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 September 30, Nine months ended September 30, 2024 2023 2024 2023 Revenues Property and casualty insurance premiums $ 14,333 $ 12,839 $ 41,797 $ 37,482 Accident and health insurance premiums and contract charges 487 463 1,439 1,379 Other revenue 781 592 2,129 1,750 Net investment income 783 689 2,259 1,874 Net gains (losses) on investments and derivatives 243 ( 86 ) ( 24 ) ( 223 ) Total revenues 16,627 14,497 47,600 42,262 Costs and expenses Property and casualty insurance claims and claims expense 10,409 10,237 30,711 32,290 Accident, health and other policy benefits (including remeasurement (gains) losses of $ 1 , $ 0 , $ 1 and $ 0 ) 317 262 904 785 Amortization of deferred policy acquisition costs 2,037 1,841 5,977 5,374 Operating costs and expenses 2,217 1,771 6,121 5,273 Pension and other postretirement remeasurement (gains) losses 26 149 15 56 Restructuring and related charges 28 87 51 141 Amortization of purchased intangibles 71 83 210 246 Interest expense 104 88 299 272 Total costs and expenses 15,209 14,518 44,288 44,437 Income (loss) from operations before income tax expense 1,418 ( 21 ) 3,312 ( 2,175 ) Income tax expense (benefit) 254 ( 17 ) 603 ( 475 ) Net income (loss) 1,164 ( 4 ) 2,709 ( 1,700 ) Less: Net (loss) income attributable to noncontrolling interest ( 26 ) 1 ( 30 ) ( 23 ) Net income (loss) attributable to Allstate 1,190 ( 5 ) 2,739 ( 1,677 ) Less: Preferred stock dividends 29 36 88 99 Net income (loss) applicable to common shareholders $ 1,161 $ ( 41 ) $ 2,651 $ ( 1,776 ) Earnings per common share: Net income (loss) applicable to common shareholders per common share - Basic $ 4.39 $ ( 0.16 ) $ 10.04 $ ( 6.76 ) Weighted average common shares - Basic 264.6 261.8 264.1 262.6 Net income (loss) applicable to common shareholders per common share - Diluted $ 4.33 $ ( 0.16 ) $ 9.91 $ ( 6.76 ) Weighted average common shares - Diluted 268.0 261.8 267.4 262.6 See notes to condensed consolidated financial statements. Third 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 September 30, Nine months ended September 30, 2024 2023 2024 2023 Net income (loss) $ 1,164 $ ( 4 ) $ 2,709 $ ( 1,700 ) Other comprehensive income (loss), after-tax Changes in: Unrealized net capital gains and losses 1,299 ( 667 ) 965 ( 257 ) Unrealized foreign currency translation adjustments 14 ( 14 ) ( 1 ) 64 Unamortized pension and other postretirement prior service credit — ( 5 ) ( 1 ) ( 14 ) Discount rate for reserve for future policy benefits ( 36 ) 30 ( 12 ) 29 Other comprehensive income (loss), after-tax 1,277 ( 656 ) 951 ( 178 ) Comprehensive income (loss) 2,441 ( 660 ) 3,660 ( 1,878 ) Less: Comprehensive loss attributable to noncontrolling interest ( 19 ) ( 1 ) ( 22 ) ( 21 ) Comprehensive income (loss) attributable to Allstate $ 2,460 $ ( 659 ) $ 3,682 $ ( 1,857 ) 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) September 30, 2024 December 31, 2023 Assets Investments Fixed income securities, at fair value (amortized cost, net $ 53,447 and $ 49,649 ) $ 53,961 $ 48,865 Equity securities, at fair value (cost $ 1,829 and $ 2,244 ) 2,091 2,411 Mortgage loans, net 765 822 Limited partnership interests 8,925 8,380 Short-term, at fair value (amortized cost $ 6,995 and $ 5,145 ) 6,994 5,144 Other investments, net 866 1,055 Total investments 73,602 66,677 Cash 816 722 Premium installment receivables, net 11,041 10,044 Deferred policy acquisition costs 5,751 5,940 Reinsurance and indemnification recoverables, net 9,013 8,809 Accrued investment income 603 539 Deferred income taxes — 219 Property and equipment, net 714 859 Goodwill 3,206 3,502 Other assets, net 5,834 6,051 Assets held for sale 3,163 — Total assets 113,743 103,362 Liabilities Reserve for property and casualty insurance claims and claims expense 42,743 39,858 Reserve for future policy benefits 274 1,347 Contractholder funds — 888 Unearned premiums 27,059 24,709 Claim payments outstanding 1,727 1,353 Deferred income taxes 211 — Other liabilities and accrued expenses 10,644 9,635 Debt 8,083 7,942 Liabilities held for sale 2,164 — Total liabilities 92,905 85,732 Commitments and Contingent Liabilities (Note 15) 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, 265 million and 262 million shares outstanding 9 9 Additional capital paid-in 3,987 3,854 Retained income 51,635 49,716 Treasury stock, at cost ( 635 million and 638 million shares) ( 37,006 ) ( 37,110 ) Accumulated other comprehensive income (loss): Unrealized net capital gains and losses 361 ( 604 ) Unrealized foreign currency translation adjustments ( 99 ) ( 98 ) Unamortized pension and other postretirement prior service credit 12 13 Discount rate for reserve for future policy benefits ( 23 ) ( 11 ) Total accumulated other comprehensive income (loss) 251 ( 700 ) Total Allstate shareholders’ equity 20,877 17,770 Noncontrolling interest ( 39 ) ( 140 ) Total equity 20,838 17,630 Total liabilities and equity $ 113,743 $ 103,362 See notes to condensed consolidated financial statements. Third 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 September 30, Nine months ended September 30, 2024 2023 2024 2023 Preferred stock par value $ — $ — $ — $ — Preferred stock additional capital paid-in Balance, beginning of period 2,001 2,001 2,001 1,970 Preferred stock issuance, net of issuance costs — — — 587 Preferred stock redemption — — — ( 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 3,927 3,786 3,854 3,788 Equity incentive plans activity, net 60 25 133 23 Balance, end of period 3,987 3,811 3,987 3,811 Retained income Balance, beginning of period 50,718 48,766 49,716 50,970 Net income (loss) 1,190 ( 5 ) 2,739 ( 1,677 ) Dividends on common stock (declared per share of $ 0.92 , $ 0.89 , $ 2.76 , and $ 2.67 ) ( 244 ) ( 234 ) ( 732 ) ( 703 ) Dividends on preferred stock ( 29 ) ( 36 ) ( 88 ) ( 99 ) Balance, end of period 51,635 48,491 51,635 48,491 Treasury stock Balance, beginning of period ( 37,036 ) ( 37,131 ) ( 37,110 ) ( 36,857 ) Shares acquired — ( 26 ) — ( 333 ) Shares reissued under equity incentive plans, net 30 8 104 41 Balance, end of period ( 37,006 ) ( 37,149 ) ( 37,006 ) ( 37,149 ) Accumulated other comprehensive income (loss) Balance, beginning of period ( 1,026 ) ( 1,914 ) ( 700 ) ( 2,392 ) Change in unrealized net capital gains and losses 1,299 ( 667 ) 965 ( 257 ) Change in unrealized foreign currency translation adjustments 14 ( 14 ) ( 1 ) 64 Change in unamortized pension and other postretirement prior service credit — ( 5 ) ( 1 ) ( 14 ) Change in discount rate for reserve for future policy benefits ( 36 ) 30 ( 12 ) 29 Balance, end of period 251 ( 2,570 ) 251 ( 2,570 ) Total Allstate shareholders’ equity 20,877 14,593 20,877 14,593 Noncontrolling interest Balance, beginning of period ( 20 ) ( 145 ) ( 140 ) ( 125 ) Change in unrealized net capital gains and losses 7 ( 2 ) 8 2 Noncontrolling (loss) income ( 26 ) 1 ( 30 ) ( 23 ) Capital transaction for noncontrolling interest — — 123 — Balance, end of period ( 39 ) ( 146 ) ( 39 ) ( 146 ) Total equity $ 20,838 $ 14,447 $ 20,838 $ 14,447 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) Nine months ended September 30, 2024 2023 Cash flows from operating activities Net income (loss) $ 2,709 $ ( 1,700 ) Adjustments to reconcile net income (loss) to net cash provided by operating activities Depreciation, amortization and other non-cash items 404 539 Net (gains) losses on investments and derivatives 24 223 Pension and other postretirement remeasurement (gains) losses 15 56 Changes in: Policy benefits and other insurance reserves 2,921 3,068 Unearned premiums 2,378 2,216 Deferred policy acquisition costs ( 315 ) ( 385 ) Premium installment receivables, net ( 1,094 ) ( 934 ) Reinsurance recoverables, net ( 324 ) 534 Income taxes 346 ( 532 ) Other operating assets and liabilities 162 ( 82 ) Net cash provided by operating activities 7,226 3,003 Cash flows from investing activities Proceeds from sales Fixed income securities 26,841 17,443 Equity securities 2,137 4,755 Limited partnership interests 409 590 Other investments 169 153 Investment collections Fixed income securities 1,260 1,384 Mortgage loans 74 66 Other investments 35 76 Investment purchases Fixed income securities ( 33,023 ) ( 23,708 ) Equity securities ( 