Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Overview
The following discussion highlights significant factors influencing the consolidated financial position and results of operations of The Allstate Corporation (referred to in this document as “we,” “our,” “us,” the “Company” or “Allstate”). It should be read in conjunction with the condensed consolidated financial statements and related notes thereto found under Part I. Item 1. contained herein, and with the discussion, analysis, consolidated financial statements and notes thereto in Part I. Item 1. and Part II. Item 7. and Item 8. of The Allstate Corporation annual report on Form 10-K for 2025.
Further analysis of our insurance segments Allstate Protection and Run-off Property-Liability, together Property-Liability Operations, and Protection Services, is provided in Management’s Discussion and Analysis (“MD&A”). The segments are consistent with the way in which the chief operating decision maker reviews financial performance and makes decisions about the allocation of resources.
Measuring segment profit or loss
The measure of segment profit or loss used in evaluating performance is underwriting income for the Allstate Protection and Run-off Property-Liability segments and adjusted net income for the Protection Services and Corporate segments. We use these measures in our evaluation of results of operations to analyze profitability.
Underwriting income (loss) is calculated as premiums earned and other revenue, less claims and claims expense (“losses”), amortization of deferred policy acquisition costs (“DAC”), operating costs and expenses, amortization or impairment of purchased intangibles and restructuring and related charges, as determined using GAAP.
Adjusted net income (loss) is net income (loss) applicable to common shareholders, excluding:
•
Net gains and losses on investments and derivatives
•
Pension and other postretirement remeasurement gains and losses
•
Amortization or impairment of purchased intangibles
•
Gain or loss on disposition
•
Adjustments for other significant non-recurring, infrequent or unusual items, when (a) the nature of the charge or gain is such that it is reasonably unlikely to recur within two years, or (b) there has been no similar charge or gain within the prior two years
•
Income tax expense or benefit on reconciling items
Macroeconomic impacts
Macroeconomic factors have and may continue to impact the results of our operations, financial condition and liquidity. These conditions include U.S. government fiscal and monetary policies, tariff measures, major combat operations in Iran, the Russia/Ukraine conflict, supply chain disruptions, volatility in global energy markets and labor availability. Increased oil prices may contribute to higher transportation, manufacturing and repair costs. If sustained, these conditions may change claims frequency in auto coverages and may increase severity in auto and homeowners coverages and place additional pressure on operating costs and consumer affordability. T1We continue to monitor these conditions and reflect our current expectations in pricing and reserving; however, uncertainty remains regarding the extent and duration of these impacts.
Corporate strategy
Our strategy has two components: increase personal property-liability market share and expand protection offerings by leveraging the Allstate brand, customer base and capabilities.
Transformative Growth is a comprehensive plan to improve Allstate’s competitive position by providing affordable, simple and connected protection through multiple distribution methods. The ultimate objective is to enhance customer value to drive growth in all businesses.
In the personal property-liability businesses, this has five key components:
•Improving customer value
•Expanding customer access
•Increasing sophistication and investment in customer acquisition
•Deploying new technology ecosystems
•Driving organizational transformation
We are expanding Protection Services businesses internationally and by leveraging the Allstate brand, customer base and capabilities.
44 www.allstate.com
Financial Highlights
($ in millions)
Q1
Q2
Consolidated net income applicable to common shareholders increased $1.16 billion to $3.24 billion in the second quarter of 2026 and increased $3.02 billion to $5.67 billion in the first six months of 2026 compared to the same periods of 2025, primarily due to higher underwriting income and valuation gains on equity investments.
Total revenue increased 11.8% to $18.60 billion in the second quarter of 2026 and increased 7.4% to $35.54 billion in the first six months of 2026 compared to the same periods of 2025, primarily due to higher auto and homeowners insurance policies in force and valuation gains on equity investments.
Net investment income increased $255 million to $1.01 billion in the second quarter of 2026 and increased $339 million to $1.95 billion in the first six months of 2026 compared to the same periods of 2025, primarily due to higher market-based and performance-based investment results.
Investments totaled $87.80 billion as of June 30, 2026, increasing from $83.24 billion as of December 31, 2025.
Allstate shareholders’ equity was $33.70 billion as of June 30, 2026, increasing from $30.61 billion as of December 31, 2025, primarily due to net income, partially offset by common share repurchases, dividends to shareholders and unrealized net capital losses.
Book value per diluted common share (ratio of Allstate common shareholders’ equity to total common shares outstanding and dilutive potential common shares outstanding) was $123.38 as of June 30, 2026, an increase of 49.7% from $82.40 as of June 30, 2025, and an increase of 13.8% from $108.45 as of December 31, 2025.
Return on average Allstate common shareholders’ equity for the twelve months ended June 30, 2026, was 49.1%, an increase of 19.5 points from 29.6% for the twelve months ended June 30, 2025.
Second Quarter 2026 Form 10-Q 45
Property-Liability Operations
Property-Liability Operations
Overview Property-Liability operations consist of two reportable segments: Allstate Protection and Run-off Property-Liability. These segments are consistent with the groupings of financial information that management uses to evaluate performance and to determine the allocation of resources.
We do not allocate Property-Liability investment income, net gains and losses on investments and derivatives, or assets to the Allstate Protection and Run-off Property-Liability segments. Management reviews assets at the Property-Liability level for decision-making purposes.
For segment results, services provided by Protection Services to Allstate Protection are not eliminated as management considers those transactions in assessing the results of the respective segments. The effects of inter-segment transactions are eliminated in the consolidated results.
GAAP operating ratios are used to measure our profitability to enhance an investor’s understanding of our financial results and are calculated as follows:
•Loss ratio: the ratio of claims and claims expense (loss adjustment expenses), to premiums earned. Loss ratios include the impact of catastrophe losses and prior year reserve reestimates.
•Expense ratio: the ratio of amortization of DAC, operating costs and expenses, amortization or impairment of purchased intangibles and restructuring and related charges, less other revenue to premiums earned.
•Combined ratio: the sum of the loss ratio and the expense ratio.
We have also calculated the following impacts of specific items on the GAAP operating ratios because of the volatility of these items between periods. The impacts are calculated by taking the specific items noted below divided by Property-Liability premiums earned:
•Effect of catastrophe losses on combined ratio: includes catastrophe losses and prior year reserve reestimates of catastrophe losses included in claims and claims expense
•Effect of prior year reserve reestimates on combined ratio
•Effect of restructuring and related charges on combined ratio
•Effect of amortization of purchased intangibles on combined ratio
•Effect of Run-off Property-Liability business on combined ratio: includes claims and claims expense, restructuring and related charges and operating costs and expenses in the Run-off Property-Liability segment
Premium measures and statistics are used to analyze our premium trends and are calculated as follows:
•PIF: policy counts are based on items rather than customers. A multi-car customer would generate multiple item (policy) counts, even if all cars were insured under one policy. Lender-placed policies are excluded from policy counts.
•New issued applications: item counts of automobile or homeowner insurance applications for insurance policies that were issued during the period, regardless of whether the customer was previously insured by another Allstate brand.
•Average premium-gross written (“average premium”): gross premiums written divided by issued item count. Gross premiums written include the impacts from discounts, surcharges and ceded reinsurance premiums and exclude the impacts from mid-term premium adjustments and premium refund accruals. Average premiums represent the appropriate policy term for each line, typically six months for an auto policy and twelve months for a homeowners policy.
•Implemented rate changes: represents the impact in the locations (U.S. states, the District of Columbia or Canadian provinces) where rate changes were implemented during the period as a percentage of total prior year-end premiums written.
46 www.allstate.com
Property-Liability Operations
Underwriting results
Three months ended June 30,
Six months ended June 30,
($ in millions, except ratios)
2026
2025
2026
2025
Premiums written
$
15,431
$
15,047
$
30,056
$
29,344
Premiums earned
$
14,918
$
14,346
$
29,720
$
28,373
Other revenue
568
504
1,112
992
Total revenue
15,486
14,850
30,832
29,365
Claims and claims expense
(9,668)
(10,084)
(18,660)
(20,744)
Amortization of DAC
(1,840)
(1,742)
(3,661)
(3,474)
Other costs and expenses
(1,928)
(1,685)
(3,763)
(3,386)
Restructuring and related charges
(6)
(13)
(7)
(29)
Amortization of purchased intangibles
(38)
(46)
(77)
(92)
Underwriting income
$
2,006
$
1,280
$
4,664
$
1,640
Catastrophe losses
Catastrophe losses, excluding reserve reestimates
$
1,671
$
1,984
$
2,899
$
4,202
Catastrophe reserve reestimates (1)
51
6
63
(10)
Total catastrophe losses
$
1,722
$
1,990
$
2,962
$
4,192
Prior year reserve reestimates, excluding catastrophes (1)
$
(692)
$
(376)
$
(1,708)
$
(611)
Prior year reserve reestimates (1)
(641)
(370)
(1,645)
(621)
GAAP operating ratios
Loss ratio
64.8
70.3
62.8
73.1
Expense ratio (2)
21.8
20.8
21.5
21.1
Combined ratio
86.6
91.1
84.3
94.2
Effect of catastrophe losses on combined ratio
11.5
13.9
10.0
14.8
Effect of prior year reserve reestimates on combined ratio
(4.3)
(2.6)
(5.6)
(2.2)
Effect of catastrophe losses included in prior year reserve reestimates on combined ratio
0.3
—
0.2
—
Effect of restructuring and related charges on combined ratio
—
0.1
—
0.1
Effect of amortization of purchased intangibles on combined ratio
0.3
0.3
0.3
0.3
Effect of Run-off Property-Liability business on combined ratio
—
—
—
—
(1)Reserve releases are shown in parentheses.
