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

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

Overview

The following discussion highlights significant factors influencing the consolidated financial position and results of operations of The Allstate Corporation (referred to in this document as “we,” “our,” “us,” the “Company” or “Allstate”). It should be read in conjunction with the condensed consolidated financial statements and related notes thereto found under Part I. Item 1. contained herein, and with the discussion, analysis, consolidated financial statements and notes thereto in Part I. Item 1. and Part II. Item 7. and Item 8. of The Allstate Corporation annual report on Form 10-K for 2023, filed February 21, 2024.

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

On November 1, 2023, we announced that we are pursuing the sale of the Health and Benefits business. We continue to pursue the sale of the business but have not completed the sale process.

Macroeconomic Impacts

Macroeconomic factors have and may continue to impact the results of our operations, financial condition and liquidity, such as U.S. government fiscal and monetary policies, the Russia/Ukraine and Israel/Hamas conflicts, supply chain disruptions, labor shortages and other macroeconomic factors that have increased inflation.

These factors have affected our operations and may continue to affect our results of operations, financial condition and liquidity and should be considered when comparing the current period to prior periods. This is not inclusive of all potential impacts and should not be treated as such. Within the MD&A, we have included further disclosures related to macroeconomic impacts on our 2024 results.

Corporate Strategy

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

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

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

Improving customer value
Expanding customer access
Increasing sophistication and investment in customer acquisition
Deploying new technology ecosystem
Driving organizational transformation

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

Measuring segment profit or loss

The measure of segment profit or loss used in evaluating performance is underwriting income for the Allstate Protection and Run-off Property-Liability segments and adjusted net income for the Protection Services, Allstate Health and Benefits and Corporate and Other segments. We use these measures in our evaluation of results of operations to analyze profitability.

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

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


•			Net gains and losses on investments and derivatives
•			Pension and other postretirement remeasurement gains and losses
•			Amortization or impairment of purchased intangibles
•			Gain or loss on disposition
•			Adjustments for other significant non-recurring, infrequent or unusual items, when (a) the nature of the charge or gain is such that it is reasonably unlikely to recur within two years, or (b) there has been no similar charge or gain within the prior two years
•			Income tax expense or benefit on reconciling items

First Quarter 2024 Form 10-Q 43

Highlights


Consolidated net income (loss) applicable to common shareholders
($ in millions)

4355


Consolidated net income applicable to common shareholders was $1.19 billion in the first quarter of 2024 compared to a loss of $346 million in the first quarter of 2023, primarily due to improved underwriting results. For the twelve months ended March 31, 2024, return on Allstate common shareholders’ equity was 7.6%, an increase of 20.6 points from (13.0)% for the twelve months ended March 31, 2023.


Total revenue
($ in millions)

4361


Total revenues increased 10.7% to $15.26 billion in the first quarter of 2024 compared to the first quarter of 2023, primarily due to an increase of 11.0% in property and casualty insurance premiums earned.


Net investment income
($ in millions)

4368


Net investment income increased $189 million to $764 million in the first quarter of 2024, primarily due to an increase in market-based income reflecting higher fixed income portfolio yields and investment balances, and higher performance-based valuation increases.

Financial highlights

Investments totaled $67.86 billion as of March 31, 2024, increasing from $66.68 billion as of December 31, 2023.

Allstate shareholders’ equity was $18.64 billion as of March 31, 2024, increasing from $17.77 billion as of December 31, 2023, primarily due to net income, partially offset by dividends to shareholders and higher unrealized net capital losses on investments.

Book value per diluted common share (ratio of Allstate common shareholders’ equity to total common shares outstanding and dilutive potential common shares outstanding) was $62.27, an increase of 6.2% from $58.65 as of March 31, 2023, and an increase of 4.8% from $59.39 as of December 31, 2023.

Return on average Allstate common shareholders’ equity for the twelve months ended March 31, 2024 was 7.6%, an increase of 20.6 points from (13.0)% for the twelve months ended March 31, 2023. The increase was primarily due to net income applicable to common shareholders for the trailing twelve-month period ending March 31, 2024 compared to a net loss for the twelve-month period ending March 31, 2023.

Pension and other postretirement remeasurement gains and losses We recorded pension and other postretirement remeasurement gains of $2 million in the first quarter of 2024, primarily related to an increase in the liability discount rate, partially offset by unfavorable asset performance compared to expected return on plan assets.

44 www.allstate.com

Summarized consolidated financial results


	Three months ended March 31,
($ in millions)	2024		2023
Revenues
Property and casualty insurance premiums	$	13,512	$	12,173
Accident and health insurance premiums and contract charges	478		463
Other revenue	669		561
Net investment income	764		575
Net gains (losses) on investments and derivatives	(164)		14
Total revenues	15,259		13,786

Costs and expenses
Property and casualty insurance claims and claims expense	(9,501)		(10,326)
Accident, health and other policy benefits	(296)		(265)
Amortization of deferred policy acquisition costs	(1,939)		(1,744)
Operating, restructuring and interest expenses	(1,992)		(1,829)
Pension and other postretirement remeasurement gains (losses)	2		53
Amortization of purchased intangibles	(69)		(81)

Total costs and expenses	(13,795)		(14,192)

Income (loss) from operations before income tax expense	1,464		(406)

Income tax (expense) benefit	(266)		85

Net income (loss)	1,198		(321)

Less: Net loss attributable to noncontrolling interest	(20)		(1)

Net income (loss) attributable to Allstate	1,218		(320)

Preferred stock dividends	(29)		(26)

Net income (loss) applicable to common shareholders	$	1,189	$	(346)

Segment highlights

Allstate Protection underwriting income was $903 million in the first quarter of 2024 compared to underwriting loss of $998 million in the first quarter of 2023 due to increased premiums earned and lower catastrophe losses, partially offset by higher non-catastrophe losses and advertising costs. We continue to execute a comprehensive approach to restore auto margins, by raising rates in states not currently achieving acceptable returns, reducing operating expenses and continuing to enhance claims processes to manage loss costs. As auto profitability improves, we are increasing advertising and removing underwriting restrictions to support growth.

Catastrophe losses decreased $960 million to $731 million in the first quarter of 2024 compared to the first quarter of 2023.

Premiums written increased 11.9% to $13.18 billion in the first quarter of 2024 compared to the same period of 2023, reflecting higher premiums in both Allstate and National General brands.

Protection Services adjusted net income was $54 million in the first quarter of 2024 compared to $34 million in the first quarter of 2023. The increase was primarily due to gross margin improvement at Allstate Protection Plans and improved claim severity at Allstate Roadside.

Premiums and other revenue increased 12.1% or $75 million in the first quarter of 2024 compared to the same period of 2023, primarily due to Allstate Protection Plans.

Allstate Health and Benefits adjusted net income was $56 million in the first quarter of 2024 and 2023.

Premiums and contract charges increased 3.2% to $478 million in the first quarter of 2024 compared to the first quarter of 2023, primarily due to growth in group health and individual health, partially offset by a decline in employer voluntary benefits.

First Quarter 2024 Form 10-Q 45

Property-Liability Operations

Property-Liability Operations

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

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

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

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

*•*Expense ratio: the ratio of amortization of DAC, operating costs and expenses, amortization or impairment of purchased intangibles and restructuring and related charges, less other revenue to premiums earned.

