8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15 (d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported) February 10, 2010

The Allstate Corporation

(Exact name of registrant as specified in charter)

Delaware	1-11840	36-3871531
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)
2775 Sanders Road, Northbrook, Illinois		60062
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code (847) 402-5000

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2.below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Section 2. – Financial Information

Item 2.02.            Results of Operations and Financial Condition.

On February 10, 2010, the registrant issued a press release announcing its financial results for the fourth quarter of 2009, and the availability of the registrant’s fourth quarter investor supplement on the registrant’s web site. The press release and the investor supplement are furnished as Exhibits 99.1 and 99.2 to this report. The information contained in the press release and the investor supplement are furnished and not filed pursuant to instruction B.2 of Form 8-K.

Section 9. – Financial Statements and Exhibits

Item 9.01.              Financial Statements and Exhibits.

(d)  Exhibits

99.1            Registrant’s press release dated February 10, 2010

99.2            Fourth quarter 2009 Investor Supplement of The Allstate Corporation

2

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

	THE ALLSTATE CORPORATION
	(registrant)
	By	/s/ Samuel H. Pilch
	Name: Samuel H. Pilch
	Title: Controller
Dated: February 10, 2010

3

EX-99.1

Exhibit 99.1

NEWS

FOR IMMEDIATE RELEASE

Contacts:
Maryellen Thielen	Robert Block, Christine Ieuter
Media Relations	Investor Relations
(847) 402-5600	(847) 402-2800

Allstate Reports Improved Fourth Quarter 2009 Results,

is Well Positioned for 2010

NORTHBROOK, Ill., February 10, 2010 – The Allstate Corporation (NYSE: ALL) today reported results for the fourth quarter of 2009:

Consolidated Highlights
	Three months ended December 31,				Twelve months ended December 31,
($ in millions, except per share amounts and ratios)	2009	2008		% Change	2009	2008		% Change
Consolidated revenues	$   8,058	$   6,569		22.7	$   32,013	$   29,394		8.9
Net income (loss)	518	(1,129	)	NM	854	(1,679	)	NM
Net income (loss) per diluted share	0.96	(2.10	)**	NM	1.58	(3.06	)**	NM
Operating income*	592	518		14.3	1,881	1,758		7.0
Operating income per diluted share*	1.09	0.96		13.5	3.48	3.21		8.4
Book value per share					30.84	23.47	**	31.4
Book value per share, excluding the impact of unrealized net capital gains and losses on fixed income securities*					32.62	30.04	**	8.6
Catastrophe losses	328	260		26.2	2,069	3,342		(38.1	)
Property-Liability combined ratio	93.2	96.4		(3.2) pts	96.2	99.4		(3.2) pts
Property-Liability combined ratio excluding the effect of catastrophes and prior year reserve reestimates (“underlying combined ratio”)*	88.1	91.5		(3.4) pts	88.1	86.8		1.3 pts

NM = not meaningful

* Measures used in this release that are not based on accounting principles generally accepted in the United States of America (“non-GAAP”) are defined and reconciled to the most directly comparable GAAP measure and operating measures are defined in the “Definitions of Non-GAAP and Operating Measures” section of this document.

** As a result of the adoption of new earnings per share accounting guidance in the first quarter of 2009, prior periods have been restated.

“Our business results continue to improve and we made substantial progress on our three goals for 2009,” said Thomas J. Wilson, chairman, president and chief executive officer of The Allstate Corporation.  “We successfully executed our first priority of keeping Allstate financially strong by achieving excellent underwriting margins and improving our capital position.  Our focus on the customer resulted in improvements in customer loyalty and enabled us to share that success with employees through a maximum contribution to the Allstate 401(k) Savings Plan. We also made progress in laying the foundation to reinvent protection and retirement for the consumer.”

1

Consolidated Financial Results

Total revenues for the fourth quarter of 2009 were $8.1 billion, an increase of 22.7% compared to the fourth quarter of 2008.  This reflected lower realized capital losses, which decrease revenues, than the prior year quarter.  Partially offsetting this were decreases in net investment income of 19.0% and property-liability premiums of 2.3%.  Allstate’s fourth quarter 2009 net income was $518 million compared to a net loss of $1.1 billion in the fourth quarter of 2008 due to lower realized capital losses and improved operating income.  Operating income was $592 million in the fourth quarter of 2009 compared to $518 million in the same period of 2008, reflecting improved results in both Property-Liability and Allstate Financial.

Total 2009 revenues were $32.0 billion, an increase of 8.9% compared to 2008.  Net income totaled $854 million in 2009 compared to a net loss of $1.7 billion in 2008.  Revenue and net income increases during 2009 were due to lower realized capital losses.  Operating income increased 7.0% during 2009 to $1.9 billion due to an increase in the Property-Liability business, partly offset by lower operating income in Allstate Financial.

Property-Liability Combined Ratio Reflects Continued Strength in Auto

Allstate’s Property-Liability business produced a combined ratio of 93.2 in the fourth quarter of 2009 compared to 96.4 in the prior year quarter, resulting from continued margin strength in the auto business and actions taken to reduce expenses, partly offset by the impact of catastrophe losses on the homeowners business.  The underlying combined ratio was 88.1 for the year, in line with the outlook of 87 to 89 established at the beginning of 2009.  Management’s outlook for the 2010 underlying combined ratio is 88 to 90.

Allstate brand standard auto premiums written* for the fourth quarter of 2009 increased 0.7% compared to the prior year fourth quarter, with increases of 11.4% in new issued applications, 2.6% in average premium and 0.2 points in the renewal ratio, to 88.8.  Policies in force declined 1.0% versus the prior year quarter as improved sales and retention were offset by fewer policies available to renew.  The combined ratio was 93.7, a decline of 5.7 points from the fourth quarter of 2008, due to lower average claim costs and lower expenses partly offset by higher loss frequency.  Rate increases approved during the quarter averaged 5.5% in 15 states.

Allstate brand homeowners premiums written for the fourth quarter of 2009 increased 0.9% compared to the same period a year ago, as a 6.0% increase in average premium was partly offset by a 3.9% decline in policies in force.  The combined ratio was 89.0 in the fourth quarter of 2009 compared to 84.6 in the fourth quarter of 2008, reflecting higher catastrophe losses and non-catastrophe claim frequencies, partly offset by lower non-catastrophe claim severities.  Allstate continues to implement profit improvement actions in this business and also will benefit from rate increases averaging 6.5% in 22 states that were approved during the quarter.

Allstate had catastrophe losses of $328 million in the fourth quarter compared to $260 million in the fourth quarter of 2008.  Fourth quarter 2009 included catastrophe losses of $210 million from 13 events during the quarter and $148 million related to reestimates of events during the first nine months of 2009.

The Property-Liability expense ratio for the fourth quarter of 2009 was 24.9, a decline of 1.9 points compared to the prior year quarter, primarily resulting from a non-recurring write-off and benefit expense in 2008, partly offset by lower premiums earned.

Allstate Financial Makes Strong Progress on ‘Focus to Win’

Allstate remains focused on returning Allstate Financial to profitable growth through its Focus to Win restructuring program.  During 2009, actions included reducing expenses, shifting fixed costs to variable, and targeting higher product returns.  Expense savings initiatives during 2009 delivered approximately 90% of the target of $90 million in annual cost savings.

Pricing actions to produce higher returns and reduce concentrations in products with profits tied to investment performance contributed to a 25.8% decrease in premiums and deposits* in the fourth quarter of 2009 versus the same period of 2008.  Premiums and deposits on life products increased 7.2% during the fourth quarter of 2009 when compared to the prior year quarter.

2

Allstate Financial’s operating income was $95 million in the fourth quarter of 2009.  This represented a 6.7% increase from $89 million in the fourth quarter of 2008, primarily due to lower amortization of deferred policy acquisition costs (DAC) and reduced operating expenses, partly offset by lower benefit and investment spreads.  The decline in DAC amortization was due to lower investment spreads and a lower amortization rate due to updated assumptions for fixed annuities.  Operating expenses decreased 26.6% to $105 million in the fourth quarter of 2009 from $143 million in the same period of 2008, in part reflecting substantial progress made through Focus to Win.  The benefit spread declined 30.1% from the prior year quarter to $100 million due to higher mortality experience and non-recurring benefit costs.  The investment spread declined 23.0% from the prior year quarter to $107 million due to lower net investment income, partly offset by lower interest credited on contractholder funds.

Allstate Financial’s net loss was $137 million in the fourth quarter of 2009, compared to a net loss of $1.0 billion in the same period of 2008.  The improvement related to lower realized net capital losses, after-tax, of $178 million, compared to $736 million in the prior year quarter, and the absence of $493 million of DAC charges incurred in 2008 comprising acceleration in DAC amortization and a non-recurring DAC charge.

Proactive Investment Strategies Provide both Protection and Returns

Throughout the year, Allstate’s investment portfolio benefited from proactive strategies to mitigate risk and optimize returns, including managing interest rate, equity, and credit exposures and reducing commercial real estate holdings.  Simultaneously, the company invested in opportunities to generate income and capital appreciation.  The fourth quarter of 2009 marked the fourth consecutive quarter of positive portfolio returns, as net investment income and valuation improvements were significantly greater than net realized capital losses.

The consolidated investment portfolio was $99.8 billion at December 31, 2009 a slight decline from September 30, 2009, as net reductions in Allstate Financial contractholder funds and a scheduled debt repayment more than offset operating cash flows.  The pre-tax unrealized net loss totaled $2.3 billion at December 31, 2009, a $180 million improvement from the prior quarter.

Net investment income for the fourth quarter of 2009 was $1.1 billion, consistent with the prior quarter, but $253 million less than the fourth quarter of 2008, primarily the result of lower yields and reduced average investment balances.  Net investment income in the Property-Liability portfolio totaled $324 million in the fourth quarter of 2009, a 16.3% decline from the prior year quarter, while Allstate Financial’s net investment income was $737 million, a 19.5% decline for the same period.

In the fourth quarter of 2009, the company deployed approximately $7.0 billion of short-term investments and cash receipts, for a total of $16.6 billion deployed during the last three quarters of 2009, primarily into fixed income and equity securities to generate income and capital appreciation.  The duration of the fixed income investment portfolio declined 5% to 4.0 years at December 31, 2009 when compared to year-end 2008.

Net realized capital losses for the quarter were $33 million, pre-tax, compared to a net realized loss of $1.9 billion in the prior year quarter.  The fourth quarter of 2009 reflected $270 million of impairment write-downs and $215 million of write-downs related to the intent to sell securities that primarily have commercial real estate exposure.  Net gains of $390 million were realized on sales that were primarily part of a change in equity strategy to a more passive portfolio management approach, and $56 million from derivatives, mainly related to the effects of rising interest rates upon liability hedges.

Risk mitigation programs continued to protect Allstate’s portfolios as macro hedges against interest rate and equity market risk performed as expected during the fourth quarter.  Commercial real estate exposure was reduced by 8.7% or $1.2 billion of amortized cost since September 30, 2009, and 30.3% or $5.4 billion of amortized cost since December 31, 2008, primarily through targeted dispositions and principal repayments from borrowers.  Exposure to certain municipal fixed income securities was also reduced by $445 million of amortized cost during the fourth quarter of 2009 and $1.9 billion of amortized cost, or 8.0%, since December 31, 2008.

3

Allstate’s Capital Position Continues to Improve

“Our proactive approach to risk management and return optimization continues to serve us well.  We improved our investment portfolio mix and produced strong operating results that enabled us to end the year with a strong capital position,” said Don Civgin, senior vice president and chief financial officer.  “Our capital strength puts us in great shape to reinvest in our business to enhance growth and the customer experience.”

Statutory surplus at December 31, 2009 was an estimated $14.9 billion for Allstate Insurance Company, including $3.4 billion at Allstate Life Insurance Company.  This is compared to statutory surplus of $13.0 billion for Allstate Insurance Company at December 31, 2008.  Reflected in the 2009 balances is a capital contribution of $448 million from Allstate Insurance Company to Allstate Life Insurance Company that occurred during the fourth quarter.  There were $3.1 billion in assets available at the holding company level at the end of 2009 to cover the company’s relatively low annual fixed charges.

Book value per share was $30.84 at December 31, 2009 compared to $23.47 at December 31, 2008 and $32.29 at September 30, 2009.  The decline during the fourth quarter of 2009 was related to an increase in unrealized net capital loss, after adjusting for DAC and taxes.  The reduction in pre-tax unrealized net capital losses was more than offset by a decrease in the DAC adjustment due to updated assumptions for Allstate Financial fixed annuity investment performance.  The updated assumptions anticipate continued credit losses in certain asset classes within the portfolio in 2010 and 2011, primarily residential and commercial mortgage-backed securities.

Looking Forward

“We continued to build on the strength of our management team this year,” said Wilson.  “Mark LaNeve joined us as chief marketing officer.  Joe Lacher replaced George Ruebenson as president, Allstate Protection, after George retired following a highly successful 39 year career.  Matt Winter became president and chief executive officer of Allstate Financial to enable us to realize the strategic potential of this business.

“In 2010, we’ll deliver value to our shareholders by improving customer loyalty, reinventing protection and retirement for the consumer, and growing our businesses.”

*     *     *     *     *

Visit www.allstateinvestors.com to view additional information about Allstate’s fourth quarter results, including a webcast of its quarterly conference call.  The conference call will be held at 9 a.m. ET on Thursday, February 11, 2010.

The Allstate Corporation (NYSE: ALL) is the nation’s largest publicly held personal lines insurer.  Widely known through the “You’re In Good Hands With Allstate®” slogan, Allstate is reinventing protection and retirement to help more than 17 million households insure what they have today and better prepare for tomorrow.  Consumers access Allstate insurance products and services through Allstate agencies, independent agencies, and Allstate exclusive financial representatives in the U.S. and Canada, as well as via www.allstate.com and 1-800 Allstate®.

4

THE ALLSTATE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

($ in millions, except per share data)	Three months ended December 31,						Twelve months ended December 31,
	2009			2008			2009			2008
	(unaudited)						(unaudited)
Revenues
Property-liability insurance premiums	$	6,517		$	6,668		$	26,194		$	26,967
Life and annuity premiums and contract charges	498			504			1,958			1,895
Net investment income	1,076			1,329			4,444			5,622
Realized capital gains and losses:
Total other-than-temporary impairment losses	(641		)	(893		)	(2,376		)	(3,735		)
Portion of loss recognized in other comprehensive income	156			--			457			--
Net other-than-temporary impairment losses recognized in earnings	(485		)	(893		)	(1,919		)	(3,735		)
Sales and other realized capital gains and losses	452			(1,039		)	1,336			(1,355		)
Total realized capital gains and losses	(33		)	(1,932		)	(583		)	(5,090		)
	8,058			6,569			32,013			29,394
Costs and expenses
Property-liability insurance claims and claims expense	4,451			4,641			18,746			20,064
Life and annuity contract benefits	441			402			1,617			1,612
Interest credited to contractholder funds	490			638			2,126			2,411
Amortization of deferred policy acquisition costs	1,105			1,665			4,754			4,679
Operating costs and expenses	760			939			3,007			3,273
Restructuring and related charges	18			19			130			23
Interest expense	101			87			392			351
	7,366			8,391			30,772			32,413
Gain (loss) on disposition of operations	1			--			7			(6		)
Income (loss) from operations before income tax expense (benefit)	693			(1,822		)	1,248			(3,025		)
Income tax expense (benefit)	175			(693		)	394			(1,346		)
Net income (loss)	$	518		$	(1,129	)	$	854		$	(1,679	)
Earnings per share:
Net income (loss) per share - Basic	$	0.96		$	(2.10	)	$	1.58		$	(3.06	)
Weighted average shares - Basic	539.9			538.3			539.6			548.3
Net income (loss) per share - Diluted	$	0.96		$	(2.10	)	$	1.58		$	(3.06	)
Weighted average shares - Diluted	542.1			538.3			540.9			548.3
Cash dividends declared per share	$	0.20		$	0.41		$	0.80		$	1.64

5

THE ALLSTATE CORPORATION

SEGMENT RESULTS

($ in millions, except ratios)	Three months ended						Twelve months ended
	December 31,						December 31,
	2009			2008			2009			2008
Property-Liability
Premiums written	$	6,277		$	6,301		$	25,971		$	26,584
Premiums earned	$	6,517		$	6,668		$	26,194		$	26,967
Claims and claims expense	(4,451		)	(4,641		)	(18,746		)	(20,064		)
Amortization of deferred policy acquisition costs	(957		)	(973		)	(3,789		)	(3,975		)
Operating costs and expenses	(648		)	(793		)	(2,559		)	(2,742		)
Restructuring and related charges	(17		)	(18		)	(105		)	(22		)
Underwriting income	444			243			995			164
Net investment income	324			387			1,328			1,674
Periodic settlements and accruals on non-hedge derivative instruments	(2		)	(1		)	(10		)	1
Income tax expense on operations	(212		)	(164		)	(555		)	(401		)
Operating income	554			465			1,758			1,438
Realized capital gains and losses, after-tax	151			(519		)	(222		)	(1,209		)
Reclassification of periodic settlements and accruals on non-hedge derivative instruments, after-tax	2			1			7			(1		)
Net income (loss)	$	707		$	(53	)	$	1,543		$	228
Catastrophe losses	$	328		$	260		$	2,069		$	3,342
Operating ratios:
Claims and claims expense ratio	68.3			69.6			71.6			74.4
Expense ratio	24.9			26.8			24.6			25.0
Combined ratio	93.2			96.4			96.2			99.4
Effect of catastrophe losses on combined ratio	5.0			3.9			7.9			12.4
Effect of prior year reserve reestimates on combined ratio	(0.4		)	1.0			(0.4		)	0.7
Effect of catastrophe losses included in prior year reserve reestimates on combined ratio	(0.5)			--			(0.6)			0.5
Effect of Discontinued Lines and Coverages on combined ratio	0.1			0.1			0.1			0.1
Allstate Financial
Investments	$	62,216		$	61,449		$	62,216		$	61,449
Premiums and deposits	$	1,156		$	1,557		$	5,121		$	10,952
Premiums and contract charges	$	498		$	504		$	1,958		$	1,895
Net investment income	737			916			3,064			3,811
Periodic settlements and accruals on non-hedge derivative instruments	14			(5		)	14			20
Contract benefits	(441		)	(402		)	(1,617		)	(1,612		)
Interest credited to contractholder funds	(479		)	(584		)	(2,038		)	(2,417		)
Amortization of deferred policy acquisition costs	(90		)	(144		)	(437		)	(531		)
Operating costs and expenses	(105		)	(143		)	(430		)	(520		)
Restructuring and related charges	(1		)	(1		)	(25		)	(1		)
Income tax expense on operations	(38		)	(52		)	(149		)	(207		)
Operating income	95			89			340			438
Realized capital gains and losses, after-tax	(178		)	(736		)	(417		)	(2,034		)
DAC and DSI (amortization) accretion relating to realized capital gains and losses, after-tax	(45		)	102			(177		)	385
DAC and DSI unlocking relating to realized capital gains and losses, after-tax	--			(274		)	(224		)	(274		)
Non-recurring charge for DAC, after-tax	--			(219		)	--			(219		)
Reclassification of periodic settlements and accruals on non-hedge derivative instruments, after-tax	(9		)	3			(9		)	(13		)
Gain (loss) on disposition of operations, after-tax	--			--			4			(4		)
Net loss	$	(137	)	$	(1,035	)	$	(483	)	$	(1,721	)
Corporate and Other
Net investment income	$	15		$	26		$	52		$	137
Operating costs and expenses	(108		)	(90		)	(410		)	(362		)
Income tax benefit on operations	36			28			141			107
Operating loss	(57		)	(36		)	(217		)	(118		)
Realized capital gains and losses, after-tax	5			(5		)	11			(68		)
Net loss	$	(52	)	$	(41	)	$	(206	)	$	(186	)
Consolidated net income (loss)	$	518		$	(1,129	)	$	854		$	(1,679	)

6

THE ALLSTATE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

($ in millions, except par value data)	December 31,			December 31,
	2009			2008
Assets	(unaudited)
Investments:
Fixed income securities, at fair value (amortized cost $81,243 and $77,104)	$	78,766		$	68,608
Equity securities, at fair value (cost $4,845 and $3,137)	5,024			2,805
Mortgage loans	7,935			10,229
Limited partnership interests	2,744			2,791
Short-term, at fair value (amortized cost $3,056 and $8,903)	3,056			8,906
Other	2,308			2,659
Total investments	99,833			95,998
Cash	612			415
Premium installment receivables, net	4,839			4,842
Deferred policy acquisition costs	5,470			8,542
Reinsurance recoverables, net	6,355			6,403
Accrued investment income	864			884
Deferred income taxes	1,870			3,794
Property and equipment, net	990			1,059
Goodwill	875			874
Other assets	1,872			3,748
Separate Accounts	9,072			8,239
Total assets	$	132,652		$	134,798
Liabilities
Reserve for property-liability insurance claims and claims expense	$	19,167		$	19,456
Reserve for life-contingent contract benefits	12,910			12,881
Contractholder funds	52,582			58,413
Unearned premiums	9,822			10,024
Claim payments outstanding	742			790
Other liabilities and accrued expenses	5,726			6,663
Long-term debt	5,910			5,659
Separate Accounts	9,072			8,239
Total liabilities	115,931			122,125
Equity
Preferred stock, $1 par value, 25 million shares authorized, none issued	--			--
Common stock, $.01 par value, 2.0 billion shares authorized and 900 million issued, 537 million and 536 million shares outstanding	9			9
Additional capital paid-in	3,172			3,130
Retained income	31,492			30,207
Deferred ESOP expense	(47		)	(49		)
Treasury stock, at cost (363 million and 364 million shares)	(15,828		)	(15,855		)
Accumulated other comprehensive income:
Unrealized net capital gains and losses:
Unrealized net capital losses on fixed income securities with OTTI	(441		)	--
Other unrealized net capital gains and losses	(1,072		)	(5,767		)
Unrealized adjustment to DAC, DSI and insurance reserves	643			2,029
Total unrealized net capital gains and losses	(870		)	(3,738		)
Unrealized foreign currency translation adjustments	46			5
Unrecognized pension and other postretirement benefit cost	(1,282		)	(1,068		)
Total accumulated other comprehensive loss	(2,106		)	(4,801		)
Total shareholders’ equity	16,692			12,641
Noncontrolling interest	29			32
Total equity	16,721			12,673
Total liabilities and equity	$	132,652		$	134,798

7

THE ALLSTATE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

($ in millions)	Twelve months ended December 31,
	2009		2008
Cash flows from operating activities	(Unaudited)
Net income (loss)	$	854	$	(1,679	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, amortization and other non-cash items	(91)		(376		)
Realized capital gains and losses	583		5,090
(Gain) loss on disposition of operations	(7)		6
Interest credited to contractholder funds	2,126		2,411
Changes in:
Policy benefits and other insurance reserves	(577)		626
Unearned premiums	(247)		(359		)
Deferred policy acquisition costs	514		141
Premium installment receivables, net	26		18
Reinsurance recoverables, net	(85)		(269		)
Income taxes	1,660		(1,864		)
Other operating assets and liabilities	(455)		165
Net cash provided by operating activities	4,301		3,910
Cash flows from investing activities
Proceeds from sales:
Fixed income securities	21,359		22,936
Equity securities	6,894		9,535
Limited partnership interests	369		371
Mortgage loans	340		279
Other investments	520		171
Investment collections:
Fixed income securities	5,556		4,269
Mortgage loans	1,764		844
Other investments	117		98
Investment purchases:
Fixed income securities	(29,573)		(14,448		)
Equity securities	(8,496)		(9,477		)
Limited partnership interests	(784)		(982		)
Mortgage loans	(26)		(500		)
Other investments	(64)		(140		)
Change in short-term investments, net	5,981		(8,283		)
Change in other investments, net	(340)		(474		)
Disposition (acquisition) of operations	12		(120		)
Purchases of property and equipment, net	(189)		(291		)
Net cash provided by investing activities	3,440		3,788
Cash flows from financing activities
Proceeds from issuance of long-term debt	1,003		20
Repayment of long-term debt	(752)		(1		)
Contractholder fund deposits	4,150		9,984
Contractholder fund withdrawals	(11,406)		(15,480		)
Dividends paid	(542)		(889		)
Treasury stock purchases	(4)		(1,323		)
Shares reissued under equity incentive plans, net	3		33
Excess tax benefits on share-based payment arrangements	(5)		3
Other	9		(52		)
Net cash used in financing activities	(7,544)		(7,705		)
Net increase (decrease) in cash	197		(7		)
Cash at beginning of period	415		422
Cash at end of period	$	612	$	415

8

Definitions of Non-GAAP and Operating Measures

We believe that investors’ understanding of Allstate’s performance is enhanced by our disclosure of the following non-GAAP and operating financial measures.  Our methods for calculating these measures may differ from those used by other companies and therefore comparability may be limited.

Operating income is net income (loss), excluding:

·realized capital gains and losses, after-tax, except for periodic settlements and accruals on non-hedge derivative instruments, which are reported with realized capital gains and losses but included in operating income,

·amortization of DAC and DSI, to the extent they resulted from the recognition of certain realized capital gains and losses,

·gain (loss) on disposition of operations, after-tax, and

·adjustments for other significant non-recurring, infrequent or unusual items, when (a) the nature of the charge or gain is such that it is reasonably unlikely to recur within two years, or (b) there has been no similar charge or gain within the prior two years.

Net income (loss) is the GAAP measure that is most directly comparable to operating income.

We use operating income as an important measure to evaluate our results of operations.  We believe that the measure provides investors with a valuable measure of the company’s ongoing performance because it reveals trends in our insurance and financial services business that may be obscured by the net effect of realized capital gains and losses, gain (loss) on disposition of operations and adjustments for other significant non-recurring, infrequent or unusual items.  Realized capital gains and losses and gain (loss) on disposition of operations may vary significantly between periods and are generally driven by business decisions and external economic developments such as capital market conditions, the timing of which is unrelated to the insurance underwriting process.  Consistent with our intent to protect results or earn additional income, operating income includes periodic settlements and accruals on certain derivative instruments that are reported in realized capital gains and losses because they do not qualify for hedge accounting or are not designated as hedges for accounting purposes.  These instruments are used for economic hedges and to replicate fixed income securities, and by including them in operating income, we are appropriately reflecting their trends in our performance and in a manner consistent with the economically hedged investments, product attributes (e.g., net investment income and interest credited to contractholder funds) or replicated investments.  Non-recurring items are excluded because, by their nature, they are not indicative of our business or economic trends.  Accordingly, operating income excludes the effect of items that tend to be highly variable from period to period and highlights the results from ongoing operations and the underlying profitability of our business.  A byproduct of excluding these items to determine operating income is the transparency and understanding of their significance to net income variability and profitability while recognizing these or similar items may recur in subsequent periods.  Operating income is used by management along with the other components of net income (loss) to assess our performance.  We use adjusted measures of operating income and operating income per diluted share in incentive compensation.  Therefore, we believe it is useful for investors to evaluate net income (loss), operating income and their components separately and in the aggregate when reviewing and evaluating our performance.  We note that investors, financial analysts, financial and business media organizations and rating agencies utilize operating income results in their evaluation of our and our industry’s financial performance and in their investment decisions, recommendations and communications as it represents a reliable, representative and consistent measurement of the industry and the company and management’s performance.  We note that the price to earnings multiple commonly used by insurance investors as a forward-looking valuation technique uses operating income as the denominator.  Operating income should not be considered as a substitute for net income (loss) and does not reflect the overall profitability of our business.