(2)Other revenue is deducted from operating costs and expenses in the expense ratio calculation.
Second Quarter 2026 Form 10-Q 47
Segment Results Allstate Protection
Allstate Protection Segment
Underwriting results
Three months ended June 30,
Six months ended June 30,
($ in millions)
2026
2025
2026
2025
Premiums written
$
15,431
$
15,047
$
30,056
$
29,344
Premiums earned
$
14,918
$
14,346
$
29,720
$
28,373
Other revenue
568
504
1,112
992
Total revenue
15,486
14,850
30,832
29,365
Claims and claims expense
(9,668)
(10,082)
(18,660)
(20,739)
Amortization of DAC
(1,840)
(1,742)
(3,661)
(3,474)
Other costs and expenses
(1,928)
(1,684)
(3,762)
(3,384)
Restructuring and related charges
(6)
(13)
(7)
(29)
Amortization of purchased intangibles
(38)
(46)
(77)
(92)
Underwriting income
$
2,006
$
1,283
$
4,665
$
1,647
Catastrophe losses
$
1,722
$
1,990
$
2,962
$
4,192
T2Underwriting income increased $723 million and increased $3.02 billion in the second quarter and first six months of 2026, respectively, compared to the same periods of 2025, primarily due to an increase in premiums earned, lower catastrophe losses and the benefit of prior year reserve releases, partially offset by higher expenses.
Underwriting income (loss)
Three months ended June 30,
Six months ended June 30,
($ in millions)
2026
2025
2026
2025
Auto
$
1,606
$
1,331
$
3,335
$
2,147
Homeowners
226
(76)
911
(527)
Specialty lines (1)
108
(11)
265
(76)
Commercial lines
13
(17)
34
(1)
Brokered solutions and collateral protection (2)
52
54
116
95
Answer Financial
1
2
4
9
Total
$
2,006
$
1,283
$
4,665
$
1,647
(1)Includes renters, condominium, landlord, boat, umbrella, manufactured home, scheduled personal property, auto assigned risk and valuable item protection products.
(2)Brokered solutions and collateral protection includes brokered property and casualty and life and annuity products, and lender-placed products.
Change in underwriting results from prior year period - three months ended
($ in millions)
48 www.allstate.com
Allstate Protection Segment Results
Change in underwriting results from prior year period - six months ended
($ in millions)
Premium measures and statistics include PIF, new issued applications and average premiums. Premiums written is the amount of premiums charged for policies issued during a reporting period. Premiums are considered earned and are included in the financial results on a pro-rata basis over the policy period. The portion of premiums written applicable to the unexpired term of the policies is recorded as unearned premiums on our Condensed Consolidated Statements of Financial Position.
Premiums written
Three months ended June 30,
Six months ended June 30,
($ in millions)
2026
2025
2026
2025
Auto
$
9,572
$
9,533
$
19,422
$
19,381
Homeowners
4,752
4,395
8,493
7,848
Specialty lines
886
865
1,654
1,594
Commercial lines
121
100
233
194
Brokered solutions and collateral protection
100
154
254
327
Total premiums written
$
15,431
$
15,047
$
30,056
$
29,344
Premiums earned
Three months ended June 30,
Six months ended June 30,
($ in millions)
2026
2025
2026
2025
Auto
$
9,644
$
9,528
$
19,191
$
18,875
Homeowners
4,201
3,771
8,365
7,428
Specialty lines
822
779
1,642
1,520
Commercial lines
107
104
208
217
Brokered solutions and collateral protection
144
164
314
333
Total premiums earned
$
14,918
$
14,346
$
29,720
$
28,373
Policies in force
As of June 30,
(In thousands)
2026
2025
Auto
25,951
25,243
Homeowners
7,819
7,596
Specialty lines
4,945
4,885
Commercial lines
182
176
Total
38,897
37,900
Auto insurance premiums written increased $39 million in the second quarter of 2026 compared to the second quarter of 2025 and increased $41 million in the first six months of 2026 compared to the first six months of 2025, primarily due to the following factors:
•Increased new issued applications in all channels
•PIF increased 2.8% or 708 thousand to 25,951 thousand as of June 30, 2026 compared to June 30, 2025
•Lower Allstate brand average premiums resulting from a shift in product mix towards affordable, simple and connected protection
Second Quarter 2026 Form 10-Q 49
Segment Results Allstate Protection
T3We will pursue rate adjustments in states where we are achieving acceptable returns, while implementing rates where needed to keep pace with increasing costs.
Auto premium measures and statistics
Three months ended June 30,
Six months ended June 30,
2026
2025
Change
2026
2025
Change
New issued applications (in thousands)
Allstate Protection by channel
Exclusive agency
805
764
5.4
%
1,612
1,512
6.6
%
Independent agency
745
685
8.8
1,487
1,371
8.5
Direct
797
708
12.6
1,645
1,465
12.3
Total new issued applications
2,347
2,157
8.8
%
4,744
4,348
9.1
%
Allstate brand average premium
$
819
$
850
(3.6)
%
$
826
$
852
(3.1)
%
Homeowners insurance premiums written increased 8.1% or $357 million in the second quarter of 2026 compared to the second quarter of 2025 and increased 8.2% or $645 million in the first six months of 2026 compared to the first six months of 2025, primarily due to the following factors:
•Higher Allstate brand average premiums resulting from rate increases and inflation in insured home replacement costs, combined with growth in policies in force
•In the six months ended June 30, 2026, rate increases of 4.9% were implemented resulting in a total estimated insurance premium impact of 1.3%, excluding the impact of changes in insured home replacement costs
•PIF increased 2.9% or 223 thousand to 7,819 thousand as of June 30, 2026 compared to June 30,
2025, primarily in the direct and exclusive agency channels, partially offset in the independent agency channel
•Increased new issued applications in all channels
In Florida, we are not writing new homeowners business and completed the non-renewal of certain policies during the second quarter of 2026. In California, we write a limited amount of new homeowners business through North Light Specialty Insurance Company, our excess and surplus lines carrier.
We may not be able to grow in certain states without regulatory or legislative reforms that enable customers to be provided coverage at appropriate risk adjusted returns.
Homeowners premium measures and statistics
Three months ended June 30,
Six months ended June 30,
2026
2025
Change
2026
2025
Change
New issued applications (in thousands)
Allstate Protection by channel
Exclusive agency
260
251
3.6
%
501
483
3.7
%
Independent agency
65
48
35.4
101
95
6.3
Direct
86
54
59.3
167
95
75.8
Total new issued applications
411
353
16.4
%
769
673
14.3
%
Allstate brand average premium
$
2,399
$
2,267
5.8
%
$
2,382
$
2,241
6.3
%
Specialty lines premiums written increased 2.4% or $21 million in the second quarter of 2026 compared to the second quarter of 2025 and increased 3.8% or $60 million in the first six months of 2026 compared to the first six months of 2025, primarily due to increases in landlords and personal umbrella policies, partially offset by a decrease in auto assigned risk policies purchased from other carriers. In Florida, we are not writing new condominium business and we completed the non-renewal of certain policies during the second quarter of 2026.
Commercial lines premiums written increased 21.0% or $21 million in the second quarter of 2026 compared to the second quarter of 2025 and increased 20.1% or $39 million in the first six months of 2026
compared to the first six months of 2025, primarily due to an increase in new issued applications and higher average premiums from current offerings.
Brokered solutions and collateral protection premiums written decreased 35.1% or $54 million in the second quarter of 2026 compared to the second quarter of 2025 and decreased 22.3% or $73 million in the first six months of 2026 compared to the first six months of 2025, due to lower premiums from lender-placed agent business.
GAAP operating ratios include loss ratio, expense ratio and combined ratio to analyze our profitability trends. Frequency and severity changes are used to describe the trends in loss costs.
50 www.allstate.com
Allstate Protection Segment Results
Combined ratios
Loss ratio
Expense ratio (2)
Combined ratio
2026
2025
2026
2025
2026
2025
Three months ended June 30,
Auto
61.4
65.0
21.9
21.0
83.3
86.0
Homeowners
72.4
81.2
22.2
20.8
94.6
102.0
Specialty lines (1)
68.5
86.1
18.4
15.3
86.9
101.4
Commercial lines
71.0
84.6
16.9
31.7
87.9
116.3
Brokered solutions and collateral protection
45.8
38.4
18.1
28.7
63.9
67.1
Total
64.8
70.3
21.8
20.8
86.6
91.1
Impact of amortization of purchased intangibles
0.3
0.3
0.3
0.3
Impact of restructuring and related charges
—
0.1
—
0.1
Six months ended June 30,
Auto
61.0
67.1
21.6
21.5
82.6
88.6
Homeowners
67.0
86.4
22.1
20.7
89.1
107.1
Specialty lines (1)
66.2
88.6
17.7
16.4
83.9
105.0
Commercial lines
64.0
71.0
19.7
29.5
83.7
100.5
Brokered solutions and collateral protection
40.5
44.2
22.6
27.3
63.1
71.5
Total
62.8
73.1
21.5
21.1
84.3
94.2
Impact of amortization of purchased intangibles
0.3
0.3
0.3
0.3
Impact of restructuring and related charges
—
0.1
—
0.1
(1)Expense ratio includes other revenue of $42 million and $86 million for the three and six months ended June 30, 2026, respectively, compared to $47 million and $91 million for the three and six months ended June 30, 2025, respectively, for fees on auto assigned risk policies.
