserve reestimates on combined ratio • Effect of amortization of purchased intangibles on combined ratio • Effect of restructuring and related charges on combined ratio • Effect of Run-off Property-Liability business on combined ratio: includes claims and claims expense, restructuring and related charges and operating costs and expenses in the Run-off Property-Liability segment Premium measures and statistics are used to analyze our premium trends and are calculated as follows: • PIF : policy counts are based on items rather than customers. A multi-car customer would generate multiple item (policy) counts, even if all cars were insured under one policy. Commercial lines PIF counts for shared economy agreements reflected contracts that covered multiple rather than individual drivers. Lender-placed policies are excluded from policy counts because relationships are with the lenders. • New issued applications : item counts of automobile or homeowner insurance applications for insurance policies that were issued during the period, regardless of whether the customer was previously insured by another Allstate brand. • Average premium - gross written (“average premium”): gross premiums written divided by issued item count. Gross premiums written include the impacts from discounts, surcharges and ceded reinsurance premiums and exclude the impacts from mid-term premium adjustments and premium refund accruals. Average premiums represent the appropriate policy term for each line. • Renewal ratio: renewal policy item counts issued during the period, based on contract effective dates, divided by the total policy item counts issued generally 6 months prior for auto or 12 months prior for homeowners. • Implemented rate changes: represents the impact in the locations (U.S. states, the District of Columbia or Canadian provinces) where rate changes were implemented during the period as a percentage of total brand prior year-end premiums written. 48 www.allstate.com Property-Liability Operations Underwriting results Three months ended June 30, Six months ended June 30, ($ in millions, except ratios) 2024 2023 2024 2023 Premiums written $ 14,279 $ 12,620 $ 27,462 $ 24,403 Premiums earned $ 13,339 $ 11,921 $ 26,239 $ 23,556 Other revenue 441 389 871 742 Claims and claims expense (10,649) (11,575) (19,998) (21,755) Amortization of DAC (1,673) (1,496) (3,281) (2,948) Other costs and expenses (1,537) (1,249) (2,954) (2,528) Restructuring and related charges (1) (15) (26) (22) (47) Amortization of purchased intangibles (51) (58) (102) (115) Underwriting (loss) income $ (145) $ (2,094) $ 753 $ (3,095) Catastrophe losses Catastrophe losses, excluding reserve reestimates $ 2,258 $ 2,665 $ 3,151 $ 4,398 Catastrophe reserve reestimates (2) (138) 31 (300) (11) Total catastrophe losses $ 2,120 $ 2,696 $ 2,851 $ 4,387 Non-catastrophe reserve reestimates (2) $ (64) $ 182 $ (53) $ 209 Prior year reserve reestimates (2) (202) 213 (353) 198 GAAP operating ratios Loss ratio 79.8 97.1 76.2 92.3 Expense ratio (3) 21.3 20.5 20.9 20.8 Combined ratio 101.1 117.6 97.1 113.1 Effect of catastrophe losses on combined ratio 15.9 22.6 10.9 18.6 Effect of prior year reserve reestimates on combined ratio (1.5) 1.9 (1.4) 0.8 Effect of catastrophe losses included in prior year reserve reestimates on combined ratio (1.0) 0.3 (1.1) (0.1) Effect of restructuring and related charges on combined ratio (1) 0.1 0.2 0.1 0.2 Effect of amortization of purchased intangibles on combined ratio 0.4 0.5 0.4 0.5 Effect of Run-off Property-Liability business on combined ratio — 0.1 — — (1) Restructuring and related charges for the second quarter and first six months of 2024 primarily relate to implementing a new phase of the organizational transformation component of the Transformative Growth plan. See Note 13 of the condensed consolidated financial statements for additional details. (2) Favorable reserve reestimates are shown in parentheses. (3) Other revenue is deducted from operating costs and expenses in the expense ratio calculation. Second Quarter 2024 Form 10-Q 49 Segment Results Allstate Protection Allstate Protection Segment Underwriting results Three months ended June 30, Six months ended June 30, ($ in millions) 2024 2023 2024 2023 Premiums written $ 14,279 $ 12,620 $ 27,462 $ 24,403 Premiums earned $ 13,339 $ 11,921 $ 26,239 $ 23,556 Other revenue 441 389 871 742 Claims and claims expense (10,647) (11,574) (19,992) (21,752) Amortization of DAC (1,673) (1,496) (3,281) (2,948) Other costs and expenses (1,536) (1,248) (2,952) (2,526) Restructuring and related charges (15) (26) (22) (47) Amortization of purchased intangibles (51) (58) (102) (115) Underwriting (loss) income $ (142) $ (2,092) $ 761 $ (3,090) Catastrophe losses $ 2,120 $ 2,696 $ 2,851 $ 4,387 Underwriting loss was $142 million in the second quarter of 2024 and underwriting income was $761 million in the first six months of 2024 compared to underwriting loss of $2.09 billion and $3.09 billion in the second quarter and first six months of 2023, respectively, due to increased premiums earned and lower catastrophe losses, partially offset by higher advertising costs. As auto profitability improves, we are increasing advertising and removing underwriting restrictions to support growth. Change in underwriting results from prior year period - three months ended ($ in millions) Change in underwriting results from prior year period - six months ended ($ in millions) 50 www.allstate.com Allstate Protection Segment Results Underwriting income (loss) by brand and by line of business Allstate brand National General Allstate Protection ($ in millions) 2024 2023 2024 2023 2024 2023 Three months ended June 30, Auto $ 231 $ (546) $ 139 $ (132) $ 370 $ (678) Homeowners (258) (1,195) (117) (112) (375) (1,307) Other personal lines (53) (70) (2) — (55) (70) Commercial lines (144) (60) 6 (1) (138) (61) Other business lines (1) 35 24 17 (3) 52 21 Answer Financial 4 3 Total $ (189) $ (1,847) $ 43 $ (248) $ (142) $ (2,092) Six months ended June 30, Auto $ 492 $ (878) $ 229 $ (146) $ 721 $ (1,024) Homeowners 310 (1,703) (121) (138) 189 (1,841) Other personal lines (51) (160) 3 1 (48) (159) Commercial lines (213) (124) 5 3 (208) (121) Other business lines (1) 63 46 37 4 100 50 Answer Financial 7 5 Total $ 601 $ (2,819) $ 153 $ (276) $ 761 $ (3,090) (1) Other business lines represents commissions earned and other costs and expenses for Ivantage, non-proprietary life and annuity products, and lender-placed products. Second Quarter 2024 Form 10-Q 51 Segment Results Allstate Protection Premium measures and statistics include PIF, new issued applications, average premiums and renewal ratio to analyze our premium trends. Premiums written is the amount of premiums charged for policies issued during a reporting period. Premiums are considered earned and are included in the financial results on a pro-rata basis over the policy period. The portion of premiums written applicable to the unexpired term of the policies is recorded as unearned premiums on our Condensed Consolidated Statements of Financial Position. Premiums written by brand and by line of business Allstate brand National General Allstate Protection ($ in millions) 2024 2023 2024 2023 2024 2023 Three months ended June 30, Auto $ 7,488 $ 6,821 $ 1,796 $ 1,448 $ 9,284 $ 8,269 Homeowners 3,349 2,937 496 444 3,845 3,381 Other personal lines 678 621 167 54 845 675 Commercial lines 60 146 90 54 150 200 Other business lines — — 155 95 155 95 Total premiums written $ 11,575 $ 10,525 $ 2,704 $ 2,095 $ 14,279 $ 12,620 Six months ended June 30, Auto $ 14,887 $ 13,647 $ 3,754 $ 2,971 $ 18,641 $ 16,618 Homeowners 5,866 5,147 853 768 6,719 5,915 Other personal lines 1,197 1,113 308 110 1,505 1,223 Commercial lines 134 323 173 104 307 427 Other business lines — — 290 220 290 220 Total premiums written $ 22,084 $ 20,230 $ 5,378 $ 4,173 $ 27,462 $ 24,403 Premiums earned by brand and by line of business Allstate brand National General Allstate Protection ($ in millions) 2024 2023 2024 2023 2024 2023 Three months ended June 30, Auto $ 7,363 $ 6,772 $ 1,716 $ 1,349 $ 9,079 $ 8,121 Homeowners 2,861 2,537 394 346 3,255 2,883 Other personal lines 591 540 110 47 701 587 Commercial lines 82 153 76 49 158 202 Other business lines — — 146 128 146 128 Total premiums earned $ 10,897 $ 10,002 $ 2,442 $ 1,919 $ 13,339 $ 11,921 Six months ended June 30, Auto $ 14,536 $ 13,432 $ 3,321 $ 2,597 $ 17,857 $ 16,029 Homeowners 5,628 5,025 781 668 6,409 5,693 Other personal lines 1,155 1,061 205 88 1,360 1,149 Commercial lines 182 336 145 98 327 434 Other business lines — — 286 251 286 251 Total premiums earned $ 21,501 $ 19,854 $ 4,738 $ 3,702 $ 26,239 $ 23,556 Reconciliation of premiums written to premiums earned Three months ended June 30, Six months ended June 30, ($ in millions) 2024 2023 2024 2023 Total premiums written $ 14,279 $ 12,620 $ 27,462 $ 24,403 (Increase) decrease in unearned premiums (921) (753) (1,158) (880) Other (19) 54 (65) 33 Total premiums earned $ 13,339 $ 11,921 $ 26,239 $ 23,556 52 www.allstate.com Allstate Protection Segment Results Policies in force by brand and by line of business Allstate brand National General Allstate Protection PIF (thousands) 2024 2023 2024 2023 2024 2023 As of June 30, Auto 19,877 20,821 5,247 4,699 25,124 25,520 Homeowners 6,743 6,614 683 654 