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

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

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

*•*Effect of prior year reserve reestimates on combined ratio

*•*Effect of amortization of purchased intangibles on combined ratio

*•*Effect of restructuring and related charges on combined ratio

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

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

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

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

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

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

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

46 www.allstate.com

Property-Liability Operations


Underwriting results
	Three months ended March 31,
($ in millions, except ratios)	2024		2023
Premiums written	$	13,183	$	11,783
Premiums earned	$	12,900	$	11,635
Other revenue	430		353
Claims and claims expense	(9,349)		(10,180)
Amortization of DAC	(1,608)		(1,452)
Other costs and expenses	(1,417)		(1,279)
Restructuring and related charges (1)	(7)		(21)
Amortization of purchased intangibles	(51)		(57)
Underwriting income (loss)	$	898	$	(1,001)

Catastrophe losses
Catastrophe losses, excluding reserve reestimates	$	893	$	1,733
Catastrophe reserve reestimates (2)	(162)		(42)
Total catastrophe losses	$	731	$	1,691

Non-catastrophe reserve reestimates (2)	$	11	$	27
Prior year reserve reestimates (2)	(151)		(15)

GAAP operating ratios
Loss ratio	72.4		87.5
Expense ratio (3)	20.6		21.1
Combined ratio	93.0		108.6
Effect of catastrophe losses on combined ratio	5.7		14.5
Effect of prior year reserve reestimates on combined ratio	(1.2)		(0.1)
Effect of catastrophe losses included in prior year reserve reestimates on combined ratio	(1.3)		(0.4)
Effect of restructuring and related charges on combined ratio (1)	0.1		0.2
Effect of amortization of purchased intangibles on combined ratio	0.3		0.5
Effect of Run-off Property-Liability business on combined ratio	—		—

(1)Restructuring and related charges for the first quarter of 2024 primarily relate to implementing actions to streamline the organization and outsource operations, and real estate costs related to facilities being vacated. See Note 12 of the condensed consolidated financial statements for additional details.

(2)Favorable reserve reestimates are shown in parentheses.

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

First Quarter 2024 Form 10-Q 47

Segment Results Allstate Protection

Allstate Protection Segment


Underwriting results
	Three months ended March 31,
($ in millions)	2024		2023
Premiums written	$	13,183	$	11,783
Premiums earned	$	12,900	$	11,635
Other revenue	430		353
Claims and claims expense	(9,345)		(10,178)
Amortization of DAC	(1,608)		(1,452)
Other costs and expenses	(1,416)		(1,278)
Restructuring and related charges	(7)		(21)
Amortization of purchased intangibles	(51)		(57)
Underwriting income (loss)	$	903	$	(998)
Catastrophe losses	$	731	$	1,691

Underwriting income was $903 million in the first quarter of 2024 compared to underwriting loss of $998 million in the first quarter of 2023 due to increased premiums earned and lower catastrophe losses, partially offset by higher non-catastrophe losses and advertising costs. We continue to execute a comprehensive approach to restore auto margins, by raising rates in states not currently achieving acceptable returns, reducing operating expenses and continuing to enhance claims processes to manage loss costs. As auto profitability improves, we are increasing advertising and removing underwriting restrictions to support growth.


Change in underwriting results from prior year period - three months ended
($ in millions)

780


Underwriting income (loss) by brand and by line of business
	Allstate brand				National General				Allstate Protection
($ in millions)	2024		2023		2024		2023		2024		2023
Three months ended March 31,
Auto	$	261	$	(332)	$	90	$	(14)	$	351	$	(346)
Homeowners	568		(508)		(4)		(26)		564		(534)
Other personal lines	2		(90)		5		1		7		(89)
Commercial lines	(69)		(64)		(1)		4		(70)		(60)
Other business lines (1)	28		22		20		7		48		29
Answer Financial									3		2
Total	$	790	$	(972)	$	110	$	(28)	$	903	$	(998)

(1)Other business lines represents commissions earned and other costs and expenses for Ivantage, non-proprietary life and annuity products, and lender-placed products.

48 www.allstate.com

Allstate Protection Segment Results

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


Premiums written by brand and by line of business
	Allstate brand				National General				Allstate Protection
($ in millions)	2024		2023		2024		2023		2024		2023
Three months ended March 31,
Auto	$	7,399	$	6,826	$	1,958	$	1,523	$	9,357	$	8,349
Homeowners	2,517		2,210		357		324		2,874		2,534
Other personal lines	519		492		141		56		660		548
Commercial lines	74		177		83		50		157		227
Other business lines	—		—		135		125		135		125
Total premiums written	$	10,509	$	9,705	$	2,674	$	2,078	$	13,183	$	11,783


Premiums earned by brand and by line of business
	Allstate brand				National General				Allstate Protection
($ in millions)	2024		2023		2024		2023		2024		2023
Three months ended March 31,
Auto	$	7,173	$	6,660	$	1,605	$	1,248	$	8,778	$	7,908
Homeowners	2,767		2,488		387		322		3,154		2,810
Other personal lines	564		521		95		41		659		562
Commercial lines	100		183		69		49		169		232
Other business lines	—		—		140		123		140		123
Total premiums earned	$	10,604	$	9,852	$	2,296	$	1,783	$	12,900	$	11,635


Reconciliation of premiums written to premiums earned
	Three months ended March 31,
($ in millions)	2024		2023
Total premiums written	$	13,183	$	11,783
(Increase) decrease in unearned premiums	(237)		(127)
Other	(46)		(21)
Total premiums earned	$	12,900	$	11,635


Policies in force by brand and by line of business
	Allstate brand		National General		Allstate Protection
PIF (thousands)	2024	2023	2024	2023	2024	2023
As of March 31,
Auto	20,038	21,142	5,169	4,591	25,207	25,733
Homeowners	6,681	6,621	683	641	7,364	7,262
Other personal lines	4,489	4,607	360	306	4,849	4,913
Commercial lines	131	199	142	108	273	307

Total	31,339	32,569	6,354	5,646	37,693	38,215

Auto insurance premiums written increased 12.1% or $1.01 billion in the first quarter of 2024 compared to the first quarter of 2023 primarily due to the following factors:

Increased average premiums driven by rate increases. In the three months ended March 31, 2024:

–Rate increases of 8.4% were taken for Allstate brand in 27 locations, resulting in total Allstate brand insurance premium impact of 2.4%

–Rate increases of 9.6% were taken for National General brand in 27 locations, resulting in total

National General brand insurance premium impact of 4.1%

We expect to continue to pursue rate increases for both Allstate and National General brands in states currently not achieving acceptable returns to offset increases in loss costs throughout 2024
PIF decreased 2.0% or 526 thousand to 25,207 thousand as of March 31, 2024 compared to March 31, 2023
Renewal ratio increased 0.3 points in the first quarter compared to the first quarter of 2023

First Quarter 2024 Form 10-Q 49

Segment Results Allstate Protection

Increased new issued applications driven by growth in all channels
The impact of the ongoing rate increases and underwriting restrictions have and may continue to

have an adverse effect on the renewal ratio, premiums and future PIF growth


Auto premium measures and statistics
	Three months ended March 31,
	2024		2023		Change
New issued applications (thousands)
Allstate Protection by brand
Allstate brand	800		751		6.5	%




National General	870		783		11.1




Total new issued applications	1,670		1,534		8.9







Allstate brand average premium	$	823	$	726	13.4	%
Allstate brand renewal ratio (%)	86.0		85.7		0.3

Homeowners insurance premiums written increased 13.4% or $340 million in the first quarter of 2024 compared to the first quarter of 2023 primarily due to the following factors:

Higher Allstate brand average premiums from implemented rate increases and inflation in insured home replacement costs, combined with policies in force growth
In the three months ended March 31, 2024, rate increases of 11.7% were taken for Allstate brand in 15 locations, resulting in total Allstate brand insurance premium impact of 3.4%
National General policy growth may be negatively impacted in future quarters as we improve certain underwriting margins to targeted levels through underwriting and rate actions. In the three months ended March 31, 2024, rate increases of 14.0% were taken for National General brand in 12 locations, resulting in total National General brand insurance premium impact of 1.6%
Increased new issued applications driven by growth in the exclusive agency and direct channels, partially offset by a decline in the independent agency channel
Policy growth is being reduced in states and lines of business that are underperforming. We are no longer writing new homeowners business in California, New Jersey and Florida, and we may take further actions to reduce our exposure, which have and will continue to negatively impact premiums
We may not be able to grow in certain states without regulatory or legislative reforms that enable customers to be provided coverage at appropriate risk adjusted returns
The impact of the ongoing rate increases has and may continue to have an adverse effect on the renewal ratio, premiums and future PIF growth


Homeowners premium measures and statistics
	Three months ended March 31,
	2024		2023		Change
New issued applications (thousands)
Allstate Protection by brand
Allstate brand	259		230		12.6	%




National General	32		35		(8.6)




Total new issued applications	291		265		9.8











Allstate brand average premium	$	1,912	$	1,706	12.1	%
Allstate brand renewal ratio (%)	87.1		86.3		0.8

Other personal lines premiums written increased 20.4% or $112 million in the first quarter of 2024 compared to the first quarter of 2023 primarily due to increases in landlords policies for Allstate brand. We are no longer writing condominium new business in California and Florida and we are non-renewing certain policies in Florida, which may negatively impact premiums.