1,631 ) ( 2,316 ) Limited partnership interests ( 915 ) ( 639 ) Mortgage loans ( 17 ) ( 138 ) Other investments ( 125 ) ( 234 ) Change in short-term and other investments, net ( 1,653 ) 851 Purchases of property and equipment, net ( 160 ) ( 196 ) Proceeds from sale of property and equipment 18 19 Net cash used in investing activities ( 6,581 ) ( 1,894 ) 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 98 99 Contractholder fund withdrawals ( 26 ) ( 23 ) Dividends paid on common stock ( 719 ) ( 692 ) Dividends paid on preferred stock ( 88 ) ( 71 ) Treasury stock purchases — ( 335 ) Shares reissued under equity incentive plans, net 149 17 Other 4 15 Net cash used in financing activities ( 437 ) ( 985 ) Net increase in cash 208 124 Cash at beginning of period 722 736 Less: Cash classified as assets held for sale at end of period 114 — Cash at end of period $ 816 $ 860 See notes to condensed consolidated financial statements. Third 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 September 30, 2024 and for the three and nine month periods ended September 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. Held for sale classification A business is classified as held for sale when management having the authority to approve the action commits to a plan to sell the business, the sale is probable to occur during the next 12 months at a price that is reasonable in relation to its current fair value and certain other criteria are met. A business classified as held for sale is recorded at the lower of its carrying amount or estimated fair value less cost to sell. When the proceeds expected to be received from the sale exceed the carrying amount of the business, a gain is recognized when the sale closes. Assets and liabilities related to a business classified as held for sale are segregated in the condensed consolidated statement of position in the period in which the business is classified as held for sale. Additional details are included in Note 3. 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 guidance affects disclosures only. 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 affects disclosures only. 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 6 www.allstate.com Notes to Condensed Consolidated Financial Statements 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. 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 September 30, Nine months ended September 30, 2024 2023 2024 2023 Numerator: Net income (loss) $ 1,164 $ ( 4 ) $ 2,709 $ ( 1,700 ) Less: Net (loss) income attributable to noncontrolling interest ( 26 ) 1 ( 30 ) ( 23 ) Net income (loss) attributable to Allstate 1,190 ( 5 ) 2,739 ( 1,677 ) Less: Preferred stock dividends 29 36 88 99 Net income (loss) applicable to common shareholders $ 1,161 $ ( 41 ) $ 2,651 $ ( 1,776 ) Denominator: Weighted average common shares outstanding 264.6 261.8 264.1 262.6 Effect of dilutive potential common shares (1) : Stock options 2.6 — 2.6 — Restricted stock units (non-participating) and performance stock awards 0.8 — 0.7 — Weighted average common and dilutive potential common shares outstanding 268.0 261.8 267.4 262.6 Earnings per common share - Basic $ 4.39 $ ( 0.16 ) $ 10.04 $ ( 6.76 ) Earnings per common share - Diluted (1) $ 4.33 $ ( 0.16 ) $ 9.91 $ ( 6.76 ) Anti-dilutive options excluded from diluted earnings per common share 0.6 3.1 0.5 3.0 Weighted average dilutive potential common shares excluded due to net loss applicable to common shareholders (1) — 1.5 — 1.9 (1) As a result of the net loss reported for the three and nine month periods ended September 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 Disposition On August 13, 2024, the Company entered into a share purchase agreement (the “Purchase Agreement”) with StanCorp Financial Group, Inc. to sell American Heritage Life Insurance Company and American Heritage Service Company, comprising the Company’s employer voluntary benefits business for approximately $ 2.0 billion in cash. The employer voluntary benefits business is reported in the Allstate Health and Benefits segment, and as of September 30, 2024, the assets and liabilities of the business are classified as held for sale. The transaction price less costs to sell exceeds the carrying value of the net assets related to this transaction, resulting in an estimated gain that will be recognized at closing of the transaction. The anticipated gain on the sale will be impacted by purchase price adjustments associated with certain pre-close transactions, changes in the carrying value of net assets, changes in accumulated other comprehensive income and the related tax effects. The amount of goodwill included in the carrying value is based on the relative fair value of the employer voluntary benefits business to the fair value of the Allstate Health and Benefits segment and is reported in other assets in the table below. Third Quarter 2024 Form 10-Q 7 Notes to Condensed Consolidated Financial Statements The transaction is expected to close in the first half of 2025, subject to regulatory approvals and other customary closing conditions. The Company continues to pursue the sale of the group health and individual health businesses. The employer voluntary benefits business generated $ 248 million and $ 742 million of premiums and contract charges for the three and nine months ended September 30, 2024, respectively, and adjusted net income of $ 19 million and $ 64 million for the three and nine months ended September 30, 2024, respectively. Major classes of assets and liabilities classified as held for sale ($ in millions) September 30, 2024 Assets Investments Fixed income securities, at fair value (amortized cost, net $ 1,691 ) $ 1,641 Equity securities, at fair value (cost $ 1 ) 1 Short-term, at fair value (amortized cost $ 76 ) 76 Other investments, net 121 Total investments 1,839 Cash 114 Deferred policy acquisitions costs 516 Reinsurance recoverables, net 117 Other assets 577 Total assets held for sale $ 3,163 Liabilities Reserve for future policy benefits $ 1,141 Contractholder funds 891 Other liabilities and accrued expenses 132 Total liabilities held for sale $ 2,164 Included in shareholders' equity is $ 65 million of accumulated other comprehensive loss related to assets and liabilities held for sale. Note 4 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, 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 A reconciliation of these measures to net income (loss) applicable to common shareholders is provided below. 8 www.allstate.com Notes to Condensed Consolidated Financial Statements Reportable segments financial performance Three months ended September 30, Nine months ended September 30, ($ in millions) 2024 2023 2024 2023 Underwriting income (loss) by segment Allstate Protection $ 555 $ ( 331 ) $ 1,316 $ ( 3,421 ) Run-off Property-Liability ( 60 ) ( 83 ) ( 68 ) ( 88 ) Total Property-Liability 495 ( 414 ) 1,248 ( 3,509 ) Adjusted net income (loss) by segment, after-tax Protection Services 58 27 167 102 Allstate Health and Benefits 37 69 151 182 Corporate and Other ( 110 ) ( 110 ) ( 320 ) ( 310 ) Reconciling items Allstate Protection and Run-off Property-Liability net investment income 708 627 2,053 1,680 Net gains (losses) on investments and derivatives 243 ( 86 ) ( 24 ) ( 223 ) Pension and other postretirement remeasurement gains (losses) ( 26 ) ( 149 ) ( 15 ) ( 56 ) Amortization of purchased intangibles (1) ( 19 ) ( 23 ) ( 56 ) ( 71 ) Gain (loss) on disposition 1 ( 5 ) 6 ( 4 ) Non-recurring costs (2) — — — ( 90 ) Income tax (expense) benefit on Property-Liability and reconciling items (3) ( 251 ) 25 ( 588 ) 501 Total reconciling items 656 389 1,376 1,737 Less: Net (loss) income attributable to noncontrolling interest (4) ( 25 ) 2 ( 29 ) ( 22 ) Net income (loss) applicable to common shareholders $ 1,161 $ ( 41 ) $ 2,651 $ ( 1,776 ) (1) Excludes amortization of purchased intangibles in Allstate Protection, 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 (loss) income attributable to noncontrolling interest in Property-Liability. Third Quarter 2024 Form 10-Q 9 Notes to Condensed Consolidated Financial Statements Reportable segments revenue information ($ in millions) Three months ended September 30, Nine months ended September 30, 2024 