Allstate : Q1 2020 Earnings Call Presentation

®

The Allstate Corporation

First Quarter 2020 Earnings Presentation May 6, 2020

Forward-Looking Statements and Non-GAAP Financial Information

Company Participants

Tom Wilson, Chair, President and Chief Executive Officer

Don Civgin, Vice Chair

Mario Rizzo, Chief Financial Officer

Glenn Shapiro, President of Personal Property-Liability

John Dugenske, President of Investments and Financial Products

John Pintozzi, Controller and Chief Accounting Officer

Mark Nogal, Director of Investor Relations

This presentation contains forward-looking statements and information. Additional information on factors that

could cause results to differ materially from those projected in this presentation is available in the 2019 Form 10-K, in our most recent earnings release, and at the end of these slides. These materials are available on our website,

www.allstateinvestors.com, under the "Financials" link.

This presentation also contains some non-GAAP measures that are denoted with an asterisk. You can find the reconciliation of those measures to GAAP measures within our most recent earnings release or investor

supplement. These materials are available on our website, www.allstateinvestors.com, under the "Financials" link.

Allstate Earnings Conference Call Presentation: May 6, 2020	1

Allstate Acted Quickly and Led the Industry in Helping Customers

Customers

Business

Processes

Employees and

Agents

Financial Position

• Shelter-in-PlacePayback of over $600 million
• Special Payment Plan provides payment flexibility
• Expanded coverage to support commercial use of vehicles
• Free Allstate Identity Protection for remainder of year (all U.S. residents)
• Executed business continuity plans
• Expanded virtual sales and service support capabilities
• Leveraged digital innovations for safety and effectiveness (QFC, Virtual Assist, inspections)
• Maximized work from home across brands and global locations
• Relaxed Allstate agency requirements (hours and new sales requirements)
• Introduced leave for pandemic medical volunteers
• Modified agency compensation programs to stabilize cash flow
• $3.4 billion of holding company assets and liquidity in excess of $8 billion
• Reduced equity holdings by $4 billion in February 2020
• Executing share repurchase program

	▪	Allstate Foundation contributed $5 million to support local communities, domestic
Communities	▪	violence victims, youth in need and first responders
	Doubled employee and agency donation match

Allstate Earnings Conference Call Presentation: May 6, 2020	2

Allstate's Strategy Drives Profitable Growth

Increase Personal

Property-Liability Market Share

• Differentiated Products
• Sophisticated Pricing
• Claims Expertise
• Integrated Digital Enterprise

Leveraging Allstate Brand

and Capabilities

Expand Protection Businesses

• Circle of Protection for Customers
• Innovative Growth Platforms
• Broad Distribution
• SupportProperty-Liability Businesses

2020 Operating Priorities

• Better Serve Customers
• Grow Customer Base
• Achieve Target Returns on Capital
• Proactively Manage Investments
• BuildLong-Term Growth Platforms

Allstate Earnings Conference Call Presentation: May 6, 2020	3

Allstate Had Strong Operating and Financial Results

• Revenues of $10.1 billion reflects realized capital losses
• Adjusted net income* increased to $1.1 billion ($3.54 per share) due to strong underwriting results
• Adjusted net income return on common shareholders' equity* of 18.2% for the latest 12 months

		Three months ended
			March 31,
($ in millions, except per share data and ratios)	2020	2019	Change
Total revenues		$10,076	$10,990	(8.3)%
Total revenues (excl. realized capital gains and losses)	10,538	10,328	2.0%
Property-Liability insurance premiums	8,881	8,507	4.4%
Net investment income	421	648	(35.0)%
Realized capital gains and losses	(462)	662	NM
Income applicable to common shareholders:
Net income		513	1,261	(59.3)%
per diluted common share	1.59	3.74	(57.5)%
Adjusted net income*		1,140	776	46.9%
per diluted common share*		3.54	2.30	53.9%
Return on common shareholders' equity (trailing twelve months)
Net income applicable to common shareholders	18.0%	10.8%	7.2 pts
Adjusted net income*	18.2%	13.5%	4.7 pts

NM = not meaningful

Allstate Earnings Conference Call Presentation: May 6, 2020	4

Property-Liability Results Remain Strong

• Policy and premium growth continued with strong recorded and underlying profitability
• Underwriting income of $1.3 billion increased by $645 million compared to the prior year quarter
• • Improvement driven by lower catastrophe losses, increased premiums earned and lower auto accident frequency, partially offset by higher severity andShelter-in-Place Payback expense
• Expense ratio excluding theShelter-in-Place Payback expense of $210 million was 23.4 and improved by 1.0 point compared to the prior year quarter

