Allstate (ALL)

Annual incentive bonus award objectives for 2004

        The annual performance goals for 2004 reflected our overall goal to achieve a balance between revenue growth and profitability.

        For 2004, the performance goals for the annual incentive bonus for Mr. Liddy and the executives of corporate functions including finance and administration were based on two equally-weighted goals. The first was based on a corporate measure of adjusted operating income per diluted share. The second was based on the combined weighted results of the Allstate Protection, Allstate Financial and Investments business units.

        For executives in business unit functions, the performance goals for the 2004 annual incentive bonus included a combination of corporate and specific business unit goals. The corporate goal was based on the adjusted operating income per diluted share goal and accounted for 10% of the total award opportunity.

        The remaining 90% of the 2004 total annual incentive bonus award opportunity for the Allstate Protection business unit was comprised of four performance goals. The primary goal (worth 50% of the total award opportunity) was a matrix measuring the results of premium growth, policy growth and combined ratio. This matrix was designed to achieve a balance among revenue, unit growth and profit goals. A second goal (worth 20% of the total award opportunity) was based on the sales of financial services products by Allstate agencies, including the sale of traditional life insurance products as well as annuity and other financial product sales. The third goal (worth 10% of the total award opportunity) was a reduction of the business unit's expense ratio, consistent with our ongoing goals to contain expenses. The fourth goal (worth 10% of the total award opportunity) was based on improving Allstate's score on an external customer loyalty index.

        The remaining 90% of the 2004 total annual incentive bonus award opportunity for the Allstate Financial business unit was based on five performance goals that emphasized an increase in new sales, consistent with Allstate's strategy to grow Allstate's financial services business. The first performance goal (worth 30% of the total award opportunity) was based on an adjusted Allstate Financial operating income measure. The second performance goal (worth 20% of the total award opportunity) was an expense management objective for the Allstate Financial business unit. The third and fourth performance goals (each worth 15% of the total award opportunity) were based on new sales of traditional life insurance products and annuities, respectively. The fifth performance goal was based on a measure of the return achieved on new sales of products (worth 10% of the total award opportunity).

        The remaining 90% of the 2004 total annual incentive bonus award opportunity for the Investments business unit was based on Allstate's strategy to maximize returns on its investments and was comprised of three performance goals. The first was based on a measurement of Allstate's portfolio total return (worth 45% of the total award opportunity). The second performance goal (worth 35% of the total award

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opportunity) was based on a measurement of the excess spread achieved on the Allstate Financial investment portfolio against an external market benchmark. The third performance goal was based on portfolio defaults and losses (worth 10% of the total award opportunity).