1. The Allstate Corporation 2002 Annual Report, Notice of Annual Meeting and Proxy Statement
Our time.
Our opportunity.
The Allstate Corporation
The Allstate Corporation 2002 Annual Report,
2775 Sanders Road Notice of Annual Meeting
and Proxy Statement
Northbrook, IL 60062-6127

2. After more than 60 years as part of Sears,
Allstate became a publicly traded company
almost a decade ago.
Since then we’ve seen our customers
through storms and accidents, earthquakes
and hurricanes, bull markets and bear.
Along the way, we’ve grown the company.
We’ve focused more intently on the things
we do best, and expanded the ways we reach
and serve customers. We’ve staked out leader-
ship positions in the evolving field of financial
services.
Now we’ve set even higher goals. And
we’re better prepared and better positioned
than ever.
So the mission going forward is clear: One
by one, we will deepen relationships with cus-
tomers to help provide financial security for
millions of American households.
That’s the challenge. That’s the opportunity.
That’s Allstate in the next decade and beyond.
Table of Contents
Financial Highlights 1
Message from the Chairman 2
Financial Section 17
At a Glance Product Alternatives 22
Our People 23
Board of Directors 24
Senior Management Team 24
Notice of Annual Meeting
and Proxy Statement
Shareholder Information inside back cover

3. Financial Highlights $ in millions, except per share data 2002 2001 % change
$÷29,579 $÷28,865 2.5
Revenues
1,134 1,158 (2.1)
Net income
Operating income1 2,075 1,492 39.1
$÷90,650 $÷79,876 13.5
Investments
117,426 109,175 7.6
Total assets
17,438 17,196 1.4
Shareholders’ equity
Per diluted common share:
$÷÷÷1.60 $÷÷÷1.60 —
Net income
2.92 2.06 41.7
Operating income
0.84 0.76 10.5
Dividends declared
Market value per share:
$÷÷36.99 $÷÷33.70
Close
41.95 45.90
12-month high
31.03 30.00
12-month low
Revenues Total assets
($ in billions) ($ in billions)
30 120
29.58 117.43
29.13
28.87
109.18
28 110
104.81
26 100
24 90
22 80
2000 2001 2002 2000 2001 2002
Operating income
Net income per diluted common share
($ in billions)
(In dollars)
3.00
4.00
2.95 2.25
3.00 2.08
2.00
1.49
1.50
2.00
1.60 1.60
.75
1.00
0
0
2000 2001 2002
2000 2001 2002
1
Operating income is a measure used by Allstate management, which is not based on generally accepted accounting principles (“non-GAAP”), to supplement its evaluation of Net
income. Operating income is “Income before dividends on preferred securities and cumulative effect of changes in accounting principle, after-tax”, excluding the effects of Realized
capital gains and losses, after-tax, and Gain (loss) on disposition of operations, after-tax. In this computation Realized capital gains and losses, after-tax is presented net of the effects of
Allstate Financial’s deferred policy acquisition cost amortization and additional future policy benefits, to the extent that such effects resulted from the recognition of Realized capital gains
and losses. Further information and a reconciliation of Operating income to Net income appear in the Definitions of Non-GAAP and Operating Measures section of Appendix D of the
Notice of Annual Meeting and Proxy Statement, beginning on page D-3.
“This annual report contains forward-looking statements about Allstate, including statements about its profitability and the impact of Strategic Risk Management. These statements are
subject to the Private Securities Litigation Reform Act of 1995 and are based on management’s estimates, assumptions and projections. Actual results may differ materially from those
projected in the forward-looking statements for a variety of reasons. For example, profitability could be affected by loss costs in our Property-Liability business, including losses due to
catastrophes such as hurricanes and earthquakes in excess of management’s projections. Also, the number of customers priced through SRM could be less than projected by
management if competitive pressures lead to sales of private passenger auto and homeowners insurance that are lower than projected by management. Readers are encouraged to
review the other risk factors facing Allstate that we disclose in our annual report to the Securities and Exchange Commission on Form 10-K. We undertake no obligation to publicly
correct or update any forward-looking statements.”
1

4. Message from the Chairman
Edward M. Liddy
Chairman, President and CEO
The Allstate Corporation
On behalf of our Allstate employees
and dedicated agencies, I am pleased to
report that your company had a very good
year in 2002. We significantly improved
our financial results, while some of our
competitors continued to struggle. This
has enabled us to advance our strategy
of helping to protect and secure the
financial future of our customers, and
enhanced the value of your shares.
Just as important, we continued to
transform Allstate by getting better and
bigger in the personal lines insurance
market and by broadening our financial
services offerings. By doing so, we were
able to give our customers more ways to
protect and grow their assets. Allstate’s
successful implementation of our
business plan should provide for more
predictable and sustained growth, create
additional opportunities for our employees
and agencies and ultimately translate
into a reliable and rewarding picture for
our investors.
In a time of corporate mistrust, you
should feel confident that your board
worked diligently over the past year
to further strengthen our corporate
governance processes. These processes
were recently recognized by a leading
investor services group as being among
the very best in corporate America.
With the 10-year anniversary of our
initial public offering only months away,
Allstate is well-positioned for both
accelerated growth and sustained
profitability. Over the past decade, we
have continuously refined our strategy to
At the core of our company are only two Having the assurance of one of the meet the ever-changing expectations of
things: people and capital. With the right industry’s strongest balance sheets helps the marketplace.
people and sound stewardship of our give us, and our customers, that confi- We have broadened our business so
financial resources, we can confidently dence. But more importantly, I’m fortunate that, as we reach out in new directions,
deliver on our promise - to give our cus- to work with the finest employees and our journey will take us both further and
tomers peace of mind by protecting their agencies in the business, and to have the faster in our quest to reassure you, our
property and their lives, and to help them support and good sense of the best man- shareholders, that Allstate has the right
achieve financial security. agement team in the insurance industry. strategy at the right time. Our perfor-
Together, we have fashioned a strategy mance in 2002 represents another
that worked very well in 2002, and has us milestone in achieving those goals that
readied for the future. we set for ourselves and we’ll endeavor to
I’m honored to lead the work ahead. build on those accomplishments in 2003.
2