7,426 7,268 Other personal lines 4,469 4,574 402 316 4,871 4,890 Commercial lines 105 194 151 113 256 307 Total 31,194 32,203 6,483 5,782 37,677 37,985 Auto insurance premiums written increased 12.3% or $1.02 billion in the second quarter of 2024 compared to the second quarter of 2023 and 12.2% or $2.02 billion in the first six months of 2024 compared to the first six months of 2023, primarily due to the following factors: • Increased average premiums driven by rate increases. In the six months ended June 30, 2024: – Rate increases of 7.9% were taken for Allstate brand in 42 locations, resulting in total estimated Allstate brand insurance premium impact of 3.4% – Rate increases of 11.2% were taken for National General brand in 38 locations, resulting in total estimated National General brand insurance premium impact of 6.1% • We expect to continue to pursue targeted rate increases for both Allstate and National General brands in states currently not achieving acceptable returns to offset increases in loss costs throughout 2024 • PIF decreased 1.6% or 396 thousand to 25,124 thousand as of June 30, 2024 compared to June 30, 2023 • Renewal ratio increased 0.2 points and 0.3 points in the second quarter and the first six months of 2024, respectively, compared to the second quarter and first six months of 2023 • Increased new issued applications driven by growth in all channels • We have removed underwriting restrictions in areas that represent the majority of Allstate brand countrywide premiums, which is expected to increase premiums written and PIF Auto premium measures and statistics Three months ended June 30, Six months ended June 30, 2024 2023 Change 2024 2023 Change New issued applications (thousands) Allstate Protection by brand Allstate brand 892 724 23.2 % 1,692 1,475 14.7 % National General 836 754 10.9 1,706 1,537 11.0 Total new issued applications 1,728 1,478 16.9 3,398 3,012 12.8 Allstate brand average premium $ 841 $ 737 14.1 % $ 832 $ 732 13.7 % Allstate brand renewal ratio (%) 85.7 85.5 0.2 85.9 85.6 0.3 Homeowners insurance premiums written increased 13.7% or $464 million in the second quarter of 2024 compared to the second quarter of 2023 and increased 13.6% or $804 million in the first six months of 2024 compared to the first six months of 2023, primarily due to the following factors: • Higher Allstate brand average premiums from implemented rate increases, combined with policies in force growth • In the six months ended June 30, 2024, rate increases of 11.6% were taken for Allstate brand in 25 locations, resulting in total estimated Allstate brand insurance premium impact of 4.5% • National General policy growth may be negatively impacted in future quarters as we improve certain underwriting margins to targeted levels through underwriting and rate actions. In the six months ended June 30, 2024, rate increases of 14.4% were taken for National General brand in 22 locations, resulting in total estimated National General brand insurance premium impact of 3.9% • Increased new issued applications driven by growth in the exclusive agency and direct channels • Policy growth is being reduced in states and lines of business that are underperforming. We are no longer writing new homeowners business in California, New Jersey and Florida, and are non-renewing certain policies in Florida, which have and will continue to negatively impact premiums • We may not be able to grow in certain states without regulatory or legislative reforms that enable customers to be provided coverage at appropriate risk adjusted returns • The impact of the ongoing rate increases has and may continue to have an adverse effect on the renewal ratio, premiums and future PIF growth Second Quarter 2024 Form 10-Q 53 Segment Results Allstate Protection Homeowners premium measures and statistics Three months ended June 30, Six months ended June 30, 2024 2023 Change 2024 2023 Change New issued applications (thousands) Allstate Protection by brand Allstate brand 293 234 25.2 % 552 464 19.0 % National General 41 46 (10.9) 73 81 (9.9) Total new issued applications 334 280 19.3 625 545 14.7 Allstate brand average premium $ 1,993 $ 1,800 10.7 % $ 1,957 $ 1,758 11.3 % Allstate brand renewal ratio (%) 87.2 86.3 0.9 87.2 86.3 0.9 Other personal lines premiums written increased 25.2% or $170 million in the second quarter of 2024 compared to the second quarter of 2023 and increased 23.1% or $282 million in the first six months of 2024 compared to the first six months of 2023 primarily due to increases in involuntary auto policies purchased from other carriers for National General and landlords policies for Allstate brand. We are no longer writing condominium new business in California and Florida, and we are non-renewing certain policies in Florida, which may negatively impact premiums. Commercial lines premiums written decreased 25.0% or $50 million in the second quarter of 2024 compared to the second quarter of 2023 and decreased 28.1% or $120 million in the first six months of 2024 compared to the first six months of 2023 primarily due to the strategic decision for the Allstate brand to stop writing new business and non-renew certain policies. We are committed to offering comprehensive commercial products to customers through our exclusive agency and independent agency channels, with solutions offered by the National General brand and NEXT Insurance. Other business lines premiums written increased 63.2% or $60 million in the second quarter of 2024 compared to the second quarter of 2023 and increased 31.8% or $70 million in the first six months of 2024 compared to the first six months of 2023 due to growth in the lender-placed business. GAAP operating ratios include loss ratio, expense ratio and combined ratio to analyze our profitability trends. Frequency and severity statistics are used to describe the trends in loss costs. Combined ratios by line of business Loss ratio Expense ratio (1) Combined ratio 2024 2023 2024 2023 2024 2023 Three months ended June 30, Auto 74.2 87.9 21.7 20.4 95.9 108.3 Homeowners 90.3 125.0 21.2 20.3 111.5 145.3 Other personal lines 92.0 93.5 15.8 18.4 107.8 111.9 Commercial lines 158.8 105.4 28.5 24.8 187.3 130.2 Other business lines 49.3 51.6 15.1 32.0 64.4 83.6 Total 79.8 97.0 21.3 20.5 101.1 117.5 Impact of amortization of purchased intangibles 0.4 0.5 0.4 0.5 Impact of restructuring and related charges 0.1 0.2 0.1 0.2 Six months ended June 30, Auto 74.8 85.7 21.2 20.7 96.0 106.4 Homeowners 75.6 111.9 21.5 20.4 97.1 132.3 Other personal lines 88.9 93.6 14.6 20.2 103.5 113.8 Commercial lines 136.4 103.7 27.2 24.2 163.6 127.9 Other business lines 46.8 47.4 18.2 32.7 65.0 80.1 Total 76.2 92.3 20.9 20.8 97.1 113.1 Impact of amortization of purchased intangibles 0.4 0.5 0.4 0.5 Impact of restructuring and related charges 0.1 0.2 0.1 0.2 (1) Other revenue is deducted from operating costs and expenses in the expense ratio calculation. 54 www.allstate.com Allstate Protection Segment Results Loss ratios by line of business Loss ratio Effect of catastrophe losses (1) Effect of prior year reserve reestimates Effect of catastrophe losses included in prior year reserve reestimates 2024 2023 2024 2023 2024 2023 2024 2023 Three months ended June 30, Auto 74.2 87.9 3.9 4.2 (2.0) 1.2 (0.1) (0.2) Homeowners 90.3 125.0 49.6 75.9 (5.8) 3.2 (3.9) 1.8 Other personal lines 92.0 93.5 17.3 24.2 8.7 0.5 0.2 (0.9) Commercial lines 158.8 105.4 3.2 4.0 67.7 3.9 (1.2) 1.0 Other business lines 49.3 51.6 15.1 9.4 (0.7) 7.8 — — Total 79.8 97.0 15.9 22.6 (1.5) 1.8 (1.0) 0.3 Six months ended June 30, Auto 74.8 85.7 2.6 2.7 (1.4) 0.5 (0.1) (0.3) Homeowners 75.6 111.9 33.9 63.9 (5.9) 1.3 (4.3) 0.8 Other personal lines 88.9 93.6 13.4 24.0 8.3 0.5 (0.1) (1.1) Commercial lines 136.4 103.7 1.8 3.9 48.3 7.4 (1.6) 0.7 Other business lines 46.8 47.4 10.1 7.2 1.4 4.4 — — Total 76.2 92.3 10.9 18.6 (1.4) 0.8 (1.1) (0.1) (1) The ten-year average effect of catastrophe losses on the total combined ratio was 13.5 points in the second quarter of 2024. Auto underwriting quarterly results 2024 2023 2022 ($ in millions, except ratios) Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Underwriting income (loss) $ 370 $ 351 $ 93 $ (178) $ (678) $ (346) $ (974) $ (1,315) $ (578) $ (147) Loss ratio 74.2 75.4 78.5 81.4 87.9 83.4 90.6 95.3 84.9 77.6 Effect of prior year non-catastrophe reserve reestimates on combined ratio (1.9) (0.7) 1.7 0.3 1.4 (0.1) 2.3 8.5 3.8 2.1 Frequency and severity are influenced by: • Supply chain disruptions and labor shortages • Mix of repairable losses and total losses • Value of total losses due to changes in used car prices • Changes in medical inflation and consumption • Number of claims with attorney representation • Labor and part cost increases • Changes in commuting activity • Driving behavior (e.g., speed, time of day) impacting severity and mix of claim types • Organizational and process changes impacting claim opening and closing practices and shifts in timing, if any, can impact comparisons to prior periods The quarterly auto loss ratio has been more variable due to these and additional factors discussed below. Auto loss ratio decreased 13.7 and 10.9 points in the second quarter and first six months of 2024, respectively, compared to the same periods of 2023 driven by increased earned premiums. Estimated