NEWS For Immediate Release Contact: Michael Trevino

Media Relations (847) 402-5600

Robert Block, Larry Moews, Phil Dorn Investor Relations (847) 402-2800 Allstate Reports 2002 Second Quarter Results

NORTHBROOK, Ill., July 18, 2002 -- The Allstate Corporation (NYSE: ALL) today reported net income of $344 million ($0.48 per diluted share) for the second quarter of 2002 compared to $168 million ($0.23 per diluted share) for the second quarter of 2001. Operating income was $453 million ($0.64 per diluted share), for the second quarter of 2002, compared to $230 million ($0.31 per diluted share) for the second quarter of 2001. Excluding restructuring charges for the second quarter of 2002, operating income was $476 million ($0.67 per diluted share) compared to $233 million ($0.32 per diluted share) for the same period in 2001. Operating income is defined as net income before the after-tax effects of realized capital gains and losses, gain (loss) on disposition of operations, dividends on preferred securities of subsidiary trust and the cumulative effect of changes in accounting principles. “We had a very solid quarter and our performance improvement strategies are working,” said Chairman, President and CEO Edward M. Liddy. “With two quarters behind us, we now anticipate that operating income per diluted share for 2002 will be in the range of $2.70 to $2.90 (excluding restructuring charges and assuming normal catastrophes) — $.20 higher than the estimate we issued at the beginning of the year. “The rate increases we have taken in our auto and homeowners lines continue to push premium written growth over prior year levels. We also continue to see improvements in loss frequencies in the auto and homeowners lines. Our underwriting strategies in targeted areas are proving successful. And expense control efforts are also favorably impacting margins. “Catastrophe losses in the quarter were $288 million, an amount that is within the normal experience for a second quarter, and includes the impact of the early season fires in Colorado and Arizona. In the second quarter of 2001 we experienced $537 million in catastrophe losses. “We saw an encouraging 6.3% growth rate in written premium for the Allstate brand standard auto line in the quarter over the prior year second quarter. In this line, the loss

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ratio for the quarter was 75.4 and we expect this ratio to improve in the second half of 2002. “We strengthened our reserve position by $68 million after tax ($0.10 per diluted share) for upward development of prior year claims, primarily in the homeowners line. Texas water and mold claims remain a challenge, playing a prominent role in our reserve actions this quarter. However, we remain on track to return the Allstate branded homeowners line to acceptable levels of profitability by mid-2003. “We are making good progress on controlling expenses. Excluding restructuring charges, our expense ratio for the second quarter of 2002 was 22.4, a 1.2 point decline from the second quarter of 2001 as expenses were flat with the prior year. "Allstate Financial's operating income of $143 million for the second quarter of 2002 was up 20.2% over the second quarter of 2001 due to increased investment and mortality margins. Statutory premium and deposits, including Allstate Bank deposits, were up 13.2% over the second quarter of 2001. “In the second quarter of 2002 compared to the second quarter of 2001, Allstate Financial saw sales of fixed annuities rise 47% while variable annuity sales were down 22% reflecting a change in investing attitudes among consumers. It is clear that there is considerable consumer interest in products that offer greater stability and guaranteed returns and Allstate Financial’s broad product portfolio has allowed it to capitalize on those changing consumer attitudes. “We continue to be encouraged with the progress that our exclusive agents are making in helping transform the company to a personal financial services company. Through the first six months of 2002 our exclusive agents have more than doubled their sales of Allstate Financial products compared to the same period in the prior year. “Overall, Allstate Financial continues to perform well in the very difficult market conditions in which we are operating.”

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Summary of results for the quarter and six months ended June 30, 2002:

Consolidated Highlights Quarter Ended

June 30 Six Months Ended

June 30 ($ in millions, except per-share amounts) Est.