The following tables reconcile operating income and net income (loss) for the three months and twelve months ended December 31, 2009 and 2008.

For the three months ended December 31,	Property-Liability				Allstate Financial				Consolidated				Per diluted share(2)
($ in millions, except per share data)	2009		2008		2009		2008		2009		2008		2009		2008
Operating income	$	554	$	465	$	95	$	89	$	592	$	518	$	1.09	$	0.96
Realized capital gains and losses (1)	235		(792)		(275)		(1,131)		(33)		(1,932)
Income tax (expense) benefit	(84)		273		97		395		11		672
Realized capital gains and losses, after-tax	151		(519)		(178)		(736)		(22)		(1,260)		(0.04)		(2.34)
DAC and DSI (amortization) accretion relating to realized capital gains and losses, after-tax	--		--		(45)		102		(45)		102		(0.08)		0.19
DAC and DSI unlocking relating to realized capital gains and losses, after-tax	--		--		--		(274)		--		(274)		--		(0.51)
Non-recurring charge for DAC, after-tax	--		--		--		(219)		--		(219)		--		(0.41)
Reclassification of periodic settlements and accruals on non-hedge derivative instruments, after-tax	2		1		(9)		3		(7)		4		(0.01)		0.01
Net income (loss)	$	707	$	(53)	$	(137)	$	(1,035)	$	518	$	(1,129)	$	0.96	$	(2.10)

9

For the twelve months ended December 31,	Property-Liability				Allstate Financial				Consolidated				Per diluted share(2)
($ in millions, except per share data)	2009		2008		2009		2008		2009		2008		2009		2008
Operating income	$	1,758	$	1,438	$	340	$	438	$	1,881	$	1,758	$	3.48	$	3.21
Realized capital gains and losses (1)	(168)		(1,858)		(431)		(3,127)		(583)		(5,090)
Income tax (expense) benefit	(54)		649		14		1,093		(45)		1,779
Realized capital gains and losses, after-tax	(222)		(1,209)		(417)		(2,034)		(628)		(3,311)		(1.16)		(6.04)
DAC and DSI (amortization) accretion relating to realized capital gains and losses, after-tax	--		--		(177)		385		(177)		385		(0.33)		0.70
DAC and DSI unlocking relating to realized capital gains and losses, after-tax	--		--		(224)		(274)		(224)		(274)		(0.42)		(0.50)
Non-recurring charge for DAC, after-tax	--		--		--		(219)		--		(219)		--		(0.40)
Reclassification of periodic settlements and accruals on non-hedge derivative instruments, after-tax	7		(1)		(9)		(13)		(2)		(14)		--		(0.02)
Gain (loss) on disposition of operations, after-tax	--		--		4		(4)		4		(4)		0.01		(0.01)
Net income (loss)	$	1,543	$	228	$	(483)	$	(1,721)	$	854	$	(1,679)	$	1.58	$	(3.06)

(1)

Beginning in the fourth quarter of 2008, income from limited partnerships accounted for on the equity method of accounting (“EMA LP”) is reported in realized capital gains and losses. EMA LP income for periods prior to the fourth quarter of 2008 is reported in net investment income. The amount of EMA LP income included in Property-Liability, Allstate Financial and Consolidated net investment income in the twelve months ended December 31, 2008 was $15 million, $14 million and $24 million, respectively.

(2)

As a result of the adoption of new earnings per share accounting guidance in the first quarter of 2009, prior periods have been restated.

Combined ratio excluding the effect of catastrophes and prior year reserve reestimates (“underlying combined ratio”) is a non-GAAP ratio, which is computed as the difference between three GAAP operating ratios: the combined ratio, the effect of catastrophes on the combined ratio and the effect of prior year reserve reestimates on the combined ratio.  The most directly comparable GAAP measure is the combined ratio.  We believe that this ratio is useful to investors and it is used by management to reveal the trends in our Property-Liability business that may be obscured by catastrophe losses and prior year reserve reestimates.  These catastrophe losses cause our loss trends to vary significantly between periods as a result of their incidence of occurrence and magnitude, and can have a significant impact on the combined ratio.  Prior year reserve reestimates are caused by unexpected loss development on historical reserves.  We believe it is useful for investors to evaluate these components separately and in the aggregate when reviewing our underwriting performance.  We also provide it to facilitate a comparison to our outlook on the 2009 combined ratio excluding the effect of catastrophe losses and prior year reserve reestimates.  The combined ratio excluding the effect of catastrophes and prior year reserve reestimates should not be considered a substitute for the combined ratio and does not reflect the overall underwriting profitability of our business.  A reconciliation of the combined ratio excluding the effect of catastrophes and prior year reserve reestimates to the combined ratio is provided in the following table.

	Three months ended December 31,		Twelve months ended December 31,
	2009	2008	2009	2008
Combined ratio excluding the effect of catastrophes and prior year reserve reestimates (“underlying combined ratio”)	88.1	91.5	88.1	86.8
Effect of catastrophe losses	5.0	3.9	7.9	12.4
Effect of prior year non-catastrophe reserve reestimates	0.1	1.0	0.2	0.2
Combined ratio	93.2	96.4	96.2	99.4
Effect of prior year catastrophe reserve reestimates	(0.5)	--	(0.6)	0.5

In this news release, we provide our outlook range on the 2010 combined ratio excluding the effect of catastrophe losses and prior year reserve reestimates.  A reconciliation of this measure to the combined ratio is not possible on a forward-looking basis because it is not possible to provide a reliable forecast of catastrophes.  Future prior year reserve reestimates are expected to be zero because reserves are determined based on our best estimate of ultimate loss reserves as of the reporting date.

Book value per share, excluding the impact of unrealized net capital gains and losses on fixed income securities, is a ratio that uses a non-GAAP measure.  It is calculated by dividing shareholders’ equity after excluding the impact of unrealized net capital gains and losses on fixed income securities and related DAC, DSI and life insurance reserves by total shares outstanding plus dilutive potential shares outstanding.  Book value per share is the most directly comparable GAAP measure.

10

We use the trend in book value per share, excluding the impact of unrealized net capital gains and losses on fixed income securities, in conjunction with book value per share to identify and analyze the change in net worth attributable to management efforts between periods.  We believe the non-GAAP ratio is useful to investors because it eliminates the effect of items that can fluctuate significantly from period to period and are generally driven by economic developments, primarily capital market conditions, the magnitude and timing of which are generally not influenced by management, and we believe it enhances understanding and comparability of performance by highlighting underlying business activity and profitability drivers.  We note that book value per share, excluding the impact of unrealized net capital gains and losses on fixed income securities, is a measure commonly used by insurance investors as a valuation technique.  Book value per share, excluding the impact of unrealized net capital gains and losses on fixed income securities, should not be considered as a substitute for book value per share, and does not reflect the recorded net worth of our business.  The following table shows the reconciliation.

	As of December 31,
($ in millions, except per share data)	2009		2008
Book value per share
Numerator:
Shareholders’ equity	$	16,692	$	12,641
Denominator:
Shares outstanding and dilutive potential shares outstanding	541.3		538.5
Book value per share	$	30.84	$	23.47
Book value per share, excluding the impact of unrealized net capital gains and losses on fixed income securities
Numerator:
Shareholders’ equity	$	16,692	$	12,641
Unrealized net capital gains and losses on fixed income securities	(967)		(3,533)
Adjusted shareholders’ equity	$	17,659	$	16,174
Denominator:
Shares outstanding and dilutive potential shares outstanding	541.3		538.5
Book value per share, excluding the impact of unrealized net capital gains and losses on fixed income securities	$	32.62	$	30.04

Premiums writtenis the amount of premiums charged for policies issued during a fiscal period.  Premiums earned is a GAAP measure.  Premiums are considered earned and are included in financial results on a pro-rata basis over the policy period.  The portion of premiums written applicable to the unexpired terms of the policies is recorded as unearned premiums on our Consolidated Statements of Financial Position.  A reconciliation of premiums written to premiums earned is presented in the following table.

	Three months ended December 31,				Twelve months ended December 31,
($ in millions)	2009		2008		2009		2008
Premiums written	$	6,277	$	6,301	$	25,971	$	26,584
Decrease in Property-Liability unearned premiums	248		424		200		383
Other	(8)		(57)		23		--
Premiums earned	$	6,517	$	6,668	$	26,194	$	26,967

Premiums and deposits is an operating measure that we use to analyze production trends for Allstate Financial sales.  It includes premiums on insurance policies and annuities and all deposits and other funds received from customers on deposit-type products including the net new deposits of Allstate Bank, which we account for under GAAP as increases to liabilities rather than as revenue.

The following table illustrates where premiums and deposits are reflected in the consolidated financial statements.

	Three months ended December 31,				Twelve months ended December 31,
($ in millions)	2009		2008		2009		2008
Total premiums and deposits	$	1,156	$	1,557	$	5,121	$	10,952
Deposits to contractholder funds	(898)		(1,286)		(4,150)		(9,984)
Deposits to separate accounts	(27)		(31)		(110)		(129)
Change in unearned premiums and other adjustments	12		14		108		104
Life and annuity premiums (1)	$	243	$	254	$	969	$	943

(1)Life and annuity contract charges in the amount of $255 million and $250 million for the three months ended December 31, 2009 and 2008, respectively, and $989 million and $952 million for the twelve months ended December 31, 2009 and 2008, respectively, which are also revenues recognized for GAAP, have been excluded from the table above, but are a component of the Consolidated Statements of Operations line item life and annuity premiums and contract charges.

11

Forward-Looking Statements and Risk Factors

This news release contains forward-looking statements about our outlook for the combined ratio excluding the effect of catastrophes and prior year reserve reestimates for 2010.  These statements are subject to the Private Securities Litigation Reform Act of 1995 and are based on management’s estimates, assumptions and projections.  Actual results may differ materially from those projected based on the risk factors described below.

·Premiums written and premiums earned, the denominator of the underlying combined ratio, may be materially less than projected.  Policyholder attrition may be greater than anticipated resulting in a lower amount of insurance in force.

·Unanticipated increases in the severity or frequency of standard auto insurance claims may adversely affect our underwriting results.  Changes in the severity or frequency of claims may affect the profitability of our Allstate Protection segment.  Changes in bodily injury claim severity are driven primarily by inflation in the medical sector of the economy and litigation.  Changes in auto physical damage claim severity are driven primarily by inflation in auto repair costs, auto parts prices and used car prices.  The short-term level of claim frequency we experience may vary from period to period and may not be sustainable over the longer term.  A decline in gas prices, increase in miles driven, and higher unemployment are examples of factors leading to a short-term frequency change.  A significant long-term increase in claim frequency could have an adverse effect on our underwriting results.

We undertake no obligation to publicly correct or update any forward-looking statements.  This news release contains unaudited financial information.

# # # # #

12

EX-99.2

Exhibit 99.2

THE ALLSTATE CORPORATION

Investor Supplement

Fourth Quarter 2009

The consolidated financial statements and financial exhibits included herein are unaudited. These consolidated financial statements and exhibits should be read in conjunction with the consolidated financial statements and notes thereto included in the Annual Report on Form 10-K, which will be filed with the Securities and Exchange Commission.  The results of operations for interim periods should not be considered indicative of results to be expected for the full year.

Measures used in these financial statements and exhibits that are not based on generally accepted accounting principles (“non-GAAP”) and operating measures are denoted with an asterisk (*) the first time they appear.  These measures are defined on the page “Definitions of Non-GAAP and Operating Measures” and non-GAAP measures are reconciled to the most directly comparable GAAP measure herein.

THE ALLSTATE CORPORATION

Investor Supplement - Fourth Quarter 2009

Table of Contents

	PAGE
Consolidated
Statements of Operations	1
Contribution to Income	2
Revenues	3
Statements of Financial Position	4
Book Value Per Share	5
Return on Shareholders’ Equity	6
Debt to Capital	7
Statements of Cash Flows	8
Analysis of Deferred Policy Acquisition Costs	9-10
Historical Summary of Consolidated Operating and Financial Position Data	11
Property-Liability Operations
Property-Liability Results	12
Historical Property-Liability Results	13
Underwriting Results by Area of Business	14
Historical Underwriting Results by Area of Business	15
Premiums Written by Market Segment	16
Allstate Protection Market Segment Analysis	17
Allstate Protection Historical Market Segment Analysis	18
Historical Impact of Net Rate Changes Approved on Premiums Written	19
Standard Auto Profitability Measures	20
Non-standard Auto Profitability Measures	21
Auto Profitability Measures	22
Homeowners Profitability Measures	23
Allstate Brand Domestic Operating Measures and Statistics	24
Homeowners Supplemental Information	25
Effect of Catastrophe Losses on the Combined Ratio	26
Allstate Protection Historical Catastrophe by Size of Event	27
Effect of Pre-tax Prior Year Reserve Reestimates on the Combined Ratio	28
Historical Pre-tax Prior Year Reserve Reestimate	29
Historical Property-Liability Loss Reserves	30
Asbestos and Environmental Reserves	31
Allstate Financial Operations and Reconciliations
Allstate Financial Results	32
Historical Allstate Financial Results	33
Premiums and Deposits	34
Change in Contractholder Funds	35
Analysis of Net Income	36
Allstate Financial Weighted Average Investment Spreads	37
Corporate and Other Results	38
Investments
Investments	39
Fixed Income Security Portfolio By Credit Rating	40
Unrealized Net Capital Gains and Losses on Security Portfolio by Type	41
Gross Unrealized Gains and Losses on Fixed Income Securities by Type and Sector	42
Fair Value and Unrealized Net Capital Gains and Losses for Fixed Income Securities by Credit Rating	43
Realized Capital Gains and Losses by Transaction Type	44
Property-Liability Net Investment Income, Yields and Realized Capital Gains and Losses (Pre-tax)	45
Allstate Financial Net Investment Income, Yields and Realized Capital Gains and Losses (Pre-tax)	46
Definitions of Non-GAAP and Operating Measures	47

THE ALLSTATE CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

($ in millions, except per share data)

	Three months ended																	Twelve months ended
		Dec. 31,		Sept. 30,		June 30,		March 31,		Dec. 31,		Sept. 30,		June 30,		March 31,		Dec. 31,		Dec. 31,
		2009		2009		2009		2009 (1)		2008		2008		2008		2008		2009 (1)		2008
Revenues
Property-liability insurance premiums		$	6,517	$	6,535	$	6,560	$	6,582	$	6,668	$	6,785	$	6,750	$	6,764	$	26,194	$	26,967
Life and annuity premiums and contract charges		498		482		494		484		504		468		471		452		1,958		1,895
Net investment income		1,076		1,084		1,108		1,176		1,329		1,355		1,412		1,526		4,444		5,622
Realized capital gains and losses:
Total other-than-temporary impairment losses		(641)		(539)		(471)		(725)		(893)		(1,119)		(1,265)		(458)		(2,376)		(3,735)
Portion of loss recognized in other comprehensive income		156		147		154		-		-		-		-		-		457		-
Net other-than-temporary impairment losses recognized in earnings		(485)		(392)		(317)		(725)		(893)		(1,119)		(1,265)		(458)		(1,919)		(3,735)
Sales and other realized capital gains and losses		452		(127)		645		366		(1,039)		(169)		50		(197)		1,336		(1,355)
Total realized capital gains and losses		(33)		(519)		328		(359)		(1,932)		(1,288)		(1,215)		(655)		(583)		(5,090)
Total revenues		8,058		7,582		8,490		7,883		6,569		7,320		7,418		8,087		32,013		29,394
Costs and expenses
Property-liability insurance claims and claims expense		4,451		4,573		5,002		4,720		4,641		5,971		4,776		4,676		18,746		20,064
Life and annuity contract benefits		441		382		407		387		402		418		395		397		1,617		1,612
Interest credited to contractholder funds		490		496		561		579		638		586		563		624		2,126		2,411
Amortization of deferred policy acquisition costs		1,105		1,023		1,229		1,397		1,665		980		959		1,075		4,754		4,679
Operating costs and expenses		760		744		702		801		939		814		728		792		3,007		3,273
Restructuring and related charges		18		35		32		45		19		10		(5)		(1)		130		23
Interest expense		101		106		97		88		87		88		88		88		392		351
Total costs and expenses		7,366		7,359		8,030		8,017		8,391		8,867		7,504		7,651		30,772		32,413
Gain (loss) on disposition of operations		1		2		1		3		-		3		-		(9)		7		(6)
Income (loss) from operations before income tax expense (benefit)		693		225		461		(131)		(1,822)		(1,544)		(86)		427		1,248		(3,025)
Income tax expense (benefit)		175		4		72		143		(693)		(621)		(111)		79		394		(1,346)
Net income (loss)		$	518	$	221	$	389	$	(274)	$	(1,129)	$	(923)	$	25	$	348	$	854	$	(1,679)
Earnings per share:(2)(3)
Net income (loss) per share - Basic		$	0.96	$	0.41	$	0.72	$	(0.51)	$	(2.10)	$	(1.70)	$	0.05	$	0.62	$	1.58	$	(3.06)
Weighted average shares - Basic		539.9		539.9		539.8		538.9		538.3		542.4		551.8		560.8		539.6		548.3
Net income (loss) per share - Diluted		$	0.96	$	0.41	$	0.72	$	(0.51)	$	(2.10)	$	(1.70)	$	0.05	$	0.62	$	1.58	$	(3.06)
Weighted average shares - Diluted		542.1		541.5		540.6		538.9		538.3		542.4		553.8		562.8		540.9		548.3
Cash dividends declared per share		$	0.20	$	0.20	$	0.20	$	0.20	$	0.41	$	0.41	$	0.41	$	0.41	$	0.80	$	1.64

(1)      Income tax expense for the three months ended March 31, 2009 and twelve months ended December 31, 2009 includes expense of $254 million attributable to an increase in the valuation allowance relating to the deferred tax asset on capital losses recorded in the first quarter of 2009. This valuation allowance was released in connection with the adoption of new OTTI accounting guidance on April 1, 2009; however, the release was recorded as an increase to retained income and therefore did not reverse the amount recorded in income tax expense.

(2)      As a result of the net loss for the three months ended March 31, 2009, September 30, 2008, December 31, 2008 and twelve months ended December 31, 2008, weighted average dilutive potential common shares outstanding resulting from stock options of 0.6 million, 1.2 million, 0.1 million and 1.3 million, respectively, were not included in the computation of diluted earnings per share since inclusion of these securities would have an anti-dilutive effect. Accordingly, the sum of our income (loss) per share amounts for the quarters of 2009 and 2008 may not equal the year-to-date per share amount.

(3)      As a result of the adoption of new earnings per share accounting guidance in the first quarter of 2009, prior period amounts have been restated.

1

THE ALLSTATE CORPORATION

CONTRIBUTION TO INCOME

($ in millions, except per share data)

	Three months ended																	Twelve months ended
		Dec. 31,		Sept. 30,		June 30,		March 31,		Dec. 31,		Sept. 30,		June 30,		March 31,		Dec. 31,		Dec. 31,
		2009		2009		2009		2009		2008		2008		2008		2008		2009		2008
Contribution to income
Operating income (loss) before the impact of restructuring and related charges		$	604	$	561	$	318	$	483	$	530	$	(183)	$	680	$	746	$	1,966	$	1,773
Restructuring and related charges, after-tax		(12)		(23)		(21)		(29)		(12)		(7)		3		1		(85)		(15)
Operating income (loss) *		592		538		297		454		518		(190)		683		747		1,881		1,758
Realized capital gains and losses, after-tax		(22)		(336)		218		(488)		(1,260)		(838)		(788)		(425)		(628)		(3,311)
DAC and DSI (amortization) accretion relating to realized capital gains and losses, after-tax		(45)		18		(131)		(19)		102		110		134		39		(177)		385
DAC and DSI unlocking relating to realized capital gains and losses, after-tax		-		-		-		(224)		(274)		-		-		-		(224)		(274)
Non-recurring charge for DAC, after-tax		-		-		-		-		(219)		-		-		-		-		(219)
Reclassification of periodic settlements and accruals on non-hedge derivative instruments, after-tax		(7)		-		4		1		4		(7)		(4)		(7)		(2)		(14)
Gain (loss) on disposition of operations, after-tax		-		1		1		2		-		2		-		(6)		4		(4)
Net income (loss)		$	518	$	221	$	389	$	(274)	$	(1,129)	$	(923)	$	25	$	348	$	854	$	(1,679)
Income per share - Diluted (1) (2)
Operating income (loss) before the impact of restructuring and related charges		$	1.11	$	1.04	$	0.59	$	0.90	$	0.98	$	(0.34)	$	1.23	$	1.33	$	3.63	$	3.23
Restructuring and related charges, after-tax		(0.02)		(0.05)		(0.04)		(0.06)		(0.02)		(0.01)		0.01		-		(0.15)		(0.02)
Operating income (loss)		1.09		0.99		0.55		0.84		0.96		(0.35)		1.24		1.33		3.48		3.21
Realized capital gains and losses, after-tax		(0.04)		(0.62)		0.40		(0.90)		(2.34)		(1.54)		(1.42)		(0.76)		(1.16)		(6.04)
DAC and DSI (amortization) accretion relating to realized capital gains and losses, after-tax		(0.08)		0.04		(0.24)		(0.03)		0.19		0.20		0.24		0.07		(0.33)		0.70
DAC and DSI unlocking relating to realized capital gains and losses, after-tax		-		-		-		(0.42)		(0.51)		-		-		-		(0.42)		(0.50)
Non-recurring charge for DAC, after-tax		-		-		-		-		(0.41)		-		-		-		-		(0.40)
Reclassification of periodic settlements and accruals on non-hedge derivative instruments, after-tax		(0.01)		-		0.01		-		0.01		(0.01)		(0.01)		(0.01)		-		(0.02)
(Loss) gain on disposition of operations, after-tax		-		-		-		-		-		-		-		(0.01)		0.01		(0.01)
Net income (loss)		$	0.96	$	0.41	$	0.72	$	(0.51)	$	(2.10)	$	(1.70)	$	0.05	$	0.62	$	1.58	$	(3.06)
Weighted average shares - Diluted		542.1		541.5		540.6		538.9		538.3		542.4		553.8		562.8		540.9		548.3

(1)As a result of the net loss for the three months ended March 31, 2009, September 30, 2008, December 31, 2008 and twelve months ended December 31, 2008, weighted average dilutive potential common shares outstanding resulting from stock options of 0.6 million, 1.2 million, 0.1 million and 1.3 million, respectively, were not included in the computation of diluted earnings per share since inclusion of these securities would have an anti-dilutive effect.  Accordingly, the sum of our income (loss) per share amounts for the quarters of 2009 and 2008 may not equal the year-to-date per share amount.

(2)As a result of the adoption of new earnings per share accounting guidance in the first quarter of 2009, prior period amounts have been restated.

2

THE ALLSTATE CORPORATION

REVENUES

($ in millions)

	Three months ended																	Twelve months ended
		Dec. 31,		Sept. 30,		June 30,		March 31,		Dec. 31,		Sept. 30,		June 30,		March 31,		Dec. 31,		Dec. 31,
		2009		2009		2009		2009		2008		2008		2008		2008		2009		2008
Property-Liability
Property-liability insurance premiums		$	6,517	$	6,535	$	6,560	$	6,582	$	6,668	$	6,785	$	6,750	$	6,764	$	26,194	$	26,967
Net investment income		324		326		334		344		387		386		431		470		1,328		1,674
Realized capital gains and losses		235		(290)		201		(314)		(792)		(634)		(238)		(194)		(168)		(1,858)
Total Property-Liability revenues		7,076		6,571		7,095		6,612		6,263		6,537		6,943		7,040		27,354		26,783
Allstate Financial
Life and annuity premiums and contract charges		498		482		494		484		504		468		471		452		1,958		1,895
Net investment income		737		744		764		819		916		937		943		1,015		3,064		3,811
Realized capital gains and losses		(275)		(234)		121		(43)		(1,131)		(599)		(965)		(432)		(431)		(3,127)
Total Allstate Financial revenues		960		992		1,379		1,260		289		806		449		1,035		4,591		2,579
Corporate and Other
Service fees (1)		2		3		1		3		3		2		3		2		9		10
Net investment income		15		14		10		13		26		32		38		41		52		137
Realized capital gains and losses		7		5		6		(2)		(9)		(55)		(12)		(29)		16		(105)
Total Corporate and Other revenues before reclassification of services fees		24		22		17		14		20		(21)		29		14		77		42
Reclassification of service fees (1)		(2)		(3)		(1)		(3)		(3)		(2)		(3)		(2)		(9)		(10)
Total Corporate and Other revenues		22		19		16		11		17		(23)		26		12		68		32
Consolidated revenues		$	8,058	$	7,582	$	8,490	$	7,883	$	6,569	$	7,320	$	7,418	$	8,087	$	32,013	$	29,394

(1)For presentation in the Consolidated Statements of Operations, service fees of the Corporate and Other segment are reclassified to Operating costs and expenses.

3

THE ALLSTATE CORPORATION

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

($ in millions)

	Dec. 31,			Sept. 30,			June 30,			March 31,			Dec. 31,
	2009			2009			2009			2009			2008
Assets
Investments
Fixed income securities, at fair value (amortized cost $81,243, $81,367, $79,890, $77,322 and $77,104)	$	78,766		$	78,561		$	72,766		$	68,438		$	68,608
Equity securities, at fair value(cost $4,845, $4,274, $3,483, $2,947 and $3,137)	5,024			4,603			3,297			2,410			2,805
Mortgage loans	7,935			8,853			9,406			9,710			10,229
Limited partnership interests	2,744			2,770			2,464			2,482			2,791
Short-term, at fair value (amortized cost $3,056, $3,470, $6,070, $8,124 and $8,903)	3,056			3,470			6,070			8,125			8,906
Other	2,308			2,369			2,455			2,708			2,659
Total investments	99,833			100,626			96,458			93,873			95,998
Cash	612			727			667			837			415
Premium installment receivables, net	4,839			4,970			4,794			4,766			4,842
Deferred policy acquisition costs	5,470			6,916			8,228			8,379			8,542
Reinsurance recoverables, net (1)	6,355			6,460			6,621			6,651			6,403
Accrued investment income	864			901			859			906			884
Deferred income taxes	1,870			1,520			2,710			3,486			3,794
Property and equipment, net	990			1,013			1,031			1,044			1,059
Goodwill	875			874			874			874			874
Other assets	1,872			2,471			2,656			2,180			3,748
Separate Accounts	9,072			9,026			8,193			7,375			8,239
Total assets	$	132,652		$	135,504		$	133,091		$	130,371		$	134,798
Liabilities
Reserve for property-liability insurance claims and claims expense	$	19,167		$	19,176		$	19,271		$	19,124		$	19,456
Reserve for life-contingent contract benefits	12,910			12,849			12,835			12,669			12,881
Contractholder funds	52,582			53,336			53,999			56,621			58,413
Unearned premiums	9,822			10,069			9,755			9,685			10,024
Claim payments outstanding	742			772			813			629			790
Other liabilities and accrued expenses	5,726			6,081			6,469			6,338			6,663
Long-term debt	5,910			6,661			6,658			5,659			5,659
Separate Accounts	9,072			9,026			8,193			7,375			8,239
Total liabilities	115,931			117,970			117,993			118,100			122,125
Equity
Common stock, 537 million, 536 million, 536 million, 536 million and 536 million shares outstanding	9			9			9			9			9
Additional capital paid-in	3,172			3,160			3,144			3,129			3,130
Retained income	31,492			31,083			30,969			29,825			30,207
Deferred ESOP expense	(47		)	(47		)	(47		)	(46		)	(49		)
Treasury stock, at cost ($363 million, $364 million, $364 million, $364 million and $364 million)	(15,828		)	(15,832		)	(15,835		)	(15,836		)	(15,855		)
Accumulated other comprehensive income:
Unrealized net capital gains and losses:
Unrealized net capital losses on fixed income securities with other-than-temporary impairment	(441		)	(411		)	(380		)	-			-
Other unrealized net capital gains and losses	(1,072		)	(1,218		)	(4,374		)	(6,227		)	(5,767		)
Unrealized adjustment to DAC, DSI and insurance reserves	643			1,741			2,642			2,460			2,029
Total unrealized net capital gains and losses	(870		)	112			(2,112		)	(3,767		)	(3,738		)
Unrealized foreign currency translation adjustments	46			42			17			(3		)	5
Unrecognized pension and other postretirement benefit cost	(1,282		)	(1,022		)	(1,077		)	(1,069		)	(1,068		)
Total accumulated other comprehensive loss	(2,106		)	(868		)	(3,172		)	(4,839		)	(4,801		)
Total shareholders’ equity	16,692			17,505			15,068			12,242			12,641
Noncontrolling interest	29			29			30			29			32
Total equity	16,721			17,534			15,098			12,271			12,673
Total liabilities and equity	$	132,652		$	135,504		$	133,091		$	130,371		$	134,798

(1)Reinsurance recoverables of unpaid losses related to Property-Liability were $2,139 million, $2,140 million, $2,162 million, $2,205 million and $2,275 million at December 31, 2009, September 30, 2009, June 30, 2009, March 31, 2009 and December 31, 2008, respectively.