5. Allstate today has a window of opportunity we
can use to strengthen and consolidate our
competitive position. We’re determined to seize
that advantage. Execution will be the key.
2002 Results 2002. Total return for the year increased In financial services, our mix of busi-
•
As usual, numbers help tell the story: 12.3 percent over 2001, compared with an ness likewise is expanding from a
average loss of 22 percent among compa- primary reliance on life insurance
In our Allstate brand standard auto
• nies in the Standard & Poor’s 500 (S&P), as products toward more asset accumu-
insurance, our largest single product, well as outperforming all insurance indices lation products across a range of
Premiums written2 rose 5.9 percent that S&P tracks. Your dividend increased distribution channels.
last year and loss ratios moderated for the ninth straight year, while we com- We continue to refine our organization
•
compared with 2001. pleted one share repurchase program and to reflect the company’s business
The improvement was even more
• authorized another in early 2003. strategy. In September 2002, we
dramatic in our Allstate brand home- Of course, not everything was perfect. joined our Allstate property and casu-
owners product, where Premiums We had our challenges: Declining inter- alty and Ivantage businesses to
written were up 18 percent. As est rates reduced our investment income leverage their resources. We intend to
promised, we’re on track to bring prof- and, as a result of deteriorating capital strengthen and deepen the relation-
itability to targeted levels by mid-2003. markets, losses on securities in our ships with agencies and customers in
Our Ivantage independent agency
• investment portfolio cut into Net income. both channels.
business increased Premiums Elsewhere, regulation and other fac- Our protection claims organization
•
written by 4.5 percent and cut its tors slowed opportunities for growth in successfully completed a national
Underwriting loss3 approximately in key states such as California, Texas and consolidation of claims offices, sub-
half. We’re on schedule to achieve Florida. Issues like medical inflation and stantially reducing overhead costs
targeted levels of profitability. mold claims, as well as adverse trends in while allowing us to focus our people
In financial services, we performed environmental and asbestos litigation, and resources on front-line customer
•
well despite one of the most difficult caused us to strengthen reserves. service and severity control.
market environments in memory. In all of these areas, we acted quickly
This progress reflects the effort and
to confront concerns. We did the same
Overall Property-Liability Premiums expertise of everyone in the organization.
with respect to rate increases in auto and
written rose 5.8 percent and Operating Change is never easy, even when it’s
homeowners. Because we were ahead
income jumped 54.8 percent, driven working. But what we’ve accomplished
of the industry curve, we are hitting
largely by decisive pricing and risk man- has created real momentum. Allstate
profitability targets faster and gaining
agement actions. Premiums and today has a window of opportunity we
greater strategic flexibility than many of
deposits4 in our Allstate Financial busi- can use to strengthen and consolidate
our competitors for 2003 and beyond.
ness rose 11.6 percent and Operating our competitive position.
Other trendlines are pointed in
income gained 5.5 percent. We’re determined to seize that
similarly positive directions:
For the company as a whole, advantage. Execution will be the key.
Operating income increased 39.1 per- In our protection business, the focus Underlying our better, bigger and
•
cent, from $1.49 billion to $2.08 billion. of our customer base is shifting. We’re broader strategy are seven priorities that
A solid performance. increasing the number of more prof- will help make Allstate the company cus-
These accomplishments helped drive itable customers while decreasing the tomers prefer to help bring alive their
up the value of your Allstate stock during number of less profitable ones. version of the American Dream.
2
Premiums written is used in the property-liability insurance industry to measure the amount of premiums charged for policies issued during a fiscal period. Premiums are considered
earned (“Premiums earned” is a GAAP measure) and are included in financial results on a pro-rata basis over the policy period. Further information and a reconciliation of Premiums
written to Premiums earned appear in the Definitions of Non-GAAP and Operating Measures section of Appendix D of the Notice of Annual Meeting and Proxy Statement, beginning
on page D-3.
3
Underwriting income (loss) is a non-GAAP measure used by Allstate management to supplement its evaluation of Property-Liability Net income. Underwriting income (loss) is
Premiums earned, less Claims and claims expense (“losses”) and underwriting expenses as determined using GAAP. Further information and a reconciliation of Underwriting income to Net
income appear in the Definitions of Non-GAAP and Operating Measures section of Appendix D of the Notice of Annual Meeting and Proxy Statement, beginning on page D-3.
4
Premiums and deposits is an operating measure used by Allstate management to analyze production trends for Allstate Financial sales. Premiums and deposits includes premiums on
insurance policies and annuities, and all deposits and other funds received from customers on deposit-type products which are accounted for by Allstate as liabilities, rather than as rev-
enue, including the net new deposits of Allstate Bank. Further information and a table illustrating where Premiums and deposits are reflected in the consolidated financial statements
appear in the Definitions of Non-GAAP and Operating Measures section of Appendix D of the Notice of Annual Meeting and Proxy Statement, beginning on page D-3.
3

