Allstate (ALL)

The Board unanimously recommends that stockholders vote against this proposal for the following reasons:

        The initial impression of many is that majority voting is a good idea. And it may be in an election between two candidates for a single position. When majority voting is applied in the context of board of directors elections, however, serious difficulties can arise including the possibility of "failed" elections and directors who remain in office under current statutory "holdover" provisions, both of which are discussed in more detail below. The Board therefore believes that maintaining the existing plurality vote standard together with our recently adopted Majority Votes in Director Elections Policy is preferable to the majority vote standard called for in the proposal.

        The plurality vote standard, established as the default under the law of Delaware, the state in which The Allstate Corporation and over half of all U.S. publicly-traded companies are incorporated, provides that the nominees who receive the most affirmative votes are elected to serve as directors. Under the plurality vote standard, in every election since Allstate was spun off from Sears, Roebuck and Co. in 1995, every Allstate director nominee has received an affirmative vote of greater than 94 percent of the shares cast.

        Despite that history, the Board has been mindful of recent governance developments on the subject of majority-voting in the election of directors and has examined the issue very closely. When shareholders cast more "withheld" votes than "for" votes with regard to a director, we believe that Nominating and Governance Committee and the Board should very deliberately reconsider whether it is appropriate for the director to remain on the Board. The controversy leading to a majority-withheld vote may suggest the director should not serve out his or her term. However, if the controversy is most effectively addressed by changes in strategy, policy or management and if the director's particular qualifications mean that Allstate would be best served by his or her on-going service on the Board, then we believe the director should continue to serve. Accordingly, earlier this year we adopted the Majority Votes in Director Elections Policy (the "Policy"), a copy of which is attached as Appendix A.

        As summarized in our Corporate Governance Guidelines, our Policy provides:

In any uncontested election of Directors, any nominee for Director who receives a greater number of votes "withheld" from his or her election than votes "for" his or her election (a "Majority Withheld Vote") will promptly tender his or her resignation to the Chairman of the Board following the receipt and communication of the inspector of election's certification of shareholder vote results.

The Nominating and Governance Committee maintains a process to assess the resignation and will recommend to the Board whether to accept or reject it.

The Board will act on the Nominating and Governance Committee's recommendation no later than 60 days following the date of the shareholders' meeting which prompted the tendered resignation. The Board will consider the factors considered by the Nominating and Governance Committee and such additional information and factors that the Board believes to be relevant to the Company's and shareholders' best interests. Shortly following the Board's action, the Company will file a Form 8-K with the Securities and Exchange Commission describing the Board's decision.

The Board believes this policy enhances its accountability to shareholders by formalizing the consequences of a Majority Withheld Vote and demonstrating its responsiveness to director election results while at the same time protecting the long-term interests of the Company and its shareholders.

        We believe our Policy provides a solution to a majority-withheld vote that is more complete and meaningful than the majority vote standard called for in the proposal. The majority vote standard in the proposal does not address the consequences of a failed election where an insufficient number of director nominees receive the requisite majority vote. In addition, the majority vote standard called for in the proposal does not address the consequences of the "holdover" provision of Delaware law that an

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incumbent director holds office until a successor is elected and qualified—which effectively means that an incumbent director could not be forced off the Board under a majority vote standard until the next annual meeting. In contrast, our Policy avoids the failed election problem and provides a step-by-step process to be followed in the event an incumbent director does not receive a majority of the votes cast for his or her election. Other significant negative consequences not addressed by the majority vote standard called for in the proposal include the possible triggering of adverse "change of control" contractual provisions as well as the possible failure to comply with New York Stock Exchange or other requirements for maintaining independent directors or directors with particular qualifications.

        An American Bar Association committee is currently examining the myriad of issues raised by the possibility of changing the voting standard of the Model Business Corporation Act related to the election of directors. While Delaware is not a "Model Act" state, its lawmakers will undoubtedly study the final recommendations issued by the ABA committee. The committee issued its Preliminary Report on January 17, 2006 and is currently seeking comments on the proposals contained in its report. The committee declined to propose a wholesale change to the statutory plurality vote default standard, opting instead to recommend changes to existing statutory code provisions that would facilitate alternative director election systems, such as the Policy we have adopted.

        We will continue to monitor developments in Delaware law on the subject of director elections. In the meantime, we believe our Policy addresses the problems inherent in a plurality vote standard while also avoiding the problems posed by a majority vote standard.

        For the reasons stated above, the Board recommends a vote against this proposal.

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Item 6
Stockholder Proposal on Simple Majority Vote

        Mr. Emil Rossi, P.O. Box 249, Boonville, California, 95415, registered owner of 6,094 shares of Allstate common stock as of October 14, 2005, intends to propose the following resolution at the Annual Meeting.

6—Adopt Simple Majority Vote

Resolved: Shareholders recommend that our Board of Directors take each step necessary for a simple majority vote to apply on each issue that can be subject to shareholder vote to the greatest extent possible.

Emil Rossi, P.O. Box 249, Boonville, Calif. 95415 submitted this proposal.

        75% yes-vote

This topic won a 75% yes-vote average at 7 major companies in 2004. The Council of Institutional Investors www.cii.org formally recommends adoption of this proposal topic.

        End Potential Frustration of the Shareholder Majority

Our current rule allows a small minority to frustrate the will of our shareholder majority. For example, in requiring a 67% vote to amend our company's bylaws, if 66% vote yes and only 1% vote no—only 1% could force their will on the overwhelming 66% majority.

This proposal does not address a majority vote standard in director elections which is gaining increased support as a separate topic.

        Progress Begins with One Step

It is important to take a step forward in corporate governance and adopt the above RESOLVED statement since our 2005 governance standards were far from impeccable. For instance in 2005 it was reported (and certain corresponding concerns are noted):

•

The Corporate Library (TCL), an independent investment research firm in Portland, Maine rated our company:

"D" in Overall Board Effectiveness
"D" in CEO Compensation—$26 million
"D" in Shareholder responsiveness
"F" in Accounting
Overall Governance Risk Assessment = High

•

We had no Independent Chairman or Lead Director—Independent oversight concern.



•

A 67% shareholder vote was required to make certain key changes—Entrenchment concern.



•

Cumulative voting was not permitted.



•

Poison pill: In response to a 2003 shareholder proposal, Allstate adopted a policy requiring poison pill shareholder approval, but allowing the board to override the policy and adopt a pill without shareholder approval. According to The Corporate Library, this "override" provision undermines the shareholder approval requirement.

Additionally:

•

Our complete Board met only 6 times in a full year—Commitment concern.



•

Eight directors were allowed to hold from 4 to 6 director seats each—Over-extension concern.

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•

Four of our directors were designated "problem directors" by The Corporate Library:



1)

James Andress—because he chaired the committee that set executive compensation at Dade Behring Holdings, which received a CEO Compensation rating of "F" by TCL.



2)

Ed Brennan—because he chaired the committee that set executive compensation at 3M Company which received a CEO compensation grade of "F" by TCL.



3)

W. James Farrell—due to his membership on the board of UAL Corporation which filed for bankruptcy.



4)

Ronald LeMay—due to the settlement of a shareholder lawsuit at Sprint Corp. where he served as director.

        One Step Forward

The above practices reinforce the reason to take one step forward and adopt simple majority vote.

Adopt Simple Majority Vote
Yes on 6