Allstate Takes $32M Charge for Asbestos Settlement
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Published November 22, 2002

Allstate Corp. (NYSE:ALL) said it settled an asbestos-related coverage  
dispute with a policyholder, a move expected to trim $32 million, or 4 
cents a share, from third-quarter net income. Allstate spokesman Mike 
Trevino confirmed that the settlement as related to asbestos, part of the
company's discontinued lines and coverages segment.  That line of 
business covers policies written by Allstate between 1972 and 1985, when
the company wrote business that exposed it to asbestos, environmental 
and mass-tort claims, Mr. Trevino said.  "We haven't written that kind of
business since 1985," he said. 

The insurer does "a regular and extensive review of our reserves" to 
ensure that there is adequate reserving for those discontinued lines, 
said Trevino.  He couldn't say whether there are any other outstanding 
asbestos-related issues to be resolved.  "We have had asbestos claims, 
which are now part of the discontinued lines segment," he said.  
"Whatever is there, we believe our reserves are adequate." 

Mr. Trevino declined to name the policyholder with which Allstate 
settled.  

Investment bank Morgan Stanley said in a research note that the added 
charge probably wasn't a significant development. Morgan Stanley noted 
that Allstate had already reported a $64 million after-tax loss related 
to environmental and other losses--including asbestos. 

"Because Allstate's margins are improving so rapidly and reserves appear
relatively adequate for asbestos, we still do not expect future large 
one-time charges that would significantly affect earnings or valuation," 
Morgan Stanley said. 

A month ago, Allstate said its third-quarter net income rose to $280 
million, or 39 cents a share, from $226 million, or 32 cents a share, for
the same quarter a year ago (BestWire, Oct. 17, 2002).  Operating income
increased to $548 million, or 77 cents a share, from $401 million, or 56
cents a share. 

Those figures were revised on the company's 10-Q quarterly filing with 
the U.S. Securities and Exchange Commission, published Nov. 13, to take 
the settlement into account.  Net income now stands at $248 million, or 
35 cents a share.  Revised operating income is $516 million, or 73 cents
a share. 

Allstate said the revised results don't affect its projected year-end 
result.  The company still expects operating income per share of $2.80 to
$3, excluding restructuring charges and assuming normal catastrophe 
losses. 

The financial strength of Allstate Insurance Group is rated A+ (Superior)
by A.M. Best Co. Allstate's stock was trading at $39.17 a share on the 
afternoon of Nov. 14, down 0.89% from the previous close.