UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15 (d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported) October 27, 2010

The Allstate Corporation

(Exact name of registrant as specified in charter)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2.below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Section 2. – Financial Information

Item 2.02.             Results of Operations and Financial Condition.

On October 27, 2010, the registrant issued a press release announcing its financial results for the third quarter of 2010, and the availability of the registrant’s third quarter investor supplement on the registrant’s web site.  The press release and the investor supplement are furnished as Exhibits 99.1 and 99.2 to this report.  The information contained in the press release and the investor supplement are furnished and not filed pursuant to instruction B.2 of Form 8-K.

Section 9. – Financial Statements and Exhibits

Item 9.01.              Financial Statements and Exhibits.

(d)  Exhibits

99.1                                                Registrant’s press release dated October 27, 2010

99.2                                                Third quarter 2010 Investor Supplement of The Allstate Corporation

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

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Exhibit 99.1

NEWS

FOR IMMEDIATE RELEASE

Allstate Reports Third Quarter 2010 Results and Continued Positive Trends

NORTHBROOK, Ill., October 27, 2010 – The Allstate Corporation (NYSE: ALL) today reported financial results for the third quarter of 2010:

* Measures used in this release that are not based on accounting principles generally accepted in the United States of America (“non-GAAP”) are defined and reconciled to the most directly comparable GAAP measure and operating measures are defined in the “Definitions of Non-GAAP and Operating Measures” section of this document.

“Our strategies to create shareholder value in an uncertain economic climate continue to generate positive results,” said Thomas J. Wilson, chairman, president and chief executive officer of The Allstate Corporation.  “Net income of $367 million showed strong growth over the prior year third quarter and second quarter of this year.

“Profitability at Allstate Protection remains strong, with the underlying combined ratio consistently meeting our annual outlook range.  We remain comfortable with our range of 88 to 90 for the year.  Overall policies in force declined, but standard auto new issued applications improved as we implemented new marketing and growth initiatives.  Allstate Financial’s net and operating income improved this quarter from a year ago, reflecting progress on its strategic repositioning. 

“Book value per share rose 7% during the quarter to $35.48 at September 30, 2010 reflecting profitability and strong investment results,” said Wilson.

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Consolidated Financial Results

Allstate’s third quarter 2010 net income was $367 million, or $0.68 per diluted share, compared to $221 million in the third quarter of 2009, primarily due to lower realized capital losses in 2010 versus 2009.  Operating income was $452 million, or $0.83 per diluted share, in the third quarter of 2010 compared to $538 million in the same period of 2009, reflecting a decline in Property-Liability partly offset by increases in Allstate Financial. 

Property-Liability Profitability is a Source of Financial Strength

Property-Liability remained a source of financial strength for the company while beginning to implement growth plans.  Allstate’s Property-Liability business produced an underlying combined ratio within the company’s full-year outlook range of 88 to 90.  The underlying combined ratio, which excludes catastrophes and prior year reserve reestimates, was 89.2 in the third quarter of 2010 compared to 88.0 in the same period of 2009, due to a higher expense ratio and increases in claim frequencies.  The recorded combined ratio was 95.9 for the third quarter of 2010, compared to 94.7 in the third quarter of 2009. 

Catastrophe losses totaled $386 million during the third quarter of 2010, reflecting 29 events with losses of $371 million.  This compares to catastrophe losses of $407 million for the third quarter of 2009.  Catastrophe losses added 5.9 points to the combined ratio during the third quarter of 2010.

Property-Liability premiums written* declined 0.6% in the third quarter of 2010 compared to the prior year quarter.  Allstate’s brand growth of 0.2% was more than offset by a 16.7% decline in the Encompass brand, reflecting actions to improve profitability.

Allstate brand standard auto premiums written declined 0.5% for the third quarter of 2010 compared to the prior year third quarter.  This decline was driven by a 1.7% decline in policies in force, reflecting a 0.4 point decline in retention to 88.7%, partly offset by a 2.5% increase in new issued applications from the prior year third quarter.  Average premium increased 1.4% during the third quarter when compared to the prior year quarter.  Allstate’s Customer Loyalty Index (CLI) as of September 30, 2010 declined slightly from the prior quarter of 2010.  The Allstate brand standard auto combined ratio was 93.2, an increase of 0.5 points from the third quarter of 2009, due to higher claim frequencies. 

