Allstate Reports 2007 First Quarter 9% Increase in Net Income EPS

Business Wire, April 18, 2007

First Quarter Operating Income EPS of $1.93

NORTHBROOK, Ill. -- The Allstate Corporation (NYSE:ALL) today reported for the first quarter of 2007:

[TABLE OMITTED]

"Allstate is off to a strong start in 2007," said Thomas J. Wilson, president and chief executive officer, The Allstate Corporation. "Our property-casualty, financial and investment operations delivered solid results, generating net income of $1.49 billion for the first quarter of 2007. Our return on equity for shareholders remained strong at 23.5 percent and book value increased 14.3 percent compared to first quarter 2006.

Consumer Focus

"Our highly successful marketing programs continue to distinguish us from our competitors and deliver quantifiable results for our auto insurance business. Allstate brand standard auto policies in force grew 2.6 percent in the first quarter of 2007 compared to the prior year and new issued applications increased 7.3 percent. Customer loyalty also remains a top priority and is the focus of several new initiatives.

Profitability

"Profitability remained strong in the first quarter of 2007," added Wilson. Operating income in the quarter was $1.2 billion compared to $1.3 billion for last year's first quarter. The Property-Liability combined ratio for the quarter was 84.6, an increase of 2.7 points compared with the first quarter of 2006, partly because of higher claim frequencies. "Winter weather in the central and northeast sections of the country partially contributed to the increase in claim frequency in standard auto property damage and in our homeowners line during the quarter. Property damage severity results in the quarter were moderate and better than we expected at the beginning of the year," continued Wilson. Catastrophe losses for the quarter were $161 million, compared to $107 million in the first quarter of 2006. Allstate Financial generated $156 million of operating income for the quarter and is making progress in raising returns on new business.

Our investment portfolios generated strong results for both Property-Liability and Allstate Financial. Both business units benefited from growth in assets under management. Allstate Financial's portfolio yield, in particular, also benefited from a rise in yield on its floating rate investments. Realized capital gain activity also outpaced last year's results and was primarily driven by non-recurring gains related to the disposition of certain limited partnership interests.

Capital Management

During the first quarter we repurchased $700 million of common stock, bringing the cumulative repurchases under the $3 billion repurchase program announced in October 2006 to $907 million. Allstate's board of directors has also authorized the issuance of up to $1 billion of junior subordinated securities with the proceeds to be used to repurchase up to $1 billion of our common stock by March 31, 2008, in addition to the current $3 billion authorization. We plan to complete the hybrid offering during the second quarter (market conditions permitting). "We also will continue to focus on reducing our exposure to mega-catastrophes through a variety of initiatives while seeking alternative solutions for our customers," added Wilson.

People

"The depth and strength of our management team across the company allowed us to seamlessly continue the leadership transitions we announced beginning in September 2006. In the quarter, we made some key executive appointments in Allstate Protection due to retirements and created a new organization with responsibility for emerging businesses. This new team will improve focus on lines of business that offer Allstate additional opportunities for profitable growth," said Wilson.

Outlook

"Overall, we are pleased with our performance during the quarter. We remain focused on executing our multifaceted competitive strategy to continue generating strong returns for shareholders and delivering market-leading products and services to our customers. We continue to expect that the Property-Liability combined ratio, excluding the effect of catastrophes and assuming no prior year reserve reestimates, will be between 84.0 and 86.0 in 2007," concluded Wilson.

BUSINESS SEGMENT HIGHLIGHTS

Property-Liability

* Property-Liability premiums written1 declined 1.7% from the first quarter of 2006, reflecting the increased cost of the Allstate Protection catastrophe reinsurance program. The cost of the catastrophe reinsurance program was $216 million in the first quarter of 2007 compared to $73 million in the first quarter of last year. Excluding this cost, premiums written grew 0.4% in the first quarter of 2007 when compared to the prior year quarter.

* Allstate brand standard auto premiums written grew 2.5% in the first quarter of 2007 compared to the prior year quarter. Contributing to the overall change were the following:

[TABLE OMITTED]

* Allstate brand homeowners premiums written declined 5.8% in the first quarter of 2007 compared to the prior year quarter due to our catastrophe risk management actions. Contributing to the overall change were the following: