UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2022~~March 31, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to ______

Commission file number 1-11840

THE ALLSTATE CORPORATION

(Exact name of registrant as specified in its charter)

Delaware

36-3871531

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

3100 Sanders Road, Northbrook, Illinois 60062

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (847) 402-5000

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbols	Name of each exchange on which registered
Common Stock, par value $.01 per share	ALL	New York Stock Exchange Chicago Stock Exchange
5.100% Fixed-to-Floating Rate Subordinated Debentures due 2053	ALL.PR.B	New York Stock Exchange
~~Depositary Shares represent 1/1,000th of a share of 5.625% Noncumulative Preferred Stock, Series G~~	~~ALL PR G~~	~~New York Stock Exchange~~
Depositary Shares represent 1/1,000th of a share of 5.100% Noncumulative Preferred Stock, Series H	ALL PR H	New York Stock Exchange
Depositary Shares represent 1/1,000th of a share of 4.750% Noncumulative Preferred Stock, Series I	ALL PR I	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~October~~April 17, ~~2022,~~2023, the registrant had ~~265,209,574~~262,851,915 common shares, $.01 par value, outstanding.

The Allstate Corporation

Index to Quarterly Report on Form 10-Q

~~September 30, 2022~~March 31, 2023


Part I Financial Information		Page

Item 1. Financial Statements (unaudited) as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022 and for the Three Month ~~and Nine Month~~ Periods Ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~

	Condensed Consolidated Statements of Operations	1
	Condensed Consolidated Statements of Comprehensive Income (Loss)	2
	Condensed Consolidated Statements of Financial Position	3
	Condensed Consolidated Statements of Shareholders’ Equity	4
	Condensed Consolidated Statements of Cash Flows	5
	Notes to Condensed Consolidated Financial Statements (unaudited)	6
	Report of Independent Registered Public Accounting Firm	4546

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

	Highlights	4647
	Property-Liability Operations	51
	Segment results
	Allstate Protection	53
	Run-off Property-Liability	6260
	Protection Services	6562
	Allstate Health and Benefits	6764
	Investments	6966
	Capital Resources and Liquidity	7774
	~~Recent Developments~~	79
	Forward-Looking Statements	8076

Item 4. Controls and Procedures		8076

Part II Other Information
Item 1. Legal Proceedings		8177
Item 1A. Risk Factors		8177
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		8177

Item 6. Exhibits		8278

Condensed Consolidated Financial Statements

Part I. Financial Information

Item 1. Financial Statements

The Allstate Corporation and Subsidiaries

Condensed Consolidated Statements of Operations (unaudited)


($ in millions, except per share data)	($ in millions, except per share data)	Three months ended September 30,				Nine months ended September 30,				($ in millions, except per share data)	Three months ended March 31,
		2022		2021		2022		2021			2023		2022
Revenues	Revenues									Revenues
Property and casualty insurance premiums	Property and casualty insurance premiums	$	11,661	$	10,615	$	34,004	$	31,366	Property and casualty insurance premiums	$	12,173	$	10,981
Accident and health insurance premiums and contract charges	Accident and health insurance premiums and contract charges	463		460		1,398		1,362		Accident and health insurance premiums and contract charges	463		468
Other revenue	Other revenue	561		536		1,684		1,585		Other revenue	561		560
Net investment income	Net investment income	690		764		1,846		2,446		Net investment income	575		594
Net gains (losses) on investments and derivatives	Net gains (losses) on investments and derivatives	(167)		105		(1,167)		818		Net gains (losses) on investments and derivatives	14		(267)
Total revenues	Total revenues	13,208		12,480		37,765		37,577		Total revenues	13,786		12,336

Costs and expenses	Costs and expenses									Costs and expenses
Property and casualty insurance claims and claims expense	Property and casualty insurance claims and claims expense	10,073		8,264		27,262		21,514		Property and casualty insurance claims and claims expense	10,326		7,822
Shelter-in-Place Payback expense		—		—		—		29

Accident, health and other policy benefits	Accident, health and other policy benefits	263		277		801		771		Accident, health and other policy benefits	265		268
Amortization of deferred policy acquisition costs	Amortization of deferred policy acquisition costs	1,682		1,582		4,913		4,650		Amortization of deferred policy acquisition costs	1,744		1,608
Operating costs and expenses	Operating costs and expenses	1,842		1,890		5,594		5,304		Operating costs and expenses	1,716		1,902
Pension and other postretirement remeasurement (gains) losses	Pension and other postretirement remeasurement (gains) losses	79		40		91		(404)		Pension and other postretirement remeasurement (gains) losses	(53)		(247)
Restructuring and related charges	Restructuring and related charges	14		23		27		145		Restructuring and related charges	27		12
Amortization of purchased intangibles	Amortization of purchased intangibles	90		109		264		267		Amortization of purchased intangibles	81		87

Interest expense	Interest expense	85		69		251		246		Interest expense	86		83
Total costs and expenses	Total costs and expenses	14,128		12,254		39,203		32,522		Total costs and expenses	14,192		11,535

(Loss) income from operations before income tax expense	(Loss) income from operations before income tax expense	(920)		226		(1,438)		5,055		(Loss) income from operations before income tax expense	(406)		801

Income tax (benefit) expense	Income tax (benefit) expense	(237)		20		(377)		1,008		Income tax (benefit) expense	(85)		151

Net (loss) income from continuing operations		(683)		206		(1,061)		4,047

Income (loss) from discontinued operations, net of tax		—		325		—		(3,272)

Net (loss) income	Net (loss) income	(683)		531		(1,061)		775		Net (loss) income	(321)		650

Less: Net loss attributable to noncontrolling interest	Less: Net loss attributable to noncontrolling interest	(15)		(7)		(34)		(7)		Less: Net loss attributable to noncontrolling interest	(1)		(10)

Net (loss) income attributable to Allstate	Net (loss) income attributable to Allstate	(668)		538		(1,027)		782		Net (loss) income attributable to Allstate	(320)		660

Less: Preferred stock dividends	Less: Preferred stock dividends	26		30		79		87		Less: Preferred stock dividends	26		26

Net (loss) income applicable to common shareholders	Net (loss) income applicable to common shareholders	$	(694)	$	508	$	(1,106)	$	695	Net (loss) income applicable to common shareholders	$	(346)	$	634

Earnings per common share applicable to common shareholders
Basic
Continuing operations		$	(2.58)	$	0.62	$	(4.04)	$	13.31
Discontinued operations		—		1.11		—		(10.98)
Total		$	(2.58)	$	1.73	$	(4.04)	$	2.33

Diluted
Continuing operations		$	(2.58)	$	0.62	$	(4.04)	$	13.11
Discontinued operations		—		1.09		—		(10.81)
Total		$	(2.58)	$	1.71	$	(4.04)	$	2.30

Earnings per common share:										Earnings per common share:
Net (loss) income applicable to common shareholders per common share - Basic										Net (loss) income applicable to common shareholders per common share - Basic	$	(1.31)	$	2.28
Weighted average common shares - Basic	Weighted average common shares - Basic	268.7		293.1		273.5		298.1		Weighted average common shares - Basic	263.5		278.1
Net (loss) income applicable to common shareholders per common share - Diluted										Net (loss) income applicable to common shareholders per common share - Diluted	$	(1.31)	$	2.25
Weighted average common shares - Diluted	Weighted average common shares - Diluted	268.7		297.9		273.5		302.6		Weighted average common shares - Diluted	263.5		281.8

See notes to condensed consolidated financial statements.

~~Third~~First Quarter ~~2022~~2023 Form 10-Q 1

Condensed Consolidated Financial Statements

The Allstate Corporation and Subsidiaries

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


($ in millions)	($ in millions)	Three months ended September 30,				Nine months ended September 30,				($ in millions)	Three months ended March 31,
		2022		2021		2022		2021			2023		2022
Net (loss) income	Net (loss) income	$	(683)	$	531	$	(1,061)	$	775	Net (loss) income	$	(321)	$	650

Other comprehensive loss, after-tax
Other comprehensive income (loss), after-tax										Other comprehensive income (loss), after-tax
Changes in:	Changes in:									Changes in:
Unrealized net capital gains and losses	Unrealized net capital gains and losses	(789)		(336)		(3,525)		(1,352)		Unrealized net capital gains and losses	682		(1,594)
Unrealized foreign currency translation adjustments	Unrealized foreign currency translation adjustments	(88)		(21)		(135)		10		Unrealized foreign currency translation adjustments	50		—
Unamortized pension and other postretirement prior service credit	Unamortized pension and other postretirement prior service credit	(8)		(15)		(38)		(44)		Unamortized pension and other postretirement prior service credit	(4)		(15)
Other comprehensive loss, after-tax		(885)		(372)		(3,698)		(1,386)
Discount rate for reserve for future policy benefits										Discount rate for reserve for future policy benefits	(9)		95
Other comprehensive income (loss), after-tax										Other comprehensive income (loss), after-tax	719		(1,514)

Comprehensive (loss) income		(1,568)		159		(4,759)		(611)
Less: Comprehensive loss attributable to noncontrolling interest		(21)		(7)		(60)		(8)
Comprehensive (loss) income attributable to Allstate		$	(1,547)	$	166	$	(4,699)	$	(603)
Comprehensive income (loss)										Comprehensive income (loss)	398		(864)
Less: Comprehensive income (loss) attributable to noncontrolling interest										Less: Comprehensive income (loss) attributable to noncontrolling interest	4		(22)
Comprehensive income (loss) attributable to Allstate										Comprehensive income (loss) attributable to Allstate	$	394	$	(842)

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)	($ in millions, except par value data)	September 30, 2022		December 31, 2021		($ in millions, except par value data)	March 31, 2023		December 31, 2022
Assets	Assets					Assets
Investments	Investments					Investments
Fixed income securities, at fair value (amortized cost, net $45,468 and $41,376)		$	41,715	$	42,136
Equity securities, at fair value (cost $4,652 and $6,016)		4,723		7,061
Fixed income securities, at fair value (amortized cost, net $46,120 and $45,370)						Fixed income securities, at fair value (amortized cost, net $46,120 and $45,370)	$	44,103	$	42,485
Equity securities, at fair value (cost $2,147 and $4,253)						Equity securities, at fair value (cost $2,147 and $4,253)	2,174		4,567
Mortgage loans, net	Mortgage loans, net	833		821		Mortgage loans, net	781		762
Limited partnership interests	Limited partnership interests	7,907		8,018		Limited partnership interests	7,971		8,114
Short-term, at fair value (amortized cost $4,031 and $4,009)		4,030		4,009
Short-term, at fair value (amortized cost $6,722 and $4,174)						Short-term, at fair value (amortized cost $6,722 and $4,174)	6,722		4,173
Other investments, net	Other investments, net	1,798		2,656		Other investments, net	1,724		1,728
Total investments	Total investments	61,006		64,701		Total investments	63,475		61,829
Cash	Cash	786		763		Cash	662		736
Premium installment receivables, net	Premium installment receivables, net	9,150		8,364		Premium installment receivables, net	9,483		9,165
Deferred policy acquisition costs	Deferred policy acquisition costs	5,273		4,722		Deferred policy acquisition costs	5,471		5,442
Reinsurance and indemnification recoverables, net	Reinsurance and indemnification recoverables, net	9,961		10,024		Reinsurance and indemnification recoverables, net	9,528		9,619
Accrued investment income	Accrued investment income	389		339		Accrued investment income	436		423
Deferred income taxes	Deferred income taxes	492		—		Deferred income taxes	345		382
Property and equipment, net	Property and equipment, net	1,008		939		Property and equipment, net	971		987
Goodwill	Goodwill	3,502		3,502		Goodwill	3,502		3,502
Other assets, net	Other assets, net	6,109		6,086		Other assets, net	5,758		5,904

Total assets	Total assets	97,676		99,440		Total assets	99,631		97,989
Liabilities	Liabilities					Liabilities
Reserve for property and casualty insurance claims and claims expense	Reserve for property and casualty insurance claims and claims expense	36,529		33,060		Reserve for property and casualty insurance claims and claims expense	38,644		37,541
Reserve for future policy benefits	Reserve for future policy benefits	1,276		1,273		Reserve for future policy benefits	1,338		1,322
Contractholder funds	Contractholder funds	909		908		Contractholder funds	878		879
Unearned premiums	Unearned premiums	22,026		19,844		Unearned premiums	22,499		22,299
Claim payments outstanding	Claim payments outstanding	1,196		1,123		Claim payments outstanding	1,333		1,268
Deferred income taxes		—		833

Other liabilities and accrued expenses	Other liabilities and accrued expenses	10,212		9,296		Other liabilities and accrued expenses	9,114		9,353
Long-term debt		7,967		7,976

Debt						Debt	8,452		7,964
Total liabilities	Total liabilities	80,115		74,313		Total liabilities	82,258		80,626
Commitments and Contingent Liabilities (Note 12)
Commitments and Contingent Liabilities (Note 14)						Commitments and Contingent Liabilities (Note 14)
Equity	Equity					Equity
Preferred stock and additional capital paid-in, $1 par value, 25 million shares authorized, 81.0 thousand shares issued and outstanding, $2,025 aggregate liquidation preference	Preferred stock and additional capital paid-in, $1 par value, 25 million shares authorized, 81.0 thousand shares issued and outstanding, $2,025 aggregate liquidation preference	1,970		1,970		Preferred stock and additional capital paid-in, $1 par value, 25 million shares authorized, 81.0 thousand shares issued and outstanding, $2,025 aggregate liquidation preference	1,970		1,970
Common stock, $.01 par value, 2.0 billion shares authorized and 900 million issued, 266 million and 281 million shares outstanding		9		9
Common stock, $.01 par value, 2.0 billion shares authorized and 900 million issued, 263 million and 263 million shares outstanding						Common stock, $.01 par value, 2.0 billion shares authorized and 900 million issued, 263 million and 263 million shares outstanding	9		9
Additional capital paid-in	Additional capital paid-in	3,765		3,722		Additional capital paid-in	3,780		3,788
Retained income	Retained income	51,490		53,294		Retained income	50,388		50,970

Treasury stock, at cost (634 million and 619 million shares)		(36,518)		(34,471)
Treasury stock, at cost (637 million and 637 million shares)						Treasury stock, at cost (637 million and 637 million shares)	(36,980)		(36,857)
Accumulated other comprehensive income:	Accumulated other comprehensive income:					Accumulated other comprehensive income:

Unrealized net capital gains and losses	Unrealized net capital gains and losses	(2,927)		598		Unrealized net capital gains and losses	(1,573)		(2,255)
Unrealized foreign currency translation adjustments	Unrealized foreign currency translation adjustments	(150)		(15)		Unrealized foreign currency translation adjustments	(115)		(165)
Unamortized pension and other postretirement prior service credit	Unamortized pension and other postretirement prior service credit	34		72		Unamortized pension and other postretirement prior service credit	25		29
Total accumulated other comprehensive income (“AOCI”)		(3,043)		655
Discount rate for reserve for future policy benefits						Discount rate for reserve for future policy benefits	(10)		(1)
Total accumulated other comprehensive income						Total accumulated other comprehensive income	(1,673)		(2,392)
Total Allstate shareholders’ equity	Total Allstate shareholders’ equity	17,673		25,179		Total Allstate shareholders’ equity	17,494		17,488
Noncontrolling interest	Noncontrolling interest	(112)		(52)		Noncontrolling interest	(121)		(125)
Total equity	Total equity	17,561		25,127		Total equity	17,373		17,363
Total liabilities and equity	Total liabilities and equity	$	97,676	$	99,440	Total liabilities and equity	$	99,631	$	97,989

See notes to condensed consolidated financial statements.

~~Third~~First Quarter ~~2022~~2023 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)	($ in millions, except per share data)	Three months ended September 30,				Nine months ended September 30,				($ in millions, except per share data)	Three months ended March 31,
		2022		2021		2022		2021			2023		2022

Preferred stock par value	Preferred stock par value	$	—	$	—	$	—	$	—	Preferred stock par value	$	—	$	—

Preferred stock additional capital paid-in	Preferred stock additional capital paid-in									Preferred stock additional capital paid-in	1,970		1,970
Balance, beginning of period		1,970		2,170		1,970		1,970
Acquisition		—		—		—		450

Preferred stock redemption		—		(200)		—		(450)
Balance, end of period		1,970		1,970		1,970		1,970

Common stock par value	Common stock par value	9		9		9		9		Common stock par value	9		9

Common stock additional capital paid-in	Common stock additional capital paid-in									Common stock additional capital paid-in
Balance, beginning of period	Balance, beginning of period	3,740		3,668		3,722		3,498		Balance, beginning of period	3,788		3,722
Forward contract on accelerated share repurchase agreement		—		—		—		113

Equity incentive plans activity	Equity incentive plans activity	25		32		43		89		Equity incentive plans activity	(8)		(16)
Balance, end of period	Balance, end of period	3,765		3,700		3,765		3,700		Balance, end of period	3,780		3,706

Retained income	Retained income									Retained income
Balance, beginning of period	Balance, beginning of period	52,412		52,464		53,294		52,767		Balance, beginning of period	50,970		53,288

Net (loss) income	Net (loss) income	(668)		538		(1,027)		782		Net (loss) income	(320)		660
Dividends on common stock (declared per share of $0.85, $0.81, $2.55 and $2.43)		(228)		(236)		(698)		(726)
Dividends on common stock (declared per share of $0.89 and $0.85)										Dividends on common stock (declared per share of $0.89 and $0.85)	(236)		(236)
Dividends on preferred stock	Dividends on preferred stock	(26)		(30)		(79)		(87)		Dividends on preferred stock	(26)		(26)

Balance, end of period	Balance, end of period	51,490		52,736		51,490		52,736		Balance, end of period	50,388		53,686

Treasury stock	Treasury stock									Treasury stock
Balance, beginning of period	Balance, beginning of period	(35,858)		(32,394)		(34,471)		(31,331)		Balance, beginning of period	(36,857)		(34,471)
Shares acquired	Shares acquired	(665)		(1,227)		(2,142)		(2,390)		Shares acquired	(153)		(794)
Shares reissued under equity incentive plans, net	Shares reissued under equity incentive plans, net	5		17		95		117		Shares reissued under equity incentive plans, net	30		57
Balance, end of period	Balance, end of period	(36,518)		(33,604)		(36,518)		(33,604)		Balance, end of period	(36,980)		(35,208)

Accumulated other comprehensive income	Accumulated other comprehensive income									Accumulated other comprehensive income
Balance, beginning of period	Balance, beginning of period	(2,158)		2,290		655		3,304		Balance, beginning of period	(2,392)		426

Change in unrealized net capital gains and losses	Change in unrealized net capital gains and losses	(789)		(336)		(3,525)		(1,352)		Change in unrealized net capital gains and losses	682		(1,594)
Change in unrealized foreign currency translation adjustments	Change in unrealized foreign currency translation adjustments	(88)		(21)		(135)		10		Change in unrealized foreign currency translation adjustments	50		—
Change in unamortized pension and other postretirement prior service credit	Change in unamortized pension and other postretirement prior service credit	(8)		(15)		(38)		(44)		Change in unamortized pension and other postretirement prior service credit	(4)		(15)

Change in discount rate for reserve for future policy benefits										Change in discount rate for reserve for future policy benefits	(9)		95
Balance, end of period	Balance, end of period	(3,043)		1,918		(3,043)		1,918		Balance, end of period	(1,673)		(1,088)
Total Allstate shareholders’ equity	Total Allstate shareholders’ equity	17,673		26,729		17,673		26,729		Total Allstate shareholders’ equity	17,494		23,075

Noncontrolling interest	Noncontrolling interest									Noncontrolling interest
Balance, beginning of period	Balance, beginning of period	(91)		(15)		(52)		—		Balance, beginning of period	(125)		(52)
Acquisition		—		—		—		(14)

Change in unrealized net capital gains and losses	Change in unrealized net capital gains and losses	(6)		—		(26)		(1)		Change in unrealized net capital gains and losses	5		(12)
Noncontrolling loss	Noncontrolling loss	(15)		(7)		(34)		(7)		Noncontrolling loss	(1)		(10)
Balance, end of period	Balance, end of period	(112)		(22)		(112)		(22)		Balance, end of period	(121)		(74)
Total equity	Total equity	$	17,561	$	26,707	$	17,561	$	26,707	Total equity	$	17,373	$	23,001

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)	($ in millions)	Nine months ended September 30,				($ in millions)	Three months ended March 31,
		2022		2021			2023		2022
Cash flows from operating activities	Cash flows from operating activities					Cash flows from operating activities
Net (loss) income	Net (loss) income	$	(1,061)	$	775	Net (loss) income	$	(321)	$	650

Adjustments to reconcile net income (loss) to net cash provided by operating activities:	Adjustments to reconcile net income (loss) to net cash provided by operating activities:					Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, amortization and other non-cash items	Depreciation, amortization and other non-cash items	646		818		Depreciation, amortization and other non-cash items	177		236
Net (gains) losses on investments and derivatives	Net (gains) losses on investments and derivatives	1,167		(1,011)		Net (gains) losses on investments and derivatives	(14)		267

Pension and other postretirement remeasurement (gains) losses	Pension and other postretirement remeasurement (gains) losses	91		(404)		Pension and other postretirement remeasurement (gains) losses	(53)		(247)
Amortization of deferred gain on reinsurance		—		(5)

Loss on disposition of operations, net of tax		—		3,754
Changes in:	Changes in:					Changes in:
Policy benefits and other insurance reserves	Policy benefits and other insurance reserves	3,520		2,771		Policy benefits and other insurance reserves	1,080		(111)
Unearned premiums	Unearned premiums	2,256		1,490		Unearned premiums	199		390
Deferred policy acquisition costs	Deferred policy acquisition costs	(562)		(492)		Deferred policy acquisition costs	(29)		(103)
Premium installment receivables, net	Premium installment receivables, net	(1,022)		(606)		Premium installment receivables, net	(317)		(502)
Reinsurance recoverables, net	Reinsurance recoverables, net	56		(1,973)		Reinsurance recoverables, net	91		333
Income taxes	Income taxes	(559)		31		Income taxes	(125)		93
Other operating assets and liabilities	Other operating assets and liabilities	(381)		(903)		Other operating assets and liabilities	(87)		(574)

Net cash provided by operating activities	Net cash provided by operating activities	4,151		4,245		Net cash provided by operating activities	601		432
Cash flows from investing activities	Cash flows from investing activities					Cash flows from investing activities
Proceeds from sales	Proceeds from sales					Proceeds from sales
Fixed income securities	Fixed income securities	25,577		22,610		Fixed income securities	7,008		12,400
Equity securities	Equity securities	8,767		3,151		Equity securities	3,739		5,216
Limited partnership interests	Limited partnership interests	786		574		Limited partnership interests	414		300

Other investments	Other investments	1,034		696		Other investments	55		208
Investment collections	Investment collections					Investment collections
Fixed income securities	Fixed income securities	526		1,965		Fixed income securities	646		104
Mortgage loans	Mortgage loans	92		747		Mortgage loans	22		3
Other investments	Other investments	144		421		Other investments	25		49
Investment purchases	Investment purchases					Investment purchases
Fixed income securities	Fixed income securities	(30,103)		(22,682)		Fixed income securities	(8,424)		(13,220)
Equity securities	Equity securities	(7,613)		(1,790)		Equity securities	(1,187)		(3,624)
Limited partnership interests	Limited partnership interests	(860)		(927)		Limited partnership interests	(226)		(216)
Mortgage loans	Mortgage loans	(104)		(97)		Mortgage loans	(41)		(37)
Other investments	Other investments	(269)		(1,470)		Other investments	(73)		(186)
Change in short-term and other investments, net	Change in short-term and other investments, net	1,094		854		Change in short-term and other investments, net	(2,675)		114
Purchases of property and equipment, net	Purchases of property and equipment, net	(352)		(286)		Purchases of property and equipment, net	(79)		(130)

Acquisition of operations, net of cash acquired		—		(3,481)
Other		—		4

Net cash (used in) provided by investing activities	Net cash (used in) provided by investing activities	(1,281)		289		Net cash (used in) provided by investing activities	(796)		981
Cash flows from financing activities	Cash flows from financing activities					Cash flows from financing activities
Proceeds from issuance of long-term debt						Proceeds from issuance of long-term debt	744		—
Redemption and repayment of debt						Redemption and repayment of debt	(250)		—

Redemption and repayment of long-term debt		—		(422)

Redemption of preferred stock		—		(450)
Contractholder fund deposits	Contractholder fund deposits	102		741		Contractholder fund deposits	33		34
Contractholder fund withdrawals	Contractholder fund withdrawals	(31)		(1,036)		Contractholder fund withdrawals	(9)		(9)
Dividends paid on common stock	Dividends paid on common stock	(698)		(650)		Dividends paid on common stock	(224)		(230)
Dividends paid on preferred stock	Dividends paid on preferred stock	(79)		(87)		Dividends paid on preferred stock	(26)		(26)
Treasury stock purchases	Treasury stock purchases	(2,150)		(2,257)		Treasury stock purchases	(153)		(802)
Shares reissued under equity incentive plans, net	Shares reissued under equity incentive plans, net	61		108		Shares reissued under equity incentive plans, net	6		17

Other	Other	(52)		(12)		Other	—		(30)
Net cash used in financing activities		(2,847)		(4,065)
Net increase in cash, including cash classified as assets held for sale		23		469
Cash from continuing operations at beginning of period		763		311
Cash classified as assets held for sale at beginning of period		—		66
Less: Cash classified as assets held for sale at end of period		—		156
Cash from continuing operations at end of period		$	786	$	690
Net cash provided by (used in) financing activities						Net cash provided by (used in) financing activities	121		(1,046)
Net (decrease) increase in cash						Net (decrease) increase in cash	(74)		367
Cash at beginning of period						Cash at beginning of period	736		763
Cash at end of period						Cash at end of period	$	662	$	1,130

See notes to condensed consolidated financial statements.

~~Third~~First Quarter ~~2022~~2023 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 ~~with various property and casualty and investment subsidiaries~~ (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, 2022~~March 31, 2023 and for the three ~~and nine~~ month periods ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ 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.

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, ~~2021.~~2022. 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.

~~Subsequent Events~~

~~On October 18, 2022, Allstate closed~~To reflect the ~~sale~~application of ~~its headquarters for $232 million resulting in a gain of approximately $99 million, pre-tax~~the new guidance to all in-scope long-duration insurance contracts, certain amounts in the ~~fourth quarter of 2022. $16 million of the gain will be classified in Property-Liability net gains~~condensed consolidated financial statements and ~~losses on investments and derivatives and $83 million will be classified as other income within the Corporate and Other segment.~~notes for 2022 have been recast.

Macroeconomic impacts

The Novel Coronavirus Pandemic or COVID-19 (“Coronavirus”) and subsequent U.S. government fiscal and monetary policies have and may continue to effect economic activity through longer-term impacts such as supply chain disruptions, labor shortages and other macroeconomic factors that have increased inflation and affected our operations. These factors may continue to significantly affect results of operations, financial condition and liquidity. The impact from the pandemic and the ongoing effects should be considered when comparing the current period to prior periods.

The Coronavirus resulted in governments worldwide enacting emergency measures to combat the spread of the virus, including travel restrictions, government-imposed shelter-in-place orders, quarantine periods, social distancing, and restrictions on large gatherings. These measures have moderated, but new variants of the Coronavirus could result in further economic volatility. The Company continues to closely monitor and proactively adapt to developments and changing conditions. Currently, it is not possible to reliably estimate the impact to its operations, but the effects have been and could be material.

~~Pending~~

Adopted accounting standard

Accounting for Long-Duration Insurance Contracts ~~In August 2018,~~Effective January 1, 2023, the Company adopted the Financial Accounting Standards Board (”FASB”) ~~issued~~ guidance revising the accounting for certain long-duration insurance ~~contracts. As disclosed in Note 3,~~contracts using the Company sold substantially all of its life and annuity business in scope of the new standard. The Company’s reserves and deferred policy acquisition costs (“DAC”) for certain voluntary and individual life and accident and health insurance products are subjectmodified retrospective approach to the ~~new guidance.~~transition date of January 1, 2021.

Under the new guidance, measurement assumptions, including those for mortality, morbidity and policy ~~terminations, will be~~lapses, are required to be reviewed at least annually, and updated as appropriate. ~~The effects of updating assumptions other than the discount rate are required to be measured on a retrospective basis and reported in net income.~~ In addition, reserves under the new guidance are required to be discounted using an upper-medium grade fixed income instrument yield that is updated through other comprehensive income (“OCI”) at each reporting date. ~~Current GAAP requires the measurement of reserves to utilize assumptions set at~~Additionally, deferred policy ~~issuance unless updated current assumptions indicate that recorded reserves are deficient.~~

6~~www.allstate.com~~

~~Notes to Condensed Consolidated Financial Statements~~

~~The new guidance also requires DAC and other capitalized balances currently amortized in proportion to premiums or gross profits to~~acquisition costs (“DAC”) for all long-duration products will be amortized on a ~~constant level basis over~~simplified basis. Also, the ~~expected term~~Company’s reserve for ~~all long-duration insurance contracts.~~future policy benefits and DAC will ~~not~~ be subject to ~~loss recognition testing but will be reduced when actual lapse experience exceeds expected experience.~~new disclosure guidance.

The new guidance is effective for financial statements issued for reporting periods beginning after December 15, 2022 and restatement of prior periods presented is required. The new guidance will be applied to affected contracts and DAC onIn addition, the ~~basis of existing carrying amounts at~~Company met the ~~earliest period presented.~~

~~In July 2022, the FASB issued an Exposure Draft of an~~conditions included in Accounting Standards Update ~~(“Exposure Draft”) that would provide reporting entities with an accounting policy election~~No. 2022-05, Transition for Sold Contracts, and elected to not apply the new guidance ~~to insurance~~for contracts ~~in-force on~~that were part of the ~~January 1,~~ 2021 ~~transition date but sold prior to the January 1, 2023 effective date provided certain conditions are met.~~

sales of Allstate Life Insurance Company (“ALIC”) and Allstate Life Insurance Company of New York (“ALNY”).


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

($ in millions)	January 1, 2021

Decrease in retained income	$	21
Decrease in accumulated other comprehensive income (“AOCI”)	277
Total decrease in equity	$	298

The Company will adopt the new guidance effective January 1, 2023, using the modified retrospective approach and make the accounting policy election to not apply the new guidance to insurance contracts in-force on the transition date but sold prior to the effective date. The total impact on equity of implementing the new guidance is expected to be a decrease of between $250 million and $350 million. The expected decrease in equity includes the anticipated decrease in AOCI ~~of between $235 million and $315 million~~is primarily attributable to a change in the discount rate used in measuring the ~~liability~~reserve for future policy benefits for traditional life contracts and other long-term products with guaranteed terms from a portfolio-based rate at contract issuance to an upper-medium grade fixed income-based ~~rate.~~rate at the reporting date. The ~~expected decrease in equity also includes the anticipated~~ decrease in retained income ~~of between $15 million and $35 million which~~ primarily relates to certain cohorts of long-term contracts ~~with guaranteed terms with~~whose expected net ~~premium ratios that are required~~premiums exceeded expected gross premiums which resulted in an increase in reserves and a decrease in retained income equal to ~~be adjusted~~the present value of expected future benefits less the present value of expected future premiums at the transition date.

6www.allstate.com

Notes to Condensed Consolidated Financial Statements

Transition disclosures The ~~impact on equity, AOCI,~~following tables summarize the balance of and ~~retained income excludes sold contracts that would meet the conditions included~~changes in the ~~Exposure Draft.~~reserve for future policy benefits and DAC on January 1, 2021 upon the adoption of the guidance.

~~The estimated impact~~


Impact of adoption for reserve for future policy benefits
( $ in millions)	Accident and health		Traditional life		Total
Pre-adoption 12/31/2020 balance (1)	$	728	$	311	$	1,039

Adjustments:
Effect of the remeasurement of the reserve at upper-medium grade fixed income-based rate (2)	232		153		385

Adjustments for contracts with net premiums in excess of gross premiums (3)	77		—		77
Total adjustments	309		153		462
Post-adoption 1/1/2021 balance	1,037		464		1,501
Less: reinsurance recoverables (4)	159		3		162
Post-adoption 1/1/2021 balance, after reinsurance recoverables	$	878	$	461	$	1,339

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

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

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

(4)Represents post-adoption January 1, 2021 balance of reinsurance recoverables. Adjustments to reinsurance recoverables for accident and health products increased January 1, 2021 AOCI ~~at transition date is expected to decline significantly at the effective date~~by $33 million due to the ~~increase~~remeasurement of the reserve at upper-medium grade fixed income based rate and increased January 1, 2021 retained income by $51 million due to adjustments for contracts with net premiums in ~~the discount rate between the transition date and effective date.~~excess of gross premiums.


Impact of adoption for DAC
( $ in millions)	Accident and health		Traditional life		Interest- sensitive life		Total
Pre-adoption 12/31/2020 balance	$	343	$	32	$	95	$	470
Adjustment for removal of impact of unrealized gains or losses (1)	—		—		2		2

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

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

Impacts of the adoption on the financial statements


Consolidated Statements of Operations
	Three months ended March 31, 2022
($ in millions, except per share data)	As reported		Impact of change		As adjusted
Revenues
Accident and health insurance premiums and contract charges	$	469	$	(1)	$	468
Total revenues	12,337		(1)		12,336

Costs and expenses
Accident, health and other policy benefits	269		(1)		268
Amortization of deferred policy acquisition costs	1,612		(4)		1,608

Total costs and expenses	11,540		(5)		11,535

Income from operations before income tax expense	797		4		801
Income tax expense	151		—		151
Net income	646		4		650

Net income attributable to Allstate	656		4		660

Net income applicable to common shareholders	$	630	$	4	$	634

Earnings per common share:
Net income applicable to common shareholders per common share - Basic	$	2.27	$	0.01	$	2.28
Net income applicable to common shareholders per common share - Diluted	$	2.24	$	0.01	$	2.25

~~Third~~First Quarter ~~2022~~2023 Form 10-Q 7

Notes to Condensed Consolidated Financial Statements


Condensed Consolidated Statements of Comprehensive Income (unaudited)
	Three months ended March 31, 2022
($ in millions)	As reported		Impact of change		As adjusted
Net income	$	646	$	4	$	650

Other comprehensive income (loss), after-tax
Changes in:
Unrealized net capital gains and losses	(1,593)		(1)		(1,594)
Discount rate for reserve for future policy benefits	—		95		95
Other comprehensive loss, after-tax	(1,608)		94		(1,514)

Comprehensive loss	(962)		98		(864)
Comprehensive loss attributable to Allstate	$	(940)	$	98	$	(842)














Condensed Consolidated Statements of Financial Position (unaudited)
	December 31, 2022
($ in millions)	As reported		Impact of change		As adjusted
Assets
Deferred policy acquisition costs	$	5,418	$	24	$	5,442
Reinsurance and indemnification recoverables, net	9,606		13		9,619
Deferred income taxes	386		(4)		382
Other assets, net	5,905		(1)		5,904
Total assets	97,957		32		97,989
Liabilities
Reserve for future policy benefits	1,273		49		1,322
Contractholder funds	897		(18)		879
Unearned premiums	22,311		(12)		22,299

Total liabilities	80,607		19		80,626
Equity
Retained income	50,954		16		50,970
Accumulated other comprehensive income:
Unrealized net capital gains and losses	(2,253)		(2)		(2,255)
Discount rate for reserve for future policy benefits	—		(1)		(1)
Total AOCI	(2,389)		(3)		(2,392)
Total Allstate shareholders’ equity	17,475		13		17,488
Total equity	17,350		13		17,363
Total liabilities and equity	$	97,957	$	32	$	97,989

8www.allstate.com

Notes to Condensed Consolidated Financial Statements


Condensed Consolidated Statements of Shareholders’ Equity (unaudited)
	Three months ended March 31, 2022
($ in millions)	As reported		Impact of change		As adjusted
















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

Net income	656		4		660



Balance, end of period	53,688		(2)		53,686












Accumulated other comprehensive income (loss)
Balance, beginning of period	655		(229)		426

Change in unrealized net capital gains and losses	(1,593)		(1)		(1,594)


Change in discount rate for reserve for future policy benefits	—		95		95
Balance, end of period	(953)		(135)		(1,088)

Total Allstate shareholders’ equity	23,212		(137)		23,075
Total equity	$	23,138	$	(137)	$	23,001


Condensed Consolidated Statements of Cash Flows (unaudited)
	Three months ended March 31, 2022
($ in millions)	As reported		Impact of change		As adjusted
Cash flows from operating activities
Net income	$	646	$	4	$	650
Adjustments to reconcile net income to net cash provided by operating activities:







Changes in:
Policy benefits and other insurance reserves	(113)		2		(111)
Unearned premiums	392		(2)		390
Deferred policy acquisition costs	(99)		(4)		(103)
Reinsurance recoverables, net	334		(1)		333
Income taxes	92		1		93
Other operating assets and liabilities	(574)		—		(574)
Net cash provided by operating activities	$	432	$	—	$	432

Changes to significant accounting policies

Reserve for future policy benefits

Long-duration voluntary accident and health insurance and traditional life insurance contracts The reserve for future policy benefits (“RFPB”) is calculated using the net premium reserving model, which uses the present value of insurance contract benefits less the present value of net premiums. Under the net premium reserving model, the Company computes a net premium ratio which is the present value of insurance contract benefits divided by the present value of gross premiums. The present value of contract benefits and gross premiums are determined using the discount rate at contract inception. The net premium ratio is applied to premiums due on a periodic basis to compute the RFPB. The net premium ratio is recomputed at least annually using both actual historical cash flows and future cash flows anticipated over the life of cohort of contracts subject to measurement. Assumptions including mortality, morbidity, and lapses affect the timing and amount of estimated cash flows used to calculate the RFPB.

The Company has grouped contracts into cohorts based on product type and issue year. Examples of insurance product types include whole life, term life, critical illness and disability. Issue year is based on the issuance date of the contract to the policyholder,

except in the case of contracts acquired in a business combination, where the issue date is based on the acquisition date of the business combination. The RFPB is calculated for contracts in force at the end of each period, which results in the Company recognizing the effects of actual experience in the period it occurs.

Annually, in the third quarter, the Company obtains historical premiums and benefits information and evaluates future cash flow assumptions that include mortality, morbidity, and terminations, and updates cash flow assumptions as necessary. The Company has elected to not update the expense assumption when annually reviewing and updating future cash flow assumptions. Actual premiums and benefits and any updates to future cash flow assumptions are incorporated into the calculation of an updated net premium ratio. Updates for actual premiums and benefits and changes to future cash flow assumptions will result in a liability remeasurement gain or loss that is recognized in net income. The first step to determining the liability remeasurement gain or loss is to calculate the RFPB using revised net premiums discounted at the locked-in discount rate set at contract issuance. The result of the first step is then compared to the carrying amount of the RFPB before the updates for actual experience and changes to future cash flow assumptions. The decrease (gain) or increase (loss) in the RFPB is reported as liability

First Quarter 2023 Form 10-Q 9

Notes to Condensed Consolidated Financial Statements

remeasurement gain or loss in net income and presented parenthetically as part of Accident, health and other policy benefits on the Consolidated Statements of Operations. The updated net premium ratio is used in future quarters to measure the RFPB until the next annual update or an earlier date if the Company determines it is necessary to revise future cash flow assumptions based on available evidence, including actual experience.

The discount rate assumption is determined using a yield curve approach. The yield curve consists of U.S. dollar-denominated senior unsecured fixed-income securities issued by U.S. companies that have an A credit rating based on the ratings provided by nationally recognized rating agencies that include Moody’s, Standard & Poor’s, and Fitch. For points on the yield curve that do not have observable yields, the Company uses linear interpolation which calculates the unobservable yield based on the two nearest observable yields, except for any points beyond the last observable yield at 30 years, where interest rates are held constant with the last observable point on the yield curve. The Company updates the current discount rate quarterly and the change in the RFPB resulting from the updated current discount rate is recognized in OCI.

Deferred policy acquisition costs

Deferred policy acquisition costs are related directly to the successful acquisition of new or renewal insurance contracts and are deferred and recognized as an expense over the life of the related contracts. These costs are principally agent and broker remuneration, premium taxes and certain underwriting expenses. All other acquisition costs are expensed as incurred and included in operating costs and expenses.

Long-duration voluntary accident and health insurance, traditional life insurance contracts, and interest-sensitive life insurance contracts Voluntary accident and health insurance and traditional life insurance contracts are grouped by product and issue year into cohorts consistent with the cohorts used to calculate the RFPB. Interest-sensitive life insurance contracts are grouped into cohorts by issue year, and the issue year is determined based on contract issue date. DAC is amortized on a constant level basis over the expected contract term and is included in Amortization of deferred policy acquisition costs on the Consolidated Statements of Operations. The constant level basis used for all cohorts is based on policies-in-force. The expected contract term and mortality, morbidity, and termination assumptions are used to calculate both DAC amortization and the RFPB. If actual contract terminations are greater than expected terminations for any cohort, each affected cohort’s DAC balance will be reduced in the current period based on the difference between the actual and expected terminations. No adjustments to DAC amortization are recorded if actual contract terminations are less than expected terminations for any cohort. If the Company makes an update to any of its mortality, morbidity, or termination assumptions, the Company will use the assumptions prospectively to amortize any cohort’s remaining DAC over the remaining expected contract term.

The costs assigned to the right to receive future cash flows from certain business purchased from other insurers are also classified as DAC in the Consolidated Statements of Financial Position. The costs capitalized represent the present value of future profits expected to be earned over the lives of the contracts acquired. The Company amortizes the present value of future profits using the same methodology and assumptions as the amortization of DAC. The present value of future profits is subject to premium deficiency testing.

10www.allstate.com

Notes to Condensed Consolidated Financial Statements


Note 2			Earnings per Common Share

Basic earnings per common share is computed using the weighted average number of common shares outstanding, including vested unissued participating restricted stock units. Diluted earnings per common share is computed using the weighted average number of common and dilutive potential common shares outstanding.

For the Company, dilutive potential common shares consist of outstanding stock options, unvested

non-participating restricted stock units and contingently issuable performance stock awards. The effect of dilutive potential common shares does not include the effect of options with an anti-dilutive effect on earnings per common share because their exercise prices exceed the average market price of Allstate common shares during the period or for which the unrecognized compensation cost would have an anti-dilutive effect.