4

THE ALLSTATE CORPORATION

BOOK VALUE PER SHARE

($ in millions, except per share data )

	Dec. 31,		Sept. 30,		June 30,		March 31,		Dec. 31,		Sept. 30,		June 30,		March 31,
	2009		2009		2009		2009		2008		2008		2008		2008
Book value per share
Numerator:
Shareholders’ equity	$	16,692	$	17,505	$	15,068	$	12,242	$	12,641	$	16,938	$	19,709	$	20,303
Denominator:
Shares outstanding and dilutive potential shares outstanding	541.3		542.1		540.6		540.5		538.5		539.6		549.4		557.9
Book value per share	$	30.84	$	32.29	$	27.87	$	22.65	$	23.47	$	31.39	$	35.87	$	36.39
Book value per share, excluding the impact of unrealized net capital gains and losses on fixed income securities *
Numerator:
Shareholders’ equity	$	16,692	$	17,505	$	15,068	$	12,242	$	12,641	$	16,938	$	19,709	$	20,303
Unrealized net capital gains and losses on fixed income securities	(967)		(81)		(1,988)		(3,314)		(3,533)		(1,515)		(550)		(514)
Adjusted shareholders’ equity	$	17,659	$	17,586	$	17,056	$	15,556	$	16,174	$	18,453	$	20,259	$	20,817
Denominator:
Shares outstanding and dilutive potential shares outstanding	541.3		542.1		540.6		540.5		538.5		539.6		549.4		557.9
Book value per share, excluding the impact of unrealized net capital gains and losses on fixed income securities	$	32.62	$	32.44	$	31.55	$	28.78	$	30.04	$	34.20	$	36.87	$	37.31

5

THE ALLSTATE CORPORATION

RETURN ON SHAREHOLDERS’ EQUITY

($ in millions)

	Twelve months ended
		Dec. 31,			Sept. 30,			June 30,			March 31,			Dec. 31,			Sept. 30,			June 30,			March 31,
		2009			2009			2009			2009			2008			2008			2008			2008
Return on Shareholders’ Equity
Numerator:
Net income (loss) (1)		$	854		$	(793)		$	(1,937)		$	(2,301)		$	(1,679)		$	210		$	2,111		$	3,489
Denominator:
Beginning shareholders’ equity		$	12,641		$	16,938		$	19,709		$	20,303		$	21,851		$	21,634		$	21,560		$	22,491
Ending shareholders’ equity		16,692			17,505			15,068			12,242			12,641			16,938			19,709			20,303
Average shareholders’ equity (2)		$	14,667		$	17,222		$	17,389		$	16,273		$	17,246		$	19,286		$	20,635		$	21,397
Return on shareholders’ equity		5.8		%	(4.6)		%	(11.1)		%	(14.1)		%	(9.7)		%	1.1		%	10.2		%	16.3		%
Operating Income Return on Shareholders’ Equity *
Numerator:
Operating income (1)		$	1,881		$	1,807		$	1,079		$	1,465		$	1,758		$	1,941		$	3,024		$	3,413
Denominator:
Beginning shareholders’ equity		$	12,641		$	16,938		$	19,709		$	20,303		$	21,851		$	21,634		$	21,560		$	22,491
Unrealized net capital gains and losses		(3,738)			(1,475)			(274)			(280)			888			1,376			1,430			2,058
Adjusted beginning shareholders’ equity		16,379			18,413			19,983			20,583			20,963			20,258			20,130			20,433
Ending shareholders’ equity		16,692			17,505			15,068			12,242			12,641			16,938			19,709			20,303
Unrealized net capital gains and losses		(870)			112			(2,112)			(3,767)			(3,738)			(1,475)			(274)			(280)
Adjusted ending shareholders’ equity		17,562			17,393			17,180			16,009			16,379			18,413			19,983			20,583
Average adjusted shareholders’ equity (2)		$	16,971		$	17,903		$	18,582		$	18,296		$	18,671		$	19,336		$	20,057		$	20,508
Operating income return on shareholders’ equity		11.1		%	10.1		%	5.8		%	8.0		%	9.4		%	10.0		%	15.1		%	16.6		%

(1)Net income (loss) and operating income reflect a trailing twelve-month period.

(2)Average shareholders’ equity and average adjusted shareholders’ equity are determined using a two-point average, with the beginning and ending shareholders’ equity and adjusted shareholders’ equity, respectively, for the twelve-month period as data points.

6

THE ALLSTATE CORPORATION

DEBT TO CAPITAL

($ in millions)

	Dec. 31,			Sept. 30,			June 30,			March 31,			Dec. 31,			Sept. 30,			June 30,			March 31,
	2009			2009			2009			2009			2008			2008			2008			2008
Debt
Short-term debt	$	-		$	-		$	-		$	-		$	-		$	-		$	18		$	2
Long-term debt	5,910			6,661			6,658			5,659			5,659			5,659			5,640			5,640
Total debt	$	5,910		$	6,661		$	6,658		$	5,659		$	5,659		$	5,659		$	5,658		$	5,642
Capital resources
Debt	$	5,910		$	6,661		$	6,658		$	5,659		$	5,659		$	5,659		$	5,658		$	5,642
Shareholders’ equity
Common stock	9			9			9			9			9			9			9			9
Additional capital paid-in	3,172			3,160			3,144			3,129			3,130			3,115			3,096			3,075
Retained income	31,492			31,083			30,969			29,825			30,207			31,557			32,701			32,902
Deferred ESOP expense	(47)			(47)			(47)			(46)			(49)			(49)			(49)			(49)
Treasury stock	(15,828)			(15,832)			(15,835)			(15,836)			(15,855)			(15,852)			(15,420)			(14,997)
Unrealized net capital gains and losses	(870)			112			(2,112)			(3,767)			(3,738)			(1,475)			(274)			(280)
Unrealized foreign currency translation adjustments	46			42			17			(3)			5			48			65			63
Unrecognized pension and other postretirement benefit cost	(1,282)			(1,022)			(1,077)			(1,069)			(1,068)			(415)			(419)			(420)
Total shareholders’ equity	16,692			17,505			15,068			12,242			12,641			16,938			19,709			20,303
Total capital resources	$	22,602		$	24,166		$	21,726		$	17,901		$	18,300		$	22,597		$	25,367		$	25,945
Ratio of debt to shareholders’ equity	35.4		%	38.1		%	44.2		%	46.2		%	44.8		%	33.4		%	28.7		%	27.8		%
Ratio of debt to capital resources	26.1		%	27.6		%	30.6		%	31.6		%	30.9		%	25.0		%	22.3		%	21.7		%

7

THE ALLSTATE CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

($ in millions)

	Three months ended																	Twelve months ended
		Dec. 31,		Sept. 30,		June 30,		March 31,		Dec. 31,		Sept. 30,		June 30,		March 31,		Dec. 31,		Dec. 31,
		2009		2009		2009		2009		2008		2008		2008		2008		2009		2008
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)		$	518	$	221	$	389	$	(274)	$	(1,129)	$	(923)	$	25	$	348	$	854	$	(1,679)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, amortization and other non-cash items		(4)		(1)		(12)		(74)		(109)		(126)		(82)		(59)		(91)		(376)
Realized capital gains and losses		33		519		(328)		359		1,932		1,288		1,215		655		583		5,090
(Gain) loss on disposition of operations		(1)		(2)		(1)		(3)		-		(3)		-		9		(7)		6
Interest credited to contractholder funds		490		496		561		579		638		586		563		624		2,126		2,411
Changes in:
Policy benefit and other insurance reserves		(117)		(312)		96		(244)		(532)		1,304		(154)		8		(577)		626
Unearned premiums		(253)		289		47		(330)		(380)		200		102		(281)		(247)		(359)
Deferred policy acquisition costs		43		(77)		167		381		597		(187)		(233)		(36)		514		141
Premium installment receivables, net		134		(163)		(16)		71		174		(144)		(31)		19		26		18
Reinsurance recoverables, net		16		32		(52)		(81)		50		(370)		89		(38)		(85)		(269)
Income taxes		485		(184)		(84)		1,443		(688)		(815)		(408)		47		1,660		(1,864)
Other operating assets and liabilities		(558)		215		193		(305)		(199)		447		93		(176)		(455)		165
Net cash provided by operating activities		786		1,033		960		1,522		354		1,257		1,179		1,120		4,301		3,910
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales
Fixed income securities		5,261		7,242		4,373		4,483		3,647		5,176		6,101		8,012		21,359		22,936
Equity securities		2,258		1,089		1,675		1,872		1,527		2,902		1,854		3,252		6,894		9,535
Limited partnership interests		76		79		60		154		101		56		100		114		369		371
Mortgage loans		200		(1)		129		12		51		24		204		-		340		279
Other investments		91		167		246		16		4		4		67		96		520		171
Investment collections
Fixed income securities		1,609		1,289		1,455		1,203		1,111		1,014		1,082		1,062		5,556		4,269
Mortgage loans		671		495		126		472		239		206		264		135		1,764		844
Other investments		18		34		34		31		19		10		43		26		117		98
Investment purchases
Fixed income securities		(6,879)		(10,270)		(6,999)		(5,425)		(2,088)		(2,930)		(4,156)		(5,274)		(29,573)		(14,448)
Equity securities		(2,505)		(1,784)		(2,274)		(1,933)		(1,057)		(3,265)		(2,249)		(2,906)		(8,496)		(9,477)
Limited partnership interests		(110)		(406)		(124)		(144)		(172)		(211)		(266)		(333)		(784)		(982)
Mortgage loans		(3)		(9)		(4)		(10)		1		(63)		(93)		(345)		(26)		(500)
Other investments		(10)		(13)		(41)		-		(18)		(47)		(54)		(21)		(64)		(140)
Change in short-term investments, net		544		2,270		2,460		707		(1,503)		(176)		(3,174)		(3,430)		5,981		(8,283)
Change in other investments, net		(196)		(64)		(32)		(48)		(54)		(146)		(48)		(226)		(340)		(474)
Disposition (acquisition) of operations		-		-		-		12		-		-		(120)		-		12		(120)
Purchases of property and equipment, net		(46)		(39)		(51)		(53)		(138)		(55)		(46)		(52)		(189)		(291)
Net cash provided by (used in) investing activities		979		79		1,033		1,349		1,670		2,499		(491)		110		3,440		3,788
CASH FLOWS FROM FINANCING ACTIVITIES
Change in short-term debt, net		-		-		-		-		-		(18)		16		2		-		-
Proceeds from issuance of long-term debt		-		3		1,000		-		1		19		-		-		1,003		20
Repayment of long-term debt		(751)		-		(1)		-		(1)		-		-		-		(752)		(1)
Contractholder fund deposits		898		802		1,152		1,298		1,286		1,663		4,211		2,824		4,150		9,984
Contractholder fund withdrawals		(1,921)		(1,749)		(4,159)		(3,577)		(2,983)		(5,056)		(3,938)		(3,503)		(11,406)		(15,480)
Dividends paid		(108)		(107)		(107)		(220)		(221)		(224)		(228)		(216)		(542)		(889)
Treasury stock purchases		(1)		-		-		(3)		(5)		(453)		(434)		(431)		(4)		(1,323)
Shares reissued under equity incentive plans, net		1		2		-		-		2		18		9		4		3		33
Excess tax benefits on share-based payment arrangements		1		-		-		(6)		-		1		1		1		(5)		3
Other		1		(3)		(48)		59		(43)		(99)		53		37		9		(52)
Net cash used in financing activities		(1,880)		(1,052)		(2,163)		(2,449)		(1,964)		(4,149)		(310)		(1,282)		(7,544)		(7,705)
NET (DECREASE) INCREASE IN CASH		(115)		60		(170)		422		60		(393)		378		(52)		197		(7)
CASH AT BEGINNING OF PERIOD		727		667		837		415		355		748		370		422		415		422
CASH AT END OF PERIOD		$	612	$	727	$	667	$	837	$	415	$	355	$	748	$	370	$	612	$	415

8

THE ALLSTATE CORPORATION

ANALYSIS OF DEFERRED POLICY ACQUISITION COSTS

($ in millions)

	Change in Deferred Policy Acquisition Costs
	For the three months ended December 31, 2009
							Accretion
							(amortization)
							relating to
							realized		Amortization		Effect of
	Beginning		Acquisition		Amortization		capital		acceleration		unrealized		Ending
	balance		costs		before		gains and		charged to		capital gains		balance
	Sept. 30, 2009		deferred		adjustments (1) (2)		losses (2) (3)		income (2)		and losses (4)		Dec. 31, 2009
Property-Liability	$	1,446	$	921	$	(957)	$	-	$	-	$	-	$	1,410
Allstate Financial:
Traditional life and accident and health	628		49		(27)		-		-		-		650
Interest-sensitive life	2,214		71		(40)		4		-		(3)		2,246
Fixed annuity	2,623		22		(23)		(62)		-		(1,401)		1,159
Other	5		-		-		-		-		-		5
Sub-total	5,470		142		(90)		(58)		-		(1,404)		4,060
Consolidated	$	6,916	$	1,063	$	(1,047)	$	(58)	$	-	$	(1,404)	$	5,470

	Change in Deferred Policy Acquisition Costs
	For the three months ended December 31, 2008
							Accretion
							relating to
							realized		Amortization		Effect of
	Beginning		Acquisition		Amortization		capital		acceleration		unrealized		Ending
	balance		costs		before		gains and		charged to		capital gains		balance
	Sept. 30, 2008		deferred		adjustments(1) (2)		losses(2) (3)		income(2)		and losses		Dec. 31, 2008
Property-Liability	$	1,526	$	900	$	(973)	$	-	$	-	$	-	$	1,453
Allstate Financial:
Traditional life and accident and health	915		47		(31)		-		(336)		-		595
Interest-sensitive life	2,239		79		(48)		120		(83)		142		2,449
Fixed annuity	3,160		41		(62)		20		(269)		1,147		4,037
Variable annuity	1		-		(1)		-		-		-		-
Other	10		-		(2)		-		-		-		8
Sub-total	6,325		167		(144)		140		(688)		1,289		7,089
Consolidated	$	7,851	$	1,067	$	(1,117)	$	140	$	(688)	$	1,289	$	8,542

(1)	Amortization before adjustments reflects total DAC amortization before amortization/accretion related to realized capital gains and losses and amortization acceleration/deceleration charged/credited to income.
(2)	Included as a component of amortization of DAC on the Consolidated Statements of Operations.
(3)	In 2009, DAC amortization resulted primarily from realized capital gains on derivatives.  Additionally, DAC amortization reflects our decision in the second half of 2009 not to recapitalize DAC for credit losses on investments supporting certain fixed annuities following concerns that an increase in the level of expected realized capital losses in 2010 and 2011 may reduce EGP and adversely impact DAC recoverability.  In 2008, DAC accretion resulted primarily from realized capital losses on derivatives and other-than-temporary impairment losses.  Despite the recent improvement in the credit markets and the overall economy, the cumulative impact of realized capital losses through December 31, 2009 has negatively impacted both the actual and expected gross profits of our fixed annuity business.  In the fourth quarter of 2009, we reviewed and updated the gross profit assumptions used in substantially all of our fixed annuity DAC models to exclude excess realized capital losses when determining gross profits used for calculating DAC amortization.  This is consistent with our decision not to record negative amortization related to realized capital losses for these fixed annuities, which is expected to be our practice during periods when realized capital losses are reported.  This treatment results in a lower DAC amortization rate for these fixed annuities.  The lower rate of amortization will be applied to a higher level of actual gross profits, as gross profits used to determine DAC amortization will exclude excess realized capital losses.
(4)	Represents the change in the DAC adjustment for unrealized capital gains and losses.  The DAC adjustment balance represents the amount by which the amortization of DAC would increase or decrease if the unrealized gains or losses in the respective product portfolios were realized.  The DAC adjustment balance, subject to limitations, is determined by applying the DAC amortization rate to unrealized net capital gains or losses.  The fixed annuity DAC adjustment for unrealized capital gains and losses declined as of December 31, 2009 as a result of lower unrealized capital losses and the lower rate of DAC amortization used for certain fixed annuities discussed above.  Changes in the DAC adjustment balance relating to unrealized capital gains and losses are reported through other comprehensive income.

9

THE ALLSTATE CORPORATION

ANALYSIS OF DEFERRED POLICY ACQUISITION COSTS

($ in millions)

	Change in Deferred Policy Acquisition Costs																		Reconciliation of Deferred Policy
	For the twelve months ended December 31, 2009																		Acquisition Costs as of December 31, 2009
					Impact of						Amortization
			Impact of		adoption of new						relating to		Amortization						DAC before				DAC after
			adoption of new		OTTI accounting						realized		(acceleration)		Effect of				impact of		Impact of		impact of
	Beginning		OTTI accounting		effect of		Acquisition		Amortization		capital		deceleration		unrealized		Ending		unrealized		unrealized		unrealized
	balance		before		unrealized capital		costs		before		gains and		(charged) credited		capital gains		balance		capital gains		capital gains		capital gains
	Dec. 31, 2008		unrealized impact (1)		gains and losses (2)		deferred		adjustments (3) (4)		losses (4)		to income (4)		and losses		Dec. 31, 2009		and losses		and losses		and losses
Property-Liability	$	1,453	$	-	$	-	$	3,746	$	(3,789)	$	-	$	-	$	-	$	1,410	$	1,410	$	-	$	1,410
Allstate Financial:
Traditional life and accident and health	595		-		-		162		(107)		-		-		-		650		650		-		650
Interest-sensitive life	2,449		(6)		6		230		(176)		(4)		12		(265)		2,246		2,149		97		2,246
Fixed annuity	4,037		(170)		170		103		(186)		(212)		(289)		(2,294)		1,159		386		773		1,159
Other	8		-		-		-		(3)		-		-		-		5		5		-		5
Sub-total	7,089		(176)		176		495		(472)		(216)		(277)		(2,559)		4,060		3,190		870		4,060
Consolidated	$	8,542	$	(176)	$	176	$	4,241	$	(4,261)	$	(216)	$	(277)	$	(2,559)	$	5,470	$	4,600	$	870	$	5,470
	Change in Deferred Policy Acquisition Costs														Reconciliation of Deferred Policy
	For the twelve months ended December 31, 2008														Acquisition Costs as of December 31, 2008
							Accretion
							relating to		Amortization						DAC before				DAC after
							realized		(acceleration)		Effect of				impact of		Impact of		impact of
	Beginning		Acquisition		Amortization		capital		deceleration		unrealized		Ending		unrealized		unrealized		unrealized
	Balance		costs		before		gains and		(charged) credited		capital gains		balance		capital gains		capital gains		capital gains
	Dec. 31, 2007		deferred		adjustments (3) (4)		losses (4)		to income (4)		and losses		Dec. 31, 2008		and losses		and losses		and losses
Property-Liability	$	1,477	$	3,951	$	(3,975)	$	-	$	-	$	-	$	1,453	$	1,453	$	-	$	1,453
Allstate Financial:
Traditional life and accident and health	882		160		(111)		-		(336)		-		595		595		-		595
Interest-sensitive life	1,911		304		(178)		141		(75)		346		2,449		2,093		356		2,449
Fixed annuity	1,489		212		(258)		374		(252)		2,472		4,037		1,140		2,897		4,037
Variable annuity	2		-		(2)		-		-		-		-		-		-		-
Other	7		8		(7)		-		-		-		8		8		-		8
Sub-total	4,291		684		(556)		515		(663)		2,818		7,089		3,836		3,253		7,089
Consolidated	$	5,768	$	4,635	$	(4,531)	$	515	$	(663)	$	2,818	$	8,542	$	5,289	$	3,253	$	8,542

(1)	The adoption of new accounting guidance for the recognition of other-than-temporary impairments of fixed income securities (“new OTTI accounting”) resulted in an adjustment to DAC to reverse previously recorded DAC accretion related to realized capital losses that were reclassified to other comprehensive income upon adoption on April 1, 2009. The adjustment was recorded as a reduction of the DAC balance and retained earnings.
(2)	The adoption of new OTTI accounting resulted in an adjustment to DAC due to the change in unrealized capital gains and losses balance that occurred upon adoption on April 1, 2009 when previously recorded realized capital losses were reclassified to other comprehensive income. The adjustment was recorded as an increase of the DAC balance and unrealized net capital gains and losses.
(3)	Amortization before adjustments reflects total DAC amortization before amortization/accretion related to realized capital gains and losses and amortization acceleration/deceleration charged/credited to income.
(4)	Included as a component of amortization of DAC on the Consolidated Statements of Operations.

10

THE ALLSTATE CORPORATION

HISTORICAL CONSOLIDATED OPERATING

AND FINANCIAL POSITION DATA

($ in millions except per share data)

	At or for the Year Ended December 31,
	2009		2008		2007		2006		2005
Consolidated statements of operations data:
Insurance premiums and contract charges	$	28,152	$	28,862	$	29,099	$	29,333	$	29,088
Net investment income	4,444		5,622		6,435		6,177		5,746
Realized capital gains and losses	(583)		(5,090)		1,235		286		549
Total revenues	$	32,013	$	29,394	$	36,769	$	35,796	$	35,383
Operating income	$	1,881	$	1,758	$	3,863	$	4,888	$	1,582
Realized capital gains and losses, after-tax	(628)		(3,311)		798		186		360
DAC and DSI (amortization) accretion relating to realized capital gains and losses, after-tax	(177)		385		12		36		(103)
DAC and DSI unlocking relating to realized capital gains and losses, after-tax	(224)		(274)		-		-		-
Non-recurring items, after-tax (1)	-		(219)		-		(18)		(22)
Reclassification of periodic settlements and accruals on non-hedge derivative instruments, after-tax	(2)		(14)		(29)		(36)		(40)
Gain (loss) on disposition of operations, after-tax	4		(4)		(8)		(63)		(12)
Net income (loss)	$	854	$	(1,679)	$	4,636	$	4,993	$	1,765
Income per share - Diluted (2)
Operating income	$	3.48	$	3.21	$	6.47	$	7.66	$	2.37
Realized capital gains and losses, after-tax	(1.16)		(6.04)		1.33		0.29		0.54
DAC and DSI (amortization) accretion relating to realized capital gains and losses, after-tax	(0.33)		0.70		0.02		0.06		(0.15)
DAC and DSI unlocking relating to realized capital gains and losses, after-tax	(0.42)		(0.50)		-		-		-
Non-recurring items, after-tax (1)	-		(0.40)		-		(0.03)		(0.03)
Reclassification of periodic settlements and accruals on non-hedge derivative instruments, after-tax	-		(0.02)		(0.05)		(0.05)		(0.06)
Gain (loss) on disposition of operations, after-tax	0.01		(0.01)		(0.01)		(0.10)		(0.02)
Net income (loss)	$	1.58	$	(3.06)	$	7.76	$	7.83	$	2.65
Net income (loss) per share - Basic	$	1.58	$	(3.06)	$	7.80	$	7.88	$	2.67
Consolidated statements of financial position data:
Investments	$	99,833	$	95,998	$	118,980	$	119,757	$	118,297
Total assets	132,652		134,798		156,408		157,554		156,072
Reserves for claims and claims expense, life-contingent contract benefits and contractholder funds	84,659		90,750		94,052		93,683		94,639
Debt	5,910		5,659		5,640		4,662		5,300
Shareholders’ equity	16,692		12,641		21,851		21,846		20,186
Book value per share (2)	30.84		23.47		38.54		34.80		31.01
Operating ratios:
Annual statutory premiums written to surplus ratio (U.S. property-liability operations)	1.7x		1.9x		1.5x		1.4x		1.8x
Other operating data:
Total employees (excluding agents) (3)	36,000		38,500		38,400		37,200		38,900
Total Allstate agencies (3)	14,200		14,700		15,000		14,800		14,100

(1)	During the fourth quarter of 2008, for traditional life insurance and immediate annuities with life contingencies, an aggregate premium deficiency of $336 million, pre-tax ($219 million, after-tax) resulted primarily from an experience study indicating that the annuitants on certain life-contingent contracts are projected to live longer than we anticipated when the contracts were issued, and, to a lesser degree, a reduction in the related investment portfolio yield. The deficiency was recorded through a reduction in deferred acquisition costs.
(2)	As a result of the adoption of new earnings per share accounting guidance in the first quarter of 2009, prior period amounts have been restated.
(3)	Rounded to the nearest hundred.

