Allstate Reports Strong Third Quarter 2012 Earnings

             Allstate Reports Strong Third Quarter 2012 Earnings

PR Newswire

NORTHBROOK, Ill., Oct. 31, 2012

NORTHBROOK, Ill., Oct. 31, 2012 /PRNewswire/ -- The Allstate Corporation
(NYSE: ALL) today reported financial results for the third quarter of 2012:

The Allstate Corporation Consolidated Highlights
                                               Three months ended

                                               September 30,
($ in millions, except per share amounts and                    %
ratios)
                                               2012     2011      Change
Consolidated revenues                          $ 8,128 $  8,242 (1.4)
Net income                                     723      175       NM
Net income per diluted share                   1.48     0.34      NM
Operating income*                              717      80        NM
Operating income per diluted share*            1.46     0.16      NM
Book value per share                           42.64    34.84     22.4
Book value per share, excluding the impact of
unrealized net
                                               37.31    32.61     14.4
 capital gains and losses on fixed income
securities*
Catastrophe losses                             206      1,077     NM
Property-Liability combined ratio              90.2     104.8     (14.6) pts
Property-Liability combined ratio excluding
the effect of

 catastrophes, prior year reserve
reestimates, business
                                               87.8     89.2      (1.4) pts
combination expenses and the amortization of
purchased

intangible assets ("underlying combined
ratio")*

NM = not meaningful
   Measures used in this release that are not based on accounting principles
* generally accepted in the United States of America ("non-GAAP") are defined
   and reconciled to the most directly comparable GAAP measure in the
   "Definitions of Non-GAAP Measures" section of this document.

"We are on pace to achieve our 2012 operating priorities which resulted in
strong financial performance in the third quarter with net income of $723
million. Our strategy of serving four distinct customer segments is also
working as the Esurance and Encompass brands increased policies in force,"
said Thomas J. Wilson, chairman, president and chief executive officer of The
Allstate Corporation. "We improved underlying margins in both auto and
homeowners insurance and benefited from lower catastrophe losses while growing
overall written premiums. In particular, Allstate brand homeowners, Emerging
Businesses, Encompass and Esurance continued their favorable premium growth
trend, partially offset by a decline in standard auto insurance sold through
Allstate agencies, reflecting the actions to improve homeowners' returns.

"Allstate Financial's profit declined due to expected reductions in the
annuity business and lower investment margins. The strategy of focusing on
underwritten products is working as sales increased through Allstate agencies
and Allstate Benefits. Investment total returns continued to be strong this
quarter. Effective execution of our strategy resulted in a book value
increase of 22.4% year-over-year to $42.64 per diluted share. Through
September, shareholder returns from stock price appreciation and dividends
totaled 47.3%."

Consolidated Results

Net income for the quarter was $723 million, or $1.48 per diluted share,
compared to $175 million, or $0.34 per diluted share in the third quarter of
2011. An increase of $637 million in operating income was the primary driver
of the net income improvement. For the quarter, operating income was $717
million, or $1.46 per diluted share versus $80 million, or $0.16 per diluted
share in last year's third quarter. The increase in operating income was due
to lower catastrophe losses and an improvement in the underlying combined
ratio for property-liability. Return on equity for the trailing twelve months
was 13.6% on a net income basis and 15.0%* on an operating income basis.

Property-Liability Premium Grew and Profitability Remained Strong

Third quarter results reflected Allstate's commitment to maintaining auto
margins while improving homeowners returns. The total property-liability
combined ratio was 90.2, an improvement of 14.6 points from third quarter
2011. The underlying combined ratio was 87.8, an improvement of 1.4 points
from the prior year quarter and below our annual outlook range of 88 to 91,
reflecting favorable margins in the Allstate and Encompass brands. The
underlying margin in Esurance declined from second quarter. Catastrophe
losses in the third quarter 2012 were $206 million versus $1.1 billion in
third quarter 2011.

The combined ratio for Allstate brand standard auto was 91.9, an improvement
of 2.2 points from the prior year quarter. The underlying combined ratio
improved to 93.7 from 94.4 in the same quarter a year ago as the positive
effect of rate actions combined with a relatively flat loss cost trend.
Allstate brand homeowners combined ratio was 72.9, a significant improvement
from the prior year quarter's 131.9. The underlying combined ratio was 66.2,
an improvement of 7.1 points from third quarter 2011, reflecting positive
contributions from rate increases and the impact of favorable weather onloss
cost trends.

