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) October 27, 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 October 27, 2010, the registrant issued a press release announcing its financial results for the third quarter of 2010, and the availability of the registrant’s third 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

99.1Registrant’s press release dated October 27, 2010

99.2Third quarter 2010 Investor Supplement of The Allstate Corporation

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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: October 27, 2010

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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 Third Quarter 2010 Results and Continued Positive Trends

NORTHBROOK, Ill., October 27, 2010 – The Allstate Corporation (NYSE: ALL) today reported financial results for the third quarter of 2010:

The Allstate Corporation Consolidated Highlights
	Three months ended September 30,
($ in millions, except per share amounts and ratios)	2010	2009	% Change
Consolidated revenues	$   7,908	$    7,582	4.3
Net income	367	221	66.1
Net income per diluted share	0.68	0.41	65.9
Operating income*	452	538	(16.0)
Operating income per diluted share*	0.83	0.99	(16.2)
Book value per share	35.48	32.29	9.9
Book value per share, excluding the impact of unrealized net capital gains and losses on fixed income securities*	33.38	32.44	2.9
Catastrophe losses	386	407	(5.2)
Property-Liability combined ratio	95.9	94.7	1.2 pts
Property-Liability combined ratio excluding the effect of catastrophes and prior year reserve reestimates (“underlying combined ratio”)*	89.2	88.0	1.2 pts

* 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.

“Our strategies to create shareholder value in an uncertain economic climate continue to generate positive results,” said Thomas J. Wilson, chairman, president and chief executive officer of The Allstate Corporation.  “Net income of $367 million showed strong growth over the prior year third quarter and second quarter of this year.

“Profitability at Allstate Protection remains strong, with the underlying combined ratio consistently meeting our annual outlook range.  We remain comfortable with our range of 88 to 90 for the year.  Overall policies in force declined, but standard auto new issued applications improved as we implemented new marketing and growth initiatives.  Allstate Financial’s net and operating income improved this quarter from a year ago, reflecting progress on its strategic repositioning. 

“Book value per share rose 7% during the quarter to $35.48 at September 30, 2010 reflecting profitability and strong investment results,” said Wilson.

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Consolidated Financial Results

Allstate’s third quarter 2010 net income was $367 million, or $0.68 per diluted share, compared to $221 million in the third quarter of 2009, primarily due to lower realized capital losses in 2010 versus 2009.  Operating income was $452 million, or $0.83 per diluted share, in the third quarter of 2010 compared to $538 million in the same period of 2009, reflecting a decline in Property-Liability partly offset by increases in Allstate Financial. 

Property-Liability Profitability is a Source of Financial Strength

Property-Liability remained a source of financial strength for the company while beginning to implement growth plans.  Allstate’s Property-Liability business produced an underlying combined ratio within the company’s full-year outlook range of 88 to 90.  The underlying combined ratio, which excludes catastrophes and prior year reserve reestimates, was 89.2 in the third quarter of 2010 compared to 88.0 in the same period of 2009, due to a higher expense ratio and increases in claim frequencies.  The recorded combined ratio was 95.9 for the third quarter of 2010, compared to 94.7 in the third quarter of 2009. 

Catastrophe losses totaled $386 million during the third quarter of 2010, reflecting 29 events with losses of $371 million.  This compares to catastrophe losses of $407 million for the third quarter of 2009.  Catastrophe losses added 5.9 points to the combined ratio during the third quarter of 2010.

Property-Liability premiums written* declined 0.6% in the third quarter of 2010 compared to the prior year quarter.  Allstate’s brand growth of 0.2% was more than offset by a 16.7% decline in the Encompass brand, reflecting actions to improve profitability.

Allstate brand standard auto premiums written declined 0.5% for the third quarter of 2010 compared to the prior year third quarter.  This decline was driven by a 1.7% decline in policies in force, reflecting a 0.4 point decline in retention to 88.7%, partly offset by a 2.5% increase in new issued applications from the prior year third quarter.  Average premium increased 1.4% during the third quarter when compared to the prior year quarter.  Allstate’s Customer Loyalty Index (CLI) as of September 30, 2010 declined slightly from the prior quarter of 2010.  The Allstate brand standard auto combined ratio was 93.2, an increase of 0.5 points from the third quarter of 2009, due to higher claim frequencies. 

Allstate brand homeowners premiums written for the third quarter of 2010 increased 2.4% compared to the same period a year ago, as a 7.2% increase in average premium was partly offset by a 4.1% decline in policies in force.  Rate increases averaging 4.2% in 15 states were approved during the third quarter, as Allstate took actions to improve returns and lessen the volatility of homeowners results.  The combined ratio was 104.7 in the third quarter of 2010 compared to 98.3 in the third quarter a year ago, primarily due to unfavorable prior year reserve reestimates and a higher expense ratio.  Unfavorable prior year reserve reestimates in the third quarter of 2010 included a litigation settlement of $70 million.    

The Property-Liability expense ratio for the third quarter of 2010 was 25.1 compared to 24.7 in the prior year third quarter, primarily due to higher marketing expenditures.

Allstate Financial Strategy Gaining Traction

Allstate Financial made significant progress on its goals to produce higher returns, reduce concentrations in products with returns dependent on investment spread, and serve its customers by focusing on Allstate agencies and the Allstate Workplace Division. 

Consistent with this strategy, premiums and deposits* on mortality and morbidity (underwritten) products increased 8.6% when compared to the third quarter of 2009, while deposits on annuities declined by 30.3% compared to the prior year period.  Premiums and deposits trends reflect premium growth in the Allstate Workplace Division and Allstate agencies, and the discontinuation earlier this year of new business through financial institutions.

Allstate Financial operating income was $108 million in the third quarter of 2010 compared to $95 million in the prior year third quarter.  The increase was due to a higher investment spread and lower amortization of deferred acquisition costs (DAC), partly offset by higher operating costs and expenses and a lower benefit

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spread.  The investment spread increased to $127 million in the third quarter of 2010 from $109 million in the prior year third quarter.  The change reflected decreased interest credited to contractholder funds, partly offset by lower net investment income.  DAC amortization declined primarily due to a lower amortization rate on fixed annuities.  Operating costs and expenses rose as product distribution and marketing costs, employee benefits, and certain acquisition-related expenses increased.  The benefit spread declined 2.8% from the prior year third quarter due to an increase in contract benefits on immediate annuities, reflecting favorable mortality experience in the third quarter of 2009, partly offset by growth in accident and health products. 

Allstate Financial reported net income of $85 million in the third quarter of 2010 compared to a net loss of $38 million in the 2009 quarter.  Net income reflected after-tax net realized capital losses, including the impact of deferred acquisition costs and deferred sales inducements of $18 million in the third quarter of 2010 compared to $133 million in the third quarter of 2009. 

Strong Returns from Investment Portfolio

Allstate’s consolidated investment portfolio was $102.2 billion at September 30, 2010, up $2.3 billion from June 30, 2010, as strong investment returns more than offset impacts from reductions in Allstate Financial’s contractholder funds.  Investment returns reflect lower interest rates, improved equity markets, and significant cash flow generated by the portfolio.  Allstate’s net unrealized gain at September 30, 2010 was $2.7 billion, pre-tax, compared to a net unrealized gain of $400 million, pre-tax, at June 30, 2010 and a net unrealized loss of $2.5 billion, pre-tax, at September 30, 2009.

Net realized capital loss for the third quarter of 2010 was $144 million, pre-tax, compared to $519 million in the prior year third quarter, with lower impairment write-downs, higher gains on sales and lower derivative losses driving the improvement.  Impairment write-downs of $137 million were primarily related to residential and commercial real estate exposure.  Net realized gains from sales of $319 million were due to sales of fixed income and equity securities.

Derivative net losses totaled $285 million in the third quarter of 2010 and were driven primarily by Allstate’s risk management actions.  Declining interest rates resulted in $181 million of derivative losses, which were significantly less than the increases in the portfolio’s fixed income valuations during the period.  Favorable valuations on equity securities were also significantly greater than the $115 million of derivative losses related to equity market hedges. 

As part of the company’s ongoing strategy to manage exposure to certain portfolio segments, reductions of municipal fixed income securities totaled $2.4 billion of amortized cost and reductions of commercial real estate totaled $484 million of amortized cost during the third quarter of 2010. 

Net investment income for the third quarter of 2010 was $1.0 billion, 7.3% less than the third quarter of 2009 and 4.2% less than the second quarter of 2010.  These declines primarily resulted from lower interest rates, risk reduction actions related to municipal bonds and commercial real estate, and duration management actions taken to protect the portfolio from rising interest rates.  Net investment income in the Property-Liability portfolio totaled $284 million in the third quarter of 2010, a 12.9% decline from the third quarter of 2009 and an 8.4% decrease from the second quarter of 2010.  Allstate Financial’s net investment income was $707 million, a 5.0% decline from the third quarter of 2009 and a 2.2% decline from the second quarter of 2010.

Capital Position Continues to Improve

“The combination of higher net income and favorable investment returns resulted in a 15% increase in book value during the first nine months of 2010,” said Don Civgin, senior vice president and chief financial officer.  “Our capital position continues to improve, providing us with greater flexibility in achieving our strategic priorities to improve customer loyalty, reinvent protection and retirement, and grow our businesses.”

Book value per share grew to $35.48 per share at September 30, 2010 compared to $33.24 at June 30, 2010 and $30.84 at December 31, 2009.  Book value increased during the third quarter as higher shareholders’ equity reflected improved investment valuations.  Statutory surplus at September 30, 2010 is an estimated $15.1 billion for Allstate Insurance Company, including $3.2 billion at Allstate Life Insurance Company.  This compares to Allstate Insurance Company statutory surplus of $14.9 billion at June 30, 2010 and $14.8 billion at September 30, 2009.  Deployable assets at the holding company level increased to $3.5 billion at

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September 30, 2010, reflecting $400 million of dividends from Allstate Insurance Company during the third quarter.

*     *     *     *     *

Visit www.allstateinvestors.com to view additional information about Allstate’s third quarter results, including a webcast of its quarterly conference call and the presentation used in the call.  The conference call will be held at 9 a.m. ET on Thursday, October 28, 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 (auto, home, life and retirement) 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®.

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THE ALLSTATE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

($ in millions, except per share data)		Three months ended September 30,				Nine months ended September 30,
		2010		2009		2010		2009
		(unaudited)				(unaudited)
Revenues
Property-liability insurance premiums	$	6,499	$	6,535	$	19,515	$	19,677
Life and annuity premiums and contract charges		548		482		1,637		1,460
Net investment income		1,005		1,084		3,104		3,368
Realized capital gains and losses:
Total other-than-temporary impairment losses		(99)		(539)		(637)		(1,735)
Portion of loss recognized in other comprehensive income		(68)		147		(91)		301
Net other-than-temporary impairment losses recognized in earnings		(167)		(392)		(728)		(1,434)
Sales and other realized capital gains and losses		23		(127)		(215)		884
Total realized capital gains and losses		(144)		(519)		(943)		(550)
		7,908		7,582		23,313		23,955
Costs and expenses
Property-liability insurance claims and claims expense		4,603		4,573		14,109		14,295
Life and annuity contract benefits		445		382		1,372		1,176
Interest credited to contractholder funds		445		496		1,358		1,636
Amortization of deferred policy acquisition costs		1,006		1,023		2,969		3,649
Operating costs and expenses		828		744		2,446		2,247
Restructuring and related charges		9		35		33		112
Interest expense		91		106		275		291
		7,427		7,359		22,562		23,406
Gain on disposition of operations		9		2		12		6
Income from operations before income tax expense		490		225		763		555
Income tax expense		123		4		131		219
Net income	$	367	$	221	$	632	$	336
Earnings per share:
Net income per share - Basic	$	0.68	$	0.41	$	1.17	$	0.62
Weighted average shares - Basic		540.9		539.9		540.6		539.5
Net income per share - Diluted	$	0.68	$	0.41	$	1.16	$	0.62
Weighted average shares - Diluted		543.0		541.5		542.7		540.5
Cash dividends declared per share	$	0.20	$	0.20	$	0.60	$	0.60

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THE ALLSTATE CORPORATION

SEGMENT RESULTS

($ in millions, except ratios)		Three months ended				Nine months ended
		September 30,				September 30,
		2010		2009		2010		2009
Property-Liability
Premiums written	$	6,767	$	6,810	$	19,665	$	19,694
Premiums earned	$	6,499	$	6,535	$	19,515	$	19,677
Claims and claims expense		(4,603)		(4,573)		(14,109)		(14,295)
Amortization of deferred policy acquisition costs		(915)		(943)		(2,754)		(2,832)
Operating costs and expenses		(706)		(642)		(2,074)		(1,911)
Restructuring and related charges		(9)		(31)		(34)		(88)
Underwriting income		266		346		544		551
Net investment income		284		326		898		1,004
Periodic settlements and accruals on non-hedge derivative instruments		(2)		(2)		(4)		(8)
Income tax expense on operations		(154)		(169)		(390)		(343)
Operating income		394		501		1,048		1,204
Realized capital gains and losses, after-tax		(69)		(188)		(261)		(373)
Gain on disposition of operations, after-tax		4		--		4		--
Reclassification of periodic settlements and accruals on non-hedge
derivative instruments, after-tax		2		1		3		5
Net income	$	331	$	314	$	794	$	836
Catastrophe losses	$	386	$	407	$	1,670	$	1,741
Operating ratios:
Claims and claims expense ratio		70.8		70.0		72.3		72.6
Expense ratio		25.1		24.7		24.9		24.6
Combined ratio		95.9		94.7		97.2		97.2
Effect of catastrophe losses on combined ratio		5.9		6.2		8.6		8.8
Effect of prior year reserve reestimates on combined ratio		0.2		(0.7)		(0.9)		(0.4)
Effect of catastrophe losses included in prior year reserve reestimates on
combined ratio		(0.6)		(1.2)		(0.7)		(0.7)
Effect of Discontinued Lines and Coverages on combined ratio		0.3		0.3		0.1		0.1
Allstate Financial
Investments	$	62,915	$	61,891	$	62,915	$	61,891
Premiums and deposits	$	1,011	$	1,033	$	3,134	$	3,965
Premiums and contract charges	$	548	$	482	$	1,637	$	1,460
Net investment income		707		744		2,161		2,327
Periodic settlements and accruals on non-hedge derivative instruments		10		2		38		--
Contract benefits		(445)		(382)		(1,372)		(1,176)
Interest credited to contractholder funds		(446)		(497)		(1,359)		(1,559)
Amortization of deferred policy acquisition costs		(101)		(108)		(200)		(347)
Operating costs and expenses		(118)		(99)		(354)		(325)
Restructuring and related charges		--		(4)		1		(24)
Income tax expense on operations		(47)		(43)		(180)		(111)
Operating income		108		95		372		245
Realized capital gains and losses, after-tax		(25)		(151)		(360)		(239)
DAC and DSI accretion (amortization) relating to realized capital gains
and losses, after-tax		7		18		9		(132)
DAC and DSI unlocking relating to realized capital gains and losses, after-tax		--		--		(18)		(224)
Reclassification of periodic settlements and accruals on non-hedge
derivative instruments, after-tax		(7)		(1)		(25)		--
Gain on disposition of operations, after-tax		2		1		4		4
Net income (loss)	$	85	$	(38)	$	(18)	$	(346)
Corporate and Other
Net investment income	$	14	$	14	$	45	$	37
Operating costs and expenses		(95)		(109)		(293)		(302)
Income tax benefit on operations		31		37		96		105
Operating loss		(50)		(58)		(152)		(160)
Realized capital gains and losses, after-tax		1		3		8		6
Net loss	$	(49)	$	(55)	$	(144)	$	(154)
Consolidated net income	$	367	$	221	$	632	$	336

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THE ALLSTATE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

($ in millions, except par value data)		September 30,		December 31,
		2010		2009
Assets		(unaudited)
Investments:
Fixed income securities, at fair value (amortized cost $80,786 and $81,243)	$	83,193	$	78,766
Equity securities, at fair value (cost $3,447 and $4,845)		3,707		5,024
Mortgage loans		6,961		7,935
Limited partnership interests		3,454		2,744
Short-term, at fair value (amortized cost $2,776 and $3,056)		2,776		3,056
Other		2,123		2,308
Total investments		102,214		99,833
Cash		500		612
Premium installment receivables, net		4,981		4,839
Deferred policy acquisition costs		4,671		5,470
Reinsurance recoverables, net		6,597		6,355
Accrued investment income		847		864
Deferred income taxes		670		1,870
Property and equipment, net		922		990
Goodwill		874		875
Other assets		1,799		1,872
Separate Accounts		8,459		9,072
Total assets	$	132,534	$	132,652
Liabilities
Reserve for property-liability insurance claims and claims expense	$	19,294	$	19,167
Reserve for life-contingent contract benefits		13,955		12,910
Contractholder funds		48,936		52,582
Unearned premiums		10,001		9,822
Claim payments outstanding		733		742
Other liabilities and accrued expenses		5,945		5,726
Long-term debt		5,909		5,910
Separate Accounts		8,459		9,072
Total liabilities		113,232		115,931
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, 538 million and 537 million shares outstanding		9		9
Additional capital paid-in		3,165		3,172
Retained income		31,781		31,492
Deferred ESOP expense		(45)		(47)
Treasury stock, at cost (362 million and 363 million shares)		(15,755)		(15,828)
Accumulated other comprehensive income:
Unrealized net capital gains and losses:
Unrealized net capital losses on fixed income securities with OTTI		(200)		(441)
Other unrealized net capital gains and losses		1,919		(1,072)
Unrealized adjustment to DAC, DSI and insurance reserves		(427)		643
Total unrealized net capital gains and losses		1,292		(870)
Unrealized foreign currency translation adjustments		54		46
Unrecognized pension and other postretirement benefit cost		(1,227)		(1,282)
Total accumulated other comprehensive income (loss)		119		(2,106)
Total shareholders’ equity		19,274		16,692
Noncontrolling interest		28		29
Total equity		19,302		16,721
Total liabilities and equity	$	132,534	$	132,652

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THE ALLSTATE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

($ in millions)		Nine months ended September 30,
		2010		2009
Cash flows from operating activities		(unaudited)
Net income	$	632	$	336
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and other non-cash items		55		(87)
Realized capital gains and losses		943		550
Gain on disposition of operations		(12)		(6)
Interest credited to contractholder funds		1,358		1,636
Changes in:
Policy benefits and other insurance reserves		143		(460)
Unearned premiums		172		6
Deferred policy acquisition costs		(138)		471
Premium installment receivables, net		(137)		(108)
Reinsurance recoverables, net		(229)		(101)
Income taxes		178		1,175
Other operating assets and liabilities		58		103
Net cash provided by operating activities		3,023		3,515
Cash flows from investing activities
Proceeds from sales
Fixed income securities		17,345		16,098
Equity securities		4,262		4,636
Limited partnership interests		387		293
Mortgage loans		121		140
Other investments		98		429
Investment collections
Fixed income securities		3,672		3,947
Mortgage loans		784		1,093
Other investments		96		99
Investment purchases
Fixed income securities		(20,712)		(22,694)
Equity securities		(2,721)		(5,991)
Limited partnership interests		(1,040)		(674)
Mortgage loans		(55)		(23)
Other investments		(99)		(54)
Change in short-term investments, net		104		5,437
Change in other investments, net		(464)		(144)
Disposition of operations		7		12
Purchases of property and equipment, net		(114)		(143)
Net cash provided by investing activities		1,671		2,461
Cash flows from financing activities
Proceeds from issuance of long-term debt		-		1,003
Repayment of long-term debt		(1)		(1)
Contractholder fund deposits		2,297		3,252
Contractholder fund withdrawals		(6,779)		(9,485)
Dividends paid		(322)		(434)
Treasury stock purchases		(5)		(3)
Shares reissued under equity incentive plans, net		26		2
Excess tax benefits on share-based payment arrangements		(7)		(6)
Other		(15)		8
Net cash used in financing activities		(4,806)		(5,664)
Net (decrease) increase in cash		(112)		312
Cash at beginning of period		612		415
Cash at end of period	$	500	$	727

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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 nine months ended September 30, 2010 and 2009.

