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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 
Date of report (Date of earliest event reported): May 5, 2020
THE ALLSTATE CORPORATION
(Exact name of registrant as specified in its charter)
 
Delaware
 
1-11840
 
36-3871531
(State or other
jurisdiction of incorporation)
 
(Commission
File Number)
 
(IRS Employer
Identification No.)
 2775 Sanders Road, Northbrook, Illinois    60062
(Address of principal executive offices)    (Zip Code)
 
Registrant’s telephone number, including area code  (847) 402-5000
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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 $0.01 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 is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
 
 
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. ____





1


Section 2 – Financial Information
 
Item 2.02.                             Results of Operations and Financial Condition.
 
The Registrant’s press release dated May 5, 2020, announcing its financial results for the first quarter of 2020, and the Registrant’s first quarter 2020 investor supplement are furnished as Exhibits 99.1 and 99.2, respectively, to this report.  The information contained in the press release and the investor supplement are furnished and not filed pursuant to instruction B.2 of Form 8-K.
 
Section 9 – Financial Statements and Exhibits
 
Item 9.01.                             Financial Statements and Exhibits.
 
(d)  Exhibits
 
99.1                                                Registrant’s press release dated May 5, 2020
99.2                                             First quarter 2020 Investor Supplement of The Allstate Corporation
104     Cover Page Interactive Data File (formatted as inline XBRL).































2




SIGNATURES
 
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 hereunto duly authorized.
 
 
 
THE ALLSTATE CORPORATION
 
(Registrant)
 
 
 
 
By:
/s/ John C. Pintozzi
 
Name: John C. Pintozzi
 
Title: Senior Vice President, Controller, and Chief Accounting Officer

Date: May 5, 2020

3
Exhibit

Exhibit 99.1

https://cdn.kscope.io/d67cceb5defc3b988fe2b989d6a62c90-earningsreleaseimagea30.jpg
FOR IMMEDIATE RELEASE

Contacts:    
Greg Burns                Mark Nogal                
Media Relations          Investor Relations            
(847) 402-5600                (847) 402-2800                

Allstate Delivers Strong Operating Results
Proactively responds to coronavirus

NORTHBROOK, Ill., May 5, 2020 – The Allstate Corporation (NYSE: ALL) today reported financial results for the first quarter of 2020.
The Allstate Corporation Consolidated Highlights
 
Three months ended March 31,
($ in millions, except per share data and ratios)
2020
2019
% / pts
Change
Consolidated revenues
$
10,076

$
10,990

(8.3
)
Net income applicable to common shareholders
513

1,261

(59.3
)
per diluted common share
1.59

3.74

(57.5
)
Adjusted net income*
1,140

776

46.9

per diluted common share*
3.54

2.30

53.9

Return on common shareholders’ equity (trailing twelve months)
 
 
 
Net income applicable to common shareholders
18.0
%
10.8
%
7.2

Adjusted net income*
18.2
%
13.5
%
4.7

Book value per common share
69.67

63.59

9.6

Property-Liability combined ratio
 
 
 
Recorded
84.9

91.8

(6.9
)
Underlying combined ratio*
82.2

84.2

(2.0
)
Property-Liability insurance premiums earned
8,881

8,507

4.4

Catastrophe losses
211

680

(69.0
)
Shelter-in-Place Payback expense
210

—

NA

Total policies in force (in thousands)
153,712

123,871

24.1

*
Measures used in this release that are not based on accounting principles generally accepted in the United States of America (“non-GAAP”) are denoted with an asterisk and defined and reconciled to the most directly comparable GAAP measure in the “Definitions of Non-GAAP Measures” section of this document.
NA = not applicable

“Allstate’s proactive risk and return management served customers and shareholders exceptionally well as the coronavirus pandemic hit our shores. After 89 years in the catastrophe business, we know success is determined by acting decisively, quickly and putting people first,” said Tom Wilson, Chair, President and CEO of The Allstate Corporation. “We led the industry in helping customers, including providing a Shelter-in-Place Payback of over $600 million since they are driving less due to social distancing requirements. Our employees and agents reacted quickly, with over 95% working from home to serve customers. Allstate Identity Protection is also providing free identity protection to any U.S. resident for the rest of the year. Public equity holdings were reduced in February by $4 billion as we adjusted our risk and return profile, which lowered the negative impact of the March equity market decline.”


1


“Operating and financial results were also strong with more policies in force and excellent returns for shareholders. Revenues were $10.1 billion and Property-Liability insurance premiums earned increased 4.4% over the prior year. Net income was $513 million in the quarter, and adjusted net income* was $1.14 billion, or $3.54 per common share, which was 53.9% higher than last year, reflecting lower catastrophe losses. Adjusted net income return on equity* was 18.2% for the last 12 months. Shareholders also benefited by receiving $670 million of cash through common share repurchases and dividends in the quarter. Allstate’s role in creating prosperity goes far beyond quarterly results, as laid out in our 2019 Prosperity Report,” concluded Wilson.


First Quarter 2020 Results

•
Total revenue of $10.08 billion in the first quarter of 2020 decreased 8.3% compared to the prior year quarter, primarily driven by net realized capital losses of $462 million in the first quarter of 2020 compared to gains of $662 million in the first quarter of 2019. Net investment income decreased 35.0% in the first quarter on lower performance-based results. Property-Liability insurance premiums earned increased 4.4%.

•
Net income applicable to common shareholders was $513 million, or $1.59 per diluted share, in the first quarter of 2020, compared to net income of $1.26 billion, or $3.74 per diluted share, in the first quarter of 2019. Higher underwriting income was more than offset by net realized capital losses and pension and other postretirement remeasurement losses. Adjusted net income* of $1.14 billion, or $3.54 per diluted share, for the first quarter of 2020 was above the prior year quarter, primarily due to higher underwriting income.

Property-Liability Results
 
Three months ended March 31,
($ in millions, except ratios)
2020
2019
% / pts
Change
Premiums written
8,592

8,327

3.2
%
Underwriting income
1,345

700

92.1

 
 
 
 
Recorded Combined Ratio
84.9

91.8

(6.9
)
Allstate Brand Auto
88.2

90.4

(2.2
)
Allstate Brand Homeowners
70.9

92.2

(21.3
)
Esurance Brand
96.3

99.4

(3.1
)
Encompass Brand
94.5

100.8

(6.3
)
 
 
 
 
Underlying Combined Ratio*
82.2

84.2

(2.0
)
Allstate Brand Auto
87.7

90.2

(2.5
)
Allstate Brand Homeowners
61.8

63.7

(1.9
)
Esurance Brand
95.6

97.4

(1.8
)
Encompass Brand
89.8

88.5

1.3



•
Property-Liability written premium of $8.59 billion increased 3.2% in the first quarter of 2020 compared to the prior year, driven by higher average premiums and policy growth in the Allstate brand. The recorded combined ratio of 84.9 in the first quarter of 2020 generated underwriting income of $1.35 billion, an increase of $645 million compared to the prior year quarter, primarily due to lower catastrophe losses, increased premiums earned and a decline in auto losses, partially offset by the Shelter-in-Place Payback expense.

◦
In response to the coronavirus pandemic, Allstate is providing a Shelter-in-Place Payback of more than $600 million to auto insurance customers, recording a $210 million expense in the first quarter of 2020. In addition, we are extending auto insurance coverage to customers using their personal vehicles for commercial purposes and offering auto and home insurance customers the option to delay two consecutive monthly premium payments without penalty.



2

◦
The underlying combined ratio* of 82.2 for the first quarter of 2020 was 2.0 points below the prior year quarter, reflecting higher premiums earned and lower losses. This was partially offset by the Shelter-in-Place Payback to our customers, which increased the expense ratio by 2.4 points in the first quarter. Excluding this impact, the expense ratio improved by 1.0 point to 23.4, compared to the first quarter of 2019.

◦
Allstate brand auto insurance net written premium grew 3.3%, and policies in force increased 0.9% in the first quarter of 2020 compared to the prior year quarter. The recorded combined ratio of 88.2 in the first quarter of 2020 was 2.2 points below the prior year quarter, and the underlying combined ratio* of 87.7 in the quarter was 2.5 points below the first quarter of 2019, primarily due to higher premiums earned and lower accident frequency from reduced miles driven. This was partially offset by higher severity and a 3.4 point impact from the Shelter-in-Place Payback expense.

◦
Allstate brand homeowners insurance net written premium grew 3.4%, and policies in force increased 0.9% in the first quarter of 2020 compared to the prior year quarter. The recorded combined ratio of 70.9 in the first quarter of 2020 was 21.3 points below the first quarter of 2019, primarily driven by lower catastrophe losses. The underlying combined ratio* of 61.8 was 1.9 points better than the prior year quarter, primarily due to a lower loss and expense ratio and increased premiums earned.

◦
Esurance brand net written premium decreased 2.3% in the first quarter of 2020 compared to the prior year quarter, primarily driven by a decline in auto policies in force partially offset by higher average premiums. The recorded combined ratio of 96.3 in the first quarter of 2020 was 3.1 points below the prior year quarter due to higher premiums earned and lower accident frequency, partially offset by the Shelter-in-Place Payback expense. The underlying combined ratio* of 95.6 was 1.8 points lower than the first quarter of 2019.

◦
Encompass brand net written premium decreased 0.9% in the first quarter of 2020 compared to the prior year quarter, driven by a decline in policies in force. The recorded combined ratio of 94.5 in the first quarter of 2020 was 6.3 points lower than the prior year quarter, primarily driven by lower catastrophe losses. The underlying combined ratio* of 89.8 in the first quarter was 1.3 points higher than the prior year quarter, driven by higher severity and the Shelter-in-Place Payback expense, partially offset by lower accident frequency.

Allstate Investment Results
 
Three months ended March 31,
($ in millions, except ratios)
2020
2019
% / pts
Change
Net investment income
$
421

$
648

(35.0
)
Market-based investment income(1)
674

693

(2.7
)
Performance-based investment (loss) income(1)
(208
)
6

NM

Realized capital gains (losses)
(462
)
662

NM

Change in unrealized net capital gains and losses, pre-tax
(1,837
)
1,335

NM

Total return on investment portfolio
(2.4
)%
3.3
%
(5.7
)
Total return on investment portfolio (trailing twelve months)
3.6
 %
4.7
%
(1.1
)
(1) 
Investment expenses are not allocated between market-based and performance-based portfolios with the exception of investee level expenses.
NM = not meaningful


•
Allstate Investments $84.8 billion portfolio generated net investment income of $421 million in the first quarter of 2020, a decrease of $227 million from the prior year quarter, due to lower performance-based results. In February, we reduced equity exposure by $4 billion, primarily through the sale of public equity securities at an average sale price equivalent to 3,281 on the S&P 500 compared to 2,585 at March 31, 2020. The proceeds were invested in investment grade fixed income securities.

◦
Total return on the investment portfolio was -2.4% for the quarter, reflecting lower valuations for fixed income and equity investments.


3

◦
Market-based investments contributed $674 million of investment income in the first quarter of 2020, a decrease of $19 million, or -2.7%, compared to the prior year quarter, due to lower interest-bearing portfolio yields.

◦
Performance-based investment losses were $208 million in the first quarter of 2020, compared to income of $6 million in the prior year quarter. First quarter results include write-downs of $137 million on four underperforming private equity investments. We also recognized declines in the value of limited partnership interests where available information enabled updated estimates. This included updating publicly traded investments held within limited partnerships to their March 31, 2020 values, which reduced income by $52 million. Additionally, $195 million of valuation increases reported in the fourth quarter 2019 partnership financial statements were excluded from income considering the equity market decline in March.

◦
Net realized capital losses were $462 million in the first quarter of 2020, compared to gains of $662 million in the prior year quarter.

◦
Unrealized net capital gains decreased $1.84 billion from prior year end, as fixed income valuations declined, reflecting wider credit spreads, which were only partially offset by lower interest rates.

Allstate Life, Benefits and Annuities Results
 
Three months ended March 31,
($ in millions)
2020
2019
% Change
Premiums and Contract Charges
 
 
 
Allstate Life
$
333

$
337

(1.2
)%
Allstate Benefits
282

288

(2.1
)
Allstate Annuities
2

3

(33.3
)
Adjusted Net Income (Loss)
 
 


Allstate Life
$
80

$
73

9.6
 %
Allstate Benefits
24

31

(22.6
)
Allstate Annuities
(139
)
(25
)
NM


•
Allstate Life adjusted net income was $80 million in the first quarter of 2020, a $7 million increase from the prior year quarter, primarily driven by lower operating costs and expenses.

•
Allstate Benefits premium declined 2.1% compared to the prior year quarter, primarily due to decreases in disability products driven by the non-renewal of a large underperforming account in the fourth quarter of 2019. Adjusted net income of $24 million in the first quarter of 2020 was $7 million lower than the prior year quarter, due to higher operating costs and expenses driven by increased investments in technology and higher amortization of DAC.

•
Allstate Annuities adjusted net loss was $139 million in the first quarter of 2020 compared to adjusted net loss of $25 million in the prior year quarter, primarily due to lower performance-based investment income.


4

Service Businesses Results
 
Three months ended March 31,
($ in millions)
2020
2019
% / $
Change
Total Revenues
$
430

$
392

9.7
 %
Allstate Protection Plans
200

164

22.0

Allstate Dealer Services
112

107

4.7

Allstate Roadside Services
60

73

(17.8
)
Arity
30

24

25.0

Allstate Identity Protection
28

24

16.7

Adjusted Net Income (Loss)
$
37

$
11

$
26

Allstate Protection Plans
34

14

20

Allstate Dealer Services
7

6

1

Allstate Roadside Services
2

(6
)
8

Arity
(3
)
(2
)
(1
)
Allstate Identity Protection
(3
)
(1
)
(2
)

•
Service Businesses policies in force grew to 113.7 million, and revenues increased to $430 million in the first quarter, 9.7% higher than the first quarter of 2019. Adjusted net income of $37 million increased by $26 million compared to the prior year quarter, primarily due to growth at Allstate Protection Plans and improved results at Allstate Roadside Services.
◦
Allstate Protection Plans revenue was $200 million in the first quarter of 2020, reflecting policy growth of 29.3 million compared to the first quarter of 2019. Adjusted net income of $34 million in the first quarter of 2020 was $20 million higher than the prior year quarter due to increased revenue and improved loss experience.

◦
Allstate Dealer Services revenue of $112 million was 4.7% higher than the first quarter of 2019, and adjusted net income was $7 million.

◦
Allstate Roadside Services revenue of $60 million in the first quarter of 2020 decreased 17.8% compared to the first quarter of 2019, reflecting declines in wholesale and retail business. Adjusted net income of $2 million in the first quarter was $8 million better than the prior year quarter, driven by fewer claims and lower operating expenses.

◦
Arity revenue was $30 million in the first quarter of 2020, primarily from contracts with affiliates. The adjusted net loss of $3 million in the quarter includes investments in capabilities and growth.

◦
Allstate Identity Protection had revenues of $28 million and an adjusted net loss of $3 million in the first quarter of 2020 related to growth and integration expenses.


Proactive Capital Management

“Allstate’s capital position and liquidity remain strong, including $3.4 billion in parent holding company deployable assets and $8.8 billion in highly liquid securities generally saleable in one week. In the first quarter we generated strong returns on capital and plan to continue share repurchases under the current $3 billion program, which is expected to be completed by the end of 2021,” said Mario Rizzo, Chief Financial Officer.








5

Visit www.allstateinvestors.com to view additional information about Allstate’s results, including a webcast of its quarterly conference call and the call presentation. The conference call will be held at 9 a.m. ET on Wednesday, May 6. Financial information, including material announcements about The Allstate Corporation, is routinely posted on www.allstateinvestors.com.



Forward-Looking Statements
This news release 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. These 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. We believe these statements are based on reasonable estimates, assumptions and plans. However, if the estimates, assumptions or plans underlying the forward-looking statements prove inaccurate or if other risks or uncertainties arise, actual results could 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 may be found in our filings with the U.S. Securities and Exchange Commission, including the “Risk Factors” section in our most recent annual report on Form 10-K. Forward-looking statements are as of the date on which they are made, and we assume no obligation to update or revise any forward-looking statement.

6

THE ALLSTATE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED)
 
 
 
 
($ in millions, except par value data)

March 31, 2020
 
December 31, 2019
Assets
 
 
 
Investments:
 
 
 
Fixed income securities, at fair value (amortized cost, net $58,945 and $56,293)
$
59,857

 
$
59,044

Equity securities, at fair value (cost $3,631 and $6,568)
3,701

 
8,162

Mortgage loans, net
4,759

 
4,817

Limited partnership interests
7,087

 
8,078

Short-term, at fair value (amortized cost $5,671 and $4,256)
5,671

 
4,256

Other, net
3,767

 
4,005

Total investments
84,842

 
88,362

Cash
338

 
338

Premium installment receivables, net
6,401

 
6,472

Deferred policy acquisition costs
4,742

 
4,699

Reinsurance and indemnification recoverables, net
9,214

 
9,211

Accrued investment income
593

 
600

Property and equipment, net
1,123

 
1,145

Goodwill
2,544

 
2,545

Other assets, net
3,876

 
3,534

Separate Accounts
2,434

 
3,044

Total assets
$
116,107

 
$
119,950

Liabilities
 
 
 
Reserve for property and casualty insurance claims and claims expense
$
27,148

 
$
27,712

Reserve for life-contingent contract benefits
12,244

 
12,300

Contractholder funds
17,404

 
17,692

Unearned premiums
14,999

 
15,343

Claim payments outstanding
892

 
929

Deferred income taxes
331

 
1,154

Other liabilities and accrued expenses
9,849

 
9,147

Long-term debt
6,633

 
6,631

Separate Accounts
2,434

 
3,044

Total liabilities
91,934

 
93,952

Shareholders’ equity
 
 
 
Preferred stock and additional capital paid-in, $1 par value, 25 million shares authorized, 81.0 thousand and 92.5 thousand shares issued and outstanding, $2,025 and $2,313 aggregate liquidation preference
1,970

 
2,248

Common stock, $.01 par value, 3.0 billion shares authorized and 900 million issued, 315 million and 319 million shares outstanding
9

 
9

Additional capital paid-in
3,519

 
3,463

Retained income
48,326

 
48,074

Treasury stock, at cost (585 million and 581 million shares)
(30,209
)
 
(29,746
)
Accumulated other comprehensive income:
 
 
 
Unrealized net capital gains and losses on fixed income securities with credit losses
—

 
70

Other unrealized net capital gains and losses
714

 
2,094

Unrealized adjustment to DAC, DSI and insurance reserves
(184
)
 
(277
)
Total unrealized net capital gains and losses
530

 
1,887

Unrealized foreign currency translation adjustments
(98
)
 
(59
)
Unamortized pension and other postretirement prior service credit
126

 
122

Total accumulated other comprehensive income
558

 
1,950

Total shareholders’ equity
24,173

 
25,998

Total liabilities and shareholders’ equity
$
116,107

 
$
119,950





7

THE ALLSTATE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
 
 
($ in millions, except per share data)
Three months ended March 31,
 
2020
 
2019
 
 
 
 
Revenues
 
 
 
Property and casualty insurance premiums
$
9,235

 
$
8,802

Life premiums and contract charges
617

 
628

Other revenue
265

 
250

Net investment income
421

 
648

Realized capital gains (losses)
(462
)
 
662

Total revenues
10,076

 
10,990

 
 
 
 
Costs and expenses
 
 
 
