Allstate (ALL)

2009 HIGHLIGHTS

•

Consolidated net income was $854 million in 2009 compared to a net loss of $1.68 billion in 2008. Net income per diluted share was $1.58 in 2009 compared to net loss per diluted share of $3.06 in 2008.

•

Property-Liability net income was $1.54 billion in 2009 compared to $228 million in 2008.

•

The Property-Liability combined ratio was 96.2 in 2009 compared to 99.4 in 2008.

•

Allstate Financial had a net loss of $483 million in 2009 compared to a net loss of $1.72 billion in 2008.

•

Total revenues were $32.01 billion in 2009 compared to $29.39 billion in 2008.

•

Property-Liability premiums earned in 2009 totaled $26.19 billion, a decrease of 2.9% from $26.97 billion in 2008.

•

Net realized capital losses were $583 million in 2009 compared to net realized capital losses of $5.09 billion in 2008.

•

Investments as of December 31, 2009 totaled $99.83 billion, an increase of 4.0% from $96.00 billion as of December 31, 2008. Net investment income in 2009 was $4.44 billion, a decrease of 21.0% from $5.62 billion in 2008.

•

Book value per diluted share (ratio of shareholders' equity to total shares outstanding and dilutive potential shares outstanding) was $30.84 as of December 31, 2009, an increase of 31.4% from $23.47 as of December 31, 2008.

•

For the twelve months ended December 31, 2009, return on the average of beginning and ending period shareholders' equity was 5.8%, an increase of 15.5 points from (9.7)% for the twelve months ended December 31, 2008.

•

At December 31, 2009, we had $16.69 billion in capital. This total included $3.07 billion in deployable invested assets at the parent holding company level.

28

HIGHLIGHTS

·                  Consolidated net loss was $274 million in the first quarter of 2009 compared to net income of $348 million in the first quarter of 2008.  Net loss per diluted share was $0.51 in the first quarter of 2009 compared to net income per diluted share of $0.62 in the first quarter of 2008.

·                  Property-Liability net income was $100 million in the first quarter of 2009 compared to $503 million in the first quarter of 2008.

·                  The Property-Liability combined ratio was 96.8 in the first quarter of 2009 compared to 94.0 in the first quarter of 2008.

·                  Allstate Financial had a net loss of $327 million in the first quarter of 2009 compared to a net loss of $111 million in the first quarter of 2008.

·                  Total revenues were $7.88 billion in the first quarter of 2009 compared to $8.09 billion in the first quarter of 2008.

·                  Property-Liability premiums earned in the first quarter of 2009 totaled $6.58 billion, a decrease of 2.7% from $6.76 billion in the first quarter of 2008.

·                  Net realized capital losses were $359 million in the first quarter of 2009 compared to net realized capital losses of $655 million in the first quarter of 2008.

·                  Investments as of March 31, 2009 totaled $93.87 billion, a decrease of 2.2% from $96.00 billion as of December 31, 2008.  Net investment income in the first quarter of 2009 was $1.18 billion, a decrease of 22.9% from $1.53 billion in the first quarter of 2008.

·                  Income tax expense for the first quarter of 2009 includes expense of $254 million attributable to an increase in the valuation allowance relating to the deferred tax asset on capital losses.

·                  Book value per diluted share (ratio of shareholders’ equity to total shares outstanding and dilutive potential shares outstanding) was $22.65 as of March 31, 2009, a decrease of 37.8% from $36.39 as of March 31, 2008 and a decrease of 3.5% from $23.47 as of December 31, 2008.

·                  For the twelve months ended March 31, 2009, return on the average of beginning and ending period shareholders’ equity was (14.1)%, a decrease of 30.4 points from 16.3% for the twelve months ended March 31, 2008.

·                  To further enhance our liquidity and capital levels, in 2008 we suspended our $2.00 billion share repurchase program and did not complete it by our original target date of March 2009.

·                  At March 31, 2009, we held $12.24 billion in capital.  This total included $3.35 billion in deployable invested assets at the parent holding company level.

·                  In the first quarter of 2009, we revised our shareholder dividend to $0.20 from $0.41.

33

2008 HIGHLIGHTS

•

Consolidated net loss was $1.68 billion in 2008 compared to net income of $4.64 billion in 2007. Net loss per diluted share was $3.07 in 2008 compared to net income per diluted share of $7.77 in 2007.



•

Property-Liability net income was $228 million in 2008 compared to $4.26 billion in 2007.



•

The Property-Liability combined ratio was 99.4 in 2008 compared to 89.8 in 2007.



•

Catastrophe losses in 2008 totaled $3.34 billion compared to $1.41 billion in 2007. The effect of catastrophe losses on the combined ratio was 12.4 points and 5.2 points in 2008 and 2007, respectively.



