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Letter to the Editor

Allstate to Sell European Auto Insurance Operations

NORTHBROOK, Ill. -- The Allstate Corporation has entered into an agreement to sell its direct auto insurance businesses in Germany and Italy to Direct Line, the London-based insurance subsidiary of The Royal Bank of Scotland. The Allstate businesses operate out of Berlin and Milan.

"Our decision to sell these companies is based on our desire to focus our efforts on the businesses we operate in North America, where we have scale. While we believe these overseas markets represent significant business opportunities, Allstate's best opportunities in the immediate term are closer to home," said Chairman, President, and CEO, Edward M. Liddy. "The transaction represents a good opportunity for both parties. Allstate can sharpen its focus in North America and Direct Line gets a jump start with its expansion plans."

"We are extremely proud of our employees in these two countries and with the success they had in launching the operations. However, these companies are now at a stage of growth where they need a significant investment of capital and management resources to capitalize on the opportunities in Germany and Italy. In the short to medium term, we believe that greater potential for Allstate exists in North America, with the expansion of our property and casualty business into new distribution channels, and the wider range of financial products and services that we are now offering. This is where we intend to focus our efforts.

``Since November 1999, we have launched The Good Hands(SM) Network, instituted significant cost reduction measures, begun rolling out our strategic risk management initiative across the United States, deployed new desktop technology to some 20,000 workstations, and restructured our agency force. In short, we have mapped out a new customer-focused direction for Allstate, and are delivering on that direction."

The sale is expected to close in the third quarter pending regulatory approval. Details of the transaction were not disclosed.

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