2 nuedLines and Coverage sProperty 6248 1

Please refer to the "Effect of Pre-tax Prior Year Reserve Reestimates on the Combined Ratio" table for detailed reserve reestimate information. THE ALLSTATE CORPORATIONPROPERTY-LIABILITYEFFECT OF PRE-TAX PRIOR YEAR RESERVE REESTIMATES ON THE COMBINED RATIOThree Months Ended December 31, Effect of Pre-taxReservePre-tax Reestimates on the Reserve Reestimates (1) Combined Ratio($ inEst.2007Est.2007 millions20082008 , except ratios) Auto$70$(22 )1.1(0.3) Homeowne844 0.10.7 rsOther(20) 10 (0.3)0.1Allstate58 32 0.90.5 Protecti on (2) Disconti416 0.10.2 nuedLines and Coverage sProperty $62$48 1.00.7 -Liabili ty Allstate $67$17 1.00.3 brand Encompas(9 ) 15 (0.1)0.2 s brandAllstate $58$32 0.90.5 Protecti on (2)Twelve Months Ended December 31,Effect of Pre-taxReservePre-tax Reestimates on the Reserve Reestimates (1) Combined Ratio($ inEst.2007Est.2007 millions20082008 , except ratios) Auto$(24)$(311)(0.1)(1.1) Homeowne1241150.50.4 rsOther54 (23 )0.2(0.1)Allstate154(219)0.6(0.8) Protecti on (3) Disconti18 47 0.10.2 nuedLines and Coverage sProperty $172 $(172)0.7(0.6) -Liabili ty Allstate $157 $(167)0.6(0.6) brand Encompas(3 ) (52 )-(0.2) s brandAllstate $154 $(219)0.6(0.8) Protecti on (3)(1)Favorable reserve reestimates are shown in parentheses. (2)There were no net reserve reestimates included in catastrophelosses in the three months ended December 31, 2008. Unfavorablereserve reestimates included in catastrophe losses totaled $26 million in the three months ended December 31, 2007.(3)Unfavorable reserve reestimates included in catastrophe losses totaled $125 million and $127 million in the twelve months ended December 31, 2008 and 2007, respectively. THE ALLSTATE CORPORATION INVESTMENT RESULTS Three Months EndedTwelve Months Ended December 31,December 31,Est Est. ($ in millions)2008 20072008 2007NET INVESTMENT INCOME Fixed income securities: Tax-exempt$240$242 $961$969 Taxable886 1,1203,822 4,490Equity securities 3328 120 114Mortgage loans148 159618 600Limited partnership interests (1) (4) 88 62293Short-term 4247 195 221Other1648 54191 Investment income 1,361 1,7325,832 6,878Less: Investment expense32105210 443 Net investment income$1,329$1,627 $5,622$6,435REALIZED CAPITAL GAINS AND LOSSES (PRE-TAX) Sales $(357)$422 $(464)$1,483Impairment write-downs (3)(652) (126 ) (1,983) (163 ) Change in intent write-downs (3)(241) (38) (1,752) (147 ) Valuation of derivative instruments (884) (166 ) (1,280) (77) Equity method of accounting income (1)(97 ) -(97 ) -Settlements of derivative instruments 299 6486 139 Realized capital gains and losses $(1,932)$98$(5,090)$1,235 (pre-tax)Dec 31, Dec. EMA LP income for periods prior to the fourth quarter of 2008 is reported in net investment income.

