ALLSTATE CORP

Overview

The following discussion highlights significant factors influencing the consolidated financial position and results of operations of The Allstate Corporation (referred to in this document as “we,” “our,” “us,” the “Company” or “Allstate”). It should be read in conjunction with the condensed consolidated financial statements and related notes thereto found under Part I. Item 1. contained herein, and with the discussion, analysis, consolidated financial statements and notes thereto in Part I. Item 1. and Part II. Item 7. and Item 8. of The Allstate Corporation annual report on Form 10-K for 2023, filed February 21, 2024.

Further analysis of our insurance segments is provided in the Property-Liability Operations and Segment Results sections, including Allstate Protection, Run-off Property-Liability, Protection Services and Allstate Health and Benefits, of Management’s Discussion and Analysis (“MD&A”). The segments are consistent with the way in which the chief operating decision maker reviews financial performance and makes decisions about the allocation of resources.

Macroeconomic Impacts

Macroeconomic factors have and may continue to impact the results of our operations, financial condition and liquidity, such as U.S. government fiscal and monetary policies, the Russia/Ukraine and Israel/Hamas conflicts, supply chain disruptions and labor shortages.These factors should be considered when comparing the current period to prior periods. This is not inclusive of all potential impacts and should not be treated as such. Within the MD&A, we have included further disclosures related to macroeconomic impacts on our 2024 results.

Corporate Strategy

Our strategy has two components: increase personal property-liability market share and expand protection offerings by leveraging the Allstate brand, customer base and capabilities.

Transformative Growth is about creating a business model, capabilities and culture that continually transform to better serve customers. This is done by providing affordable, simple and connected protection through multiple distribution methods. The ultimate objective is to enhance customer value to drive growth in all businesses.

In the personal property-liability businesses, this has five key components:

•Improving customer value

•Expanding customer access

•Increasing sophistication and investment in customer acquisition

•Deploying new technology ecosystem

•Driving organizational transformation

We are expanding protection services businesses utilizing enterprise capabilities and resources such as the Allstate brand, distribution, analytics, claims, investment expertise, talent and capital.

Disposition

On August 13, 2024, we entered into a share purchase agreement with StanCorp Financial Group, Inc. to sell American Heritage Life Insurance Company and American Heritage Service Company, comprising our employer voluntary benefits business for approximately $2.0 billion in cash. The employer voluntary benefits business is reported in the Allstate Health and Benefits segment, and as of September 30, 2024, the assets and liabilities of the business are classified as held for sale. The transaction price less costs to sell exceeds the carrying value of net assets related to this transaction, resulting in an expected gain that will be recognized at closing of the transaction. The ultimate amount of the anticipated gain on the sale will be impacted by purchase price adjustments associated with certain pre-close transactions, changes in the carrying value of net assets, changes in accumulated other comprehensive income and the related tax effects.

The transaction is expected to close in the first half of 2025, subject to regulatory approvals and other customary closing conditions. We continue to pursue the sale of the group health and individual health businesses but have not completed the sale process. Once the criteria for these businesses to be classified as held for sale is met, the entire Health and Benefits segment will be reported in discontinued operations.

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Measuring segment profit or loss

The measure of segment profit or loss used in evaluating performance is underwriting income for the Allstate Protection and Run-off Property-Liability segments and adjusted net income for the Protection Services, Allstate Health and Benefits and Corporate and Other segments. We use these measures in our evaluation of results of operations to analyze profitability.

Underwriting income is calculated as premiums earned and other revenue, less claims and claims expense (“losses”), amortization of deferred policy acquisition costs (“DAC”), operating costs and expenses, amortization or impairment of purchased intangibles and restructuring and related charges, as determined using accounting principles generally accepted in the United States of America (“GAAP”).

Adjusted net incomeis net income (loss) applicable to common shareholders, excluding:

Highlights

Consolidated net income (loss) applicable to common shareholders

($ in millions)

Consolidated net income applicable to common shareholders was $1.16 billion and $2.65 billion in the third quarter and first nine months of 2024, respectively, compared to a loss of $41 million and $1.78 billion in the third quarter and first nine months of 2023, respectively, primarily due to improved underwriting results from increased earned premium and improved loss trends.For the twelve months ended September 30, 2024, return on Allstate common shareholders’ equity was 26.1%.

