Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 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 income was $221 million in the third quarter of 2009 compared to a net loss of $923 million in the third quarter of 2008, and net income was $336 million in the first nine months of 2009 compared to a net loss of $550 million in the first nine months of 2008. Net income per diluted share was $0.41 in the third quarter of 2009 compared to net loss per diluted share of $1.70 in the third quarter of 2008, and net income per diluted share of $0.62 in the first nine months of 2009 compared to net loss per diluted share of $1.00 in the first nine months of 2008.

† Property-Liability net income was $314 million in the third quarter of 2009 compared to a net loss of $661 million in the third quarter of 2008, and net income of $836 million in the first nine months of 2009 compared to $281 million in the first nine months of 2008.

† The Property-Liability combined ratio was 94.7 in the third quarter of 2009 compared to 112.7 in the third quarter of 2008, and 97.2 in the first nine months of 2009 compared to 100.4 in the first nine months of 2008.

† Allstate Financial had a net loss of $38 million in the third quarter of 2009 compared to a net loss of $196 million in the third quarter of 2008, and a net loss of $346 million in the first nine months of 2009 compared to a net loss of $686 million in the first nine months of 2008.

† Total revenues were $7.58 billion in the third quarter of 2009 compared to $7.32 billion in the third quarter of 2008, and $23.96 billion in the first nine months of 2009 compared to $22.83 billion in the first nine months of 2008.

† Property-Liability premiums earned in the third quarter of 2009 totaled $6.54 billion, a decrease of 3.7% from $6.79 billion in the third quarter of 2008, and $19.68 billion in the first nine months of 2009, a decrease of 3.1% from $20.30 billion in the first nine months of 2008.

† Net realized capital losses were $519 million in the third quarter of 2009 compared to net realized capital losses of $1.29 billion in the third quarter of 2008, and net realized capital losses were $550 million in the first nine months of 2009 compared to net realized capital losses of $3.16 billion in the first nine months of 2008.

† Investments as of September 30, 2009 totaled $100.63 billion, an increase of 4.8% from $96.00 billion as of December 31, 2008. Net investment income in the third quarter of 2009 was $1.08 billion, a decrease of 20.0% from $1.36 billion in the third quarter of 2008, and $3.37 billion in the first nine months of 2009, a decrease of 21.5% from $4.29 billion in the first nine months of 2008.

† Book value per diluted share (ratio of shareholders' equity to total shares outstanding and dilutive potential shares outstanding) was $32.29 as of September 30, 2009, an increase of 2.9% from $31.39 as of September 30, 2008 and an increase of 37.6% from $23.47 as of December 31, 2008.

† For the twelve months ended September 30, 2009, return on the average of beginning and ending period shareholders' equity was (4.6)%, a decrease of 5.7 points from 1.1% for the twelve months ended September 30, 2008.

† At September 30, 2009, we had $17.51 billion in capital. This total included $3.36 billion in deployable invested assets at the parent holding company level.

---

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2009 AND 2008