In the third quarter, Allstate continued to make progress on its priority to
grow premiums. Total property-liability premiums written of $7.1 billion grew
5% from last year's third quarter primarily due to the acquisition of Esurance
in October 2011. In addition, growth in Allstate brand homeowners, Emerging
Businesses and Encompass contributed to this positive result, partially offset
by a decline in Allstate brand standard auto. In total, policies in force
declined 0.3% from the prior quarter as decreases in U.S. Allstate brand
standard auto and homeowners were offset somewhat by a 7.8% increase in
Esurance. Unit gains were also achieved in Canada, Encompass and Emerging
Businesses.

Allstate Financial Profits Decline; Growth in Premiums and Contract Charges
Continues

Net income for Allstate Financial was $131 million compared to $192 million in
third quarter 2011 due primarily to net after-tax realized capital losses of
$36 million versus $142 million in net after-tax realized capital gains in
third quarter 2011. Valuation changes on derivatives embedded in
equity-indexed annuity contracts resulted in a $75 million after-tax gain in
third quarter 2012 compared to $5 million after-tax loss in third quarter
2011. Operating income was $97 million, a decrease of $32 million from the
prior year quarter. During the quarter, a $27 million pre-tax charge to net
income was recorded related to our annual comprehensive review of assumptions
for deferred policy acquisition costs (DAC), deferred sales inducement costs
and secondary guarantee liability balances. This compares to a $6 million
pre-tax charge to income in first quarter 2011.

Premiums and contract charges on underwritten products was $548 million in the
third quarter, a growth rate of 3.6% from the prior year period. Allstate
agency life unit sales continued to increase in the third quarter with issued
policies growing 6.9% compared to third quarter 2011. Consistent with the
strategy to reduce Allstate Financial's annuity business, contractholder funds
declined $722 million from June 30, 2012 and $2.2 billion from year end 2011.

Proactive Management Continues to Drive Investment Results

Allstate delivered strong investment results for the first nine months of 2012
reflecting proactive management of investment risk and return. We remain
focused on balancing yield and return considerations in the low interest rate
environment, and continue to favor intermediate corporate credit. In the third
quarter, we opportunistically reduced portfolio risk through the sale of
selected structured securities.

Allstate's consolidated investment portfolio increased to $98.5 billion at
September 30, 2012 compared to $95.6 billion at December 31, 2011, as solid
investment returns and operating cash flow more than offset the impact of the
managed reduction in Allstate Financial's liabilities. Pre-tax net unrealized
capital gains were $5.7 billion at September 30, 2012 compared to $2.9 billion
at December 31, 2011 resulting from lower interest rates, tightened credit
spreads and higher equity values.

For the third quarter of 2012, net investment income totaled $940 million and
the total portfolio yield was 4.3%, lower than both the prior quarter and the
third quarter of 2011. Excluding limited partnership results, third quarter
2012 net investment income was comparable to the prior quarter but lower than
third quarter 2011, consistent with the reduction in Allstate Financial's
liabilities and lower reinvestment rates.

Pre-tax net realized capital losses for the third quarter of 2012 were $72
million compared to pre-tax net realized capital gains of $264 million for the
third quarter of 2011. Realized capital losses in the third quarter of 2012
reflect the sale of structured securities in connection with risk reduction
activities but included significantly lower impairment write-downs than last
year's third quarter. Derivative losses totaled $2 million in third quarter
2012 compared to losses of $234 million in third quarter 2011. The prior year
quarter reflected interest rate derivative valuation losses driven by a
significant decrease in interest rates. Interest rate derivative positions
used for overall risk management purposes were terminated in 2011.

Capital Management Update

"In the third quarter, we repurchased $153 million of our sharesand paid a
$0.22 per share dividend," said Steve Shebik, chief financial officer.
"Shares repurchased under the current $1 billion authorization totaled $834
million. This program, along with earnings and portfolio valuation growth,
enabled book value per diluted share to reach $42.64, 7.3% higher than it was
at the end of last quarter, 17.9% higher than at year-end 2011, and 22.4%
higher than at September 30, 2011."

Statutory surplus at September 30, 2012 was an estimated $17.0 billion for the
combined insurance operating companies. Property-liability surplus was an
estimated $13.3 billion with Allstate Financial companies accounting for the
remainder. Deployable assets at the holding company level were $2.3 billion
at September 30, 2012.

Visit www.allstateinvestors.com to view additional information about
Allstate's results, including a webcast of its quarterly conference call and
the presentation discussed on the call. The conference call will be held at 9
a.m. ET on Thursday, November 1.