For the three months ended September 30,		Property-Liability				Allstate Financial				Consolidated				Per diluted share
($ in millions, except per share data)		2010		2009		2010		2009		2010		2009		2010		2009
Operating income	$	394	$	501	$	108	$	95	$	452	$	538	$	0.83	$	0.99
Realized capital gains and losses		(107)		(290)		(38)		(234)		(144)		(519)
Income tax benefit		38		102		13		83		51		183
Realized capital gains and losses, after-tax		(69)		(188)		(25)		(151)		(93)		(336)		(0.17)		(0.62)
DAC and DSI accretion relating to realized capital gains and losses, after-tax		--		--		7		18		7		18		0.01		0.04
Reclassification of periodic settlements and accruals on non-hedge derivative instruments, after-tax		2		1		(7)		(1)		(5)		--		--		--
Gain on disposition of operations, after-tax		4		--		2		1		6		1		0.01		--
Net income (loss)	$	331	$	314	$	85	$	(38)	$	367	$	221	$	0.68	$	0.41

9

For the nine months ended September 30,		Property-Liability				Allstate Financial				Consolidated				Per diluted share
($ in millions, except per share data)		2010		2009		2010		2009		2010		2009		2010		2009
Operating income	$	1,048	$	1,204	$	372	$	245	$	1,268	$	1,289	$	2.34	$	2.38
Realized capital gains and losses		(403)		(403)		(553)		(156)		(943)		(550)
Income tax benefit (expense)		142		30		193		(83)		330		(56)
Realized capital gains and losses,    after-tax		(261)		(373)		(360)		(239)		(613)		(606)		(1.13)		(1.12)
DAC and DSI accretion (amortization) relating to realized capital gains and losses, after-tax		--		--		9		(132)		9		(132)		0.01		(0.24)
DAC and DSI unlocking relating to realized capital gains and losses,    after-tax		--		--		(18)		(224)		(18)		(224)		(0.03)		(0.42)
Reclassification of periodic settlements and accruals on non-hedge derivative instruments, after-tax		3		5		(25)		--		(22)		5		(0.04)		0.01
Gain on disposition of operations, after-tax		4		--		4		4		8		4		0.01		0.01
Net income (loss)	$	794	$	836	$	(18)	$	(346)	$	632	$	336	$	1.16	$	0.62

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 “Segment Results” page.

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 non-catastrophe 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 2010 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 September 30,		Nine months ended September 30,
	2010	2009	2010	2009
Combined ratio excluding the effect of catastrophes and prior year reserve reestimates (“underlying combined ratio”)	89.2	88.0	88.8	88.1
Effect of catastrophe losses	5.9	6.2	8.6	8.8
Effect of prior year non-catastrophe reserve reestimates	0.8	0.5	(0.2)	0.3
Combined ratio	95.9	94.7	97.2	97.2
Effect of prior year catastrophe reserve reestimates	(0.6)	(1.2)	(0.7)	(0.7)

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.

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.

10

($ in millions, except per share data)		As of September 30,
		2010		2009
Book value per share
Numerator:
Shareholders’ equity	$	19,274	$	17,505
Denominator:
Shares outstanding and dilutive potential shares outstanding		543.3		542.1
Book value per share	$	35.48	$	32.29
Book value per share, excluding the impact of unrealized net capital gains and losses on fixed income securities
Numerator:
Shareholders’ equity	$	19,274	$	17,505
Unrealized net capital gains and losses on fixed income securities		1,138		(81)
Adjusted shareholders’ equity	$	18,136	$	17,586
Denominator:
Shares outstanding and dilutive potential shares outstanding		543.3		542.1
Book value per share, excluding the impact of unrealized net capital gains and losses on fixed income securities	$	33.38	$	32.44

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 Condensed Consolidated Statements of Financial Position.  A reconciliation of premiums written to premiums earned is presented in the following table.

($ in millions)		Three months ended September 30,				Nine months ended September 30,
		2010		2009		2010		2009
Premiums written	$	6,767	$	6,810	$	19,665	$	19,694
Increase in Property-Liability unearned premiums		(319)		(315)		(184)		(48)
Other		51		40		34		31
Premiums earned	$	6,499	$	6,535	$	19,515	$	19,677

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 condensed consolidated financial statements.

($ in millions)		Three months ended September 30,				Nine months ended September 30,
		2010		2009		2010		2009
Total premiums and deposits	$	1,011	$	1,033	$	3,134	$	3,965
Deposits to contractholder funds		(730)		(802)		(2,297)		(3,252)
Deposits to separate accounts		(25)		(27)		(76)		(83)
Change in unearned premiums and other adjustments		34		28		104		96
Life and annuity premiums (1)	$	290	$	232	$	865	$	726

(1)Life and annuity contract charges in the amount of $258 million and $250 million for the three months ended September 30, 2010 and 2009, respectively, and $772 million and $734 million for the nine months ended September 30, 2010 and 2009, respectively, which are also revenues recognized for GAAP, have been excluded from the table above, but are a component of the Condensed Consolidated Statements of Operations line item life and annuity premiums and contract charges. 

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.

# # # # #

11

EX-99.2

Exhibit 99.2

THE ALLSTATE CORPORATION

Investor Supplement

Third Quarter 2010

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 most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. 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 - Third Quarter 2010

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
Property-Liability Operations
Property-Liability Results	11
Underwriting Results by Area of Business	12
Premiums Written by Market Segment	13
Allstate Protection Market Segment Analysis	14
Allstate Protection Historical Market Segment Analysis	15
Historical Impact of Net Rate Changes Approved on Premiums Written	16
Standard Auto Profitability Measures	17
Non-standard Auto Profitability Measures	18
Auto Profitability Measures	19
Homeowners Profitability Measures	20
Allstate Brand Domestic Operating Measures and Statistics	21
Homeowners Supplemental Information	22
Effect of Catastrophe Losses on the Combined Ratio	23
Allstate Protection Historical Catastrophe by Size of Event	24
Effect of Pre-tax Prior Year Reserve Reestimates on the Combined Ratio	25
Asbestos and Environmental Reserves	26
Allstate Financial Operations
Allstate Financial Results	27
Premiums and Deposits	28
Change in Contractholder Funds	29
Analysis of Net Income	30
Allstate Financial Weighted Average Investment Spreads	31
Corporate and Other Results	32
Investments
Investments	33
Fixed Income Security Portfolio By Credit Rating	34
Unrealized Net Capital Gains and Losses on Security Portfolio by Type	35
Gross Unrealized Gains and Losses on Fixed Income Securities by Type and Sector	36
Fair Value and Unrealized Net Capital Gains and Losses for Fixed Income Securities by Credit Rating	37
Realized Capital Gains and Losses by Transaction Type	38
Property-Liability Net Investment Income, Yields and Realized Capital Gains and Losses (Pre-tax)	39
Allstate Financial Net Investment Income, Yields and Realized Capital Gains and Losses (Pre-tax)	40
Definitions of Non-GAAP and Operating Measures	41

THE ALLSTATE CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

($ in millions, except per share data)

		Three months ended																					Nine months ended
		Sept. 30,			June 30,			March 31,			Dec. 31,			Sept. 30,			June 30,			March 31,			Sept. 30,			Sept. 30,
		2010			2010			2010			2009			2009			2009			2009 (1)			2010			2009
Revenues
Property-liability insurance premiums	$	6,499		$	6,513		$	6,503		$	6,517		$	6,535		$	6,560		$	6,582		$	19,515		$	19,677
Life and annuity premiums and contract charges		548			545			544			498			482			494			484			1,637			1,460
Net investment income		1,005			1,049			1,050			1,076			1,084			1,108			1,176			3,104			3,368
Realized capital gains and losses:
Total other-than-temporary impairment losses		(99	)		(288	)		(250	)		(641	)		(539	)		(471	)		(725	)		(637	)		(1,735	)
Portion of loss recognized in other comprehensive income		(68	)		(18	)		(5	)		156			147			154			-			(91	)		301
Net other-than-temporary impairment losses recognized in earnings		(167	)		(306	)		(255	)		(485	)		(392	)		(317	)		(725	)		(728	)		(1,434	)
Sales and other realized capital gains and losses		23			(145	)		(93	)		452			(127	)		645			366			(215	)		884
Total realized capital gains and losses		(144	)		(451	)		(348	)		(33	)		(519	)		328			(359	)		(943	)		(550	)
Total revenues		7,908			7,656			7,749			8,058			7,582			8,490			7,883			23,313			23,955
Costs and expenses
Property-liability insurance claims and claims expense		4,603			4,714			4,792			4,451			4,573			5,002			4,720			14,109			14,295
Life and annuity contract benefits		445			485			442			441			382			407			387			1,372			1,176
Interest credited to contractholder funds		445			450			463			490			496			561			579			1,358			1,636
Amortization of deferred policy acquisition costs		1,006			949			1,014			1,105			1,023			1,229			1,397			2,969			3,649
Operating costs and expenses		828			789			829			760			744			702			801			2,446			2,247
Restructuring and related charges		9			13			11			18			35			32			45			33			112
Interest expense		91			92			92			101			106			97			88			275			291
Total costs and expenses		7,427			7,492			7,643			7,366			7,359			8,030			8,017			22,562			23,406
Gain on disposition of operations		9			2			1			1			2			1			3			12			6
Income (loss) from operations before income tax expense (benefit)		490			166			107			693			225			461			(131	)		763			555
Income tax expense (benefit)		123			21			(13	)		175			4			72			143			131			219
Net income (loss)	$	367		$	145		$	120		$	518		$	221		$	389		$	(274	)	$	632		$	336
Earnings per share:(2)(3)
Net income (loss) per share - Basic	$	0.68		$	0.27		$	0.22		$	0.96		$	0.41		$	0.72		$	(0.51	)	$	1.17		$	0.62
Weighted average shares - Basic		540.9			540.7			540.5			539.9			539.9			539.8			538.9			540.6			539.5
Net income (loss) per share - Diluted	$	0.68		$	0.27		$	0.22		$	0.96		$	0.41		$	0.72		$	(0.51	)	$	1.16		$	0.62
Weighted average shares - Diluted		543.0			543.0			541.8			542.1			541.5			540.6			538.9			542.7			540.5
Cash dividends declared per share	$	0.20		$	0.20		$	0.20		$	0.20		$	0.20		$	0.20		$	0.20		$	0.60		$	0.60

(1)Income tax expense for the three months ended March 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, weighted average dilutive potential common shares outstanding resulting from stock options of 0.6 million 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 may not equal the year-to-date per share amount.

(3)In accordance with GAAP, the quarter and year-to-date per share amounts are calculated discretely.  Therefore, the sum of each quarter may not equal the year-to-date amount.

1

THE ALLSTATE CORPORATION

CONTRIBUTION TO INCOME

($ in millions, except per share data)

	Three months ended																							Nine months ended
			Sept. 30,			June 30,			March 31,			Dec. 31,			Sept. 30,			June 30,			March 31,			Sept. 30,			Sept. 30,
			2010			2010			2010			2009			2009			2009			2009			2010			2009
Contribution to income
Operating income before the impact of restructuring and related charges		$	457		$	450		$	382		$	604		$	561		$	318		$	483		$	1,289		$	1,362
Restructuring and related charges, after-tax			(5	)		(9	)		(7	)		(12	)		(23	)		(21	)		(29	)		(21	)		(73	)
Operating income *			452			441			375			592			538			297			454			1,268			1,289
Realized capital gains and losses, after-tax			(93	)		(294	)		(226	)		(22	)		(336	)		218			(488	)		(613	)		(606	)
DAC and DSI accretion (amortization) relating to realized capital gains and losses, after-tax			7			4			(2	)		(45	)		18			(131	)		(19	)		9			(132	)
DAC and DSI unlocking relating to realized capital gains and losses, after-tax			-			-			(18	)		-			-			-			(224	)		(18	)		(224	)
Reclassification of periodic settlements and accruals on non-hedge derivative instruments, after-tax			(5	)		(7	)		(10	)		(7	)		-			4			1			(22	)		5
Gain on disposition of operations, after-tax			6			1			1			-			1			1			2			8			4
Net income (loss)		$	367		$	145		$	120		$	518		$	221		$	389		$	(274	)	$	632		$	336
Income per share - Diluted(1)(2)
Operating income before the impact of restructuring and related charges		$	0.84		$	0.83		$	0.70		$	1.11		$	1.04		$	0.59		$	0.90		$	2.38		$	2.52
Restructuring and related charges, after-tax			(0.01	)		(0.02	)		(0.01	)		(0.02	)		(0.05	)		(0.04	)		(0.06	)		(0.04	)		(0.14	)
Operating income			0.83			0.81			0.69			1.09			0.99			0.55			0.84			2.34			2.38
Realized capital gains and losses, after-tax			(0.17	)		(0.53	)		(0.42	)		(0.04	)		(0.62	)		0.40			(0.90	)		(1.13	)		(1.12	)
DAC and DSI accretion (amortization) relating to realized capital gains and losses, after-tax			0.01			-			-			(0.08	)		0.04			(0.24	)		(0.03	)		0.01			(0.24	)
DAC and DSI unlocking relating to realized capital gains and losses, after-tax			-			-			(0.03	)		-			-			-			(0.42	)		(0.03	)		(0.42	)
Reclassification of periodic settlements and accruals on non-hedge derivative instruments, after-tax			-			(0.01	)		(0.02	)		(0.01	)		-			0.01			-			(0.04	)		0.01
Gain on disposition of operations, after-tax			0.01			-			-			-			-			-			-			0.01			0.01
Net income (loss)		$	0.68		$	0.27		$	0.22		$	0.96		$	0.41		$	0.72		$	(0.51	)	$	1.16		$	0.62
Weighted average shares - Diluted			543.0			543.0			541.8			542.1			541.5			540.6			538.9			542.7			540.5

(1)As a result of the net loss for the three months ended March 31, 2009, weighted average dilutive potential common shares outstanding resulting from stock options of 0.6 million 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 may not equal the year-to-date per share amount.

(2)In accordance with GAAP, the quarter and year-to-date per share amounts are calculated discretely. Therefore, the sum of each quarter may not equal the year-to-date amount.

2

THE ALLSTATE CORPORATION

REVENUES

($ in millions)

	Three months ended																							Nine months ended
			Sept. 30,			June 30,			March 31,			Dec. 31,			Sept. 30,			June 30,			March 31,			Sept. 30,			Sept. 30,
			2010			2010			2010			2009			2009			2009			2009			2010			2009
Property-Liability
Property-liability insurance premiums		$	6,499		$	6,513		$	6,503		$	6,517		$	6,535		$	6,560		$	6,582		$	19,515		$	19,677
Net investment income			284			310			304			324			326			334			344			898			1,004
Realized capital gains and losses			(107	)		(106	)		(190	)		235			(290	)		201			(314	)		(403	)		(403	)
Total Property-Liability revenues			6,676			6,717			6,617			7,076			6,571			7,095			6,612			20,010			20,278
Allstate Financial
Life and annuity premiums and contract charges			548			545			544			498			482			494			484			1,637			1,460
Net investment income			707			723			731			737			744			764			819			2,161			2,327
Realized capital gains and losses			(38	)		(353	)		(162	)		(275	)		(234	)		121			(43	)		(553	)		(156	)
Total Allstate Financial revenues			1,217			915			1,113			960			992			1,379			1,260			3,245			3,631
Corporate and Other
Service fees (1)			2			3			3			2			3			1			3			8			7
Net investment income			14			16			15			15			14			10			13			45			37
Realized capital gains and losses			1			8			4			7			5			6			(2	)		13			9
Total Corporate and Other revenues before reclassification of services fees			17			27			22			24			22			17			14			66			53
Reclassification of service fees (1)			(2	)		(3	)		(3	)		(2	)		(3	)		(1	)		(3	)		(8	)		(7	)
Total Corporate and Other revenues			15			24			19			22			19			16			11			58			46
Consolidated revenues		$	7,908		$	7,656		$	7,749		$	8,058		$	7,582		$	8,490		$	7,883		$	23,313		$	23,955

(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)

		Sept. 30,			June 30,			March 31,			Dec. 31,			Sept. 30,
		2010			2010			2010			2009			2009
Assets
Investments
Fixed income securities, at fair value (amortized cost $80,786, $81,425, $82,486, $81,243 and $81,367)	$	83,193		$	81,925		$	81,284		$	78,766		$	78,561
Equity securities, at fair value (cost $3,447, $3,356, $3,436, $4,845 and $4,274)		3,707			3,254			3,807			5,024			4,603
Mortgage loans		6,961			7,173			7,639			7,935			8,853
Limited partnership interests		3,454			3,119			2,802			2,744			2,770
Short-term, at fair value (amortized cost $2,776, $2,414, $2,482, $3,056 and $3,470)		2,776			2,414			2,482			3,056			3,470
Other		2,123			2,058			2,209			2,308			2,369
Total investments		102,214			99,943			100,223			99,833			100,626
Cash		500			711			704			612			727
Premium installment receivables, net		4,981			4,830			4,823			4,839			4,970
Deferred policy acquisition costs		4,671			5,003			5,186			5,470			6,916
Reinsurance recoverables, net (1)		6,597			6,537			6,415			6,355			6,460
Accrued investment income		847			851			904			864			901
Deferred income taxes		670			1,301			1,440			1,870			1,520
Property and equipment, net		922			935			954			990			1,013
Goodwill		874			874			874			875			874
Other assets		1,799			1,822			1,804			1,872			2,471
Separate Accounts		8,459			8,003			9,059			9,072			9,026
Total assets	$	132,534		$	130,810		$	132,386		$	132,652		$	135,504
		Sept. 30,			June 30,			March 31,			Dec. 31,			Sept. 30,
		2010			2010			2010			2009			2009
Liabilities
Reserve for property-liability insurance claims and claims expense	$	19,294		$	19,434		$	19,420		$	19,167		$	19,176
Reserve for life-contingent contract benefits		13,955			13,483			13,052			12,910			12,849
Contractholder funds		48,936			49,443			51,027			52,582			53,336
Unearned premiums		10,001			9,684			9,575			9,822			10,069
Claim payments outstanding		733			733			763			742			772
Other liabilities and accrued expenses		5,945			6,054			5,992			5,726			6,081
Long-term debt		5,909			5,909			5,910			5,910			6,661
Separate Accounts		8,459			8,003			9,059			9,072			9,026
Total liabilities		113,232			112,743			114,798			115,931			117,970
Equity
Common stock, 538 million, 538 million, 538 million, 537 million and 536 million shares outstanding		9			9			9			9			9
Additional capital paid-in		3,165			3,155			3,152			3,172			3,160
Retained income		31,781			31,552			31,514			31,492			31,083
Deferred ESOP expense		(45	)		(44	)		(44	)		(47	)		(47	)
Treasury stock, at cost (362 million, 362 million, 362 million, 363 million and 364 million shares)		(15,755	)		(15,760	)		(15,782	)		(15,828	)		(15,832	)
Accumulated other comprehensive income:
Unrealized net capital gains and losses:
Unrealized net capital losses on fixed income securities with other-than-temporary impairment		(200	)		(332	)		(384	)		(441	)		(411	)
Other unrealized net capital gains and losses		1,919			588			(172	)		(1,072	)		(1,218	)
Unrealized adjustment to DAC, DSI and insurance reserves		(427	)		72			472			643			1,741
Total unrealized net capital gains and losses		1,292			328			(84	)		(870	)		112
Unrealized foreign currency translation adjustments		54			43			60			46			42
Unrecognized pension and other postretirement benefit cost		(1,227	)		(1,244	)		(1,265	)		(1,282	)		(1,022	)
Total accumulated other comprehensive income (loss)		119			(873	)		(1,289	)		(2,106	)		(868	)
Total shareholders’ equity		19,274			18,039			17,560			16,692			17,505
Noncontrolling interest		28			28			28			29			29
Total equity		19,302			18,067			17,588			16,721			17,534
Total liabilities and equity	$	132,534		$	130,810		$	132,386		$	132,652		$	135,504

(1)Reinsurance recoverables of unpaid losses related to Property-Liability were $2,095 million, $2,176 million, $2,162 million, $2,139 million and $2,140 million at September 30, 2010, June 30, 2010, March 31, 2010, December 31, 2009 and September 30, 2009, respectively.