2023 2024 2023 Property-Liability Insurance premiums Auto $ 9,270 $ 8,345 $ 27,127 $ 24,374 Homeowners 3,403 2,969 9,812 8,662 Other personal lines 718 608 2,078 1,757 Commercial lines 151 194 478 628 Other business lines 152 154 438 405 Allstate Protection 13,694 12,270 39,933 35,826 Run-off Property-Liability — — — — Total Property-Liability insurance premiums 13,694 12,270 39,933 35,826 Other revenue 531 393 1,402 1,135 Net investment income 708 627 2,053 1,680 Net gains (losses) on investments and derivatives 222 ( 62 ) ( 43 ) ( 185 ) Total Property-Liability 15,155 13,228 43,345 38,456 Protection Services Protection plans 480 392 1,372 1,126 Roadside assistance 34 51 115 148 Protection and insurance products 125 126 377 382 Intersegment premiums and service fees (1) 49 34 123 102 Other revenue 110 75 293 243 Net investment income 24 19 68 53 Net gains (losses) on investments and derivatives 10 ( 8 ) 4 ( 13 ) Total Protection Services 832 689 2,352 2,041 Allstate Health and Benefits Employer voluntary benefits 248 253 742 753 Group health 120 111 358 328 Individual health 119 99 339 298 Other revenue 123 104 378 306 Net investment income 26 20 74 60 Net gains (losses) on investments and derivatives ( 6 ) ( 2 ) ( 4 ) 1 Total Allstate Health and Benefits 630 585 1,887 1,746 Corporate and Other Other revenue 17 20 56 66 Net investment income 25 23 64 81 Net gains (losses) on investments and derivatives 17 ( 14 ) 19 ( 26 ) Total Corporate and Other 59 29 139 121 Intersegment eliminations (1) ( 49 ) ( 34 ) ( 123 ) ( 102 ) Consolidated revenues $ 16,627 $ 14,497 $ 47,600 $ 42,262 (1) Intersegment insurance premiums and service fees are primarily related to Arity and Allstate Roadside and are eliminated in the condensed consolidated financial statements. 10 www.allstate.com Notes to Condensed Consolidated Financial Statements Note 5 Investments Portfolio composition ($ in millions) September 30, 2024 December 31, 2023 Fixed income securities, at fair value $ 53,961 $ 48,865 Equity securities, at fair value 2,091 2,411 Mortgage loans, net 765 822 Limited partnership interests 8,925 8,380 Short-term investments, at fair value 6,994 5,144 Other investments, net 866 1,055 Total $ 73,602 $ 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 September 30, 2024 U.S. government and agencies $ 9,125 $ 162 $ ( 41 ) $ 9,246 Municipal 8,223 131 ( 96 ) 8,258 Corporate 33,480 799 ( 483 ) 33,796 Foreign government 1,446 37 ( 6 ) 1,477 ABS 1,173 14 ( 3 ) 1,184 Total fixed income securities $ 53,447 $ 1,143 $ ( 629 ) $ 53,961 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) September 30, 2024 December 31, 2023 Amortized cost, net Fair value Amortized cost, net Fair value Due in one year or less $ 2,663 $ 2,641 $ 3,422 $ 3,374 Due after one year through five years 22,966 22,968 23,218 22,614 Due after five years through ten years 17,073 17,351 12,553 12,273 Due after ten years 9,572 9,817 8,717 8,859 52,274 52,777 47,910 47,120 ABS 1,173 1,184 1,739 1,745 Total $ 53,447 $ 53,961 $ 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 September 30, Nine months ended September 30, 2024 2023 2024 2023 Fixed income securities $ 587 $ 457 $ 1,684 $ 1,269 Equity securities 17 15 50 47 Mortgage loans 9 9 27 25 Limited partnership interests 138 190 440 446 Short-term investments 87 59 216 194 Other investments 25 41 71 121 Investment income, before expense 863 771 2,488 2,102 Investment expense ( 80 ) ( 82 ) ( 229 ) ( 228 ) Net investment income $ 783 $ 689 $ 2,259 $ 1,874 Third Quarter 2024 Form 10-Q 11 Notes to Condensed Consolidated Financial Statements Net gains (losses) on investments and derivatives by asset type ($ in millions) Three months ended September 30, Nine months ended September 30, 2024 2023 2024 2023 Fixed income securities $ 105 $ ( 129 ) $ ( 92 ) $ ( 397 ) Equity securities 119 ( 35 ) 195 153 Mortgage loans ( 1 ) ( 1 ) — ( 4 ) Limited partnership interests ( 8 ) ( 6 ) ( 13 ) 1 Derivatives 20 31 ( 3 ) ( 28 ) Other investments 8 54 12 52 Other (1) — — ( 123 ) — Net gains (losses) on investments and derivatives $ 243 $ ( 86 ) $ ( 24 ) $ ( 223 ) (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 8 for further detail. Net gains (losses) on investments and derivatives by transaction type ($ in millions) Three months ended September 30, Nine months ended September 30, 2024 2023 2024 2023 Sales $ 116 $ ( 63 ) $ ( 85 ) $ ( 313 ) Credit losses ( 12 ) ( 20 ) ( 143 ) ( 69 ) Valuation change of equity investments (1) 119 ( 34 ) 207 187 Valuation change and settlements of derivatives 20 31 ( 3 ) ( 28 ) Net gains (losses) on investments and derivatives $ 243 $ ( 86 ) $ ( 24 ) $ ( 223 ) (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 September 30, Nine months ended September 30, 2024 2023 2024 2023 Gross realized gains $ 201 $ 11 $ 275 $ 85 Gross realized losses ( 93 ) ( 133 ) ( 363 ) ( 459 ) Net appreciation (decline) recognized in net income for assets that are still held ($ in millions) Three months ended September 30, Nine months ended September 30, 2024 2023 2024 2023 Equity securities $ 107 $ ( 32 ) $ 170 $ 31 Limited partnership interests carried at fair value 18 19 65 67 Total $ 125 $ ( 13 ) $ 235 $ 98 12 www.allstate.com Notes to Condensed Consolidated Financial Statements Credit losses recognized in net income ($ in millions) Three months ended September 30, Nine months ended September 30, 2024 2023 2024 2023 Assets Fixed income securities: Municipal $ ( 2 ) $ — $ ( 2 ) $ — Corporate ( 1 ) ( 7 ) ( 2 ) ( 23 ) Total fixed income securities ( 3 ) ( 7 ) ( 4 ) ( 23 ) Mortgage loans ( 1 ) ( 1 ) — ( 4 ) Limited partnership interests ( 8 ) ( 9 ) ( 24 ) ( 25 ) Other investments Bank loans — ( 2 ) 5 ( 16 ) Real estate — — 2 — Other assets — — ( 123 ) — Total credit losses by asset type $ ( 12 ) $ ( 19 ) $ ( 144 ) $ ( 68 ) Liabilities Commitments to fund commercial mortgage loans and bank loans — ( 1 ) 1 ( 1 ) Total $ ( 12 ) $ ( 20 ) $ ( 143 ) $ ( 69 ) Unrealized net capital gains and losses included in accumulated other comprehensive income (“AOCI”) ($ in millions) Fair value Gross unrealized Unrealized net gains (losses) September 30, 2024 Gains Losses Fixed income securities $ 53,961 $ 1,143 $ ( 629 ) $ 514 Short-term investments 6,994 — ( 1 ) ( 1 ) Derivative instruments — — ( 2 ) ( 2 ) Limited partnership interests — Investments classified as held for sale ( 50 ) Unrealized net capital gains and losses, pre-tax 461 Reclassification of noncontrolling interest 5 Deferred income taxes ( 105 ) Unrealized net capital gains and losses, after-tax $ 361 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) Nine months ended September 30, 2024 Fixed income securities $ 1,298 Short-term investments — Derivative instruments — Limited partnership interests 4 Investments classified as held for sale ( 50 ) Total 1,252 Reclassification of noncontrolling interest ( 8 ) Deferred income taxes ( 279 ) Change in unrealized net capital gains and losses, after-tax $ 965 Third Quarter 2024 Form 10-Q 13 Notes to Condensed Consolidated Financial Statements Carrying value for limited partnership interests ($ in millions) September 30, 2024 December 31, 2023 Private equity $ 7,531 $ 7,154 Real estate 1,246 1,085 Other (1) 148 141 Total $ 8,925 $ 8,380 (1) Other consists of certain limited partnership interests where the underlying assets are predominately public equity and debt securities. 