•

Allstate Financial had a net loss of $1.72 billion in 2008 compared to net income of $465 million in 2007.



•

Total revenues were $29.39 billion in 2008 compared to $36.77 billion in 2007.



•

Property-Liability premiums earned in 2008 totaled $26.97 billion, a decrease of 1.0% from $27.23 billion in 2007.



•

Net realized capital losses were $5.09 billion in 2008 compared to net realized capital gains of $1.24 billion in 2007.



•

Investments as of December 31, 2008 totaled $96.00 billion, a decrease of 19.3% from $118.98 billion as of December 31, 2007. Net investment income in 2008 was $5.62 billion, a decrease of 12.6% from $6.44 billion in 2007.



•

Book value per diluted share was $23.51 as of December 31, 2008, a decrease of 39.1% from $38.58 as of December 31, 2007.



•

For the twelve months ended December 31, 2008, return on the average of beginning and ending period shareholders' equity was (9.7)%, a decrease of 30.9 points from 21.2% for the twelve months ended December 31, 2007.



•

To further enhance our liquidity and capital levels, we suspended our $2.00 billion share repurchase program and do not plan to complete it by our original target date of March 2009. The number of shares repurchased under the program was 22.7 million shares for $1.07 billion during the twelve months ended December 31, 2008.



•

At December 31, 2008, we held $12.64 billion in capital. This total included $3.64 billion in deployable invested assets at the parent holding company level.



•

On February 25, 2009, we announced that our shareholder dividend was being revised to $.20.

27

2008 HIGHLIGHTS

•

Consolidated net loss was $1.68 billion in 2008 compared to net income of $4.64 billion in 2007. Net loss
per diluted share was $3.07 in 2008 compared to net income per diluted share of $7.77 in 2007.




•

Property-Liability net income was $228 million in 2008 compared to $4.26 billion in 2007.




•

The Property-Liability combined ratio was 99.4 in 2008 compared to 89.8 in 2007.




•

Catastrophe losses in 2008 totaled $3.34 billion compared to $1.41 billion in 2007. The effect of
catastrophe losses on the combined ratio was 12.4 points and 5.2 points in 2008 and 2007, respectively.




•

Allstate Financial had a net loss of $1.72 billion in 2008 compared to net income of $465 million in 2007.




•

Total revenues were $29.39 billion in 2008 compared to $36.77 billion in 2007.




•

Property-Liability premiums earned in 2008 totaled $26.97 billion, a decrease of 1.0% from $27.23 billion in
2007.




•

Net realized capital losses were $5.09 billion in 2008 compared to net realized capital gains of
$1.24 billion in 2007.




•

Investments as of December 31, 2008 totaled $96.00 billion, a decrease of 19.3% from $118.98 billion
as of December 31, 2007. Net investment income in 2008 was $5.62 billion, a decrease of 12.6% from $6.44 billion in 2007.




•

Book value per diluted share was $23.51 as of December 31, 2008, a decrease of 39.1% from $38.58 as of
December 31, 2007.




•

For the twelve months ended December 31, 2008, return on the average of beginning and ending period shareholders'
equity was (9.7)%, a decrease of 30.9 points from 21.2% for the twelve months ended December 31, 2007.




•

To further enhance our liquidity and capital levels, we suspended our $2.00 billion share repurchase program and do
not plan to complete it by our original target date of March 2009. The number of shares repurchased under the program was 22.7 million shares for $1.07 billion during the twelve months
ended December 31, 2008.




•

At December 31, 2008, we held $12.64 billion in capital. This total included $3.64 billion in
deployable invested assets at the parent holding company level.




•

On February 25, 2009, we announced that our shareholder dividend was being revised to $.20.

27

·                  Consolidated net loss was $923 million in the third quarter of 2008 compared to net income of $978 million in the third quarter of 2007, and a net loss of $550 million in the first nine months of 2008 compared to net income of $3.88 billion in the first nine months of 2007.  Net loss per diluted share was $1.71 in the third quarter of 2008 compared to net income per diluted share of $1.70 in the third quarter of 2007.  Net loss per diluted share was $1.00 in the first nine months of 2008 compared to net income per diluted share of $6.41 in the first nine months of 2007.

·                  Property-Liability had a net loss of $661 million in the third quarter of 2008 compared to net income of $935 million in the third quarter of 2007, and a net income of $281 million in the first nine months of 2008 compared to net income of $3.51 billion in the first nine months of 2007.

·                  The Property-Liability combined ratio was 112.7 in the third quarter of 2008 compared to 91.0 in the third quarter of 2007 and 100.4 in the first nine months of 2008 compared to 87.7 in the first nine months of 2007.

