A.M. Best Affirms Ratings of Allstate; Assigns Issuer Credit Ratings.

OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating of A+ (Superior) and has assigned issuer credit ratings (ICR) of "aa" to Allstate Insurance Group (Allstate) and its members. A.M. Best has also affirmed the debt ratings of The Allstate Corporation's (NYSE:ALL) (both of Northbrook, IL) existing debt securities. All the above ratings have a positive outlook. (See link below for a complete list of the ratings.)

In addition, as a result of A.M. Best's revised rating methodology for affiliated companies (please see "Rating Members of Insurance Groups", http://www.ambest.com/ratings/membergroups.pdf.), A.M. Best has revised its view of the rating enhancement received by Allstate's property/casualty operating affiliates. The affiliation rating codes for these companies have been revised to "g" (group) from "r" (reinsured). This revision is based on A.M. Best's review of the amount of protection ultimately afforded to policyholders by the affiliate reinsurance contracts, which is the basis for assignment of the affiliation code and financial strength rating. Although reinsurance protection is provided by Allstate Insurance Company (Allstate Insurance) (Northbrook, IL) to its affiliates, in A.M. Best's opinion, these reinsurance contracts do not sufficiently protect policyholders in the event Allstate Insurance were to terminate the contracts. However, the reinsurance agreements in conjunction with other explicit and implicit support provided by Allstate Insurance to its affiliates make them eligible for full rating enhancement.

The ratings reflect Allstate's superior financial strength, strong operating performance and significant market presence. The positive outlook is based on Allstate's superior capitalization and A.M. Best's expectation of continued favorable earnings.

Allstate's strong capital position reflects management's conservative operating philosophies and correspondingly stable balance sheet. Furthermore, management's commitment to capital discipline is reflected in the relatively low financial leverage maintained at The Allstate Corporation, as well as the additional liquidity provided at the holding company level through available lines of credit, its investment company Kennett Capital, Inc., access to the capital markets and its commercial paper program.

Allstate's strong operating performance is derived from its solid underwriting capabilities and consistent stream of investment income from a well-diversified conservative portfolio. The sustained favorable operating performance reflects Allstate's tightened underwriting guidelines, improved risk segmentation along with firm pricing conditions and favorable loss trends. Additionally, underwriting results in recent years reflect the favorable impact of Allstate's various expense management initiatives and its significant investment in technology. Allstate maintains an outstanding market presence as the second-largest personal lines writer.

The ratings also reflect Allstate's inherent exposure to natural disasters due to its expansive market presence throughout the country. Due to a number of factors, Allstate's core lines of business generated adverse development in prior accident years. In addition, Allstate posted unfavorable reserve development on its discontinued lines, primarily with regard to asbestos. Recently, improvement in loss reserve development patterns has been noted. However, continued monitoring is needed to determine the sustainability of these results.

Moreover, A.M. Best will need to further evaluate Allstate's enterprise risk management initiatives and assess the impact on its overall view of the group's risk-adjusted capitalization.

For a complete listing of The Allstate Corporation's financial strength, debt and issuer credit ratings, visit http://www.ambest.com/press/061003allstate.pdf.

For Best's Debt Ratings, all other Best's Ratings, an overview of the rating process and rating methodologies, please visit http://www.ambest.com/ratings.

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.