Allstate (ALL)

Compensation Discussion and Analysis

        We provide this Compensation and Discussion Analysis ("CD&A") to assist our stockholders in understanding the compensation earned by, awarded to, or paid to our chief executive officer, chief financial officer and three other most highly compensated executive officers ("named executives") in 2006. In addition, we intend the CD&A to put into perspective for our stockholders the compensation tables on pages 29 through 53 and the narrative information that accompanies them. This CD&A contains statements regarding our performance measures and targets. These are disclosed in the limited context of our annual and long-term cash incentive awards and should not be understood to be statements of management's expectations or estimates of results or other guidance. We specifically caution investors not to apply these statements to other contexts.

        We believe that our success in creating stockholder value depends on our ability to attract, motivate and retain highly talented executives. Our stockholder return over the last ten years demonstrates our success in creating stockholder value. The following graph shows the cumulative total stockholder return for an initial $100 investment in Allstate common stock made on December 31 of the indicated year and compares it with the performance of the S&P 500 Property/Casualty Index* and the S&P 500 Index, assuming all dividends are reinvested quarterly. The graph provides an investor who has held Allstate common stock for periods ranging from ten years to one year with a comparison of cumulative performance.