Commercial lines premiums written decreased 30.8% or $70 million in the first quarter of 2024 compared to the first quarter of 2023 due to profitability actions taken to no longer offer coverage

to transportation network companies unless the contracts utilize telematics-based pricing and the Allstate brand exiting traditional commercial insurance in five states, which will continue to negatively impact premiums.

Other business lines premiums written increased 8.0% or $10 million in the first quarter of 2024 compared to the first quarter of 2023.

50 www.allstate.com

Allstate Protection Segment Results

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


Combined ratios by line of business
	Loss ratio		Expense ratio (1)		Combined ratio
	2024	2023	2024	2023	2024	2023
Three months ended March 31,
Auto	75.4	83.4	20.6	21.0	96.0	104.4
Homeowners	60.3	98.5	21.8	20.5	82.1	119.0
Other personal lines	85.6	93.8	13.3	22.0	98.9	115.8
Commercial lines	115.4	102.2	26.0	23.7	141.4	125.9
Other business lines	44.3	43.1	21.4	33.3	65.7	76.4

Total	72.4	87.5	20.6	21.1	93.0	108.6
Impact of amortization of purchased intangibles			0.3	0.5	0.3	0.5
Impact of restructuring and related charges			0.1	0.2	0.1	0.2

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


Loss ratios by line of business
	Loss ratio		Effect of catastrophe losses (1)		Effect of prior year reserve reestimates		Effect of catastrophe losses included in prior year reserve reestimates
	2024	2023	2024	2023	2024	2023	2024	2023
Three months ended March 31,
Auto	75.4	83.4	1.2	1.2	(0.8)	(0.3)	(0.1)	(0.4)
Homeowners	60.3	98.5	17.6	51.6	(6.0)	(0.7)	(4.7)	(0.2)
Other personal lines	85.6	93.8	9.3	23.8	7.9	0.5	(0.4)	(1.3)
Commercial lines	115.4	102.2	0.6	3.9	30.2	10.3	(1.7)	0.4
Other business lines	44.3	43.1	5.0	4.9	3.6	0.8	—	—
Total	72.4	87.5	5.7	14.5	(1.2)	(0.1)	(1.3)	(0.4)

(1)The ten-year average effect of catastrophe losses on the total combined ratio was 7.1 points in the first quarter of 2024.


Auto underwriting results
	For the periods ended
	2024		2023					2022
($ in millions, except ratios)	Q1			Q4		Q3		Q2		Q1		Q4		Q3		Q2		Q1
Underwriting income (loss)	$	351		$	93	$	(178)	$	(678)	$	(346)	$	(974)	$	(1,315)	$	(578)	$	(147)
Loss ratio	75.4			78.5		81.4		87.9		83.4		90.6		95.3		84.9		77.6
Effect of prior year non-catastrophe reserve reestimates on combined ratio	(0.7)			1.7		0.3		1.4		(0.1)		2.3		8.5		3.8		2.1

Frequency and severity are influenced by:

Supply chain disruptions and labor shortages
Mix of repairable losses and total losses
Value of total losses due to changes in used car prices
Changes in medical inflation and consumption
Number of claims with attorney representation
Labor and part cost increases
Changes in commuting activity
Driving behavior (e.g., speed, time of day) impacting severity and mix of claim types
Organizational and process changes impacting claim opening and closing practices and shifts in timing, if any, can impact comparisons to prior periods

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

Auto loss ratio decreased 8.0 points in the first quarter of 2024 compared to the same period of 2023 driven by increased earned premiums. Estimated report year 2024 incurred claim severity for Allstate brand increased compared to report year 2023 for major coverages due to higher part costs and labor rates for repairable vehicles, a higher mix of total losses, an increase in claims with attorney representation, higher medical consumption, and inflation. Gross claim frequency decreased relative to the prior year. We continue to enhance our claims practices to manage loss costs by increasing resources and expanding re-inspections, accelerating resolution of bodily injury claims, and negotiating improved vendor services and parts agreements.

First Quarter 2024 Form 10-Q 51

Segment Results Allstate Protection

Homeowners loss ratio decreased 38.2 points in the first quarter of 2024 compared to the same period of 2023, primarily due to lower catastrophe losses and increased premiums earned.

Gross claim frequency decreased in the first quarter of 2024 compared to the same period of 2023 due to fewer wind/hail and fire claims reported. Paid claim severity increased in the first quarter of 2024 compared to the same period of 2023 due to inflationary loss cost pressure driven by increases in labor and materials costs. Homeowners paid claim severity can be impacted by both the mix of perils and the magnitude of specific losses paid during the quarter.

Other personal lines loss ratio decreased 8.2 points in the first quarter of 2024 compared to the first quarter of 2023 primarily due to increased premiums earned and lower catastrophe losses, partially offset by increased severity.

Commercial lines loss ratio increased 13.2 points in the first quarter of 2024 compared to the same period of 2023, primarily due to premiums earned decreasing as a result of profitability actions taken and higher unfavorable reserve reestimates related to the shared economy business.

Other business lines loss ratio increased 1.2 points in the first quarter of 2024 compared to the first quarter of 2023, primarily due to higher non-catastrophe losses and unfavorable prior year reserve reestimates.

Catastrophe losses decreased $960 million to $731 million in the first quarter of 2024 compared to the first quarter of 2023 primarily due to a decrease in number of events and lower losses per event compared to historically high levels in the prior year.

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

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

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

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

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


Catastrophe losses by the type of event
	Three months ended March 31,
($ in millions)	Number of events	2024		Number of events	2023

Tornadoes	—	$	—	2	$	133
Wind/hail	18	726		22	1,498
Wildfires	2	9		—	—
Freeze/other events	1	158		4	102
Prior year reserve reestimates		(162)			(42)



Total catastrophe losses	21	$	731	28	$	1,691

Catastrophe reinsurance The catastrophe reinsurance program is part of our catastrophe management strategy, which is intended to provide our shareholders with an acceptable return on the risks assumed in our personal lines business, reduce earnings variability, and provide protection to our customers. Our current catastrophe reinsurance program supports our risk and return framework which incorporates our robust economic capital model and is

informed by catastrophe risk models including hurricanes, earthquakes and wildfires and adjusts based on premium and insured value growth. As of March 31, 2024, the modeled 1-in-100 probable maximum loss for hurricane, wildfire and earthquake perils is approximately $2.5 billion, net of reinsurance. We continually review our aggregate risk appetite and the cost and availability of reinsurance to optimize the risk and return profile of this exposure.

52 www.allstate.com

Allstate Protection Segment Results

We have placed coverage related to our 2024-2025 Nationwide Excess Catastrophe Reinsurance Program (the “Nationwide Program”), the National General Reciprocal Excess Catastrophe Program, the Kentucky Earthquake Excess Catastrophe Reinsurance Contract, and the Canada Catastrophe Excess Reinsurance Contract. The Florida Excess Catastrophe Reinsurance Program and the National General Lender Services Program will be completed in the second quarter of 2024. We are continuing to evaluate complimentary coverage that, if purchased, we expect to have in place by June 1, 2024.

Similar to our 2023 program, our 2024 program includes coverage for losses to personal lines property, personal lines automobile, commercial lines property or commercial lines automobile arising out of multiple perils, in addition to hurricanes and earthquakes.

The Nationwide Program provides coverage up to $7.90 billion of loss less retentions of $500 million to $1.00 billion, and is subject to the percentage of reinsurance placed in each of its agreements. Property business in the state of Florida is excluded from this program. Separate reinsurance agreements address the distinct needs of separately capitalized legal entities. The Nationwide Program includes reinsurance agreements with both the traditional and insurance-linked securities (“ILS”) markets as described below:

*•*Core traditional market multi-year and per occurrence agreements provide limits totaling $5.00 billion for catastrophe losses arising out of multiple perils and are comprised of the following:

–Multi-year contracts providing combined $3.25 billion of placed limits exhausting at $4.25 billion, with a 5% co-participation and one annual reinstatement. One third of the contracts are structured with the first $250 million in excess of $500 million retained by the Company with remaining contracts attaching at a $1.00 billion retention.

