Allstate (ALL)

Allstate Financial Measures

        Adjusted net income:      This is a measure management uses to assess the profitability of the business. The Allstate Financial measure, net income, is adjusted to exclude the after tax effects of restructuring and related charges and the potential cost of any guaranty fund assessments related to the potential insolvency of Executive Life Insurance Company of New York. For disclosure of this Allstate Financial measure see footnote 18 to our audited financial statements.

        Adjusted operating income:      This is a measure management uses to assess the profitability of the business. The Allstate Financial segment measure, operating income, is adjusted to exclude the after tax effects of restructuring and related charges and the potential cost of any guaranty fund assessments related to the potential insolvency of Executive Life Insurance Company of New York. For disclosure of the Allstate Financial segment measure see footnote 18 to our audited financial statements.

        Financial product sales ("production credits"):      This measure of sales and related profitability of proprietary and non-proprietary financial products sold through the Allstate Exclusive Agency channel is used by management to assess the execution of our strategy to become broader in financial services. This measure is calculated as the total amount of production credits for current year transactions. Production credits are an internal sales statistic calculated as a percent of premium or deposits to life insurance, annuities, or mutual funds which vary based on the expected profitability of the specific financial product.

        Sales and return matrix:      This is a measure used by management that balances growth and profit. The matrix utilizes various combinations of sales with the expected new business lifetime return on capital. Sales include premiums (which are reported as life and annuity premiums and contract charges) and deposits (which are reported as increases in liabilities) and exclude renewal premiums and deposits on life insurance products for all Allstate Financial products issued. Sales are weighted to reflect each product's profitability relative to other products. (For example, certain life insurance sales are adjusted to receive a higher relative weighting to reflect the recurring nature of life insurance premiums and their profitability relative to other products). The expected new business lifetime return on capital is the actuarially determined weighted-average expected return on required capital for all products issued, excluding certain developmental expenses for consumer driven innovation and new market growth initiatives.

71

Table of Contents