2002 $

2001

$

Change

%

Est. 2002

$

2001

$

Change

% Consolidated Revenues 7,455 7,203 3.5 14,753 14,334 2.9Operating Income Before Restructuring Charges After-tax 476 233

104.3

977 790 23.7

Operating Income Per Share (Diluted) Before Restructuring Charges After-tax .67 .32

109.4

1.37 1.08 26.9

Restructuring Charges After-tax 23 3 -- 36 8 --Operating Income 453 230 97.0 941 782 20.3Operating Income Per Share (Diluted) .64 .31 106.5 1.32 1.07 23.4Realized Capital (Losses) Gains After-tax (107) (47) 127.7 (171) (80) 113.8Gain (Loss) on Disposition of Operations After-tax -- (6)

--

5 (6) (183.3)

Dividends on Preferred Securities of Subsidiary Trust(s) After-tax (2) (9)

(77.8)

(5) (19) (73.7)

Cumulative Effect of a Change in Accounting Principle After-tax -- --

--

(331) (9) --

Net Income 344 168 104.8 439 668 (34.3)Net Income per share (Diluted) .48 .23 108.7 .62 .91 (31.9)Weighted Average Shares Outstanding (Diluted) 712.1 728.5

(2.3)

712.9 729.4 (2.3)

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• The increase in second quarter 2002 consolidated revenues was due to increased Property-Liability premiums earned, partially offset by higher realized capital losses as compared to the same quarter in the prior year.

• The consolidated operating income increase in the second quarter of 2002 when

compared to the prior year quarter was due to: - increased Property-Liability premiums earned - lower catastrophe losses - improved auto and homeowners loss frequencies - increased Allstate Financial operating income

These factors were partly offset by: - increased reserves for prior accident years in Property-Liability - increased restructuring expenses

• Restructuring expenses incurred during the second quarter of 2002 totaled $35 million,

or $23 million after-tax and $0.03 per diluted share. Restructuring expenses for the first six months of 2002 totaled $55 million, or $36 million after-tax and $0.05 per diluted share. These expenses related to the previously announced realignment of the company’s claim offices, Customer Information Centers and other back-office operations.

• During the second quarter of 2002, Allstate purchased 4.1 million shares of its stock at

an average cost per share of $38.61 for an overall cost of $156 million. The total cost of shares repurchased under its current $500 million repurchase program through June 30, 2002 is $296 million. The company intends to complete this repurchase program by December 31, 2002.

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• The components of pre-tax realized capital gains (losses) were:

Est. Quarter Ended June 30, 2002

Quarter Ended June 30, 2001

($ in millions) Property- Liability

Allstate Financial

Corporate and Other

Total

Property- Liability

Allstate Financial

Corporate and Other

Total

Valuation of derivative instruments

$ (29) $ (16) $ -- $ (45) $ 10

$ 14 $ -- $ 24

Portfolio trading (58) 11 -- (47) 14 (26) (1) (13)Investment write-downs

(27) (32) (2) (61) (45) (37) -- (82)

Realized Capital Gains (Losses)

$(114) $(37) $ (2) $(153) $(21)

$(49) $ (1) $ (71)

Est. Six Months Ended June 30, 2002

Six Months Ended June 30, 2001

($ in millions) Property- Liability

Allstate Financial

Corporate and Other

Total

Property- Liability

Allstate Financial

Corporate and Other

Total

Valuation of derivative instruments

$ (24) $ (26) $ -- $ (50) $ (27)

$ (39) $ -- $ (66)

Portfolio trading (60) (40) (1) (101) 101 (21) 1 81Investment write-downs

(45) (58) (2) (105) (68) (69) -- (137)

Realized Capital Gains (Losses)

$(129) $(124) $ (3) $(256) $ 6

$ (129) $ 1 $(122)

• As of January 1, 2002, the company adopted Statement of Financial Accounting

Standard (“SFAS”) No. 142 “Goodwill and Other Intangible Assets.” As required by this statement, the company ceased amortizing goodwill in the first quarter of 2002, and completed its adoption of a fair value appraisal method for goodwill in the second quarter of 2002.

Goodwill amortization recognized in the second quarter of 2001 totaled $13 million and $26 million for the first six months of 2001. The fair value appraisal of goodwill completed in the second quarter of 2002 resulted in an impairment totaling $331 million after-tax. The impairment relates to goodwill arising

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from the company’s purchases of American Heritage Life Investment Corporation (“AHL”) in 1999 and Pembridge Inc. in 1998 and is a result of adopting the fair value appraisal method required by SFAS No. 142.