Allstate brand homeowners premiums written for the third quarter of 2010 increased 2.4% compared to the same period a year ago, as a 7.2% increase in average premium was partly offset by a 4.1% decline in policies in force.  Rate increases averaging 4.2% in 15 states were approved during the third quarter, as Allstate took actions to improve returns and lessen the volatility of homeowners results.  The combined ratio was 104.7 in the third quarter of 2010 compared to 98.3 in the third quarter a year ago, primarily due to unfavorable prior year reserve reestimates and a higher expense ratio.  Unfavorable prior year reserve reestimates in the third quarter of 2010 included a litigation settlement of $70 million.    

The Property-Liability expense ratio for the third quarter of 2010 was 25.1 compared to 24.7 in the prior year third quarter, primarily due to higher marketing expenditures.

Allstate Financial Strategy Gaining Traction

Allstate Financial made significant progress on its goals to produce higher returns, reduce concentrations in products with returns dependent on investment spread, and serve its customers by focusing on Allstate agencies and the Allstate Workplace Division. 

Consistent with this strategy, premiums and deposits* on mortality and morbidity (underwritten) products increased 8.6% when compared to the third quarter of 2009, while deposits on annuities declined by 30.3% compared to the prior year period.  Premiums and deposits trends reflect premium growth in the Allstate Workplace Division and Allstate agencies, and the discontinuation earlier this year of new business through financial institutions.

Allstate Financial operating income was $108 million in the third quarter of 2010 compared to $95 million in the prior year third quarter.  The increase was due to a higher investment spread and lower amortization of deferred acquisition costs (DAC), partly offset by higher operating costs and expenses and a lower benefit

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spread.  The investment spread increased to $127 million in the third quarter of 2010 from $109 million in the prior year third quarter.  The change reflected decreased interest credited to contractholder funds, partly offset by lower net investment income.  DAC amortization declined primarily due to a lower amortization rate on fixed annuities.  Operating costs and expenses rose as product distribution and marketing costs, employee benefits, and certain acquisition-related expenses increased.  The benefit spread declined 2.8% from the prior year third quarter due to an increase in contract benefits on immediate annuities, reflecting favorable mortality experience in the third quarter of 2009, partly offset by growth in accident and health products. 

Allstate Financial reported net income of $85 million in the third quarter of 2010 compared to a net loss of $38 million in the 2009 quarter.  Net income reflected after-tax net realized capital losses, including the impact of deferred acquisition costs and deferred sales inducements of $18 million in the third quarter of 2010 compared to $133 million in the third quarter of 2009. 

Strong Returns from Investment Portfolio

Allstate’s consolidated investment portfolio was $102.2 billion at September 30, 2010, up $2.3 billion from June 30, 2010, as strong investment returns more than offset impacts from reductions in Allstate Financial’s contractholder funds.  Investment returns reflect lower interest rates, improved equity markets, and significant cash flow generated by the portfolio.  Allstate’s net unrealized gain at September 30, 2010 was $2.7 billion, pre-tax, compared to a net unrealized gain of $400 million, pre-tax, at June 30, 2010 and a net unrealized loss of $2.5 billion, pre-tax, at September 30, 2009.

Net realized capital loss for the third quarter of 2010 was $144 million, pre-tax, compared to $519 million in the prior year third quarter, with lower impairment write-downs, higher gains on sales and lower derivative losses driving the improvement.  Impairment write-downs of $137 million were primarily related to residential and commercial real estate exposure.  Net realized gains from sales of $319 million were due to sales of fixed income and equity securities.

Derivative net losses totaled $285 million in the third quarter of 2010 and were driven primarily by Allstate’s risk management actions.  Declining interest rates resulted in $181 million of derivative losses, which were significantly less than the increases in the portfolio’s fixed income valuations during the period.  Favorable valuations on equity securities were also significantly greater than the $115 million of derivative losses related to equity market hedges. 

As part of the company’s ongoing strategy to manage exposure to certain portfolio segments, reductions of municipal fixed income securities totaled $2.4 billion of amortized cost and reductions of commercial real estate totaled $484 million of amortized cost during the third quarter of 2010. 

Net investment income for the third quarter of 2010 was $1.0 billion, 7.3% less than the third quarter of 2009 and 4.2% less than the second quarter of 2010.  These declines primarily resulted from lower interest rates, risk reduction actions related to municipal bonds and commercial real estate, and duration management actions taken to protect the portfolio from rising interest rates.  Net investment income in the Property-Liability portfolio totaled $284 million in the third quarter of 2010, a 12.9% decline from the third quarter of 2009 and an 8.4% decrease from the second quarter of 2010.  Allstate Financial’s net investment income was $707 million, a 5.0% decline from the third quarter of 2009 and a 2.2% decline from the second quarter of 2010.

