S&P Affirms ‘AA’ Ratings for Allstate Insurance

February 2, 2004

Standard & Poor’s Ratings Services has affirmed its ‘AA’ counterparty credit and financial strength ratings on Allstate Insurance Co. and related group members (collectively referred to as AIC) based on the group’s excellent market position, improved operating results, and strong capitalization.

Partially offsetting these positive factors are uncertainties associated with the discontinued lines and coverages reserves of its Specialty Operations Division and the group’s exposure to catastrophe losses in certain segments of the U.S.

Standard & Poor’s also said that the outlook on all these companies is stable, except for Northbrook Indemnity Co., which has a negative outlook.

The operating performance of Allstate Corp.’s property/casualty operations is expected to show continued improvement over the next two years. Capital adequacy is expected to increase moderately over the medium term. Financial leverage is expected to remain at current levels or lower, while interest coverage is expected to remain very strong in 2003 and 2004. “The group is well positioned to benefit from its scale, geographic diversification, and the hard property/casualty market,” commented Standard & Poor’s credit analyst Polina Chernyak.

AIC is the second largest personal lines insurer in the U.S., with more than $19 billion in net written premium for the first nine months of 2003 and an 11 percent market share, second only to State Farm Insurance Co. Collectively, these two organizations account for one-third of total personal property/casualty insurance sales in the U.S. AIC’s significant market position provides it with the scale and geographic diversification necessary to achieve better-than-average underwriting results relative to its peers.

These strengths – combined with a strong brand name and a conservative financial position – support the company’s formidable market position in the industry.

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