TEXT-Fitch affirms Allstate's ratings

Feb 14 - Fitch Ratings has affirmed the 'A-' Issuer Default Rating
(IDR) of The Allstate Corporation (Allstate) as well as the 'A+' Insurer
Financial Strength (IFS) ratings of Allstate Insurance Co. and its
property/casualty subsidiaries, and the 'A-' IFS ratings of Allstate Life
Insurance Co. and the other life subsidiaries. In addition, Fitch has assigned a
'BBB+' rating to Allstate's $500 million senior unsecured debt issuance. The
Rating Outlook is Stable. A full list of ratings can be found below.

Key issues supporting the rating are Allstate's market position as a top tier
personal lines writer and acceptable capitalization at the operating
subsidiaries. Balanced against these strengths was profitability challenged by
catastrophe losses, life operations undergoing a strategic shift and remaining
unrealized losses on asset-backed securities.

Allstate has the second leading market position in both private passenger auto
and homeowners insurance behind State Farm Mutual Automobile Insurance Co.
Allstate's acquisition of Esurance gives it access to direct distribution in an
effort to compete more effectively against fast-growing peers GEICO and
Progressive.

Statutory surplus at Allstate Insurance Company (AIC), the primary underwriting
subsidiary, was $15 billion as of Dec. 31, 2011. While this level of
capitalization is acceptable at the current rating category, it remains below
pre-financial crisis levels of $19.1 billion reported at year-end 2006.
Operating leverage, excluding the surplus attributable to Allstate's life
operations, was 2.1 times (x), which is worse than the 1.8x median for 'A' rated
companies in Fitch's universe.

Allstate's largest line of business, personal auto insurance, continues to
perform well, while the homeowners' line was hit hard by catastrophes. The GAAP
combined ratio for Allstate's property/liability operations was 103.4% for 2011
relative to 98.1% in 2010. Losses attributable to catastrophes during 2011
amounted to nearly 15 percentage points in the combined ratio compared to less
than 9 percentage points in 2010. Allstate's 19-year average annual catastrophe
loss as a percentage of earned premium appears high at 7.5 percentage points.

Allstate Financial reported net income of $586 million for 2011. This was up
from $58 million in 2010 and represents a considerable improvement relative to
net losses of $483 million and $1.7 billion for full years 2009 and 2008,
respectively. Changes at Allstate Financial could eventually improve its
strategic importance within the Allstate enterprise, but it will take time to
see what level of earnings it will contribute.

Gross unrealized investment losses on fixed income securities continue to
shrink, amounting to $1.7 billion at Dec. 31, 2011 compared to $2.4 billion, $5
billion and $11 billion at year-ends 2010, 2009 and 2008, respectively.
Unrealized loss concentrations continue to be in asset-backed securities, which
are more heavily focused in the life insurance operations. The total net
unrealized investment gain on a pre-tax basis was $2.9 billion as of Dec. 31,
2011.

Fitch's rating rationale anticipates a continuation of Allstate's practice of
maintaining sizeable liquid assets at the holding company level. Allstate has
$2.2 billion in deployable assets at the holding company level, relative to
annual interest expense and common dividends of approximately $800 million.

Allstate issued $500 million in senior notes in January 2012 to fund debt
repayment during 2012. Debt-to-total capital remained appropriate for the
current rating category at 26% at Dec. 31, 2011. This ratio was calculated
excluding unrealized investment gains on fixed income securities from the
denominator. On a pro forma basis, using the new $500 million debt issuance to
fund the maturing $350 million debt leaves the financial leverage calculation
virtually unchanged.

The rating on Allstate's life operations reflects Fitch's assessment of its
limited strategic importance within the Allstate enterprise and view that the
'standalone' IFS rating is in the 'BBB' range. The ratings of the life
operations continue to benefit from the Capital Support Agreement from Allstate
Insurance Co. and its access to the holding company credit facility.

The life operations focus on traditional underwritten products and de-emphasize
spread-based products, which improve its risk profile.