–Two eight-year term contracts providing combined $236 million of placed limits, both with a 5% co-participation and one reinstatement of limits over each contract’s term.

–Five single-year contracts providing combined $1.52 billion of placed limits filling capacity around the multi-year and ILS placements, with two contracts providing one reinstatement of limits.

*•*ILS placements provide $1.95 billion of placed limits, with no reinstatement of limits, and are comprised of the following:

–Six contracts providing occurrence coverage of $1.30 billion of placed limits, reinsuring

losses in all states except Florida caused by named storms, earthquakes and fire following earthquakes, severe weather, wildfires, and other naturally occurring or man-made events determined to be a catastrophe by the Company.

–Two contracts providing occurrence and aggregate coverage of $325 million of placed limits, also provide that for each annual period beginning April 1, Allstate declared catastrophes to personal lines property and automobile business can be aggregated to erode the aggregate retention and qualify for coverage under the aggregate limits. Recoveries are limited to the ultimate net loss from the reinsured event.

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

National General Reciprocal Excess Catastrophe Reinsurance Contracts are placed in the traditional market and provide $445 million of placed limits, subject to a $15 million retention, with one reinstatement of limits.

Kentucky Earthquake Excess Catastrophe Reinsurance Contract is placed in the traditional market and provides $27 million of placed limits, subject to a $2 million retention, with one reinstatement of limits.

Canada Catastrophe Excess of Loss Reinsurance Contract is placed in the traditional market and provides CAD 355 million of placed limits, subject to a CAD 75 million retention, with one reinstatement of limits.

The total cost of our property catastrophe reinsurance programs, excluding reinstatement premiums, during the first quarter of 2024 was $286 million compared to $219 million in the first quarter of 2023. Catastrophe placement premiums reduce net written and earned premium with approximately 78% of the reduction related to homeowners premium.

Prior year reserve reestimates Favorable reserve reestimates, including catastrophes, were $155 million in the first quarter of 2024 primarily due to favorable reserve reestimates in homeowners lines and physical damage coverages in personal auto lines, partially offset by unfavorable reserve reestimates in other personal lines and commercial lines.

For a more detailed discussion on reinsurance and reserve reestimates, see Note 8 of the condensed consolidated financial statements.

First Quarter 2024 Form 10-Q 53

Segment Results Allstate Protection


Prior year reserve reestimates
	Three months ended March 31,
	Prior year reserve reestimates (1)				Effect on combined ratio (2)
($ in millions, except ratios)	2024		2023		2024	2023
Auto	$	(74)	$	(25)	(0.6)	(0.2)
Homeowners	(189)		(20)		(1.4)	(0.1)
Other personal lines	52		3		0.4	—
Commercial lines	51		24		0.4	0.2
Other business lines	5		1		—	—
Total Allstate Protection	$	(155)	$	(17)	(1.2)	(0.1)

Allstate brand	$	(177)	$	(54)	(1.4)	(0.4)
National General	22		37		0.2	0.3
Total Allstate Protection	$	(155)	$	(17)	(1.2)	(0.1)

(1)Favorable reserve reestimates are shown in parentheses.

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

Expense ratio decreased 0.5 points in the first quarter of 2024 compared to the first quarter of 2023, primarily due to higher earned premium growth relative to fixed costs and lower employee-related costs, partially offset by an increase in advertising costs.


Impact of specific costs and expenses on the expense ratio
	Three months ended March 31,
($ in millions, except ratios)	2024		2023		Change
Amortization of DAC	$	1,608	$	1,452	$	156
Advertising expense	283		158		125
Amortization of purchased intangibles	51		57		(6)
Other costs and expenses, net of other revenue	703		767		(64)
Restructuring and related charges	7		21		(14)
Total underwriting expenses	$	2,652	$	2,455	$	197

Premiums earned	$	12,900	$	11,635	$	1,265

Expense ratio
Amortization of DAC	12.5		12.5		—
Advertising expense	2.2		1.3		0.9
Other costs and expenses	5.5		6.6		(1.1)
Subtotal	20.2		20.4		(0.2)
Amortization of purchased intangibles	0.3		0.5		(0.2)
Restructuring and related charges	0.1		0.2		(0.1)
Total expense ratio	20.6		21.1		(0.5)

54 www.allstate.com

Run-off Property-Liability Segment Results

Run-off Property-Liability Segment


Underwriting results
($ in millions)	Three months ended March 31,
		2024			2023



Claims and claims expense			$	(4)		$	(2)





Operating costs and expenses			(1)			(1)
Underwriting loss			$	(5)		$	(3)


Reserves for asbestos, environmental and other run-off claims before and after the effects of reinsurance
($ in millions)	March 31, 2024		December 31, 2023
Asbestos claims
Gross reserves	$	1,151	$	1,166
Reinsurance	(358)		(362)
Net reserves	793		804
Environmental claims
Gross reserves	327		331
Reinsurance	(63)		(64)
Net reserves	264		267
Other run-off claims
Gross reserves	440		445
Reinsurance	(67)		(72)
Net reserves	373		373
Total
Gross reserves	1,918		1,942
Reinsurance	(488)		(498)
Net reserves	$	1,430	$	1,444


Reserves by type of exposure before and after the effects of reinsurance
($ in millions)	March 31, 2024		December 31, 2023
Direct excess commercial insurance
Gross reserves	$	1,098	$	1,114
Reinsurance	(377)		(382)
Net reserves	721		732
Assumed reinsurance coverage
Gross reserves	596		603
Reinsurance	(53)		(54)
Net reserves	543		549
Direct primary commercial insurance
Gross reserves	138		140
Reinsurance	(57)		(61)
Net reserves	81		79
Other run-off business
Gross reserves	1		1
Reinsurance	—		—
Net reserves	1		1
Unallocated loss adjustment expenses
Gross reserves	85		84
Reinsurance	(1)		(1)
Net reserves	84		83
Total
Gross reserves	1,918		1,942
Reinsurance	(488)		(498)
Net reserves	$	1,430	$	1,444

First Quarter 2024 Form 10-Q 55

Segment Results Run-off Property-Liability


Percentage of gross and ceded reserves by case and IBNR
	March 31, 2024				December 31, 2023
	Case		IBNR		Case		IBNR
Direct excess commercial insurance
Gross reserves (1)	56	%	44	%	57	%	43	%
Ceded (2)	60		40		63		37
Assumed reinsurance coverage
Gross reserves	33		67		32		68
Ceded	44		56		43		57
Direct primary commercial insurance
Gross reserves	59		41		59		41
Ceded	86		14		83		17

(1)Approximately 70% and 68% of gross case reserves as of March 31, 2024 and December 31, 2023, respectively, are subject to settlement agreements.

(2)Approximately 75% and 72% of ceded case reserves as of March 31, 2024 and December 31, 2023, respectively, are subject to settlement agreements.


Gross payments from case reserves by type of exposure
($ in millions)	Three months ended March 31,
		2024			2023
Direct excess commercial insurance
Gross (1)			$	16		$	23
Ceded (2)			(6)			(5)
Assumed reinsurance coverage
Gross			6			5
Ceded			—			(1)
Direct primary commercial insurance
Gross			1			1
Ceded			—			—

(1)In the first quarter of 2024 and 2023, 85% and 87% of payments, respectively, related to settlement agreements.

(2)In the first quarter of 2024 and 2023, 89% and 92% of payments, respectively, related to settlement agreements.

Total net reserves as of March 31, 2024, included $755 million or 53% of estimated IBNR reserves compared to $762 million or 53% of estimated IBNR reserves as of December 31, 2023.

Total gross payments were $23 million for the first quarter of 2024 compared to $29 million for the first quarter of 2023. Payments primarily related to settlement agreements reached with several insureds on large claims, mainly asbestos related losses, where the scope of coverages has been agreed upon. The claims associated with these settlement agreements are expected to be substantially paid out over the next several years as qualified claims are submitted by these insureds. Reinsurance collections were $11 million for the first quarter of 2024 compared to $15 million for the first quarter of 2023.