As required by SFAS No. 142, the impairment is recorded as the cumulative effect of a change in accounting principle as of January 1, 2002 and therefore impacts the previously released net income per diluted share for the first quarter of 2002 and net income per diluted share for the six months ended June 30, 2002, by $0.46. The previously released first quarter 2002 net income per diluted share was $0.60. The revised first quarter 2002 net income per diluted share including the impact of this impairment is $0.14. This impairment decreased the March 31, 2002 book value per diluted share by $0.46. There is no impact of this impairment on operating income or net income per diluted share for the second quarter of 2002.

Goodwill Impairment by Acquisition ($ in millions) AHL $ 283Pembridge, Inc. 48Total impairment $ 331

• The net income for the six months ended June 30, 2001 includes a negative $9 million

after-tax effect related to the adoption of SFAS Nos. 133 and 138. These statements comprise a single, integrated accounting framework for derivative instruments and hedging activities, including specific methodologies for the valuation of derivative securities.

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Property-Liability Business

Property-Liability Highlights

Quarter Ended June 30

Six Months Ended June 30

($ in millions, except ratios) Est. 2002

$

2001

$

Change

%

Est. 2002

$

2001

$

Change

% Property-Liability Premiums Written 6,042 5,728 5.5 11,758 11,168 5.3Property-Liability Revenues 6,117 5,918 3.4 12,205 11,864 2.9Operating Income before Restructuring Charges 357 135 164.4

744 584 27.4

Restructuring Charges After-tax 22 1 -- 35 5 --Operating Income 335 134 150.0 709 579 22.5Realized Capital (Losses) Gains After-tax (68) (11) -- (80) 6 --Gain (Loss) on Disposition of Operations -- (6) -- 5 (6) (183.3)Cumulative Effect of a Change in Accounting Principle After-tax -- -- --

(48) (3) --

Net Income 267 117 128.2 586 576 1.7Catastrophe Losses 288 537 (46.4) 398 619 (35.7)Combined Ratio before impacts of catastrophes and restructuring charges Impact of catastrophes Impact of restructuring charges Combined Ratio

94.8

5.00.6

100.4

96.5

9.8--

106.3

(1.7)pts

(4.8)pts 0.6pts

(5.9)pts

95.8

3.5 0.5

99.8

96.4

5.60.1

102.1

(0.6)pts

(2.1)pts 0.4 pts

(2.3) pts

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• Factors contributing to Property-Liability premium written growth in the second quarter of

2002 as compared to the same quarter in the prior year included: - A 5.8% increase in Allstate brand premiums written

6.3% increase in standard auto 17.1% increase in homeowners 11.1% decrease in Allstate brand non-standard auto as a result of

profit improvement actions

• The following net rate changes have been approved for Property-Liability:

Quarter Ended Six Months Ended June 30, 2002 June 30, 2002

# of States Weighted Average

Rate Change

(%)

# of States

Weighted Average

Rate Change

(%) Allstate brand Standard Auto 18 7.6 31 7.8 Non-standard Auto 15 11.2 32 10.4 Homeowners 15 21.6 36 20.6 Ivantage brand Standard Auto (Encompass) 14 7.8 23 6.9 Non-standard Auto (Deerbrook) 14 14.1 20 9.5 Homeowners (Encompass) 14 8.9 22 16.0

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• Factors contributing to the increased Property-Liability loss costs in the second quarter of 2002 when compared to the prior year quarter include: - Reserve strengthening for upward development of prior year claims:

----Loss Ratio Impact--- $ in Mil. Ratio Pr. Yr. Variance Auto $18 0.3 1.4 Homeowner 87 1.5 (1.0)* Pre-tax Total $105 1.8 0.4 *Prior year strengthening in 2001 included $90 million for the Northridge catastrophe.

These factors were partially offset by:

improved auto and homeowners frequency decreased catastrophe losses

- Incurred losses related to mold claims in Texas in the second quarter of

2002 were $103 million compared to $25 million in the second quarter of 2001. Strengthening of prior year reserves noted above that was related to mold losses in Texas totaled $30 million.