11

THE ALLSTATE CORPORATION

PROPERTY-LIABILITY RESULTS

($ in millions, except ratios)

	Three months ended																	Twelve months ended
		Dec. 31,		Sept. 30,		June 30,		March 31,		Dec. 31,		Sept. 30,		June 30,		March 31,		Dec. 31,		Dec. 31,
		2009		2009		2009		2009 (1)		2008		2008		2008		2008		2009 (1)		2008
Premiums written *		$	6,277	$	6,810	$	6,615	$	6,269	$	6,301	$	6,966	$	6,803	$	6,514	$	25,971	$	26,584
Decrease (increase) in unearned premium		248		(315)		(70)		337		424		(181)		(154)		294		200		383
Other		(8)		40		15		(24)		(57)		-		101		(44)		23		-
Premiums earned		6,517		6,535		6,560		6,582		6,668		6,785		6,750		6,764		26,194		26,967
Claims and claims expense		(4,451)		(4,573)		(5,002)		(4,720)		(4,641)		(5,971)		(4,776)		(4,676)		(18,746)		(20,064)
Amortization of deferred policy acquisition costs		(957)		(943)		(940)		(949)		(973)		(991)		(1,000)		(1,011)		(3,789)		(3,975)
Operating costs and expenses		(648)		(642)		(591)		(678)		(793)		(678)		(601)		(670)		(2,559)		(2,742)
Restructuring and related charges		(17)		(31)		(30)		(27)		(18)		(10)		5		1		(105)		(22)
Underwriting income (loss) *		444		346		(3)		208		243		(865)		378		408		995		164
Net investment income		324		326		334		344		387		386		431		470		1,328		1,674
Periodic settlements and accruals on non-hedge derivative instruments		(2)		(2)		(3)		(3)		(1)		1		-		1		(10)		1
Income tax (expense) benefit on operations		(212)		(169)		(39)		(135)		(164)		230		(217)		(250)		(555)		(401)
Operating income (loss)		554		501		289		414		465		(248)		592		629		1,758		1,438
Realized capital gains and losses, after-tax		151		(188)		131		(316)		(519)		(412)		(153)		(125)		(222)		(1,209)
Reclassification of periodic settlements and accruals on non-hedge derivative instruments, after-tax		2		1		2		2		1		(1)		-		(1)		7		(1)
Net income (loss)		$	707	$	314	$	422	$	100	$	(53)	$	(661)	$	439	$	503	$	1,543	$	228
Catastrophe losses		$	328	$	407	$	818	$	516	$	260	$	1,816	$	698	$	568	$	2,069	$	3,342
Operating ratios *
Claims and claims expense ratio		68.3		70.0		76.2		71.7		69.6		88.0		70.8		69.1		71.6		74.4
Expense ratio (2)		24.9		24.7		23.8		25.1		26.8		24.7		23.6		24.9		24.6		25.0
Combined ratio		93.2		94.7		100.0		96.8		96.4		112.7		94.4		94.0		96.2		99.4
Combined ratio excluding the effect of catastrophes *		88.2		88.5		87.5		89.0		92.5		85.9		84.1		85.6		88.3		87.0
Effect of catastrophe losses on combined ratio *		5.0		6.2		12.5		7.8		3.9		26.8		10.3		8.4		7.9		12.4
Combined ratio		93.2		94.7		100.0		96.8		96.4		112.7		94.4		94.0		96.2		99.4
Combined ratio excluding the effect of catastrophes and prior year reserve reestimates (“underlying”) *		88.1		88.0		87.2		88.9		91.5		85.9		84.1		85.8		88.1		86.8
Effect of catastrophe losses on combined ratio *		5.0		6.2		12.5		7.8		3.9		26.8		10.3		8.4		7.9		12.4
Effect of prior year reserve reestimates on combined ratio *		(0.4)		(0.7)		0.3		(0.8)		1.0		-		0.1		1.5		(0.4)		0.7
Effect of catastrophe losses included in prior year reserve reestimates on combined ratio		0.5		1.2		-		0.9		-		-		(0.1)		(1.7)		0.6		(0.5)
Combined ratio		93.2		94.7		100.0		96.8		96.4		112.7		94.4		94.0		96.2		99.4
Effect of restructuring and related charges on combined ratio *		0.3		0.5		0.5		0.4		0.3		0.1		(0.1)		-		0.4		0.1
Effect of Discontinued Lines and Coverages on combined ratio		0.1		0.3		-		0.1		0.1		0.1		-		0.1		0.1		0.1

(1)      Income tax expense for the three months ended March 31, 2009 and twelve months ended December 31, 2009 includes expense of $112 million attributable to an increase in the valuation allowance relating to the deferred tax asset on capital losses recorded in the first quarter of 2009. This valuation allowance was released in connection with the adoption of new OTTI accounting guidance on April 1, 2009; however, the release was recorded as an increase to retained income and therefore did not reverse the amount recorded in income tax expense.

(2)      The decline in the expense ratio in the fourth quarter of 2009 compared to the fourth quarter of 2008 includes a reduction in the net cost of benefits totaling $36 million and a write-off in the prior year period of capitalized software costs totaling $34 million.

12

THE ALLSTATE CORPORATION

HISTORICAL PROPERTY-LIABILITY RESULTS

($ in millions)

	Twelve months ended December 31,
	2009		2008		2007		2006		2005
Premiums written	$	25,971	$	26,584	$	27,183	$	27,526	$	27,391
Decrease (increase) in unearned premium	200		383		17		(354)		(349)
Other	23		-		33		197		(3)
Premiums earned	26,194		26,967		27,233		27,369		27,039
Claims and claims expense	(18,746)		(20,064)		(17,667)		(16,017)		(21,175)
Amortization of deferred policy acquisition costs	(3,789)		(3,975)		(4,121)		(4,131)		(4,092)
Operating costs and expenses	(2,559)		(2,742)		(2,634)		(2,567)		(2,369)
Restructuring and related charges	(105)		(22)		(27)		(157)		(39)
Underwriting income (loss)	995		164		2,784		4,497		(636)
Net investment income	1,328		1,674		1,972		1,854		1,791
Periodic settlement and accruals on non-hedge derivative instruments	(10)		1		-		-		-
Income tax expense on operations	(555)		(401)		(1,413)		(1,963)		(63)
Operating income	1,758		1,438		3,343		4,388		1,092
Realized capital gains and losses, after-tax	(222)		(1,209)		915		227		339
Loss on disposition of operations, after-tax	-		-		-		(1)		-
Reclassification of periodic settlements and accruals on non-hedge derivative instruments, after-tax	7		(1)		-		-		-
Net income	$	1,543	$	228	$	4,258	$	4,614	$	1,431
Catastrophe losses	$	2,069	$	3,342	$	1,409	$	810	$	5,674
Operating ratios
Claims and claims expense ratio	71.6		74.4		64.9		58.5		78.3
Expense ratio	24.6		25.0		24.9		25.1		24.1
Combined ratio	96.2		99.4		89.8		83.6		102.4
Combined ratio excluding the effect of catastrophes	88.3		87.0		84.6		80.6		81.4
Effect of catastrophe losses on combined ratio	7.9		12.4		5.2		3.0		21.0
Combined ratio	96.2		99.4		89.8		83.6		102.4
Combined ratio excluding the effect of catastrophes and prior year reserve reestimates (“underlying”)	88.1		86.8		85.7		83.3		83.5
Effect of catastrophe losses on combined ratio	7.9		12.4		5.2		3.0		21.0
Effect of prior year reserve reestimates on combined ratio	(0.4)		0.7		(0.6)		(3.5)		(1.7)
Effect of catastrophe losses included in prior year reserve reestimate on combined ratio	0.6		(0.5)		(0.5)		0.8		(0.4)
Combined ratio	96.2		99.4		89.8		83.6		102.4
Effect of restructuring and related charges on combined ratio	0.4		0.1		0.1		0.6		0.1
Effect of Discontinued Lines and Coverages on the combined ratio	0.1		0.1		0.2		0.5		0.7

13

THE ALLSTATE CORPORATION

PROPERTY-LIABILITY UNDERWRITING RESULTS BY AREA OF BUSINESS

($ in millions)

	Three months ended																	Twelve months ended
		Dec. 31,		Sept. 30,		June 30,		March 31,		Dec. 31,		Sept. 30,		June 30,		March 31,		Dec. 31,		Dec. 31,
		2009		2009		2009		2009		2008		2008		2008		2008		2009		2008
Property-Liability Underwriting Summary
Allstate Protection		$	449	$	363	$	1	$	214	$	250	$	(857)	$	381	$	415	$	1,027	$	189
Discontinued Lines and Coverages		(5)		(17)		(4)		(6)		(7)		(8)		(3)		(7)		(32)		(25)
Underwriting income (loss)		$	444	$	346	$	(3)	$	208	$	243	$	(865)	$	378	$	408	$	995	$	164
Allstate Protection Underwriting Summary
Premiums written		$	6,277	$	6,810	$	6,615	$	6,270	$	6,301	$	6,966	$	6,803	$	6,514	$	25,972	$	26,584
Premiums earned		$	6,517	$	6,535	$	6,560	$	6,583	$	6,668	$	6,785	$	6,750	$	6,764	$	26,195	$	26,967
Claims and claims expense		(4,448)		(4,557)		(5,000)		(4,717)		(4,636)		(5,965)		(4,774)		(4,671)		(18,722)		(20,046)
Amortization of deferred policy acquisition costs		(957)		(943)		(940)		(949)		(973)		(991)		(1,000)		(1,011)		(3,789)		(3,975)
Operating costs and expenses		(646)		(641)		(589)		(676)		(791)		(676)		(600)		(668)		(2,552)		(2,735)
Restructuring and related charges		(17)		(31)		(30)		(27)		(18)		(10)		5		1		(105)		(22)
Underwriting income (loss)		$	449	$	363	$	1	$	214	$	250	$	(857)	$	381	$	415	$	1,027	$	189
Catastrophe losses		$	328	$	407	$	818	$	516	$	260	$	1,816	$	698	$	568	$	2,069	$	3,342
Operating ratios
Claims and claims expense ratio		68.2		69.7		76.2		71.6		69.6		87.9		70.7		69.1		71.5		74.3
Expense ratio		24.9		24.7		23.8		25.1		26.7		24.7		23.7		24.8		24.6		25.0
Combined ratio		93.1		94.4		100.0		96.7		96.3		112.6		94.4		93.9		96.1		99.3
Effect of catastrophe losses on combined ratio		5.0		6.2		12.5		7.8		3.9		26.8		10.3		8.4		7.9		12.4
Effect of restructuring and related charges on combined ratio		0.3		0.5		0.5		0.4		0.3		0.1		(0.1)		-		0.4		0.1
Discontinued Lines and Coverages Underwriting Summary
Premiums written		$	-	$	-	$	-	$	(1)	$	-	$	-	$	-	$	-	$	(1)	$	-
Premiums earned		$	-	$	-	$	-	$	(1)	$	-	$	-	$	-	$	-	$	(1)	$	-
Claims and claims expense		(3)		(16)		(2)		(3)		(5)		(6)		(2)		(5)		(24)		(18)
Operating costs and expenses		(2)		(1)		(2)		(2)		(2)		(2)		(1)		(2)		(7)		(7)
Underwriting loss		$	(5)	$	(17)	$	(4)	$	(6)	$	(7)	$	(8)	$	(3)	$	(7)	$	(32)	$	(25)
Effect of Discontinued Lines and Coverages on the Property-Liability combined ratio		0.1		0.3		-		0.1		0.1		0.1		-		0.1		0.1		0.1

14

THE ALLSTATE CORPORATION

HISTORICAL PROPERTY-LIABILITY

UNDERWRITING RESULTS BY AREA OF BUSINESS

($ in millions)

	Twelve months ended December 31,
	2009		2008		2007		2006		2005
Property-Liability Underwriting Summary
Allstate Protection	$	1,027	$	189	$	2,838	$	4,636	$	(461)
Discontinued Lines and Coverages	(32)		(25)		(54)		(139)		(175)
Underwriting income (loss)	$	995	$	164	$	2,784	$	4,497	$	(636)
Allstate Protection Underwriting Summary
Premiums written	$	25,972	$	26,584	$	27,183	$	27,525	$	27,393
Premiums earned	$	26,195	$	26,967	$	27,232	$	27,366	$	27,038
Claims and claims expense	(18,722)		(20,046)		(17,620)		(15,885)		(21,008)
Amortization of deferred policy acquisition costs	(3,789)		(3,975)		(4,121)		(4,131)		(4,092)
Operating costs and expenses	(2,552)		(2,735)		(2,626)		(2,557)		(2,360)
Restructuring and related charges	(105)		(22)		(27)		(157)		(39)
Underwriting income (loss)	$	1,027	$	189	$	2,838	$	4,636	$	(461)
Catastrophe losses	$	2,069	$	3,342	$	1,409	$	810	$	5,674
Operating ratios
Claims and claims expense ratio	71.5		74.3		64.7		58.1		77.7
Expense ratio	24.6		25.0		24.9		25.0		24.0
Combined ratio	96.1		99.3		89.6		83.1		101.7
Effect of catastrophe losses on combined ratio	7.9		12.4		5.2		3.0		21.0
Effect of restructuring and related charges on combined ratio	0.4		0.1		0.1		0.6		0.1
Discontinued Lines and Coverages Underwriting Summary
Premiums written	$	(1)	$	-	$	-	$	1	$	(2)
Premiums earned	$	(1)	$	-	$	1	$	3	$	1
Claims and claims expense	(24)		(18)		(47)		(132)		(167)
Operating costs and expenses	(7)		(7)		(8)		(10)		(9)
Underwriting loss	$	(32)	$	(25)	$	(54)	$	(139)	$	(175)
Effect of Discontinued Lines and Coverages on the Property-Liability combined ratio	0.1		0.1		0.2		0.5		0.7

15

THE ALLSTATE CORPORATION

PROPERTY-LIABILITY PREMIUMS WRITTEN BY MARKET SEGMENT

($ in millions)

	Three months ended																	Twelve months ended
		Dec. 31,		Sept. 30,		June 30,		March 31,		Dec. 31,		Sept. 30,		June 30,		March 31,		Dec. 31,		Dec. 31,
		2009		2009		2009		2009		2008		2008		2008		2008		2009		2008
Allstate brand (1)
Standard auto		$	3,860	$	4,049	$	3,876	$	3,978	$	3,834	$	4,050	$	3,957	$	4,077	$	15,763	$	15,918
Non-standard auto		219		235		232		241		226		257		261		274		927		1,018
Auto		4,079		4,284		4,108		4,219		4,060		4,307		4,218		4,351		16,690		16,936
Involuntary auto		15		13		15		12		12		13		17		16		55		58
Commercial lines		128		132		147		143		142		153		173		167		550		635
Homeowners		1,359		1,573		1,532		1,171		1,347		1,576		1,531		1,185		5,635		5,639
Other personal lines		410		460		451		391		383		488		423		371		1,712		1,665
		5,991		6,462		6,253		5,936		5,944		6,537		6,362		6,090		24,642		24,933
Encompass brand
Standard auto		171		208		217		204		219		264		272		270		800		1,025
Non-standard auto		3		6		5		8		9		8		11		12		22		40
Auto		174		214		222		212		228		272		283		282		822		1,065
Involuntary auto		2		2		3		3		2		4		3		3		10		12
Homeowners		89		110		112		97		103		126		129		113		408		471
Other personal lines		21		22		25		22		24		27		26		26		90		103
		286		348		362		334		357		429		441		424		1,330		1,651
Allstate Protection		6,277		6,810		6,615		6,270		6,301		6,966		6,803		6,514		25,972		26,584
Discontinued Lines and Coverages		-		-		-		(1)		-		-		-		-		(1)		-
Property-Liability		$	6,277	$	6,810	$	6,615	$	6,269	$	6,301	$	6,966	$	6,803	$	6,514	$	25,971	$	26,584
Allstate Protection
Standard auto		$	4,031	$	4,257	$	4,093	$	4,182	$	4,053	$	4,314	$	4,229	$	4,347	$	16,563	$	16,943
Non-standard auto		222		241		237		249		235		265		272		286		949		1,058
Auto		4,253		4,498		4,330		4,431		4,288		4,579		4,501		4,633		17,512		18,001
Involuntary auto		17		15		18		15		14		17		20		19		65		70
Commercial lines		128		132		147		143		142		153		173		167		550		635
Homeowners		1,448		1,683		1,644		1,268		1,450		1,702		1,660		1,298		6,043		6,110
Other personal lines		431		482		476		413		407		515		449		397		1,802		1,768
		$	6,277	$	6,810	$	6,615	$	6,270	$	6,301	$	6,966	$	6,803	$	6,514	$	25,972	$	26,584

(1) Allstate brand premiums written by the direct channel, including customer information centers and the internet, totaled $161 million, $169 million, $146 million, $146 million, $128 million, $131 million, $119 million and $118 million for the three months ended December 31, 2009, September 30, 2009, June 30, 2009, March 31, 2009, December 31, 2008, September 30, 2008, June 30, 2008 and March 31, 2008, respectively. Allstate brand premiums written by the direct channel totaled $622 million and $496 million for the twelve months ended December 31, 2009 and December 31, 2008, respectively.

16

THE ALLSTATE CORPORATION

ALLSTATE PROTECTION MARKET SEGMENT ANALYSIS

($ in millions)

	Three months ended December 31,
	2009		2008		2009		2008		2009		2008		2009		2008		2009	2008	2009	2008	2009	2008	2009	2008
																							Effect of Pre-tax
																			Effect of				Prior Year Reserve
									Incurred										Catastrophe Losses				Reestimates on the
	Premiums Earned				Incurred Losses				Catastrophe Losses				Expenses				Loss Ratio (2)		on the Loss Ratio (2)		Expense Ratio (2)		Combined Ratio (2)
Allstate brand
Standard auto	$	3,944	$	3,939	$	2,729	$	2,888	$	(12)	$	23	$	965	$	1,026	69.2	73.3	(0.3)	0.6	24.5	26.1	(0.7)	1.5
Non-standard auto	231		246		160		165		1		1		58		61		69.3	67.1	0.4	0.4	25.1	24.8	0.4	2.4
Auto	4,175		4,185		2,889		3,053		(11)		24		1,023		1,087		69.2	72.9	(0.3)	0.6	24.5	26.0	(0.6)	1.6
Homeowners	1,411		1,459		919		875		290		169		337		360		65.1	59.9	20.6	11.6	23.9	24.7	(3.3)	0.9
Other (1)	591		606		394		405		39		54		169		210		66.7	66.8	6.6	8.9	28.6	34.7	9.0	(2.1)
Total Allstate brand	6,177		6,250		4,202		4,333		318		247		1,529		1,657		68.0	69.3	5.1	4.0	24.8	26.5	(0.3)	1.0
Encompass brand
Standard auto	205		261		159		204		(1)		1		52		73		77.5	78.1	(0.5)	0.4	25.4	28.0	(0.5)	(0.4)
Non-standard auto	5		10		4		13		-		-		2		5		80.0	130.0	-	-	40.0	50.0	(20.0)	30.0
Auto	210		271		163		217		(1)		1		54		78		77.6	80.1	(0.5)	0.4	25.7	28.8	(1.0)	0.7
Homeowners	104		117		60		62		10		7		31		39		57.7	53.0	9.6	6.0	29.8	33.3	(3.8)	(4.3)
Other (1)	26		30		23		24		1		5		6		8		88.4	80.0	3.8	16.7	23.1	26.7	(7.7)	(20.0)
Total Encompass brand	340		418		246		303		10		13		91		125		72.3	72.5	2.9	3.1	26.8	29.9	(2.4)	(2.2)
Allstate Protection	$	6,517	$	6,668	$	4,448	$	4,636	$	328	$	260	$	1,620	$	1,782	68.2	69.6	5.0	3.9	24.9	26.7	(0.4)	0.9

	Twelve months ended December 31,
	2009		2008		2009		2008		2009		2008		2009		2008		2009	2008	2009	2008	2009	2008	2009	2008
																							Effect of Pre-tax
																			Effect of				Prior Year Reserve
									Incurred										Catastrophe Losses				Reestimates onthe
	Premiums Earned				Incurred Losses				Catastrophe Losses				Expenses				Loss Ratio (2)		on the Loss Ratio (2)		Expense Ratio (2)		CombinedRatio (2)
Allstate brand
Standard auto	$	15,735	$	15,957	$	10,912	$	10,873	$	187	$	238	$	3,823	$	3,907	69.3	68.1	1.2	1.5	24.3	24.5	(0.3)	0.1
Non-standard auto	939		1,055		630		657		7		10		230		251		67.1	62.3	0.7	0.9	24.5	23.8	(1.6)	(0.1)
Auto	16,674		17,012		11,542		11,530		194		248		4,053		4,158		69.2	67.8	1.2	1.5	24.3	24.4	(0.4)	0.1
Homeowners	5,633		5,758		4,484		5,543		1,636		2,675		1,296		1,350		79.6	96.3	29.0	46.5	23.0	23.4	(2.6)	2.1
Other (1)	2,402		2,434		1,617		1,686		169		258		695		717		67.3	69.3	7.0	10.6	29.0	29.4	3.5	0.6
Total Allstate brand	24,709		25,204		17,643		18,759		1,999		3,181		6,044		6,225		71.4	74.4	8.1	12.6	24.5	24.7	(0.5)	0.6
Encompass brand
Standard auto	907		1,091		684		723		3		10		236		298		75.4	66.3	0.3	0.9	26.0	27.3	0.7	(4.2)
Non-standard auto	27		45		20		40		-		-		10		16		74.1	88.9	-	-	37.0	35.5	(11.1)	-
Auto	934		1,136		704		763		3		10		246		314		75.4	67.2	0.3	0.9	26.3	27.6	0.3	(4.0)
Homeowners	444		503		293		384		65		140		129		159		66.0	76.4	14.6	27.8	29.0	31.6	(4.3)	0.4
Other (1)	108		124		82		140		2		11		27		34		75.9	112.9	1.9	8.9	25.0	27.4	5.6	33.1
Total Encompass brand	1,486		1,763		1,079		1,287		70		161		402		507		72.6	73.0	4.7	9.1	27.1	28.8	(0.7)	(0.2)
Allstate Protection	$	26,195	$	26,967	$	18,722	$	20,046	$	2,069	$	3,342	$	6,446	$	6,732	71.5	74.3	7.9	12.4	24.6	25.0	(0.5)	0.6

(1)	Other includes commercial, condominium, renters, involuntary auto and other personal lines.
(2)	Ratios are calculated using the premiums earned for the respective line of business.

17

THE ALLSTATE CORPORATION

ALLSTATE PROTECTION HISTORICAL MARKET SEGMENT ANALYSIS

($ in millions)

	Three months ended December 31, 2009						Three months ended September 30, 2009					Three months ended June 30, 2009					Three months ended March 31, 2009
	Premiums Earned		Loss Ratio	Effect of CAT Losses on Loss Ratio		Expense Ratio	Premiums Earned		Loss Ratio	Effect of CAT Losses on Loss Ratio	Expense Ratio	Premiums Earned		Loss Ratio	Effect of CAT Losses on Loss Ratio	Expense Ratio	Premiums Earned		Loss Ratio	Effect of CAT Losses on Loss Ratio	Expense Ratio
Allstate brand
Standard auto	$	3,944	69.2	(0.3	)	24.5	$	3,946	68.6	1.3	24.1	$	3,928	70.7	2.1	24.2	$	3,917	68.8	1.6	24.5
Non-standard auto	231		69.3	0.4		25.1	231		63.6	0.4	25.6	240		67.1	1.3	23.7	237		68.4	0.8	23.6
Auto	4,175		69.2	(0.3	)	24.5	4,177		68.4	1.3	24.1	4,168		70.6	2.1	24.1	4,154		68.8	1.6	24.5
Homeowners	1,411		65.1	20.6		23.9	1,396		75.4	22.3	22.9	1,409		95.1	45.8	21.2	1,417		82.7	27.5	24.1
Other (1)	591		66.7	6.6		28.6	601		64.1	4.0	31.6	600		72.5	9.8	25.3	610		66.1	7.7	30.1
Total Allstate brand	6,177		68.0	5.1		24.8	6,174		69.5	6.3	24.6	6,177		76.3	12.8	23.6	6,181		71.7	8.1	25.0
Encompass brand
Standard auto	205		77.5	(0.5	)	25.4	221		76.9	0.5	25.4	234		73.5	0.4	26.1	247		74.1	0.8	27.1
Non-standard auto	5		80.0	-		40.0	6		66.7	-	50.0	7		85.7	-	28.6	9		66.7	-	33.3
Auto	210		77.6	(0.5	)	25.7	227		76.6	0.4	26.0	241		73.9	0.4	26.1	256		73.8	0.8	27.4
Homeowners	104		57.7	9.6		29.8	108		67.6	15.7	29.6	114		76.3	22.8	28.1	118		61.9	10.2	28.8
Other (1)	26		88.4	3.8		23.1	26		65.4	-	26.9	28		71.4	3.6	25.0	28		78.6	-	25.0
Total Encompass brand	340		72.3	2.9		26.8	361		73.1	5.0	27.2	383		74.4	7.3	26.6	402		70.7	3.5	27.6
Allstate Protection	$	6,517	68.2	5.0		24.9	$	6,535	69.7	6.2	24.7	$	6,560	76.2	12.5	23.8	$	6,583	71.6	7.8	25.1

Three months ended December 31, 2008

Three months ended September 30, 2008

Three months ended June 30, 2008

Three months ended March 31, 2008

Premiums Earned

Loss Ratio

Effect of CAT Losses on Loss Ratio

Expense Ratio

Premiums Earned

Loss Ratio

Effect of CAT Losses on Loss Ratio

Expense Ratio

Premiums Earned

Loss Ratio

Effect of CAT Losses on Loss Ratio

Expense Ratio

Premiums Earned

Loss Ratio

Effect of CAT Losses on Loss Ratio

Expense Ratio

Allstate brand

Standard auto	$	3,939	73.3	0.6	26.1	$	3,993	66.7	1.9	24.3	$	4,014	67.1	2.1	23.5	$	4,011	65.5	1.4	24.1
Non-standard auto	246		67.1	0.4	24.8	261		57.1	1.5	24.1	270		60.0	1.1	22.6	278		65.1	0.7	23.7
Auto	4,185		72.9	0.6	26.0	4,254		66.1	1.9	24.3	4,284		66.6	2.0	23.5	4,289		65.5	1.3	24.1
Homeowners	1,459		59.9	11.6	24.7	1,453		158.1	106.2	23.2	1,420		86.5	38.0	21.2	1,426		80.2	29.7	24.6
Other (1)	606		66.8	8.9	34.7	643		77.0	17.1	28.3	593		63.1	5.9	26.8	592		69.6	10.0	28.0
Total Allstate brand	6,250		69.3	4.0	26.5	6,350		88.2	27.3	24.5	6,297		70.8	10.5	23.2	6,307		69.2	8.6	24.6
Encompass brand
Standard auto	261		78.1	0.4	28.0	272		71.0	1.1	27.2	278		65.8	1.8	27.7	280		51.1	0.4	26.4
Non-standard auto	10		130.0	-	50.0	9		77.8	-	33.3	12		83.3	-	25.0	14		71.4	-	35.7
Auto	271		80.1	0.4	28.8	281		71.2	1.1	27.4	290		66.5	1.7	27.6	294		52.0	0.3	26.9
Homeowners	117		53.0	6.0	33.3	124		113.7	62.9	30.7	129		72.9	23.3	31.8	133		65.4	18.8	30.8
Other (1)	30		80.0	16.7	26.7	30		66.6	6.7	26.7	34		88.2	5.9	26.5	30		220.0	6.7	30.0
Total Encompass brand	418		72.5	3.1	29.9	435		83.0	19.1	28.3	453		70.0	8.2	28.7	457		67.0	6.1	28.2
Allstate Protection	$	6,668	69.6	3.9	26.7	$	6,785	87.9	26.8	24.7	$	6,750	70.7	10.3	23.7	$	6,764	69.1	8.4	24.8

(1)Other includes commercial, condominium, renters, involuntary auto and other personal lines.