Property-Liability Results

($ in millions)	Q1 2020	Q1 2019		Var PY
Net Premiums Written	$8,592	$8,327		3.2%
Premiums Earned	8,881	8,507		4.4%
Policies in Force (in thousands)	33,585	33,387		0.6%
Underwriting Income	1,345	700	92.1%
Catastrophe Losses	211	680	(69.0)%
Shelter-in-Place Payback expense	210	-		NM
(% to premiums earned)
Loss Ratio	59.1	67.4	(8.3) pts
Expense Ratio	25.8	24.4		1.4 pts
Expense Ratio ex. Shelter-in-Place Payback	23.4	24.4	(1.0) pts
Combined Ratio	84.9	91.8	(6.9) pts
Underlying Combined Ratio*	82.2	84.2	(2.0) pts

Property-Liability Expense Ratio

25.8

25.1

24.124.4

2.4

23.4

2018

2019

Q1 2019

Q1 2020

Shelter-in-Place Payback Expense Ratio Impact

Expense Ratio ex. Shelter-in-Place Payback

Allstate Earnings Conference Call Presentation: May 6, 2020	5

Investment Income Reflects Market Decline and Lower Performance-based Results

• First quarter GAAP total return reflects investment valuation declines and lower net investment income

Net Investment Income

																Q1 2020	Var PYQ
($M)												Market-based	$674	(2.7)%
											Performance-based	(208)	NM
$1,300													Expense ex ILE (2)	(45)	(11.8)%
											942		Total			$421	(35.0)%
$1,100		786	824	844	786			880
$900
											689
	181	176	214	145	648		261	202		421
$700		6					-
$500		652	696	683	696	693		731	727	735		674
$300
$100
-$100																(208)
-$300
	Q1			Q2		Q3	Q4	Q1		Q2		Q3	Q4		Q1
						2018					2019			2020
					Market-based	Performance-based			Expense ex ILE(2)
Total Return	(0.5)	0.5		1.1	(0.2)	3.3		2.8		1.9	1.3		(2.4)
Total TTM(1)	3.8	2.5		2.1	0.8	4.7		7.0		7.8	9.2		3.6

• Performance-basedlosses included investment-specificwrite-downs and adjustments to reflect significant equity market decline
• • $137 millionwrite-downs on four underperforming private equity investments
  • Limited partnership interests included updated valuation adjustments where measurable
  • • Valuations are generally recorded on aone-quarter lag, which for this period is fourth quarter 2019 financial statements
    • Limited partnerships holding publicly traded investments reduced by $52 million to reflect 3/31/2020 market prices
    • Excluded $195 million of valuation increases from fourth quarter 2019 partnership financial statements

(1)Trailing twelve months

(2)Investee level expenses (ILE) comprise asset level operating expenses are netted against market-based and performance-based income. Beginning January 1, 2020, depreciation previously included in ILE is reported as realized capital gains or losses

Allstate Earnings Conference Call Presentation: May 6, 2020	6

Proactive Portfolio Management Enhanced Returns

• Portfolio positioning mitigated impact of market downturn
• • Predominantly investment grade portfolio with substantial liquidity
  • Extended fixed income portfolio duration in 2018 and 2019, enhancing income and return
  • Conservatively positioned in pandemic sensitive sectors (e.g. energy, retail, restaurants, lodging)
  • Reduced public equity exposure by approximately $4 billion in February 2020, limiting losses

Portfolio Allocation as of March 31, 2020 (1)

	Equity Exposure Reduction in Q1 2020
($M)	S&P Index

($B)

Short Term:

Other:

7,500	Average	3600
	sale price

$5.7 , 7%

Performance-based: $8.4 , 10%

Public Equity: $2.2 , 3%

$1.6 , 2%

6,500	equivalent to	3400
3,281 S&P level
	3200
5,500		3000
4,500		2800

Mortgage Loans:	Inv. Grade FI:
$4.7 , 5%
$54.0 , 63%

Below Inv. Grade

FI/Bank Loans:

$8.2 , 10%

Total CV $84.8B

3,500			2600
	Public Equity Exposure		2400
	S&P500
2,500
		2200
1,500			2000
12/31/2019	1/31/2020	2/29/2020	3/31/2020

1. Fixed income ETFs are included in their respective risk category (investment grade or below investment grade fixed income). As of Q1 2020 and Q4 2019, FI ETFs totaled $1.39B and $1.79B,respectively, and were included in equity securities in our consolidated balance sheet

Allstate Earnings Conference Call Presentation: May 6, 2020	7

Allstate Life and Benefits Generated Attractive Returns; Allstate Annuities Had A Substantial Loss

• Allstate Life adjusted net income of $80 million increased $7 million from the prior year quarter, driven by lower operating costs and expenses
• Allstate Benefits adjusted net income of $24 million was $7 million lower than the prior year quarter
• Allstate Annuities adjusted net loss of $139 million in the first quarter primarily related to losses onperformance-based investments from lower limited partnership valuations