Property and casualty insurance claims and claims expense
5,341

 
5,820

Shelter-in-Place Payback expense
210

 
—

Life contract benefits
501

 
497

Interest credited to contractholder funds
132

 
162

Amortization of deferred policy acquisition costs
1,401

 
1,364

Operating costs and expenses
1,399

 
1,380

Pension and other postretirement remeasurement (gains) losses
318

 
15

Restructuring and related charges
5

 
18

Amortization of purchased intangibles
28

 
32

Interest expense
81

 
83

Total costs and expenses
9,416

 
9,371

 
 
 
 
Gain on disposition of operations
1

 
1

 
 
 
 
Income from operations before income tax expense
661

 
1,620

 
 
 
 
Income tax expense
112

 
328

 
 
 
 
Net income
549

 
1,292

 
 
 
 
Preferred stock dividends
36

 
31

 
 
 
 
Net income applicable to common shareholders
$
513

 
$
1,261

 
 
 
 
Earnings per common share:
 
 
 
 
 
 
 
Net income applicable to common shareholders per common share – Basic
$
1.62

 
$
3.79

 
 
 
 
Weighted average common shares – Basic
317.4

 
332.6

 
 
 
 
Net income applicable to common shareholders per common share – Diluted
$
1.59

 
$
3.74

 
 
 
 
Weighted average common shares – Diluted
322.4

 
337.5



8

Definitions of Non-GAAP Measures
We believe that investors’ understanding of Allstate’s performance is enhanced by our disclosure of the following non-GAAP measures. Our methods for calculating these measures may differ from those used by other companies and therefore comparability may be limited.
Adjusted net income is net income applicable to common shareholders, excluding:
•
realized capital gains and losses, after-tax, except for periodic settlements and accruals on non-hedge derivative instruments, which are reported with realized capital gains and losses but included in adjusted net income,
•
pension and other postretirement remeasurement gains and losses, after-tax,
•
valuation changes on embedded derivatives not hedged, after-tax,
•
amortization of deferred policy acquisition costs (“DAC”) and deferred sales inducements (“DSI”), to the extent they resulted from the recognition of certain realized capital gains and losses or valuation changes on embedded derivatives not hedged, after-tax,
•
business combination expenses and the amortization or impairment of purchased intangibles, after-tax,
•
gain (loss) on disposition of operations, after-tax, and
•
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.
Net income applicable to common shareholders is the GAAP measure that is most directly comparable to adjusted net income.
We use adjusted net income as an important measure to evaluate our results of operations. We believe that the measure provides investors with a valuable measure of the company’s ongoing performance because it reveals trends in our insurance and financial services business that may be obscured by the net effect of realized capital gains and losses, pension and other postretirement remeasurement gains and losses, valuation changes on embedded derivatives not hedged, business combination expenses and the amortization or impairment of purchased intangibles, gain (loss) on disposition of operations and adjustments for other significant non-recurring, infrequent or unusual items. Realized capital gains and losses, pension and other postretirement remeasurement gains and losses, valuation changes on embedded derivatives not hedged and gain (loss) on disposition of operations may vary significantly between periods and are generally driven by business decisions and external economic developments such as capital market conditions, the timing of which is unrelated to the insurance underwriting process. Consistent with our intent to protect results or earn additional income, adjusted net income includes periodic settlements and accruals on certain derivative instruments that are reported in realized capital gains and losses because they do not qualify for hedge accounting or are not designated as hedges for accounting purposes. These instruments are used for economic hedges and to replicate fixed income securities, and by including them in adjusted net income, we are appropriately reflecting their trends in our performance and in a manner consistent with the economically hedged investments, product attributes (e.g. net investment income and interest credited to contractholder funds) or replicated investments. Business combination expenses are excluded because they are non-recurring in nature and the amortization or impairment of purchased intangibles is excluded because it relates to the acquisition purchase price and is not indicative of our underlying business results or trends. Non-recurring items are excluded because, by their nature, they are not indicative of our business or economic trends. Accordingly, adjusted net income excludes the effect of items that tend to be highly variable from period to period and highlights the results from ongoing operations and the underlying profitability of our business. A byproduct of excluding these items to determine adjusted net income is the transparency and understanding of their significance to net income variability and profitability while recognizing these or similar items may recur in subsequent periods. Adjusted net income is used by management along with the other components of net income applicable to common shareholders to assess our performance. We use adjusted measures of adjusted net income in incentive compensation. Therefore, we believe it is useful for investors to evaluate net income applicable to common shareholders, adjusted net income and their components separately and in the aggregate when reviewing and evaluating our performance. We note that investors, financial analysts, financial and business media organizations and rating agencies utilize adjusted net income results in their evaluation of our and our industry’s financial performance and in their investment decisions, recommendations and communications as it represents a reliable, representative and consistent measurement of the industry and the company and management’s performance. We note that the price to earnings multiple commonly used by insurance investors as a forward-looking valuation technique uses adjusted net income as the denominator. Adjusted net income should not be considered a substitute for net income applicable to common shareholders and does not reflect the overall profitability of our business.
The following tables reconcile net income applicable to common shareholders and adjusted net income. Taxes on adjustments to reconcile net income applicable to common shareholders and adjusted net income generally use a 21% effective tax rate and are reported net of income taxes as the reconciling adjustment.
($ in millions, except per share data)
Three months ended March 31,
 
Consolidated
 
Per diluted common share
 
2020
 
2019
 
2020
 
2019
Net income applicable to common shareholders
$
513

 
$
1,261

 
$
1.59

 
$
3.74

Realized capital (gains) losses, after-tax
366

 
(524
)
 
1.13

 
(1.55
)
Pension and other postretirement remeasurement (gains) losses, after-tax
251

 
11

 
0.78

 
0.03

Valuation changes on embedded derivatives not hedged, after-tax
(14
)
 
3

 
(0.04
)
 
0.01

DAC and DSI amortization relating to realized capital gains and losses and valuation changes on embedded derivatives not hedged, after-tax
3

 
2

 
0.01

 
—

Reclassification of periodic settlements and accruals on non-hedge derivative instruments, after-tax
—

 
(1
)
 
—

 
—

Business combination expenses and the amortization of purchased intangibles, after-tax
22

 
25

 
0.07

 
0.07

Gain on disposition of operations, after-tax
(1
)
 
(1
)
 
—

 
—

Adjusted net income*
$
1,140

 
$
776

 
$
3.54

 
$
2.30


9

Adjusted net income return on common shareholders’ equity is a ratio that uses a non-GAAP measure. It is calculated by dividing the rolling 12-month adjusted net income by the average of common shareholders’ equity at the beginning and at the end of the 12-months, after excluding the effect of unrealized net capital gains and losses. Return on common shareholders’ equity is the most directly comparable GAAP measure. We use adjusted net income as the numerator for the same reasons we use adjusted net income, as discussed above. We use average common shareholders’ equity excluding the effect of unrealized net capital gains and losses for the denominator as a representation of common shareholders’ equity primarily attributable to the company’s earned and realized business operations because it eliminates the effect of items that are unrealized and vary significantly between periods due to external economic developments such as capital market conditions like changes in equity prices and interest rates, the amount and timing of which are unrelated to the insurance underwriting process. We use it to supplement our evaluation of net income applicable to common shareholders and return on common shareholders’ equity because it excludes the effect of items that tend to be highly variable from period to period. We believe that this measure is useful to investors and that it provides a valuable tool for investors when considered along with return on common shareholders’ equity because it eliminates the after-tax effects of realized and unrealized net capital gains and losses that can fluctuate significantly from period to period and that are driven by economic developments, the magnitude and timing of which are generally not influenced by management. In addition, it eliminates non-recurring items that are not indicative of our ongoing business or economic trends. A byproduct of excluding the items noted above to determine adjusted net income return on common shareholders’ equity from return on common shareholders’ equity is the transparency and understanding of their significance to return on common shareholders’ equity variability and profitability while recognizing these or similar items may recur in subsequent periods. We use adjusted measures of adjusted net income return on common shareholders’ equity in incentive compensation. Therefore, we believe it is useful for investors to have adjusted net income return on common shareholders’ equity and return on common shareholders’ equity when evaluating our performance. We note that investors, financial analysts, financial and business media organizations and rating agencies utilize adjusted net income return on common shareholders’ equity results in their evaluation of our and our industry’s financial performance and in their investment decisions, recommendations and communications as it represents a reliable, representative and consistent measurement of the industry and the company and management’s utilization of capital. We also provide it to facilitate a comparison to our long-term adjusted net income return on common shareholders’ equity goal. Adjusted net income return on common shareholders’ equity should not be considered a substitute for return on common shareholders’ equity and does not reflect the overall profitability of our business.
The following tables reconcile return on common shareholders’ equity and adjusted net income return on common shareholders’ equity.
($ in millions)
For the twelve months ended March 31,
 
2020
 
2019
Return on common shareholders’ equity
 
 
 
Numerator:
 
 
 
Net income applicable to common shareholders
$
3,930

 
$
2,296

Denominator:
 
 
 
Beginning common shareholders’ equity (1)
$
21,488

 
$
20,970

Ending common shareholders’ equity (1)
22,203

 
21,488

Average common shareholders’ equity
$
21,846

 
$
21,229

Return on common shareholders’ equity
18.0
%
 
10.8
%

($ in millions)
For the twelve months ended March 31,
 
2020
 
2019
Adjusted net income return on common shareholders’ equity
 
 
 
Numerator:
 
 
 
Adjusted net income *
$
3,841

 
$
2,797

 
 
 
 
Denominator:
 
 
 
Beginning common shareholders’ equity (1)
$
21,488

 
$
20,970

Less: Unrealized net capital gains and losses
972

 
187

Adjusted beginning common shareholders’ equity
20,516

 
20,783

 
 
 
 
Ending common shareholders’ equity (1)
22,203

 
21,488

Less: Unrealized net capital gains and losses
530

 
972

Adjusted ending common shareholders’ equity
21,673

 
20,516

Average adjusted common shareholders’ equity
$
21,095

 
$
20,650

Adjusted net income return on common shareholders’ equity *
18.2
%
 
13.5
%
_____________
(1) Excludes equity related to preferred stock of $1,970 million as of March 31, 2020, $1,930 million as of March 31, 2019 and $2,303 million as of March 31, 2018.



10


Combined ratio excluding the effect of catastrophes, prior year reserve reestimates and amortization or impairment of purchased intangibles (“underlying combined ratio”) is a non-GAAP ratio, which is computed as the difference between four GAAP operating ratios: the combined ratio, the effect of catastrophes on the combined ratio, the effect of prior year non-catastrophe reserve reestimates on the combined ratio, and the effect of amortization or impairment of purchased intangibles on the combined ratio. We believe that this ratio is useful to investors and it is used by management to reveal the trends in our Property-Liability business that may be obscured by catastrophe losses, prior year reserve reestimates and amortization or impairment of purchased intangibles. Catastrophe losses cause our loss trends to vary significantly between periods as a result of their incidence of occurrence and magnitude, and can have a significant impact on the combined ratio. Prior year reserve reestimates are caused by unexpected loss development on historical reserves, which could increase or decrease current year net income. Amortization or impairment of purchased intangibles relates to the acquisition purchase price and is not indicative of our underlying insurance business results or trends. We believe it is useful for investors to evaluate these components separately and in the aggregate when reviewing our underwriting performance. We also provide it to facilitate a comparison to our outlook on the underlying combined ratio. The most directly comparable GAAP measure is the combined ratio. The underlying combined ratio should not be considered a substitute for the combined ratio and does not reflect the overall underwriting profitability of our business.
The following tables reconcile the respective combined ratio to the underlying combined ratio. Underwriting margin is calculated as 100% minus the combined ratio.
Property-Liability
Three months ended March 31,
 
2020
 
2019
Combined ratio
84.9

 
91.8

Effect of catastrophe losses
(2.4
)
 
(8.0
)
Effect of prior year non-catastrophe reserve reestimates
(0.3
)
 
0.4

Underlying combined ratio*
82.2

 
84.2

 
 
 
 
Effect of prior year catastrophe reserve reestimates
(0.2
)
 
0.6

 
 
 
 
Effect of Shelter-in-Place Payback expense on combined and expense ratios
2.4

 
—

Allstate brand - Total
Three months ended March 31,
 
2020
 
2019
Combined ratio
83.8

 
90.9

Effect of catastrophe losses
(2.4
)
 
(8.3
)
Effect of prior year non-catastrophe reserve reestimates
(0.3
)
 
0.6

Underlying combined ratio*
81.1

 
83.2

 
 
 
 
Effect of prior year catastrophe reserve reestimates
(0.2
)
 
0.6

 
 
 
 
Effect of Shelter-in-Place Payback expense on combined and expense ratios
2.3

 
—

Allstate brand - Auto Insurance
Three months ended March 31,
 
2020
 
2019
Combined ratio
88.2

 
90.4

Effect of catastrophe losses
(0.2
)
 
(1.3
)
Effect of prior year non-catastrophe reserve reestimates
(0.3
)
 
1.1

Underlying combined ratio*
87.7

 
90.2

 
 
 
 
Effect of prior year catastrophe reserve reestimates
(0.1
)
 
—

 
 
 
 
Effect of Shelter-in-Place Payback expense on combined and expense ratios
3.4

 
—

Allstate brand - Homeowners Insurance
Three months ended March 31,
 
2020
 
2019
Combined ratio
70.9

 
92.2

Effect of catastrophe losses
(8.9
)
 
(28.2
)
Effect of prior year non-catastrophe reserve reestimates
(0.2
)
 
(0.3
)
Underlying combined ratio*
61.8

 
63.7

 
 
 
 
Effect of prior year catastrophe reserve reestimates
(0.4
)
 
2.3


11

Esurance brand - Total
Three months ended March 31,
 
2020
 
2019
Combined ratio
96.3

 
99.4

Effect of catastrophe losses
(0.6
)
 
(1.2
)
Effect of prior year non-catastrophe reserve reestimates
(0.1
)
 
(0.6
)
Effect of amortization of purchased intangibles
—

 
(0.2
)
Underlying combined ratio*
95.6

 
97.4

 
 
 
 
Effect of prior year catastrophe reserve reestimates
—

 
—

 
 
 
 
Effect of Shelter-in-Place Payback expense on combined and expense ratios
3.3

 
—

Encompass brand - Total
Three months ended March 31,
 
2020
 
2019
Combined ratio
94.5

 
100.8

Effect of catastrophe losses
(4.7
)
 
(11.9
)
Effect of prior year non-catastrophe reserve reestimates
—

 
(0.4
)
Underlying combined ratio*
89.8

 
88.5

 
 
 
 
Effect of prior year catastrophe reserve reestimates
(0.8
)
 
1.6

 
 
 
 
Effect of Shelter-in-Place Payback expense on combined and expense ratios
2.0

 
—





# # # # #

12
allcorp33120investorsupp
The Allstate Corporation Investor Supplement First Quarter 2020 The condensed consolidated financial statements and financial exhibits included herein are unaudited. These condensed consolidated financial statements and exhibits should be read in conjunction with the consolidated financial statements and notes thereto included in the most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. The results of operations for interim periods should not be considered indicative of results to be expected for the full year. Measures used in these financial statements and exhibits that are not based on generally accepted accounting principles ("non-GAAP") are denoted with an asterisk (*). These measures are defined on the pages "Definitions of Non-GAAP Measures" and are reconciled to the most directly comparable generally accepted accounting principles ("GAAP") measure herein.

 
The Allstate Corporation Investor Supplement - First Quarter 2020 Table of Contents Consolidated Operations Service Businesses Condensed Consolidated Statements of Operations 1 Segment Results 24 Contribution to Income 2 Allstate Protection Plans Results 25 Segment Results 3 Condensed Consolidated Statements of Financial Position 4 Allstate Life Book Value per Common Share 5 Segment Results and Other Statistics 26 Return on Common Shareholders' Equity 6 Return on Equity 27 Debt to Capital 7 Policies in Force 8 Allstate Benefits Premiums Written for Allstate Protection and Service Businesses 9 Segment Results and Other Statistics 28 Return on Equity 29 Property-Liability Results 10 Allstate Annuities Catastrophe Losses 11 Segment Results and Other Statistics 30 Prior Year Reserve Reestimates 12 Return on Equity 31 Catastrophe Losses included in Prior Year Reserve Reestimates 13 Allstate Protection Corporate and Other Impact of Net Rate Changes Approved on Premiums Written 14 Corporate and Other Segment Results 32 Allstate Brand Profitability Measures 15 Allstate Brand Statistics 16 Investments Esurance Brand Profitability Measures and Statistics 17 Investment Position 33 Encompass Brand Profitability Measures and Statistics 18 Net Investment Income, Yields and Realized Capital Gains (Losses) (Pre-tax) 34 Auto Profitability Measures by Brand 19 Net Investment Income, Yields and Realized Capital Gains (Losses) (Pre-tax) by Segment 35 Homeowners Profitability Measures by Brand 20 Investment Position and Results by Strategy by Segment 36 Other Personal Lines Profitability Measures by Brand 21 Performance-Based Investments 37 Commercial Lines Profitability Measures 22 Discontinued Lines and Coverages Definitions of Non-GAAP Measures 38,39 Reserves 23

 
The Allstate Corporation Condensed Consolidated Statements of Operations ($ in millions, except per share data) Three months ended March 31, Dec. 31, Sept. 30, June 30, March 31, 2020 2019 2019 2019 2019 Revenues Property and casualty insurance premiums (1) $ 9,235 $ 9,194 $ 9,094 $ 8,986 $ 8,802 Life premiums and contract charges (2) 617 627 625 621 628 Other revenue (3) 265 260 273 271 250 Net investment income 421 689 880 942 648 Realized capital gains (losses) (462) 702 197 324 662 Total revenues 10,076 11,472 11,069 11,144 10,990 Costs and expenses Property and casualty insurance claims and claims expense 5,341 5,749 6,051 6,356 5,820 Shelter-in-place payback expense 210 - - - - Life contract benefits 501 518 513 511 497 Interest credited to contractholder funds 132 153 169 156 162 Amortization of deferred policy acquisition costs 1,401 1,382 1,425 1,362 1,364 Operating costs and expenses 1,399 1,516 1,414 1,380 1,380 Pension and other postretirement remeasurement (gains) losses 318 (251) 225 125 15 Restructuring and related charges 5 14 - 9 18 Amortization of purchased intangibles 28 30 32 32 32 Impairment of purchased intangibles - 51 - 55 - Interest expense 81 82 80 82 83 Total costs and expenses 9,416 9,244 9,909 10,068 9,371 Gain on disposition of operations 1 3 - 2 1 Income from operations before income tax expense 661 2,231 1,160 1,078 1,620 Income tax expense 112 458 229 227 328 Net income 549 1,773 931 851 1,292 Preferred stock dividends 36 66 42 30 31 Net income applicable to common shareholders $ 513 $ 1,707 $ 889 $ 821 $ 1,261 Earnings per common share Net income applicable to common shareholders per common share - Basic $ 1.62 $ 5.32 $ 2.71 $ 2.47 $ 3.79 Weighted average common shares - Basic 317.4 320.7 327.7 332.0 332.6 Net income applicable to common shareholders per common share - Diluted $ 1.59 $ 5.23 $ 2.67 $ 2.44 $ 3.74 Weighted average common shares - Diluted 322.4 326.3 333.0 336.9 337.5 Cash dividends declared per common share $ 0.54 $ 0.50 $ 0.50 $ 0.50 $ 0.50 (1) Property and casualty insurance premiums are reported in the Property-Liability and Service Businesses results and include auto, homeowners, other personal lines and commercial lines insurance products, including shared economy, as well as consumer product protection plans, roadside assistance, and finance and insurance products. (2) Life premiums and contract charges are reported in the Allstate Life, Allstate Benefits and Allstate Annuities results and include life insurance, voluntary accident and health insurance, and annuity products. (3) Other revenue primarily represents fees collected from policyholders relating to premium installment payments, commissions on sales of non-proprietary products, sales of identity protection services, fee-based services and other revenue transactions. The Allstate Corporation 1Q20 Supplement 1