6. Designers Insurance Agency, Fairfax, Va. – Agent Wally Arcayan’s outbound marketing results have been aided by ECRM.
“My team is more targeted in its outreach,” says Arcayan.
4

7. 1. Meeting Customer Needs
“Putting the customer first” is too often an empty promise. Mistrust in
the marketplace is real, and it creates problems for many companies.
But it also creates opportunities for those who can consistently meet and
exceed expectations. Allstate is working to be that kind of company.
In the recent era of rapid growth and mass products like auto and homeowners with customers in ways that help us
marketing, many businesses believed the insurance to providing for their future understand and anticipate customers’
key to success was “pushing product.” financial security with savings and current and future needs. One tool
Many companies still do. But it’s a strategy investment opportunities. we’re testing is Enterprise Customer
out of sync with today’s realities. And we’re constantly assessing Relationship Management (ECRM).
We know the only way for Allstate market trends to introduce new products. It’s a technology that helps us better
to win in a crowded and competitive In 2002, for example, we redesigned understand our customer needs,
marketplace is to understand and meet some long-term care and life insurance especially in response to significant
customer needs, one-on-one, better than policies and introduced important new life events. It gives our agencies, our
anyone else in the business. So we’re annuity features for customers. Web site and our telephone centers a
constantly studying what matters most to We also offer alternatives in terms of better ability to interact with our cus-
our customers – what attracts them, sat- accessibility. We’re available to customers tomers in a more personal manner.
isfies them and keeps them coming back. through Allstate’s exclusive agency By tapping into true needs rather
For example, research shows that network, the Internet and our toll-free than simply pushing product, we
Allstate customers closely associate our telephone number. Moreover, customers intend to draw on the reservoir of
traditional protection products with other can also buy Allstate products through consumer goodwill that we know
financial services. But to help make that independent agents, banks and financial exists. Customers want to be satisfied,
connection a reality, we have to offer a services firms. to be delighted, to be loyal. Our job is
spectrum of financial solutions – from To succeed, we must pull together our to help make that possible.
protecting their current assets with various products and ways to interact
5

8. 2. Help Middle America Achieve
Financial Security
But who are our customers? They are teachers, firefighters, professionals
from all walks of life. Mostly they are middle-income Americans who
want and need better protection and retirement planning. Many have
been ignored or intimidated by traditional financial services companies.
And with relationships with one out of six American households, Allstate
is in a unique position to help them achieve financial security.
Steinbacher residence, Marysville, Wash. – Commercial tradesman Jason Steinbacher and wife Andrea
(with newborn daughter Malia) think they will move to a larger home soon, and they intend to seek out their agent
Bruce Pleasant when they start planning for Malia’s education costs.
6

9. Personal Financial Representatives. More
Our focus is clear. Allstate does not want
than a third also regularly partner with
to be all things to all people in financial
Allstate’s Exclusive Financial Specialists
services. We want to be more things to
(EFS) – more than 1,000 professionals
more people. So we don’t plan on being
who focus solely on life insurance and
a player in the consumer finance or bro-
financial, rather than property/casualty,
kerage businesses, for example. Instead
products.
we focus on areas adjacent to our exist-
The strategy is already working.
ing business – asset protection, asset
New sales of financial products by
accumulation and life insurance and sav-
Allstate exclusive agencies5 reached
ings.
Within our overall customer base, $1.6 billion in 2002 – more than in the
we likewise focus on an underserved three previous years combined.
segment of the financial services market- In addition to life insurance, annuities
place. Households earning between and mutual funds, we offer insured
$30,000 and $100,000 a year have an savings accounts, certificates of deposit,
aggregate income of $3.1 trillion. Like insured money-market accounts and
most Americans, they want to build other savings and lending products
assets for a home, for college education through our Allstate Bank. Deposits have
and especially for retirement. grown rapidly, reaching $610 million in
Our protection business gives Allstate less than 18 months. It’s one more way
a great place to start – because of our we’re reaching customers with new
brand name and large customer base. solutions that fit their financial futures.
Also, because insuring assets like homes
and cars is the first step toward financial
security. But to build on that base for the
future, we must make the most of our
existing customer relationships.
That’s where our Allstate agencies
play a critical role. They have answered
the challenge and broadened their
expertise. More than half have studied,
tested and are licensed to sell a broad
range of financial products. We call them
5
New sales of financial products by Allstate exclusive agencies is an operating measure used by Allstate management to quantify the
current year sales of financial products by the Allstate proprietary distribution channel. New sales of financial products by Allstate exclusive agencies
includes annual premiums on new insurance policies, initial premiums and deposits on annuities, deposits in the Allstate Bank, sales of other com-
pany’s mutual funds and generally excludes renewal premiums. Further information appears in the Definitions of Non-GAAP and Operating Measures
section of Appendix D of the Notice of Annual Meeting and Proxy Statement, beginning on page D-3.
7