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Allstate Financial Business

Allstate Financial Highlights Quarter Ended

June 30 Six Months Ended

June 30 ($ in millions)

Est. 2002

$

2001

$

Change

%

Est. 2002

$

2001

$

Change

% Statutory Premiums and Deposits* 3,325 2,936 13.2 6,115 5,803 5.4Allstate Financial GAAP Revenues 1,321 1,266 4.3 2,515 2,427 3.6Operating Income before Restructuring Charges 144 121 19.0

287 249 15.3

Restructuring Charges After tax 1 2 (50.0) 1 3 (66.7)Operating Income 143 119 20.2 286 246 16.3Realized Capital (Losses) Gains After-tax (37) (35) 5.7

(89) (87) 2.3

Cumulative Effect of a Change in Accounting Principle After-tax -- -- --

(283) (6) --

Net Income 106 84 26.2 (86) 153 (156.2)Investments including Separate Accounts 64,427 58,501 10.1

64,427 58,501 10.1

*Statutory premiums and deposits is a measure used by Allstate management to analyze sales trends. Statutory premiums and deposits includes premiums on insurance policies and premiums and deposits on annuities determined in conformity with statutory accounting practices prescribed or permitted by the insurance regulatory authorities of the states in which the Company’s insurance subsidiaries are domiciled, and all other funds received from customers on deposit type products which are treated as liabilities, including the deposits of Allstate Bank.

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• Factors contributing to the increase in Allstate Financial statutory premiums and deposits

during the second quarter of 2002 as compared to the same quarter in the prior year included:

- an increase in the retail sales of fixed annuities - growth in deposits of Allstate Bank

This increase was partly offset by: - a decrease in variable annuity sales

• Factors contributing to the growth in Allstate Financial operating income in the second quarter of 2002 when compared to the same quarter in the prior year included:

- an increase in investment and mortality margins - a change in accounting eliminating the amortization of goodwill which

totaled $7 million in the second quarter of 2001 and $15 million for the first six months of 2001.

This press release contains forward-looking statements about the profitability of Allstate’s homeowners line of business, our loss ratio for Allstate standard auto, our operating income for 2002 and rate changes in our Property-Liability business. These statements are subject to the Private Securities Litigation Reform Act of 1995 and are based on management’s estimates, assumptions and projections. Actual results may differ materially from those projected in the forward-looking statements for a variety of reasons. Projected weighted average rate changes in our Property-Liability business may be lower than projected due to a decrease in the number of policies in force. Loss costs in our Property-Liability business, including losses due to catastrophes such as hurricanes and earthquakes, may exceed management’s projections. Competitive pressures could lead to sales of Property-Liability products, including private passenger auto and homeowners insurance, that are lower than projected by management, as we increase prices and modify our underwriting practices. Investment income may not meet management’s projections due to poor stock market performance or lower returns on the fixed income portfolio due to worsening credit conditions. Readers are encouraged to review the other risk factors facing Allstate that we disclose in our current, quarterly and annual reports to the Securities and Exchange Commission on Forms 8-K, 10-Q and 10-K. We undertake no obligation to publicly correct or update any forward-looking statements. This press release contains unaudited financial information. The supplemental operating information included in the tables above allows for additional analysis of results of operations. The net effects of realized capital gains and losses have been excluded due to the volatility between periods and because such data is often excluded when evaluating the overall financial performance of insurers. After-tax realized capital gains and losses are presented net of the effects of Allstate Financial’s deferred policy acquisition cost amortization to the extent that such effects resulted from

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the recognition of realized capital gains and losses. Operating income should not be considered as a substitute for any generally accepted accounting principles ("GAAP") measure of performance. The method of calculating operating income may be different from the method used by other companies and therefore comparability may be limited. The Allstate Corporation (NYSE: ALL) is the nation’s largest publicly held personal lines insurer. Widely known through the “You’re In Good Hands With Allstate®” slogan, Allstate provides insurance products to more than 14 million households and has approximately 13,000 exclusive agents in the U.S. and Canada. Customers can access Allstate products and services through Allstate agents, or in select states at allstate.com and 1-800-Allstate. Encompasssm and Deerbrooksm Insurance brand property and casualty products are sold exclusively through independent agents. Allstate Financial Group includes the businesses that provide life insurance, retirement and investment products, through Allstate agents, workplace marketing, independent agents, banks and securities firms. The Allstate Corporation prepares an interim investor supplement, containing standard information that is not totally available at the time of the earnings release. The supplement is posted to the company’s website and will be updated periodically over the next 30 days, and can be accessed by going to the Allstate web site at allstate.com and clicking on “About Allstate.” From there, go to the “Find Financial Information” button.

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