 
The Allstate Corporation Contribution to Income ($ in millions, except per share data) Three months ended March 31, Dec. 31, Sept. 30, June 30, March 31, 2020 2019 2019 2019 2019 Contribution to income Net income applicable to common shareholders $ 513 $ 1,707 $ 889 $ 821 $ 1,261 Realized capital (gains) losses, after-tax 366 (553) (155) (256) (524) Pension and other postretirement remeasurement (gains) losses, after-tax 251 (199) 179 99 11 Valuation changes on embedded derivatives not hedged, after-tax (14) - 10 2 3 DAC and DSI amortization relating to realized capital gains and losses and valuation changes on embedded derivatives not hedged, after-tax 3 3 (1) 1 2 Reclassification of periodic settlements and accruals on non-hedge derivative instruments, after-tax - - (1) - (1) Business combination expenses and the amortization of purchased intangibles, after-tax 22 24 25 26 25 Impairment of purchased intangibles, after-tax - 40 - 43 - Gain on disposition of operations, after-tax (1) (2) - (1) (1) Adjusted net income* $ 1,140 $ 1,020 $ 946 $ 735 $ 776 Income per common share - Diluted Net income applicable to common shareholders $ 1.59 $ 5.23 $ 2.67 $ 2.44 $ 3.74 Realized capital (gains) losses, after-tax 1.13 (1.69) (0.47) (0.76) (1.55) Pension and other postretirement remeasurement (gains) losses, after-tax 0.78 (0.61) 0.54 0.29 0.03 Valuation changes on embedded derivatives not hedged, after-tax (0.04) - 0.03 - 0.01 DAC and DSI amortization relating to realized capital gains and losses and valuation changes on embedded derivatives not hedged, after-tax 0.01 0.01 - - - Reclassification of periodic settlements and accruals on non-hedge derivative instruments, after-tax - - - - - Business combination expenses and the amortization of purchased intangibles, after-tax 0.07 0.07 0.07 0.08 0.07 Impairment of purchased intangibles, after-tax - 0.12 - 0.13 - Gain on disposition of operations, after-tax - - - - - Adjusted net income* $ 3.54 $ 3.13 $ 2.84 $ 2.18 $ 2.30 Weighted average common shares - Diluted 322.4 326.3 333.0 336.9 337.5 The Allstate Corporation 1Q20 Supplement 2

 
The Allstate Corporation Consolidating Segment Results Allstate Discontinued Property- Service Allstate Allstate Allstate Corporate Intersegment ($ in millions) Protection Lines Liability Businesses Life Benefits Annuities and Other Eliminations Consolidated Three months ended March 31, 2020 Premiums and contract charges $ 8,881 $ - $ 8,881 $ 354 $ 333 $ 282 $ 2 $ - $ - $ 9,852 Intersegment insurance premiums and service fees - - - 38 - - - - (38) - Other revenue 181 - 181 52 32 - - - - 265 Claims and claims expense (5,249) (2) (5,251) (92) - - - - 2 (5,341) Shelter-in-Place Payback expense (210) - (210) - - - - - - (210) Contract benefits and interest credited to contractholder funds - - - - (268) (150) (215) - - (633) Amortization of deferred policy acquisition costs (1,167) - (1,167) (153) (34) (45) (2) - - (1,401) Operating costs and expenses (1,083) (1) (1,084) (161) (84) (75) (6) (25) 36 (1,399) Pension and other postretirement remeasurement gains (losses) - - - - - - - (318) - (318) Restructuring and related charges (4) - (4) - (1) - - - - (5) Amortization of purchased intangibles (1) - (1) (27) - - - - - (28) Impairment of purchased intangibles - - - - - - - - - - Interest expense - - - - - - - (81) - (81) Underwriting income (loss) $ 1,348 $ (3) 1,345 Net investment income 202 10 128 20 47 14 - 421 Realized capital gains (losses) (103) (24) (31) (14) (269) (21) - (462) Gain on disposition of operations - - - - 1 - - 1 Income tax (expense) benefit (282) - (11) (4) 93 92 - (112) Preferred stock dividends - - - - - (36) - (36) Net income (loss) applicable to common shareholders $ 1,162 $ (3) $ 64 $ 14 $ (349) $ (375) $ - $ 513 Realized capital (gains) losses, after-tax 82 19 25 10 213 17 - 366 Pension and other postretirement remeasurement (gains) losses, after-tax - - - - - 251 251 Valuation changes on embedded derivatives not hedged, after-tax - - (12) - (2) - - (14) DAC and DSI amortization relating to realized capital gains and losses and valuation changes on embedded derivatives not hedged, after-tax - - 3 - - - - 3 Reclassification of periodic settlements and accruals on non-hedge derivative instruments, after-tax - - - - - - - - Business combination expenses and the amortization of purchased intangibles, after-tax 1 21 - - - - - 22 Impairment of purchased intangibles, after-tax - - - - - - - - Gain on disposition of operations, after-tax - - - - (1) - - (1) Adjusted net income (loss) * $ 1,245 $ 37 (1) $ 80 (1) $ 24 (1) $ (139) (1) $ (107) (1) $ - $ 1,140 Three months ended March 31, 2019 Premiums and contract charges $ 8,507 $ - $ 8,507 $ 295 $ 337 $ 288 $ 3 $ - $ - $ 9,430 Intersegment insurance premiums and service fees - - - 33 - - - - (33) - Other revenue 176 - 176 47 27 - - - - 250 Claims and claims expense (5,728) (2) (5,730) (92) - - - - 2 (5,820) Contract benefits and interest credited to contractholder funds - - - - (286) (154) (219) - - (659) Amortization of deferred policy acquisition costs (1,164) - (1,164) (127) (28) (43) (2) - - (1,364) Operating costs and expenses (1,069) (1) (1,070) (151) (91) (71) (7) (21) 31 (1,380) Pension and other postretirement remeasurement gains (losses) - - - - - - - (15) - (15) Restructuring and related charges (18) - (18) - - - - - - (18) Amortization of purchased intangibles (1) - (1) (31) - - - - - (32) Interest expense - - - - - - - (83) - (83) Underwriting income (loss) $ 703 $ (3) 700 Net investment income 291 9 127 19 190 12 - 648 Realized capital gains (losses) 497 8 (5) 4 156 2 - 662 Gain on disposition of operations - - - - 1 - - 1 Income tax (expense) benefit (306) 3 (14) (9) (25) 23 - (328) Preferred stock dividends - - - - - (31) - (31) Net income (loss) applicable to common shareholders $ 1,182 $ (6) $ 67 $ 34 $ 97 $ (113) $ - $ 1,261 Realized capital (gains) losses, after-tax (393) (7) 4 (3) (124) (1) - (524) Pension and other postretirement remeasurement (gains) losses, after-tax - - - - - 11 11 Valuation changes on embedded derivatives not hedged, after-tax - - - - 3 - - 3 DAC and DSI amortization relating to realized capital gains and losses and valuation changes on embedded derivatives not hedged, after-tax - - 2 - - - - 2 Reclassification of periodic settlements and accruals on non-hedge derivative instruments, after-tax (1) - - - - - - (1) Business combination expenses and the amortization of purchased intangibles, after-tax 1 24 - - - - - 25 Gain on disposition of operations, after-tax - - - - (1) - - (1) Adjusted net income (loss) * $ 789 $ 11 (1) $ 73 (1) $ 31 (1) $ (25) (1) $ (103) (1) $ - $ 776 (1) Adjusted net income is the segment measure used for each business. The Allstate Corporation 1Q20 Supplement 3

 
The Allstate Corporation Condensed Consolidated Statements of Financial Position ($ in millions) March 31, 2020 Dec. 31, 2019 Sept. 30, 2019 June 30, 2019 March 31, 2019 Assets Investments Fixed income securities, at fair value (1) $ 59,857 $ 59,044 $ 59,259 $ 58,484 $ 58,202 Equity securities, at fair value (2) 3,701 8,162 8,206 7,906 5,802 Mortgage loans, net 4,759 4,817 4,694 4,687 4,681 Limited partnership interests 7,087 8,078 7,990 7,818 7,493 Short-term, at fair value 5,671 4,256 5,254 3,740 4,157 Other, net 3,767 4,005 3,904 3,856 3,786 Total investments 84,842 88,362 89,307 86,491 84,121 Cash 338 338 587 599 551 Premium installment receivables, net 6,401 6,472 6,558 6,380 6,201 Deferred policy acquisition costs 4,742 4,699 4,683 4,667 4,670 Reinsurance and indemnification recoverables, net 9,214 9,211 9,363 9,292 9,374 Accrued investment income 593 600 613 633 614 Property and equipment, net 1,123 1,145 1,092 1,058 1,047 Goodwill 2,544 2,545 2,545 2,547 2,547 Other assets, net 3,876 3,534 3,383 3,649 3,659 Separate Accounts 2,434 3,044 2,942 3,058 3,050 Total assets $ 116,107 $ 119,950 $ 121,073 $ 118,374 $ 115,834 Liabilities Reserve for property and casualty insurance claims and claims expense $ 27,148 $ 27,712 $ 28,076 $ 28,105 $ 27,544 Reserve for life-contingent contract benefits 12,244 12,300 12,378 12,337 12,200 Contractholder funds 17,404 17,692 17,804 17,964 18,161 Unearned premiums 14,999 15,343 15,343 14,752 14,323 Claim payments outstanding 892 929 952 915 891 Deferred income taxes 331 1,154 1,079 997 817 Other liabilities and accrued expenses 9,849 9,147 9,729 9,142 8,977 Long-term debt 6,633 6,631 6,630 6,628 6,453 Separate Accounts 2,434 3,044 2,942 3,058 3,050 Total liabilities 91,934 93,952 94,933 93,898 92,416 Equity Preferred stock and additional capital paid-in (3)(4) 1,970 2,248 3,052 1,930 1,930 Common stock (5) 9 9 9 9 9 Additional capital paid-in 3,519 3,463 3,511 3,477 3,291 Retained income 48,326 48,074 46,527 45,803 45,148 Deferred ESOP expense - - (3) (3) (3) Treasury stock, at cost (6) (30,209) (29,746) (29,063) (28,500) (28,042) Accumulated other comprehensive income: Unrealized net capital gains and losses 530 1,887 2,023 1,654 972 Unrealized foreign currency translation adjustments (98) (59) (50) (40) (44) Unamortized pension and other postretirement prior service credit 126 122 134 146 157 Total accumulated other comprehensive income 558 1,950 2,107 1,760 1,085 Total shareholders' equity 24,173 25,998 26,140 24,476 23,418 Total liabilities and shareholders' equity $ 116,107 $ 119,950 $ 121,073 $ 118,374 $ 115,834 (1) Amortized cost, net was $58,945, $56,293, $56,263, $56,008 and $56,831 as of March 31, 2020, December 31, 2019, September 30, 2019, June 30, 2019 and March 31, 2019, respectively. (2) Cost was $3,631, $6,568, $6,930, $6,673 and $4,767 as of March 31, 2020, December 31, 2019, September 30, 2019, June 30, 2019 and March 31, 2019, respectively. (3) Preferred shares outstanding were 81.0 thousand at March 31, 2020, 92.5 thousand at December 31, 2019, 125.8 thousand at September 30, 2019 and 79.8 thousand at June 30, 2019 and March 31, 2019. (4) On January 15, 2020, we redeemed all 11,500 shares of our Fixed Rate Noncumulative Perpetual Preferred Stock, Series A. (5) Common shares outstanding were 315,485,956; 318,791,191; 324,988,765; 329,903,875 and 333,056,875 as of March 31, 2020, December 31, 2019, September 30, 2019, June 30, 2019 and March 31, 2019, respectively. (6) Treasury shares outstanding were 585 million, 581 million, 575 million, 570 million and 567 million as of March 31, 2020, December 31, 2019, September 30, 2019, June 30, 2019 and March 31, 2019, respectively. The Allstate Corporation 1Q20 Supplement 4

 
The Allstate Corporation Book Value per Common Share ($ in millions, except per share data) March 31, Dec. 31, Sept. 30, June 30, March 31, 2020 2019 2019 2019 2019 Book value per common share Numerator: Common shareholders' equity (1) $ 22,203 $ 23,750 $ 23,088 $ 22,546 $ 21,488 Denominator: Common shares outstanding and dilutive potential common shares outstanding 318.7 324.8 330.6 335.1 337.9 Book value per common share $ 69.67 $ 73.12 $ 69.84 $ 67.28 $ 63.59 Book value per common share, excluding the impact of unrealized net capital gains and losses on fixed income securities Numerator: Common shareholders' equity $ 22,203 $ 23,750 $ 23,088 $ 22,546 $ 21,488 Less: Unrealized net capital gains and losses on fixed income securities 534 1,893 2,028 1,658 975 Adjusted common shareholders' equity $ 21,669 $ 21,857 $ 21,060 $ 20,888 $ 20,513 Denominator: Common shares outstanding and dilutive potential common shares outstanding 318.7 324.8 330.6 335.1 337.9 Book value per common share, excluding the impact of unrealized net capital gains and losses on fixed income securities * $ 67.99 $ 67.29 $ 63.70 $ 62.33 $ 60.71 (1) Excludes equity related to preferred stock of $1,970 million at March 31, 2020, $2,248 million at December 31, 2019, $3,052 million at September 30, 2019 and $1,930 million at June 30, 2019 and March 31, 2019. The Allstate Corporation 1Q20 Supplement 5

 
The Allstate Corporation Return on Common Shareholders' Equity ($ in millions) Twelve months ended March 31, Dec. 31, Sept. 30, June 30, March 31, 2020 2019 2019 2019 2019 Return on Common Shareholders' Equity Numerator: Net income applicable to common shareholders (1)(2) $ 3,930 $ 4,678 $ 2,386 $ 2,439 $ 2,296 Denominator: Beginning common shareholders' equity $ 21,488 $ 19,382 $ 21,356 $ 20,819 $ 20,970 Ending common shareholders' equity (3) 22,203 23,750 23,088 22,546 21,488 Average common shareholders' equity (4) $ 21,846 $ 21,566 $ 22,222 $ 21,683 $ 21,229 Return on common shareholders' equity 18.0 % 21.7 % 10.7 % 11.2 % 10.8 % Adjusted Net Income Return on Common Shareholders' Equity Numerator: Adjusted net income * (1) $ 3,841 $ 3,477 $ 3,009 $ 2,822 $ 2,797 Denominator: Beginning common shareholders' equity $ 21,488 $ 19,382 $ 21,356 $ 20,819 $ 20,970 Less: Unrealized net capital gains and losses 972 (2) (16) 54 187 Adjusted beginning common shareholders' equity 20,516 19,384 21,372 20,765 20,783 Ending common shareholders' equity 22,203 23,750 23,088 22,546 21,488 Less: Unrealized net capital gains and losses 530 1,887 2,023 1,654 972 Adjusted ending common shareholders' equity 21,673 21,863 21,065 20,892 20,516 Average adjusted common shareholders' equity (4) $ 21,095 $ 20,624 $ 21,219 $ 20,829 $ 20,650 Adjusted net income return on common shareholders' equity * 18.2 % 16.9 % 14.2 % 13.5 % 13.5 % (1) Net income applicable to common shareholders and adjusted net income reflect a trailing twelve-month period. (2) Includes a $2 million Tax Legislation expense for the period ended September 30, 2019 and a $29 million benefit for the periods ended June 30, 2019 and March 31, 2019. (3) Excludes equity related to preferred stock of $1,970 million at March 31, 2020, $2,248 million at December 31, 2019, $3,052 million at September 30, 2019 and $1,930 million at June 30, 2019 and March 31, 2019. (4) Average common shareholders' equity and average adjusted common shareholders' equity are determined using a two-point average, with the beginning and ending common shareholders' equity and adjusted common shareholders' equity, respectively, for the twelve-month period as data points. The Allstate Corporation 1Q20 Supplement 6

 
The Allstate Corporation Debt to Capital March 31, Dec. 31, Sept. 30, June 30, March 31, ($ in millions) 2020 2019 2019 2019 2019 Debt Short-term debt $ - $ - $ - $ - $ - Long-term debt 6,633 6,631 6,630 6,628 6,453 Total debt $ 6,633 $ 6,631 $ 6,630 $ 6,628 $ 6,453 Capital resources Debt $ 6,633 $ 6,631 $ 6,630 $ 6,628 $ 6,453 Shareholders' equity Preferred stock and additional capital paid-in 1,970 2,248 3,052 1,930 1,930 Common stock 9 9 9 9 9 Additional capital paid-in 3,519 3,463 3,511 3,477 3,291 Retained income 48,326 48,074 46,527 45,803 45,148 Deferred ESOP expense - - (3) (3) (3) Treasury stock (30,209) (29,746) (29,063) (28,500) (28,042) Unrealized net capital gains and losses 530 1,887 2,023 1,654 972 Unrealized foreign currency translation adjustments (98) (59) (50) (40) (44) Unamortized pension and other postretirement prior service credit 126 122 134 146 157 Total shareholders' equity 24,173 25,998 26,140 24,476 23,418 Total capital resources $ 30,806 $ 32,629 $ 32,770 $ 31,104 $ 29,871 Ratio of debt to shareholders' equity 27.4 % 25.5 % 25.4 % 27.1 % 27.6 % Ratio of debt to capital resources 21.5 % 20.3 % 20.2 % 21.3 % 21.6 % The Allstate Corporation 1Q20 Supplement 7

