FINANCIAL INSTITUTIONSISSUER COMMENT 5 October 2016RATINGSALLSTATE CORP. (ALL) Moodys SR Unsecured Rating A3Moodys Outlook STABond-Implied Rating A3CDS-Implied Rating A1EDF-Implied Rating A3As of October 4, 2016ContactsAllerton G. Smith 212-553-4058 Sr Dir-Sr Research Analyst allerton.smith@moodys.comABOUT CAPITAL MARKETS RESEARCHAnalyses from Moodys Capital Markets Research, Inc. (CMR) focus on explaining signals from the credit and equity markets. The publications address whether market signals, in the opinion of the groups analysts, accurately reflect the risks and investment opportunities associated with issuers and sectors. CMR research thus complements the fundamentally-oriented research offered by Moodys Investors Service (MIS), the rating agency.CMR is part of Moodys Analytics, which is one of the two operating businesses of Moodys Corporation. Moodys Analytics (including CMR) is legally and organizationally separated from Moodys Investors Service and operates on an arms length basis from the ratings business. CMR does not provide investment advisory services or products.View the CMR FAQ Contact the CMR team Follow us on TwitterMoodys Analytics markets and distributes all Moodys Capital Markets Research, Inc. materials. Moodys Capital Markets Research,Inc. is a subsidiary of Moodys Corporation. Moodys Analytics does not provide investment advisory services or products.For further detail, please see the last page.Market Signals ReviewAllstates Market Signals, Hurricane Matthew, and the Hurricane Season Hurricane Matthew is approaching the US East Coast, and may make landfall this week. Market signal levels observed recently indicate that investors do have a heightened concern for Allstate over claims related to this storm.The record shows that going short credit risk in ALL around the start of the hurricane season and then returning to a risk-on position in ALL towards the close of the hurricane season will lead to the best market performance. Since the bond-implied rating recently declined one notch, and the CDS-implied rating weakened by one notch last May, investors thinking to go long credit risk in ALL might consider both buying All bonds or selling protection in the CDS market. Please see ratings view section below for a summary of Allstates credit profile, including the A3 senior debt rating of Allstate Corporation and the Aa3 insurance financial strength rating of the groups lead property-casualty insurer, Allstate Insurance Company.Allstates market-implied ratings are cyclically correlated with the Atlantic hurricane season, worsening in ten of the last eleven years near the June 1 start of the season and rebounding towards the November 30 end of the season (see Figures 4-14). The seasonality in market signals is not precise, but it is directionally consistent and has implications for credit market performance. Investors should consider seasonality as they position risk exposure in the comp...