10. 3. Improve Agency Relationships
Meeting customers’ needs and helping them achieve financial
security is everyone’s job at Allstate, but the people customers see
most – the faces and voices of our company in the community –
are Allstate agencies and EFSs.
The Parthenon, Nashville, Tenn. – Dennis Smith was among the first agents to secure his Series 6/63 licenses. Smith also has partnered with Allstate
to develop new ways for agencies to manage their businesses more efficiently.
8

11. Allstate’s local presence is a long-stand- compensation to strategies that
ing strategic advantage, and it will be just produce more profit for the agency
as important in the future. But running and for the company, we’ll help
an agency is harder than it used to be. motivate and encourage agencies
Competition is keener, costs keep rising to build their businesses.
We’re working in other ways,
and the industry keeps changing.
too. Because so many agencies
We’ve made some changes too. In
are active as volunteer leaders in
recent years, for example, almost all
their communities, we’re increasing
Allstate employee agencies have made
financial and other support for local
the shift to independent contractors.
community efforts.
Likewise, we asked our agencies to
All this represents progress. But
become educated on new products,
we need to do much more. Nationally
new processes, new technology. To be
the trend is toward larger agencies
competitive, all these changes were
with more support staff. So, for
essential. But they still were wrenching.
agencies, finding and training more
So now, more than ever, our job at
employees, organizing businesses for
Allstate is to help make the work of our
greatest efficiencies, and financing
agencies easier, not harder. And to give
growth initiatives all are issues we
them more ways to win.
must help them address. By listening
One way we can help is by providing
harder to them, and working harder
more opportunities to sell more products
with them, we’ll help create more
to more customers. Our expansion into
opportunities for them.
financial services, for example, is broad-
ening their revenue base.
We’ll also help by expanding local
agency advertising and marketing
programs in 2003. We’ll make more tech-
nology enhancements available, based
upon guidelines and feedback from
agencies themselves. And, by linking
9

12. 4. Deepen Relationships With
Our Financial Partners
Allstate exclusive agencies serve one of the biggest customer bases
in the business, with a presence in 14 million American households.
But the other 90 million-plus U.S. households need financial services too.
To be a leader, we must be able to serve consumers who prefer to do
their financial business through other channels.
Allstate reaches these consumers in a We’re also diversified in terms of in sales in just nine months. Some
variety of ways. Approximately 80,000 products we can offer customers – from of its features are so unique we’ve even
independent agents and financial plan- traditional life insurance to mutual funds applied for a patent.
ners sell Allstate products under the to annuities and 529 college savings Another growing distribution
Lincoln Benefit Life name. We also pro- plans. And we’re constantly adding to channel focuses on workplace market-
vide Allstate Financial products through a our portfolio based on feedback from ing. Allstate’s Workplace Division sells
wide range of blue-chip financial services consumers and producers. Product life insurance, disability and supplemen-
firms, including many of the largest development at Allstate today is faster tal insurance coverage through
national and regional investment advisory and more focused. independent agencies to employees at
One example is the Allstate®
firms and banks, as well as through inde- more than 20,000 small and mid-sized
pendent insurance agents and Treasury-Linked Annuity, which com- businesses across the country.
brokerages. bines the safety and security of a fixed All told, these non-proprietary chan-
Diversified distribution is good annuity with the opportunity for growth, nels accounted for 80.2 percent of the
for growth. In 2002, for example, total based on the five-year U.S. Treasury yield. total Premiums and deposits generated
Premiums and deposits in the bank Based on extensive investor research by the Allstate Financial business unit
channel rose 38 percent, easily surpass- and developed by a cross-functional in 2002. Our aim is to continually
ing projections. Today, Allstate ranks team of Allstate Financial and Allstate strengthen these relationships by
Investments professionals, the Allstate®
third in life insurance, sixth in fixed annu- offering more products and generating
ity and eighth in variable annuity sales more revenue with our successful
Treasury-Linked Annuity was launched
through banks. producer-partners.
in February 2002. It recorded $762 million
5. Simplify Doing Business
With Allstate
Reaching customers through Allstate agencies or other distribution chan-
nels is only the beginning. To succeed, we need to nurture customer
relationships. Every interaction is an opportunity to serve, satisfy and retain
their loyalty. So we need to provide real solutions and support – no matter
what, where or when.
Our most important interactions with the claims experience faster, better and innovative Sterling Autobody Centers,
customers involve claims. So we’re con- more attuned to customer needs. which offer customers the option of hav-
stantly seeking innovative ways to make For example, we expanded our ing Allstate-owned facilities repair their
10