 
The Allstate Corporation Policies in Force and Other Statistics March 31, Dec. 31, Sept. 30, June 30, March 31, 2020 2019 2019 2019 2019 Policies in Force statistics (in thousands) (1) Allstate Protection Allstate brand Auto 20,323 20,398 20,339 20,301 20,145 Homeowners 6,254 6,254 6,237 6,221 6,198 Landlord 653 658 663 670 676 Renters 1,684 1,683 1,679 1,668 1,655 Condominium 676 676 673 670 668 Other 1,326 1,327 1,326 1,319 1,307 Other personal lines 4,339 4,344 4,341 4,327 4,306 Commercial lines 224 227 228 229 230 Total 31,140 31,223 31,145 31,078 30,879 Esurance brand Auto 1,503 1,515 1,543 1,548 1,548 Homeowners 106 105 104 101 98 Other personal lines 46 46 48 48 48 Total 1,655 1,666 1,695 1,697 1,694 Encompass brand Auto 485 493 496 497 499 Homeowners 230 234 235 236 237 Other personal lines 75 76 77 77 78 Total 790 803 808 810 814 Allstate Protection Policies in Force 33,585 33,692 33,648 33,585 33,387 Service Businesses Allstate Protection Plans 107,124 99,632 89,783 83,968 77,866 Allstate Dealer Services 4,096 4,205 4,224 4,253 4,294 Allstate Roadside Services 576 599 617 635 649 Allstate Identity Protection 1,932 1,511 1,318 1,260 1,211 Total 113,728 105,947 95,942 90,116 84,020 Allstate Life 1,902 1,923 1,926 1,933 1,936 Allstate Benefits 4,309 4,183 4,287 4,296 4,322 Allstate Annuities 188 192 197 201 206 Total Policies in Force 153,712 145,937 136,000 130,131 123,871 Agency Data (2) Total Allstate agencies (3) 12,700 12,900 12,800 12,700 12,700 Licensed sales professionals (4) 25,800 27,100 26,800 26,700 26,800 Allstate independent agencies (5) 3,800 3,400 3,300 3,200 3,000 Encompass independent agencies 2,900 2,800 2,800 2,800 2,700 (1) 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 for shared economy agreements typically reflect contracts that cover multiple drivers as opposed to individual drivers. • Non-proprietary products offered by Ivantage (insurance agency) and Answer Financial (independent insurance agency) are not included. • Allstate Roadside Services reflects memberships in force and do not include their wholesale partners as the customer relationship is managed by the wholesale partner. • Allstate Dealer Services reflects service contracts and other products sold in conjunction with auto lending and vehicle sales transactions and do not include their third party administrators ("TPAs") as the customer relationship is managed by the TPAs. • Allstate Protection Plans (formerly known as SquareTrade) represents active consumer product protection plans. • Allstate Identity Protection (formerly known as InfoArmor) reflects individual customer counts for identity protection products. • Allstate Life insurance policies and Allstate Annuities in force reflect the number of contracts in force excluding sold blocks of business that remain on the balance sheet due to the dispositions of the business being effected through reinsurance arrangements. • Allstate Benefits reflects certificate counts as opposed to group counts. (2) Rounded to the nearest hundred. (3) Total Allstate agencies represents exclusive Allstate agencies and financial representatives in the United States and employee producers in Canada. (4) Represents employees of Allstate agencies who are licensed to sell Allstate products. (5) Includes 881 and 1,102 engaged Allstate independent agencies (“AIAs”) as of March 31, 2020 and December 31, 2019, respectively. Engaged AIAs, as currently determined, include those that achieve a minimum number of new policies written. The Allstate Corporation 1Q20 Supplement 8

 
The Allstate Corporation Premiums Written for Allstate Protection and Service Businesses ($ in millions) Three months ended March 31, Dec. 31, Sept. 30, June 30, March 31, 2020 2019 2019 2019 2019 Allstate Protection Allstate brand (1) Auto $ 5,574 $ 5,470 $ 5,599 $ 5,472 $ 5,395 Homeowners 1,618 1,861 2,143 2,076 1,565 Landlord 125 135 141 134 124 Renters 71 71 87 78 69 Condominium 64 70 78 75 62 Other 151 158 186 191 144 Other personal lines 411 434 492 478 399 Commercial lines 221 243 238 236 185 Total 7,824 8,008 8,472 8,262 7,544 Esurance brand Auto 517 460 525 469 532 Homeowners 27 27 35 32 25 Other personal lines 2 2 2 2 2 Total 546 489 562 503 559 Encompass brand Auto 118 127 147 146 120 Homeowners 87 94 110 111 86 Other personal lines 17 19 21 21 18 Total 222 240 278 278 224 Total Allstate Protection Auto 6,209 6,057 6,271 6,087 6,047 Homeowners 1,732 1,982 2,288 2,219 1,676 Other personal lines 430 455 515 501 419 Commercial lines 221 243 238 236 185 Total 8,592 8,737 9,312 9,043 8,327 Discontinued Lines and Coverages - - - - - Total Property-Liability $ 8,592 $ 8,737 $ 9,312 $ 9,043 $ 8,327 Service Businesses (2) Allstate Protection Plans $ 221 $ 278 $ 181 $ 167 $ 206 Allstate Dealer Services 107 123 126 120 99 Allstate Roadside Services 51 52 57 63 63 Total 379 453 364 350 368 Total premiums written $ 8,971 $ 9,190 $ 9,676 $ 9,393 $ 8,695 Non-Proprietary Premiums Ivantage (3) $ 1,916 $ 1,901 $ 1,871 $ 1,840 $ 1,806 Answer Financial (4) 144 134 153 150 145 (1) Canada premiums included in Allstate brand Auto $ 239 $ 253 $ 291 $ 287 $ 205 Homeowners 67 79 93 87 58 Other personal lines 24 30 32 28 20 Total $ 330 $ 362 $ 416 $ 402 $ 283 (2) There are no premiums written for Arity or Allstate Identity Protection, which are part of the Service Businesses segment. Revenues for Arity and Allstate Identity Protection are primarily reported as intersegment service fees and other revenue. (3) Represents non-proprietary premiums under management as of the end of the period related to personal and commercial line products offered by Ivantage when an Allstate product is not available. Fees for the three months ended March 31, 2020, December 31, 2019, September 30, 2019, June 30, 2019 and March 31, 2019 were $39 million, $41 million, $45 million, $45 million and $37 million, respectively. (4) Represents non-proprietary premiums written for the period. Commissions earned for the three months ended March 31, 2020 were $18 million. The Allstate Corporation 1Q20 Supplement 9

 
The Allstate Corporation Property-Liability Results ($ in millions) Three months ended March 31, Dec. 31, Sept. 30, June 30, March 31, 2020 2019 2019 2019 2019 Premiums written $ 8,592 $ 8,737 $ 9,312 $ 9,043 $ 8,327 Decrease (increase) in unearned premiums 370 129 (538) (384) 179 Other (81) 7 8 22 1 Premiums earned 8,881 8,873 8,782 8,681 8,507 Other revenue 181 180 195 190 176 Claims and claims expense (5,251) (5,660) (5,960) (6,272) (5,730) Shelter-in-Place Payback expense (210) - - - - Amortization of deferred policy acquisition costs (1,167) (1,155) (1,167) (1,163) (1,164) Operating costs and expenses (1,085) (1,175) (1,114) (1,060) (1,071) Restructuring and related charges (4) (12) 1 (9) (18) Impairment of purchased intangibles - (51) - - - Underwriting income (1) 1,345 1,000 737 367 700 Net investment income 202 323 448 471 291 Income tax expense on operations (303) (270) (236) (179) (202) Realized capital gains (losses), after-tax (82) 437 127 204 393 Net income applicable to common shareholders $ 1,162 $ 1,490 $ 1,076 $ 863 $ 1,182 Catastrophe losses $ 211 $ 295 $ 510 $ 1,072 $ 680 Amortization of purchased intangibles $ 1 $ 1 $ 1 $ 1 $ 1 Operating ratios Loss ratio 59.1 63.8 67.9 72.3 67.4 Expense ratio (2) 25.8 24.9 23.7 23.5 24.4 Combined ratio 84.9 88.7 91.6 95.8 91.8 Loss ratio 59.1 63.8 67.9 72.3 67.4 Less: effect of catastrophe losses 2.4 3.3 5.8 12.3 8.0 effect of prior year non-catastrophe reserve reestimates 0.3 (0.1) (0.5) (0.9) (0.4) Underlying loss ratio * 56.4 60.6 62.6 60.9 59.8 Reconciliation of combined ratio to underlying combined ratio Combined ratio 84.9 88.7 91.6 95.8 91.8 Effect of catastrophe losses (2.4) (3.3) (5.8) (12.3) (8.0) Effect of prior year non-catastrophe reserve reestimates (0.3) 0.1 0.5 0.9 0.4 Effect of impairment of purchased intangibles - (0.6) - - - Underlying combined ratio * 82.2 84.9 86.3 84.4 84.2 Effect of restructuring and related charges on combined ratio - 0.1 - 0.1 0.2 Effect of Discontinued Lines and Coverages on combined ratio 0.1 - 1.1 0.1 0.1 Effect of Shelter-in-Place Payback expense on combined and expense ratios 2.4 - - - - (1) Underwriting Income (Loss) Allstate brand $ 1,314 $ 1,024 $ 858 $ 367 $ 702 Esurance brand 19 (37) (6) (3) 3 Encompass brand 14 17 (15) 7 (2) Answer Financial 1 (1) (1) (1) - Total underwriting income for Allstate Protection 1,348 1,003 836 370 703 Discontinued Lines and Coverages (3) (3) (99) (3) (3) Total underwriting income for Property-Liability $ 1,345 $ 1,000 $ 737 $ 367 $ 700 (2) Other revenue is deducted from other costs and expenses in the expense ratio calculation. The Allstate Corporation 1Q20 Supplement 10

 
The Allstate Corporation Property-Liability Catastrophe Losses ($ in millions) Three months ended March 31, Dec. 31, Sept. 30, June 30, March 31, 2020 2019 2019 2019 2019 Allstate Protection Allstate brand Auto $ 12 $ 2 $ 130 $ 179 $ 68 Homeowners (1) 170 (3) 253 (3) 292 781 511 Other personal lines 12 19 23 57 64 Commercial lines 2 5 2 4 1 Total 196 279 447 1,021 644 Esurance brand Auto 1 2 9 10 3 Homeowners 2 2 7 15 3 Total 3 4 16 25 6 Encompass brand Auto - - 4 3 3 Homeowners 11 12 41 22 25 Other personal lines 1 - 2 1 2 Total 12 12 47 26 30 Allstate Protection Auto 13 4 143 192 74 Homeowners 183 267 340 818 539 Other personal lines 13 19 25 58 66 Commercial lines 2 5 2 4 1 Total 211 295 510 1,072 680 Discontinued Lines and Coverages - - - - - Total Property-Liability $ 211 $ 295 $ 510 $ 1,072 $ 680 Effect of Catastrophe Losses on Combined Ratio (2) Allstate Protection Auto 0.2 - 1.6 2.2 0.9 Homeowners 2.1 3.0 3.9 9.4 6.3 Other personal lines 0.1 0.2 0.3 0.7 0.8 Commercial lines - 0.1 - - - Total 2.4 3.3 5.8 12.3 8.0 10-year average effect of catastrophe losses on combined ratio 6.1 5.9 6.9 14.0 6.8 (1) Includes $8 million and $7 million of reduction of reinsurance premiums for the three months ended December 31, 2019 and September 30, 2019, respectively, and $5 million and $15 million of reinstatement reinsurance premiums for the three months ended June 30, 2019 and March 31, 2019, respectively, related to the 2018 Camp Fire. (2) Calculated using the total premiums earned for Allstate Protection for the respective period. Discontinued Lines and Coverages does not have premiums earned. (3) Includes $1 million and $12 million for Texas Windstorm Insurance Association assessments related to Hurricane Harvey which occurred in third quarter 2017 for the three months ended March 31, 2020 and December 31, 2019, respectively. The Allstate Corporation 1Q20 Supplement 11

 
The Allstate Corporation Property-Liability Prior Year Reserve Reestimates ($ in millions) Three months ended March 31, Dec. 31, Sept. 30, June 30, March 31, 2020 2019 2019 2019 2019 Prior Year Reserve Reestimates (1) Allstate Protection Allstate brand Auto $ 9 $ (11) $ (152) $ (94) $ (58) Homeowners (4) 5 (1) (1) 46 Other personal lines (4) (9) 10 (1) 10 Commercial lines 6 - - 13 4 Total 7 (15) (143) (83) 2 Esurance brand Auto 3 (1) - (1) 4 Homeowners (2) 1 - 1 (1) Other personal lines - - - - - Total 1 - - - 3 Encompass brand Auto 1 - (1) (9) - Homeowners (1) - 3 4 8 Other personal lines (2) - (1) 2 (3) Total (2) - 1 (3) 5 Total Allstate Protection Auto 13 (12) (153) (104) (54) Homeowners (7) 6 2 4 53 Other personal lines (6) (9) 9 1 7 Commercial lines 6 - - 13 4 Total 6 (15) (142) (86) 10 Discontinued Lines and Coverages 2 2 98 3 2 Total Property-Liability $ 8 $ (13) $ (44) $ (83) $ 12 Effect of Prior Year Reserve Reestimates on Combined Ratio (1)(2) Allstate Protection Auto 0.2 (0.2) (1.7) (1.2) (0.6) Homeowners (0.1) 0.1 - - 0.6 Other personal lines (0.1) (0.1) 0.1 - 0.1 Commercial lines 0.1 - - 0.2 - Total 0.1 (0.2) (1.6) (1.0) 0.1 Discontinued Lines and Coverages - - 1.1 0.1 0.1 Total Property-Liability 0.1 (0.2) (0.5) (0.9) 0.2 Allstate Protection by brand Allstate brand 0.1 (0.2) (1.6) (1.0) - Esurance brand - - - - - Encompass brand - - - - 0.1 Total 0.1 (0.2) (1.6) (1.0) 0.1 (1) Favorable reserve reestimates are shown in parentheses. (2) Calculated using the total premiums earned for Allstate Protection for the respective period. Discontinued Lines and Coverages does not have premiums earned. The Allstate Corporation 1Q20 Supplement 12

 
The Allstate Corporation Property-Liability Catastrophe Losses included in Prior Year Reserve Reestimates ($ in millions) Three months ended March 31, Dec. 31, Sept. 30, June 30, March 31, 2020 2019 2019 2019 2019 Allstate Protection (1) Allstate brand Auto $ (8) $ (8) $ (1) $ (7) $ (1) Homeowners (2) (7) (4) 8 (4) (1) 6 42 Other personal lines (4) (4) (1) (3) 9 Commercial lines 1 - (1) 1 (1) Total (18) (4) (4) (3) 49 Esurance brand Auto - - (1) 1 - Homeowners - - - 1 - Total - - (1) 2 - Encompass brand Auto (1) - - - - Homeowners (1) (1) 3 4 4 Other personal lines - - (1) - - Total (2) (1) 2 4 4 Total Allstate Protection Auto (9) (8) (2) (6) (1) Homeowners (8) 7 2 11 46 Other personal lines (4) (4) (2) (3) 9 Commercial lines 1 - (1) 1 (1) Total (20) (5) (3) 3 53 Discontinued Lines and Coverages - - - - - Total Property-Liability $ (20) $ (5) $ (3) $ 3 $ 53 Effect of Catastrophe Losses included in Prior Year Reserve Reestimates on Combined Ratio (1)(3) Allstate Protection Auto (0.1) (0.1) - (0.1) - Homeowners (0.1) 0.1 - 0.1 0.5 Other personal lines - (0.1) - - 0.1 Commercial lines - - - - - Total (0.2) (0.1) - - 0.6 Allstate Protection by brand Allstate brand (0.2) (0.1) - - 0.6 Esurance brand - - - - - Encompass brand - - - - - Total (0.2) (0.1) - - 0.6 (1) Favorable reserve reestimates are shown in parentheses. (2) Includes $8 million and $7 million reduction of reinsurance premiums for the three months ended December 31, 2019 and September 30, 2019, respectively, and $5 million and $15 million of reinstatement reinsurance premiums incurred for the three months ended June 30, 2019 and March 31, 2019, respectively, related to the 2018 Camp Fire. (3) Calculated using the total premiums earned for Allstate Protection for the respective period. Discontinued Lines and Coverages does not have premiums earned or catastrophe losses. (4) Includes $1 million and $12 million for Texas Windstorm Insurance Association assessments related to Hurricane Harvey which occurred in third quarter 2017 for the three months ended March 31, 2020 and December 31, 2019, respectively. The Allstate Corporation 1Q20 Supplement 13

 
The Allstate Corporation Allstate Protection Impact of Net Rate Changes Approved on Premiums Written Three months ended Three months ended Three months ended March 31, 2020 (1) December 31, 2019 September 30, 2019 Number of Location Number of Location Number of Location locations (5) Total brand (%) (6) specific (%) (7) locations Total brand (%) specific (%) locations Total brand (%) specific (%) Allstate brand Auto (2)(3) 16 0.5 6.5 26 0.8 2.6 24 0.5 3.1 Homeowners (4) 15 1.3 4.1 12 0.7 4.9 12 0.3 3.5 Esurance brand Auto 10 2.6 7.2 12 0.9 5.2 15 1.1 2.8 Homeowners - - - - - - 1 - (3.0) Encompass brand Auto 5 - (0.2) 9 0.7 4.4 6 0.3 2.4 Homeowners 6 1.8 11.9 8 2.9 15.2 11 3.5 9.4 Three months ended Three months ended Three months ended June 30, 2019 March 31, 2019 December 31, 2018 Number of Location Number of Location Number of Location locations Total brand (%) specific (%) locations Total brand (%) specific (%) locations Total brand (%) specific (%) Allstate brand Auto 20 0.8 3.4 19 0.6 3.4 25 0.3 3.2 Homeowners 4 0.1 5.1 20 2.1 5.5 18 1.1 4.6 Esurance brand Auto 6 2.4 5.3 9 0.6 4.1 8 0.3 1.3 Homeowners 2 2.7 19.9 2 2.0 18.2 1 0.4 9.9 Encompass brand Auto 1 - 3.6 3 0.5 4.5 4 0.5 2.6 Homeowners 8 1.4 6.5 4 1.4 10.8 3 1.2 8.2 (1) Rate changes include changes approved based on our net cost of reinsurance. These rate changes do not reflect initial rates filed for insurance subsidiaries initially writing business. Based on historical premiums written in 50 states, the District of Columbia and Canadian provinces, rate changes approved for Allstate brand, Esurance brand and Encompass brand for the three month period ending March 31, 2020 are estimated to total $258 million. Rate changes do not include rating plan enhancements, including the introduction of discounts and surcharges that result in no change in the overall rate level in a location. (2) Impacts of Allstate brand auto effective rate changes as a percentage of total brand prior year-end premiums written were 0.4%, 0.9%, 0.4%, 0.9%, 0.6% and 0.2% for the three months ended March 31, 2020, December 31, 2019, September 30, 2019, June 30, 2019, March 31, 2019 and December 31, 2018, respectively. Rate changes are included in the effective calculations in the period the rate change is effective for renewal contracts. (3) Allstate brand auto rate changes were 2.6%, 2.7%, 2.2%, 1.7%, 1.4% and 1.1% for the trailing twelve months ended March 31, 2020, December 31, 2019, September 30, 2019, June 30, 2019, March 31, 2019 and December 31, 2018, respectively. (4) Impacts of Allstate brand homeowners effective rate changes as a percentage of total brand prior year-end premiums written were 1.2%, 0.2%, 0.2%, 0.8%, 2.3% and 0.2% for the three months ended March 31, 2020, December 31, 2019, September 30, 2019, June 30, 2019, March 31, 2019 and December 31, 2018, respectively. (5) Allstate brand operates in 50 states, the District of Columbia, and 5 Canadian provinces. Esurance brand operates in 43 states. Encompass operates in 40 states and the District of Columbia. (6) Represents the impact in the states, the District of Columbia and Canadian provinces where rate changes were approved during the period as a percentage of total brand prior year-end premiums written. (7) Represents the impact in the states, the District of Columbia and Canadian provinces where rate changes were approved during the period as a percentage of its respective total prior year-end premiums written in those same locations. The Allstate Corporation 1Q20 Supplement 14

