2008 Losses Cause Allstate to Slash Quarterly Dividend by More Than Half

Feb. 26, 2009 – Officials for the Allstate Corporation yesterday announced the insurer would pay a quarterly dividend of 20 cents on each outstanding share of the insurer’s common stock, which will be paid in cash on April 1 to stockholders of record at the close of business on March 13, 2009.

The dividend is less than half the 41 cents per share previously paid and expected to continue by shareholders, causing Allstate’s shares to drop by more than a dollar to around $17. Company shares sold for more than $50 each a year ago. But as one of the nation’s largest providers of auto insurance and homeowners insurance protection, Allstate suffered massive losses during storm-riddled 2008.

“Recalibrating our dividend supports all three of our 2009 corporate priorities: maintaining financial strength; investing to build customer loyalty and funding initiatives to reinvent protection and retirement for the consumer,” said Thomas J. Wilson, chairman, president and chief executive officer of the Allstate Corporation. “These priorities help us focus relentlessly on those actions that will help us manage through these turbulent times and build long term success. That, in turn, will provide the most value to our shareholders and customers.”

While Allstate officials slashed its quarterly dividend, the insurer says the 20 cents per share payout is in line with competitor dividends during the current down market.

“In light of recent earnings, Allstate has decided to reduce our dividend for this quarter to a level we believe puts Allstate’s payout ratio in line with our peers,” Wilson said. “Allstate has a history of proactively and prudently managing our capital, while consistently returning substantial amounts of capital to our shareholders. As part of that process we calibrate our dividends to company earnings and also ensure that Allstate’s payout ratio is competitive with the marketplace.”

Nearly all property and casualty insurers suffered billions of dollars in losses in 2008 after a string of natural disasters that included massive flooding in the Midwest, wildfires in the West, a spate of tornadoes and a very active Atlantic storm season. Allstate officials reported its 2008 catastrophe losses more than doubled to $3.34 billion over the prior year.

Allstate officials reported a fourth-quarter net loss of $1.13 billion in 2008. And the insurer’s operating income fell 26 percent to $518 million due to decreased net investment income and underwriting income. The Allstate Corporation is the nation’s largest publicly held personal lines insurer.