report year 2024 incurred claim severity for Allstate brand increased compared to report year 2023 for major coverages due to higher repair costs, a higher mix of total losses, an increase in claims with attorney representation, higher medical consumption, and inflation. Gross claim frequency decreased relative to the prior year. We continue to enhance our claims practices to manage loss costs by increasing resources and expanding re-inspections, accelerating resolution of bodily injury claims, and negotiating improved vendor services and parts agreements. Homeowners loss ratio decreased 34.7 and 36.3 points in the second quarter and first six months of 2024, respectively, compared to the same periods of 2023, primarily due to lower catastrophe losses and increased premiums earned. Gross claim frequency decreased in the second quarter and first six months of 2024 compared to the same periods of 2023 due to fewer fire claims reported. Paid claim severity increased in the second quarter and first six months of 2024 compared to the same periods of 2023 due to inflationary loss cost pressure driven by increases in labor and materials costs. Homeowners paid claim severity can be impacted by both the mix of perils and the magnitude of specific losses paid during the quarter. Other personal lines loss ratio decreased 1.5 and 4.7 points in the second quarter and first six months of 2024, respectively, compared to the same periods of 2023 primarily due to increased premiums earned and lower catastrophe losses, partially offset by increased severity. Second Quarter 2024 Form 10-Q 55 Segment Results Allstate Protection Commercial lines loss ratio increased 53.4 and 32.7 points in the second quarter and first six months of 2024, respectively, compared to the same periods of 2023, primarily due to higher unfavorable reserve reestimates related to the shared economy business and premiums earned decreasing as a result of the strategic decision for the Allstate brand to stop writing new business and non-renew certain policies. Other business lines loss ratio decreased 2.3 and 0.6 points in the second quarter and first six months of 2024, respectively, compared to the same periods of 2023, primarily due to increased premiums earned and favorable reserve development, partially offset by higher losses. Catastrophe losses decreased $576 million to $2.12 billion in the second quarter of 2024 compared to the second quarter of 2023 and decreased $1.54 billion to $2.85 billion in the first six months of 2024 compared to the first six months of 2023, primarily due to lower losses per event compared to historically high levels in the prior year. Favorable prior year reserve reestimates of $138 million and $300 million for the second quarter and first six months of 2024, respectively, were primarily due to reserve reestimates in homeowners lines for 2023 events. We define a “catastrophe” as an event that produces pre-tax losses before reinsurance in excess of $1 million and involves multiple first party policyholders, or a winter weather event that produces a number of claims in excess of a preset, per-event threshold of average claims in a specific area, occurring within a certain amount of time following the event. Catastrophes are caused by various natural events including high winds, winter storms and freezes, tornadoes, hailstorms, wildfires, tropical storms, tsunamis, hurricanes, earthquakes and volcanoes. We are also exposed to man-made catastrophic events, such as certain types of terrorism, civil unrest, wildfires or industrial accidents. The nature and level of catastrophes in any period cannot be reliably predicted. Loss estimates are generally based on claim adjuster inspections and the application of historical loss development factors. Our loss estimates are calculated in accordance with the coverage provided by our policies. The establishment of appropriate reserves, including reserves for catastrophe losses, is an inherently uncertain and complex process. Reserving for hurricane losses is complicated by the inability of insureds to promptly report losses, limitations placed on claims adjusting staff affecting their ability to inspect losses, determining whether losses are covered by our homeowners policy (generally for damage caused by wind or wind driven rain) or specifically excluded coverage caused by flood, exposure to mold damage, and the effects of numerous other considerations, including the timing of a catastrophe in relation to other events, such as at or near the end of a financial reporting period, which can affect the availability of information needed to estimate reserves for that reporting period. In these situations, we may need to adapt our practices to accommodate these circumstances in order to determine a best estimate of our losses from a catastrophe. Over time, we have limited our aggregate insurance exposure to catastrophe losses in certain regions of the country that are subject to high levels of natural catastrophes by utilizing reinsurance and participating in various state facilities. Catastrophe losses by the type of event Three months ended June 30, Six months ended June 30, ($ in millions) Number of events 2024 Number of events 2023 Number of events 2024 Number of events 2023 Tornadoes 1 $ 53 1 $ 25 1 $ 53 3 $ 138 Wind/hail 41 2,146 39 2,858 59 2,908 63 4,230 Wildfires 1 20 2 26 3 29 2 26 Freeze/other events — — — — 1 161 2 4 Prior year reserve reestimates (138) 31 (300) (11) Prior quarter reserve reestimates 39 (244) — — Total catastrophe losses 43 $ 2,120 42 $ 2,696 64 $ 2,851 70 $ 4,387 Catastrophe reinsurance The catastrophe reinsurance program is part of our catastrophe management strategy, which is intended to provide our shareholders with an acceptable return on the risks assumed in our personal lines business, reduce earnings variability, and provide protection to our customers. Our current catastrophe reinsurance program supports our risk and return framework which incorporates our robust economic capital model and is informed by catastrophe risk models including hurricanes, earthquakes and wildfires and adjusts based on premium and insured value growth. As of June 30, 2024, the modeled 1-in-100 probable maximum loss for hurricane, wildfire and earthquake perils is approximately $2.9 billion, net of reinsurance. We continually review our aggregate risk appetite and the cost and availability of reinsurance to optimize the risk and return profile of this exposure. During the second quarter of 2024, we completed the placement of our 2024-2025 Florida Excess Catastrophe Reinsurance Program (“Florida program”) and the National General Lender Services Standalone Program. Additionally, we placed one single-year term contract as part of our 2024-2025 Nationwide Excess Catastrophe Reinsurance Program, providing $90 56 www.allstate.com Allstate Protection Segment Results million of placed limit in excess of a $7.70 billion retention. Florida program updates Our 2024 Florida program provides coverage for property policies of Castle Key Insurance Company and certain affiliate companies for Florida catastrophe events up to $890 million of loss less a $30 million retention. The Florida program includes reinsurance agreements placed in the traditional market, the Florida Hurricane Catastrophe Fund (“FHCF”) and the insurance-linked securities (“ILS”) market as follows: • Traditional market placements comprise reinsurance limits for losses to personal lines property in Florida arising out of multiple perils. These contracts provide a combined $310 million of limits, with a portion of the traditional market placements providing coverage for perils not covered by the FHCF contracts, which only cover hurricanes. • Three FHCF contracts provide $206 million of limits for qualifying losses to personal lines property in Florida caused by storms the National Hurricane Center declares to be hurricanes. The three contracts are 90% placed. • ILS placements provide $625 million of reinsurance limits for qualifying losses to personal lines property in Florida caused by a named storm event, a severe weather event, an earthquake event, a fire event, a volcanic eruption event, or a meteorite impact event. National General Lender Services Standalone Program is placed in the traditional market and provides $265 million of coverage, subject to a $70 million retention, with one reinstatement of limits. Inuring contracts include the National General FHCF contract providing $71 million of limits in excess of a $36 million retention, 90% placed. For a complete summary of the 2024 reinsurance placement, please read this in conjunction with the discussion and analysis in Part I. Item 2. Management’s Discussion and Analysis - Allstate Protection Segment Results, Catastrophe Reinsurance of The Allstate Corporation Form 10-Q for the quarterly period ended March 31, 2024. The total cost of our property catastrophe reinsurance programs, excluding reinstatement premiums, during the second quarter and first six months of 2024 was $296 million and $582 million, respectively, compared to $242 million and $461 million in the second quarter and first six months of 2023, respectively. Catastrophe placement premiums reduce net written and earned premium with approximately 79% of the reduction related to homeowners