(2)Other revenue is deducted from operating costs and expenses in the expense ratio calculation.
Loss ratios
Loss ratio
Effect of catastrophe
losses (1) (2)
Effect of prior year reserve reestimates
Effect of catastrophe losses included in prior year reserve reestimates
2026
2025
2026
2025
2026
2025
2026
2025
Three months ended June 30,
Auto
61.4
65.0
2.2
2.2
(6.7)
(4.5)
(0.1)
(0.2)
Homeowners
72.4
81.2
33.5
42.8
0.9
0.8
1.6
0.5
Specialty lines
68.5
86.1
9.7
19.3
(2.3)
3.9
(0.4)
0.3
Commercial lines
71.0
84.6
0.9
1.9
(10.3)
8.6
(2.8)
1.9
Brokered solutions and collateral protection
45.8
38.4
16.7
7.3
(0.7)
(6.1)
—
—
Total
64.8
70.3
11.5
13.9
(4.3)
(2.6)
0.3
—
Six months ended June 30,
Auto
61.0
67.1
1.6
2.2
(7.8)
(3.6)
(0.1)
(0.2)
Homeowners
67.0
86.4
29.3
46.3
(0.9)
0.3
0.6
0.3
Specialty lines
66.2
88.6
10.4
18.0
(2.9)
5.0
1.4
(0.3)
Commercial lines
64.0
71.0
0.5
2.3
(13.5)
(8.7)
—
2.3
Brokered solutions and collateral protection
40.5
44.2
11.8
15.9
(2.2)
(7.5)
—
—
Total
62.8
73.1
10.0
14.8
(5.6)
(2.2)
0.2
—
(1)The ten-year average effect of total catastrophe losses on the total combined ratio was 13.5 points and 11.0 points in the second quarter and first six months of 2026, respectively.
(2)The ten-year average effect of homeowners catastrophe losses on the total homeowners combined ratio was 43.5 points and 36.0 points in the second quarter and first six months of 2026, respectively.
Auto loss ratio decreased 3.6 points and decreased 6.1 points in the second quarter and first six months of 2026, respectively, compared to the same periods of 2025, driven by the benefit of prior year reserve releases, excluding catastrophes. Estimated report
year 2026 incurred claim severity for Allstate brand increased compared to report year 2025 for major coverages, reflecting ongoing inflationary pressures, including rising medical costs and continued increases in attorney representation.
Second Quarter 2026 Form 10-Q 51
Segment Results Allstate Protection
Homeowners loss ratio decreased 8.8 points and decreased 19.4 points in the second quarter and first six months of 2026, respectively, compared to the same periods of 2025, primarily due to increased premiums earned and lower catastrophe losses. Gross claim frequency, excluding catastrophes, increased in the second quarter and first six months of 2026 compared to the same periods of 2025. Paid claim severity, excluding catastrophes, increased in the second quarter and first six months of 2026 compared to the same periods of 2025, primarily due to fire perils. Homeowners paid claim severity can be impacted by both the mix of perils and the magnitude of specific losses paid during the quarter.
Specialty lines loss ratio decreased 17.6 points and decreased 22.4 points in the second quarter and first six months of 2026, respectively, compared to the same periods of 2025, primarily due to the benefit of prior year reserve releases, excluding catastrophes, lower catastrophe losses and increased premiums earned.
Commercial lines loss ratio decreased 13.6 points in the second quarter of 2026 compared to the second quarter of 2025, primarily due to prior year reserve releases in the current year compared to prior year reserve strengthening in the prior year. Commercial lines loss ratio decreased 7.0 points in the first six months of 2026 compared to the first six months of 2025, primarily due to lower losses, including the benefit of prior year reserve releases, partially offset by a decrease in premiums earned.
Brokered solutions and collateral protection loss ratio increased 7.4 points in the second quarter of 2026, compared to the second quarter of 2025, primarily due to lower premiums earned and higher catastrophe losses. Brokered solutions and collateral protection loss ratio decreased 3.7 points in the first six months of 2026 compared to the first six months of 2025, primarily due to lower losses, partially offset by a decrease in premiums earned and lower prior year reserve releases.
T4Catastrophe losses decreased $268 million to $1.72 billion in the second quarter of 2026 compared to the second quarter of 2025. Catastrophe losses decreased $1.23 billion to $2.96 billion in the first six months of 2026 compared to the first six months of 2025. Results in 2025 included $1.11 billion of losses related to the California wildfire events.
We define a “catastrophe” as an event that produces pre-tax losses before reinsurance in excess of $1 million and involves multiple first party policyholders, or a winter weather event that produces a number of claims in excess of a preset, per-event threshold of average claims in a specific area, occurring within a certain amount of time following the event. Catastrophes are caused by various natural events including high winds, winter storms and freezes, tornadoes, hailstorms, wildfires, tropical storms, tsunamis, hurricanes, earthquakes and volcanoes.
We are also exposed to man-made catastrophic events, such as wildfires, terrorism, civil unrest, or industrial accidents. The nature and level of catastrophes in any period cannot be reliably predicted.
Loss estimates are generally based on claim adjuster inspections and the application of historical loss development factors. Our loss estimates are calculated in accordance with the coverage provided by our policies. The establishment of appropriate reserves, including reserves for catastrophe losses, is an inherently uncertain and complex process. Reserving for hurricane losses is complicated by the inability of insureds to promptly report losses, limitations placed on claims adjusting staff affecting their ability to inspect losses, determining whether losses are covered by our homeowners policy (generally for damage caused by wind or wind driven rain) or specifically excluded coverage caused by flood, exposure to mold damage, and the effects of numerous other considerations, including the timing of a catastrophe in relation to other events, such as at or near the end of a financial reporting period, which can affect the availability of information needed to estimate reserves for that reporting period. In these situations, we may need to adapt our practices to accommodate these circumstances in order to determine a best estimate of our losses from a catastrophe.
Over time, we have limited our aggregate insurance exposure to catastrophe losses in certain regions of the country that are subject to high levels of natural catastrophes by managing coverage, number of policies in force, utilizing reinsurance and participating in various state facilities.
52 www.allstate.com
Allstate Protection Segment Results
Catastrophe losses by the type of event
Three months ended June 30,
Six months ended June 30,
($ in millions)
Number of events
2026
Number of events
2025
Number of events
2026
Number of events
2025
Wind/hail
41
$
1,658
36
$
2,026
63
$
2,612
50
$
3,162
Wildfires
4
30
1
2
4
30
3
1,088
Freeze/other events
—
—
—
—
2
257
—
—
Prior year reserve reestimates (1)
61
(1)
69
50
Prior year aggregate reinsurance recoveries
(10)
7
(6)
(60)
Current year aggregate reinsurance recoveries
—
8
—
(48)
Prior quarter reserve reestimates
(17)
(52)
—
—
Total catastrophe losses
45
$
1,722
37
$
1,990
69
$
2,962
53
$
4,192
(2)
(1)Includes reinsurance recoveries.
(2)Gross losses before reinsurance recoverables and reinstatement premiums were $5.22 billion.
The Company is pursuing subrogation recoveries related to the January 2025 California wildfires. No amounts have been recognized for these potential recoveries. Any ultimate recovery is expected to primarily benefit the Company's reinsurers, with the Company's direct benefit principally related to reinsurance reinstatement premiums.
Catastrophe reinsurance The catastrophe reinsurance program is part of our catastrophe management strategy, which is intended to provide shareholders with long-term returns on the risks assumed in our property business, reduce earnings volatility, and provide protection to our customers. The current catastrophe reinsurance program supports our risk and return framework which incorporates robust economic capital modeling and is informed by catastrophe risk models including hurricanes, earthquakes and wildfires. As of June 30, 2026, the modeled 1-in-100 annual aggregate probable maximum loss for hurricane, earthquake and wildfire perils was
approximately $3.2 billion, net of reinsurance. We continually review our aggregate risk appetite and the cost and availability of reinsurance to optimize the risk and return profile of this exposure.
Similar to our 2025 program, our 2026 program includes coverage for losses to personal lines property, personal lines automobile, commercial lines property or commercial lines automobile arising out of multiple perils, in addition to hurricanes, earthquakes and wildfires.
The total cost of our property catastrophe reinsurance programs, excluding reinstatement premiums, during the second quarter and first six months of 2026 was $378 million and $686 million, respectively, compared to $305 million and $562 million in the second quarter and first six months of 2025. Catastrophe placement premiums reduce net written and earned premium with approximately 83% of the reduction related to homeowners premium.
