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): July 31, 2013

THE ALLSTATE CORPORATION

(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code  (847) 402-5000

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:

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

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

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

[ ] 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 July 31, 2013, the registrant issued a press release announcing its financial results for the second quarter of 2013, and the availability of the registrant’s second 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 July 31, 2013

99.2                                                Second quarter 2013 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

FOR IMMEDIATE RELEASE

Allstate Reports Solid Second Quarter 2013 Earnings Reflecting

Successful Execution of Customer-Focused Strategy

NORTHBROOK, Ill., July 31, 2013 – The Allstate Corporation (NYSE: ALL) today reported financial results for the second quarter of 2013.  The financial highlights were:

*              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 in the “Definitions of Non-GAAP Measures” section of this document.

“We are successfully executing our customer-focused strategy to offer unique products and services to distinct consumer segments,” said Thomas J. Wilson, chairman, president and chief executive officer of The Allstate Corporation.  “Property-liability premiums written increased 4.2% from the second quarter of 2012, with positive trends in all consumer segments which are served under the Allstate, Encompass and Esurance brands.  We maintained profitability with an underlying combined ratio better than our full-year outlook and operating income of $529 million.  Proactive execution of the investment strategy to reduce risk related to increases in interest rates proved beneficial as rates moved up in the quarter.  We also made progress in strengthening our capital position by repurchasing outstanding debt, issuing new lower-cost financing, while maintaining share repurchases.  Shortly after the quarter ended, we announced several other significant strategic actions: the pending sale of Lincoln Benefit Life, a change in employee benefit plans and a decision to cease issuing fixed annuities at year-end 2013.”

Financial Results

Net income available to common shareholders for the second quarter 2013 was $434 million, or $0.92 per diluted common share, compared to $423 million, or $0.86 per diluted common share in the second quarter

2012.  The increase in net income available to common shareholders was driven by higher after-tax realized capital gains and operating income which more than offset the after-tax loss of $312 million on extinguishment of $1.83 billion of debt.  Operating income for the second quarter 2013 increased to $529 million, or $1.12 per diluted common share, from $432 million, or $0.87 per diluted common share, in the second quarter 2012.  The improvement was due primarily to lower catastrophe losses in the second quarter compared to the prior year quarter.

In the second quarter 2013, property-liability net income was $617 million versus $354 million in the prior year quarter.  The property-liability combined ratio was 96.1, improving 1.9 points.  Pre-tax catastrophe losses in the quarter totaled $647 million compared to $819 million in the second quarter 2012.  The underlying combined ratio for the quarter was 86.9, 0.6 points higher than the prior year quarter, and better than the full year outlook of 88 to 90.  Should trends continue, the underlying combined ratio could be at the low end or below the full year outlook range.  Allstate Financial net income for the quarter was $190 million, an improvement of $58 million from the prior year quarter, due primarily to an increase in after-tax realized capital gains and improved operating income results.

Continued Progress on Customer-Focused Strategy and Achievement of 2013 Priorities

The results for the second quarter 2013 reflect successful execution of our 2013 priorities:  growing insurance premiums, maintaining auto profitability, raising returns in homeowner and annuities, proactively managing investments, and reducing the cost structure.

The company experienced positive momentum in growing insurance premiums in the second quarter.  Total property-liability net written premium increased 4.2% over prior year quarter and Allstate Financial grew 3.6% in total premiums and contract charges, including 4.8% in underwritten products.  For the Allstate brand, which serves consumers who prefer local advice from Allstate agencies and a wide range of products, net written premium increased 3.0% due to higher retention and new business issuance of standard auto and homeowners policies, and solid growth in emerging businesses.  While Allstate brand units declined from the prior year quarter, they increased sequentially by 91,000 policies in force.  Encompass net written premium and units grew 9.0% and 6.8%, respectively, from the prior year quarter.  Esurance, serving the self-directed customer segment, continued to grow rapidly with net written premium increasing 31.7% and units up 36.5% from the prior year quarter.

Allstate maintained auto profitability in the second quarter with a combined ratio for standard auto of 97.0, slightly better than the prior year quarter.  For the Allstate brand, which comprises the majority of the auto earned premium, the recorded combined ratio was 94.9, 0.6 points better than prior year, with an underlying combined ratio of 94.2, 0.8 points higher than the second quarter 2012.  Frequency was essentially flat while severity increased modestly.  The Encompass brand recorded a standard auto combined ratio of 104.4, an improvement of 4.8 points, reflecting the impact of price increases.  The Esurance brand standard auto combined ratio increased 2.8 points to 119.5 due to the increased volume of new business, higher bodily injury severities and increased utilization of price discounts.  Esurance is adjusting pricing and underwriting to ensure its growth investments create shareholder value.

Higher returns were realized in the homeowners and annuities businesses.  In the second quarter, Allstate homeowners recorded a combined ratio of 95.3, a 9.1 point improvement from the prior year quarter, primarily due to reduced catastrophe losses.  The Allstate brand homeowners underlying combined ratio was 62.7, a 1.9 point improvement from the second quarter 2012.  Rate increases continued to positively impact results and both frequency and severity exhibited modest increases in the quarter.  Returns in annuities improved slightly in the second quarter, but remain under pressure from continued low interest rates.  Contractholder funds declined $2.5 billion from March 31, 2013, primarily due to a large institutional product maturity.

