Allstate (ALL)

2009 Outlook and Focus

“We expect 2009 to challenge businesses and consumers alike,” Wilson said.  “As people focus more on value, we’re reaching out with a variety of initiatives to help consumers make the best use of their insurance and investment dollars.  We are taking the actions necessary to protect Allstate’s financial strength, improve customer loyalty and introduce new products and services.”

Property-Liability

·                  Continued emphasis on preserving auto insurance margins by providing customer-focused products and services

·                  Reducing homeowners exposure to catastrophe losses

·                  Short-term growth will be limited reflecting a transition to a value-based strategy in the competitive environment and reductions of catastrophe exposure

·                  Property-Liability combined ratio, excluding the effects of catastrophes and prior year reserve reestimates, to be between 87.0% and 89.0% for the full year of 2009

Allstate Financial

·                  Continued focus on improving returns and reducing Allstate Financial’s concentration in spread based products, primarily fixed annuities and institutional markets products, will result in lower premiums and deposits and a smaller balance sheet

·                  Finalizing plans to improve efficiency and narrow the focus of product offerings to better serve the needs of everyday Americans

·                  Targeting savings at 20% of certain operating expenses, excluding acquisition costs, estimated to yield annual savings of $90 million beginning in 2011.  We anticipate a reduction of approximately 1,000 workforce positions, through a combination of attrition and position elimination over the next two years

·                  Maintaining high liquidity in the investment portfolio will result in lower operating income but ensure ability to meet contractholder obligations.  We will target sales of our spread based products at levels that allow us to avoid sales of investments with significant unrealized losses into distressed or illiquid markets

·                  Continued investment spread compression due to credit losses, reduced contractholder funds balances and maintenance of liquidity will result in operating income of approximately $300 million in 2009

Investments

·                  Risk mitigation efforts will focus on shortening duration of the fixed income portfolio, reducing exposures to real estate and certain other market sectors and managing excess market volatility through our macro hedging programs

·                  Declining consolidated net investment income due to lower asset balances and yields, and the costs of maintaining high liquidity and the risk mitigation programs

·                  Significant portfolio cash flow continuing from maturities, principal and interest receipts will be available to manage liabilities and take advantage of market opportunities

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