A.M. Best Affirms Financial Strength and Debt Ratings of Allstate; Revises Outlook of Certain Allstate Life Affiliates to Stable.

Business Editors

OLDWICK, N.J.--(BUSINESS WIRE)--Feb. 18, 2004

A.M. Best Co. has affirmed the financial strength and debt ratings for most of the property/casualty and life/health affiliates of The Allstate Corporation (Allstate) (NYSE:ALL) (Northbrook, IL). The rating outlook for Allstate Insurance Company and its core property/casualty affiliates remains positive. The outlook for certain of its life operations has been revised to stable from positive. The outlook for all other Allstate life affiliates remains stable. (See link below for complete details regarding the debt and financial strength ratings.)

The ratings reflect Allstate's superior financial strength, solid operating performance and considerable market presence. The strong capital position, stable balance sheet and excellent liquidity reflect management's conservative operating and financial strategies. Management's commitment to capital discipline is reflected in the relatively low financial leverage and favorable fixed charge coverage maintained at the corporation. The rating also acknowledges the additional liquidity provided through very strong cash flow, its Kennett Capital, Inc. investment company, the availability of lines of credit, access to the capital markets and its commercial paper program. Further, there is significant financial flexibility as evidenced by the recently announced increase in the shareholder dividend, along with a $1 billion addition to its current share repurchase program.

In recent years, Allstate has posted strong operating results in the core property/casualty business, reflecting improved rate adequacy, more stringent risk segmentation and prudent expense management. Particularly noteworthy was the considerable profitability improvement in the homeowners line, despite significant catastrophes during 2003.

A consideration relative to these positive rating factors is Allstate's reserve development patterns in calendar years 2001 and 2002. Recently, however, reserve development has begun to trend more favorably on the core lines of business. Prior to 2001, the group consistently posted considerable loss reserve redundancies on its core automobile and homeowners lines. Nevertheless, due to a number of factors, adverse development occurred in accident years 2001 and 2000. Key drivers impacting loss reserve adequacy for these accident years were: unusual late reported loss emergence due to severe weather experienced at the end of 2000, late reported loss emergence and increased severity associated with mold-related losses and litigation related reserve re-estimates. In addition, the group posted unfavorable reserve development on its discontinued lines, primarily with regards to asbestos. Despite the recent improving reserving trend, continued monitoring is needed to determine the sustainability of these results.

A.M. Best views the outlook for the core property and casualty affiliates as positive based on Allstate's superior capitalization, solid operating performance and anticipation that reserve development on the core lines of business will continue to trend favorably.

The rating of Allstate Life Insurance Company (ALIC) (Northbrook, IL) and its rated core subsidiaries and affiliates reflects its strong strategic position within Allstate; diverse and competitive business profile enhanced by a broad product portfolio and wide distribution platforms; solid revenue and earnings; adequate capitalization and well-defined asset liability management. Partially offsetting these strengths are its evolving business strategies; the challenges of balancing an interest-sensitive book of business while sustaining healthy interest rate margins in a low interest rate environment, further improving profitability of its term life insurance and worksite businesses and an elevated but improving and manageable level of investment concentration relative to its capital and surplus positions.

For a complete listing of The Allstate Corporation's financial strength and debt ratings, visit www.ambest.com/press/021803allstate.pdf.

For a list of A.M. Best's debt ratings, please visit http://www3.ambest.com/debtratings/.

A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com.