Computation of basic and diluted earnings per common share	Computation of basic and diluted earnings per common share									Computation of basic and diluted earnings per common share
(In millions, except per share data)	(In millions, except per share data)	Three months ended September 30,				Nine months ended September 30,				(In millions, except per share data)	Three months ended March 31,
		2022		2021		2022		2021			2023		2022
Numerator:	Numerator:									Numerator:
Net (loss) income from continuing operations		$	(683)	$	206	$	(1,061)	$	4,047
Net (loss) income										Net (loss) income	$	(321)	$	650
Less: Net loss attributable to noncontrolling interest	Less: Net loss attributable to noncontrolling interest	(15)		(7)		(34)		(7)		Less: Net loss attributable to noncontrolling interest	(1)		(10)
Net (loss) income from continuing operations attributable to Allstate		(668)		213		(1,027)		4,054
Net (loss) income attributable to Allstate										Net (loss) income attributable to Allstate	(320)		660
Less: Preferred stock dividends	Less: Preferred stock dividends	26		30		79		87		Less: Preferred stock dividends	26		26
Net (loss) income from continuing operations applicable to common shareholders		(694)		183		(1,106)		3,967
Income (loss) from discontinued operations, net of tax		—		325		—		(3,272)

Net (loss) income applicable to common shareholders	Net (loss) income applicable to common shareholders	$	(694)	$	508	$	(1,106)	$	695	Net (loss) income applicable to common shareholders	$	(346)	$	634

Denominator:	Denominator:									Denominator:
Weighted average common shares outstanding	Weighted average common shares outstanding	268.7		293.1		273.5		298.1		Weighted average common shares outstanding	263.5		278.1
Effect of dilutive potential common shares (1):	Effect of dilutive potential common shares (1):									Effect of dilutive potential common shares (1):
Stock options	Stock options	—		3.1		—		2.9		Stock options	—		2.6
Restricted stock units (non-participating) and performance stock awards	Restricted stock units (non-participating) and performance stock awards	—		1.7		—		1.6		Restricted stock units (non-participating) and performance stock awards	—		1.1
Weighted average common and dilutive potential common shares outstanding	Weighted average common and dilutive potential common shares outstanding	268.7		297.9		273.5		302.6		Weighted average common and dilutive potential common shares outstanding	263.5		281.8

Earnings per common share applicable to common shareholders
Basic
Continuing operations		$	(2.58)	$	0.62	$	(4.04)	$	13.31
Discontinued operations		—		1.11		—		(10.98)
Total		$	(2.58)	$	1.73	$	(4.04)	$	2.33

Diluted (1)
Continuing operations		$	(2.58)	$	0.62	$	(4.04)	$	13.11
Discontinued operations		—		1.09		—		(10.81)
Total		$	(2.58)	$	1.71	$	(4.04)	$	2.30
Earnings per common share - Basic										Earnings per common share - Basic	$	(1.31)	$	2.28
Earnings per common share - Diluted (1)										Earnings per common share - Diluted (1)	$	(1.31)	$	2.25

Anti-dilutive options excluded from diluted earnings per common share	Anti-dilutive options excluded from diluted earnings per common share	2.4		0.6		1.6		1.3		Anti-dilutive options excluded from diluted earnings per common share	1.1		1.2
Weighted average dilutive potential common shares excluded due to net loss applicable to common shareholders (1)	Weighted average dilutive potential common shares excluded due to net loss applicable to common shareholders (1)	2.9		—		3.3		—		Weighted average dilutive potential common shares excluded due to net loss applicable to common shareholders (1)	2.6		—

(1)As a result of the net loss reported for the three ~~and nine~~ month ~~periods~~period ended ~~September 30, 2022,~~March 31, 2023, weighted average shares for basic earnings per share is also used for calculating diluted earnings per share because all dilutive potential common shares are anti-dilutive and are therefore excluded from the calculation.

8~~www.allstate.com~~

~~Notes to Condensed Consolidated Financial Statements~~


Note 3			~~Acquisitions and Dispositions~~

~~Acquisitions~~

~~National General~~ On January 4, 2021, the Company completed the acquisition of National General Holdings Corp. (“National General”), an insurance holding company serving customers predominantly through independent agents for property and casualty and accident and health products.

~~Assets and liabilities recognized in the National General acquisition~~ ~~(1)~~

~~($ in millions)~~

~~January 4, 2021~~

~~Assets~~

~~Investments~~

~~4,962~~

~~Cash~~

~~400~~

~~Premiums and other receivables, net~~

~~1,539~~

~~Deferred acquisition costs (value of business acquired)~~

~~317~~

~~Reinsurance recoverables, net~~

~~1,212~~

~~Intangible assets~~

~~1,199~~

~~Other assets~~

~~734~~

~~Goodwill~~ ~~(2)~~

~~1,038~~

~~Total assets~~

~~11,401~~

~~Liabilities~~

~~Reserve for property and casualty insurance claims and claims expense~~

~~2,765~~

~~Reserve for future policy benefits~~

~~186~~

~~Unearned premiums~~

~~2,245~~

~~Reinsurance payable~~

~~363~~

~~Debt~~ ~~(3)~~

~~593~~

~~Deferred tax liabilities~~

~~162~~

~~Other liabilities~~

~~776~~

~~Total liabilities~~

~~7,090~~

~~(1)The amounts reflect allocation of assets acquired and liabilities assumed.~~

~~(2)~~$675 million, $20 million and $343 million of goodwill were allocated to the Allstate Protection, Protection Services and Allstate Health and Benefits segments, respectively, and is non-deductible for income tax purposes. Goodwill is primarily attributable to expected synergies and future growth opportunities.

~~(3)~~Subsequent to the acquisition, the Company repaid $100 million of 7.625% Subordinated Notes and $72 million of Subordinated Debentures on February 3, 2021 and March 15, 2021, respectively. As of September 30, 2022, the Company had principal balance remaining of $350 million 6.750% Senior Notes due in 2024, with a fair value adjustment of $31 million.

~~SafeAuto~~ On October 1, 2021, the Company completed the acquisition of Safe Auto Insurance Group, Inc. (“SafeAuto”), a non-standard auto insurance carrier focused on providing state-minimum private-passenger auto insurance direct to consumers with coverage options in 28 states for $267 million in cash.

~~Dispositions~~

~~Life and annuity business~~ On October 1, 2021, the Company closed the sale of Allstate Life Insurance Company of New York (“ALNY”) to Wilton Reassurance Company for $400 million. On November 1, 2021, the Company closed the sale of Allstate Life Insurance Company (“ALIC”) and certain affiliates to entities managed by Blackstone for total proceeds of $4 billion, including a pre-close dividend of $1.25 billion paid by ALIC.

~~In 2021 and prior periods, the assets and liabilities of the businesses were reclassified as held for sale and results were presented as discontinued operations.~~

~~Third Quarter 2022 Form 10-Q~~ 9

~~Notes to Condensed Consolidated Financial Statements~~

Financial results from discontinued operations
Three months ended September 30, Nine months ended September 30,
($ in millions) 2021 2021
Revenues
Life premiums and contract charges $ 331 $ 1,007
Net investment income 427 1,251
Net gains (losses) on investments and derivatives 4 193
Total revenues 762 2,451
Costs and expenses
Life contract benefits 411 1,207
Interest credited to contractholder funds 127 371
Amortization of DAC 27 84
Operating costs and expenses 45 151
Restructuring and related charges 7 30
Total costs and expenses 617 1,843
Amortization of deferred gain on reinsurance 1 5
Income from discontinued operations before income tax expense 146 613
Income tax expense 38 131
Income from discontinued operations, net of tax 108 482
Loss on disposition of operations 89 (4,048)
Income tax benefit (128) (294)
Loss on disposition of operations, net of tax 217 (3,754)
Income (loss) from discontinued operations, net of tax $ 325 $ (3,272)

~~Cash flows from discontinued operations~~

~~Nine months ended September 30,~~

~~($ in millions)~~

~~2021~~

~~Net cash provided by operating activities from discontinued operations~~

~~888~~

~~Net cash used in investing activities from discontinued operations~~

~~(405)~~


~~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.

~~National General results are included in the following segments:~~

•~~Property and casualty - Allstate Protection~~

•~~Accident and health - Allstate Health and Benefits~~

•~~Technology solutions - Protection Services~~

Underwriting income is calculated as premiums earned and other revenue, less claims and claims expenses (“losses”), ~~Shelter-in-Place Payback expense,~~ amortization of DAC, operating costs and expenses, amortization or impairment of purchased intangibles and restructuring and related charges as determined using GAAP.

Adjusted net income is net income (loss) applicable to common shareholders, excluding:


•			Net gains and losses on investments and derivatives
•			Pension and other postretirement remeasurement gains and losses
•			~~Business combination expenses and the amortization~~Amortization or impairment of purchased intangibles
•			~~Income or loss from discontinued operations~~
•			Gain or loss on disposition ~~of operations~~
•			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.

10First Quarter 2023 Form 10-Q ~~www.allstate.com~~11

Notes to Condensed Consolidated Financial Statements

															Reportable segments financial performance
		Three months ended September 30,				Nine months ended September 30,					Three months ended March 31,
($ in millions)	($ in millions)	2022		2021		2022		2021		($ in millions)	2023		2022
Underwriting income (loss) by segment	Underwriting income (loss) by segment									Underwriting income (loss) by segment
Allstate Protection	Allstate Protection	$	(1,170)	$	(421)	$	(1,749)	$	1,670	Allstate Protection	$	(998)	$	282
Run-off Property-Liability	Run-off Property-Liability	(122)		(113)		(127)		(118)		Run-off Property-Liability	(3)		(2)
Total Property-Liability	Total Property-Liability	(1,292)		(534)		(1,876)		1,552		Total Property-Liability	(1,001)		280

Adjusted net income (loss) by segment, after-tax	Adjusted net income (loss) by segment, after-tax									Adjusted net income (loss) by segment, after-tax
Protection Services	Protection Services	35		45		131		150		Protection Services	34		53
Allstate Health and Benefits	Allstate Health and Benefits	54		33		172		160		Allstate Health and Benefits	56		57
Corporate and Other	Corporate and Other	(104)		(95)		(322)		(330)		Corporate and Other	(89)		(111)

Reconciling items	Reconciling items									Reconciling items
Property-Liability net investment income	Property-Liability net investment income	632		710		1,696		2,314		Property-Liability net investment income	509		558
Net gains (losses) on investments and derivatives	Net gains (losses) on investments and derivatives	(167)		105		(1,167)		818		Net gains (losses) on investments and derivatives	14		(267)
Pension and other postretirement remeasurement gains (losses)	Pension and other postretirement remeasurement gains (losses)	(79)		(40)		(91)		404		Pension and other postretirement remeasurement gains (losses)	53		247

Business combination expenses and amortization of purchased intangibles (1)		(29)		(34)		(86)		(124)
Business combination fair value adjustment		—		—		—		6
Gain (loss) on disposition of operations		(5)		—		6		—
Amortization of purchased intangibles (1)										Amortization of purchased intangibles (1)	(24)		(29)

Gain (loss) on disposition										Gain (loss) on disposition	9		(16)
Income tax benefit (expense) on reconciling items	Income tax benefit (expense) on reconciling items	246		(14)		396		(990)		Income tax benefit (expense) on reconciling items	92		(148)
Total reconciling items	Total reconciling items	598		727		754		2,428		Total reconciling items	653		345

Income (loss) from discontinued operations		—		235		—		(3,435)
Income tax benefit from discontinued operations		—		90		—		163
Total from discontinued operations		$	—	$	325	$	—	$	(3,272)

Less: Net loss attributable to noncontrolling interest (2)	Less: Net loss attributable to noncontrolling interest (2)	(15)		(7)		(35)		(7)		Less: Net loss attributable to noncontrolling interest (2)	(1)		(10)

Net (loss) income applicable to common shareholders	Net (loss) income applicable to common shareholders	$	(694)	$	508	$	(1,106)	$	695	Net (loss) income applicable to common shareholders	$	(346)	$	634

(1)Excludes amortization of purchased intangibles in Property-Liability, which is included above in underwriting income.

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

~~Third Quarter 2022 Form 10-Q~~ 1211www.allstate.com

Notes to Condensed Consolidated Financial Statements


Reportable segments revenue information	Reportable segments revenue information									Reportable segments revenue information
($ in millions)	($ in millions)	Three months ended September 30,				Nine months ended September 30,				($ in millions)	Three months ended March 31,
		2022		2021		2022		2021			2023		2022
Property-Liability	Property-Liability									Property-Liability
Insurance premiums	Insurance premiums									Insurance premiums
Auto	Auto	$	7,545	$	6,912	$	21,974	$	20,604	Auto	$	7,908	$	7,081
Homeowners	Homeowners	2,776		2,522		8,065		7,325		Homeowners	2,810		2,490
Other personal lines	Other personal lines	540		521		1,616		1,545		Other personal lines	562		531
Commercial lines	Commercial lines	296		204		874		590		Commercial lines	232		283
Other business lines										Other business lines	123		113
Allstate Protection	Allstate Protection	11,157		10,159		32,529		30,064		Allstate Protection	11,635		10,498
Run-off Property-Liability	Run-off Property-Liability	—		—		—		—		Run-off Property-Liability	—		—
Total Property-Liability insurance premiums	Total Property-Liability insurance premiums	11,157		10,159		32,529		30,064		Total Property-Liability insurance premiums	11,635		10,498
Other revenue	Other revenue	364		365		1,066		1,071		Other revenue	353		347
Net investment income	Net investment income	632		710		1,696		2,314		Net investment income	509		558
Net gains (losses) on investments and derivatives	Net gains (losses) on investments and derivatives	(123)		94		(988)		763		Net gains (losses) on investments and derivatives	12		(203)
Total Property-Liability	Total Property-Liability	12,030		11,328		34,303		34,212		Total Property-Liability	12,509		11,200

Protection Services	Protection Services									Protection Services
Protection plans	Protection plans	330		295		961		834		Protection plans	361		313
Roadside assistance	Roadside assistance	50		50		152		144		Roadside assistance	49		53
Finance and insurance products	Finance and insurance products	124		111		362		324		Finance and insurance products	128		117
Intersegment premiums and service fees (1)	Intersegment premiums and service fees (1)	39		46		118		133		Intersegment premiums and service fees (1)	33		41
Other revenue	Other revenue	84		85		269		263		Other revenue	84		94
Net investment income	Net investment income	13		10		34		32		Net investment income	16		9
Net gains (losses) on investments and derivatives	Net gains (losses) on investments and derivatives	(13)		4		(56)		20		Net gains (losses) on investments and derivatives	(1)		(13)
Total Protection Services	Total Protection Services	627		601		1,840		1,750		Total Protection Services	670		614

Allstate Health and Benefits	Allstate Health and Benefits									Allstate Health and Benefits
Employer voluntary benefits	Employer voluntary benefits	257		251		780		769		Employer voluntary benefits	255		263
Group health	Group health	96		90		285		260		Group health	107		94
Individual health	Individual health	110		119		333		333		Individual health	101		111
Other revenue	Other revenue	90		85		277		248		Other revenue	101		95
Net investment income	Net investment income	17		18		50		56		Net investment income	19		17
Net gains (losses) on investments and derivatives	Net gains (losses) on investments and derivatives	(6)		(1)		(25)		5		Net gains (losses) on investments and derivatives	2		(7)
Total Allstate Health and Benefits	Total Allstate Health and Benefits	564		562		1,700		1,671		Total Allstate Health and Benefits	585		573

Corporate and Other	Corporate and Other									Corporate and Other
Other revenue	Other revenue	23		1		72		3		Other revenue	23		24
Net investment income	Net investment income	28		26		66		44		Net investment income	31		10
Net gains (losses) on investments and derivatives	Net gains (losses) on investments and derivatives	(25)		8		(98)		30		Net gains (losses) on investments and derivatives	1		(44)
Total Corporate and Other	Total Corporate and Other	26		35		40		77		Total Corporate and Other	55		(10)

Intersegment eliminations (1)	Intersegment eliminations (1)	(39)		(46)		(118)		(133)		Intersegment eliminations (1)	(33)		(41)
Consolidated revenues	Consolidated revenues	$	13,208	$	12,480	$	37,765	$	37,577	Consolidated revenues	$	13,786	$	12,336

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

12First Quarter 2023 Form 10-Q ~~www.allstate.com~~13

Notes to Condensed Consolidated Financial Statements


Note 54			Investments

											Portfolio composition
($ in millions)	($ in millions)	September 30, 2022		December 31, 2021		($ in millions)	March 31, 2023		December 31, 2022
Fixed income securities, at fair value	Fixed income securities, at fair value	$	41,715	$	42,136	Fixed income securities, at fair value	$	44,103	$	42,485
Equity securities, at fair value	Equity securities, at fair value	4,723		7,061		Equity securities, at fair value	2,174		4,567
Mortgage loans, net	Mortgage loans, net	833		821		Mortgage loans, net	781		762
Limited partnership interests	Limited partnership interests	7,907		8,018		Limited partnership interests	7,971		8,114
Short-term investments, at fair value	Short-term investments, at fair value	4,030		4,009		Short-term investments, at fair value	6,722		4,173
Other investments, net	Other investments, net	1,798		2,656		Other investments, net	1,724		1,728
Total	Total	$	61,006	$	64,701	Total	$	63,475	$	61,829

																						Amortized cost, gross unrealized gains (losses) and fair value for fixed income securities
($ in millions)	($ in millions)	Amortized cost, net			Gross unrealized					Fair value		($ in millions)		Amortized cost, net		Gross unrealized				Fair value
				Gains			Losses						Gains			Losses
September 30, 2022
March 31, 2023												March 31, 2023
U.S. government and agencies	U.S. government and agencies	$	8,756		$	1		$	(313)	$	8,444	U.S. government and agencies		$	7,826	$	21	$	(152)	$	7,695
Municipal	Municipal	6,486			4			(461)		6,029		Municipal		6,499		65		(240)		6,324
Corporate	Corporate	27,614			3			(2,885)		24,732		Corporate		29,705		118		(1,787)		28,036
Foreign government	Foreign government	933			—			(43)		890		Foreign government		1,112		3		(24)		1,091
ABS	ABS	1,679			4			(63)		1,620		ABS		978		4		(25)		957
Total fixed income securities	Total fixed income securities	$	45,468		$	12		$	(3,765)	$	41,715	Total fixed income securities		$	46,120	$	211	$	(2,228)	$	44,103

December 31, 2021
December 31, 2022												December 31, 2022
U.S. government and agencies	U.S. government and agencies	$	6,287		$	12		$	(26)	$	6,273	U.S. government and agencies		$	8,123	$	6	$	(231)	$	7,898
Municipal	Municipal	6,130			279			(16)		6,393		Municipal		6,500		36		(326)		6,210
Corporate	Corporate	26,834			688			(192)		27,330		Corporate		28,562		46		(2,345)		26,263
Foreign government	Foreign government	982			9			(6)		985		Foreign government		997		—		(40)		957
ABS	ABS	1,143			14			(2)		1,155		ABS		1,188		4		(35)		1,157
Total fixed income securities	Total fixed income securities	$	41,376		$	1,002		$	(242)	$	42,136	Total fixed income securities		$	45,370	$	92	$	(2,977)	$	42,485

																			Scheduled maturities for fixed income securities
($ in millions)	($ in millions)	September 30, 2022				December 31, 2021				($ in millions)	March 31, 2023				December 31, 2022
		Amortized cost, net		Fair value		Amortized cost, net		Fair value			Amortized cost, net		Fair value		Amortized cost, net		Fair value
Due in one year or less	Due in one year or less	$	2,429	$	2,398	$	1,105	$	1,111	Due in one year or less	$	3,754	$	3,697	$	2,870	$	2,836
Due after one year through five years	Due after one year through five years	26,566		24,992		21,039		21,291		Due after one year through five years	24,766		23,771		26,546		25,217
Due after five years through ten years	Due after five years through ten years	11,356		9,738		13,808		14,079		Due after five years through ten years	11,461		10,697		11,035		9,870
Due after ten years	Due after ten years	3,438		2,967		4,281		4,500		Due after ten years	5,161		4,981		3,731		3,405
		43,789		40,095		40,233		40,981			45,142		43,146		44,182		41,328
ABS	ABS	1,679		1,620		1,143		1,155		ABS	978		957		1,188		1,157
Total	Total	$	45,468	$	41,715	$	41,376	$	42,136	Total	$	46,120	$	44,103	$	45,370	$	42,485

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)	($ in millions)	Three months ended September 30,				Nine months ended September 30,				($ in millions)	Three months ended March 31,
		2022		2021		2022		2021				2023		2022
Fixed income securities	Fixed income securities	$	323	$	279	$	889	$	870	Fixed income securities		$	390	$	267
Equity securities	Equity securities	30		24		100		51		Equity securities		11		36
Mortgage loans	Mortgage loans	8		9		25		31		Mortgage loans		8		8
Limited partnership interests	Limited partnership interests	325		438		841		1,467		Limited partnership interests		134		292
Short-term investments	Short-term investments	30		1		42		3		Short-term investments		66		2
Other investments	Other investments	38		50		120		139		Other investments		41		40
Investment income, before expense	Investment income, before expense	754		801		2,017		2,561		Investment income, before expense		650		645
Investment expense	Investment expense	(64)		(37)		(171)		(115)		Investment expense		(75)		(51)
Net investment income	Net investment income	$	690	$	764	$	1,846	$	2,446	Net investment income		$	575	$	594

~~Third Quarter 2022 Form 10-Q~~ 1413www.allstate.com

Notes to Condensed Consolidated Financial Statements

																Net gains (losses) on investments and derivatives by asset type
($ in millions)	($ in millions)	Three months ended September 30,				Nine months ended September 30,				($ in millions)	Three months ended March 31,
		2022		2021		2022		2021				2023		2022
Fixed income securities	Fixed income securities	$	(166)	$	86	$	(644)	$	355	Fixed income securities		$	(136)	$	(152)
Equity securities	Equity securities	(239)		6		(1,222)		322		Equity securities		167		(347)
Mortgage loans	Mortgage loans	1		—		—		19		Mortgage loans		—		(1)
Limited partnership interests	Limited partnership interests	(49)		(15)		(224)		1		Limited partnership interests		22		(101)
Derivatives	Derivatives	299		46		889		54		Derivatives		(52)		318
Other investments	Other investments	(13)		(18)		34		67		Other investments		13		16
Net gains (losses) on investments and derivatives	Net gains (losses) on investments and derivatives	$	(167)	$	105	$	(1,167)	$	818	Net gains (losses) on investments and derivatives		$	14	$	(267)

																Net gains (losses) on investments and derivatives by transaction type
($ in millions)	($ in millions)	Three months ended September 30,				Nine months ended September 30,				($ in millions)	Three months ended March 31,
		2022		2021		2022		2021				2023		2022
Sales	Sales	$	(175)	$	80	$	(605)	$	441	Sales		$	(120)	$	(127)
Credit losses	Credit losses	(6)		(12)		(30)		2		Credit losses		(12)		(11)

Valuation change of equity investments (1)	Valuation change of equity investments (1)	(285)		(9)		(1,421)		321		Valuation change of equity investments (1)		198		(447)
Valuation change and settlements of derivatives	Valuation change and settlements of derivatives	299		46		889		54		Valuation change and settlements of derivatives		(52)		318
Net gains (losses) on investments and derivatives	Net gains (losses) on investments and derivatives	$	(167)	$	105	$	(1,167)	$	818	Net gains (losses) on investments and derivatives		$	14	$	(267)

(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	Gross realized gains (losses) on sales of fixed income securities									Gross realized gains (losses) on sales of fixed income securities
($ in millions)	($ in millions)	Three months ended September 30,				Nine months ended September 30,				($ in millions)	Three months ended March 31,
		2022		2021		2022		2021				2023		2022
Gross realized gains	Gross realized gains	$	19	$	104	$	112	$	460	Gross realized gains		$	46	$	66
Gross realized losses	Gross realized losses	(181)		(18)		(748)		(106)		Gross realized losses		(173)		(218)

The following table presents the net pre-tax appreciation (decline) recognized in net income of equity securities and limited partnership interests carried at fair value that are still held as of September 30, 2022 and 2021, respectively.


Net appreciation (decline) recognized in net income for assets that are still held
($ in millions)	Three months ended March 31,
		2023		2022
Equity securities		$	20	$	(92)
Limited partnership interests carried at fair value		16		38
Total		$	36	$	(54)

Net appreciation (decline) recognized in net income
($ in millions) Three months ended September 30, Nine months ended September 30,
2022 2021 2022 2021
Equity securities $ (209) $ (20) $ (771) $ 170
Limited partnership interests carried at fair value
(36) 137 8 415
Total $ (245) $ 117 $ (763) $ 585


Credit losses recognized in net income
($ in millions)	Three months ended March 31,
		2023		2022
Assets
Fixed income securities:

Corporate		$	(9)	$	—

Total fixed income securities		(9)		—
Mortgage loans		—		(1)

Other investments
Bank loans		(3)		(10)
Total credit losses by asset type		$	(12)	$	(11)

Liabilities
Commitments to fund commercial mortgage loans and bank loans		—		—
Total		$	(12)	$	(11)

14First Quarter 2023 Form 10-Q ~~www.allstate.com~~15

Notes to Condensed Consolidated Financial Statements

Credit losses recognized in net income
($ in millions) Three months ended September 30, Nine months ended September 30,
2022 2021 2022 2021
Assets
Fixed income securities:
Corporate $ (2) $ — $ (6) $ —
ABS (2) — (2) 1
Total fixed income securities (4) — (8) 1
Mortgage loans 1 — — 17
Limited partnership interests (1) — (4) —
Other investments
Bank loans (2) (13) (18) (16)
Agent loans — 1 — —
Total credit losses by asset type $ (6) $ (12) $ (30) $ 2
Liabilities
Commitments to fund commercial mortgage loans and bank loans — — — —
Total $ (6) $ (12) $ (30) $ 2


Unrealized net capital gains and losses included in AOCI	Unrealized net capital gains and losses included in AOCI															Unrealized net capital gains and losses included in AOCI
($ in millions)	($ in millions)	Fair value				Gross unrealized								Unrealized net gains (losses)		($ in millions)			Fair value			Gross unrealized						Unrealized net gains (losses)
September 30, 2022				Gains				Losses
March 31, 2023																March 31, 2023					Fair value			Gains			Losses			Unrealized net gains (losses)
Fixed income securities	Fixed income securities			$	41,715			$	12			$	(3,765)				$	(3,753)		Fixed income securities					$	211		$	(2,228)
Short-term investments	Short-term investments	4,030				—				(1)				(1)		Short-term investments			6,722			—			—			—
Derivative instruments	Derivative instruments	—				—				(3)				(3)		Derivative instruments			—			—			(2)			(2)
Equity method of accounting (“EMA”) limited partnerships (1)														7
Limited partnership interests (1)																Limited partnership interests (1)												4
Unrealized net capital gains and losses, pre-tax	Unrealized net capital gains and losses, pre-tax													(3,750)		Unrealized net capital gains and losses, pre-tax												(2,015)
Other unrealized net capital gains and losses, pre-tax (2)	Other unrealized net capital gains and losses, pre-tax (2)													32		Other unrealized net capital gains and losses, pre-tax (2)												18
Deferred income taxes	Deferred income taxes													791		Deferred income taxes												424
Unrealized net capital gains and losses, after-tax	Unrealized net capital gains and losses, after-tax													$	(2,927)	Unrealized net capital gains and losses, after-tax												$	(1,573)

December 31, 2021
December 31, 2022																December 31, 2022
Fixed income securities	Fixed income securities	$	42,136			$	1,002			$	(242)			$	760	Fixed income securities			$	42,485		$	92		$	(2,977)		$	(2,885)
Short-term investments	Short-term investments	4,009				—				—				—		Short-term investments			4,173			—			(1)			(1)
Derivative instruments	Derivative instruments	—				—				(3)				(3)		Derivative instruments			—			—			(3)			(3)
EMA limited partnerships (1)														(1)
Limited partnership interests (1)																Limited partnership interests (1)												2
Unrealized net capital gains and losses, pre-tax	Unrealized net capital gains and losses, pre-tax													756		Unrealized net capital gains and losses, pre-tax												(2,887)
Other unrealized net capital gains and losses, pre-tax (2)	Other unrealized net capital gains and losses, pre-tax (2)													5		Other unrealized net capital gains and losses, pre-tax (2)												23
Deferred income taxes	Deferred income taxes													(163)		Deferred income taxes												609
Unrealized net capital gains and losses, after-tax	Unrealized net capital gains and losses, after-tax													$	598	Unrealized net capital gains and losses, after-tax												$	(2,255)

(1)Unrealized net capital gains and losses for limited partnership interests represent the Company’s share of ~~EMA~~the equity method of accounting (“EMA”) limited partnerships’ OCI. Fair value and gross unrealized gains and losses are not applicable.

(2)Includes amounts recognized for the reclassification of unrealized gains and losses related to noncontrolling ~~interest and the amount by which the amortization of DAC would increase or decrease if the unrealized gains or losses in the respective product portfolios were realized.~~interest.

Change in unrealized net capital gains (losses)

($ in millions)

~~Nine~~Three months ended ~~September 30, 2022~~March 31, 2023

Fixed income securities

~~(4,513)~~868

Short-term investments

~~(1)~~1

Derivative instruments

—1

~~EMA limited partnerships~~Limited partnership interests

Total

~~(4,506)~~872

Other unrealized net capital gains and losses, pre-tax

27 (5)

Deferred income taxes

~~954~~ (185)

~~Decrease~~Increase in unrealized net capital gains and losses, after-tax

~~(3,525)~~682

~~Third Quarter 2022 Form 10-Q~~ 15

~~Notes to Condensed Consolidated Financial Statements~~

																							Carrying value for limited partnership interests
($ in millions)	($ in millions)	September 30, 2022						December 31, 2021						($ in millions)	March 31, 2023						December 31, 2022
		EMA		Fair Value		Total		EMA		Fair Value		Total			EMA		Fair Value		Total		EMA			Fair Value		Total
Private equity	Private equity	$	5,287	$	1,280	$	6,567	$	4,905	$	1,434	$	6,339	Private equity	$	5,546	$	1,199	$	6,745	$	5,372		$	1,217	$	6,589
Real estate	Real estate	881		38		919		823		97		920		Real estate	1,019		29		1,048		1,013			29		1,042
Other (1)	Other (1)	421		—		421		759		—		759		Other (1)	178		—		178		483			—		483
Total	Total	$	6,589	$	1,318	$	7,907	$	6,487	$	1,531	$	8,018	Total	$	6,743	$	1,228	$	7,971	$	6,868		$	1,246	$	8,114

(1)Other consists of certain limited partnership interests where the underlying assets are predominately public equity and debt securities.

Short-term investments Short-term investments, including money market funds, commercial paper, U.S. Treasury bills and other short-term investments, are carried at fair value. As of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, the fair value of short-term investments totaled ~~$4.03~~$6.72 billion and ~~$4.01~~$4.17 billion, respectively.

16www.allstate.com

Notes to Condensed Consolidated Financial Statements

Other investments Other investments primarily consist of bank loans, real estate, policy loans and derivatives. Bank loans are primarily senior secured corporate loans and are carried at amortized cost, net. Policy loans are carried at unpaid principal balances. Real estate is carried at cost less accumulated depreciation. Derivatives are carried at fair value.


Other investments by asset type	Other investments by asset type					Other investments by asset type
($ in millions)	($ in millions)	September 30, 2022		December 31, 2021		($ in millions)	March 31, 2023		December 31, 2022
Bank loans, net	Bank loans, net	$	748	$	1,574	Bank loans, net	$	698	$	686
Real estate	Real estate	774		809		Real estate	790		813
Policy loans	Policy loans	119		148		Policy loans	120		120
Derivatives	Derivatives	48		12		Derivatives	10		1
Other	Other	109		113		Other	106		108
Total	Total	$	1,798	$	2,656	Total	$	1,724	$	1,728

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.

16~~www.allstate.com~~

~~Notes to Condensed Consolidated Financial Statements~~

When a security is sold or otherwise disposed or when the security is deemed uncollectible and written off, the Company removes amounts previously recognized in the credit loss allowance. Recoveries after write-offs are recognized when received. Accrued interest excluded from the amortized cost of fixed income securities totaled ~~$359~~$400 million and ~~$311~~$389 million as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively, and is reported within the accrued investment income line of the Condensed Consolidated Statements of Financial Position. The Company monitors accrued interest and writes off amounts when they are not expected to be received.

The Company’s portfolio monitoring process includes a quarterly review of all securities to identify instances where the fair value of a security compared to its amortized cost is below internally established thresholds. The process also includes the monitoring of other credit loss indicators such as ratings, ratings downgrades and payment defaults. The securities

identified, in addition to other securities for which the Company may have a concern, are evaluated for potential credit losses using all reasonably available information relevant to the collectability or recovery of the security. Inherent in the Company’s evaluation of credit losses for these securities are assumptions and estimates about the financial condition and future earnings potential of the issue or issuer. Some of the factors that may be considered in evaluating whether a

First Quarter 2023 Form 10-Q 17

Notes to Condensed Consolidated Financial Statements

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,					Three months ended March 31,
($ in millions)	($ in millions)	2022		2021		2022		2021		($ in millions)		2023		2022
Beginning balance	Beginning balance	$	(10)	$	(2)	$	(6)	$	(3)	Beginning balance		$	(13)	$	(6)
Credit losses on securities for which credit losses not previously reported	Credit losses on securities for which credit losses not previously reported	(2)		—		(2)		—		Credit losses on securities for which credit losses not previously reported		—		—
Net (increases) decreases related to credit losses previously reported		(2)		—		(6)		1
Net increases related to credit losses previously reported										Net increases related to credit losses previously reported		(9)		—
Reduction of allowance related to sales	Reduction of allowance related to sales	1		—		1		—		Reduction of allowance related to sales		—		—
Write-offs	Write-offs	—		—		—		—		Write-offs		—		—
Ending balance										Ending balance		$	(22)	$	(6)

Ending balance (1) (2)		$	(13)	$	(2)	$	(13)	$	(2)
Components of credit loss allowance										Components of credit loss allowance
Corporate bonds										Corporate bonds		$	(20)	$	(6)
ABS										ABS		(2)		—
Total										Total		$	(22)	$	(6)

~~(1)~~Allowance for fixed income securities as of September 30, 2022 comprised $11 million and $2 million of corporate bonds and ABS, respectively. Allowance for fixed income securities as of September 30, 2021 comprised $1 million and $1 million of corporate bonds and ABS, respectively.

~~(2)Includes $1 million of credit loss allowance for fixed income securities that were classified as held for sale as of September 30, 2021.~~


Gross unrealized losses and fair value by type and length of time held in a continuous unrealized loss position
($ 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
March 31, 2023
Fixed income securities
U.S. government and agencies	70	$	2,576	$	(41)	104	$	3,216	$	(111)	$	(152)
Municipal	1,183	1,632		(27)		1,860	2,376		(213)		(240)
Corporate	970	8,673		(286)		1,777	14,543		(1,501)		(1,787)
Foreign government	15	197		(1)		87	452		(23)		(24)
ABS	74	160		(5)		152	669		(20)		(25)
Total fixed income securities	2,312	$	13,238	$	(360)	3,980	$	21,256	$	(1,868)	$	(2,228)
Investment grade fixed income securities	2,132	$	12,415	$	(313)	3,601	$	18,633	$	(1,509)	$	(1,822)
Below investment grade fixed income securities	180	823		(47)		379	2,623		(359)		(406)
Total fixed income securities	2,312	$	13,238	$	(360)	3,980	$	21,256	$	(1,868)	$	(2,228)

December 31, 2022
Fixed income securities
U.S. government and agencies	112	$	4,900	$	(138)	75	$	2,393	$	(93)	$	(231)
Municipal	3,015	3,944		(215)		507	740		(111)		(326)
Corporate	2,085	18,072		(1,389)		845	6,105		(956)		(2,345)
Foreign government	74	739		(22)		42	200		(18)		(40)
ABS	194	874		(27)		83	109		(8)		(35)
Total fixed income securities	5,480	$	28,529	$	(1,791)	1,552	$	9,547	$	(1,186)	$	(2,977)
Investment grade fixed income securities	4,959	$	25,487	$	(1,409)	1,437	$	8,791	$	(1,009)	$	(2,418)
Below investment grade fixed income securities	521	3,042		(382)		115	756		(177)		(559)
Total fixed income securities	5,480	$	28,529	$	(1,791)	1,552	$	9,547	$	(1,186)	$	(2,977)

~~Third Quarter 2022 Form 10-Q~~ 1817www.allstate.com

Notes to Condensed Consolidated Financial Statements

Gross unrealized losses and fair value by type and length of time held in a continuous unrealized loss position
($ 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, 2022
Fixed income securities
U.S. government and agencies 137 $ 6,980 $ (231) 53 $ 1,428 $ (82) $ (313)
Municipal 3,880 5,508 (400) 289 341 (61) (461)
Corporate 2,611 21,603 (2,305) 515 2,879 (580) (2,885)
Foreign government 80 744 (27) 42 141 (16) (43)
ABS 269 1,484 (58) 62 36 (5) (63)
Total fixed income securities 6,977 $ 36,319 $ (3,021) 961 $ 4,825 $ (744) $ (3,765)
Investment grade fixed income securities 6,313 $ 32,385 $ (2,346) 902 $ 4,474 $ (643) $ (2,989)
Below investment grade fixed income securities 664 3,934 (675) 59 351 (101) (776)
Total fixed income securities 6,977 $ 36,319 $ (3,021) 961 $ 4,825 $ (744) $ (3,765)
December 31, 2021
Fixed income securities
U.S. government and agencies 112 $ 5,451 $ (24) 4 $ 72 $ (2) $ (26)
Municipal 767 1,213 (15) 2 14 (1) (16)
Corporate 1,197 9,725 (176) 22 130 (16) (192)
Foreign government 51 415 (6) 4 3 — (6)
ABS 80 500 (2) 53 8 — (2)
Total fixed income securities 2,207 $ 17,304 $ (223) 85 $ 227 $ (19) $ (242)
Investment grade fixed income securities 1,993 $ 15,391 $ (188) 71 $ 183 $ (8) $ (196)
Below investment grade fixed income securities 214 1,913 (35) 14 44 (11) (46)
Total fixed income securities 2,207 $ 17,304 $ (223) 85 $ 227 $ (19) $ (242)


Gross unrealized losses by unrealized loss position and credit quality as of September 30, 2022
Gross unrealized losses by unrealized loss position and credit quality as of March 31, 2023								Gross unrealized losses by unrealized loss position and credit quality as of March 31, 2023
($ in millions)	($ in millions)	Investment grade		Below investment grade		Total		($ in millions)	Investment grade		Below investment grade		Total
Fixed income securities with unrealized loss position less than 20% of amortized cost, net (1) (2)	Fixed income securities with unrealized loss position less than 20% of amortized cost, net (1) (2)	$	(2,422)	$	(439)	$	(2,861)	Fixed income securities with unrealized loss position less than 20% of amortized cost, net (1) (2)	$	(1,669)	$	(296)	$	(1,965)
Fixed income securities with unrealized loss position greater than or equal to 20% of amortized cost, net (3) (4)	Fixed income securities with unrealized loss position greater than or equal to 20% of amortized cost, net (3) (4)	(567)		(337)		(904)		Fixed income securities with unrealized loss position greater than or equal to 20% of amortized cost, net (3) (4)	(153)		(110)		(263)
Total unrealized losses	Total unrealized losses	$	(2,989)	$	(776)	$	(3,765)	Total unrealized losses	$	(1,822)	$	(406)	$	(2,228)

(1)Below investment grade fixed income securities include ~~$419~~$41 million that have been in an unrealized loss position for less than twelve months.

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

(3)~~No below~~Below investment grade fixed income securities include $104 million that have been in an unrealized loss position for a period of twelve or more consecutive months.

(4)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

18~~www.allstate.com~~

~~Notes to Condensed Consolidated Financial Statements~~

the Company owns, such as overcollateralization and excess spread. Municipal bonds in an unrealized loss position were evaluated based on the underlying credit quality of the primary obligor, obligation type and quality of the underlying assets.

As of ~~September 30, 2022,~~March 31, 2023, the Company has not made the decision to sell and it is not more likely than not the Company will be required to sell fixed income securities with unrealized losses before recovery of the amortized cost basis.

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
($ in millions)	($ in millions)	September 30,		December 31,		($ in millions)	March 31,		December 31,
		2022		2021			2023		2022
Mortgage loans	Mortgage loans	$	3	$	2	Mortgage loans	$	3	$	3
Bank Loans	Bank Loans	4		4		Bank Loans	4		3

First Quarter 2023 Form 10-Q 19

Notes to Condensed Consolidated Financial Statements

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, 2022 December 31, 2021
($ in millions) 2017 and prior 2018 2019 2020 2021 Current Total Total
Below 1.0 $ — $ — $ — $ — $ — $ 18 $ 18 $ —
1.0 - 1.25 35 — — 10 — 22 67 46
1.26 - 1.50 13 5 103 — — 7 128 160
Above 1.50 77 101 136 41 217 54 626 621
Amortized cost before allowance $ 125 $ 106 $ 239 $ 51 $ 217 $ 101 $ 839 $ 827
Allowance (6) (6)
Amortized cost, net $ 833 $ 821

~~Third Quarter 2022 Form 10-Q~~ 19

~~Notes to Condensed Consolidated Financial Statements~~


Mortgage loans amortized cost by debt service coverage ratio distribution and year of origination
	March 31, 2023														December 31, 2022
($ in millions)	2018 and prior		2019		2020		2021		2022		Current		Total		Total
Below 1.0	$	—	$	—	$	—	$	—	$	18	$	—	$	18	$	18
1.0 - 1.25	10		—		10		—		—		—		20		42
1.26 - 1.50	41		66		—		12		7		8		134		151
Above 1.50	108		172		42		185		77		32		616		558
Amortized cost before allowance	$	159	$	238	$	52	$	197	$	102	$	40	$	788	$	769
Allowance													(7)		(7)
Amortized cost, net													$	781	$	762

Mortgage loans with a debt service coverage ratio below 1.0 that are not considered impaired primarily relate to situations 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 factors such as additional collateral, escrow balances or borrower guarantees. Payments on all mortgage loans were current as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021.~~2022.