The Allstate Corporation (NYSE: ALL) is the nation's largest publicly held
personal lines insurer, serving approximately 16 million households through
its Allstate, Encompass, Esurance and Answer Financial brand names and
Allstate Financial business segment. Allstate branded insurance products
(auto, home, life and retirement) and services are offered through Allstate
agencies, independent agencies, and Allstate exclusive financial
representatives, as well as via www.allstate.com and 1-800 Allstate^®, and are
widely known through the slogan "You're In Good Hands With Allstate^®."



THE ALLSTATE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
($ in millions, except per share        Three months ended   Nine months ended
data)
                                        September 30,        September 30,
                                        2012         2011    2012      2011
                                        (unaudited)        (unaudited)
Revenues
 Property-liability insurance       $ 6,697  $   6,432   $ 19,993   $ 19,337
premiums
 Life and annuity premiums and
contract                                563        552       1,675      1,668

  charges
 Net investment income                940        994       2,977      2,996
 Realized capital gains and losses:
Total other-than-temporary
                                        (39)       (197)     (195)      (435)
 impairment losses
Portion of loss recognized in other
                                        (7)        (6)       16         (37)
 comprehensive income
Net other-than-temporary

 impairment losses recognized        (46)       (203)     (179)      (472)

in earnings
Sales and other realized capital
                                        (26)       467       302        889
 gains and losses
Total realized capital gains
                                        (72)       264       123        417
 and losses
                                        8,128      8,242     24,768     24,418
Costs and expenses
 Property-liability insurance
claims and                              4,293      5,132     13,442     15,963

 claims expense
 Life and annuity contract benefits   453        455       1,354      1,331
 Interest credited to                 215        405       959        1,240
contractholder funds
 Amortization of deferred policy
                                        1,016      1,046     2,937      2,990
 acquisition costs
 Operating costs and expenses         1,010      888       3,023      2,656
 Restructuring and related charges    9          8         25         28
 Interest expense                     93         92        281        275
                                        7,089      8,026     22,021     24,483
Gain (loss) on disposition of           9          3         15         (10)
operations
Income (loss) from operations
                                        1,048      219       2,762      (75)
before income tax expense (benefit)
Income tax expense (benefit)            325        44        850        (150)
Net income                            $ 723    $   175     $ 1,912    $ 75
Earnings per share:
Net income per share - Basic          $ 1.49       0.34    $ 3.89     $ 0.14
Weighted average shares - Basic         485.9      512.0     491.5      520.4
Net income per share - Diluted        $ 1.48   $   0.34    $ 3.86     $ 0.14
Weighted average shares - Diluted       489.9      514.2     494.7      522.9
Cash dividends declared per share     $ 0.22   $   0.21    $ 0.66     $ 0.63

