Allstate (ALL)

PROPERTY-LIABILITY 2005 HIGHLIGHTS

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Premiums written, an operating measure that is defined and reconciled to premiums earned on page 35, reached a record $27.39 billion during 2005. Compared to 2004, premiums written increased 3.2% due to increases in the number of policies in force ("PIF") for Allstate brand standard auto of 2.9% and homeowners of 3.4% and higher average premiums. Allstate brand standard auto and homeowners premiums written increased 4.7% and 7.1%, respectively, in 2005 over 2004. Allstate brand standard auto and homeowners new business premiums decreased 0.3% and 7.0%, respectively, compared to 2004.



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Underwriting loss for Property-Liability was $636 million in 2005 compared to underwriting income of $1.83 billion in 2004 due to higher catastrophes, increased severity of current year claims and a $120 million accrual for a settlement of a worker classification lawsuit and lower favorable Allstate Protection reserve reestimates, partially offset by higher premiums earned, favorable claim frequencies excluding catastrophes and lower unfavorable reserve reestimates related to prior years in Discontinued Lines and Coverages in 2005. The combined ratio was 102.4 in 2005 compared to 93.0 in 2004. Underwriting (loss) income, a measure that is not based on GAAP, is defined below.



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Catastrophe losses in 2005 totaled $5.67 billion compared to $2.47 billion in 2004. The effect of catastrophe losses on the combined ratio was 21.0 and 9.5 points in 2005 and 2004, respectively. Catastrophe losses include $5.00 billion related to Hurricanes Katrina, Rita and Wilma and $120 million for assessments from Citizens Property Insurance Corporation in the state of Florida ("FL Citizens").