premium. Prior year reserve reestimates Favorable reserve reestimates, including catastrophes, were $204 million and $359 million in the second quarter and first six months of 2024, respectively, primarily due to favorable reserve reestimates in homeowners lines and personal auto lines, partially offset by unfavorable reserve reestimates in commercial lines and other personal lines. For a more detailed discussion on reinsurance and reserve reestimates, see Note 8 of the condensed consolidated financial statements. Prior year reserve reestimates Three months ended June 30, Six months ended June 30, Prior year reserve reestimates (1) Effect on combined ratio (2) Prior year reserve reestimates (1) Effect on combined ratio (2) ($ in millions, except ratios) 2024 2023 2024 2023 2024 2023 2024 2023 Auto $ (180) $ 97 (1.3) 0.8 $ (254) $ 72 (1.0) 0.3 Homeowners (191) 94 (1.4) 0.8 (380) 74 (1.4) 0.3 Other personal lines 61 3 0.4 — 113 6 0.4 — Commercial lines 107 8 0.8 0.1 158 32 0.6 0.1 Other business lines (1) 10 — 0.1 4 11 — 0.1 Total Allstate Protection $ (204) $ 212 (1.5) 1.8 $ (359) $ 195 (1.4) 0.8 Allstate brand $ (198) $ 36 (1.5) 0.3 $ (375) $ (18) (1.5) (0.1) National General (6) 176 — 1.5 16 213 0.1 0.9 Total Allstate Protection $ (204) $ 212 (1.5) 1.8 $ (359) $ 195 (1.4) 0.8 (1) Favorable reserve reestimates are shown in parentheses. (2) Ratios are calculated using Allstate Protection premiums earned. Second Quarter 2024 Form 10-Q 57 Segment Results Allstate Protection Expense ratio increased 0.8 and 0.1 points in the second quarter and first six months of 2024, respectively, compared to the second quarter and first six months of 2023, primarily due to an increase in advertising costs, partially offset by higher earned premium growth relative to fixed costs. Impact of specific costs and expenses on the expense ratio Three months ended June 30, Six months ended June 30, ($ in millions, except ratios) 2024 2023 Change 2024 2023 Change Amortization of DAC $ 1,673 $ 1,496 $ 177 $ 3,281 $ 2,948 $ 333 Advertising expense 402 113 289 685 271 414 Other costs and expenses, net of other revenue 693 746 (53) 1,396 1,513 (117) Amortization of purchased intangibles 51 58 (7) 102 115 (13) Restructuring and related charges 15 26 (11) 22 47 (25) Total underwriting expenses $ 2,834 $ 2,439 $ 395 $ 5,486 $ 4,894 $ 592 Premiums earned $ 13,339 $ 11,921 $ 1,418 $ 26,239 $ 23,556 $ 2,683 Expense ratio Amortization of DAC 12.6 12.6 — 12.5 12.5 — Advertising expense 3.0 0.9 2.1 2.6 1.2 1.4 Other costs and expenses, net of other revenue 5.2 6.3 (1.1) 5.3 6.4 (1.1) Subtotal 20.8 19.8 1.0 20.4 20.1 0.3 Amortization of purchased intangibles 0.4 0.5 (0.1) 0.4 0.5 (0.1) Restructuring and related charges 0.1 0.2 (0.1) 0.1 0.2 (0.1) Total expense ratio 21.3 20.5 0.8 20.9 20.8 0.1 58 www.allstate.com Run-off Property-Liability Segment Results Run-off Property-Liability Segment Underwriting results ($ in millions) Three months ended June 30, Six months ended June 30, 2024 2023 2024 2023 Claims and claims expense $ (2) $ (1) $ (6) $ (3) Operating costs and expenses (1) (1) (2) (2) Underwriting income (loss) $ (3) $ (2) $ (8) $ (5) Reserves for asbestos, environmental and other run-off claims before and after the effects of reinsurance ($ in millions) June 30, 2024 December 31, 2023 Asbestos claims Gross reserves $ 1,132 $ 1,166 Reinsurance (350) (362) Net reserves 782 804 Environmental claims Gross reserves 322 331 Reinsurance (63) (64) Net reserves 259 267 Other run-off claims Gross reserves 425 445 Reinsurance (66) (72) Net reserves 359 373 Total Gross reserves 1,879 1,942 Reinsurance (479) (498) Net reserves $ 1,400 $ 1,444 Reserves by type of exposure before and after the effects of reinsurance ($ in millions) June 30, 2024 December 31, 2023 Direct excess commercial insurance Gross reserves $ 1,082 $ 1,114 Reinsurance (370) (382) Net reserves 712 732 Assumed reinsurance coverage Gross reserves 576 603 Reinsurance (53) (54) Net reserves 523 549 Direct primary commercial insurance Gross reserves 136 140 Reinsurance (55) (61) Net reserves 81 79 Other run-off business Gross reserves 1 1 Reinsurance — — Net reserves 1 1 Unallocated loss adjustment expenses Gross reserves 84 84 Reinsurance (1) (1) Net reserves 83 83 Total Gross reserves 1,879 1,942 Reinsurance (479) (498) Net reserves $ 1,400 $ 1,444 Second Quarter 2024 Form 10-Q 59 Segment Results Run-off Property-Liability Percentage of gross and ceded reserves by case and incurred but not reported (“IBNR”) June 30, 2024 December 31, 2023 Case IBNR Case IBNR Direct excess commercial insurance Gross reserves (1) 62 % 38 % 57 % 43 % Ceded (2) 65 35 63 37 Assumed reinsurance coverage Gross reserves 31 69 32 68 Ceded 39 61 43 57 Direct primary commercial insurance Gross reserves 58 42 59 41 Ceded 87 13 83 17 (1) Approximately 64% and 68% of gross case reserves as of June 30, 2024 and December 31, 2023, respectively, are subject to settlement agreements. (2) Approximately 70% and 72% of ceded case reserves as of June 30, 2024 and December 31, 2023, respectively, are subject to settlement agreements. Gross payments from case reserves by type of exposure ($ in millions) Three months ended June 30, Six months ended June 30, 2024 2023 2024 2023 Direct excess commercial insurance Gross (1) $ 16 $ 9 $ 32 $ 32 Ceded (2) (7) (4) (13) (9) Assumed reinsurance coverage Gross 21 14 27 19 Ceded (2) (2) (2) (3) Direct primary commercial insurance Gross 2 1 3 2 Ceded (1) — (1) — (1) In the second quarter and first six months of 2024 87% and 86% of payments related to settlement agreements, respectively, compared to 79% and 85% of the second quarter and first six months of 2023, respectively. (2) In the second quarter and first six months of 2024 96% and 93% of payments related to settlement agreements, respectively, compared to 74% and 87% of the second quarter and first six months of 2023, respectively. Total net reserves as of June 30, 2024, included $698 million or 50% of estimated IBNR reserves compared to $762 million or 53% of estimated IBNR reserves as of December 31, 2023. Total gross payments were $39 million and $62 million for the second quarter and first six months of 2024, respectively, compared to $24 million and $53 million for the second quarter and first six months of 2023, respectively . Payments primarily related to settlement agreements reached with several insureds on large claims, mainly asbestos related losses, where the scope of coverages has been agreed upon. The claims associated with these settlement agreements are expected to be substantially paid out over the next several years as qualified claims are submitted by these insureds. Reinsurance collections were $15 million and $26 million for the second quarter and first six months of 2024, respectively, compared to $9 million and $24 million for the second quarter and first six months of 2023, respectively. 60 www.allstate.com Protection Services Segment Results Protection Services Segment Summarized financial information ($ in millions) Three months ended June 30, Six months ended June 30, 2024 2023 2024 2023 Premiums written $ 676 $ 658 $ 1,303 $ 1,277 Revenues Premiums $ 613 $ 549 $ 1,225 $ 1,087 Other revenue 98 84 183 168 Intersegment insurance premiums and service fees (1) 39 35 74 68 Net investment income 23 18 44 34 Costs and expenses Claims and claims expense (157) (153) (315) (306) Amortization of DAC (296) (259) (585) (510) Operating costs and expenses (246) (218) (480) (439) Restructuring and related charges — — (1) (1) Income tax expense on operations (19) (15) (36) (26) Adjusted net income $ 55 $ 41 $ 109 $ 75 Allstate Protection Plans $ 41 $ 31 $ 81 $ 59 Allstate Dealer Services 6 6 12 13 Allstate Roadside 8 6 19 10 Arity (2) (3) (6) (7) Allstate Identity Protection 2 1 3 — Adjusted net income $ 55 $ 41 $ 109 $ 75 Policies in force Allstate Protection Plans 151,172 138,172 Allstate Dealer Services 3,733 3,825 Allstate Roadside 604 545 Allstate Identity Protection 2,510 3,222 Policies in force as of June 30 (in thousands) 158,019 145,764 (1) Primarily related to Arity and Allstate Roadside and are eliminated in our condensed consolidated financial statements. Adjusted net income increased 34.1% or $14 million in the second quarter of 2024 compared to the second quarter of 2023, primarily due to revenue growth at Allstate Protection Plans. Adjusted net income increased 45.3% or $34 million in the first six months of 2024 compared to the same period of 2023, due to growth at Allstate Protection Plans and improved claim severity and lower expenses at Allstate Roadside. Premiums written increased 2.7% or $18 million in the second quarter of 2024 and increased 2.0% or $26 million in the first six months of 2024 compared to the same periods of 2023, primarily due to growth at Allstate Protection Plans, partially offset by lower sales at Allstate Dealer Services and Allstate Roadside. PIF increased 8.4% or 12 million as of June 30, 2024 compared to June 30, 2023 due to growth at Allstate Protection Plans. Other revenue increased 16.7% or $14 million in the second quarter of 2024 and increased 8.9% or $15 million in the first six months of 2024 compared to the same periods of 2023, primarily due to higher revenue from increased customer advertising at Arity. Intersegment premiums and service fees increased 11.4% or $4 million in the second quarter of 2024 and increased 8.8% or $6 million in the first six months of 2024 compared to the same periods of 2023, driven by increased software revenue at Arity. Second Quarter 2024 Form 10-Q 61 Segment Results Protection Services Claims and claims expense increased 2.6% or $4 million in the second quarter 2024 and increased 2.9% or $9 million in the first six months of 2024 compared to the same periods of 2023, primarily driven by growth at Allstate Protection Plans, partially offset by lower claim severity at Allstate Roadside. Amortization of DAC increased 14.3% or $37 million in the second quarter of 2024 and increased 14.7% or $75 million in the first six months of 2024 compared to the same periods of 2023, driven by growth at Allstate Protection Plans. Operating costs and expenses increased 12.8% or $28 million in the second quarter of 2024 and increased 9.3% or $41 million in the first six months of 2024 compared to the same periods of 2023, primarily due to growth at Allstate Protection Plans and Arity, partially offset by lower expenses at Allstate Roadside. 