THE ALLSTATE CORPORATION
SEGMENT RESULTS
($ in millions, except                Three months ended   Nine months ended
ratios)
                                      September 30,        September 30,
                                      2012       2011      2012       2011
Property-Liability
 Premiums written                  $ 7,063    $ 6,728   $ 20,390   $ 19,554
 Premiums earned                   $ 6,697    $ 6,432   $ 19,993   $ 19,337
 Claims and claims expense           (4,293)    (5,132)   (13,442)   (15,963)
 Amortization of deferred policy     (870)      (866)     (2,613)    (2,597)
acquisition costs
 Operating costs and expenses        (866)      (735)     (2,597)    (2,230)
 Restructuring and related charges   (9)        (8)       (25)       (30)
^
 Underwriting income (loss)*      659        (309)     1,316      (1,483)
 Net investment income               299        298       964        892
 Periodic settlements and accruals   (1)        (5)       (4)        (12)
on non-hedge derivative instruments
Business combination expenses and
the amortization of purchased
intangible assets                    26         --        99         --
 Income tax (expense) benefit on     (316)      38        (750)      320
operations
 Operating income (loss)          667        22        1,625      (283)
 Realized capital gains and          (11)       15        125        47
losses, after-tax
 Reclassification of periodic
settlements and accruals on
non-hedge
 derivative instruments,          1          4         3          8
after-tax
Business combination expenses and
the amortization of purchased
 intangible assets, after-tax       (18)       --        (65)       --
 Net income (loss)              $ 639      $ 41      $ 1,688    $ (228)
 Catastrophe losses                $ 206      $ 1,077   $ 1,284    $ 3,749
 Operating ratios:
 Claims and claims expense        64.1       79.8      67.2       82.6
ratio
 Expense ratio                    26.1       25.0      26.2       25.1
 Combined ratio ^                 90.2       104.8     93.4       107.7
 Effect of catastrophe losses     3.1        16.7      6.4        19.4
on combined ratio
 Effect of prior year reserve     (2.2)      (1.8)     (2.6)      (1.1)
reestimates on combined ratio
 Effect of catastrophe losses
included in prior year reserve
reestimates
 on combined ratio             (1.1)      (0.7)     (1.7)      (0.5)
 Effect of business combination
expenses and the amortization of
 purchased intangible assets   0.4        --        0.5        --
on combined ratio
 Effect of Discontinued Lines     0.7        0.2       0.2        0.1
and Coverages on combined ratio
Allstate Financial
 Investments                       $ 58,155   $ 59,068  $ 58,155   $ 59,068
 Premiums and contract charges     $ 563      $ 552     $ 1,675    $ 1,668
 Net investment income               632        682       1,982      2,060
 Periodic settlements and accruals   15         18        45         54
on non-hedge derivative instruments
 Contract benefits                   (453)      (455)     (1,354)    (1,331)
 Interest credited to                (357)      (395)     (1,087)    (1,232)
contractholder funds
 Amortization of deferred policy     (117)      (83)      (279)      (265)
acquisition costs
 Operating costs and expenses        (147)      (129)     (424)      (396)
 Restructuring and related charges   --         --        --         2
 Income tax expense on operations    (39)       (61)      (173)      (183)
 Operating income                 97         129       385        377
 Realized capital gains and          (36)       142       (45)       207
losses, after-tax
 Valuation changes on embedded
derivatives that are not hedged,      97         (4)       88         1
after-tax
 DAC and DSI amortization relating
to realized capital gains and
 losses and valuation changes
on embedded derivatives that are
not
 hedged, after-tax                (28)       (65)      (38)       (92)
 DAC and DSI unlocking relating to
realized capital gains and losses,    4          --        4          3
after-tax
 Reclassification of periodic
settlements and accruals on
non-hedge
 derivative instruments,          (9)        (12)      (29)       (35)
after-tax
 Gain (loss) on disposition of       6          2         10         (6)
operations, after-tax
 Net income                     $ 131      $ 192     $ 375      $ 455
Corporate and Other
 Net investment income             $ 9        $ 14      $ 31       $ 44
 Operating costs and expenses        (90)       (116)     (283)      (305)
 Income tax benefit on operations    34         31        101        94
 Operating loss                   (47)       (71)      (151)      (167)
 Realized capital gains and          --         13        --         15
losses, after-tax
 Net loss                       $ (47)     $ (58)    $ (151)    $ (152)
Consolidated net income             $ 723      $ 175     $ 1,912    $ 75

THE ALLSTATE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
($ in millions, except par value data)           September 30,   December 31,
                                                  2012            2011
Assets                                            (unaudited)
Investments:
 Fixed income securities, at fair value
(amortized cost                                 $ 77,729        $ 76,113

 $72,432 and $73,379)
 Equity securities, at fair value (cost       3,876           4,363
$3,429 and $4,203)
 Mortgage loans                               6,904           7,139
 Limited partnership interests                4,974           4,697
Short‑term, at fair value (amortized cost
$2,825 and                                        2,825           1,291

 $1,291)
 Other                                        2,208           2,015
 Total investments                       98,516          95,618
Cash                                              642             776
Premium installment receivables, net              5,108           4,920
Deferred policy acquisition costs                 3,578           3,871
Reinsurance recoverables, net                     7,278           7,251
Accrued investment income                         835             826
Deferred income taxes                             --              722
Property and equipment, net                       928             914
Goodwill                                          1,242           1,242
Other assets                                      2,041           2,069
Separate Accounts                                 6,820           6,984
 Total assets                      $ 126,988       $ 125,193
Liabilities
Reserve for property-liability insurance claims $ 20,197        $ 20,375
and claims expense
Reserve for life‑contingent contract benefits     14,900          14,406
Contractholder funds                              40,110          42,332
Unearned premiums                                 10,494          10,057
Claim payments outstanding                        763             827
Deferred income taxes                             689             --
Other liabilities and accrued expenses            6,121           5,978
Long-term debt                                    6,057           5,908
Separate Accounts                                 6,820           6,984
 Total liabilities                   106,151         106,867
Equity
Preferred stock, $1 par value, 25 million
shares authorized,                                --              --