The amount of EMA LP income included in net investment income was $109 million, $24 million and $198 million in the three months ended December 31, 2007, the nine months ended September 30, 2008, and the twelve months ended December 31, 2007, respectively.(2)At December 31, 2008, we have commitments to invest in additional limited partnership interests totaling $805 million, $1.08 billion and $8 million for Property-Liability, Allstate Financial and Corporate and Other, respectively.(3)Impairment write-downs reflect issue specific other-than-temporary declines in fair value, including instances where we could not reasonably assert that the recovery period would be temporary. Change in intent write-downs reflect instances where we cannot assert a positive intent to hold until recovery. THE ALLSTATE CORPORATIONCOMPONENTS OF UNREALIZED CAPITAL GAINS AND LOSSES ON FIXED INCOME SECURITIES (PRE-TAX)December 31, 2008 (Est.)Amortized Fair Fair Value to($ in millions)CostGains LossesValue Amortized Cost (1) CorporateUtilities $5,383$132$(434 )$5,081 94.4Consumer goods5,072 54(486 ) 4,640 91.5(cyclical and non-cyclical) Banking4,378 93(943 ) 3,528 80.6Financial 3,604 23(571 ) 3,056 84.8services Capital goods 3,048 43(299 ) 2,792 91.6Communications1,918 19(188 ) 1,749 91.2Transportation1,706 26(179 ) 1,553 91.0Basic industry1,661 6 (183 ) 1,484 89.3Energy 1,652 15(145 ) 1,522 92.1Technology 1,006 18(105 ) 919 91.4Other1,612 34(343 ) 1,303 80.8 Total corporate fixed31,040463 (3,876 ) 27,62789.0 income portfolioMunicipal23,565467 (2,184 ) 21,84892.7 Commercial mortgage5,840 10(2,004 ) 3,846 65.9 -backed securities Asset-backed6,319 13(2,472 ) 3,860 61.1 securitiesMortgage-backed 4,826 85(419 ) 4,492 93.1 securitiesU.S. government and 3,272 963 (1 ) 4,234 129.4agenciesForeign government2,206 544 (75) 2,675 121.3Redeemable preferred36- (10) 2672.2 stockTotal fixed income $77,104 $2,545$(11,041)$68,60889.0 securitiesDecember 31, 2007 Amortized Fair Fair Value to($ in millions)CostGains LossesValue Amortized Cost (1) CorporateUtilities $5,778$250$(72)$5,956 103.1 Consumer goods6,030 101 (113 ) 6,018 99.8(cyclical and non-cyclical) Banking6,539 78(227 ) 6,390 97.7Financial 5,343 54(180 ) 5,217 97.6services Capital goods 3,597 79(44) 3,632 101.0 Communications2,474 68(25) 2,517 101.7 Transportation1,907 45(31) 1,921 100.7 Basic industry2,022 47(14) 2,055 101.6 Energy 1,752 51(8 ) 1,795 102.5 Technology 1,114 23(10) 1,127 101.2 Other1,821 56(38) 1,839 101.0Total corporate fixed38,377852 (762 ) 38,467100.2income portfolioMunicipal24,587816 (96) 25,307102.9Commercial mortgage7,925 79(387 ) 7,617 96.1 -backed securities Asset-backed9,495 30(846 ) 8,679 91.4 securitiesMortgage-backed 7,002 57(100 ) 6,959 99.4 securitiesU.S. government and 3,503 918 -4,421 126.2agenciesForeign government2,542 397 (3 ) 2,936 115.5Redeemable preferred642 (1 ) 65101.6stockTotal fixed income $93,495 $3,151$(2,195 )$94,451101.0securities(1)Comparing percentages from period to period may be distorted by investment transactions such as sales, purchases and impairment write-downs.

THE ALLSTATE CORPORATIONCONSOLIDATED STATEMENTS OF FINANCIAL POSITION December 31,December 31,($ in millions, except par value data) 2008 (Est.) 2007 AssetsInvestments Fixed income securities, at fair value(amortized cost $77,104 and $93,495) $68,608$94,451Equity securities, at fair value (cost $3,137 and2,8055,257 $4,267) Mortgage loans 10,229 10,830Limited partnership interests2,7912,501 Short-term, at fair value (amortized cost $8,903 and 8,9063,058 $3,058) (1) Other2,6592,883 Total investments (2) 95,998 118,980 Cash415422Premium installment receivables, net 4,8424,879Deferred policy acquisition costs8,5425,768Reinsurance recoverables, net6,4035,817Accrued investment income8841,050Deferred income taxes3,794467Property and equipment, net1,0591,062Goodwill 874825Other assets 3,7482,209Separate Accounts8,23914,929Total assets $134,798 $156,408 LiabilitiesReserve for property-liability insuranceclaims and claims expense $19,456$18,865 Reserve for life-contingent contract benefits12,881 13,212 Contractholder funds 58,413 61,975 Unearned premiums10,024 10,409 Claim payments outstanding 790748Other liabilities and accrued expenses 6,6958,779Long-term debt 5,6595,640Separate Accounts8,23914,929Total liabilities 122,157134,557 Shareholders' equity Preferred stock, $1 par value, 25 million shares authorized, none issued Common stock, $.01 par value, 2.0 billion sharesauthorized and 900 million issued, 536 millionand 563 million shares outstanding 99Additional capital paid-in 3,1303,052Retained income30,207 32,796 Deferred ESOP expense(49) (55) Treasury stock, at cost (364 million and 337 million shares) (15,855) (14,574) Accumulated other comprehensive income: Unrealized net capital gains and losses (3)(3,738 ) 888 Unrealized foreign currency translation adjustments579Unrecognized pension and other postretirement benefit(1,068 ) (344 )costTotal accumulated other comprehensive (loss) income (4,801 ) 623 Total shareholders' equity12,641 21,851Total liabilities and shareholders' equity $134,798 $156,408 (1)Increases in the short-term balance reflect actions taken to enhance liquidity position. For further information on potential liquidity needs, see the Capital Management and Liquidity section.(2)Total investments include $30,837 for Property-Liability, $61,499 for Allstate Financial and $3,662 for Corporate and Other investments at December 31, 2008. Total investments include $40,905 for Property-Liability, $74,256 for Allstate Financial and $3,819 for Corporate andOther investments at December 31, 2007. (3)After-tax unrealized net capital gains and losses at December 31, 2008 include net gains and losses on fixed income securities, equity securities, short-term investments and derivatives of $(3,533) million, $(214) million, $2 million and $7 million, respectively.

