Allstate (ALL)

On February 2, 2009, A.M. Best affirmed The Allstate Corporation’s debt rating of a- as well as the A+ financial strength ratings of AIC and ALIC.  A.M. Best also affirmed the commercial paper rating of AMB-1.  The outlook for all ratings remained stable. On January 29, 2009, S&P downgraded the rating for The Allstate Corporation to A- from A+, the financial strength ratings for AIC and ALIC to AA- from AA, and the commercial paper rating of The Allstate Corporation to A-2 from A-1.  The outlook for all ratings remained negative.  On January 29, 2009, Moody’s downgraded the rating for The Allstate Corporation to A3 from A2, the financial strength rating of AIC to Aa3 from Aa2, the financial strength rating of ALIC to A1 from Aa3, and the commercial paper rating of The Allstate Corporation to P-2 from P-1.  The outlook for all ratings was revised to stable from negative.

We have distinct and separately capitalized groups of subsidiaries licensed to sell property and casualty insurance in New Jersey and Florida that maintain separate group ratings.  The ratings of these groups are influenced by the risks that relate specifically to each group.

Effective May 8, 2008, ALIC, AIC and The Allstate Corporation (the “Corporation”) entered into a one-year Amended and Restated Intercompany Liquidity Agreement (“Liquidity Agreement”) replacing the Intercompany Liquidity Agreement between ALIC and AIC, dated January 1, 2008.  The agreement allows for short-term advances of funds to be made between parties for liquidity and other general corporate purposes.  It shall be automatically renewed for subsequent one-year terms unless terminated by the parties.  The Liquidity Agreement does not establish a commitment to advance funds on the part of either party.  ALIC and AIC each serve as a lender and borrower and the Corporation serves only as a lender.  AIC also has a capital support agreement with ALIC effective December 14, 2007.  Under the capital support agreement, AIC is committed to provide capital to ALIC to allow for profitable growth while maintaining an adequate capital level.  The maximum amount of potential funding under the intercompany and capital support agreements is $1.00 billion.

In addition to the Liquidity Agreement, the Corporation also has an intercompany loan agreement with certain of its subsidiaries, which include, but are not limited to, AIC and ALIC.  The amount of intercompany loans available to the Corporation’s subsidiaries is at the discretion of the Corporation.  The maximum amount of loans the Corporation will have outstanding to all its eligible subsidiaries at any given point in time is limited to $1.00 billion.  The Corporation may use commercial paper borrowings, bank lines of credit and repurchase agreements to fund intercompany borrowings.

Allstate’s domestic property-liability and life insurance subsidiaries prepare their statutory-basis financial statements in conformity with accounting practices prescribed or permitted by the insurance department of the applicable state of domicile.  Statutory surplus is a measure that is often used as a basis for determining dividend paying capacity, operating leverage and premium growth capacity, and it is also reviewed by rating agencies in determining their ratings.  As of March 31, 2009, AIC’s statutory surplus is approximately $13.0 billion compared to $13.0 billion at December 31, 2008.  These amounts include ALIC’s statutory surplus of approximately $3.4 billion at March 31, 2009, compared to $3.2 billion at December 31, 2008.

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In October 2008, A.M. Best affirmed the A+ financial strength ratings of AIC and Allstate Life Insurance Company (“ALIC”) but downgraded The Allstate Corporation’s debt rating to aa- from aa.  The outlook for all ratings are stable.  S&P affirmed the A+ ratings for The Allstate Corporation, AA for AIC and AA for ALIC but revised its outlook from stable to negative.  Moody’s affirmed the Aa2 financial strength ratings of AIC but downgraded the senior debt ratings for The Allstate Corporation to A2 from A1 and ALIC insurance financial strength rating to Aa3 from Aa2 with a negative outlook for all three entities.  A.M. Best, S&P and Moody’s each affirmed the commercial paper ratings of The Allstate Corporation of AMB-1, A-1 and P-1, respectively.  We also have distinct groups of subsidiaries licensed to sell property and casualty insurance in New Jersey and Florida that maintain separate group ratings.  The ratings of these groups are influenced by the risks that relate specifically to each group.  On October 29, 2008, A.M. Best placed The Allstate Corporations subsidiary in Florida, Allstate Floridian Insurance Group, under review with negative implications based upon the uncertainty regarding the Florida Hurricane Catastrophe Fund’s ability to fund its reimbursement obligations. Allstate Floridian is rated B+ by A.M. Best.