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 September 30, 2024 and December 31, 2023, the fair value of short-term investments totaled $ 6.99 billion and $ 5.14 billion, respectively. Other investments primarily consist of bank loans, real estate 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. Other investments by asset type ($ in millions) September 30, 2024 December 31, 2023 Bank loans, net $ 187 $ 224 Real estate 677 709 Policy loans — 119 Other 2 3 Total $ 866 $ 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 reverses 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 $ 560 million and $ 495 million as of September 30, 2024 and December 31, 2023, respectively, and is reported within the accrued 14 www.allstate.com Notes to Condensed Consolidated Financial Statements 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 September 30, Nine months ended September 30, ($ in millions) 2024 2023 2024 2023 Beginning balance $ ( 19 ) $ ( 29 ) $ ( 36 ) $ ( 13 ) Credit losses on securities for which credit losses not previously reported ( 3 ) ( 8 ) ( 10 ) ( 12 ) Net (increases) decreases related to credit losses previously reported — 1 3 ( 11 ) (Increase) decrease of allowance related to sales and other — ( 1 ) 3 ( 1 ) Write-offs — — 18 — Ending balance $ ( 22 ) $ ( 37 ) $ ( 22 ) $ ( 37 ) Components of credit loss allowance as of September 30 Municipal bonds $ ( 2 ) $ — Corporate bonds ( 18 ) ( 34 ) ABS ( 2 ) ( 3 ) Total $ ( 22 ) $ ( 37 ) Third Quarter 2024 Form 10-Q 15 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 September 30, 2024 Fixed income securities U.S. government and agencies 33 $ 1,299 $ ( 11 ) 69 $ 914 $ ( 30 ) $ ( 41 ) Municipal 119 352 ( 1 ) 1,214 1,817 ( 95 ) ( 96 ) Corporate 149 1,288 ( 18 ) 1,249 10,608 ( 465 ) ( 483 ) Foreign government 1 10 — 56 139 ( 6 ) ( 6 ) ABS 19 82 — 85 44 ( 3 ) ( 3 ) Total fixed income securities 321 $ 3,031 $ ( 30 ) 2,673 $ 13,522 $ ( 599 ) $ ( 629 ) Investment grade fixed income securities 280 $ 2,755 $ ( 25 ) 2,459 $ 11,984 $ ( 533 ) $ ( 558 ) Below investment grade fixed income securities 41 276 ( 5 ) 214 1,538 ( 66 ) ( 71 ) Total fixed income securities 321 $ 3,031 $ ( 30 ) 2,673 $ 13,522 $ ( 599 ) $ ( 629 ) 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 $ 19 million and $ 32 million and unrealized losses of $ 7 million and $ 3 million with credit loss allowances of $ 3 million and $ 8 million as of September 30, 2024 and December 31, 2023, respectively. Gross unrealized losses by unrealized loss position and credit quality as of September 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) $ ( 546 ) $ ( 64 ) $ ( 610 ) Fixed income securities with unrealized loss position greater than or equal to 20% of amortized cost, net (2) ( 12 ) ( 7 ) ( 19 ) Total unrealized losses $ ( 558 ) $ ( 71 ) $ ( 629 ) (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 16 www.allstate.com Notes to Condensed Consolidated Financial Statements quality of the primary obligor, obligation type and quality of the underlying assets. As of September 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 September 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 September 30, 2024 December 31, 2023 ($ in millions) 2019 and prior 2020 2021 2022 2023 2024 Total Total Below 1.0 $ — $ — $ — $ — $ — $ — $ — $ 13 1.0 - 1.25 60 — — 18 27 — 105 41 1.26 - 1.50 48 10 — 30 41 — 129 133 Above 1.50 185 41 183 42 76 15 542 646 Amortized cost before allowance $ 293 $ 51 $ 183 $ 90 $ 144 $ 15 $ 776 $ 833 Allowance ( 11 ) ( 11 ) Amortized cost, net $ 765 $ 822 Third Quarter 2024 Form 10-Q 17 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 September 30, 2024 and December 31, 2023. Rollforward of credit loss allowance for mortgage loans Three months ended September 30, Nine months ended September 30, ($ in millions) 2024 2023 2024 2023 Beginning balance $ ( 10 ) $ ( 10 ) $ ( 11 ) $ ( 7 ) Net increases related to credit losses ( 1 ) ( 1 ) — ( 4 ) Write-offs — — — — Ending balance $ ( 11 ) $ ( 11 ) $ ( 11 ) $ ( 11 ) 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 September 30, 2024 December 31, 2023 ($ in millions) 2019 and prior 2020 2021 2022 2023 2024 Total Total NAIC 1 / A $ — $ — $ — $ — $ — $ 10 $ 10 $ — NAIC 2 / BBB — — — — — 37 37 9 NAIC 3 / BB — — 2 — 2 15 19 38 NAIC 4 / B 25 1 4 2 38 49 119 153 NAIC 5-6 / CCC and below — — — — 10 3 13 46 Amortized cost before allowance $ 25 $ 1 $ 6 $ 2 $ 50 $ 114 $ 198 $ 246 Allowance ( 11 ) ( 22 ) Amortized cost, net $ 187 $ 224 Rollforward of credit loss allowance for bank loans ($ in millions) Three months ended September 30, Nine months ended September 30, 2024 2023 2024 2023 Beginning balance $ ( 11 ) $ ( 62 ) $ ( 22 ) $ ( 57 ) Net (increases) decreases related to credit losses — ( 2 ) 5 ( 16 ) Reduction of allowance related to sales — 28 — 34 Write-offs — — 6 3 Ending balance $ ( 11 ) $ ( 36 ) $ ( 11 ) $ ( 36 ) Note 6 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: 18 www.allstate.com Notes to Condensed Consolidated Financial Statements (a) Quoted prices for similar assets or liabilities in active markets; (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. Third Quarter 2024 Form 10-Q 19 Notes to Condensed Consolidated Financial Statements Corporate - privately placed: Privately placed are valued using a discounted cash flow model that is widely accepted in the financial services industry 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, also 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. • Assets held for sale: Comprise U.S. government and agencies, municipal, corporate and MBS fixed income securities. The significant inputs and valuation techniques are based on the respective asset type as described above. 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: 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 expected cash flows, 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. ABS: The primary inputs to the valuation include expected cash flows, benchmark yields, collateral performance and credit spreads. Residential mortgage-backed securities, included in ABS, also 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 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 held for sale: Comprise corporate fixed income securities. The significant inputs and valuation techniques are based on the respective asset type as described above. 20 www.allstate.com Notes to Condensed Consolidated Financial Statements 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 September 30, 2024, the Company has commitments to invest $ 161 million in these limited partnership interests. Assets and liabilities measured at fair value September 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 $ 9,239 $ 7 $ — $ 9,246 Municipal — 8,253 5 8,258 Corporate - public — 24,292 28 24,320 Corporate - privately placed — 9,425 51 9,476 Foreign government — 1,477 — 1,477 ABS — 1,087 97 1,184 Total fixed income securities 9,239 44,541 181 53,961 Equity securities (1) 1,295 238 408 1,941 Short-term investments 2,771 4,221 2 6,994 Other investments — 1 2 $ ( 1 ) 2 Other assets 2 — 123 125 Assets held for sale 177 1,534 7 — 1,718 Total recurring basis assets 13,484 50,535 723 ( 1 ) 64,741 Non-recurring basis — — 1 1 Total assets at fair value $ 13,484 $ 50,535 $ 724 $ ( 1 ) $ 64,742 % of total assets at fair value 20.8 % 78.1 % 1.1 % — % 100.0 % Investments reported at NAV 1,124 Total $ 65,866 Liabilities Other liabilities $ ( 9 ) $ ( 16 ) $ — $ 16 $ ( 9 ) Total recurring basis liabilities ( 9 ) ( 16 ) — 16 ( 9 ) Total liabilities at fair value $ ( 9 ) $ ( 16 ) $ — $ 16 $ ( 9 ) % of total liabilities at fair value 100.0 % 177.8 % — % ( 177.8 ) % 100.0 % (1) Excludes $ 150 million of preferred stock measured at cost. Third Quarter 2024 Form 10-Q 21 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 September 30, 2024 and December 31, 2023, Level 3 fair value measurements of fixed income securities total $ 181 million and $ 153 million, respectively, and include $ 28 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 $ 5 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. 