																Rollforward of credit loss allowance for mortgage loans
		Three months ended September 30,				Nine months ended September 30,					Three months ended March 31,
($ in millions)	($ in millions)	2022		2021		2022		2021		($ in millions)		2023		2022
Beginning balance	Beginning balance	$	(7)	$	(30)	$	(6)	$	(67)	Beginning balance		$	(7)	$	(6)

Net (increases) decreases related to credit losses		1		2		—		39
Net increases related to credit losses										Net increases related to credit losses		—		(1)
Write-offs	Write-offs	—		—		—		—		Write-offs		—		—

Ending balance ~~(1)~~	Ending balance ~~(1)~~	$	(6)	$	(28)	$	(6)	$	(28)	Ending balance ~~(1)~~		$	(7)	$	(7)

~~(1)Includes $21 million of credit loss allowance for mortgage loans that were classified as held for sale as of September 30, 2021.~~

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, 2022 December 31, 2021
($ in millions) 2017 and prior 2018 2019 2020 2021 Current Total Total
NAIC 2 / BBB $ — $ — $ 7 $ 5 $ 37 $ — $ 49 $ 86
NAIC 3 / BB 9 — 7 3 262 14 295 656
NAIC 4 / B 8 16 18 18 271 30 361 768
NAIC 5-6/ CCC and below 21 10 40 8 11 5 95 125
Amortized cost before allowance $ 38 $ 26 $ 72 $ 34 $ 581 $ 49 $ 800 $ 1,635
Allowance (52) (61)
Amortized cost, net $ 748 $ 1,574

Rollforward of credit loss allowance for bank loans
($ in millions) Three months ended September 30, Nine months ended September 30,
2022 2021 2022 2021
Beginning balance $ (56) $ (52) $ (61) $ (67)
Net increases related to credit losses (2) (14) (18) (10)
Reduction of allowance related to sales 6 2 27 13
Write-offs — — — —
Ending balance (1)
$ (52) $ (64) $ (52) $ (64)

20www.allstate.com

Notes to Condensed Consolidated Financial Statements

~~(1)~~
~~Includes $7 million of credit loss allowance for bank loans that were classified as held for sale as of September 30, 2021.~~


Bank loans amortized cost by credit rating and year of origination
	March 31, 2023														December 31, 2022
($ in millions)	2018 and prior		2019		2020		2021		2022		Current		Total		Total
NAIC 2 / BBB	$	—	$	7	$	5	$	45	$	4	$	—	$	61	$	54
NAIC 3 / BB	5		4		3		202		16		22		252		266
NAIC 4 / B	22		17		15		223		38		32		347		329
NAIC 5-6/ CCC and below	31		34		1		16		6		2		90		94
Amortized cost before allowance	$	58	$	62	$	24	$	486	$	64	$	56	$	750	$	743
Allowance													(52)		(57)
Amortized cost, net													$	698	$	686


Rollforward of credit loss allowance for bank loans
($ in millions)	Three months ended March 31,
		2023		2022
Beginning balance		$	(57)	$	(61)

Net increases related to credit losses		(3)		(10)
Reduction of allowance related to sales		5		3
Write-offs		3		—

Ending balance		$	(52)	$	(68)


Note 65			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:

20~~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

First Quarter 2023 Form 10-Q 21

Notes to Condensed Consolidated Financial Statements

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 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 2022 Form 10-Q~~ 21

~~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 ~~MBS,~~mortgage-backed securities (“MBS”), included in ABS, use prepayment speeds as a primary input for valuation.

•Equity securities: The primary inputs to the valuation include quoted prices or quoted net asset values for identical or similar assets in markets that are not active.

•Short-term: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields and credit spreads.

•Other investments: Free-standing exchange listed derivatives that are not actively traded are valued based on quoted prices for identical instruments in markets that are not active.

Over-the-counter (“OTC”) derivatives, including interest rate swaps, foreign currency swaps, total return swaps, foreign exchange forward contracts, certain options and certain credit default swaps, are valued using models that rely on inputs such as interest rate yield curves, implied volatilities, index price levels, currency rates, and credit spreads that are observable for substantially the full term of the contract. The valuation techniques underlying the models are widely accepted in the financial

22www.allstate.com

Notes to Condensed Consolidated Financial Statements

services industry and do not involve significant judgment.

Level 3 measurements

•Fixed income securities:

Municipal: Comprise municipal bonds that are not rated by third-party credit rating agencies. The primary inputs to the valuation of these municipal bonds include quoted prices for identical or similar assets that are not market observable, contractual cash flows, benchmark yields and credit spreads. Also included are municipal bonds valued based on non-binding broker quotes where the inputs have

not been corroborated to be market observable and municipal bonds in default valued based on the present value of expected cash flows.

Corporate - public and privately placed and ABS: Primarily valued based on non-binding broker quotes where the inputs have not been corroborated to be market observable. Other inputs for corporate fixed income securities include an interest rate yield curve, as well as published credit spreads for similar assets that incorporate the credit quality and industry sector of the issuer.

•Equity securities: The primary inputs to the valuation include quoted prices or quoted net asset values for identical or similar assets that are not market observable.

•Short-term: For certain short-term investments, amortized cost is used as the best estimate of fair value.

•Other investments: Certain OTC derivatives, such as interest rate caps, certain credit default swaps and certain options (including swaptions), are valued using models that are widely accepted in the financial services industry. These are categorized as Level 3 as a result of the significance of non-market observable inputs such as volatility. Other primary inputs include interest rate yield curves and credit spreads, and quoted prices for identical or similar assets in markets that exhibit less liquidity relative to those markets supporting Level 2 fair value measurements.

•Other assets: Includes the contingent consideration provision in the sale agreement for 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 municipal, corporate and ABS fixed income securities and equity securities. The valuation is based on the respective asset type as described above.~~

•~~Liabilities held for sale:~~ Comprise derivatives embedded in certain life and annuity contracts which are valued internally using models widely accepted in the financial services industry that determine a single best estimate of fair value for the embedded derivatives within a block of contractholder liabilities. The models primarily use stochastically determined cash flows based on the contractual elements of embedded derivatives, projected option cost and applicable market data, such as interest rate yield curves and equity index volatility assumptions. These are categorized as Level 3 as a result of the significance of non-market observable inputs.

22~~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.

Investments excluded from the fair value hierarchy

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, 2022,~~March 31, 2023, the Company has commitments to invest ~~$215~~$204 million in these limited partnership interests.

Assets and liabilities measured at fair value
September 30, 2022
($ 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 $ 8,424 $ 20 $ — $ 8,444
Municipal — 6,010 19 6,029
Corporate - public — 16,751 68 16,819
Corporate - privately placed — 7,842 71 7,913
Foreign government — 890 — 890
ABS — 1,572 48 1,620
Total fixed income securities 8,424 33,085 206 41,715
Equity securities 4,092 304 327 4,723
Short-term investments 928 3,096 6 4,030
Other investments — 107 2 $ (59) 50
Other assets 14 — 104 118
Total recurring basis assets 13,458 36,592 645 (59) 50,636
Non-recurring basis
— — 23 23
Total assets at fair value $ 13,458 $ 36,592 $ 668 $ (59) $ 50,659
% of total assets at fair value 26.6 % 72.2 % 1.3 % (0.1) % 100.0 %
Investments reported at NAV 1,318
Total $ 51,977
Liabilities
Other liabilities $ (9) $ (32) $ — $ (7) $ (48)
Total recurring basis liabilities (9) (32) — (7) (48)
Total liabilities at fair value $ (9) $ (32) $ — $ (7) $ (48)
% of total liabilities at fair value 18.7 % 66.7 % — % 14.6 % 100.0 %

~~Third~~First Quarter ~~2022~~2023 Form 10-Q 23

Notes to Condensed Consolidated Financial Statements


Assets and liabilities measured at fair value	Assets and liabilities measured at fair value																Assets and liabilities measured at fair value
		December 31, 2021																March 31, 2023
($ in millions)	($ 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			($ 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	Assets																Assets
Fixed income securities:	Fixed income securities:																Fixed income securities:
U.S. government and agencies	U.S. government and agencies	$	6,247		$	26		$	—					$	6,273		U.S. government and agencies	$	7,678		$	17		$	—					$	7,695
Municipal	Municipal	—			6,375			18						6,393			Municipal	—			6,307			17						6,324
Corporate - public	Corporate - public	—			16,569			20						16,589			Corporate - public	—			20,320			29						20,349
Corporate - privately placed	Corporate - privately placed	—			10,675			66						10,741			Corporate - privately placed	—			7,638			49						7,687
Foreign government	Foreign government	—			985			—						985			Foreign government	—			1,091			—						1,091
ABS	ABS	—			1,115			40						1,155			ABS	—			930			27						957
Total fixed income securities	Total fixed income securities	6,247			35,745			144						42,136			Total fixed income securities	7,678			36,303			122						44,103
Equity securities	Equity securities	6,312			400			349						7,061			Equity securities	1,523			293			358						2,174
Short-term investments	Short-term investments	1,140			2,864			5						4,009			Short-term investments	2,034			4,682			6						6,722
Other investments	Other investments	—			34			2			$	(22)		14			Other investments	—			10			2			$	—		12
Other assets	Other assets	1			—			65						66			Other assets	4			—			112						116
Total recurring basis assets	Total recurring basis assets	13,700			39,043			565			(22)			53,286			Total recurring basis assets	11,239			41,288			600			—			53,127
Non-recurring basis	Non-recurring basis	—			—			32						32			Non-recurring basis	—			—			19						19
Total assets at fair value	Total assets at fair value	$	13,700		$	39,043		$	597		$	(22)		$	53,318		Total assets at fair value	$	11,239		$	41,288		$	619		$	—		$	53,146
% of total assets at fair value	% of total assets at fair value	25.7		%	73.2		%	1.1		%	—		%	100.0		%	% of total assets at fair value	21.1		%	77.7		%	1.2		%	—		%	100.0		%

Investments reported at NAV	Investments reported at NAV													1,531			Investments reported at NAV													1,228
Total	Total													$	54,849		Total													$	54,374
Liabilities	Liabilities																Liabilities
Other liabilities	Other liabilities	$	(3)		$	(12)		$	—		$	7		$	(8)		Other liabilities	$	(5)		$	(16)		$	—		$	16		$	(5)
Total recurring basis liabilities	Total recurring basis liabilities	(3)			(12)			—			7			(8)			Total recurring basis liabilities	(5)			(16)			—			16			(5)

Total liabilities at fair value	Total liabilities at fair value	$	(3)		$	(12)		$	—		$	7		$	(8)		Total liabilities at fair value	$	(5)		$	(16)		$	—		$	16		$	(5)
% of total liabilities at fair value	% of total liabilities at fair value	37.5		%	150.0		%	—		%	(87.5)		%	100.0		%	% of total liabilities at fair value	100.0		%	320.0		%	—		%	(320.0)		%	100.0		%

Quantitative information about the significant unobservable inputs used in Level 3 fair value measurements (1)
September 30, 2021
($ in millions) Fair value Valuation
technique Unobservable
input Range Weighted
average
Derivatives embedded in life and annuity contracts – Equity-indexed and forward starting options $ (455) Stochastic cash flow model Projected option cost 1.0 - 4.2% 2.90%

~~(1)~~24 ~~These were included in the liabilities held for sale as of September 30, 2021.~~www.allstate.com

Notes to Condensed Consolidated Financial Statements


Assets and liabilities measured at fair value
	December 31, 2022
($ 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	$	7,878		$	20		$	—					$	7,898
Municipal	—			6,189			21						6,210
Corporate - public	—			18,547			69						18,616
Corporate - privately placed	—			7,592			55						7,647
Foreign government	—			957			—						957
ABS	—			1,129			28						1,157
Total fixed income securities	7,878			34,434			173						42,485
Equity securities	3,936			298			333						4,567
Short-term investments	508			3,659			6						4,173
Other investments	—			23			3			$	(22)		4
Other assets	3			—			103						106
Total recurring basis assets	12,325			38,414			618			(22)			51,335
Non-recurring basis	—			—			23						23
Total assets at fair value	$	12,325		$	38,414		$	641		$	(22)		$	51,358
% of total assets at fair value	24.0		%	74.8		%	1.2		%	—		%	100.0		%

Investments reported at NAV													1,246
Total													$	52,604
Liabilities
Other liabilities	$	(1)		$	(25)		$	—		$	21		$	(5)
Total recurring basis liabilities	(1)			(25)			—			21			(5)

Total liabilities at fair value	$	(1)		$	(25)		$	—		$	21		$	(5)
% of total liabilities at fair value	20.0		%	500.0		%	—		%	(420.0)		%	100.0		%

The embedded derivatives are equity-indexed and forward starting options in certain life and annuity products that provide customers with interest crediting rates based on the performance of the S&P 500. If the projected option cost increased (decreased), it would result in a higher (lower) liability fair value. These life and annuity products were included in the sales of ALIC, ALNY and certain affiliates.

As of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, Level 3 fair value measurements of fixed income securities total ~~$206~~$122 million and ~~$144~~$173 million, respectively, and include ~~$70~~$30 million and ~~$41~~$70 million, respectively, of securities valued based on non-binding broker quotes where the inputs have not been

corroborated to be market observable and ~~$17~~$16 million and ~~$16~~$21 million, respectively, of municipal fixed income securities that are not rated by third-party credit rating agencies. As the Company does not develop the Level 3 fair value

unobservable inputs for these fixed income securities, they are not included in the table above. However, an increase (decrease) in credit spreads for fixed income securities valued based on non-binding broker quotes would result in a lower (higher) fair value, and an increase (decrease) in the credit rating of municipal bonds that are not rated by third-party credit rating agencies would result in a higher (lower) fair value.

24~~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, 2022
Balance as of
June 30, 2022 Total gains (losses) included in: Transfers Balance as of
September 30, 2022
($ in millions) Net income OCI Into Level 3 Out of Level 3 Purchases Sales Issues Settlements
Assets
Fixed income securities:
Municipal $ 18 $ — $ — $ 2 $ (1) $ — $ — $ — $ — $ 19
Corporate - public 77 — (2) — — — (7) — — 68
Corporate - privately placed 73 1 1 — — 18 (22) — — 71
ABS 18 — — — — 30 — — — 48
Total fixed income securities 186 1 (1) 2 (1) 48 (29) — — 206
Equity securities 372 (16) — — — 8 (37) — — 327
Short-term investments 8 — — — — — — — (2) 6
Other investments 2 — — — — — — — — 2
Other assets 108 (4) — — — — — — — 104
Total recurring Level 3 assets 676 (19) (1) 2 (1) 56 (66) — (2) 645
Liabilities
Total recurring Level 3 liabilities $ — $ — $ — $ — $ — $ — $ — $ — $ — $ —
Rollforward of Level 3 assets and liabilities held at fair value during the nine month period ended September 30, 2022
Balance as of
December 31, 2021 Total gains (losses) included in: Transfers Balance as of
September 30, 2022
($ in millions) Net income OCI Into Level 3 Out of Level 3 Purchases Sales Issues Settlements
Assets
Fixed income securities:
Municipal $ 18 $ — $ 1 $ 2 $ — $ — $ — $ — $ (2) $ 19
Corporate - public 20 — (6) — — 66 (10) — (2) 68
Corporate - privately placed 66 20 (1) — — 32 (46) — — 71
ABS 40 1 — — (28) 37 — — (2) 48
Total fixed income securities 144 21 (6) 2 (28) 135 (56) — (6) 206
Equity securities 349 13 — — — 10 (45) — — 327
Short-term investments 5 — — — — 23 — — (22) 6
Other investments 2 — — — — — — — — 2
Other assets 65 39 — — — — — — — 104
Total recurring Level 3 assets 565 73 (6) 2 (28) 168 (101) — (28) 645
Liabilities
Total recurring Level 3 liabilities $ — $ — $ — $ — $ — $ — $ — $ — $ — $ —

~~Third~~First Quarter ~~2022~~2023 Form 10-Q 25

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, 2021
Balance as of
June 30, 2021 Total gains (losses) included in: Transfers Transfers to (from) held for sale Balance as of
September 30, 2021
($ in millions) Net income OCI Into Level 3 Out of Level 3 Purchases Sales Issues Settlements
Assets
Fixed income securities:
Municipal $ 18 $ — $ (1) $ — $ — $ — $ — $ — $ — $ — $ 17
Corporate - public 20 — — — — (1) — — — — 19
Corporate - privately placed 84 1 1 — (22) (2) 104 (7) — (5) 154
ABS 33 — — 1 — — 5 — — (30) 9
Total fixed income securities 155 1 — 1 (22) (3) 109 (7) — (35) 199
Equity securities 405 31 — — — — 27 (87) — — 376
Short-term investments — — — — — — 14 — — — 14
Other investments 3 — — — — — — (1) — — 2
Assets held for sale 164 1 — — (20) 3 — — — (2) 146
Total recurring Level 3 assets 727 33 — 1 (42) — 150 (95) — (37) 737
Liabilities
Liabilities held for sale (490) 15 — — — — — — (9) 5 (479)
Total recurring Level 3 liabilities $ (490) $ 15 $ — $ — $ — $ — $ — $ — $ (9) $ 5 $ (479)
Rollforward of Level 3 assets and liabilities held at fair value during the nine month period ended September 30, 2021
Balance as of
December 31, 2020 Total gains (losses) included in: Transfers Transfers to (from) held for sale Balance as of
September 30, 2021
($ in millions) Net income OCI Into Level 3 Out of Level 3 Purchases Sales Issues Settlements
Assets
Fixed income securities:
Municipal $ 17 $ — $ — $ — $ — $ — $ 3 $ — $ — $ (3) $ 17
Corporate - public 67 1 (2) — — (7) 13 (53) — — 19
Corporate - privately placed 63 — 2 8 — 14 103 (31) — (5) 154
ABS 79 1 — — (32) — 57 (42) — (54) 9
Total fixed income securities 226 2 — 8 (32) 7 176 (126) — (62) 199
Equity securities 304 63 — — — 101 40 (132) — — 376
Short-term investments 35 — — — — — 14 — — (35) 14
Other investments — — — — — — 3 (1) — — 2
Assets held for sale 267 3 — 5 (13) (108) 3 (6) — (5) 146
Total recurring Level 3 assets 832 68 — 13 (45) — 236 (265) — (102) 737
Liabilities
Liabilities held for sale (516) 46 — — — — — — (25) 16 (479)
Total recurring Level 3 liabilities $ (516) $ 46 $ — $ — $ — $ — $ — $ — $ (25) $ 16 $ (479)


Rollforward of Level 3 assets and liabilities held at fair value during the three month period ended March 31, 2023
	Balance as of December 31, 2022		Total gains (losses) included in:				Transfers																Balance as of March 31, 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)	$	17
Corporate - public	69		(1)		2		—		—			—			(41)			—			—		29
Corporate - privately placed	55		(4)		—		—		—			—			(2)			—			—		49
ABS	28		—		—		—		—			—			—			—			(1)		27
Total fixed income securities	173		(5)		2		—		—			—			(46)			—			(2)		122
Equity securities	333		—		—		—		—			42			(17)			—			—		358
Short-term investments	6		—		—		—		—			—			—			—			—		6
Other investments	3		(1)		—		—		—			—			—			—			—		2
Other assets	103		9		—		—		—			—			—			—			—		112
Total recurring Level 3 assets	$	618	$	3	$	2	$	—	$	—		$	42		$	(63)		$	—		$	(2)	$	600

Total Level 3 gains (losses) included in net income
Three months ended September 30, Nine months ended September 30,
($ in millions) 2022 2021 2022 2021
Net investment income $ 4 $ 6 $ 17 $ (1)
Net gains (losses) on investments and derivatives (23) 26 56 66


Rollforward of Level 3 assets and liabilities held at fair value during the three month period ended March 31, 2022
	Balance as of December 31, 2021		Total gains (losses) included in:				Transfers												Balance as of March 31, 2022
($ in millions)			Net income		OCI		Into Level 3		Out of Level 3		Purchases		Sales		Issues		Settlements
Assets
Fixed income securities:
Municipal	$	18	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	(1)	$	17
Corporate - public	20		—		(2)		—		—		35		(4)		—		—		49
Corporate - privately placed	66		—		1		—		—		63		—		—		—		130
ABS	40		1		—		—		(28)		7		—		—		(1)		19
Total fixed income securities	144		1		(1)		—		(28)		105		(4)		—		(2)		215
Equity securities	349		25		—		—		—		2		(3)		—		—		373
Short-term investments	5		—		—		—		—		6		—		—		—		11
Other investments	2		—		—		—		—		—		—		—		—		2
Other assets	65		12		—		—		—		—		—		—		—		77

Total recurring Level 3 assets	$	565	$	38	$	(1)	$	—	$	(28)	$	113	$	(7)	$	—	$	(2)	$	678


Total Level 3 gains (losses) included in net income
	Three months ended March 31,
($ in millions)		2023		2022
Net investment income		$	(5)	$	9
Net gains (losses) on investments and derivatives		8		29

26 www.allstate.com

Notes to Condensed Consolidated Financial Statements

~~Transfers~~There were no transfers into Level 3 during the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 and ~~September 30, 2021 included situations where a quote was not provided by~~2022.

There were no transfers out of Level 3 during the Company’s independent third-party valuation service provider and as a result the price was stale or had been replaced with a broker quote where the inputs had not been corroborated to be market observable resulting in the security being classified as Level 3.

three months ended March 31, 2023. Transfers out of Level 3 during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 ~~and 2021~~ included situations where a broker quote was used in the prior period and a quote became available from the

Company’s independent third-party valuation service provider in the current period. A quote utilizing the new pricing source was not available as of the prior period, and any gains or losses related to the change in valuation source for individual securities were not significant.


Valuation changes included in net income and OCI for Level 3 assets and liabilities held as of September 30,
($ in millions)		Three months ended September 30,				Nine months ended September 30,
										Valuation changes included in net income and OCI for Level 3 assets and liabilities held as of March 31,
											Three months ended March 31,
($ in millions)	($ in millions)	2022		2021		2022		2021		($ in millions)	2023		2022
										Assets
Municipal		$	—	$	1	$	—	$	—
Fixed income securities:										Fixed income securities:

Corporate - privately placed	Corporate - privately placed	1		—		1		—		Corporate - privately placed	$	(4)	$	—

Total fixed income securities	Total fixed income securities	1		1		1		—		Total fixed income securities	(4)		—
Equity securities	Equity securities	$	(16)	$	9	$	11	$	22	Equity securities	(1)		25

Other investments										Other investments	(1)		—
Other assets	Other assets	(4)		—		39		—		Other assets	9		12

Assets held for sale		—		1		—		3

Total recurring Level 3 assets	Total recurring Level 3 assets	$	(19)	$	11	$	51	$	25	Total recurring Level 3 assets	$	3	$	37
Liabilities
Liabilities held for sale		$	—	$	15	$	—	$	46
Total recurring Level 3 liabilities		—		15		—		46

Total included in net income	Total included in net income	$	(19)	$	26	$	51	$	71	Total included in net income	$	3	$	37

Components of net income	Components of net income									Components of net income
Net investment income	Net investment income	$	3	$	6	$	16	$	(1)	Net investment income	$	(5)	$	9
Net gains (losses) on investments and derivatives	Net gains (losses) on investments and derivatives	(22)		4		35		23		Net gains (losses) on investments and derivatives	8		28
Total included in net income	Total included in net income	$	(19)	$	10	$	51	$	22	Total included in net income	$	3	$	37

Assets	Assets									Assets
Municipal		$	—	$	(1)	$	1	$	—

Corporate - public	Corporate - public	(3)		—		(6)		(1)		Corporate - public	$	1	$	(2)
Corporate - privately placed	Corporate - privately placed	(1)		1		(2)		1		Corporate - privately placed	—		1

Total recurring Level 3 assets		$	(4)	$	—	$	(7)	$	—

Changes in unrealized net capital gains and losses reported in OCI	Changes in unrealized net capital gains and losses reported in OCI	$	(4)	$	—	$	(7)	$	—	Changes in unrealized net capital gains and losses reported in OCI	$	1	$	(1)

																					Financial instruments not carried at fair value
($ in millions)	($ in millions)		September 30, 2022				December 31, 2021				($ in millions)		March 31, 2023				December 31, 2022
Financial assets	Financial assets	Fair value level	Amortized cost, net		Fair value		Amortized cost, net		Fair value		Financial assets	Fair value level	Amortized cost, net		Fair value		Amortized cost, net		Fair value
Mortgage loans	Mortgage loans	Level 3	$	833	$	779	$	821	$	853	Mortgage loans	Level 3	$	781	$	724	$	762	$	700
Bank loans	Bank loans	Level 3	748		738		1,574		1,634		Bank loans	Level 3	698		706		686		686

Financial liabilities	Financial liabilities	Fair value level	Carrying value (1)		Fair value		Carrying value (1)		Fair value		Financial liabilities	Fair value level	Carrying value (1)		Fair value		Carrying value (1)		Fair value
Contractholder funds on investment contracts	Contractholder funds on investment contracts	Level 3	$	52	$	52	$	55	$	55	Contractholder funds on investment contracts	Level 3	$	48	$	48	$	50	$	50
Long-term debt		Level 2	7,967		7,383		7,976		9,150
Debt											Debt	Level 2	8,452		8,089		7,964		7,449
Liability for collateral	Liability for collateral	Level 2	2,201		2,201		1,444		1,444		Liability for collateral	Level 2	1,807		1,807		2,011		2,011

(1)Represents the amounts reported on the Condensed Consolidated Statements of Financial Position.

~~Third Quarter 2022 Form 10-Q~~ 27

~~Notes to Condensed Consolidated Financial Statements~~


Note 76			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

First Quarter 2023 Form 10-Q 27

Notes to Condensed Consolidated Financial Statements

swaps are used to offset valuation losses in the fixed income portfolio during periods of declining market values. Credit default swaps are typically used to mitigate the credit risk within the Property-Liability fixed income portfolio. Equity index total return swaps, futures and options are used by Property-Liability to offset valuation losses in the equity portfolio during periods of declining equity market values. In addition, equity futures are used to hedge the market risk related to deferred compensation liability contracts. Forward contracts are primarily used by Property-Liability to hedge foreign currency risk associated with holding foreign currency denominated investments and foreign operations.

~~The~~In 2022, the Company also ~~has~~had derivatives embedded in non-derivative host contracts that ~~are~~were required to be separated from the host contracts and accounted for at fair value with changes in fair value of embedded derivatives reported in net income.

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

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 ~~includes~~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 ~~ending~~a final potential payment date of January 1, 2035. The contingent consideration is determined annually based on the average 10-year Treasury rate over the preceding 3-year period compared to a designated rate. The contingent consideration meets the definition of a derivative and is accounted for on a fair value basis with periodic changes in fair value reflected in earnings. ~~As of September 30, 2022, the Company recorded $104 million in other assets~~There are no collateral requirements related to ~~this derivative. For~~ the ~~three and nine months ended September 30, 2022, the Company recorded a loss of $4 million and a gain of $39 million, respectively, in operating costs and expenses related to valuation of this~~ contingent consideration.

28 www.allstate.com

Notes to Condensed Consolidated Financial Statements


Summary of the volume and fair value positions of derivative instruments as of September 30, 2022
Summary of the volume and fair value positions of derivative instruments as of March 31, 2023												Summary of the volume and fair value positions of derivative instruments as of March 31, 2023
($ in millions, except number of contracts)	($ in millions, except number of contracts)		Volume (1)									($ in millions, except number of contracts)		Volume (1)
		Balance sheet location	Notional amount		Number of contracts	Fair value, net		Gross asset		Gross liability			Balance sheet location	Notional amount		Number of contracts	Fair value, net		Gross asset		Gross liability
Asset derivatives	Asset derivatives											Asset derivatives

Derivatives not designated as accounting hedging instruments	Derivatives not designated as accounting hedging instruments											Derivatives not designated as accounting hedging instruments
Interest rate contracts	Interest rate contracts											Interest rate contracts

Futures	Futures	Other assets	n/a		45,626	$	14	$	14	$	—	Futures	Other assets	n/a		6,842	$	2	$	2	$	—
Equity and index contracts	Equity and index contracts											Equity and index contracts
Options		Other investments	n/a		1,309	44		44		—

Futures	Futures	Other assets	n/a		336	—		—		—		Futures	Other assets	n/a		1,116	2		2		—

Foreign currency contracts	Foreign currency contracts											Foreign currency contracts
Foreign currency forwards	Foreign currency forwards	Other investments	$	39	n/a	(4)		—		(4)		Foreign currency forwards	Other investments	$	453	n/a	(9)		5		(14)
Embedded derivative financial instruments		Other investments	750		n/a	—		—		—

Contingent consideration	Contingent consideration	Other assets	250		n/a	104		104		—		Contingent consideration	Other assets	250		n/a	112		112		—
Credit default contracts	Credit default contracts											Credit default contracts
Credit default swaps – buying protection	Credit default swaps – buying protection	Other investments	79		n/a	3		3		—		Credit default swaps – buying protection	Other investments	51		n/a	—		1		(1)

Total asset derivatives	Total asset derivatives		$	1,118	47,271	$	161	$	165	$	(4)	Total asset derivatives		$	754	7,958	$	107	$	122	$	(15)

Liability derivatives	Liability derivatives											Liability derivatives

Derivatives not designated as accounting hedging instruments	Derivatives not designated as accounting hedging instruments											Derivatives not designated as accounting hedging instruments
Interest rate contracts	Interest rate contracts											Interest rate contracts

Futures	Futures	Other liabilities & accrued expenses	n/a		2,969	$	(1)	$	—	$	(1)	Futures	Other liabilities & accrued expenses	n/a		12,394	$	(3)	$	—	$	(3)
Equity and index contracts	Equity and index contracts											Equity and index contracts
Options		Other liabilities & accrued expenses	n/a		1,210	(16)		—		(16)

Futures	Futures	Other liabilities & accrued expenses	n/a		3,674	(8)		—		(8)		Futures	Other liabilities & accrued expenses	n/a		680	(2)		—		(2)

Foreign currency contracts	Foreign currency contracts											Foreign currency contracts
Foreign currency forwards	Foreign currency forwards	Other liabilities & accrued expenses	$	689	n/a	49		60		(11)		Foreign currency forwards	Other liabilities & accrued expenses	$	176	n/a	3		4		(1)

Credit default contracts	Credit default contracts											Credit default contracts
Credit default swaps – buying protection	Credit default swaps – buying protection	Other liabilities & accrued expenses	55		n/a	(1)		—		(1)		Credit default swaps – buying protection	Other liabilities & accrued expenses	3		n/a	—		—		—

Total liability derivatives	Total liability derivatives		744		7,853	23		$	60	$	(37)	Total liability derivatives		179		13,074	(2)		$	4	$	(6)
Total derivatives	Total derivatives		$	1,862	55,124	$	184					Total derivatives		$	933	21,032	$	105

(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~~First Quarter ~~2022~~2023 Form 10-Q 29

Notes to Condensed Consolidated Financial Statements


Summary of the volume and fair value positions of derivative instruments as of December 31, 2021
Summary of the volume and fair value positions of derivative instruments as of December 31, 2022												Summary of the volume and fair value positions of derivative instruments as of December 31, 2022
($ in millions, except number of contracts)	($ in millions, except number of contracts)		Volume (1)									($ in millions, except number of contracts)		Volume (1)
		Balance sheet location	Notional amount		Number of contracts	Fair value, net		Gross asset		Gross liability			Balance sheet location	Notional amount		Number of contracts	Fair value, net		Gross asset		Gross liability
Asset derivatives	Asset derivatives											Asset derivatives

Derivatives not designated as accounting hedging instruments	Derivatives not designated as accounting hedging instruments											Derivatives not designated as accounting hedging instruments
Interest rate contracts	Interest rate contracts											Interest rate contracts

Futures	Futures	Other assets	n/a		1,181	$	1	$	1	$	—	Futures	Other assets	n/a		24,380	$	3	$	3	$	—
Equity and index contracts	Equity and index contracts											Equity and index contracts
Options		Other investments	n/a		61	5		5		—

Futures	Futures	Other assets	n/a		113	—		—		—		Futures	Other assets	n/a		343	—		—		—

Foreign currency contracts	Foreign currency contracts											Foreign currency contracts
Foreign currency forwards	Foreign currency forwards	Other investments	$	2	n/a	—		—		—		Foreign currency forwards	Other investments	$	354	n/a	1		14		(13)
Embedded derivative financial instruments		Other investments	750		n/a	—		—		—

Contingent consideration	Contingent consideration	Other assets	250		n/a	65		65		—		Contingent consideration	Other assets	250		n/a	103		103		—
Credit default contracts	Credit default contracts											Credit default contracts
Credit default swaps – buying protection	Credit default swaps – buying protection	Other investments	33		n/a	(1)		—		(1)		Credit default swaps – buying protection	Other investments	24		n/a	—		1		(1)
Credit default swaps – selling protection		Other investments	250		n/a	6		6		—

Total asset derivatives	Total asset derivatives		$	1,285	1,355	$	76	$	77	$	(1)	Total asset derivatives		$	628	24,723	$	107	$	121	$	(14)

Liability derivatives	Liability derivatives											Liability derivatives

Derivatives not designated as accounting hedging instruments	Derivatives not designated as accounting hedging instruments											Derivatives not designated as accounting hedging instruments
Interest rate contracts	Interest rate contracts											Interest rate contracts

Futures	Futures	Other liabilities & accrued expenses	n/a		36,668	$	(2)	$	—	$	(2)	Futures	Other liabilities & accrued expenses	n/a		1,624	$	—	$	—	$	—
Equity and index contracts	Equity and index contracts											Equity and index contracts

Futures	Futures	Other liabilities & accrued expenses	n/a		1,260	(1)		—		(1)		Futures	Other liabilities & accrued expenses	n/a		1,229	(1)		—		(1)

Foreign currency contracts	Foreign currency contracts											Foreign currency contracts
Foreign currency forwards	Foreign currency forwards	Other liabilities & accrued expenses	$	715	n/a	16		23		(7)		Foreign currency forwards	Other liabilities & accrued expenses	$	283	n/a	—		7		(7)

Credit default contracts	Credit default contracts											Credit default contracts
Credit default swaps – buying protection	Credit default swaps – buying protection	Other liabilities & accrued expenses	70		n/a	(4)		—		(4)		Credit default swaps – buying protection	Other liabilities & accrued expenses	525		n/a	(3)		1		(4)
Credit default swaps – selling protection		Other liabilities & accrued expenses	5		n/a	—		—		—

Total liability derivatives	Total liability derivatives		790		37,928	9		$	23	$	(14)	Total liability derivatives		808		2,853	(4)		$	8	$	(12)
Total derivatives	Total derivatives		$	2,075	39,283	$	85					Total derivatives		$	1,436	27,576	$	103


Gross and net amounts for OTC derivatives (1)	Gross and net amounts for OTC derivatives (1)													Gross and net amounts for OTC derivatives (1)
($ in millions)	($ in millions)			Offsets										($ in millions)			Offsets
		Gross amount		Counter-party netting		Cash collateral (received) pledged		Net amount on balance sheet		Securities collateral (received) pledged		Net amount			Gross amount		Counter-party netting		Cash collateral (received) pledged		Net amount on balance sheet		Securities collateral (received) pledged		Net amount
September 30, 2022
March 31, 2023														March 31, 2023
Asset derivatives	Asset derivatives	$	60	$	(64)	$	5	$	1	$	—	$	1	Asset derivatives	$	10	$	(19)	$	19	$	10	$	—	$	10
Liability derivatives	Liability derivatives	(16)		64		(71)		(23)		—		(23)		Liability derivatives	(16)		19		(3)		—		—		—

December 31, 2021
December 31, 2022														December 31, 2022
Asset derivatives	Asset derivatives	$	23	$	(24)	$	2	$	1	$	—	$	1	Asset derivatives	$	23	$	(22)	$	—	$	1	$	—	$	1
Liability derivatives	Liability derivatives	(10)		24		(17)		(3)		—		(3)		Liability derivatives	(22)		22		(1)		(1)		—		(1)

(1)All OTC derivatives are subject to enforceable master netting agreements.

30 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)	($ in millions)	Net gains (losses) on investments and derivatives		Operating costs and expenses		Total gain (loss) recognized in net income on derivatives		($ 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, 2022
Three months ended March 31, 2023								Three months ended March 31, 2023
Interest rate contracts	Interest rate contracts	$	260	$	—	$	260	Interest rate contracts	$	(35)	$	—	$	(35)
Equity and index contracts	Equity and index contracts	9		(8)		1		Equity and index contracts	4		8		12
Contingent consideration	Contingent consideration	—		(4)		(4)		Contingent consideration	—		9		9
Foreign currency contracts	Foreign currency contracts	40		(6)		34		Foreign currency contracts	(7)		—		(7)
Credit default contracts	Credit default contracts	(10)		—		(10)		Credit default contracts	(14)		—		(14)

Other contracts		—		(1)		(1)

Total	Total	$	299	$	(19)	$	280	Total	$	(52)	$	17	$	(35)

Nine months ended September 30, 2022

Three months ended March 31, 2022								Three months ended March 31, 2022
Interest rate contracts	Interest rate contracts	$	734	$	—	$	734	Interest rate contracts	$	316	$	—	$	316
Equity and index contracts	Equity and index contracts	65		(55)		10		Equity and index contracts	3		(13)		(10)
Contingent consideration	Contingent consideration	—		39		39		Contingent consideration	—		12		12

Foreign currency contracts	Foreign currency contracts	84		(8)		76		Foreign currency contracts	7		—		7
Credit default contracts	Credit default contracts	6		—		6		Credit default contracts	(8)		—		(8)

Other contracts		—		(1)		(1)
Total	Total	$	889	$	(25)	$	864	Total	$	318	$	(1)	$	317

Three months ended September 30, 2021
Interest rate contracts		$	18	$	—	$	18
Equity and index contracts		10		(3)		7

Foreign currency contracts		15		—		15
Credit default contracts		1		—		1
Total return swaps - fixed income		2		—		2

Total		$	46	$	(3)	$	43

Nine months ended September 30, 2021
Interest rate contracts		$	19	$	—	$	19
Equity and index contracts		2		27		29
Foreign currency contracts		23		—		23
Credit default contracts		6		—		6
Total return swaps - fixed income		4		—		4

Total		$	54	$	27	$	81

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, 2022~~March 31, 2023
Pledged by the Company	$	519
Pledged to the Company (1)	713

(1)No$1 million of collateral was posted under ~~MNA’s~~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.

~~Third Quarter 2022 Form 10-Q~~ 31

~~Notes to Condensed Consolidated Financial Statements~~

																				OTC derivatives counterparty credit exposure by counterparty credit rating
($ in millions)	($ in millions)	September 30, 2022							December 31, 2021							($ in millions)	March 31, 2023								December 31, 2022
Rating (1)	Rating (1)	Number of counter- parties	Notional amount (2)		Credit exposure (2)		Exposure, net of collateral (2)		Number of counter- parties	Notional amount (2)		Credit exposure (2)		Exposure, net of collateral (2)		Rating (1)	Number of counter- parties	Notional amount (2)			Credit exposure (2)		Exposure, net of collateral (2)		Number of counter- parties	Notional amount (2)		Credit exposure (2)		Exposure, net of collateral (2)

A+	A+	4	$	500	$	25	$	—	1	$	199	$	7	$	—	A+	1	$	176		$	3	$	—	1	$	128	$	5	$	—
A	A	1	232		24		—		1	367		9		—		A	—	—			—		—		1	192		7		—

Total	Total	5	$	732	$	49	$	—	2	$	566	$	16	$	—	Total	1	$	176		$	3	$	—	2	$	320	$	12	$	—

(1) Allstate uses the lower of S&P’s or Moody’s long-term debt issuer ratings.

(2) Only OTC derivatives with a net positive fair value are included for each counterparty.

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, 2022~~March 31, 2023
Pledged by the Company	$	~~162~~146
Received by the Company	3—

Market risk is the risk that the Company will incur losses due to adverse changes in market rates and prices. Market risk exists for all of the derivative financial instruments the Company currently holds, as these instruments may become less valuable due to

adverse changes in market conditions. To limit this risk, the Company’s senior management has established risk control limits. In addition, changes in fair value of the derivative financial instruments that the Company uses for risk management purposes are generally offset by the change in the fair value or cash flows of the hedged risk component of the related assets, liabilities or forecasted transactions.

Certain of the Company’s derivative transactions contain credit-risk-contingent termination events and cross-default provisions. Credit-risk-contingent termination events allow the counterparties to terminate the derivative agreement or a specific trade on certain dates if AIC’s financial strength credit

First Quarter 2023 Form 10-Q 31

Notes to Condensed Consolidated Financial Statements

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)	($ in millions)	September 30, 2022		December 31, 2021		($ in millions)	March 31, 2023		December 31, 2022
Gross liability fair value of contracts containing credit-risk-contingent features	Gross liability fair value of contracts containing credit-risk-contingent features	$	11	$	8	Gross liability fair value of contracts containing credit-risk-contingent features	$	4	$	21
Gross asset fair value of contracts containing credit-risk-contingent features and subject to MNAs	Gross asset fair value of contracts containing credit-risk-contingent features and subject to MNAs	(11)		(7)		Gross asset fair value of contracts containing credit-risk-contingent features and subject to MNAs	(3)		(11)
Collateral posted under MNAs for contracts containing credit-risk-contingent features	Collateral posted under MNAs for contracts containing credit-risk-contingent features	—		—		Collateral posted under MNAs for contracts containing credit-risk-contingent features	(1)		(10)
Maximum amount of additional exposure for contracts with credit-risk-contingent features if all features were triggered concurrently	Maximum amount of additional exposure for contracts with credit-risk-contingent features if all features were triggered concurrently	$	—	$	1	Maximum amount of additional exposure for contracts with credit-risk-contingent features if all features were triggered concurrently	$	—	$	—

~~Credit derivatives - selling protection~~

A credit default swap (“CDS”) is a derivative instrument, representing an agreement between two parties to exchange the credit risk of a specified entity (or a group of entities), or an index based on the credit risk of a group of entities (all commonly referred to as the “reference entity” or a portfolio of “reference entities”), in return for a periodic premium. In selling protection, CDS are used to replicate fixed income securities and to complement the cash market when credit exposure to certain issuers is not available or when the derivative alternative is less expensive than the cash market alternative. CDS typically have a five-year term. As of September 30, 2022, there were no open CDS positions.

