[December 05, 2016]

Fitch Rates The Allstate Corporation's Senior Unsecured Notes 'BBB+'

Fitch Ratings has assigned a 'BBB+' rating to The Allstate Corporation's (Allstate) new $550 million 3.28% senior notes due 2026 and $700 million 4.20% senior notes due 2046; the issuance is anticipated to close on Dec. 8, 2016.

KEY RATING DRIVERS

The ratings for the new offerings are equivalent to the rating on Allstate's existing senior debt. Proceeds from the issuance will be used for general corporate purposes, including in part to fund its recently announced, approximately $1.4 billion acquisition of consumer protection plan provider, SquareTrade Holding Company, Inc. Fitch expects pro forma financial leverage following the senior note issuance to increase to 24.8% from 20.9% at Sept. 30, 2016.

Fitch last reviewed the ratings of Allstate and its insurance operating subsidiaries on July 12, 2016. For more details, see Fitch's press release at www.fitchratings.com.

RATING SENSITIVITIES

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

--Sustainable capital position measured by net leverage excluding life company capital below 3.8x and a score approaching 'Very Strong' on Fitch's Prism capital model;

--No material deterioration in underwriting profitability of the property/casualty operations from current levels.

Given its Negative Outlook, Fitch considers an upgrade of Allstate Life Insurance Company (ALIC) unlikely over the near- to intermediate-term. The following rating triggers could result in a revision of ALIC's Outlook to Stable from Negative:

--An improvement in statutory Risky Assets/TAC ratio to 200% with operating performance remaining stable;

--Fitch's view of its strategic importance changes to 'Core' from 'Very Important'.

Given its relatively small size and scale, American Heritage Life Insurance Company (AHLIC) is unlikely to be upgraded in the near- to intermediate-term, but the following could result in an upgrade over the longer term:

--Fitch's view of its strategic importance changes to 'Very Important' from 'Important' or if the agency's view of parent support merits a greater degree of uplift.

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;

--Significant deterioration in capital strength as measured by Fitch's capital model, NAIC risk-based capital, and statutory net leverage. Specifically, if net leverage excluding life company capital approached 5x it would place downward pressure on ratings;

--Significant increases in financial leverage ratio to greater than 30%;

--Liquid assets at the holding company of less than one year's interest expense, and preferred and common dividends.

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

--Statutory Risky Assets/TAC ratio deteriorates further;

--Fitch's view of its strategic importance weakens.

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

--Financial performance or capitalization deteriorates significantly;

--Fitch's view of its strategic importance weakens.

FULL LIST OF RATING ACTIONS

Fitch has assigned the following ratings:

Allstate Corporation

--$550 million 3.28% senior notes due 2026 at 'BBB+';

--$700 million 4.20% senior notes due 2046 at 'BBB+'.

Fitch currently rates the Allstate entities as follows:

The Allstate Corporation

--Long-Term Issuer Default Rating at 'A-'/Stable Outlook;

--Preferred stock at 'BB+';

--Commercial paper at 'F2';

--Short-Term IDR at 'F2'.

The following senior unsecured debt at 'BBB+':

--6.75% $177 million debenture due May 15, 2018;

--7.45% $317 million debenture due May 16, 2019;

--3.15% $500 million debenture due June 15, 2023;

--6.125% $159 million note due Dec. 15, 2032;

--5.35% $323 million note due June 1, 2033;

--5.55% $546 million note due May 9, 2035;

--5.95% $386 million note due April 1, 2036;

--6.9% $165 million debenture due May 15, 2038;

--5.2% $62 million note due Jan. 15, 2042;

--4.5% $500 million note due June 15, 2043.

The following junior subordinated debt at 'BBB-':

--6.125% $224 million debenture due May 15, 2067;

--5.10% $500 million subordinated debenture due Jan. 15, 2053;

--5.75% $800 million subordinated debenture due Aug. 15, 2053;

--6.5% $500 million debenture due May 15, 2067.

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.

--Insurer Financial Strength (IFS) at 'A+'/Stable Outlook.

American Heritage Life Insurance Co.

--IFS at 'A'/Stable Outlook.

Allstate Life Insurance Co.

Allstate Life Insurance Co. of NY

--IFS at 'A'/Negative Outlook.

Date of Relevant Rating Committee: July 11, 2016

Additional information is available on www.fitchratings.com

Applicable Criteria

Insurance Rating Methodology - Effective May 17, 2016 to Sept. 15, 2016 (pub. 17 May 2016)

https://www.fitchratings.com/site/re/881564

Additional Disclosures

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1015916

Endorsement Policy

https://www.fitchratings.com/regulatory

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