·                  Catastrophe losses in the third quarter of 2008 totaled $1.82 billion compared to $343 million in the third quarter of 2007, and $3.08 billion in the first nine months of 2008 compared to $937 million in the first nine months of 2007.  The effect of catastrophe losses on the combined ratio was 26.8 points and 5.0 points in the third quarter of 2008 and 2007, respectively, and 15.2 points and 4.6 points in the first nine months of 2008 and 2007, respectively.

·                  Allstate Financial had a net loss of $196 million in the third quarter of 2008 compared to net income of $70 million in the third quarter of 2007, and a net loss of $686 million in the first nine months of 2008 compared to net income of $434 million in the first nine months of 2007.

·                  Total revenues were $7.32 billion in the third quarter of 2008 compared to $8.99 billion in the third quarter of 2007, and $22.83 billion in the first nine months of 2008 compared to $27.78 billion in the first nine months of 2007.

·                  Property-Liability premiums earned decreased 0.5% to $6.79 billion in the third quarter of 2008 from $6.82 billion in the third quarter of 2007, and 0.7% to $20.30 billion in the first nine months of 2008 from $20.45 billion in the first nine months of 2007.

·                  Realized capital losses were $1.29 billion and $3.16 billion in the third quarter and first nine months of 2008, respectively, compared to realized capital gains of $121 million and $1.14 billion in the third quarter and first nine months of 2007, respectively.

·                  Investments as of September 30, 2008 decreased 11.8% to $104.98 billion from $118.98 billion as of December 31, 2007.  Net investment income decreased 15.5% to $1.36 billion in the third quarter of 2008 from $1.60 billion in the third quarter of 2007, and 10.7% to $4.29 billion in the first nine months of 2008 from $4.81 billion in the first nine months of 2007.

·                  Book value per diluted share decreased 16.0% to $31.44 as of September 30, 2008 from $37.45 as of September 30, 2007, and decreased 18.5% from $38.58 as of December 31, 2007.

·                  For the twelve months ended September 30, 2008, return on the average of beginning and ending period shareholders’ equity decreased 22.1 points to 1.1% from 23.2% for the twelve months ended September 30, 2007.

28

HIGHLIGHTS

·        Net income decreased $1.38 billion to $25 million in the second quarter of 2008 from $1.40 billion in the second quarter of 2007, and $2.53 billion to $373 million in the first six months of 2008 from $2.90 billion in the first six months of 2007.  Net income per diluted share decreased $2.25 to $0.05 in the second quarter of 2008 from $2.30 in the second quarter of 2007, and $4.04 to $0.67 in the first six months of 2008 from $4.71 in the first six months of 2007.

·        The Property-Liability combined ratio was 94.4 in the second quarter of 2008 compared to 87.6 in the second quarter of 2007 and 94.2 in the first six months of 2008 compared to 86.1 in the first six months of 2007.

·        Allstate Financial had a net loss of $379 million in the second quarter of 2008 compared to net income of $200 million in the second quarter of 2007, and a net loss of $490 million in the first six months of 2008 compared to net income of $364 million in the first six months of 2007.

·        Total revenues decreased 21.5% to $7.42 billion in the second quarter of 2008 from $9.46 billion in the second quarter of 2007, and 17.5% to $15.51 billion in the first six months of 2008 from $18.79 billion in the first six months of 2007.

·        Property-Liability premiums earned decreased 1.1% to $6.75 billion in the second quarter of 2008 from $6.82 billion in the second quarter of 2007, and 0.8% to $13.51 billion in the first six months of 2008 from $13.63 billion in the first six months of 2007.

·        Realized capital losses were $1.22 billion and $1.87 billion in the second quarter and first six months of 2008, respectively, compared to realized capital gains of $545 million and $1.02 billion in the second quarter and first six months of 2007, respectively.

·        Investments as of June 30, 2008 decreased 4.5% from December 31, 2007 and net investment income decreased 13.6% and 8.3% in the second quarter and first six months of 2008, respectively, compared to the same periods of 2007.

·        Book value per diluted share decreased 1.3% to $35.93 as of June 30, 2008 from $36.39 as of June 30, 2007 and decreased 6.9% from $38.58 as of December 31, 2007.

·        For the twelve months ended June 30, 2008, return on the average of beginning and ending period shareholders’ equity decreased 14.8 points to 10.2% from 25.0% for the twelve months ended June 30, 2007.

·        Stock repurchases totaled $434 million and $858 million for the three months and six months ended June 30, 2008, respectively.  In the first six months of 2008, we completed our $4.00 billion share repurchase program that commenced in November 2006, and commenced a $2.00 billion share repurchase program that is expected to be completed by March 31, 2009.

28

·             Net income decreased $1.15 billion to $348 million in the first quarter of 2008 from $1.50 billion in the first quarter of 2007.  Net income per diluted share decreased $1.79 to $0.62 in the first quarter of 2008 from $2.41 in the first quarter of 2007.