62 www.allstate.com Allstate Health and Benefits Segment Results Allstate Health and Benefits Segment Summarized financial information Three months ended June 30, Six months ended June 30, ($ in millions) 2024 2023 2024 2023 Revenues Accident and health insurance premiums and contract charges $ 474 $ 453 $ 952 $ 916 Other revenue 121 101 255 202 Net investment income 25 21 48 40 Costs and expenses Accident, health and other policy benefits (291) (258) (587) (523) Amortization of DAC (32) (34) (74) (75) Operating costs and expenses (224) (210) (449) (413) Restructuring and related charges — — (1) (4) Income tax expense on operations (15) (16) (30) (30) Adjusted net income $ 58 $ 57 $ 114 $ 113 Benefit ratio (1) 59.7 55.0 59.9 55.2 Policies in force Employer voluntary benefits (2) 3,577 3,736 Group health (3) 148 131 Individual health (4) 456 406 Policies in force as of June 30 (in thousands) 4,181 4,273 (1) Benefit ratio is calculated as accident, health and other policy benefits less interest credited to contractholder funds of $8 million and $9 million for the three months ended June 30, 2024 and 2023, respectively, and $17 million for both the six months ended June 30, 2024 and 2023, divided by premiums and contract charges. (2) Employer voluntary benefits include supplemental life and health products offered through workplace enrollment. (3) Group health includes health products and administrative services sold to employers. (4) Individual health includes short-term medical and other health products sold directly to individuals. Adjusted net income increased $1 million in the second quarter of 2024 compared to the same period of 2023, primarily due to an increase in group health and employer voluntary benefits, partially offset by a decline in individual health. Adjusted net income increased $1 million in the first six months of 2024 compared to the same period of 2023, primarily due to an increase in group health. Premiums and contract charges increased 4.6% or $21 million in the second quarter of 2024 and increased 3.9% or $36 million in the first six months of 2024 compared to the same periods of 2023, primarily due to growth in group health and individual health. The increase in the first six months of 2024 was partially offset by a decline in employer voluntary benefits. Premiums and contract charges by line of business Three months ended June 30, Six months ended June 30, ($ in millions) 2024 2023 2024 2023 Employer voluntary benefits $ 246 $ 245 $ 494 $ 500 Group health 120 110 238 217 Individual health 108 98 220 199 Premiums and contract charges $ 474 $ 453 $ 952 $ 916 Other revenue increased $20 million in the second quarter of 2024 and increased $53 million in the first six months of 2024 compared to the same periods of 2023, primarily due to an increase in individual health and group health administrative fees. Accident, health and other policy benefits increased 12.8% or $33 million in the second quarter of 2024 and increased 12.2% or $64 million in the first six months of 2024 compared to the same periods of 2023, primarily from growth in group health and individual health and higher benefit utilization. Accident, health and other policy benefits include changes in the reserve for future policy benefits, expected development on reported claims, and reserves for incurred but not reported claims as shown in Note 9. Second Quarter 2024 Form 10-Q 63 Segment Results Allstate Health and Benefits Benefit ratio increased 4.7 points to 59.7 in the second quarter of 2024 compared to 55.0 in the second quarter of 2023 and increased 4.7 points to 59.9 in the first six months of 2024 compared to 55.2 in the same period of 2023, primarily due to higher benefit utilization in individual health and group health. Amortization of DAC decreased 5.9% or $2 million in the second quarter of 2024 and decreased 1.3% or $1 million in the first six months of 2024 compared to the same periods of 2023. Operating costs and expenses Three months ended June 30, Six months ended June 30, ($ in millions) 2024 2023 2024 2023 Non-deferrable commissions $ 86 $ 78 $ 177 $ 157 General and administrative expenses 138 132 272 256 Total operating costs and expenses $ 224 $ 210 $ 449 $ 413 Operating costs and expenses increased $14 million in the second quarter of 2024 and increased $36 million in the first six months of 2024 compared to the same periods of 2023, primarily due to growth in individual health and group health. 64 www.allstate.com Investments Investments Portfolio composition and strategy by reporting segment (1) June 30, 2024 ($ in millions) Property-Liability Protection Services Allstate Health and Benefits Corporate and Other Total Fixed income securities (2) $ 47,714 $ 1,941 $ 1,826 $ 1,095 $ 52,576 Equity securities (3) 1,541 236 59 380 2,216 Mortgage loans, net 699 — 116 — 815 Limited partnership interests 8,719 — — 11 8,730 Short-term investments (4) 4,171 128 120 869 5,288 Other investments, net 859 — 120 — 979 Total $ 63,703 $ 2,305 $ 2,241 $ 2,355 $ 70,604 Percent to total 90.2 % 3.3 % 3.2 % 3.3 % 100.0 % Market-based $ 53,839 $ 2,305 $ 2,241 $ 2,097 $ 60,482 Performance-based 9,864 — — 258 10,122 Total $ 63,703 $ 2,305 $ 2,241 $ 2,355 $ 70,604 (1) Balances reflect the elimination of related party investments between segments. (2) Fixed income securities are carried at fair value. Amortized cost, net for these securities was $48.72 billion, $2.00 billion, $1.96 billion, $1.11 billion and $53.79 billion for Property-Liability, Protection Services, Allstate Health and Benefits, Corporate and Other, and in total, respectively. (3) Equity securities are carried at fair value. The fair value of equity securities held as of June 30, 2024, was $213 million in excess of cost. These net gains were primarily concentrated in the technology and banking sectors. Equity securities include $715 million of funds with underlying investments in fixed income securities as of June 30, 2024. (4) Short-term investments are carried at fair value. Investments totaled $70.60 billion as of June 30, 2024, increasing from $66.68 billion as of December 31, 2023, primarily due to positive operating cash flows, partially offset by lower fixed income valuations and dividends to shareholders. Portfolio composition by investment strategy We utilize two primary strategies to manage risks and returns and to position our portfolio to take advantage of market opportunities while attempting to mitigate adverse effects. As strategies and market conditions evolve, the asset allocation may change. Market-based strategy seeks to deliver predictable earnings aligned to business needs and provide flexibility to adjust investment risk profile based on enterprise objectives and market opportunities primarily through public and private fixed income investments and public equity securities. Performance-based strategy seeks to deliver attractive risk-adjusted returns and supplement market risk with idiosyncratic risk primarily through investments in private equity, including infrastructure investments, and real estate with a majority being limited partnerships. These investments include investee level expenses, reflecting asset level operating expenses on directly held real estate and other consolidated investments. Portfolio composition by investment strategy June 30, 2024 ($ in millions) Market- based Performance-based Total Fixed income securities $ 52,456 $ 120 $ 52,576 Equity securities 1,539 677 2,216 Mortgage loans, net 815 — 815 Limited partnership interests 162 8,568 8,730 Short-term investments 5,288 — 5,288 Other investments, net 222 757 979 Total $ 60,482 $ 10,122 $ 70,604 Percent to total 85.7 % 14.3 % 100.0 % Unrealized net capital gains and losses Fixed income securities $ (1,212) $ — $ (1,212) Short-term investments (2) — (2) Other (2) — (2) Total $ (1,216) $ — $ (1,216) Second Quarter 2024 Form 10-Q 65 Investments Fixed income securities Fixed income securities by type Fair value as of ($ in millions) June 30, 2024 December 31, 2023 U.S. government and agencies $ 10,564 $ 8,619 Municipal 6,538 6,006 Corporate 32,514 31,205 Foreign government 1,289 1,290 Asset-backed securities (“ABS”) 1,671 1,745 Total fixed