 
The Allstate Corporation Allstate Brand Profitability Measures ($ in millions) Three months ended March 31, Dec. 31, Sept. 30, June 30, March 31, 2020 2019 2019 2019 2019 Net premiums written $ 7,824 $ 8,008 $ 8,472 $ 8,262 $ 7,544 Net premiums earned Auto $ 5,532 $ 5,509 $ 5,446 $ 5,404 $ 5,321 Homeowners 1,907 1,892 1,868 1,832 1,811 Other personal lines 449 449 447 440 437 Commercial lines 218 237 236 226 183 Total $ 8,106 $ 8,087 $ 7,997 $ 7,902 $ 7,752 Other revenue Auto $ 58 $ 58 $ 57 $ 57 $ 57 Homeowners 11 11 12 11 11 Other personal lines 29 31 37 35 28 Commercial lines 1 2 1 2 1 Other business lines (1) 40 42 46 46 38 Total $ 139 $ 144 $ 153 $ 151 $ 135 Incurred losses Auto $ 3,378 $ 3,712 $ 3,689 $ 3,698 $ 3,485 Homeowners 927 958 1,082 1,508 1,254 Other personal lines 243 225 277 281 292 Commercial lines 171 185 197 196 139 Total $ 4,719 $ 5,080 $ 5,245 $ 5,683 $ 5,170 Expenses Auto $ 1,560 $ 1,456 $ 1,385 $ 1,376 $ 1,381 Homeowners 436 459 437 414 426 Other personal lines 147 159 156 146 143 Commercial lines 43 41 39 39 38 Other business lines (1) 26 12 30 28 27 Total $ 2,212 $ 2,127 $ 2,047 $ 2,003 $ 2,015 Underwriting income (loss) Auto $ 652 $ 399 $ 429 $ 387 $ 512 Homeowners 555 486 361 (79) 142 Other personal lines 88 96 51 48 30 Commercial lines 5 13 1 (7) 7 Other business lines 14 30 16 18 11 Total $ 1,314 $ 1,024 $ 858 $ 367 $ 702 Loss ratio 58.2 62.8 65.6 71.9 66.7 Expense ratio (2) 25.6 24.5 23.7 23.5 24.2 Combined ratio 83.8 87.3 89.3 95.4 90.9 Loss ratio 58.2 62.8 65.6 71.9 66.7 Less: effect of catastrophe losses 2.4 3.4 5.6 13.0 8.3 effect of prior year non-catastrophe reserve reestimates 0.3 (0.1) (1.7) (1.0) (0.6) Underlying loss ratio * 55.5 59.5 61.7 59.9 59.0 Reconciliation of combined ratio to underlying combined ratio Combined ratio 83.8 87.3 89.3 95.4 90.9 Effect of catastrophe losses (2.4) (3.4) (5.6) (13.0) (8.3) Effect of prior year non-catastrophe reserve reestimates (0.3) 0.1 1.7 1.0 0.6 Underlying combined ratio * 81.1 84.0 85.4 83.4 83.2 Effect of prior year reserve reestimates on combined ratio 0.1 (0.2) (1.8) (1.0) - Effect of advertising expenses on combined ratio 2.0 2.9 2.1 1.9 1.9 Effect of Shelter-in-Place Payback expense on combined and expense ratios 2.3 - - - - (1) Other business lines primarily represent commissions earned and other costs and expenses for Ivantage. (2) Other revenue is deducted from other costs and expenses in the expense ratio calculation. The Allstate Corporation 1Q20 Supplement 15

 
The Allstate Corporation Allstate Brand Statistics (1) Three months ended March 31, Dec. 31, Sept. 30, June 30, March 31, 2020 2019 2019 2019 2019 New Issued Applications (in thousands) (2) Auto 751 694 753 755 740 Homeowners 199 196 226 229 197 Average Premium - Gross Written ($) (3) Auto 598 595 589 581 578 Homeowners 1,314 1,304 1,308 1,295 1,267 Average Premium - Net Earned ($) (4) Auto 543 541 537 535 530 Homeowners 1,213 1,209 1,191 1,174 1,166 Annualized Average Premium ($) (5) Auto 1,089 1,080 1,071 1,065 1,057 Homeowners 1,220 1,210 1,198 1,178 1,169 Average Underlying Loss (Incurred Pure Premium) and Expense * ($) (6) Auto 955 1,003 991 970 953 Homeowners 754 739 779 732 745 Renewal Ratio (%) (7) Auto 88.0 88.1 88.6 88.8 88.8 Homeowners 87.6 88.2 88.4 88.2 88.4 Auto Property Damage (% change year-over-year) Gross claim frequency (8) (12.0) (2.2) 2.0 (0.8) (1.6) Paid claim frequency (8) (3.8) (4.0) 0.2 (1.5) (3.6) Paid claim severity (9) 7.7 6.0 5.1 8.8 6.1 Bodily Injury (% change year-over-year) Gross claim frequency (8) (11.2) (3.2) (0.5) (2.1) (1.2) Homeowners Excluding Catastrophe Losses (% change year-over-year) Gross claim frequency (8) (13.1) (11.2) (8.8) (2.8) (0.2) Paid claim frequency (8) (10.7) (11.6) (6.4) (6.7) 1.1 Paid claim severity (9) 16.1 23.2 13.2 11.7 0.5 (1) Statistics presented for Allstate brand exclude excess and surplus lines. (2) New Issued Applications: Item counts of automobiles or homeowners insurance applications for insurance policies that were issued during the period, regardless of whether the customer was previously insured by another Allstate Protection brand. Allstate brand includes automobiles added by existing customers when they exceed the number allowed (currently 10) on a policy. (3) Average Premium - Gross Written: 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, which is 6 months for auto and 12 months for homeowners. (4) Average Premium - Net Earned: Earned premium divided by average policies in force for the period. Earned premium includes the impacts from mid-term premium adjustments and ceded reinsurance, but does not include impacts of premium refund accruals. Average premiums represent the appropriate policy term for each line, which is 6 months for auto and 12 months for homeowners. (5) Annualized Average Premium is calculated by annualizing net earned premium reported in the quarter and year-to-date divided by policies in force at quarter end. (6) Average underlying loss (incurred pure premium) and expense is calculated as the underlying combined ratio multiplied by the annualized average premium. (7) Renewal ratio: Renewal policies issued during the period, based on contract effective dates, divided by the total policies issued 6 months prior for auto or 12 months prior for homeowners. (8) Paid claim frequency is calculated as annualized notice counts closed with payment in the period divided by the average of policies in force with the applicable coverage during the period. Gross claim frequency is calculated as annualized notice counts received in the period divided by the average of policies in force 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). Frequency statistics exclude counts associated with catastrophe events. The percent change in paid or gross claim frequency is calculated as the amount of increase or decrease in the paid or gross claim frequency in the current period compared to the same period in the prior year; divided by the prior year paid or gross claim frequency. (9) Paid claim severity is calculated by dividing the sum of paid losses and loss expenses by claims closed with a payment during the period. The percent change in paid claim severity is calculated as the amount of increase or decrease in paid claim severity in the current period compared to the same period in the prior year; divided by the prior year paid claims severity. The Allstate Corporation 1Q20 Supplement 16

 
The Allstate Corporation Esurance Brand Profitability Measures and Statistics ($ in millions) Three months ended March 31, Dec. 31, Sept. 30, June 30, March 31, 2020 2019 2019 2019 2019 Net premiums written $ 546 $ 489 $ 562 $ 503 $ 559 Net premiums earned Auto $ 487 $ 500 $ 498 $ 496 $ 475 Homeowners 30 30 28 27 25 Other personal lines 2 2 2 2 2 Total $ 519 $ 532 $ 528 $ 525 $ 502 Other revenue Auto $ 23 $ 20 $ 23 $ 20 $ 20 Total $ 23 $ 20 $ 23 $ 20 $ 20 Incurred losses Auto $ 359 $ 405 $ 404 $ 387 $ 367 Homeowners 13 16 20 31 15 Other personal lines 1 2 - 1 2 Total $ 373 $ 423 $ 424 $ 419 $ 384 Expenses Auto $ 145 $ 160 $ 126 $ 121 $ 129 Homeowners 5 6 7 7 6 Other personal lines - - - 1 - Total $ 150 $ 166 $ 133 $ 129 $ 135 Underwriting income (loss) Auto $ 6 $ (45) $ (9) $ 8 $ (1) Homeowners 12 8 1 (11) 4 Other personal lines 1 - 2 - - Total $ 19 $ (37) $ (6) $ (3) $ 3 Loss ratio 71.8 79.5 80.3 79.8 76.5 Expense ratio (1) 24.5 27.5 20.8 20.8 22.9 Combined ratio 96.3 107.0 101.1 100.6 99.4 Loss ratio 71.8 79.5 80.3 79.8 76.5 Less: effect of catastrophe losses 0.6 0.8 3.0 4.8 1.2 effect of prior year non-catastrophe reserve reestimates 0.1 - 0.2 (0.4) 0.6 Underlying loss ratio * 71.1 78.7 77.1 75.4 74.7 Reconciliation of combined ratio to underlying combined ratio Combined ratio 96.3 107.0 101.1 100.6 99.4 Effect of catastrophe losses (0.6) (0.8) (3.0) (4.8) (1.2) Effect of prior year non-catastrophe reserve reestimates (0.1) - (0.2) 0.4 (0.6) Effect of amortization of purchased intangibles - (0.2) - - (0.2) Effect of impairment of purchased intangibles - (9.6) - - - Underlying combined ratio * 95.6 96.4 97.9 96.2 97.4 Effect of prior year reserve reestimates on combined ratio 0.1 - - - 0.6 Effect of advertising expenses on combined ratio 8.5 4.7 8.0 7.4 8.2 Effect of Shelter-in-Place Payback expense on combined and expense ratios 3.3 - - - - Policies in Force (in thousands) Auto 1,503 1,515 1,543 1,548 1,548 Homeowners 106 105 104 101 98 Other personal lines 46 46 48 48 48 1,655 1,666 1,695 1,697 1,694 New Issued Applications (in thousands) Auto 130 119 149 145 180 Homeowners 5 6 9 7 7 Average Premium - Gross Written ($) Auto (6-month policy) 632 619 626 611 625 Homeowners (12-month policy) 1,081 1,047 1,082 1,063 1,016 Renewal Ratio (%) Auto 82.0 81.8 81.9 84.0 83.9 Homeowners 83.9 83.2 84.1 85.5 84.8 (1) Other revenue is deducted from other costs and expenses in the expense ratio calculation. The Allstate Corporation 1Q20 Supplement 17

 
The Allstate Corporation Encompass Brand Profitability Measures and Statistics ($ in millions) Three months ended March 31, Dec. 31, Sept. 30, June 30, March 31, 2020 2019 2019 2019 2019 Net premiums written $ 222 $ 240 $ 278 $ 278 $ 224 Net premiums earned Auto $ 135 $ 134 $ 136 $ 135 $ 134 Homeowners 101 100 101 99 99 Other personal lines 20 20 20 20 20 Total $ 256 $ 254 $ 257 $ 254 $ 253 Other revenue Auto $ 1 $ - $ 2 $ - $ 1 Homeowners - 1 - 1 - Total $ 1 $ 1 $ 2 $ 1 $ 1 Incurred losses Auto $ 90 $ 88 $ 94 $ 87 $ 91 Homeowners 55 52 82 66 72 Other personal lines 12 15 17 14 11 Total $ 157 $ 155 $ 193 $ 167 $ 174 Expenses Auto $ 48 $ 44 $ 43 $ 42 $ 45 Homeowners 32 32 32 32 31 Other personal lines 6 7 6 7 6 Total $ 86 $ 83 $ 81 $ 81 $ 82 Underwriting income (loss) Auto $ (2) $ 2 $ 1 $ 6 $ (1) Homeowners 14 17 (13) 2 (4) Other personal lines 2 (2) (3) (1) 3 Total $ 14 $ 17 $ (15) $ 7 $ (2) Loss ratio 61.3 61.0 75.1 65.7 68.8 Expense ratio (1) 33.2 32.3 30.7 31.5 32.0 Combined ratio 94.5 93.3 105.8 97.2 100.8 Loss ratio 61.3 61.0 75.1 65.7 68.8 Less: effect of catastrophe losses 4.7 4.7 18.3 10.2 11.9 effect of prior year non-catastrophe reserve reestimates - 0.4 (0.4) (2.8) 0.4 Underlying loss ratio * 56.6 55.9 57.2 58.3 56.5 Reconciliation of combined ratio to underlying combined ratio Combined ratio 94.5 93.3 105.8 97.2 100.8 Effect of catastrophe losses (4.7) (4.7) (18.3) (10.2) (11.9) Effect of prior year non-catastrophe reserve reestimates - (0.4) 0.4 2.8 (0.4) Underlying combined ratio * 89.8 88.2 87.9 89.8 88.5 Effect of prior year reserve reestimates on combined ratio (0.8) - 0.4 (1.2) 2.0 Effect of Shelter-in-Place Payback expense on combined and expense ratios 2.0 - - - - Policies in Force (in thousands) Auto 485 493 496 497 499 Homeowners 230 234 235 236 237 Other personal lines 75 76 77 77 78 790 803 808 810 814 New Issued Applications (in thousands) Auto 16 19 21 22 20 Homeowners 8 9 12 12 9 Average Premium - Gross Written ($) Auto (12-month policy) 1,162 1,134 1,137 1,130 1,134 Homeowners (12-month policy) 1,880 1,823 1,807 1,782 1,768 Renewal Ratio (%) Auto 77.5 77.8 78.9 78.1 77.7 Homeowners 81.9 82.1 83.0 82.5 82.1 (1) Other revenue is deducted from other costs and expenses in the expense ratio calculation. The Allstate Corporation 1Q20 Supplement 18

 
The Allstate Corporation Auto Profitability Measures by Brand ($ in millions) Three months ended March 31, Dec. 31, Sept. 30, June 30, March 31, 2020 2019 2019 2019 2019 Allstate brand auto Net premiums written $ 5,574 $ 5,470 $ 5,599 $ 5,472 $ 5,395 Net premiums earned $ 5,532 $ 5,509 $ 5,446 $ 5,404 $ 5,321 Other revenue 58 58 57 57 57 Incurred losses (3,378) (3,712) (3,689) (3,698) (3,485) Expenses (1,560) (1,456) (1,385) (1,376) (1,381) Underwriting income $ 652 $ 399 $ 429 $ 387 $ 512 Loss ratio 61.1 67.4 67.7 68.4 65.5 Less: effect of catastrophe losses 0.2 - 2.4 3.3 1.3 effect of prior year non-catastrophe reserve reestimates 0.3 - (2.8) (1.6) (1.1) Underlying loss ratio * 60.6 67.4 68.1 66.7 65.3 Expense ratio (1) 27.1 25.4 24.4 24.4 24.9 Combined ratio 88.2 92.8 92.1 92.8 90.4 Effect of catastrophe losses (0.2) - (2.4) (3.3) (1.3) Effect of prior year non-catastrophe reserve reestimates (0.3) - 2.8 1.6 1.1 Underlying combined ratio * 87.7 92.8 92.5 91.1 90.2 Effect of Shelter-in-Place Payback expense on combined and expense ratios 3.4 - - - - Esurance brand auto Net premiums written $ 517 $ 460 $ 525 $ 469 $ 532 Net premiums earned $ 487 $ 500 $ 498 $ 496 $ 475 Other revenue 23 20 23 20 20 Incurred losses (359) (405) (404) (387) (367) Expenses (145) (160) (126) (121) (129) Underwriting income (loss) $ 6 $ (45) $ (9) $ 8 $ (1) Loss ratio 73.7 81.0 81.1 78.0 77.3 Less: effect of catastrophe losses 0.2 0.4 1.8 2.0 0.6 effect of prior year non-catastrophe reserve reestimates 0.7 (0.2) 0.2 (0.4) 0.9 Underlying loss ratio * 72.8 80.8 79.1 76.4 75.8 Expense ratio (1) 25.1 28.0 20.7 20.4 22.9 Combined ratio 98.8 109.0 101.8 98.4 100.2 Effect of catastrophe losses (0.2) (0.4) (1.8) (2.0) (0.6) Effect of prior year non-catastrophe reserve reestimates (0.7) 0.2 (0.2) 0.4 (0.9) Effect of amortization of purchased intangibles - (0.2) - - (0.2) Effect of impairment of purchased intangibles - (10.2) - - - Underlying combined ratio * 97.9 98.4 99.8 96.8 98.5 Effect of Shelter-in-Place Payback expense on combined and expense ratios 3.5 - - - - Encompass brand auto Net premiums written $ 118 $ 127 $ 147 $ 146 $ 120 Net premiums earned $ 135 $ 134 $ 136 $ 135 $ 134 Other revenue 1 - 2 - 1 Incurred losses (90) (88) (94) (87) (91) Expenses (48) (44) (43) (42) (45) Underwriting (loss) income $ (2) $ 2 $ 1 $ 6 $ (1) Loss ratio 66.7 65.7 69.1 64.5 67.9 Less: effect of catastrophe losses - - 2.9 2.2 2.2 effect of prior year non-catastrophe reserve reestimates 1.5 - (0.7) (6.6) - Underlying loss ratio * 65.2 65.7 66.9 68.9 65.7 Expense ratio (1) 34.8 32.8 30.2 31.1 32.8 Combined ratio 101.5 98.5 99.3 95.6 100.7 Effect of catastrophe losses - - (2.9) (2.2) (2.2) Effect of prior year non-catastrophe reserve reestimates (1.5) - 0.7 6.6 - Underlying combined ratio * 100.0 98.5 97.1 100.0 98.5 Effect of Shelter-in-Place Payback expense on combined and expense ratios 3.7 - - - - (1) Other revenue is deducted from other costs and expenses in the expense ratio calculation. The Allstate Corporation 1Q20 Supplement 19

 
The Allstate Corporation Homeowners Profitability Measures by Brand ($ in millions) Three months ended March 31, Dec. 31, Sept. 30, June 30, March 31, 2020 2019 2019 2019 2019 Allstate brand homeowners Net premiums written $ 1,618 $ 1,861 $ 2,143 $ 2,076 $ 1,565 Net premiums earned $ 1,907 $ 1,892 $ 1,868 $ 1,832 $ 1,811 Other revenue 11 11 12 11 11 Incurred losses (927) (958) (1,082) (1,508) (1,254) Expenses (436) (459) (437) (414) (426) Underwriting income (loss) $ 555 $ 486 $ 361 $ (79) $ 142 Loss ratio 48.6 50.6 57.9 82.3 69.3 Less: effect of catastrophe losses 8.9 13.4 15.7 42.6 28.2 effect of prior year non-catastrophe reserve reestimates 0.2 (0.2) - (0.4) 0.3 Underlying loss ratio * 39.5 37.4 42.2 40.1 40.8 Expense ratio (1) 22.3 23.7 22.8 22.0 22.9 Combined ratio 70.9 74.3 80.7 104.3 92.2 Effect of catastrophe losses (8.9) (13.4) (15.7) (42.6) (28.2) Effect of prior year non-catastrophe reserve reestimates (0.2) 0.2 - 0.4 (0.3) Underlying combined ratio * 61.8 61.1 65.0 62.1 63.7 Esurance brand homeowners Net premiums written $ 27 $ 27 $ 35 $ 32 $ 25 Net premiums earned $ 30 $ 30 $ 28 $ 27 $ 25 Incurred losses (13) (16) (20) (31) (15) Expenses (5) (6) (7) (7) (6) Underwriting income (loss) $ 12 $ 8 $ 1 $ (11) $ 4 Loss ratio 43.3 53.3 71.4 114.8 60.0 Less: effect of catastrophe losses 6.7 6.7 25.0 55.5 12.0 effect of prior year non-catastrophe reserve reestimates (6.7) 3.3 - - (4.0) Underlying loss ratio * 43.3 43.3 46.4 59.3 52.0 Expense ratio (1) 16.7 20.0 25.0 25.9 24.0 Combined ratio 60.0 73.3 96.4 140.7 84.0 Effect of catastrophe losses (6.7) (6.7) (25.0) (55.5) (12.0) Effect of prior year non-catastrophe reserve reestimates 6.7 (3.3) - - 4.0 Underlying combined ratio * 60.0 63.3 71.4 85.2 76.0 Encompass brand homeowners Net premiums written $ 87 $ 94 $ 110 $ 111 $ 86 Net premiums earned $ 101 $ 100 $ 101 $ 99 $ 99 Other revenue - 1 - 1 - Incurred losses (55) (52) (82) (66) (72) Expenses (32) (32) (32) (32) (31) Underwriting income (loss) $ 14 $ 17 $ (13) $ 2 $ (4) Loss ratio 54.4 52.0 81.2 66.7 72.7 Less: effect of catastrophe losses 10.9 12.0 40.6 22.2 25.3 effect of prior year non-catastrophe reserve reestimates - 1.0 - - 4.0 Underlying loss ratio * 43.5 39.0 40.6 44.5 43.4 Expense ratio (1) 31.7 31.0 31.7 31.3 31.3 Combined ratio 86.1 83.0 112.9 98.0 104.0 Effect of catastrophe losses (10.9) (12.0) (40.6) (22.2) (25.3) Effect of prior year non-catastrophe reserve reestimates - (1.0) - - (4.0) Underlying combined ratio * 75.2 70.0 72.3 75.8 74.7 (1) Other revenue is deducted from other costs and expenses in the expense ratio calculation. The Allstate Corporation 1Q20 Supplement 20

