Spreadsheet: 07296c68-386c-439e-ae6d-c17a93d8cce3
Sheet: 41

THE ALLSTATE CORPORATION
ALLSTATE FINANCIAL ANALYSIS OF NET INCOME
($ in millions)
 |  | Three months ended |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Twelve months ended
 |  |  | Dec. 31, |  |  | Sept. 30, |  |  | June 30, |  |  | March 31, |  |  | Dec. 31, |  |  | Sept. 30, |  |  | June 30, |  |  | March 31, |  |  | Dec. 31, |  |  | Dec. 31,
 |  |  | 2012 |  |  | 2012 |  |  | 2012 |  |  | 2012 |  |  | 2011 |  |  | 2011 |  |  | 2011 |  |  | 2011 |  |  | 2012 |  |  | 2011
Benefit spread
Premiums |  | $ | 299 |  | $ | 291 |  | $ | 291 |  | $ | 287 |  | $ | 305 |  | $ | 287 |  | $ | 286 |  | $ | 312 |  | $ | 1168 |  | $ | 1190
Cost of insurance contract charges (1) |  |  | 173 |  |  | 180 |  |  | 173 |  |  | 170 |  |  | 168 |  |  | 167 |  |  | 162 |  |  | 162 |  |  | 696 |  |  | 659
Contract benefits excluding the implied interest
on immediate annuities with life contingencies (2) |  |  | -331 |  |  | -318 |  |  | -326 |  |  | -305 |  |  | -294 |  |  | -320 |  |  | -287 |  |  | -319 |  |  | -1280 |  |  | -1220
Total benefit spread |  |  | 141 |  |  | 153 |  |  | 138 |  |  | 152 |  |  | 179 |  |  | 134 |  |  | 161 |  |  | 155 |  |  | 584 |  |  | 629
Investment spread
Net investment income |  |  | 665 |  |  | 632 |  |  | 663 |  |  | 687 |  |  | 656 |  |  | 682 |  |  | 694 |  |  | 684 |  |  | 2647 |  |  | 2716
Implied interest on immediate annuities with
life contingencies (2) |  |  | -133 |  |  | -135 |  |  | -136 |  |  | -134 |  |  | -136 |  |  | -135 |  |  | -135 |  |  | -135 |  |  | -538 |  |  | -541
Interest credited to contractholder funds |  |  | -357 |  |  | -215 |  |  | -366 |  |  | -378 |  |  | -405 |  |  | -405 |  |  | -417 |  |  | -418 |  |  | -1316 |  |  | -1645
Total investment spread |  |  | 175 |  |  | 282 |  |  | 161 |  |  | 175 |  |  | 115 |  |  | 142 |  |  | 142 |  |  | 131 |  |  | 793 |  |  | 530
Surrender charges and contract maintenance
 | expense fees (1) |  | 94 |  |  | 92 |  |  | 95 |  |  | 96 |  |  | 97 |  |  | 98 |  |  | 99 |  |  | 95 |  |  | 377 |  |  | 389
Realized capital gains and losses |  |  | 56 |  |  | -56 |  |  | 8 |  |  | -21 |  |  | 68 |  |  | 219 |  |  | 62 |  |  | 39 |  |  | -13 |  |  | 388
Amortization of deferred policy
acquisition costs |  |  | -77 |  |  | -146 |  |  | -77 |  |  | -101 |  |  | -101 |  |  | -180 |  |  | -93 |  |  | -120 |  |  | -401 |  |  | -494
Operating costs and expenses |  |  | -152 |  |  | -147 |  |  | -135 |  |  | -142 |  |  | -159 |  |  | -129 |  |  | -135 |  |  | -132 |  |  | -576 |  |  | -555
Restructuring and related charges |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | -3 |  |  | 0 |  |  | 0 |  |  | 2 |  |  | 0 |  |  | -1
Gain (loss) on disposition of operations |  |  | 3 |  |  | 9 |  |  | 3 |  |  | 3 |  |  | 2 |  |  | 4 |  |  | 7 |  |  | -20 |  |  | 18 |  |  | -7
Income tax expense |  |  | -74 |  |  | -56 |  |  | -61 |  |  | -50 |  |  | -63 |  |  | -96 |  |  | -82 |  |  | -48 |  |  | -241 |  |  | -289
Net income |  | $ | 166 |  | $ | 131 |  | $ | 132 |  | $ | 112 |  | $ | 135 |  | $ | 192 |  | $ | 161 |  | $ | 102 |  | $ | 541 |  | $ | 590