·             The Property-Liability combined ratio was 94.0 in the first quarter of 2008 compared to 84.6 in the first quarter of 2007.

·             Allstate Financial had a net loss of $111 million in the first quarter of 2008 compared to net income of $164 million in the first quarter of 2007.

·             Total revenues decreased 13.3% to $8.09 billion in the first quarter of 2008 from $9.33 billion in the first quarter of 2007.

·             Property-Liability premiums earned decreased 0.6% to $6.76 billion in the first quarter of 2008 from $6.81 billion in the first quarter of 2007.

·             Realized capital losses were $655 million in the first quarter of 2008 compared to realized capital gains of $471 million in the first quarter of 2007.

·             Investments as of March 31, 2008 decreased 3.0% from December 31, 2007 and net investment income decreased 2.9% in the first quarter of 2008 compared to the first quarter of 2007.

·             Book value per diluted share decreased 0.2% to $36.45 as of March 31, 2008 from $36.54 as of March 31, 2007 and decreased 5.5% from $38.58 as of December 31, 2007.

·             For the twelve months ended March 31, 2008, return on the average of beginning and ending period shareholders’ equity decreased 7.3 points to 16.3% from 23.6% for the twelve months ended March 31, 2007.

·             Stock repurchases totaled $424 million for the three months ended March 31, 2008.  We completed our $4.00 billion share repurchase program that commenced in November 2006, and commenced a $2.00 billion share repurchase program that is expected to be completed by March 31, 2009.

·             We increased our quarterly dividend to $0.41 per share in the first quarter of 2008, a 7.9% increase over the same period in prior year.

27

2007 HIGHLIGHTS

•

Net income decreased 7.2% to $4.64 billion in 2007 from $4.99 billion in 2006. Net income per diluted share decreased 0.9% to $7.77 in 2007 from $7.84 in 2006.



•

Total revenues increased 2.7% to $36.77 billion in 2007 from $35.80 billion in 2006.



•

Realized capital gains on a pre-tax basis were $1.24 billion in 2007 compared to $286 million in 2006.



•

Net investment income increased 4.2% in 2007 compared to 2006.



•

Book value per diluted share increased 10.7% to $38.58 as of December 31, 2007 from $34.84 as of December 31, 2006.



•

For the twelve months ended December 31, 2007, return on the average of beginning and ending period shareholders' equity decreased 2.6 points to 21.2% from 23.8% for the twelve months ended December 31, 2006.



•

Stock repurchases totaled $3.55 billion for 2007. As of December 31, 2007, our $4.00 billion share repurchase program, which commenced in November 2006, had $240 million remaining and is expected to be completed by March 31, 2008. This program was increased from $3.00 billion in May 2007.

33

•

Property-Liability premiums earned decreased 0.5% to $27.23 billion in 2007 from $27.37 billion in 2006.



•

The Property-Liability combined ratio was 89.8 for 2007 compared to 83.6 for 2006.



•

Allstate® Your Choice Auto Insurance ("YCA") continued to add customers in 2007, bringing the total YCA policies sold since inception to 3.2 million.



•

Allstate Financial net income increased 0.2% to $465 million in 2007 from $464 million in 2006.

2007 HIGHLIGHTS

•

Net
income decreased 7.2% to $4.64 billion in 2007 from $4.99 billion in 2006. Net income per diluted share decreased 0.9% to $7.77 in 2007 from $7.84 in 2006.




•

Total
revenues increased 2.7% to $36.77 billion in 2007 from $35.80 billion in 2006.




•

Realized
capital gains on a pre-tax basis were $1.24 billion in 2007 compared to $286 million in 2006.




•

Net
investment income increased 4.2% in 2007 compared to 2006.




•

Book
value per diluted share increased 10.7% to $38.58 as of December 31, 2007 from $34.84 as of December 31, 2006.




•

For
the twelve months ended December 31, 2007, return on the average of beginning and ending period shareholders' equity decreased 2.6 points to 21.2% from 23.8% for
the twelve months ended December 31, 2006.




•

Stock
repurchases totaled $3.55 billion for 2007. As of December 31, 2007, our $4.00 billion share repurchase program, which commenced in November 2006,
had $240 million remaining and is expected to be completed by March 31, 2008. This program was increased from $3.00 billion in May 2007.

33

•

Property-Liability
premiums earned decreased 0.5% to $27.23 billion in 2007 from $27.37 billion in 2006.




•

The
Property-Liability combined ratio was 89.8 for 2007 compared to 83.6 for 2006.




•

Allstate®
Your Choice Auto Insurance ("YCA") continued to add customers in 2007, bringing the total YCA policies sold since inception to 3.2 million.




•

Allstate
Financial net income increased 0.2% to $465 million in 2007 from $464 million in 2006.