Effective May 8, 2008, ALIC, AIC and the Corporation entered into a one-year Amended and Restated Intercompany Liquidity Agreement (“Liquidity Agreement”) replacing the Intercompany Liquidity Agreement between ALIC and AIC, dated January 1, 2008.  The agreement allows for short-term advances of funds to be made between parties for liquidity and other general corporate purposes.  It shall be automatically renewed for subsequent one-year terms unless terminated by the parties.  The Liquidity Agreement does not establish a commitment to

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We have distinct groups of subsidiaries licensed to sell property and casualty insurance in New Jersey and Florida that maintain separate group ratings.  The ratings of these groups are influenced by the risks that relate specifically to each group.  S&P affirmed the ratings for The Allstate Corporation, AIC and ALIC in July 2008.  Moody’s affirmed the ratings of AIC and The Allstate Corporation’s commercial paper rating but placed under review the ratings for ALIC and The Allstate Corporation’s senior long-term debt.

Effective May 8, 2008, ALIC, AIC and The Allstate Corporation entered into a one-year Amended and Restated Intercompany Liquidity Agreement (“Liquidity Agreement”) replacing the Intercompany Liquidity Agreement between ALIC and AIC, dated January 1, 2008.  The agreement allows for short-term advances of funds to be made between parties for liquidity and other general corporate purposes.  It shall be automatically renewed for subsequent one-year terms unless terminated by the parties.  The Liquidity Agreement does not establish a commitment to advance funds on the part of either party.  ALIC and AIC each serve as a lender and borrower and The Allstate Corporation serves only as a lender.

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We have distinct groups of subsidiaries licensed to sell property and casualty insurance in New Jersey and Florida that maintain separate group ratings.  The ratings of these groups are influenced by the risks that relate specifically to each group.

We have distinct groups of subsidiaries licensed to sell property and casualty insurance in New Jersey and Florida that maintain separate group ratings. The ratings of these groups are influenced by the risks that relate specifically to each group.

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We have distinct groups of subsidiaries licensed to sell property and casualty insurance in New Jersey and Florida that maintain separate group ratings.  The ratings of these groups are influenced by the risks that relate specifically to each group.

We have distinct groups of subsidiaries licensed to sell property and casualty insurance in New Jersey and Florida that maintain separate group ratings.  The ratings of these groups are influenced by the risks that relate specifically to each group.

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Allstate’s domestic property-liability and life insurance subsidiaries prepare their statutory basis financial statements in conformity with accounting practices prescribed or permitted by the insurance department of the applicable state of domicile.  Statutory surplus is a measure that is often used as a basis for determining dividend paying capacity, operating leverage and premium growth capacity, and it is also reviewed by rating agencies in determining their ratings.  As of September 30, 2006, AIC’s statutory surplus is approximately $18.6 billion compared to $14.8 billion at December 31, 2005.  As of September 30, 2006, AIC’s statutory surplus excluding ALIC is approximately $15.0 billion.

In 2005, Allstate committed to provide capital to AIC, in the form of surplus notes or contributed surplus, to maintain levels of statutory surplus as set forth in a Capital Support Commitment.  In accordance with its terms, this agreement terminated when AIC’s statutory surplus excluding ALIC exceeded $13.1 billion.  AIC’s statutory surplus excluding ALIC was $13.8 billion at June 30, 2006 and the commitment terminated with no capital contribution having been made.