Benefit spread by product group
Life insurance |  | $ | 79 |  | $ | 90 |  | $ | 87 |  | $ | 91 |  | $ | 74 |  | $ | 90 |  | $ | 98 |  | $ | 93 |  | $ | 347 |  | $ | 355
Accident and health insurance |  |  | 82 |  |  | 76 |  |  | 72 |  |  | 73 |  |  | 114 |  |  | 70 |  |  | 71 |  |  | 74 |  |  | 303 |  |  | 329
Annuities |  |  | -20 |  |  | -13 |  |  | -21 |  |  | -12 |  |  | -9 |  |  | -26 |  |  | -8 |  |  | -12 |  |  | -66 |  |  | -55
 | Total benefit spread | $ | 141 |  | $ | 153 |  | $ | 138 |  | $ | 152 |  | $ | 179 |  | $ | 134 |  | $ | 161 |  | $ | 155 |  | $ | 584 |  | $ | 629
Investment spread by product group
Annuities and institutional products |  | $ | 85 |  | $ | 39 |  | $ | 71 |  | $ | 97 |  | $ | 43 |  | $ | 54 |  | $ | 55 |  | $ | 36 |  | $ | 292 |  | $ | 188
Life insurance |  |  | 21 |  |  | 23 |  |  | 20 |  |  | 18 |  |  | 12 |  |  | 17 |  |  | 14 |  |  | 11 |  |  | 82 |  |  | 54
Allstate Bank products |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 2 |  |  | 6 |  |  | 6 |  |  | 8 |  |  | 0 |  |  | 22
Accident and health insurance |  |  | 6 |  |  | 7 |  |  | 6 |  |  | 6 |  |  | 5 |  |  | 4 |  |  | 5 |  |  | 5 |  |  | 25 |  |  | 19
Net investment income on investments
 | supporting capital |  | 72 |  |  | 64 |  |  | 68 |  |  | 64 |  |  | 73 |  |  | 67 |  |  | 66 |  |  | 59 |  |  | 268 |  |  | 265
 | Investment spread before valuation changes on
 | embedded derivatives that are not hedged |  | 184 |  |  | 133 |  |  | 165 |  |  | 185 |  |  | 135 |  |  | 148 |  |  | 146 |  |  | 119 |  |  | 667 |  |  | 548
Valuation changes on derivatives embedded in equity-
 | indexed annuity contracts that are not hedged |  | -9 |  |  | 149 |  |  | -4 |  |  | -10 |  |  | -20 |  |  | -6 |  |  | -4 |  |  | 12 |  |  | 126 |  |  | -18
 | Total investment spread | $ | 175 |  | $ | 282 |  | $ | 161 |  | $ | 175 |  | $ | 115 |  | $ | 142 |  | $ | 142 |  | $ | 131 |  | $ | 793 |  | $ | 530
(1) Reconciliation of contract charges
Cost of insurance contract charges |  | $ | 173 |  | $ | 180 |  | $ | 173 |  | $ | 170 |  | $ | 168 |  | $ | 167 |  | $ | 162 |  | $ | 162 |  | $ | 696 |  | $ | 659
Surrender charges and contract maintenance
 | expense fees |  | 94 |  |  | 92 |  |  | 95 |  |  | 96 |  |  | 97 |  |  | 98 |  |  | 99 |  |  | 95 |  |  | 377 |  |  | 389
 | Total contract charges | $ | 267 |  | $ | 272 |  | $ | 268 |  | $ | 266 |  | $ | 265 |  | $ | 265 |  | $ | 261 |  | $ | 257 |  | $ | 1073 |  | $ | 1048
(2) Reconciliation of contract benefits
Contract benefits excluding the implied interest
on immediate annuities with life contingencies |  | $ | -331 |  | $ | -318 |  | $ | -326 |  | $ | -305 |  | $ | -294 |  | $ | -320 |  | $ | -287 |  | $ | -319 |  | $ | -1280 |  | $ | -1220
Implied interest on immediate annuities with
life contingencies |  |  | -133 |  |  | -135 |  |  | -136 |  |  | -134 |  |  | -136 |  |  | -135 |  |  | -135 |  |  | -135 |  |  | -538 |  |  | -541
 | Total contract benefits | $ | -464 |  | $ | -453 |  | $ | -462 |  | $ | -439 |  | $ | -430 |  | $ | -455 |  | $ | -422 |  | $ | -454 |  | $ | -1818 |  | $ | -1761