32~~www.allstate.com~~

~~Notes to Condensed Consolidated Financial Statements~~

CDS notional amounts by credit rating and fair value of protection sold
($ in millions) Notional amount
AAA AA A BBB
BB and
lower
Total
Fair
value
December 31, 2021
Single name
Corporate debt $ — $ — $ — $ — $ 5 $ 5 $ —
Index
Corporate debt 2 4 46 190 8 250 6
Total $ 2 $ 4 $ 46 $ 190 $ 13 $ 255 $ 6

In selling protection with CDS, the Company sells credit protection on an identified single name, a basket of names in a first-to-default (“FTD”) structure or credit derivative index (“CDX”) that is generally investment grade, and in return receives periodic premiums through expiration or termination of the agreement. With single name CDS, this premium or credit spread generally corresponds to the difference between the yield on the reference entity’s public fixed maturity cash instruments and swap rates at the time the agreement is executed. With a FTD basket, because of the additional credit risk inherent in a basket of named reference entities, the premium generally corresponds to a high proportion of the sum of the credit spreads of the names in the basket and the correlation between the names. CDX is utilized to take a position on multiple (generally 125) reference entities. Credit events are typically defined as bankruptcy, failure to pay, or restructuring, depending on the nature of the reference entities. If a credit event occurs, the Company settles with the counterparty, either through physical settlement or cash settlement.

In a physical settlement, a reference asset is delivered by the buyer of protection to the Company, in exchange for cash payment at par, whereas in a cash settlement, the Company pays the difference between par and the prescribed value of the reference asset. When a credit event occurs in a single name or FTD basket (for FTD, the first credit event occurring for any one name in the basket), the contract terminates at the time of settlement. For CDX, the reference entity’s name incurring the credit event is removed from the index while the contract continues until expiration. The maximum payout on a CDS is the contract notional amount. A physical settlement may afford the Company with recovery rights as the new owner of the asset.

The Company monitors risk associated with credit derivatives through individual name credit limits at both a credit derivative and a combined cash instrument/credit derivative level. The ratings of individual names for which protection has been sold are also monitored.

~~Third Quarter 2022 Form 10-Q~~ 33

~~Notes to Condensed Consolidated Financial Statements~~


Note 87			Variable Interest Entities

Consolidated VIEs, of which the Company is the primary beneficiary, primarily include Adirondack Insurance Exchange, a New York reciprocal insurer, and New Jersey Skylands Insurance Association, a New Jersey reciprocal insurer (together “Reciprocal Exchanges”). The Reciprocal Exchanges are insurance carriers organized as unincorporated associations. The Company does not own the equity of the Reciprocal Exchanges, which is owned by their respective policyholders.

The Company manages the business operations of the Reciprocal Exchanges and has the power to direct their activities that most significantly impact their economic performance. The Company receives a management fee for the services provided to the Reciprocal Exchanges. In addition, as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, the Company holds interests of $123 million in the form of surplus notes included in other liabilities and expenses on the Statement of Assets and Liabilities of the Reciprocal Exchanges that provide capital to the Reciprocal Exchanges and would absorb any expected losses. The Company is therefore

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

In the event of dissolution, policyholders would share any residual unassigned surplus but are not subject to assessment for any deficit in unassigned surplus of the Reciprocal Exchanges. The assets of the Reciprocal Exchanges can be used only to settle the obligations of the Reciprocal Exchanges and general creditors have no recourse to the Company.

The results of operations of the Reciprocal Exchanges are included in the Company’s Allstate Protection segment and generated ~~$39 million and $122~~$57 million of earned premiums for the three ~~and nine~~ months ended ~~September 30, 2022, respectively,~~March 31, 2023 compared to ~~$47 million and $137~~$42 million for the three ~~and nine~~ months ended ~~September 30, 2021, respectively.~~March 31, 2022.

Claims and claims expenses were ~~$31 million and $91~~$40 million for the three ~~and nine~~ months ended ~~September 30, 2022, respectively,~~March 31, 2023 compared to ~~$38 million and $105~~$34 million for the three ~~and nine~~ months ended ~~September 30, 2021, respectively.~~March 31, 2022.


Assets and liabilities of Reciprocal Exchanges	Assets and liabilities of Reciprocal Exchanges					Assets and liabilities of Reciprocal Exchanges
($ in millions)	($ in millions)	September 30, 2022		December 31, 2021		($ in millions)	March 31, 2023		December 31, 2022
Assets	Assets					Assets
Fixed income securities	Fixed income securities	$	302	$	324	Fixed income securities	$	285	$	302
Short-term investments	Short-term investments	12		30		Short-term investments	16		13
Deferred policy acquisition costs	Deferred policy acquisition costs	20		15		Deferred policy acquisition costs	23		15
Premium installment and other receivables, net	Premium installment and other receivables, net	41		42		Premium installment and other receivables, net	36		43
Reinsurance recoverables, net	Reinsurance recoverables, net	119		114		Reinsurance recoverables, net	88		97
Other assets	Other assets	89		82		Other assets	37		90
Total assets	Total assets	583		607		Total assets	485		560
Liabilities	Liabilities					Liabilities
Reserve for property and casualty insurance claims and claims expense	Reserve for property and casualty insurance claims and claims expense	200		226		Reserve for property and casualty insurance claims and claims expense	194		209
Unearned premiums	Unearned premiums	174		175		Unearned premiums	132		171
Other liabilities and expenses	Other liabilities and expenses	327		265		Other liabilities and expenses	285		311
Total liabilities	Total liabilities	$	701	$	666	Total liabilities	$	611	$	691

32www.allstate.com

Notes to Condensed Consolidated Financial Statements


Note 98			Reserve for Property and Casualty Insurance Claims and Claims Expense

The Company establishes reserves for claims and claims expense on reported and unreported claims of insured losses. The Company’s reserving process takes into account known facts and interpretations of circumstances and factors including the Company’s experience with similar cases, actual claims paid, historical trends involving claim payment patterns and pending levels of unpaid claims, loss management programs, product mix and contractual terms, changes in law and regulation, 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 ~~be more reflective of the new trends. For example, the Coronavirus has had a significant impact on driving patterns and auto frequency.~~develop reserve liabilities. Supply chain disruptions

and inflation have resulted in higher ~~parts~~part costs, used car values and longer time to claim resolution, which have combined with labor shortages to increase physical damage loss costs. Medical inflation, treatment trends, attorney representation, litigation costs and more severe accidents have contributed to higher third-party bodily injury loss costs. The Company has also digitized and modified claim processes to increase effectiveness and efficiency. These factors may lead to historical development trends being less predictive of future loss development, potentially creating additional reserve variability.

Generally, the initial reserves for a new accident year are established based on ~~actual~~ 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 ~~macroeconomic~~ factors. Changes

34~~www.allstate.com~~

~~Notes to Condensed Consolidated Financial Statements~~

in auto current year claim severity are generally influenced by inflation in the medical and auto repair sectors, the effectiveness and efficiency of claim practices and changes in mix of claim types. The Company mitigates these effects through various loss management programs. When such 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”)~~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.

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) 2022 2021
Balance as of January 1 $ 33,060 $ 27,610
Less recoverables (1)
(9,479) (7,033)
Net balance as of January 1 23,581 20,577
National General acquisition as of January 4, 2021 — 1,797
Incurred claims and claims expense related to:
Current year 25,792 21,579
Prior years 1,470 (65)
Total incurred 27,262 21,514
Claims and claims expense paid related to:
Current year (14,020) (12,539)
Prior years (9,850) (8,098)
Total paid (23,870) (20,637)
Net balance as of September 30 26,973 23,251
Plus recoverables 9,556 10,035
Balance as of September 30 $ 36,529 $ 33,286

First Quarter 2023 Form 10-Q 33

Notes to Condensed Consolidated Financial Statements


Rollforward of the reserve for property and casualty insurance claims and claims expense
	Three months ended March 31,
($ in millions)	2023		2022
Balance as of January 1	$	37,541	$	33,060
Less recoverables (1)	(9,176)		(9,479)
Net balance as of January 1	28,365		23,581

Incurred claims and claims expense related to:
Current year	10,341		7,677
Prior years	(15)		145
Total incurred	10,326		7,822
Claims and claims expense paid related to:
Current year	(3,122)		(2,751)
Prior years	(6,036)		(4,735)
Total paid	(9,158)		(7,486)
Net balance as of March 31	29,533		23,917
Plus recoverables	9,111		9,074
Balance as of March 31	$	38,644	$	32,991

(1)Recoverables comprises reinsurance and indemnification recoverables.

Incurred claims and claims expense represents the sum of paid losses, claim adjustment expenses and reserve changes in the period. This expense included losses from catastrophes of ~~$2.33~~$1.69 billion and ~~$2.81 billion~~$462 million in the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ 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.


Prior year reserve reestimates included in claims and claims expense (1)
	Non-catastrophe losses				Catastrophe losses				Total
($ in millions)	2023		2022		2023		2022		2023		2022
Three months ended March 31,
Auto	$	3	$	151	$	(28)	$	(9)	$	(25)	$	142
Homeowners	(12)		4		(8)		(11)		(20)		(7)
Other personal lines	10		(11)		(7)		4		3		(7)
Commercial lines	23		20		1		(1)		24		19
Other business lines	1		(7)		—		4		1		(3)
Run-off Property-Liability	2		1		—		—		2		1

Total prior year reserve reestimates	$	27	$	158	$	(42)	$	(13)	$	(15)	$	145

(1)Favorable reserve reestimates are shown in parentheses.

~~Third~~34www.allstate.com

Notes to Condensed Consolidated Financial Statements


Note 9			Reserve for Future Policy Benefits and Contractholder Funds


Rollforward of reserve for future policy benefits (1)
	Three months ended March 31,
	Accident and health				Traditional life				Total
($ in millions)	2023		2022		2023		2022		2023		2022
Present value of expected net premiums
Beginning balance	$	1,464	$	1,785	$	238	$	254	$	1,702	$	2,039
Beginning balance at original discount rate	1,549		1,604		246		215		1,795		1,819
Effect of changes in cash flow assumptions	—		—		—		—		—		—
Effect of actual variances from expected experience	(42)		(49)		5		20		(37)		(29)
Adjusted beginning balance	1,507		1,555		251		235		1,758		1,790
Issuances	199		173		17		4		216		177
Interest accrual	12		12		3		2		15		14
Net premiums collected	(95)		(103)		(12)		(11)		(107)		(114)
Lapses and withdrawals	—		—		—		—		—		—
Ending balance at original discount rate	1,623		1,637		259		230		1,882		1,867
Effect of changes in discount rate assumptions	(62)		65		(5)		20		(67)		85
Ending balance	1,561		1,702		254		250		1,815		1,952

Present value of expected future policy benefits
Beginning balance	2,229		2,796		524		673		2,753		3,469
Beginning balance at original discount rate	2,316		2,426		534		511		2,850		2,937
Effect of changes in cash flow assumptions	—		—		—		—		—		—
Effect of actual variances from expected experience	(47)		(53)		4		19		(43)		(34)
Adjusted beginning balance	2,269		2,373		538		530		2,807		2,903
Issuances	199		172		16		4		215		176
Interest accrual	19		19		6		5		25		24
Benefit payments	(99)		(110)		(12)		(8)		(111)		(118)
Lapses and withdrawals	—		—		—		—		—		—
Ending balance at original discount rate	2,388		2,454		548		531		2,936		2,985
Effect of changes in discount rate assumptions	(53)		175		(1)		94		(54)		269
Ending balance	$	2,335	$	2,629	$	547	$	625	$	2,882	$	3,254

Net reserve for future policy benefits (1)	$	774	$	927	$	293	$	375	$	1,067	$	1,302
Less: reinsurance recoverables	76		139		2		2		78		141
Net reserve for future policy benefits, after reinsurance recoverables	$	698	$	788	$	291	$	373	$	989	$	1,161

(1)Excludes $271 million and $264 million of reserves related to short-duration and other contracts as of March 31, 2023 and 2022, respectively.


Revenue and interest recognized in the condensed consolidated statements of operations
($ in millions)	Three months ended March 31,
		2023		2022
Revenues (1)
Accident and health		$	225	$	253
Traditional life		25		22
Total		$	250	$	275

Interest expense (2)
Accident and health		$	7	$	7
Traditional life		3		3
Total		$	10	$	10

(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.

First Quarter ~~2022~~2023 Form 10-Q 35

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) 2022 2021 2022

2021 (2) (3)
2022 2021
Three months ended September 30,
Auto $ 643 $ 77 $ (11) $ (5) $ 632 $ 72
Homeowners 51 14 4 3 55 17
Other personal lines (2) (66) (3) — (5) (66)
Commercial lines 63 24 1 1 64 25
Run-off Property-Liability (4)
120 113 — — 120 113
Protection Services — — — — — —
Total prior year reserve reestimates $ 875 $ 162 $ (9) $ (1) $ 866 $ 161
Nine months ended September 30,

Auto $ 1,069 $ 31 $ (58) $ (28) $ 1,011 $ 3
Homeowners 95 12 82 (168) 177 (156)
Other personal lines (18) (69) 4 (14) (14) (83)
Commercial lines 174 55 1 3 175 58
Run-off Property-Liability (4)
124 115 — — 124 115
Protection Services (3) (2) — — (3) (2)
Total prior year reserve reestimates $ 1,441 $ 142 $ 29 $ (207) $ 1,470 $ (65)
The following table provides the amount of undiscounted and discounted expected gross premiums and expected future benefits and expenses for nonparticipating traditional and limited-payment contracts.


	As of March 31,
	2023				2022
($ in millions)	Undiscounted		Discounted		Undiscounted		Discounted
Accident and health
Expected future gross premiums	$	5,068	$	3,671	$	5,219	$	4,137
Expected future benefits and expenses	3,351		2,335		3,453		2,629
Traditional life
Expected future gross premiums	721		500		652		500
Expected future benefits and expenses	1,008		547		972		625


Key assumptions used in calculating the reserve for future policy benefits
	As of March 31,
	Accident and health				Traditional life
	2023		2022		2023		2022
Weighted-average duration (in years)	4.1		4.2		14.1		13.9
Weighted-average interest rates
Interest accretion rate (discount rate at contract issuance)	5.09	%	6.69	%	5.50	%	5.70	%
Current discount rate (upper-medium grade fixed income yield)	4.58		2.76		5.03		3.54

Significant assumptions To determine mortality and morbidity assumptions, the Company uses a combination of Company 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 the Company’s historical claim patterns. The lapse assumption is determined based on historical lapses of the Company’s insurance contracts.

The following table summarizes the ratio of actual to expected lapses used in the determination of the reserve for future policy benefits.


	As of March 31,
	Accident and health				Traditional life
	2023		2022		2023		2022
Lapses	90	%	111	%	92	%	95	%

Contractholder funds


Contractholder funds activity
	Three months ended March 31,
($ in millions)	2023			2022
Balance, beginning of year	$	879		$	890
Deposits	33			35
Interest credited	8			8
Benefits	(4)			(3)
Surrenders and partial withdrawals	(5)			(5)
Contract charges	(30)			(28)
Other adjustments	(3)			(6)
Balance, end of period	$	878		$	891

Components of contractholder funds
Interest-sensitive life insurance	$	830		$	837
Fixed annuities	48			54
Total	$	878		$	891

Weighted-average crediting rate	4.27		%	4.29		%
Net amount at risk (1)	$	11,780		$	12,101
Cash surrender value	$	722		$	728

(1)~~Favorable reserve reestimates are shown~~Guaranteed benefit amounts in ~~parentheses.~~excess of the current account balances.

36www.allstate.com

Notes to Condensed Consolidated Financial Statements


Account values: comparison of current crediting rate to guaranteed minimum crediting rate (1)

($ in millions) Range of guaranteed minimum crediting rates	At guaranteed minimum		1-50 basis points above		Total
March 31, 2023
Less than 3%	$	—	$	—	$	—
3.00% - 3.49%	—		20		20
3.50% - 3.99%	11		—		11
4.00% - 4.49%	431		—		431
4.50% - 4.99%	266		—		266
5% or greater	69		—		69
Non-account balances (2)					81
Total	$	777	$	20	$	878

March 31, 2022
Less than 3%	$	—	$	—	$	—
3.00% - 3.49%	—		6		6
3.50% - 3.99%	12		—		12
4.00% - 4.49%	438		—		438
4.50% - 4.99%	272		—		272
5% or greater	71		—		71
Non-account balances (2)					92
Total	$	793	$	6	$	891

(1)Difference, in basis points, between rates being credited to contractholders and the respective guaranteed minimum crediting rates.

(2)~~Included approximately $40 million~~Non-account balances include unearned revenue and ~~$240 million of estimated recoveries~~amounts related to Nationwide Aggregate Reinsurance Program cover for aggregate catastrophe losses occurring between April 1, 2020 and December 31, 2020, for the three and nine months ended 2021, respectively, which primarily impacted homeowners reestimates.

~~(3)Included approximately $110 million favorable subrogation settlements arising from the Woolsey wildfire, which primarily impacted homeowners reestimates, for the nine months ended 2021.~~

~~(4)The Company’s 2022 and 2021 annual reserve reviews, using established industry and actuarial practices, resulted in unfavorablereestimates of $118 million and $111 million, respectively~~.

Unfavorable reserve reestimates for personal auto are primarily from bodily injury and physical damage coverages. Increases in injury coverages reflect recent data and updated assumptions related to severity of third-party bodily injury claims, increased claims with attorney representation, litigation costs and higher medical inflation. Increases in physical damage reflect the ongoing inflationary factors and supply chain shortages impacting used vehicle and parts prices, labor rates and length ofpolicies where a claim ~~resolution. Delays~~is either in the ~~receipt~~course of ~~third-party carrier claims also contributed to~~settlement or incurred but not reported. A claim on a life insurance policy results in the ~~adverse development~~accrual of ~~claims reported in prior years.~~interest at a rate and over a period of time that is specified by state insurance regulations.


Note 10			Reinsurance and Indemnification

															Effects of reinsurance ceded and indemnification programs on property and casualty premiums earned and accident and health insurance premiums and contract charges
($ in millions)	($ in millions)	Three months ended September 30,				Nine months ended September 30,				($ in millions)	Three months ended March 31,
		2022		2021		2022		2021			2023		2022
Property and casualty insurance premiums earned	Property and casualty insurance premiums earned	$	(479)	$	(442)	$	(1,362)	$	(1,488)	Property and casualty insurance premiums earned	$	(446)	$	(427)
Accident and health insurance premiums and contract charges	Accident and health insurance premiums and contract charges	(12)		(17)		(29)		(65)		Accident and health insurance premiums and contract charges	(9)		(8)

															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)	($ in millions)	Three months ended September 30,				Nine months ended September 30,				($ in millions)	Three months ended March 31,
		2022		2021		2022		2021			2023		2022
Property and casualty insurance claims and claims expense (1) (2)		$	(925)	$	(1,458)	$	(1,300)	$	(3,209)
Property and casualty insurance claims and claims expense (1)										Property and casualty insurance claims and claims expense (1)	$	(320)	$	(109)
Accident, health and other policy benefits	Accident, health and other policy benefits	(5)		(13)		(21)		(68)		Accident, health and other policy benefits	(8)		(7)

(1)Ceded losses incurred included $100 million and $525 million related to the Michigan Catastrophic Claims Association for the nine months ended September 30, 2022 and 2021, respectively, and $305 million of expected reinsurance recoveries related to the Florida Excess Catastrophe Reinsurance Program for Hurricane Ian for the three and nine months ended September 30, 2022.

~~(2)Included~~Includes approximately ~~$1.40 billion and $185~~$58 million of ceded losses offset by approximately $18 million of reinstatement premiums, related to the Nationwide ~~Catastrophe~~ Reinsurance Program ~~and the National Flood Insurance Program, respectively,~~ for the ~~nine months~~first quarter of 2023.~~ended September 30, 2021.~~

Reinsurance and indemnification recoverables


Reinsurance and indemnification recoverables, net
($ in millions)	March 31, 2023		December 31, 2022
Property and casualty
Paid and due from reinsurers and indemnitors	$	265	$	291
Unpaid losses estimated (including IBNR)	9,111		9,176
Total property and casualty	$	9,376	$	9,467

Accident and health insurance	152		152
Total	$	9,528	$	9,619

36First Quarter 2023 Form 10-Q ~~www.allstate.com~~37

Notes to Condensed Consolidated Financial Statements

~~Reinsurance and indemnification recoverables~~

Reinsurance and indemnification recoverables, net
($ in millions) September 30, 2022 December 31, 2021
Property and casualty
Paid and due from reinsurers and indemnitors $ 264 $ 391
Unpaid losses estimated (including IBNR) 9,556 9,479
Total property and casualty $ 9,820 $ 9,870
Accident and health insurance 141 154
Total $ 9,961 $ 10,024


Rollforward of credit loss allowance for reinsurance recoverables	Rollforward of credit loss allowance for reinsurance recoverables									Rollforward of credit loss allowance for reinsurance recoverables
($ in millions)	($ in millions)	Three months ended September 30,				Nine months ended September 30,				($ in millions)	Three months ended March 31,
		2022		2021		2022		2021			2023		2022
Property and casualty (1) (2)	Property and casualty (1) (2)									Property and casualty (1) (2)
Beginning balance	Beginning balance	$	(66)	$	(60)	$	(66)	$	(59)	Beginning balance	$	(62)	$	(66)
Increase in the provision for credit losses		(5)		(6)		(5)		(7)
Decrease (increase) in the provision for credit losses										Decrease (increase) in the provision for credit losses	1		—
Write-offs	Write-offs	9		—		9		—		Write-offs	—		—
Ending balance	Ending balance	$	(62)	$	(66)	$	(62)	$	(66)	Ending balance	$	(61)	$	(66)

Accident and health insurance	Accident and health insurance									Accident and health insurance
Beginning balance	Beginning balance	$	(8)	$	(1)	$	(8)	$	(1)	Beginning balance	$	(3)	$	(8)

Increase in the provision for credit losses	Increase in the provision for credit losses	—		—		—		—		Increase in the provision for credit losses	—		—
Write-offs	Write-offs	—		—		—		—		Write-offs	—		—
Ending balance	Ending balance	$	(8)	$	(1)	$	(8)	$	(1)	Ending balance	$	(3)	$	(8)

(1)Primarily related to Run-off Property-Liability reinsurance ceded.

(2)Indemnification recoverables are considered collectible based on the industry pool and facility enabling legislation.


Note 11			Deferred Policy Acquisition Costs


Deferred policy acquisition costs activity
($ in millions)	Accident and health		Traditional life		Interest-sensitive life		Total













Three months ended March 31, 2023
Accident and health insurance
Long-duration contracts
Beginning balance	$	322	$	79	$	101	$	502

Acquisition costs deferred	13		6		4		23
Amortization charged to income	(9)		(3)		(4)		(16)

Experience adjustment	(9)		—		—		(9)
Total	$	317	$	82	$	101	500
Short-duration contracts							28
Property and casualty							4,943
Balance, end of year							$	5,471














Three months ended March 31, 2022
Accident and health insurance
Long-duration contracts
Balance, beginning of year	$	339	$	47	$	90	$	476

Acquisition costs deferred	12		11		8		31
Amortization charged to income	(7)		(2)		(3)		(12)

Experience adjustment	(14)		—		—		(14)
Total	$	330	$	56	$	95	481
Short-duration contracts							20
Property and casualty							4,342
Balance, end of year							$	4,843

38www.allstate.com

Notes to Condensed Consolidated Financial Statements


Note 12			Capital Structure

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

applicable redemption price prior to the maturity date. The net proceeds of this issuance were used to repay the $250 million senior debt maturity and for general corporate purposes.

Subsequent event On April 17, 2023, the Company redeemed all 23,000 shares of Fixed Rate Noncumulative Preferred Stock, Series G, par value $1.00 per share and liquidation preference amount of $25,000 per share, and the corresponding depositary shares for a total redemption payment of $575 million.


Note 13			Company Restructuring

The Company undertakes various programs to reduce expenses. These programs generally involve a reduction in staffing levels, and in certain cases, office closures. Restructuring and related charges primarily include the following costs related to these programs:

•Employee - severance and relocation benefits

•Exit - contract termination penalties and real estate costs primarily related to accelerated amortization of right-of-use assets and related leasehold improvements at facilities to be vacated

The expenses related to these activities are included in the Condensed Consolidated Statements of Operations as restructuring and related charges and totaled ~~$14~~$27 million and ~~$23~~$12 million during the three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021, respectively, and $27 million and $145 million during the nine months ended September 30, 2022 and 2021,~~ respectively.

Restructuring expenses during the ~~third~~first quarter ~~and first nine months~~ of ~~2022~~2023 are primarily due to ~~the~~

~~future work environment and employee costs.~~real estate costs related to facilities being vacated. The Company continues to identify ways to improve operating efficiency and reduce cost which may result in additional restructuring charges in the future.


~~Future work environment~~
~~($ in millions)~~
~~Expected program charges~~	$	~~110~~
~~2021 expenses~~	~~(131)~~
~~2022 expenses~~	~~(13)~~
~~Change in estimated program costs~~	44
~~Remaining program charges~~	$	10

These charges are primarily recorded in the Allstate Protection segment. Exit costs of this program reflect real estate costs primarily related to accelerated amortization of right-of-use assets and related leasehold improvements at facilities to be vacated. The Company expects that the majority of these actions will be completed in 2022.

~~Third Quarter 2022 Form 10-Q~~ 37

~~Notes to Condensed Consolidated Financial Statements~~


Restructuring activity during the period	Restructuring activity during the period							Restructuring activity during the period
($ in millions)	($ in millions)	Employee costs		Exit costs		Total liability		($ in millions)	Employee costs		Exit costs		Total liability
Restructuring liability as of December 31, 2021		$	14	$	7	$	21
Restructuring liability as of December 31, 2022								Restructuring liability as of December 31, 2022	$	27	$	7	$	34
Expense incurred	Expense incurred	18		17		35		Expense incurred	6		28		34
Adjustments to liability	Adjustments to liability	(8)		—		(8)		Adjustments to liability	(2)		(5)		(7)
Payments and non-cash charges	Payments and non-cash charges	(6)		(17)		(23)		Payments and non-cash charges	(16)		(28)		(44)
Restructuring liability as of September 30, 2022		$	18	$	7	$	25
Restructuring liability as of March 31, 2023								Restructuring liability as of March 31, 2023	$	15	$	2	$	17

As of ~~September 30, 2022,~~March 31, 2023, the cumulative amount incurred to date for active programs related to employee severance, relocation benefits and exit expenses totaled ~~$19~~$23 million for employee costs and ~~$140~~$169 million for exit costs.


Note 1214			Guarantees and Contingent Liabilities

Shared markets and state facility assessments

The Company is required to participate in assigned risk plans, reinsurance facilities and joint underwriting associations in various states that provide insurance coverage to individuals or entities that otherwise are unable to purchase such coverage from private insurers.

The Company routinely reviews its exposure to assessments from these plans, facilities and government programs. Underwriting results related to these arrangements, which tend to be adverse, have been immaterial to the Company’s results of operations in the last two years. Because of the Company’s participation, it may be exposed to losses that surpass the capitalization of these facilities or assessments from these facilities.

Guarantees

In the normal course of business, the Company provides standard indemnifications to contractual counterparties in connection with numerous

transactions, including acquisitions and divestitures. The types of indemnifications typically provided include indemnifications for breaches of representations and warranties, taxes and certain other liabilities, such as third-party lawsuits. The indemnification clauses are often standard contractual terms and are entered into in the normal course of business based on an assessment that the risk of loss would be remote. The terms of the indemnifications vary in duration and nature. In many cases, the maximum obligation is not explicitly stated and the contingencies triggering the obligation to indemnify have not occurred and are not expected to occur. Consequently, the maximum amount of the obligation under such indemnifications is not determinable. Historically, the Company has not made any material payments pursuant to these obligations.

Related to the sale of ALNY on October 1, 2021, AIC agreed to indemnify Wilton Reassurance Company in connection with certain representations, warranties and covenants of AIC, and certain liabilities specifically

First Quarter 2023 Form 10-Q 39

Notes to Condensed Consolidated Financial Statements

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 not material as of ~~September 30, 2022.~~March 31, 2023.

Regulation and compliance

The Company is subject to extensive laws, regulations, administrative directives, and regulatory actions. From time to time, regulatory authorities or legislative bodies seek to influence and restrict premium rates, require premium refunds to policyholders, require reinstatement of terminated policies, prescribe rules or guidelines on how affiliates compete in the marketplace, restrict the ability of insurers to cancel or non-renew policies, require insurers to continue to write new policies or limit their ability to write new policies, limit insurers’ ability to change coverage terms or to impose underwriting standards, impose additional regulations regarding agency and broker compensation, regulate the nature of and amount of investments, impose fines and penalties for unintended errors or mistakes, impose additional regulations regarding cybersecurity and privacy, and otherwise expand overall regulation of insurance products and the insurance industry. In addition, the Company is subject to laws and regulations administered and enforced by federal agencies, international agencies, and other organizations, including but not limited to the Securities and Exchange Commission (“SEC”), the Financial Industry Regulatory Authority, the U.S. 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

38~~www.allstate.com~~

~~Notes to Condensed Consolidated Financial Statements~~

some of its procedures and policies. Such modifications, and the reviews that led to them, may be accompanied by payments being made and costs being incurred. The ultimate changes and eventual effects of these actions on the Company’s business, if any, are uncertain.

Legal and regulatory proceedings and inquiries

The Company and certain subsidiaries are involved in a number of lawsuits, regulatory inquiries, and other legal proceedings arising out of various aspects of its business.

Background These matters raise difficult and complicated factual and legal issues and are subject to many uncertainties and complexities, including the underlying facts of each matter; novel legal issues; variations between jurisdictions in which matters are being litigated, heard, or investigated; changes in assigned judges; differences or developments in applicable laws and judicial interpretations; judges reconsidering prior rulings; the length of time before many of these matters might be resolved by settlement, through litigation, or otherwise; adjustments with respect to anticipated trial schedules and other proceedings; developments in similar actions against other companies; the fact that some of the lawsuits are putative class actions in which a class has not been certified and in which the purported class may not be clearly defined; the fact that some of the lawsuits involve multi-state class actions in which the applicable law(s) for the claims at issue is in dispute and therefore unclear; and the challenging legal environment faced by corporations and insurance companies.

The outcome of these matters may be affected by decisions, verdicts, and settlements, and the timing of such decisions, verdicts, and settlements, in other individual and class action lawsuits that involve the Company, other insurers, or other entities and by other legal, governmental, and regulatory actions that involve the Company, other insurers, or other entities. The outcome may also be affected by future state or federal legislation, the timing or substance of which cannot be predicted.

In the lawsuits, plaintiffs seek a variety of remedies which may include equitable relief in the form of injunctive and other remedies and monetary relief in the form of contractual and extra-contractual damages. In some cases, the monetary damages sought may include punitive or treble damages. Often specific information about the relief sought, such as the amount of damages, is not available because plaintiffs have not requested specific relief in their pleadings. When specific monetary demands are made, they are often set just below a state court jurisdictional limit in order to seek the maximum amount available in state court, regardless of the specifics of the case, while still avoiding the risk of removal to federal court. In Allstate’s experience, monetary demands in pleadings bear little relation to the ultimate loss, if any, to the Company.

In connection with regulatory examinations and proceedings, government authorities may seek various

forms of relief, including penalties, restitution, and changes in business practices. The Company may not be advised of the nature and extent of relief sought until the final stages of the examination or proceeding.

40www.allstate.com

Notes to Condensed Consolidated Financial Statements

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

~~Third Quarter 2022 Form 10-Q~~ 39

~~Notes to Condensed Consolidated Financial Statements~~

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 ~~$178~~$148 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 managing various disputes in Florida that raise challenges to the Company’s practices, processes, and procedures relating to claims for personal injury protection benefits under Florida auto policies. Medical providers continue to pursue litigation under various theories that challenge the amounts that the Company pays under the personal injury protection coverage, seeking additional benefit payments, as well as applicable interest, penalties and fees. There is a pending ~~putative class action,~~lawsuit, Revival Chiropractic v. Allstate Insurance Company, et al. (M.D. Fla., filed January 2019; appeal pending, ~~11th~~11th Circuit Court of

Appeals), where the federal district court denied class certification and plaintiff’s request to file a renewed motion for class certification. In Revival, on June 2, 2022, the 11th Circuit certified to the Florida Supreme Court Allstate’s appeal of the federal district court’s interpretation of the state

First Quarter 2023 Form 10-Q 41

Notes to Condensed Consolidated Financial Statements

personal injury protection statute. The 11th Circuit is holding determination on plaintiff’s class certification appeal pending the outcome of the Florida Supreme Court certification. The oral argument before the Florida Supreme Court was on March 8, 2023. The Company is also defending litigation involving individual plaintiffs.

The Company is defending putative class actions in various courts that raise challenges to the 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:Clark v. Allstate Vehicle and Property Insurance Company (Circuit Court of Independence Co., Ark. filed February 2016); 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 Company (Circuit Court of Cole Co., Mo. filed October 2022); Tabuga v. Allstate Vehicle and Property Insurance Company (D. Md. filed April 2023); and Shumway, et al. v Allstate Vehicle and Property Insurance Company (D. Ariz. filed April 2023). No classes have been certified in any of these matters. The court granted preliminary approval of a class-wide settlement in the following cases: Perry v. Allstate Indemnity Company, et ~~al.~~al. (N.D. Ohio filed May 2016);Lado v. Allstate Vehicle and Property Insurance Company (S.D. Ohio filed March 2020);Maniaci v. Allstate Insurance Company (N.D. Ohio filed March 2020); Ferguson-Luke, et al. v. Allstate Property and Casualty Insurance Company (N.D. Ohio filed April 2020);~~Clark v. Allstate Vehicle and Property Insurance Company~~ ~~(Circuit Court of Independence Co., Ark., filed February 2016);~~ Mitchell, et al. v. Allstate Vehicle and Property Insurance Company, et al. (S.D. Ala., filed August 2021); and ~~Sims,~~Hester, et al. v. Allstate ~~Fire~~Vehicle and ~~Casualty~~Property Insurance Company, et ~~al.~~al ~~(W.D. Tex.~~. (St. Clair Co., Ill. filed June ~~2022);~~2020) (as part of the proposed class-wide settlement, the plaintiff and ~~Thompson, et al. v. Allstate Insurance Company~~ ~~(Circuit Court of Cole Co., Mo. filed June 2022). No classes have been certified in any of these matters. A settlement-in-principle has been reached~~defendant in Thaxton v. Allstate Indemnity Company~~(Madison~~ (Madison Co., Ill., filed July 2020) ~~and~~were added to the Hester ~~v. Allstate Vehicle and Property Insurance Company~~ ~~(St. Clair Co., Ill. filed June 2020)~~ complaint).

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 ~~allegedly~~alleged systematic underpayments result from one or more of 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; 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; or (c) after paying for the value of the loss vehicle, then the Company allegedly is not entitled to retain the residual salvage value, and the Company allegedly must pay salvage value to the owner (or if the loss vehicle is retained by the owner, then the Company allegedly may not apply any offset for the salvage value).authority.

The following cases are currently pending against the Company: ~~Olberg v. Allstate Insurance Company, Allstate Fire and Casualty Insurance Company, and CCC Information Services, Inc. (W.D. Wash., filed April 2018);~~ ~~Bloomgarden v. Allstate Fire and Casualty Insurance~~

40~~www.allstate.com~~

~~Notes to Condensed Consolidated Financial Statements~~

~~Company~~ ~~(S.D. Fla., filed July 2018, dismissed August 2019, refiled on September 2019, remanded to 17th Judicial Circuit, Broward Co. October 2020);~~ ~~Erby v. Allstate Fire and Casualty Insurance Company~~ ~~(E.D. Pa., filed October 2018);~~ 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.~~ (W.D. La., filed June 2019); ~~Williams v. Esurance Property and Casualty Insurance Company~~ ~~(C.D. Cal., filed September 2020);~~Cotton v. Allstate Fire and Casualty Insurance Company~~(Cir.~~ (Cir. Ct. of Cook Co. Ill.,

Chancery Div., filed October 2020); ~~Romaniak v. Esurance Property and Casualty Insurance Company~~ ~~(N.D. Ohio, filed December 2020);~~ ~~Rawlins v. Esurance Property and Casualty Insurance Company~~ ~~(E.D. Mo., filed February 2021)~~; Bass v. Imperial Fire and Casualty Insurance Company (W.D. La., filed February 2022); Cummings v. Allstate Property and Casualty Insurance Company (M.D. La., filed April 2022); Slaughter v. Esurance Property and Casualty Insurance Company (Cir. Ct. of Cook Co, Ill., Chancery Div., filed September 2022); and Kanak v. Allstate Fire and Casualty Insurance Company (Cir. Ct. of Cook Co., Ill., Chancery Div., filed September 2022).

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

Other proceedings The Company is defending against an investigatory hearing before the California Insurance Commissioner concerning the private passenger automobile insurance rating practices of Allstate Insurance Company and Allstate Indemnity Company in California. The investigatory hearing is captioned: In the Matter of the Rating Practices of Allstate Insurance Company and Allstate Indemnity Company. Pursuant to the Notice of Hearing issued by the California Insurance Commissioner, the California Insurance Commissioner is investigating: (1) whether Allstate has potentially violated California insurance law by using illegal price optimization; (2) how Allstate implemented any such potentially illegal price optimization in its private passenger auto insurance rates and/or class plans; and (3) how such potentially illegal price optimization impacted Allstate’s private passenger auto insurance policyholders. Fact discovery has been completed in the investigatory hearing. The hearing is ~~expected to be set~~scheduled for ~~a date in December 2022.~~May 22, 2023.

In re The Allstate Corp. Securities Litigation is a certified class action filed on November 11, 2016 in the United States District Court for the Northern District of Illinois against the Company and two of its officers asserting claims under the federal securities laws. Plaintiffs allege that they purchased Allstate common stock during the class period and suffered damages as the result of the conduct alleged. Plaintiffs seek an unspecified amount of damages, costs, attorney’s fees, and other relief as the court deems appropriate. Plaintiffs allege that the Company and certain senior officers made allegedly material misstatements or omissions concerning claim frequency statistics and the reasons for a claim frequency increase for Allstate

brand auto insurance between October 2014 and August 3, 2015.

Plaintiffs further allege that a senior officer engaged in stock option exercises during that time allegedly while in possession of material nonpublic information about Allstate brand auto insurance claim frequency. The Company, its chairman, president and chief executive officer, and its former president are the named defendants. After the court denied their motion to dismiss on February 27, 2018, defendants answered the complaint, denying plaintiffs’ allegations that there was any misstatement or omission or other misconduct. On June 22, 2018, plaintiffs filed their motion for class certification. The court allowed the lead plaintiffs to amend their complaint to add the City of Providence Employee Retirement System as a proposed class representative and on September 12, 2018, the amended complaint was filed. A class was

42www.allstate.com

Notes to Condensed Consolidated Financial Statements

certified on March 26, 2019, vacated by the U.S. Court of Appeals for the Seventh Circuit on July 16, 2020 and remanded for further consideration by the district court. On December 21, 2020, the district court again granted plaintiffs’ motion for class certification and certified a class consisting of all persons who purchased Allstate common stock between October 29, 2014 and August 3, 2015. Defendants’ petition for permission to appeal this ruling was denied on January 28, 2021. Following the close of discovery, defendants moved for summary judgment on March 23, 2022. On July 26, 2022, the court entered its order granting summary judgment in part (as to plaintiffs’ claims relating to certain statements made in October 2014) and denying it as to the remainder of plaintiffs’ claims. ~~The court held a conference on August 24, 2022, ordering~~On January 10, 2023, the parties ~~to submit~~filed a joint pre-trial ~~order by January 10, 2023. A~~order. There is no date currently set for a pre-trial ~~conference was also scheduled for February 3, 2023.~~conference.

The Company is continuing to defend two putative class actions in California federal court, Holland Hewitt v. Allstate Life Insurance Company (E.D. Cal., filed May

2020) and Farley v. Lincoln Benefit Life Company (E.D. Cal., filed Dec. 2020), following the sale of ALIC. ~~No classes have~~On April 19, 2023, the court certified a class in Farley. There has been ~~certified~~no ruling on plaintiff’s motion for class certification in ~~these matters. Also pending is an individual action in California state court,~~ ~~Gilmore v. Lincoln Benefit Life Company~~Hewitt. ~~(San Diego Co., Cal., filed October 29, 2021).~~ 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.

