Allstate Memo



FOR IMMEDIATE RELEASE

Contact:

Robert Block (847) 402-8885

Phil Dorn (847) 402-8240

Investor Relations

ALLSTATE REPORTS 2000 THIRD QUARTER RESULTS

NORTHBROOK, IL., October 19, 2000 -- The Allstate Corporation (NYSE: ALL) today reported that consolidated revenues for the third quarter of 2000 increased 13.6 percent to $7.45 billion from $6.55 billion for the same period in 1999. The growth was driven by increases in both the personal property and casualty and the life and savings business units.

Before the impact of restructuring charges, operating income for the quarter was $537 million ($.72 per diluted share) compared to $401 million ($.51 per diluted share) for the same period in 1999, reflecting increased premiums offset by higher loss costs. Catastrophe losses for the quarter were $62 million after-tax ($.09 per diluted share) versus $172 million after-tax ($.22 per diluted share) during the third quarter of 1999. Operating income for the quarter was $525 million ($.71 per diluted share). Consolidated net income for the quarter was $644 million or $.87 per diluted share, compared to $490 million or $.62 per diluted share for the same period in 1999, reflecting increases in operating income and realized capital gains.

For the nine months ended September 30, 2000, consolidated revenues were $21.91 billion, operating income was $1.42 billion ($1.89 per diluted share), and net income was $1.66 billion, compared to consolidated revenues of $19.95 billion, operating income of $1.67 billion ($2.07 per diluted share), and net income of $2.30 billion for the same period in 1999. Catastrophes during the first nine months of 2000 totaled $549 million after tax, compared to $434 million after tax in the same period of the previous year. Realized capital gains during the first nine months of 2000 were $276 million after-tax, compared to $664 million after-tax in 1999, due to changing market conditions during both years.

“We experienced another strong quarter with solid progress continuing to be made on the company’s strategic initiatives,” said Chairman, President and CEO Edward M. Liddy. “Growth was positive in the core Allstate property and casualty lines. We saw the highest growth rate in the last eight quarters for standard auto insurance, more than offsetting the impact of planned actions to improve profitability in the non-standard book. We are seeing initial positive results from our strategic risk management initiative, which employs our increasingly sophisticated underwriting and pricing strategies. We continue to be encouraged by the consistent growth in our homeowners’ line.

“The rollout of our multi-access strategy is on target to reach about 40% of the U.S. population this year. In the quarter, we opened three new customer information centers (CICs) that support our direct sales and service operations and began offering direct access to Allstate in six additional states as planned. Our multi-access strategy is now in place in seven states and consumers can reach Allstate anytime, however they choose. They can reach us through our agents, customer information centers or the Internet.

“We have substantially completed the transition of our agents to one independent contractor exclusive agency program. As explained in our last quarterly earnings release, some agents sold the economic interest in their books of business, other agents purchased the economic interest in those books, and some new agents were appointed.

“The quarter marked a new era for the company’s primary independent agency brand as we changed the name of CNA Personal Insurance to EncompassSM Insurance. Encompass serves customers who choose to buy through an independent insurance agent, supporting our multi-channel, multi-brand strategy.

“Strong growth in total premiums and revenues on a year to year basis continues in the life and savings operation. Sales of variable annuities continue to increase, especially in the Putnam Allstate alliance, and fixed annuity sales showed a 33% increase over the third quarter in 1999. Strong growth was also experienced in pension sales. The life and savings operation continues to contribute substantially increased operating income at $133 million, up 29% over the third quarter in 1999.

“In the third quarter, we repurchased another 7.8 million shares of our stock, bringing the total shares repurchased this year to almost 63 million shares, at a total cost of just under $1.5 billion. We expect to complete the current authorization by the end of the second quarter 2001.”

Property-Liability Business

Property-liability written premiums for the third quarter of 2000 increased 9.4 percent to $5.64 billion versus $5.16 billion during the same period of 1999. Higher written premiums during the quarter reflect the acquisition of Encompass during the fourth quarter of 1999 as well as higher average premiums and unit growth in standard auto and homeowners. Excluding Encompass, written premiums increased 0.2 percent over the third quarter of 1999 and were negatively impacted by planned actions in the non-standard auto lines.