Key rating triggers for Allstate that could lead to an upgrade include:

--Growth in surplus leading to an improved capitalization profile;
-- Reduced volatility in earnings from catastrophe losses and better operating
results consistent with companies in the 'AA' rating category.

Key rating triggers for Allstate that could lead to a downgrade include:

--A prolonged decline in underwriting profitability that is inconsistent with
industry averages or is driven by an effort to grow market share during soft
pricing conditions;
--Substantial adverse reserve development that is inconsistent with industry
trends;
--Significant deterioration in capital strength as measured by Fitch's capital
model, NAIC risk-based capital and traditional operating leverage. Specifically,
if operating leverage, excluding the surplus of the life insurance operations,
approached 2.5x it would place downward pressure on ratings;
--Significant increases in financial leverage to a debt-to-total capital ratio
greater than 30%;
--Unexpected and adverse surrender activity on liabilities in the life insurance
operations;
--Liquid assets at the holding company less than one year's interest expense and
common dividends.

Fitch has taken the following rating actions on Allstate and subsidiaries:

The Allstate Corporation
--Long-term IDR affirmed at 'A-'.

The following junior subordinated debt is affirmed at 'BBB-':
--6.125% $500 million debenture due May 15, 2037;
--6.5% $500 million debenture due May 15, 2067.

The following senior unsecured debt is rated 'BBB+':
--5.2% $500 million note due Jan. 15, 2042.

The following senior unsecured debt is affirmed at 'BBB+':
--6.125% $350 million note due Feb. 15, 2012;
--7.5% $250 million debenture due July 15, 2013;
--6.2% $300 million debenture due 2014;
--5% $650 million note due Aug. 15, 2014;
--6.75% $250 million debenture due May 15, 2018;
--7.45% $700 million debenture due 2019;
--6.9% $250 million debenture due May 15, 2038;
--6.125% $250 million note due Dec. 15, 2032;
--5.35% $400 million note due June 1, 2033;
--5.55% $800 million note due May 9, 2035;
--5.95% $650 million note due April 1, 2036;

The following ratings are affirmed:
--Commercial paper at 'F1';
--Short-term IDR at 'F1'.

Allstate Insurance Company
Allstate County Mutual Insurance Co.
Allstate Indemnity Co.
Allstate Property & Casualty Insurance Co.
Allstate Texas Lloyd's
Allstate Vehicle and Property Insurance Co.
Encompass Home and Auto Insurance Co.
Encompass Independent Insurance Co.
Encompass Insurance Company of America
Encompass Insurance Company of Massachusetts
Encompass Property and Casualty Co.
--IFS affirmed at 'A+'.

Allstate Life Insurance Co.
Allstate Life Insurance Co. of NY
American Heritage Life Insurance Co.
Lincoln Benefit Life Insurance Co.
--IFS affirmed at 'A-'.

Allstate Life Global Funding Trusts Program
--Affirmed at 'A-'.

Contact:
Primary Analysts:
Douglas M. Pawlowski, CFA (Allstate Corp. and Allstate Insurance Co.)
Senior Director
+1-312-368-2054
Fitch, Inc.
70 West Madison St.
Chicago, IL 60602

Bruce E. Cox (Allstate Life Insurance Co.)
Director
+1-312-606-2316

Committee Chairman:
Jim Auden
Managing Director
+1-312-368-3146

Additional information is available at 'www.fitchratings.com'. The issuer did
not participate in the rating process, or provide additional information, beyond
the issuer's available public disclosure. For the Allstate Corp.: The ratings
above were unsolicited and have been provided by Fitch as a service to
investors. For the other companies mentioned: The ratings above were solicited
by, or on behalf of, the issuer, and therefore, Fitch has been compensated for
the provision of the ratings.

Applicable Criteria & Related Research:
--'Insurance Rating Methodology' (Sept. 22, 2011).

Applicable Criteria and Related Research:
Insurance Rating Methodology