18

THE ALLSTATE CORPORATION

PROPERTY-LIABILITY

HISTORICAL IMPACT OF NET RATE CHANGES APPROVED ON PREMIUMS WRITTEN

	Three months ended			Three months ended				Three months ended				Three months ended
	December 31, 2009 (1)			September 30, 2009				June 30, 2009				March 31, 2009
	Number of		State	Number of			State	Number of			State	Number of			State
	States	Countrywide (%) (4)	Specific (%) (5)	States		Countrywide (%) (4)	Specific (%) (5)	States		Countrywide (%) (4)	Specific (%) (5)	States		Countrywide (%) (4)	Specific (%) (5)
Allstate brand
Standard auto (2)	15	1.5	5.5	15		1.4	6.5	12		0.8	4.3	18	(6)	0.9	3.3
Non-standard auto	4	1.1	9.4	4		1.2	5.5	2		0.1	3.2	4		0.1	1.6
Auto	17	1.5	5.6	17		1.4	6.4	13		0.8	4.3	19	(6)	0.9	3.3
Homeowners (3)	22	1.9	6.5	19	(6)	2.4	6.9	16		1.7	13.3	14		2.5	7.4
Encompass brand
Standard auto	11	1.3	9.5	13		1.6	9.6	8		1.0	8.3	24		3.7	8.1
Non-standard auto	-	-	-	-		-	-	-		-	-	1		0.9	31.7
Auto	12	1.3	9.5	13		1.6	9.6	8		0.9	8.3	25		3.6	8.1
Homeowners	10	0.6	7.9	17		2.0	4.8	10	(6)	0.5	5.7	18		1.6	6.7
	Three months ended			Three months ended				Three months ended				Three months ended
	December 31, 2008			September 30, 2008				June 30, 2008				March 31, 2008
	Number of		State	Number of			State	Number of			State	Number of			State
	States	Countrywide (%) (4)	Specific (%) (5)	States		Countrywide (%) (4)	Specific (%) (5)	States		Countrywide (%) (4)	Specific (%) (5)	States		Countrywide (%) (4)	Specific (%) (5)
Allstate brand
Standard auto (2)	8	0.2	4.1	12		0.6	3.8	15		(0.4)	(1.2)	12		0.8	4.5
Non-standard auto	2	(0.1)	(16.5)	2		-	0.6	5	(6)	(0.2)	(7.7)	2		0.2	3.0
Auto	9	0.2	3.9	13		0.6	3.8	19	(6)	(0.4)	(1.2)	12		0.8	4.5
Homeowners (3)	4	0.2	3.6	17	(6)	(3.1)	(11.5)	16		0.7	2.3	9		1.3	10.9
Encompass brand
Standard auto	4	0.1	6.7	14		1.3	11.0	9		0.8	3.4	17		0.3	1.4
Non-standard auto	1	0.9	49.5	3		4.0	20.7	-		-	-	-		-	-
Auto	5	0.2	9.1	16		1.5	11.9	9		0.8	3.4	17		0.3	1.4
Homeowners	4	1.2	13.1	12		0.5	2.3	13	(6)	0.9	4.5	9		0.6	7.5

(1)	Rate increases that are indicated based on a loss trend analysis to achieve a targeted return will continue to be pursued. Rate changes include changes approved based on our net cost of reinsurance. These rate changes do not reflect initial rates filed for insurance subsidiaries initially writing business. Based on historical premiums written in those states, rate changes approved for the three month period ending December 31, 2009 are estimated to total $368 million. Rate changes do not include rating plan enhancements, including the introduction of discounts and surcharges, that result in no change in the overall rate level in the state.
(2)	Impacts of Allstate brand standard auto effective rate changes as a percentage of total countrywide prior year-end premiums written were 1.6%, 0.5%, 0.6%, 0.7%, 0.1%, 0.8%, (0.6)% and 0.7% for the three months ended December 31, 2009, September 30, 2009, June 30, 2009, March 31, 2009, December 31, 2008, September 30, 2008, June 30, 2008 and March 31, 2008, respectively.
(3)	Impacts of Allstate brand homeowners effective rate changes as a percentage of total countrywide prior year-end premiums written were 1.5%, 2.4%, 1.7%, 1.7%, 0.2%, (2.6)%, 0.8% and 0.8% for the three months ended December 31, 2009, September 30, 2009, June 30, 2009, March 31, 2009, December 31, 2008, September 30, 2008, June 30, 2008 and March 31, 2008, respectively.
(4)	Represents the impact in the states where rate changes were approved during the year as a percentage of total countrywide prior year-end premiums written.
(5)	Represents the impact in the states where rate changes were approved during the year as a percentage of its respective total prior year-end premiums written in those states.
(6)	Includes Washington, D.C.

19

THE ALLSTATE CORPORATION

STANDARD AUTO PROFITABILITY MEASURES

	Three months ended																	Twelve months ended
		Dec. 31,		Sept. 30,		June 30,		March 31,		Dec. 31,		Sept. 30,		June 30,		March 31,		Dec. 31,		Dec. 31,
		2009		2009		2009		2009		2008		2008		2008		2008		2009		2008
Standard auto
($ in millions)
Net premiums written
Allstate brand		$	3,860	$	4,049	$	3,876	$	3,978	$	3,834	$	4,050	$	3,957	$	4,077	$	15,763	$	15,918
Encompass brand		171		208		217		204		219		264		272		270		800		1,025
		4,031		4,257		4,093		4,182		4,053		4,314		4,229		4,347		16,563		16,943
Net premiums earned
Allstate brand		$	3,944	$	3,946	$	3,928	$	3,917	$	3,939	$	3,993	$	4,014	$	4,011	$	15,735	$	15,957
Encompass brand		205		221		234		247		261		272		278		280		907		1,091
		4,149		4,167		4,162		4,164		4,200		4,265		4,292		4,291		16,642		17,048
Incurred losses
Allstate brand		$	2,729	$	2,708	$	2,779	$	2,696	$	2,888	$	2,663	$	2,693	$	2,629	$	10,912	$	10,873
Encompass brand		159		170		172		183		204		193		183		143		684		723
		2,888		2,878		2,951		2,879		3,092		2,856		2,876		2,772		11,596		11,596
Expenses
Allstate brand		$	965	$	949	$	949	$	960	$	1,026	$	971	$	944	$	966	$	3,823	$	3,907
Encompass brand		52		56		61		67		73		74		77		74		236		298
		1,017		1,005		1,010		1,027		1,099		1,045		1,021		1,040		4,059		4,205
Underwriting Income
Allstate brand		$	250	$	289	$	200	$	261	$	25	$	359	$	377	$	416	$	1,000	$	1,177
Encompass brand		(6)		(5)		1		(3)		(16)		5		18		63		(13)		70
		244		284		201		258		9		364		395		479		987		1,247
Loss ratio
Allstate brand		69.2		68.6		70.7		68.8		73.3		66.7		67.1		65.5		69.3		68.1
Encompass brand		77.5		76.9		73.5		74.1		78.1		71.0		65.8		51.1		75.4		66.3
Allstate Protection		69.6		69.1		70.9		69.1		73.6		67.0		67.0		64.6		69.7		68.0
Expense ratio
Allstate brand		24.5		24.1		24.2		24.5		26.1		24.3		23.5		24.1		24.3		24.5
Encompass brand		25.4		25.4		26.1		27.1		28.0		27.2		27.7		26.4		26.0		27.3
Allstate Protection		24.5		24.1		24.3		24.7		26.2		24.5		23.8		24.2		24.4		24.7
Combined ratio
Allstate brand		93.7		92.7		94.9		93.3		99.4		91.0		90.6		89.6		93.6		92.6
Encompass brand		102.9		102.3		99.6		101.2		106.1		98.2		93.5		77.5		101.4		93.6
Allstate Protection		94.1		93.2		95.2		93.8		99.8		91.5		90.8		88.8		94.1		92.7
Effect of catastrophe losses on loss ratio
Allstate brand		(0.3)		1.3		2.1		1.6		0.6		1.9		2.1		1.4		1.2		1.5
Encompass brand		(0.5)		0.5		0.4		0.8		0.4		1.1		1.8		0.4		0.3		0.9
Allstate brand standard auto domestic operating measures (1)
		Dec. 31,		Sept. 30,		June 30,		March 31,		Dec. 31,		Sept. 30,		June 30,		March 31,		Dec. 31,		Dec. 31,
		2009		2009		2009		2009		2008		2008		2008		2008		2009		2008
Operating measures (2)
Policies in force (in thousands)		17,744		17,774		17,836		17,843		17,924		18,012		18,124		18,172		17,744		17,924
New issued applications (in thousands)		488		524		496		521		438		468		447		454		2,029		1,807
Average premium - gross written ($)		441		435		430		430		430		427		427		428		434		427
Average premium - net earned ($)		428		426		425		424		424		424		426		424		426		425
Renewal ratio (%)		88.8		89.1		89.0		88.6		88.6		88.9		89.1		89.0		88.9		88.9
Loss trends
(% change year-over-year)
Bodily injury claim frequency		14.4		19.6		13.6		5.5		(6.2)		(13.7)		(7.6)		(6.4)		13.1		(8.5		)
Property damage claim frequency		7.6		10.7		5.1		1.6		(7.2)		(11.8)		(4.2)		(2.4)		6.2		(6.5		)

(1)	Measures and statistics presented for Allstate brand exclude the Company’s Canadian operations and specialty auto.
(2)	Refer to the Allstate Brand Domestic Operating Measures and Statistics table for descriptions of these measures.

20

THE ALLSTATE CORPORATION

NON-STANDARD AUTO PROFITABILITY MEASURES

	Three months ended																Twelve months ended
	Dec. 31,		Sept. 30,		June 30,		March 31,		Dec. 31,		Sept. 30,		June 30,		March 31,		Dec. 31,		Dec. 31,
	2009		2009		2009		2009		2008		2008		2008		2008		2009		2008
Non-standard auto
($ in millions)
Net premiums written
Allstate brand	$	219	$	235	$	232	$	241	$	226	$	257	$	261	$	274	$	927	$	1,018
Encompass brand	3		6		5		8		9		8		11		12		22		40
	222		241		237		249		235		265		272		286		949		1,058
Net premiums earned
Allstate brand	$	231	$	231	$	240	$	237	$	246	$	261	$	270	$	278	$	939	$	1,055
Encompass brand	5		6		7		9		10		9		12		14		27		45
	236		237		247		246		256		270		282		292		966		1,100
Incurred losses
Allstate brand	$	160	$	147	$	161	$	162	$	165	$	149	$	162	$	181	$	630	$	657
Encompass brand	4		4		6		6		13		7		10		10		20		40
	164		151		167		168		178		156		172		191		650		697
Expenses
Allstate brand	$	58	$	59	$	57	$	56	$	61	$	63	$	61	$	66	$	230	$	251
Encompass brand	2		3		2		3		5		3		3		5		10		16
	60		62		59		59		66		66		64		71		240		267
Underwriting Income
Allstate brand	$	13	$	25	$	22	$	19	$	20	$	49	$	47	$	31	$	79	$	147
Encompass brand	(1)		(1)		(1)		-		(8)		(1)		(1)		(1)		(3)		(11		)
	12		24		21		19		12		48		46		30		76		136
Loss ratio
Allstate brand	69.3		63.6		67.1		68.4		67.1		57.1		60.0		65.1		67.1		62.3
Encompass brand	80.0		66.7		85.7		66.7		130.0		77.8		83.3		71.4		74.1		88.9
Allstate Protection	69.5		63.7		67.6		68.3		69.5		57.8		61.0		65.4		67.3		63.3
Expense ratio
Allstate brand	25.1		25.6		23.7		23.6		24.8		24.1		22.6		23.7		24.5		23.8
Encompass brand	40.0		50.0		28.6		33.3		50.0		33.3		25.0		35.7		37.0		35.5
Allstate Protection	25.4		26.2		23.9		24.0		25.8		24.4		22.7		24.3		24.8		24.3
Combined ratio
Allstate brand	94.4		89.2		90.8		92.0		91.9		81.2		82.6		88.8		91.6		86.1
Encompass brand	120.0		116.7		114.3		100.0		180.0		111.1		108.3		107.1		111.1		124.4
Allstate Protection	94.9		89.9		91.5		92.3		95.3		82.2		83.7		89.7		92.1		87.6
Effect of catastrophe losses on loss ratio
Allstate brand	0.4		0.4		1.3		0.8		0.4		1.5		1.1		0.7		0.7		0.9
Encompass brand	-		-		-		-		-		-		-		-		-		-
Allstate brand non-standard auto domestic operating measures (1)
	Dec. 31,		Sept. 30,		June 30,		March 31,		Dec. 31,		Sept. 30,		June 30,		March 31,		Dec. 31,		Dec. 31,
	2009		2009		2009		2009		2008		2008		2008		2008		2009		2008
Operating measures (2)
Policies in force (in thousands)	719		733		743		750		745		767		790		811		719		745
New issued applications (in thousands)	84		91		86		102		82		82		78		86		363		328
Average premium - gross written ($)	625		613		612		615		620		625		624		627		616		624
Average premium - net earned ($)	574		578		583		591		596		600		602		606		582		601
Renewal ratio (%)	72.4		72.6		73.3		71.6		72.5		73.8		74.1		74.5		72.5		73.7
Loss trends
(% change year-over-year)
Bodily injury claim frequency	16.7		29.5		26.3		15.9		(0.1)		(12.0)		(6.6)		(3.9)		21.9		(5.7		)
Property damage claim frequency	9.4		16.5		10.2		7.1		(1.1)		(10.1)		(3.4)		(3.6)		10.7		(4.6		)

(1)	Measures and statistics presented for Allstate brand exclude the Company’s Canadian operations and specialty auto.
(2)	Refer to the Allstate Brand Domestic Operating Measures and Statistics page for descriptions of these measures.

21

THE ALLSTATE CORPORATION

AUTO PROFITABILITY MEASURES

	Three months ended																	Twelve months ended
		Dec. 31,		Sept. 30,		June 30,		March 31,		Dec. 31,		Sept. 30,		June 30,		March 31,		Dec. 31,		Dec. 31,
		2009		2009		2009		2009		2008		2008		2008		2008		2009		2008
Auto
($ in millions)
Net premiums written
Allstate brand		$	4,079	$	4,284	$	4,108	$	4,219	$	4,060	$	4,307	$	4,218	$	4,351	$	16,690	$	16,936
Encompass brand		174		214		222		212		228		272		283		282		822		1,065
		4,253		4,498		4,330		4,431		4,288		4,579		4,501		4,633		17,512		18,001
Net premiums earned
Allstate brand		$	4,175	$	4,177	$	4,168	$	4,154	$	4,185	$	4,254	$	4,284	$	4,289	$	16,674	$	17,012
Encompass brand		210		227		241		256		271		281		290		294		934		1,136
		4,385		4,404		4,409		4,410		4,456		4,535		4,574		4,583		17,608		18,148
Incurred losses
Allstate brand		$	2,889	$	2,855	$	2,940	$	2,858	$	3,053	$	2,812	$	2,855	$	2,810	$	11,542	$	11,530
Encompass brand		163		174		178		189		217		200		193		153		704		763
		3,052		3,029		3,118		3,047		3,270		3,012		3,048		2,963		12,246		12,293
Expenses
Allstate brand		$	1,023	$	1,008	$	1,006	$	1,016	$	1,087	$	1,034	$	1,005	$	1,032	$	4,053	$	4,158
Encompass brand		54		59		63		70		78		77		80		79		246		314
		1,077		1,067		1,069		1,086		1,165		1,111		1,085		1,111		4,299		4,472
Underwriting Income
Allstate brand		$	263	$	314	$	222	$	280	$	45	$	408	$	424	$	447	$	1,079	$	1,324
Encompass brand		(7)		(6)		-		(3)		(24)		4		17		62		(16)		59
		256		308		222		277		21		412		441		509		1,063		1,383
Loss ratio
Allstate brand		69.2		68.4		70.6		68.8		72.9		66.1		66.6		65.5		69.2		67.8
Encompass brand		77.6		76.6		73.9		73.8		80.1		71.2		66.5		52.0		75.4		67.2
Allstate Protection		69.6		68.8		70.7		69.1		73.4		66.4		66.7		64.7		69.6		67.7
Expense ratio
Allstate brand		24.5		24.1		24.1		24.5		26.0		24.3		23.5		24.1		24.3		24.4
Encompass brand		25.7		26.0		26.1		27.4		28.8		27.4		27.6		26.9		26.3		27.6
Allstate Protection		24.6		24.2		24.3		24.6		26.1		24.5		23.7		24.2		24.4		24.7
Combined ratio
Allstate brand		93.7		92.5		94.7		93.3		98.9		90.4		90.1		89.6		93.5		92.2
Encompass brand		103.3		102.6		100.0		101.2		108.9		98.6		94.1		78.9		101.7		94.8
Allstate Protection		94.2		93.0		95.0		93.7		99.5		90.9		90.4		88.9		94.0		92.4
Effect of catastrophe losses on loss ratio
Allstate brand		(0.3)		1.3		2.1		1.6		0.6		1.9		2.0		1.3		1.2		1.5
Encompass brand		(0.5)		0.4		0.4		0.8		0.4		1.1		1.7		0.3		0.3		0.9
Effect of pre-tax reserve reestimates on combined ratio*
Allstate brand		(0.6)		0.1		(0.2)		(0.7)		1.6		(0.7)		(0.5)		0.1		(0.4)		0.1
Encompass brand		(1.0)		3.1		1.7		(2.3)		0.7		1.4		2.4		(20.1)		0.3		(4.0		)
Allstate brand auto domestic operating measures (1)
		Dec. 31,		Sept. 30,		June 30,		March 31,		Dec. 31,		Sept. 30,		June 30,		March 31,		Dec. 31,		Dec. 31,
		2009		2009		2009		2009		2008		2008		2008		2008		2009		2008
Operating measures (2)
Policies in force (in thousands)		18,463		18,507		18,579		18,593		18,669		18,779		18,914		18,983		18,463		18,669
New issued applications (in thousands)		572		615		582		623		520		550		525		540		2,392		2,135
Average premium - gross written ($)		449		443		438		438		438		435		438		437		442		437
Average premium - net earned ($)		434		432		431		431		431		432		433		432		432		432
Renewal ratio (%)		88.1		88.3		88.3		87.8		87.9		88.2		88.4		88.3		88.2		88.2
Loss trends
(% change year-over-year)
Bodily injury claim frequency		14.4		20.1		14.2		5.9		(6.1)		(13.8)		(7.8)		(6.6)		13.1		(8.3		)
Property damage claim frequency		7.7		10.9		5.3		1.7		(7.0)		(11.9)		(4.4)		(2.8)		5.9		(6.6		)
Paid severity - bodily injury		(4.9)		(0.9)		0.9		2.1		4.5		6.4		7.1		8.6		(0.7)		6.5
Paid severity - property damage		0.1		(1.0)		0.5		(2.4)		0.7		(0.3)		2.6		4.1		(0.7)		1.8

(1)	Measures and statistics presented for Allstate brand exclude the Company’s Canadian operations and specialty auto.
(2)	Refer to the Allstate Brand Domestic Operating Measures and Statistics page for descriptions of these measures.

22

THE ALLSTATE CORPORATION

HOMEOWNERS PROFITABILITY MEASURES

	Three months ended																Twelve months ended
	Dec. 31,		Sept. 30,		June 30,		March 31,		Dec. 31,		Sept. 30,		June 30,		March 31,		Dec. 31,		Dec. 31,
	2009		2009		2009		2009		2008		2008		2008		2008		2009		2008
Homeowners
($ in millions)
Net premiums written
Allstate brand	$	1,359	$	1,573	$	1,532	$	1,171	$	1,347	$	1,576	$	1,531	$	1,185	$	5,635	$	5,639
Encompass brand	89		110		112		97		103		126		129		113		408		471
	1,448		1,683		1,644		1,268		1,450		1,702		1,660		1,298		6,043		6,110
Net premiums earned
Allstate brand	$	1,411	$	1,396	$	1,409	$	1,417	$	1,459	$	1,453	$	1,420	$	1,426	$	5,633	$	5,758
Encompass brand	104		108		114		118		117		124		129		133		444		503
	1,515		1,504		1,523		1,535		1,576		1,577		1,549		1,559		6,077		6,261
Incurred losses
Allstate brand	$	919	$	1,053	$	1,340	$	1,172	$	875	$	2,297	$	1,228	$	1,143	$	4,484	$	5,543
Encompass brand	60		73		87		73		62		141		94		87		293		384
	979		1,126		1,427		1,245		937		2,438		1,322		1,230		4,777		5,927
Expenses
Allstate brand	$	337	$	319	$	299	$	341	$	360	$	338	$	301	$	351	$	1,296	$	1,350
Encompass brand	31		32		32		34		39		38		41		41		129		159
	368		351		331		375		399		376		342		392		1,425		1,509
Underwriting Income
Allstate brand	$	155	$	24	$	(230)	$	(96)	$	224	$	(1,182)	$	(109)	$	(68)	$	(147)	$	(1,135)
Encompass brand	13		3		(5)		11		16		(55)		(6)		5		22		(40)
	168		27		(235)		(85)		240		(1,237)		(115)		(63)		(125)		(1,175)
Loss ratio
Allstate brand	65.1		75.4		95.1		82.7		59.9		158.1		86.5		80.2		79.6		96.3
Encompass brand	57.7		67.6		76.3		61.9		53.0		113.7		72.9		65.4		66.0		76.4
Allstate Protection	64.6		74.9		93.7		81.1		59.5		154.6		85.3		78.9		78.6		94.7
Expense ratio
Allstate brand	23.9		22.9		21.2		24.1		24.7		23.2		21.2		24.6		23.0		23.4
Encompass brand	29.8		29.6		28.1		28.8		33.3		30.7		31.8		30.8		29.0		31.6
Allstate Protection	24.3		23.3		21.7		24.4		25.3		23.8		22.1		25.1		23.5		24.1
Combined ratio
Allstate brand	89.0		98.3		116.3		106.8		84.6		181.3		107.7		104.8		102.6		119.7
Encompass brand	87.5		97.2		104.4		90.7		86.3		144.4		104.7		96.2		95.0		108.0
Allstate Protection	88.9		98.2		115.4		105.5		84.8		178.4		107.4		104.0		102.1		118.8
Effect of catastrophe losses on loss ratio
Allstate brand	20.6		22.3		45.8		27.5		11.6		106.2		38.0		29.7		29.0		46.5
Encompass brand	9.6		15.7		22.8		10.2		6.0		62.9		23.3		18.8		14.6		27.8
Effect of pre-tax reserve reestimates on combined ratio
Allstate brand	(3.3)		(5.2)		(0.9)		(1.2)		0.9		1.3		1.5		4.8		(2.6)		2.1
Encompass brand	(3.8)		(1.9)		1.8		(12.7)		(4.3)		0.8		(2.3)		6.8		(4.3)		0.4
Allstate brand homeowners domestic operating measures (1)
	Dec. 31,		Sept. 30,		June 30,		March 31,		Dec. 31,		Sept. 30,		June 30,		March 31,		Dec. 31,		Dec. 31,
	2009		2009		2009		2009		2008		2008		2008		2008		2009		2008
Operating measures (2)
Policies in force (in thousands)	6,973		7,027		7,105		7,181		7,255		7,326		7,418		7,499		6,973		7,255
New issued applications (in thousands)	136		148		145		127		126		154		164		150		556		594
Average premium - gross written ($)	899		889		879		861		848		852		867		867		883		861
Average premium - net earned ($)	785		771		768		771		779		765		739		733		773		754
Renewal ratio (%)	88.4		88.5		88.0		87.5		87.6		87.3		86.3		86.7		88.1		87.0
Loss trends
(% change year-over-year)
Claim frequency excluding catastrophe losses	13.9		13.5		3.9		5.1		4.7		3.6		12.3		0.8		9.0		5.4
Claim severity excluding catastrophe losses	(8.5)		9.0		7.0		3.2		9.6		(4.2)		0.3		3.3		3.0		0.6

(1)Measures presented for Allstate brand exclude the Company’s Canadian operations. 

(2) Refer to the Allstate Brand Domestic Operating Measures and Statistics page for descriptions of these measures.

23

THE ALLSTATE CORPORATION

PROPERTY-LIABILITY

ALLSTATE BRAND DOMESTIC OPERATING MEASURES AND STATISTICS (1)

	Three months ended
	Dec. 31,	Sept. 30,	June 30,	March 31,	Dec. 31,	Sept. 30,	June 30,	March 31,
	2009	2009	2009	2009	2008	2008	2008	2008
Policies in Force (2)
(in thousands)
Standard auto	17,744	17,774	17,836	17,843	17,924	18,012	18,124	18,172
Non-standard auto	719	733	743	750	745	767	790	811
Auto	18,463	18,507	18,579	18,593	18,669	18,779	18,914	18,983
Homeowners	6,973	7,027	7,105	7,181	7,255	7,326	7,418	7,499
New Issued Applications (3)
(in thousands)
Standard auto	488	524	496	521	438	468	447	454
Non-standard auto	84	91	86	102	82	82	78	86
Auto	572	615	582	623	520	550	525	540
Homeowners	136	148	145	127	126	154	164	150
Average Premium - Gross Written ($) (4)
Standard auto	441	435	430	430	430	427	427	428
Non-standard auto	625	613	612	615	620	625	624	627
Auto	449	443	438	438	438	435	438	437
Homeowners	899	889	879	861	848	852	867	867
Average Premium - Net Earned ($) (5)
Standard auto	428	426	425	424	424	424	426	424
Non-standard auto	574	578	583	591	596	600	602	606
Auto	434	432	431	431	431	432	433	432
Homeowners	785	771	768	771	779	765	739	733
Renewal Ratio (%) (6)
Standard auto	88.8	89.1	89.0	88.6	88.6	88.9	89.1	89.0
Non-standard auto	72.4	72.6	73.3	71.6	72.5	73.8	74.1	74.5
Auto	88.1	88.3	88.3	87.8	87.9	88.2	88.4	88.3
Homeowners	88.4	88.5	88.0	87.5	87.6	87.3	86.3	86.7
Bodily Injury Claim Frequency
(% change year-over-year)
Standard auto	14.4	19.6	13.6	5.5	(6.2)	(13.7)	(7.6)	(6.4)
Non-standard auto	16.7	29.5	26.3	15.9	(0.1)	(12.0)	(6.6)	(3.9)
Auto	14.4	20.1	14.2	5.9	(6.1)	(13.8)	(7.8)	(6.6)
Property Damage Claim Frequency
(% change year-over-year)
Standard auto	7.6	10.7	5.1	1.6	(7.2)	(11.8)	(4.2)	(2.4)
Non-standard auto	9.4	16.5	10.2	7.1	(1.1)	(10.1)	(3.4)	(3.6)
Auto	7.7	10.9	5.3	1.7	(7.0)	(11.9)	(4.4)	(2.8)
Auto Paid Severity
(% change year-over-year)
Bodily injury	(4.9)	(0.9)	0.9	2.1	4.5	6.4	7.1	8.6
Property damage	0.1	(1.0)	0.5	(2.4)	0.7	(0.3)	2.6	4.1
Homeowners Excluding Catastrophe Losses
(% change year-over-year)
Claim frequency	13.9	13.5	3.9	5.1	4.7	3.6	12.3	0.8
Claim severity	(8.5)	9.0	7.0	3.2	9.6	(4.2)	0.3	3.3

(1)   Measures and statistics presented for Allstate brand exclude the Company’s Canadian operations loan protection and specialty auto.

(2)   Policies in Force:  Policy counts are based on items rather than customers.  A multi-car customer would generate multiple item (policy) counts, even if all cars were insured under one policy.

(3)   New Issued Applications:  Item counts of automobiles or homeowners insurance applications for insurance policies that were issued during the period.  Does not include automobiles that are added by existing customers.

(4)   Average Premium - Gross Written:  Gross premiums written divided by issued item count.  Gross premiums written include the impacts from discounts and surcharges; and exclude the impacts from mid-term premium adjustments, ceded reinsurance premiums, or premium refund accruals.  Average premiums represent the appropriate policy term for each line, which is 6 months for auto and 12 months for homeowners.

(5)   Average Premium - Net Earned:  Earned premium divided by average policies in force for the period.  Earned premium includes the impacts from mid-term premium adjustments and ceded reinsurance, but does not include impacts of premium refund accruals.  Average premiums represent the appropriate policy term for each line, which is 6 months for auto and 12 months for homeowners.

(6)   Renewal ratio:  Renewal policies issued during the period, based on contract effective dates, divided by the total policies issued 6 months prior for auto (12 months prior for Encompass brand standard auto) or 12 months prior for homeowners.