none issued
Common stock, $.01 par value, 2.0 billion
shares authorized

 and 900 million issued, 483 million and 501     9               9
million shares

outstanding
Additional capital paid‑in                        3,154           3,189
Retained income                                   33,496          31,909
Deferred ESOP expense                             (41)            (43)
Treasury stock, at cost (417 million and 399      (17,368)        (16,795)
million shares)
Accumulated other comprehensive income:
Unrealized net capital gains and losses:
Unrealized net capital losses on fixed income
securities                                        (42)            (174)

with OTTI
Other unrealized net capital gains and losses     3,765           2,041
Unrealized adjustment to DAC, DSI and insurance
                                                  (843)           (467)
reserves
 Total unrealized net capital gains and      2,880           1,400
losses
 Unrealized foreign currency translation      70              56
adjustments
 Unrecognized pension and other
postretirement benefit                            (1,363)         (1,427)

 cost
 Total accumulated other             1,587           29
comprehensive income
 Total shareholders' equity          20,837          18,298
Noncontrolling interest                           --              28
 Total equity                        20,837          18,326
 Total liabilities and equity      $ 126,988       $ 125,193

THE ALLSTATE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in millions)                                                              Nine months ended

                                                                            September 30,
                                                                             2012       2011
Cash flows from operating activities                                         (unaudited)
Net income                                                                 $ 1,912    $ 75
Adjustments to reconcile net income to net cash provided by operating


activities:
Depreciation, amortization and other non-cash items                          293        149
Realized capital gains and losses                                            (123)      (417)
(Gain) loss on disposition of operations                                     (15)       10
Interest credited to contractholder funds                                    959        1,240
Changes in:
Policy benefits and other insurance reserves                                 (769)      546
Unearned premiums                                                            421        220
Deferred policy acquisition costs                                            13         129
Premium installment receivables, net                                         (178)      (158)
Reinsurance recoverables, net                                                (139)      (275)
Income taxes                                                                669        (183)
Other operating assets and liabilities                                       (425)      335
Net cash provided by operating activities                                    2,618      1,671
Cash flows from investing activities
Proceeds from sales
 Fixed income securities                                                 13,952     23,916
 Equity securities                                                       1,345      1,116
 Limited partnership interests                                           1,067      762
 Mortgage loans                                                          11         74
 Other investments                                                       104        149
Investment collections
Fixed income securities                                                      3,892      3,864
Mortgage loans                                                               682        491
Other investments                                                            70         105
Investment purchases
Fixed income securities                                                      (16,809)   (21,900)
Equity securities                                                            (385)      (1,066)
Limited partnership interests                                                (1,232)    (1,159)
Mortgage loans                                                               (472)      (896)
Other investments                                                            (275)      (199)
Change in short-term investments, net                                        (1,284)    64
Change in other investments, net                                             (6)        (357)
Purchases of property and equipment, net                                     (176)      (160)
Disposition of operations                                                    13         1
Net cash provided by investing activities                                    497        4,805
Cash flows from financing activities
Proceeds from issuance of long-term debt                                     493        --
Repayment of long-term debt                                                  (351)      (1)
Contractholder fund deposits                                                 1,571      1,606
Contractholder fund withdrawals                                              (3,938)    (6,439)
Dividends paid                                                               (322)      (327)
Treasury stock purchases                                                     (729)      (858)
Shares reissued under equity incentive plans, net                            60         18
Excess tax benefits on share-based payment arrangements                      7          (4)
Other                                                                        (40)       (7)
Net cash used in financing activities                                        (3,249)    (6,012)
Net (decrease) increase in cash                                              (134)      464
Cash at beginning of period                                                  776        562
Cash at end of period                                                      $ 642      $ 1,026

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.

Operating income (loss) is net income (loss), excluding:

  orealized 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 operating
    income (loss),
  ovaluation changes on embedded derivatives that are not hedged, after-tax,
  oamortization of 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 that are not hedged,
    after-tax,
  obusiness combination expenses and the amortization of purchased intangible
    assets, after-tax,
  ogain (loss) on disposition of operations, after-tax, and
  oadjustments 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 (loss) is the GAAP measure that is most directly comparable to
operating income (loss).