Adjusted Net Income

										Allstate Life																					Allstate Benefits																				Allstate Annuities
																				YTD			Var PY																							YTD			Var PY																														YTD	Var PY
								Adjusted Net Income	$80				9.6%														Adjusted Net Income	$24	(22.6)%																			Adjusted Net Loss	$(139)		NM
	($M)		Premiums & Contract Charges	$333	(1.2)%					($M)		Premiums & Contract Charges	$282			(2.1)%					($M)									Investment Spread	$(138)		NM
	$71	$80	$75	$69	$73	$68					$76	$80
							$44														$36											$37
																																$29	$33	$26	$31	$31				$24
																																																							$16						$35	$44	$20	$32				$52	$16
																																																																																		($25)
																																																																																										($33)
																																																																																															($139)
		Q1		Q2		Q3		Q4		Q1		Q2		Q3			Q4			Q1					Q1		Q2		Q3			Q4		Q1		Q2		Q3			Q4			Q1						Q1		Q2			Q3			Q4		Q1		Q2			Q3		Q4			Q1
				2018								2019						2020							2018									2019						2020									2018											2019						2020

NM = not meaningful

Allstate Earnings Conference Call Presentation: May 6, 2020	8

Service Businesses Growth Continues; Adjusted Net Income Improves

• Policies in force increased 35.4% to 113.7 million, primarily due to Allstate Protection Plans
• Revenues(1)of $454 million increased 18.2% to the prior year quarter, driven by Allstate Protection Plans
• Adjusted net income of $37 million in the quarter increased $26 million compared to prior year quarter
• • Increase driven by growth at Allstate Protection Plans and improved profitability at Allstate Roadside Services

Service Businesses Revenues (1)

($M)												$454
														$423
										$396	$414		28
									$384
								$361		23		24
					$329			23
$317	$322			24
	16
										164	175		184	219
								141	157
				123	127
124
21	21	22		24	24	25	35		35	30
98	101	103		105	106	111	113		115	117
74	77	77		75	73	73	68		65	60
	Q1	Q2		Q3		Q4	Q1	Q2		Q3		Q4	Q1
					2018					2019			2020
			Allstate Roadside Services		Allstate Dealer Services		Arity
			Allstate Protection Plans		Allstate Identity Protection

Service Businesses Results

($ in millions)	Q1 2020	Var PY
Revenues (1)		$454	18.2%
Adjusted Net Income		$37	$26
Allstate Protection Plans		34	20
Arity		(3)	(1)
Allstate Roadside Services		2	8
Allstate Dealer Services		7	1
Allstate Identity Protection		(3)	(2)
Policies in Force
(in thousands)		113,728	35.4%

(1)Service Business Revenues exclude the impact of realized capital gains and losses

Allstate Earnings Conference Call Presentation: May 6, 2020	9

Attractive Returns and Strong Capital Position

• Strong capital and liquidity position
• • Deployable holding company assets of $3.4 billion
  • Highly liquid securities generally saleable within one week of $8.8 billion
• Adjusted net income return on equity* of 18.2%
• Returned $670 million to common shareholders in the first quarter
• • Share repurchases of $511 million
  • Common dividends of $159 million

Capital Position

	3/31/2020	12/31/19
Total Shareholders' Equity ($ in billions)	$24.17	$26.00
Debt-to-Capital Ratio	21.5%	20.3%
Book Value per Common Share	$69.67	$73.12
Deployable Holding Company Assets ($ in billions)	$3.41	$2.30
Amount Remaining on Share Repurchase Authorization
- To Be Completed by End of 2021 ($ in billions)	$2.75	-

Allstate Earnings Conference Call Presentation: May 6, 2020	10

Coronavirus Impacts Auto Insurance Profit and Growth

Factors Impacted by Coronavirus and Potential Impact (1)

Profit

• Lower loss costs due to fewer accidents reflecting a reduction in miles driven
• Increased severity per claim with higher speed accidents
• Extension of payment terms likely to increase bad debt expense
• Higher severity if auto parts prices increase because supply chain is disrupted or auto manufacturers raise prices

Growth

• Lower required rate increases due to reduced loss costs
• Customer actions, includingShelter-in-Place Payback, should have positive retention impact
• Varied impacts on new business
• • Lower vehicle sales
  • Increased unemployment
  • Projected higher shopping rates
• Consumer interest in telematics is increasing; Drivewise® and Milewise® are well positioned

(1)Grid is for illustrative purposes only; does not include all potential impacts

Allstate Earnings Conference Call Presentation: May 6, 2020	11

Arity's Telematics Platform Provides Unique Insights Into Driving Behavior

• Broad telematics ecosystem used to assess coronavirus operating environment
• • 23+ million vehicles
  • 3.5 billion trips; 38 billion miles; Feb 2, 2020 to May 1, 2020

