899051--2/26/2009--ALLSTATE

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{condition, economic, financial}

{loan, real, estate}

{tax, income, asset}

{regulation, government, change}

{regulation, change, law}

{competitive, industry, competition}

{operation, natural, condition}

{capital, credit, financial}

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{product, liability, claim}

{debt, indebtedness, cash}

{cost, operation, labor}

{financial, litigation, operation}

Risks Relating to the Property-Liability business As a property and casualty insurer, we may face significant losses from catastrophes and severe weather events The nature and level of catastrophes in any period cannot be predicted and could be material to catastrophe losses Impacts of catastrophes and our catastrophe management strategy may adversely affect premium growth Unanticipated increases in the severity or frequency of claims may adversely affect our profitability and financial condition Actual claims incurred may exceed current reserves established for claims and may adversely affect our operating results and financial condition Predicting claim expense relating to asbestos, environmental, and other discontinued lines is inherently uncertain and may have a material adverse effect on our operating results and financial condition Regulation limiting rate increases and requiring us to underwrite business and participate in loss sharing arrangements may decrease our profitability The potential benefits of implementing our sophisticated risk segmentation process may not be fully realized Allstate Protection's financial condition and operating results may be adversely affected by the cyclical nature of the property and casualty business Risks Relating to the Allstate Financial Segment Changes in underwriting and actual experience could materially affect profitability and financial condition Changes in reserve estimates may adversely affect our operating results Changes in market interest rates may lead to a significant decrease in the sales and profitability of spread-based products Changes in estimates of profitability on interest-sensitive life, fixed annuities and other investment products may adversely affect our profitability and financial condition through increased amortization of DAC Narrowing the focus of our product offerings and reducing our concentration in fixed annuities and funding agreements may adversely affect reported results A loss of key product distribution relationships could materially affect sales Changes in tax laws may decrease sales and profitability of products and financial condition We are subject to market risk and declines in credit quality which may adversely impact investment income and cause additional realized losses Deteriorating financial performance on securities collateralized by mortgage loans and commercial mortgage loans may lead to write-downs The impact of our investment strategies may be adversely affected by developments in the investment markets Concentration of our investment portfolios in any particular segment of the economy may have adverse effects on our operating results and financial condition The determination of the amount of realized capital losses recorded for impairments of our investments is highly subjective and could materially impact our operating results and financial condition The determination of the fair value of our fixed income and equity securities results in unrealized net capital gains and losses and is highly subjective and could materially impact our operating results and financial condition Risks Relating to the Insurance Industry Our future results are dependent in part on our ability to successfully operate in an insurance industry that is highly competitive Difficult conditions in the economy generally could adversely affect our business and operating results There can be no assurance that actions of the U.S. federal government, Federal Reserve and other governmental and regulatory bodies for the purpose of stabilizing the financial markets and stimulating the economy will achieve the intended effect Losses from litigation may be material to our operating results or cash flows and financial condition We are subject to extensive regulation and potential further restrictive regulation may increase our operating costs and limit our growth Reinsurance may be unavailable at current levels and prices, which may limit our ability to write new business Reinsurance subjects us to the credit risk of our reinsurers and may not be adequate to protect us against losses arising from ceded insurance, which could have a material adverse effect on our operating results and financial condition The continued threat of terrorism and ongoing military actions may adversely affect the level of claim losses we incur and the value of our investment portfolio A downgrade in our financial strength ratings may have an adverse effect on our competitive position, the marketability of our product offerings, and our liquidity, operating results and financial condition Adverse capital and credit market conditions may significantly affect our ability to meet liquidity needs or our ability to obtain credit on acceptable terms Changes in accounting standards issued by the Financial Accounting Standards Board ("FASB") or other standard-setting bodies may adversely affect our financial statements The change in our unrecognized tax benefit during the next 12 months is subject to uncertainty The realization of deferred tax assets is subject to uncertainty The ability of our subsidiaries to pay dividends may affect our liquidity and ability to meet our obligations The occurrence of events unanticipated in our disaster recovery systems and management continuity planning could impair our ability to conduct business effectively Changing climate conditions may adversely affect our financial condition, profitability or cash flows Loss of key vendor relationships could affect our operations

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899051--2/26/2009--ALLSTATE_CORP