income securities $ 52,576 $ 48,865 Fixed income securities are rated by third-party credit rating agencies or are internally rated. The Securities Valuation Office (“SVO”) of the National Association of Insurance Commissioners (“NAIC”) evaluates the fixed income securities of insurers for regulatory reporting and capital assessment purposes. The NAIC assigns securities to one of six credit quality categories defined as “NAIC designations”. In general, securities with NAIC designations of 1 and 2 are considered investment grade and securities with NAIC designations of 3 through 6 are considered below investment grade. The rating is either received from the SVO based on availability of applicable ratings from rating agencies on the NAIC Nationally Recognized Statistical Rating Organizations (“NRSRO”) provider list, including Moody’s Investors Service (“Moody’s”), S&P Global Ratings (“S&P”), Fitch Ratings (“Fitch”), or a comparable internal rating. As a result of time lags between the funding of investments, the finalization of legal documents, and the completion of the SVO filing process, the portfolio includes certain securities that have not yet been designated by the SVO as of each balance sheet date and the categorization of these securities is based on the expected ratings indicated by internal analysis . As of June 30, 2024, 91.4% of the consolidated fixed income securities portfolio was rated investment grade. Credit ratings below these designations are considered lower credit quality or below investment grade, which includes high yield bonds. Market prices for certain securities may have credit spreads which imply higher or lower credit quality than the current third-party rating. Our initial investment decisions and ongoing monitoring procedures for fixed income securities are based on a due diligence process which includes, but is not limited to, an assessment of the credit quality, sector, structure, and liquidity risks of each issuer. Fixed income portfolio monitoring is a comprehensive process to identify and evaluate each fixed income security that may require a credit loss allowance. The 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. For further detail on our fixed income portfolio monitoring process, see Note 4 of the condensed consolidated financial statements. 66 www.allstate.com Investments The following table presents total fixed income securities by the applicable NAIC designation and comparable S&P rating. Fair value and unrealized net capital gains (losses) for fixed income securities by credit rating June 30, 2024 NAIC 1 NAIC 2 NAIC 3 A and above BBB BB ($ in millions) Fair value Unrealized gain (loss) Fair value Unrealized gain (loss) Fair value Unrealized gain (loss) U.S. government and agencies $ 10,564 $ (160) $ — $ — $ — $ — Municipal 6,352 (123) 179 (1) 5 — Corporate Public 6,982 (137) 15,829 (542) 583 (16) Privately placed 1,978 (48) 3,306 (92) 2,331 (45) Total corporate 8,960 (185) 19,135 (634) 2,914 (61) Foreign government 1,288 (10) 1 — — — ABS 1,571 — 13 — 29 — Total fixed income securities $ 28,735 $ (478) $ 19,328 $ (635) $ 2,948 $ (61) NAIC 4 NAIC 5-6 Total B CCC and lower Fair value Unrealized gain (loss) Fair value Unrealized gain (loss) Fair value Unrealized gain (loss) U.S. government and agencies $ — $ — $ — $ — $ 10,564 $ (160) Municipal — — 2 1 6,538 (123) Corporate Public 104 (1) 2 1 23,500 (695) Privately placed 1,284 (30) 115 (19) 9,014 (234) Total corporate 1,388 (31) 117 (18) 32,514 (929) Foreign government — — — — 1,289 (10) ABS 1 — 57 10 1,671 10 Total fixed income securities $ 1,389 $ (31) $ 176 $ (7) $ 52,576 $ (1,212) Municipal bonds , including tax-exempt and taxable securities, include general obligations of state and local issuers and revenue bonds. Corporate bonds include publicly traded and privately placed securities. Privately placed securities primarily consist of corporate issued senior debt securities that are negotiated with the borrower or are issued by public entities in unregistered form. ABS includes collateralized debt obligations, consumer and other ABS. Credit risk is managed by monitoring the performance of the underlying collateral. Many of the securities in the ABS portfolio have credit enhancement with features such as overcollateralization, subordinated structures, reserve funds, guarantees or insurance. ABS also includes residential mortgage-backed securities and commercial mortgage-backed securities. Equity securities of $2.22 billion primarily include common stocks, exchange traded and mutual funds, non-redeemable preferred stocks and real estate investment trust (“REIT”) equity investments. Certain exchange traded and mutual funds have fixed income securities as their underlying investments. Mortgage loans of $815 million mainly comprise loans secured by first mortgages on developed commercial real estate. Key considerations used to manage our exposure include property type and geographic diversification. For further detail on our mortgage loan portfolio, see Note 4 of the condensed consolidated financial statements. Limited partnership interests include $7.43 billion of interests in private equity funds, $1.14 billion of interests in real estate funds and $162 million of interests in other funds as of June 30, 2024. We have commitments to invest additional amounts in limited partnership interests totaling $2.99 billion as of June 30, 2024. Other investments include $149 million of bank loans, net, and $708 million of direct investments in real estate as of June 30, 2024. Second Quarter 2024 Form 10-Q 67 Investments Unrealized net capital gains (losses) June 30, December 31, ($ in millions) 2024 2023 U.S. government and agencies $ (160) $ (5) Municipal (123) (43) Corporate (929) (746) Foreign government (10) 4 ABS 10 6 Fixed income securities (1,212) (784) Short-term investments (2) (1) Derivatives (2) (2) Equity method of accounting (“EMA”) limited partnerships — (4) Unrealized net capital gains and losses, pre-tax $ (1,216) $ (791) Gross unrealized gains (losses) on fixed income securities by type and sector ($ in millions) Amortized cost, net Gross unrealized Fair value Gains Losses June 30, 2024 Corporate Banking $ 4,125 $ 24 $ (100) $ 4,049 Basic industry 1,027 4 (36) 995 Capital goods 3,118 16 (101) 3,033 Communications 2,684 9 (126) 2,567 Consumer goods (cyclical and non-cyclical) 7,611 43 (259) 7,395 Financial services 2,294 8 (77) 2,225 Energy 2,703 25 (59) 2,669 Technology 2,781 17 (143) 2,655 Transportation 903 4 (37) 870 Utilities 5,765 38 (154) 5,649 Other 432 3 (28) 407 Total corporate fixed income portfolio 33,443 191 (1,120) 32,514 U.S. government and agencies 10,724 34 (194) 10,564 Municipal 6,661 46 (169) 6,538 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 Corporate Banking $ 4,189 $ 31 $ (135) $ 4,085 Basic industry 1,007 7 (42) 972 Capital goods 2,800 33 (97) 2,736 Communications 2,767 33 (115) 2,685 Consumer goods (cyclical and non-cyclical) 6,813 93 (251) 6,655 Financial services 2,111 17 (88) 2,040 Energy 2,645 35 (63) 2,617 Technology 2,800 21 (153) 2,668 Transportation 1,104 13 (45) 1,072 Utilities 5,330 109 (123) 5,316 Other 385 5 (31) 359 Total corporate fixed income portfolio 31,951 397 (1,143) 31,205 U.S. government and agencies 8,624 114 (119) 8,619 Municipal 6,049 109 (152) 6,006 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 68 www.allstate.com Investments Gross unrealized losses are related to an increase in market yields which may include increased risk-free interest rates and wider credit spreads since the time of initial purchase. Similarly, gross unrealized gains reflect a decrease in market yields since the time of initial purchase. Equity securities by sector June 30, 2024 December 31, 2023 ($ in millions) Cost Over (under) cost Fair value Cost Over (under) cost Fair value Banking $ 38 $ 44 $ 82 $ 30 $ 38 $ 68 Basic industry 11 2 13 9 2 11 Capital goods 77 (23) 54 77 (27) 50 Energy 32 6 38 32 3 35 Financial services 210 15 225 210 12 222 Funds Equities 285 36 321 258 12 270 Fixed income 730 (15) 715 1,038 (15) 1,023 Other 62 4 66 58 5 63 Total funds 1,077 25 1,102 1,354 2 1,356 REITs 173 15 188 179 21 200 Technology 179 84 263 138 50 188 Utilities 57 3 60 59 1 60 Other (1) 149 42 191 156 65 221 Total equity securities $ 2,003 $ 213 $ 2,216 $ 2,244 $ 167 $ 2,411 (1) As of June 30, 2024, other is generally comprised of consumer goods and communications sectors. Net investment income Three months ended June 30, Six months ended June 30, ($ in millions) 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 Investee level expenses (14) (18) (24) (35) Securities lending expense (27) (22) (52) (43) Operating costs and expenses (35) (31) (73) (68) Total investment expense (76) (71) (149) (146) Net investment income $ 712 $ 610 $ 1,476 $ 1,185 Property-Liability $ 643 $ 544 $ 1,345 $ 1,053 Protection Services 23 18 44 34 Allstate Health and Benefits 25 21 48 40 Corporate and Other 21 27 39 58 Net investment income $ 712 $ 610 $ 1,476 $ 1,185 Market-based $ 667 $ 538 $ 1,293 $ 1,046 Performance-based 121 143 332 285 Investment income, before expense $ 788 $ 681 $ 1,625 $ 1,331 Net investment income increased $102 million in the second quarter of 2024, primarily due to higher market-based investment results, partially offset by lower performance-based