HIGHLIGHTS

•             Net income decreased 15.5% to $978 million in the third quarter of 2007 from $1.16 billion in the third quarter of 2006, and increased 2.5% to $3.88 billion in the first nine months of 2007 from $3.78 billion in the first nine months of 2006. Net income per diluted share decreased 7.1% to $1.70 in the third quarter of 2007 from $1.83 in the third quarter of 2006, and increased 8.5% to $6.41 in the first nine months of 2007 from $5.91 in the first nine months of 2006.

•             Total revenues increased 2.9% to $8.99 billion in the third quarter of 2007 from $8.74 billion in the third quarter of 2006, and 4.1% to $27.78 billion in the first nine months of 2007 from $26.69 billion in the first nine months of 2006.

•             Realized capital gains on a pre-tax basis were $121 million in the third quarter of 2007 compared to realized capital losses of $61 million in the third quarter of 2006, and realized capital gains were $1.14 billion in the first nine months of 2007 compared to $90 million in the first nine months of 2006.

•             Book value per diluted share increased 6.8% to $37.45 as of September 30, 2007 compared to $35.08 as of September 30, 2006, increased 2.9% compared to $36.39 as of June 30, 2007 and increased 7.5% compared to $34.84 as of December 31, 2006.

•             For the twelve months ended September 30, 2007, return on the average of beginning and ending period shareholders’ equity of 23.2% was comparable to the twelve months ended September 30, 2006.

•             Property-Liability premiums earned increased 0.3% to $6.82 billion in the third quarter of 2007 from $6.80 billion in the third quarter of 2006, and decreased 0.4% to $20.45 billion for the first nine months of 2007 from $20.54 billion for the first nine months of 2006.

•             The Property-Liability combined ratio was 91.0 in the third quarter of 2007 compared to 84.1 in the third quarter of 2006 and 87.7 in the first nine months of 2007 compared to 82.9 in the first nine months of 2006.

•             Allstate Financial net income decreased $65 million to $70 million in the third quarter of 2007 from $135 million in the third quarter of 2006, and increased $118 million to $434 million in the first nine months of 2007 compared to $316 million in the first nine months of 2006.

•             Stock repurchases totaled $773 million and $2.97 billion for the three months and nine months ended September 30, 2007, respectively. As of September 30, 2007, our $4.00 billion share repurchase program, which was increased from $3.00 billion in May 2007, had $820 million remaining and is expected to be completed by March 31, 2008. Share repurchases during the second and third quarter of 2007 included an accelerated stock repurchase agreement which commenced on June 27, 2007 and settled on August 14, 2007 totaling $500 million.

24

HIGHLIGHTS

·             Net income increased 16.2% to $1.40 billion in the second quarter of 2007 from $1.21 billion in the second quarter of 2006, and 10.5% to $2.90 billion in the first six months of 2007 from $2.62 billion in the first six months of 2006.  Net income per diluted share increased 21.7% to $2.30 in the second quarter of 2007 from $1.89 in the second quarter of 2006, and 15.4% to $4.71 in the first six months of 2007 from $4.08 in the first six months of 2006.

·             Total revenues increased 6.5% to $9.46 billion in the second quarter of 2007 from $8.88 billion in the second quarter of 2006, and 4.6% to $18.79 billion in the first six months of 2007 from $17.96 billion in the first six months of 2006.

·             Realized capital gains on a pre-tax basis were $545 million in the second quarter of 2007 compared to realized capital losses of $48 million in the second quarter of 2006, and realized capital gains were $1.02 billion in the first six months of 2007 compared to $151 million in the first six months of 2006.

·             Book value per diluted share increased 12.2% to $36.39 as of June 30, 2007 compared to $32.43 as of June 30, 2006, decreased 0.4% compared to $36.54 as of March 31, 2007 and increased 4.4% compared to $34.84 as of December 31, 2006.

·             For the twelve months ended June 30, 2007, return on the average of beginning and ending period shareholders’ equity increased 15.1 points to 25.0% from 9.9% for the twelve months ended June 30, 2006.

·             Property-Liability premiums earned decreased 0.6% to $6.82 billion in the second quarter of 2007 from $6.86 billion in the second quarter of 2006, and 0.8% to $13.63 billion for the first six months of 2007 from $13.74 billion for the first six months of 2006.

·             The Property-Liability combined ratio was 87.6 in the second quarter of 2007 compared to 82.5 in the second quarter of 2006 and 86.1 in the first six months of 2007 compared to 82.2 in the first six months of 2006.

·             Allstate Financial net income increased $127 million to $200 million in the second quarter of 2007 from $73 million in the second quarter of 2006, and $183 million to $364 million in the first six months of 2007 compared to $181 million in the first six months of 2006.