 
The Allstate Corporation Other Personal Lines Profitability Measures by Brand (1) ($ in millions) Three months ended March 31, Dec. 31, Sept. 30, June 30, March 31, 2020 2019 2019 2019 2019 Allstate brand other personal lines Net premiums written $ 411 $ 434 $ 492 $ 478 $ 399 Net premiums earned $ 449 $ 449 $ 447 $ 440 $ 437 Other revenue 29 31 37 35 28 Incurred losses (243) (225) (277) (281) (292) Expenses (147) (159) (156) (146) (143) Underwriting income $ 88 $ 96 $ 51 $ 48 $ 30 Loss ratio 54.1 50.1 62.0 63.9 66.8 Less: effect of catastrophe losses 2.7 4.2 5.1 13.0 14.6 effect of prior year non-catastrophe reserve reestimates - (1.1) 2.5 0.4 0.2 Underlying loss ratio * 51.4 47.0 54.4 50.5 52.0 Expense ratio (2) 26.3 28.5 26.6 25.2 26.3 Combined ratio 80.4 78.6 88.6 89.1 93.1 Effect of catastrophe losses (2.7) (4.2) (5.1) (13.0) (14.6) Effect of prior year non-catastrophe reserve reestimates - 1.1 (2.5) (0.4) (0.2) Underlying combined ratio * 77.7 75.5 81.0 75.7 78.3 Esurance brand other personal lines Net premiums written $ 2 $ 2 $ 2 $ 2 $ 2 Net premiums earned $ 2 $ 2 $ 2 $ 2 $ 2 Incurred losses (1) (2) - (1) (2) Expenses - - - (1) - Underwriting income $ 1 $ - $ 2 $ - $ - Encompass brand other personal lines Net premiums written $ 17 $ 19 $ 21 $ 21 $ 18 Net premiums earned $ 20 $ 20 $ 20 $ 20 $ 20 Incurred losses (12) (15) (17) (14) (11) Expenses (6) (7) (6) (7) (6) Underwriting income (loss) $ 2 $ (2) $ (3) $ (1) $ 3 Loss ratio 60.0 75.0 85.0 70.0 55.0 Less: effect of catastrophe losses 5.0 - 10.0 5.0 10.0 effect of prior year non-catastrophe reserve reestimates (10.0) - - 10.0 (15.0) Underlying loss ratio * 65.0 75.0 75.0 55.0 60.0 Expense ratio (2) 30.0 35.0 30.0 35.0 30.0 Combined ratio 90.0 110.0 115.0 105.0 85.0 Effect of catastrophe losses (5.0) - (10.0) (5.0) (10.0) Effect of prior year non-catastrophe reserve reestimates 10.0 - - (10.0) 15.0 Underlying combined ratio * 95.0 110.0 105.0 90.0 90.0 (1) Other personal lines include renters, condominium, landlord and other personal lines products in Allstate Protection. (2) Other revenue is deducted from other costs and expenses in the expense ratio calculation. The Allstate Corporation 1Q20 Supplement 21

 
The Allstate Corporation Commercial Lines Profitability Measures (1) ($ in millions) Three months ended March 31, Dec. 31, Sept. 30, June 30, March 31, 2020 2019 2019 2019 2019 Net premiums written $ 221 $ 243 $ 238 $ 236 $ 185 Net premiums earned $ 218 $ 237 $ 236 $ 226 $ 183 Other revenue 1 2 1 2 1 Incurred losses (2) (171) (185) (197) (196) (139) Expenses (43) (41) (39) (39) (38) Underwriting income (loss) $ 5 $ 13 $ 1 $ (7) $ 7 Loss ratio 78.4 78.1 83.5 86.7 76.0 Expense ratio (3) 19.3 16.4 16.1 16.4 20.2 Combined ratio 97.7 94.5 99.6 103.1 96.2 Reconciliation of combined ratio to underlying combined ratio Combined ratio 97.7 94.5 99.6 103.1 96.2 Effect of catastrophe losses (0.9) (2.1) (0.9) (1.8) (0.5) Effect of prior year non-catastrophe reserve reestimates (2.3) - (0.4) (5.3) (2.8) Underlying combined ratio * 94.5 92.4 98.3 96.0 92.9 Effect of prior year reserve reestimates on combined ratio 2.8 - - 5.7 2.2 Effect of catastrophe losses included in prior year reserve reestimates on combined ratio 0.5 - (0.4) 0.4 (0.6) (1) Commercial lines are all Allstate brand products and includes our shared economy business. (2) Recorded losses related to the shared economy agreements are primarily based on original pricing expectations given limited loss experience. (3) Other revenue is deducted from other costs and expenses in the expense ratio calculation. The Allstate Corporation 1Q20 Supplement 22

 
The Allstate Corporation Discontinued Lines and Coverages Reserves Three months ($ in millions) ended Twelve months ended December 31, March 31, (net of reinsurance) 2020 2019 2018 2017 2016 2015 Asbestos Beginning reserves $ 810 $ 866 $ 884 $ 912 $ 960 $ 1,014 Incurred claims and claims expense - 28 44 61 67 39 Claims and claims expense paid (20) (84) (62) (89) (115) (93) Ending reserves $ 790 $ 810 $ 866 $ 884 $ 912 $ 960 Claims and claims expense paid as a percent of ending reserves 2.5 % 10.4 % 7.2 % 10.1 % 12.6 % 9.7 % Environmental Beginning reserves $ 179 $ 170 $ 166 $ 179 $ 179 $ 203 Incurred claims and claims expense - 36 20 10 23 1 Claims and claims expense paid (4) (27) (16) (23) (23) (25) Ending reserves $ 175 $ 179 $ 170 $ 166 $ 179 $ 179 Claims and claims expense paid as a percent of ending reserves 2.3 % 15.1 % 9.4 % 13.9 % 12.8 % 14.0 % Other (1) Beginning reserves $ 376 $ 355 $ 357 $ 354 $ 377 $ 395 Incurred claims and claims expense 2 41 23 25 15 13 Claims and claims expense paid (8) (20) (25) (22) (38) (31) Ending reserves $ 370 $ 376 $ 355 $ 357 $ 354 $ 377 Claims and claims expense paid as a percent of ending reserves 2.2 % 5.3 % 7.0 % 6.2 % 10.7 % 8.2 % Total (2) Beginning reserves $ 1,365 $ 1,391 $ 1,407 $ 1,445 $ 1,516 $ 1,612 Incurred claims and claims expense 2 105 87 96 105 53 Claims and claims expense paid (32) (131) (103) (134) (176) (149) Ending reserves $ 1,335 $ 1,365 $ 1,391 $ 1,407 $ 1,445 $ 1,516 Claims and claims expense paid as a percent of ending reserves 2.4 % 9.6 % 7.4 % 9.5 % 12.2 % 9.8 % (1) Other includes other mass torts, workers' compensation, commercial and other. (2) The 3-year survival ratio for the combined asbestos, environmental and other claims was 11.1, 11.1, 10.1, 9.2, 9.2 and 10.6 for the annualized three months of 2020 and twelve months ended 2019, 2018, 2017, 2016 and 2015, respectively, and is calculated by taking the ending reserves divided by average net payments made during the 3-year period. The Allstate Corporation 1Q20 Supplement 23

 
The Allstate Corporation Service Businesses Segment Results (1) ($ in millions) Three months ended March 31, Dec. 31, Sept. 30, June 30, March 31, 2020 2019 2019 2019 2019 Service Businesses Net premiums written $ 379 $ 453 $ 364 $ 350 $ 368 Net premiums earned $ 354 $ 321 $ 312 $ 305 $ 295 Other revenue 52 46 47 48 47 Intersegment insurance premiums and service fees 38 44 44 33 33 Net investment income 10 12 11 10 9 Realized capital gains (losses) (24) 11 4 9 8 Claims and claims expense (92) (92) (93) (86) (92) Amortization of deferred policy acquisition costs (153) (143) (139) (134) (127) Operating costs and expenses (161) (181) (171) (158) (151) Restructuring and related charges - - (1) 1 - Amortization of purchased intangibles (27) (29) (31) (31) (31) Impairment of purchased intangibles - - - (55) - Income tax (benefit) expense - (1) 4 12 3 Net loss applicable to common shareholders $ (3) $ (12) $ (13) $ (46) $ (6) Realized capital (gains) losses, after-tax 19 (8) (4) (6) (7) Amortization of purchased intangibles, after-tax 21 23 25 25 24 Impairment of purchased intangibles, after-tax - - - 43 - Adjusted net income $ 37 $ 3 $ 8 $ 16 $ 11 Allstate Dealer Services Net premiums written $ 107 $ 123 $ 126 $ 120 $ 99 Total revenue (2) $ 112 $ 121 $ 115 $ 114 $ 107 Claims and claims expense (11) (12) (12) (12) (11) Other costs and expenses (3) (97) (95) (93) (90) (88) Income tax expense (1) (3) (2) (3) (1) Net income applicable to common shareholders $ 3 $ 11 $ 8 $ 9 $ 7 Realized capital (gains) losses, after-tax 4 (4) (2) (2) (1) Adjusted net income $ 7 $ 7 $ 6 $ 7 $ 6 Arity Other revenue $ - $ - $ 1 $ 1 $ - Intersegment service fees 30 35 34 24 24 Other costs and expenses (3) (34) (39) (36) (26) (27) Income tax benefit 1 1 - - 1 Net loss applicable to common shareholders $ (3) $ (3) $ (1) $ (1) $ (2) Adjusted net loss $ (3) $ (3) $ (1) $ (1) $ (2) Allstate Identity Protection Other revenue $ 28 $ 24 $ 22 $ 23 $ 24 Intersegment service fees - - 1 - - Other costs and expenses (3)(4) (43) (48) (47) (44) (38) Income tax benefit 3 3 6 5 3 Net loss applicable to common shareholders $ (12) $ (21) $ (18) $ (16) $ (11) Amortization of purchased intangibles, after-tax 9 9 11 10 10 Adjusted net loss $ (3) $ (12) $ (7) $ (6) $ (1) Allstate Roadside Services Net premiums written $ 51 $ 52 $ 57 $ 63 $ 63 Total revenue (2) $ 60 $ 65 $ 68 $ 73 $ 73 Claims and claims expense (26) (31) (35) (37) (38) Other costs and expenses (3) (31) (35) (39) (40) (43) Income tax (expense) benefit (1) - 1 1 2 Net income (loss) applicable to common shareholders $ 2 $ (1) $ (5) $ (3) $ (6) Adjusted net income (loss) $ 2 $ (1) $ (5) $ (3) $ (6) (1) Service Businesses results also include Allstate Protection Plans (formerly known as SquareTrade); results are on the next page. (2) Total revenue may include net premiums earned, intersegment insurance premiums and service fees, other revenue, net investment income and realized capital gains and losses. (3) Other costs and expenses may include amortization of deferred policy acquisition costs, operating costs and expenses, and restructuring and related charges. (4) Includes investments in growing the business and integration into Allstate. The Allstate Corporation 1Q20 Supplement 24

 
The Allstate Corporation Allstate Protection Plans Results ($ in millions) As of or for the three months ended March 31, Dec. 31, Sept. 30, June 30, March 31, 2020 2019 2019 2019 2019 Net premiums written $ 221 $ 278 $ 181 $ 167 $ 206 Net premiums earned $ 206 $ 172 $ 163 $ 153 $ 145 Other revenue (1) 8 6 7 7 8 Net investment income 5 6 5 4 4 Realized capital gains (losses) (19) 5 2 6 7 Claims and claims expense (55) (49) (46) (37) (43) Amortization of deferred policy acquisition costs (70) (62) (60) (56) (53) Other costs and expenses (50) (56) (49) (48) (42) Amortization of purchased intangibles (16) (18) (18) (18) (18) Impairment of purchased intangibles - - - (55) - Income tax (benefit) expense (2) (2) (1) 9 (2) Net income (loss) applicable to common shareholders $ 7 $ 2 $ 3 $ (35) $ 6 Realized capital (gains) losses, after-tax 15 (4) (2) (4) (6) Amortization of purchased intangibles, after-tax 12 14 14 15 14 Impairment of purchased intangibles, after-tax - - - 43 - Adjusted net income $ 34 $ 12 $ 15 $ 19 $ 14 Protection Plans in Force (in thousands) (2) 107,124 99,632 89,783 83,968 77,866 New Issued Protection Plans (in thousands) 12,561 16,515 10,086 9,754 13,500 (1) Other revenue relates to the acquisition of PlumChoice and iCracked Inc. (2) Protection plan terms generally range between one and five years with an average term of three years. The Allstate Corporation 1Q20 Supplement 25

 
The Allstate Corporation Allstate Life Segment Results and Other Statistics ($ in millions) As of or for the three months ended March 31, Dec. 31, Sept. 30, June 30, March 31, 2020 2019 2019 2019 2019 Premiums $ 153 $ 166 $ 155 $ 157 $ 154 Contract charges 180 176 176 176 183 Other revenue (1) 32 34 31 33 27 Net investment income 128 134 128 125 127 Contract benefits (212) (223) (202) (216) (214) Interest credited to contractholder funds (70) (73) (73) (70) (72) Amortization of deferred policy acquisition costs (30) (29) (85) (27) (26) Operating costs and expenses (84) (95) (77) (91) (91) Restructuring and related charges (1) (1) - (1) - Income tax expense on operations (16) (13) (9) (18) (15) Adjusted net income 80 76 44 68 73 Realized capital gains (losses), after-tax (25) - 4 - (4) Valuation changes on embedded derivatives not hedged, after-tax 12 - (9) - - DAC and DSI amortization related to realized capital gains and losses and valuation changes on embedded derivatives not hedged, after-tax (3) (3) 1 (1) (2) Net income applicable to common shareholders $ 64 $ 73 $ 40 $ 67 $ 67 Premiums and Contract Charges by Product Traditional life insurance premiums $ 153 $ 165 $ 155 $ 156 $ 154 Accident and health insurance premiums - 1 - 1 - Interest-sensitive life insurance contract charges 180 176 176 176 183 Total $ 333 $ 342 $ 331 $ 333 $ 337 Benefit spread Premiums $ 153 $ 166 $ 155 $ 157 $ 154 Cost of insurance contract charges 128 124 123 123 129 Contract benefits (212) (223) (202) (216) (214) Total benefit spread $ 69 $ 67 $ 76 $ 64 $ 69 Investment spread Net investment income $ 128 $ 134 $ 128 $ 125 $ 127 Interest credited to contractholder funds (56) (72) (85) (70) (72) Total investment spread $ 72 $ 62 $ 43 $ 55 $ 55 Proprietary Life Issued Policies (2) 20,169 34,927 31,031 33,105 28,425 Policies in Force (in thousands) (3) Life insurance Allstate agencies 1,797 1,816 1,818 1,822 1,823 Closed channels 103 105 106 109 111 Accident and health insurance 2 2 2 2 2 Total 1,902 1,923 1,926 1,933 1,936 (1) Includes gross dealer concessions received in connection with Allstate exclusive agencies and exclusive financial specialist's sales of non-proprietary products, including mutual funds, fixed and variable annuities, disability insurance and long-term care insurance. (2) Policies issued during the period. (3) Reflect the number of contracts in force. The Allstate Corporation 1Q20 Supplement 26

 
The Allstate Corporation Allstate Life Return on Equity ($ in millions) Twelve months ended March 31, Dec. 31, Sept. 30, June 30, March 31, 2020 2019 2019 2019 2019 Return on Equity Numerator: Net income applicable to common shareholders (1)(2) $ 244 $ 247 $ 237 $ 252 $ 260 Denominator: Beginning equity $ 2,657 $ 2,474 $ 2,528 $ 2,587 $ 2,542 Ending equity 2,842 2,944 2,863 2,744 2,657 Average equity (3) $ 2,750 $ 2,709 $ 2,696 $ 2,666 $ 2,600 Return on equity 8.9 % 9.1 % 8.8 % 9.5 % 10.0 % Adjusted Net Income Return on Adjusted Equity Numerator: Adjusted net income (1) $ 268 $ 261 $ 254 $ 285 $ 297 Denominator: Beginning equity $ 2,657 $ 2,474 $ 2,528 $ 2,587 $ 2,542 Less: Unrealized net capital gains and losses 168 52 75 89 142 Goodwill 175 175 175 175 175 Adjusted beginning equity $ 2,314 $ 2,247 $ 2,278 $ 2,323 $ 2,225 Ending equity $ 2,842 $ 2,944 $ 2,863 $ 2,744 $ 2,657 Less: Unrealized net capital gains and losses 183 328 350 271 168 Goodwill 175 175 175 175 175 Adjusted ending equity $ 2,484 $ 2,441 $ 2,338 $ 2,298 $ 2,314 Average adjusted equity (3) $ 2,399 $ 2,344 $ 2,308 $ 2,311 $ 2,270 Adjusted net income return on adjusted equity * 11.2 % 11.1 % 11.0 % 12.3 % 13.1 % (1) Net income applicable to common shareholders and adjusted net income reflect a trailing twelve-month period. (2) Includes a $16 million Tax Legislation expense for the periods ended June 30, 2019 and March 31, 2019. (3) Average equity and average adjusted equity are determined using a two-point average, with the beginning and ending equity and adjusted equity, respectively, for the twelve-month period as data points. The Allstate Corporation 1Q20 Supplement 27