24

THE ALLSTATE CORPORATION

HOMEOWNERS SUPPLEMENTAL INFORMATION

($ in millions)

	Twelve months ended December 31, 2009
											Premium Rate Changes (5)
													Annual Impact of
								Effect of					Rate Changes
	Earned		Incurred			Catastrophe		Catastrophes	Number of		Number of		on State Specific
Primary Exposure Groupings(1)	Premiums		Losses		Loss Ratios	Losses		on Loss Ratio	Catastrophes		States		Premiums Written
Florida	$	78	$	75	96.2%	$	14	17.9%
Other hurricane exposure states	3,129		2,654		84.8%	1,078		34.5%
Total hurricane exposure states (2)	3,207		2,729		85.1%	1,092		34.1%			18		7.5%
Other catastrophe exposure states	2,870		2,048		71.4%	609		21.2%			26		13.7%
Total	$	6,077	$	4,777	78.6%	$	1,701	28.0%	82		44		10.4%
									1992 to 2009 Historical Information
	1992 to 2009 Historical Information								(Adjusted for Industry Reinsurance or Insurance Mechanism)
								Effect of								Effect of
	Earned		Incurred			Catastrophe		Catastrophes	Earned		Incurred			Catastrophe		Catastrophes	Number of
Primary Exposure Groupings(1)	Premiums		Losses		Loss Ratios	Losses		on Loss Ratio	Premiums (4)		Losses(3)		Loss Ratios (3)	Losses (3)		on Loss Ratio (3)	Catastrophes
Florida	$	3,563	$	5,037	141.4%	$	3,552	99.7%	$	3,672	$	3,255	88.6%	$	1,770	48.2%
Other hurricane exposure states	38,580		30,965		80.3%	10,957		28.4%	38,649		30,897		79.9%	10,889		28.2%
Total hurricane exposure states (2)	42,143		36,002		85.4%	14,509		34.4%	42,321		34,152		80.7%	12,659		29.9%
Other catastrophe exposure states	35,898		26,982		75.2%	8,223		22.9%	35,898		25,141		70.0%	6,382		17.8%
Total	$	78,041	$	62,984	80.7%	$	22,732	29.1%	$	78,219	$	59,293	75.8%	$	19,041	24.3%	1,183

(1) Basis of Presentation

This homeowners supplemental information schedule displays financial results for the homeowners business (defined to include standard homeowners, scheduled personal property and other than primary residence lines) for the period 1992 through 2009.  The premiums and losses are presented on a GAAP basis with adjustments as indicated in Notes 3 and 4.  Each state in which the Company writes business has been categorized into one of two exposure groupings (Hurricane or Other).  Hurricane exposure states are comprised of those states in which hurricanes are the primary catastrophe exposure. However, the catastrophe losses for these states include losses due to other kinds of catastrophes.  A catastrophe is defined by Allstate as an event that produces pre-tax losses before reinsurance in excess of $1 million, and involves multiple first party policyholders, or an event that produces a number of claims in excess of a preset per-event threshold of average claims in a specific area, occurring within a certain amount of time following the event.

(2) Hurricane Exposure States

Hurricane exposure states include the following coastal locations:  Alabama, Connecticut, Delaware, Florida, Georgia, Louisiana, Maine, Maryland, Massachusetts, Mississippi, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island, South Carolina, Texas, Virginia and Washington, D.C.

(3) Incurred Losses

Incurred losses (which include catastrophe losses) and Catastrophe losses, exclude the effects of those events for which the exposure is now covered, at least in part, by permanent industry reinsurance or insurance mechanism (i.e., Florida Hurricane Catastrophe Fund (“FHCF”), California Earthquake Authority) or with Hawaii hurricanes, coverage is being brokered to a non-affiliated insurance company.  Mechanisms such as the FHCF and external reinsurance are available and are reflected in our capital structure and help mitigate exposure to these types of events.  For the period 1992 - 2009, Incurred losses and Catastrophe losses for the Hurricane exposure states were adjusted to exclude $1.8 billion for losses related to Hurricane Andrew.  Incurred losses and Catastrophe losses for the Other catastrophe exposure states were adjusted to exclude an additional $1.8 billion for losses related to certain California earthquakes and Hawaii hurricanes.  Subsequent catastrophes of a similar magnitude are not excluded from the exhibit.  Through the use of the insurance mechanisms, Allstate may have a contingent liability for industry assessments and losses exceeding the claims paying capacity of these mechanisms as discussed in the Annual Report on Form 10-K.

(4) Earned Premiums

Earned premiums for the Hurricane exposure locations was adjusted to add back premium ceded to third party reinsurers of $178 million for hurricane reinsurance purchased in Florida, the Northeast and other states during the period 1992 to 2005.  These programs support management actions that address hurricane exposures.  Mechanisms such as the FHCF and external reinsurance are available and are reflected in our capital structure because they help mitigate exposure to these types of events, but no impact is reflected in earned premiums above.

(5) Premium Rate Changes

Represents the impact in the states where rate changes were approved during the year as a percentage of total prior year-end premiums written in those states.

25

THE ALLSTATE CORPORATION

PROPERTY-LIABILITY

EFFECT OF CATASTROPHE LOSSES ON THE COMBINED RATIO

($ in millions, except ratios)

	Effect of all catastrophe losses on the Property-Liability					Premiums		Total
	combined ratio					earned		catastrophe
	Quarter 1	Quarter 2	Quarter 3	Quarter 4	Year	year-to-date		losses by year
1992 (3)	3.2	7.1	48.7	25.5	21.2	$	15,542	$	3,301
1993 (3)	5.8	3.0	1.2	3.8	3.4	16,039		547
1994 (3)	27.4	4.4	9.5	7.3	12.0	16,513		1,989
1995	4.0	7.8	3.8	5.0	5.2	17,540		905
1996	5.1	6.0	6.4	3.8	5.4	18,366		983
1997	2.4	2.6	2.6	0.3	2.0	18,604		365
1998	2.5	6.3	3.9	3.4	4.0	19,307		780
1999	2.6	5.6	5.4	2.7	4.1	20,112		816
2000	7.0	6.7	1.7	2.3	4.4	21,871		967
2001	1.5	9.8	2.5	2.4	4.0	22,197		894
2002	1.9	5.0	1.6	4.0	3.1	23,361		731
2003	2.2	9.2	6.1	6.5	6.0	24,677		1,489
2004	1.6	3.8	26.0	6.2	9.5	25,989		2,468
2005	2.5	2.2	69.4	9.6	21.0	27,039		5,674
2006	1.6	3.7	2.5	4.1	3.0	27,369		810
2007	2.4	6.3	5.0	7.0	5.2	27,233		1,409
2008	8.4	10.3	26.8	3.9	12.4	26,967		3,342
2009	7.8	12.5	6.2	5.0	7.9	26,194		2,069
Average (2)	4.7	6.3	13.4	5.5	7.5
	Excludes the effect of catastrophe losses relating to
	Hurricane Andrew, California Earthquakes,					Premiums		Total
	and Hawaii Hurricanes (1)					earned		catastrophe
	Quarter 1	Quarter 2	Quarter 3	Quarter 4	Year	year-to-date		losses by year
1992 (3)	3.2	7.0	4.5	2.9	4.4	$	15,542	$	681
1993 (3)	5.6	3.0	1.5	5.1	3.8	16,039		607
1994 (3)	5.1	3.8	1.7	2.5	3.2	16,513		535
1995	4.0	7.7	1.8	5.0	4.6	17,540		843
1996	5.1	6.0	6.4	3.8	5.4	18,366		991
1997	2.4	2.6	1.8	0.3	1.8	18,604		329
1998	2.0	6.3	3.9	2.2	3.6	19,307		695
1999	2.6	5.6	5.4	2.3	3.9	20,112		790
2000	7.0	6.7	1.5	1.8	4.3	21,871		930
2001	1.5	8.1	2.5	1.7	3.5	22,197		769
2002	1.8	5.0	1.6	3.6	3.0	23,361		706
2003	2.1	9.0	6.1	6.4	5.9	24,677		1,458
2004	1.6	3.8	26.0	6.2	9.5	25,989		2,468
2005	2.5	2.2	69.4	9.6	21.0	27,039		5,674
2006	1.6	3.7	2.5	4.1	3.0	27,369		810
2007	2.4	6.3	5.0	7.0	5.2	27,233		1,409
2008	8.4	10.3	26.8	3.9	12.4	26,967		3,342
2009	7.8	12.5	6.2	5.0	7.9	26,194		2,069
Average (2)	3.7	6.2	11.2	4.3	6.3

(1)The effect of Catastrophe losses on the combined ratio is presented excluding the effects of those events for which the exposure is now covered by an industry reinsurance or insurance mechanism (i.e., Florida Hurricane Catastrophe Fund and California Earthquake Authority) or with Hawaii hurricanes, coverage is being brokered to a non-affiliated insurance company (see the “Commitments, Guarantees and Contingent Liabilities” footnote to the Consolidated Financial Statements).

(2)The effect of Catastrophes and Catastrophes excluding extraordinary catastrophes on the Combined Ratio calculated as an average for all periods since 1992.

(3)The years 1992-1994 have been adjusted to exclude the premiums earned of the PMI Group, a mortgage guarantee insurer that was sold in 1995.

26

THE ALLSTATE CORPORATION

ALLSTATE PROTECTION HISTORICAL CATASTROPHE BY SIZE OF EVENT

($ in millions, except ratios)

Three months ended December 31, 2009
									Average
	Number			Claim and				Combined	catastrophe
Size of Catastrophe	of events			claim expense				ratio impact	loss per event
Greater than $250 million	-	-	%	$	-	-	%	-	$	-
$100 million to $250 million	-	-		-		-		-	-
$50 million to $100 million	-	-		-		-		-	-
Less than $50 million	13	100.0		210		64.0		3.2	16
Total	13	100.0	%	210		64.0		3.2	16
Prior year reserve reestimates				(30)		(9.1)		(0.5)
Prior quarter reserve reestimates (1)				148		45.1		2.3
Total Catastrophe losses				$	328	100.0	%	5.0

Twelve months ended December 31, 2009
									Average
	Number			Claim and				Combined	Catastrophe
Size of Catastrophe	of Events			Claim Expense				Ratio Impact	Loss per Event
Greater than $250 million	-	-	%	$	-	-	%	-	$	-
$100 million to $250 million	3	3.7		442		21.4		1.7	147
$50 million to $100 million	11	13.4		825		39.9		3.1	75
Less than $50 million	68	82.9		971		46.9		3.7	14
Total	82	100.0	%	2,238		108.2		8.5	27
Prior year reserve reestimates				(169)		(8.2)		(0.6)
Total Catastrophe losses				$	2,069	100.0	%	7.9

1995 through 2009
	Principal									Average
	state with	Number			Claim and				Combined	catastrophe
Size of Catastrophe	loss	of events			claim expense				ratio impact	loss per event
Greater than $250 million (2)
Hurricane Katrina - 2005	LA				$	3,592	15.2	%	1.0	$	3,592
Hurricane Ike - 2008	TX				909		3.8		0.3	909
Hurricane Rita - 2005	TX				900		3.8		0.3	900
Hurricane Ivan - 2004	FL				650		2.8		0.2	650
Hurricane Charley - 2004	FL				602		2.5		0.2	602
Hurricane Frances - 2004	FL				577		2.4		0.2	577
Hurricane Wilma - 2005	FL				540		2.3		0.2	540
Hurricane Jeanne - 2004	FL				336		1.4		0.1	336
October 2003 Fires	CA				300		1.3		-	300
Hurricane Gustav - 2008	LA				286		1.2		-	286
Greater than $250 million		10	1.0	%	8,692		36.7		2.5	869
$100 million to $250 million		16	1.6		2,491		10.5		0.7	156
$50 million to $100 million		46	4.6		3,246		13.7		0.9	71
Less than $50 million		922	92.8		9,273		39.1		2.7	10
Total		994	100.0	%	$	23,702	100.0	%	6.8	24

(1)        Prior quarter reserve reestimates of $148 million were primarily due to adverse frequency development on severe weather losses related to wind and hail events in Georgia and Alabama.

(2)        Catastrophe claims and claims expense of $2.26 billion related to Hurricane Andrew of 1992 and $2.08 billion related to the Northridge earthquake of 1994, which were incurred prior to 1995, are excluded from the table above.

27

THE ALLSTATE CORPORATION

PROPERTY-LIABILITY

EFFECT OF PRE-TAX PRIOR YEAR RESERVE REESTIMATES ON THE COMBINED RATIO

($ in millions, except ratios)

	Three months ended																	Twelve months ended
		Dec. 31,		Sept. 30,		June 30,		March 31,		Dec. 31,		Sept. 30,		June 30,		March 31,		Dec. 31,		Dec. 31,
		2009		2009		2009		2009		2008		2008		2008		2008		2009		2008
Pre-tax Reserve Reestimates (1)
Auto		$	(29)	$	11	$	(4)	$	(35)	$	67	$	(27)	$	(13)	$	(54)	$	(57)	$	(27)
Homeowners		(50)		(75)		(11)		(32)		8		20		18		78		(168)		124
Other		51		(3)		32		9		(19)		-		2		72		89		55
Allstate Protection (2)		(28)		(67)		17		(58)		56		(7)		7		96		(136)		152
Discontinued Lines and Coverages		3		15		3		3		4		7		2		5		24		18
Property-Liability		$	(25)	$	(52)	$	20	$	(55)	$	60	$	-	$	9	$	101	$	(112)	$	170
Allstate brand		$	(20)	$	(74)	$	9	$	(41)	$	65	$	(4)	$	(2)	$	96	$	(126)	$	155
Encompass brand		(8)		7		8		(17)		(9)		(3)		9		-		(10)		(3)
Allstate Protection (2)		$	(28)	$	(67)	$	17	$	(58)	$	56	$	(7)	$	7	$	96	$	(136)	$	152
Effect of Pre-tax Reserve
Reestimates on Combined Ratio (1)
Auto		(0.4)		0.2		-		(0.5)		1.1		(0.4)		(0.2)		(0.8)		(0.2)		(0.1)
Homeowners		(0.8)		(1.2)		(0.2)		(0.5)		0.1		0.3		0.3		1.1		(0.6)		0.5
Other		0.8		-		0.5		0.1		(0.3)		-		-		1.1		0.3		0.2
Allstate Protection (2)		(0.4)		(1.0)		0.3		(0.9)		0.9		(0.1)		0.1		1.4		(0.5)		0.6
Discontinued Lines and Coverages		-		0.3		-		0.1		0.1		0.1		-		0.1		0.1		0.1
Property-Liability		(0.4)		(0.7)		0.3		(0.8)		1.0		-		0.1		1.5		(0.4)		0.7
Allstate brand		(0.3)		(1.1)		0.2		(0.6)		1.0		(0.1)		-		1.4		(0.5)		0.6
Encompass brand		(0.1)		0.1		0.1		(0.3)		(0.1)		-		0.1		-		-		-
Allstate Protection (2)		(0.4)		(1.0)		0.3		(0.9)		0.9		(0.1)		0.1		1.4		(0.5)		0.6

(1)       Favorable reserve reestimates are shown in parentheses.

(2)       Favorable reserve reestimates included in catastrophe losses totaled $30 million in the three months ended December 31, 2009.  There were no net reserve reestimates included in catastrophe losses in the three months ended December 31, 2008.  Favorable reserve reestimates included in catastrophe losses totaled $169 million in the twelve months ended December 31, 2009 compared to unfavorable reserve reestimates totaling $125 million in the twelve months ended December 31, 2008.

28

THE ALLSTATE CORPORATION

PROPERTY-LIABILITY

HISTORICAL PRE-TAX PRIOR YEAR RESERVE REESTIMATES(1)

($ in millions)

	Twelve months ended December 31,
	2009		2008		2007		2006		2005
Allstate brand	$	(126)	$	155	$	(167)	$	(1,085)	$	(613)
Encompass brand	(10)		(3)		(52)		(18)		(22)
Allstate Protection	(136)		152		(219)		(1,103)		(635)
Discontinued Lines and Coverages	24		18		47		132		167
Property-Liability	$	(112)	$	170	$	(172)	$	(971)	$	(468)
Effect of Property-Liability pre-tax reserve reestimates on the combined ratio	(0.4)		0.7		(0.6)		(3.5)		(1.7)

(1)  Favorable reserve reestimates are shown in parentheses.

29

THE ALLSTATE CORPORATION

HISTORICAL PROPERTY-LIABILITY LOSS RESERVES

($ in millions)

	Twelve months ended December 31,
	2009			2008			2007			2006			2005
(net of reinsurance)
Net reserve for claims and claims expense, beginning of year	$	17,182		$	16,660		$	16,610		$	18,931		$	16,761
Claims and claims expense
Provision attributable to the current year	18,858			19,894			17,839			16,988			21,643
Change in provision attributable to prior years (1)	(112)			170			(172)			(971)			(468)
Total claims and claims expense	18,746			20,064			17,667			16,017			21,175
Payments
Claims and claims expense attributable to current year	(11,906)			(12,658)			(10,933)			(10,386)			(12,340)
Claims and claims expense attributable to prior years	(6,994)			(6,884)			(6,684)			(7,952)			(6,665)
Total payments	(18,900)			(19,542)			(17,617)			(18,338)			(19,005)
Net reserve for claims and claims expense, end of year (2)	$	17,028		$	17,182		$	16,660		$	16,610		$	18,931
Percent change in loss reserves	(0.9)		%	3.1		%	0.3		%	(12.3)		%	12.9		%
(1)    Reserve reestimates due to:
Asbestos and environmental claims	$	5		$	8		$	80		$	96		$	141
All other property-liability claims	(117)			162			(252)			(1,067)			(609)
Change in pre-tax reserve	$	(112)		$	170		$	(172)		$	(971)		$	(468)

(2)    Net reserves for claims and claims expense are net of expected reinsurance recoveries of $2.14 billion, $2.27 billion, $2.21 billion, $2.26 billion and $3.19 billion at December 31, 2009, 2008, 2007, 2006 and 2005, respectively.

30

THE ALLSTATE CORPORATION

ASBESTOS AND ENVIRONMENTAL RESERVES

($ in millions)

	Three months ended								Twelve months ended December 31,
	Dec. 31,		Sept. 30,		June 30,		March 31,
	2009		2009		2009		2009		2009		2008		2007		2006		2005
(net of reinsurance)
Asbestos claims
Beginning reserves	$	1,161	$	1,194	$	1,209	$	1,228	$	1,228	$	1,302	$	1,375	$	1,373	$	1,464
Incurred claims and claims expense	-		(8)		-		-		(8)		8		17		86		139
Claims and claims expense paid (1)	19		(25)		(15)		(19)		(40)		(82)		(90)		(84)		(230)
Ending reserves	$	1,180	$	1,161	$	1,194	$	1,209	$	1,180	$	1,228	$	1,302	$	1,375	$	1,373
Claims and claims expense paid as a percent of ending reserves	(1.6)%		2.2%		1.3%		1.6%		3.4%		6.7%		6.9%		6.1%		16.8%
Environmental claims
Beginning reserves	$	200	$	189	$	191	$	195	$	195	$	232	$	194	$	205	$	232
Incurred claims and claims expense	-		13		-		-		13		-		63		10		2
Claims and claims expense paid (1)	(2)		(2)		(2)		(4)		(10)		(37)		(25)		(21)		(29)
Ending reserves	$	198	$	200	$	189	$	191	$	198	$	195	$	232	$	194	$	205
Claims and claims expense paid as a percent of ending reserves	1.0%		1.0%		1.1%		2.1%		5.1%		19.0%		10.8%		10.8%		14.1%

(1)  Claims and claims expense paid decreased during the fourth quarter of 2009 primarily as a result of $63 million for asbestos and $7 million for environmental attributable to recent commutation activity related to three reinsurers.

31

THE ALLSTATE CORPORATION

ALLSTATE FINANCIAL RESULTS

($ in millions)

	Three months ended																	Twelve months ended
		Dec. 31,		Sept. 30,		June 30,		March 31,		Dec. 31,		Sept. 30,		June 30,		March 31,		Dec. 31,		Dec. 31,
		2009		2009		2009		2009 (1)		2008		2008		2008		2008		2009 (1)		2008
Investments		$	62,216	$	61,891	$	59,861	$	59,576	$	61,449	$	66,547	$	72,504	$	73,023	$	62,216	$	61,449
Premiums and deposits *		$	1,156	$	1,033	$	1,399	$	1,533	$	1,557	$	1,896	$	4,453	$	3,046	$	5,121	$	10,952
Deposits to contractholder funds		(898)		(802)		(1,152)		(1,298)		(1,286)		(1,663)		(4,211)		(2,824)		(4,150)		(9,984)
Deposits to separate accounts		(27)		(27)		(28)		(28)		(31)		(32)		(33)		(33)		(110)		(129)
Change in unearned premiums and other adjustments		12		28		29		39		14		27		24		39		108		104
Life and annuity premiums		243		232		248		246		254		228		233		228		969		943
Contract charges		255		250		246		238		250		240		238		224		989		952
Premiums and contract charges		498		482		494		484		504		468		471		452		1,958		1,895
Net investment income		737		744		764		819		916		937		943		1,015		3,064		3,811
Periodic settlements and accruals on non-hedge derivative instruments		14		2		(3)		1		(5)		9		7		9		14		20
Contract benefits		(441)		(382)		(407)		(387)		(402)		(418)		(395)		(397)		(1,617)		(1,612)
Interest credited to contractholder funds		(479)		(497)		(520)		(542)		(584)		(604)		(599)		(630)		(2,038)		(2,417)
Amortization of deferred policy acquisition costs		(90)		(108)		(130)		(109)		(144)		(140)		(130)		(117)		(437)		(531)
Operating costs and expenses		(105)		(99)		(105)		(121)		(143)		(134)		(125)		(118)		(430)		(520)
Restructuring and related charges		(1)		(4)		(2)		(18)		(1)		-		-		-		(25)		(1)
Income tax expense on operations		(38)		(43)		(26)		(42)		(52)		(30)		(54)		(71)		(149)		(207)
Operating income		95		95		65		85		89		88		118		143		340		438
Realized capital gains and losses, after-tax		(178)		(151)		82		(170)		(736)		(390)		(627)		(281)		(417)		(2,034)
DAC and DSI (amortization) accretion relating to realized capital gains and losses, after-tax (2)		(45)		18		(131)		(19)		102		110		134		39		(177)		385
DAC and DSI unlocking relating to realized capital gains and losses, after-tax		-		-		-		(224)		(274)		-		-		-		(224)		(274)
Non-recurring charge for DAC, after-tax		-		-		-		-		(219)		-		-		-		-		(219)
Reclassification of periodic settlements and accruals on non-hedge derivative instruments, after-tax		(9)		(1)		2		(1)		3		(6)		(4)		(6)		(9)		(13)
Gain (loss) on disposition of operations, after-tax		-		1		1		2		-		2		-		(6)		4		(4)
Net (loss) income		$	(137)	$	(38)	$	19	$	(327)	$	(1,035)	$	(196)	$	(379)	$	(111)	$	(483)	$	(1,721)

(1)

Income tax expense for the three months ended March 31, 2009 and twelve months ended December 31, 2009 includes expense of $142 million attributable to an increase in the valuation allowance relating to the deferred tax asset on capital losses recorded in the first quarter of 2009. This valuation allowance was released in connection with the adoption of new OTTI accounting guidance on April 1, 2009; however, the release was recorded as an increase to retained income and therefore did not reverse the amount recorded in income tax expense.

(2)

In 2009, DAC amortization relating to realized capital gains and losses resulted primarily from realized capital gains on derivatives.  Additionally, DAC amortization reflects our decision in the second half of 2009 not to recapitalize DAC for credit losses on investments supporting certain fixed annuities following concerns that an increase in the level of expected realized capital losses in 2010 and 2011 may reduce EGP and adversely impact DAC recoverability.  In 2008, DAC accretion resulted primarily from realized capital losses on derivatives and other-than-temporary impairment losses.

32

THE ALLSTATE CORPORATION

HISTORICAL ALLSTATE FINANCIAL RESULTS

($ in millions)

	At or for the Year Ended December 31,
	2009		2008		2007		2006		2005
Investments	$	62,216	$	61,449	$	74,256	$	75,951	$	75,233
Premiums and deposits	$	5,121	$	10,952	$	9,627	$	11,678	$	14,395
Deposits to contractholder funds	(4,150)		(9,984)		(8,632)		(10,066)		(12,004)
Deposits to separate accounts and other	(110)		(129)		(136)		(713)		(1,473)
Change in unearned premiums and other adjustments	108		104		11		-		-
Life and annuity premiums	969		943		870		899		918
Contract charges	989		952		996		1,065		1,131
Premiums and contract charges	1,958		1,895		1,866		1,964		2,049
Net investment income	3,064		3,811		4,297		4,173		3,830
Periodic settlements and accruals on non-hedge derivative instruments	14		20		46		56		63
Contract benefits	(1,617)		(1,612)		(1,589)		(1,570)		(1,615)
Interest credited to contractholder funds	(2,038)		(2,417)		(2,682)		(2,614)		(2,371)
Operating costs and expenses (1)	(867)		(1,051)		(1,042)		(1,117)		(1,107)
Restructuring and related charges	(25)		(1)		(2)		(24)		(2)
Income tax expense on operations	(149)		(207)		(279)		(274)		(266)
Operating income	340		438		615		594		581
Realized capital gains and losses, after-tax (2)	(818)		(1,923)		(113)		(14)		(91)
Non-recurring items, after-tax (3)	-		(219)		-		(18)		(22)
Reclassification of periodic settlements and accruals on non-hedge derivative instruments, after-tax	(9)		(13)		(29)		(36)		(40)
Gain (loss) on disposition of operations, after-tax	4		(4)		(8)		(62)		(12)
Net (loss) income	$	(483)	$	(1,721)	$	465	$	464	$	416
Life insurance in force, net of reinsurance	$	282,443	$	280,042	$	271,035	$	254,726	$	234,469

(1)	Includes amortization expense on DAC, excluding that portion relating to realized capital gains and losses.
(2)	Includes amortization expense on DAC and DSI relating to realized capital gains and losses, after-tax.
(3)	During the fourth quarter of 2008, for traditional life insurance and immediate annuities with life contingencies, an aggregate premium deficiency of $336 million, pre-tax ($219 million, after-tax) resulted primarily from an experience study indicating that the annuitants on certain life-contingent contracts are projected to live longer than we anticipated when the contracts were issued, and, to a lesser degree, a reduction in the related investment portfolio yield. The deficiency was recorded through a reduction in deferred acquisition costs.

