Investments and Asset Management

Allstate’s top priority is to make sure that money is available to
pay current and future claims. Keeping promises to customers
comes first. So our investment strategy stresses security as well
as growth.

The return on our investment portfolios is an important component of our financial results. Our seasoned investment team uses sophisticated economic forecasting tools and a strategic asset allocation approach which uses models that consider the nature of our liabilities and risk tolerances, as well as the risk and return parameters of the asset classes in which we invest.

One major investment category is municipal bonds. As of December 31, 2010, Allstate held approximately $16 billion in bonds that help improve infrastructure and extend vital services in communities across the country. The portfolio is actively managed and well diversified among states and sectors. Major holdings include bonds where proceeds fund various community needs such as primary and secondary schools, public and private universities, hospitals, single and multi-family housing programs, green energy projects — hydroelectric and wind generated power plants, police and fire stations, libraries and community buildings, and Economic Development Projects.

Allstate also invests in communities through our Socially Responsible Investment (SRI) program. Over the years, it has financed more than 56,000 units of affordable housing and helped serve more than 100,000 patients at community health facilities countrywide. In 2010, the SRI portfolio delivered a return of 4.4 percent, proving socially responsible investing can be successful on several levels.

As of 2010 year-end, our SRI portfolio stood at $89 million, in addition to our growing affordable housing investment portfolio with a book value of $345 million. In light of the current credit crisis, such targeted investments are more critical than ever.

To help revitalize neighborhoods across the country, Allstate also:

Makes long-term, below-market-rate loans to established institutions such as Impact Community Capital and Local Initiatives Support Corporation (LISC). These loans support childcare facilities, new charter schools, job training facilities, and commercial and retail properties, all of which aid the redevelopment of communities.
Makes loans to help local chapters of national organizations purchase and develop vacant lots, build new facilities that improve the quality of community life, and provide young adults with services that support job readiness, placement and training.
Invests substantially in new affordable housing developments. Besides providing much-needed housing for low-income families and seniors, many of the developments incorporate green and sustainable features into their construction.

Allstate has a policy to exclude certain kinds of investments. For example, we do not:

Directly invest in tobacco companies.
Directly invest in liquor companies.
Invest in countries, governments, organizations, and individuals specified by the Office of Foreign Assets Control.

Since 2008, we have been reducing our investment holdings in municipal bonds and real estate as part of our risk mitigation and return optimization program.

For the year, Allstate’s overall return on investment was 8.6 percent.

Additional information can be found in Allstate's 2010 Annual Report.