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 September 30, 2024 Balance as of June 30, 2024 Total gains (losses) included in: Transfers Transfers (to) from held for sale Balance as of September 30, 2024 ($ in millions) Net income OCI Into Level 3 Out of Level 3 Purchases Sales Issues Settlements Assets Fixed income securities: Municipal $ 7 $ ( 2 ) $ — $ — $ — $ — $ — $ — $ — $ — $ 5 Corporate - public 30 — — — — ( 7 ) 5 — — — 28 Corporate - privately placed 50 — — — — — 1 — — — 51 ABS 71 — — — — — 27 — — ( 1 ) 97 Total fixed income securities 158 ( 2 ) — — — ( 7 ) 33 — — ( 1 ) 181 Equity securities 393 12 — — — — 5 ( 2 ) — — 408 Short-term investments 1 — — — — — 1 — — — 2 Other investments 2 — — — — — — — — — 2 Other assets 121 2 — — — — — — — — 123 Assets held for sale — — — — — 7 — — — — 7 Total recurring Level 3 assets $ 675 $ 12 $ — $ — $ — $ — $ 39 $ ( 2 ) $ — $ ( 1 ) $ 723 Rollforward of Level 3 assets and liabilities held at fair value during the nine month period ended September 30, 2024 Balance as of December 31, 2023 Total gains (losses) included in: Transfers Transfers (to) from held for sale Balance as of September 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 ) $ — $ ( 2 ) $ 5 Corporate - public 26 1 1 — — ( 7 ) 16 ( 9 ) — — 28 Corporate - privately placed 58 ( 6 ) — — — — 1 ( 2 ) — — 51 ABS 58 — — — — — 41 — — ( 2 ) 97 Total fixed income securities 153 ( 7 ) 1 — — ( 7 ) 58 ( 13 ) — ( 4 ) 181 Equity securities 402 18 — — — — 14 ( 26 ) — — 408 Short-term investments 1 — — — — — 22 ( 20 ) — ( 1 ) 2 Other investments 2 — — — — — — — — — 2 Other assets 118 5 — — — — — — — — 123 Assets held for sale — — — — — 7 — — — — 7 Total recurring Level 3 assets $ 676 $ 16 $ 1 $ — $ — $ — $ 94 $ ( 59 ) $ — $ ( 5 ) $ 723 Third Quarter 2024 Form 10-Q 23 Notes to Condensed Consolidated Financial Statements Rollforward of Level 3 assets and liabilities held at fair value during the three month period ended September 30, 2023 Balance as of June 30, 2023 Total gains (losses) included in: Transfers Balance as of September 30, 2023 ($ in millions) Net income OCI Into Level 3 Out of Level 3 Purchases Sales Issues Settlements Assets Fixed income securities: Municipal $ 12 $ — $ — $ — $ — $ — $ ( 1 ) $ — $ — $ 11 Corporate - public 26 — ( 1 ) — — — — — — 25 Corporate - privately placed 60 — ( 1 ) — — — — — — 59 ABS 34 — — — — 4 — — — 38 Total fixed income securities 132 — ( 2 ) — — 4 ( 1 ) — — 133 Equity securities 381 15 — — — — ( 13 ) — — 383 Short-term investments 6 — — — — 10 — — — 16 Other investments 2 — — — — — — — — 2 Other assets 104 9 — — — — — — — 113 Total recurring Level 3 assets $ 625 $ 24 $ ( 2 ) $ — $ — $ 14 $ ( 14 ) $ — $ — $ 647 Rollforward of Level 3 assets and liabilities held at fair value during the nine month period ended September 30, 2023 Balance as of December 31, 2022 Total gains (losses) included in: Transfers Balance as of September 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 ) $ — $ — $ — $ ( 10 ) $ — $ ( 2 ) $ 11 Corporate - public 69 ( 1 ) 1 — — — ( 44 ) — — 25 Corporate - privately placed 55 ( 11 ) — 16 — 1 ( 2 ) — — 59 ABS 28 — — — — 11 — — ( 1 ) 38 Total fixed income securities 173 ( 9 ) — 16 — 12 ( 56 ) — ( 3 ) 133 Equity securities 333 22 — — — 70 ( 42 ) — — 383 Short-term investments 6 — — — — 10 — — — 16 Other investments 3 ( 1 ) — — — — — — — 2 Other assets 103 10 — — — — — — — 113 Total recurring Level 3 assets $ 618 $ 22 $ — $ 16 $ — $ 92 $ ( 98 ) $ — $ ( 3 ) $ 647 Total Level 3 gains (losses) included in net income Three months ended September 30, Nine months ended September 30, ($ in millions) 2024 2023 2024 2023 Net investment income $ — $ ( 1 ) $ 1 $ ( 3 ) Net gains (losses) on investments and derivatives (1) 10 16 10 15 Operating costs and expenses (1) 2 9 5 10 (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 nine months ended September 30, 2024. There were no transfers into Level 3 during the three months ended September 30, 2023. Transfers into Level 3 during the nine months ended September 30, 2023 included situations where securities were written down utilizing an internal price where the inputs have not been corroborated to be market observable resulting in the securities being classified as Level 3. There were no transfers out of Level 3 during the three and nine months ended September 30, 2024 and 2023. 24 www.allstate.com 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 September 30, Nine months ended September 30, ($ in millions) 2024 2023 2024 2023 Assets Fixed income securities: Municipal $ ( 2 ) $ — $ ( 2 ) $ — Corporate - public — — 1 — Corporate - privately placed — — ( 6 ) ( 11 ) Total fixed income securities ( 2 ) — ( 7 ) ( 11 ) Equity securities 12 15 23 21 Other investments — — — ( 1 ) Other assets 2 9 5 10 Total recurring Level 3 assets $ 12 $ 24 $ 21 $ 19 Total included in net income $ 12 $ 24 $ 21 $ 19 Components of net income Net investment income $ — $ ( 1 ) $ 1 $ ( 3 ) Net gains (losses) on investments and derivatives 10 16 15 12 Operating costs and expenses 2 9 5 10 Total included in net income $ 12 $ 24 $ 21 $ 19 Assets Corporate - public $ — $ ( 1 ) $ 1 $ — Corporate - privately placed — ( 1 ) — — Changes in unrealized net capital gains and losses reported in OCI $ — $ ( 2 ) $ 1 $ — Financial instruments not carried at fair value ($ in millions) September 30, 2024 December 31, 2023 Financial assets Fair value level Amortized cost, net Fair value Amortized cost, net Fair value Mortgage loans Level 3 $ 765 $ 736 $ 822 $ 769 Bank loans Level 3 187 197 224 238 Financial liabilities Fair value level Carrying value (2) Fair value Carrying value (2) Fair value Contractholder funds on investment contracts (1) Level 3 $ — $ — $ 46 $ 46 Debt Level 2 8,083 8,027 7,942 7,655 Liability for collateral Level 2 2,021 2,021 1,891 1,891 Liabilities held for sale Level 3 41 41 — — (1) As of September 30, 2024, all contractholder funds on investment contracts are held for sale. (2) Represents the amounts reported on the Condensed Consolidated Statements of Financial Position. Note 7 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 Third Quarter 2024 Form 10-Q 25 Notes to Condensed Consolidated Financial Statements 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, equity futures are used to hedge the market risk related to deferred compensation liability contracts. Equity derivatives may also be utilized to replicate cash market positions to increase equity exposure. 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. 26 www.allstate.com Notes to Condensed Consolidated Financial Statements Summary of the volume and fair value positions of derivative instruments as of September 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 3,520 $ 1 $ 1 $ — Equity and index contracts Futures Other assets n/a 1,045 1 1 — Foreign currency contracts Foreign currency forwards Other investments $ 383 n/a ( 8 ) 1 ( 9 ) Contingent consideration Other assets 250 n/a 123 123 — Credit default contracts Credit default swaps – buying protection Other investments 30 n/a — — — Total asset derivatives $ 663 4,565 $ 117 $ 126 $ ( 9 ) Liability derivatives Derivatives not designated as accounting hedging instruments Interest rate contracts Futures Other liabilities & accrued expenses n/a 22,106 $ ( 9 ) $ — $ ( 9 ) Equity and index contracts Futures Other liabilities & accrued expenses n/a 284 — — — Foreign currency contracts Foreign currency forwards Other liabilities & accrued expenses $ 262 n/a ( 7 ) — ( 7 ) Total liability derivatives 262 22,390 ( 16 ) $ — $ ( 16 ) Total derivatives $ 925 26,955 $ 101 (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) Third Quarter 2024 Form 10-Q 27 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 September 30, 2024 Asset derivatives $ 1 $ ( 9 ) $ 8 $ — $ — $ — Liability derivatives ( 16 ) 9 7 — — — 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. 28 www.allstate.com Notes to Condensed Consolidated Financial Statements Gains (losses) from valuation and settlements reported on derivatives not designated as accounting hedges ($ in millions) Net gains (losses) on investments and derivatives Operating costs and expenses Total gain (loss) recognized in net income on derivatives Three months ended September 30, 2024 Interest rate contracts $ 42 $ — $ 42 Equity and index contracts ( 2 ) 10 8 Contingent consideration — 2 2 Foreign currency contracts ( 23 ) — ( 23 ) Credit default contracts 3 — 3 Total $ 20 $ 12 $ 32 Nine months ended September 30, 2024 Interest rate contracts $ 21 $ — $ 21 Equity and index contracts ( 17 ) 24 7 Contingent consideration — 5 5 Foreign currency contracts ( 9 ) — ( 9 ) Credit default contracts 2 — 2 Total $ ( 3 ) $ 29 $ 26 Three months ended September 30, 2023 Interest rate contracts $ 5 $ — $ 5 Equity and index contracts 10 ( 10 ) — Contingent consideration — 9 9 Foreign currency contracts 17 — 17 Credit default contracts ( 1 ) — ( 1 ) Total $ 31 $ ( 1 ) $ 30 Nine months ended September 30, 2023 Interest rate contracts $ ( 12 ) $ — $ ( 12 ) Equity and index contracts ( 6 ) 8 2 Contingent consideration — 10 10 Foreign currency contracts 6 — 6 Credit default contracts ( 16 ) — ( 16 ) Total $ ( 28 ) $ 18 $ ( 10 ) 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) September 30, 2024 Pledged by the Company $ 15 Pledged to the Company (1) — (1) $ 14 million of 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. As of September 30, 2024 and December 31, 2023, the Company did not have any counterparty credit exposure. 