13. Allstate Customer Information Center, Charlotte, N.C. – Allstate CICs provide extensive upfront and ongoing training to elevate
and maintain strong customer service skills. (Instructor Charlotte Tucker pictured.)
phone centers answered more than
50,000 calls for agencies that were
closed the day after Thanksgiving
last year.
Our Customer Information Centers
(CIC) offer all the services available
autos. Compared with traditional a wealth of services and information, on our Web site and more. All told,
alternatives, Sterling Autobody including paying a bill, reporting a claim, 1-800-Allstate handled nearly 10 mil-
Centers have substantially lower purchasing a policy, viewing policy lion calls last year from claims reports
repair times. Plans call for continued information or learning about invest- to agent referrals.
expansion in 2003 and beyond. ment-planning basics. It’s already a powerful partnership.
Beyond claims, customers have The response has been positive. Allstate.com and 1-800-Allstate help
more routine interactions such as Registration for our online Customer handle many routine service tasks,
policy changes or bill payments. And Care Center more than doubled during freeing agencies to focus more on
they want to do them on their time, 2002. Nearly nine of 10 visitors were building relationships and satisfying
on their terms. We try to make that either very or completely satisfied with customers. They also bring new
as easy as possible. the overall experience. customers into agencies. Our focus
So we’re continually expanding our Like our Web presence, 1-800-Allstate will be to continue to leverage this
online presence at allstate.com. Most is available to customers 24 hours a day, relationship with Allstate agencies
American customers can choose from seven days a week. For example, our tele- and Exclusive Financial Specialists.
11

14. Leaving school, Scottsdale, Ariz. – Persistent work by agent Chris King and more flexible SRM auto policy pricing won back working mother of two
Audrey Contreras from a competitor. Contreras has auto, renters and life policies with Allstate.
12

15. 6. Achieve Profitable Growth
Focusing on customers first is the surest way to build our business.
But as we expand, we must keep a close eye on our bottom line and
our capital as well.
It all starts with our Strategic Risk to total policies in force. The same is true created a separate property/casualty
Management (SRM) tool that integrates when we sell more policies to the same company in New Jersey to deal with
underwriting, pricing and marketing number of customers. profitability issues. Today, Allstate
to help attract and retain the right cus- It’s also important to remember that New Jersey is profitable and growing.
tomers with the right products at the the impact of SRM is cumulative. Today, We’re currently looking at this and
right price. In particular, SRM helps us customers priced through SRM repre- other options in states where we face
attract and keep high-lifetime-value cus- sent about 25 percent of our total similar profitability challenges.
tomers – the kind who are more likely to business. Within five years, they will Finally, generating profitable
renew their policies and buy more prod- account for two-thirds, and the cumula- growth requires that we be highly
ucts from Allstate. tive effects will be significant. One visible in the marketplace. That’s
In one 22-state sample, for instance, example: High-lifetime-value customers why late last year we dramatically
the share of new standard auto customers are renewing their policies today at a rate increased advertising and marketing
in high-value segments increased from 1 percent to 2 percent higher than other spending, with a focus on encourag-
28 percent to 43 percent. Retention rates customers. Over 10 years, that could ing current single-line customers to
in those segments are higher. And those mean substantially fewer defections. become multi-line customers. We’ll
customers buy more, too. In the same Moving forward, we know profitability, build on that marketing momentum in
study, cross-sell results were 51 percent growth and acceptable returns can live 2003 and supplement national efforts
more in higher-value segments. together, even when the need arises to with local plans in key markets.
The long-term benefits are obvious: adapt to different regulatory and market
When we lose fewer customers, we add conditions. In 1998, for example, Allstate
13

16. Allstate Investments trading floor, Northbrook, Ill. – A 100-member investments team actively manages the company’s investment decisions.
14

17. 7 Maintain Our Financial Strength
.
Supporting growth – in our customer base, in our distribution networks and
in our product portfolio – is the financial strength that has made us a stable
company for decades. When we tell our customers, our investors and our
®
employees, “You’re In Good Hands with Allstate, ” the commitment carries
with it an awesome responsibility. While some companies today find their
resources and reputations declining, financial strength ensures that Allstate
will be able to keep its promises.
than most. In 2002, for example, our
Strength comes from strategy and
investment writedowns, while substantial,
focus. Since our public offering, we sold
amounted to only one half of 1 percent of
non-core businesses, including large
the average portfolio for the year. And
commercial accounts, reinsurance and
while the major rating agencies down-
mortgage insurance. That channeled our
graded the life operations of many other
energies and resources to markets where
companies in the industry, our ratings
we had the best chance of winning, while
from A.M. Best Company, Moody’s
limiting our catastrophe exposure and
Investors Service and Standard & Poor’s
shielding our asset base against multi-
remained unchanged at the same high
billion-dollar losses.
levels that we have consistently enjoyed
Financial strength comes from
over the past five years.
sound governance, transparency and a
Finally, financial strength comes from
commitment to integrity. Our board is
always being conscious of costs. In 2002,
recognized as one of the most indepen-
our Property-Liability expense ratio
dent in America. In recent years we’ve
declined again, from 23.9 percent to
increased the transparency of our finan-
23.3 percent. The reduction reflected
cial reporting. What’s more, we operate
premium increases and companywide
in one of the most regulated industries
efforts by individuals at all levels. Six
anywhere. Our principles, accounting
Sigma initiatives implemented in Allstate
and otherwise, are sound. So when I sign
Financial and a more rigorous procure-
our financial statements every quarter,
ment governance process also yielded
I do it with a steady hand.
incremental savings.
Strength also comes from sound
Staying true to these priorities while
investment decisions that help improve
making prudent moves to ensure that our
returns for shareholders. Allstate
reserves are sufficient to address liquidity
Investments, LLC, an Allstate subsidiary,
requirements will help keep us financially
manages our $91 billion portfolio. We
strong far into the future.
believe in being diversified and value-
oriented. While almost no one emerged
unscathed from economic downturns in
recent years – Allstate fared far better
15