·             Stock repurchases totaled $1.50 billion and $2.20 billion for the three months and six months ended June 30, 2007, respectively.  As of June 30, 2007, our $4.00 billion share repurchase program, which was increased from $3.00 billion in May 2007, had $1.59 billion remaining and is expected to be completed by March 31, 2008.  Share repurchases during the second quarter of 2007 included an accelerated stock repurchase agreement which commenced on June 27, 2007 and will settle the total shares repurchased in up to four months totaling $500 million.

·             In May 2007, we issued $1 billion of junior subordinated securities, the proceeds of which are being used in our share repurchase program.

24

HIGHLIGHTS

·             Net income increased 5.7% to $1.50 billion in the first quarter of 2007 from $1.42 billion in the first quarter of 2006.  Net income per diluted share increased 10.0% to $2.41 in the first quarter of 2007 from $2.19 in the first quarter of 2006.

·             Total revenues increased 2.8% to $9.33 billion in the first quarter of 2007 from $9.08 billion in the first quarter of 2006.

·             Book value per diluted share increased 14.3% to $36.54 as of March 31, 2007 from $31.98 as of March 31, 2006 and increased 4.9% from $34.84 as of December 31, 2006.

·             For the twelve months ended March 31, 2007, return on the average of beginning and ending period shareholders’ equity increased 13.8 points to 23.6% from 9.8% for the twelve months ended March 31, 2006.

·             Property-Liability premiums earned decreased 1.0% to $6.81 billion in the first quarter of 2007 from $6.88 billion in the first quarter of 2006.

·             The Property-Liability combined ratio was 84.6 in the first quarter of 2007 compared to 81.9 in the first quarter of 2006.

·             Allstate Financial net income increased 51.9% to $164 million in the first quarter of 2007 from $108 million in the first quarter of 2006.

·             Stock repurchases totaled $700 million for the three months ended March 31, 2007.

·             The Allstate Board of Directors authorized the issuance of up to $1 billion of junior subordinated securities, that we expect to issue during the second quarter of 2007 (favorable market conditions existing), the proceeds of which will be used to repurchase up to $1 billion of our common stock by March 31, 2008 in addition to the current $3 billion share repurchase program.

22

2006 HIGHLIGHTS

•

Net income increased to $4.99 billion in 2006 from $1.77 billion in 2005. Net income per diluted share increased to $7.84 in 2006 from $2.64 in 2005.



•

Total revenues reached a record $35.80 billion, an increase of 1.2% compared to last year.



•

Property-Liability premiums earned increased 1.2% to $27.37 billion. The combined ratio improved 18.8 points to 83.6 in 2006.



•

Catastrophe losses in 2006 totaled $810 million, with an impact to the combined ratio of 3.0 points, compared to $5.67 billion in 2005, with a combined ratio impact of 21.0 points.



•

Allstate Financial investments as of December 31, 2006 increased 1.0% over December 31, 2005.



•

Allstate Financial net income increased 11.5% to $464 million in 2006 from $416 million in 2005.



•

Stock repurchases totaled $1.75 billion for the year.



•

Book value per share increased 12.4% to $34.84 as of December 31, 2006 from $31.01 as of December 31, 2005.



•

Return on equity improved 15.4 points to 23.8%.

32

HIGHLIGHTS

·             Net income increased to $1.16 billion in the third quarter of 2006 from a net loss of $1.55 billion in the third quarter of last year, and to $3.78 billion in the first nine months of 2006 from $724 million in the first nine months of last year.  Net income per diluted share increased to $1.83 in the third quarter of 2006 from a net loss per diluted share of $2.36 in the third quarter of last year, and to $5.91 in the first nine months of 2006 from $1.08 in the first nine months of last year.

·             Total revenues decreased 2.3% to $8.74 billion in the third quarter of 2006 from $8.94 billion in the third quarter of last year, and increased 1.0% to $26.69 billion in the first nine months of 2006 from $26.44 billion in the first nine months of last year.

·             Book value per share increased 18.3% to $35.08 as of September 30, 2006 compared to $29.66 as of September 30, 2005 and increased 13.1% compared to $31.01 as of December 31, 2005.

·             For the twelve months ended September 30, 2006, return on the average of beginning and ending period shareholders’ equity increased 14.0 points to 23.2% from 9.2% for the twelve months ended September 30, 2005.

·             Property-Liability premiums earned increased 0.3% to $6.80 billion in the third quarter of 2006 from $6.78 billion in the third quarter of 2005 and increased 1.7% to $20.54 billion for the first nine months of 2006 from $20.20 billion for the first nine months of 2005.

·             The Property-Liability combined ratio was 84.1 in the third quarter of 2006 compared to 149.6 in the third quarter of 2005 and 82.9 in the first nine months of 2006 compared to 106.9 in the first nine months of 2005.  The effect of catastrophe losses on the combined ratio was 2.5 points and 69.4 points in the third quarter of 2006 and 2005, respectively, and 2.6 points and 24.8 points in the first nine months of 2006 and 2005, respectively.