investment results. Net investment income increased $291 million in the first six months of 2024 compared to the same period of 2023, due to higher market-based and performance-based investment results. Market-based results continue to benefit from portfolio repositioning into higher yielding fixed income securities and higher investment balances. Second Quarter 2024 Form 10-Q 69 Investments Performance-based investment income Three months ended June 30, Six months ended June 30, ($ in millions) 2024 2023 2024 2023 Private equity $ 119 $ 112 $ 315 $ 217 Real estate 2 31 17 68 Total performance-based income before investee level expenses $ 121 $ 143 $ 332 $ 285 Investee level expenses (1) (14) (16) (24) (32) Total performance-based income $ 107 $ 127 $ 308 $ 253 (1) Investee level expenses include asset level operating expenses on directly held real estate and other consolidated investments reported in investment expense. Performance-based investment income decreased $20 million in the second quarter of 2024 compared to the same period of 2023 primarily due to lower real estate investments results. Performance-based investment income increased $55 million in the first six months of 2024 compared to the same period of 2023, primarily due to higher private equity valuation increases. Performance-based investment results and income can vary significantly between periods and are influenced by economic conditions, equity market performance, comparable public company earnings multiples, capitalization rates, operating performance of the underlying investments and the timing of asset sales. The Company typically employs a lag in recording and recognizing changes in valuations of limited partnership interests due to the availability of investee financial statements. Components of net gains (losses) on investments and derivatives and the related tax effect Three months ended June 30, Six months ended June 30, ($ in millions) 2024 2023 2024 2023 Sales $ (90) $ (130) $ (201) $ (250) Credit losses (1) (16) (37) (131) (49) Valuation change of equity investments - appreciation (decline): Equity securities 19 26 85 174 Equity fund investments in fixed income securities (5) (5) (9) 14 Limited partnerships (2) 4 2 12 33 Total valuation of equity investments 18 23 88 221 Valuation change and settlements of derivatives (15) (7) (23) (59) Net gains (losses) on investments and derivatives, pre-tax (103) (151) (267) (137) Income tax benefit 22 35 58 29 Net gains (losses) on investments and derivatives, after-tax $ (81) $ (116) $ (209) $ (108) Property-Liability (1) $ (81) $ (104) $ (208) $ (98) Protection Services (1) (3) (4) (4) Allstate Health and Benefits 1 1 2 3 Corporate and Other — (10) 1 (9) Net gains (losses) on investments and derivatives, after-tax $ (81) $ (116) $ (209) $ (108) Market-based (1) $ (99) $ (124) $ (284) $ (127) Performance-based (4) (27) 17 (10) Net gains (losses) on investments and derivatives, pre-tax $ (103) $ (151) $ (267) $ (137) (1) Includes $123 million loss for the six months ended 2024 related to the carrying value of the surplus notes issued by Adirondack Insurance Exchange and New Jersey Skylands Insurance Association (together “Reciprocal Exchanges”). See Note 7 for further details. (2) Relates to limited partnerships where the underlying assets are predominately public equity securities. Net losses on investments and derivatives in the second quarter of 2024 primarily related to losses on sales of fixed income securities, partially offset by valuation gains on equity securities. Net losses in the first six months of 2024 primarily related to losses on sales of fixed income securities and a loss recognized related to surplus notes issued by the Reciprocal Exchanges, partially offset by valuation gains on equity securities. Net losses on sales in the second quarter and first six months of 2024 related primarily to sales of fixed income securities in connection with ongoing portfolio management. Net losses on valuation change and settlements of derivatives of $15 million and $23 million in the second quarter and first six months of 2024, respectively, primarily related to net losses on interest rate futures used to manage duration and net losses on equity 70 www.allstate.com Investments futures used to manage equity exposure, partially offset by gains on foreign currency contracts used to manage foreign currency risk. Net gains (losses) on performance-based investments and derivatives Three months ended June 30, Six months ended June 30, ($ in millions) 2024 2023 2024 2023 Sales $ 2 $ (5) $ (2) $ 3 Credit losses (17) (24) (21) (27) Valuation change of equity investments 8 6 26 25 Valuation change and settlements of derivatives 3 (4) 14 (11) Total performance-based $ (4) $ (27) $ 17 $ (10) Net losses on performance-based investments and derivatives in the second quarter of 2024 primarily included a credit loss related to real estate, partially offset by increased valuation of equity investments. Net gains on performance-based investments and derivatives in the first six months of 2024, primarily related to increased valuation of equity investments and valuation change and settlements of derivatives, partially offset by a credit loss related to real estate. Second Quarter 2024 Form 10-Q 71 Capital Resources and Liquidity Capital Resources and Liquidity Capital resources consist of shareholders’ equity and debt, representing funds deployed or available to be deployed to support business operations or for general corporate purposes. Capital resources ($ in millions) June 30, 2024 December 31, 2023 Preferred stock, common stock, treasury stock, retained income and other shareholders’ equity items $ 19,619 $ 18,470 Accumulated other comprehensive loss (1,026) (700) Total Allstate shareholders’ equity 18,593 17,770 Debt 8,082 7,942 Total capital resources $ 26,675 $ 25,712 Ratio of debt to Allstate shareholders’ equity 43.5 % 44.7 % Ratio of debt to capital resources 30.3 30.9 Allstate shareholders’ equity increased in the first six months of 2024, primarily due to net income, partially offset by dividends to shareholders and higher unrealized net capital losses on investments. In the six months ended June 30, 2024, we paid dividends of $476 million and $59 million related to our common and preferred shares, respectively. Repayment of debt On May 15, 2024, the Company repaid, at maturity, $350 million of 6.75% Senior Notes. Issuance of debt On June 24, 2024, the Company issued $500 million of 5.05% Senior Notes due 2029. Interest on the Senior Notes is payable semi-annually in arrears on June 24 and December 24 of each year, beginning on December 24, 2024. The Senior Notes are redeemable at any time at the applicable redemption price prior to the maturity date. The net proceeds of this issuance were used for general corporate purposes. Debt maturities Debt maturities for each of the next five years and thereafter (excluding issuance costs) ($ in millions) 2025 $ 600 2026 550 2027 — 2028 — 2029 500 Thereafter 6,491 Total long-term debt principal $ 8,141 Common share repurchases On March 31, 2024, our $5.00 billion share repurchase authorization expired with $472 million remaining. A new common share repurchase program has not been authorized as of June 30, 2024. Common shareholder dividends On January 2, 2024 and April 1, 2024, we paid a common shareholder dividend of $0.89 and $0.92, respectively. On May 14, 2024, we declared a common shareholder dividend of $0.92 payable on July 1, 2024. Financial ratings and strength Our ratings are influenced by many factors including our operating and financial performance, asset quality, liquidity, overall portfolio mix, financial leverage (i.e., debt), exposure to risks such as catastrophes and the current level of operating leverage. The preferred stock and subordinated debentures are viewed as having a common equity component by certain rating agencies and are given equity credit up to a pre-determined limit in our capital structure as determined by their respective methodologies. These respective methodologies consider the existence of certain terms and features in the instruments such as the noncumulative dividend feature in the preferred stock. In May 2024, S&P affirmed the Corporation’s debt and short-term issuer ratings of BBB+ and A-2, respectively, and the insurance financial strength rating of A+ for AIC. The outlook for the ratings is stable. Since December 31, 2023, A.M. Best and Moody’s have not affirmed or changed any of the Corporation’s ratings. Liquidity sources and uses We actively manage our financial position and liquidity levels in light of changing market, economic and business conditions. Liquidity is managed at both the entity and enterprise level across the Company and is assessed on both base and stressed level liquidity needs. We believe we have sufficient liquidity to meet these needs. Additionally, we have existing intercompany agreements in place that facilitate liquidity management across the Company to enhance flexibility. The Corporation is party to an Amended and Restated Intercompany Liquidity Agreement (“Liquidity Agreement”) with certain subsidiaries, which includes, but is not limited to Allstate Insurance Company (“AIC”). The Liquidity Agreement allows for short-term advances of funds to be made between