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 2011. 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 the following priorities:

†          maintain auto profitability;

†          raise returns in homeowners and annuity businesses;

†          grow insurance premiums; and

†          proactively manage investments and capital.

HIGHLIGHTS

† Consolidated net income was $766 million in the first quarter of 2012 compared to $524 million in the first quarter of 2011. Net income per diluted share was $1.53 in the first quarter of 2012 compared to $0.98 in the first quarter of 2011.

† Property-Liability net income was $695 million in the first quarter of 2012 compared to $468 million in the first quarter of 2011.

† The Property-Liability combined ratio was 92.1 in the first quarter of 2012 compared to 94.9 in the first quarter of 2011.

† Allstate Financial net income was $112 million in the first quarter of 2012 compared to $102 million in the first quarter of 2011.

† Total revenues were $8.36 billion in the first quarter of 2012 compared to $8.10 billion in the first quarter of 2011.

† Property-Liability premiums earned totaled $6.63 billion in the first quarter of 2012, an increase of 2.8% from $6.45 billion in the first quarter of 2011.

† Net realized capital gains were $168 million in the first quarter of 2012 compared to $96 million in the first quarter of 2011.

† Investments totaled $97.01 billion as of March 31, 2012, an increase of 1.5% from $95.62 billion as of December 31, 2011. Net investment income in the first quarter of 2012 was $1.01 billion, an increase of 3.0% from $982 million in the first quarter of 2011.

† Book value per diluted share (ratio of shareholders' equity to total shares outstanding and dilutive potential shares outstanding) was $38.57 as of March 31, 2012, an increase of 8.0% from $35.72 as of March 31, 2011 and an increase of 6.6% from $36.18 as of December 31, 2011.

† For the twelve months ended March 31, 2012, return on the average of beginning and ending period shareholders' equity was 5.4%, a decrease of 1.9 points from 7.3% for the twelve months ended March 31, 2011.

† As of March 31, 2012, shareholders' equity was $19.18 billion. This total included $2.65 billion in deployable invested assets at the parent holding company level.

† New deferred policy acquisition costs ("DAC") accounting guidance was adopted on a retrospective basis as of January 1, 2012 (see Note 1 of the condensed consolidated financial statements). Accordingly, all prior period balances have been adjusted. The DAC and shareholders' equity balances were reduced by $572 million and $376 million, respectively, when compared to the previously reported December 31, 2011 balances. Impacted income statement line items include amortization of DAC, operating costs and expenses, gain/loss on disposition of operations, and income tax expense. Impacted balance sheet line items include DAC, deferred income taxes, reserve for life-contingent contract benefits, other liabilities and accrued expenses, retained income, unrealized net capital gains and losses, and unrealized foreign currency translation adjustments.