4

THE ALLSTATE CORPORATION

BOOK VALUE PER SHARE

($ in millions, except per share data )

		Sept. 30,			June 30,			March 31,			Dec. 31,			Sept. 30,			June 30,			March 31,
		2010			2010			2010			2009			2009			2009			2009
Book value per share
Numerator:
Shareholders’ equity	$		19,274	$		18,039	$		17,560	$		16,692	$		17,505	$		15,068	$		12,242
Denominator:
Shares outstanding and dilutive potential shares outstanding		543.3			542.7			544.3			541.3			542.1			540.6			540.5
Book value per share	$		35.48	$		33.24	$		32.26	$		30.84	$		32.29	$		27.87	$		22.65
Book value per share, excluding the impact of unrealized net capital gains and losses on fixed income securities *
Numerator:
Shareholders’ equity	$		19,274	$		18,039	$		17,560	$		16,692	$		17,505	$		15,068	$		12,242
Unrealized net capital gains and losses on fixed income securities		1,138			398			(309)			(967)			(81)			(1,988)			(3,314)
Adjusted shareholders’ equity	$		18,136	$		17,641	$		17,869	$		17,659	$		17,586	$		17,056	$		15,556
Denominator:
Shares outstanding and dilutive potential shares outstanding		543.3			542.7			544.3			541.3			542.1			540.6			540.5
Book value per share, excluding the impact of unrealized net capital gains and losses on fixed income securities	$		33.38	$		32.51	$		32.83	$		32.62	$		32.44	$		31.55	$		28.78

5

THE ALLSTATE CORPORATION

RETURN ON SHAREHOLDERS’ EQUITY

($ in millions)

	Twelve months ended
		Sept. 30,			June 30,		March 31,		Dec. 31,			Sept. 30,			June 30,		March 31,
		2010			2010		2010		2009			2009			2009		2009
Return on Shareholders’ Equity
Numerator:
Net income (loss) (1)	$	1,150		$	1,004	$	1,248	$	854		$	(793)		$	(1,937)	$	(2,301)
Denominator:
Beginning shareholders’ equity	$	17,505		$	15,068	$	12,242	$	12,641		$	16,938		$	19,709	$	20,303
Ending shareholders’ equity		19,274			18,039		17,560		16,692			17,505			15,068		12,242
Average shareholders’ equity (2)	$	18,390		$	16,554	$	14,901	$	14,667		$	17,222		$	17,389	$	16,273
Return on shareholders’ equity		6.3	%		6.1	%	8.4	%	5.8	%		(4.6)	%		(11.1)	%	(14.1)	%
Operating Income Return on Shareholders’ Equity *
Numerator:
Operating income (1)	$	1,860		$	1,946	$	1,802	$	1,881		$	1,807		$	1,079	$	1,465
Denominator:
Beginning shareholders’ equity	$	17,505		$	15,068	$	12,242	$	12,641		$	16,938		$	19,709	$	20,303
Unrealized net capital gains and losses		112			(2,112)		(3,767)		(3,738)			(1,475)			(274)		(280)
Adjusted beginning shareholders’ equity		17,393			17,180		16,009		16,379			18,413			19,983		20,583
Ending shareholders’ equity		19,274			18,039		17,560		16,692			17,505			15,068		12,242
Unrealized net capital gains and losses		1,292			328		(84)		(870)			112			(2,112)		(3,767)
Adjusted ending shareholders’ equity		17,982			17,711		17,644		17,562			17,393			17,180		16,009
Average adjusted shareholders’ equity(2)	$	17,688		$	17,446	$	16,827	$	16,971		$	17,903		$	18,582	$	18,296
Operating income return on shareholders’ equity		10.5	%		11.2	%	10.7	%	11.1	%		10.1	%		5.8	%	8.0	%

(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)

		Sept. 30,			June 30,			March 31,			Dec. 31,			Sept. 30,			June 30,			March 31,
		2010			2010			2010			2009			2009			2009			2009
Debt
Long-term debt	$	5,909		$	5,909		$	5,910		$	5,910		$	6,661		$	6,658		$	5,659
Capital resources
Debt	$	5,909		$	5,909		$	5,910		$	5,910		$	6,661		$	6,658		$	5,659
Shareholders’ equity
Common stock		9			9			9			9			9			9			9
Additional capital paid-in		3,165			3,155			3,152			3,172			3,160			3,144			3,129
Retained income		31,781			31,552			31,514			31,492			31,083			30,969			29,825
Deferred ESOP expense		(45)			(44)			(44)			(47)			(47)			(47)			(46)
Treasury stock		(15,755)			(15,760)			(15,782)			(15,828)			(15,832)			(15,835)			(15,836)
Unrealized net capital gains and losses		1,292			328			(84)			(870)			112			(2,112)			(3,767)
Unrealized foreign currency translation adjustments		54			43			60			46			42			17			(3)
Unrecognized pension and other postretirement benefit cost		(1,227)			(1,244)			(1,265)			(1,282)			(1,022)			(1,077)			(1,069)
Total shareholders’ equity		19,274			18,039			17,560			16,692			17,505			15,068			12,242
Total capital resources	$	25,183		$	23,948		$	23,470		$	22,602		$	24,166		$	21,726		$	17,901
Ratio of debt to shareholders’ equity		30.7	%		32.8	%		33.7	%		35.4	%		38.1	%		44.2	%		46.2	%
Ratio of debt to capital resources		23.5	%		24.7	%		25.2	%		26.1	%		27.6	%		30.6	%		31.6	%

7

THE ALLSTATE CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

($ in millions)

	Three months ended															Nine months ended
		Sept. 30,		June 30,		March 31,		Dec. 31,		Sept. 30,		June 30,		March 31,		Sept. 30,		Sept. 30,
		2010		2010		2010		2009		2009		2009		2009		2010		2009
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	367	$	145	$	120	$	518	$	221	$	389	$	(274)	$	632	$	336
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, amortization and other non-cash items		29		10		16		(4)		(1)		(12)		(74)		55		(87)
Realized capital gains and losses		144		451		348		33		519		(328)		359		943		550
Gain on disposition of operations		(9)		(2)		(1)		(1)		(2)		(1)		(3)		(12)		(6)
Interest credited to contractholder funds		445		450		463		490		496		561		579		1,358		1,636
Changes in:
Policy benefits and other insurance reserves		(163)		118		188		(117)		(312)		96		(244)		143		(460)
Unearned premiums		307		126		(261)		(253)		289		47		(330)		172		6
Deferred policy acquisition costs		(68)		(100)		30		43		(77)		167		381		(138)		471
Premium installment receivables, net		(146)		(15)		24		134		(163)		(16)		71		(137)		(108)
Reinsurance recoverables, net		(23)		(134)		(72)		16		32		(52)		(81)		(229)		(101)
Income taxes		104		1		73		485		(184)		(84)		1,443		178		1,175
Other operating assets and liabilities		(58)		80		36		(558)		215		193		(305)		58		103
Net cash provided by operating activities		929		1,130		964		786		1,033		960		1,522		3,023		3,515
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales
Fixed income securities		8,231		4,184		4,930		5,261		7,242		4,373		4,483		17,345		16,098
Equity securities		1,216		1,056		1,990		2,258		1,089		1,675		1,872		4,262		4,636
Limited partnership interests		109		132		146		76		79		60		154		387		293
Mortgage loans		77		41		3		200		(1)		129		12		121		140
Other investments		36		25		37		91		167		246		16		98		429
Investment collections
Fixed income securities		1,281		1,269		1,122		1,609		1,289		1,455		1,203		3,672		3,947
Mortgage loans		146		375		263		671		495		126		472		784		1,093
Other investments		52		26		18		18		34		34		31		96		99
Investment purchases
Fixed income securities		(8,812)		(4,801)		(7,099)		(6,879)		(10,270)		(6,999)		(5,425)		(20,712)		(22,694)
Equity securities		(1,220)		(945)		(556)		(2,505)		(1,784)		(2,274)		(1,933)		(2,721)		(5,991)
Limited partnership interests		(424)		(431)		(185)		(110)		(406)		(124)		(144)		(1,040)		(674)
Mortgage loans		(45)		(9)		(1)		(3)		(9)		(4)		(10)		(55)		(23)
Other investments		(20)		(36)		(43)		(10)		(13)		(41)		-		(99)		(54)
Change in short-term investments, net		(335)		28		411		544		2,270		2,460		707		104		5,437
Change in other investments, net		(336)		(79)		(49)		(196)		(64)		(32)		(48)		(464)		(144)
Disposition of operations		7		-		-		-		-		-		12		7		12
Purchases of property and equipment, net		(45)		(45)		(24)		(46)		(39)		(51)		(53)		(114)		(143)
Net cash (used in) provided by investing activities		(82)		790		963		979		79		1,033		1,349		1,671		2,461
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of long-term debt		-		-		-		-		3		1,000		-		-		1,003
Repayment of long-term debt		-		(1)		-		(751)		-		(1)		-		(1)		(1)
Contractholder fund deposits		730		739		828		898		802		1,152		1,298		2,297		3,252
Contractholder fund withdrawals		(1,667)		(2,543)		(2,569)		(1,921)		(1,749)		(4,159)		(3,577)		(6,779)		(9,485)
Dividends paid		(107)		(108)		(107)		(108)		(107)		(107)		(220)		(322)		(434)
Treasury stock purchases		-		-		(5)		(1)		-		-		(3)		(5)		(3)
Shares reissued under equity incentive plans, net		1		11		14		1		2		-		-		26		2
Excess tax benefits on share-based payment arrangements		(3)		(2)		(2)		1		-		-		(6)		(7)		(6)
Other		(12)		(9)		6		1		(3)		(48)		59		(15)		8
Net cash used in financing activities		(1,058)		(1,913)		(1,835)		(1,880)		(1,052)		(2,163)		(2,449)		(4,806)		(5,664)
NET (DECREASE) INCREASE IN CASH		(211)		7		92		(115)		60		(170)		422		(112)		312
CASH AT BEGINNING OF PERIOD		711		704		612		727		667		837		415		612		415
CASH AT END OF PERIOD	$	500	$	711	$	704	$	612	$	727	$	667	$	837	$	500	$	727

8

THE ALLSTATE CORPORATION

ANALYSIS OF DEFERRED POLICY ACQUISITION COSTS

($ in millions)

		Change in Deferred Policy Acquisition Costs
		For the three months ended September 30, 2010
											Accretion
											(amortization)
											relating to
											realized			Amortization			Effect of
		Beginning			Acquisition			Amortization			capital			acceleration			unrealized			Ending
		balance			costs			before			gains and			charged			capital gains			balance
		June 30, 2010			deferred			adjustments (1) (2)			losses (2)			to income (2)			and losses			Sept. 30, 2010
Property-Liability	$		1,367	$		954	$		(915)	$	-		$		-	$		-	$		1,406
Allstate Financial:
Traditional life and accident and health		669			37			(29)			-			-			-			677
Interest-sensitive life		2,225			68			(53)			12			-			(139)			2,113
Fixed annuity		738			13			(19)			(2)			-			(259)			471
Other		4			-			-			-			-			-			4
Sub-total		3,636			118			(101)			10			-			(398)			3,265
Consolidated	$		5,003	$		1,072	$		(1,016)	$		10	$		-	$		(398)	$		4,671
		Change in Deferred Policy Acquisition Costs
		For the three months ended September 30, 2009
											(Amortization)
											accretion
											relating to
											realized			Amortization			Effect of
		Beginning			Acquisition			Amortization			capital			acceleration			unrealized			Ending
		balance			costs			before			gains and			charged			capital gains			balance
		June 30, 2009			deferred			adjustments(1) (2)			losses(2)			to income(2)			and losses			Sept. 30, 2009
Property-Liability	$		1,401	$		988	$		(943)	$		-	$		-	$		-	$		1,446
Allstate Financial:
Traditional life and accident and health		614			39			(25)			-			-			-			628
Interest-sensitive life		2,386			55			(47)			(10)			-			(170)			2,214
Fixed annuity		3,821			21			(35)			38			-			(1,222)			2,623
Other		6			-			(1)			-			-			-			5
Sub-total		6,827			115			(108)			28			-			(1,392)			5,470
Consolidated	$		8,228	$		1,103	$		(1,051)	$		28	$		-	$		(1,392)	$		6,916

(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.

9

THE ALLSTATE CORPORATION

ANALYSIS OF DEFERRED POLICY ACQUISITION COSTS

($ in millions)

		Change in Deferred Policy Acquisition Costs														Reconciliation of Deferred Policy
		For the nine months ended September 30, 2010														Acquisition Costs as of September 30, 2010
								Accretion
								(amortization)
								relating to		Amortization						DAC before				DAC after
								realized		deceleration		Effect of				impact of		Impact of		impact of
		Beginning		Acquisition		Amortization		capital		(acceleration)		unrealized		Ending		unrealized		unrealized		unrealized
		balance		costs		before		gains and		credited (charged)		capital gains		balance		capital gains		capital gains		capital gains
		Dec. 31, 2009		deferred		adjustments (1) (2)		losses (2)		to income (2)		and losses		Sept. 30, 2010		and losses		and losses		and losses
Property-Liability	$	1,410	$	2,750	$	(2,754)	$	-	$	-	$	-	$	1,406	$	1,406	$	-	$	1,406
Allstate Financial:
Traditional life and accident and health		650		112		(85)		-		-		-		677		677		-		677
Interest-sensitive life		2,246		199		(92)		18		13		(271)		2,113		2,287		(174)		2,113
Fixed annuity		1,159		44		(62)		(5)		(1)		(664)		471		362		109		471
Other		5		-		(1)		-		-		-		4		4		-		4
Sub-total		4,060		355		(240)		13		12		(935)		3,265		3,330		(65)		3,265
Consolidated	$	5,470	$	3,105	$	(2,994)	$	13	$	12	$	(935)	$	4,671	$	4,736	$	(65)	$	4,671
		Change in Deferred Policy Acquisition Costs																		Reconciliation of Deferred Policy
		For the nine months ended September 30, 2009																		Acquisition Costs as of September 30, 2009
						Impact of						Amortization
				Impact of		adoption of new						relating to		Amortization						DAC before				DAC after
				adoption of new		OTTI accounting						realized		deceleration		Effect of				Impact of		impact of		impact of
		Beginning		OTTI accounting		effect of		Acquisition		Amortization		capital		(acceleration)		unrealized		Ending		unrealized		unrealized		unrealized
		balance		before		unrealized capital		costs		before		gains and		credited (charged)		capital gains		balance		capital gains		capital gains		capital gains
		Dec. 31, 2008		unrealized impact (3)		gains and losses (4)		deferred		adjustments (1) (2)		losses (2)		to income (2)		and losses		Sept. 30, 2009		and losses		and losses		and losses
Property-Liability	$	1,453	$	-	$	-	$	2,825	$	(2,832)	$	-	$	-	$	-	$	1,446	$	1,446	$	-	$	1,446
Allstate Financial:
Traditional life and accident and health		595		-		-		113		(80)		-		-		-		628		628		-		628
Interest-sensitive life		2,449		(6)		6		159		(136)		(8)		12		(262)		2,214		2,114		100		2,214
Fixed annuity		4,037		(170)		170		81		(163)		(150)		(289)		(893)		2,623		448		2,175		2,623
Other		8		-		-		-		(3)		-		-		-		5		5		-		5
Sub-total		7,089		(176)		176		353		(382)		(158)		(277)		(1,155)		5,470		3,195		2,275		5,470
Consolidated	$	8,542	$	(176)	$	176	$	3,178	$	(3,214)	$	(158)	$	(277)	$	(1,155)	$	6,916	$	4,641	$	2,275	$	6,916

(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)	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.
(4)	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.