Current Reinsurance Programs
Nationwide Excess Catastrophe Reinsurance Program (1)
Reinsures multi-line catastrophes in every state except Florida, where coverage is only provided for personal lines automobile unless otherwise stated
Canada Catastrophe Excess of
Loss Reinsurance Contract (1)
Reinsures personal lines property and automobile physical damage catastrophe losses in the Canadian provinces of Ontario, Quebec, Alberta, New Brunswick, and Nova Scotia
State-specific Earthquake-related Catastrophe Reinsurance (1)
Kentucky contract reinsures personal lines property losses in the state caused by earthquakes and fire-following earthquakes
Excess & Surplus (“E&S”) contract reinsures shake damage resulting from the earthquake peril for personal lines property policies underwritten by North Light, our E&S lines carrier, in California
Florida Excess Catastrophe Reinsurance Program (2)
Reinsures Castle Key Insurance Company (“CKIC”), Castle Key Indemnity Company (“CKI”) and affiliated companies personal lines property excess catastrophe losses in Florida
National General Lender Services Standalone Program (2)
Reinsures the National General Lender Services portfolio, which includes property and automobile products
National General Flood Excess of Loss Reinsurance Contract (2)
Reinsures the National General Flood portfolio, which includes business classified as Private Flood Insurance policies providing stand-alone flood coverage
(1)Programs or contracts updated in the first quarter of 2026.
(2)Programs or contracts updated in the second quarter of 2026.
Florida Program Our 2026 Florida Program provides coverage for property policies of CKIC, CKI
and affiliated companies for Florida catastrophe events
Second Quarter 2026 Form 10-Q 53
Segment Results Allstate Protection
up to $934 million of property loss less a $30 million retention.
The Florida Program includes reinsurance agreements placed in the traditional market, Florida Hurricane Catastrophe Fund (“FHCF”) and the insurance-linked securities (“ILS”) market as follows:
•Contracts between $30 million and $85 million:
–First event coverage provides $55 million of reinsurance limit, with $25 million placed with traditional reinsurers and $30 million placed as a catastrophe bond, and is not eligible for reinstatement of limits
–Second event coverage is placed with traditional reinsurers, with $55 million of reinsurance limit
•Contracts between $85 million and $369 million:
–Provide $149 million of limits, 90% placed (totaling $134 million of placed limit) for qualifying losses to personal lines property in Florida caused by storms the National Hurricane Center declares to be hurricanes. These contracts inure to the benefit of all other reinsurance and do not have reinstatement provisions
–Provide $150 million of limit placed with traditional reinsurers for a first event, with one automatic reinstatement of limits, with premium due. A separate contract offsets the full amount of this reinstatement premium
•Contracts between $369 million and $719 million provide $350 million of limit placed as two catastrophe bonds and are not eligible for reinstatement of limits.
•Contracts between $719 million and $934 million provide $215 million of limit placed with traditional reinsurers for a first event, with one automatic reinstatement of limits, with additional premium due. A separate contract offsets the full amount of this reinstatement premium.
National General Lender Services Standalone Program is placed in the traditional market and provides coverage for catastrophe events up to $350 million of loss less a $70 million retention, with
one automatic reinstatement of limits, with additional premium due. The National General FHCF contract provides additional coverage for Florida hurricane events, for a combined coverage for such catastrophe events of $443 million of loss less a $63 million retention.
National General Flood Excess of Loss Reinsurance Contract provides $60 million of placed limits, subject to a $20 million retention, with one automatic reinstatement of limits, with additional premium due.
T5Prior year reserve reestimates, including catastrophes, decreased reserves by $641 million in the second quarter of 2026 and $1.65 billion in the first six months of 2026.
During the second quarter of 2026, favorable auto severity, excluding catastrophes, reflected improved prior period loss development and better than expected claim outcomes. Auto reserve releases for the second quarter of 2026 included $597 million related to auto injury coverages and $42 million related to other auto coverages. Approximately 51% of auto injury coverage reserve releases related to accident year 2025 and approximately 33% to 2023 and 2024.
During the first six months of 2026, favorable auto severity, excluding catastrophes, reflected improved prior period loss development and better than expected claim outcomes. Auto reserve releases during the first six months of 2026 included $1.27 billion related to auto injury coverages and $205 million related to other auto coverages. Approximately 30% of auto injury coverage reserve releases related to accident year 2025 and approximately 51% to 2023 and 2024.
For the second quarter and first six months of 2026, reserve releases in homeowners were primarily driven by favorable severity assumptions, offset by catastrophe reserve increases. Reserve releases in specialty lines and commercial lines were primarily driven by favorable large loss experience in personal umbrella coverage and improved commercial auto injury severity.
For a more detailed discussion on reinsurance and reserve reestimates, see Note 8 of the condensed consolidated financial statements.
54 www.allstate.com
Allstate Protection Segment Results
Prior year reserve reestimates
Three months ended June 30,
Six months ended June 30,
Prior year reserve
reestimates (1)
Effect on
combined ratio (2)
Prior year reserve
reestimates (1)
Effect on
combined ratio (2)
($ in millions, except ratios)
2026
2025
2026
2025
2026
2025
2026
2025
Auto
$
(648)
$
(431)
(4.3)
(3.0)
$
(1,488)
$
(680)
(5.0)
(2.4)
Homeowners
38
30
0.2
0.2
(74)
22
(0.3)
0.1
Specialty lines
(19)
30
(0.1)
0.2
(48)
76
(0.2)
0.3
Commercial lines
(11)
9
(0.1)
0.1
(28)
(19)
(0.1)
(0.1)
Brokered solutions and collateral protection
(1)
(10)
—
(0.1)
(7)
(25)
—
(0.1)
Total Allstate Protection
$
(641)
$
(372)
(4.3)
(2.6)
$
(1,645)
$
(626)
(5.6)
(2.2)
(1)Reserve releases are shown in parentheses.
(2)Ratios are calculated using Allstate Protection premiums earned.
Expense ratio increased 1.0 point and increased 0.4 points in the second quarter and first six months of 2026, respectively, compared to the same periods of 2025 primarily due to higher advertising and legal expenses, partially offset by higher earned premium growth relative to costs.
Impact of specific costs and expenses on the expense ratio
Three months ended June 30,
Six months ended June 30,
($ in millions, except ratios)
2026
2025
Change
2026
2025
Change
Amortization of DAC
$
1,840
$
1,742
$
98
$
3,661
$
3,474
$
187
Advertising expense
524
442
82
1,068
965
103
Other costs and expenses, net of other revenue
836
738
98
1,582
1,427
155
Amortization of purchased intangibles
38
46
(8)
77
92
(15)
Restructuring and related charges
6
13
(7)
7
29
(22)
Total underwriting expenses
$
3,244
$
2,981
$
263
$
6,395
$
5,987
$
408
Premiums earned
$
14,918
$
14,346
$
572
$
29,720
$
28,373
$
1,347
Expense ratio
Amortization of DAC
12.3
12.1
0.2
12.3
12.2
0.1
Advertising expense
3.5
3.1
0.4
3.6
3.4
0.2
Other costs and expenses, net of other revenue
5.7
5.2
0.5
5.3
5.1
0.2
Subtotal
21.5
20.4
1.1
21.2
20.7
0.5
Amortization of purchased intangibles
0.3
0.3
—
0.3
0.3
—
Restructuring and related charges
—
0.1
(0.1)
—
0.1
(0.1)
Total expense ratio
21.8
20.8
1.0
21.5
21.1
0.4
Second Quarter 2026 Form 10-Q 55
Segment Results Run-off Property-Liability
Run-off Property-Liability Segment
Underwriting results
($ in millions)
Three months ended June 30,
Six months ended June 30,
2026
2025
2026
2025
Claims and claims expense
$
—
$
(2)
$
—
$
(5)
Operating costs and expenses
—
(1)
(1)
(2)
Underwriting loss
$
—
$
(3)
$
(1)
$
(7)
Reserves for asbestos, environmental and other run-off claims before and after the effects of reinsurance
($ in millions)
June 30, 2026
December 31, 2025
Asbestos claims
Gross reserves
$
1,031
$
1,098
Reinsurance
(297)
(329)
Net reserves
734
769
Environmental claims
Gross reserves
297
302
Reinsurance
(54)
(55)
Net reserves
243
247
Other run-off claims
Gross reserves
457
452
Reinsurance
(52)
(36)
Net reserves
405
416
Total
Gross reserves
1,785
1,852
Reinsurance
(403)
(420)
Net reserves
$
1,382
$
1,432
Reserves by type of exposure before and after the effects of reinsurance
($ in millions)
June 30, 2026
December 31, 2025
Direct excess commercial insurance
Gross reserves
$
1,018
$
1,063
Reinsurance
(326)
(341)
Net reserves
692
722
Assumed reinsurance coverage
Gross reserves
572
584
Reinsurance
(54)
(54)
Net reserves
518
530
Direct primary commercial insurance
Gross reserves
92
98
Reinsurance
(22)
(24)
Net reserves
70
74
Unallocated loss adjustment expenses
Gross reserves
103
107
Reinsurance
(1)
(1)
Net reserves
102
106
Total
Gross reserves
1,785
1,852
Reinsurance
(403)
(420)
Net reserves
$
1,382
$
1,432
56 www.allstate.com
Run-off Property-Liability Segment Results
Percentage of gross and ceded reserves by case and incurred but not reported (“IBNR”)
June 30, 2026
December 31, 2025
Case
IBNR
Case
IBNR
Direct excess commercial insurance
Gross reserves (1)
69
%
31
%
57
%
43
%
Ceded (2)
82
18
66
34
Assumed reinsurance coverage
Gross reserves
33
67
32
68
Ceded
40
60
44
56
Direct primary commercial insurance
Gross reserves
40
60
38
62
Ceded
76
24
72
28
(1)Approximately 57% and 66% of gross case reserves as of June 30, 2026 and December 31, 2025, respectively, are subject to settlement agreements that define and limit our obligations.