We have distinct groups of subsidiaries licensed to sell property and casualty insurance in New Jersey and Florida that maintain separate group ratings.  A.M. Best confirmed the rating and outlook of Allstate Floridian in August 2006.  AFIC and its subsidiary, Allstate Floridian Indemnity Company, have Demotech financial stability ratings of A’ that were confirmed in April 2006.  Encompass Floridian Insurance Company and Encompass Floridian Indemnity Company, both subsidiaries of AFIC, have Demotech financial stability ratings of A that were

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confirmed in April 2006.  AIC’s commitment to make as much as $375 million of additional capital available to AFIC expired on May 31, 2006.  A total of $159 million had been contributed under the commitment.  As of September 30, 2006, AFIC’s statutory surplus is approximately $259 million compared to $233 million at December 31, 2005.

Allstate’s domestic property-liability and life insurance subsidiaries prepare their statutory basis financial statements in conformity with accounting practices prescribed or permitted by the insurance department of the applicable state of domicile.  Statutory surplus is a measure that is often used as a basis for determining dividend paying capacity, operating leverage and premium growth capacity, and it is also reviewed by rating agencies in determining their ratings.  As of June 30, 2006, AIC’s statutory surplus is approximately $17.6 billion compared to $14.8 billion at December 31, 2005.  As of June 30, 2006, AIC’s statutory surplus excluding Allstate Life Insurance Company (“ALIC”) is approximately $13.8 billion.

In 2005, Allstate committed to provide capital to AIC, in the form of surplus notes or contributed surplus, to maintain levels of statutory surplus as set forth in a Capital Support Commitment.  In accordance with its terms, this agreement terminated when AIC’s statutory surplus excluding ALIC exceeded $13.1 billion.  AIC’s statutory surplus excluding ALIC was approximately $13.8 billion at June 30, 2006 and the commitment terminated with no capital contribution having been made.

We have distinct groups of subsidiaries licensed to sell property and casualty insurance in New Jersey and Florida.  These groups maintain separate group ratings and are not reinsured by other Allstate subsidiaries that are not part of these respective groups. A.M. Best is currently in the process of reviewing the rating of Allstate Floridian.  The resolution of this review is influenced by developments prior to the 2006 hurricane season, which included Florida regulatory and legislative actions; Allstate and Allstate Floridian management actions such as pursuing alternative markets, reinsurance and underwriting actions; and A.M. Best’s assessment of the timing and nature of such developments

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and their view on the amount of capital and risk-adjusted capitalization deemed necessary to support the ratings.  Allstate Floridian will continue to pursue additional management actions as described in the Allstate Protection Segment section of the MD&A, including not offering continuing coverage, pursuing alternative markets and other underwriting actions.  AFIC and its subsidiary, Allstate Floridian Indemnity Company, have Demotech financial stability ratings of A’ that were confirmed in April 2006.  Encompass Floridian Insurance Company and Encompass Floridian Indemnity Company, both subsidiaries of AFIC, have Demotech financial stability ratings of A that were confirmed in April 2006.  AIC’s commitment to make as much as $375 million of additional capital available to AFIC expired on May 31, 2006.  A total of $159 million had been contributed under the commitment.  As of June 30, 2006, AFIC’s statutory surplus is approximately $266 million compared to $233 million at December 31, 2005.

We have distinct groups of subsidiaries licensed to sell property and casualty insurance in New Jersey and Florida. These groups maintain separate group ratings and are not reinsured by other Allstate subsidiaries that are not part of these respective groups. Allstate Floridian ratings from A.M. Best remain under review. The resolution of this review will be influenced by developments prior to the 2006 hurricane season, including Florida regulatory and legislative actions; Allstate and Allstate Floridian management actions such as continuing to pursue alternative markets, reinsurance and underwriting actions; and A.M. Best’s assessment of the timing and nature of such developments and their view on the amount of capital and risk-adjusted capitalization deemed necessary to support the ratings. Allstate Floridian Insurance Company (“AFIC”) and its subsidiary, Allstate Floridian Indemnity Company, have Demotech financial stability ratings of A’ that were confirmed in April 2006. Encompass Floridian Insurance Company and Encompass Floridian Indemnity Company, both subsidiaries of Allstate Floridian, have Demotech financial stability ratings of A that were confirmed in April 2006. In addition, Allstate Insurance Company (“AIC”) committed to AFIC to make as much as $375 million of additional capital available until May 31, 2006 under specified circumstances if one or more events reduce AFIC’s capital to below $272 million initially and to $225 million if subsequent events should occur. As of March 31, 2006, $159 million had been contributed under this agreement.