56 www.allstate.com

Protection Services Segment Results

Protection Services Segment ProtectionServicesLogos - Updated 1.6.23.jpg


Summarized financial information
($ in millions)		Three months ended March 31,
	2024			2023
Premiums written		$	627		$	619

Revenues
Premiums		$	612		$	538
Other revenue		85			84
Intersegment insurance premiums and service fees (1)		35			33
Net investment income		21			16

Costs and expenses
Claims and claims expense		(158)			(153)
Amortization of DAC		(289)			(251)
Operating costs and expenses		(234)			(221)
Restructuring and related charges		(1)			(1)

Income tax expense on operations		(17)			(11)

Less: noncontrolling interest		—			—

Adjusted net income		$	54		$	34

Allstate Protection Plans		$	40		$	28
Allstate Dealer Services		6			7
Allstate Roadside		11			4
Arity		(4)			(4)
Allstate Identity Protection		1			(1)
Adjusted net income		$	54		$	34

Allstate Protection Plans		148,086			136,591
Allstate Dealer Services		3,758			3,839
Allstate Roadside		565			536
Allstate Identity Protection		3,031			3,206
Policies in force as of March 31 (in thousands)		155,440			144,172

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

Adjusted net income increased 58.8% or $20 million in the first quarter of 2024 compared to the first quarter of 2023, due to gross margin improvement at Allstate Protection Plans and improved claim severity at Allstate Roadside.

Premiums written increased 1.3% or $8 million in the first quarter of 2024 compared to the first quarter of 2023, primarily due to growth at Allstate Protection Plans, partially offset by lower sales at Allstate Dealer Services.

PIF increased 7.8% or 11 million as of March 31, 2024 compared to March 31, 2023 due to growth at Allstate Protection Plans.

Other revenue increased 1.2% or $1 million in the first quarter of 2024 compared to the first quarter of 2023, primarily due to higher advertising and Mobility Intelligence product sales at Arity.

Intersegment premiums and service fees increased 6.1% or $2 million in the first quarter of 2024 compared to the first quarter of 2023, driven by increased hardware revenue at Arity.

Claims and claims expense increased 3.3% or $5 million in the first quarter 2024 compared to the first quarter of 2023, primarily driven by growth at Allstate Protection Plans, partially offset by lower claim severity at Allstate Roadside.

Amortization of DAC increased 15.1% or $38 million in the first quarter of 2024 compared to the first quarter of 2023, driven by growth at Allstate Protection Plans.

Operating costs and expenses increased 5.9% or $13 million in the first quarter of 2024 compared to the first quarter of 2023, primarily due to growth at Allstate Protection Plans.

First Quarter 2024 Form 10-Q 57

Segment Results Allstate Health and Benefits

Allstate Health and Benefits Segment


Summarized financial information
	Three months ended March 31,
($ in millions)	2024		2023
Revenues
Accident and health insurance premiums and contract charges	$	478	$	463
Other revenue	134		101
Net investment income	23		19

Costs and expenses
Accident, health and other policy benefits	(296)		(265)
Amortization of DAC	(42)		(41)
Operating costs and expenses	(225)		(203)
Restructuring and related charges	(1)		(4)

Income tax expense on operations	(15)		(14)
Adjusted net income	$	56	$	56

Benefit ratio (1)	60.0		55.5

Employer voluntary benefits (2)	3,594		3,799
Group health (3)	146		127
Individual health (4)	453		413
Policies in force as of March 31 (in thousands)	4,193		4,339

(1)Benefit ratio is calculated as accident, health and other policy benefits less interest credited to contractholder funds of $9 million and $8 million for the three months ended March 31, 2024 and 2023, respectively, divided by premiums and contract charges.

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

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

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

Adjusted net income in the first quarter of 2024 was comparable to the first quarter of 2023 due to an increase in individual health, offset by a decline in employer voluntary benefits.

Premiums and contract charges increased 3.2% or $15 million in the first quarter of 2024 compared to the first quarter of 2023, primarily due to growth in group health and individual health, partially offset by a decline in employer voluntary benefits.


Premiums and contract charges by line of business
	Three months ended March 31,
($ in millions)	2024		2023
Employer voluntary benefits	$	248	$	255
Group health	118		107
Individual health	112		101
Premiums and contract charges	$	478	$	463

Other revenue increased $33 million in the first quarter of 2024 compared to the first quarter of 2023, primarily due to an increase in individual health and group health administrative fees.

Accident, health and other policy benefits increased 11.7% or $31 million in the first quarter of 2024 compared to the first quarter of 2023, primarily from growth in group health and individual health and higher benefit utilization.

Accident, health and other policy benefits include changes in the reserve for future policy benefits, expected development on reported claims, and reserves for incurred but not reported claims as shown in Note 9.

Benefit ratio increased 4.5 points to 60.0 in the first quarter of 2024 compared to 55.5 in the first quarter of 2023 primarily due to higher benefit utilization across all lines of business.

Amortization of DAC increased 2.4% or $1 million in the first quarter of 2024 compared to the first quarter of 2023.

58 www.allstate.com

Allstate Health and Benefits Segment Results


Operating costs and expenses
	Three months ended March 31,
($ in millions)	2024		2023
Non-deferrable commissions	$	91	$	79
General and administrative expenses	134		124
Total operating costs and expenses	$	225	$	203

Operating costs and expenses increased $22 million in the first quarter of 2024 compared to the first quarter of 2023, primarily due to growth in individual health and group health and investments in the business.

First Quarter 2024 Form 10-Q 59

Investments

Investments


Portfolio composition and strategy by reporting segment (1)
	March 31, 2024
($ in millions)	Property-Liability			Protection Services			Allstate Health and Benefits			Corporate and Other			Total
Fixed income securities (2)	$	45,611		$	1,854		$	1,764		$	1,548		$	50,777
Equity securities (3)	1,492			228			54			609			2,383
Mortgage loans, net	699			—			116			—			815
Limited partnership interests	8,550			—			—			12			8,562
Short-term investments (4)	3,751			144			117			306			4,318
Other investments, net	884			—			120			—			1,004
Total	$	60,987		$	2,226		$	2,171		$	2,475		$	67,859
Percent to total	89.9		%	3.3		%	3.2		%	3.6		%	100.0		%

Market-based	$	51,269		$	2,226		$	2,171		$	2,249		$	57,915
Performance-based	9,718			—			—			226			9,944
Total	$	60,987		$	2,226		$	2,171		$	2,475		$	67,859

(1) Balances reflect the elimination of related party investments between segments.

(2) Fixed income securities are carried at fair value. Amortized cost, net for these securities was $46.47 billion, $1.91 billion, $1.89 billion, $1.57 billion and $51.84 billion for Property-Liability, Protection Services, Allstate Health and Benefits, Corporate and Other, and in total, respectively.

(3) Equity securities are carried at fair value. The fair value of equity securities held as of March 31, 2024, was $211 million in excess of cost. These net gains were primarily concentrated in the technology and banking sectors. Equity securities include $913 million of funds with underlying investments in fixed income securities as of March 31, 2024.

(4) Short-term investments are carried at fair value.

Investments totaled $67.86 billion as of March 31, 2024, increasing from $66.68 billion as of December 31, 2023, primarily due to positive operating cash flows, partially offset by dividends to shareholders and lower fixed income valuations.

Portfolio composition by investment strategy We utilize two primary strategies to manage risks and returns and to position our portfolio to take advantage of market opportunities while attempting to mitigate adverse effects. As strategies and market conditions evolve, the asset allocation may change.

Market-based strategy seeks to deliver predictable earnings aligned to business needs and provide flexibility to adjust investment risk profile based on enterprise objectives and market opportunities primarily through public and private fixed income investments and public equity securities.

Performance-based strategy seeks to deliver attractive risk-adjusted returns and supplement market risk with idiosyncratic risk primarily through investments in private equity, including infrastructure investments, and real estate with a majority being limited partnerships. These investments include investee level expenses, reflecting asset level operating expenses on directly held real estate and other consolidated investments.

