Consolidated VIEs, of which the Company is the primary beneficiary, primarily include Adirondack Insurance Exchange, a New York reciprocal insurer, and New Jersey Skylands Insurance Association, a New Jersey reciprocal insurer (together “Reciprocal Exchanges”). The Reciprocal Exchanges are insurance carriers organized as unincorporated associations. The Company does not own the equity of the Reciprocal Exchanges, which is owned by their respective policyholders.

The Company manages the business operations of the Reciprocal Exchanges and has the power to direct their activities that most significantly impact their economic performance. The Company receives a management fee for the services provided to the Reciprocal Exchanges. In addition, as of March 31, 2023 and December 31, 2022, the Company holds interests of $123 million in the form of surplus notes included in other liabilities and expenses on the Statement of Assets and Liabilities of the Reciprocal Exchanges that provide capital to the Reciprocal Exchanges and would absorb any expected losses. The Company is therefore

the primary beneficiary. In addition, the Company provides quota share reinsurance on the property business of the Reciprocal Exchanges.

In the event of dissolution, policyholders would share any residual unassigned surplus but are not subject to assessment for any deficit in unassigned surplus of the Reciprocal Exchanges. The assets of the Reciprocal Exchanges can be used only to settle the obligations of the Reciprocal Exchanges and general creditors have no recourse to the Company.

The results of operations of the Reciprocal Exchanges are included in the Company’s Allstate Protection segment and generated $57 million of earned premiums for the three months ended March 31, 2023 compared to $42 million for the three months ended March 31, 2022.

Claims and claims expenses were $40 million for the three months ended March 31, 2023 compared to $34 million for the three months ended March 31, 2022.


Assets and liabilities of Reciprocal Exchanges
($ in millions)	March 31, 2023		December 31, 2022
Assets
Fixed income securities	$	285	$	302
Short-term investments	16		13
Deferred policy acquisition costs	23		15
Premium installment and other receivables, net	36		43
Reinsurance recoverables, net	88		97
Other assets	37		90
Total assets	485		560
Liabilities
Reserve for property and casualty insurance claims and claims expense	194		209
Unearned premiums	132		171
Other liabilities and expenses	285		311
Total liabilities	$	611	$	691