Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 2009 AND 2008

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 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 2008. Further analysis of our insurance segments is provided in the Property-Liability Operations (which includes the Allstate Protection and the Discontinued Lines and Coverages segments) and in the Allstate Financial Segment sections of Management's Discussion and Analysis ("MD&A"). The segments are consistent with the way in which we use financial information to evaluate business performance and to determine the allocation of resources.

Allstate is focused on three priorities: protecting Allstate's financial strength, improving customer loyalty, and continuing to reinvent protection and retirement for the consumer. In addition, we will continue to monitor market conditions and will consider business start-ups, acquisitions and alliances that would forward our business objectives and represent prudent uses of corporate capital.

HIGHLIGHTS

† Consolidated net loss was $274 million in the first quarter of 2009 compared to net income of $348 million in the first quarter of 2008. Net loss per diluted share was $0.51 in the first quarter of 2009 compared to net income per diluted share of $0.62 in the first quarter of 2008.

† Property-Liability net income was $100 million in the first quarter of 2009 compared to $503 million in the first quarter of 2008.

† The Property-Liability combined ratio was 96.8 in the first quarter of 2009 compared to 94.0 in the first quarter of 2008.

† Allstate Financial had a net loss of $327 million in the first quarter of 2009 compared to a net loss of $111 million in the first quarter of 2008.

† Total revenues were $7.88 billion in the first quarter of 2009 compared to $8.09 billion in the first quarter of 2008.

† Property-Liability premiums earned in the first quarter of 2009 totaled $6.58 billion, a decrease of 2.7% from $6.76 billion in the first quarter of 2008.

† Net realized capital losses were $359 million in the first quarter of 2009 compared to net realized capital losses of $655 million in the first quarter of 2008.

† Investments as of March 31, 2009 totaled $93.87 billion, a decrease of 2.2% from $96.00 billion as of December 31, 2008. Net investment income in the first quarter of 2009 was $1.18 billion, a decrease of 22.9% from $1.53 billion in the first quarter of 2008.

† Income tax expense for the first quarter of 2009 includes expense of $254 million attributable to an increase in the valuation allowance relating to the deferred tax asset on capital losses.

† Book value per diluted share (ratio of shareholders' equity to total shares outstanding and dilutive potential shares outstanding) was $22.65 as of March 31, 2009, a decrease of 37.8% from $36.39 as of March 31, 2008 and a decrease of 3.5% from $23.47 as of December 31, 2008.

† For the twelve months ended March 31, 2009, return on the average of beginning and ending period shareholders' equity was (14.1)%, a decrease of 30.4 points from 16.3% for the twelve months ended March 31, 2008.

† To further enhance our liquidity and capital levels, in 2008 we suspended our $2.00 billion share repurchase program and did not complete it by our original target date of March 2009.

† At March 31, 2009, we held $12.24 billion in capital. This total included $3.35 billion in deployable invested assets at the parent holding company level.

† In the first quarter of 2009, we revised our shareholder dividend to $0.20 from $0.41.

---