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) September 30, 2024 Pledged by the Company $ 82 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, Third Quarter 2024 Form 10-Q 29 Notes to Condensed Consolidated Financial Statements 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) September 30, 2024 December 31, 2023 Gross liability fair value of contracts containing credit-risk-contingent features $ 16 $ 10 Gross asset fair value of contracts containing credit-risk-contingent features and subject to MNAs ( 1 ) ( 3 ) Collateral posted under MNAs for contracts containing credit-risk-contingent features ( 14 ) ( 5 ) Maximum amount of additional exposure for contracts with credit-risk-contingent features if all features were triggered concurrently $ 1 $ 2 Note 8 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 received a management fee for the services provided to the Reciprocal Exchanges totaling $ 2 million and $ 23 million for the three and nine months ended September 30, 2024, respectively, compared to $ 14 million and $ 37 million for the three and nine months ended September 30, 2023, respectively. In addition, as of September 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 absorb expected losses. Due to ongoing operating losses, 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. Adirondack and Skylands are withdrawing from writing substantially all business. As the reciprocal insurers are dissolved, policyholders will 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 New York State Department of Financial Services has approved the withdrawal plan for Adirondack to non-renew or cancel all policies effective as of December 31, 2024. National General Holdings Corp. entered into a $ 15 million line of credit agreement with Adirondack to pay claims if it is unable to pay, which will expire after a final reserve study is conducted to determine if additional funding is needed as of December 31, 2027. As of September 30, 2024, there is no outstanding balance on the line of credit. Additionally, the Company waived all fees payable by Adirondack after July 1, 2024, excluding Loss Adjustment Expenses associated with individual claims. The New Jersey Department of Banking and Insurance has acknowledged the withdrawal plan filed on behalf of Skylands to withdraw from providing personal lines insurance, except dwelling fire and watercraft policies, beginning December 14, 2024. Skylands has a 100 % quota share reinsurance agreement with the Company to cede all of Skylands’ business to the Company. Claims and claims expense ceded to the Company were $( 6 ) million and $ 24 million for the three and nine months ended September 30, 2024, respectively, compared to $ 10 million and $ 27 million for the three and nine months ended September 30, 2023, respectively. The Reciprocal Exchanges generated $ 48 million and $ 170 million of earned premiums for the three and nine months ended September 30, 2024, respectively, compared to $ 59 million and $ 173 million for the three and nine months ended September 30, 2023, 30 www.allstate.com Notes to Condensed Consolidated Financial Statements respectively. Total costs and expenses were $ 62 million and $ 207 million for the three and nine months ended September 30, 2024, respectively, compared to $ 58 million and $ 202 million for the three and nine months ended September 30, 2023, respectively. 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) September 30, 2024 December 31, 2023 Assets Fixed income securities $ 121 $ 267 Short-term investments 96 7 Deferred policy acquisition costs 12 25 Premium installment and other receivables, net 32 44 Reinsurance recoverables, net 68 76 Other assets 10 54 Total assets 339 473 Liabilities Reserve for property and casualty insurance claims and claims expense 224 201 Unearned premiums 117 177 Other liabilities and expenses 16 77 Total liabilities $ 357 $ 455 (1) Intercompany balances eliminated in consolidation Total assets $ ( 42 ) $ ( 26 ) Total liabilities ( 193 ) ( 189 ) Note 9 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 continues to digitize and modernize claim processes where necessary 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 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. Third Quarter 2024 Form 10-Q 31 Notes to Condensed Consolidated Financial Statements 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 Nine months ended September 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 31,033 31,910 Prior years ( 322 ) 380 Total incurred 30,711 32,290 Claims and claims expense paid related to: Current year ( 15,977 ) ( 16,593 ) Prior years ( 12,181 ) ( 12,057 ) Total paid ( 28,158 ) ( 28,650 ) Net balance as of September 30 34,015 32,005 Plus: Recoverables 8,728 8,654 Balance as of September 30 $ 42,743 $ 40,659 (1) Recoverables comprises reinsurance and indemnification recoverables. Incurred claims and claims expense represents the sum of paid losses, claim adjustment expenses and reserve changes in the period. This expense included losses from catastrophes of $ 4.55 billion and $ 5.57 billion in the nine months ended September 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. 32 www.allstate.com 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 September 30, Auto $ ( 55 ) $ 27 $ ( 10 ) $ 6 $ ( 65 ) $ 33 Homeowners ( 11 ) 46 ( 1 ) 16 ( 12 ) 62 Other personal lines 54 ( 3 ) ( 3 ) ( 11 ) 51 ( 14 ) Commercial lines 1 13 — 6 1 19 Other business lines ( 3 ) 1 — — ( 3 ) 1 Run-off Property-Liability 59 82 — — 59 82 Protection Services 1 — — — 1 — Total prior year reserve reestimates $ 46 $ 166 $ ( 14 ) $ 17 $ 32 $ 183 Nine months ended September 30, Auto $ ( 293 ) $ 146 $ ( 26 ) $ ( 41 ) $ ( 319 ) $ 105 Homeowners ( 114 ) 75 ( 278 ) 61 ( 392 ) 136 Other personal lines 169 15 ( 5 ) ( 23 ) 164 ( 8 ) Commercial lines 164 42 ( 5 ) 9 159 51 Other business lines 1 12 — — 1 12 Run-off Property-Liability 65 85 — — 65 85 Protection Services — ( 1 ) — — — ( 1 ) Total prior year reserve reestimates $ ( 8 ) $ 374 $ ( 314 ) $ 6 $ ( 322 ) $ 380 (1) Favorable reserve reestimates are shown in parentheses. Third Quarter 2024 Form 10-Q 33 Notes to Condensed Consolidated Financial Statements Note 10 Reserve for Future Policy Benefits and Contractholder Funds Rollforward of reserve for future policy benefits (1) Nine months ended September 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 ( 88 ) ( 12 ) ( 13 ) 34 ( 101 ) 22 Effect of actual variances from expected experience 28 ( 4 ) 4 4 32 — Adjusted beginning balance 1,677 1,533 321 284 1,998 1,817 Issuances 490 378 69 53 559 431 Interest accrual 63 48 11 8 74 56 Net premiums collected ( 281 ) ( 260 ) ( 49 ) ( 37 ) ( 330 ) ( 297 ) Ending balance at original discount rate 1,949 1,699 352 308 2,301 2,007 Effect of changes in discount rate assumptions 6 ( 113 ) ( 1 ) ( 19 ) 5 ( 132 ) Reclassified to liabilities held for sale ( 1,270 ) — ( 345 ) — ( 1,615 ) — Ending balance 685 1,586 6 289 691 1,875 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 ( 11 ) 21 ( 10 ) 30 ( 21 ) 51 Effect of actual variances from expected experience ( 28 ) ( 24 ) ( 4 ) 3 ( 32 ) ( 21 ) Adjusted beginning balance 2,456 2,313 642 567 3,098 2,880 Issuances 479 368 69 68 548 436 Interest accrual 84 75 23 18 107 93 Benefit payments ( 317 ) ( 297 ) ( 24 ) ( 30 ) ( 341 ) ( 327 ) Ending balance at original discount rate 2,702 2,459 710 623 3,412 3,082 Effect of changes in discount rate assumptions 27 ( 126 ) 8 ( 38 ) 35 ( 164 ) Reclassified to liabilities held for sale ( 1,998 ) — ( 704 ) — ( 2,702 ) — Ending balance $ 731 $ 2,333 $ 14 $ 585 $ 745 $ 2,918 Net reserve for future policy benefits (1) $ 46 $ 747 $ 8 $ 296 $ 54 $ 1,043 Less: reinsurance recoverables (2) — 82 — 2 — 84 Net reserve for future policy benefits, after reinsurance recoverables $ 46 $ 665 $ 8 $ 294 $ 54 $ 959 (1) Excludes $ 220 million and $ 266 million of reserves related to short-duration and other contracts as of September 30, 2024 and 2023, respectively. (2) Classified as held for sale as of September 30, 2024. Revenue and interest recognized in the condensed consolidated statements of operations ($ in millions) Nine months ended September 30, 2024 2023 Revenues (1) Accident and health $ 605 $ 600 Traditional life 106 77 Total $ 711 $ 677 Interest expense (2) Accident and health $ 21 $ 27 Traditional life 12 10 Total $ 33 $ 37 (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. 