We use operating income (loss) 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, valuation changes on embedded
derivatives that are not hedged, business combination expenses and the
amortization of purchased intangible assets, gain (loss) on disposition of
operations and adjustments for other significant non-recurring, infrequent or
unusual items. Realized capital gains and losses, valuation changes on
embedded derivatives that are 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, operating income (loss) 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
operating income (loss), 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 of purchased intangible assets is excluded because it relates
to the acquisition purchase price and is not indicative of our underlying
insurance business results or trends. Non-recurring items are excluded
because, by their nature, they are not indicative of our business or economic
trends. Accordingly, operating income (loss) 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 operating income
(loss) 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. Operating income (loss) is used by
management along with the other components of net income (loss) to assess our
performance. We use adjusted measures of operating income (loss) and
operating income (loss) per diluted share in incentive compensation.
Therefore, we believe it is useful for investors to evaluate net income
(loss), operating income (loss) 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 operating income (loss) 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 operating income (loss) as the denominator. Operating income (loss)
should not be considered as a substitute for net income (loss) and does not
reflect the overall profitability of our business.

The following tables reconcile operating income (loss) and net income (loss).

($ in millions,
except per share   For the three months ended September 30,
data)
                   Property-Liability   Allstate      Consolidated   Per diluted
                                        Financial                    share
                   2012        2011     2012   2011   2012    2011   2012     2011
Operating income $ 667     $   22     $ 97   $ 129  $ 717   $ 80   $ 1.46   $ 0.16
Realized capital

gains and         (16)        24       (56)   219    (72)    264

losses
Income tax
                   5           (9)      20     (77)   25      (94)
benefit
(expense)
Realized capital

gains and         (11)        15       (36)   142    (47)    170    (0.09)   0.33
losses,

after-tax
Valuation
changes

on embedded

derivatives       --          --       97     (4)    97      (4)    0.20     (0.01)
that

are not hedged,

after-tax
DAC and DSI

amortization

relating to

realized
capital

gains and

losses and
                   --          --       (28)   (65)   (28)    (65)   (0.06)   (0.13)
valuation

changes on

embedded

derivatives
that

are not hedged,

after-tax
DAC and DSI

unlocking

relating to

realized          --          --       4      --     4       --     0.01     --

capital gains

and losses,

after-tax
Reclassification

of periodic

settlements and

accruals on
                   1           4        (9)    (12)   (8)     (8)    (0.01)   (0.01)
non-hedge

derivative

instruments,

after-tax
Business

combination

expenses

and the
                   (18)        --       --     --     (18)    --     (0.04)   --
amortization

of purchased

intangible
assets,

after-tax
Gain on

disposition
                   --          --       6      2      6       2      0.01     --
of operations,

after-tax
                         
                   639         41     $ 131  $ 192  $ 723   $ 175  $ 1.48   $ 0.34
Net income       $         $

                   For the nine months ended September 30,
                   Property-Liability   Allstate       Consolidated    Per diluted
                                        Financial                      share
                   2012        2011     2012   2011    2012    2011    2012     2011
Operating income $ 1,625   $   (283)  $ 385  $ 377   $ 1,859 $ (73)  $ 3.76   $ (0.14)
(loss)
Realized capital

gains and         192         73       (69)   320     123     417

losses
Income tax

(expense)         (67)        (26)     24     (113)   (43)    (148)

benefit
Realized capital

gains and
                   125         47       (45)   207     80      269     0.16     0.52
losses,

after-tax
Valuation

changes on

embedded

derivatives       --          --       88     1       88      1       0.18     --

that are not

hedged,

after-tax
DAC and DSI

amortization

relating to

realized
capital

gains and

losses and
                   --          --       (38)   (92)    (38)    (92)    (0.08)   (0.18)
valuation

changes on

embedded

derivatives

that are not

hedged,

after-tax
DAC and DSI

unlocking

relating to

realized          --          --       4      3       4       3       0.01     --

capital gains

and losses,

after-tax
Reclassification

of periodic

settlements and

accruals on
                   3           8        (29)   (35)    (26)    (27)    (0.06)   (0.05)
non-hedge

derivative

instruments,

after-tax
Business

combination

expenses

and the

amortization      (65)        --       --     --      (65)    --      (0.13)   --

of purchased

intangible

assets,

after-tax
Gain (loss)

on

disposition       --          --       10     (6)     10      (6)     0.02     (0.01)

of

operations,
after-tax
                         
                   1,688       (228)  $ 375  $ 455   $ 1,912 $ 75    $ 3.86   $ 0.14
Net income       $         $
(loss)