 
The Allstate Corporation Allstate Benefits Segment Results and Other Statistics ($ in millions) As of or for the three months ended March 31, Dec. 31, Sept. 30, June 30, March 31, 2020 2019 2019 2019 2019 Premiums $ 253 $ 254 $ 262 $ 256 $ 259 Contract charges 29 28 29 28 29 Net investment income 20 22 21 21 19 Contract benefits (141) (152) (161) (143) (145) Interest credited to contractholder funds (9) (8) (9) (8) (9) Amortization of deferred policy acquisition costs (45) (50) (33) (35) (43) Operating costs and expenses (75) (74) (69) (71) (71) Income tax expense on operations (8) (4) (9) (11) (8) Adjusted net income 24 16 31 37 31 Realized capital gains (losses), after-tax (10) 2 2 2 3 Net income applicable to common shareholders $ 14 $ 18 $ 33 $ 39 $ 34 Benefit ratio (1) 50.0 53.9 55.3 50.4 50.3 Operating expense ratio (2) 26.6 26.2 23.7 25.0 24.7 Premiums and Contract Charges by Product Life $ 38 $ 40 $ 41 $ 38 $ 38 Accident 73 72 76 74 76 Critical illness 122 116 121 120 122 Short-term disability 20 27 27 27 26 Other health 29 27 26 25 26 Total $ 282 $ 282 $ 291 $ 284 $ 288 New Annualized Premium Sales by Product (3) Life $ 6 $ 19 $ 9 $ 9 $ 8 Accident 17 43 20 20 21 Critical illness 21 61 23 22 24 Short-term disability 5 11 7 9 8 Other health 8 24 10 13 11 Total $ 57 $ 158 $ 69 $ 73 $ 72 Annualized Premium In Force (4) $ 1,233 $ 1,195 $ 1,248 $ 1,249 $ 1,251 (1) Benefit ratio is contract benefits divided by premiums and contract charges. (2) Operating expense ratio is operating costs and expenses divided by premiums and contract charges. (3) New annualized premium sales reflects annualized premiums at initial customer enrollment (including new accounts and new employees or policies of existing accounts). A significant portion of Allstate Benefits business is seasonally written in the fourth quarter during many clients’ annual employee benefits enrollment. (4) Premium amount paid annually for all active policies, which have not been cancelled. The Allstate Corporation 1Q20 Supplement 28

 
The Allstate Corporation Allstate Benefits Return on Equity ($ in millions) Twelve months ended March 31, Dec. 31, Sept. 30, June 30, March 31, 2020 2019 2019 2019 2019 Return on Equity Numerator: Net income applicable to common shareholders (1) $ 104 $ 124 $ 126 $ 128 $ 125 Denominator: Beginning equity $ 906 $ 842 $ 883 $ 848 $ 824 Ending equity 923 949 1,010 969 906 Average equity (2) $ 915 $ 896 $ 947 $ 909 $ 865 Return on equity 11.4 % 13.8 % 13.3 % 14.1 % 14.5 % Adjusted Net Income Return on Adjusted Equity Numerator: Adjusted net income (1) $ 108 $ 115 $ 125 $ 127 $ 126 Denominator: Beginning equity $ 906 $ 842 $ 883 $ 848 $ 824 Less: Unrealized net capital gains and losses 21 (10) (4) (4) 8 Goodwill 96 96 96 96 96 Adjusted beginning equity $ 789 $ 756 $ 791 $ 756 $ 720 Ending equity $ 923 $ 949 $ 1,010 $ 969 $ 906 Less: Unrealized net capital gains and losses 14 53 52 44 21 Goodwill 96 96 96 96 96 Adjusted ending equity $ 813 $ 800 $ 862 $ 829 $ 789 Average adjusted equity (2) $ 801 $ 778 $ 827 $ 793 $ 755 Adjusted net income return on adjusted equity * 13.5 % 14.8 % 15.1 % 16.0 % 16.7 % (1) Net income applicable to common shareholders and adjusted net income reflect a trailing twelve-month period. (2) Average equity and average adjusted equity are determined using a two-point average, with the beginning and ending equity and adjusted equity, respectively, for the twelve-month period as data points. The Allstate Corporation 1Q20 Supplement 29

 
The Allstate Corporation Allstate Annuities Segment Results and Other Statistics ($ in millions) As of or for the three months ended March 31, Dec. 31, Sept. 30, June 30, March 31, 2020 2019 2019 2019 2019 Contract charges $ 2 $ 3 $ 3 $ 4 $ 3 Net investment income (1) 47 180 251 296 190 Periodic settlements and accruals on non-hedge derivative instruments - - (1) 1 - Contract benefits (148) (143) (150) (152) (138) Interest credited to contractholder funds (70) (73) (73) (75) (78) Amortization of deferred policy acquisition costs (2) (2) (2) (1) (2) Operating costs and expenses (6) (7) (7) (8) (7) Restructuring and related charges - (1) - - - Income tax benefit (expense) on operations 38 10 (5) (13) 7 Adjusted net (loss) income (139) (33) 16 52 (25) Realized capital gains (losses), after-tax (213) 97 16 37 124 Valuation changes on embedded derivatives not hedged, after-tax 2 - (1) (2) (3) Gain on disposition of operations, after-tax 1 2 - 1 1 Net (loss) income applicable to common shareholders $ (349) $ 66 $ 31 $ 88 $ 97 Benefit spread Cost of insurance contract charges $ 2 $ 3 $ 2 $ 2 $ 2 Contract benefits excluding the implied interest on immediate annuities with life contingencies (30) (24) (30) (33) (17) Total benefit spread $ (28) $ (21) $ (28) $ (31) $ (15) Investment spread Net investment income $ 47 $ 180 $ 251 $ 296 $ 190 Implied interest on immediate annuities with life contingencies (118) (119) (120) (119) (121) Interest credited to contractholder funds excluding valuation changes on embedded derivatives not hedged (67) (73) (75) (78) (81) Total investment spread $ (138) $ (12) $ 56 $ 99 $ (12) (1) Performance-based net investment income, a component of net investment income $ (122) $ (5) $ 68 $ 106 $ 1 The Allstate Corporation 1Q20 Supplement 30

 
The Allstate Corporation Allstate Annuities Return on Equity ($ in millions) Twelve months ended March 31, Dec. 31, Sept. 30, June 30, March 31, 2020 2019 2019 2019 2019 Return on Equity Numerator: Net (loss) income applicable to common shareholders (1)(2) $ (164) $ 282 $ 94 $ 194 $ 156 Denominator: Beginning equity $ 5,278 $ 4,949 $ 5,119 $ 5,029 $ 5,009 Ending equity 4,926 5,625 5,552 5,437 5,278 Average equity (3) $ 5,102 $ 5,287 $ 5,336 $ 5,233 $ 5,144 Return on equity (3.2) % 5.3 % 1.8 % 3.7 % 3.0 % Adjusted Net Income Return on Adjusted Equity Numerator: Adjusted net (loss) income (1) $ (104) $ 10 $ 75 $ 79 $ 71 Denominator: Beginning equity $ 5,278 $ 4,949 $ 5,119 $ 5,029 $ 5,009 Less: Unrealized net capital gains and losses 428 193 241 272 279 Adjusted beginning equity $ 4,850 $ 4,756 $ 4,878 $ 4,757 $ 4,730 Ending equity $ 4,926 $ 5,625 $ 5,552 $ 5,437 $ 5,278 Less: Unrealized net capital gains and losses 277 604 585 502 428 Adjusted ending equity $ 4,649 $ 5,021 $ 4,967 $ 4,935 $ 4,850 Average adjusted equity (3) $ 4,750 $ 4,889 $ 4,923 $ 4,846 $ 4,790 Adjusted net (loss) income return on adjusted equity * (2.2) % 0.2 % 1.5 % 1.6 % 1.5 % Adjusted net income (loss) return on adjusted equity by product: Deferred annuities 15.1 % 14.5 % 14.2 % 13.2 % 11.7 % Immediate annuities (3.7) % (1.1) % 0.3 % 0.5 % 0.4 % (1) Net income applicable to common shareholders and adjusted net income reflect a trailing twelve-month period. (2) Includes a $69 million Tax Legislation benefit for the periods ended June 30, 2019 and March 31, 2019. (3) Average equity and average adjusted equity are determined using a two-point average, with the beginning and ending equity and adjusted equity, respectively, for the twelve- month period as data points. The Allstate Corporation 1Q20 Supplement 31

 
The Allstate Corporation Corporate and Other Segment Results ($ in millions) Three months ended March 31, Dec. 31, Sept. 30, June 30, March 31, 2020 2019 2019 2019 2019 Net investment income $ 14 $ 18 $ 21 $ 19 $ 12 Operating costs and expenses (25) (27) (19) (24) (21) Interest expense (81) (81) (80) (82) (83) Income tax benefit on operations 21 20 19 19 20 Preferred stock dividends (36) (66) (42) (30) (31) Adjusted net loss (107) (136) (101) (98) (103) Realized capital gains (losses), after-tax (17) 9 2 7 1 Pension and other postretirement remeasurement gains (losses), after-tax (251) 199 (179) (99) (11) Net (loss) income applicable to common shareholders $ (375) $ 72 $ (278) $ (190) $ (113) The Allstate Corporation 1Q20 Supplement 32

 
The Allstate Corporation Investment Position March 31, Dec. 31, Sept. 30, June 30, March 31, ($ in millions) 2020 2019 2019 2019 2019 Consolidated Investments Fixed income securities, at fair value $ 59,857 $ 59,044 $ 59,259 $ 58,484 $ 58,202 Equity securities (1) 3,701 8,162 8,206 7,906 5,802 Mortgage loans, net 4,759 4,817 4,694 4,687 4,681 Limited partnership interests (2) 7,087 8,078 7,990 7,818 7,493 Short-term, at fair value 5,671 4,256 5,254 3,740 4,157 Other investments, net 3,767 4,005 3,904 3,856 3,786 Total $ 84,842 $ 88,362 $ 89,307 $ 86,491 $ 84,121 Fixed income securities, at amortized cost, net (3) $ 58,945 $ 56,293 $ 56,263 $ 56,008 $ 56,831 Ratio of fair value to amortized cost 101.5 % 104.9 % 105.3 % 104.4 % 102.4 % Short-term, at amortized cost $ 5,671 $ 4,256 $ 5,254 $ 3,740 $ 4,157 March 31, 2020 - By Segment Property- Service Allstate Allstate Allstate Corporate Liability Businesses Life Benefits Annuities and Other Total Fixed income securities, at fair value $ 34,577 $ 1,410 $ 7,824 $ 1,275 $ 13,586 $ 1,185 $ 59,857 Equity securities 1,842 111 157 64 1,213 314 3,701 Mortgage loans, net 568 - 1,792 198 2,201 - 4,759 Limited partnership interests 4,154 - - - 2,933 - 7,087 Short-term, at fair value 2,507 83 485 30 606 1,960 5,671 Other investments, net 1,540 - 1,309 300 617 1 3,767 Total $ 45,188 $ 1,604 $ 11,567 $ 1,867 $ 21,156 $ 3,460 $ 84,842 Fixed income securities, at amortized cost, net $ 34,556 $ 1,383 $ 7,466 $ 1,257 $ 13,126 $ 1,157 $ 58,945 Ratio of fair value to amortized cost 100.1 % 102.0 % 104.8 % 101.4 % 103.5 % 102.4 % 101.5 % Short-term, at amortized cost $ 2,507 $ 83 $ 485 $ 30 $ 606 $ 1,960 $ 5,671 Fixed income securities portfolio duration (in years) (4) 5.09 5.01 6.51 5.15 4.70 3.17 5.15 (1) As of March 31, 2020, equity securities include $1.39 billion of investments in exchange traded and mutual funds whose underlying investments are fixed income securities. (2) As of March 31, 2020, we have commitments to invest additional amounts in limited partnership interests totaling $2.71 billion. (3) Due to the adoption of the measurement of credit losses on financial instruments accounting standard on January 1, 2020, credit losses for fixed income securities are now recorded as an allowance. (4) Duration measures the price sensitivity of assets and liabilities to changes in interest rates. The Allstate Corporation 1Q20 Supplement 33

 
The Allstate Corporation Net Investment Income, Yields and Realized Capital Gains and Losses (Pre-Tax) ($ in millions) Three months ended March 31, Dec. 31, Sept. 30, June 30, March 31, 2020 2019 2019 2019 2019 Net Investment Income Fixed income securities $ 525 $ 548 $ 546 $ 543 $ 538 Equity securities 6 51 57 68 30 Mortgage loans 60 59 54 54 53 Limited partnership interests ("LP") (1) (192) 11 197 254 9 Short-term 17 22 28 26 26 Other 63 66 66 67 63 Investment income, before expense 479 757 948 1,012 719 Less: Investment expense (58) (68) (68) (70) (71) Net investment income $ 421 $ 689 $ 880 $ 942 $ 648 Interest-bearing investments (2) $ 646 $ 674 $ 676 $ 672 $ 664 Equity securities 6 51 57 68 30 LP and other alternative investments (3) (173) 32 215 272 25 Investment income, before expense $ 479 $ 757 $ 948 $ 1,012 $ 719 Pre-Tax Yields (4) Fixed income securities 3.6 % 3.9 % 3.9 % 3.8 % 3.8 % Equity securities 0.5 3.0 3.4 4.7 2.6 Mortgage loans 4.9 5.0 4.6 4.6 4.6 Limited partnership interests (10.1) 0.5 10.0 13.3 0.5 Total portfolio 2.2 3.5 4.4 4.8 3.4 Interest-bearing investments 3.7 3.9 4.0 4.0 3.9 Realized Capital Gains (Losses), Pre-tax by transaction type Sales (5) $ 388 $ 216 $ 147 $ 117 $ 95 Credit losses (6) (79) (4) (14) (15) (14) Valuation of equity investments (859) 521 24 200 627 Valuation and settlements of derivative instruments 88 (31) 40 22 (46) Total $ (462) $ 702 $ 197 $ 324 $ 662 Total Return on Investment Portfolio (7) Net investment income 0.5 % 0.8 % 1.0 % 1.1 % 0.8 % Valuation-interest bearing (1.9) (0.1) 0.8 1.5 1.7 Valuation-equity investments (1.0) 0.6 0.1 0.2 0.8 Total (2.4) % 1.3 % 1.9 % 2.8 % 3.3 % Average Investment Balances (in billions) (8) $ 83.9 $ 84.5 $ 83.9 $ 82.2 $ 81.2 Investment Expense Investee level expenses (5) $ (13) $ (22) $ (19) $ (20) $ (20) Securities lending expense (6) (8) (10) (11) (11) Other expenses (39) (38) (39) (39) (40) Total investment expense $ (58) $ (68) $ (68) $ (70) $ (71) (1) Income from equity method of accounting LP is generally recognized on a three-month delay due to the availability of the related financial statements from investees. (2) Comprise fixed income securities, mortgage loans, short-term investments, and other investments including bank and agent loans and derivatives. (3) Comprise limited partnership interests and other alternative investments, including real estate investments classified as other investments. (4) Quarterly pre-tax yield is calculated as annualized quarterly investment income, before investment expense divided by the average of the ending investment balances of the current and prior quarter. For the purposes of the pre-tax yield calculation, income for directly held real estate and other consolidated investments is net of investee level expenses (depreciation and asset level operating expenses reported in investment expense). Beginning January 1, 2020, depreciation included in investee level expenses will now be reported as realized capital gains or losses on sales. Fixed income securities investment balances exclude unrealized capital gains and losses. Equity securities investment balances use cost in the calculation. (5) Beginning January 1, 2020, depreciation previously included in investee level expenses will be reported as realized capital gains or losses. (6) Due to the adoption of the measurement of credit losses on financial instruments accounting standard, prior period OTTI impairment write-downs are now presented as credit losses. (7) Total return on investment portfolio is calculated from GAAP results, including the total of net investment income, realized capital gains and losses, the change in unrealized net capital gains and losses, and the change in the difference between fair value and carrying value of mortgage loans, cost method limited partnerships for periods prior to 2018, bank loans and agent loans divided by the average fair value balances. (8) Average investment balances for the quarter are calculated as the average of the current and prior quarter investment balances. For purposes of the average investment balances calculation, unrealized capital gains and losses on fixed income securities are excluded and equity securities investment balances are at cost. The Allstate Corporation 1Q20 Supplement 34

 
The Allstate Corporation Net Investment Income, Yields and Realized Capital Gains and Losses (Pre-Tax) by Segment ($ in millions) Three months ended March 31, 2020 Property- Service Allstate Allstate Allstate Corporate and Liability Businesses Life Benefits Annuities Other Total Net Investment Income Fixed income securities $ 267 $ 8 $ 86 $ 13 $ 141 $ 10 $ 525 Equity securities 6 2 1 - (5) 2 6 Mortgage loans 6 - 24 3 27 - 60 Limited partnership interests ("LP") (77) - - - (115) - (192) Short-term 9 - 2 - 4 2 17 Other 25 - 20 4 12 2 63 Investment income, before expense 236 10 133 20 64 16 479 Less: Investment expense (34) - (5) - (17) (2) (58) Net investment income $ 202 $ 10 $ 128 $ 20 $ 47 $ 14 $ 421 Net investment income, after-tax $ 171 $ 8 $ 106 $ 16 $ 38 $ 11 $ 350 Interest-bearing investments (1) $ 295 $ 8 $ 132 $ 20 $ 177 $ 14 $ 646 Equity securities 6 2 1 - (5) 2 6 LP and other alternative investments (2) (65) - - - (108) - (173) Investment income, before expense $ 236 $ 10 $ 133 $ 20 $ 64 $ 16 $ 479 Pre-Tax Yields (3) Fixed income securities 3.2 % 2.6 % 4.6 % 4.1 % 4.3 % 3.4 % 3.6 % Equity securities 0.8 3.2 2.2 1.2 (1.8) 2.2 0.5 Mortgage loans 4.1 - 5.2 5.3 4.9 - 4.9 Limited partnership interests (6.9) - - - (14.9) - (10.1) Total portfolio 2.0 2.6 4.7 4.4 1.1 2.2 2.2 Interest-bearing investments 3.2 2.6 4.8 4.5 4.3 2.2 3.7 Realized Capital Gains (Losses), Pre-tax by transaction type Sales (4) $ 366 $ 14 $ (4) $ - $ 4 $ 8 $ 388 Credit losses (5) (35) - (16) (2) (26) - (79) Valuation of equity investments (512) (38) (11) (12) (257) (29) (859) Valuation and settlements of derivative instruments 78 - - - 10 - 88 Total $ (103) $ (24) $ (31) $ (14) $ (269) $ (21) $ (462) (1) Comprised of fixed income securities, mortgage loans, short-term investments, and other investments including bank and agent loans and derivatives. (2) Comprised of limited partnership interests and other alternative investments, including real estate investments classified as other investments. (3) Quarterly pre-tax yield is calculated as annualized quarterly investment income, before investment expense divided by the average of the current and prior quarter investment balances. For the purposes of the pre-tax yield calculation, income for directly held real estate and other consolidated investments is net of investee level expenses (depreciation and asset level operating expenses reported in investment expense). Beginning January 1, 2020, depreciation included in investee level expenses will now be reported as realized capital gains or losses on sales. Fixed income securities investment balances exclude unrealized capital gains and losses. Equity securities investment balances use cost in the calculation. (4) Beginning January 1, 2020, depreciation previously included in investee level expenses will be reported as realized capital gains or losses. (5) Due to the adoption of the measurement of credit losses on financial instruments accounting standard, realized capital losses previously reported as OTTI impairment write-downs are now presented as credit losses. The Allstate Corporation 1Q20 Supplement 35

