A.M. Best Affirms Ratings of Allstate; Revises Selected Outlooks.

OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating (FSR) of A+ (Superior) and the issuer credit ratings (ICR) of "aa" of Allstate Insurance Group (Allstate) and its members. Additionally, A.M. Best has affirmed the ICR of "a" and all the debt ratings of Allstate's parent, The Allstate Corporation [NYSE: ALL] (both of Northbrook, IL). Concurrently, A.M. Best has affirmed the FSRs and ICRs of Allstate Financial's life/health member companies. A.M. Best has also affirmed the debt ratings of the outstanding notes issued under Allstate Life Insurance Company's (Northbrook, IL) various funding agreement-backed securities (FABS) programs. The outlook for all FSRs is stable, while the outlook for all ICRs and debt ratings has been revised to stable from negative. (See link below for a detailed listing of the ratings.)

Allstate's superior capital position reflects management's conservative operating philosophy and correspondingly strong balance sheet. Furthermore, management's commitment to capital discipline is reflected in the moderate 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 Kennett Capital, Inc. investment company, access to capital markets as well as its commercial paper program. Allstate's operating returns compare favorably to its industry composite peers due to its solid underwriting capabilities and increasing stream of investment income from its well-diversified investment portfolio. The favorable operating performance reflects Allstate's tightened underwriting guidelines, improved risk segmentation, adequate pricing and favorable loss trends. Furthermore, Allstate maintains an outstanding market presence as the second-largest personal lines writer.

Partially offsetting these positive rating attributes is Allstate's inherent exposure to natural disasters due to its expansive market presence throughout the United States. This exposure was particularly evident in recent years as net catastrophe losses totaled $5.7 billion in 2005, with an overall combined ratio impact of 21 points, and $2.5 billion in 2004, with an overall combined ratio impact of 10 points. In addition, as a result of these catastrophe losses and significant dividend payments to its parent, Allstate's statutory surplus declined in 2005, resulting in deterioration of risk-adjusted capitalization. Nevertheless, Allstate's operating results improved significantly in 2006, which enabled it to restore statutory surplus through retained earnings to a higher level than prior to the 2005 hurricane season. Furthermore, in 2005 and prior, Allstate had property catastrophe reinsurance protection only in some of the states that experienced significant losses. However, in 2006, Allstate executed an extensive catastrophe risk exposure reduction program, including an enhanced property catastrophe reinsurance program, non-renewals, stricter underwriting guidelines, policy transfers, increased deductibles and discontinuance of selected lines of coverage.

Based on the entire organization's improved statutory capital position and the resulting restoration of its risk-adjusted capitalization, as well as the implementation of various catastrophe risk management initiatives, A.M. Best revised the outlook for the ICRs and debt ratings to stable from negative.

The ratings of Allstate Financial's life/health members reflect its competitive market position, multi-channel distribution system, diverse earnings profile and its effective asset/liability risk management techniques with well-integrated investing practices. Partially offsetting the group's strengths are its exposure to interest sensitive lines of business, the challenge to increase cross sales between the property/casualty and life/health operations and significant historical dividends. In 2006, the dividends essentially represented a return of capital from the sale of the variable annuity business.

For a complete listing of The Allstate Corporation's FSRs, ICRs and debt ratings, please visit www.ambest.com/press/020604allstate.pdf.

Founded in 1899, A.M. Best Company is a full-service credit rating organization dedicated to serving the financial services industries, including the banking and insurance sectors. For more information, visit www.ambest.com.