10

THE ALLSTATE CORPORATION

PROPERTY-LIABILITY RESULTS

($ in millions, except ratios)

		Three months ended																					Nine months ended
		Sept. 30,			June 30,			March 31,			Dec. 31,			Sept. 30,			June 30,			March 31,			Sept. 30,			Sept. 30,
		2010			2010			2010			2009			2009			2009			2009			2010			2009
Premiums written *	$	6,767		$	6,640		$	6,258		$	6,277		$	6,810		$	6,615		$	6,269		$	19,665		$	19,694
(Increase) decrease in unearned premiums		(319	)		(110	)		245			248			(315	)		(70	)		337			(184	)		(48	)
Other		51			(17	)		-			(8	)		40			15			(24	)		34			31
Premiums earned		6,499			6,513			6,503			6,517			6,535			6,560			6,582			19,515			19,677
Claims and claims expense		(4,603	)		(4,714	)		(4,792	)		(4,451	)		(4,573	)		(5,002	)		(4,720	)		(14,109	)		(14,295	)
Amortization of deferred policy acquisition costs		(915	)		(914	)		(925	)		(957	)		(943	)		(940	)		(949	)		(2,754	)		(2,832	)
Operating costs and expenses		(706	)		(664	)		(704	)		(648	)		(642	)		(591	)		(678	)		(2,074	)		(1,911	)
Restructuring and related charges		(9	)		(14	)		(11	)		(17	)		(31	)		(30	)		(27	)		(34	)		(88	)
Underwriting income (loss) *		266			207			71			444			346			(3	)		208			544			551
Net investment income		284			310			304			324			326			334			344			898			1,004
Periodic settlements and accruals on non-hedge derivative instruments		(2	)		(1	)		(1	)		(2	)		(2	)		(3	)		(3	)		(4	)		(8	)
Income tax expense on operations		(154	)		(148	)		(88	)		(212	)		(169	)		(39	)		(135	)		(390	)		(343	)
Operating income		394			368			286			554			501			289			414			1,048			1,204
Realized capital gains and losses, after-tax		(69	)		(69	)		(123	)		151			(188	)		131			(316	)		(261	)		(373	)
Gain on disposition of operations, after-tax		4			-			-			-			-			-			-			4			-
Reclassification of periodic settlements and accruals on non-hedge derivative instruments, after-tax		2			-			1			2			1			2			2			3			5
Net income	$	331		$	299		$	164		$	707		$	314		$	422		$	100		$	794		$	836
Catastrophe losses	$	386		$	636		$	648		$	328		$	407		$	818		$	516		$	1,670		$	1,741
Operating ratios *
Claims and claims expense (“loss”) ratio (1)		70.8			72.4			73.7			68.3			70.0			76.2			71.7			72.3			72.6
Expense ratio (2)		25.1			24.4			25.2			24.9			24.7			23.8			25.1			24.9			24.6
Combined ratio		95.9			96.8			98.9			93.2			94.7			100.0			96.8			97.2			97.2
Combined ratio excluding the effect of catastrophes *		90.0			87.0			88.9			88.2			88.5			87.5			89.0			88.6			88.4
Effect of catastrophe losses on combined ratio *		5.9			9.8			10.0			5.0			6.2			12.5			7.8			8.6			8.8
Combined ratio		95.9			96.8			98.9			93.2			94.7			100.0			96.8			97.2			97.2
Combined ratio excluding the effect of catastrophes and prior year reserve reestimates (“underlying”) *		89.2			88.1			89.1			88.1			88.0			87.2			88.9			88.8			88.1
Effect of catastrophe losses on combined ratio *		5.9			9.8			10.0			5.0			6.2			12.5			7.8			8.6			8.8
Effect of prior year reserve reestimates on combined ratio *		0.2			(2.3	)		(0.4	)		(0.4	)		(0.7	)		0.3			(0.8	)		(0.9	)		(0.4	)
Effect of catastrophe losses included in prior year reserve reestimates on combined ratio		0.6			1.2			0.2			0.5			1.2			-			0.9			0.7			0.7
Combined ratio		95.9			96.8			98.9			93.2			94.7			100.0			96.8			97.2			97.2
Effect of restructuring and related charges on combined ratio *		0.1			0.2			0.2			0.3			0.5			0.5			0.4			0.2			0.4
Effect of Discontinued Lines and Coverages on combined ratio		0.3			-			0.1			0.1			0.3			-			0.1			0.1			0.1

(1)The increase in the loss ratio for the third quarter of 2010 compared to the same quarter of 2009 includes a $70 million unfavorable prior year reserve reestimate related to a litigation settlement.

(2)The increase in expense ratio in the third quarter of 2010 is due to increased investments in marketing and increases in the net costs of employee benefits, partially offset by improved operational efficiencies.

11

THE ALLSTATE CORPORATION

PROPERTY-LIABILITY UNDERWRITING RESULTS BY AREA OF BUSINESS

($ in millions)

		Three months ended																					Nine months ended
		Sept. 30,			June 30,			March 31,			Dec. 31,			Sept. 30,			June 30,			March 31,			Sept. 30,			Sept. 30,
		2010			2010			2010			2009			2009			2009			2009			2010			2009
Property-Liability Underwriting Summary
Allstate Protection	$	287		$	209		$	75		$	449		$	363		$	1		$	214		$	571		$	578
Discontinued Lines and Coverages		(21	)		(2	)		(4	)		(5	)		(17	)		(4	)		(6	)		(27	)		(27	)
Underwriting income (loss)	$	266		$	207		$	71		$	444		$	346		$	(3	)	$	208		$	544		$	551
Allstate Protection Underwriting Summary
Premiums written	$	6,767		$	6,640		$	6,258		$	6,277		$	6,810		$	6,615		$	6,270		$	19,665		$	19,695
Premiums earned	$	6,498		$	6,513		$	6,503		$	6,517		$	6,535		$	6,560		$	6,583		$	19,514		$	19,678
Claims and claims expense		(4,582	)		(4,713	)		(4,790	)		(4,448	)		(4,557	)		(5,000	)		(4,717	)		(14,085	)		(14,274	)
Amortization of deferred policy acquisition costs		(915	)		(914	)		(925	)		(957	)		(943	)		(940	)		(949	)		(2,754	)		(2,832	)
Operating costs and expenses		(705	)		(663	)		(702	)		(646	)		(641	)		(589	)		(676	)		(2,070	)		(1,906	)
Restructuring and related charges		(9	)		(14	)		(11	)		(17	)		(31	)		(30	)		(27	)		(34	)		(88	)
Underwriting income	$	287		$	209		$	75		$	449		$	363		$	1		$	214		$	571		$	578
Catastrophe losses	$	386		$	636		$	648		$	328		$	407		$	818		$	516		$	1,670		$	1,741
Operating ratios
Loss ratio		70.5			72.4			73.6			68.2			69.7			76.2			71.6			72.2			72.6
Expense ratio		25.1			24.4			25.2			24.9			24.7			23.8			25.1			24.9			24.5
Combined ratio		95.6			96.8			98.8			93.1			94.4			100.0			96.7			97.1			97.1
Effect of catastrophe losses on combined ratio		5.9			9.8			10.0			5.0			6.2			12.5			7.8			8.6			8.8
Effect of restructuring and related charges on combined ratio		0.1			0.2			0.2			0.3			0.5			0.5			0.4			0.2			0.4
Discontinued Lines and Coverages Underwriting Summary
Premiums written	$	-		$	-		$	-		$	-		$	-		$	-		$	(1	)	$	-		$	(1	)
Premiums earned	$	1		$	-		$	-		$	-		$	-		$	-		$	(1	)	$	1		$	(1	)
Claims and claims expense		(21	)		(1	)		(2	)		(3	)		(16	)		(2	)		(3	)		(24	)		(21	)
Operating costs and expenses		(1	)		(1	)		(2	)		(2	)		(1	)		(2	)		(2	)		(4	)		(5	)
Underwriting loss	$	(21	)	$	(2	)	$	(4	)	$	(5	)	$	(17	)	$	(4	)	$	(6	)	$	(27	)	$	(27	)
Effect of Discontinued Lines and Coverages on the Property-Liability combined ratio		0.3			-			0.1			0.1			0.3			-			0.1			0.1			0.1

12

THE ALLSTATE CORPORATION

PROPERTY-LIABILITY PREMIUMS WRITTEN BY MARKET SEGMENT

($ in millions)

	Three months ended																	Nine months ended
			Sept. 30,		June 30,		March 31,		Dec. 31,		Sept. 30,		June 30,		March 31,			Sept. 30,		Sept. 30,
			2010		2010		2010		2009		2009		2009		2009			2010		2009
Allstate brand (1)
Standard auto		$	4,028	$	3,948	$	4,023	$	3,860	$	4,049	$	3,876	$	3,978		$	11,999	$	11,903
Non-standard auto			223		220		237		219		235		232		241			680		708
Auto			4,251		4,168		4,260		4,079		4,284		4,108		4,219			12,679		12,611
Involuntary auto			18		25		16		15		13		15		12			59		40
Commercial lines			130		137		131		128		132		147		143			398		422
Homeowners			1,610		1,565		1,189		1,359		1,573		1,532		1,171			4,364		4,276
Other personal lines			468		457		399		410		460		451		391			1,324		1,302
			6,477		6,352		5,995		5,991		6,462		6,253		5,936			18,824		18,651
Encompass brand
Standard auto			166		169		160		171		208		217		204			495		629
Non-standard auto			1		1		3		3		6		5		8			5		19
Auto			167		170		163		174		214		222		212			500		648
Involuntary auto			3		3		2		2		2		3		3			8		8
Homeowners			98		94		80		89		110		112		97			272		319
Other personal lines			22		21		18		21		22		25		22			61		69
			290		288		263		286		348		362		334			841		1,044
Allstate Protection			6,767		6,640		6,258		6,277		6,810		6,615		6,270			19,665		19,695
Discontinued Lines and Coverages			-		-		-		-		-		-		(1	)		-		(1	)
Property-Liability		$	6,767	$	6,640	$	6,258	$	6,277	$	6,810	$	6,615	$	6,269		$	19,665	$	19,694
Allstate Protection
Standard auto		$	4,194	$	4,117	$	4,183	$	4,031	$	4,257	$	4,093	$	4,182		$	12,494	$	12,532
Non-standard auto			224		221		240		222		241		237		249			685		727
Auto			4,418		4,338		4,423		4,253		4,498		4,330		4,431			13,179		13,259
Involuntary auto			21		28		18		17		15		18		15			67		48
Commercial lines			130		137		131		128		132		147		143			398		422
Homeowners			1,708		1,659		1,269		1,448		1,683		1,644		1,268			4,636		4,595
Other personal lines			490		478		417		431		482		476		413			1,385		1,371
		$	6,767	$	6,640	$	6,258	$	6,277	$	6,810	$	6,615	$	6,270		$	19,665	$	19,695

(1) Allstate brand premiums written, excluding Allstate Canada, by the direct channel totaled $195 million, $181 million, $185 million, $161 million, $169 million, $146 million and $146 million for the three months ended September 30, 2010, June 30, 2010, March 31, 2010, December 31, 2009, September 30, 2009, June 30, 2009 and March 31, 2009, respectively.  Allstate brand premiums written by the direct channel totaled $561 million and $461 million for the nine months ended September 30, 2010 and September 30, 2009, respectively.  The decline in growth rate in the three months and nine months ended September 30, 2010, compared to the growth rate in the three months and six months ended June 30, 2010 was impacted by profitabiliity management actions taken in New York, Florida, California and North Carolina.  The direct channel includes call centers and the internet.

13

THE ALLSTATE CORPORATION

ALLSTATE PROTECTION MARKET SEGMENT ANALYSIS

($ in millions)

		Three months ended September 30,
		2010		2009		2010		2009		2010		2009		2010		2009	2010	2009	2010	2009	2010	2009	2010		2009
																			Effect of				Effect of pre-tax
										Incurred									catastrophe losses				reserve reestimates
		Premiums earned				Incurred losses				catastrophe losses				Expenses			Loss ratio (2)		on the loss ratio		Expense ratio		on the combined ratio
Allstate brand
Standard auto	$	3,961	$	3,946	$	2,723	$	2,708	$	15	$	53	$	970	$	949	68.7	68.6	0.4	1.3	24.5	24.1	(0.6	)	0.3
Non-standard auto		222		231		137		147		-		1		61		59	61.7	63.6	-	0.4	27.5	25.6	(6.8	)	(3.9	)
Auto		4,183		4,177		2,860		2,855		15		54		1,031		1,008	68.4	68.4	0.4	1.3	24.6	24.1	(0.9	)	0.1
Homeowners		1,430		1,396		1,151		1,053		331		311		346		319	80.5	75.4	23.1	22.3	24.2	22.9	5.2		(5.2	)
Other personal lines (1)		591		601		363		385		26		24		161		190	61.4	64.1	4.4	4.0	27.3	31.6	(6.3	)	(0.8	)
Total Allstate brand		6,204		6,174		4,374		4,293		372		389		1,538		1,517	70.5	69.5	6.0	6.3	24.8	24.6	-		(1.2	)
Encompass brand
Standard auto		173		221		131		170		1		1		52		56	75.7	76.9	0.6	0.5	30.1	25.4	(1.7	)	3.6
Non-standard auto		2		6		2		4		-		-		1		3	100.0	66.7	-	-	50.0	50.0	-		(16.7	)
Auto		175		227		133		174		1		1		53		59	76.0	76.6	0.6	0.4	30.3	26.0	(1.7	)	3.1
Homeowners		96		108		61		73		13		17		31		32	63.5	67.6	13.5	15.7	32.3	29.6	(7.3	)	(1.9	)
Other personal lines(1)		23		26		14		17		-		-		7		7	60.9	65.4	-	-	30.4	26.9	(4.3	)	7.7
Total Encompass brand		294		361		208		264		14		18		91		98	70.7	73.1	4.8	5.0	31.0	27.2	(3.7	)	1.9
Allstate Protection	$	6,498	$	6,535	$	4,582	$	4,557	$	386	$	407	$	1,629	$	1,615	70.5	69.7	5.9	6.2	25.1	24.7	(0.2	)	(1.0	)
		Nine months ended September 30,
		2010		2009		2010		2009		2010		2009		2010		2009	2010	2009	2010	2009	2010	2009	2010		2009
																			Effect of				Effect of pre-tax
										Incurred									catastrophe losses				reserve reestimates
		Premiums earned				Incurred losses				catastrophe losses				Expenses			Loss ratio (2)		on the loss ratio		Expense ratio		on the combined ratio
Allstate brand
Standard auto	$	11,873	$	11,791	$	8,245	$	8,183	$	121	$	199	$	2,924	$	2,858	69.5	69.4	1.0	1.7	24.6	24.2	(0.9	)	(0.1	)
Non-standard auto		680		708		452		470		2		6		177		172	66.5	66.4	0.3	0.8	26.0	24.3	(4.3	)	(2.3	)
Auto		12,553		12,499		8,697		8,653		123		205		3,101		3,030	69.3	69.2	1.0	1.6	24.7	24.3	(1.0	)	(0.3	)
Homeowners		4,262		4,222		3,559		3,565		1,348		1,346		992		959	83.5	84.5	31.6	31.9	23.3	22.7	0.2		(2.4	)
Other personal lines (1)		1,775		1,811		1,128		1,223		118		130		502		526	63.5	67.5	6.6	7.2	28.3	29.1	(3.6	)	1.7
Total Allstate brand		18,590		18,532		13,384		13,441		1,589		1,681		4,595		4,515	72.0	72.5	8.5	9.1	24.7	24.4	(1.0	)	(0.6	)
Encompass brand
Standard auto		552		702		415		525		4		4		153		184	75.2	74.8	0.7	0.6	27.7	26.2	1.8		1.0
Non-standard auto		8		22		8		16		-		-		3		8	100.0	72.7	-	-	37.5	36.4	-		(9.1	)
Auto		560		724		423		541		4		4		156		192	75.5	74.7	0.7	0.6	27.9	26.5	1.8		0.7
Homeowners		292		340		226		233		74		55		89		98	77.4	68.6	25.3	16.2	30.5	28.8	(3.4	)	(4.4	)
Other personal lines (1)		72		82		52		59		3		1		18		21	72.2	72.0	4.2	1.2	25.0	25.6	(1.4	)	9.8
Total Encompass brand		924		1,146		701		833		81		60		263		311	75.9	72.7	8.8	5.2	28.4	27.1	(0.1	)	(0.2	)
Allstate Protection	$	19,514	$	19,678	$	14,085	$	14,274	$	1,670	$	1,741	$	4,858	$	4,826	72.2	72.6	8.6	8.8	24.9	24.5	(1.0	)	(0.5	)

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

(2)Ratios are calculated using the premiums earned for the respective line of business.

14

THE ALLSTATE CORPORATION

ALLSTATE PROTECTION HISTORICAL MARKET SEGMENT ANALYSIS

($ in millions)

		Three months ended					Three months ended					Three months ended					Three months ended
		September 30, 2010					June 30, 2010					March 31, 2010					December 31, 2009
				Effect of					Effect of					Effect of					Effect of
		Premiums	Loss	CAT losses	Expense		Premiums	Loss	CAT losses	Expense		Premiums	Loss	CAT losses	Expense		Premiums	Loss	CAT losses		Expense
		earned	ratio	on loss ratio	ratio		earned	ratio	on loss ratio	ratio		earned	ratio	on loss ratio	ratio		earned	ratio	on loss ratio		ratio
Allstate brand
Standard auto	$	3,961	68.7	0.4	24.5	$	3,969	70.1	2.0	24.4	$	3,943	69.4	0.7	25.0	$	3,944	69.2	(0.3	)	24.5
Non-standard auto		222	61.7	-	27.5		228	68.9	0.4	26.3		230	68.7	0.4	24.3		231	69.3	0.4		25.1
Auto		4,183	68.4	0.4	24.6		4,197	70.1	1.9	24.5		4,173	69.4	0.7	25.0		4,175	69.2	(0.3	)	24.5
Homeowners		1,430	80.5	23.1	24.2		1,416	82.6	34.7	21.8		1,416	87.5	37.1	23.8		1,411	65.1	20.6		23.9
Other personal lines (1)		591	61.4	4.4	27.3		592	65.7	8.3	28.4		592	63.5	7.3	29.2		591	66.7	6.6		28.6
Total Allstate brand		6,204	70.5	6.0	24.8		6,205	72.5	10.0	24.3		6,181	73.0	9.7	25.1		6,177	68.0	5.1		24.8
Encompass brand
Standard auto		173	75.7	0.6	30.1		185	73.0	0.5	27.0		194	76.8	1.0	26.3		205	77.5	(0.5	)	25.4
Non-standard auto		2	100.0	-	50.0		2	100.0	-	50.0		4	100.0	-	25.0		5	80.0	-		40.0
Auto		175	76.0	0.6	30.3		187	73.2	0.5	27.3		198	77.3	1.0	26.2		210	77.6	(0.5	)	25.7
Homeowners		96	63.5	13.5	32.3		96	64.6	15.6	30.2		100	103.0	46.0	29.0		104	57.7	9.6		29.8
Other personal lines (1)		23	60.9	-	30.4		25	64.0	-	20.0		24	91.7	12.5	25.0		26	88.4	3.8		23.1
Total Encompass brand		294	70.7	4.8	31.0		308	69.8	5.2	27.6		322	86.4	15.8	27.0		340	72.3	2.9		26.8
Allstate Protection	$	6,498	70.5	5.9	25.1	$	6,513	72.4	9.8	24.4	$	6,503	73.6	10.0	25.2	$	6,517	68.2	5.0		24.9
		Three months ended					Three months ended					Three months ended					Three months ended
		September 30, 2009					June 30, 2009					March 31, 2009					December 31, 2008
				Effect of					Effect of					Effect of					Effect of
		Premiums	Loss	CAT losses	Expense		Premiums	Loss	CAT losses	Expense		Premiums	Loss	CAT losses	Expense		Premiums	Loss	CAT losses		Expense
		earned	ratio	on loss ratio	ratio		earned	ratio	on loss ratio	ratio		earned	ratio	on loss ratio	ratio		earned	ratio	on loss ratio		ratio
Allstate brand
Standard auto	$	3,946	68.6	1.3	24.1	$	3,928	70.7	2.1	24.2	$	3,917	68.8	1.6	24.5	$	3,939	73.3	0.6		26.1
Non-standard auto		231	63.6	0.4	25.6		240	67.1	1.3	23.7		237	68.4	0.8	23.6		246	67.1	0.4		24.8
Auto		4,177	68.4	1.3	24.1		4,168	70.6	2.1	24.1		4,154	68.8	1.6	24.5		4,185	72.9	0.6		26.0
Homeowners		1,396	75.4	22.3	22.9		1,409	95.1	45.8	21.2		1,417	82.7	27.5	24.1		1,459	59.9	11.6		24.7
Other personal lines (1)		601	64.1	4.0	31.6		600	72.5	9.8	25.3		610	66.1	7.7	30.1		606	66.8	8.9		34.7
Total Allstate brand		6,174	69.5	6.3	24.6		6,177	76.3	12.8	23.6		6,181	71.7	8.1	25.0		6,250	69.3	4.0		26.5
Encompass brand
Standard auto		221	76.9	0.5	25.4		234	73.5	0.4	26.1		247	74.1	0.8	27.1		261	78.1	0.4		28.0
Non-standard auto		6	66.7	-	50.0		7	85.7	-	28.6		9	66.7	-	33.3		10	130.0	-		50.0
Auto		227	76.6	0.4	26.0		241	73.9	0.4	26.1		256	73.8	0.8	27.4		271	80.1	0.4		28.8
Homeowners		108	67.6	15.7	29.6		114	76.3	22.8	28.1		118	61.9	10.2	28.8		117	53.0	6.0		33.3
Other personal lines (1)		26	65.4	-	26.9		28	71.4	3.6	25.0		28	78.6	-	25.0		30	80.0	16.7		26.7
Total Encompass brand		361	73.1	5.0	27.2		383	74.4	7.3	26.6		402	70.7	3.5	27.6		418	72.5	3.1		29.9
Allstate Protection	$	6,535	69.7	6.2	24.7	$	6,560	76.2	12.5	23.8	$	6,583	71.6	7.8	25.1	$	6,668	69.6	3.9		26.7

