Allstate Reports 2008 Third Quarter Results

Business Wire, Oct 22, 2008

[TABLE OMITTED]

* Unrealized net capital losses on fixed income securities were $4.2 billion as of September 30, 2008, and comprised $1.9 billion of gross unrealized gains and $6.1 billion of gross unrealized losses. Included in gross unrealized losses were $2.5 billion of securities with a fair value below 70% of amortized cost, or 3.3% of our fixed income portfolio at September 30, 2008. The percentage of fair value to amortized cost for the remaining gross unrealized losses on fixed income securities at September 30, 2008 are shown in the following table.

[TABLE OMITTED]

(1) See the SFAS 157 Level 3 section of this document for further details of net unrealized losses on Level 3 investments totaling $2.4 billion as of September 30, 2008.

Included in the fixed income securities with a fair value less than 70% of amortized cost were unrealized losses for other collateralized debt obligations ("other CDO") of $569 million (which primarily includes $270 million of cash flow collateralized loan obligations ("cash flow CLO") and $99 million of synthetic collateralized debt obligations ("synthetic CDO")), asset-backed residential mortgage-backed securities ("ABS RMBS") of $538 million, corporate bonds of $480 million, and commercial mortgage-backed securities ("CMBS") of $305 million. For additional information on ABS RMBS, CMBS, and other CDO, see the Securities Experiencing Illiquid and Disrupted Markets section of this document. We continue to believe that the unrealized losses on these securities are not necessarily predictive of the ultimate performance. The unrealized losses should reverse over the remaining lives of the securities in the absence of further deterioration in the collateral relative to our positions in the securities' respective capital structures.

* For our illiquid investment portfolios, par value totaled $8.6 billion and amortized cost totaled $7.2 billion or 84% of par value at September 30, 2008, which is primarily the result of write-downs of approximately $1.4 billion. Fair value of these investments totaled $5.5 billion or 64% of par value. See additional details and discussion in the Securities Experiencing Illiquid and Disrupted Markets section of this document. Our illiquid portfolios include prime residential mortgage-backed securities ("Prime"), Alt-A residential mortgage-backed securities ("Alt-A"), commercial real estate collateralized debt obligations ("CRE CDO"), and certain asset-backed securities including ABS RMBS, asset-backed collateralized debt obligations ("ABS CDO") and other CDO. In addition, for commercial mortgage-backed securities excluding CRE CDO, par value totaled $6.0 billion and amortized cost totaled $5.9 billion or 98% of par value, which was primarily the result of write-downs. Fair value totaled $5.1 billion or 85% of par value.

* Consolidated unrealized net capital losses after-tax and after adjustments for deferred policy acquisition costs, deferred sales inducements and insurance reserves, as of September 30, 2008, were $1.5 billion and were comprised of $640 million related to Property-Liability, $820 million related to Allstate Financial and $15 million related to Corporate and Other.