A.M. Best Affirms Ratings of The Allstate Corporation and Its Subsidiaries

  A.M. Best Affirms Ratings of The Allstate Corporation and Its Subsidiaries

Business Wire

OLDWICK, N.J. -- January 31, 2013

A.M. Best Co. has affirmed the financial strength rating (FSR) of A+
(Superior) and issuer credit ratings (ICR) of “aa-” of all members of Allstate
Insurance Group (Allstate).

Concurrently, A.M. Best has affirmed the FSR of A+ (Superior) and ICR of “aa-”
of the key life/health insurance members of the Allstate Financial Companies
(Allstate Financial). In addition, A.M. Best has affirmed the debt ratings of
“aa-” of the remaining outstanding notes issued under the funding
agreement-backed securities programs of Allstate Financial’s lead life company
Allstate Life Insurance Company.  The outlook for all the above ratings is

A.M. Best also has revised the outlook to positive from stable and affirmed
the FSR of A- (Excellent) and ICR of “a-” of First Colonial Insurance Company
(First Colonial)  (Jacksonville, FL). Additionally, A.M. Best has affirmed the
ICR of “a-” and debt ratings of the organization’s ultimate parent, The
Allstate Corporation (Allcorp) (Northbrook, IL) [NYSE: ALL]. The outlook for
these ratings is stable. (See link below for a detailed listing of the
companies and ratings.)

The ratings reflect Allstate’s solid risk-adjusted capitalization, generally
favorable operating performance and strong business profile with a significant
market presence. The group’s capital position reflects its profitable
earnings, which have contributed to surplus growth in most of the past
five-year period, excluding parental dividends. Allstate's non-catastrophe
operating results continue to be favorable as a result of enhanced pricing
sophistication and improved loss cost management while maintaining
underwriting discipline. Additionally, Allstate has a significant market
presence and strong overall business profile as the second-largest personal
lines writer in the United States. Furthermore, Allstate maintains moderate
financial leverage as well as additional liquidity at the holding company
level in both Allcorp and its subsidiary, Kennett Capital, Inc., and through
access to capital markets, lines of credit and its commercial paper program.
The group's improved automobile and homeowners' margins are attributable to
rate adequacy along with its solid core underwriting capabilities, prudent
capital management and sizeable investment income. Furthermore, Allstate’s
underwriting results also reflect the favorable impact of its ongoing risk
management actions, various expense management initiatives and significant
investment in technology.

Partially offsetting these positive rating attributes is Allstate's inherent
exposure to natural disasters due to its expansive market presence throughout
the United States. This exposure has been evident as significant net
catastrophe losses have been reported in two of the past three years. However,
during this time, Allstate has executed an extensive catastrophe risk exposure
reduction program, including a significantly enhanced property catastrophe
reinsurance program, non-renewals, stricter underwriting guidelines, increased
deductibles and discontinuance of selected lines of coverage, including
earthquakes. The group's underwriting results in 2012 benefited from these
risk reduction actions and lower catastrophe losses.

Key rating drivers that could produce a revision in the outlook or a
downgrading of the ratings include capitalization that does not meet A.M.
Best's “Superior” FSR standards; a sustained period of net losses or
catastrophe losses out of proportion with market share; and consolidated
financial leverage, including short-term debt of greater than 30%.

In affirming Allstate Financial’s ratings, A.M. Best notes these ratings
significantly benefit from the financial strength and support of its immediate
parent, Allstate Insurance Company (AIC), as well as its ultimate parent,
Allcorp. The rating affirmations also recognize the benefits from the strong
Allstate brand name recognition as well as the competitive advantages derived
from Allstate’s exclusive agencies and insurance specialists that provide
Allstate Financial with significant cross-selling opportunities within the

The current rating actions also reflect Allstate Financial’s adequate levels
of consolidated stand-alone risk-adjusted capitalization, as well as the
improving performance of its fixed-income investment portfolio, which
continues to experience declining levels of realized investment losses and is
currently in a large net unrealized gain position. Additionally, the
affirmation of the ratings recognizes Allstate Financial’s positive and
diversified GAAP operating performance and improving levels of statutory
earnings that have benefited from the group’s strategy to focus on growing its
core protection and workplace supplemental health products while continuing to
de-emphasize its spread-based products.

Offsetting these positive rating factors are the challenges Allstate Financial
faces to sustain and improve its overall operating performance, which remains
modest relative to A.M. Best’s expectations. Managing its large, but
declining, interest sensitive liabilities that remain exposed to interest
rate, credit, reinvestment and disintermediation risks add to the challenge.
While A.M. Best recognizes the currently favorable performance of Allstate
Financial’s investment portfolio, there remain several asset classes that
could be exposed to potentially large asset impairments should the fragile
U.S. economic recovery stall or deteriorate. However, A.M. Best notes that
Allstate Financial has been actively reducing its exposure to these asset

A.M. Best believes Allstate Financial is well positioned at the current rating
level for the foreseeable future. Factors that could result in negative rating
actions include negative rating actions taken by A.M. Best on AIC, a material
change in A.M. Best's view of Allstate Financial's importance to the
enterprise or a significant and sustained decline in its consolidated
risk-adjusted capitalization.

The ratings of First Colonial are based on its solid risk-adjusted
capitalization and explicit and implicit support provided by Allstate. As a
subsidiary, First Colonial benefits from Allstate’s expansive market presence
and brand-name recognition. The company's capital position reflects its
conservative investment risk profile and historical record of financial
support from Allcorp. In addition, First Colonial maintains modest
underwriting leverage and an improved risk-adjusted capital position following
AIC's assumption of a large book of auto roadside business. Furthermore, First
Colonial's steady stream of investment income has complemented underwriting
earnings in most years. The outlooks reflect A.M. Best's expectation that
First Colonial will maintain solid risk-adjusted capitalization as its
operating results continue to improve.

Positive rating actions could occur if there is a sustainable long-term
improvement in First Colonial's operating performance and loss reserve
development trends. However, any material negative deviation in terms of
earnings, capitalization or risk profile could result in downward pressure on
the ratings and/or a revised outlook.

For a complete listing of The Allstate Corporation and its property/casualty
and life/health subsidiaries’ FSRs, ICRs and debt ratings, please visit

The methodology used in determining these ratings is Best’s Credit Rating
Methodology, which provides a comprehensive explanation of A.M. Best’s rating
process and contains the different rating criteria employed in the rating
process. Key criteria utilized include: “Understanding BCAR for
Property/Casualty Insurers”; “Understanding BCAR for Life/Health Insurers”;
“Insurance Holding Company and Debt Ratings”; “Catastrophe Analysis in A.M.
Best Ratings”; “Rating Members of Insurance Groups”; “Equity Credit for Hybrid
Securities”; and “Risk Management and the Rating Process for Insurance
Companies.” Best’s Credit Rating Methodology can be found at

Founded in 1899, A.M. Best Company is the world's oldest and most
authoritative insurance rating and information source. For more information,
visit www.ambest.com.

       Copyright © 2013 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.


A.M. Best Company, Inc.
Michael T. Venezia—P/C, 908-439-2200, ext. 5034
Senior Financial Analyst
Steven Faulks—L/H, 908-439-2200, ext. 5035
Senior Financial Analyst
Rachelle Morrow, 908-439-2200, ext. 5378
Senior Manager, Public Relations
Jim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
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