After-tax unrealized net capital gains and losses at December 31, 2007 include net gains and losses on fixed income securities, equity securities and derivatives of $266 million, $644 million and $(22) million, respectively. THE ALLSTATE CORPORATIONCONSOLIDATED STATEMENTS OF CASH FLOWS December 31,December 31,($ in 2008 (Est.) 2007millions ) Cash flows from operating activities Net (loss) income$(1,679 )$4,636Adjustments to reconcile net (loss) income to net cashprovided by operating activities: Depreciation, amortization and other non-cash(376 ) (257 ) itemsRealized capital gains and losses5,090(1,235 ) Loss on disposition of operations610 Interest credited to contractholder funds2,4112,681Changes in:Policy benefit and other insurance reserves 626(192 ) Unearned premiums (359 ) (74) Deferred policy acquisition costs 141(37) Premium installment receivables, net18 (62) Reinsurance recoverables, net (269 ) (240 ) Income taxes(1,864 ) (52) Other operating assets and liabilities165255Net cash provided by operating activities 3,9105,433Cash flows from investing activities Proceeds from sales Fixed income securities22,936 23,462 Equity securities9,5359,127Limited partnership interests371800Mortgage loans 279-Other investments171173Investment collectionsFixed income securities4,2695,257Mortgage loans 8441,649Other investments98 395Investment purchasesFixed income securities(14,448) (26,401) Equity securities(9,477 ) (7,902 ) Limited partnership interests(982 ) (1,375 ) Mortgage loans (500 ) (2,936 ) Other investments(140 ) (763 ) Change in short-term investments, net (8,283 ) (1,323 ) Change in other investments, net(474 ) (7 ) (Acquisition) disposition of operations (120 ) 3Purchases of property and equipment, net(291 ) (274 ) Net cash provided by (used in) investing 3,788(115 ) activities Cash flows from financing activities Change in short-term debt, net-(12) Proceeds from issuance of long-term debt20 987Repayment of long-term debt (1 ) (9 ) Contractholder fund deposits9,9848,632Contractholder fund withdrawals (15,480) (10,599) Dividends paid(889 ) (901 ) Treasury stock purchases(1,323 ) (3,604 ) Shares reissued under equity incentive plans, net 33 109Excess tax benefits from share-based payment329 arrangementsOther (52) 29 Net cash used in financing activities(7,705 ) (5,339 ) Net decrease in cash (7 ) (21) Cash at beginning of year422443Cash at end of year $415 $422PROPERTY-LIABILITY RESULTS($ in millions, except ratios)Three months endedTwelve months ended December 31,December 31,Property-Liability Highlights Est. 2007 Est.2007 2008Change2008ChangePremiums written $ 6,301 $ 6,560(3.9)$ 26,584$ 27,183(2.2 ) Underwriting income243 276(12.0 )164 2,784 (94.1) Operating income 465 562(17.3 )1,438 3,343 (57.0) Net (loss) income (53)744(107.1)228 4,258 (94.7) Combined ratio96.495.9 0.5 pts.99.489.89.6 pts.Underlying combined ratio 91.588.6 2.9 pts.86.885.71.1 pts.Catastrophe losses260 472(44.9 )3,342 1,409 137.2 Property-Liability premiums written declined 3.9 in the fourth quarter of2008 from the fourth quarter of 2007. Excluding the impact of the catastrophereinsurance program, Property-Liability premiums written declined 5.1 in thequarter.