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The sources of liquidity for The Allstate Corporation include but are not limited to dividends from AIC and $1.76 billion of investments at Kennett Capital at March 31, 2007.

We have access to additional borrowing to support liquidity as follows:

·               A commercial paper program with a borrowing limit of $1.00 billion to cover short-term cash needs.  As of March 31, 2007, there were no balances outstanding and therefore the remaining borrowing capacity was $1.00 billion; however, the outstanding balance fluctuates daily.

·               A five-year revolving credit facility expiring in 2009 totaling $1.00 billion to cover short-term liquidity requirements.  This facility contains an increase provision that would make up to an additional $500 million available for borrowing provided the increased portion could be fully syndicated at a later date among existing or new lenders.  Although the right to borrow under the facility is not subject to a minimum rating requirement, the costs of maintaining the facility and borrowing under it are based on the ratings of our senior, unsecured, nonguaranteed long-term debt.  There were no borrowings under this line of credit during the first quarter of 2007. The total amount outstanding at any point in time under the combination of the commercial paper program and the credit facility cannot exceed the amount that can be borrowed under the credit facility.

·                  A universal shelf registration statement filed with the Securities and Exchange Commission in May 2006.  We can use it to issue an unspecified amount of debt securities, common stock (including 289 million shares of treasury stock as of March 31, 2007), preferred stock, depositary shares, warrants, stock purchase contracts, stock purchase units and securities of subsidiaries.  The specific terms of any securities we issue under this

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registration statement will be provided in the applicable prospectus supplements.  We have not yet issued any securities under this registration statement.

As described in Note 1, in accordance with Financial Accounting Standards Board Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (“FIN 48”), at January 1, 2007, the total liability for net unrecognized tax benefits was $48 million.  The liability is net of a recoverable of $11 million related to the settlement of prior years’ examinations.  We believe it is reasonably possible that the liability balance will increase by $11 million within the next 12 months due to the expected collection of this recoverable.

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The sources of liquidity for The Allstate Corporation include but are not limited to dividends from AIC and $2.46 billion of investments at Kennett Capital at June 30, 2006.  Without the prior approval from the Illinois Department of Insurance, AIC does not have the statutory capacity to pay dividends to The Allstate Corporation until the third quarter of 2006.

We have access to additional borrowing to support liquidity as follows:

·      A commercial paper program with a borrowing limit of $1.00 billion to cover short-term cash needs.  As of June 30, 2006, there were no balances outstanding and therefore the remaining borrowing capacity was $1.00 billion; however, the outstanding balance fluctuates daily.

·      A five-year revolving credit facility expiring in 2009 totaling $1.00 billion to cover short-term liquidity requirements.  This facility contains an increase provision that would make up to an additional $500 million available for borrowing provided the increased portion could be fully syndicated at a later date among existing or new lenders.  Although the right to borrow under the facility is not subject to a minimum rating requirement, the costs of maintaining the facility and borrowing under it are based on the ratings of our senior, unsecured, nonguaranteed long-term debt.  There were no borrowings under this line of credit during the first six months of 2006. The total amount outstanding at any point in time under the combination of the commercial paper program and the credit facility cannot exceed the amount that can be borrowed under the credit facility.

·      In May 2006, we filed a universal shelf registration statement with the SEC.  In accordance with rules adopted by the SEC in 2005, this registration statement covers an unspecified amount of securities.  We can use it to issue debt securities, common stock, preferred stock, depositary shares, warrants, stock purchase contracts, stock purchase units and securities of subsidiaries.  The specific terms of any securities we issue under this registration statement will be provided in the applicable prospectus supplements.  This registration statement, under which we have not yet issued any securities, replaced our 2003 universal shelf registration statement.

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