Allstate Reports 2008 Third Quarter Results

Business Wire, Oct 22, 2008

* Catastrophe losses for the quarter totaled $1.8 billion, compared to $343 million in the third quarter of 2007, impacting the combined ratio by 26.8 points in the third quarter of 2008 and 5.0 points in the third quarter of 2007. Catastrophe losses for the quarter include estimates of losses for Hurricanes Ike and Gustav of $944 million and $459 million, respectively, among other events. The catastrophe losses for Hurricane Ike reflect reinsurance recoverables of $246 million. Hurricane Ike catastrophe losses included $325 million related to states other than Texas. Hurricane Ike is expected to be among the top three costliest U.S. hurricanes along with Hurricane Katrina of 2005 and Hurricane Andrew of 1992. Hurricane Gustav is expected to be among the top 10 costliest U.S. hurricanes. See the Catastrophe Losses, Reinsurance and Exposure Management section of this document for further detail.

* Property-Liability prior year reserve reestimates for the third quarter of 2008 netted to zero, compared to unfavorable prior year reserve reestimates of $52 million in the third quarter of 2007. Prior year reserve reestimates in the third quarter of 2007 resulted from the annual discontinued lines reserve study.

* Allstate expects the Property-Liability underlying combined ratio will be at the favorable end of the range of 86.0 and 88.0 for the full year 2008. The calculations of the underlying combined ratio for the three months and nine months ended September 30 are shown in the

table below. Favorable reserve reestimates are shown in parenthesis.

[TABLE OMITTED]

Allstate Financial

* Premiums and deposits in the third quarter of 2008 were $1.9 billion, a decrease of $406 million or 17.6% from the prior year quarter. This decrease is due to the absence of issuances of institutional products in the third quarter of 2008 compared to $500 million in the prior year quarter, partially offset by an increase in retail premiums and deposits of $94 million or 5.2% due to an increase in deposits on fixed deferred annuities of 14.3%.

* Operating income for the third quarter of 2008 was $88 million, a decrease of $59 million from the prior year quarter. The decline was primarily due to lower investment spreads, reduced benefit spreads on life and annuities reflecting unfavorable mortality experience and increased operating expenses related to our continuing efforts to reinvent protection and retirement for consumers, partially offset by lower amortization of deferred policy acquisition costs ("DAC").

* Net loss for the third quarter of 2008 was $196 million compared to net income of $70 million in the prior year quarter. The decline was primarily due to a $209 million increase in after-tax net realized capital losses including the effect of DAC and deferred sales inducements accretion related to the net realized capital losses, and a $59 million decline in operating income.

* During the third quarter of 2008, we retired $2.2 billion of institutional market deposits for which investors had elected to non-extend their maturity date through a combination of maturities, calls, and acquisitions in the secondary market. Total outstanding non-extended institutional market deposits were $1.3 billion as of September 30, 2008, all of which become due before the end of the third quarter of 2009. We have accumulated, and expect to maintain, short-term and other maturing investments to fund the retirement of these obligations.