·             Allstate Financial net income declined 12.3% to $135 million in the third quarter of 2006 and increased 3.9% to $316 million in the first nine months of 2006 compared to the same periods in 2005.

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·             Net income increased 5.0% to $1.21 billion in the second quarter of 2006 from $1.15 billion in the second quarter of last year, and 15.4% to $2.62 billion in the first six months of 2006 from $2.27 billion in the first six months of last year.  Net income per diluted share increased 10.5% to $1.89 in the second quarter of 2006 from $1.71 in the second quarter of last year, and 21.8% to $4.08 in the first six months of 2006 from $3.35 in the first six months of last year.

·             Total revenues increased 1.0% to $8.88 billion in the second quarter of 2006 from $8.79 billion in the second quarter of last year, and 2.6% to $17.96 billion in the first six months of 2006 from $17.50 billion in the first six months of last year.

·             Book value per share decreased 3.1% to $32.43 as of June 30, 2006 compared to $33.48 as of June 30, 2005, increased 1.4% compared to $31.98 as of March 31, 2006 and increased 4.6% compared to $31.01 as of December 31, 2005.

·             For the twelve months ended June 30, 2006, return on the average of beginning and ending period shareholders’ equity declined 6.2 points to 9.9% from 16.1% for the twelve months ended June 30, 2005.  This decline was due to the increased level of hurricane losses incurred in the third and fourth quarters of 2005, which are included in our trailing twelve month calculation.

·             Property-Liability premiums earned increased 1.8% to $6.86 billion in the second quarter of 2006 from $6.74 billion in the second quarter of 2005 and increased 2.4% to $13.74 billion for the first six months of 2006 from $13.42 billion for the first six months of 2005.

·             The Property-Liability combined ratio was 82.5 in the second quarter of 2006 compared to 85.2 in the second quarter of 2005 and 82.2 in the first six months of 2006 compared to 85.3 in the first six months of 2005.

·             On June 1, 2006, Allstate Financial completed the disposal of substantially all of its variable annuity business through reinsurance with Prudential Financial Inc. (“Prudential”).

·             Allstate Financial gross margin increased 16.2% and 11.5% in the second quarter and first six months of 2006, respectively, compared to the same periods of 2005.

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HIGHLIGHTS

•             Net income increased 26.0% to $1.42 billion in the first quarter of 2006 compared to a net income of $1.12 billion in the first quarter of 2005. Net income per diluted share increased 33.5% to $2.19 in the first quarter of 2006 compared to net income per diluted share of $1.64 in the first quarter of 2005.

•             Total revenues increased 4.3% to $9.08 billion in the first quarter of 2006 from $8.71 billion in the first quarter of 2005.

•             Book value per diluted share increased 1.6% to $31.98 as of March 31, 2006 compared to $31.48 as of March 31, 2005 and 3.1% compared to $31.01 as of December 31, 2005.

•             For the twelve months ended March 31, 2006, return on the average of beginning and ending period shareholders’ equity declined 5.8 points to 9.8% from 15.6% for the twelve months ended March 31, 2005. This decline was to due to the increased level of hurricane losses incurred in the third quarter of 2005, which are included in our trailing twelve month calculation. Return on equity for the twelve months ended December 31, 2005 was 8.4%.

•             Property-Liability premiums earned increased 2.9% to $6.88 billion in the first quarter of 2006 from $6.68 billion in the first quarter of 2005.

•             The Property-Liability combined ratio was 81.9 in the first quarter of 2006 compared to 85.3 in the first quarter of 2005.

•             Allstate Financial investments increased 1.8% as of March 31, 2006 compared to March 31, 2005.

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2005 HIGHLIGHTS

•

Net income was $1.77 billion in 2005 compared to a net income of $3.18 billion in 2004. Net income per diluted share was $2.64 in 2005 compared to net income per diluted share of $4.54 in 2004. These declines were primarily due to catastrophes.



•

Total revenues reached a record $35.38 billion, an increase of 4.3% compared to last year.



•

Property-Liability premiums earned increased 4.0% to $27.04 billion. The combined ratio was 102.4 in 2005 compared to 93.0 in 2004.



•

Catastrophe losses in 2005 totaled $5.67 billion, net of reinsurance and other recoveries, primarily due to Hurricanes Katrina, Rita and Wilma, with an impact to the combined ratio of 21.0 points, compared to $2.47 billion in 2004, with a combined ratio impact of 9.5 points.



•

Allstate Financial investments including separate account assets as of December 31, 2005 increased 4.1% over December 31, 2004 primarily due to sales of fixed annuities and funding agreements.



•

Total of $2.45 billion shares of stock were repurchased during the year.



•

Book value per share was $31.01 as of December 31, 2005 compared to $31.72 as of December 31, 2004.