33

THE ALLSTATE CORPORATION

ALLSTATE FINANCIAL PREMIUMS AND DEPOSITS

($ in millions)

	Three months ended																	Twelve months ended
PREMIUMS AND DEPOSITS - BY PRODUCT		Dec. 31, 2009		Sept. 30, 2009		June 30, 2009		March 31, 2009		Dec. 31, 2008		Sept. 30, 2008		June 30, 2008		March 31, 2008		Dec. 31, 2009		Dec. 31, 2008
Life Products
Interest-sensitive life		$	384	$	355	$	356	$	341	$	355	$	349	$	356	$	364	$	1,436	$	1,424
Traditional		121		102		101		92		120		100		99		89		416		408
Accident, health, and other		121		115		114		110		109		104		99		101		460		413
		626		572		571		543		584		553		554		554		2,312		2,245
Annuities
Indexed annuities		155		105		117		127		168		138		151		133		504		590
Fixed deferred annuities		141		196		471		452		474		965		1,037		516		1,260		2,992
Sub-total		296		301		588		579		642		1,103		1,188		649		1,764		3,582
Fixed immediate annuities		73		56		81		90		99		99		85		67		300		350
		369		357		669		669		741		1,202		1,273		716		2,064		3,932
Institutional Products
Funding agreements backing medium-term notes		-		-		-		-		-		-		2,498		1,660		-		4,158
Bank deposits		161		104		159		321		232		141		128		116		745		617
Total		$	1,156	$	1,033	$	1,399	$	1,533	$	1,557	$	1,896	$	4,453	$	3,046	$	5,121	$	10,952
PREMIUMS AND DEPOSITS - BY DISTRIBUTION CHANNEL
Allstate agencies		$	647	$	558	$	576	$	735	$	716	$	606	$	587	$	508	$	2,516	$	2,417
Financial institutions		105		115		329		347		282		745		833		407		896		2,267
Independent agents		320		342		368		327		409		444		453		392		1,357		1,698
Specialized brokers and other		84		18		126		124		150		101		2,580		1,739		352		4,570
Total		$	1,156	$	1,033	$	1,399	$	1,533	$	1,557	$	1,896	$	4,453	$	3,046	$	5,121	$	10,952

34

THE ALLSTATE CORPORATION

CHANGE IN CONTRACTHOLDER FUNDS

($ in millions)

	Three months ended																	Twelve months ended
		Dec. 31,		Sept. 30,		June 30,		March 31,		Dec. 31,		Sept. 30,		June 30,		March 31,		Dec. 31,		Dec. 31,
		2009		2009		2009		2009		2008		2008		2008		2008		2009		2008
Beginning balance		$	53,336	$	53,999	$	56,621	$	58,413	$	59,320	$	62,419	$	61,727	$	61,975	$	58,413	$	61,975
Deposits
Fixed annuities		351		343		635		635		701		1,178		1,237		686		1,964		3,802
Institutional products (funding agreements)		-		-		-		-		-		-		2,498		1,660		-		4,158
Interest-sensitive life insurance		384		355		357		342		353		344		347		360		1,438		1,404
Bank and other deposits		275		208		268		427		329		256		242		211		1,178		1,038
Total deposits		1,010		906		1,260		1,404		1,383		1,778		4,324		2,917		4,580		10,402
Interest credited		481		498		515		531		583		597		599		626		2,025		2,405
Maturities, benefits, withdrawals and other adjustments
Maturities and retirements of institutional products		(58)		(212)		(2,552)		(1,951)		(1,139)		(3,330)		(2,243)		(1,887)		(4,773)		(8,599)
Benefits		(353)		(379)		(406)		(450)		(402)		(424)		(421)		(463)		(1,588)		(1,710)
Surrenders and partial withdrawals		(1,540)		(1,184)		(1,235)		(1,213)		(1,474)		(1,334)		(1,318)		(1,187)		(5,172)		(5,313)
Contract charges		(238)		(232)		(227)		(221)		(227)		(219)		(215)		(209)		(918)		(870)
Net transfers from separate accounts		3		2		2		4		3		4		7		5		11		19
Fair value hedge adjustments for institutional products		(6)		1		78		(48)		109		(164)		(67)		66		25		(56)
Other adjustments		(53)		(63)		(57)		152		257		(7)		26		(116)		(21)		160
Total maturities, benefits, withdrawals and other adjustments		(2,245)		(2,067)		(4,397)		(3,727)		(2,873)		(5,474)		(4,231)		(3,791)		(12,436)		(16,369)
Ending balance		$	52,582	$	53,336	$	53,999	$	56,621	$	58,413	$	59,320	$	62,419	$	61,727	$	52,582	$	58,413

35

THE ALLSTATE CORPORATION

ALLSTATE FINANCIAL ANALYSIS OF NET INCOME

($ in millions)

	Three months ended																	Twelve months ended
		Dec. 31,		Sept. 30,		June 30,		March 31,		Dec. 31,		Sept. 30,		June 30,		March 31,		Dec. 31,		Dec. 31,
		2009		2009		2009		2009		2008		2008		2008		2008		2009		2008
Benefit spread
Premiums		$	243	$	232	$	248	$	246	$	254	$	228	$	233	$	228	$	969	$	943
Cost of insurance contract charges (1)		158		156		150		152		152		150		151		142		616		595
Contract benefits excluding the implied interest on immediate annuities with life contingencies (2)		(301)		(243)		(267)		(248)		(263)		(281)		(257)		(259)		(1,059)		(1,060)
Total benefit spread (3)		100		145		131		150		143		97		127		111		526		478
Investment spread
Net investment income		737		744		764		819		916		937		943		1,015		3,064		3,811
Implied interest on immediate annuities with life contingencies (2)		(140)		(139)		(140)		(139)		(139)		(137)		(138)		(138)		(558)		(552)
Interest credited to contractholder funds		(490)		(496)		(561)		(579)		(638)		(586)		(563)		(624)		(2,126)		(2,411)
Total investment spread		107		109		63		101		139		214		242		253		380		848
Surrender charges and contract maintenance expense fees(1)		97		94		96		86		98		90		87		82		373		357
Realized capital gains and losses		(275)		(234)		121		(43)		(1,131)		(599)		(965)		(432)		(431)		(3,127)
Amortization of deferred policy acquisition costs		(148)		(80)		(289)		(448)		(692)		11		41		(64)		(965)		(704)
Operating costs and expenses		(105)		(99)		(105)		(121)		(143)		(134)		(125)		(118)		(430)		(520)
Restructuring and related charges		(1)		(4)		(2)		(18)		(1)		-		-		-		(25)		(1)
Gain (loss) on disposition of operations		1		2		1		3		-		3		-		(9)		7		(6)
Income tax benefit (expense) on operations		87		29		3		(37)		552		122		214		66		82		954
Net (loss) income		$	(137)	$	(38)	$	19	$	(327)	$	(1,035)	$	(196)	$	(379)	$	(111)	$	(483)	$	(1,721)
Benefit spread by product group
Life insurance		$	68	$	96	$	96	$	103	$	110	$	76	$	91	$	86	$	363	$	363
Accident and health		47		50		50		49		46		45		43		43		196		177
Annuities		(15)		(1)		(15)		(2)		(13)		(24)		(7)		(18)		(33)		(62)
Total benefit spread		$	100	$	145	$	131	$	150	$	143	$	97	$	127	$	111	$	526	$	478
Investment spread by product group
Annuities and institutional products		$	45	$	44	$	3	$	34	$	42	$	128	$	148	$	142	$	126	$	460
Life insurance		1		(2)		7		(3)		10		9		13		16		3		48
Bank		9		8		7		6		6		7		4		5		30		22
Accident and health		3		5		4		4		4		3		2		3		16		12
Net investment income on investments supporting capital		49		54		42		60		77		67		75		87		205		306
Total investment spread		$	107	$	109	$	63	$	101	$	139	$	214	$	242	$	253	$	380	$	848
(1)Reconciliation of contract charges
Cost of insurance contract charges		$	158	$	156	$	150	$	152	$	152	$	150	$	151	$	142	$	616	$	595
Surrender charges and contract maintenance expense fees		97		94		96		86		98		90		87		82		373		357
Total contract charges		$	255	$	250	$	246	$	238	$	250	$	240	$	238	$	224	$	989	$	952
(2)Reconciliation of contract benefits
Contract benefits excluding the implied interest on immediate annuities with life contingencies		$	(301)	$	(243)	$	(267)	$	(248)	$	(263)	$	(281)	$	(257)	$	(259)	$	(1,059)	$	(1,060)
Implied interest on immediate annuities with life contingencies		(140)		(139)		(140)		(139)		(139)		(137)		(138)		(138)		(558)		(552)
Total contract benefits		$	(441)	$	(382)	$	(407)	$	(387)	$	(402)	$	(418)	$	(395)	$	(397)	$	(1,617)	$	(1,612)

(3)Benefit spread in the fourth quarter of 2009 was reduced by $22 million for non-recurring extra-contractual benefit costs.

36

THE ALLSTATE CORPORATION

ALLSTATE FINANCIAL WEIGHTED AVERAGE INVESTMENT SPREADS

	Three months ended December 31, 2009						Three months ended December 31, 2008
	Weighted average		Weighted average		Weighted average		Weighted average		Weighted average		Weighted average
	investment yield		interest crediting rate		investment spreads		investment yield		interest crediting rate		investment spreads
Interest-sensitive life insurance	5.9	%	4.6	%	1.3	%	5.8	%	4.6	%	1.2	%
Deferred fixed annuities and institutional products	4.4		3.3		1.1		5.1		3.7		1.4
Immediate fixed annuities with and without life contingencies	6.3		6.5		(0.2)		6.6		6.5		0.1
Investments supporting capital, traditional life and other products	3.7		N/A		N/A		4.8		N/A		N/A

	Twelve months ended December 31, 2009						Twelve months ended December 31, 2008
	Weighted average		Weighted average		Weighted average		Weighted average		Weighted average		Weighted average
	investment yield		interest crediting rate		investment spreads		investment yield		interest crediting rate		investment spreads
Interest-sensitive life insurance	5.5	%	4.6	%	0.9	%	6.0	%	4.6	%	1.4	%
Deferred fixed annuities and institutional products	4.5		3.4		1.1		5.2		3.7		1.5
Immediate fixed annuities with and without life contingencies	6.3		6.5		(0.2)		6.8		6.5		0.3
Investments supporting capital, traditional life and other products	3.7		N/A		N/A		5.3		N/A		N/A

37

THE ALLSTATE CORPORATION

CORPORATE AND OTHER RESULTS

($ in millions)

	Three months ended																Twelve months ended
	Dec. 31,		Sept. 30,		June 30,		March 31,		Dec. 31,		Sept. 30,		June 30,		March 31,		Dec. 31,		Dec. 31,
	2009		2009		2009		2009		2008		2008		2008		2008		2009		2008
Net investment income	$	15	$	14	$	10	$	13	$	26	$	32	$	38	$	41	$	52	$	137
Operating costs and expenses	(108)		(109)		(103)		(90)		(90)		(90)		(90)		(92)		(410)		(362)
Income tax benefit on operations	36		37		36		32		28		28		25		26		141		107
Operating loss	(57)		(58)		(57)		(45)		(36)		(30)		(27)		(25)		(217)		(118)
Realized capital gains and losses,
after-tax	5		3		5		(2)		(5)		(36)		(8)		(19)		11		(68)
Net loss	$	(52)	$	(55)	$	(52)	$	(47)	$	(41)	$	(66)	$	(35)	$	(44)	$	(206)	$	(186)

38

THE ALLSTATE CORPORATION

INVESTMENTS

($ in millions)

	PROPERTY-LIABILITY											ALLSTATE FINANCIAL
		Dec. 31,		Sept. 30,		June 30,		March 31,		Dec. 31,			Dec. 31,		Sept. 30,		June 30,		March 31,		Dec. 31,
		2009		2009		2009		2009		2008			2009		2009		2009		2009		2008
Fixed income securities, at fair value:
Tax-exempt		$	14,294	$	15,507	$	16,894	$	16,853	$	16,537		$	64	$	65	$	63	$	37	$	84
Taxable		12,991		12,930		10,164		9,126		7,557			49,222		47,815		44,890		41,731		43,641
Equity securities, at fair value		4,840		4,414		3,118		2,349		2,723			184		189		179		61		82
Mortgage loans		50		78		98		103		104			7,885		8,775		9,308		9,607		10,125
Limited partnership interests		1,674		1,714		1,389		1,384		1,552			1,032		1,021		1,040		1,060		1,191
Short-term, at fair value		503		588		1,303		818		2,152			1,697		1,785		2,162		4,674		3,930
Other		174		127		235		300		212			2,132		2,241		2,219		2,406		2,446
Total		$	34,526	$	35,358	$	33,201	$	30,933	$	30,837		$	62,216	$	61,891	$	59,861	$	59,576	$	61,499
Fixed income securities, at amortized cost:
Tax-exempt		$	14,177	$	15,117	$	17,320	$	17,336	$	17,490		$	60	$	61	$	61	$	37	$	81
Taxable		13,414		13,404		11,077		10,011		8,346			51,435		50,592		50,711		49,291		50,436
Ratio of fair value to amortized cost		98.9%		99.7%		95.3%		95.0%		93.3%			95.7%		94.5%		88.5%		84.7%		86.6%
Equity securities, at cost		$	4,685	$	4,106	$	3,300	$	2,869	$	3,030		$	160	$	168	$	183	$	78	$	107
Short-term, at amortized cost		503		588		1,303		818		2,152			1,697		1,785		2,162		4,673		3,927
	CORPORATE AND OTHER											CONSOLIDATED
		Dec. 31,		Sept. 30,		June 30,		March 31,		Dec. 31,			Dec. 31,		Sept. 30,		June 30,		March 31,		Dec. 31,
		2009		2009		2009		2009		2008			2009		2009		2009		2009		2008
Fixed income securities, at fair value:
Tax-exempt		$	670	$	766	$	752	$	663	$	733		$	15,028	$	16,338	$	17,709	$	17,553	$	17,354
Taxable		1,525		1,478		3		28		56			63,738		62,223		55,057		50,885		51,254
Equity securities, at fair value		-		-		-		-		-			5,024		4,603		3,297		2,410		2,805
Mortgage loans		-		-		-		-		-			7,935		8,853		9,406		9,710		10,229
Limited partnership interests		38		35		35		38		48			2,744		2,770		2,464		2,482		2,791
Short-term, at fair value		856		1,097		2,605		2,633		2,824			3,056		3,470		6,070		8,125		8,906
Other		2		1		1		2		1			2,308		2,369		2,455		2,708		2,659
Total		$	3,091	$	3,377	$	3,396	$	3,364	$	3,662		$	99,833	$	100,626	$	96,458	$	93,873	$	95,998
Fixed income securities, at amortized cost:
Tax-exempt		$	632	$	719	$	718	$	619	$	690		$	14,869	$	15,897	$	18,099	$	17,992	$	18,261
Taxable		1,525		1,474		3		28		61			66,374		65,470		61,791		59,330		58,843
Ratio of fair value to amortized cost		101.8%		102.3%		104.7%		106.8%		105.1%			97.0%		96.6%		91.1%		88.5%		89.0%
Equity securities, at cost		$	-	$	-	$	-	$	-	$	-		$	4,845	$	4,274	$	3,483	$	2,947	$	3,137
Short-term, at amortized cost		856		1,097		2,605		2,633		2,824			3,056		3,470		6,070		8,124		8,903

39

THE ALLSTATE CORPORATION

FIXED INCOME SECURITY PORTFOLIO BY CREDIT RATING 

($ in millions)

		PROPERTY-LIABILITY											ALLSTATE FINANCIAL
NAIC			Dec 31,		Sept. 30,		June 30,		March 31,		Dec. 31,			Dec 31,		Sept. 30,		June 30,		March 31,		Dec. 31,
Rating	Credit rating		2009		2009		2009		2009		2008			2009		2009		2009		2009		2008
1	Aaa/Aa/A		$	21,714	$	22,281	$	21,170	$	20,329	$	18,818		$	31,676	$	30,922	$	29,369	$	27,614	$	29,286
2	Baa		3,517		4,080		3,854		3,845		3,747			14,681		13,909		12,995		11,918		12,690
3	Ba		849		914		964		865		687			1,635		1,625		1,716		1,519		1,275
4	B		506		489		514		481		496			571		754		438		436		317
5	Caa or lower		552		557		440		395		301			628		593		356		227		131
6	In or near default		147		116		116		64		45			95		77		79		54		26
Total			$	27,285	$	28,437	$	27,058	$	25,979	$	24,094		$	49,286	$	47,880	$	44,953	$	41,768	$	43,725
		CORPORATE AND OTHER											CONSOLIDATED
NAIC			Dec 31,		Sept. 30,		June 30,		March 31,		Dec. 31,			Dec 31,		Sept. 30,		June 30,		March 31,		Dec. 31,
Rating	Credit rating		2009		2009		2009		2009		2008			2009		2009		2009		2009		2008
1	Aaa/Aa/A		$	2,183	$	2,229	$	733	$	667	$	762		$	55,573	$	55,432	$	51,272	$	48,610	$	48,866
2	Baa		11		12		19		21		21			18,209		18,001		16,868		15,784		16,458
3	Ba		-		-		-		-		-			2,484		2,539		2,680		2,384		1,962
4	B		-		2		2		2		3			1,077		1,245		954		919		816
5	Caa or lower		-		-		-		-		3			1,180		1,150		796		622		435
6	In or near default		1		1		1		1		-			243		194		196		119		71
Total			$	2,195	$	2,244	$	755	$	691	$	789		$	78,766	$	78,561	$	72,766	$	68,438	$	68,608

40

THE ALLSTATE CORPORATION

UNREALIZED NET CAPITAL GAINS AND LOSSES ON SECURITY PORTFOLIO BY TYPE

($ in millions)

	December 31, 2009					September 30, 2009					June 30, 2009
	Unrealized Net				Fair value	Unrealized Net				Fair value	Unrealized Net				Fair value
	Capital Gains		Fair		as % of	Capital Gains		Fair		as % of	Capital Gains		Fair		as % of
	and Losses		Value		Amortized Cost (1)	and Losses		Value		Amortized Cost (1)	and Losses		Value		Amortized Cost (1)
SECURITIES BY TYPE
Fixed income securities
U.S. government and agencies	$	203	$	7,536	102.8	$	255	$	8,132	103.2	$	253	$	4,185	106.4
Municipal	(403)		21,280		98.1	39		22,167		100.2	(1,025)		23,097		95.8
Corporate	345		33,115		101.1	206		32,059		100.6	(1,550)		29,938		95.1
Foreign government	291		3,197		110.0	330		2,874		113.0	244		2,723		109.8
Residential mortgage-backed securities (“RMBS”)	(1,500)		7,987		84.2	(1,756)		8,077		82.1	(2,160)		7,503		77.6
Commercial mortgage-backed securities (“CMBS”)	(925)		2,586		73.7	(1,159)		2,578		69.0	(1,746)		3,237		65.0
Asset-backed securities (“ABS”)	(488)		3,026		86.1	(720)		2,637		78.6	(1,134)		2,051		64.4
Redeemable preferred stock	-		39		100.0	(1)		37		97.4	(6)		32		84.2
Total fixed income securities	(2,477)		78,766		97.0	(2,806)		78,561		96.6	(7,124)		72,766		91.1
Equity securities	179		5,024		103.7	329		4,603		107.7	(186)		3,297		94.7
Short-term investments	-		3,056		100.0	-		3,470		100.0	-		6,070		100.0
Derivatives	(23)		548		96.0	(24)		538		95.7	(15)		449		96.8
Unrealized net capital gains and losses, pre-tax	$	(2,321)	$	87,394	97.4	$	(2,501)	$	87,172	97.2	$	(7,325)	$	82,582	91.9
Amounts recognized for:
Insurance reserves (2)	-					-					-
DAC and DSI (3)	990					2,679					4,064
Amounts recognized	990					2,679					4,064
Deferred income taxes	461					(66)					1,149
Unrealized net capital gains and losses, after-tax	$	(870)				$	112				$	(2,112)

	March 31, 2009					December 31, 2008					September 30, 2008
	Unrealized Net				Fair value	Unrealized Net				Fair value	Unrealized Net				Fair value
	Capital Gains		Fair		as % of	Capital Gains		Fair		as % of	Capital Gains		Fair		as % of
	and Losses		Value		Amortized Cost (1)	and Losses		Value		Amortized Cost (1)	and Losses		Value		Amortized Cost (1)
SECURITIES BY TYPE
Fixed income securities
U.S. government and agencies	$	516	$	3,979	114.9	$	962	$	4,234	129.4	$	748	$	4,045	122.7
Municipal	(1,225)		22,097		94.7	(1,717)		21,848		92.7	(816)		23,206		96.6
Corporate	(3,452)		28,309		89.1	(3,413)		27,627		89.0	(1,846)		30,795		94.3
Foreign government	366		2,475		117.4	469		2,675		121.3	323		2,612		114.1
RMBS	(1,721)		6,307		78.6	(1,445)		6,565		82.0	(982)		7,516		88.4
CMBS	(2,044)		3,661		64.2	(1,994)		3,846		65.9	(763)		5,209		87.2
ABS	(1,313)		1,587		54.7	(1,348)		1,787		57.0	(821)		2,590		75.9
Redeemable preferred stock	(11)		23		67.6	(10)		26		72.2	(4)		35		89.7
Total fixed income securities	(8,884)		68,438		88.5	(8,496)		68,608		89.0	(4,161)		76,008		94.8
Equity securities	(537)		2,410		81.8	(332)		2,805		89.4	76		4,228		101.8
Short-term investments	1		8,125		100.0	3		8,906		100.0	-		8,707		100.0
Derivatives	16		432		103.8	11		301		103.8	(14)		228		94.2
Unrealized net capital gains and losses, pre-tax	$	(9,404)	$	79,405	89.4	$	(8,814)	$	80,620	90.1	$	(4,099)	$	89,171	95.6
Amounts recognized for:
Insurance reserves (2)	-					(378)					(456)
DAC and DSI (3)	3,785					3,500					2,286
Amounts recognized	3,785					3,122					1,830
Deferred income taxes	1,852					1,954					794
Unrealized net capital gains and losses, after-tax	$	(3,767)				$	(3,738)				$	(1,475)

(1)Comparing percentages from period to period may be distorted by investment transactions such as sales, purchases and impairment write-downs.

(2)The insurance reserves adjustment represents the amount by which the reserve balance would increase if the net unrealized gains in the applicable product portfolios were realized and reinvested at current lower interest rates, resulting in a premium deficiency.  Although we evaluate premium deficiencies on the combined performance of our life insurance and immediate annuities with life contingencies, the adjustment primarily relates to structured settlement annuities with life contingencies, in addition to annuity buy-outs and certain payout annuities with life contingencies.

(3)The DAC and DSI adjustment balance represents the amount by which the amortization of DAC and DSI would increase or decrease if the unrealized gains or losses in the respective product portfolios were realized.  Only the unrealized net capital losses on the Allstate Financial fixed annuity and interest-sensitive life product portfolios are used in this calculation.  The DAC and DSI adjustment balance, subject to limitations, is determined by applying the DAC and DSI amortization rate to unrealized net capital gains or losses.  Recapitalization of the DAC and DSI balances is limited to the originally deferred costs plus interest.  The DAC adjustment balance (88% of the total DAC and DSI adjustment balance) was limited as of December 31, 2008 and March 31, 2009 because the calculated amount, when added to the DAC balance before the impact of unrealized capital gains and losses, was greater than originally deferred costs plus interest.  The DSI adjustment balance was limited as of December 31, 2008, March 31, 2009, June 30, 2009 and September 30, 2009.  In periods subsequent to the adjustment balance reaching the limitation, the change in the adjustment will not trend in a linear relationship with the change in unrealized gains and losses until such time as the adjustment balance is below the limitation.  The DAC and DSI adjustment balance is below the limitation as of December 31, 2009.  The limitation amount changes from period to period based on changes in the DAC and DSI balance before the impact of unrealized capital gains and losses, as well as new deferrals and interest.

41

THE ALLSTATE CORPORATION

GROSS UNREALIZED GAINS AND LOSSES ON FIXED INCOME SECURITIES BY TYPE AND SECTOR

($ in millions)

	As of December 31, 2009
											Amortized
											cost as a		Fair value
	Par		Amortized		Gross Unrealized				Fair		percent of		as a percent
	value (1)		cost		Gains		Losses		value		par value (2)		of par value (2)
Corporate:
Banking	$	4,345	$	4,131	$	81	$	(367)	$	3,845	95.1	%	88.5	%
Financial services	3,482		3,370		95		(100)		3,365		96.8		96.6
Utilities	5,752		5,755		291		(79)		5,967		100.1		103.7
Consumer goods (cyclical and non-cyclical)	4,872		4,917		202		(75)		5,044		100.9		103.5
Transportation	1,670		1,684		59		(50)		1,693		100.8		101.4
Capital goods	3,363		3,367		127		(42)		3,452		100.1		102.6
Communications	1,841		1,826		83		(26)		1,883		99.2		102.3
Basic industry	1,501		1,520		68		(21)		1,567		101.3		104.4
Technology	1,132		1,157		40		(13)		1,184		102.2		104.6
Energy	2,132		2,143		89		(13)		2,219		100.5		104.1
FDIC guaranteed	1,513		1,523		18		-		1,541		100.7		101.9
Other	1,528		1,377		39		(61)		1,355		90.1		88.7
Total corporate fixed income portfolio	33,131		32,770		1,192		(847)		33,115		98.9		100.0
U.S. government and agencies	7,580		7,333		219		(16)		7,536		96.7		99.4
Municipal	27,425		21,683		537		(940)		21,280		79.1		77.6
Foreign government	3,375		2,906		306		(15)		3,197		86.1		94.7
RMBS	9,984		9,487		130		(1,630)		7,987		95.0		80.0
CMBS	3,790		3,511		30		(955)		2,586		92.6		68.2
ABS	3,974		3,514		62		(550)		3,026		88.4		76.1
Redeemable preferred stock	47		39		1		(1)		39		83.0		83.0
Total fixed income securities	$	89,306	$	81,243	$	2,477	$	(4,954)	$	78,766	91.0		88.2

(1)Included in par value are zero-coupon securities that are generally purchased at a deep discount to the par value that is received at maturity.  These included corporate, municipal, foreign government, U.S. government and agencies and ABS zero-coupon securities with par value of $882 million, $8.19 billion, $1.42 billion, $792 million and $29 million, respectively.

(2)Excluding the impact of zero-coupon securities, the percentage of amortized cost to par value would be 99.5% for corporates, 100.0% for municipals, 103.9% for foreign governments and 101.6% for U.S. government and agencies.  Similarly, excluding the impact of zero-coupon securities, the percentage of fair value to par value would be 100.4% for corporates, 99.5% for municipals, 108.8% for foreign governments and 102.7% for U.S. government and agencies.