Investments in the Middle East As of March 31, 2024, we have approximately $42 million investment exposure in the Middle East, of which approximately $39 million is held in Israel, which is primarily indirect exposure through foreign funds managed by external asset managers.

60 www.allstate.com

Investments


Portfolio composition by investment strategy
	March 31, 2024
($ in millions)	Market- based			Performance-based			Total
Fixed income securities	$	50,665		$	112		$	50,777
Equity securities	1,722			661			2,383
Mortgage loans, net	815			—			815
Limited partnership interests	158			8,404			8,562
Short-term investments	4,318			—			4,318
Other investments, net	237			767			1,004
Total	$	57,915		$	9,944		$	67,859
Percent to total	85.3		%	14.7		%	100.0		%

Unrealized net capital gains and losses
Fixed income securities	$	(1,060)		$	—		$	(1,060)

Short-term investments	(2)			—			(2)
Other	(2)			—			(2)
Total	$	(1,064)		$	—		$	(1,064)

Fixed income securities


Fixed income securities by type
	Fair value as of
($ in millions)	March 31, 2024		December 31, 2023
U.S. government and agencies	$	10,030	$	8,619
Municipal	5,392		6,006
Corporate	32,269		31,205
Foreign government	1,240		1,290
Asset-backed securities (“ABS”)	1,846		1,745
Total fixed income securities	$	50,777	$	48,865

Fixed income securities are rated by third-party credit rating agencies or are internally rated. The Securities Valuation Office (“SVO”) of the National Association of Insurance Commissioners (“NAIC”) evaluates the fixed income securities of insurers for regulatory reporting and capital assessment purposes. The NAIC assigns securities to one of six credit quality categories defined as “NAIC designations”. In general, securities with NAIC designations of 1 and 2 are considered investment grade and securities with NAIC designations of 3 through 6 are considered below investment grade. The rating is either received from the SVO based on availability of applicable ratings from rating agencies on the NAIC Nationally Recognized Statistical Rating Organizations (“NRSRO”) provider list, including Moody’s Investors Service (“Moody’s”), S&P Global Ratings (“S&P”), Fitch Ratings (“Fitch”), or a comparable internal rating.

As a result of time lags between the funding of investments, the finalization of legal documents, and the completion of the SVO filing process, the portfolio includes certain securities that have not yet been designated by the SVO as of each balance sheet date and the categorization of these securities is based on the expected ratings indicated by internal analysis.

As of March 31, 2024, 91.4% of the consolidated fixed income securities portfolio was rated investment grade. Credit ratings below these designations are considered lower credit quality or below investment grade, which includes high yield bonds.

Market prices for certain securities may have credit spreads which imply higher or lower credit quality than the current third-party rating. Our initial investment decisions and ongoing monitoring procedures for fixed income securities are based on a due diligence process which includes, but is not limited to, an assessment of the credit quality, sector, structure, and liquidity risks of each issuer.

Fixed income portfolio monitoring is a comprehensive process to identify and evaluate each fixed income security that may require a credit loss allowance. The process includes a quarterly review of all securities to identify instances where the fair value of a security compared to its amortized cost is below internally established thresholds. For further detail on our fixed income portfolio monitoring process, see Note 4 of the condensed consolidated financial statements.

First Quarter 2024 Form 10-Q 61

Investments

The following table presents total fixed income securities by the applicable NAIC designation and comparable S&P rating.


Fair value and unrealized net capital gains (losses) for fixed income securities by credit rating
	March 31, 2024
	NAIC 1				NAIC 2				NAIC 3
	A and above				BBB				BB
($ in millions)	Fair value		Unrealized gain (loss)		Fair value		Unrealized gain (loss)		Fair value		Unrealized gain (loss)
U.S. government and agencies	$	10,030	$	(112)	$	—	$	—	$	—	$	—
Municipal	5,269		(100)		116		(1)		5		—
Corporate
Public	7,305		(102)		15,849		(476)		599		(17)
Privately placed	1,804		(48)		3,017		(96)		1,980		(44)
Total corporate	9,109		(150)		18,866		(572)		2,579		(61)
Foreign government	1,239		(15)		1		—		—		—
ABS	1,752		1		13		—		30		—
Total fixed income securities	$	27,399	$	(376)	$	18,996	$	(573)	$	2,614	$	(61)

	NAIC 4				NAIC 5-6				Total
	B				CCC and lower
	Fair value		Unrealized gain (loss)		Fair value		Unrealized gain (loss)		Fair value		Unrealized gain (loss)
U.S. government and agencies	$	—	$	—	$	—	$	—	$	10,030	$	(112)
Municipal	—		—		2		2		5,392		(99)
Corporate
Public	115		(2)		2		2		23,870		(595)
Privately placed	1,442		(38)		156		(20)		8,399		(246)
Total corporate	1,557		(40)		158		(18)		32,269		(841)
Foreign government	—		—		—		—		1,240		(15)
ABS	—		—		51		6		1,846		7
Total fixed income securities	$	1,557	$	(40)	$	211	$	(10)	$	50,777	$	(1,060)

Municipal bonds, including tax-exempt and taxable securities, include general obligations of state and local issuers and revenue bonds.

Corporate bonds include publicly traded and privately placed securities. Privately placed securities primarily consist of corporate issued senior debt securities that are negotiated with the borrower or are issued by public entities in unregistered form.

ABS includes collateralized debt obligations, consumer and other ABS. Credit risk is managed by monitoring the performance of the underlying collateral. Many of the securities in the ABS portfolio have credit enhancement with features such as overcollateralization, subordinated structures, reserve funds, guarantees or insurance. ABS also includes residential mortgage-backed securities and commercial mortgage-backed securities.

Equity securities of $2.38 billion primarily include common stocks, exchange traded and mutual funds, non-redeemable preferred stocks and real estate investment trust (“REIT”) equity investments. Certain exchange traded and mutual funds have fixed income securities as their underlying investments.

Mortgage loans of $815 million mainly comprise loans secured by first mortgages on developed commercial real estate. Key considerations used to manage our exposure include property type and geographic diversification. For further detail on our mortgage loan portfolio, see Note 4 of the condensed consolidated financial statements.

Limited partnership interests include $7.27 billion of interests in private equity funds, $1.14 billion of interests in real estate funds and $158 million of interests in other funds as of March 31, 2024. We have commitments to invest additional amounts in limited partnership interests totaling $3.01 billion as of March 31, 2024.

Other investments include $164 million of bank loans, net, and $717 million of direct investments in real estate as of March 31, 2024.

62 www.allstate.com

Investments


Unrealized net capital gains (losses)
	March 31,		December 31,
($ in millions)	2024		2023
U.S. government and agencies	$	(112)	$	(5)
Municipal	(99)		(43)
Corporate	(841)		(746)
Foreign government	(15)		4
ABS	7		6
Fixed income securities	(1,060)		(784)
Short-term investments	(2)		(1)
Derivatives	(2)		(2)
Equity method of accounting (“EMA”) limited partnerships	—		(4)
Unrealized net capital gains and losses, pre-tax	$	(1,064)	$	(791)


Gross unrealized gains (losses) on fixed income securities by type and sector
($ in millions)		Amortized cost, net			Gross unrealized				Fair value
	Gains			Losses
March 31, 2024
Corporate
Banking		$	4,060		$	24	$	(114)	$	3,970
Basic industry		1,055			5		(38)		1,022
Capital goods		2,971			21		(98)		2,894
Communications		2,711			17		(124)		2,604
Consumer goods (cyclical and non-cyclical)		7,687			68		(252)		7,503
Financial services		2,046			12		(81)		1,977
Energy		2,669			33		(58)		2,644





Technology		2,914			19		(148)		2,785
Transportation		1,037			8		(39)		1,006
Utilities		5,569			63		(132)		5,500
Other		391			3		(30)		364
Total corporate fixed income portfolio		33,110			273		(1,114)		32,269
U.S. government and agencies		10,142			56		(168)		10,030
Municipal		5,491			61		(160)		5,392
Foreign government		1,255			4		(19)		1,240
ABS		1,839			14		(7)		1,846
Total fixed income securities		$	51,837		$	408	$	(1,468)	$	50,777






