Allstate Reports 2004 First Quarter; 43% Increase in Net Income EPS; 52% Increase in Operating Income EPS

Business Wire, April 20, 2004

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Business Editors

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NORTHBROOK, Ill.--(BUSINESS WIRE)--April 20, 2004

The Allstate Corporation (NYSE:ALL) today reported for the first quarter of 2004:

                      Consolidated Highlights(1)

                                        Three Months Ended March 31,
                                      --------------------------------
                                                            Change
                                                       ---------------
(in millions, except per share amounts  Est.             $
 and ratios)                            2004     2003   Amt        %
                                      --------------------------------
Consolidated revenues                 $8,311   $7,861  $ 450      5.7
Net income                               949      665    284     42.7
Net income per diluted share            1.34     0.94   0.40     42.6
Operating income(1)                    1,020      673    347     51.6
Operating income per diluted share(1)   1.44     0.95   0.49     51.6
Property-Liability combined ratio       86.4     93.1     --  (6.7)pts
Book value per diluted share           30.48    25.50   4.98     19.5
Operating income return on equity(1)    18.0     14.8     --   3.2 pts

-- Property-Liability premiums written(1) grew 6.7% over the

first quarter of 2003. Allstate brand standard auto and

homeowners new business premiums written both increased 43%.

-- Property-Liability underwriting income(1) increased 109% or

$452 million in the first quarter to $865 million from $413

million in the first quarter of 2003 due to higher premiums

earned, continued favorable auto and homeowners loss

frequencies, and lower catastrophes. The combined ratio

decreased 6.7 points to 86.4 in the first quarter of 2004.

-- Catastrophe losses in the first quarter decreased to $102

million compared to $133 million in the first quarter of 2003.

The impact of catastrophe losses on the combined ratio

decreased to 1.6 pts from 2.2 pts in the first quarter of

2003.

-- Allstate Financial had premiums and deposits(1) of $3.46

billion, a 38% increase over the first quarter of 2003.

Operating income was $132 million compared to $82 million in

the first quarter of 2003.

-- Allstate's annual operating income per diluted share

guidance(1) for 2004 (assuming the level of average expected

catastrophe losses used in pricing for the remainder of the

year) is in the range of $4.80 to $5.10, compared to the

previously announced range of $4.30 to $4.55.

(1) Measures used in this release that are not based on generally accepted accounting principles ("non-GAAP") are defined and reconciled to the most directly comparable GAAP measure and operating measures are defined in the "Definitions of Non-GAAP and Operating Measures" section of this document.

"This was an outstanding quarter for Allstate. We're off to a great start for 2004," said Chairman, President and CEO Edward M. Liddy. "Simply put, our strategy is to grow profitably and this quarter's results very clearly indicate we are succeeding. And we have every intention of continuing the momentum.

"I am especially pleased with the fact that this was the first time operating income reached $1 billion for a quarter. The fact is that good news is coming from across the enterprise - Allstate Protection, Allstate Financial and Investment units all generated strong results.

"In our Property-Liability business, premiums written were up more than 6% in an environment of moderating rate activity. Policies in force (PIF) showed healthy growth. In particular, Allstate brand standard auto and homeowners business PIF grew 3.6% and 4.6% respectively, as compared to the first quarter of 2003. We retained more customers as evidenced by the improvement in our retention ratio. And while we were pleased with our underwriting performance, results also benefited from lower catastrophe losses and the mild winter, which contributed to favorable auto and homeowners loss frequency trends.

"Our efforts to expand the reach of our brand through marketing and advertising are achieving success. We are reaching shoppers at targeted levels and our advertising is being well received. Our competitive position remains strong across the country as evidenced by the growth rates of our core lines. New business premiums written for Allstate brand standard auto and homeowners increased 43% compared to the first quarter of 2003. Our Strategic Risk Management approach continues to work well at attracting our target customers, which are those that tend to buy multiple products and stay with the company for a longer period of time," continued Liddy.

"I am also pleased with the performance of our Allstate Exclusive Agencies. They are clearly executing our strategy to get better and bigger in our property-casualty business while also making solid contributions to becoming broader in financial services. New sales of financial products by Allstate exclusive agencies(1) for the first quarter of 2004 were $491 million, a 36% increase from the first quarter of 2003. We have an agency force that is committed to fulfilling our customers' needs and reaching more customers.