Proactive management of the investment portfolio mitigated the impact of rising interest rates, but total returns were negative for the quarter.  Interest rate risk mitigation actions over the past several quarters reduced the maturity profile of the property-liability portfolio to make it less sensitive to higher interest rates.  Allstate’s consolidated investment portfolio totaled $92.32 billion at June 30, 2013 compared to $97.28 billion at December 31, 2012.  The lower portfolio value reflects a $2.73 billion decrease in net unrealized capital gains driven by the significant increase in interest rates in the second quarter.  Total returns for the quarter of -1.5% reflect a consistent contribution from net investment income offset by lower investment valuations, particularly for fixed income securities.  For the second quarter, net investment income totaled $984 million, which included $37 million related to prepayment fee income and litigation proceeds.  The total portfolio yield was 4.6%, an increase from prior quarter, and comparable to the second quarter of 2012.

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Property-liability net investment income was $343 million and portfolio yield was 4.0%.  This was an increase from the prior quarter, reflecting higher limited partnership results and the timing of equity dividends, but was below the second quarter of 2012 due to the impact of interest rate risk reduction actions and low investment yields.  Allstate Financial net investment income was $633 million and the portfolio yield was 5.1%.  Allstate Financial’s net investment income declined from the prior year quarter, primarily due to the managed reduction in spread-based liabilities, which will continue with the pending sale of Lincoln Benefit Life.  Allstate Financial’s portfolio yield has been less impacted by low reinvestment rates as its investment cash flows have largely been used to fund the liability outflows.

Progress was made in reducing the company’s cost structure while investing for growth.  The closure of a call center and a change to employee benefits were announced, which will improve effectiveness and efficiency.  The property-liability expense ratio increased in the quarter, reflecting higher technology and marketing expenses.

Continued Focus on Capital Management

During the second quarter of 2013, Allstate repurchased principal amounts of $1.83 billion of debt and recognized a pre-tax loss on extinguishment of $480 million.  Also during the quarter, Allstate issued shares of 5.625% noncumulative perpetual preferred stock with liquidation value of $287.5 million, $500 million of 3.15% senior notes due 2023 and $500 million of 4.50% senior notes due 2043.

“These capital actions took advantage of the current low cost of capital and will help ensure Allstate’s strategic flexibility,” said Steve Shebik, chief financial officer.  “In addition, Allstate repurchased 4.9 million common shares at a cost of $254 million in the second quarter of 2013.  As of June 30, 2013, $1.08 billion remained in our share repurchase programs.  Allstate’s earnings and repurchases increased book value per diluted common share by 4.8% from a year ago, to $41.63 at the end of the second quarter of 2013.”

Statutory surplus at June 30, 2013 was an estimated $17.0 billion for the combined insurance operating companies.  Property-liability surplus was an estimated $13.6 billion, with Allstate Financial companies accounting for the remainder.  Deployable assets at the holding company level totaled $2.4 billion at June 30, 2013.

Subsequent Events

In July 2013, the company approved amendments to its pension plans to introduce a new cash balance formula to replace the current formulas under which eligible employees accrue benefits, effective January 1, 2014.  The company also will eliminate certain life insurance benefits currently provided to eligible employees and effective January 1, 2016 for all retirees who retired after 1989.  Finally, on July 17, 2013, the company entered into a definitive agreement to sell Lincoln Benefit Life, which serves consumer segments who want independent advice and a choice of life insurance and annuity products.  This transaction is expected to close by the end of this year, subject to regulatory approval.

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Visit www.allstateinvestors.com to view additional information about Allstate’s results, including a webcast of its quarterly conference call and the presentation discussed on the call.  The conference call will be held at 9 a.m. ET on Thursday, August 1.

The Allstate Corporation (NYSE: ALL) is the nation’s largest publicly held personal lines insurer, serving approximately 16 million households through its Allstate, Encompass, Esurance and Answer Financial brand names and Allstate Financial business segment.  Allstate branded insurance products (auto, home, life and retirement) and services are offered through Allstate agencies, independent agencies, and Allstate exclusive financial representatives, as well as via www.allstate.com, www.allstate.com/financial and 1-800 Allstate®, and are widely known through the slogan “You’re In Good Hands With 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 Measures

We believe that investors’ understanding of Allstate’s performance is enhanced by our disclosure of the following non-GAAP 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 available to common shareholders, 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,

·      valuation changes on embedded derivatives that are not hedged, after-tax,

·      amortization of DAC and deferred sales inducements (DSI), to the extent they resulted from the recognition of certain realized capital gains and losses or valuation changes on embedded derivatives that are not hedged, after-tax,

·      business combination expenses and the amortization of purchased intangible assets, after-tax,

·      gain  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 available to common shareholders 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, valuation changes on embedded derivatives that are not hedged, business combination expenses and the amortization of purchased intangible assets, gain  on disposition of operations and adjustments for other significant non-recurring, infrequent or unusual items.  Realized capital gains and losses, valuation changes on embedded derivatives that are not hedged and gain 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.  Business combination expenses are excluded because they are non-recurring in nature and the amortization of purchased intangible assets is excluded because it relates to the acquisition purchase price and is not indicative of our underlying insurance business results or trends.  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 available to common shareholders to assess our performance.  We use adjusted measures of operating income and operating income per diluted common share in incentive compensation.  Therefore, we believe it is useful for investors to evaluate net income available to common shareholders, 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 a substitute for net income available to common shareholders and does not reflect the overall profitability of our business.

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The following tables reconcile operating income and net income available to common shareholders.