December 31, 2023
Corporate
Banking	$	4,189	$	31	$	(135)	$	4,085
Basic industry	1,007		7		(42)		972
Capital goods	2,800		33		(97)		2,736
Communications	2,767		33		(115)		2,685
Consumer goods (cyclical and non-cyclical)	6,813		93		(251)		6,655
Financial services	2,111		17		(88)		2,040
Energy	2,645		35		(63)		2,617





Technology	2,800		21		(153)		2,668
Transportation	1,104		13		(45)		1,072
Utilities	5,330		109		(123)		5,316
Other	385		5		(31)		359
Total corporate fixed income portfolio	31,951		397		(1,143)		31,205
U.S. government and agencies	8,624		114		(119)		8,619
Municipal	6,049		109		(152)		6,006
Foreign government	1,286		17		(13)		1,290
ABS	1,739		13		(7)		1,745
Total fixed income securities	$	49,649	$	650	$	(1,434)	$	48,865

First Quarter 2024 Form 10-Q 63

Investments

Gross unrealized losses are related to an increase in market yields which may include increased risk-free interest rates and wider credit spreads since the time of initial purchase. Similarly, gross unrealized gains reflect a decrease in market yields since the time of initial purchase.


Equity securities by sector
	March 31, 2024						December 31, 2023
($ in millions)	Cost		Over (under) cost		Fair value		Cost		Over (under) cost		Fair value

Banking	$	34	$	44	$	78	$	30	$	38	$	68
Basic Industry	9		2		11		9		2		11
Capital Goods	77		(24)		53		77		(27)		50
Energy	32		6		38		32		3		35





Funds
Equities	273		38		311		258		12		270
Fixed income	937		(24)		913		1,038		(15)		1,023
Other	62		2		64		58		5		63
Total funds	1,272		16		1,288		1,354		2		1,356
Transportation	13		22		35		16		23		39
Utilities	59		7		66		59		1		60
Other (1)	676		138		814		667		125		792
Total equity securities	$	2,172	$	211	$	2,383	$	2,244	$	167	$	2,411

(1)As of March 31, 2024, other is generally comprised of consumer goods, technology, REITs, financial services and communications sectors.


Net investment income
	Three months ended March 31,
($ in millions)		2024		2023
Fixed income securities		$	526	$	390
Equity securities		15		11
Mortgage loans		9		8
Limited partnership interests		199		134
Short-term investments		67		66
Other investments		21		41
Investment income, before expense		837		650
Investment expense
Investee level expenses		(10)		(17)
Securities lending expense		(25)		(21)
Operating costs and expenses		(38)		(37)
Total investment expense		(73)		(75)
Net investment income		$	764	$	575

Property-Liability		$	702	$	509
Protection Services		21		16
Allstate Health and Benefits		23		19
Corporate and Other		18		31
Net investment income		$	764	$	575

Market-based		$	626	$	508
Performance-based		211		142
Investment income, before expense		$	837	$	650

Net investment income increased $189 million in the first quarter of 2024 compared to the same period of 2023, primarily due to higher market-based and performance-based investment results.

64 www.allstate.com

Investments


Performance-based investment income
	Three months ended March 31,
($ in millions)		2024		2023
Private equity		$	196	$	105
Real estate		15		37
Total performance-based income before investee level expenses		$	211	$	142

Investee level expenses (1)		(10)		(16)
Total performance-based income		$	201	$	126

(1)Investee level expenses include asset level operating expenses on directly held real estate and other consolidated investments reported in investment expense.

Performance-based investment income increased $75 million in the first quarter of 2024 compared to the same period of 2023, primarily due to higher private equity valuation increases.

Performance-based investment results and income can vary significantly between periods and are influenced by economic conditions, equity market

performance, comparable public company earnings multiples, capitalization rates, operating performance of the underlying investments and the timing of asset sales. The Company typically employs a lag in recording and recognizing changes in valuations of limited partnership interests due to the availability of investee financial statements.


Components of net gains (losses) on investments and derivatives and the related tax effect
	Three months ended March 31,
($ in millions)		2024		2023
Sales		$	(111)	$	(120)
Credit losses (1)		(115)		(12)
Valuation change of equity investments - appreciation (decline):
Equity securities		66		148
Equity fund investments in fixed income securities		(4)		19
Limited partnerships (2)		8		31
Total valuation of equity investments		70		198
Valuation change and settlements of derivatives		(8)		(52)
Net gains (losses) on investments and derivatives, pre-tax		(164)		14
Income tax benefit (expense)		36		(6)
Net gains (losses) on investments and derivatives, after-tax		$	(128)	$	8

Property-Liability (1)		$	(127)	$	6
Protection Services		(3)		(1)
Allstate Health and Benefits		1		2
Corporate and Other		1		1
Net gains (losses) on investments and derivatives, after-tax		$	(128)	$	8

Market-based (1)		$	(185)	$	(3)
Performance-based		21		17
Net gains (losses) on investments and derivatives, pre-tax		$	(164)	$	14

(1)Includes $123 million loss related to the valuation allowance established for the surplus notes issued by Adirondack Insurance Exchange and New Jersey Skylands Insurance Association (together “Reciprocal Exchanges”). See Note 7 for further details.

(2)Relates to limited partnerships where the underlying assets are predominately public equity securities.

Net losses on investments and derivatives in the first quarter of 2024 related primarily to a valuation allowance established for surplus notes issued by the Reciprocal Exchanges and losses on sales of fixed income securities, partially offset by valuation gains on equity securities.

Net losses on sales in the first quarter of 2024 related primarily to sales of fixed income securities in connection with ongoing portfolio management.

Net losses on valuation change and settlements of derivatives of $8 million in the first quarter of 2024 primarily related to net losses on equity futures used to manage equity exposure and net losses on interest rate futures used to manage duration, partially offset by gains on foreign currency contracts used to manage foreign currency risk.

First Quarter 2024 Form 10-Q 65

Investments


Net gains (losses) on performance-based investments and derivatives
	Three months ended March 31,
($ in millions)		2024		2023
Sales		$	(4)	$	8
Credit losses		(4)		(3)
Valuation change of equity investments		18		19
Valuation change and settlements of derivatives		11		(7)
Total performance-based		$	21	$	17

Net gains on performance-based investments and derivatives in the first quarter of 2024, primarily related to increased valuation of equity investments and valuation change and settlements of derivatives.

66 www.allstate.com

Capital Resources and Liquidity

Capital Resources and Liquidity

Capital resources consist of shareholders’ equity and debt, representing funds deployed or available to be deployed to support business operations or for general corporate purposes.


Capital resources
($ in millions)	March 31, 2024			December 31, 2023
Preferred stock, common stock, treasury stock, retained income and other shareholders’ equity items	$	19,522		$	18,470
Accumulated other comprehensive loss	(883)			(700)
Total Allstate shareholders’ equity	18,639			17,770
Debt	7,938			7,942
Total capital resources	$	26,577		$	25,712

Ratio of debt to Allstate shareholders’ equity	42.6		%	44.7		%
Ratio of debt to capital resources	29.9			30.9

Allstate shareholders’ equity increased in the first three months of 2024, primarily due to net income, partially offset by dividends to shareholders and higher unrealized net capital losses on investments. In the three months ended March 31, 2024, we paid dividends of $233 million and $29 million related to our common and preferred shares, respectively.

Debt maturities We have $350 million of debt that is scheduled to mature in May 2024.


Debt maturities for each of the next five years and thereafter (excluding issuance costs and other)
($ in millions)
2025	$	600
2026	550
2027	—
2028	—
2029	—

Thereafter	6,491
Total long-term debt principal	$	7,641

Common share repurchases On March 31, 2024, our $5.00 billion share repurchase authorization expired with $472 million remaining. In the first quarter of 2024, we did not repurchase any shares under the program. A new common share repurchase program has not been authorized as of March 31, 2024.

Common shareholder dividends On January 2, 2024, we paid a common shareholder dividend of $0.89. On February 23, 2024, we declared a common shareholder dividend of $0.92 payable on April 1, 2024.