42

THE ALLSTATE CORPORATION

FAIR VALUE AND UNREALIZED NET CAPITAL GAINS AND LOSSES FOR FIXED INCOME SECURITIES BY CREDIT RATING

($ in millions)

	As of December 31, 2009
	Aaa				Aa				A				Baa				Ba or lower				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized		Fair		Unrealized		Fair		Unrealized		Par		Fair		Unrealized
	Value		gain/(loss)		Value		gain/(loss)		Value		gain/(loss)		Value		gain/(loss)		Value		gain/(loss)		Value		Value		gain/(loss)
U.S. government and agencies	$	7,536	$	203	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	7,580	$	7,536	$	203
Municipal
Tax exempt	1,605		106		5,839		175		4,385		53		2,474		(73)		725		(102)		16,481		15,028		159
Taxable	133		1		2,003		(83)		1,481		(114)		785		(181)		163		(78)		9,149		4,565		(455)
Auction rate securities	1,350		(50)		71		(4)		85		(7)		78		(22)		103		(24)		1,795		1,687		(107)
Corporate
Public	1,985		20		1,685		36		5,444		219		8,530		273		1,047		(41)		18,077		18,691		507
Privately placed	653		23		1,108		31		3,286		113		6,237		33		1,501		(77)		12,981		12,785		123
Hybrid	-		-		95		5		564		(92)		614		(154)		366		(44)		2,073		1,639		(285)
Foreign government	1,974		234		396		6		455		37		361		14		11		-		3,375		3,197		291
RMBS
U.S. government sponsored entities	5,011		108		-		-		-		-		-		-		-		-		4,818		5,011		108
Prime residential mortgage-backed securities	498		(26)		65		(12)		54		(12)		11		(7)		75		(30)		801		703		(87)
Alt-A residential mortgage-backed securities	73		(9)		34		(8)		34		(12)		136		(38)		361		(186)		1,143		638		(253)
Subprime residential mortgage-backed securities	211		(29)		446		(198)		126		(115)		115		(75)		737		(851)		3,222		1,635		(1,268)
CMBS	1,368		(108)		282		(153)		268		(176)		312		(152)		356		(336)		3,790		2,586		(925)
ABS
Collateralized debt obligations	48		(10)		349		(27)		449		(75)		234		(96)		429		(244)		2,340		1,509		(452)
Consumer and other asset-backed securities	662		(7)		259		(3)		235		(9)		310		(9)		51		(8)		1,634		1,517		(36)
Redeemable preferred stock	-		-		-		-		2		-		31		-		6		-		47		39		-
Total fixed income securities	$	23,107	$	456	$	12,632	$	(235)	$	16,868	$	(190)	$	20,228	$	(487)	$	5,931	$	(2,021)	$	89,306	$	78,766	$	(2,477)

43

THE ALLSTATE CORPORATION

REALIZED CAPITAL GAINS AND LOSSES BY TRANSACTION TYPE

($ in millions)

	Three months ended																Twelve months ended
	Dec. 31,		Sept. 30,		June 30,		March 31,		Dec. 31,		Sept. 30,		June 30,		March 31,		Dec. 31,		Dec. 31,
	2009		2009		2009		2009		2008		2008		2008		2008		2009		2008
Impairment write-downs(1)	$	(270)	$	(381)	$	(291)	$	(620)	$	(652)	$	(666)	$	(250)	$	(415)	$	(1,562)	$	(1,983)
Change in intent write-downs (2)	(215)		(11)		(26)		(105)		(241)		(453)		(1,015)		(43)		(357)		(1,752)
Net other-than-temporary impairment losses recognized in earnings	(485)		(392)		(317)		(725)		(893)		(1,119)		(1,265)		(458)		(1,919)		(3,735)
Sales	390		201		263		418		(357)		(137)		(73)		103		1,272		(464)
Valuation of derivative instruments	166		(269)		367		103		(884)		(111)		40		(325)		367		(1,280)
Settlements of derivative instruments	(110)		(92)		52		(12)		299		79		83		25		(162)		486
EMA limited partnership income (3)	6		33		(37)		(143)		(97)		-		-		-		(141)		(97)
Total	$	(33)	$	(519)	$	328	$	(359)	$	(1,932)	$	(1,288)	$	(1,215)	$	(655)	$	(583)	$	(5,090)

(1)	Beginning April 1, 2009 for fixed income securities, impairment write-downs reflect the credit loss component of issue specific other-than-temporary declines in fair value where the amortized cost basis is not expected to be entirely recovered. For periods prior to April 1, 2009 for fixed income securities and all periods for equity securities, impairment write-downs reflect issue specific other-than-temporary declines in fair value, including instances where the Company could not reasonably assert that the recovery period would be temporary.
(2)	Beginning April 1, 2009 for fixed income securities, change in intent write-downs reflect instances where the Company has made a decision to sell the security or it is more likely than not the Company will be required to sell the security before recovery of its amortized cost basis. For periods prior to April 1, 2009 for fixed income securities and all periods for equity securities, change in intent write-downs reflect instances where the Company could not assert a positive intent to hold until recovery.
(3)	Beginning in the fourth quarter of 2008, income from limited partnership interests accounted for utilizing the equity method of accounting (“EMA LP”) is reported in realized capital gains and losses. EMA LP income for periods prior to the fourth quarter of 2008 is reported in net investment income.

44

THE ALLSTATE CORPORATION

PROPERTY-LIABILITY

NET INVESTMENT INCOME, YIELDS AND REALIZED CAPITAL GAINS AND LOSSES (PRE-TAX)

($ in millions)

	Three months ended																Twelve months ended
	Dec. 31,		Sept. 30,		June 30,		March 31,		Dec. 31,		Sept. 30,		June 30,		March 31,		Dec. 31,		Dec. 31,
	2009		2009		2009		2009		2008		2008		2008		2008		2009		2008
NET INVESTMENT INCOME
Fixed income securities:
Tax-exempt	$	180	$	204	$	217	$	225	$	228	$	223	$	225	$	221	$	826	$	897
Taxable	126		120		111		109		125		142		159		185		466		611
Equity securities	29		13		18		15		32		22		29		30		75		113
Mortgage loans	-		2		1		1		1		9		10		11		4		31
Limited partnership interests (5)	4		2		2		1		(1)		(15)		16		37		9		37
Short-term	2		1		1		3		11		15		10		11		7		47
Other	1		2		-		1		(2)		5		1		1		4		5
Sub-total	342		344		350		355		394		401		450		496		1,391		1,741
Less: Investment expense	(18)		(18)		(16)		(11)		(7)		(15)		(19)		(26)		(63)		(67)
Net investment income (7)	$	324	$	326	$	334	$	344	$	387	$	386	$	431	$	470	$	1,328	$	1,674
Net investment income, after-tax	$	266	$	273	$	282	$	290	$	321	$	320	$	349	$	376	$	1,111	$	1,366
PRE-TAX YIELDS (1)
Fixed income securities:
Tax-exempt	4.9		5.0		5.0		5.2		5.2		5.1		5.1		5.1		5.1		5.1
Equivalent yield for tax-exempt	7.1		7.3		7.3		7.6		7.6		7.4		7.4		7.4		7.4		7.4
Taxable	3.7		3.9		4.2		4.7		6.0		5.9		5.4		5.4		4.1		5.6
Equity securities	2.7		1.5		2.2		2.1		3.6		2.2		2.9		3.1		2.1		3.0
Mortgage loans	5.0		4.5		4.5		4.5		5.8		7.5		5.4		5.4		4.7		6.1
Limited partnership interests	0.8		0.6		0.4		0.3		(0.4)		(3.7)		4.1		10.0		0.6		2.3
Total portfolio (2)	3.9		3.9		4.1		4.3		4.7		4.5		4.8		5.1		4.1		4.8
REALIZED CAPITAL GAINS AND LOSSES (PRE-TAX) BY ASSET TYPE
Fixed income securities:
Tax-exempt	$	(12)	$	27	$	9	$	(28)	$	17	$	(55)	$	(5)	$	12	$	(4)	$	(31)
Taxable	(40)		-		(3)		(7)		(52)		(203)		(211)		(106)		(50)		(572)
Equity securities	336		(22)		26		(138)		(632)		(402)		(131)		45		202		(1,120)
Limited partnership interests	19		11		(30)		(164)		(100)		(10)		(2)		-		(164)		(112)
Derivatives and other	(68)		(306)		199		23		(25)		36		111		(145)		(152)		(23)
Total	$	235	$	(290)	$	201	$	(314)	$	(792)	$	(634)	$	(238)	$	(194)	$	(168)	$	(1,858)
REALIZED CAPITAL GAINS AND LOSSES (PRE-TAX) BY TRANSACTION TYPE
Impairment write-downs (3)	$	(91)	$	(100)	$	(87)	$	(256)	$	(170)	$	(242)	$	(51)	$	(175)	$	(534)	$	(638)
Change in intent write-downs (4) (6)	(6)		(10)		(1)		(72)		(50)		(179)		(253)		(19)		(89)		(501)
Net other-than-temporary impairment losses recognized in earnings	(97)		(110)		(88)		(328)		(220)		(421)		(304)		(194)		(623)		(1,139)
Sales(6)	377		91		93		50		(480)		(251)		(47)		143		611		(635)
Valuation of derivative instruments	53		(209)		188		20		(239)		34		32		(123)		52		(296)
Settlements of derivative instruments	(121)		(99)		11		6		224		4		81		(20)		(203)		289
EMA LP income (7)	23		37		(3)		(62)		(77)		-		-		-		(5)		(77)
Total	$	235	$	(290)	$	201	$	(314)	$	(792)	$	(634)	$	(238)	$	(194)	$	(168)	$	(1,858)

(1)	Pre-tax yields are calculated as annualized investment income (including dividend income in the case of equity securities) divided by the average of investment balances at the end of each quarter during the year. Investment balances, for purposes of the pre-tax yield calculation, exclude unrealized capital gains and losses.
(2)	The pre-tax yield for the total portfolio reflects the yield on total investments. Total investments includes fixed income and equity securities, mortgage loans, limited partnership interests, short-term and other investments.
(3)	Beginning April 1, 2009 for fixed income securities, impairment write-downs reflect the credit loss component of issue specific other-than-temporary declines in fair value where the amortized cost basis is not expected to be entirely recovered. For periods prior to April 1, 2009 for fixed income securities and all periods for equity securities, impairment write-downs reflect issue specific other-than-temporary declines in fair value, including instances where the Company could not reasonably assert that the recovery period would be temporary.
(4)	Beginning April 1, 2009 for fixed income securities, change in intent write-downs reflect instances where the Company has made a decision to sell the security or it is more likely than not the Company will be required to sell the security before recovery of its amortized cost basis. For periods prior to April 1, 2009 for fixed income securities and all periods for equity securities, change in intent write-downs reflect instances where the Company could not assert a positive intent to hold until recovery.
(5)	At December 31, 2009, we have commitments to invest in additional limited partnership interests totaling $630 million.
(6)	Includes $2 million and $37 million of write-downs for equity securities effectively carried on a lower of cost or fair value basis because we do not intend to hold them until recovery for the three months and twelve months ended December 31, 2009, respectively.
(7)	Beginning in the fourth quarter of 2008, income from EMA LP is reported in realized capital gains and losses. EMA LP income for periods prior to the fourth quarter of 2008 is reported in net investment income. The amount of EMA LP income included in the Property-Liability net investment income was $(24) million, $9 million and $30 million for the three months ended September 30, 2008, June 30, 2008 and March 31, 2008, respectively.

45

THE ALLSTATE CORPORATION

ALLSTATE FINANCIAL

NET INVESTMENT INCOME, YIELDS AND REALIZED CAPITAL GAINS AND LOSSES (PRE-TAX)

($ in millions)

	Three months ended																	Twelve months ended
		Dec. 31,		Sept. 30,		June 30,		March 31,		Dec. 31,		Sept. 30,		June 30,		March 31,		Dec. 31,		Dec. 31,
		2009		2009		2009		2009		2008		2008		2008		2008		2009		2008
NET INVESTMENT INCOME
Fixed income securities		$	657	$	654	$	658	$	699	$	760	$	792	$	788	$	843	$	2,668	$	3,183
Equity securities		1		2		1		1		1		2		2		2		5		7
Mortgage loans		109		119		130		136		147		145		146		149		494		587
Limited partnership interests (5)		2		2		2		2		(3)		(4)		13		24		8		30
Short-term		1		2		2		7		19		31		33		16		12		99
Other		(4)		(7)		(4)		(1)		17		4		(1)		25		(16)		45
Sub-total		766		772		789		844		941		970		981		1,059		3,171		3,951
Less: Investment expense		(29)		(28)		(25)		(25)		(25)		(33)		(38)		(44)		(107)		(140)
Net investment income (6)		$	737	$	744	$	764	$	819	$	916	$	937	$	943	$	1,015	$	3,064	$	3,811
Net investment income, after-tax		$	480	$	489	$	500	$	535	$	595	$	613	$	620	$	665	$	2,004	$	2,493
PRE-TAX YIELDS (1)
Fixed income securities		5.2		5.2		5.3		5.6		5.9		5.9		5.7		5.8		5.3		5.8
Equity securities		3.7		3.1		4.8		2.9		3.9		4.9		6.5		4.8		3.6		5.3
Mortgage loans		5.2		5.3		5.5		5.5		5.8		5.7		5.8		5.8		5.4		5.8
Limited partnership interests		1.0		0.6		0.7		0.8		(1.0)		(1.2)		4.7		9.2		0.8		2.7
Total portfolio (2)		4.7		4.7		4.8		5.0		5.5		5.4		5.3		5.7		4.8		5.5
REALIZED CAPITAL GAINS AND LOSSES (PRE-TAX) BY ASSET TYPE
Fixed income securities		$	(342)	$	(64)	$	2	$	140	$	(444)	$	(489)	$	(909)	$	(235)	$	(264)	$	(2,077)
Equity securities		2		1		1		(25)		(4)		(2)		(20)		(3)		(21)		(29)
Mortgage loans		(30)		(66)		(16)		(32)		(45)		(10)		(37)		1		(144)		(91)
Limited partnership interests		(26)		(32)		(53)		(171)		(46)		(27)		(4)		1		(282)		(76)
Derivatives and other		121		(73)		187		45		(592)		(71)		5		(196)		280		(854)
Total		$	(275)	$	(234)	$	121	$	(43)	$	(1,131)	$	(599)	$	(965)	$	(432)	$	(431)	$	(3,127)
REALIZED CAPITAL GAINS AND LOSSES (PRE-TAX) BY TRANSACTION TYPE
Impairment write-downs (3)		$	(179)	$	(281)	$	(204)	$	(357)	$	(476)	$	(372)	$	(199)	$	(209)	$	(1,021)	$	(1,256)
Change in intent write-downs (4)		(209)		(1)		(25)		(33)		(191)		(270)		(762)		(24)		(268)		(1,247)
Net other-than-temporary impairment losses recognized in earnings		(388)		(282)		(229)		(390)		(667)		(642)		(961)		(233)		(1,289)		(2,503)
Sales		10		106		163		359		120		114		(14)		(42)		638		178
Valuation of derivative instruments		113		(60)		179		83		(645)		(146)		8		(202)		315		(985)
Settlements of derivative instruments		11		7		41		(18)		75		75		2		45		41		197
EMA LP income (6)		(21)		(5)		(33)		(77)		(14)		-		-		-		(136)		(14)
Total		$	(275)	$	(234)	$	121	$	(43)	$	(1,131)	$	(599)	$	(965)	$	(432)	$	(431)	$	(3,127)

(1)	Pre-tax yields are calculated as annualized investment income (including dividend income in the case of equity securities) divided by the average of investment balances at the end of each quarter during the year. Investment balances, for purposes of the pre-tax yield calculation, exclude unrealized capital gains and losses.
(2)	The pre-tax yield for the total portfolio reflects the yield on total investments. Total investments include fixed income and equity securities, mortgage loans, limited partnership interests, short-term and other investments.
(3)	Beginning April 1, 2009 for fixed income securities, impairment write-downs reflect the credit loss component of issue specific other-than-temporary declines in fair value where the amortized cost basis is not expected to be entirely recovered. For periods prior to April 1, 2009 for fixed income securities and all periods for equity securities, impairment write-downs reflect issue specific other-than-temporary declines in fair value, including instances where the Company could not reasonably assert that the recovery period would be temporary.
(4)	Beginning April 1, 2009 for fixed income securities, change in intent write-downs reflect instances where the Company has made a decision to sell the security or it is more likely than not the Company will be required to sell the security before recovery of its amortized cost basis. For periods prior to April 1, 2009 for fixed income securities and all periods for equity securities, change in intent write-downs reflect instances where the Company could not assert a positive intent to hold until recovery.
(5)	At December 31, 2009, we have commitments to invest in additional limited partnership interests totaling $802 million.
(6)	Beginning in the fourth quarter of 2008, income from EMA LP is reported in realized capital gains and losses. EMA LP income for periods prior to the fourth quarter of 2008 is reported in net investment income. The amount of EMA LP income included in Allstate Financial’s net investment income was $(9) million, $8 million and $15 million for the three months ended September 30, 2008, June 30, 2008 and March 31, 2008, respectively.

46

Definitions of Non-GAAP and Operating Measures

We believe that investors’ understanding of Allstate’s performance is enhanced by our disclosure of the following non-GAAP financial measures.  Our methods for calculating these measures may differ from those used by other companies and therefore comparability may be limited.

Operating income (loss) is net income (loss), excluding:

 - realized capital gains and losses, after-tax, except for periodic settlements and accruals on non-hedge derivative instruments, which are reported with realized capital gains and losses but included in operating income (loss),

 - amortization of DAC and deferred sales inducements (“DSI”), to the extent they resulted from the recognition of certain realized capital gains and losses,

 - gain (loss) on disposition of operations, after-tax, and

 - adjustments for other significant non-recurring, infrequent or unusual items, when (a) the nature of the charge or gain is such that it is reasonably unlikely to recur within two years, or (b) there has been no similar charge or gain within the prior two years. 

Net income (loss) is the GAAP measure that is most directly comparable to operating income (loss).   We use operating income (loss) as an important measure to evaluate our results of operations.  We believe that the measure provides investors with a valuable measure of the Company’s ongoing performance because it reveals trends in our insurance and financial services business that may be obscured by the net effect of realized capital gains and losses, gain (loss) on disposition of operations and adjustments for other significant non-recurring, infrequent or unusual items.  Realized capital gains and losses and gain (loss) on disposition of operations may vary significantly between periods and are generally driven by business decisions and external economic developments such as capital market conditions, the timing of which is unrelated to the insurance underwriting process.   Consistent with our intent to protect results or earn additional income, operating income (loss) includes periodic settlements and accruals on certain derivative instruments that are reported in realized capital gains and losses because they do not qualify for hedge accounting or are not designated as hedges for accounting purposes.  These instruments are used for economic hedges and to replicate fixed income securities, and by including them in operating income (loss), we are appropriately reflecting their trends in our performance and in a manner consistent with the economically hedged investments, product attributes (e.g. net investment income and interest credited to contractholder funds) or replicated investments.  Non-recurring items are excluded because, by their nature, they are not indicative of our business or economic trends.  Accordingly, operating income (loss) excludes the effect of items that tend to be highly variable from period to period and highlights the results from ongoing operations and the underlying profitability of our business.  A byproduct of excluding these items to determine operating income (loss) is the transparency and understanding of their significance to net income variability and profitability while recognizing these or similar items may recur in subsequent periods.  Operating income (loss) is used by management along with the other components of net income (loss) to assess our performance.  We use adjusted measures of operating income (loss) and operating income (loss) per diluted share in incentive compensation.  Therefore, we believe it is useful for investors to evaluate net income (loss), operating income (loss) and their components separately and in the aggregate when reviewing and evaluating our performance.   We note that investors, financial analysts, financial and business media organizations and rating agencies utilize operating income (loss) results in their evaluation of our and our industry’s financial performance and in their investment decisions, recommendations and communications as it represents a reliable, representative and consistent measurement of the industry and the Company and management’s performance.  We note that the price to earnings multiple commonly used by insurance investors as a forward-looking valuation technique uses operating income (loss) as the denominator.  Operating income (loss) should not be considered as a substitute for net income (loss) and does not reflect the overall profitability of our business.  A reconciliation of operating income (loss) to net income (loss) is provided in the schedule, “Contribution to Income”.

Underwriting income (loss) is calculated as premiums earned, less claims and claims expense (“losses”), amortization of DAC, operating costs and expenses and restructuring and related charges as determined using GAAP.  Management uses this measure in its evaluation of the results of operations to analyze the profitability of our Property-Liability insurance operations separately from investment results.  It is also an integral component of incentive compensation.  It is useful for investors to evaluate the components of income separately and in the aggregate when reviewing performance.   Net income (loss) is the most directly comparable GAAP measure.  Underwriting income (loss) should not be considered as a substitute for net income (loss) and does not reflect the overall profitability of our business.  A reconciliation of Property-Liability underwriting income (loss) to net income (loss) is provided in the schedule, “Property-Liability Results”.

Combined ratio excluding the effect of catastrophes is a non-GAAP ratio, which is computed as the difference between two GAAP operating ratios:  the combined ratio and the effect of catastrophes on the combined ratio.  The most directly comparable GAAP measure is the combined ratio.    We believe that this ratio is useful to investors and it is used by management to reveal the trends in our Property-Liability business that may be obscured by catastrophe losses.  These catastrophe losses cause our loss trends to vary significantly between periods as a result of their incidence of occurrence and magnitude and can have a significant impact on the combined ratio.  We believe it is useful for investors to evaluate these components separately and in the aggregate when reviewing our underwriting performance.  The combined ratio excluding the effect of catastrophes should not be considered a substitute for the combined ratio and does not reflect the overall underwriting profitability of our business.  A reconciliation of combined ratio excluding the effect of catastrophes to combined ratio is provided in the schedule, “Property-Liability Results”.

Combined ratio excluding the effect of catastrophes and prior year reserve reestimates (“underlying combined ratio”) is a non-GAAP ratio, which is computed as the difference between three GAAP operating ratios: the combined ratio, the effect of catastrophes on the combined ratio and the effect of prior year reserve reestimates on the combined ratio.  The most directly comparable GAAP measure is the combined ratio.  We believe that this ratio is useful to investors and it is used by management to reveal the trends in our Property-Liability business that may be obscured by catastrophe losses and prior year reserve reestimates.  These catastrophe losses cause our loss trends to vary significantly between periods as a result of their incidence of occurrence and magnitude, and can have a significant impact on the combined ratio.  Prior year reserve reestimates are caused by unexpected loss development on historical reserves.  We believe it is useful for investors to evaluate these components separately and in the aggregate when reviewing our underwriting performance.  We also provide it to facilitate a comparison to our outlook on the 2009 combined ratio excluding the effect of catastrophe losses and prior year reserve reestimates.  The combined ratio excluding the effect of catastrophes and prior year reserve reestimates should not be considered a substitute for the combined ratio and does not reflect the overall underwriting profitability of our business.  A reconciliation of the combined ratio excluding the effect of catastrophes and prior year reserve reestimates to combined ratio is provided in the schedule, “Property-Liability Results”.

Operating income return on equity is a ratio that uses a non-GAAP measure. It is calculated by dividing the rolling 12-month operating income by the average of shareholders’ equity at the beginning and at the end of the 12-months, after excluding the effect of unrealized net capital gains and losses.  Return on equity is the most directly comparable GAAP measure.  We use operating income as the numerator for the same reasons we use operating income, as discussed above.  We use average shareholders’ equity excluding the effect of unrealized net capital gains and losses for the denominator as a representation of shareholders’ equity primarily attributable to the Company’s earned and realized business operations because it eliminates the effect of items that are unrealized and vary significantly between periods due to external economic developments such as capital market conditions like changes in equity prices and interest rates, the amount and timing of which are unrelated to the insurance underwriting process.  We use it to supplement our evaluation of net income and return on equity because it excludes the effect of items that tend to be highly variable from period to period.  We believe that this measure is useful to investors and that it provides a valuable tool for investors when considered along with net income return on equity because it eliminates the after-tax effects of realized and unrealized net capital gains and losses that can fluctuate significantly from period to period and that are driven by economic developments, the magnitude and timing of which are generally not influenced by management.  In addition, it eliminates non-recurring items that are not indicative of our ongoing business or economic trends. A byproduct of excluding the items noted above to determine operating income return on equity from return on equity is the transparency and understanding of their significance to return on equity variability and profitability while recognizing these or similar items may recur in subsequent periods.  Therefore, we believe it is useful for investors to have operating income return on equity and return on equity when evaluating our performance.  We note that investors, financial analysts, financial and business media organizations and rating agencies utilize operating income return on equity results in their evaluation of our and our industry’s financial performance and in their investment decisions, recommendations and communications as it represents a reliable, representative and consistent measurement of the industry and the company and management’s utilization of capital.  Operating income return on equity should not be considered as a substitute for return on equity and does not reflect the overall profitability of our business.  A reconciliation of return on equity and operating income return on equity can be found in the schedule, “Return on Equity”.

Book value per share, excluding the impact of unrealized net capital gains and losses on fixed income securities, is a ratio that uses a non-GAAP measure.  It is calculated by dividing shareholders’ equity after excluding the impact of unrealized net capital gains and losses on fixed income securities and related DAC, DSI and life insurance reserves by total shares outstanding plus dilutive potential shares outstanding.  Book value per share is the most directly comparable GAAP measure.  We use the trend in book value per share, excluding the impact of unrealized net capital gains and losses on fixed income securities in conjunction with book value per share to identify and analyze the change in net worth attributable to management efforts between periods.  We believe the non-GAAP ratio is useful to investors because it eliminates the effect of items that can fluctuate significantly from period to period and are generally driven by economic developments, primarily capital market conditions, the magnitude and timing of which are generally not influenced by management, and we believe it enhances understanding and comparability of performance by highlighting underlying business activity and profitability drivers.  We note that book value per share, excluding the impact of unrealized net capital gains and losses on fixed income securities, is a measure commonly used by insurance investors as a valuation technique.  Book value per share, excluding the impact of unrealized net capital gains and losses on fixed income securities, should not be considered as a substitute for book value per share, and does not reflect the recorded net worth of our business.  A reconciliation of book value per share, excluding the impact of unrealized net capital gains on fixed income securities, and book value per share can be found in the schedule, “Book Value per Share”.

Operating Measures

We believe that investors’ understanding of Allstate’s performance is enhanced by our disclosure of the following operating financial measures.  Our method for calculating these measures may differ from those used by other companies and therefore comparability may be limited.

Premiums written is the amount of premiums charged for policies issued during a fiscal period.  Premiums earned is a GAAP measure.  Premiums are considered earned and are included in financial results on a pro-rata basis over the policy period.  The portion of premiums written applicable to the unexpired terms of the policies is recorded as unearned premiums on our Consolidated Statements of Financial Position.  A reconciliation of premiums written to premiums earned is presented in the schedule, “Property-Liability Results”.

Premiums and deposits is an operating measure that we use to analyze production trends for Allstate Financial sales.  It includes premiums on insurance policies and annuities and all deposits and other funds received from customers on deposit-type products including the net new deposits of Allstate Bank, which we account for under GAAP as increases to liabilities rather than as revenue.  An illustration of where premiums and deposits are reflected in the consolidated financial statements is included in the schedule, “Allstate Financial Results”.

Definitions of GAAP Operating Ratios and Impacts of Specific Items on the GAAP Operating Ratios

We use the following operating ratios to measure the profitability of our Property-Liability results.  We believe that they enhance an investor’s understanding of our profitability.  They are calculated as follows:

Claims and claims expense (“loss”) ratio is the ratio of claims and claims expense to premiums earned.  Loss ratios include the impact of catastrophe losses.

Expense ratio is the ratio of amortization of DAC, operating costs and expenses and restructuring and related charges to premiums earned.

Combined ratio is the ratio of claims and claims expense, amortization of DAC, operating costs and expenses and restructuring and related charges to premiums earned.  The combined ratio is the sum of the loss ratio and the expense ratio.  The difference between 100% and the combined ratio represents underwriting income (loss) as a percentage of premiums earned.

Effect of Discontinued Lines and Coverages on combined ratio is the ratio of claims and claims expense and other costs and expenses in the Discontinued Lines and Coverages segment to Property-Liability premiums earned.  The sum of the effect of Discontinued Lines and Coverages on the combined ratio and the Allstate Protection combined ratio is equal to the Property-Liability combined ratio.

Effect of catastrophe losses on combined ratio is the percentage of catastrophe losses included in claims and claims expense to premiums earned.  This ratio includes prior year reserve reestimates of catastrophe losses. 

Effect of prior year reserve reestimates on combined ratio is the percentage of prior year reserve reestimates included in claims and claims expense to premiums earned.  This ratio includes prior year reserve reestimates of catastrophe losses.

Effect of pre-tax reserve reestimates on combined ratio is the percentage of prior year reserve reestimates included in claims and claims expense to premiums earned.  This ratio includes prior year reserve reestimates of catastrophe losses. 

Effect of restructuring and related charges on combined ratio is the percentage of restructuring and related charges to premiums earned.

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