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As a result of the catastrophe losses incurred in the third quarter of 2005, we remain engaged in discussions with A.M. Best about our financial condition and capital management plans.  In October 2005, Standard & Poor’s affirmed the A+ senior debt rating of The Allstate Corporation and the AA insurance financial strength ratings of AIC, ALIC and their rated affiliates, with a revised rating outlook of ‘Negative’ (from ‘Stable’).  Also in October 2005, Moody’s affirmed the A1 senior debt rating of The Allstate Corporation and the Aa2 insurance financial strength ratings of AIC, ALIC and their rated affiliates.

We have distinct groups of subsidiaries licensed to sell property and casualty insurance in New Jersey and Florida.  These groups maintain separate group ratings and are not reinsured by other Allstate subsidiaries that are not part of these respective groups.  Allstate New Jersey Insurance Company and Encompass Insurance Company of New Jersey are rated A- by A.M. Best.  Allstate New Jersey Insurance Company also has a Demotech rating of A”.  During the second quarter of 2005, A.M. Best affirmed its B+ ratings with a negative outlook for Allstate Floridian Insurance Company and Allstate Floridian Indemnity Company.  These companies have Demotech ratings of A’.  During the third quarter of 2005, A.M. Best assigned B+ ratings with a negative outlook to Encompass Floridian Insurance Company and Encompass Floridian Indemnity Company.  These companies have Demotech ratings of A.

Allstate’s domestic property-liability and life insurance subsidiaries prepare their statutory-basis financial statements in conformity with accounting practices prescribed or permitted by the insurance department of the applicable state of domicile.  Statutory surplus is a measure that is often used as a basis for determining dividend paying capacity, operating leverage and premium growth capacity, and it is also reviewed when determining financial ratings.  As of September 30, 2005, AIC’s statutory surplus is approximately $14.8 billion compared to $16.9 billion at December 31, 2004.  This decline is primarily due to the estimated catastrophe losses related to Hurricanes Katrina and Rita.

We have distinct groups of subsidiaries licensed to sell property and casualty insurance in New Jersey and Florida.  These groups are adequately capitalized to maintain separate group ratings and are not reinsured by other Allstate subsidiaries that are not part of these respective groups.  During the second quarter of 2005, A.M. Best affirmed its B+ ratings with a negative outlook for Allstate Floridian Insurance Company and Allstate Floridian Indemnity Company.  These companies also have Demotech ratings of A’.

We have distinct groups of subsidiaries licensed to sell property and casualty insurance in New Jersey and Florida.  These groups are adequately capitalized to maintain separate group ratings and are not reinsured by other Allstate subsidiaries that are not part of these respective groups.  The Allstate Floridian Insurance Company (“Allstate Floridian”) and Allstate Floridian Indemnity Company ratings from A.M. Best remain under review with negative implications as the current risk-adjusted capitalization is not supportive of the rating, as a result of a decline in capital of Allstate Floridian due to hurricanes Charley, Frances, Ivan and Jeanne during 2004.  The resolution of the ratings review will be influenced by developments prior to the 2005 hurricane season, including Florida regulatory and legislative actions, Allstate and Allstate Floridian capital management actions, A.M. Best’s assessment of the timing and nature of such developments and their view on the amount of capital and risk-adjusted capitalization deemed necessary to support the ratings. Although at present it is not clear when a ratings decision will be made, it is believed A.M. Best will make a ratings decision before the 2005 hurricane season.  A.M. Best has indicated it is evaluating its methodology for determining the level of capital needed to support property insurance written in areas of hurricane loss exposure in Florida.  Allstate Floridian also has a Demotech rating of A1.