(2)Approximately 62% and 73% of ceded case reserves as of June 30, 2026 and December 31, 2025, respectively, are subject to settlement agreements that define and limit our obligations.
Gross payments from case reserves by type of exposure
($ in millions)
Three months ended June 30,
Six months ended June 30,
2026
2025
2026
2025
Direct excess commercial insurance
Gross (1)
$
24
$
34
$
46
$
60
Ceded (2)
(9)
(10)
(18)
(21)
Assumed reinsurance coverage
Gross
8
10
12
16
Ceded
—
(1)
—
(1)
Direct primary commercial insurance
Gross
4
1
5
2
Ceded
(1)
(1)
(2)
(1)
(1)In the second quarter and first six months of 2026, 86% and 87% of payments related to settlement agreements, respectively, compared to 93% and 91% in the second quarter and first six months of 2025, respectively.
(2)In the second quarter and first six months of 2026, 94% of payments related to settlement agreements compared to 94% and 93% in the second quarter and first six months of 2025, respectively.
Total net reserves as of June 30, 2026, included $653 million or 47% of estimated IBNR reserves compared to $761 million or 53% of estimated IBNR reserves as of December 31, 2025.
Total gross payments were $36 million and $63 million for the second quarter and first six months of 2026, respectively, compared to $45 million and $78 million for the second quarter and first six months of 2025, respectively. Payments primarily related to settlement agreements reached with several insureds on large claims, mainly asbestos-related losses, where the scope of coverages has been agreed upon. The claims associated with these settlement agreements are expected to be substantially paid out over the next several years as qualified claims are submitted by these insureds.
Second Quarter 2026 Form 10-Q 57
Segment Results Protection Services
Protection Services Segment
Summarized financial information
($ in millions)
Three months ended June 30,
Six months ended June 30,
2026
2025
2026
2025
Premiums written
$
769
$
733
$
1,496
$
1,390
Revenues
Premiums
$
752
$
695
$
1,503
$
1,366
Other revenue
123
111
240
239
Intersegment insurance premiums and service fees (1)
35
36
66
73
Net investment income
25
25
48
49
Total revenue
935
867
1,857
1,727
Costs and expenses
Claims and claims expense
(198)
(170)
(397)
(331)
Amortization of DAC
(356)
(328)
(704)
(646)
Operating costs and expenses
(310)
(290)
(619)
(599)
Restructuring and related charges
—
(1)
(4)
(1)
Income tax expense on operations
(19)
(18)
(34)
(35)
Less: noncontrolling interest
(1)
—
(1)
—
Adjusted net income
$
53
$
60
$
100
$
115
Protection Plans
$
42
$
51
$
83
$
96
Roadside
13
11
25
22
Dealer Services
3
4
8
8
Identity Protection
2
2
3
3
Arity
(7)
(8)
(19)
(14)
Adjusted net income
$
53
$
60
$
100
$
115
Policies in force
Protection Plans
168,703
162,315
Roadside
1,520
988
Dealer Services
3,601
3,697
Identity Protection
2,719
2,669
Policies in force as of June 30 (in thousands)
176,543
169,669
(1)Primarily related to Arity and Roadside and are eliminated in our condensed consolidated financial statements.
Premiums written increased 4.9% or $36 million in the second quarter of 2026 and increased 7.6% or $106 million in the first six months of 2026 compared to the same periods of 2025, primarily due to continued growth at Protection Plans.
Adjusted net income decreased 11.7% or $7 million in the second quarter of 2026 and decreased 13.0% or $15 million in the first six months of 2026 compared to the same periods of 2025, primarily reflecting lower margins on major appliances at Protection Plans.
PIF increased 4.1% or 7 million as of June 30, 2026 compared to June 30, 2025 due to growth at Protection Plans.
Other revenue increased 10.8% or $12 million in the second quarter of 2026 compared to the second quarter of 2025, primarily due to higher lead generation revenue at Arity.
Intersegment premiums and service fees decreased 9.6% or $7 million in the first six months of
2026 compared to the first six months of 2025, primarily driven by Arity and Roadside.
Claims and claims expense increased 16.5% or $28 million in the second quarter of 2026 and increased 19.9% or $66 million in the first six months of 2026 compared to the same periods of 2025, primarily driven by increased loss costs at Protection Plans.
Amortization of DAC increased 8.5% or $28 million in the second quarter of 2026 and increased 9.0% or $58 million in the first six months of 2026 compared to the same periods of 2025, driven by growth at Protection Plans.
Operating costs and expenses increased 6.9% or $20 million in the second quarter of 2026 and increased 3.3% or $20 million in the first six months of 2026 compared to the same periods of 2025, primarily due to expenses related to growth at Protection Plans.
58 www.allstate.com
Investments
Investments
Portfolio composition and strategy (1)
June 30, 2026
($ in millions)
Property-Liability
Protection Services
Corporate
and all other
Total
Fixed income securities (2)
$
51,476
$
1,707
$
7,626
$
60,809
Equity securities (3)
9,324
500
1,335
11,159
Mortgage loans, net
842
—
—
842
Limited partnership interests
8,961
—
6
8,967
Short-term investments (4)
3,551
321
1,000
4,872
Other investments, net
1,153
—
—
1,153
Total
$
75,307
$
2,528
$
9,967
$
87,802
Percent to total
85.8
%
2.9
%
11.3
%
100.0
%
Market-based
$
65,617
$
2,488
$
9,925
$
78,030
Performance-based
9,690
40
42
9,772
Total
$
75,307
$
2,528
$
9,967
$
87,802
(1) Balances reflect the elimination of related-party investments between segments.
(2) Fixed income securities are carried at fair value. Amortized cost, net for these securities was $51.54 billion, $1.71 billion, $7.66 billion and $60.90 billion for Allstate Protection and Run-off Property-Liability, Protection Services, Corporate and all other, and in total, respectively.
(3) Equity securities are carried at fair value. The fair value of equity securities held as of June 30, 2026, was $1.09 billion in excess of cost. Equity securities include $2.88 billion of funds with underlying investments in fixed income and short-term securities as of June 30, 2026.
(4) Short-term investments are carried at fair value.
Investments totaled $87.80 billion as of June 30, 2026, increasing from $83.24 billion as of December 31, 2025, primarily due to operating cash flows.
Portfolio composition by investment strategy We utilize two primary strategies to manage risks and returns and to position our portfolio to take advantage of market opportunities while attempting to mitigate adverse effects. As strategies and market conditions evolve, the asset allocation may change.
Market-based strategy seeks to deliver predictable earnings aligned to business needs and provide flexibility to adjust investment risk profile based on enterprise objectives and market opportunities primarily through public and private fixed income investments and public equity securities.
Performance-based strategy seeks to deliver attractive risk-adjusted returns and supplement market risk with idiosyncratic risk primarily through investments in private equity, including infrastructure investments, and real estate with a majority being
limited partnerships. These investments include investee level expenses, reflecting asset level operating expenses on directly held real estate and other consolidated investments.
Macroeconomic impacts Strategic actions continued to focus on optimizing portfolio yield, risk and return amid evolving market and macroeconomic conditions.
Private credit exposure We define private credit as investments in asset-based financing arrangements, corporate credit excluding SEC Rule 144a and similar exposures, and certain consumer lending exposures. Our private credit investments are primarily originated by third-party asset managers with global credit platforms and are generally secured by collateral, with 93% rated investment grade. Mortgage loans consist of residential loans, which are secured by collateral and have recourse to the borrower.
The following table reflects investments as of June 30, 2026 in private credit by investment type.
Private credit investments
As of June 30, 2026
($ in millions)
Fixed income securities (1)
Bank loans (1)
Mortgage loans
Total
Asset-based financing
$
84
$
291
$
342
$
717
Corporate credit
160
178
—
338
Total carrying value
$
244
$
469
$
342
$
1,055
(1) 93% of fixed income securities and 93% of bank loans were rated investment grade.
Given this composition, the portfolio is well positioned in the current market environment, with risk characteristics that differ from areas of the private credit market experiencing heightened volatility.