Capital Position Continues to Improve

“The combination of higher net income and favorable investment returns resulted in a 15% increase in book value during the first nine months of 2010,” said Don Civgin, senior vice president and chief financial officer.  “Our capital position continues to improve, providing us with greater flexibility in achieving our strategic priorities to improve customer loyalty, reinvent protection and retirement, and grow our businesses.”

Book value per share grew to $35.48 per share at September 30, 2010 compared to $33.24 at June 30, 2010 and $30.84 at December 31, 2009.  Book value increased during the third quarter as higher shareholders’ equity reflected improved investment valuations.  Statutory surplus at September 30, 2010 is an estimated $15.1 billion for Allstate Insurance Company, including $3.2 billion at Allstate Life Insurance Company.  This compares to Allstate Insurance Company statutory surplus of $14.9 billion at June 30, 2010 and $14.8 billion at September 30, 2009.  Deployable assets at the holding company level increased to $3.5 billion at

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September 30, 2010, reflecting $400 million of dividends from Allstate Insurance Company during the third quarter.

*     *     *     *     *

Visit www.allstateinvestors.com to view additional information about Allstate’s third quarter results, including a webcast of its quarterly conference call and the presentation used in the call.  The conference call will be held at 9 a.m. ET on Thursday, October 28, 2010. 

The Allstate Corporation (NYSE: ALL) is the nation’s largest publicly held personal lines insurer.  Widely known through the “You’re In Good Hands With Allstate®” slogan, Allstate is reinventing protection and retirement to help more than 17 million households insure what they have today and better prepare for tomorrow.  Consumers access Allstate insurance products (auto, home, life and retirement) and services through Allstate agencies, independent agencies, and Allstate exclusive financial representatives in the U.S. and Canada, as well as via www.allstate.com and 1-800 Allstate®.

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THE ALLSTATE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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THE ALLSTATE CORPORATION

SEGMENT RESULTS

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THE ALLSTATE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

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THE ALLSTATE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

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Definitions of Non-GAAP and Operating Measures

We believe that investors’ understanding of Allstate’s performance is enhanced by our disclosure of the following non-GAAP and operating financial measures.  Our methods for calculating these measures may differ from those used by other companies and therefore comparability may be limited.

Operating income is net income (loss), excluding:

·       realized capital gains and losses, after-tax, except for periodic settlements and accruals on non-hedge derivative instruments, which are reported with realized capital gains and losses but included in operating income,

·       amortization of DAC and DSI, to the extent they resulted from the recognition of certain realized capital gains and losses,

·       gain (loss) on disposition of operations, after-tax, and 

·       adjustments for other significant non-recurring, infrequent or unusual items, when (a) the nature of the charge or gain is such that it is reasonably unlikely to recur within two years, or (b) there has been no similar charge or gain within the prior two years. 

Net income (loss) is the GAAP measure that is most directly comparable to operating income.

We use operating income as an important measure to evaluate our results of operations.  We believe that the measure provides investors with a valuable measure of the company’s ongoing performance because it reveals trends in our insurance and financial services business that may be obscured by the net effect of realized capital gains and losses, gain (loss) on disposition of operations and adjustments for other significant non-recurring, infrequent or unusual items.  Realized capital gains and losses and gain (loss) on disposition of operations may vary significantly between periods and are generally driven by business decisions and external economic developments such as capital market conditions, the timing of which is unrelated to the insurance underwriting process.  Consistent with our intent to protect results or earn additional income, operating income includes periodic settlements and accruals on certain derivative instruments that are reported in realized capital gains and losses because they do not qualify for hedge accounting or are not designated as hedges for accounting purposes.  These instruments are used for economic hedges and to replicate fixed income securities, and by including them in operating income, we are appropriately reflecting their trends in our performance and in a manner consistent with the economically hedged investments, product attributes (e.g., net investment income and interest credited to contractholder funds) or replicated investments.  Non-recurring items are excluded because, by their nature, they are not indicative of our business or economic trends.  Accordingly, operating income excludes the effect of items that tend to be highly variable from period to period and highlights the results from ongoing operations and the underlying profitability of our business.  A byproduct of excluding these items to determine operating income is the transparency and understanding of their significance to net income variability and profitability while recognizing these or similar items may recur in subsequent periods.  Operating income is used by management along with the other components of net income (loss) to assess our performance.  We use adjusted measures of operating income and operating income per diluted share in incentive compensation.  Therefore, we believe it is useful for investors to evaluate net income (loss), operating income and their components separately and in the aggregate when reviewing and evaluating our performance.  We note that investors, financial analysts, financial and business media organizations and rating agencies utilize operating income results in their evaluation of our and our industry’s financial performance and in their investment decisions, recommendations and communications as it represents a reliable, representative and consistent measurement of the industry and the company and management’s performance.  We note that the price to earnings multiple commonly used by insurance investors as a forward-looking valuation technique uses operating income as the denominator.  Operating income should not be considered as a substitute for net income (loss) and does not reflect the overall profitability of our business.