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

15

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
	September 30, 2010 (1)				June 30, 2010				March 31, 2010				December 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)	21	(7)	0.5	2.8	32	(6)(7)	0.2	0.5	8		0.3	2.9	15	1.5	5.5
Non-standard auto	4		0.7	5.8	5	(6)	2.7	10.9	1		0.9	22.1	4	1.1	9.4
Auto	24		0.5	2.9	33	(6)	0.3	0.9	9		0.3	3.3	17	1.5	5.6
Homeowners (3)	15		1.0	4.2	14	(6)	2.0	11.3	6		0.9	7.4	22	1.9	6.5
Encompass brand
Standard auto	12		(0.1)	(1.3)	10		(0.1)	(0.5)	6		1.5	7.1	11	1.3	9.5
Non-standard  auto	-		-	-	-		-	-	-		-	-	-	-	-
Auto	12		(0.1)	(1.3)	10		(0.1)	(0.5)	6		1.4	7.1	11	1.3	9.5
Homeowners	8	(6)	-	(0.1)	7		-	(0.3)	5		0.7	5.2	10	0.6	7.9
	Three months ended				Three months ended				Three months ended				Three months ended
	September 30, 2009				June 30, 2009				March 31, 2009				December 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)	15		1.4	6.5	12		0.8	4.3	18	(6)	0.9	3.3	8	0.2	4.1
Non-standard auto	4		1.2	5.5	2		0.1	3.2	4		0.1	1.6	2	(0.1)	(16.5)
Auto	17		1.4	6.4	13		0.8	4.3	19	(6)	0.9	3.3	9	0.2	3.9
Homeowners(3)	19	(6)	2.4	6.9	16		1.7	13.3	14		2.5	7.4	4	0.2	3.6
Encompass brand
Standard auto	13		1.6	9.6	8		1.0	8.3	24		3.7	8.1	4	0.1	6.7
Non-standard auto	-		-	-	-		-	-	1		0.9	31.7	1	0.9	49.5
Auto	13		1.6	9.6	8		0.9	8.3	25		3.6	8.1	5	0.2	9.1
Homeowners	17		2.0	4.8	10	(6)	0.5	5.7	18		1.6	6.7	4	1.2	13.1

(1)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 September 30, 2010 are estimated to total $145 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 0.2%, (0.1)%, 1.5%, 1.6%, 0.5%, 0.6%, 0.7% and 0.1% for the three months ended September 30, 2010, June 30, 2010, March 31, 2010, December 31, 2009, September 30, 2009, June 30, 2009, March 31, 2009 and December 31, 2008, respectively.

(3)Impacts of Allstate brand homeowners effective rate changes as a percentage of total countrywide prior year-end premiums written were 1.0%, 1.7%, 1.5%, 1.5%, 2.4%, 1.7%, 1.7% and 0.2% for the three months ended September 30, 2010, June 30, 2010, March 31, 2010, December 31, 2009, September 30, 2009, June 30, 2009, March 31, 2009 and December 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.

(7)Includes targeted rate decreases in certain markets to improve our competitive position for target customers (multi-car residence owners).

16

THE ALLSTATE CORPORATION

STANDARD AUTO PROFITABILITY MEASURES

		Three months ended																			Nine months ended
		Sept. 30,			June 30,		March 31,			Dec. 31,			Sept. 30,			June 30,		March 31,			Sept. 30,			Sept. 30,
		2010			2010		2010			2009			2009			2009		2009			2010			2009
Standard auto
($ in millions)
Net premiums written
Allstate brand	$	4,028		$	3,948	$	4,023		$	3,860		$	4,049		$	3,876	$	3,978		$	11,999		$	11,903
Encompass brand		166			169		160			171			208			217		204			495			629
		4,194			4,117		4,183			4,031			4,257			4,093		4,182			12,494			12,532
Net premiums earned
Allstate brand	$	3,961		$	3,969	$	3,943		$	3,944		$	3,946		$	3,928	$	3,917		$	11,873		$	11,791
Encompass brand		173			185		194			205			221			234		247			552			702
		4,134			4,154		4,137			4,149			4,167			4,162		4,164			12,425			12,493
Incurred losses
Allstate brand	$	2,723		$	2,783	$	2,739		$	2,729		$	2,708		$	2,779	$	2,696		$	8,245		$	8,183
Encompass brand		131			135		149			159			170			172		183			415			525
		2,854			2,918		2,888			2,888			2,878			2,951		2,879			8,660			8,708
Expenses
Allstate brand	$	970		$	969	$	985		$	965		$	949		$	949	$	960		$	2,924		$	2,858
Encompass brand		52			50		51			52			56			61		67			153			184
		1,022			1,019		1,036			1,017			1,005			1,010		1,027			3,077			3,042
Underwriting Income
Allstate brand	$	268		$	217	$	219		$	250		$	289		$	200	$	261		$	704		$	750
Encompass brand		(10	)		-		(6	)		(6	)		(5	)		1		(3	)		(16	)		(7	)
		258			217		213			244			284			201		258			688			743
Loss ratio
Allstate brand		68.7			70.1		69.4			69.2			68.6			70.7		68.8			69.5			69.4
Encompass brand		75.7			73.0		76.8			77.5			76.9			73.5		74.1			75.2			74.8
Allstate Protection		69.1			70.3		69.8			69.6			69.1			70.9		69.1			69.7			69.7
Expense ratio
Allstate brand		24.5			24.4		25.0			24.5			24.1			24.2		24.5			24.6			24.2
Encompass brand		30.1			27.0		26.3			25.4			25.4			26.1		27.1			27.7			26.2
Allstate Protection		24.7			24.5		25.1			24.5			24.1			24.3		24.7			24.8			24.4
Combined ratio
Allstate brand		93.2			94.5		94.4			93.7			92.7			94.9		93.3			94.1			93.6
Encompass brand		105.8			100.0		103.1			102.9			102.3			99.6		101.2			102.9			101.0
Allstate Protection		93.8			94.8		94.9			94.1			93.2			95.2		93.8			94.5			94.1
Effect of catastrophe losses on loss ratio
Allstate brand		0.4			2.0		0.7			(0.3	)		1.3			2.1		1.6			1.0			1.7
Encompass brand		0.6			0.5		1.0			(0.5	)		0.5			0.4		0.8			0.7			0.6
Allstate brand standard auto domestic operating measures (1)
		Sept. 30,			June 30,		March 31,			Dec. 31,			Sept. 30,			June 30,		March 31,			Sept. 30,			Sept. 30,
		2010			2010		2010			2009			2009			2009		2009			2010			2009
Operating measures (2)
Policies in force (in thousands)		17,479			17,529		17,581			17,744			17,774			17,836		17,843			17,479			17,774
New issued applications (in thousands) (3)		537			498		464			488			524			496		521			1,499			1,541
Average premium - gross written ($)		441			444		443			441			435			430		430			443			432
Average premium - net earned ($)		432			433		430			428			426			425		424			432			425
Renewal ratio (%) (4)		88.7			89.0		88.8			88.8			89.1			89.0		88.6			88.8			88.9
Loss trends
(% change year-over-year)
Bodily injury claim frequency		7.5			4.2		5.4			14.4			19.6			13.6		5.5			5.7			12.7
Property damage claim frequency		3.7			1.9		(0.1	)		7.6			10.7			5.1		1.6			1.8			5.6

(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 table for descriptions of these measures.

(3)     The decrease in new issued applications in the first nine months of 2010 was impacted by decreases in Florida and California, due in part to rate actions that were approved in 2009 in these markets and other actions to improve profitability. Excluding Florida and California, new issued applications on a countrywide basis increased 13.5% to 428 thousand in the third quarter of 2010 from 377 thousand in the third quarter of 2009, and increased 11.1% to 1,185 thousand in the first nine months of 2010 from 1,067 thousand in the first nine months of 2009, with new issued application increases in 39 states, most of which offer an auto discount (the Preferred Package Discount) for our target customer (multi-car residence owner).

(4)     The decrease in the renewal ratio of 0.4 points in the third quarter of 2010 compared to the same period of 2009, was primarily due to profitability management actions in California, Georgia, New York and North Carolina. The renewal ratio for the first nine months of 2010 was comparable to the same period of 2009.

17

THE ALLSTATE CORPORATION

NON-STANDARD AUTO PROFITABILITY MEASURES

		Three months ended																				Nine months ended
		Sept. 30,			June 30,			March 31,			Dec. 31,			Sept. 30,			June 30,			March 31,		Sept. 30,			Sept. 30,
		2010			2010			2010			2009			2009			2009			2009		2010			2009
Non-standard auto
($ in millions)
Net premiums written
Allstate brand	$	223		$	220		$	237		$	219		$	235		$	232		$	241	$	680		$	708
Encompass brand		1			1			3			3			6			5			8		5			19
		224			221			240			222			241			237			249		685			727
Net premiums earned
Allstate brand	$	222		$	228		$	230		$	231		$	231		$	240		$	237	$	680		$	708
Encompass brand		2			2			4			5			6			7			9		8			22
		224			230			234			236			237			247			246		688			730
Incurred losses
Allstate brand	$	137		$	157		$	158		$	160		$	147		$	161		$	162	$	452		$	470
Encompass brand		2			2			4			4			4			6			6		8			16
		139			159			162			164			151			167			168		460			486
Expenses
Allstate brand	$	61		$	60		$	56		$	58		$	59		$	57		$	56	$	177		$	172
Encompass brand		1			1			1			2			3			2			3		3			8
		62			61			57			60			62			59			59		180			180
Underwriting Income
Allstate brand	$	24		$	11		$	16		$	13		$	25		$	22		$	19	$	51		$	66
Encompass brand		(1	)		(1	)		(1	)		(1	)		(1	)		(1	)		-		(3	)		(2	)
		23			10			15			12			24			21			19		48			64
Loss ratio
Allstate brand		61.7			68.9			68.7			69.3			63.6			67.1			68.4		66.5			66.4
Encompass brand		100.0			100.0			100.0			80.0			66.7			85.7			66.7		100.0			72.7
Allstate Protection		62.0			69.2			69.2			69.5			63.7			67.6			68.3		66.8			66.6
Expense ratio
Allstate brand		27.5			26.3			24.3			25.1			25.6			23.7			23.6		26.0			24.3
Encompass brand		50.0			50.0			25.0			40.0			50.0			28.6			33.3		37.5			36.4
Allstate Protection		27.7			26.5			24.4			25.4			26.2			23.9			24.0		26.2			24.6
Combined ratio
Allstate brand		89.2			95.2			93.0			94.4			89.2			90.8			92.0		92.5			90.7
Encompass brand		150.0			150.0			125.0			120.0			116.7			114.3			100.0		137.5			109.1
Allstate Protection		89.7			95.7			93.6			94.9			89.9			91.5			92.3		93.0			91.2
Effect of catastrophe losses on loss ratio
Allstate brand		-			0.4			0.4			0.4			0.4			1.3			0.8		0.3			0.8
Encompass brand		-			-			-			-			-			-			-		-			-
Allstate brand non-standard auto domestic operating measures (1)
		Sept. 30,			June 30,			March 31,			Dec. 31,			Sept. 30,			June 30,			March 31,		Sept. 30,			Sept. 30,
		2010			2010			2010			2009			2009			2009			2009		2010			2009
Operating measures (2)
Policies in force (in thousands)		671			706			724			719			733			743			750		671			733
New issued applications (in thousands)		70			77			99			84			91			86			102		246			279
Average premium - gross written ($)		630			619			619			625			613			612			615		623			613
Average premium - net earned ($)		571			573			571			574			578			583			591		572			585
Renewal ratio (%)		70.8			72.5			71.8			72.4			72.6			73.3			71.6		71.7			72.5
Loss trends
(% change year-over-year)
Bodily injury claim frequency		7.1			1.4			6.6			16.7			29.5			26.3			15.9		4.9			23.6
Property damage claim frequency		3.3			0.8			3.1			9.4			16.5			10.2			7.1		2.4			11.1

(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.

18

THE ALLSTATE CORPORATION

AUTO PROFITABILITY MEASURES

		Three months ended																					Nine months ended
		Sept. 30,			June 30,			March 31,			Dec. 31,			Sept. 30,			June 30,			March 31,			Sept. 30,			Sept. 30,
		2010			2010			2010			2009			2009			2009			2009			2010			2009
Auto
($ in millions)
Net premiums written
Allstate brand	$	4,251		$	4,168		$	4,260		$	4,079		$	4,284		$	4,108		$	4,219		$	12,679		$	12,611
Encompass brand		167			170			163			174			214			222			212			500			648
		4,418			4,338			4,423			4,253			4,498			4,330			4,431			13,179			13,259
Net premiums earned
Allstate brand	$	4,183		$	4,197		$	4,173		$	4,175		$	4,177		$	4,168		$	4,154		$	12,553		$	12,499
Encompass brand		175			187			198			210			227			241			256			560			724
		4,358			4,384			4,371			4,385			4,404			4,409			4,410			13,113			13,223
Incurred losses
Allstate brand	$	2,860		$	2,940		$	2,897		$	2,889		$	2,855		$	2,940		$	2,858		$	8,697		$	8,653
Encompass brand		133			137			153			163			174			178			189			423			541
		2,993			3,077			3,050			3,052			3,029			3,118			3,047			9,120			9,194
Expenses
Allstate brand	$	1,031		$	1,029		$	1,041		$	1,023		$	1,008		$	1,006		$	1,016		$	3,101		$	3,030
Encompass brand		53			51			52			54			59			63			70			156			192
		1,084			1,080			1,093			1,077			1,067			1,069			1,086			3,257			3,222
Underwriting Income
Allstate brand	$	292		$	228		$	235		$	263		$	314		$	222		$	280		$	755		$	816
Encompass brand		(11	)		(1	)		(7	)		(7	)		(6	)		—			(3	)		(19	)		(9	)
		281			227			228			256			308			222			277			736			807
Loss ratio
Allstate brand		68.4			70.1			69.4			69.2			68.4			70.6			68.8			69.3			69.2
Encompass brand		76.0			73.2			77.3			77.6			76.6			73.9			73.8			75.5			74.7
Allstate Protection		68.7			70.2			69.8			69.6			68.8			70.7			69.1			69.6			69.5
Expense ratio
Allstate brand		24.6			24.5			25.0			24.5			24.1			24.1			24.5			24.7			24.3
Encompass brand		30.3			27.3			26.2			25.7			26.0			26.1			27.4			27.9			26.5
Allstate Protection		24.9			24.6			25.0			24.6			24.2			24.3			24.6			24.8			24.4
Combined ratio
Allstate brand		93.0			94.6			94.4			93.7			92.5			94.7			93.3			94.0			93.5
Encompass brand		106.3			100.5			103.5			103.3			102.6			100.0			101.2			103.4			101.2
Allstate Protection		93.6			94.8			94.8			94.2			93.0			95.0			93.7			94.4			93.9
Effect of catastrophe losses on loss ratio
Allstate brand		0.4			1.9			0.7			(0.3	)		1.3			2.1			1.6			1.0			1.6
Encompass brand		0.6			0.5			1.0			(0.5	)		0.4			0.4			0.8			0.7			0.6
Effect of pre-tax reserve reestimates on combined ratio*
Allstate brand		(0.9	)		(2.1	)		(0.1	)		(0.6	)		0.1			(0.2	)		(0.7	)		(1.0	)		(0.3	)
Encompass brand		(1.7	)		1.6			5.1			(1.0	)		3.1			1.7			(2.3	)		1.8			0.7
Allstate brand auto domestic operating measures (1)
		Sept. 30,			June 30,			March 31,			Dec. 31,			Sept. 30,			June 30,			March 31,			Sept. 30,			Sept. 30,
		2010			2010			2010			2009			2009			2009			2009			2010			2009
Operating measures (2)
Policies in force (in thousands)		18,150			18,235			18,305			18,463			18,507			18,579			18,593			18,150			18,507
New issued applications (in thousands)		607			575			563			572			615			582			623			1,745			1,820
Average premium - gross written ($)		449			452			451			449			443			438			438			450			440
Average premium - net earned ($)		437			439			436			434			432			431			431			437			431
Renewal ratio (%)		87.9			88.3			88.0			88.1			88.3			88.3			87.8			88.1			88.2
Loss trends
(% change year-over-year)
Bodily injury claim frequency		7.3			3.9			5.4			14.4			20.1			14.2			5.9			5.5			13.2
Property damage claim frequency		3.6			1.8			-			7.7			10.9			5.3			1.7			1.8			5.8
Paid severity - bodily injury		1.1			(1.0	)		(1.3	)		(4.9	)		(0.9	)		0.9			2.1			(0.4	)		0.7
Paid severity - property damage		1.0			(1.5	)		0.4			0.1			(1.0	)		0.5			(2.4	)		(0.1	)		(1.0	)

(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.