Second Quarter 2026 Form 10-Q 59
Investments
Portfolio composition by investment strategy
June 30, 2026
($ in millions)
Market-
based
Performance-based
Total
Fixed income securities
$
60,703
$
106
$
60,809
Equity securities
10,806
353
11,159
Mortgage loans, net
842
—
842
Limited partnership interests
256
8,711
8,967
Short-term investments
4,872
—
4,872
Other investments, net
551
602
1,153
Total
$
78,030
$
9,772
$
87,802
Percent to total
88.9
%
11.1
%
100.0
%
Unrealized net capital gains and losses
Fixed income securities
$
(93)
$
—
$
(93)
Short-term investments
(2)
—
(2)
Other investments
(2)
—
(2)
Total
$
(97)
$
—
$
(97)
Fixed income securities
Fixed income securities by type
Fair value as of
($ in millions)
June 30, 2026
December 31, 2025
U.S. government and agencies
$
12,351
$
18,133
Municipal
6,334
5,643
Corporate
36,407
30,401
Foreign government
1,625
1,460
Asset-backed securities (“ABS”)
1,971
1,352
Mortgage-backed securities (“MBS”)
2,121
2,126
Total fixed income securities
$
60,809
$
59,115
Fixed income securities are rated by third-party credit rating agencies or are internally rated. The Securities Valuation Office (“SVO”) of the National Association of Insurance Commissioners (“NAIC”) evaluates the fixed income securities of insurers for regulatory reporting and capital assessment purposes. The NAIC assigns securities to one of six credit quality categories defined as “NAIC designations”. In general, securities with NAIC designations of 1 and 2 are considered investment grade and securities with NAIC designations of 3 through 6 are considered below investment grade. The rating is either received from the SVO based on availability of applicable ratings from rating agencies on the NAIC Nationally Recognized Statistical Rating Organizations provider list, including Moody’s Investors Service (“Moody’s”), S&P Global Ratings (“S&P”), Fitch Ratings or a comparable internal rating.
As a result of time lags between the funding of investments, the finalization of legal documents, and the completion of the SVO filing process, the portfolio includes certain securities that have not yet been designated by the SVO as of each balance sheet date and the categorization of these securities is based on the expected ratings indicated by internal analysis.
As of June 30, 2026, 92.2% of the consolidated fixed income securities portfolio was rated investment
grade. Credit ratings below these designations are considered lower credit quality or below investment grade, which includes high yield bonds.
Market prices for certain securities may have credit spreads which imply higher or lower credit quality than the current third-party rating. Our initial investment decisions and ongoing monitoring procedures for fixed income securities are based on a due diligence process which includes, but is not limited to, an assessment of the credit quality, sector, structure and liquidity risks of each issuer.
Fixed income portfolio monitoring is a comprehensive process to identify and evaluate each fixed income security that may require a credit loss allowance. The process includes a quarterly review of all securities to identify instances where the fair value of a security compared to its amortized cost is below internally established thresholds. For further detail on our fixed income portfolio monitoring process, see Note 4 of the condensed consolidated financial statements.
The following table presents total fixed income securities by the applicable NAIC designation and comparable S&P rating.
60 www.allstate.com
Investments
Fair value and unrealized net capital gains (losses) for fixed income securities by credit rating
June 30, 2026
NAIC 1
NAIC 2
NAIC 3
A and above
BBB
BB
($ in millions)
Fair
value
Unrealized
gain (loss)
Fair
value
Unrealized
gain (loss)
Fair
value
Unrealized
gain (loss)
U.S. government and agencies
$
12,351
$
(91)
$
—
$
—
$
—
$
—
Municipal
6,121
49
210
1
—
—
Corporate
Public
7,855
(10)
14,958
(40)
613
1
Privately placed
2,987
(5)
5,932
1
2,492
8
Total corporate
10,842
(15)
20,890
(39)
3,105
9
Foreign government
1,520
(2)
105
1
—
—
ABS
1,757
(7)
160
—
15
—
MBS
2,121
(3)
—
—
—
—
Total fixed income securities
$
34,712
$
(69)
$
21,365
$
(37)
$
3,120
$
9
NAIC 4
NAIC 5-6
Total
B
CCC and lower
Fair
value
Unrealized
gain (loss)
Fair
value
Unrealized
gain (loss)
Fair
value
Unrealized
gain (loss)
U.S. government and agencies
$
—
$
—
$
—
$
—
$
12,351
$
(91)
Municipal
—
—
3
2
6,334
52
Corporate
Public
88
—
—
—
23,514
(49)
Privately placed
1,338
2
144
(2)
12,893
4
Total corporate
1,426
2
144
(2)
36,407
(45)
Foreign government
—
—
—
—
1,625
(1)
ABS
1
—
38
2
1,971
(5)
MBS
—
—
—
—
2,121
(3)
Total fixed income securities
$
1,427
$
2
$
185
$
2
$
60,809
$
(93)
Municipal bonds, including tax-exempt and taxable securities, include general obligations of state and local issuers and revenue bonds.
Corporate bonds include publicly traded and privately placed securities. Privately placed securities primarily consist of corporate issued senior debt securities that are negotiated with the borrower or are issued by public entities in unregistered form.
ABS includes collateralized debt obligations, consumer and other ABS. Credit risk is managed by monitoring the performance of the underlying collateral. Many of the securities in the ABS portfolio have credit enhancement with features such as overcollateralization, subordinated structures, reserve funds, guarantees or insurance.
MBS includes residential mortgage-backed securities (“RMBS”) and commercial mortgage-backed securities (“CMBS”). RMBS is subject to interest rate risk, but unlike other fixed income securities, is additionally subject to prepayment risk from the underlying residential mortgage loans. RMBS primarily consists of a U.S. Agency portfolio having collateral issued or guaranteed by U.S. government agencies. CMBS investments are primarily traditional conduit transactions collateralized by commercial mortgage loans, broadly diversified across property types and geographical area.
Equity securities of $11.16 billion primarily include common stocks, exchange traded and mutual funds, non-redeemable preferred stocks and real estate investment trust (“REITs”) equity investments. Exchange traded and mutual funds that have fixed income and short-term securities as their underlying investments total $2.88 billion as of June 30, 2026.
Mortgage loans of $842 million comprise loans secured by first mortgages on developed commercial real estate of $548 million and residential mortgage loans of $294 million. Key considerations used to manage our exposure include property type and geographic diversification. For further detail on our mortgage loan portfolio, see Note 4 of the condensed consolidated financial statements.
Limited partnership interests include $7.09 billion of interests in private equity funds, $1.62 billion of interests in real estate funds and $256 million of interests in other funds as of June 30, 2026. We have commitments to invest additional amounts in limited partnership interests totaling $3.07 billion as of June 30, 2026.
Other investments include $575 million of direct investments in real estate and $564 million of bank loans, net as of June 30, 2026. We have commitments to invest additional amounts in bank loans totaling $172 million as of June 30, 2026.
Second Quarter 2026 Form 10-Q 61
Investments
Unrealized net capital gains (losses)
June 30,
December 31,
($ in millions)
2026
2025
U.S. government and agencies
$
(91)
$
(32)
Municipal
52
26
Corporate
(45)
351
Foreign government
(1)
(4)
ABS
(5)
4
MBS
(3)
40
Fixed income securities
(93)
385
Short-term investments
(2)
(1)
Derivatives
(2)
(2)
Unrealized net capital gains and losses, pre-tax
$
(97)
$
382
Gross unrealized gains (losses) on fixed income securities by type and sector
($ in millions)
Amortized
cost, net
Gross unrealized
Fair
value
Gains
Losses
June 30, 2026
Corporate
Banking
$
4,422
$
35
$
(27)
$
4,430
Basic industry
1,530
10
(12)
1,528
Capital goods
3,603
35
(37)
3,601
Communications
2,957
20
(45)
2,932
Consumer goods (cyclical and non-cyclical)
6,963
64
(55)
6,972
Energy
4,160
40
(28)
4,172
Financial services
2,429
17
(26)
2,420
Technology
2,853
18
(52)
2,819
Transportation
1,172
8
(11)
1,169
Utilities
5,906
60
(54)
5,912
Other
457
3
(8)
452
Total corporate fixed income portfolio
36,452
310
(355)
36,407
U.S. government and agencies
12,442
12
(103)
12,351
Municipal
6,282
92
(40)
6,334
Foreign government
1,626
13
(14)
1,625
ABS
1,976
7
(12)
1,971
MBS
2,124
11
(14)
2,121
Total fixed income securities
$
60,902
$
445
$
(538)
$
60,809
62 www.allstate.com
Investments
Gross unrealized gains (losses) on fixed income securities by type and sector
($ in millions)
Amortized
cost, net
Gross unrealized
Fair
value
Gains
Losses
December 31, 2025
Corporate
Banking
$
3,720
$
83
$
(11)
$
3,792
Basic industry
1,028
19
(9)
1,038
Capital goods
3,142
64
(22)
3,184
Communications
2,195
38
(21)
2,212
Consumer goods (cyclical and non-cyclical)
6,097
124
(42)
6,179
Energy
2,715
55
(17)
2,753
Financial services
2,430
39
(21)
2,448
Technology
2,956
40
(47)
2,949
Transportation
831
14
(6)
839
Utilities
4,465
104
(27)
4,542
Other
471
5
(11)
465
Total corporate fixed income portfolio
30,050
585
(234)
30,401
U.S. government and agencies
18,165
43
(75)
18,133
Municipal
5,617
87
(61)
5,643
Foreign government
1,464
13
(17)
1,460
ABS
1,348
8
(4)
1,352
MBS
2,086
41
(1)
2,126
Total fixed income securities
$
58,730
$
777
$
(392)
$
59,115
In general, gross unrealized losses are related to an increase in market yields, which may include increased risk-free interest rates and wider credit spreads since the time of initial purchase. Similarly, gross unrealized gains reflect a decrease in market yields since the time of initial purchase.