Total property-liability revenues in the third quarter of 2000 increased 10.0 percent to $6.12 billion, compared to 1999 third quarter revenues of $5.56 billion. Property-liability operating income for the quarter was $408 million versus 1999 third quarter operating income of $302 million, reflecting increased premiums and lower catastrophe losses offset by higher loss costs. Increased premiums were the result of growth in standard auto and homeowners lines, partially offset by planned reductions in the non-standard line. Loss costs increased due to claim severity pressure in both auto and homeowners lines. As a result, current year reserves were strengthened, primarily in the auto physical damage coverages. The combined ratio for property-liability for the quarter was 98.6. Excluding catastrophes and restructuring charges, the combined ratio was 96.5. Property-liability realized capital gains were $119 million after-tax in the third quarter of 2000, compared to $93 million after-tax for the same period in 1999. Property-liability net income was $527 million for the quarter, compared to $395 million for the same period in the previous year.

For the nine months ended September 30, 2000, property-liability written premiums increased 10.5 percent to $16.60 billion compared to $15.02 billion for the same period in 1999. Property-liability revenues for the first nine months of 2000 were $18.26 billion, operating income was $1.05 billion, realized capital gains totaled $329 million after-tax, and net income was $1.38 billion. These totals compare to property-liability revenues of $16.93 billion, operating income of $1.39 billion, realized capital gains of $579 million after-tax and net income of $1.95 billion for the same period in 1999.

Life and Savings Business

For the third quarter of 2000, life and savings statutory premiums and deposits increased 46.3 percent to $3.34 billion compared to $2.28 billion in the third quarter of 1999. The increase was primarily due to higher fixed and variable annuity sales. Life and savings revenues were $1.30 billion for the third quarter, compared to $979 million for the same period in the previous year, due to increased sales as well as investment income and realized capital gains. Life and savings operating income for the quarter was $133 million compared to $103 million for the same period in 1999, due to increased investment income and variable annuity fees as well as favorable mortality results. Net income for the third quarter of 2000 was $144 million versus $114 million in the same period of 1999, due to increased operating income and realized capital gains.

Life and savings statutory premiums for the nine months ended September 30, 2000 were $9.58 billion compared to $5.83 billion in the same period of 1999. Life and savings revenues for the first nine months of 2000 were $3.61 billion, operating income was $405 million and net income was $376 million. These totals compare to revenues of $2.97 billion, operating income of $301 million and net income of $392 million for the same period in 1999.

The Allstate Corporation (NYSE: ALL) is the nation's largest publicly held personal lines insurance company. The company’s personal property and casualty business provides insurance for more than 14 million households and approximately 13,000 Allstate agents in the U.S. and Canada. The company also provides personal lines insurance products and services, such as Allstate and EncompassSM Insurance, through independent agents. The Allstate Life Group of Companies is the nation's 17th largest life insurance business, marketing investment, savings and financial services products through licensed financial professionals. Allstate maintains a web site at .

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The Allstate Corporation prepares an interim investor supplement, containing standard information that is not available at the time of the earnings release. A supplement will be posted to the company’s website in approximately 10 days, and can be accessed by going to the Allstate web site at and clicking on “About Allstate.” From there, go to the “Find Financial Information” button.

Summary of results for the quarter and nine months ended September 30, 2000

|Consolidated Highlights |

| |Quarter Ended |Nine Months Ended |

| |September 30 |September 30 |

| |Est. | | |Est. | | |

| |2000 |1999 |Change |2000 |1999 |Change |

|($ In millions, except per-share amounts) |$ |$ |% |$ |$ |% |

|Consolidated Revenues |7,445 |6,551 |13.6 |21,914 |19,950 |9.8 |

|Operating Income Before Restructuring Charges | | | | | | |

| |537 |401 |33.9 |1,453 |1,674 |(13.2) |

|Operating Income Per Share (Diluted) Before Restructuring Charges| | | | | | |

| |.72 |.51 |41.2 |1.93 |2.07 |(6.8) |

|Restructuring Charges After-tax |12 |-- |-- |33 |-- |-- |

|Operating Income |525 |401 |30.9 |1,420 |1,674 |(15.2) |

|Operating Income Per Share (Diluted) |.71 |.51 |39.2 |1.89 |2.07 |(8.7) |

|Realized Capital Gains After-tax |129 |99 |30.3 |276 |664 |(58.4) |

|Dividends on Preferred Securities of Subsidiary Trusts | | | | | | |

| |10 |10 |-- |32 |29 |10.3 |

|Net Income |644 |490 |31.4 |1,664 |2,295 |(27.5) |

|Net Income Per Share (Diluted) |.87 |.62 |40.3 |2.21 |2.84 |(22.2) |

|Weighted Average Shares Outstanding (Diluted) | | | | | | |

| |740.6 |793.9 |(6.7) |753.4 |807.0 |(6.6) |

• For the third quarter of 2000, consolidated revenues increased to $7.45 billion, an increase of 13.6 percent over the third quarter of 1999.

