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 2024, filed February 24, 2025.

Further analysis of our insurance segments Allstate Protection and Run-off Property-Liability, together Property-Liability Operations, and Protection Services, is provided in 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. The dispositions of the employer voluntary benefits (“EVB”) and group health businesses did not qualify for discontinued operations. Starting in the third quarter of 2025, the Allstate Health and Benefits segment is no longer a reportable segment, with results of this segment recast to reflect only the results of the EVB and group health businesses. The retained individual health business, previously included in the Allstate Health and Benefits segment, is a non-reportable segment with results included in all other for all periods presented.

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 and Corporate 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 income (loss) is net income (loss) applicable to common shareholders, excluding:

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 conflict, supply chain disruptions and labor shortages.

Tariffs Beginning on April 2, 2025, the U.S. government announced additional tariffs on goods imported to the U.S. We regularly evaluate scenarios to understand the potential impact of tariffs on our businesses and incorporate estimates of the impact into our development of reserves for claims. The evolving and uncertain global trade environment makes it difficult to predict the full effect on our business. The following factors may impact operations at levels beyond what we are currently observing:

•Higher new and used vehicle pricing and replacement parts, increasing claims costs in Allstate Protection and Dealer Services

•Increases in building material costs, driving increases in homeowners claim costs

•Lack of availability of replacement parts from disruption in global trade broadly impacting all businesses

•Fewer auto new issued applications due to lower new and used vehicle sales

•Reduced demand in Dealer Services due to lower new vehicle sales

•Lower premiums written from reduced U.S. retail sales in Protection Plans

•Higher claims costs at Protection Plans

•Bad debt and credit allowance exposure in all businesses

•Adverse impacts on investment valuations and liquidity for market-based and performance-based investments

This is not inclusive of all potential impacts and should not be treated as such.

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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 ecosystems

•Driving organizational transformation

We are expanding Protection Services businesses internationally and by leveraging the Allstate brand, customer base and capabilities.

Dispositions

On April 1, 2025, we closed the sale of American Heritage Life Insurance Company and American Heritage Service Company, comprising our employer voluntary benefits (“EVB”) business. We recorded a gain on the sale of $888 million or $641 million, after-tax for the nine months ended September 30, 2025.

On July 1, 2025, we closed the sale of Direct General Life Insurance Company, NSM Sales Corporation and The Association Benefits Solution, LLC, comprising the group health business. We recorded a gain on sale of approximately $722 million or $506 million, after-tax in the third quarter of 2025.

See Note 3 of the condensed consolidated financial statements for further information on the EVB and group health dispositions.

Highlights

Consolidated net income applicable to common shareholders

($ in millions)

Consolidated net income applicable to common shareholders increased $2.56 billion to $3.72 billion in the third quarter of 2025 and increased $3.71 billion to $6.36 billion in the first nine months of 2025 compared to the same periods of 2024, primarily due to higher underwriting income and gains on dispositions.

Total revenues

($ in millions)

Total revenues increased 3.8% to $17.26 billion in the third quarter of 2025 and increased 5.8% to $50.34 billion in the first nine months of 2025 compared to the same periods of 2024, primarily due to higher auto and homeowners insurance policies in force and premium rate increases.

Net investment income

($ in millions)

Net investment income increased $166 million to $949 million in the third quarter of 2025 and increased $298 million to $2.56 billion in the first nine months of 2025 compared to the same periods of 2024, primarily due to higher market-based and performance-based investment results.

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Financial highlights

Investments totaled $82.33 billion as of September 30, 2025, increasing from $72.61 billion as of December 31, 2024.

Allstate shareholders’ equity was $27.51 billion as of September 30, 2025, increasing from $21.44 billion as of December 31, 2024, primarily due to net income and an increase in unrealized net capital gains on investments in 2025, partially offset by common share repurchases and 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 $95.95 as of September 30, 2025, an increase of 36.4% from $70.35 as of September 30, 2024, and an increase of 32.6% from $72.35 as of December 31, 2024.

Return on average Allstate common shareholders’ equityfor the twelve months ended September 30, 2025, was 37.2%, an increase of 11.1 points from 26.1% for the twelve months ended September 30, 2024. The increase was primarily due to higher net income applicable to common shareholders for the trailing twelve-month period ending September 30, 2025.

Summarized consolidated financial results

Segment highlights

Allstate Protection underwriting income was $3.04 billion in the third quarter of 2025 compared to underwriting income of $555 million in the third quarter of 2024, due to lower catastrophe losses, increased premiums earned and the benefit of prior year reserve releases. Underwriting income totaled $4.69 billion in the first nine months of 2025 compared to underwriting income of $1.32 billion in the first nine months of 2024, due to increased premiums earned and the benefit of prior year reserve releases, partially offset by higher expenses.

Catastrophe losses were $558 million and $4.75 billion in the third quarter and first nine months of 2025, respectively, compared to $1.70 billion and $4.55 billion in the third quarter and first nine months of 2024, respectively.

Premiums written increased 6.3% to $15.63 billion in the third quarter of 2025 and increased 6.7% to $44.97 billion in the first nine months of 2025 compared to the same periods of 2024, reflecting higher auto and homeowners insurance policies in force and premium rate increases.

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Protection Services adjusted net income was $46 million in the third quarter of 2025 compared to $58 million in the third quarter of 2024. Adjusted net income was $161 million the first nine months of 2025 compared to $167 million in the nine months of 2024. The decrease in both periods was primarily due to higher expenses at Arity and increased claims at Protection Plans, partially offset by premium growth at Protection Plans.

Premiums and other revenue increased 12.7% to $844 million the third quarter of 2025 and increased 13.5% to $2.45 billion in the first nine months of 2025 compared to the same periods of 2024, primarily due to growth at Protection Plans.

Income taxes The effective tax rate is the ratio of income tax expense (benefit) divided by income (loss) from operations before income tax expense. For the first nine months ended September 30, 2025, we reported an effective tax rate of 21.9% based on total

income tax expense of $1.80 billion on total income from operations before income tax expense of $8.24 billion. The effective rate for the first nine months ended September 30, 2025, is higher than the federal statutory rate of 21%, primarily due to non-deductible goodwill and higher state income taxes arising from the sales of the EVB and group health businesses, offset by tax benefits derived from tax credits, tax-exempt interest income and share-based payments.

For the first nine months ended September 30, 2024, we reported an effective tax rate of 18.2% based on a total income tax expense of $603 million on income from operations before income tax benefit of $3.31 billion. The effective tax rate for the first nine months ended 2024 was lower than the federal statutory rate of 21% due to the additional tax benefit derived from tax credits, shared-based payments and tax-exempt interest income.

(1)The sales of the employer voluntary benefits and group health businesses on April 1, 2025 and July 1, 2025, respectively, resulted in the disposal of non-deductible goodwill.

On July 4, 2025, H.R. 1 was signed into law, making a number of changes to the U.S. tax code. The legislation makes many provisions permanent that were originally enacted under the 2017 Tax Cuts and Jobs Act, in addition to implementing new measures that directly affect corporate taxpayers. Key provisions include the permanent reinstatement of full and immediate expensing for domestic research and development expenditures, new limitations on the deductibility of corporate charitable contributions, and a substantial rollback of renewable energy tax credits, including transferability of certain energy-related credits, while at the same time expanding availability of tax incentives for affordable housing developments. These changes do not have a significant impact to our consolidated financial statements.

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