~~Third Quarter 2022 Form 10-Q~~ 41

~~Notes to Condensed Consolidated Financial Statements~~


Note 1315			Benefit Plans


Components of net cost (benefit) for pension and other postretirement plans	Components of net cost (benefit) for pension and other postretirement plans									Components of net cost (benefit) for pension and other postretirement plans
		Three months ended September 30,				Nine months ended September 30,					Three months ended March 31,
($ in millions)	($ in millions)	2022		2021		2022		2021		($ in millions)	2023		2022
Pension benefits	Pension benefits									Pension benefits
Service cost	Service cost	$	22	$	27	$	79	$	78	Service cost	$	33	$	29
Interest cost	Interest cost	59		47		157		145		Interest cost	60		46
Expected return on plan assets	Expected return on plan assets	(85)		(112)		(295)		(338)		Expected return on plan assets	(77)		(110)
Amortization of prior service credit	Amortization of prior service credit	(2)		(13)		(27)		(38)		Amortization of prior service credit	—		(13)

Costs and expenses	Costs and expenses	(6)		(51)		(86)		(153)		Costs and expenses	16		(48)
Remeasurement of projected benefit obligation	Remeasurement of projected benefit obligation	(254)		(25)		(1,427)		(292)		Remeasurement of projected benefit obligation	123		(752)
Remeasurement of plan assets	Remeasurement of plan assets	335		68		1,563		(99)		Remeasurement of plan assets	(180)		529
Remeasurement (gains) losses	Remeasurement (gains) losses	81		43		136		(391)		Remeasurement (gains) losses	(57)		(223)
Pension net cost (benefit)		$	75	$	(8)	$	50	$	(544)
Pension net benefit										Pension net benefit	$	(41)	$	(271)

Postretirement benefits	Postretirement benefits									Postretirement benefits
Service cost	Service cost	$	—	$	—	$	1	$	1	Service cost	$	—	$	—
Interest cost	Interest cost	3		2		7		6		Interest cost	3		2
Amortization of prior service credit	Amortization of prior service credit	(7)		(5)		(19)		(18)		Amortization of prior service credit	(6)		(6)

Costs and expenses	Costs and expenses	(4)		(3)		(11)		(11)		Costs and expenses	(3)		(4)
Remeasurement of projected benefit obligation	Remeasurement of projected benefit obligation	(2)		(3)		(45)		(13)		Remeasurement of projected benefit obligation	4		(24)
Remeasurement of plan assets	Remeasurement of plan assets	—		—		—		—		Remeasurement of plan assets	—		—
Remeasurement (gains) losses	Remeasurement (gains) losses	(2)		(3)		(45)		(13)		Remeasurement (gains) losses	4		(24)
Postretirement net benefit		$	(6)	$	(6)	$	(56)	$	(24)
Postretirement net cost (benefit)										Postretirement net cost (benefit)	$	1	$	(28)

Pension and postretirement benefits	Pension and postretirement benefits									Pension and postretirement benefits
Costs and expenses	Costs and expenses	$	(10)	$	(54)	$	(97)	$	(164)	Costs and expenses	$	13	$	(52)
Remeasurement (gains) losses	Remeasurement (gains) losses	79		40		91		(404)		Remeasurement (gains) losses	(53)		(247)
Total net cost (benefit)		$	69	$	(14)	$	(6)	$	(568)
Total net benefit										Total net benefit	$	(40)	$	(299)

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) 2022 2021 2022 2021
Remeasurement of projected benefit obligation (gains) losses:
Discount rate $ (284) $ (32) $ (1,289) $ (271)
Other assumptions 28 4 (183) (34)
Remeasurement of plan assets (gains) losses 335 68 1,563 (99)
Remeasurement (gains) losses $ 79 $ 40 $ 91 $ (404)

First Quarter 2023 Form 10-Q 43

Notes to Condensed Consolidated Financial Statements


Pension and postretirement benefits remeasurement gains and losses
	Three months ended March 31,
($ in millions)	2023		2022
Remeasurement of projected benefit obligation (gains) losses:
Discount rate	$	124	$	(585)
Other assumptions	3		(191)
Remeasurement of plan assets (gains) losses	(180)		529
Remeasurement (gains) losses	$	(53)	$	(247)

Remeasurement ~~losses~~gains for the ~~third~~first quarter of ~~2022~~2023 are primarily related to ~~unfavorable~~favorable asset performance compared to expected return on plan assets, partially offset by a ~~reduction in the projected benefit obligation due to an increase~~decrease in the liability discount rate. Remeasurement losses in the first nine months of 2022 are primarily related to unfavorable asset performance compared to expected return on plan assets, partially offset by a reduction in the projected benefit obligation due to an increase in the liability discount rate and changes in other assumptions, primarily related to an increase in the long-term lump sum interest rate.

The weighted average discount rate used to measure the pension benefit obligation ~~increased~~decreased to ~~5.72% at September 30, 2022 compared to 4.92% at June 30, 2022, 3.97%~~5.33% at March 31, ~~2022 and 2.93%~~2023 compared to 5.64% at December 31, ~~2021~~2022, resulting in ~~gains~~losses for the ~~third~~first quarter ~~and first nine months~~ of ~~2022.~~2023.

For the ~~third~~first quarter ~~and first nine months~~ of ~~2022,~~2023, the actual return on plan assets was ~~lower~~higher than the expected return due to higher ~~interest rates, widening credit spreads~~fixed income valuations from lower market yields and ~~weak~~positive equity ~~market performance.~~

42~~www.allstate.com~~

~~Notes to Condensed Consolidated Financial Statements~~returns.


Note 1416			Supplemental Cash Flow Information

Non-cash investing activities include ~~$111~~$36 million and ~~$31~~$21 million related to mergers and exchanges completed with equity ~~and~~securities, fixed income securities, bank loans, and limited partnerships for the three months ended March 31, 2023 and 2022, respectively. Non-cash investing activities include $17 million related to right-of-use real estate ~~limited partnerships~~obtained in exchange for lease obligations and ~~modifications~~$51 million related to debt assumed by purchaser on sale of ~~other investments~~real estate for the ~~nine~~three months ended ~~September 30, 2022 and 2021, respectively.~~March 31, 2023.

Non-cash financing activities include ~~$65~~$35 million and ~~$52~~$60 million related to the issuance of Allstate common shares for vested equity awards for the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ 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 ~~$127~~$33 million and ~~$137~~$43 million for the ~~nine~~three

months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ respectively. Non-cash operating activities include ~~$17~~$4 million and ~~$96~~$8 million related to right-of-use assets obtained in exchange for lease obligations for the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ respectively.

Liabilities for collateral received in conjunction with the Company’s securities lending program and OTC and cleared derivatives are reported in other liabilities and accrued expenses or other investments. The accompanying cash flows are included in cash flows from operating activities in the Condensed Consolidated Statements of Cash Flows along with the activities resulting from management of the proceeds, as follows:


($ in millions)	($ in millions)	Nine months ended September 30,				($ in millions)	Three months ended March 31,
		2022		2021			2023		2022
Net change in proceeds managed	Net change in proceeds managed					Net change in proceeds managed
Net change in fixed income securities	Net change in fixed income securities	$	(473)	$	—	Net change in fixed income securities	$	111	$	—
Net change in short-term investments	Net change in short-term investments	(285)		(579)		Net change in short-term investments	93		(63)
Operating cash flow (used)		(758)		(579)
Operating cash flow provided (used)						Operating cash flow provided (used)	204		(63)
Net change in cash	Net change in cash	1		12		Net change in cash	—		3
Net change in proceeds managed	Net change in proceeds managed	$	(757)	$	(567)	Net change in proceeds managed	$	204	$	(60)

Cash flows from operating activities	Cash flows from operating activities					Cash flows from operating activities
Net change in liabilities	Net change in liabilities					Net change in liabilities
Liabilities for collateral, beginning of period	Liabilities for collateral, beginning of period	$	(1,444)	$	(914)	Liabilities for collateral, beginning of period	$	(2,011)	$	(1,444)
Liabilities for collateral, end of period	Liabilities for collateral, end of period	(2,201)		(1,481)		Liabilities for collateral, end of period	(1,807)		(1,504)
Operating cash flow provided		$	757	$	567
Operating cash flow (used) provided						Operating cash flow (used) provided	$	(204)	$	60

~~Third Quarter 2022 Form 10-Q~~ 4443www.allstate.com

Notes to Condensed Consolidated Financial Statements


Note 1517			Other Comprehensive Income (Loss)

																							Components of other comprehensive income (loss) on a pre-tax and after-tax basis
($ in millions)	($ in millions)	Three months ended September 30,												($ in millions)	Three months ended March 31,
		2022						2021							2023						2022
		Pre-tax		Tax		After-tax		Pre-tax		Tax		After-tax			Pre-tax		Tax		After-tax		Pre-tax			Tax		After-tax
Unrealized net holding gains and losses arising during the period, net of related offsets	Unrealized net holding gains and losses arising during the period, net of related offsets	$	(1,161)	$	246	$	(915)	$	(343)	$	73	$	(270)	Unrealized net holding gains and losses arising during the period, net of related offsets	$	729	$	(156)	$	573	$	(2,149)		$	458	$	(1,691)
Less: reclassification adjustment of realized capital gains and losses	Less: reclassification adjustment of realized capital gains and losses	(159)		33		(126)		84		(18)		66		Less: reclassification adjustment of realized capital gains and losses	(138)		29		(109)		(123)			26		(97)
Unrealized net capital gains and losses	Unrealized net capital gains and losses	(1,002)		213		(789)		(427)		91		(336)		Unrealized net capital gains and losses	867		(185)		682		(2,026)			432		(1,594)
Unrealized foreign currency translation adjustments	Unrealized foreign currency translation adjustments	(112)		24		(88)		(26)		5		(21)		Unrealized foreign currency translation adjustments	63		(13)		50		—			—		—
Unamortized pension and other postretirement prior service credit (1)	Unamortized pension and other postretirement prior service credit (1)	(9)		1		(8)		(19)		4		(15)		Unamortized pension and other postretirement prior service credit (1)	(6)		2		(4)		(19)			4		(15)
Other comprehensive (loss) income		$	(1,123)	$	238	$	(885)	$	(472)	$	100	$	(372)
Discount rate for reserve for future policy benefits														Discount rate for reserve for future policy benefits	(11)		2		(9)		120			(25)		95
Other comprehensive income (loss)														Other comprehensive income (loss)	$	913	$	(194)	$	719	$	(1,925)		$	411	$	(1,514)

		Nine months ended September 30,
		2022						2021
		Pre-tax		Tax		After-tax		Pre-tax		Tax		After-tax
Unrealized net holding gains and losses arising during the period, net of related offsets		$	(5,081)	$	1,080	$	(4,001)	$	(1,350)	$	288	$	(1,062)
Less: reclassification adjustment of realized capital gains and losses		(602)		126		(476)		367		(77)		290
Unrealized net capital gains and losses		(4,479)		954		(3,525)		(1,717)		365		(1,352)
Unrealized foreign currency translation adjustments		(171)		36		(135)		13		(3)		10
Unamortized pension and other postretirement prior service credit (1)		(47)		9		(38)		(56)		12		(44)
Other comprehensive (loss) income		$	(4,697)	$	999	$	(3,698)	$	(1,760)	$	374	$	(1,386)

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

44First Quarter 2023 Form 10-Q ~~www.allstate.com~~45

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of

The Allstate Corporation

Northbrook, Illinois 60062

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, 2022,~~March 31, 2023, the related condensed consolidated statements of operations, comprehensive income (loss) ~~and~~, shareholders’ equity ~~for the three-month and nine-month periods ended September 30, 2022 and 2021,~~ and cash flows for the ~~nine~~three month periods ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ and the related notes (collectively referred to as the ~~“condensed consolidated~~“interim financial ~~statements”~~information”). Based on our reviews, we are not aware of any material modifications that should be made to the accompanying ~~condensed consolidated~~interim financial ~~statements~~information for ~~them~~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, ~~2021,~~2022, and the related consolidated statements of operations, comprehensive income (loss), shareholders’ equity, and cash flows for the year then ended prior to the retrospective adjustment for a change in the Company’s method of accounting for reserve for future policy benefits and deferred policy acquisition costs for long-duration insurance contracts (not presented herein); and in our report dated February ~~18, 2022,~~16, 2023, we expressed an unqualified opinion on those consolidated financial statements. We also audited the adjustments described in Note 1 that were applied to retrospectively adjust the December 31, 2022, consolidated statement of financial position of the Company (not presented herein). In our opinion, such adjustments are appropriate and have been properly applied to the ~~information set forth~~previously issued consolidated statement of financial position in deriving the accompanying retrospectively adjusted condensed consolidated statement of financial position as of December 31, ~~2021, is fairly stated, in all material respects, in relation to the consolidated statement of financial position from which it has been derived.~~2022.

Basis for Review Results

~~These condensed consolidated~~This interim financial ~~statements are~~information is the responsibility of the Company's management. We are a public accounting firm registered with the ~~PCAOB~~Public Company Accounting Oversight Board (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 ~~condensed consolidated~~interim financial ~~statements~~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~~Deloitte & ~~TOUCHE~~Touche LLP

Chicago, Illinois

~~November 2, 2022~~May 3, 2023

~~Third Quarter 2022 Form 10-Q~~ 4645www.allstate.com

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

The following discussion highlights significant factors influencing the consolidated financial position and results of operations of The Allstate Corporation (referred to in this document as “we,” “our,” “us,” the “Company” or “Allstate”). It should be read in conjunction with the condensed consolidated financial statements and related notes thereto found under Part I. Item 1. contained herein, and with the discussion, analysis, consolidated financial statements and notes thereto in Part I. Item 1. and Part II. Item 7. and Item 8. of The Allstate Corporation annual report on Form 10-K for ~~2021,~~2022, filed February ~~18, 2022.~~16, 2023. Certain amounts have been reclassified to conform to current year presentation.

Further analysis of our insurance segments is provided in the Property-Liability Operations and Segment Results sections, including Allstate Protection and Run-off Property-Liability, Protection Services and Allstate Health and Benefits, of Management’s Discussion and Analysis (“MD&A”). The segments are consistent with the way in which the chief operating decision maker reviews financial performance and makes decisions about the allocation of resources.

~~Subsequent event~~

On October 18, 2022, Allstate closed the sale of its headquarters for $232 million resulting in a gain of approximately $99 million, pre-tax in the fourth quarter of 2022. $16 million of the gain will be classified in Property-Liability net gains and losses on investments and derivatives and $83 million will be classified as other income within the Corporate and Other segment, but excluded from adjusted net income, the measure of segment profit or loss. The sale will reduce real estate expenses and further advance Allstate’s multi-year Transformative Growth initiative.Macroeconomic Impacts

The Novel Coronavirus Pandemic or COVID-19 (“Coronavirus”)

The Coronavirus resulted in governments worldwide enacting emergency measures to combat the spread of the virus, including travel restrictions, government-imposed shelter-in-place orders, quarantine periods, social distancing, and ~~restrictions on large gatherings. These measures~~subsequent U.S. government fiscal and monetary policies have moderated, but new variants of the Coronavirus could result in further economic volatility. We continue to closely monitor and proactively adapt to developments and changing conditions. Currently, it is not possible to reliably estimate the impact to our operations, but the effects have been and could be material.

Certain growth and profitability comparisons to the prior year were impacted, in part, by the effects the Coronavirus had on our prior year results. Beginning in March 2020, when shelter-in-place orders and other restrictions were initiated, and throughout 2021, we experienced lower auto accident claim frequency and different claim patterns than historically experienced. Total auto claim frequency has increased through the first nine months of 2022 and during 2021, but remains below pre-pandemic levels.

~~The Coronavirus has affected our operations~~ and may continue to effect economic activity through longer-term impacts such as supply chain disruptions, labor shortages and other macroeconomic factors that have increased inflation and affected our operations. These factors may continue to significantly affect ~~our~~ results of operations, financial condition and liquidity. The impact from the pandemic and the ongoing effects should be considered when comparing the current period to prior periods.

Over the ~~prior period, including:~~

•~~Sales~~past several quarters, inflation continued to remain elevated, which led to increases in interest rates by the Federal Reserve and a widening of ~~new~~credit spreads reflecting ongoing recession concerns. Many foreign governmental authorities and ~~retention of existing policies~~

•~~Rate changes~~central banks have also responded to inflationary pressure, generally through more restrictive monetary policy, such as increasing target interest rates. These actions and ~~average gross premiums~~

•~~Supply chain~~other ongoing impacts from the pandemic could create significant economic uncertainty. Market volatility resulting from these factors and from disruptions in the banking industry have and ~~labor shortages increasing the cost of settling claims~~

•~~Premium for transportation network products~~

•~~Driving behavior and auto accident frequency~~

•~~Hospital and outpatient claim costs~~

•~~Investment~~may continue to impact our investment valuations and ~~returns~~

•~~Bad debt and credit allowance exposure~~

•~~Consumer utilization of Milewise~~®,~~our pay-per-mile insurance product~~

•~~Retail sales in Allstate Protection Plans~~returns.

This ~~list~~ is not inclusive of all potential impacts and should not be treated as such. Within the MD&A we have included further disclosures related to ~~the~~macroeconomic impacts ~~of the Coronavirus~~ on our ~~2022~~2023 results.

Russia/Ukraine Conflict

The Russia-Ukraine war and related sanctions imposed as a result of this conflict have increased global economic and political uncertainty, including inflationary pressures and an increased risk of cybersecurity incidents. Allstate does not have operations or direct investments in Russia, Belarus or Ukraine, but we could experience significant indirect impacts on the investment portfolio, financial position, or results of operations.

Corporate Strategy

Our strategy has two components: increase personal property-liability market share and expand protection offerings by leveraging the Allstate brand, customer base and ~~other core~~ capabilities.

Transformative Growth is about creating a business model, capabilities and culture that continually transform to better serve customers. This is done by providing affordable, simple and connected protection through multiple distribution ~~partners.~~methods. The ultimate objective is to create continuous transformative growth in all businesses.

In the personal property-liability businesses this has five key components:

•Improving customer value

•Expanding customer access

•~~Improving~~Increasing sophistication and investment in customer ~~value~~

•~~Increasing customer~~ acquisition ~~sophistication~~

•Modernizing the technology ecosystem

•~~Enhancing~~Driving organizational ~~capabilities~~transformation

46~~www.allstate.com~~

~~Protection~~We are expanding protection services businesses ~~are being expanded by leveraging~~utilizing enterprise capabilities and resources such as the Allstate brand, distribution, ~~brand,~~ analytics, claims, investment expertise, talent and capital.

~~Acquisitions and Dispositions~~

~~Acquisitions~~First Quarter 2023 Form 10-Q On January 4, 2021, we completed the acquisition of National General Holdings Corp. (“National General”), significantly enhancing our strategic position in the independent agency channel. The transaction increased our market share in personal property-liability by over one percentage point and enhanced our independent agent-facing technology.47

~~Discontinued operations and held for sale~~ On October 1, 2021, we closed the sale of Allstate Life Insurance Company of New York (“ALNY”) to Wilton Reassurance Company for $400 million. On November 1, 2021, we closed the sale of Allstate Life Insurance Company (“ALIC”) and certain affiliates to entities managed by Blackstone for total proceeds of $4 billion, including a pre-close dividend of $1.25 billion paid by ALIC.

~~In 2021 and prior periods, the assets and liabilities of the businesses were reclassified as held for sale and results were presented as discontinued operations.~~

~~See Note 3 of the condensed consolidated financial statements for further information on acquisitions and dispositions.~~

Measuring segment profit or loss

Underwriting income is calculated as premiums earned and other revenue, less claims and claims expense (“losses”), amortization of deferred policy acquisition costs (“DAC”), operating costs and expenses, amortization or impairment of purchased intangibles and restructuring and related charges, as determined using accounting principles generally accepted in the United States of America (“GAAP”). We use this measure in our evaluation of results of operations to analyze profitability.

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
•			~~Business combination expenses and the amortization~~Amortization or impairment of purchased intangibles
•			~~Income or loss from discontinued operations~~
•			Gain or loss on disposition ~~of operations~~
•			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

~~Third Quarter 2022 Form 10-Q~~ 47

Highlights

Consolidated net income (loss) applicable to common shareholders

($ in millions)


Consolidated net loss applicable to common shareholders was ~~$694~~$346 million ~~and $1.11 billion~~ in the ~~third~~first quarter ~~and first nine months~~ of ~~2022, respectively,~~2023 compared to income of ~~$508 million and $695~~$634 million in the ~~third~~first quarter ~~and first nine months~~ of ~~2021, respectively,~~2022, primarily due to higher losses ~~excluding catastrophes,~~driven by severity and ~~equity valuation decreases,~~frequency and higher catastrophe losses, partially offset by increased Property-Liability premiums ~~earned and the loss on the sale of the life and annuities business in the first nine months of 2021.~~earned. For the twelve months ended ~~September 30, 2022,~~March 31, 2023, return on Allstate common shareholders’ equity was ~~(1.6)~~(13.0)%, a decrease of ~~14.8%~~28.6 points from ~~13.2%~~15.6% for the twelve months ended ~~September 30, 2021.~~March 31, 2022.

Total revenue

($ in millions)


Total revenue increased ~~5.8%~~11.8% to ~~$13.21 billion and increased 0.5% to $37.77~~$13.79 billion in the ~~third~~first quarter ~~and first nine months~~ of ~~2022, respectively,~~2023 compared to the ~~same periods~~first quarter of ~~2021. The increase in both periods is~~2022 due to ~~increases~~an increase of ~~9.9% and 8.4%~~10.9% in property and casualty insurance premiums earned in the ~~third~~first quarter ~~and~~of 2023 compared to the first ~~nine months~~quarter of 2022 ~~respectively, partially offset by~~and net ~~losses~~gains on investments and derivatives in ~~2022~~2023 compared to net ~~gains~~losses in ~~2021 and decreases in net investment income.~~2022. ~~Insurance premiums earned increased for Property-Liability and Protection Services.~~

Net investment income

($ in millions)


Net investment income decreased ~~$74~~$19 million to ~~$690~~$575 million in the ~~third~~first quarter of ~~2022 and decreased $600 million to $1.85 billion in the first nine months of 2022~~2023 compared to the ~~same periods~~first quarter of ~~2021. The decrease in both periods was~~2022, primarily due to lower performance-based investment results, mainly from limited partnerships, ~~partially~~largely offset by higher market-based income. Market-based reflects higher fixed income portfolio ~~yields.~~yields and balance.

48 www.allstate.com

Financial highlights

Investments totaled ~~$61.01~~$63.48 billion as of ~~September 30, 2022, decreasing~~March 31, 2023, increasing from ~~$64.70~~$61.83 billion as of December 31, ~~2021.~~2022.

Allstate shareholders’ equity Aswas $17.49 billion as of ~~September 30, 2022, Allstate shareholders’ equity was $17.67 billion.~~March 31, 2023 and December 31, 2022.

Book value per diluted common share (ratio of Allstate common shareholders’ equity to total common shares outstanding and dilutive potential common shares outstanding) was ~~$58.35,~~$58.65, a decrease of ~~31.0%~~22.3% from ~~$84.62~~$75.46 as of ~~September 30, 2021,~~March 31, 2022, and ~~a decrease~~an increase of ~~28.4%~~0.9% from ~~$81.52~~$58.12 as of December 31, ~~2021.~~2022.

Return on average Allstate common shareholders’ equity For the twelve months ended ~~September 30, 2022,~~March 31, 2023, return on Allstate common shareholders’ equity was ~~(1.6)~~(13.0)%, a decrease of ~~14.8~~28.6 points from ~~13.2%~~15.6% for the twelve months ended ~~September 30, 2021.~~March 31, 2022. The decrease was primarily due to lower net income applicable to common shareholders for the trailing twelve-month period ending ~~September 30, 2022.~~March 31, 2023.

Pension and other postretirement remeasurement gains and losses We recorded pension and other postretirement remeasurement ~~losses~~gains of ~~$79~~$53 million in the ~~third~~first quarter of ~~2022,~~2023, primarily related to ~~unfavorable~~favorable asset performance compared to expected return on plan assets, partially offset by a ~~reduction in the projected benefit obligation due to an increase~~decrease in the liability discount rate.

We recorded losses of $91 million in the first nine months of 2022, primarily related to unfavorable asset performance compared to expected return on plan assets, partially offset by a reduction in the projected benefit obligation due to an increase in the liability discount rate and changes in other assumptions, primarily related to an increase in the long-term lump sum interest rate.

Summarized consolidated financial results

Three months ended September 30, Nine months ended September 30,
($ in millions) 2022 2021 2022 2021
Revenues
Property and casualty insurance premiums $ 11,661 $ 10,615 $ 34,004 $ 31,366
Accident and health insurance premiums and contract charges 463 460 1,398 1,362
Other revenue 561 536 1,684 1,585
Net investment income 690 764 1,846 2,446
Net gains (losses) on investments and derivatives (167) 105 (1,167) 818
Total revenues 13,208 12,480 37,765 37,577
Costs and expenses
Property and casualty insurance claims and claims expense (10,073) (8,264) (27,262) (21,514)
Shelter-in-Place Payback expense — — — (29)
Accident, health and other policy benefits (263) (277) (801) (771)
Amortization of deferred policy acquisition costs (1,682) (1,582) (4,913) (4,650)
Operating, restructuring and interest expenses (1,941) (1,982) (5,872) (5,695)
Pension and other postretirement remeasurement gains (losses) (79) (40) (91) 404
Amortization of purchased intangibles (90) (109) (264) (267)
Total costs and expenses (14,128) (12,254) (39,203) (32,522)
(Loss) income from operations before income tax expense (920) 226 (1,438) 5,055
Income tax benefit (expense) 237 (20) 377 (1,008)
Net (loss) income from continuing operations (683) 206 (1,061) 4,047
Income (loss) from discontinued operations, net of tax — 325 — (3,272)
Net (loss) income (683) 531 (1,061) 775
Less: Net loss attributable to noncontrolling interest (15) (7) (34) (7)
Net (loss) income attributable to Allstate (668) 538 (1,027) 782
Preferred stock dividends (26) (30) (79) (87)
Net (loss) income applicable to common shareholders $ (694) $ 508 $ (1,106) $ 695


	Three months ended March 31,
($ in millions)	2023		2022
Revenues
Property and casualty insurance premiums	$	12,173	$	10,981
Accident and health insurance premiums and contract charges	463		468
Other revenue	561		560
Net investment income	575		594
Net gains (losses) on investments and derivatives	14		(267)
Total revenues	13,786		12,336

Costs and expenses
Property and casualty insurance claims and claims expense	(10,326)		(7,822)
Accident, health and other policy benefits	(265)		(268)
Amortization of deferred policy acquisition costs	(1,744)		(1,608)
Operating, restructuring and interest expenses	(1,829)		(1,997)
Pension and other postretirement remeasurement gains (losses)	53		247
Amortization of purchased intangibles	(81)		(87)

Total costs and expenses	(14,192)		(11,535)

(Loss) income from operations before income tax expense	(406)		801

Income tax benefit (expense)	85		(151)

Net (loss) income	(321)		650

Less: Net loss attributable to noncontrolling interest	(1)		(10)

Net (loss) income attributable to Allstate	(320)		660

Preferred stock dividends	(26)		(26)

Net (loss) income applicable to common shareholders	$	(346)	$	634

~~Third Quarter 2022 Form 10-Q~~ 49

Segment highlights

Allstate Protection underwriting loss was ~~$1.17 billion in the third quarter of 2022 compared to underwriting loss of $421~~$998 million in the ~~third~~first quarter of ~~2021. Underwriting loss totaled $1.75 billion in the first nine months of 2022~~2023 compared to underwriting income of ~~$1.67 billion~~$282 million in the first ~~nine months~~quarter of ~~2021.~~2022. The decrease ~~in both periods~~ was primarily due to higher non-catastrophe losses, ~~and unfavorable reserve reestimates, both excluding catastrophes,~~ primarily for auto insurance, and higher catastrophe losses, partially offset by increased premiums. We are executing a comprehensive plan to improve auto insurance profitability, including broadly raising rates, reducing operating expenses and advertising, implementing underwriting restrictions in underperforming states and executing claims operating actions to manage loss costs.

At this time, we will no longer write new homeowners and condominium business in the state of California, although we will offer continuing coverage to existing customers. Additional actions are likely in personal auto insurance.

Commercial insurance is being exited in five states and coverage to transportation network companies will not be offered unless it utilizes telematics-based pricing. We expect these actions will negatively impact premiums starting in the fourth quarter.

Catastrophe losses were ~~$763 million and $2.33~~$1.69 billion in the ~~third~~first quarter ~~and first nine months~~ of ~~2022, respectively,~~2023 compared to ~~$1.27 billion and $2.81 billion~~$462 million in the ~~third~~first quarter ~~and first nine months~~ of ~~2021, respectively.~~2022.

Premiums written increased ~~9.8%~~9.5% to ~~$12.04 billion and 10.5% to $34.31~~$11.78 billion in the ~~third~~first quarter ~~and first nine months~~ of ~~2022, respectively,~~2023 compared to the same ~~periods~~period of ~~2021,~~2022, reflecting higher premiums in both Allstate and National General brands.

Protection Services adjusted net income was $35 million in the third quarter of 2022 compared to $45 million in the third quarter of 2021, primarily due to a prior year restructuring benefit and higher current year technology expenses at Allstate Identity Protection. Adjusted net income was $131$34 million in the first ~~nine months~~quarter of ~~2022~~2023 compared to ~~$150~~$53 million in the first ~~nine months~~quarter of ~~2021, primarily related~~2022, due to ~~investments~~Allstate Protection Plans higher appliance and furniture claim severity, a shift in business mix and lower third-party advertising sales by Arity. The decrease was partially offset by growth in new business at Allstate Protection ~~Plans and lower revenue at Arity.~~Plans.

First Quarter 2023 Form 10-Q 49

Premiums and other revenue increased ~~8.7%~~7.8% or ~~$47 million in the third quarter of 2022 and 11.4% or $179~~$45 million in the first ~~nine months~~quarter of ~~2022~~2023 compared to the same ~~periods~~period of ~~2021,~~2022, primarily due to Allstate Protection Plans.

Allstate Health and Benefits adjusted net income was ~~$54~~$56 million in the ~~third~~first quarter of ~~2022~~2023 compared to ~~$33~~$57 million in the ~~third~~first quarter ~~2021,~~2022, primarily due to ~~lower~~a decline in employer voluntary benefits, partially offset by growth in group health.

Premiums and contract charges decreased 1.1% to $463 million in the first quarter of 2023 compared to the same period of 2022, primarily due to a decline in individual health and employer voluntary benefits, claims as well as lower restructuring charges compared to the prior year quarter. Adjusted net income was $172 million in the first nine months of 2022 compared to $160 million in the first nine months of 2021, primarily due to increases in group health and employer voluntary benefits revenues, partially offset by ~~higher group and individual health claims utilization.~~

Premiums and contract charges increased 0.7% to $463 million in the third quarter of 2022 and 2.6% to $1.40 billion in the first nine months of 2022 compared to the same periods of 2021, primarily due to growth in group ~~health~~health.

Adopted accounting standard

Accounting for Long-Duration Insurance Contracts Effective January 1, 2023, we adopted the Financial Accounting Standards Board (”FASB”) guidance revising the accounting for certain long-duration insurance contracts using the modified retrospective approach to the transition date of January 1, 2021.

Under the new guidance, measurement assumptions, including those for mortality, morbidity and ~~employer voluntary benefits.~~policy lapses, are required to be reviewed at least annually, and updated as appropriate. In addition, reserves under the new guidance are required to be discounted using an upper-medium grade fixed income instrument yield that is updated through other comprehensive income (“OCI”) at each reporting date. Additionally, deferred policy acquisition costs (“DAC”) for all long-duration products will be amortized on a simplified basis. Our reserve for future policy benefits and DAC will be subject to new disclosure guidance.

In addition, the Company met the conditions included in Accounting Standards Update No. 2022-05, Transition for Sold Contracts, and elected to not apply the new guidance for contracts that were part of the 2021 sales of Allstate Life Insurance Company (“ALIC”) and Allstate Life Insurance Company of New York (“ALNY”).


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

($ in millions)	January 1, 2021

Decrease in retained income	$	21
Decrease in accumulated other comprehensive income (“AOCI”)	277
Total decrease in equity	$	298

The decrease in AOCI is primarily attributable to a change in the discount rate used in measuring the reserve for future policy benefits for traditional life contracts and other long-term products with guaranteed terms from a portfolio-based rate at contract issuance to an upper-medium grade fixed income-based rate at the reporting date. The decrease in retained income primarily relates to certain cohorts of long-term contracts whose expected net premiums exceeded expected gross premiums which resulted in an increase in reserves and a decrease in retained income equal to the present value of expected future benefits less the present value of expected future premiums at the transition date.

See Note 1 of the condensed consolidated financial statements for further information regarding the impact of the adopted accounting standard on our condensed consolidated financial statements.

50 www.allstate.com

Property-Liability Operations

Overview Property-Liability operations consist of two reportable segments: Allstate Protection and Run-off Property-Liability. These segments are consistent with the groupings of financial information that management uses to evaluate performance and to determine the allocation of resources.

We do not allocate Property-Liability investment income, net gains and losses on investments and derivatives, or assets to the Allstate Protection and Run-off Property-Liability segments. Management reviews assets at the Property-Liability level for decision-making purposes.

GAAP operating ratios are used to measure our profitability to enhance an investor’s understanding of our financial results and are calculated as follows:

•Loss ratio: the ratio of claims and claims expense (loss adjustment expenses), to premiums earned. Loss ratios include the impact of catastrophe losses and prior year reserve reestimates.

•Expense ratio: the ratio of amortization of DAC, operating costs and expenses, amortization or impairment of purchased intangibles and restructuring and related charges, ~~and Shelter-in-Place Payback expense,~~ less other revenue to premiums earned.

•Combined ratio: the sum of the loss ratio and the expense ratio.

We have also calculated the following impacts of specific items on the GAAP operating ratios because of the volatility of these items between periods. The impacts are calculated by taking the specific items noted below divided by Property-Liability premiums earned:

•Effect of catastrophe losses on combined ratio: includes catastrophe losses and prior year reserve reestimates of catastrophe losses included in claims and claims expense

•Effect of prior year reserve reestimates on combined ratio

•Effect of amortization of purchased intangibles on combined ratio

•Effect of restructuring and related charges on combined ratio

•Effect of ~~Shelter-in-Place Payback expense on combined and expense ratios~~

•~~Effect of~~ Run-off Property-Liability business on combined ratio: includes claims and claims expense, restructuring and related charges and operating costs and expenses in the Run-off Property-Liability segment

Premium measures and statistics are used to analyze our premium trends and are calculated as follows:

•PIF: policy counts are based on items rather than customers. A multi-car customer would generate multiple item (policy) counts, even if all cars were insured under one policy. Commercial lines PIF counts for shared economy agreements typically reflect contracts that cover multiple rather than individual drivers. Lender-placed policies are excluded from policy counts because relationships are with the lenders.

•New issued applications: item counts of automobile or homeowner insurance applications for insurance policies that were issued during the period, regardless of whether the customer was previously insured by another Allstate brand.

•Average premium-gross written (“average premium”): gross premiums written divided by issued item count. Gross premiums written include the impacts from discounts, surcharges and ceded reinsurance premiums and exclude the impacts from mid-term premium adjustments and premium refund accruals. Average premiums represent the appropriate policy term for each line.

•Renewal ratio: renewal policy item counts issued during the period, based on contract effective dates, divided by the total policy item counts issued generally 6 months prior for auto or 12 months prior for homeowners.

•Implemented rate changes: represents the impact in the locations (U.S. states, the District of Columbia or Canadian provinces) where rate changes were implemented during the period as a percentage of total brand prior year-end premiums written.

Frequency and severity statistics, which are influenced by driving patterns, inflation and other factors, are provided to describe the trends in loss costs. Our reserving process incorporates changes in loss patterns, operational statistics and changes in claims reporting processes to determine our best estimate of recorded reserves. We use the following statistics to evaluate losses:

•Gross claim frequency is calculated as annualized notice counts, excluding counts associated with catastrophe events, received in the period divided by the average of PIF with the applicable coverage during the period. Gross claim frequency includes all actual notice counts, regardless of their current status (open or closed) or their ultimate disposition (closed with a payment or closed without payment).

First Quarter 2023 Form 10-Q 51

Property-Liability Operations

•Report year incurred claim severity is calculated by dividing the sum of recorded estimated incurred losses and allocated loss adjustment expenses, excluding catastrophes, by the reported notice counts during that report year. Report year incurred claim severity does not include incurred but not reported (“IBNR”) losses or benefits from subrogation and salvage.

~~Third Quarter 2022 Form 10-Q~~ 51

~~Property-Liability Operations~~

•Paid claim severity is calculated by dividing the sum of paid losses and loss expenses by claims closed with a payment during the period.

•Percent change in frequency or paid claim severity statistics are calculated as the amount of increase or decrease in gross claim frequency or paid claim severity in the current period compared to the same period in the prior year, divided by the prior year gross claim frequency or paid claim severity.

•Percent change in report year incurred claim severity statistic is calculated as the amount of increase or decrease in report year incurred claim severity recorded in the year-to-date period divided by the current estimate of the prior report year incurred claim severity.

															Underwriting results
		Three months ended September 30,				Nine months ended September 30,					Three months ended March 31,
($ in millions, except ratios)	($ in millions, except ratios)	2022		2021		2022		2021		($ in millions, except ratios)	2023		2022
Premiums written	Premiums written	$	12,037	$	10,966	$	34,307	$	31,057	Premiums written	$	11,783	$	10,761
Premiums earned	Premiums earned	$	11,157	$	10,159	$	32,529	$	30,064	Premiums earned	$	11,635	$	10,498
Other revenue	Other revenue	364		365		1,066		1,071		Other revenue	353		347
Claims and claims expense	Claims and claims expense	(9,934)		(8,145)		(26,867)		(21,193)		Claims and claims expense	(10,180)		(7,702)
Shelter-in-Place Payback expense		—		—		—		(29)
Amortization of DAC	Amortization of DAC	(1,414)		(1,346)		(4,117)		(3,968)		Amortization of DAC	(1,452)		(1,348)
Other costs and expenses	Other costs and expenses	(1,390)		(1,477)		(4,285)		(4,115)		Other costs and expenses	(1,279)		(1,445)
Restructuring and related charges (1)	Restructuring and related charges (1)	(14)		(15)		(24)		(113)		Restructuring and related charges (1)	(21)		(12)
Amortization of purchased intangibles	Amortization of purchased intangibles	(61)		(75)		(178)		(165)		Amortization of purchased intangibles	(57)		(58)
Underwriting (loss) income	Underwriting (loss) income	$	(1,292)	$	(534)	$	(1,876)	$	1,552	Underwriting (loss) income	$	(1,001)	$	280

Catastrophe losses	Catastrophe losses									Catastrophe losses
Catastrophe losses, excluding reserve reestimates	Catastrophe losses, excluding reserve reestimates	$	772	$	1,270	$	2,304	$	3,018	Catastrophe losses, excluding reserve reestimates	$	1,733	$	475
Catastrophe reserve reestimates (2)	Catastrophe reserve reestimates (2)	(9)		(1)		29		(207)		Catastrophe reserve reestimates (2)	(42)		(13)
Total catastrophe losses	Total catastrophe losses	$	763	$	1,269	$	2,333	$	2,811	Total catastrophe losses	$	1,691	$	462

Non-catastrophe reserve reestimates (2)	Non-catastrophe reserve reestimates (2)	875		162		1,444		144		Non-catastrophe reserve reestimates (2)	27		158
Prior year reserve reestimates (2)	Prior year reserve reestimates (2)	866		161		1,473		(63)		Prior year reserve reestimates (2)	(15)		145

GAAP operating ratios	GAAP operating ratios									GAAP operating ratios
Loss ratio	Loss ratio	89.0		80.2		82.6		70.5		Loss ratio	87.5		73.3
Expense ratio (3)	Expense ratio (3)	22.6		25.1		23.2		24.3		Expense ratio (3)	21.1		24.0
Combined ratio	Combined ratio	111.6		105.3		105.8		94.8		Combined ratio	108.6		97.3
Effect of catastrophe losses on combined ratio	Effect of catastrophe losses on combined ratio	6.8		12.5		7.2		9.4		Effect of catastrophe losses on combined ratio	14.5		4.4
Effect of prior year reserve reestimates on combined ratio	Effect of prior year reserve reestimates on combined ratio	7.7		1.6		4.6		(0.3)		Effect of prior year reserve reestimates on combined ratio	(0.1)		1.4
Effect of catastrophe losses included in prior year reserve reestimates on combined ratio	Effect of catastrophe losses included in prior year reserve reestimates on combined ratio	(0.1)		—		0.1		(0.7)		Effect of catastrophe losses included in prior year reserve reestimates on combined ratio	(0.4)		(0.1)
Effect of restructuring and related charges on combined ratio (1)	Effect of restructuring and related charges on combined ratio (1)	0.1		0.1		0.1		0.4		Effect of restructuring and related charges on combined ratio (1)	0.2		0.1
Effect of amortization of purchased intangibles on combined ratio	Effect of amortization of purchased intangibles on combined ratio	0.6		0.8		0.5		0.5		Effect of amortization of purchased intangibles on combined ratio	0.5		0.5
Effect of Shelter-in-Place Payback expense on combined and expense ratios		—		—		—		0.1
Effect of Run-off Property-Liability business on combined ratio		1.1		1.2		0.4		0.4

(1)Restructuring and related charges for the ~~third~~first quarter ~~and first nine months~~ of ~~2022~~2023 are primarily for real estate costs related to ~~future work environment and employee costs.~~facilities being vacated. See Note 1113 of the condensed consolidated financial statements for additional details.

(2)Favorable reserve reestimates are shown in parentheses.

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

52 www.allstate.com

Allstate Protection Segment Results

Allstate Protection Segment


Underwriting results	Underwriting results									Underwriting results
		Three months ended September 30,				Nine months ended September 30,					Three months ended March 31,
($ in millions)	($ in millions)	2022		2021		2022		2021		($ in millions)	2023		2022
Premiums written	Premiums written	$	12,037	$	10,966	$	34,307	$	31,057	Premiums written	$	11,783	$	10,761
Premiums earned	Premiums earned	$	11,157	$	10,159	$	32,529	$	30,064	Premiums earned	$	11,635	$	10,498
Other revenue	Other revenue	364		365		1,066		1,071		Other revenue	353		347
Claims and claims expense	Claims and claims expense	(9,814)		(8,032)		(26,743)		(21,078)		Claims and claims expense	(10,178)		(7,701)
Shelter-in-Place Payback expense		—		—		—		(29)
Amortization of DAC	Amortization of DAC	(1,414)		(1,346)		(4,117)		(3,968)		Amortization of DAC	(1,452)		(1,348)
Other costs and expenses	Other costs and expenses	(1,388)		(1,476)		(4,282)		(4,112)		Other costs and expenses	(1,278)		(1,444)
Restructuring and related charges	Restructuring and related charges	(14)		(16)		(24)		(113)		Restructuring and related charges	(21)		(12)
Amortization of purchased intangibles	Amortization of purchased intangibles	(61)		(75)		(178)		(165)		Amortization of purchased intangibles	(57)		(58)
Underwriting (loss) income	Underwriting (loss) income	$	(1,170)	$	(421)	$	(1,749)	$	1,670	Underwriting (loss) income	$	(998)	$	282
Catastrophe losses	Catastrophe losses	$	763	$	1,269	$	2,333	$	2,811	Catastrophe losses	$	1,691	$	462

Underwriting loss was ~~$1.17 billion in the third quarter of 2022 compared to underwriting loss of $421~~$998 million in the ~~third~~first quarter of ~~2021. Underwritingloss totaled $1.75 billion in first nine months of 2022~~2023 compared to underwriting income of ~~$1.67 billion~~$282 million in the first ~~nine months~~quarter of ~~2021. The decrease in both periods was primarily~~2022, due to higher non-catastrophe losses, ~~and unfavorable reserve reestimates, both excluding catastrophes,~~ primarily for auto insurance, and higher catastrophe losses, partially offset by increased premiums. We are executing a comprehensive plan to improve auto insurance profitability, including broadly raising rates, reducing operating expenses and advertising, implementing underwriting restrictions in underperforming states and executing claims operating actions to manage loss costs.