18. Looking Ahead
Clearly, we have a full plate of initiatives going forward. Our agenda is
ambitious, yet achievable. And our confidence in the future is bolstered by
lessons from the recent past.
In the near decade since becoming These attributes will continue to
a public company, much has changed at serve us well. In many ways, Allstate
Allstate. But several characteristics have today represents the best of both worlds.
remained consistent: As a company with roots that go back
more than 70 years, we have financial
• We have an unwavering commitment
strength and one of America’s finest
to integrity. Our word is our bond.
brands. Having functioned on our own
• Our approach to change has been
as a public company for nearly a decade,
calculated, not haphazard. We built
we’re becoming nimble enough to
on our core strengths.
respond to changing markets and
• We place a premium on execution.
customer preferences.
We did what we said we’d do.
The combination makes us a
• We demonstrated a passion for
formidable competitor. We’ll draw on
success. Our employees have
all of these resources as we expand our
been able to embrace, and to
operations and our opportunities in
implement change.
the years ahead.
Sincerely,
Edward M. Liddy
Chairman, President and CEO
16

19. Financial Data Allstate operates from a strong provide insurance, investment and
position financially, with $117.4 billion retirement products to 14 million house-
in assets and shareholders’ equity of holds served through Allstate directly,
$17.4 billion. Its main business units, and 2.5 million households served
Property-Liability and Allstate Financial, through non-proprietary channels.
Comparison of Cumulative Total Return
For a $100 initial investment made as of December 31, 1997, 1998, 1999, 2000 and 2001.
Allstate vs. Published Indices
Allstate
$175
S&P 500 163.27
S&P 500 Property/Casualty
150
126.98
125
112.26
104.59
97.08 94.91
100 90.24 88.80
88.68 89.14
81.98
78.03
75.64
75 68.79
62.57
50
25
0
Five-year Return Four-year Return Three-year Return Two-year Return One-year Return
(Invested at 12/31/97) (Invested at 12/31/98) (Invested at 12/31/99) (Invested at 12/31/00) (Invested at 12/31/01)
The chart above compares the cumulative
performance of Allstate’s returns for an initial
$100 investment made at the end of each of Operating income
Revenues
($ in billions)
($ in billions)
the preceding five year periods, with the
performance of the S&P 500 and S&P 500
Property/Casualty indices. The chart shows the 3.00
30 29.58
changes in cumulative value of an initial $100 29.13
28.87
investment over the indicated time periods,
assuming all dividends are reinvested quarterly.
2.25
28
2.08
2.00
1.49
1.50
26
.75
24
0
22
2000 2001 2002
2000 2001 2002
Net income
($ in billions)
3.00
2.21
2.25
1.50
1.16 1.13
.75
0
2000 2001 2002
17

20. Consolidated Financial Allstate provides insurance, investment DeerbrookSM Insurance brand property
Highlights and retirement products to more than and casualty insurance products that
14 million households served through are sold exclusively through independent
Allstate directly and 2.5 million house- agents. Allstate Financial products can
holds served through non-proprietary also be accessed through independent
channels, and has approximately 12,300 agents and representatives of banks
exclusive agents in the United States and and securities firms. The consolidated
Canada. Customers can access Allstate financial results of Allstate include its
products and services through Allstate Property-Liability, Allstate Financial and
agents, allstate.com and 1-800-Allstate. Corporate and Other business units.
Ivantage includes EncompassSM and
Revenues
($ in billions)
Revenues increased to $29.58 billion in Net income declined to $1.13 billion in
2002 from $28.87 billion in 2001 due to 2002 from $1.16 billion in 2001 due to
30 29.58
29.13
increased Premiums earned in the higher realized capital losses when com-
28.87
Property-Liability business, Life and pared to 2001, and the cumulative effect
28
annuity premiums and contract charges of a 2002 change in accounting principle.
in the Allstate Financial business and Net income per diluted common share in
26
Net investment income. Offsetting these 2002 was equal to 2001 as reduced Net
increases was a higher level of net income was offset by the positive impacts
realized capital losses in 2002 when of Allstate’s share repurchase program.
24
compared to 2001. Allstate repurchased 12 million shares
totaling $446 million during 2002.
22
2000 2001 2002
Operating income increased to $2.08
billion in 2002 from $1.49 billion in 2001
Net income
due to higher Operating income in both
($ in billions)
Property-Liability and Allstate Financial.
3.00
2.21
2.25
1.50
1.16 1.13
.75
0
2000 2001 2002
Operating income
($ in billions)
3.00
2.25
2.08
2.00
1.49
1.50
.75
0
2000 2001 2002
18