Total revenues

($ in millions)

Total revenues increased 14.7% to $16.63 billion and increased 12.6% to $47.60 billion in the third quarter and first nine months of 2024, respectively, compared to the same periods of 2023 due to premium rate increases and higher realized capital gains on investments compared to the prior year.

Net investment income

($ in millions)

Net investment income increased $94 million to $783 million in the third quarter of 2024 primarily due to higher market-based investment results, partially offset by lower performance-based investment results. Net investment income increased $385 million to $2.26 billion in the first nine months of 2024 compared to the same period of 2023, primarily due to higher market-based investment results. Market-based results continue to benefit from portfolio repositioning into higher yielding fixed income securities and higher investment balances.

Third Quarter 2024 Form 10-Q 47

Financial highlights

Investments totaled $73.60 billion as of September 30, 2024, increasing from $66.68 billion as of December 31, 2023.

Allstate shareholders’ equity was $20.88 billion as of September 30, 2024, increasing from $17.77 billion as of December 31, 2023, primarily due to net income and unrealized net capital gains, partially offset by dividends to shareholders.

Book value per diluted common share (ratio of Allstate common shareholders’ equity to total common shares outstanding and dilutive potential common

shares outstanding) was $70.35, an increase of 47.2% from $47.79 as of September 30, 2023, and an increase of 18.5% from $59.39 as of December 31, 2023.

Return on average Allstate common shareholders’ equityfor the twelve months ended September 30, 2024 was 26.1%, an increase of 40.8 points from (14.7)% for the twelve months ended September 30, 2023. The increase was primarily due to net income applicable to common shareholders for the trailing twelve-month period ending September 30, 2024 compared to a net loss for the twelve-month period ending September 30, 2023.

Summarized consolidated financial results

Segment highlights

Allstate Protection underwriting income was $555 million in the third quarter of 2024 compared to an underwriting loss of $331 million in the third quarter of 2023 due to increased premiums earned and lower non-catastrophe losses, partially offset by higher catastrophe losses and advertising costs. Underwriting income totaled $1.32 billion in the first nine months of 2024 compared to an underwriting loss of $3.42 billion in the first nine months of 2023, primarily due to increased premiums earned and lower losses, partially offset by higher advertising costs. As auto profitability improves, we are increasing advertising, expanding customer access and delivering personalized affordable, simple and connected consumer offerings to support growth.

Catastrophe losses were $1.70 billion and $4.55 billion in the third quarter and first nine months of 2024, respectively, compared to $1.18 billion and $5.57 billion in the third quarter and first nine months of 2023, respectively.

Premiums written increased 10.5% to $14.71 billion and increased 11.8% to $42.17 billion in the third quarter and first nine months of 2024, respectively, compared to the same periods of 2023, reflecting higher premiums in both Allstate and National General brands.

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Protection Services adjusted net income was $58 million in the third quarter of 2024 compared to $27 million in the third quarter of 2023, primarily due to revenue growth and improved claim frequency at Allstate Protection Plans. Adjusted net income was $167 million the first nine months of 2024 compared to $102 million in the first nine months of 2023, primarily due to growth at Allstate Protection Plans and improved claim severity at Allstate Roadside.

Premiums and other revenue increased 16.3% to $749 million and increased 13.6% to $2.16 billion in the third quarter and first nine months of 2024, respectively, compared to the same periods of 2023, primarily due to Allstate Protection Plans.

Allstate Health and Benefits adjusted net income was $37 million in the third quarter of 2024 compared to adjusted net income of $69 million in the third quarter of 2023, and adjusted net income was $151 million in the first nine months of 2024 compared to $182 million in the first nine months of 2023. The decline in adjusted net income from the third quarter of 2023 was primarily due to increased benefit utilization across all lines of business.

Premiums and contract charges increased 5.2% to $487 million in the third quarter of 2024 and increased 4.4% to $1.44 billion in the first nine months of 2024 compared to the same periods of 2023, primarily due to growth in individual health and group health, partially offset by a decline in employer voluntary benefits.

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