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

($ in millions)

~~Change in underwriting results from prior year period - nine months ended~~

~~($ in millions)~~

~~Third Quarter 2022 Form 10-Q~~ 53

~~Segment Results~~ ~~Allstate Protection~~

																							Underwriting income (loss) by brand and by line of business
		Allstate brand				National General				Allstate Protection					Allstate brand				National General					Allstate Protection
($ in millions)	($ in millions)	2022		2021		2022		2021		2022		2021		($ in millions)	2023		2022		2023		2022			2023		2022
Three months ended September 30,
Auto (1)		$	(1,222)	$	(123)	$	(93)	$	(36)	$	(1,315)	$	(159)
Three months ended March 31,														Three months ended March 31,
Auto														Auto	$	(332)	$	(137)	$	(14)	$	(10)		$	(346)	$	(147)
Homeowners ~~(2)~~(1)	Homeowners ~~(2)~~(1)	268		(208)		(23)		(69)		245		(277)		Homeowners ~~(2)~~(1)	(508)		368		(26)		32			(534)		400
Other personal lines	Other personal lines	(3)		47		(7)		(7)		(10)		40		Other personal lines	(90)		18		1		—			(89)		18
Commercial lines	Commercial lines	(116)		(54)		(1)		—		(117)		(54)		Commercial lines	(64)		(19)		4		(3)			(60)		(22)
Other business lines ~~(3)~~(1)	Other business lines ~~(3)~~(1)	24		27		—		—		24		27		Other business lines ~~(3)~~(1)	22		21		7		10			29		31
Answer Financial	Answer Financial	—		—		—		—		3		2		Answer Financial	—		—		—		—			2		2
Total	Total	$	(1,049)	$	(311)	$	(124)	$	(112)	$	(1,170)	$	(421)	Total	$	(972)	$	251	$	(28)	$	29		$	(998)	$	282

Nine months ended September 30,
Auto (1)		$	(1,937)	$	1,444	$	(103)	$	118	$	(2,040)	$	1,562
Homeowners (2)		504		61		(35)		(77)		469		(16)
Other personal lines		20		112		(1)		—		19		112
Commercial lines		(280)		(81)		6		—		(274)		(81)
Other business lines (3)		70		82		—		—		70		82
Answer Financial		—		—		—		—		7		11
Total		$	(1,623)	$	1,618	$	(133)	$	41	$	(1,749)	$	1,670

(1)~~2021 results include certain National General commercial lines insurance products.~~

~~(2)2021 results include National General packaged policies, which include auto, and commercial lines insurance products.~~

~~(3)~~Other business lines represents commissions earned and other costs and expenses for Ivantage and non-proprietary life and annuity ~~products.~~products, and lender-placed products and related services. In the first quarter of 2023, National General lender-placed products and related services results were reclassified from homeowners to other business lines. Historical results have been updated to conform with this presentation.

First Quarter 2023 Form 10-Q 53

Segment Results Allstate Protection

Premium measures and statistics include PIF, new issued applications, average premiums and renewal ratio to analyze our premium trends. Premiums written is the amount of premiums charged for policies issued during a ~~fiscal~~reporting period. Premiums are considered earned and are included in the financial results on a pro-rata basis over the policy period. The portion of premiums written applicable to the unexpired term of the policies is recorded as unearned premiums on our Condensed Consolidated Statements of Financial Position.

																							Premiums written by brand and by line of business
		Allstate brand				National General				Allstate Protection					Allstate brand				National General					Allstate Protection
($ in millions)	($ in millions)	2022		2021		2022		2021		2022		2021		($ in millions)	2023		2022		2023		2022			2023		2022
Three months ended September 30,
Three months ended March 31,														Three months ended March 31,
Auto	Auto	$	6,704	$	6,153	$	1,156	$	1,018	$	7,860	$	7,171	Auto	$	6,826	$	6,308	$	1,523	$	1,254		$	8,349	$	7,562
Homeowners	Homeowners	2,803		2,452		483		552		3,286		3,004		Homeowners	2,210		2,020		324		261			2,534		2,281
Other personal lines	Other personal lines	564		543		42		41		606		584		Other personal lines	492		469		56		35			548		504
Commercial lines	Commercial lines	233		207		52		—		285		207		Commercial lines	177		238		50		56			227		294

Other business lines														Other business lines	—		—		125		120			125		120
Total premiums written	Total premiums written	$	10,304	$	9,355	$	1,733	$	1,611	$	12,037	$	10,966	Total premiums written	$	9,705	$	9,035	$	2,078	$	1,726		$	11,783	$	10,761

Nine months ended September 30,
Auto		$	19,386	$	18,165	$	3,506	$	2,836	$	22,892	$	21,001
Homeowners		7,488		6,492		1,332		1,317		8,820		7,809
Other personal lines		1,609		1,519		110		120		1,719		1,639
Commercial lines		718		608		158		—		876		608

Total premiums written		$	29,201	$	26,784	$	5,106	$	4,273	$	34,307	$	31,057


Premiums earned by brand and by line of business
	Allstate brand				National General				Allstate Protection
($ in millions)	2023		2022		2023		2022		2023		2022
Three months ended March 31,
Auto	$	6,660	$	6,073	$	1,248	$	1,008	$	7,908	$	7,081
Homeowners	2,488		2,210		322		280		2,810		2,490
Other personal lines	521		496		41		35		562		531
Commercial lines	183		232		49		51		232		283
Other business lines	—		—		123		113		123		113
Total premiums earned	$	9,852	$	9,011	$	1,783	$	1,487	$	11,635	$	10,498


Reconciliation of premiums written to premiums earned
	Three months ended March 31,
($ in millions)	2023		2022
Total premiums written	$	11,783	$	10,761
(Increase) decrease in unearned premiums	(127)		(258)
Other	(21)		(5)
Total premiums earned	$	11,635	$	10,498


Policies in force by brand and by line of business
	Allstate brand		National General		Allstate Protection
PIF (thousands)	2023	2022	2023	2022	2023	2022
Auto	21,142	21,968	4,591	4,103	25,733	26,071
Homeowners	6,621	6,536	641	629	7,262	7,165
Other personal lines	4,607	4,609	306	285	4,913	4,894
Commercial lines	199	208	108	104	307	312

Total	32,569	33,321	5,646	5,121	38,215	38,442

Auto insurance premiums written increased 10.4% or $787 million in the first quarter of 2023 compared to the first quarter of 2022, primarily due to the following factors:

•Increased average premiums driven by rate increases. In the three months ended March 31, 2023, rate increases of 8.4% were taken for Allstate brand in 28 locations, resulting in total Allstate brand insurance premium impact of 1.7%

•Rate increases of 5.6% were taken for National General brand in 28 locations, resulting in total National General brand insurance premium impact of 1.9%

•We expect to continue to pursue rate increases for both Allstate and National General brands

throughout 2023 to improve auto insurance profitability

•PIF decreased 1.3% or 338 thousand to 25,733 thousand as of March 31, 2023 compared to March 31, 2022

•Renewal ratio decreased 1.8 points

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

•The impact of the ongoing rate increases and temporary reductions in advertising have and may continue to have an adverse effect on the renewal ratio and future PIF growth

54 www.allstate.com

Allstate Protection Segment Results

Premiums earned by brand and by line of business
Allstate brand National General Allstate Protection
($ in millions) 2022 2021 2022 2021 2022 2021
Three months ended September 30,
Auto $ 6,416 $ 6,009 $ 1,129 $ 903 $ 7,545 $ 6,912
Homeowners 2,350 2,080 426 442 2,776 2,522
Other personal lines 505 481 35 40 540 521
Commercial lines 246 204 50 — 296 204
Total premiums earned $ 9,517 $ 8,774 $ 1,640 $ 1,385 $ 11,157 $ 10,159
Nine months ended September 30,
Auto $ 18,742 $ 18,059 $ 3,232 $ 2,545 $ 21,974 $ 20,604
Homeowners 6,841 6,120 1,224 1,205 8,065 7,325
Other personal lines 1,511 1,432 105 113 1,616 1,545
Commercial lines 722 590 152 — 874 590
Total premiums earned $ 27,816 $ 26,201 $ 4,713 $ 3,863 $ 32,529 $ 30,064

Reconciliation of premiums written to premiums earned
Three months ended September 30, Nine months ended September 30,
($ in millions) 2022 2021 2022 2021
Total premiums written $ 12,037 $ 10,966 $ 34,307 $ 31,057
(Increase) decrease in unearned premiums (852) (672) (1,709) (1,264)
Other (28) (135) (69) 271
Total premiums earned $ 11,157 $ 10,159 $ 32,529 $ 30,064

Policies in force by brand and by line of business
Allstate brand National General Allstate Protection
PIF (thousands) 2022 2021 2022 2021 2022 2021
Auto 21,853 21,951 4,278 3,703 26,131 25,654
Homeowners 6,599 6,496 638 642 7,237 7,138
Other personal lines 4,637 4,560 293 288 4,930 4,848
Commercial lines 204 212 106 107 310 319
Total 33,293 33,219 5,315 4,740 38,608 37,959

~~Auto insurance premiums written~~ increased 9.6% or $689 million in the third quarter of 2022 compared to the third quarter of 2021 and 9.0% or $1.89 billion in the first nine months of 2022 compared to the first nine months of 2021, primarily due to the following factors:

•Increased average premiums driven by rate increases. In the nine months ended September 30, 2022, rate increases of 14.7% were taken for Allstate brand in 52 locations, resulting in total Allstate brand insurance premium impact of 10.8%, and 9.1% were taken for National General brand in 36 locations, resulting in total National General brand insurance premium impact of 5.9%, to improve underwriting results. Allstate expects to continue to pursue rate increases for the balance of 2022 and into 2023 to improve auto insurance profitability

•~~Renewal ratio decreased 0.2 in the third quarter and increased 0.3 points in the first nine months of 2022, respectively, compared to the third quarter and first nine months of 2021~~

•~~PIF increased 1.9% or 477 thousand to 26,131 thousand as of September 30, 2022 compared to September 30, 2021 due to growth in National General, including the SafeAuto acquisition~~

•~~The impact of the ongoing rate actions may have an adverse effect on the renewal ratio and future PIF growth~~

•~~Increased new issued applications driven by direct channel, including the acquisition of SafeAuto, and growth in the independent agency channel~~


Auto premium measures and statistics
	Three months ended March 31,
	2023		2022		Change




New issued applications (thousands)
Allstate Protection by brand


Allstate brand	751		964		(22.1)	%
National General	783		718		9.1	%
Total new issued applications	1,534		1,682		(8.8)	%

Allstate Protection by channel
Exclusive agency channel	589		599		(1.7)	%
Direct channel	463		631		(26.6)	%
Independent agency channel	482		452		6.6	%
Total new issued applications	1,534		1,682		(8.8)	%





Allstate brand average premium	$	726	$	626	16.0	%
Allstate brand renewal ratio (%)	85.7		87.5		(1.8)

~~Third Quarter 2022 Form 10-Q~~ 55

~~Segment Results~~ ~~Allstate Protection~~

Auto premium measures and statistics
Three months ended September 30, Nine months ended September 30,
2022 2021 Change 2022 2021 Change
New issued applications (thousands)
Allstate Protection by brand
Allstate brand 933 932 0.1 % 2,856 2,787 2.5 %
National General 648 516 25.6 % 2,038 1,553 31.2 %
Total new issued applications 1,581 1,448 9.2 % 4,894 4,340 12.8 %
Allstate Protection by channel
Exclusive agency channel 624 610 2.3 % 1,842 1,843 (0.1) %
Direct channel 535 447 19.7 % 1,737 1,337 29.9 %
Independent agency channel 422 391 7.9 % 1,315 1,160 13.4 %
Total new issued applications 1,581 1,448 9.2 % 4,894 4,340 12.8 %
Allstate brand average premium $ 667 $ 604 10.4 % $ 646 $ 604 7.0 %
Allstate brand renewal ratio (%) 87.0 87.2 (0.2) 87.3 87.0 0.3

Homeowners insurance premiums written increased ~~9.4%~~11.1% or ~~$282~~$253 million in the ~~third~~first quarter of ~~2022 compared to the third quarter of 2021 and increased 12.9% or $1.01 billion in the first nine months of 2022~~2023 compared to the first ~~nine months~~quarter of ~~2021,~~2022, primarily due to the following factors:

•Higher Allstate brand average premiums from inflation in insured home replacement costs and implemented rate increases, combined with policies in force growth. National General ~~premiums and policies~~policy growth is expected to be negatively impacted in ~~force declined in the third quarter of 2022~~future quarters as we improve underwriting margins to targeted levels through underwriting and rate actions

•Increased new issued applications driven by growth in the independent agency channel ~~in the third quarter and first nine months of 2022 and direct channel in the first nine months of 2022 compared to the same periods of 2021~~

•~~Growth~~Policy growth is being reduced in states and lines of business that are underperforming. ~~At this time, we will~~We are no longer ~~write~~writing new homeowners ~~and condominium~~ business in ~~the state of~~ California ~~although~~and Florida, and we may take further actions, which have and will ~~offer continuing coverage~~continue to ~~existing customers. We expect this action will~~ negatively impact premiums ~~starting in the fourth quarter~~

																					Homeowners premium measures and statistics
		Three months ended September 30,						Nine months ended September 30,							Three months ended March 31,
		2022		2021		Change		2022		2021		Change			2023		2022		Change

New issued applications (thousands)	New issued applications (thousands)													New issued applications (thousands)

Allstate Protection by brand	Allstate Protection by brand													Allstate Protection by brand
Allstate brand	Allstate brand	267		259		3.1	%	765		737		3.8	%	Allstate brand	230		235		(2.1)	%
National General	National General	41		28		46.4	%	108		77		40.3	%	National General	35		27		29.6	%
Total new issued applications	Total new issued applications	308		287		7.3	%	873		814		7.2	%	Total new issued applications	265		262		1.1	%

Allstate Protection by channel	Allstate Protection by channel													Allstate Protection by channel
Exclusive agency channel	Exclusive agency channel	219		225		(2.7)	%	642		646		(0.6)	%	Exclusive agency channel	196		201		(2.5)	%
Direct channel	Direct channel	24		24		—	%	74		62		19.4	%	Direct channel	19		23		(17.4)	%
Independent agency channel	Independent agency channel	65		38		71.1	%	157		106		48.1	%	Independent agency channel	50		38		31.6	%
Total new issued applications	Total new issued applications	308		287		7.3	%	873		814		7.2	%	Total new issued applications	265		262		1.1	%

Allstate brand average premium	Allstate brand average premium	$	1,635	$	1,443	13.3	%	$	1,596	$	1,406	13.5	%	Allstate brand average premium	$	1,706	$	1,554	9.8	%
Allstate brand renewal ratio (%)	Allstate brand renewal ratio (%)	87.4		87.1		0.3		86.9		87.1		(0.2)		Allstate brand renewal ratio (%)	86.3		86.2		0.1

Other personal lines premiums written increased ~~3.8%~~8.7% or ~~$22 million in the third quarter of 2022 compared to the third quarter of 2021 and increased 4.9% or $80~~$44 million in the first ~~nine months~~quarter of ~~2022~~2023 compared to the first ~~nine months~~quarter of ~~2021,~~2022, primarily due to increases in landlords ~~condominiums and personal umbrella premiums~~ for Allstate brand. Starting in the fourth quarter of 2022, we no longer write condominium new business in California and Florida and we may take further actions to reduce certain exposure in Florida, which will continue to negatively impact premiums.

Commercial lines premiums written ~~increased 37.7%~~decreased 22.8% or ~~$78 million in the third quarter of 2022 compared to the third quarter of 2021 and increased~~

~~44.1% or $268~~$67 million in the first ~~nine months~~quarter of ~~2022~~2023 compared to the first ~~nine months~~quarter of ~~2021, primarily~~2022, due to ~~higher miles driven and increased average premium in our shared economy business in part due~~profitability actions taken to ~~higher rates. Commercial insurance is being exited in five states and~~no longer offer coverage to transportation network companies ~~will not be offered~~ unless ~~it utilizes~~the

contracts utilize telematics-based ~~pricing. We expect these actions will negatively impact~~pricing and the Allstate brand exiting traditional commercial insurance in five states, with non-renewals for those states beginning later in 2023.

Other business lines premiums ~~starting~~written increased 4.2% or $5 million in the ~~fourth quarter.~~first quarter of 2023 compared to the first quarter of 2022.

56First Quarter 2023 Form 10-Q ~~www.allstate.com~~55

~~Allstate Protection~~Segment Results Allstate Protection

GAAP operating ratios include loss ratio, expense ratio and combined ratio to analyze our profitability trends. Frequency and severity statistics are used to describe the trends in loss costs.

													Combined ratios by line of business
		Loss ratio		Expense ratio (1)		Combined ratio			Loss ratio		Expense ratio (1)			Combined ratio
		2022	2021	2022	2021	2022	2021		2023	2022	2023	2022		2023	2022
Three months ended September 30,
Three months ended March 31,								Three months ended March 31,
Auto	Auto	95.3	76.9	22.1	25.4	117.4	102.3	Auto	83.4	77.6	21.0	24.5		104.4	102.1

Homeowners	Homeowners	66.9	85.9	24.3	25.1	91.2	111.0	Homeowners	98.5	61.8	20.5	22.1		119.0	83.9
Other personal lines	Other personal lines	76.1	64.9	25.8	27.4	101.9	92.3	Other personal lines	93.8	72.1	22.0	24.5		115.8	96.6
Commercial lines	Commercial lines	120.6	104.4	18.9	22.1	139.5	126.5	Commercial lines	102.2	87.3	23.7	20.5		125.9	107.8
Other business lines								Other business lines	43.1	31.0	33.3	41.6		76.4	72.6

Total								Total	87.5	73.3	21.1	24.0		108.6	97.3
Impact of amortization of purchased intangibles								Impact of amortization of purchased intangibles	—	—	0.5	0.5		0.5	0.5
Impact of restructuring and related charges								Impact of restructuring and related charges	—	—	0.2	0.1		0.2	0.1

Total		88.0	79.0	22.5	25.1	110.5	104.1
Impact of amortization of purchased intangibles		—	—	0.6	0.8	0.6	0.8

Impact of restructuring and related charges		—	—	0.1	0.2	0.1	0.2

Nine months ended September 30,
Auto		86.1	67.7	23.2	24.7	109.3	92.4
Impact of Shelter-in-Place Payback expense		—	—	—	0.1	—	0.1

Homeowners		69.9	75.9	24.3	24.3	94.2	100.2
Other personal lines		74.4	67.0	24.4	25.8	98.8	92.8
Commercial lines		112.0	91.5	19.4	22.2	131.4	113.7

Total		82.2	70.1	23.2	24.3	105.4	94.4
Impact of amortization of purchased intangibles		—	—	0.5	0.5	0.5	0.5
Impact of Shelter-in-Place Payback expense		—	—	—	0.1	—	0.1
Impact of restructuring and related charges		—	—	0.1	0.4	0.1	0.4
Impact of Allstate Special Payment plan bad debt expense		—	—	—	(0.1)	—	(0.1)

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

													Loss ratios by line of business
		Loss ratio		Effect of catastrophe losses (1)		Effect of prior year reserve reestimates		Effect of catastrophe losses included in prior year reserve reestimates			Loss ratio			Effect of catastrophe losses (1)		Effect of prior year reserve reestimates		Effect of catastrophe losses included in prior year reserve reestimates
		2022	2021	2022	2021	2022	2021	2022	2021		2023	2022		2023	2022	2023	2022	2023	2022
Three months ended September 30,
Three months ended March 31,										Three months ended March 31,
Auto	Auto	95.3	76.9	4.4	2.9	8.4	1.0	(0.1)	(0.1)	Auto	83.4	77.6		1.2	0.6	(0.3)	2.0	(0.4)	(0.1)
Homeowners	Homeowners	66.9	85.9	14.1	38.0	2.0	0.7	0.2	0.1	Homeowners	98.5	61.8		51.6	15.4	(0.7)	(0.3)	(0.2)	(0.4)
Other personal lines	Other personal lines	76.1	64.9	5.7	19.6	(0.9)	(12.7)	(0.6)	—	Other personal lines	93.8	72.1		23.8	6.4	0.5	(1.3)	(1.3)	0.8
Commercial lines	Commercial lines	120.6	104.4	3.4	4.9	21.6	12.3	0.4	0.5	Commercial lines	102.2	87.3		3.9	—	10.3	6.7	0.4	(0.4)

Other business lines										Other business lines	43.1	31.0		4.9	1.8	0.8	(2.7)	—	3.5
Total	Total	88.0	79.0	6.8	12.5	6.7	0.4	(0.1)	—	Total	87.5	73.3		14.5	4.4	(0.1)	1.4	(0.4)	(0.1)

Nine months ended September 30,
Auto		86.1	67.7	2.2	1.9	4.6	—	(0.3)	(0.1)
Homeowners		69.9	75.9	21.0	29.8	2.2	(2.1)	1.0	(2.3)
Other personal lines		74.4	67.0	8.4	14.4	(0.9)	(5.4)	0.2	(0.9)
Commercial lines		112.0	91.5	2.1	4.2	20.0	9.8	0.1	0.5

Total		82.2	70.1	7.2	9.4	4.2	(0.6)	0.1	(0.7)

(1)The ten-year average effect of catastrophe losses on the total combined ratio was ~~7.5~~7.3 points in the ~~third~~first quarter of ~~2022.~~2023.


Auto underwriting results
		For the periods ended
	2023	2022				2021
($ in millions, except ratios)	Q1	Q4	Q3	Q2	Q1	Q4	Q3	Q2	Q1
Underwriting income (loss)	(346)	(974)	(1,315)	(578)	(147)	(300)	(159)	394	1,327
Loss ratio	83.4	90.6	95.3	84.9	77.6	78.9	76.9	68.7	57.2
Effect of prior year non-catastrophe reserve reestimates	(0.1)	2.3	8.5	3.8	2.1	2.1	1.1	(0.4)	(0.2)

~~Third Quarter 2022 Form 10-Q~~ 57

~~Segment Results~~ ~~Allstate Protection~~

~~Auto loss ratio~~ ~~increased 18.4 points in both the third quarter and first nine months of 2022 compared to the same periods of 2021, primarily due to:~~

•Higher gross claim frequency in all coverages, as miles driven has rebounded toward pre-pandemic levels. While total frequency increased relative to the prior year quarter, it remains below pre-pandemic levels

•~~Increased severity for all coverages, driven by inflationary pressures in both physical damage and bodily injury claims~~

•~~Unfavorable prior year reserve reestimates, excluding catastrophes, in both bodily injury and physical damage coverages~~

~~The impacts of the Coronavirusaffect frequency~~Frequency and severity ~~statistics including:~~are influenced by:

•Supply chain disruptions and labor shortages

•Value of total losses due to higher used car prices

•Labor and part cost increases

•~~Unemployment levels~~

•Changes in commuting activity

•Driving behavior (e.g., speed, time of day) impacting severity and mix of claim types

~~Property damage gross~~•Organizational and process changes impacting claim ~~frequency~~ opening and closing practices and shifts in timing, if any, can impact comparisons to prior periods

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

Auto loss ratio~~for Allstate brand~~ increased ~~3.5% and 9.1%~~5.8 points in the ~~third~~first quarter ~~and first nine months of 2022, respectively,~~ compared to the same ~~periods~~period of ~~2021 due to factors including:~~

•~~Increases in miles driven compared to 2021 which was impacted by the pandemic~~

•~~While gross claim frequency has rebounded from the low in 2020, it is 13.8% and 15.0% below pre-pandemic levels of 2019 for the third quarter and first nine months of 2022, respectively~~

~~Collision gross claim frequency~~ for Allstate brand increased 0.1% and 6.2% in the third quarter and first nine months of 2022, respectively, compared to the same periods of 2021. While gross claim frequency has rebounded from the low in 2020, it is 9.3% and 10.0% below pre-pandemic levels of 2019 for the third quarter and first nine months of 2022, respectively.

~~Property damage estimated~~2022. Estimated report year ~~2022~~2023 incurred claim severity for Allstate brand, excluding Esurance and Canada, increased ~~approximately 17% compared~~9% to ~~report year 2021 and also increased approximately 27%~~11% for all major coverages compared to the ~~2021 recorded severity as of September 30, 2021.~~

~~Collision estimated report~~prior year ~~2022 incurred claim severity~~ for Allstate brand, excluding Esurance and Canada, increased approximately 17% compared to report year 2021 and also increased approximately 20% compared to the 2021 recorded severity as of September 30, 2021.

~~The increase in estimated report year 2022 incurred claim severity for both coverages is geographically widespread and is~~ due to ~~rising inflationary factors and supply chain shortages impacting both repairable vehicles and total losses,~~

~~including~~ higher ~~used car values, replacement~~ part costs and labor rates ~~and length~~for repairable vehicles, a higher mix of ~~time to claim resolution.~~

~~Bodily injury estimated report year 2022 incurred claim severity~~ for Allstate brand, excluding Esurance and Canada, increased approximately 12% compared to report year 2021 and also increased approximately 16% compared to the 2021 recorded severity as of September 30, 2021. Thetotal losses, an increase ~~is due to recent data and updated assumptions related to more severe accidents, increased~~in claims with attorney representation ~~litigation costs,~~and higher medical consumption and inflation. Gross claim frequency increased in all coverages, but remains below pre-pandemic levels.

Homeowners loss ratio ~~decreased 19.0 points and 6.0~~increased 36.7 points in the ~~third~~first quarter ~~and first nine months~~ of ~~2022, respectively,~~2023 compared to the same ~~periods~~period of ~~2021,~~2022, primarily due to ~~lower~~higher catastrophe losses and ~~increased premiums earned,~~severity, partially offset by ~~higher severity.~~increased premiums earned.

56www.allstate.com

Allstate ProtectionSegment Results


Allstate brand homeowners frequency and severity statistics (excluding catastrophe losses)
(% change year-over-year)
Three months ended ~~September 30, 2022~~March 31, 2023
Gross claim frequency	~~(2.9)~~1.3	%
Paid claim severity	~~18.8~~10.9

~~Nine months ended September 30, 2022~~
~~Gross claim frequency~~	~~(2.8)~~		%
~~Paid claim severity~~	~~22.1~~

Gross claim frequency ~~decreased~~increased in the ~~third~~first quarter ~~and first nine months of 2022~~ compared to the same ~~periods~~period of ~~2021~~2022 primarily due to ~~a decline in the~~ wind/hail ~~and water~~ perils. Paid claim severity increased in the ~~third~~first quarter ~~and first nine months~~ of ~~2022~~2023 compared to the same ~~periods~~period of ~~2021~~2022 due to inflationary loss cost pressure driven by increases in labor and materials ~~costs and time to repair.~~costs. Homeowner paid claim severity can be impacted by both the mix of perils and the magnitude of specific losses paid during the quarter.

Other personal lines loss ratio increased ~~11.2 and 7.4~~21.7 points in the ~~third~~first quarter ~~and first nine months~~ of ~~2022, respectively,~~2023, compared to the same ~~periods~~period of ~~2021,~~2022, primarily due to higher catastrophes losses, ~~excluding catastrophes,~~ partially offset by ~~lower catastrophe losses and~~ increased premiums earned.

Commercial lines loss ratio increased ~~16.2 and 20.5~~14.9 points in the ~~third~~first quarter ~~and first nine months~~ of ~~2022, respectively,~~2023 compared to the same ~~periods~~period of ~~2021,~~2022, primarily due to premiums earned decreasing as a result of profitability actions and continued elevated frequency and severity.

Other business lines loss ratio increased 12.1 points in the first quarter of 2023 compared to the same period of 2022, primarily due to higher ~~unfavorable prior year reserve reestimates, excluding catastrophes, primarily in commercial auto bodily injury coverage,~~catastrophe and ~~higher auto severity, partially offset by increased premiums earned.~~non-catastrophe losses.

58~~www.allstate.com~~

~~Allstate ProtectionSegment Results~~

Catastrophe losses ~~decreased 39.9% or $506 million in the third quarter of 2022 compared~~increased $1.23 billion to ~~the third quarter of 2021. Catastrophe losses decreased 17.0% or $478 million~~$1.69 billion in the first ~~nine months~~quarter of ~~2022~~2023 compared to the first ~~nine months~~quarter of 2021. Hurricane Ian estimated gross catastrophe losses, excluding National Flood Insurance Program (“NFIP”) claim expenses, totaled $671 million, pre-tax, which will be reduced by $305 million in anticipated reinsurance recoveries for a net estimated loss of $366 million. Approximately 75% of Hurricane Ian net estimated losses relate to auto coverages. Auto policyholders generally have coverage for physical damage due to flood if they have purchased optional auto comprehensive coverage. Homeowners policies specifically exclude coverage for losses caused by flood.

~~Reinsurance recoveries in 2021~~2022, primarily related to ~~the Nationwide Aggregate Reinsurance Program for aggregate catastrophe losses occurring between April 1, 2020 and December 31, 2020, which primarily impacted homeowners prior year reserve reestimates.~~five wind events in March.

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

within a certain amount of time following the event. Catastrophes are caused by various natural events including high winds, winter storms and freezes, tornadoes, hailstorms, wildfires, tropical storms, tsunamis, hurricanes, earthquakes and volcanoes.

We are also exposed to man-made catastrophic events, such as certain types of terrorism, civil unrest, wildfires or industrial accidents. The nature and level of catastrophes in any period cannot be reliably predicted.

Loss estimates are generally based on claim adjuster inspections and the application of historical loss development factors. Our loss estimates are calculated in accordance with the coverage provided by our policies. The establishment of appropriate reserves, including reserves for catastrophe losses, is an inherently uncertain and complex process. Reserving for hurricane losses is complicated by the inability of insureds to promptly report losses, limitations placed on claims adjusting staff affecting their ability to inspect losses, determining whether losses are covered by our homeowners policy (generally for damage caused by wind or wind driven rain) or specifically excluded coverage caused by flood, exposure to mold damage, and the effects of numerous other considerations, including the timing of a catastrophe in relation to other events, such as at or near the end of a financial reporting period, which can affect the availability of information needed to estimate reserves for that reporting period. In these situations, we may need to adapt our practices to accommodate these circumstances in order to determine a best estimate of our losses from a catastrophe.

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

Catastrophe losses by the type of event
Three months ended September 30, Nine months ended September 30,
($ in millions) Number of events 2022 Number of events
2021(2)
Number of events 2022 Number of events
2021(2)
Hurricanes/Tropical storms (1)
1 $ 378 5 $ 747 1 $ 378 6 $ 754
Tornadoes — — 1 9 3 148 2 26
Wind/Hail 32 446 35 389 78 1,712 68 1,650
Wildfires 4 19 4 49 8 50 4 48
Freeze/other events — — — — 1 16 1 605
Prior year reserve reestimates (4) 38 44 30
Prior year aggregate reinsurance recoveries (5) (38) (15) (237)
Current year aggregate reinsurance recoveries — (11) — (65)
Prior quarter reserve reestimates (71) 86 — —
Total catastrophe losses 37 $ 763 45 $ 1,269 91 $ 2,333 81 $ 2,811

~~(1)2022 includes $12 million of claims expenses related to the National Flood Insurance Program.~~

~~(2)~~Includes $173 million and $256 million of reinstatement premiums for the three and nine months ended September 30, 2021, related to the Nationwide Catastrophe Reinsurance Program, primarily due to Hurricane Ida.


Catastrophe losses by the type of event
	Three months ended March 31,
($ in millions)	Number of events	2023		Number of events	2022

Tornadoes	2	$	133	1	$	91
Wind/Hail	22	1,498		14	365

Freeze/other events	4	102		1	19
Prior year reserve reestimates		(42)			(13)



Total catastrophe losses	28	$	1,691	16	$	462

~~Third~~First Quarter ~~2022~~2023 Form 10-Q 5957

Segment Results Allstate Protection

Catastrophe reinsurance

Our current catastrophe reinsurance program supports the Company’s risk tolerance framework which utilizes a modeled 1-in-100 annual aggregate limit for catastrophe losses from hurricanes, earthquakes and wildfires of $2.5 billion, net of reinsurance.

We have completed the placement of our 2023-2024 Nationwide Excess Catastrophe Reinsurance Program (the “Nationwide Program”), the National General Reciprocal Excess Catastrophe Program, the Kentucky Earthquake Excess Catastrophe Reinsurance Contract, and the Canada Catastrophe Excess Reinsurance Contract. The Florida Excess Catastrophe Reinsurance Program and the National General Lender Services Program will be completed in the second quarter of 2023.

Similar to our 2022 program, our 2023 program includes coverage for losses to personal lines property, personal lines automobile, commercial lines property or commercial lines automobile arising out of multiple perils, in addition to hurricanes and earthquakes.

The Nationwide Program provides coverage up to $6.92 billion of losses less a $500 million retention, and is subject to the percentage of reinsurance placed in each of its agreements. Property business in the state of Florida is excluded from this program. Separate reinsurance agreements address the distinct needs of separately capitalized legal entities. The Nationwide Program includes reinsurance agreements with both the traditional and insurance-linked securities (“ILS”) markets as described below:

•Core traditional market multi-year and per occurrence agreements provide limits totaling $4.56 billion for catastrophe losses arising out of multiple perils and are comprised of the following:

–$3.94 billion of placed limits exhausting at $4.75 billion, with a 5% co-participation and one annual reinstatement:

–31.6% of the coverage is provided in four multi-year contracts attaching at $500 million.

–31.7% of the coverage is provided in four multi-year contracts with the first $250 million in excess of $500 million retained by Allstate.

–31.7% of the coverage is provided in one single-year contract attaching at $250 million in excess of a $750 million retention and four multi-year contracts attaching at $1.00 billion.

–One single-year contract providing $500 million of placed limits in excess of a $4.25 billion retention, 95% placed.

–$105 million of placed limits in excess of a $4.75 billion retention and $131 million of placed limits in excess of a $5.54 billion retention, both with a 5% co-participation and

one reinstatement of limits over each contract’s eight-year term.

–$375 million of placed limits in single-year placements filling capacity around the multi-year and ILS placements:

–One contract providing $95 million of placed limits in excess of a $4.75 billion retention, with two limits available in any one contract year.

–One contract providing $260 million of placed limits in excess of a $4.75 billion retention, with no annual reinstatement.

–One contract providing $20 million of placed limits in excess of a $6.82 billion retention, with no annual reinstatement.

•ILS placements provide $1.78 billion of placed limits, with no reinstatement of limits, and are comprised of the following:

–Six contracts providing occurrence coverage of $1.05 billion of placed limits, reinsuring losses in all states except Florida caused by named storms, earthquakes and fire following earthquakes, severe weather, wildfires, and other naturally occurring or man-made events determined to be a catastrophe by the Company.

–Three contracts providing occurrence and aggregate coverage of $405 million of placed limits, also provide that for each annual period beginning April 1, Allstate declared catastrophes to personal lines property and automobile business can be aggregated to erode the aggregate retention and qualify for coverage under the aggregate limits. Recoveries are limited to the ultimate net loss from the reinsured event.

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

National General Reciprocal Excess Catastrophe Reinsurance Contracts are placed in the traditional market and provide $600 million of coverage, subject to a $20 million retention, with one reinstatement of limits.

Kentucky Earthquake Excess Catastrophe Reinsurance Contract is placed in the traditional market and provides two limits of $28 million, subject to a $2 million retention.

Canada Catastrophe Excess of Loss Reinsurance Contract is placed in the traditional market and provides CAD 275 million of coverage, subject to a CAD 75 million retention, with one reinstatement of limits.

The total cost of our property catastrophe reinsurance programs, excluding reinstatement premiums, during the ~~third~~first quarter ~~and first nine months~~ of ~~2022~~2023 was ~~$211~~$219 million, ~~and $528 million, respectively,~~ compared to ~~$109 million and $345~~$144 million in the ~~third~~first quarter ~~and first nine months~~ of ~~2021, respectively.~~2022. Catastrophe placement premiums reduce net written and earned premium with approximately ~~73%~~74% related to homeowners.

58www.allstate.com

Allstate ProtectionSegment Results

Prior year reserve reestimates ~~Unfavorable~~Favorable reserve reestimates were ~~$746~~$17 million ~~and $1.35 billion~~ in the ~~third~~first quarter ~~and first nine months~~ of ~~2022, respectively,~~2023 primarily due to ~~strengthening of~~favorable catastrophe reserve reestimates in personal auto lines and favorable reserve reestimates, excluding catastrophes losses in homeowners lines, partially offset by unfavorable reserves, excluding catastrophes, in personal auto, primarily from bodily injury and physical damage coverages. Increases in injury coverages reflect recent data and updated assumptions related to severity with third-party bodily injury claims, increased claims withfor commercial

attorney representation, litigation costs and higher medical inflation. Increases in physical damage reflect the ongoing inflationary factors and supply chain shortages impacting used vehicle and parts prices, labor rates and length of claim resolution. Delays in the receipt of third-party carrier claims also contributedinsurance primarily related to ~~the adverse development of claims reported in prior years.~~

Unfavorable reserve reestimates for homeowners were driven by losses, excluding catastrophes. Unfavorable reserve reestimates for commercial auto during the third quarter were primarily from bodily injury coverage.business that is being exited.

For a more detailed discussion on reinsurance and reserve reestimates, see Note 98 of the condensed consolidated financial statements.

																			Prior year reserve reestimates
		Three months ended September 30,						Nine months ended September 30,							Three months ended March 31,
		Reserve reestimates (1)				Effect on combined ratio (2)		Reserve reestimates (1)				Effect on combined ratio (2)			Prior year reserve reestimates (1)					Effect on combined ratio (2)
($ in millions, except ratios)	($ in millions, except ratios)	2022		2021		2022	2021	2022		2021		2022	2021	($ in millions, except ratios)	2023		2022			2023	2022
Auto	Auto	$	632	$	72	5.6	0.7	$	1,011	$	3	3.1	—	Auto	$	(25)	$	142		(0.2)	1.4
Homeowners	Homeowners	55		17		0.5	0.1	177		(156)		0.6	(0.5)	Homeowners	(20)		(7)			(0.1)	(0.1)
Other personal lines	Other personal lines	(5)		(66)		—	(0.6)	(14)		(83)		—	(0.3)	Other personal lines	3		(7)			—	(0.1)
Commercial lines	Commercial lines	64		25		0.6	0.2	175		58		0.5	0.2	Commercial lines	24		19			0.2	0.2

Other business lines														Other business lines	1		(3)			—	—
Total Allstate Protection	Total Allstate Protection	$	746	$	48	6.7	0.4	$	1,349	$	(178)	4.2	(0.6)	Total Allstate Protection	$	(17)	$	144		(0.1)	1.4

Allstate brand	Allstate brand	$	702	$	40	6.3	0.4	$	1,292	$	(176)	4.0	(0.6)	Allstate brand	$	(54)	$	148		(0.4)	1.4
National General	National General	44		8		0.4	—	57		(2)		0.2	—	National General	37		(4)			0.3	—
Total Allstate Protection	Total Allstate Protection	$	746	$	48	6.7	0.4	$	1,349	$	(178)	4.2	(0.6)	Total Allstate Protection	$	(17)	$	144		(0.1)	1.4

(1)Favorable reserve reestimates are shown in parentheses.

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

60~~www.allstate.com~~

~~Allstate ProtectionSegment Results~~

Expense ratio decreased ~~2.6 and 1.1~~2.9 points in the ~~third~~first quarter ~~and first nine months~~ of ~~2022, respectively,~~2023 compared to the ~~third~~first quarter ~~and first nine months~~ of ~~2021,~~2022, primarily due to lower advertising costs and ~~the impact of amortization of DAC. The expense ratio for the first nine months of 2022 was partially offset by~~ higher ~~operating costs, primarily due~~earned premium growth relative to ~~employee-related~~fixed costs.