parties for liquidity and other general corporate purposes. The Liquidity Agreement does not establish a commitment to advance funds on the part of any party. AIC serves as a lender and borrower, certain other subsidiaries serve only as borrowers, and the Corporation serves only as a lender. The maximum amount of potential funding under each of these agreements is $1.00 billion. In addition to the Liquidity Agreement, the Corporation also has an intercompany loan agreement with certain of its subsidiaries, which includes, but is not limited to, AIC. The amount of intercompany loans 72 www.allstate.com Capital Resources and Liquidity available to the Corporation’s subsidiaries is at the discretion of the Corporation. The maximum amount of loans the Corporation will have outstanding to all its eligible subsidiaries at any given point in time is limited to $1.00 billion. The Corporation may use commercial paper borrowings, bank lines of credit and securities lending to fund intercompany borrowings. Parent company capital capacity At the parent holding company level, we have deployable assets totaling $2.99 billion as of June 30, 2024, primarily comprised of cash and short-term, fixed income and equity securities that are generally saleable within one quarter. The earnings capacity of the operating subsidiaries is the primary source of capital generation for the Corporation. As of June 30, 2024, we held $17.95 billion of cash, U.S. government and agencies fixed income securities, public equity securities, and short-term investments, which we would expect to be able to liquidate within one week. Intercompany dividends of $18 million were paid from North Light Specialty Insurance Company to AIC in the first six months of 2024. Based on the greater of 2023 statutory net income or 10% of statutory surplus, the maximum amount of dividends that AIC will be able to pay, without prior Illinois Department of Insurance approval, at a given point in time through February 2025, is estimated at $1.20 billion, less dividends paid during the preceding twelve months measured at that point in time. In the first six months of 2024, no dividends have been paid. Dividends may not be paid or declared on our common stock and shares of common stock may not be repurchased unless the full dividends for the latest completed dividend period on our preferred stock have been declared and paid or provided for. The terms of our outstanding subordinated debentures also prohibit us from declaring or paying any dividends or distributions on our common or preferred stock or redeeming, purchasing, acquiring, or making liquidation payments on our common stock or preferred stock if we have elected to defer interest payments on the subordinated debentures, subject to certain limited exceptions. In the first six months of 2024, we did not defer interest payments on the subordinated debentures. Additional resources to support liquidity are as follows: • The Corporation and AIC have access to a $750 million unsecured revolving credit facility that is available for short-term liquidity requirements. The maturity date of this facility is November 2027. The facility is fully subscribed among 11 lenders with the largest commitment being $95 million. The commitments of the lenders are several and no lender is responsible for any other lender’s commitment if such lender fails to make a loan under the facility. This facility contains an increase provision that would allow up to an additional $500 million of borrowing, subject to the lenders’ commitment. This facility has a financial covenant requiring that we not exceed a 37.5% debt to capitalization ratio as defined in the agreement. This ratio was 22.8% as of June 30, 2024. Although the right to borrow under the facility is not subject to a minimum rating requirement, the costs of maintaining the facility and borrowing under it are based on the ratings of our senior unsecured, unguaranteed long-term debt. There were no borrowings under the credit facility during 2024. • To cover short-term cash needs, the Corporation has access to a commercial paper facility with a borrowing capacity limited to any undrawn credit facility balance up to $750 million. • As of June 30, 2024, there were no balances outstanding for the credit facility or the commercial paper facility and therefore the remaining borrowing capacity was $750 million. • The Corporation has access to a universal shelf registration statement with the Securities and Exchange Commission that was filed on April 30, 2024 and expires in 2027. We can use this shelf registration to issue an unspecified amount of debt securities, common stock (including 636 million shares of treasury stock as of June 30, 2024), preferred stock, depositary shares, warrants, stock purchase contracts and stock purchase units. The specific terms of any securities we issue under this registration statement will be provided in the applicable prospectus supplements. Second Quarter 2024 Form 10-Q 73 Forward-Looking Statements This report contains “forward-looking statements” that anticipate results based on our estimates, assumptions and plans that are subject to uncertainty. These statements are made subject to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements do not relate strictly to historical or current facts and may be identified by their use of words like “plans,” “seeks,” “expects,” “will,” “should,” “anticipates,” “estimates,” “intends,” “believes,” “likely,” “targets” and other words with similar meanings. These statements may address, among other things, our strategy for growth, catastrophe exposure management, product development, investment results, regulatory approvals, market position, expenses, financial results, litigation and reserves. We believe that these statements are based on reasonable estimates, assumptions and plans. Forward-looking statements speak only as of the date on which they are made, and we assume no obligation to update any forward-looking statements as a result of new information or future events or developments. In addition, forward-looking statements are subject to certain risks or uncertainties that could cause actual results to differ materially from those communicated in these forward-looking statements. Factors that could cause actual results to differ materially from those expressed in, or implied by, the forward-looking statements include risks related to: Insurance and Financial Services (1) actual claim costs exceeding current reserves; (2) unexpected increases in claim frequency or severity; (3 ) catastrophes and severe weather events; (4) limitations in analytical models used for loss cost estimates; (5) price competition and changes in regulation and underwriting standards; (6) market risk, inflation, and declines in credit quality of our investment portfolios; (7) our subjective determination of fair value and amount of credit losses for investments; (8) our participation in indemnification programs, including state industry pools and facilities; (9) inability to mitigate the impact associated with changes in capital requirements; (10) a downgrade in financial strength ratings; Business, Strategy and Operations (11) operations in markets that are highly competitive; (12) changing consumer preferences; (13) new or changing technologies; (14) implementation of our Transformative Growth strategy; (15) our catastrophe management strategy; (16) restrictions on our subsidiaries’ ability to pay dividends; (17) restrictions under terms of certain of our securities on our ability to pay dividends or repurchase our stock; (18) the availability of reinsurance at current levels and prices; (19) counterparty risk related to reinsurance; (20) acquisitions and divestitures of businesses; (21) intellectual property infringement, misappropriation and third-party claims; (22) vendor-related business disruptions or failure of a vendor to provide and protect data, confidential and proprietary information, or personal information of our customers, claimants or employees; (23) our ability to attract, develop and retain talent; Macro, Regulatory and Risk Environment (24) conditions in the global economy and capital markets; (25) a large-scale pandemic, the occurrence of terrorism, military actions or social unrest; (26) the failure in cyber or other information security controls, as well as the occurrence of events unanticipated in our disaster recovery processes and business continuity planning; (27) changing climate and weather conditions; (28) evolving environmental, social and governance standards and expectations; (29) restrictive regulations and regulatory reforms and uncertainty around the interpretation and implementation of regulations in the U.S. and internationally; (30) regulatory limitations on rate increases and requirements to underwrite business and participate in loss sharing arrangements; (31) losses from legal and regulatory actions; (32) changes in or the application of accounting standards and changes in tax laws; and (33) misconduct or fraudulent acts by employees, agents and third parties. Additional information concerning these and other factors may be found in our filings with the Securities and Exchange Commission, including the “Risk Factors” section in our most recent annual report on Form 10-K.