Allstate (ALL)

2005 Annual Incentive Bonus Awards for Named Executive Officers

        In 2005, Messrs. Liddy's and Hale's annual incentive bonus awards were based on goals established for executives in corporate functions. The goals established for executives in the Allstate Protection business unit were used to determine Mr. Wilson's annual incentive bonus award for the five-month period prior to the June 1, 2005 effective date of his promotion to President and Chief Operating Officer. For the seven-month period following his promotion, Allstate Protection business unit goals continued to be the basis for half of Mr. Wilson's award opportunity and goals established for executives in corporate functions were used to determine the other half of his award opportunity. Messrs. Sylla's and Simonson's annual incentive bonus awards were based on goals established for executives in the Allstate Financial business unit and Investment business unit, respectively.

        A portion of all 2005 annual incentive bonus awards depended upon the achievement of the corporate adjusted operating income per diluted share performance goal. For executives in corporate functions, this objective comprised fifty percent of their award; for executives in the Allstate Protection, Allstate Financial and Investment business units, it represented ten percent. Allstate did not meet the threshold level of performance for this objective for 2005 primarily due to the losses incurred as a result of the devastating 2005 hurricane season.

        The remaining 50% of the annual incentive bonuses for executives in corporate functions was based on the combined performance results of the Allstate Protection (weighted 70%), Allstate Financial (weighted 20%) and Investments business units (weighted 10%), which are detailed below. Similarly, the remaining 90% of the annual incentive bonus awards for executives in business units was based on the achievement of their respective business units' performance objectives. The business unit performance objectives and achievements were as follows:

        Allstate Protection business unit performance goals:

•

Matrix measuring premium growth, policy growth and combined ratio goals (worth 50%)—did not meet the threshold level of performance



•

Sales of Allstate Financial products goal (worth 15%)—did not meet the threshold level of performance



•

Business unit's expense management goal (worth 10%)—exceeded the target level of performance



•

Customer loyalty index goal (worth 15%)—achieved the target level of performance

        Allstate Financial business unit performance goals:

•

Allstate Financial adjusted operating income goal (worth 30%)—achieved the maximum level of performance



•

Business unit's expense management goal (worth 20%)—exceeded the threshold level of performance

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•

New sales of traditional life insurance goal (worth 15%)—exceeded the target level of performance



•

New sales of annuities goal (worth 15%)—did not meet the threshold level of performance



•

Measure of return achieved on new sales goal (worth 10%)—exceeded the maximum level of performance

        Investment business unit performance goals:

•

Property/casualty portfolio total return goal (worth 45%)—exceeded the target level of performance



•

Allstate Financial portfolio spread volume goal (worth 35%)—exceeded the target level of performance



•

Allstate Financial portfolio loss reduction goal (worth 10%)—achieved the maximum level of performance

        As a result, executives in corporate functions, including Messrs. Liddy and Hale, exceeded the threshold level of performance when their results were aggregated. Executives in the Allstate Financial and Investment business units, including Messrs. Sylla and Simonson, respectively, exceeded the target level of performance when their results were aggregated. When Mr. Wilson's results, based in part on corporate function goals and in part on Allstate Protection business unit goals, were aggregated, Mr. Wilson exceeded the threshold level of performance. The named executive officers' 2005 annual incentive bonus awards, shown above in the Summary Compensation Table on page 34, reflect these respective achievements.

2004 Annual Incentive Bonus Awards for Named Executive Officers

        A portion of all 2004 annual incentive bonus awards was based on the achievement of the corporate adjusted operating income per diluted share performance goal. Fifty percent of Messrs. Liddy's, Hale's and Pike's annual incentive bonus awards and 10% of Messrs. McNeil's and Wilson's annual incentive bonus awards was based on this objective. Allstate exceeded the maximum level of performance established for the year primarily due to increased profits in Allstate Protection.

        The remaining 50% of Messrs. Liddy's, Hale's and Pike's annual incentive bonuses was based on the combined performance results of the Allstate Protection, Allstate Financial and Investments business units, which are detailed below. Similarly, 90% of Messrs. McNeil's and Wilson's annual incentive bonus awards was based on the achievement of the Allstate Protection business units' performance objectives. The business unit performance objectives and achievements were as follows:

        Allstate Protection business unit performance goals:

•

Matrix measuring premium growth, policy growth and combined ratio goals (worth 50%)—exceeded the maximum level of performance



•

Sales of financial services products goal (worth 20%)—exceeded the target level of performance



•

Business unit's expense management goal (worth 10%)—achieved the maximum level of performance



•

Customer loyalty index goal (worth 10%)—achieved the maximum level of performance

        Allstate Financial business unit performance goals

•

Allstate Financial adjusted operating income goal (worth 30%)—exceeded the threshold level of performance



•

Business unit's expense management goal (worth 20%)—exceeded the target level of performance



•

New sales of traditional life insurance goal (worth 15%)—did not achieve the threshold level of performance



•

New sales of annuities goal (worth 15%)—achieved the threshold level of performance



•

Measure of return achieved on new sales goal (worth 10%)—exceeded the maximum level of performance

        Investments business unit performance goals

•

Allstate's portfolio total return goal (worth 45%)—exceeded the target level of performance



•

Portfolio spread goal (worth 35%)—exceeded the target level of performance

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•

Portfolio defaults and losses goal (worth 10%)—achieved the maximum level of performance

As a result, each of Messrs. Liddy, Hale, McNeil, Pike and Wilson received 2004 annual incentive bonus awards that reflected their respective achievements which, when combined, exceeded the target levels of the performance goals.