Operating income (loss) return on shareholders' equity is a ratio that uses a
non-GAAP measure. It is calculated by dividing the rolling 12-month operating
income (loss) by the average of 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 shareholders' equity is the most directly
comparable GAAP measure. We use operating income (loss) as the numerator for
the same reasons we use operating income (loss), as discussed above. We use
average shareholders' equity excluding the effect of unrealized net capital
gains and losses for the denominator as a representation of 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 (loss) and
return on 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 net income (loss) return on 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 operating income (loss) return on shareholders' equity from return
on shareholders' equity is the transparency and understanding of their
significance to return on shareholders' equity variability and profitability
while recognizing these or similar items may recur in subsequent periods.
Therefore, we believe it is useful for investors to have operating income
(loss) return on shareholders' equity and return on shareholders' equity when
evaluating our performance. We note that investors, financial analysts,
financial and business media organizations and rating agencies utilize
operating income (loss) return on 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. Operating income (loss)
return on shareholders' equity should not be considered as a substitute for
return on shareholders' equity and does not reflect the overall profitability
of our business.

The following table reconciles return on shareholders' equity and operating
income return on shareholders' equity.

                                     For the twelve months ended
($ in millions)
                                     September 30,
                                     2012             2011
Return on shareholders' equity
Numerator:
 Net income                      $ 2,624      $     368


Denominator:
 Beginning shareholders' equity  $ 17,732     $     18,887
 Ending shareholders' equity       20,837           17,732
Average shareholders' equity     $ 19,285     $     18,310
 Return on shareholders' equity   13.6%            2.0 %

                                                   For the twelve months ended

                                                   September 30,
                                                   2012             2011
Operating income return on shareholders' equity
Numerator:
 Operating income                              $ 2,594      $     189
Denominator:
 Beginning shareholders' equity                $ 17,732     $     18,887
 Unrealized net capital gains and losses         1,065            1,313
 Adjusted beginning shareholders' equity         16,667           17,574
 Ending shareholders' equity                     20,837           17,732
 Unrealized net capital gains and losses         2,880            1,065
 Adjusted ending shareholders' equity            17,957           16,667
 Average adjusted shareholders' equity          $ 17,312     $     17,121
 Operating income return on                     15.0%            1.1 %
shareholders'equity

Underwriting income (loss) is calculated as premiums earned, less claims and
claims expense ("losses"), amortization of DAC, operating costs and expenses
and restructuring and related charges as determined using GAAP. Management
uses this measure in its evaluation of the results of operations to analyze
the profitability of our Property-Liability insurance operations separately
from investment results. It is also an integral component of incentive
compensation. It is useful for investors to evaluate the components of income
separately and in the aggregate when reviewing performance. Net income
(loss) is the most directly comparable GAAP measure. Underwriting income
(loss) should not be considered as a substitute for net income (loss) and does
not reflect the overall profitability of our business. A reconciliation of
Property-Liability underwriting income (loss) to net income (loss) is provided
in the "Segment Results" page.

Combined ratio excluding the effect of catastrophes, prior year reserve
reestimates, business combination expenses and the amortization of purchased
intangible assets ("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, the effect of
business combination expenses and the amortization of purchased intangible
assets 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, business combination expenses and the amortization
of purchased intangible assets. 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. Business combination expenses and the
amortization of purchased intangible assets primarily relate to the
acquisition purchase price and are 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 as a substitute for the combined ratio and does not reflect the
overall underwriting profitability of our business.

A reconciliation of the Property-Liability underlying combined ratio to the
Property-Liability combined ratio is provided in the following table.

                                         Three months ended  Nine months ended

                                         September 30,       September 30,
                                         2012       2011     2012       2011
Combined ratio excluding the effect of
catastrophes,                                                

prior year reserve reestimates,                            
business combination                     87.8       89.2                88.9
                                                             
expenses and the amortization of
purchased intangible                                         87.4

assets ("underlying combined ratio")
Effect of catastrophe losses             3.1        16.7     6.4        19.4
Effect of prior year non-catastrophe     (1.1)      (1.1)    (0.9)      (0.6)
reserve reestimates
Effect of business combination expenses                      
and the amortization of                  0.4        --                  --
                                                             0.5
 purchased intangible assets
Combined ratio                           90.2       104.8    93.4       107.7
Effect of prior year catastrophe reserve (1.1)      (0.7)    (1.7)      (0.5)
reestimates
Underwriting margin is calculated as 100% minus
the combined ratio.

In this news release, we provide our outlook range on the Property-Liability
2012 underlying combined ratio. A reconciliation of this measure to the
combined ratio is not possible on a forward-looking basis because it is not
possible to provide a reliable forecast of catastrophes. Future prior year
reserve reestimates are expected to be zero because reserves are determined
based on our best estimate of ultimate loss reserves as of the reporting date.