19

THE ALLSTATE CORPORATION

HOMEOWNERS PROFITABILITY MEASURES

		Three months ended																					Nine months ended
		Sept. 30,			June 30,			March 31,			Dec. 31,			Sept. 30,			June 30,			March 31,			Sept. 30,			Sept. 30,
		2010			2010			2010			2009			2009			2009			2009			2010			2009
Homeowners
($ in millions)
Net premiums written
Allstate brand	$	1,610		$	1,565		$	1,189		$	1,359		$	1,573		$	1,532		$	1,171		$	4,364		$	4,276
Encompass brand		98			94			80			89			110			112			97			272			319
		1,708			1,659			1,269			1,448			1,683			1,644			1,268			4,636			4,595
Net premiums earned
Allstate brand	$	1,430		$	1,416		$	1,416		$	1,411		$	1,396		$	1,409		$	1,417		$	4,262		$	4,222
Encompass brand		96			96			100			104			108			114			118			292			340
		1,526			1,512			1,516			1,515			1,504			1,523			1,535			4,554			4,562
Incurred losses
Allstate brand	$	1,151		$	1,169		$	1,239		$	919		$	1,053		$	1,340		$	1,172		$	3,559		$	3,565
Encompass brand		61			62			103			60			73			87			73			226			233
		1,212			1,231			1,342			979			1,126			1,427			1,245			3,785			3,798
Expenses
Allstate brand	$	346		$	309		$	337		$	337		$	319		$	299		$	341		$	992		$	959
Encompass brand		31			29			29			31			32			32			34			89			98
		377			338			366			368			351			331			375			1,081			1,057
Underwriting Income
Allstate brand	$	(67	)	$	(62	)	$	(160	)	$	155		$	24		$	(230	)	$	(96	)	$	(289	)	$	(302	)
Encompass brand		4			5			(32	)		13			3			(5	)		11			(23	)		9
		(63	)		(57	)		(192	)		168			27			(235	)		(85	)		(312	)		(293	)
Loss ratio
Allstate brand		80.5			82.6			87.5			65.1			75.4			95.1			82.7			83.5			84.5
Encompass brand		63.5			64.6			103.0			57.7			67.6			76.3			61.9			77.4			68.6
Allstate Protection		79.4			81.4			88.5			64.6			74.9			93.7			81.1			83.1			83.2
Expense ratio
Allstate brand		24.2			21.8			23.8			23.9			22.9			21.2			24.1			23.3			22.7
Encompass brand		32.3			30.2			29.0			29.8			29.6			28.1			28.8			30.5			28.8
Allstate Protection		24.7			22.4			24.2			24.3			23.3			21.7			24.4			23.8			23.2
Combined ratio
Allstate brand		104.7			104.4			111.3			89.0			98.3			116.3			106.8			106.8			107.2
Encompass brand		95.8			94.8			132.0			87.5			97.2			104.4			90.7			107.9			97.4
Allstate Protection		104.1			103.8			112.7			88.9			98.2			115.4			105.5			106.9			106.4
Effect of catastrophe losses on loss ratio
Allstate brand		23.1			34.7			37.1			20.6			22.3			45.8			27.5			31.6			31.9
Encompass brand		13.5			15.6			46.0			9.6			15.7			22.8			10.2			25.3			16.2
Effect of pre-tax reserve reestimates on combined ratio
Allstate brand		5.2			(4.2	)		(0.4	)		(3.3	)		(5.2	)		(0.9	)		(1.2	)		0.2			(2.4	)
Encompass brand		(7.3	)		(1.0	)		(2.0	)		(3.8	)		(1.9	)		1.8			(12.7	)		(3.4	)		(4.4	)
Allstate brand homeowners domestic operating measures (1)
		Sept. 30,			June 30,			March 31,			Dec. 31,			Sept. 30,			June 30,			March 31,			Sept. 30,			Sept. 30,
		2010			2010			2010			2009			2009			2009			2009			2010			2009
Operating measures(2)
Policies in force (in thousands)		6,740			6,821			6,886			6,973			7,027			7,104			7,181			6,740			7,027
New issued applications (in thousands)		140			151			119			136			148			145			127			410			420
Average premium - gross written ($)		953			933			921			899			889			879			861			937			878
Average premium - net earned ($)		821			803			795			785			771			768			771			806			768
Renewal ratio (%)		88.6			88.3			88.0			88.4			88.5			88.0			87.5			88.3			88.0
Loss trends
(% change year-over-year)
Claim frequency excluding catastrophe losses		(2.3	)		1.7			5.1			13.9			13.5			3.9			5.1			1.2			7.7
Claim severity excluding catastrophe losses		2.1			(0.7	)		(2.1	)		(8.5	)		9.0			7.0			3.2			0.6			6.6

(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.

20

THE ALLSTATE CORPORATION

PROPERTY-LIABILITY

ALLSTATE BRAND DOMESTIC OPERATING MEASURES AND STATISTICS (1)

	Three months ended
		Sept. 30,		June 30,		March 31,		Dec. 31,		Sept. 30,		June 30,	March 31,
		2010		2010		2010		2009		2009		2009	2009
Policies in Force (2)
(in thousands)
Standard auto		17,479		17,529		17,581		17,744		17,774		17,836	17,843
Non-standard auto		671		706		724		719		733		743	750
Auto		18,150		18,235		18,305		18,463		18,507		18,579	18,593
Homeowners		6,740		6,821		6,886		6,973		7,027		7,104	7,181
New Issued Applications (3)
(in thousands)
Standard auto		537		498		464		488		524		496	521
Non-standard auto		70		77		99		84		91		86	102
Auto		607		575		563		572		615		582	623
Homeowners		140		151		119		136		148		145	127
Average Premium - Gross Written ($) (4)
Standard auto		441		444		443		441		435		430	430
Non-standard auto		630		619		619		625		613		612	615
Auto		449		452		451		449		443		438	438
Homeowners		953		933		921		899		889		879	861
Average Premium - Net Earned ($)(5)
Standard auto		432		433		430		428		426		425	424
Non-standard auto		571		573		571		574		578		583	591
Auto		437		439		436		434		432		431	431
Homeowners		821		803		795		785		771		768	771
Renewal Ratio (%) (6)
Standard auto		88.7		89.0		88.8		88.8		89.1		89.0	88.6
Non-standard auto		70.8		72.5		71.8		72.4		72.6		73.3	71.6
Auto		87.9		88.3		88.0		88.1		88.3		88.3	87.8
Homeowners		88.6		88.3		88.0		88.4		88.5		88.0	87.5
Bodily Injury Claim Frequency
(% change year-over-year)
Standard auto		7.5		4.2		5.4		14.4		19.6		13.6	5.5
Non-standard auto		7.1		1.4		6.6		16.7		29.5		26.3	15.9
Auto		7.3		3.9		5.4		14.4		20.1		14.2	5.9
Property Damage Claim Frequency
(% change year-over-year)
Standard auto		3.7		1.9		(0.1	)	7.6		10.7		5.1	1.6
Non-standard auto		3.3		0.8		3.1		9.4		16.5		10.2	7.1
Auto		3.6		1.8		-		7.7		10.9		5.3	1.7
Auto Paid Severity
(% change year-over-year)
Bodily injury		1.1		(1.0	)	(1.3	)	(4.9	)	(0.9	)	0.9	2.1
Property damage		1.0		(1.5	)	0.4		0.1		(1.0	)	0.5	(2.4	)
Homeowners Excluding Catastrophe Losses
(% change year-over-year)
Claim frequency		(2.3	)	1.7		5.1		13.9		13.5		3.9	5.1
Claim severity		2.1		(0.7	)	(2.1	)	(8.5	)	9.0		7.0	3.2

(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, and 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.

21

THE ALLSTATE CORPORATION

HOMEOWNERS SUPPLEMENTAL INFORMATION

($ in millions)

		Nine months ended September 30, 2010
												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	$	57	$	61	107.0	%	$	7	12.3	%
Other hurricane exposure states		2,336		1,985	85.0	%		730	31.3	%
Total hurricane exposure states (2)		2,393		2,046	85.5	%		737	30.8	%		15	8.9%
Other catastrophe exposure states		2,161		1,739	80.5	%		685	31.7	%		20	9.1%
Total	$	4,554	$	3,785	83.1	%	$	1,422	31.2	%	70	35	9.0%

		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 2010.  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.

22

THE ALLSTATE CORPORATION

PROPERTY-LIABILITY

EFFECT OF CATASTROPHE LOSSES ON THE COMBINED RATIO

($ in millions, except ratios)

										Excludes the effect of
										catastrophe losses relating to
										earthquakes and hurricanes
	Effect of all catastrophe losses on the Property-Liability					Premiums		Total		Total		Effect on the
	combined ratio					earned		catastrophe		catastrophe		Property-Liability
	Quarter 1	Quarter 2	Quarter 3	Quarter 4	Year	year-to-date		losses by year		losses by year		combined ratio
1992 (3)	3.2	7.1	48.7	25.5	21.2	$	15,542	$	3,301	$	680	4.4
1993(3)	5.8	3.0	1.2	3.8	3.4	16,039		547		607		3.8
1994 (3)	27.4	4.4	9.5	7.3	12.0	16,513		1,989		529		3.2
1995	4.0	7.8	3.8	5.0	5.2	17,540		905		683		3.9
1996	5.1	6.0	6.4	3.8	5.4	18,366		983		837		4.6
1997	2.4	2.6	2.6	0.3	2.0	18,604		365		325		1.7
1998	2.5	6.3	3.9	3.4	4.0	19,307		780		615		3.2
1999	2.6	5.6	5.4	2.7	4.1	20,112		816		623		3.1
2000	7.0	6.7	1.7	2.3	4.4	21,871		967		930		4.3
2001	1.5	9.8	2.5	2.4	4.0	22,197		894		763		3.4
2002	1.9	5.0	1.6	4.0	3.1	23,361		731		638		2.7
2003	2.2	9.2	6.1	6.5	6.0	24,677		1,489		1,256		5.1
2004	1.6	3.8	26.0	6.2	9.5	25,989		2,468		467		1.8
2005	2.5	2.2	69.4	9.6	21.0	27,039		5,674		460		1.7
2006	1.6	3.7	2.5	4.1	3.0	27,369		810		1,044		3.8
2007	2.4	6.3	5.0	7.0	5.2	27,233		1,409		1,336		4.9
2008	8.4	10.3	26.8	3.9	12.4	26,967		3,342		1,876		7.0
2009	7.8	12.5	6.2	5.0	7.9	26,194		2,069		2,159		8.2
2010	10.0	9.8	5.9	-	8.6	19,515		1,670		1,670		8.6
Average (2)	5.0	6.6	12.9	5.5	7.5							4.2

	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
2010	10.0	9.8	5.9	-	8.6	19,515		1,670
Average(2)	4.1	6.4	10.8	4.3	6.5

(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.

23

THE ALLSTATE CORPORATION

ALLSTATE PROTECTION HISTORICAL CATASTROPHE BY SIZE OF EVENT

($ in millions, except ratios)

Three months ended September 30, 2010
										Average
	Number				Claim and			Combined		catastrophe
Size of catastrophe	of events				claim expense			ratio impact		loss per event
Greater than $250 million	-	-	%	$	-	-	%	-	$	-
$101 million to $250 million	-	-			-	-		-		-
$50 million to $100 million	1	3.4			66	17.1		1.0		66
Less than $50 million	28	96.6			305	79.0		4.7		11
Total	29	100.0	%		371	96.1		5.7		13
Prior year reserve reestimates					(42)	(10.9)		(0.6)
Prior quarter reserve reestimates					57	14.8		0.8
Total catastrophe losses				$	386	100.0	%	5.9

Nine months ended September 30, 2010
										Average
	Number				Claim and			Combined		Catastrophe
Size of catastrophe	of events				claim expense			ratio impact		loss per event
Greater than $250 million	-	-	%	$	-	-	%	-	$	-
$101 million to $250 million	3	4.3			485	29.1		2.5		162
$50 million to $100 million	8	11.4			538	32.2		2.8		67
Less than $50 million	59	84.3			787	47.1		4.0		13
Total	70	100.0	%		1,810	108.4		9.3		26
Prior year reserve reestimates					(140)	(8.4)		(0.7)
Total catastrophe losses				$	1,670	100.0	%	8.6

1995 through September 2010
	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 (1)
Hurricane Katrina - 2005	LA				$	3,592	14.1	%	1.0	$	3,592
Hurricane Rita - 2005	TX					891	3.5		0.2		891
Hurricane Ike - 2008	TX					864	3.4		0.2		864
Hurricane Ivan - 2004	FL					632	2.5		0.2		632
Hurricane Charley - 2004	FL					605	2.4		0.2		605
Hurricane Frances - 2004	FL					550	2.2		0.1		550
Hurricane Wilma - 2005	FL					538	2.1		0.1		538
Hurricane Jeanne - 2004	FL					337	1.3		0.1		337
October 2003 Fires	CA					300	1.2		0.1		300
Hurricane Gustav - 2008	LA					274	1.1		0.1		274
Greater than $250 million		10	0.9	%		8,583	33.8		2.3		858
$101 million to $250 million		19	1.8			2,955	11.6		0.8		156
$50 million to $100 million		55	5.2			3,850	15.2		1.1		70
Less than $50 million		980	92.1			9,984	39.4		2.7		10
Total		1,064	100.0	%	$	25,372	100.0	%	6.9		24

(1)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.

24

THE ALLSTATE CORPORATION

PROPERTY-LIABILITY

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

($ in millions, except ratios)

		Three months ended																					Nine months ended
		Sept. 30,			June 30,			March 31,			Dec. 31,			Sept. 30,			June 30,			March 31,			Sept. 30,			Sept. 30,
		2010			2010			2010			2009			2009			2009			2009			2010			2009
Pre-tax Reserve Reestimates (1)
Auto	$	(40	)	$	(85	)	$	5		$	(29	)	$	11		$	(4	)	$	(35	)	$	(120	)	$	(28	)
Homeowners		67			(61	)		(8	)		(50	)		(75	)		(11	)		(32	)		(2	)		(118	)
Other personal lines		(38	)		(5	)		(22	)		51			(3	)		32			9			(65	)		38
Allstate Protection (2)		(11	)		(151	)		(25	)		(28	)		(67	)		17			(58	)		(187	)		(108	)
Discontinued Lines and Coverages		22			1			2			3			15			3			3			25			21
Property-Liability	$	11		$	(150	)	$	(23	)	$	(25	)	$	(52	)	$	20		$	(55	)	$	(162	)	$	(87	)
Allstate brand	$	-		$	(152	)	$	(34	)	$	(20	)	$	(74	)	$	9		$	(41	)	$	(186	)	$	(106	)
Encompass brand		(11	)		1			9			(8	)		7			8			(17	)		(1	)		(2	)
Allstate Protection (2)	$	(11	)	$	(151	)	$	(25	)	$	(28	)	$	(67	)	$	17		$	(58	)	$	(187	)	$	(108	)
Effect of Pre-tax Reserve
Reestimates on Combined Ratio (1)
Auto		(0.6	)		(1.3	)		0.1			(0.4	)		0.2			-			(0.5	)		(0.6	)		(0.1	)
Homeowners		1.0			(0.9	)		(0.1	)		(0.8	)		(1.2	)		(0.2	)		(0.5	)		-			(0.6	)
Other personal lines		(0.6	)		(0.1	)		(0.4	)		0.8			-			0.5			0.1			(0.4	)		0.2
Allstate Protection (2)		(0.2	)		(2.3	)		(0.4	)		(0.4	)		(1.0	)		0.3			(0.9	)		(1.0	)		(0.5	)
Discontinued Lines and Coverages		0.4			-			-			-			0.3			-			0.1			0.1			0.1
Property-Liability		0.2			(2.3	)		(0.4	)		(0.4	)		(0.7	)		0.3			(0.8	)		(0.9	)		(0.4	)
Allstate brand		-			(2.3	)		(0.5	)		(0.3	)		(1.1	)		0.2			(0.6	)		(1.0	)		(0.5	)
Encompass brand		(0.2	)		-			0.1			(0.1	)		0.1			0.1			(0.3	)		-			-
Allstate Protection (2)		(0.2	)		(2.3	)		(0.4	)		(0.4	)		(1.0	)		0.3			(0.9	)		(1.0	)		(0.5	)

(1)	Favorable reserve reestimates are shown in parentheses.
(2)	Favorable reserve reestimates included in catastrophe losses totaled $42 million and $80 million in the three months ended September 30, 2010 and 2009, respectively.  Favorable reserve reestimates included in catastrophe losses totaled $140 million and $139 million in the nine months ended September 30, 2010 and 2009, respectively.

25

THE ALLSTATE CORPORATION

ASBESTOS AND ENVIRONMENTAL RESERVES

($ in millions)

		Three months ended										Twelve months ended December 31,
			Sept. 30,			June 30,			March 31,
			2010			2010			2010				2009			2008			2007			2006			2005
(net of reinsurance)
Asbestos claims
Beginning reserves	$		1,142		$	1,157		$	1,180		$		1,228		$	1,302		$	1,375		$	1,373		$	1,464
Incurred claims and claims expense			5			-			-				(8	)		8			17			86			139
Claims and claims expense paid			(14	)		(15	)		(23	)			(40	)		(82	)		(90	)		(84	)		(230	)
Ending reserves	$		1,133		$	1,142		$	1,157		$		1,180		$	1,228		$	1,302		$	1,375		$	1,373
Claims and claims expense paid as a percent of ending reserves			1.2	%		1.3	%		2.0	%			3.4	%		6.7	%		6.9	%		6.1	%		16.8	%
Environmental claims
Beginning reserves	$		190		$	197		$	198		$		195		$	232		$	194		$	205		$	232
Incurred claims and claims expense			18			-			-				13			-			63			10			2
Claims and claims expense paid			(3	)		(7	)		(1	)			(10	)		(37	)		(25	)		(21	)		(29	)
Ending reserves	$		205		$	190		$	197		$		198		$	195		$	232		$	194		$	205
Claims and claims expense paid as a percent of ending reserves			1.5%			3.7%			0.5%				5.1%			19.0%			10.8%			10.8%			14.1%

26

THE ALLSTATE CORPORATION

ALLSTATE FINANCIAL RESULTS

($ in millions)

		Three months ended																					Nine months ended
		Sept. 30,			June 30,			March 31,			Dec. 31,			Sept. 30,			June 30,			March 31,			Sept. 30,			Sept. 30,
		2010			2010			2010			2009			2009			2009			2009			2010			2009
Investments	$	62,915		$	61,804		$	62,336		$	62,216		$	61,891		$	59,861		$	59,576		$	62,915		$	61,891
Premiums and deposits *	$	1,011		$	1,018		$	1,105		$	1,156		$	1,033		$	1,399		$	1,533		$	3,134		$	3,965
Deposits to contractholder funds		(730	)		(739	)		(828	)		(898	)		(802	)		(1,152	)		(1,298	)		(2,297	)		(3,252	)
Deposits to separate accounts		(25	)		(25	)		(26	)		(27	)		(27	)		(28	)		(28	)		(76	)		(83	)
Change in unearned premiums and other adjustments		34			32			38			12			28			29			39			104			96
Life and annuity premiums		290			286			289			243			232			248			246			865			726
Contract charges		258			259			255			255			250			246			238			772			734
Premiums and contract charges		548			545			544			498			482			494			484			1,637			1,460
Net investment income		707			723			731			737			744			764			819			2,161			2,327
Periodic settlements and accruals on non-hedge derivative instruments		10			11			17			14			2			(3	)		1			38			-
Contract benefits		(445	)		(485	)		(442	)		(441	)		(382	)		(407	)		(387	)		(1,372	)		(1,176	)
Interest credited to contractholder funds		(446	)		(450	)		(463	)		(479	)		(497	)		(520	)		(542	)		(1,359	)		(1,559	)
Amortization of deferred policy acquisition costs		(101	)		(41	)		(58	)		(90	)		(108	)		(130	)		(109	)		(200	)		(347	)
Operating costs and expenses (1)		(118	)		(116	)		(120	)		(105	)		(99	)		(105	)		(121	)		(354	)		(325	)
Restructuring and related charges		-			1			-			(1	)		(4	)		(2	)		(18	)		1			(24	)
Income tax expense on operations		(47	)		(63	)		(70	)		(38	)		(43	)		(26	)		(42	)		(180	)		(111	)
Operating income		108			125			139			95			95			65			85			372			245
Realized capital gains and losses, after-tax		(25	)		(230	)		(105	)		(178	)		(151	)		82			(170	)		(360	)		(239	)
DAC and DSI accretion (amortization) relating to realized capital gains and losses, after-tax		7			4			(2	)		(45	)		18			(131	)		(19	)		9			(132	)
DAC and DSI unlocking relating to realized capital gains and losses, after-tax		-			-			(18	)		-			-			-			(224	)		(18	)		(224	)
Reclassification of periodic settlements and accruals on non-hedge derivative instruments, after-tax		(7	)		(7	)		(11	)		(9	)		(1	)		2			(1	)		(25	)		-
Gain on disposition of operations, after-tax		2			1			1			-			1			1			2			4			4
Net income (loss)	$	85		$	(107	)	$	4		$	(137	)	$	(38	)	$	19		$	(327	)	$	(18	)	$	(346	)

(1) The increases in Allstate Financial operating costs and expenses of $19 million and $29 million in the three months and nine months ended September 30, 2010, respectively, compared to the same periods in 2009, were primarily due to increased non-deferrable acquisition costs, higher product distribution and marketing costs, increases in the net cost of employee benefits and lower reinsurance expense allowances resulting from higher retention. In the first nine months of 2010, these increased costs were partially offset by Allstate Financial expense reduction actions, which resulted in lower employee, professional services and sales support expenses.