21. Property-Liability Allstate’s Property-Liability business
Highlights is the second largest personal property
and casualty insurer in the United
States. It is principally engaged in the
sale of private passenger auto and
homeowners insurance.
Premiums written
($ in billions)
Premiums written increased to $23.92 Operating income for Property-
23.92
billion in 2002 from $22.61 billion in 2001 Liability increased to $1.63 billion in
24
due to increases in the standard auto and 2002 from $1.05 billion in 2001. This
22.61
homeowners lines. These increases were increase was due to higher Premiums
21.86
22
due to increased premium rates, but were earned and lower catastrophe losses.
partially offset by a decline in the number These factors were partially offset by
20
of policies. Increases in Premiums written higher insurance claims and claims
in standard auto and homeowners were expenses and declines in Net investment
partially offset by declines in Premiums income. During 2002, claims and claims
18
written in the Allstate brand non- expenses were affected by a higher aver-
standard auto line related to the imple- age cost per claim, which was partially
16
mentation of programs to address offset by a lower rate of claim occurrence.
2000 2001 2002
profitability trends in this line.
Outlook Property-Liability will continue
Net income
Net income for Property-Liability to seek approval for rate changes wher-
($ in billions)
increased to $1.27 billion in 2002 from ever and whenever it’s appropriate, and
2.4
$926 million in 2001. This increase was the to pursue other actions such as under-
result of higher Operating income, par- writing process improvements, that will
1.86
tially offset by increased realized capital promote a targeted level of profitability.
1.8
losses and the Cumulative effect of a Strategic plans are also in place to
1.27
change in accounting principle. increase the retention of current cus-
1.2
tomers, increase the number of agents
0.93
and market to a focused group of con-
.6
sumers who are best able to provide
profitable growth.
0
2000 2001 2002
Operating income
($ in billions)
2.4
1.8
1.63
1.54
1.2
1.05
.6
0
2000 2001 2002
19

22. Allstate Financial Highlights The Allstate Financial business provides
life insurance, investment and retirement
products through Allstate agents, inde-
pendent agents and representatives of
banks and securities firms.
Premiums and deposits
($ in billions)
Premiums and deposits increased to ments for prior year tax liabilities and the
$11.83 billion in 2002 from $10.61 billion elimination of goodwill amortization due
16
in 2001 due to an increase in fixed annu- to an accounting change. These
ity sales and an increase in deposits at increases were partly offset by higher
12.25
11.83
12
10.61
the Allstate Bank. These increases were Amortization of deferred policy acquisi-
partially offset by a significant decline in tion costs related to variable annuities
8
sales of institutional products reflecting resulting from the equity market environ-
unfavorable credit market conditions, and ment during 2002, and increased
variable annuities caused by poor equity Operating costs and expenses.
4
market performance.
Outlook Allstate Financial will continue
0
Net income for Allstate Financial to manage its investment margin to
2000 2001 2002
declined to a loss of $22 million in 2002 maintain profitable spreads between
from Net income of $363 million in 2001. investment yields and interest crediting
Net income
This decrease was the result of the rates on its inforce products. Manage-
($ in millions)
Cumulative effect of a change in ment will also continue to evaluate the
600
accounting principle and higher realized investment environment and manage
capital losses in 2002 compared to 2001. product pricing to ensure that new prod-
469
uct sales generate acceptable returns.
450
Operating income for Allstate
Allstate Financial will continue to
363
Financial increased to $556 million in
strengthen its relationships within its
300
2002 from $527 million in 2001. This
current distribution channels by enhanc-
increase was due to new product sales,
ing its focus on key distribution partners
management actions to improve the
150
and Allstate agents.
gross investment margin, which is the
margin earned on investments in excess
(22)
0
of interest credited on policies, adjust-
2000 2001 2002
Operating income
($ in millions)
600
556
527
520
450
300
150
0
2000 2001 2002
20

23. Investments Highlights Investment Growth Fixed Income Portfolio Quality
Consolidated investment balances Allstate’s fixed income portfolios are both
Allstate Investments, LLC is a
increased to $90.65 billion in 2002 highly-diversified and of high quality. On
wholly-owned subsidiary of The Allstate
from $79.88 billion in 2001, or 13.5%, a consolidated basis, approximately 93%
Corporation responsible for managing
primarily due to increased cash flows of Allstate’s fixed income assets are of
the invested assets of the principal busi-
from growth in operations, as well as investment grade quality. Allstate consid-
ness units, Property-Liability and Allstate
increased unrealized gains in fixed ers a security investment grade when it
Financial. Allstate Investments, LLC
income assets generated in a lower has received a rating from the National
works closely with Allstate’s business
interest rate environment. Association of Insurance Commissioners
units to design effective market and
of 1 or 2, a Moody’s rating of Aaa, Aa, A
credit quality, liquidity and asset alloca-
or Baa, or a comparable internal rating.
tion strategies that will most effectively Investment Growth
($ in billions)
The high quality nature of the portfolios
support their business objectives.
Property-Liability
provide the foundation for the risk man-
Allstate is a major investor in many Allstate Financial
100
Corporate and Other 90.65
agement framework that best meets
domestic securities markets and partici-
79.88
each business unit’s financial objectives
pates in several international investment 74.48
75
and risk tolerance levels.
markets. Working within a comprehen-
sive risk management framework,
Allstate’s team of dedicated investment 50
Distribution of Fixed Income Assets
professionals takes an active market by Credit Quality (In Percent)
stance in pursuit of generating returns At Dec. 31, 2002:
25
in excess of appropriate benchmarks in Investment Grade Aaa/Aa/A
support of the Company’s overall 86%
0
financial objectives.
2000 2001 2002 63%
Asset Allocation 72%
Allstate’s consolidated allocation of
Net Investment Income Investment Grade Baa
assets is designed to best support the
Allstate’s consolidated Net investment 8%
needs of its business units. Allstate’s
income for 2002 increased to $4.85 billion
portfolio of invested assets is heavily 29%
from $4.80 billion in 2001, or 1.2%, pri-
weighted towards fixed income securi-
marily due to higher investment balances, 21%
ties. Fixed income securities provide the
but partially offset by lower yields on pur-
most effective match to the business
chases of new fixed income securities. Below Investment Grade Ba
units’ financial objectives while best
Investment strategies are focused on 3%
supporting Allstate policyholder claim
achieving consistent growth in invest-
payments. The balanced allocation 5%
ment income within the context of overall
across both fixed income and equity 4%
asset growth and available market yields.
markets performed well during the
unique and volatile capital markets that Below Investment Grade B or Lower
Net Investment Income
existed during 2002. 3%
($ in billions)
Property-Liability
At Dec. 31, 2002: 3%
Allstate Financial
6.0
Corporate and Other
Total Corporation Property-Liability
$90.65 billion Allstate Financial
3%
4.85 Consolidated
4.80
Taxable Fixed Income 63% 4.63
4.5
Tax-Exempt Fixed Income 22%
Commercial Mortgage Loans 7%
0
20
40
60
80
0
10
Equity 4%
Outlook The continued presence of a
3.0
Other 4%
soft economy, geopolitical risks and his-
Property-Liability
torically low interest rates will present a
$34.25 billion
1.5
Taxable Fixed Income 30%
challenging investment climate in 2003.
Tax-Exempt Fixed Income 56%
Allstate believes a disciplined approach
Equity 10%
to risk management and asset allocation
0
Other 4%
combined with an active management
2000 2001 2002
Allstate Financial
philosophy will continue to serve Allstate
$55.26 billion
well in the coming year.
Taxable Fixed Income 84%
Commercial Mortgage Loans 11%
Other 5%
21