34 www.allstate.com Notes to Condensed Consolidated Financial Statements The following table provides the amount of undiscounted and discounted expected gross premiums and expected future benefits and expenses for nonparticipating traditional and limited-payment contracts, including those that are classified as held for sale as of September 30, 2024. As of September 30, 2024 2023 ($ in millions) Undiscounted Discounted Undiscounted Discounted Accident and health Expected future gross premiums $ 5,581 $ 3,939 $ 5,263 $ 3,600 Expected future benefits and expenses 3,943 2,729 3,503 2,333 Traditional life Expected future gross premiums 1,013 729 813 553 Expected future benefits and expenses 1,345 718 1,153 585 The following table provides the weighted-average duration and weighted-average interest rates for the reserve for future policy benefits, including those that are classified as held for sale as of September 30, 2024. As of September 30, Accident and health Traditional life 2024 2023 2024 2023 Weighted-average duration (in years) 8.3 4.3 15.5 14.8 Weighted-average interest rates Interest accretion rate (discount rate at contract issuance) 5.05 % 4.73 % 5.36 % 5.43 % Current discount rate (upper-medium grade fixed income yield) 4.65 5.28 4.82 5.56 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. The Company performed the annual review of the mortality, morbidity and lapse experience assumptions in the third quarter of 2024 and 2023 resulting in an increase of $ 1 million and an increase of less than $ 1 million, respectively, to the reserve for future policy benefits. For the nine months ended September 30, 2024, actual experience for morbidity in accident and health products was higher than expected. For the nine months ended September 30, 2023, actual experience for morbidity in accident and health products was lower than expected. For the nine months ended September 30, 2024, actual experience for lapses in accident and health products was lower than expected. For the nine months ended September 30, 2023, actual experience for lapses in accident and health products was higher than expected. For the nine months ended September 30, 2024 and 2023, actual experience for mortality and lapses in traditional life products was lower than expected. Third Quarter 2024 Form 10-Q 35 Notes to Condensed Consolidated Financial Statements Contractholder funds As of September 30, 2024, all contractholder funds are classified as held for sale. Contractholder funds activity Nine months ended September 30, ($ in millions) 2024 2023 Beginning balance $ 888 $ 879 Deposits 98 99 Interest credited 25 25 Benefits ( 9 ) ( 8 ) Surrenders and partial withdrawals ( 17 ) ( 15 ) Contract charges ( 89 ) ( 90 ) Other adjustments ( 5 ) ( 6 ) Ending balance $ 891 $ 884 Components of contractholder funds Interest-sensitive life insurance $ 850 $ 837 Fixed annuities 41 47 Total $ 891 $ 884 Weighted-average crediting rate 4.19 % 4.26 % Net amount at risk (1) $ 10,927 $ 11,550 Cash surrender value $ 734 $ 728 (1) Guaranteed benefit amounts in excess of the current account balances. Note 11 Reinsurance and Indemnification Effects of reinsurance ceded and indemnification programs on property and casualty premiums earned and accident and health insurance premiums and contract charges ($ in millions) Three months ended September 30, Nine months ended September 30, 2024 2023 2024 2023 Property and casualty insurance premiums earned $ ( 552 ) $ ( 514 ) $ ( 1,697 ) $ ( 1,455 ) Accident and health insurance premiums and contract charges ( 16 ) ( 16 ) ( 37 ) ( 35 ) Effects of reinsurance ceded and indemnification programs on property and casualty insurance claims and claims expense and accident, health and other policy benefits ($ in millions) Three months ended September 30, Nine months ended September 30, 2024 2023 2024 2023 Property and casualty insurance claims and claims expense $ ( 662 ) $ ( 274 ) $ ( 1,178 ) $ ( 534 ) Accident, health and other policy benefits ( 13 ) ( 7 ) ( 27 ) ( 32 ) Reinsurance and indemnification recoverables Reinsurance and indemnification recoverables, net ($ in millions) September 30, 2024 December 31, 2023 Property and casualty Paid and due from reinsurers and indemnitors $ 234 $ 254 Unpaid losses estimated (including IBNR) 8,728 8,396 Total property and casualty $ 8,962 $ 8,650 Accident and health insurance 51 159 Total $ 9,013 $ 8,809 36 www.allstate.com Notes to Condensed Consolidated Financial Statements Rollforward of credit loss allowance for reinsurance recoverables ($ in millions) Three months ended September 30, Nine months ended September 30, 2024 2023 2024 2023 Property and casualty (1) (2) Beginning balance $ ( 64 ) $ ( 61 ) $ ( 62 ) $ ( 62 ) Decrease in the provision for credit losses 2 — — 1 Write-offs — — — — Ending balance $ ( 62 ) $ ( 61 ) $ ( 62 ) $ ( 61 ) Accident and health insurance Beginning balance $ ( 3 ) $ ( 3 ) $ ( 3 ) $ ( 3 ) Increase in the provision for credit losses — — — — Write-offs — — — — Reinsurance recoverables classified as held for sale 1 — 1 — Ending balance $ ( 2 ) $ ( 3 ) $ ( 2 ) $ ( 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 12 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 Nine months ended September 30, 2024 Allstate Health and Benefits Long-duration contracts Beginning balance $ 321 $ 90 $ 100 $ 511 Acquisition costs deferred 76 41 12 129 Amortization charged to income ( 59 ) ( 16 ) ( 11 ) ( 86 ) Experience adjustment ( 15 ) ( 1 ) — ( 16 ) Reclassified to assets held for sale ( 277 ) ( 111 ) ( 101 ) ( 489 ) Total $ 46 $ 3 $ — $ 49 Short-duration contracts 6 Allstate Protection 2,590 Protection Services 3,106 Ending balance $ 5,751 Nine months ended September 30, 2023 Allstate Health and Benefits Long-duration contracts Beginning balance $ 322 $ 79 $ 101 $ 502 Acquisition costs deferred 73 24 12 109 Amortization charged to income ( 54 ) ( 17 ) ( 11 ) ( 82 ) Experience adjustment ( 22 ) ( 1 ) ( 2 ) ( 25 ) Total $ 319 $ 85 $ 100 504 Short-duration contracts 27 Allstate Protection 2,358 Protection Services 2,935 Ending balance $ 5,824 Third Quarter 2024 Form 10-Q 37 Notes to Condensed Consolidated Financial Statements Note 13 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. Note 14 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 $ 28 million and $ 87 million during the three months ended September 30, 2024 and 2023, respectively, and $ 51 million and $ 141 million during the nine months ended September 30, 2024 and 2023, respectively. Restructuring expenses during the third quarter and first nine 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 Change in estimated program costs 22 2024 expenses ( 38 ) Remaining program charges $ 8 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 29 16 45 Adjustments to liability 6 — 6 Payments and non-cash charges ( 38 ) ( 15 ) ( 53 ) Restructuring liability as of September 30, 2024 $ 37 $ 2 $ 39 As of September 30, 2024, the cumulative amount incurred to date for active programs related to employee severance, relocation benefits and exit expenses totaled $ 127 million for employee costs and $ 11 million for exit costs. Note 15 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 38 www.allstate.com Notes to Condensed Consolidated Financial Statements 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 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 immaterial as of September 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 Third Quarter 2024 Form 10-Q 39 Notes to Condensed Consolidated Financial Statements 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 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 $ 68 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 40 www.allstate.com Notes to Condensed Consolidated Financial Statements 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 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); Jarrett-Kelly v. Direct General Insurance Agency, Inc . (Circuit Court of Pulaski Co., Ark. filed May 2024); and Schott v. Allstate Insurance Company and Allstate Property and Casualty Insurance Company (M.D. Ga. filed October 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, which is combining separate uninsured/underinsured coverage limits of multiple vehicles into one higher coverage limit, 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 had 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 was 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 was 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. Pursuant to an agreement between the Company and the California Department of Insurance, the matter was dismissed on September 17, 2024. 