• Property-liability written premiums increased 9.4 percent to $5.64 billion during the quarter versus $5.16 billion during the same period in 1999, due to the acquisition of EncompassSM Insurance (formerly CNA Personal Insurance) in 1999, and growth of standard auto and homeowners policies in force over the third quarter of last year, partly offset by planned reductions in non-standard auto. Excluding the impacts of Encompass, written premiums increased 0.2 percent over the third quarter of 1999.

• Life and savings statutory premiums and deposits increased 46.3 percent as variable and fixed annuity sales increased during the quarter as compared to the third quarter of 1999.

• Consolidated operating income for the third quarter of 2000 was $525 million or $.71 per share, on a diluted basis. Prior year third quarter operating income was $401 million or $.51 per diluted share. Operating income increased during the quarter as increased premiums were offset by increased loss costs.

• During the third quarter of 2000, the company acquired approximately 7.8 million shares of its stock, at a cost of $236 million as part of its current stock repurchase program, bringing this year’s total repurchases under the current program to $1.02 billion through September 30, 2000.

|Property-Liability Highlights |

| |Quarter Ended |Nine Months Ended |

| |September 30 |September 30 |

| | Est. 2000 | | |Est. | | |

| |$ |1999 |Change |2000 |1999 |Change |

|($ In millions, except ratios) | |$ |% |$ |$ |% |

|Property-Liability | | | | | | |

|Premiums Written |5,644 |5,158 |9.44 |16,604 |15,024 |10.5 |

|Property-Liability Revenues |6,116 |5,561 |10.0 |18,257 |16,929 |7.8 |

|Operating Income before Restructuring Charges | | | | | | |

| |421 |302 |39.4 |1,094 |1,389 |(21.2) |

|Restructuring Charges After-tax |13 |-- |-- |42 |-- |-- |

|Operating Income |408 |302 |35.1 |1,052 |1,389 |(24.3) |

|Realized Capital Gains After-tax |119 |93 |28.0 |329 |579 |(43.2) |

|Net Income |527 |395 |33.4 |1,381 |1,954 |(29.3) |

|Catastrophes After-tax |62 |172 |(64.0) |549 |434 |26.5 |

|Combined Ratio before impacts of Catastrophes and | | | | | | |

|Restructuring Charges: | | | | | | |

| |96.5 |96.2 |.3 pts |94.3 |91.9 |2.4 pts |

|Impact of Catastrophes | | | | | | |

|Impact of Restructuring Charges |1.7 |5.4 |(3.7) pts |5.1 |4.5 |.6 pts |

| |.4 |-- |.4 pts |.4 |-- |.4 pts |

|Combined Ratio | | | | | | |

| |98.6 |101.6 |(3.0) pts |99.8 |96.4 |3.4 pts. |

|Life and Savings Highlights |

| |Quarter Ended |Nine Months Ended |

| |September 30 |September 30 |

| |Est. | | |Est. | | |

| |2000 |1999 |Change |2000 |1999 |Change |

|($ In millions) |$ |$ |% |$ |$ |% |

|Statutory Premiums and Deposits |3,338 |2,282 |46.3 |9,580 |5,828 |64.4 |

|Life and Savings GAAP Revenues |1,304 |979 |33.2 |3,614 |2,973 |21.6 |

|Operating Income before Restructuring Charges | | | | | | |

| |132 |103 |28.2 |396 |301 |31.6 |

|Restructuring Charges After-tax |(1) |-- |-- |(9) |-- |-- |

|Operating Income |133 |103 |29.1 |405 |301 |34.6 |

|Realized Capital Gains (Losses) After-tax | | | | | | |

| |11 |11 |-- |(29) |91 |(131.9) |

|Net Income |144 |114 |26.3 |376 |392 |(4.1) |

|Investments including Separate Accounts | | | | | | |

| |55,190 |44,158 |25.0 |55,190 |44,158 |25.0 |

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Allstate Insurance Company Street City, State Zip T 888.555.1234 F 888.555.1256 E someone@

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