Financial ratings and strength Our ratings are influenced by many factors including our operating and financial performance, asset quality, liquidity, overall portfolio mix, financial leverage (i.e., debt), exposure to risks such as catastrophes and the current level of operating leverage. The preferred stock and subordinated debentures are viewed as having a common equity component by certain rating agencies and are given equity credit up to a pre-determined limit in our capital structure as determined by their respective methodologies. These respective methodologies consider the existence of certain terms and features in the instruments such as the noncumulative dividend feature in the preferred stock.

There have been no changes to any of our ratings from A.M. Best, S&P or Moody’s since December 31, 2023.

Liquidity sources and uses We actively manage our financial position and liquidity levels in light of changing market, economic and business conditions. Liquidity is managed at both the entity and enterprise level across the Company and is assessed on both base and stressed level liquidity needs. We believe we have sufficient liquidity to meet these needs. Additionally, we have existing intercompany agreements in place that facilitate liquidity management across the Company to enhance flexibility.

The Corporation is party to an Amended and Restated Intercompany Liquidity Agreement (“Liquidity Agreement”) with certain subsidiaries, which includes, but is not limited to Allstate Insurance Company (“AIC”). The Liquidity Agreement allows for short-term advances of funds to be made between parties for liquidity and other general corporate purposes. The Liquidity Agreement does not establish a commitment to advance funds on the part of any party. AIC serves as a lender and borrower, certain other subsidiaries serve only as borrowers, and the Corporation serves only as a lender. The maximum amount of potential funding under each of these agreements is $1.00 billion.

In addition to the Liquidity Agreement, the Corporation also has an intercompany loan agreement with certain of its subsidiaries, which includes, but is not limited to, AIC. The amount of intercompany loans available to the Corporation’s subsidiaries is at the discretion of the Corporation. The maximum amount of loans the Corporation will have outstanding to all its eligible subsidiaries at any given point in time is limited to $1.00 billion. The Corporation may use commercial paper borrowings, bank lines of credit and securities lending to fund intercompany borrowings.

Parent company capital capacity At the parent holding company level, we have deployable assets totaling $3.17 billion as of March 31, 2024, primarily comprised of cash and short-term, fixed income and equity securities that are generally saleable within one quarter. The earnings capacity of the operating subsidiaries is the primary source of capital generation for the Corporation.

First Quarter 2024 Form 10-Q 67

Capital Resources and Liquidity

As of March 31, 2024, we held $16.86 billion of cash, U.S. government and agencies fixed income securities, public equity securities, and short-term investments, which we would expect to be able to liquidate within one week.

No intercompany dividends from insurance companies were paid in the first three months of 2024.

Based on the greater of 2023 statutory net income or 10% of statutory surplus, the maximum amount of dividends that AIC will be able to pay, without prior Illinois Department of Insurance approval, at a given point in time through February 2025, is estimated at $1.20 billion, less dividends paid during the preceding twelve months measured at that point in time. In the first three months of 2024, no dividends have been paid.

Dividends may not be paid or declared on our common stock and shares of common stock may not be repurchased unless the full dividends for the latest completed dividend period on our preferred stock have been declared and paid or provided for.

The terms of our outstanding subordinated debentures also prohibit us from declaring or paying any dividends or distributions on our common or preferred stock or redeeming, purchasing, acquiring, or making liquidation payments on our common stock or preferred stock if we have elected to defer interest payments on the subordinated debentures, subject to certain limited exceptions. In the first three months of 2024, we did not defer interest payments on the subordinated debentures.

Additional resources to support liquidity are as follows:

The Corporation and AIC have access to a $750 million unsecured revolving credit facility that is available for short-term liquidity requirements. The maturity date of this facility is November 2027. The facility is fully subscribed among 11 lenders with the largest commitment being $95 million. The commitments of the lenders are several and no lender is responsible for any other lender’s commitment if such lender fails to make a loan under the facility. This facility contains an increase provision that would allow up to an additional $500 million of borrowing, subject to the lenders’ commitment. This facility has a financial covenant requiring that we not exceed a 37.5% debt to capitalization ratio as defined in the agreement. This ratio was 22.5% as of March 31, 2024. Although the right to borrow under the facility is not subject to a minimum rating requirement, the costs of maintaining the facility and borrowing under it are based on the ratings of our senior unsecured, unguaranteed long-term debt. There were no borrowings under the credit facility during 2024.
To cover short-term cash needs, the Corporation has access to a commercial paper facility with a borrowing capacity limited to any undrawn credit facility balance up to $750 million.
As of March 31, 2024, there were no balances outstanding for the credit facility or the commercial paper facility and therefore the remaining borrowing capacity was $750 million.
The Corporation has access to a universal shelf registration statement with the Securities and Exchange Commission that was filed on April 30, 2024 and expires in 2027. We can use this shelf registration to issue an unspecified amount of debt securities, common stock (including 636 million shares of treasury stock as of March 31, 2024), preferred stock, depositary shares, warrants, stock purchase contracts and stock purchase units. The specific terms of any securities we issue under this registration statement will be provided in the applicable prospectus supplements.

68 www.allstate.com

Forward-Looking Statements

This report contains “forward-looking statements” that anticipate results based on our estimates, assumptions and plans that are subject to uncertainty. These statements are made subject to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements do not relate strictly to historical or current facts and may be identified by their use of words like “plans,” “seeks,” “expects,” “will,” “should,” “anticipates,” “estimates,” “intends,” “believes,” “likely,” “targets” and other words with similar meanings. These statements may address, among other things, our strategy for growth, catastrophe exposure management, product development, investment results, regulatory approvals, market position, expenses, financial results, litigation and reserves. We believe that these statements are based on reasonable estimates, assumptions and plans. Forward-looking statements speak only as of the date on which they are made, and we assume no obligation to update any forward-looking statements as a result of new information or future events or developments. In addition, forward-looking statements are subject to certain risks or uncertainties that could cause actual results to differ materially from those communicated in these forward-looking statements. Factors that could cause actual results to differ materially from those expressed in, or implied by, the forward-looking statements include risks related to:

Insurance and Financial Services (1) actual claim costs exceeding current reserves; (2) unexpected increases in claim frequency or severity; (3) catastrophes and severe weather events; (4) limitations in analytical models used for loss cost estimates; (5) price competition and changes in regulation and underwriting standards; (6) market risk, inflation, and declines in credit quality of our investment portfolios; (7) our subjective determination of fair value and amount of credit losses for investments; (8) our participation in indemnification programs, including state industry pools and facilities; (9) inability to mitigate the impact associated with changes in capital requirements; (10) a downgrade in financial strength ratings;

Business, Strategy and Operations (11) operations in markets that are highly competitive; (12) changing consumer preferences; (13) new or changing technologies; (14) implementation of our Transformative Growth strategy; (15) our catastrophe management strategy; (16) restrictions on our subsidiaries’ ability to pay dividends; (17) restrictions under terms of certain of our securities on our ability to pay dividends or repurchase our stock; (18) the availability of reinsurance at current levels and prices; (19) counterparty risk related to reinsurance; (20) acquisitions and divestitures of businesses; (21) intellectual property infringement, misappropriation and third-party claims; (22) vendor-related business disruptions or failure of a vendor to provide and protect data, confidential and proprietary information, or personal information of our customers, claimants or employees; (23) our ability to attract, develop and retain talent;

Macro, Regulatory and Risk Environment (24) conditions in the global economy and capital markets; (25) a large-scale pandemic, the occurrence of terrorism, military actions or social unrest; (26) the failure in cyber or other information security controls, as well as the occurrence of events unanticipated in our disaster recovery processes and business continuity planning; (27) changing climate and weather conditions; (28) evolving environmental, social and governance standards and expectations; (29) restrictive regulations and regulatory reforms in the U.S. and internationally; (30) regulatory limitations on rate increases and requirements to underwrite business and participate in loss sharing arrangements; (31) losses from legal and regulatory actions; (32) changes in or the application of accounting standards and changes in tax laws; and (33) misconduct or fraudulent acts by employees, agents and third parties.

Additional information concerning these and other factors may be found in our filings with the Securities and Exchange Commission, including the “Risk Factors” section in our most recent annual report on Form 10-K.

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