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 Third Quarter 2024 Form 10-Q 41 Notes to Condensed Consolidated Financial Statements 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 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 16 Benefit Plans For the first nine 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 September 30, Nine months ended September 30, ($ in millions) 2024 2023 2024 2023 Pension benefits Service cost $ 26 $ 34 $ 52 $ 99 Interest cost 59 58 175 176 Expected return on plan assets ( 74 ) ( 78 ) ( 227 ) ( 234 ) Costs and expenses 11 14 — 41 Remeasurement of projected benefit obligation 233 ( 211 ) 140 ( 156 ) Remeasurement of plan assets ( 214 ) 369 ( 129 ) 219 Remeasurement (gains) losses 19 158 11 63 Pension net cost $ 30 $ 172 $ 11 $ 104 Postretirement benefits Service cost $ — $ — $ — $ — Interest cost 2 3 7 8 Amortization of prior service credit — ( 6 ) ( 1 ) ( 18 ) Costs and expenses 2 ( 3 ) 6 ( 10 ) Remeasurement of benefit obligation 7 ( 9 ) 4 ( 7 ) Remeasurement of plan assets — — — — Remeasurement (gains) losses 7 ( 9 ) 4 ( 7 ) Postretirement net cost (benefit) $ 9 $ ( 12 ) $ 10 $ ( 17 ) Pension and postretirement benefits Costs and expenses $ 13 $ 11 $ 6 $ 31 Remeasurement (gains) losses 26 149 15 56 Total net cost $ 39 $ 160 $ 21 $ 87 42 www.allstate.com Notes to Condensed Consolidated Financial Statements Differences in actual experience and changes in other assumptions affect our pension and other postretirement obligations and expenses. Differences between expected and actual returns on plan assets affect remeasurement (gains) losses. Pension and other postretirement service cost, interest cost, expected return on plan assets and amortization of prior service credit are reported in property and casualty insurance claims and claims expense, operating costs and expenses, net investment income and (if applicable) restructuring and related charges on the Condensed Consolidated Statements of Operations. Pension and postretirement benefits remeasurement gains and losses Three months ended September 30, Nine months ended September 30, ($ in millions) 2024 2023 2024 2023 Remeasurement of benefit obligation (gains) losses: Discount rate $ 213 $ ( 231 ) $ 115 $ ( 180 ) Other assumptions 27 11 29 17 Remeasurement of plan assets (gains) losses ( 214 ) 369 ( 129 ) 219 Remeasurement (gains) losses $ 26 $ 149 $ 15 $ 56 Remeasurement losses of $ 26 million and $ 15 million for the third quarter and first nine months of 2024, respectively, related to a decrease in the liability discount rate and changes in other assumptions, partially offset by favorable asset performance compared to expected return on plan assets. The weighted average discount rate used to measure the pension benefit obligation decreased to 5.02 % at September 30, 2024 compared to 5.62 % at June 30, 2024 and 5.35 % at December 31, 2023 resulting in losses for the third quarter and first nine months of 2024. For the third quarter of 2024, the actual return on plan assets was higher than the expected return due to higher fixed income valuations from lower market yields and higher public equity returns. For the first nine months of 2024, the actual return on plan assets was higher than the expected return due to higher equity valuations and tighter credit spreads, partially offset by higher rates. Note 17 Supplemental Cash Flow Information Non-cash investing activities include $ 70 million and $ 54 million related to mergers and exchanges completed with equity securities, fixed income securities, bank loans, and limited partnerships for the nine months ended September 30, 2024 and 2023, respectively. Non-cash investing activities include $ 19 million related to right-of-use property and equipment obtained in exchange for lease obligations for the nine months ended September 30, 2024. Non-cash investing activities include $ 1 million and $ 15 million related to right-of-use real estate obtained in exchange for lease obligations for the nine months ended September 30, 2024 and 2023, respectively, and $ 123 million related to debt assumed by purchaser on sale of real estate for the nine months ended September 30, 2023. Non-cash financing activities include $ 28 million and $ 38 million related to the issuance of Allstate common shares for vested equity awards for the nine months ended September 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 $ 86 million and $ 101 million for the nine months ended September 30, 2024 and 2023, respectively. Non-cash operating activities include $ 50 million and $ 26 million related to right-of-use assets obtained in exchange for lease obligations for the nine months ended September 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: Third Quarter 2024 Form 10-Q 43 Notes to Condensed Consolidated Financial Statements ($ in millions) Nine months ended September 30, 2024 2023 Cash flows from operating activities Net change in proceeds managed Net change in fixed income securities $ 45 $ 207 Net change in short-term investments ( 175 ) 58 Operating cash flow (used) provided $ ( 130 ) $ 265 Net change in liabilities Liabilities for collateral, beginning of period $ ( 1,891 ) $ ( 2,011 ) Liabilities for collateral, end of period ( 2,021 ) ( 1,746 ) Operating cash flow provided (used) $ 130 $ ( 265 ) Note 18 Other Comprehensive Income (Loss) Components of other comprehensive income (loss) on a pre-tax and after-tax basis ($ in millions) Three months ended September 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 $ 1,753 $ ( 388 ) $ 1,365 $ ( 974 ) $ 210 $ ( 764 ) Less: reclassification adjustment of realized capital gains and losses 83 ( 17 ) 66 ( 121 ) 24 ( 97 ) Unrealized net capital gains and losses 1,670 ( 371 ) 1,299 ( 853 ) 186 ( 667 ) Unrealized foreign currency translation adjustments 18 ( 4 ) 14 ( 18 ) 4 ( 14 ) Unamortized pension and other postretirement prior service credit (1) — — — ( 6 ) 1 ( 5 ) Discount rate for reserve for future policy benefits ( 46 ) 10 ( 36 ) 38 ( 8 ) 30 Other comprehensive income (loss) $ 1,642 $ ( 365 ) $ 1,277 $ ( 839 ) $ 183 $ ( 656 ) Nine months ended September 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 $ 1,118 $ ( 253 ) $ 865 $ ( 717 ) $ 152 $ ( 565 ) Less: reclassification adjustment of realized capital gains and losses ( 126 ) 26 ( 100 ) ( 390 ) 82 ( 308 ) Unrealized net capital gains and losses 1,244 ( 279 ) 965 ( 327 ) 70 ( 257 ) Unrealized foreign currency translation adjustments ( 1 ) — ( 1 ) 81 ( 17 ) 64 Unamortized pension and other postretirement prior service credit (1) ( 2 ) 1 ( 1 ) ( 18 ) 4 ( 14 ) Discount rate for reserve for future policy benefits ( 15 ) 3 ( 12 ) 37 ( 8 ) 29 Other comprehensive income (loss) $ 1,226 $ ( 275 ) $ 951 $ ( 227 ) $ 49 $ ( 178 ) (1) Represents prior service credits reclassified out of other comprehensive income and amortized into operating costs and expenses. Included in shareholders' equity is $ 65 million of accumulated other comprehensive loss related to assets and liabilities held for sale as of September 30, 2024. 44 www.allstate.com 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 September 30, 2024, the related condensed consolidated statements of operations, comprehensive income (loss), and shareholders’ equity for the three-month and nine-month periods ended September 30, 2024 and 2023, and of cash flows for the nine-month periods ended September 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 October 30, 2024 Third Quarter 2024 Form 10-Q 45