A.M. Best Removes From Under Review With Positive Implications and Upgrades Issuer Credit Ratings of The Allstate Corporation and Its Key Subsidiaries

OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best has removed from under review with positive implications and upgraded the Long-Term Issuer Credit Ratings (Long-Term ICR) to “aa” from “aa-” and affirmed the Financial Strength Rating (FSR) of A+ (Superior) of the members of Allstate Insurance Group (Allstate). Concurrently, A.M. Best has removed from under review with positive implications and upgraded the Long-Term ICRs to “aa” from “aa-” and affirmed the FSR of A+ (Superior) of the key life/health members of the Allstate Life Group (Allstate Life). The outlook assigned to these Credit Ratings (ratings) is stable.

Additionally, A.M. Best has affirmed the FSR of A (Excellent) and the Long-Term ICRs of “a” of the members of Allstate New Jersey Insurance Group (collectively referred to as Allstate New Jersey) (headquartered in Bridgewater, NJ). The outlook of these ratings is stable.

At the same time, A.M. Best has removed from under review with positive implications and upgraded the Long-Term ICR to “a” from “a-”, and upgraded all existing Long- and Short-Term Issue Credit Ratings (Long-Term IR; Short-Term IR) of the ultimate parent, The Allstate Corporation (Allcorp). In addition, A.M. Best has assigned a Long-Term IR of “a” to the recently announced $250 million floating rate senior notes due 2021 and $250 million floating rate senior notes due 2023 of Allcorp. Finally, A.M. Best has assigned a Long-Term IR of “bbb+” to the recently announced $575 million 5.625% Series G fixed rate noncumulative perpetual preferred stock of AllCorp. The outlook assigned to these ratings is stable. All the above named companies are headquartered in Northbrook, IL, except where specified. (See link below for a detailed listing of the companies and ratings.)

The ratings of Allstate reflect its balance sheet strength, which A.M. Best categorizes as strongest, as well as its strong operating performance, favorable business profile and very strong enterprise risk management (ERM).

Allstate’s strong capital position reflects its favorable earnings, which have contributed to organic surplus growth in each of the past five years on a pre-dividend basis. Allstate’s operating results continue to be favorable due to enhanced pricing sophistication, and improved loss cost and expense management while maintaining underwriting discipline. Additionally, Allstate has a significant market presence and strong overall business profile as one of the largest personal lines writers in the United States. Allstate also benefits from the additional liquidity provided by Allcorp and its subsidiary, Kennett Capital, Inc., and through access to capital markets, lines of credit and its commercial paper program. The group’s favorable margins are attributable to enhanced pricing accuracy and risk optimization, along with its solid core underwriting capabilities, prudent capital management and sizable investment income. Lastly, underwriting results also reflect the favorable impact of Allstate’s ongoing risk management actions, various expense management initiatives and its significant investment in technology, as Allstate has shown the ability to adapt quickly to market trends to ensure continued underwriting and operating profitability.

Partially offsetting these positive rating attributes is Allstate’s inherent exposure to natural disasters due to its expansive market presence throughout the United States. However, Allstate over the past several years has maintained an extensive catastrophe risk exposure management program, including a significantly enhanced property catastrophe reinsurance program, stricter underwriting guidelines, increased deductibles and discontinuance of selected lines of coverage, including earthquake. In addition, this expansive geographic presence provides inherent diversification against the impact of one or few significant weather events. The group’s underwriting results in recent years have benefited from these risk-management actions. While the group maintains above-average underwriting and investment leverage, relative to industry norms, it has maintained capital levels supportive of its business risks.

The ratings of Allstate Life reflect its balance sheet strength, which A.M. Best categorizes as very strong, as well as its strong operating performance, favorable business profile and very strong ERM. Additionally, the ratings recognize the financial strength and continued support of Allstate Insurance Company, as well as Allcorp.

Allstate Life’s overall balance sheet strength can be attributed to its very strong risk-adjusted capitalization and favorable liquidity, as well as the company’s expertise in stress testing and economic capital modeling. Partially offsetting these strengths are the company’s somewhat higher level of investment risk, relative to industry benchmarks, with Allstate Life’s higher allocation to alternative assets and below investment grade bonds relative to its capital and surplus. However, A.M. Best notes that the company has a need to match assets with its longer duration liabilities, and that overall risk in the portfolio has been reduced in recent years as the company’s strategy increasingly focuses on its traditional life insurance products and voluntary benefits business.

Allstate Life’s strong operating performance reflects the company’s positive trend in core product sales growth and its favorable underwriting results, supplemented by a steady stream of net investment income. However, the company remains challenged to manage the run-off of its declining, yet sizable, exposure to interest sensitive business within its annuities segment. The company’s well-established market presence and the strength of distribution throughout the enterprise create additional benefits and synergies that support its ability to compete in its core markets. Allstate Life continues to work on modernizing digital capabilities to create greater consumer experience and to increase efficiency. The company benefits from a very strong risk culture and governance that has been embedded throughout the organization.

The ratings of Allstate New Jersey reflect its balance sheet strength, which A.M. Best categorizes as very strong, as well as its strong operating performance, limited business profile and adequate ERM. Additionally, the ratings recognize the financial strength, ERM and continued support of Allstate Insurance Company, as well as Allcorp.

Allstate New Jersey maintains favorable risk-adjusted capitalization, consistently profitable operating performance and management’s local market knowledge. These positive rating attributes are offset partially by the group’s business concentration within one state, resulting in potential operating variability due to local market disruptions and localized catastrophe weather events. The ratings further recognize the consistent profitability trends in underwriting in recent years, along with the expectation that trends in capitalization and operating performance will continue in the near to medium term.

For a complete listing of The Allstate Corporation and its property/casualty and life/health subsidiaries’ FSRs, Long-Term ICRs and Long- and Short-Term IRs, please visit The Allstate Corporation.

This press release relates to Credit Ratings that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.

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A.M. Best

Raymond Thomson, CPCU, ARe, ARM, +1-908-439-2200, ext. 5621

Associate Director – P/C

raymond.thomson@ambest.com

or

Kate Steffanelli, +1-908-439-2200, ext. 5063

Senior Financial Analyst – L/H

kate.steffanelli@ambest.com

or

Christopher Sharkey, +1-908-439-2200, ext. 5159

Manager, Public Relations

christopher.sharkey@ambest.com

or

Jim Peavy, +1-908-439-2200, ext. 5644

Director, Public Relations

james.peavy@ambest.com

Source: A.M. Best