A.M. Best Affirms Financial Strength Ratings of Allstate's Subsidiaries; Assigns Debt Ratings

Business Wire, March 14, 2001

Business Editors

OLDWICK, N.J.--(BUSINESS WIRE)--Mar. 14, 2001

A.M. Best Co. has affirmed the financial strength ratings of property/casualty and life/health subsidiaries and affiliates of The Allstate Corporation.

In addition, the rating agency has assigned a rating of AMB-1 to The Allstate Corp's commercial paper program, an "a " senior debt rating and an "a" trust preferred rating to Allstate's existing corporate securities. A.M. Best has also assigned indicative ratings to corporate securities available under a $2 billion shelf registration filed in June 2000, as well as $350 million of capacity under a previously filed shelf registration statement. These indicative ratings include "a " on senior unsecured debt, "a" on trust preferred securities and "a-" on preferred stock.

The ratings reflect Allstate's considerable franchise in both the personal lines and life and savings industries; conservative fiscal and operational management; excellent earnings and cash generation; adequate capitalization; quality of capital; diversification efforts and financial flexibility. In addition, the ratings reflect management's well conceived and executed strategic business plan model (which includes selling through agencies, call centers and the Internet) that should allow Allstate to effectively compete with both agency and direct personal lines carriers.

Allstate's conservative financial management has resulted in a strong and stable balance sheet that is reflective of low leverage and excellent liquidity accomplished through a steady earnings stream. This has been achieved despite a very aggressive stock repurchase program carried out over the past six years during which The Allstate Corp. repurchased just over $6 billion of outstanding shares funded with a combination of debt and insurance subsidiary dividends. As a result, leverage (including trust preferreds) has increased, but is still less than 20% and well in line for the debt ratings. Even more noteworthy is the fact that The Allstate Corp.'s ability to service its annual interest expense and trust preferred dividends is quite strong, not only from cash generated by the group's insurance subsidiaries but also from approximately $1 billion of assets maintained at the holding company level. Operationally, Allstate has maintained redundant reserves, appropriate capital levels and excellent investment portfolio quality while reducing catastrophe exposure over the past few years. Management maintains a cautious approach toward acquisitions by engaging only in acquisitions and alliances that will promote or enhance existing strategic business initiatives.

For a complete report, listing of companies and debt issues, visit http://www.ambest.com/news/allstate.pdf.> A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com.