27

THE ALLSTATE CORPORATION

ALLSTATE FINANCIAL PREMIUMS AND DEPOSITS

($ in millions)

		Three months ended														Nine months ended
		Sept. 30,		June 30,		March 31,		Dec. 31,		Sept. 30,		June 30,		March 31,		Sept. 30,		Sept. 30,
PREMIUMS AND DEPOSITS - BY PRODUCT		2010		2010		2010		2009		2009		2009		2009		2010		2009
Underwritten Products
Interest-sensitive life	$	359	$	387	$	389	$	384	$	355	$	356	$	341	$	1,135	$	1,052
Traditional		106		105		99		121		102		101		92		310		295
Accident, health, and other		156		148		157		121		115		114		110		461		339
		621		640		645		626		572		571		543		1,906		1,686
Annuities
Indexed annuities		114		120		122		155		105		117		127		356		349
Fixed deferred annuities		69		77		111		141		196		471		452		257		1,119
Sub-total		183		197		233		296		301		588		579		613		1,468
Fixed immediate annuities		66		69		86		73		56		81		90		221		227
		249		266		319		369		357		669		669		834		1,695
Bank deposits		141		112		141		161		104		159		321		394		584
Total	$	1,011	$	1,018	$	1,105	$	1,156	$	1,033	$	1,399	$	1,533	$	3,134	$	3,965
PREMIUMS AND DEPOSITS - BY DISTRIBUTION CHANNEL (1)
Allstate agencies	$	494	$	495	$	521	$	621	$	536	$	560	$	716	$	1,510	$	1,812
Financial institutions		28		40		102		105		115		329		347		170		791
Independent agents
Master brokerage agencies		207		227		205		208		227		255		219		639		701
Workplace enrolling agents		170		162		170		129		128		126		122		502		376
Sub-total		377		389		375		337		355		381		341		1,141		1,077
Specialized brokers and other		112		94		107		93		27		129		129		313		285
Total	$	1,011	$	1,018	$	1,105	$	1,156	$	1,033	$	1,399	$	1,533	$	3,134	$	3,965
UNDERWRITTEN PREMIUMS AND DEPOSITS -
BY DISTRIBUTION CHANNEL
Allstate agencies	$	285	$	294	$	283	$	309	$	279	$	280	$	270	$	862	$	829
Financial institutions		-		12		41		44		41		44		26		53		111
Independent agents
Master brokerage agencies		165		171		151		143		124		119		125		487		368
Workplace enrolling agents		170		162		170		129		128		126		122		502		376
Sub-total		335		333		321		272		252		245		247		989		744
Specialized brokers and other		1		1		-		1		-		2		-		2		2
Total	$	621	$	640	$	645	$	626	$	572	$	571	$	543	$	1,906	$	1,686

(1) To conform to the current period presentation, prior periods have been reclassified.

28

THE ALLSTATE CORPORATION

CHANGE IN CONTRACTHOLDER FUNDS

($ in millions)

		Three months ended																					Nine months ended
		Sept. 30,			June 30,			March 31,			Dec. 31,			Sept. 30,			June 30,			March 31,			Sept. 30,			Sept. 30,
		2010			2010			2010			2009			2009			2009			2009			2010			2009
Beginning balance	$	49,443		$	51,027		$	52,582		$	53,336		$	53,999		$	56,621		$	58,413		$	52,582		$	58,413
Deposits
Fixed annuities		224			237			291			351			343			635			635			752			1,613
Interest-sensitive life insurance		363			391			395			384			355			357			342			1,149			1,054
Bank and other deposits		262			234			252			275			208			268			427			748			903
Total deposits		849			862			938			1,010			906			1,260			1,404			2,649			3,570
Interest credited		445			448			462			481			498			515			531			1,355			1,544
Maturities, benefits, withdrawals and other adjustments
Maturities and retirements of institutional products		(3	)		(827	)		(954	)		(58	)		(212	)		(2,552	)		(1,951	)		(1,784	)		(4,715	)
Benefits		(397	)		(395	)		(395	)		(353	)		(379	)		(406	)		(450	)		(1,187	)		(1,235	)
Surrenders and partial withdrawals		(1,295	)		(1,355	)		(1,248	)		(1,540	)		(1,184	)		(1,235	)		(1,213	)		(3,898	)		(3,632	)
Contract charges		(247	)		(243	)		(241	)		(238	)		(232	)		(227	)		(221	)		(731	)		(680	)
Net transfers from separate accounts		3			3			2			3			2			2			4			8			8
Fair value hedge adjustments for institutional products		24			(74	)		(123	)		(6	)		1			78			(48	)		(173	)		31
Other adjustments		114			(3	)		4			(53	)		(63	)		(57	)		152			115			32
Total maturities, benefits, withdrawals and other adjustments		(1,801	)		(2,894	)		(2,955	)		(2,245	)		(2,067	)		(4,397	)		(3,727	)		(7,650	)		(10,191	)
Ending balance	$	48,936		$	49,443		$	51,027		$	52,582		$	53,336		$	53,999		$	56,621		$	48,936		$	53,336

29

THE ALLSTATE CORPORATION

ALLSTATE FINANCIAL ANALYSIS OF NET INCOME

($ in millions)

		Three months ended																					Nine months ended
		Sept. 30,			June 30,			March 31,			Dec. 31,			Sept. 30,			June 30,			March 31,			Sept. 30,			Sept. 30,
		2010			2010			2010			2009			2009			2009			2009			2010			2009
Benefit spread
Premiums	$	290		$	286		$	289		$	243		$	232		$	248		$	246		$	865		$	726
Cost of insurance contract charges (1)		161			159			156			158			156			150			152			476			458
Contract benefits excluding the implied interest on immediate annuities with life contingencies (2)		(310	)		(346	)		(303	)		(301	)		(243	)		(267	)		(248	)		(959	)		(758	)
Total benefit spread		141			99			142			100			145			131			150			382			426
Investment spread
Net investment income		707			723			731			737			744			764			819			2,161			2,327
Implied interest on immediate annuities with life contingencies (2)		(135	)		(139	)		(139	)		(140	)		(139	)		(140	)		(139	)		(413	)		(418	)
Interest credited to contractholder funds		(445	)		(450	)		(463	)		(490	)		(496	)		(561	)		(579	)		(1,358	)		(1,636	)
Total investment spread		127			134			129			107			109			63			101			390			273
Surrender charges and contract maintenance expense fees (1)		97			100			99			97			94			96			86			296			276
Realized capital gains and losses		(38	)		(353	)		(162	)		(275	)		(234	)		121			(43	)		(553	)		(156	)
Amortization of deferred policy acquisition costs		(91	)		(35	)		(89	)		(148	)		(80	)		(289	)		(448	)		(215	)		(817	)
Operating costs and expenses		(118	)		(116	)		(120	)		(105	)		(99	)		(105	)		(121	)		(354	)		(325	)
Restructuring and related charges		-			1			-			(1	)		(4	)		(2	)		(18	)		1			(24	)
Gain on disposition of operations		4			2			1			1			2			1			3			7			6
Income tax (expense) benefit on operations		(37	)		61			4			87			29			3			(37	)		28			(5	)
Net income (loss)	$	85		$	(107	)	$	4		$	(137	)	$	(38	)	$	19		$	(327	)	$	(18	)	$	(346	)
Benefit spread by product group
Life insurance	$	93		$	23		$	88		$	68		$	96		$	96		$	103		$	204		$	295
Accident and health		65			60			64			47			50			50			49			189			149
Annuities		(17	)		16			(10	)		(15	)		(1	)		(15	)		(2	)		(11	)		(18	)
Total benefit spread	$	141		$	99		$	142		$	100		$	145		$	131		$	150		$	382		$	426
Investment spread by product group
Annuities and institutional products	$	44		$	54		$	50		$	45		$	44		$	3		$	34		$	148		$	81
Life insurance		11			6			7			1			(2	)		7			(3	)		24			2
Allstate Bank products		8			8			8			9			8			7			6			24			21
Accident and health		5			4			4			3			5			4			4			13			13
Net investment income on investments supporting capital		59			62			60			49			54			42			60			181			156
Total investment spread	$	127		$	134		$	129		$	107		$	109		$	63		$	101		$	390		$	273
(1) Reconciliation of contract charges
Cost of insurance contract charges	$	161		$	159		$	156		$	158		$	156		$	150		$	152		$	476		$	458
Surrender charges and contract maintenance expense fees		97			100			99			97			94			96			86			296			276
Total contract charges	$	258		$	259		$	255		$	255		$	250		$	246		$	238		$	772		$	734
(2) Reconciliation of contract benefits
Contract benefits excluding the implied interest on immediate annuities with life contingencies	$	(310	)	$	(346	)	$	(303	)	$	(301	)	$	(243	)	$	(267	)	$	(248	)	$	(959	)	$	(758	)
Implied interest on immediate annuities with life contingencies		(135	)		(139	)		(139	)		(140	)		(139	)		(140	)		(139	)		(413	)		(418	)
Total contract benefits	$	(445	)	$	(485	)	$	(442	)	$	(441	)	$	(382	)	$	(407	)	$	(387	)	$	(1,372	)	$	(1,176	)

30

THE ALLSTATE CORPORATION

ALLSTATE FINANCIAL WEIGHTED AVERAGE INVESTMENT SPREADS

	Three months ended September 30, 2010						Three months ended September 30, 2009
	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	%	4.4	%	1.1	%	5.4	%	4.7	%	0.7	%
Deferred fixed annuities and institutional products	4.4		3.3		1.1		4.3		3.4		0.9
Immediate fixed annuities with and without life contingencies	6.3		6.3		-		6.4		6.4		-
Investments supporting capital, traditional life and other products	3.7		N/A		N/A		3.9		N/A		N/A

	Nine months ended September 30, 2010						Nine months ended September 30, 2009
	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	%	4.4	%	1.1	%	5.4	%	4.6	%	0.8	%
Deferred fixed annuities and institutional products	4.4		3.2		1.2		4.5		3.4		1.1
Immediate fixed annuities with and without life contingencies	6.4		6.4		-		6.3		6.4		(0.1)
Investments supporting capital, traditional life and other products	3.7		N/A		N/A		3.8		N/A		N/A

31

THE ALLSTATE CORPORATION

CORPORATE AND OTHER RESULTS

($ in millions)

		Three months ended																					Nine months ended
		Sept. 30,			June 30,			March 31,			Dec. 31,			Sept. 30,			June 30,			March 31,			Sept. 30,			Sept. 30,
		2010			2010			2010			2009			2009			2009			2009			2010			2009
Net investment income	$	14		$	16		$	15		$	15		$	14		$	10		$	13		$	45		$	37
Operating costs and expenses		(95	)		(101	)		(97	)		(108	)		(109	)		(103	)		(90	)		(293	)		(302	)
Income tax benefit on operations		31			33			32			36			37			36			32			96			105
Operating loss		(50	)		(52	)		(50	)		(57	)		(58	)		(57	)		(45	)		(152	)		(160	)
Realized capital gains and losses, after-tax		1			5			2			5			3			5			(2	)		8			6
Net loss	$	(49	)	$	(47	)	$	(48	)	$	(52	)	$	(55	)	$	(52	)	$	(47	)	$	(144	)	$	(154	)

32

THE ALLSTATE CORPORATION

INVESTMENTS

($ in millions)

	PROPERTY-LIABILITY										ALLSTATE FINANCIAL
		Sept. 30,		June 30,		March 31,		Dec. 31,		Sept. 30,		Sept. 30,		June 30,		March 31,		Dec. 31,		Sept. 30,
		2010		2010		2010		2009		2009		2010		2010		2010		2009		2009
Fixed income securities, at fair value:
Tax-exempt	$	10,287	$	12,067	$	13,181	$	14,294	$	15,507	$	63	$	64	$	64	$	64	$	65
Taxable		19,135		17,089		15,552		12,991		12,930		51,477		50,483		50,246		49,222		47,815
Equity securities, at fair value		3,499		3,063		3,580		4,840		4,414		208		191		227		184		189
Mortgage loans		28		38		50		50		78		6,933		7,135		7,589		7,885		8,775
Limited partnership interests		2,289		2,014		1,744		1,674		1,714		1,128		1,067		1,023		1,032		1,021
Short-term, at fair value		454		655		608		503		588		1,038		947		1,074		1,697		1,785
Other		53		139		94		174		127		2,068		1,917		2,113		2,132		2,241
Total	$	35,745	$	35,065	$	34,809	$	34,526	$	35,358	$	62,915	$	61,804	$	62,336	$	62,216	$	61,891
Fixed income securities, at amortized cost:
Tax-exempt	$	9,900	$	11,804	$	13,041	$	14,177	$	15,117	$	59	$	60	$	60	$	60	$	61
Taxable		18,853		17,097		15,793		13,414		13,404		49,809		50,301		51,392		51,435		50,592
Ratio of fair value to amortized cost		102.3%		100.9%		99.6%		98.9%		99.7%		103.4%		100.4%		97.8%		95.7%		94.5%
Equity securities, at cost	$	3,266	$	3,175	$	3,253	$	4,685	$	4,106	$	181	$	181	$	183	$	160	$	168
Short-term, at amortized cost		454		655		608		503		588		1,038		947		1,074		1,697		1,785
	CORPORATE AND OTHER										CONSOLIDATED
		Sept. 30,		June 30,		March 31,		Dec. 31,		Sept. 30,		Sept. 30,		June 30,		March 31,		Dec. 31,		Sept 30,
		2010		2010		2010		2009		2009		2010		2010		2010		2009		2009
Fixed income securities, at fair value:
Tax-exempt	$	618	$	613	$	652	$	670	$	766	$	10,968	$	12,744	$	13,897	$	15,028	$	16,338
Taxable		1,613		1,609		1,589		1,525		1,478		72,225		69,181		67,387		63,738		62,223
Equity securities, at fair value		-		-		-		-		-		3,707		3,254		3,807		5,024		4,603
Mortgage loans		-		-		-		-		-		6,961		7,173		7,639		7,935		8,853
Limited partnership interests		37		38		35		38		35		3,454		3,119		2,802		2,744		2,770
Short-term, at fair value		1,284		812		800		856		1,097		2,776		2,414		2,482		3,056		3,470
Other		2		2		2		2		1		2,123		2,058		2,209		2,308		2,369
Total	$	3,554	$	3,074	$	3,078	$	3,091	$	3,377	$	102,214	$	99,943	$	100,223	$	99,833	$	100,626
Fixed income securities, at amortized cost:
Tax-exempt	$	585	$	582	$	619	$	632	$	719	$	10,544	$	12,446	$	13,720	$	14,869	$	15,897
Taxable		1,580		1,581		1,581		1,525		1,474		70,242		68,979		68,766		66,374		65,470
Ratio of fair value to amortized cost		103.0%		102.7%		101.9%		101.8%		102.3%		103.0%		100.6%		98.5%		97.0%		96.6%
Equity securities, at cost	$	-	$	-	$	-	$	-	$	-	$	3,447	$	3,356	$	3,436	$	4,845	$	4,274
Short-term, at amortized cost		1,284		812		800		856		1,097		2,776		2,414		2,482		3,056		3,470

33

THE ALLSTATE CORPORATION

FIXED INCOME SECURITY PORTFOLIO BY CREDIT RATING (1)

($ in millions)

			PROPERTY-LIABILITY										ALLSTATE FINANCIAL
	NAIC			Sept. 30,		June 30,		March 31,		Dec. 31,		Sept. 30,		Sept. 30,		June 30,		March 31,		Dec. 31,		Sept. 30,
	Rating	Credit rating		2010		2010		2010		2009		2009		2010		2010		2010		2009		2009
	1	Aaa/Aa/A	$	23,391	$	23,422	$	22,814	$	21,714	$	22,281	$	32,745	$	32,128	$	32,371	$	31,676	$	30,922
	2	Baa		3,401		3,388		3,691		3,517		4,080		15,040		14,991		14,742		14,681		13,909
	3	Ba		1,149		896		858		849		914		1,935		1,608		1,686		1,635		1,625
	4	B		577		572		602		506		489		668		694		648		571		754
	5	Caa or lower		500		520		511		552		557		651		665		522		628		593
	6	In or near default		404		358		257		147		116		501		461		341		95		77
	Total		$	29,422	$	29,156	$	28,733	$	27,285	$	28,437	$	51,540	$	50,547	$	50,310	$	49,286	$	47,880
			CORPORATE AND OTHER										CONSOLIDATED
	NAIC			Sept. 30,		June 30,		March 31,		Dec. 31,		Sept. 30,		Sept. 30,		June 30,		March 31,		Dec. 31,		Sept. 30,
	Rating	Credit rating		2010		2010		2010		2009		2009		2010		2010		2010		2009		2009
	1	Aaa/Aa/A	$	2,230	$	2,218	$	2,235	$	2,183	$	2,229	$	58,366	$	57,768	$	57,420	$	55,573	$	55,432
	2	Baa		1		4		6		11		12		18,442		18,383		18,439		18,209		18,001
	3	Ba		-		-		-		-		-		3,084		2,504		2,544		2,484		2,539
	4	B		-		-		-		-		2		1,245		1,266		1,250		1,077		1,245
	5	Caa or lower		-		-		-		-		-		1,151		1,185		1,033		1,180		1,150
	6	In or near default		-		-		-		1		1		905		819		598		243		194
	Total		$	2,231	$	2,222	$	2,241	$	2,195	$	2,244	$	83,193	$	81,925	$	81,284	$	78,766	$	78,561
(1)	The Valuation of Securities Taskforce of the NAIC instituted a new process to be used by insurance companies during the fourth quarter of 2009 for statutory accounting, reporting and estimating risk-based capital requirements for non-agency RMBS, and as a result the NAIC ratings used for statutory reporting may differ from those shown above. The credit ratings shown here represent the external rating equivalent to the displayed NAIC rating.