•

Return on equity declined 6.6 points to 8.4%.

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•                  Catastrophe losses in the third quarter of 2005 totaled $4.71 billion compared to $1.71 billion in the same period of 2004.  Catastrophe losses in the first nine months of 2005 totaled $5.02 billion compared to $2.06 billion in the same period of 2004.  The effect of catastrophe losses on the combined ratio was 69.4 points and 26.0 points in the third quarter of 2005 and 2004, respectively, and 24.8 points and 10.6 points in the first nine months of 2005 and 2004, respectively.  Catastrophe losses in the third quarter of 2005 included the impacts of Hurricanes Katrina ($3.68 billion pre-tax or $2.39 billion after-tax), Rita ($850 million pre-tax or $553 million after-tax, net of reinsurance), Dennis and Ophelia.

•                  Net loss per diluted share was $2.36 in the third quarter of 2005 compared to a net income per diluted share of $0.09 in the third quarter of last year, primarily due to higher catastrophes.  Net income per diluted share was $1.08 in the first nine months of 2005 compared to $2.90 in the first nine months of last year, primarily due to higher catastrophes.

•                  Property-Liability premiums earned increased $230 million or 3.5% to $6.78 billion in the third quarter of 2005 from $6.55 billion in the third quarter of 2004 and increased $819 million or 4.2% to $20.20 billion for the first nine months of 2005 from $19.38 billion for the first nine months of 2004.

•                  The Property-Liability combined ratio was 149.6 in the third quarter of 2005 compared to 110.5 in the third quarter of 2004 and 106.9 in the first nine months of 2005 compared to 94.5 in the first nine months of 2004.

•                  Allstate Financial net income increased to $154 million in the third quarter of 2005 compared to $88 million in the third quarter of 2004 and to $304 million for the first nine months of 2005 compared to $73 million for the first nine months of 2004.  The increase in the first nine months of 2005 was partially due to a $175 million cumulative effect of a change in accounting principle, after-tax for the adoption of AICPA Statement of Position 03-1, “Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate Accounts” in the first quarter of 2004.

•                  Allstate Financial investments increased 4.6% as of September 30, 2005 compared to December 31, 2004 due primarily to increased contractholder funds and increased funds associated with securities lending.

•                  Net realized capital gains were $199 million in the third quarter of 2005 compared to $50 million in the third quarter of 2004.  Net realized capital gains were $448 million in the first nine months of 2005 compared to $261 million in the first nine months of 2004.

•                  For the twelve months ended September 30, 2005, return on equity declined 4.7 points to 9.2% from 13.9% for the twelve months ended September 30, 2004.  This decline is due to the increased level of hurricane losses incurred in the third quarter of 2005, which are included in our trailing twelve month calculation.  Return on equity for the twelve months ended June 30, 2005 was 16.1%.

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•    Net income per diluted share increased 16.3% to $1.71 in the second quarter of 2005 from $1.47 in the second quarter of last year, and 19.2% to $3.35 in the first six months of 2005 from $2.81 in the first six months of last year.  Net income per diluted share before the cumulative effect of change in accounting principle, after-tax increased 9.5% to $3.35 in the first six months of 2005 from $3.06 in the first six months of last year.

•    Property-Liability premiums earned increased $276 million or 4.3% to $6.74 billion in the second quarter of 2005 from $6.46 billion in the second quarter of 2004 and increased $589 million or 4.6% to $13.42 billion for the first six months of 2005 from $12.83 billion for the first six months of 2004.

•    The Property-Liability combined ratio improved 1.1 points to 85.2 in the second quarter of 2005 and 1.0 points to 85.3 in the first six months of 2005 compared to the same periods last year.

•    Allstate Financial net income increased $39 million to $97 million in the second quarter of 2005 compared to $58 million in the second quarter of 2004 and was $150 million for the first six months of 2005 compared to a loss of $15 million for the first six months of 2004 due to $175 million cumulative effect of change in accounting principle, after-tax for the adoption of AICPA Statement of Position 03-1, “Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate Accounts” in the first quarter of 2004.

•    Allstate Financial investments increased 6.7% as of June 30, 2005 compared to December 31, 2004 due primarily to increased contractholder funds and, to a lesser extent, increased funds associated with securities lending.

•    Net realized capital gains were $133 million in the second quarter of 2005 compared to $41 million in the second quarter of 2004.  Net realized capital gains were $249 million in the first six months of 2005 compared to $211 million in the first six months of 2004.

•    For the twelve months ended June 30, 2005, return on equity declined 1.1 points to 16.1% from 17.2% for the twelve months ended June 30, 2004.  This decline is due to the hurricane losses incurred in the third quarter of 2004, which are included in our trailing twelve month calculation.  Return on equity for the twelve months ended March 31, 2005 was 15.6%.

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