The following tables reconcile operating income and net income (loss) for the three months and nine months ended September 30, 2010 and 2009.

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Underwriting income (loss) is calculated as premiums earned, less claims and claims expense (“losses”), amortization of DAC, operating costs and expenses and restructuring and related charges as determined using GAAP.  Management uses this measure in its evaluation of the results of operations to analyze the profitability of our Property-Liability insurance operations separately from investment results.  It is also an integral component of incentive compensation.  It is useful for investors to evaluate the components of income separately and in the aggregate when reviewing performance.   Net income (loss) is the most directly comparable GAAP measure.  Underwriting income (loss) should not be considered as a substitute for net income (loss) and does not reflect the overall profitability of our business.  A reconciliation of Property-Liability underwriting income (loss) to net income (loss) is provided in the “Segment Results” page.

Combined ratio excluding the effect of catastrophes and prior year reserve reestimates (“underlying combined ratio”) is a non-GAAP ratio, which is computed as the difference between three GAAP operating ratios: the combined ratio, the effect of catastrophes on the combined ratio and the effect of prior year non-catastrophe reserve reestimates on the combined ratio.  The most directly comparable GAAP measure is the combined ratio.  We believe that this ratio is useful to investors and it is used by management to reveal the trends in our Property-Liability business that may be obscured by catastrophe losses and prior year reserve reestimates.  These catastrophe losses cause our loss trends to vary significantly between periods as a result of their incidence of occurrence and magnitude, and can have a significant impact on the combined ratio.  Prior year reserve reestimates are caused by unexpected loss development on historical reserves.  We believe it is useful for investors to evaluate these components separately and in the aggregate when reviewing our underwriting performance.  We also provide it to facilitate a comparison to our outlook on the 2010 combined ratio excluding the effect of catastrophe losses and prior year reserve reestimates.  The combined ratio excluding the effect of catastrophes and prior year reserve reestimates should not be considered a substitute for the combined ratio and does not reflect the overall underwriting profitability of our business.  A reconciliation of the combined ratio excluding the effect of catastrophes and prior year reserve reestimates to the combined ratio is provided in the following table.

In this news release, we provide our outlook range on the 2010 combined ratio excluding the effect of catastrophe losses and prior year reserve reestimates.  A reconciliation of this measure to the combined ratio is not possible on a forward-looking basis because it is not possible to provide a reliable forecast of catastrophes.  Future prior year reserve reestimates are expected to be zero because reserves are determined based on our best estimate of ultimate loss reserves as of the reporting date.

Book value per share, excluding the impact of unrealized net capital gains and losses on fixed income securities, is a ratio that uses a non-GAAP measure.  It is calculated by dividing shareholders’ equity after excluding the impact of unrealized net capital gains and losses on fixed income securities and related DAC, DSI and life insurance reserves by total shares outstanding plus dilutive potential shares outstanding.  Book value per share is the most directly comparable GAAP measure.

We use the trend in book value per share, excluding the impact of unrealized net capital gains and losses on fixed income securities, in conjunction with book value per share to identify and analyze the change in net worth attributable to management efforts between periods.  We believe the non-GAAP ratio is useful to investors because it eliminates the effect of items that can fluctuate significantly from period to period and are generally driven by economic developments, primarily capital market conditions, the magnitude and timing of which are generally not influenced by management, and we believe it enhances understanding and comparability of performance by highlighting underlying business activity and profitability drivers.  We note that book value per share, excluding the impact of unrealized net capital gains and losses on fixed income securities, is a measure commonly used by insurance investors as a valuation technique.  Book value per share, excluding the impact of unrealized net capital gains and losses on fixed income securities, should not be considered as a substitute for book value per share, and does not reflect the recorded net worth of our business.  The following table shows the reconciliation.

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Premiums written is the amount of premiums charged for policies issued during a fiscal period.  Premiums earned is a GAAP measure.  Premiums are considered earned and are included in financial results on a pro-rata basis over the policy period.  The portion of premiums written applicable to the unexpired terms of the policies is recorded as unearned premiums on our Condensed Consolidated Statements of Financial Position.  A reconciliation of premiums written to premiums earned is presented in the following table.