	Stay At Home States Have Greater Reductions		Urban Driving Declines More Than Rural

		Some drivers are driving more				Driving Safety Score Has Declined

Note: These insights are based on representative samplings of data from Arity's multi-source dataset. That dataset includes anonymized and aggregated driving behavior data from multiple insurance and
non-insurance sources and is not solely reflective of any Arity affiliate companies or any other particular source or industry. The data is collected via both mobile app and on-board device methods.	12
Allstate Earnings Conference Call Presentation: May 6, 2020

Utilizing Scenarios for Pandemic Crisis to Balance Risk and Return

• Scenario planning provides a framework to:
• • Understand potential outcomes and the impact on our businesses
  • Identify actions that should and should not be taken
  • Enhance ability to forecast
• Two primary drivers of future environment: severity of the pandemic and economic impact

Allstate Earnings Conference Call Presentation: May 6, 2020	13

Scenarios Provide Construct for Prospective Actions

Potential Impact

1. Revenue growth will be constrained
2. Investment markets will be volatile
3. Coronavirus will accelerate utilization of technology
4. Higher consumer value placed on quality and breadth of protection

Actions

1. Accelerate Transformative Growth
2. Evaluating strategic asset allocation
3. Increased focus on telematics and Integrated Digital Enterprise
4. Expand protection offerings

Allstate Earnings Conference Call Presentation: May 6, 2020	14

®

Allstate Earnings Conference Call Presentation: May 6, 2020	15

Forward-Looking Statements

• This presentation contains"forward-looking statements" that anticipate results based on our estimates, assumptions and plans that are subject to uncertainty. These statements are made subject to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements do not relate strictly to historical or current facts and may be identified by their use of words like "plans," "seeks," "expects," "will," "should," "anticipates," "estimates," "intends," "believes," "likely," "targets" and other words with simi lar meanings. We believe these statements are based on reasonable estimates, assumptions and plans. If the estimates, assumptions or plans underlying the forward-looking statements prove inaccurate or if other risks or uncertainties arise, actual results could differ materially from those communicated in these forward-looking statements. Factors that could cause actual results to differ materially from those expressed in, or implied by, the forward-looking statements include risks related to:
• • Insurance and Financial Services (1) unexpected increases in claim frequency and severity; (2) catastrophes and severe weather events;
  • 1. limitations in analytical models used for loss cost estimates; (4) price competition and changes in underwriting standards (5) actual claims costs exceeding current reserves ; (6) market risk and declines in credit quality of our investment portfolio; (7) our subjective determination of fair value and the amount of realized capital losses recorded for impairments of our investments;(8) the impact of changes in market interest rates orperformance-based investment returns on our annuity business; (9) the impact of changes in reserve estimates and amortization of deferred acquisition costs on our life, benefits and annuity businesses; (10) our participation in indemnification programs, including state industry pools and facilities; (11) our ability to mitigate the capital impact associated with statutory reserving and capital requirements; (12) a downgrade in financial strength ratings; (13) changes in tax laws;
  • Business, Strategy and Operations (14) competition in the insurance industry and new or changing technologies; (15) implementation of our transformative growth plan; (16) our catastrophe management strategy; (17) restrictions on our subsidiaries' ability to pay dividends;
  • 1. restrictions under terms of certain of our securities on our ability to pay dividends or repurchase our stock; (19) the availability of reinsurance at current level and prices; (20) counterparty risk related to reinsurance; (21) acquisitions and divestitures of businesses; (22) intellectual property infringement, misappropriation andthird-party claims;
  • Macro, Regulatory and Risk Environment (23) conditions in the global economy and capital and credit markets; (24) a large scale pandemic, such as the Novel Coronavirus Pandemic orCOVID-19 and its impacts, or occurrence of terrorism or military actions; (25) the failure in cyber or other information security controls, or the occurrence of events unanticipated in our disaster recovery processes and business continuity planning; (26) changing climate and weather conditions;(27) restrictive regulations and regulatory reforms, including limitations on rate increases and requirements to underwrite business and participate in loss sharing arrangements; (28) losses from legal and regulatory actions; (29) changes in or the application of accounting standards; (30) loss of key vendor relationships or failure of a vendor to protect our data or confidential, proprietary and personal information; (31) our ability to attract, develop and retain key personnel; and (32) misconduct or fraudulent acts by employees, agents and third parties.
• Additional information concerning these and other factors may be found in our filings with the Securities and Exchange Commission, including the "Risk Factors" section in our most recent annual report on Form10-K. Forward- looking statements speak only as of the date on which they are made, and we assume no obligation to update or revise any forward-looking statement.

Allstate Earnings Conference Call Presentation: May 6, 2020	16