34

THE ALLSTATE CORPORATION

UNREALIZED NET CAPITAL GAINS AND LOSSES ON SECURITY PORTFOLIO BY TYPE

($ in millions)

		September 30, 2010					June 30, 2010					March 31, 2010
		Unrealized net			Fair value		Unrealized net			Fair value		Unrealized net			Fair value
		capital gains		Fair	as a percent of		capital gains		Fair	as a percent of		capital gains		Fair	as a percent of
		and losses		value	amortized cost (1)		and losses		value	amortized cost (1)		and losses		value	amortized cost (1)
Fixed income securities
U.S. government and agencies	$	532	$	11,253	105.0	$	512	$	9,185	105.9	$	218	$	8,422	102.7
Municipal		402		16,768	102.5		89		18,849	100.5		(256)		20,148	98.7
Corporate		2,334		37,204	106.7		1,445		35,935	104.2		914		34,499	102.7
Foreign government		482		3,428	116.4		350		3,252	112.1		306		3,314	110.2
Residential mortgage-backed securities (“RMBS”)		(693)		8,499	92.5		(954)		8,961	90.4		(1,231)		9,112	88.1
Commercial mortgage-backed securities (“CMBS”)		(382)		1,993	83.9		(553)		2,132	79.4		(768)		2,452	76.1
Asset-backed securities (“ABS”)		(270)		4,010	93.7		(390)		3,572	90.2		(387)		3,297	89.5
Redeemable preferred stock		2		38	105.6		1		39	102.6		2		40	105.3
Total fixed income securities		2,407		83,193	103.0		500		81,925	100.6		(1,202)		81,284	98.5
Equity securities		260		3,707	107.5		(102)		3,254	97.0		371		3,807	110.8
Short-term investments		-		2,776	100.0		-		2,414	100.0		-		2,482	100.0
Derivatives		(17)		318	94.9		2		283	100.7		(18)		437	96.0
Unrealized net capital gains and losses, pre-tax	$	2,650	$	89,994	103.0	$	400	$	87,876	100.5	$	(849)	$	88,010	99.0
Amounts recognized for:
Insurance reserves (2)		(608)					(292)					-
DAC and DSI (3)		(49)					403					726
Amounts recognized		(657)					111					726
Deferred income taxes		(701)					(183)					39
Unrealized net capital gains and losses, after-tax	$	1,292				$	328				$	(84)
		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 a percent of		capital gains		Fair	as a percent of		capital gains		Fair	as a percent of
		and losses		value	amortized cost (1)		and losses		value	amortized cost (1)		and losses		value	amortized cost (1)
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
RMBS		(1,500)		7,987	84.2		(1,756)		8,077	82.1		(2,160)		7,503	77.6
CMBS		(925)		2,586	73.7		(1,159)		2,578	69.0		(1,746)		3,237	65.0
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)

(1)The comparison of 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 gains and losses on the Allstate Financial fixed annuity and interest-sensitive life product portfolios are used in this calculation.  The reduction in unrealized net capital losses in the first, second and third quarter of 2010 for these product portfolios was less than the reduction in unrealized net capital losses for the total Allstate Financial and consolidated portfolios.  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 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 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 was below the limitation in all periods beginning 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.

35

THE ALLSTATE CORPORATION

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

($ in millions)

		As of September 30, 2010
											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	$	4,273	$	4,142	$	187	$	(126)	$	4,203	96.9	%	98.4	%
Consumer goods (cyclical and non-cyclical)		5,885		5,943		458		(30)		6,371	101.0		108.3
Financial services		3,601		3,506		206		(30)		3,682	97.4		102.2
Utilities		6,181		6,186		619		(24)		6,781	100.1		109.7
Transportation		1,774		1,792		151		(21)		1,922	101.0		108.3
Capital goods		3,650		3,647		340		(19)		3,968	99.9		108.7
Basic industry		1,542		1,564		116		(7)		1,673	101.4		108.5
Energy		2,308		2,324		191		(6)		2,509	100.7		108.7
Technology		1,404		1,421		99		(6)		1,514	101.2		107.8
Communications		2,151		2,129		156		(4)		2,281	99.0		106.0
FDIC guaranteed		951		957		8		-		965	100.6		101.5
Other		1,394		1,259		87		(11)		1,335	90.3		95.8
Total corporate fixed income portfolio		35,114		34,870		2,618		(284)		37,204	99.3		106.0
U.S. government and agencies		11,306		10,721		533		(1)		11,253	94.8		99.5
Municipal		20,514		16,366		803		(401)		16,768	79.8		81.7
Foreign government		3,400		2,946		482		-		3,428	86.6		100.8
RMBS		9,913		9,192		245		(938)		8,499	92.7		85.7
CMBS		2,424		2,375		59		(441)		1,993	98.0		82.2
ABS		4,686		4,280		105		(375)		4,010	91.3		85.6
Redeemable preferred stock		37		36		2		-		38	97.3		102.7
Total fixed income securities	$	87,394	$	80,786	$	4,847	$	(2,440)	$	83,193	92.4		95.2

(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 primarily included corporate, municipal, foreign government and U.S. government and agencies zero-coupon securities with par value of $728 million, $5.90 billion, $1.36 billion and $1.71 billion, respectively.

(2)Excluding the impact of zero-coupon securities, the percentage of amortized cost to par value would be 99.8% for corporates, 99.6% for municipals, 103.9% for foreign governments and 101.5% for U.S. government and agencies. Similarly, excluding the impact of zero-coupon securities, the percentage of fair value to par value would be 106.4% for corporates, 102.7% for municipals, 114.0% for foreign governments and 104.4% for U.S. government and agencies.

36

THE ALLSTATE CORPORATION

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

($ in millions)

		As of September 30, 2010
		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	$	11,253	$	532	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	11,306	$	11,253	$	532
Municipal
Tax exempt		1,512		117		4,682		242		2,916		130		1,277		(8)		581		(57)		11,612		10,968		424
Taxable		189		12		2,506		160		1,177		19		471		(52)		166		(59)		7,509		4,509		80
Auction rate securities		940		(47)		92		(12)		116		(16)		42		(8)		101		(19)		1,393		1,291		(102)
Corporate
Public		1,792		54		2,776		184		7,210		628		8,561		688		1,692		64		20,290		22,031		1,618
Privately placed		1,158		74		1,672		104		3,632		268		6,307		312		1,326		53		13,612		14,095		811
Hybrid		35		5		44		5		402		(48)		462		(67)		135		10		1,212		1,078		(95)
Foreign government		2,057		357		431		32		548		57		392		36		-		-		3,400		3,428		482
RMBS
U.S. government sponsored
entities		5,025		180		-		-		-		-		-		-		-		-		4,770		5,025		180
Prime residential mortgage-backed
securities		505		4		74		(2)		213		1		20		(5)		533		(9)		1,432		1,345		(11)
Alt-A residential mortgage-backed
securities		43		(1)		66		(6)		125		(7)		40		(5)		404		(106)		1,048		678		(125)
Subprime residential mortgage-
backed securities		92		(3)		292		(123)		93		(25)		100		(26)		874		(560)		2,663		1,451		(737)
CMBS		1,205		34		219		(28)		217		(63)		230		(183)		122		(142)		2,424		1,993		(382)
ABS
Collateralized debt obligations		28		-		608		(21)		507		(69)		240		(91)		430		(123)		2,487		1,813		(304)
Consumer and other asset-backed securities		1,253		37		349		4		309		-		266		(3)		20		(4)		2,199		2,197		34
Redeemable preferred stock		-		-		1		-		2		-		34		2		1		-		37		38		2
Total fixed income securities	$	27,087	$	1,355	$	13,812	$	539	$	17,467	$	875	$	18,442	$	590	$	6,385	$	(952)	$	87,394	$	83,193	$	2,407

37

THE ALLSTATE CORPORATION

REALIZED CAPITAL GAINS AND LOSSES BY TRANSACTION TYPE

($ in millions)

		Three months ended														Nine months ended
		Sept. 30,		June 30,		March 31,		Dec. 31,		Sept. 30,		June 30,		March 31,		Sept. 30,		Sept. 30,
		2010		2010		2010		2009		2009		2009		2009		2010		2009
Impairment write-downs (1)	$	(137)	$	(239)	$	(223)	$	(270)	$	(381)	$	(291)	$	(620)	$	(599)	$	(1,292)
Change in intent write-downs (2)		(30)		(67)		(32)		(215)		(11)		(26)		(105)		(129)		(142)
Net other-than-temporary impairment
losses recognized in earnings		(167)		(306)		(255)		(485)		(392)		(317)		(725)		(728)		(1,434)
Sales		319		145		88		390		201		263		418		552		882
Valuation of derivative instruments		(133)		(283)		(155)		166		(269)		367		103		(571)		201
Settlements of derivative instruments		(152)		(27)		(30)		(110)		(92)		52		(12)		(209)		(52)
EMA limited partnership income		(11)		20		4		6		33		(37)		(143)		13		(147)
Total	$	(144)	$	(451)	$	(348)	$	(33)	$	(519)	$	328	$	(359)	$	(943)	$	(550)

(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.

38

THE ALLSTATE CORPORATION

PROPERTY-LIABILITY

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

($ in millions)

	Three months ended																							Nine months ended
			Sept. 30,			June 30,			March 31,			Dec. 31,			Sept. 30,			June 30,			March 31,				Sept. 30,			Sept. 30,
			2010			2010			2010			2009			2009			2009			2009				2010			2009
NET INVESTMENT INCOME
Fixed income securities:
Tax-exempt		$	132		$	153		$	165		$	180		$	204		$	217		$	225		$		450		$	646
Taxable			152			143			130			126			120			111			109				425			340
Equity securities			16			23			20			29			13			18			15				59			46
Mortgage loans			-			-			1			-			2			1			1				1			4
Limited partnership interests(1)			3			3			3			4			2			2			1				9			5
Short-term			1			1			1			2			1			1			3				3			5
Other			1			5			1			1			2			-			1				7			3
Sub-total			305			328			321			342			344			350			355				954			1,049
Less: Investment expense			(21	)		(18	)		(17	)		(18	)		(18	)		(16	)		(11	)			(56	)		(45	)
Net investment income		$	284		$	310		$	304		$	324		$	326		$	334		$	344		$		898		$	1,004
Net investment income, after-tax		$	225		$	249		$	247		$	266		$	273		$	282		$	290		$		721		$	845
PRE-TAX YIELDS (2)
Fixed income securities:
Tax-exempt			4.9			4.9			4.9			4.9			5.0			5.0			5.2				4.9			5.1
Equivalent yield for tax-exempt			7.1			7.1			7.1			7.1			7.3			7.3			7.6				7.1			7.4
Taxable			3.4			3.5			3.5			3.7			3.9			4.2			4.7				3.5			4.2
Equity securities			2.0			2.9			2.0			2.7			1.5			2.2			2.1				2.2			1.9
Mortgage loans			4.2			5.4			6.0			5.0			4.5			4.5			4.5				5.4			4.6
Limited partnership interests			0.6			0.6			0.8			0.8			0.6			0.4			0.3				0.6			0.4
Total portfolio (3)			3.5			3.8			3.7			3.9			3.9			4.1			4.3				3.7			4.1
REALIZED CAPITAL GAINS AND LOSSES (PRE-TAX) BY ASSET TYPE
Fixed income securities:
Tax-exempt		$	76		$	(23	)	$	(4	)	$	(12	)	$	27		$	9		$	(28	)	$		49		$	8
Taxable			25			6			(43	)		(40	)		-			(3	)		(7	)			(12	)		(10	)
Equity securities			68			25			14			336			(22	)		26			(138	)			107			(134	)
Limited partnership interests			(13	)		15			(7	)		19			11			(30	)		(164	)			(5	)		(183	)
Derivatives and other			(263	)		(129	)		(150	)		(68	)		(306	)		199			23				(542	)		(84	)
Total		$	(107	)	$	(106	)	$	(190	)	$	235		$	(290	)	$	201		$	(314	)	$		(403	)	$	(403	)
REALIZED CAPITAL GAINS AND LOSSES (PRE-TAX) BY TRANSACTION TYPE
Impairment write-downs		$	(57	)	$	(96	)	$	(79	)	$	(91	)	$	(100	)	$	(87	)	$	(256	)	$		(232	)	$	(443	)
Change in intent write-downs(4)			(10	)		(10	)		(9	)		(6	)		(10	)		(1	)		(72	)			(29	)		(83	)
Net other-than-temporary impairment losses recognized in earnings			(67	)		(106	)		(88	)		(97	)		(110	)		(88	)		(328	)			(261	)		(526	)
Sales (4)			228			121			41			377			91			93			50				390			234
Valuation of derivative instruments			(143	)		(134	)		(101	)		53			(209	)		188			20				(378	)		(1	)
Settlements of derivative instruments			(118	)		3			(49	)		(121	)		(99	)		11			6				(164	)		(82	)
EMA limited partnership income			(7	)		10			7			23			37			(3	)		(62	)			10			(28	)
Total		$	(107	)	$	(106	)	$	(190	)	$	235		$	(290	)	$	201		$	(314	)	$		(403	)	$	(403	)

(1)	At September 30, 2010, Property-Liability has commitments to invest in additional limited partnership interests totaling $702 million.
(2)	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.
(3)	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.
(4)	Includes $1 million and $8 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 nine months ended September 30, 2010, respectively.

39

THE ALLSTATE CORPORATION

ALLSTATE FINANCIAL

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

($ in millions)

	Three months ended																							Nine months ended
			Sept. 30,			June 30,			March 31,			Dec. 31,			Sept. 30,			June 30,			March 31,			Sept. 30,			Sept. 30,
			2010			2010			2010			2009			2009			2009			2009			2010			2009
NET INVESTMENT INCOME
Fixed income securities		$	631		$	646		$	652		$	657		$	654		$	658		$	699		$	1,929		$	2,011
Equity securities			1			2			1			1			2			1			1			4			4
Mortgage loans			92			99			103			109			119			130			136			294			385
Limited partnership interests (1)			3			4			3			2			2			2			2			10			6
Short-term			1			-			1			1			2			2			7			2			11
Other			3			-			(2	)		(4	)		(7	)		(4	)		(1	)		1			(12	)
Sub-total			731			751			758			766			772			789			844			2,240			2,405
Less: Investment expense			(24	)		(28	)		(27	)		(29	)		(28	)		(25	)		(25	)		(79	)		(78	)
Net investment income		$	707		$	723		$	731		$	737		$	744		$	764		$	819		$	2,161		$	2,327
Net investment income, after-tax		$	463		$	473		$	478		$	480		$	489		$	500		$	535		$	1,414		$	1,524
PRE-TAX YIELDS (2)
Fixed income securities			5.0			5.1			5.1			5.2			5.2			5.3			5.6			5.1			5.3
Equity securities			2.8			3.5			2.3			3.7			3.1			4.8			2.9			2.9			3.6
Mortgage loans			5.2			5.4			5.3			5.2			5.3			5.5			5.5			5.3			5.4
Limited partnership interests			1.0			1.8			1.0			1.0			0.6			0.7			0.8			1.3			0.7
Total portfolio (3)			4.8			4.8			4.7			4.7			4.7			4.8			5.0			4.8			4.8
REALIZED CAPITAL GAINS AND LOSSES (PRE-TAX) BY ASSET TYPE
Fixed income securities		$	(19	)	$	(177	)	$	(92	)	$	(342	)	$	(64	)	$	2		$	140		$	(288	)	$	78
Equity securities			15			20			-			2			1			1			(25	)		35			(23	)
Mortgage loans			(1	)		(28	)		(25	)		(30	)		(66	)		(16	)		(32	)		(54	)		(114	)
Limited partnership interests			(6	)		9			(15	)		(26	)		(32	)		(53	)		(171	)		(12	)		(256	)
Derivatives and other			(27	)		(177	)		(30	)		121			(73	)		187			45			(234	)		159
Total		$	(38	)	$	(353	)	$	(162	)	$	(275	)	$	(234	)	$	121		$	(43	)	$	(553	)	$	(156	)
REALIZED CAPITAL GAINS AND LOSSES (PRE-TAX) BY TRANSACTION TYPE
Impairment write-downs		$	(80	)	$	(143	)	$	(144	)	$	(179	)	$	(281	)	$	(204	)	$	(357	)	$	(367	)	$	(842	)
Change in intent write-downs			(20	)		(57	)		(23	)		(209	)		(1	)		(25	)		(33	)		(100	)		(59	)
Net other-than-temporary impairment losses recognized in earnings			(100	)		(200	)		(167	)		(388	)		(282	)		(229	)		(390	)		(467	)		(901	)
Sales			89			18			44			10			106			163			359			151			628
Valuation of derivative instruments			10			(149	)		(54	)		113			(60	)		179			83			(193	)		202
Settlements of derivative instruments			(34	)		(30	)		19			11			7			41			(18	)		(45	)		30
EMA limited partnership income			(3	)		8			(4	)		(21	)		(5	)		(33	)		(77	)		1			(115	)
Total		$	(38	)	$	(353	)	$	(162	)	$	(275	)	$	(234	)	$	121		$	(43	)	$	(553	)	$	(156	)

(1)At September 30, 2010, Allstate Financial has commitments to invest in additional limited partnership interests totaling $668 million.

(2)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.

(3)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.

40

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 shareholders’ 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 shareholders’ 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 shareholders’ 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 shareholders’ 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 shareholders’ equity from return on shareholders’ equity is the transparency and understanding of their significance to return on shareholders’ 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 shareholders’ equity and return on shareholders’ equity when evaluating our performance.  We note that investors, financial analysts, financial and business media organizations and rating agencies utilize operating income return on shareholders’ 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 shareholders’ equity should not be considered as a substitute for return on shareholders’ equity and does not reflect the overall profitability of our business.  A reconciliation of return on shareholders’ equity and operating income return on shareholders’ equity can be found in the schedule, “Return on Shareholders’ 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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