AM Best Affirms Credit Ratings of The Allstate Corporation and Core Subsidiaries; Downgrades Ratings on Certain Subsidiaries

AM Best has affirmed the Financial Strength Rating (FSR) of A+ (Superior) the Long-Term Issuer Credit Rating (Long-Term ICR) to "aa-" (Superior) of the members of Allstate Insurance Group (Allstate) (NYSE:ALL). In addition, AM Best has affirmed the FSR of B (Fair) and the Long-Term ICR of "bb" (Fair) of the members of Castle Key Group (Castle Key). Concurrently, AM Best has affirmed the FSR of A- (Excellent) and the Long-Term ICR of "a-" (Excellent) of ASMI Auto Group's members. AM Best also has affirmed the FSR of A (Excellent) and the Long-Term ICR of "a" (Excellent) of First Colonial Insurance Company (FCIC) (Jacksonville, FL). All of the aforementioned companies are headquartered in Northbrook, IL, except where specified.

Additionally, AM Best has affirmed the Long-Term ICR of "a-" (Excellent) and all existing Long-and Short-Term Issue Credit Ratings (Long-Term IR; Short-Term IR) of the ultimate parent, The Allstate Corporation (Allcorp). At the same time, AM Best affirms the Long-Term ICR of "a-" (Excellent) of National General Holdings Corp. (Delaware), an intermediate holding company of Allcorp. The outlook of all these Credit Ratings (ratings) is stable.

Concurrently, AM Best has downgraded the FSR to A- (Excellent) from A (Excellent) and the Long-Term ICRs to "a-" (Excellent) from "a" (Excellent) of the members of Allstate New Jersey Insurance Group (collectively referred to as Allstate New Jersey) (headquartered in Bridgewater, NJ). The outlook of these ratings is negative.

In addition, AM Best has downgraded the FSR to A (Excellent) from A+ (Superior) and the Long-Term ICRs to "a+" (Excellent) from "aa-" (Superior) of Direct General Life Insurance Company (Orangeburg, SC) and National Health Insurance Company (Dallas, TX). The outlook of these Credit Ratings (ratings) is stable. (See link below for a detailed listing of the companies and ratings.)

The ratings of Allstate reflect its balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, favorable business profile and appropriate enterprise risk management (ERM).

The Allstate group's favorable market position in the private passenger auto and homeowners' markets, its strong geographic reach and distribution capabilities are the underpinnings for its historically profitable operations and has provided significant capital generation capabilities. Recently, the group's results have reflected the challenging macro-economic trends, which have negatively affected underwriting results and risk-adjusted capitalization. The organization has responded with a comprehensive profit improvement plan, including rate increases and underwriting actions, which have improved underlying margins in recent quarters.

AM Best's expectations are that these underwriting actions in conjunction with Allstate's operational expertise will continue to lead to improved operational results and a return to the group's historical performance metrics. AM Best notes that Allcorp maintains strong financial flexibility through its access to capital markets and various other sources of liquidity. The organization's financial leverage and coverage metrics are within AM Best's expectations and adequate for its current ratings.

The ratings of Allstate New Jersey reflect its balance sheet strength, which AM Best assesses as strong, as well as its strong operating performance, limited business profile and appropriate ERM. Additionally, the ratings recognize the financial strength, ERM and continued support of Allstate Insurance Company and Allcorp.

The downgrading of the ratings and the negative outlooks of Allstate New Jersey reflects higher than expected loss cost driven by challenging macroeconomic trends in personal auto and unfavorable regulatory environment and higher than average catastrophe losses in its homeowners' line of business, which has driven a material decline in surplus. Allstate New Jersey has taken various actions to restore its operating performance to historical levels. AM Best expects these actions to improve capitalization and overall profitability in the intermediate term.

The ratings of Direct General Life Insurance Company reflect its balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate ERM. Additionally, the ratings of National Health Insurance Company reflect its balance sheet strength, which AM Best assesses as strongest, as well as its adequate operating performance, neutral business profile and appropriate ERM. The downgrading of the ratings of Direct General Life Insurance Company and National Health Insurance Company reflect the perceived decrease in their importance to the parent considering the sale of employer voluntary business.

The ratings of FCIC reflect its balance sheet strength, which AM Best assesses as very strong, as well as its marginal operating performance, neutral business profile and appropriate ERM. FCIC's ratings also benefit from the explicit and implicit support provided by Allcorp, its ultimate parent.

The ratings of Castle Key reflect its balance sheet strength, which AM Best assesses as weak, as well as its marginal operating performance, limited business profile and appropriate ERM. Castle Key continues to face challenges in the personal property insurance market in Florida, which include higher severity losses, catastrophe-related losses and higher reinsurance costs. Castle Key management has taken significant corrective underwriting actions and is actively engaged in discussions with state regulators on appropriate capitalization levels.

The ratings of ASMI Auto Group reflect its balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, very limited business profile and appropriate ERM. The ratings also reflect the risk management and service agreement support of its ultimate parent, Allcorp.

A complete listing of The Allstate Corporation and its property/casualty and life/health subsidiaries' FSRs, Long-Term ICRs and Long- and Short-Term IRs is available.

This press release relates to Credit Ratings that have been published on AM Best's website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best's Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best's Credit Ratings, Best's Performance Assessments, Best's Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best's Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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