Impact of specific costs and expenses on the expense ratio	Impact of specific costs and expenses on the expense ratio													Impact of specific costs and expenses on the expense ratio
		Three months ended September 30,						Nine months ended September 30,							Three months ended March 31,
($ in millions, except ratios)	($ in millions, except ratios)	2022		2021		Change		2022		2021		Change		($ in millions, except ratios)	2023		2022		Change
Amortization of DAC	Amortization of DAC	$	1,414	$	1,346	$	68	$	4,117	$	3,968	$	149	Amortization of DAC	$	1,452	$	1,348	$	104
Advertising expense	Advertising expense	191		325		(134)		787		949		(162)		Advertising expense	158		343		(185)
Amortization of purchased intangibles	Amortization of purchased intangibles	61		75		(14)		178		165		13		Amortization of purchased intangibles	57		58		(1)
Other costs and expenses, net of other revenue	Other costs and expenses, net of other revenue	833		786		47		2,429		2,111		318		Other costs and expenses, net of other revenue	767		754		13
Restructuring and related charges	Restructuring and related charges	14		16		(2)		24		113		(89)		Restructuring and related charges	21		12		9
Shelter-in-Place Payback expense		—		—		—		—		29		(29)
Allstate Special Payment plan bad debt expense		—		—		—		—		(19)		19
Total underwriting expenses	Total underwriting expenses	$	2,513	$	2,548	$	(35)	$	7,535	$	7,316	$	219	Total underwriting expenses	$	2,455	$	2,515	$	(60)

Premiums earned	Premiums earned	$	11,157	$	10,159	$	998	$	32,529	$	30,064	$	2,465	Premiums earned	$	11,635	$	10,498	$	1,137

Expense ratio	Expense ratio													Expense ratio
Amortization of DAC	Amortization of DAC	12.7		13.2		(0.5)		12.7		13.2		(0.5)		Amortization of DAC	12.5		12.9		(0.4)
Advertising expense	Advertising expense	1.7		3.2		(1.5)		2.4		3.2		(0.8)		Advertising expense	1.3		3.3		(2.0)
Other costs and expenses	Other costs and expenses	7.4		7.7		(0.3)		7.5		7.0		0.5		Other costs and expenses	6.6		7.2		(0.6)
Subtotal	Subtotal	21.8		24.1		(2.3)		22.6		23.4		(0.8)		Subtotal	20.4		23.4		(3.0)
Amortization of purchased intangibles	Amortization of purchased intangibles	0.6		0.8		(0.2)		0.5		0.5		—		Amortization of purchased intangibles	0.5		0.5		—
Restructuring and related charges	Restructuring and related charges	0.1		0.2		(0.1)		0.1		0.4		(0.3)		Restructuring and related charges	0.2		0.1		0.1
Shelter-in-Place Payback expense		—		—		—		—		0.1		(0.1)
Allstate Special Payment plan bad debt expense		—		—		—		—		(0.1)		0.1
Total expense ratio	Total expense ratio	22.5		25.1		(2.6)		23.2		24.3		(1.1)		Total expense ratio	21.1		24.0		(2.9)

~~Third~~First Quarter ~~2022~~2023 Form 10-Q 6159

Segment Results Run-off Property-Liability

Run-off Property-Liability Segment


Underwriting results	Underwriting results									Underwriting results
($ in millions)	($ in millions)	Three months ended September 30,				Nine months ended September 30,				($ in millions)	Three months ended March 31,
		2022		2021		2022		2021				2023		2022

Claims and claims expense	Claims and claims expense									Claims and claims expense		$	(2)	$	(1)
Asbestos claims		$	(34)	$	(64)	$	(34)	$	(64)
Environmental claims		(56)		(40)		(56)		(40)
Other run-off lines		(30)		(9)		(34)		(11)
Total claims and claims expense		(120)		(113)		(124)		(115)

Operating costs and expenses	Operating costs and expenses	(2)		—		(3)		(3)		Operating costs and expenses		(1)		(1)
Underwriting loss	Underwriting loss	$	(122)	$	(113)	$	(127)	$	(118)	Underwriting loss		$	(3)	$	(2)


Reserves for asbestos, environmental and other run-off claims before and after the effects of reinsurance
($ in millions)	March 31, 2023		December 31, 2022
Asbestos claims
Gross reserves	$	1,170	$	1,190
Reinsurance	(374)		(379)
Net reserves	796		811
Environmental claims
Gross reserves	325		328
Reinsurance	(61)		(61)
Net reserves	264		267
Other run-off claims
Gross reserves	432		437
Reinsurance	(64)		(64)
Net reserves	368		373
Total
Gross reserves	1,927		1,955
Reinsurance	(499)		(504)
Net reserves	$	1,428	$	1,451


Reserves by type of exposure before and after the effects of reinsurance
($ in millions)	March 31, 2023		December 31, 2022
Direct excess commercial insurance
Gross reserves	$	1,083	$	1,106
Reinsurance	(379)		(385)
Net reserves	704		721
Assumed reinsurance coverage
Gross reserves	613		618
Reinsurance	(56)		(56)
Net reserves	557		562
Direct primary commercial insurance
Gross reserves	147		148
Reinsurance	(63)		(62)
Net reserves	84		86
Other run-off business
Gross reserves	1		1
Reinsurance	—		—
Net reserves	1		1
Unallocated loss adjustment expenses
Gross reserves	83		82
Reinsurance	(1)		(1)
Net reserves	82		81
Total
Gross reserves	1,927		1,955
Reinsurance	(499)		(504)
Net reserves	$	1,428	$	1,451

~~Annual reserve review~~ In the third quarter of 2022 and 2021, we performed our annual reserve review using established industry and actuarial best practices. The annual review resulted in unfavorable reserve reestimates totaling $118 million and $111 million in 2022 and 2021, respectively. The reserve reestimates are included as part of claims and claims expense.

~~The reserve reestimates in 2022 primarily related to new reported information and defense costs for asbestos and higher than expected reported losses for environmental and other run-off exposures.~~

~~The reserve reestimates in 2021 primarily related to new reported information for asbestos and~~

~~environmental and higher than expected reported losses for environmental and other run-off exposures.~~

We believe that our reserves are appropriately established based on available facts, technology, laws, regulations, and assessments of other pertinent factors and characteristics of exposure (e.g., claim activity, potential liability, jurisdiction, products versus non-products exposure) presented by individual policyholders, assuming no change in the legal, legislative or economic environment. However, as we progress with the resolution of disputed claims in the courts and arbitrations and with negotiations and settlements, our reported losses may be more variable.

Reserves for asbestos, environmental and other run-off claims before and after the effects of reinsurance
($ in millions) September 30, 2022 December 31, 2021
Asbestos claims
Gross reserves $ 1,231 $ 1,210
Reinsurance (394) (382)
Net reserves 837 828
Environmental claims
Gross reserves 342 273
Reinsurance (69) (47)
Net reserves 273 226
Other run-off claims
Gross reserves 442 433
Reinsurance (65) (66)
Net reserves 377 367
Total
Gross reserves
2,015 1,916
Reinsurance (528) (495)
Net reserves $ 1,487 $ 1,421

6260 www.allstate.com

Run-off Property-Liability Segment Results

Reserves by type of exposure before and after the effects of reinsurance
($ in millions) September 30, 2022 December 31, 2021
Direct excess commercial insurance
Gross reserves
$ 1,152 $ 1,050
Reinsurance (407) (363)
Net reserves 745 687
Assumed reinsurance coverage
Gross reserves
628 617
Reinsurance (58) (56)
Net reserves 570 561
Direct primary commercial insurance
Gross reserves 151 168
Reinsurance (62) (75)
Net reserves 89 93
Other run-off business
Gross reserves 1 1
Reinsurance — —
Net reserves 1 1
Unallocated loss adjustment expenses
Gross reserves 83 80
Reinsurance (1) (1)
Net reserves 82 79
Total
Gross reserves 2,015 1,916
Reinsurance (528) (495)
Net reserves $ 1,487 $ 1,421


Percentage of gross and ceded reserves by case and IBNR	Percentage of gross and ceded reserves by case and IBNR									Percentage of gross and ceded reserves by case and IBNR
		September 30, 2022				December 31, 2021					March 31, 2023				December 31, 2022
		Case		IBNR		Case		IBNR			Case		IBNR		Case		IBNR
Direct excess commercial insurance	Direct excess commercial insurance									Direct excess commercial insurance
Gross reserves (1)	Gross reserves (1)	60	%	40	%	61	%	39	%	Gross reserves (1)	57	%	43	%	58	%	42	%
Ceded (2)	Ceded (2)	66		34		67		33		Ceded (2)	62		38		63		37
Assumed reinsurance coverage	Assumed reinsurance coverage									Assumed reinsurance coverage
Gross reserves	Gross reserves	32		68		33		67		Gross reserves	30		70		31		69
Ceded	Ceded	34		66		38		62		Ceded	32		68		33		67
Direct primary commercial insurance	Direct primary commercial insurance									Direct primary commercial insurance
Gross reserves	Gross reserves	58		42		53		47		Gross reserves	58		42		57		43
Ceded	Ceded	81		19		71		29		Ceded	81		19		81		19

(1)Approximately 65% and 64% of gross case reserves as of ~~September 30,~~March 31, 2023 and December 31, 2022, respectively, are subject to settlement agreements.

(2)Approximately ~~68%~~69% and 70% of ceded case reserves as of ~~September 30,~~March 31, 2023 and December 31, 2022, respectively, are subject to settlement agreements.

~~Third Quarter 2022 Form 10-Q~~ 63

~~Segment ResultsRun-off Property-Liability~~


Gross payments from case reserves by type of exposure	Gross payments from case reserves by type of exposure								Gross payments from case reserves by type of exposure
($ in millions)	($ in millions)	Three months ended September 30,				Nine months ended September 30,			($ in millions)	Three months ended March 31,
		2022		2021		2022	2021				2023		2022
Direct excess commercial insurance	Direct excess commercial insurance								Direct excess commercial insurance
Gross (1)	Gross (1)	$	9	$	12	37	$	46	Gross (1)		$	23	$	18
Ceded (2)	Ceded (2)	(3)		(6)		(13)	(21)		Ceded (2)		(5)		(7)
Assumed reinsurance coverage	Assumed reinsurance coverage								Assumed reinsurance coverage
Gross	Gross	14		11		25	33		Gross		5		6
Ceded	Ceded	—		(1)		(1)	(4)		Ceded		(1)		(1)
Direct primary commercial insurance	Direct primary commercial insurance								Direct primary commercial insurance
Gross	Gross	1		(1)		4	5		Gross		1		1
Ceded	Ceded	—		2		(1)	(1)		Ceded		—		—

(1) In the ~~third~~first quarter of 2023 and ~~first nine months of~~ 2022 ~~75%~~, 87% and ~~82%~~88% of payments, respectively, related to settlement agreements.

(2) In the ~~third~~first quarter of 2023 and ~~first nine months of~~ 2022 ~~88%~~, 92% and ~~90%~~93% of payments, respectively, related to settlement agreements.

Total net reserves as of ~~September 30, 2022,~~March 31, 2023, included ~~$769~~$762 million or ~~52%~~53% of estimated IBNR reserves compared to ~~$733~~$765 million or ~~52%~~53% of estimated IBNR reserves as of December 31, ~~2021.~~2022.

Total gross payments were ~~$25 million and $66~~$29 million for the ~~third~~first quarter ~~and~~of 2023 compared to $25 million for the first ~~nine months~~quarter of ~~2022, respectively,~~2022. Payments primarily related to ~~asbestos claims, mainly from~~ settlement agreements reached with

several insureds on large claims, mainly asbestos related losses, where the scope of coverages has been agreed upon. The claims associated with these settlement agreements are expected to be substantially paid out over the next several years as qualified claims are submitted by these insureds. Reinsurance collections were ~~$6 million and $27~~$15 million for the ~~third~~first quarter ~~and~~of 2023 compared to $10 million for the first ~~nine months~~quarter of ~~2022, respectively.~~2022.

64First Quarter 2023 Form 10-Q ~~www.allstate.com~~61

~~Protection Services~~Segment Results ~~Segment Results~~Protection Services

Protection Services Segment ProtectionServicesLogos - Updated 1.6.23.jpg

															Summarized financial information
($ in millions)	($ in millions)	Three months ended September 30,				Nine months ended September 30,				($ in millions)	Three months ended March 31,
		2022		2021		2022		2021			2023		2022
Premiums written	Premiums written	$	657	$	651	$	1,957	$	1,926	Premiums written	$	619	$	630

Revenues	Revenues									Revenues
Premiums	Premiums	$	504	$	456	$	1,475	$	1,302	Premiums	$	538	$	483
Other revenue	Other revenue	84		85		269		263		Other revenue	84		94
Intersegment insurance premiums and service fees (1)	Intersegment insurance premiums and service fees (1)	39		46		118		133		Intersegment insurance premiums and service fees (1)	33		41
Net investment income	Net investment income	13		10		34		32		Net investment income	16		9

Costs and expenses	Costs and expenses									Costs and expenses
Claims and claims expense	Claims and claims expense	(141)		(122)		(392)		(334)		Claims and claims expense	(153)		(123)
Amortization of DAC	Amortization of DAC	(236)		(206)		(685)		(581)		Amortization of DAC	(251)		(221)
Operating costs and expenses	Operating costs and expenses	(214)		(209)		(645)		(610)		Operating costs and expenses	(221)		(218)
Restructuring and related charges	Restructuring and related charges	(1)		1		(1)		(12)		Restructuring and related charges	(1)		—

Income tax expense on operations	Income tax expense on operations	(13)		(16)		(41)		(43)		Income tax expense on operations	(11)		(12)

Less: noncontrolling interest	Less: noncontrolling interest	—		—		1		—		Less: noncontrolling interest	—		—

Adjusted net income	Adjusted net income	$	35	$	45	$	131	$	150	Adjusted net income	$	34	$	53

Allstate Protection Plans	Allstate Protection Plans	$	29	$	32	$	108	$	119	Allstate Protection Plans	$	28	$	43
Allstate Dealer Services	Allstate Dealer Services	10		7		27		25		Allstate Dealer Services	7		9
Allstate Roadside	Allstate Roadside	1		1		4		7		Allstate Roadside	4		2
Arity	Arity	(2)		1		(4)		4		Arity	(4)		(1)
Allstate Identity Protection	Allstate Identity Protection	(3)		4		(4)		(5)		Allstate Identity Protection	(1)		—
Adjusted net income	Adjusted net income	$	35	$	45	$	131	$	150	Adjusted net income	$	34	$	53

Allstate Protection Plans	Allstate Protection Plans					134,700		141,809		Allstate Protection Plans	136,591		139,992
Allstate Dealer Services	Allstate Dealer Services					3,888		3,980		Allstate Dealer Services	3,839		3,924
Allstate Roadside	Allstate Roadside					523		533		Allstate Roadside	536		518
Allstate Identity Protection	Allstate Identity Protection					2,968		3,197		Allstate Identity Protection	3,206		2,949
Policies in force as of September 30 (in thousands)						142,079		149,519
Policies in force as of March 31 (in thousands)										Policies in force as of March 31 (in thousands)	144,172		147,383

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

Adjusted net income decreased 22.2% or $10 million in the third quarter of 2022 compared to the third quarter of 2021, primarily due to a prior year restructuring benefit and higher current year technology expenses at Allstate Identity Protection. Adjusted net income decreased 12.7%35.8% or $19 million in the first ~~nine months~~quarter of ~~2022~~2023 compared to the ~~same period~~first quarter of ~~2021, primarily driven~~2022, due to Allstate Protection Plans higher appliance and furniture claim severity, a shift in business mix and lower third-party advertising sales by ~~investments~~Arity. The decrease was partially offset by growth in ~~growth~~new business at Allstate Protection ~~Plans and lower revenue at Arity.~~Plans.

Premiums written ~~increased 0.9%~~decreased 1.7% or ~~$6 million in the third quarter of 2022 and increased 1.6% or $31~~$11 million in the first ~~nine months~~quarter of ~~2022~~2023 compared to the ~~same periods~~first quarter of ~~2021,~~2022, primarily due to ~~international~~a decrease in sales at Allstate Dealer Services and lower rescue volumes at Allstate Roadside, partially offset by growth at Allstate Protection ~~Plans, partially offset by a decrease in North American sales at both Allstate Protection Plans and Allstate Dealer Services.~~Plans.

PIF decreased ~~5.0%~~2.2% or 73 million as of ~~September 30, 2022~~March 31, 2023 compared to ~~September 30, 2021 primarily related~~March 31, 2022 due to a decline in Allstate Protection Plans.

Other revenue decreased ~~1.2%~~10.6% or $1$10 million in the ~~third~~first quarter of ~~2022~~2023 compared to the ~~third~~first quarter

of ~~2021,~~2022, primarily due to lower ~~Arity revenue. Other~~ revenue ~~increased 2.3% or $6 million~~from reductions in ~~the first nine months of 2022 compared to the same period of 2021, reflecting growth at Allstate Identity Protection partially offset by lower revenue~~customer advertising at Arity.

Intersegment premiums and service fees decreased ~~15.2%~~19.5% or ~~$7 million in the third quarter of 2022 and decreased 11.3% or $15~~$8 million in the first ~~nine months~~quarter of ~~2022~~2023 compared to the ~~same periods~~first quarter of ~~2021,~~2022, driven by decreased ~~Arity~~ device sales for the Drivewise® offering at Arity due to a shift from ~~Drivewise®~~ devices to a mobile phone program.

~~Third Quarter 2022 Form 10-Q~~ 65

~~Segment ResultsProtection Services~~

Claims and claims expense increased ~~15.6%~~24.4% or ~~$19 million in the third quarter 2022 compared to the third quarter of 2021, primarily due to higher claim severity at Allstate Protection Plans. Claims and claims expense increased 17.4% or $58~~$30 million in the first ~~nine months of 2022~~quarter 2023 compared to the ~~same period~~first quarter of ~~2021,~~2022, primarily due to higher levels of claims at Allstate Protection Plans driven by growth in the business and higher severity at both Allstate Protection Plans and Allstate ~~Roadside.~~Dealer Services.

62www.allstate.com

Protection ServicesSegment Results

Amortization of DAC increased ~~14.6%~~13.6% or $30 million in the ~~third~~first quarter of 2023 compared to the first quarter of 2022, ~~and increased 17.9% or $104 million in the first nine months of 2022 compared to the same periods of 2021,~~ driven by business growth at both Allstate Protection Plans and Allstate Dealer ~~Services business growth.~~Services.

Operating costs and expenses increased ~~2.4%~~1.4% or ~~$5 million in the third quarter of 2022 and increased 5.7% or $35~~$3 million in the first ~~nine months~~quarter of ~~2022~~2023 compared to the ~~same periods~~first quarter of ~~2021,~~2022, primarily due to investments in technology ~~and geographic and product expansion~~ at Allstate Protection Plans and Allstate Identity ~~Protection, partially offset by lower expenses at Arity.~~Protection.

Restructuring and related charges increased $2$1 million in the third quarter of 2022 compared to the same period of 2021. Restructuring and related charges decreased $11 million in the first nine months of 2022 compared to the same period of 2021, primarily due to a facility closure at Allstate Identity Protection in the first quarter of ~~2021 and accelerated lease costs at Allstate Protections Plans in~~2023 compared to the ~~third~~first quarter of ~~2021.~~2022 from real estate costs related to facilities being vacated.

66First Quarter 2023 Form 10-Q ~~www.allstate.com~~63

Segment Results Allstate Health and Benefits~~Segment Results~~

Allstate Health and Benefits Segment

Summarized financial information
Three months ended September 30, Nine months ended September 30,
($ in millions) 2022 2021 2022 2021
Revenues
Accident and health insurance premiums and contract charges $ 463 $ 460 $ 1,398 $ 1,362
Other revenue 90 85 277 248
Net investment income 17 18 50 56
Costs and expenses
Accident, health and other policy benefits (263) (277) (801) (771)
Amortization of DAC (32) (30) (111) (101)
Operating costs and expenses (207) (206) (594) (582)
Restructuring and related charges 1 (8) (1) (9)
Income tax expense on operations (15) (9) (46) (43)
Adjusted net income $ 54 $ 33 $ 172 $ 160
Benefit ratio (1)
55.1 58.5 55.5 54.8
Employer voluntary benefits (2)
3,799 3,835
Group health (3)
405 126
Individual health (4)
116 417
Policies in force as of September 30 (in thousands) 4,320 4,378
Effective January 1, 2023, we adopted the FASB guidance revising the accounting for certain long-duration insurance contracts in the Allstate Health and Benefits segment using the modified retrospective approach at the transition date of January 1, 2021. See Note 1 of the condensed consolidated financial statements for further information regarding the impact of the adopted accounting standard on our condensed consolidated financial statements.


Summarized financial information
	Three months ended March 31,
($ in millions)	2023		2022
Revenues
Accident and health insurance premiums and contract charges	$	463	$	468
Other revenue	101		95
Net investment income	19		17

Costs and expenses
Accident, health and other policy benefits	(265)		(268)
Amortization of DAC	(41)		(39)
Operating costs and expenses	(203)		(202)
Restructuring and related charges	(4)		—

Income tax expense on operations	(14)		(14)
Adjusted net income	$	56	$	57

Benefit ratio (1)	55.5		55.6

Employer voluntary benefits (2)	3,799		3,951
Group health (3)	127		114
Individual health (4)	413		419
Policies in force as of March 31 (in thousands)	4,339		4,484

(1)Benefit ratio is calculated as accident, health and other policy benefits less interest credited to contractholder funds of $8 million for both the three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021, and $25 million for both the nine months ended September 30, 2022 and 2021,~~ divided by premiums and contract charges.

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

(3)Group health includes health products and administrative services sold to employers.

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

Adjusted net income increased $21 million in the third quarter of 2022 compared to the third quarter of 2021, primarily due to lower individual health and employer voluntary benefits claims as well as lower restructuring charges compared to the prior year quarter. Adjusted net income increased $12decreased $1 million in the first ~~nine months~~quarter of ~~2022,~~2023 compared to the ~~same period~~first quarter of ~~2021,~~2022, primarily due to ~~increases~~a decline in ~~group health and~~ employer voluntary benefits, ~~revenues,~~ partially offset by ~~higher~~growth in group ~~and individual health claims utilization.~~health.

Premiums and contract charges ~~increased 0.7%~~decreased 1.1% or ~~$3 million in the third quarter of 2022 and increased 2.6% or $36~~$5 million in the first ~~nine months~~quarter of ~~2022~~2023 compared to the ~~same periods~~first quarter of ~~2021,~~2022, primarily due to ~~growth~~a decline in ~~group~~individual health and employer voluntary ~~benefits.~~benefits, partially offset by growth in group health.


Premiums and contract charges by line of business	Premiums and contract charges by line of business									Premiums and contract charges by line of business
		Three months ended September 30,				Nine months ended September 30,					Three months ended March 31,
($ in millions)	($ in millions)	2022		2021		2022		2021		($ in millions)	2023		2022
Employer voluntary benefits	Employer voluntary benefits	$	257	$	251	$	780	$	769	Employer voluntary benefits	$	255	$	263
Group health	Group health	96		90		285		260		Group health	107		94
Individual health	Individual health	110		119		333		333		Individual health	101		111
Premiums and contract charges	Premiums and contract charges	$	463	$	460	$	1,398	$	1,362	Premiums and contract charges	$	463	$	468

Other revenue increased ~~$5 million and $29~~$6 million in the ~~third~~first quarter ~~and first nine months~~ of ~~2022, respectively,~~2023 compared to the ~~same periods~~first quarter of ~~2021,~~2022, primarily due to an increase in group health administrative fees.

Accident, health and other policy benefits decreased ~~5.1%~~1.1% or ~~$14~~$3 million in the ~~third~~first quarter of ~~2022~~2023 compared to the ~~third~~first quarter of ~~2021,~~2022, primarily due to lower benefit utilization ~~in individual health and~~

employer voluntary benefits. Accident, health and other policy benefits increased 3.9% or $30 million in the first nine months of 2022 compared to the same period of 2021, primarily due to increased benefits utilization for group and individual health products, offset by employer voluntary benefits.

~~Benefit ratio~~ ~~decreased to 55.1 in the third quarter of 2022 compared to 58.5 in the third quarter of 2021, primarily due to a lower benefit ratio for individual~~

~~Third Quarter 2022 Form 10-Q~~ 67

~~Segment Results~~ ~~Allstate Health and Benefits~~

health products and lower life mortality in employer voluntary benefits. Benefit ratio increased to 55.5 in the first nine months of 2022 compared to 54.8 in the same period of 2021, primarily due to a higher benefit ratio in group and individual health, partially offset by ~~lower accident and health claims in~~increased contract benefits for employer voluntary ~~benefits.~~benefits and growth in group health.

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

Benefit ratio decreased 0.1 point to 55.5 in the first quarter of 2023 compared to 55.6 in the first quarter of 2022.

64www.allstate.com

Allstate Health and Benefits Segment Results

Amortization of DAC increased ~~6.7%~~5.1% or $2 million in the ~~third~~first quarter of 2023 compared to the first quarter of 2022, ~~and increased 9.9% or $10 million in the first nine months of 2022 compared to the same periods of 2021,~~ primarily related to individual health, partially offset by employer voluntary ~~benefits and individual health.~~benefits.


Operating costs and expenses	Operating costs and expenses									Operating costs and expenses
		Three months ended September 30,				Nine months ended September 30,					Three months ended March 31,
($ in millions)	($ in millions)	2022		2021		2022		2021		($ in millions)	2023		2022
Non-deferrable commissions	Non-deferrable commissions	$	77	$	80	$	230	$	231	Non-deferrable commissions	$	79	$	81
General and administrative expenses	General and administrative expenses	130		126		364		351		General and administrative expenses	124		121
Total operating costs and expenses	Total operating costs and expenses	$	207	$	206	$	594	$	582	Total operating costs and expenses	$	203	$	202

Operating costs and expenses increased $1 million ~~and $12 million~~ in the ~~third~~first quarter ~~and first nine months~~ of ~~2022, respectively,~~2023 compared to the ~~same periods~~first quarter of ~~2021, primarily due to growth and higher employee related expenses.~~2022.

~~Analysis of reserves~~

Reserve for future policy benefits
($ in millions) September 30, 2022 December 31, 2021
Traditional life insurance and other $ 314 $ 313
Accident and health insurance 962 960
Reserve for future policy benefits $ 1,276 $ 1,273

68First Quarter 2023 Form 10-Q ~~www.allstate.com~~65

Investments


Portfolio composition and strategy by reporting segment (1)	Portfolio composition and strategy by reporting segment (1)																Portfolio composition and strategy by reporting segment (1)
		September 30, 2022																March 31, 2023
($ in millions)	($ in millions)	Property-Liability			Protection Services			Allstate Health and Benefits			Corporate and Other			Total			($ in millions)	Property-Liability			Protection Services			Allstate Health and Benefits			Corporate and Other			Total
Fixed income securities (2)	Fixed income securities (2)	$	34,944		$	1,713		$	1,551		$	3,507		$	41,715		Fixed income securities (2)	$	37,940		$	1,825		$	1,591		$	2,747		$	44,103
Equity securities (3)	Equity securities (3)	3,963			132			70			558			4,723			Equity securities (3)	1,468			109			43			554			2,174
Mortgage loans, net	Mortgage loans, net	732			—			101			—			833			Mortgage loans, net	685			—			96			—			781
Limited partnership interests	Limited partnership interests	7,899			—			—			8			7,907			Limited partnership interests	7,955			—			—			16			7,971
Short-term investments (4)	Short-term investments (4)	3,442			118			61			409			4,030			Short-term investments (4)	5,663			151			91			817			6,722
Other investments, net	Other investments, net	1,677			—			119			2			1,798			Other investments, net	1,601			—			120			3			1,724
Total	Total	$	52,657		$	1,963		$	1,902		$	4,484		$	61,006		Total	$	55,312		$	2,085		$	1,941		$	4,137		$	63,475
Percent to total	Percent to total	86.3		%	3.2		%	3.1		%	7.4		%	100.0		%	Percent to total	87.1		%	3.3		%	3.1		%	6.5		%	100.0		%

Market-based	Market-based	$	43,769		$	1,963		$	1,902		$	4,482		$	52,116		Market-based	$	46,156		$	2,085		$	1,941		$	4,134		$	54,316
Performance-based	Performance-based	8,888			—			—			2			8,890			Performance-based	9,156			—			—			3			9,159
Total	Total	$	52,657		$	1,963		$	1,902		$	4,484		$	61,006		Total	$	55,312		$	2,085		$	1,941		$	4,137		$	63,475

(1) Balances reflect the elimination of related party investments between segments.

(2) Fixed income securities are carried at fair value. Amortized cost, net for these securities was ~~$38.17~~$39.64 billion, ~~$1.88~~$1.92 billion, ~~$1.77~~$1.72 billion, ~~$3.65~~$2.83 billion and ~~$45.47~~$46.12 billion for Property-Liability, Protection Services, Allstate Health and Benefits, Corporate and Other, and in total, respectively.

(3) Equity securities are carried at fair value. The fair value of equity securities held as of ~~September 30, 2022,~~March 31, 2023, was ~~$71~~$27 million in excess of cost. These net gains were primarily concentrated in the ~~technology,~~banking, consumer goods and ~~banking~~technology sectors. Equity securities include ~~$1.11~~$1.05 billion of funds with underlying investments in fixed income securities as of ~~September 30, 2022.~~March 31, 2023.

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

Investments totaled ~~$61.01~~$63.48 billion as of ~~September 30, 2022, decreasing~~March 31, 2023, increasing from ~~$64.70~~$61.83 billion as of December 31, ~~2021,~~2022, primarily due to ~~lower~~higher fixed income and equity valuations and positive operating cash flows, partially offset by common share repurchases and dividends paid to ~~shareholders, partially offset by positive operating cash flows.~~shareholders.

Portfolio composition by investment strategy We utilize two primary strategies to manage risks and returns and to position our portfolio to take advantage of market opportunities while attempting to mitigate adverse effects. As strategies and market conditions evolve, the asset allocation may change.

Market-based strategy seeks to deliver predictable earnings aligned to business needs and ~~take advantage of short-term~~provide flexibility to adjust investment risk profile based on enterprise objectives and market opportunities primarily through public and private fixed income investments and public equity securities.

Performance-based strategy seeks to deliver attractive risk-adjusted returns and supplement market risk with idiosyncratic risk primarily through investments in private equity, including infrastructure investments, and real estate ~~most of which were~~with a majority being limited partnerships. These investments include investee level expenses, reflecting asset level

operating expenses on directly held real estate and other consolidated investments.

Macroeconomic impacts Supply chain disruptions, labor shortages and other macroeconomic factors have increased inflation, which may have an adverse impact on investment valuations and returns. ~~Over the past several quarters,~~As inflation ~~continued to remain~~remained elevated, ~~which led to increases in interest rates by~~ the Federal Reserve significantly increased interest rates and ~~a widening of~~ credit spreads widened reflecting ongoing recession concerns. ~~Many governmental authorities and central banks have begun to respond to inflationary pressure, generally through more restrictive monetary policy, such as increasing target interest rates.~~ These ~~actions and~~factors along with other ongoing impacts from the pandemic and from disruptions in the banking industry, could create significant economic ~~uncertainty. Market~~uncertainty and the resulting market volatility ~~resulting from these factors has and~~ may continue to impact our investment valuations and returns.

As of March 31, 2023, we have exposure of approximately $240 million to regional banks primarily through investment grade corporate bonds. The investment portfolio had an insignificant exposure to Silicon Valley Bank, First Republic Bank and Signature Bank prior to their failures.

Investments in Russia and Ukraine As of ~~September 30, 2022, we do~~March 31, 2023, our investment portfolio does not have ~~any~~ direct ~~investments in~~or indirect exposure to Russia, Belarus or Ukraine. ~~We have indirect exposure of less than $1 million in Russia and Ukraine through broad-based, global funds managed by external asset managers.~~

~~Third Quarter 2022 Form 10-Q~~ 6669www.allstate.com

Investments

																					Portfolio composition by investment strategy
		September 30, 2022										March 31, 2023
($ in millions)	($ in millions)	Market- based			Performance-based			Total			($ in millions)	Market- based			Performance-based			Total
Fixed income securities	Fixed income securities	$	41,606		$	109		$	41,715		Fixed income securities	$	44,015		$	88		$	44,103
Equity securities	Equity securities	4,283			440			4,723			Equity securities	1,765			409			2,174
Mortgage loans, net	Mortgage loans, net	833			—			833			Mortgage loans, net	781			—			781
Limited partnership interests	Limited partnership interests	421			7,486			7,907			Limited partnership interests	178			7,793			7,971
Short-term investments	Short-term investments	4,030			—			4,030			Short-term investments	6,722			—			6,722
Other investments, net	Other investments, net	943			855			1,798			Other investments, net	855			869			1,724
Total	Total	$	52,116		$	8,890		$	61,006		Total	$	54,316		$	9,159		$	63,475
Percent to total	Percent to total	85.4		%	14.6		%	100.0		%	Percent to total	85.6		%	14.4		%	100.0		%

Unrealized net capital gains and losses	Unrealized net capital gains and losses										Unrealized net capital gains and losses
Fixed income securities	Fixed income securities	$	(3,750)		$	(3)		$	(3,753)		Fixed income securities	$	(2,016)		$	(1)		$	(2,017)
Limited partnership interests	Limited partnership interests	—			7			7			Limited partnership interests	—			4			4
Short-term investments		(1)			—			(1)

Other	Other	(3)			—			(3)			Other	(2)			—			(2)
Total	Total	$	(3,754)		$	4		$	(3,750)		Total	$	(2,018)		$	3		$	(2,015)

Fixed income securities


Fixed income securities by type	Fixed income securities by type					Fixed income securities by type
		Fair value as of					Fair value as of
($ in millions)	($ in millions)	September 30, 2022		December 31, 2021				($ in millions)	March 31, 2023		December 31, 2022
U.S. government and agencies	U.S. government and agencies	$	8,444	$	6,273			U.S. government and agencies	$	7,695	$	7,898
Municipal	Municipal	6,029		6,393				Municipal	6,324		6,210
Corporate	Corporate	24,732		27,330				Corporate	28,036		26,263
Foreign government	Foreign government	890		985				Foreign government	1,091		957
Asset-backed securities (“ABS”)	Asset-backed securities (“ABS”)	1,620		1,155				Asset-backed securities (“ABS”)	957		1,157
Total fixed income securities	Total fixed income securities	$	41,715	$	42,136			Total fixed income securities	$	44,103	$	42,485

Fixed income securities are rated by third-party credit rating agencies or are internally rated. The Securities Valuation Office (“SVO”) of the National Association of Insurance Commissioners (“NAIC”) evaluates the fixed income securities of insurers for regulatory reporting and capital assessment purposes. The NAIC assigns securities to one of six credit quality categories defined as “NAIC designations”. In general, securities with NAIC designations of 1 and 2 are considered investment grade and securities with NAIC designations of 3 through 6 are considered below investment grade. The rating is either received from the SVO based on availability of applicable ratings from rating agencies on the NAIC Nationally Recognized Statistical Rating Organizations (“NRSRO”) provider list, including Moody’s Investors Service (“Moody’s”), S&P Global Ratings (“S&P”), Fitch Ratings (“Fitch”), or a comparable internal rating.

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

As of ~~September 30, 2022, 89.4%~~March 31, 2023, 91.0% of the consolidated fixed income securities portfolio was rated investment grade. Credit ratings below these designations are considered lower credit quality or below investment grade, which includes high yield bonds.

Market prices for certain securities may have credit spreads which imply higher or lower credit quality than the current third-party rating. Our initial investment decisions and ongoing monitoring procedures for fixed income securities are based on a due diligence process which includes, but is not limited to, an assessment of the credit quality, sector, structure, and liquidity risks of each issuer.

Fixed income portfolio monitoring is a comprehensive process to identify and evaluate each fixed income security that may require a credit loss allowance. The process includes a quarterly review of all securities to identify instances where the fair value of a security compared to its amortized cost is below internally established thresholds. For further detail on our fixed income portfolio monitoring process, see Note 54 of the condensed consolidated financial statements.

70First Quarter 2023 Form 10-Q ~~www.allstate.com~~67

Investments

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

																							Fair value and unrealized net capital gains (losses) for fixed income securities by credit rating
		September 30, 2022													March 31, 2023
		NAIC 1				NAIC 2				NAIC 3					NAIC 1				NAIC 2					NAIC 3
		A and above				BBB				BB					A and above				BBB					BB
($ in millions)	($ in millions)	Fair value		Unrealized gain (loss)		Fair value		Unrealized gain (loss)		Fair value		Unrealized gain (loss)		($ in millions)	Fair value		Unrealized gain (loss)		Fair value		Unrealized gain (loss)			Fair value		Unrealized gain (loss)
U.S. government and agencies	U.S. government and agencies	$	8,444	$	(312)	$	—	$	—	$	—	$	—	U.S. government and agencies	$	7,695	$	(131)	$	—	$	—		$	—	$	—
Municipal	Municipal	5,705		(427)		309		(33)		—		—		Municipal	6,181		(168)		129		(10)			7		—
Corporate	Corporate													Corporate
Public	Public	4,891		(384)		10,664		(1,219)		1,125		(168)		Public	5,863		(207)		13,491		(768)			829		(70)
Privately placed	Privately placed	1,767		(153)		3,065		(359)		1,626		(289)		Privately placed	1,778		(93)		3,010		(211)			1,487		(136)
Total corporate	Total corporate	6,658		(537)		13,729		(1,578)		2,751		(457)		Total corporate	7,641		(300)		16,501		(979)			2,316		(206)
Foreign government	Foreign government	889		(43)		1		—		—		—		Foreign government	1,090		(21)		1		—			—		—
ABS	ABS	1,544		(54)		13		(2)		9		(1)		ABS	890		(19)		13		(1)			9		(1)
Total fixed income securities	Total fixed income securities	$	23,240	$	(1,373)	$	14,052	$	(1,613)	$	2,760	$	(458)	Total fixed income securities	$	23,497	$	(639)	$	16,644	$	(990)		$	2,332	$	(207)

		NAIC 4				NAIC 5-6				Total					NAIC 4				NAIC 5-6					Total
		B				CCC and lower									B				CCC and lower
		Fair value		Unrealized gain (loss)		Fair value		Unrealized gain (loss)		Fair value		Unrealized gain (loss)			Fair value		Unrealized gain (loss)		Fair value		Unrealized gain (loss)			Fair value		Unrealized gain (loss)
U.S. government and agencies	U.S. government and agencies	$	—	$	—	$	—	$	—	$	8,444	$	(312)	U.S. government and agencies	$	—	$	—	$	—	$	—		$	7,695	$	(131)
Municipal	Municipal	8		—		7		3		6,029		(457)		Municipal	—		—		7		3			6,324		(175)
Corporate	Corporate													Corporate
Public	Public	139		(22)		—		—		16,819		(1,793)		Public	166		(13)		—		—			20,349		(1,058)
Privately placed	Privately placed	1,304		(260)		151		(28)		7,913		(1,089)		Privately placed	1,286		(142)		126		(29)			7,687		(611)
Total corporate	Total corporate	1,443		(282)		151		(28)		24,732		(2,882)		Total corporate	1,452		(155)		126		(29)			28,036		(1,669)
Foreign government	Foreign government	—		—		—		—		890		(43)		Foreign government	—		—		—		—			1,091		(21)
ABS	ABS	—		—		54		(2)		1,620		(59)		ABS	—		—		45		—			957		(21)
Total fixed income securities	Total fixed income securities	$	1,451	$	(282)	$	212	$	(27)	$	41,715	$	(3,753)	Total fixed income securities	$	1,452	$	(155)	$	178	$	(26)		$	44,103	$	(2,017)

Municipal bonds, including tax-exempt and taxable securities, include general obligations of state and local issuers and revenue bonds.

Corporate bonds include publicly traded and privately placed securities. Privately placed securities primarily consist of corporate issued senior debt securities that are negotiated with the borrower or are issued by public entities in unregistered form.

ABS includes collateralized debt obligations, consumer and other ABS. Credit risk is managed by monitoring the performance of the underlying collateral. Many of the securities in the ABS portfolio have credit enhancement with features such as overcollateralization, subordinated structures, reserve funds, guarantees or insurance. ABS also includes residential mortgage-backed securities and commercial mortgage back securities.

Equity securities of ~~$4.72~~$2.17 billion primarily include common stocks, exchange traded and mutual funds, non-redeemable preferred stocks and real estate investment trust (“REIT”) equity investments. Certain exchange traded and mutual funds have fixed income securities as their underlying investments.

Mortgage loans of ~~$833~~$781 million mainly comprise loans secured by first mortgages on developed commercial real estate. Key considerations used to manage our exposure include property type and geographic diversification. For further detail on our mortgage loan portfolio, see Note 54 of the condensed consolidated financial statements.

Limited partnership interests include ~~$6.57~~$6.75 billion of interests in private equity funds, ~~$919 million~~$1.05 billion of interests in real estate funds and ~~$421~~$178 million of interests in other funds as of ~~September 30, 2022.~~March 31, 2023. We have commitments to invest additional amounts in limited partnership interests totaling ~~$2.69~~$2.70 billion as of ~~September 30, 2022.~~March 31, 2023.

Other investments include ~~$748~~$698 million of bank loans, net, and ~~$774~~$790 million of direct investments in real estate as of ~~September 30, 2022.~~March 31, 2023.