Equity securities by sector
June 30, 2026
December 31, 2025
($ in millions)
Cost
Over (under) cost
Fair
value
Cost
Over (under) cost
Fair
value
Banking
$
369
$
52
$
421
$
298
$
58
$
356
Basic industry
149
16
165
105
7
112
Capital goods
563
120
683
412
12
424
Communications
339
(12)
327
333
19
352
Consumer goods
1,490
104
1,594
1,107
22
1,129
Energy
255
41
296
187
8
195
Financial services
438
36
474
357
17
374
REITs
209
49
258
163
24
187
Technology
1,961
588
2,549
2,039
133
2,172
Transportation
79
19
98
51
2
53
Utilities
202
—
202
167
(4)
163
Other
4
(1)
3
5
(2)
3
Directly held equity securities
6,058
1,012
7,070
5,224
296
5,520
Funds
Equities
1,139
74
1,213
1,544
67
1,611
Fixed income and short-term
2,874
2
2,876
1,257
8
1,265
Other
—
—
—
1
1
2
Total funds
4,013
76
4,089
2,802
76
2,878
Total equity securities
$
10,071
$
1,088
$
11,159
$
8,026
$
372
$
8,398
Second Quarter 2026 Form 10-Q 63
Investments
Net investment income
Three months ended June 30,
Six months ended June 30,
($ in millions)
2026
2025
2026
2025
Fixed income securities
$
710
$
602
$
1,376
$
1,210
Equity securities
54
17
95
37
Mortgage loans
12
9
24
19
Limited partnership interests
240
74
446
268
Short-term investments
48
97
107
169
Other investments
28
24
54
45
Investment income, before expense
1,092
823
2,102
1,748
Investment expense
Investee level expenses
(16)
(11)
(28)
(21)
Securities lending expense
(17)
(21)
(34)
(43)
Operating costs and expenses
(50)
(37)
(93)
(76)
Total investment expense
(83)
(69)
(155)
(140)
Net investment income
$
1,009
$
754
$
1,947
$
1,608
Market-based
$
837
$
733
$
1,628
$
1,452
Performance-based
255
90
474
296
Investment income, before expense
$
1,092
$
823
$
2,102
$
1,748
Net investment income increased 33.8% or $255 million in the second quarter of 2026 and increased 21% or $339 million in the first six months of 2026 compared to the same periods of 2025, primarily related to higher market-based income resulting from higher average investment balances and improved performance-based investment results.
Performance-based investment income
Three months ended June 30,
Six months ended June 30,
($ in millions)
2026
2025
2026
2025
Private equity
$
143
$
74
$
254
$
177
Real estate
112
16
220
119
Total performance-based income before investee level expenses
$
255
$
90
$
474
$
296
Investee level expenses (1)
(16)
(11)
(28)
(21)
Total performance-based income
$
239
$
79
$
446
$
275
(1)Investee level expenses include asset level operating expenses on directly held real estate and other consolidated investments reported in investment expense.
Performance-based investment income increased $160 million in the second quarter of 2026 and increased 62.2% or $171 million in the first six months of 2026 compared to the same periods of 2025 primarily due to higher real estate and private equity valuation increases. Income in the second quarter of 2026 was concentrated among a small number of investments, with the top 10 investments contributing approximately 88% of performance-based income, while the broader portfolio generated modest returns.
Performance-based investment results and income can vary significantly between periods and are influenced by economic conditions, equity market performance, comparable public company earnings
multiples, capitalization rates, operating performance of the underlying investments and the timing of asset sales. The Company typically employs a lag in recording and recognizing changes in valuations of limited partnership interests due to the availability of investee financial statements. As a result, performance-based income in the second quarter of 2026 is primarily comprised of operating and market performance and results of our investments for the three months ended March 31, 2026, and may not reflect all economic conditions, including the effects of macroeconomic impacts referred to in the Highlights section of MD&A.
64 www.allstate.com
Investments
Components of net gains (losses) on investments and derivatives and the related tax effect
Three months ended June 30,
Six months ended June 30,
($ in millions)
2026
2025
2026
2025
Sales
$
(80)
$
(245)
$
(84)
$
(382)
Credit losses (1)
(18)
(4)
(25)
(80)
Valuation change of equity investments - appreciation (decline):
Equity securities
1,157
163
793
46
Equity fund investments in fixed income securities and short-term investments
1
1
(16)
6
Limited partnerships (2)
21
6
14
1
Total valuation of equity investments
1,179
170
791
53
Valuation change and settlements of derivatives
(26)
(65)
(32)
(84)
Net gains (losses) on investments and derivatives, pre-tax
1,055
(144)
650
(493)
Income tax (expense) benefit
(226)
32
(141)
105
Net gains (losses) on investments and derivatives, after-tax
$
829
$
(112)
$
509
$
(388)
Market-based (1)
$
1,032
$
(168)
$
642
$
(489)
Performance-based
23
24
8
(4)
Net gains (losses) on investments and derivatives, pre-tax
$
1,055
$
(144)
$
650
$
(493)
(1)2025 includes losses recorded for variable interests in Reciprocal Exchanges. See Note 7 for further details.
(2)Relates to limited partnerships where the underlying assets are predominately public equity securities.
T6Net gains on investments and derivatives in the second quarter and first six months of 2026 primarily related to valuation gains on equity investments. These gains were slightly offset by losses on sales of fixed income securities in connection with ongoing portfolio management, net losses on valuation change and settlements of derivatives primarily related to interest rate futures used to manage duration, and credit losses.
Net gains (losses) on performance-based investments and derivatives
Three months ended June 30,
Six months ended June 30,
($ in millions)
2026
2025
2026
2025
Sales
$
39
$
6
$
35
$
(3)
Credit losses
(15)
(4)
(22)
(11)
Valuation change of equity investments
(2)
59
(16)
66
Valuation change and settlements of derivatives
1
(37)
11
(56)
Total performance-based
$
23
$
24
$
8
$
(4)
Second Quarter 2026 Form 10-Q 65
Capital Resources and Liquidity
Capital Resources and Liquidity
Capital resources consist of shareholders’ equity and debt, representing funds deployed or available to be deployed to support business operations or for general corporate purposes.
Capital resources
($ in millions)
June 30, 2026
December 31, 2025
Preferred stock, common stock, treasury stock, retained income and other shareholders’ equity items
$
33,891
$
30,355
Accumulated other comprehensive (loss) income
(193)
255
Total Allstate shareholders’ equity
33,698
30,610
Debt (1)
7,492
7,490
Total capital resources
$
41,190
$
38,100
Ratio of debt to Allstate shareholders’ equity
22.2
%
24.5
%
Ratio of debt to capital resources
18.2
19.7
(1)Net of debt issuance costs of $49 million and $51 million as of June 30, 2026 and December 31, 2025, respectively.
Allstate shareholders’ equity increased in the first six months of 2026, primarily due to net income, partially offset by common share repurchases, dividends to shareholders and unrealized net capital losses. In the six months ended June 30, 2026, we paid dividends of $541 million and $59 million related to our common and preferred shares, respectively.
Debt maturities We have $550 million of debt that is scheduled to mature in December 2026.
Debt maturities for each of the next five years
and thereafter (excluding issuance costs)
($ in millions)
2027
$
—
2028
—
2029
500
2030
600
2031
—
Thereafter
5,891
Total long-term debt principal
$
6,991
Common share repurchases On February 4, 2026, the Board of Directors authorized a common share repurchase program for $4.00 billion which must be completed by February 29, 2028. As of June 30, 2026, there was $2.60 billion remaining on the $4.00 billion common share repurchase program.
T7During the first six months of 2026, we repurchased 8 million common shares, or 3.0% of total common shares outstanding at December 31, 2025, for $1.66 billion.
Common shareholder dividends On January 2, 2026 and April 1, 2026, we paid a common shareholder dividend of $1.00 and $1.08, respectively. On May 22, 2026, we declared a common shareholder dividend of $1.08 payable on July 1, 2026.
Financial ratings and strength Our ratings are influenced by many factors including our operating and financial performance, asset quality, liquidity, overall portfolio mix, financial leverage (i.e., debt), exposure to risks such as catastrophes and the current level of operating leverage. The preferred stock and subordinated debentures are viewed as having a common equity component by certain rating agencies and are given equity credit up to a pre-determined
limit in our capital structure as determined by their respective methodologies. These respective methodologies consider the existence of certain terms and features in the instruments such as the noncumulative dividend feature in the preferred stock.
