Allstate Reports 2008 Third Quarter Results

Business Wire, Oct 22, 2008

After the transfer of the $1.0 billion of invested assets through the capital contribution from the Corporation to AIC, investments at the parent company level will comprise highly liquid securities that are generally saleable within one week totaling $2.68 billion, liquid investments that are saleable within one quarter totaling $1.06 billion, and $282 million of investments that trade in illiquid markets.

For the remainder of 2008, we intend that no dividends will be paid by ALIC to AIC or by AIC to the Corporation. The payment of dividends by AIC and ALIC is dependent on business conditions, income, cash requirements and other relevant factors. The payment of dividends by AIC and ALIC without prior approval from regulatory authorities is limited to formula amounts based on net income and capital and surplus, determined in conformity with statutory accounting practices, as well as the timing and amount of dividends paid in the preceding twelve months. In 2009, we anticipate that AIC will pay dividends to the Corporation and will have the capacity to pay dividends currently estimated at $1.39 billion without prior regulatory approval. We do not anticipate that ALIC will pay dividends to AIC in 2009.

Allstate has suspended our share repurchase program and do not plan to complete it by our target date of March 2009. We will re-evaluate this program as market conditions develop in 2009. As of September 30, 2008, we had purchased a total of 22.5 million shares at a cost of $1.07 billion and the program was approximately 53% complete.

2009 Capital Outlook

Should ALIC subsequently require the remaining approved funding of $250 million from AIC, the Corporation may contribute rated municipal bonds to AIC, which is consistent with AIC's enterprise-wide asset allocation ("EAA") strategy to offset the impact to AIC's capital. The Corporation's net remaining investments would amount to $3.77 billion after this funding and are sufficient to meet quarterly fixed charges of approximately $275 million and $750 million of maturing debt in December 2009, if not refinanced, before considering receipt of AIC's 2009 estimated potential dividends of $1.39 billion that can be paid without prior regulatory approval, which would increase the Corporation's deployable assets to $3.03 billion in 2009. These assets would be available to support operating subsidiaries' capital and borrowing needs and for general corporate purposes as discussed previously. Allstate Protection anticipates continuing to produce strong underwriting results in its standard auto operations while its on-going focus on homeowners catastrophe management actions serves to reduce exposure to adverse catastrophe developments. ALIC will continue to be exposed to adverse developments in its investment portfolio and to pressures on its risk based capital ratio. ALIC's risk based capital ratio following the $1.00 billion capital infusion will improve to its targeted range.

The Corporation is well capitalized. Moreover, in addition to historic external sources of capital including the debt and equity capital markets and our $1.0 billion credit facility, access to funding from additional sources, including participation in programs offered by the U.S. Treasury and other governmental organizations, are potentially available to the Corporation and its operating subsidiaries for capital and liquidity needs.