A reconciliation of the Allstate brand standard auto underlying combined ratio
to the Allstate brand standard auto combined ratio is provided in the
following table.

                                         Three months ended  Nine months ended

                                         September 30,       September 30,
                                         2012       2011     2012       2011
Underlying combined ratio                93.7       94.4     94.0       94.3
Effect of catastrophe losses             1.3        2.9      2.1        3.3
Effect of prior year non-catastrophe     (3.1)      (3.2)    (1.9)      (1.8)
reserve reestimates
Combined ratio                           91.9       94.1     94.2       95.8
Effect of prior year catastrophe reserve (0.1)      (0.1)    (0.3)      (0.2)
reestimates

A reconciliation of the Allstate brand homeowners underlying combined ratio to
the Allstate brand homeowners combined ratio is provided in the following
table.

                                         Three months ended  Nine months ended

                                         September 30,       September 30,
                                         2012       2011     2012       2011
Underlying combined ratio                66.2       73.3     66.0       72.3
Effect of catastrophe losses             7.8        55.8     20.1       65.7
Effect of prior year non-catastrophe     (1.1)      2.8      (0.1)      1.0
reserve reestimates
Combined ratio                           72.9       131.9    86.0       139.0
Effect of prior year catastrophe reserve (3.2)      (2.8)    (5.1)      (1.8)
reestimates

Book value per 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 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 shares outstanding plus
dilutive potential shares outstanding. We use the trend in book value per
share, excluding the impact of unrealized net capital gains and losses on
fixed income securities, in conjunction with book value per 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 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 share is the most directly comparable GAAP measure. Book value
per share, excluding the impact of unrealized net capital gains and losses on
fixed income securities, should not be considered as a substitute for book
value per share, and does not reflect the recorded net worth of our business.
The following table shows the reconciliation.

($ in millions, except per share data)                     As of September 30,
                                                           2012        2011
Book value per share
Numerator:
Shareholders' equity                                   $ 20,837   $  17,732
Denominator:
Shares outstanding and dilutive potential                 488.7       509.0
sharesoutstanding
Book value per share                                     $ 42.64    $  34.84
Book value per share, excluding the impact of unrealized
net capital gains and

losseson fixed income securities
Numerator:
Shareholders' equity                                   $ 20,837   $  17,732
Unrealized net capital gains and losses on fixed         2,602       1,136
income securities
Adjusted shareholders' equity                            $ 18,235   $  16,596
Denominator:
Shares outstanding and dilutive potential shares           488.7       509.0
outstanding
Book value per share, excluding the impact of unrealized           
net capital gains and losses                               37.31       32.61
                                                         $          $
on fixed income securities

Forward-Looking Statements and Risk Factors

This news release contains forward-looking statements about our outlook for
the Property-Liability combined ratio excluding the effect of catastrophes,
prior year reserve reestimates, business combination expenses, and the
amortization of purchased intangible assetsfor 2012. These statements are
subject to the Private Securities Litigation Reform Act of 1995 and are based
on management's estimates, assumptions and projections. Actual results may
differ materially from those projected based on the risk factors described
below.

  oPremiums written and premiums earned, the denominator of the underlying
    combined ratio, may be materially less than projected. Policyholder
    attrition may be greater than anticipated resulting in a lower amount of
    insurance in force.
  oUnanticipated increases in the severity or frequency of standard auto
    insurance claims may adversely affect our underwriting results. Changes in
    the severity or frequency of claims may affect the profitability of our
    Allstate Protection segment. Changes in bodily injury claim severity are
    driven primarily by inflation in the medical sector of the economy and
    ligitation. Changes in auto physical damage claim severity are driven
    primarily by inflation in auto repair costs, auto parts prices and used
    car prices. The short-term level of claim frequency we experience may vary
    from period to period and may not be sustainable over the longer term.A
    decline in gas prices, increase in miles driven, and higher unemployment
    are examples of factors leading to ashort-term frequency change. A
    significant long-term increase in claim frequency could have an adverse
    effect on our underwriting results.

We undertake no obligation to publicly correct or update any forward-looking
statements. This news release contains unaudited financial information.

SOURCE The Allstate Corporation

Website: http://www.allstate.com
Contact: Maryellen Thielen, Media Relations, +1-847-402-5600; Robert Block,
Investor Relations, +1-847-402-2800