 
The Allstate Corporation Investment Position and Results by Strategy and Segment As of or for the three months ended ($ in millions) As of or for the three months ended March 31, 2020 March 31, 2019 Property- Service Allstate Allstate Allstate Corporate and Liability Businesses Life Benefits Annuities Other Total Total Market-based (1) Investment Position Interest-bearing investments $ 38,321 $ 1,494 $ 11,409 $ 1,803 $ 16,635 $ 3,145 $ 72,807 $ 69,863 Equity securities (2) 1,606 110 158 64 1,140 314 3,392 5,583 LP and other alternative investments (3) 162 - - - 100 - 262 766 Total $ 40,089 $ 1,604 $ 11,567 $ 1,867 $ 17,875 $ 3,459 $ 76,461 $ 76,212 Investment Income Interest-bearing investments $ 294 $ 8 $ 132 $ 20 $ 177 $ 14 $ 645 $ 663 Equity securities 20 2 1 - 4 2 29 30 LP and other alternative investments 1 - - - - - 1 2 Investment income, before expense 315 10 133 20 181 16 675 695 Investee level expenses (4) (1) - - - - - (1) (2) Income for yield calculation $ 314 $ 10 $ 133 $ 20 $ 181 $ 16 $ 674 $ 693 Market-based pre-tax yield 3.1 % 2.6 % 4.7 % 4.4 % 4.2 % 2.2 % 3.6 % 3.8 % Realized Capital Gains (Losses), Pre-tax by transaction type Sales $ 353 $ 14 $ (4) $ - $ 7 $ 8 $ 378 $ 66 Credit losses (5) (29) - (16) (2) (24) - (71) (13) Valuation of equity investments (505) (38) (11) (12) (257) (29) (852) 602 Valuation and settlements of derivative instruments 53 - - - (1) - 52 (50) Total $ (128) $ (24) $ (31) $ (14) $ (275) $ (21) $ (493) $ 605 Performance-based (6) Investment Position Interest-bearing investments $ 141 $ - $ - $ - $ 35 $ - $ 176 $ 127 Equity securities 236 - - - 73 - 309 219 LP and other alternative investments 4,722 - - - 3,173 1 7,896 7,563 Total $ 5,099 $ - $ - $ - $ 3,281 $ 1 $ 8,381 $ 7,909 Investment Income Interest-bearing investments $ 1 $ - $ - $ - $ - $ - $ 1 $ 1 Equity securities (14) - - - (9) - (23) - LP and other alternative investments (66) - - - (108) - (174) 23 Investment income, before expense (79) - - - (117) - (196) 24 Investee level expenses (7) - - - (5) - (12) (18) Income for yield calculation $ (86) $ - $ - $ - $ (122) $ - $ (208) $ 6 Performance-based pre-tax yield (6.7) % N/A N/A N/A (14.3) % - % (9.7) % 0.3 % Realized Capital Gains (Losses), Pre-tax by transaction type Sales $ 13 $ - $ - $ - $ (3) $ - $ 10 $ 29 Credit losses (6) - - - (2) - (8) (1) Valuation of equity investments (7) - - - - - (7) 25 Valuation and settlements of derivative instruments 25 - - - 11 - 36 4 Total $ 25 $ - $ - $ - $ 6 $ - $ 31 $ 57 (1) Market-based strategy seeks to deliver predictable earnings aligned to business needs and take advantage of short-term opportunities primarily through public and private fixed income investments and public equity securities. (2) Equity securities include investments in exchange traded and mutual funds whose underlying investments are fixed income securities. (3) Market-based investments include publicly traded equity securities classified as limited partnerships. (4) When calculating the pre-tax yields, investee level expenses are netted against income for directly held real estate and other consolidated investments. (5) Due to the adoption of the measurement of credit losses on financial instruments accounting standard, realized capital losses previously reported as OTTI impairment write-downs are now presented as credit losses. (6) Performance-based strategy seeks to deliver attractive risk-adjusted returns and supplement market risk with idiosyncratic risk primarily through investments in private equity and real estate. The Allstate Corporation 1Q20 Supplement 36

 
The Allstate Corporation Performance-Based ("PB") Investments ($ in millions) As of or for the three months ended March 31, Dec. 31, Sept. 30, June 30, March 31, 2020 2019 2019 2019 2019 Investment position Limited partnerships Private equity $ 5,781 $ 6,131 $ 6,162 $ 5,952 $ 5,786 Real estate 1,090 1,041 1,008 1,033 984 PB - limited partnerships 6,871 7,172 7,170 6,985 6,770 Non-LP Private equity 404 409 407 355 331 Real estate 1,106 1,128 1,017 906 808 PB - non-LP 1,510 1,537 1,424 1,261 1,139 Total Private equity 6,185 6,540 6,569 6,307 6,117 Real estate 2,196 2,169 2,025 1,939 1,792 Total PB $ 8,381 $ 8,709 $ 8,594 $ 8,246 $ 7,909 Investment income Limited partnerships Private equity $ (199) $ (6) $ 125 $ 216 $ (5) Real estate 7 17 71 38 12 PB - limited partnerships (192) 11 196 254 7 Non-LP Private equity (21) (9) 5 10 3 Real estate 17 18 19 15 14 PB - non-LP (4) 9 24 25 17 Total Private equity (220) (15) 130 226 (2) Real estate 24 35 90 53 26 Total PB $ (196) $ 20 $ 220 $ 279 $ 24 Investee level expenses (1) $ (12) $ (20) $ (18) $ (18) $ (18) Realized capital gains (losses) (1) Limited partnerships Private equity $ (2) $ 42 $ (1) $ (3) $ (3) Real estate (3) (3) - 1 - PB - limited partnerships (5) 39 (1) (2) (3) Non-LP Private equity 15 (13) 17 8 28 Real estate 21 (11) 10 31 32 PB - non-LP 36 (24) 27 39 60 Total Private equity 13 29 16 5 25 Real estate 18 (14) 10 32 32 Total PB $ 31 $ 15 $ 26 $ 37 $ 57 Pre-Tax Yield (9.7) % - % 9.6 % 12.9 % 0.3 % Internal Rate of Return (2)(3) 10 Year 12.1 % 12.2 % 12.4 % 12.1 % 11.4 % 5 Year 10.2 % 10.8 % 11.2 % 11.4 % 11.2 % 3 Year 10.4 % 11.7 % 12.7 % 12.7 % 11.6 % 1 Year 6.5 % 7.6 % 9.7 % 9.5 % 6.7 % (1) Beginning January 1, 2020, depreciation previously included in investee level expenses will be reported as realized capital gains or losses. (2) The internal rate of return ("IRR") is one of the measures we use to evaluate the performance of these investments. The IRR represents the rate of return on the investments considering the cash flows paid and received and, until the investment is fully liquidated, the estimated value of investment holdings at the end of the measurement period. The calculated IRR for any measurement period is highly influenced by the values of the portfolio at the beginning and end of the period, which reflect the estimated fair values of the investments as of such dates. As a result, the IRR can vary significantly for different measurement periods based on macroeconomic or other events that impact the estimated beginning or ending portfolio value, such as the global financial crisis. Our IRR calculation method may differ from those used by other investors. The timing of the recognition of income in the financial statements may differ significantly from the cash distributions and changes in the value of these investments. (3) IRR excludes decreases of $247 million that were recorded in consideration of intervening events during the three months ended March 31, 2020. Where information was available to enable updated estimates, we recognized current period declines in the value of limited partnership interests. This included updating publicly traded investments held within limited partnerships to their March 31, 2020 values, which reduced income $52 million. Additionally, $195 million of valuation increases reported in the fourth quarter 2019 partnership financial statements were excluded from income considering the equity market decline in March. The Allstate Corporation 1Q20 Supplement 37

 
Definitions of Non-GAAP Measures We believe that investors’ understanding of Allstate’s performance is enhanced by our disclosure of the following non-GAAP measures. Our methods for calculating these measures may differ from those used by other companies and therefore comparability may be limited. Adjusted net income is net income applicable to common shareholders, excluding: • realized capital gains and losses, after-tax, except for periodic settlements and accruals on non-hedge derivative instruments, which are reported with realized capital gains and losses but included in adjusted net income, • pension and other postretirement remeasurement gains and losses, after-tax, • valuation changes on embedded derivatives not hedged, after-tax, • amortization of deferred policy acquisition costs ("DAC") and deferred sales inducements (“DSI”), to the extent they resulted from the recognition of certain realized capital gains and losses or valuation changes on embedded derivatives not hedged, after-tax, • business combination expenses and the amortization or impairment of purchased intangibles, after-tax, • gain (loss) on disposition of operations, after-tax, and • 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. Net income applicable to common shareholders is the GAAP measure that is most directly comparable to adjusted net income. We use adjusted net income as an important measure to evaluate our results of operations. We believe that the measure provides investors with a valuable measure of the Company's ongoing performance because it reveals trends in our insurance and financial service business that may be obscured by the net effect of realized capital gains and losses, pension and other postretirement remeasurement gains and losses, valuation changes on embedded derivatives not hedged, business combination expenses and the amortization or impairment of purchased intangibles, gain (loss) on disposition of operations and adjustments for other significant non-recurring, infrequent or unusual items. Realized capital gains and losses, pension and other postretirement remeasurement gains and losses, valuation changes on embedded derivatives not hedged and gain (loss) on disposition of operations may vary significantly between periods and are generally driven by business decisions and external economic developments such as capital market conditions, the timing of which is unrelated to the insurance underwriting process. Consistent with our intent to protect results or earn additional income, adjusted net income includes periodic settlements and accruals on certain derivative instruments that are reported in realized capital gains and losses because they do not qualify for hedge accounting or are not designated as hedges for accounting purposes. These instruments are used for economic hedges and to replicate fixed income securities, and by including them in adjusted net income, we are appropriately reflecting their trends in our performance and in a manner consistent with the economically hedged investments, product attributes (e.g. net investment income and interest credited to contractholder funds) or replicated investments. Business combination expenses are excluded because they are non-recurring in nature and the amortization or impairment of purchased intangibles is excluded because it relates to the acquisition purchase price and is not indicative of our underlying business results or trends. Non-recurring items are excluded because, by their nature, they are not indicative of our business or economic trends. Accordingly, adjusted net income excludes the effect of items that tend to be highly variable from period to period and highlights the results from ongoing operations and the underlying profitability of our business. A byproduct of excluding these items to determine adjusted net income is the transparency and understanding of their significance to net income variability and profitability while recognizing these or similar items may recur in subsequent periods. Adjusted net income is used by management along with the other components of net income applicable to common shareholders to assess our performance. We use adjusted measures of adjusted net income in incentive compensation. Therefore, we believe it is useful for investors to evaluate net income applicable to common shareholders, adjusted net income and their components separately and in the aggregate when reviewing and evaluating our performance. We note that investors, financial analysts, financial and business media organizations and rating agencies utilize adjusted net income results in their evaluation of our and our industry's financial performance and in their investment decisions, recommendations and communications as it represents a reliable, representative and consistent measurement of the industry and the Company and management's performance. We note that the price to earnings multiple commonly used by insurance investors as a forward-looking valuation technique uses adjusted net income as the denominator. Adjusted net income should not be considered a substitute for net income applicable to common shareholders and does not reflect the overall profitability of our business. A reconciliation of adjusted net income to net income applicable to common shareholders is provided in the schedule, "Contribution to Income". Combined ratio excluding the effect of catastrophes, prior year reserve reestimates and amortization or impairment of purchased intangibles ("underlying combined ratio") is a non-GAAP ratio, which is computed as the difference between four GAAP operating ratios: the combined ratio, the effect of catastrophes on the combined ratio, the effect of prior year non-catastrophe reserve reestimates on the combined ratio, and the effect of amortization or impairment of purchased intangibles on the combined ratio. We believe that this ratio is useful to investors and it is used by management to reveal the trends in our Property-Liability business that may be obscured by catastrophe losses, prior year reserve reestimates and amortization or impairment of purchased intangibles. Catastrophe losses cause our loss trends to vary significantly between periods as a result of their incidence of occurrence and magnitude, and can have a significant impact on the combined ratio. Prior year reserve reestimates are caused by unexpected loss development on historical reserves which could increase or decrease current year income. Amortization or impairment of purchased intangibles relates to the acquisition purchase price and is not indicative of our underlying insurance business results or trends. We believe it is useful for investors to evaluate these components separately and in the aggregate when reviewing our underwriting performance. We also provide it to facilitate a comparison to our outlook on the underlying combined ratio. The most directly comparable GAAP measure is the combined ratio. The underlying combined ratio should not be considered a substitute for the combined ratio and does not reflect the overall underwriting profitability of our business. A reconciliation of the underlying combined ratio to combined ratio is provided in the schedules "Property-Liability Results", "Allstate Brand Profitability Measures", "Esurance Brand Profitability Measures and Statistics", "Encompass Brand Profitability Measures and Statistics", "Auto Profitability Measures by Brand", "Homeowners Profitability Measures by Brand", "Other Personal Lines Profitability Measures by Brand" and "Commercial Lines Profitability Measures". Average underlying loss (incurred pure premium) and expense is calculated as the underlying combined ratio (a non-GAAP measure) provided on the schedule "Auto Profitability Measures by Brand" and "Homeowners Profitability Measures by Brand" multiplied by average premium calculated using annualized GAAP quarterly earned premium, which is annualized (multiplied by 4), provided on the schedule "Auto Profitability Measures by Brand" and "Homeowners Profitability Measures by Brand", divided by the policies in force provided on the schedule "Policies in Force" (“average premium”). We believe that this measure is useful to investors and it is used by management for the same reasons noted above for the underlying combined ratio. The results of these calculations are provided on the schedule "Allstate Brand Statistics". The Allstate Corporation 1Q20 Supplement 38

 
Definitions of Non-GAAP Measures (continued) Underlying loss ratio is a non-GAAP ratio, which is computed as the difference between three GAAP operating ratios: the loss ratio, the effect of catastrophes on the combined ratio and the effect of prior year non- catastrophe reserve reestimates on the combined ratio. We believe that this ratio is useful to investors and it is used by management to reveal the trends that may be obscured by catastrophe losses and prior year reserve reestimates. Catastrophe losses cause our loss trends to vary significantly between periods as a result of their incidence of occurrence and magnitude, and can have a significant impact on the combined ratio. Prior year reserve reestimates are caused by unexpected loss development on historical reserves. We believe it is useful for investors to evaluate these components separately and in the aggregate when reviewing our underwriting performance. The most directly comparable GAAP measure is the loss ratio. The underlying loss ratio should not be considered a substitute for the loss ratio and does not reflect the overall loss ratio of our business. A reconciliation of underlying loss ratio is provided in the schedules "Property-Liability Results", "Allstate Brand Profitability Measures", "Esurance Brand Profitability Measures and Statistics", "Encompass Brand Profitability Measures and Statistics", "Auto Profitability Measures by Brand", "Homeowners Profitability Measures by Brand" and "Other Personal Lines Profitability Measures by Brand". Adjusted net income return on common shareholders' equity is a ratio that uses a non-GAAP measure. It is calculated by dividing the rolling 12-month adjusted net income by the average of common shareholders’ equity at the beginning and at the end of the 12-months, after excluding the effect of unrealized net capital gains and losses. Return on common shareholders' equity is the most directly comparable GAAP measure. We use adjusted net income as the numerator for the same reasons we use adjusted net income, as discussed previously. We use average common shareholders' equity excluding the effect of unrealized net capital gains and losses for the denominator as a representation of common shareholders’ equity primarily attributable to the Company’s earned and realized business operations because it eliminates the effect of items that are unrealized and vary significantly between periods due to external economic developments such as capital market conditions like changes in equity prices and interest rates, the amount and timing of which are unrelated to the insurance underwriting process. We use it to supplement our evaluation of net income applicable to common shareholders and return on common shareholders' equity because it excludes the effect of items that tend to be highly variable from period to period. We believe that this measure is useful to investors and that it provides a valuable tool for investors when considered along with return on common shareholders' equity because it eliminates the after-tax effects of realized and unrealized net capital gains and losses that can fluctuate significantly from period to period and that are driven by economic developments, the magnitude and timing of which are generally not influenced by management. In addition, it eliminates non-recurring items that are not indicative of our ongoing business or economic trends. A byproduct of excluding the items noted above to determine adjusted net income return on common shareholders' equity from return on common shareholders' equity is the transparency and understanding of their significance to return on common shareholders' equity variability and profitability while recognizing these or similar items may recur in subsequent periods. We use adjusted measures of adjusted net income return on common shareholders' equity in incentive compensation. Therefore, we believe it is useful for investors to have adjusted net income return on common shareholders' equity and return on common shareholders' equity when evaluating our performance. We note that investors, financial analysts, financial and business media organizations and rating agencies utilize adjusted net income return on common shareholders' equity results in their evaluation of our and our industry’s financial performance and in their investment decisions, recommendations and communications as it represents a reliable, representative and consistent measurement of the industry and the company and management’s utilization of capital. Adjusted net income return on common shareholders' equity should not be considered a substitute for return on common shareholders' equity and does not reflect the overall profitability of our business. A reconciliation of return on common shareholders' equity and adjusted net income return on common shareholders' equity can be found in the schedule, "Return on Common Shareholders' Equity". Adjusted net income return on adjusted equity is a ratio that uses a non-GAAP measure. It is calculated by dividing the rolling 12-month adjusted net income by the average of equity at the beginning and at the end of the 12-months, after excluding the effect of unrealized net capital gains and losses and goodwill. Return on equity is the most directly comparable GAAP measure. We use average equity excluding the effect of unrealized net capital gains and losses and goodwill for the denominator as a representation of equity primarily attributable to the Company’s earned and realized business operations. Unrealized net capital gains and losses are excluded because they vary significantly between periods due to external economic developments such as capital market conditions like changes in equity prices and interest rates, the amount and timing of which are unrelated to the insurance underwriting process. Goodwill is excluded because it relates to the acquisition purchase price and is not indicative of our underlying business results. We believe it is useful for investors to have adjusted net income return on adjusted equity when evaluating our performance as it represents a reliable, representative and consistent measurement of the company and management’s utilization of capital. Adjusted net income return on adjusted equity should not be considered a substitute for return on equity and does not reflect the overall profitability of our business. A reconciliation of return on equity and adjusted net income return on adjusted equity can be found in the schedules, "Allstate Life Return on Equity", "Allstate Benefits Return on Equity" and "Allstate Annuities Return on Equity". Book value per common share, excluding the impact of unrealized net capital gains and losses on fixed income securities, is a ratio that uses a non-GAAP measure.  It is calculated by dividing common shareholders’ equity after excluding the impact of unrealized net capital gains and losses on fixed income securities and related DAC, DSI and life insurance reserves by total common shares outstanding plus dilutive potential common shares outstanding.  We use the trend in book value per common share, excluding the impact of unrealized net capital gains and losses on fixed income securities, in conjunction with book value per common share to identify and analyze the change in net worth attributable to management efforts between periods.  We believe the non-GAAP ratio is useful to investors because it eliminates the effect of items that can fluctuate significantly from period to period and are generally driven by economic developments, primarily capital market conditions, the magnitude and timing of which are generally not influenced by management, and we believe it enhances understanding and comparability of performance by highlighting underlying business activity and profitability drivers.  We note that book value per common share, excluding the impact of unrealized net capital gains and losses on fixed income securities, is a measure commonly used by insurance investors as a valuation technique.  Book value per common share is the most directly comparable GAAP measure. Book value per common share, excluding the impact of unrealized net capital gains and losses on fixed income securities, should not be considered a substitute for book value per common share, and does not reflect the recorded net worth of our business.  A reconciliation of book value per common share, excluding the impact of unrealized net capital gains on fixed income securities, and book value per common share can be found in the schedule, "Book Value per Common Share". The Allstate Corporation 1Q20 Supplement 39