24. At a Glance Product Alternatives
Allstate offers a wide
range of protection and
savings tools that work
together to achieve
5. Wealth Transfer
financial security.
Estate planning products:
Fixed Survivorship Life Insurance
Variable Survivorship Life Insurance
4. Asset Management and Accumulation
Fixed Annuities
Variable Annuities
Single Premium Immediate Annuities
Universal Life Insurance
Variable Universal Life Insurance
5.
Structured Settlement Annuities
Mutual Funds
IRAs
Roth IRAs
SIMPLE IRAs
SEP IRAs
529 Plans
Coverdell Education Savings Accounts
3. Short-term Financial Objectives
Checking Accounts
4.
Savings Accounts
Certificates of Deposit
Money Market Accounts
Mortgages
2. Family Life Protection
Term Life Insurance
Universal Life Insurance
Variable Universal Life Insurance
Long-term Care Insurance
3.
Disability Insurance
1. Asset Protection
Auto Insurance
Homeowners Insurance
Condominium Insurance
Renters Insurance
Scheduled Personal Property
Commercial Auto Insurance
Customizer-Small Business Owner Insurance
2.
Landlord Package Insurance
Mobile Home Insurance
Motorcycle Insurance
Boat Insurance
Personal Excess Liability Insurance
Emergency Roadside Service Plans
1.
22

25. Our People
The success of any business rests on We are pleased to receive confirma-
the shoulders of its people. That’s particu- tion externally that we’re on the right
larly true in a business like ours. Our track with our employment practices and
product is our people and the service they work environment. Allstate has been rec-
deliver each and every day. ognized repeatedly in various
Allstate has long understood the publications including: CAREERS & the
relationship between company perfor- disABLED, Fortune, Hispanic, LATINA
mance and an effective work environ- Style, Money, Training Magazine and
ment that recognizes and rewards per- Working Mother.
formance while enabling employees to And, while we’re proud of the recog-
pursue personal and professional goals. nition, we know we can’t rest on our
Allstate offers a distinctive employ- laurels. Our workforce is a competitive
ment opportunity including an inclusive advantage. Employees have the opportu-
and effective work environment that nity on a regular basis to provide their
ensures dignity and respect for all indi- feedback through a survey process
viduals, competitive pay and benefits, designed to monitor the effectiveness of
opportunities for development, and qual- our work environment. We continually
ity leadership – all designed to attract the look for ways to improve the work envi-
brightest new talent and retain and moti- ronment and provide the tools our
vate our skilled workforce. employees need to be successful.
A Diverse Workforce
Shown are minority and female employee percentages of the company’s total U.S. workforce
Source: EEO-1 report, December 2002
Total Total Total African Total Total Asian/ Total Native Total
Number by Female American Hispanic Pacific Islander American Minority
Job Category Category Percent Percent Percent Percent Percent Percent
Officials & Managers 5,614 41.6 11.8 5.0 2.7 0.4 19.9
Professionals 18,789 49.2 13.2 6.0 5.0 0.4 24.5
Technicians 30 3.3 6.7 3.3 3.3 0 13.3
Sales Workers 209 18.7 9.1 4.3 3.8 0.5 17.7
Office Workers 13,779 84.1 24.0 10.2 3.1 0.4 37.8
Craft Workers 98 8.2 10.2 18.4 4.1 0 32.7
Total Workforce 38,519 60.3 16.8 7.4 4.0 0.4 28.6
Data as of 12/22/02 (Employee counts only. Exclude EAs, EFSs & IAs)
23