There have been no changes to any of our ratings from A.M. Best, S&P or Moody’s since December 31, 2025.
Liquidity sources and uses We actively manage our financial position and liquidity levels in light of changing market, economic and business conditions. Liquidity is managed at both the entity and enterprise level across the Company and is assessed on both base and stressed level liquidity needs. We believe we have sufficient liquidity to meet these needs. As of June 30, 2026, we held $28.47 billion of cash, U.S. government and agencies fixed income securities, public equity securities and short-term investments, which we would expect to be able to liquidate within one week.
Additionally, we have existing intercompany agreements in place that facilitate liquidity management across the Company to enhance flexibility.
The Corporation is party to an Amended and Restated Intercompany Liquidity Agreement (“Liquidity Agreement”) with certain subsidiaries, which includes, but is not limited to Allstate Insurance Company (“AIC”). The Liquidity Agreement allows for short-term advances of funds to be made between parties for liquidity and other general corporate purposes. The Liquidity Agreement does not establish a commitment to advance funds on the part of any party. AIC serves as a lender and borrower, certain other subsidiaries serve only as borrowers, and the Corporation serves only as a lender. The maximum amount of potential funding under each of these agreements is $1.00 billion.
In addition to the Liquidity Agreement, the Corporation also has an intercompany loan agreement with certain of its subsidiaries, which includes, but is not limited to, AIC. The amount of intercompany loans available to the Corporation’s subsidiaries is at the discretion of the Corporation. The maximum amount of loans the Corporation will have outstanding to all its
66 www.allstate.com
Capital Resources and Liquidity
eligible subsidiaries at any given point in time is limited to $1.00 billion. The Corporation may use commercial paper borrowings, bank lines of credit and securities lending to fund intercompany borrowings.
Parent company capital capacity At the parent holding company level, we have deployable assets totaling $9.45 billion as of June 30, 2026, primarily comprised of cash and short-term, fixed income and equity securities that are generally saleable within one quarter. The earnings capacity of the operating subsidiaries is the primary source of capital generation for the Corporation.
Based on the greater of 2025 statutory net income or 10% of actual December 31, 2025 statutory surplus, the maximum amount of dividends that AIC will be able to pay, without prior Illinois Department of Insurance approval, at a given point in time through February 2027, is $7.98 billion, less dividends paid during the preceding twelve months measured at that point in time. During the first six months of 2026, $4.00 billion of dividends have been paid.
Dividends may not be paid or declared on our common stock and shares of common stock may not be repurchased unless the full dividends for the latest completed dividend period on our preferred stock have been declared and paid or provided for.
The terms of our outstanding subordinated debentures also prohibit us from declaring or paying any dividends or distributions on our common or preferred stock or redeeming, purchasing, acquiring, or making liquidation payments on our common stock or preferred stock if we have elected to defer interest payments on the subordinated debentures, subject to certain limited exceptions. In the first six months of 2026, we did not defer interest payments on the subordinated debentures.
Additional resources to support liquidity are as follows:
•The Corporation and AIC have access to a $750 million unsecured revolving credit facility that is available for short-term liquidity requirements. The maturity date of this facility is November 2027. The facility is fully subscribed among 11 lenders with the largest commitment being $95 million. The commitments of the lenders are several and no lender is responsible for any other lender’s commitment if such lender fails to make a loan under the facility. This facility contains an increase provision that would allow up to an additional $500 million of borrowing, subject to the lenders’ commitment. This facility has a financial covenant requiring that we not exceed a 37.5% debt to capitalization ratio as defined in the agreement.
This ratio was 13.9% as of June 30, 2026. Although the right to borrow under the facility is not subject to a minimum rating requirement, the costs of maintaining the facility and borrowing under it are based on the ratings of our senior unsecured, unguaranteed long-term debt. There were no borrowings under the credit facility during 2026.
•To cover short-term cash needs, the Corporation has access to a commercial paper facility with a borrowing capacity limited to any undrawn credit facility balance up to $750 million.
•As of June 30, 2026, there were no balances outstanding for the credit facility or the commercial paper facility, and therefore the remaining borrowing capacity was $750 million.
•The Corporation has access to a universal shelf registration statement with the Securities and Exchange Commission that was filed on April 30, 2024 and expires in 2027. We can use this shelf registration to issue an unspecified amount of debt securities, common stock (including 646 million shares of treasury stock as of June 30, 2026), preferred stock, depositary shares, warrants, stock purchase contracts and stock purchase units. The specific terms of any securities we issue under this registration statement will be provided in the applicable prospectus supplements.
Second Quarter 2026 Form 10-Q 67
Forward-Looking Statements
This report contains “forward-looking statements” that anticipate results based on our estimates, assumptions and plans that are subject to uncertainty. These statements are made subject to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements do not relate strictly to historical or current facts and may be identified by their use of words like “plans,” “seeks,” “expects,” “will,” “should,” “anticipates,” “estimates,” “intends,” “believes,” “likely,” “targets” and other words with similar meanings. These statements may address, among other things, our strategy for growth, catastrophe exposure management, product development, investment results, regulatory approvals, market position, expenses, financial results, litigation and reserves. We believe that these statements are based on reasonable estimates, assumptions and plans.
Forward-looking statements speak only as of the date on which they are made, and we assume no obligation to update any forward-looking statements resulting from new information or future events or developments. In addition, forward-looking statements are subject to certain risks or uncertainties that could cause actual results to differ materially from those communicated in these forward-looking statements. Factors that could cause actual results to differ materially from those expressed in, or implied by, the forward-looking statements include risks related to:
Insurance and Financial Services (1) actual claim costs exceeding current reserves; (2) increases in claim frequency or severity; (3) catastrophes and severe weather events; (4) limitations in analytical models used for loss cost estimates; (5) price competition and changes in regulation and underwriting standards; (6) regulatory limitations on rates, profits, new products or the use of advanced technologies, non-traditional data sources or large language models and requirements to underwrite business and participate in loss sharing arrangements; (7) market risk, declines in credit quality and economic and capital market conditions affecting investments; (8) subjective determination of fair value and amount of credit losses for investments; (9) participation in indemnification programs, including state industry pools and facilities; (10) inability to mitigate the impact associated with changes in capital requirements; (11) a downgrade in financial strength ratings;
Business, Strategy and Operations (12) operations in markets that are highly competitive; (13) changing consumer preferences; (14) new or changing technologies and new business model impacts affecting the auto industry; (15) inability to successfully deploy advanced technologies in a cost-effective, competitive, ethical and compliant manner; (16) Transformative Growth strategy; (17) catastrophe management strategy; (18) restrictions on our subsidiaries’ ability to pay dividends; (19) restrictions under terms of some of our securities on the ability to pay dividends or repurchase stock; (20) the availability and cost of reinsurance; (21) counterparty risk related to reinsurance; (22) acquisitions and divestitures of businesses; (23) intellectual property infringement, misappropriation and third-party claims; (24) reliance on vendors for products, services or protection of data and information; (25) the failure in cyber or other information security controls; (26) inability to restore business operations following a significant operational event; (27) inability to attract, develop and retain talent;
Macro, Regulatory and Risk Environment (28) conditions in the global economy and capital markets, including changes in U.S. trade and tariff policy, new or additional U.S. and responsive non-U.S. tariffs, and our ability to plan for and respond to the impact of those changes; (29) restrictions on liquidity or availability of credit on acceptable terms; (30) widespread disruptive or destabilizing events; (31) changing climate and weather conditions; (32) practices relating to environmental and social matters; (33) evolving privacy and data security regulation and increased focus on enforcement; (34) restrictive regulations and uncertainty around the interpretation and implementation of regulations in the U.S. and internationally; (35) regulatory and federal agency reforms; (36) losses from legal and regulatory actions; (37) changes in or the application of accounting standards and changes in tax laws; and (38) misconduct or fraudulent acts by employees, agents and third parties.
Additional information concerning these and other factors may be found in our filings with the Securities and Exchange Commission, including the “Risk Factors” section in our most recent annual report on Form 10-K.
Mentions · how they’re counted
| Category | Underlined | Word counter | Model’s count |
|---|---|---|---|
| AI AI, artificial intelligence, generative AI, machine learning, large language model, LLM | 1 | 1 | 2 |
| Layoffs layoffs, RIF, headcount reduction, workforce optimization, restructuring | 12 | — | 0 |
| Recession recession, downturn, contraction, slowdown | 0 | 0 | 0 |
| Tariffs tariff, trade war, trade barriers, trade restrictions, trade policy | 3 | 3 | 3 |
| Buybacks share repurchase, buyback program | 5 | — | 2 |
Underlines use the same word lists the scores use. AI, recession and tariffs follow Palanor’s word counter, so those counts match it exactly on the same text. Layoffs and buybacks use the terms the model was given. The model’s count is an estimate by meaning, not by string, so it can differ from the underlines.
Not placed in the text
These quotes are stored with a score, but no passage here matches them closely enough to highlight. Rather than point at the wrong passage, they are listed as stored.
Theme · Improved combined ratio
“Combined ratio was 86.6, an improvement of 4.5 points compared to 91.1 in the prior year quarter.”
Source: SEC EDGAR · public domain · Highlights by Palanor