~~Third Quarter 2022 Form 10-Q~~ 71

~~Investments~~

Unrealized net capital gains (losses)
September 30, December 31,
($ in millions) 2022 2021
U.S. government and agencies $ (312) $ (14)
Municipal (457) 263
Corporate (2,882) 496
Foreign government (43) 3
ABS (59) 12
Fixed income securities (3,753) 760
Short-term investments (1) —
Derivatives (3) (3)
Equity method of accounting (“EMA”) limited partnerships 7 (1)
Unrealized net capital gains and losses, pre-tax $ (3,750) $ 756

7268 www.allstate.com

Investments

Gross unrealized gains (losses) on fixed income securities by type and sector
September 30, 2022
($ in millions)
Amortized
cost, net
Gross unrealized
Fair
value
Gains Losses
Corporate
Consumer goods (cyclical and non-cyclical) $ 6,185 $ — $ (692) $ 5,493
Technology 3,098 — (353) 2,745
Banking 4,487 — (368) 4,119
Capital goods 2,322 — (269) 2,053
Communications 2,403 — (297) 2,106
Utilities 2,423 — (241) 2,182
Financial services 2,110 — (218) 1,892
Energy
Midstream 1,645 — (138) 1,507
Independent/upstream 341 1 (33) 309
Integrated 68 — (6) 62
Other 209 — (16) 193
Total energy 2,263 1 (193) 2,071
Basic industry 1,008 1 (96) 913
Transportation 951 1 (89) 863
Other 364 — (69) 295
Total corporate fixed income portfolio 27,614 3 (2,885) 24,732
U.S. government and agencies 8,756 1 (313) 8,444
Municipal 6,486 4 (461) 6,029
Foreign government 933 — (43) 890
ABS 1,679 4 (63) 1,620
Total fixed income securities $ 45,468 $ 12 $ (3,765) $ 41,715
December 31, 2021
($ in millions) Amortized
cost, net Gross unrealized
Fair
value
Gains Losses
Corporate
Consumer goods (cyclical and non-cyclical) $ 6,817 $ 176 $ (42) $ 6,951
Technology 2,947 80 (23) 3,004
Banking 3,975 54 (31) 3,998
Capital goods 2,615 75 (12) 2,678
Communications 2,077 58 (21) 2,114
Utilities 2,009 43 (28) 2,024
Financial services 1,936 41 (14) 1,963
Energy
Midstream 1,132 37 (4) 1,165
Independent/upstream 312 18 (1) 329
Integrated 119 6 — 125
Other 224 6 (1) 229
Total energy 1,787 67 (6) 1,848
Basic industry 1,249 56 (6) 1,299
Transportation 976 35 (5) 1,006
Other 446 3 (4) 445
Total corporate fixed income portfolio 26,834 688 (192) 27,330
U.S. government and agencies 6,287 12 (26) 6,273
Municipal 6,130 279 (16) 6,393
Foreign government 982 9 (6) 985
ABS 1,143 14 (2) 1,155
Total fixed income securities $ 41,376 $ 1,002 $ (242) $ 42,136


Unrealized net capital gains (losses)
	March 31,		December 31,
($ in millions)	2023		2022
U.S. government and agencies	$	(131)	$	(225)
Municipal	(175)		(290)
Corporate	(1,669)		(2,299)
Foreign government	(21)		(40)
ABS	(21)		(31)
Fixed income securities	(2,017)		(2,885)
Short-term investments	—		(1)
Derivatives	(2)		(3)
Equity method of accounting (“EMA”) limited partnerships	4		2
Unrealized net capital gains and losses, pre-tax	$	(2,015)	$	(2,887)

~~In general, the gross~~

First Quarter 2023 Form 10-Q 69

Investments


Gross unrealized gains (losses) on fixed income securities by type and sector
	March 31, 2023
($ in millions)	Amortized cost, net		Gross unrealized				Fair value
			Gains		Losses
Corporate
Banking	$	4,534	$	12	$	(244)	$	4,302
Basic industry	999		3		(60)		942
Capital goods	2,465		10		(142)		2,333
Communications	2,429		3		(201)		2,231
Consumer goods (cyclical and non-cyclical)	6,315		28		(383)		5,960
Financial services	2,304		8		(143)		2,169
Energy
Midstream	1,877		7		(74)		1,810
Independent/upstream	320		2		(19)		303
Integrated	52		—		(3)		49
Other	238		1		(10)		229
Total energy	2,487		10		(106)		2,391
Technology	3,062		7		(229)		2,840
Transportation	1,008		2		(55)		955
Utilities	3,780		35		(170)		3,645
Other	322		—		(54)		268
Total corporate fixed income portfolio	29,705		118		(1,787)		28,036
U.S. government and agencies	7,826		21		(152)		7,695
Municipal	6,499		65		(240)		6,324
Foreign government	1,112		3		(24)		1,091
ABS	978		4		(25)		957
Total fixed income securities	$	46,120	$	211	$	(2,228)	$	44,103



	December 31, 2022
($ in millions)	Amortized cost, net		Gross unrealized				Fair value
			Gains		Losses
Corporate
Banking	$	5,153	$	16	$	(314)	$	4,855
Basic industry	1,019		2		(75)		946
Capital goods	2,288		3		(197)		2,094
Communications	2,422		1		(261)		2,162
Consumer goods (cyclical and non-cyclical)	5,984		6		(531)		5,459
Financial services	2,243		4		(176)		2,071
Energy
Midstream	1,725		1		(110)		1,616
Independent/upstream	354		1		(29)		326
Integrated	67		—		(4)		63
Other	218		—		(13)		205
Total energy	2,364		2		(156)		2,210
Technology	3,137		4		(298)		2,843
Transportation	959		1		(73)		887
Utilities	2,633		7		(203)		2,437
Other	360		—		(61)		299
Total corporate fixed income portfolio	28,562		46		(2,345)		26,263
U.S. government and agencies	8,123		6		(231)		7,898
Municipal	6,500		36		(326)		6,210
Foreign government	997		—		(40)		957
ABS	1,188		4		(35)		1,157
Total fixed income securities	$	45,370	$	92	$	(2,977)	$	42,485

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

~~Third Quarter 2022 Form 10-Q~~ 73

~~Investments~~

Equity securities by sector
September 30, 2022 December 31, 2021
($ in millions) Cost Over (under) cost
Fair
value
Cost Over (under) cost
Fair
value
Capital Goods $ 198 $ (20) $ 178 $ 376 $ 37 $ 413
Basic Industry 57 6 63 119 30 149
Utilities 73 7 80 122 23 145
Transportation 51 14 65 74 22 96
Energy
Midstream 34 (1) 33 39 7 46
Independent/upstream 29 10 39 44 5 49
Integrated 40 15 55 62 8 70
Other 8 4 12 14 3 17
Total energy 111 28 139 159 23 182
Other (1)
1,790 245 2,035 3,413 811 4,224
Funds
Fixed income 1,227 (116) 1,111 1,108 24 1,132
Equities 1,125 (92) 1,033 645 75 720
Other 20 (1) 19 — — —
Total funds 2,372 (209) 2,163 1,753 99 1,852
Total equity securities $ 4,652 $ 71 $ 4,723 $ 6,016 $ 1,045 $ 7,061

~~(1)Other is comprised of communications, REITs, financial services, banking, technology and consumer goods sectors.~~

Net investment income
Three months ended September 30, Nine months ended September 30,
($ in millions) 2022 2021 2022 2021
Fixed income securities $ 323 $ 279 $ 889 $ 870
Equity securities 30 24 100 51
Mortgage loans 8 9 25 31
Limited partnership interests 325 438 841 1,467
Short-term investments 30 1 42 3
Other investments 38 50 120 139
Investment income, before expense 754 801 2,017 2,561
Investment expense
Investee level expenses (17) (12) (47) (36)
Securities lending expense (10) — (13) —
Operating costs and expenses (37) (25) (111) (79)
Total investment expense (64) (37) (171) (115)
Net investment income $ 690 $ 764 $ 1,846 $ 2,446
Property-Liability $ 632 $ 710 $ 1,696 $ 2,314
Protection Services 13 10 34 32
Allstate Health and Benefits 17 18 50 56
Corporate and Other 28 26 66 44
Net investment income $ 690 $ 764 $ 1,846 $ 2,446
Market-based $ 406 $ 353 $ 1,100 $ 1,064
Performance-based 348 448 917 1,497
Investment income, before expense $ 754 $ 801 $ 2,017 $ 2,561

~~Net investment income~~ decreased $74 million and $600 million in the third quarter and first nine months of 2022, respectively, compared to the same periods of 2021, primarily due to lower performance-based results, mainly from limited partnerships, partially offset by higher market-based fixed income portfolio yields.

7470 www.allstate.com

Investments

Performance-based investment income
Three months ended September 30, Nine months ended September 30,
($ in millions) 2022 2021 2022 2021
Private equity $ 311 $ 400 $ 688 $ 1,282
Real estate 37 48 229 215
Total performance-based income before investee level expenses $ 348 $ 448 $ 917 $ 1,497
Investee level expenses (1)
(13) (11) (40) (33)
Total performance-based income $ 335 $ 437 $ 877 $ 1,464


Equity securities by sector
	March 31, 2023						December 31, 2022
($ in millions)	Cost		Over (under) cost		Fair value		Cost		Over (under) cost		Fair value

Banking	$	40	$	33	$	73	$	135	$	56	$	191
Basic Industry	13		2		15		57		16		73
Capital Goods	85		(36)		49		196		3		199
Energy
Independent/upstream	9		1		10		30		12		42
Integrated	8		3		11		39		26		65
Midstream	30		(2)		28		33		(2)		31
Other	1		1		2		8		8		16
Total energy	48		3		51		110		44		154
Funds
Equities	210		(10)		200		904		(19)		885
Fixed income	1,116		(68)		1,048		1,067		(84)		983
Other	3		—		3		3		—		3
Total funds	1,329		(78)		1,251		1,974		(103)		1,871
Utilities	49		1		50		67		12		79
Transportation	20		13		33		48		19		67
Other (1)	563		89		652		1,666		267		1,933
Total equity securities	$	2,147	$	27	$	2,174	$	4,253	$	314	$	4,567

(1)As of March 31, 2023, other is generally comprised of consumer goods, technology, REITs, financial services and communications sectors.


Net investment income
	Three months ended March 31,
($ in millions)		2023		2022
Fixed income securities		$	390	$	267
Equity securities		11		36
Mortgage loans		8		8
Limited partnership interests		134		292
Short-term investments		66		2
Other investments		41		40
Investment income, before expense		650		645
Investment expense
Investee level expenses		(17)		(16)
Securities lending expense		(21)		—
Operating costs and expenses		(37)		(35)
Total investment expense		(75)		(51)
Net investment income		$	575	$	594

Property-Liability		$	509	$	558
Protection Services		16		9
Allstate Health and Benefits		19		17
Corporate and Other		31		10
Net investment income		$	575	$	594

Market-based		$	508	$	325
Performance-based		142		320
Investment income, before expense		$	650	$	645

Net investment income decreased $19 million in the first quarter of 2023, compared to the same period of 2022, as higher market-based results from increased fixed income portfolio yields and to a lesser extent, the reinvestment of proceeds from sales of equity securities into fixed income securities with higher yields were more than offset by lower performance-based results, mainly from limited partnerships.

First Quarter 2023 Form 10-Q 71

Investments


Performance-based investment income
	Three months ended March 31,
($ in millions)		2023		2022
Private equity		$	105	$	248
Real estate		37		72
Total performance-based income before investee level expenses		$	142	$	320

Investee level expenses (1)		(16)		(14)
Total performance-based income		$	126	$	306

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

Performance-based investment income decreased ~~$102 million and $587~~$180 million in the ~~third~~first quarter ~~and first nine months~~ of ~~2022, respectively,~~2023, compared to ~~strong results in~~ the same ~~periods~~period of ~~2021,~~2022, primarily due to lower valuation ~~increases, partially offset by net gains on the sale of underlying investments. Three individual investments generated 97% of the performance-based investment income in the third quarter.~~increases.

Performance-based investment results and income can vary significantly between periods and are

influenced by economic conditions, equity market

performance, comparable public company earnings multiples, capitalization rates, operating performance of the underlying investments and the timing of asset sales. The ~~company~~Company typically employs a lag in recording and recognizing changes in valuations of limited partnership interests due to the availability of investee financial statements.

																Components of net gains (losses) on investments and derivatives and the related tax effect
		Three months ended September 30,				Nine months ended September 30,					Three months ended March 31,
($ in millions)	($ in millions)	2022		2021		2022		2021		($ in millions)		2023		2022
Sales	Sales	$	(175)	$	80	$	(605)	$	441	Sales		$	(120)	$	(127)
Credit losses	Credit losses	(6)		(12)		(30)		2		Credit losses		(12)		(11)
Valuation change of equity investments - appreciation (decline):	Valuation change of equity investments - appreciation (decline):									Valuation change of equity investments - appreciation (decline):
Equity securities	Equity securities	(206)		14		(1,061)		333		Equity securities		148		(285)
Equity fund investments in fixed income securities	Equity fund investments in fixed income securities	(33)		(8)		(161)		(11)		Equity fund investments in fixed income securities		19		(62)
Limited partnerships (1)	Limited partnerships (1)	(46)		(15)		(199)		(1)		Limited partnerships (1)		31		(100)
Total valuation of equity investments	Total valuation of equity investments	(285)		(9)		(1,421)		321		Total valuation of equity investments		198		(447)
Valuation change and settlements of derivatives	Valuation change and settlements of derivatives	299		46		889		54		Valuation change and settlements of derivatives		(52)		318
Net gains (losses) on investments and derivatives, pre-tax	Net gains (losses) on investments and derivatives, pre-tax	(167)		105		(1,167)		818		Net gains (losses) on investments and derivatives, pre-tax		14		(267)
Income tax benefit (expense)		35		(21)		251		(179)
Income tax (expense) benefit										Income tax (expense) benefit		(6)		56
Net gains (losses) on investments and derivatives, after-tax	Net gains (losses) on investments and derivatives, after-tax	$	(132)	$	84	$	(916)	$	639	Net gains (losses) on investments and derivatives, after-tax		$	8	$	(211)

Property-Liability	Property-Liability	$	(98)	$	74	$	(776)	$	595	Property-Liability		$	6	$	(161)
Protection Services	Protection Services	(10)		4		(43)		16		Protection Services		(1)		(10)
Allstate Health and Benefits	Allstate Health and Benefits	(5)		(1)		(20)		4		Allstate Health and Benefits		2		(5)
Corporate and Other	Corporate and Other	(19)		7		(77)		24		Corporate and Other		1		(35)
Net gains (losses) on investments and derivatives, after-tax	Net gains (losses) on investments and derivatives, after-tax	$	(132)	$	84	$	(916)	$	639	Net gains (losses) on investments and derivatives, after-tax		$	8	$	(211)

Market-based	Market-based	$	(156)	$	74	$	(1,238)	$	659	Market-based		$	(3)	$	(304)
Performance-based	Performance-based	(11)		31		71		159		Performance-based		17		37
Net gains (losses) on investments and derivatives, pre-tax	Net gains (losses) on investments and derivatives, pre-tax	$	(167)	$	105	$	(1,167)	$	818	Net gains (losses) on investments and derivatives, pre-tax		$	14	$	(267)

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

Net ~~losses~~gains on investments and derivatives in the ~~third~~first quarter ~~and first nine months~~ of ~~2022~~2023 related primarily to ~~lower~~higher valuation on equity investments, ~~and~~partially offset by losses on sales ~~partially offset by increased~~and decreased valuation change and settlements of derivatives.

~~Sales~~Net losses on sales in the ~~third~~first quarter ~~and first nine months~~ of ~~2022~~2023 related primarily to sales of fixed income securities in connection with ongoing portfolio management.

~~Valuation~~Net losses on valuation change and settlements of derivatives of ~~$299 million and $889~~$52 million in the ~~third~~first quarter ~~and first nine months~~ of ~~2022, respectively,~~2023, primarily comprised of ~~gains~~losses on interest rate futures used ~~as part of an interest rate risk reduction strategy~~ to mitigate the impact of increases in interest rates and ~~gains~~losses on ~~foreign currency contracts~~credit default swap buy protection due to tightening credit spreads on the ~~strengthening of the U.S dollar.~~underlying credit names.

~~Third Quarter 2022 Form 10-Q~~ 7275www.allstate.com

Investments


Net gains (losses) on performance-based investments and derivatives	Net gains (losses) on performance-based investments and derivatives									Net gains (losses) on performance-based investments and derivatives
		Three months ended September 30,				Nine months ended September 30,					Three months ended March 31,
($ in millions)	($ in millions)	2022		2021		2022		2021		($ in millions)		2023		2022
Sales	Sales	$	(10)	$	(5)	$	40	$	79	Sales		$	8	$	23
Credit losses	Credit losses	(3)		(3)		(10)		(3)		Credit losses		(3)		(4)
Valuation change of equity investments	Valuation change of equity investments	(38)		23		(43)		60		Valuation change of equity investments		19		11
Valuation change and settlements of derivatives	Valuation change and settlements of derivatives	40		16		84		23		Valuation change and settlements of derivatives		(7)		7
Total performance-based	Total performance-based	$	(11)	$	31	$	71	$	159	Total performance-based		$	17	$	37

Net ~~losses~~gains on performance-based investments and derivatives in the ~~third~~first quarter of ~~2022~~2023 primarily related to ~~decreased~~increased valuation of equity investments, partially offset by ~~increased~~decreased valuation change and settlements of derivatives. Net gains on performance-based investments and derivatives in the first nine months of 2022 primarily related to increased valuation change and settlements of derivatives and gains on sales, partially offset by decreased valuation of equity investments.

76First Quarter 2023 Form 10-Q ~~www.allstate.com~~73

Capital Resources and Liquidity

~~Capital Resources and Liquidity~~

Capital Resources and Liquidity

Capital resources consist of shareholders’ equity and debt, representing funds deployed or available to be deployed to support business operations or for general corporate purposes.


Capital resources	Capital resources							Capital resources
($ in millions)	($ in millions)	September 30, 2022			December 31, 2021			($ in millions)	March 31, 2023			December 31, 2022
Preferred stock, common stock, treasury stock, retained income and other shareholders’ equity items	Preferred stock, common stock, treasury stock, retained income and other shareholders’ equity items	$	20,716		$	24,524		Preferred stock, common stock, treasury stock, retained income and other shareholders’ equity items	$	19,167		$	19,880
Accumulated other comprehensive (loss) income		(3,043)			655
Accumulated other comprehensive loss								Accumulated other comprehensive loss	(1,673)			(2,392)
Total Allstate shareholders’ equity	Total Allstate shareholders’ equity	17,673			25,179			Total Allstate shareholders’ equity	17,494			17,488
Debt	Debt	7,967			7,976			Debt	8,452			7,964
Total capital resources	Total capital resources	$	25,640		$	33,155		Total capital resources	$	25,946		$	25,452

Ratio of debt to Allstate shareholders’ equity	Ratio of debt to Allstate shareholders’ equity	45.1		%	31.7		%	Ratio of debt to Allstate shareholders’ equity	48.3		%	45.5		%
Ratio of debt to capital resources	Ratio of debt to capital resources	31.1			24.1			Ratio of debt to capital resources	32.6			31.3

Allstate shareholders’ equity ~~decreased~~increased in the first ~~nine~~three months of ~~2022,~~2023, primarily due to lower unrealized net ~~unrealized~~ capital losses on investments, ~~in 2022 compared to gains at December 31, 2021, common share repurchases,~~partially offset by a net loss, ~~and~~ dividends paid to ~~shareholders.~~shareholders and common share repurchases. In the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, we paid dividends of ~~$698~~$224 million and ~~$79~~$26 million related to our common and preferred shares, respectively.

Issuance of debt On March 31, 2023, the Company issued $750 million of 5.250% Senior Notes due 2033. Interest on the Senior Notes is payable semi-annually in arrears on March 30 and September 30 of each year, beginning on September 30, 2023. The Senior Notes are redeemable at any time at the applicable redemption price prior to the maturity date. The net proceeds of this issuance were used to repay the $250 million senior debt maturity and for general corporate purposes.

Subsequent event On April 17, 2023, the Company redeemed all 23,000 shares of Fixed Rate Noncumulative Preferred Stock, Series G, par value $1.00 per share and liquidation preference $25,000 per share, and the corresponding depositary shares for a total redemption payment of $575 million.

Debt maturities~~We do not have any scheduled debt maturities in 2022.~~


Debt maturities for each of the next five years and thereafter (excluding issuance costs and other)
($ in millions)
2023	$	500
2024	350
2025	600
2026	550
2027	—
2028	—
Thereafter	6,491
Total long-term debt principal	$	8,491

Debt maturities for each of the next five years
and thereafter (excluding issuance costs and other)
($ in millions)
2023 $ 750
2024 350
2025 600
2026 550
2027 —
Thereafter 5,741
Total long-term debt principal $ 7,991

Common share repurchases As of ~~September 30, 2022,~~March 31, 2023, there was ~~$1.16 billion~~$649 million remaining in the $5.00 billion common share repurchase program. ~~We expect the program to be completed after March 31, 2023, as we moderate the pace of share repurchases.~~

During the first ~~nine~~three months of ~~2022,~~2023, we repurchased ~~17.0~~1.2 million common shares, or ~~6.1%~~0.5% of total common shares outstanding at December 31, ~~2021,~~2022, for ~~$2.14 billion.~~$153 million.

Common shareholder dividends On January 3, ~~2022, April 1, 2022 and July 1, 2022~~2023, we paid a common shareholder dividend of ~~$0.81, $0.85 and $0.85 respectively.~~$0.85. On ~~July 19, 2022,~~February 17, 2023, we declared a common shareholder dividend of ~~$0.85~~$0.89 payable on ~~October~~April 3, ~~2022.~~2023.

Financial ratings and strength Our ratings are influenced by many factors including our operating and financial performance, asset quality, liquidity, overall portfolio mix, financial leverage (i.e., debt), exposure to risks such as catastrophes and the current level of operating leverage. The preferred stock and subordinated debentures are viewed as having a common equity component by certain rating agencies

and are given equity credit up to a pre-determined limit in our capital structure as determined by their respective methodologies. These respective methodologies consider the existence of certain terms and features in the instruments such as the noncumulative dividend feature in the preferred stock.

In ~~May 2022,~~March 2023, Moody’s affirmed the A3 and P-2 senior debt and short-term issuer ratings of The Allstate Corporation’s (the “Corporation’s”) ~~debt and short-term issuer ratings of A3 and P-2, respectively,~~ and the Aa3 insurance financial strength ~~rating~~ratings of ~~Aa3 for~~ Allstate Insurance Company (“AIC”). The rating outlook for ~~the ratings is stable.~~Allstate was changed from stable to negative.

In ~~June 2022, S&P affirmed~~March 2023, A.M. Best placed under review with negative implications the ~~Corporation’s debt and short-term issuer ratings of A- and A-2, respectively, and the~~B+ insurance financial strength rating of ~~AA- for AIC. The outlook for~~ the members of Castle Key Group (Castle Key Insurance Company, Castle Key Indemnity Company, Encompass Floridian Insurance Company, Encompass Floridian Indemnity Company).

There have been no changes to our ratings ~~is stable.~~from S&P since December 31, 2022.

~~In August 2022, A.M. Best affirmed the Corporation’s debt~~

74www.allstate.com

Capital Resources and ~~short-term issuer ratings of a and AMB-1+, respectively, and the insurance financial strength rating of A+ for AIC. The outlook for the ratings is stable.~~Liquidity

Liquidity sources and uses We actively manage our financial position and liquidity levels in light of changing market, economic and business conditions. Liquidity is managed at both the entity and enterprise level across the Company and is assessed on both base and stressed level liquidity needs. We believe we have sufficient liquidity to meet these needs. Additionally, we have existing intercompany agreements in place that facilitate liquidity management across the Company to enhance flexibility.

The Corporation is party to an Amended and Restated Intercompany Liquidity Agreement (“Liquidity Agreement”) with certain subsidiaries, which includes, but is not limited to AIC. The Liquidity Agreement allows for short-term advances of funds to be made between parties for liquidity and other general corporate purposes. The Liquidity Agreement does not establish a commitment to advance funds on the part of any party. AIC serves as a lender and borrower, certain other subsidiaries serve only as borrowers, and the Corporation serves only as a lender. The maximum

~~Third Quarter 2022 Form 10-Q~~ 77

~~Capital Resources and Liquidity~~

amount of potential funding under each of these agreements is $1.00 billion.

In addition to the Liquidity Agreement, the Corporation also has an intercompany loan agreement with certain of its subsidiaries, which includes, but is not limited to, AIC. The amount of intercompany loans available to the Corporation’s subsidiaries is at the discretion of the Corporation. The maximum amount of loans the Corporation will have outstanding to all its eligible subsidiaries at any given point in time is limited to $1.00 billion. The Corporation may use commercial paper borrowings, bank lines of credit and securities lending to fund intercompany borrowings.

Parent company capital capacity ~~Parent~~At the parent holding company level, we have deployable assets ~~totaled $4.47~~totaling $4.16 billion as of ~~September 30, 2022,~~March 31, 2023, primarily comprised of cash and investments that are generally saleable within one quarter. The earnings capacity of the operating subsidiaries is the primary source of capital generation for the Corporation.

As of ~~September 30, 2022,~~March 31, 2023, we held ~~$13.38~~$16.72 billion of cash, U.S. government and agencies fixed income securities, ~~and~~ public equity securities, and short-term investments, which we would expect to be able to liquidate within one week.

~~Intercompany~~No intercompany dividends from insurance companies were paid in the first ~~nine months~~quarter of 2022 between the following companies: AIC, Allstate Insurance Holdings, LLC (“AIH”), the Corporation, American Heritage Life Insurance Company (“AHL”) and Allstate Financial Insurance Holdings Corporation (“AFIHC”).


~~Intercompany dividends~~
~~($ in millions)~~
~~AIC to AIH~~						~~4,203~~
~~AIH to the Corporation~~						~~4,201~~
~~AHL to AFIHC~~						50
~~AFIHC to the Corporation~~						47

2023.

Based on the greater of ~~2021~~2022 statutory net income or 10% of statutory surplus, the maximum amount of dividends that AIC will be able to pay, without prior Illinois Department of Insurance approval, at a given point in time through February ~~2023~~2024, is estimated at ~~$5.51~~$1.22 billion, less dividends paid during the preceding twelve months measured at that point in time. As of ~~September 30, 2022,~~March 31, 2023, we paid ~~dividends of $4.20 billion.~~no dividends.

Dividends may not be paid or declared on our common stock and shares of common stock may not be repurchased unless the full dividends for the latest

completed dividend period on our preferred stock have been declared and paid or provided for. We are prohibited from declaring or paying dividends on our Series G preferred stock if we fail to meet specified capital adequacy, net income or shareholders’ equity levels, except out of the net proceeds of common stock issued during the 90 days prior to the date of declaration. As of September 30, 2022, we satisfied all the requirements with no current restrictions on the payment of preferred stock dividends.

The terms of our outstanding subordinated debentures also prohibit us from declaring or paying any dividends or distributions on our common or preferred stock or redeeming, purchasing, acquiring, or making liquidation payments on our common stock or preferred stock if we have elected to defer interest payments on the subordinated debentures, subject to certain limited exceptions. In the first ~~nine~~three months of ~~2022,~~2023, we did not defer interest payments on the subordinated debentures.

Additional resources to support liquidity are as follows:

•The Corporation and AIC have access to a $750 million unsecured revolving credit facility that is available for short-term liquidity requirements. The maturity date of this facility is November ~~2026.~~2027. The facility is fully subscribed among 11 lenders with the largest commitment being $95 million. The commitments of the lenders are several and no lender is responsible for any other lender’s commitment if such lender fails to make a loan under the facility. This facility contains an increase provision that would allow up to an additional $500 million of borrowing, subject to the lenders’ commitment. This facility has a financial covenant requiring that we not exceed a 37.5% debt to capitalization ratio as defined in the agreement. This ratio was ~~21.6%~~24.2% as of ~~September 30, 2022.~~March 31, 2023. Although the right to borrow under the facility is not subject to a minimum rating requirement, the costs of maintaining the facility and borrowing under it are based on the ratings of our senior unsecured, unguaranteed long-term debt. There were no borrowings under the credit facility during ~~2022.~~2023.

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

•As of ~~September 30, 2022,~~March 31, 2023, there were no balances outstanding for the credit facility or the commercial paper facility and therefore the remaining borrowing capacity was $750 million.

•The Corporation has access to a universal shelf registration statement with the Securities and Exchange Commission that expires in 2024. We can use this shelf registration to issue an unspecified amount of debt securities, common stock (including ~~634~~637 million shares of treasury stock as of ~~September 30, 2022)~~March 31, 2023), preferred stock, depositary shares, warrants, stock purchase contracts, stock purchase units and securities of trust subsidiaries. The specific terms of any securities we issue under this registration statement will be provided in the applicable prospectus supplements.

78First Quarter 2023 Form 10-Q ~~www.allstate.com~~75

~~Recent Developments~~

~~The following updates the regulation disclosures included in Part I, Item 1. Regulation in our annual report on Form 10-K for the year ended December 31, 2021.~~

~~Climate disclosures.~~ In March 2022, the Securities and Exchange Commission (“SEC”) released its climate-related proposed regulation, requiring registrants to provide certain climate-related information in their registration statements and annual reports. The proposed rule would require information about a registrant’s climate-related risks that are reasonably likely to have a material impact on its business, results of operations, or financial condition. The required information about climate-related risks would also include disclosure of a registrant’s greenhouse gas emissions, which have become a commonly used metric to assess a registrant’s exposure to such risks. In addition, under the proposed rule, certain climate-related financial metrics would be required in a registrant’s audited financial statements. The Company is evaluating the anticipated impacts of the proposed guidance to its disclosures.

~~Cybersecurity risk management.~~ The SEC issued a proposed rule in March 2022 to mandate cybersecurity disclosures, including information such as: management's and the board’s role and oversight of cybersecurity risks, policies and procedures and how risks and incidents are likely to impact the financial statements. Additionally, certain incidents would have mandatory reporting on a Form 8-K. The Company is evaluating the anticipated impacts of the proposed guidance to its disclosures.

~~Share repurchase disclosure modernization.~~ The SEC issued two proposed amendments in December 2021 that could impact both the administration of 10b5-1 plans used in part to execute the Company’s stock repurchases and disclosure of activity under those plans. The proposals involve potential daily reporting of share repurchase activity, cooling off periods for both individual and corporate 10b5-1 plans (120 and 30 days, respectively) and a number of new 10-Q and 10-K disclosures that would be subject to SOX Section 302 Certifications. The Company is evaluating the anticipated impacts of the proposed guidance to its disclosures.

~~Inflation Reduction Act of 2022.~~ The Inflation Reduction Act of 2022 (“Act”), which contains several tax-related provisions, was signed into law in August 2022. The Act creates a 15% corporate alternative minimum tax on certain large corporations and an excise tax of 1% on stock repurchases by publicly traded U.S. corporations, effective for repurchases after December 31, 2022. The excise tax on stock repurchases will be classified as an additional cost of the stock acquired included in treasury stock in shareholders' equity. The Company is evaluating the anticipated impacts of the enacted legislation.

~~Third Quarter 2022 Form 10-Q~~ 79

Forward-Looking Statements

This report contains “forward-looking statements” that anticipate results based on our estimates, assumptions and plans that are subject to uncertainty. These statements are made subject to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements do not relate strictly to historical or current facts and may be identified by their use of words like “plans,” “seeks,” “expects,” “will,” “should,” “anticipates,” “estimates,” “intends,” “believes,” “likely,” “targets” and other words with similar meanings. These statements may address, among other things, our strategy for growth, catastrophe exposure management, product development, investment results, regulatory approvals, market position, expenses, financial results, litigation and reserves. We believe that these statements are based on reasonable estimates, assumptions and plans. Forward-looking statements speak only as of the date on which they are made, and we assume no obligation to update any forward-looking statements as a result of new information or future events or developments. In addition, forward-looking statements are subject to certain risks or uncertainties that could cause actual results to differ materially from those communicated in these forward-looking statements. Factors that could cause actual results to differ materially from those expressed in, or implied by, the forward-looking statements include risks related to:

Insurance and Financial Services (1) unexpected increases in claim frequency and severity; (2) catastrophes and severe weather events; (3) limitations in analytical models used for loss cost estimates; (4) price competition and changes in regulation and underwriting standards; (5) actual ~~claims~~claim costs exceeding current reserves; (6) market risk, inflation, and declines in credit quality of our investment ~~portfolio;~~portfolios; (7) our subjective determination of fair value and amount of credit losses for investments; (8) our participation in indemnification programs, including state industry pools and facilities; (9) inability to mitigate the impact associated with changes in capital requirements; (10) a downgrade in financial strength ratings;

Business, Strategy and Operations (11) competition in the industries in which we compete and new or changing technologies; (12) implementation of our ~~transformative growth~~Transformative Growth strategy; (13) our catastrophe management strategy; (14) restrictions on our subsidiaries’ ability to pay dividends; (15) restrictions under terms of certain of our securities on our ability to pay dividends or repurchase our stock; (16) the availability of reinsurance at current levels and prices; (17) counterparty risk related to reinsurance; (18) acquisitions and divestitures of businesses; (19) intellectual property infringement, misappropriation and third-party claims;

Macro, Regulatory and Risk Environment (20) conditions in the global economy and capital ~~markets, including the economic impacts from the recent military conflict between Russia and Ukraine;~~markets; (21) a large-scale pandemic, the occurrence of terrorism, military actions or social unrest; (22) the failure in cyber or other information security controls, as well as the occurrence of events unanticipated in our disaster recovery processes and business continuity planning; (23) changing climate and weather conditions; (24) evolving environmental, social and governance standards and expectations; (25)restrictive regulations and regulatory reforms, including limitations on rate increases and requirements to underwrite business and participate in loss sharing arrangements; ~~(25)~~(26) losses from legal and regulatory actions; ~~(26)~~(27) changes in or the application of accounting standards; ~~(27)~~(28) ~~loss of key vendor relationships~~vendor-related business disruptions or failure of a vendor to provide and protect ~~our~~ data, confidential and proprietary information, or personal information of our customers, claimants or employees; ~~(28)~~(29) our ability to attract, develop and retain talent; and ~~(29)~~(30) misconduct or fraudulent acts by employees, agents and third parties.

Additional information concerning these and other factors may be found in our filings with the Securities and Exchange Commission, including the “Risk Factors” section in our most recent annual report on Form 10-K.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures. We maintain disclosure controls and procedures as defined in Rules 13a-15(e) under the Securities Exchange Act of 1934. Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based upon this evaluation, the principal executive officer and the principal financial officer concluded that our disclosure controls and procedures are effective in providing reasonable assurance that material information required to be disclosed in our reports filed with or submitted to the Securities and Exchange Commission under the Securities Exchange Act is made known to management, including the principal executive officer and the principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting. During the fiscal quarter ended ~~September 30, 2022,~~March 31, 2023, there have been no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

8076 www.allstate.com

Other Information Part II.

Part II. Other Information

Item 1. Legal Proceedings

Information required for Part II, Item 1 is incorporated by reference to the discussion under the heading “Regulation and compliance” and under the heading “Legal and regulatory proceedings and inquiries” in Note 1214 of the condensed consolidated financial statements in Part I, Item 1 of this Form 10-Q.

Item 1A. Risk Factors

There have been no material changes in our risk factors from those disclosed in Part I, Item 1A in our annual report on Form 10-K for the year ended December 31, ~~2021.~~2022.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities


Period	Period	Total number of shares (or units) purchased (1)	Average price paid per share (or unit)		Total number of shares (or units) purchased as part of publicly announced plans or programs (2)	Maximum number (or approximate dollar value) of shares (or units) that may yet be purchased under the plans or programs (3)			Period	Total number of shares (or units) purchased (1)	Average price paid per share (or unit)		Total number of shares (or units) purchased as part of publicly announced plans or programs (2)	Maximum number (or approximate dollar value) of shares (or units) that may yet be purchased under the plans or programs (3)
July 1, 2022 - July 31, 2022
January 1, 2023 - January 31, 2023									January 1, 2023 - January 31, 2023
Open Market Purchases	Open Market Purchases	1,847,253	$	122.30	1,846,288				Open Market Purchases	375,573	$	133.03	375,100

August 1, 2022 - August 31, 2022
February 1, 2023 - February 28, 2023									February 1, 2023 - February 28, 2023
Open Market Purchases	Open Market Purchases	1,871,433	$	123.09	1,870,760				Open Market Purchases	538,124	$	134.02	339,286

September 1, 2022 - September 30, 2022
March 1, 2023 - March 31, 2023									March 1, 2023 - March 31, 2023
Open Market Purchases	Open Market Purchases	1,667,939	$	125.88	1,664,478				Open Market Purchases	518,483	$	114.65	508,120

Total	Total	5,386,625	$	123.68	5,381,526	$	1.16	billion	Total	1,432,180	$	126.75	1,222,506	$	649	million

(1)In accordance with the terms of its equity compensation plans, Allstate acquired the following shares in connection with the vesting of restricted stock units and performance stock awards and the exercise of stock options held by employees and/or directors. The shares were acquired in satisfaction of withholding taxes due upon exercise or vesting and in payment of the exercise price of the options.

~~July: 965~~January: 473

~~August: 673~~February: 198,838

~~September: 3,461~~March: 10,363

(2)From time to time, repurchases under our programs are executed under the terms of a pre-set trading plan meeting the requirements of Rule 10b5-1(c) of the Securities Exchange Act of 1934.

(3)In August 2021, we announced the approval of a common share repurchase program for $5 ~~billion which is expected to be completed after March 31, 2023.~~billion. The Inflation Reduction Act, enacted in August 2022 imposes a 1% excise tax on stock repurchases occurring after December 31, 2022. The excise tax on stock repurchases ~~will be~~is classified as an additional cost of the stock acquired included in treasury stock in shareholders’ equity.~~See the Recent Developments section for further details.~~

~~Third~~First Quarter ~~2022~~2023 Form 10-Q 8177

Item 6. Exhibits

(a)Exhibits

The following is a list of exhibits filed as part of this Form 10-Q.

Incorporated by Reference

Exhibit

Number

Exhibit

Number

Exhibit Description

Form

File

Number

Exhibit

Filing

Date

Filed or

Furnished

Herewith

Exhibit

Number

Exhibit Description

Form

File

Number

Exhibit

Filing

Date

Filed or

Furnished

Herewith

3.1

Restated Certificate of Incorporation filed with the Secretary of State of Delaware on May 23, 2012

8-K

1-11840

3(i)

May 23, 2012

3.2

Amended and Restated Bylaws of The Allstate Corporation as amended November 19, 2015

8-K

1-11840

3.1

November 19, 2015

3.3

Certificate of Designations with respect to the Preferred Stock of the Registrant, Series H, dated August 5, 2019

8-K

1-11840

3.1

August 5, 2019

3.4

Certificate of Designations with respect to the Preferred Stock of the Registrant, Series I, dated November 6 , 2019

8-K

1-11840

3.1

November 8, 2019

3.5

Certificate of Elimination with respect to the Preferred Stock, Series A, C, D, E and F of the Registrant, dated February 20, 2020

10-K

1-11840

3.6

February 21, 2020

3.6

Cer tificate of Elimination with re spect to the Pref erred Stock, S eries G of the Registrant, dated May 1 , 2023

The Allstate Corporation hereby agrees to furnish to the Commission, upon request, the instruments defining the rights of holders of each issue of long-term debt of it and its consolidated subsidiaries

Voluntary Retirement Agreement dated August 18, 2022, between Glenn T. Shapiro and Allstate Insurance Company

8-K

1-11840

August 18, 2022

10.1

Offer Letter dated March 9, 2022 to Robert Toohey

Acknowledgment of awareness from Deloitte & Touche LLP, dated November 2 , 2022, concerning unaudited interim financial information

Acknowledgment of awareness from Deloitte & Touche LLP, dated May 3, 20 23 , concerning unaudited interim financial information

31(i)

Rule 13a-14(a) Certification of Principal Executive Officer

31(i)

Rule 13a-14(a) Certification of Principal Executive Officer

31(i)

Rule 13a-14(a) Certification of Principal Financial Officer

31(i)

Rule 13a-14(a) Certification of Principal Financial Officer

Section 1350 Certifications

101.INS

Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101.INS

Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101.SCH

Inline XBRL Taxonomy Extension Schema Document

101.SCH

Inline XBRL Taxonomy Extension Schema Document

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

104

Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

104

Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

8278 www.allstate.com

Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	The Allstate Corporation
	(Registrant)



~~November 2, 2022~~May 3, 2023	By	/s/ John C. Pintozzi
		John C. Pintozzi
		Senior Vice President, Controller and Chief Accounting Officer
		(Authorized Signatory and Principal Accounting Officer)

~~Third~~First Quarter ~~2022~~2023 Form 10-Q 8379


Rollforward of Level 3 assets and liabilities held at fair value during the three month period ended September 30, 2022
	Balance as of June 30, 2022		Total gains (losses) included in:				Transfers																Balance as of September 30, 2022
($ in millions)			Net income		OCI		Into Level 3		Out of Level 3		Purchases			Sales			Issues			Settlements
Assets
Fixed income securities:
Municipal	$	18	$	—	$	—	$	2	$	(1)		$	—		$	—		$	—		$	—	$	19
Corporate - public	77		—		(2)		—		—			—			(7)			—			—		68
Corporate - privately placed	73		1		1		—		—			18			(22)			—			—		71
ABS	18		—		—		—		—			30			—			—			—		48
Total fixed income securities	186		1		(1)		2		(1)			48			(29)			—			—		206
Equity securities	372		(16)		—		—		—			8			(37)			—			—		327
Short-term investments	8		—		—		—		—			—			—			—			(2)		6
Other investments	2		—		—		—		—			—			—			—			—		2
Other assets	108		(4)		—		—		—			—			—			—			—		104
Total recurring Level 3 assets	676		(19)		(1)		2		(1)			56			(66)			—			(2)		645
Liabilities
Total recurring Level 3 liabilities	$	—	$	—	$	—	$	—	$	—		$	—		$	—		$	—		$	—	$	—


Rollforward of Level 3 assets and liabilities held at fair value during the three month period ended September 30, 2021
	Balance as of June 30, 2021		Total gains (losses) included in:				Transfers				Transfers to (from) held for sale										Balance as of September 30, 2021
($ in millions)			Net income		OCI		Into Level 3		Out of Level 3				Purchases		Sales		Issues		Settlements
Assets
Fixed income securities:
Municipal	$	18	$	—	$	(1)	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	17
Corporate - public	20		—		—		—		—		(1)		—		—		—		—		19
Corporate - privately placed	84		1		1		—		(22)		(2)		104		(7)		—		(5)		154
ABS	33		—		—		1		—		—		5		—		—		(30)		9
Total fixed income securities	155		1		—		1		(22)		(3)		109		(7)		—		(35)		199
Equity securities	405		31		—		—		—		—		27		(87)		—		—		376
Short-term investments	—		—		—		—		—		—		14		—		—		—		14
Other investments	3		—		—		—		—		—		—		(1)		—		—		2
Assets held for sale	164		1		—		—		(20)		3		—		—		—		(2)		146
Total recurring Level 3 assets	727		33		—		1		(42)		—		150		(95)		—		(37)		737
Liabilities
Liabilities held for sale	(490)		15		—		—		—		—		—		—		(9)		5		(479)
Total recurring Level 3 liabilities	$	(490)	$	15	$	—	$	—	$	—	$	—	$	—	$	—	$	(9)	$	5	$	(479)


Rollforward of Level 3 assets and liabilities held at fair value during the nine month period ended September 30, 2021
	Balance as of December 31, 2020		Total gains (losses) included in:				Transfers				Transfers to (from) held for sale										Balance as of September 30, 2021
($ in millions)			Net income		OCI		Into Level 3		Out of Level 3				Purchases		Sales		Issues		Settlements
Assets
Fixed income securities:
Municipal	$	17	$	—	$	—	$	—	$	—	$	—	$	3	$	—	$	—	$	(3)	$	17
Corporate - public	67		1		(2)		—		—		(7)		13		(53)		—		—		19
Corporate - privately placed	63		—		2		8		—		14		103		(31)		—		(5)		154
ABS	79		1		—		—		(32)		—		57		(42)		—		(54)		9
Total fixed income securities	226		2		—		8		(32)		7		176		(126)		—		(62)		199
Equity securities	304		63		—		—		—		101		40		(132)		—		—		376
Short-term investments	35		—		—		—		—		—		14		—		—		(35)		14
Other investments	—		—		—		—		—		—		3		(1)		—		—		2
Assets held for sale	267		3		—		5		(13)		(108)		3		(6)		—		(5)		146
Total recurring Level 3 assets	832		68		—		13		(45)		—		236		(265)		—		(102)		737
Liabilities
Liabilities held for sale	(516)		46		—		—		—		—		—		—		(25)		16		(479)
Total recurring Level 3 liabilities	$	(516)	$	46	$	—	$	—	$	—	$	—	$	—	$	—	$	(25)	$	16	$	(479)