Allstate (ALL)

Current long-term cash incentive bonus award objectives

        There were three outstanding performance cycles for long-term incentive bonuses during 2005. A new cycle starts at the beginning of each calendar year and includes three years of performance. Each of the three outstanding cycles had an adjusted return on equity goal that measures and ranks Allstate's performance against a peer group's performance. Allstate's ranked position relative to the peer group determines the percentage of the total target award to be paid. The adjusted return on equity objective is the sole performance goal for the 2003-2005 cycle. For the 2004-2006 and the 2005-2007 cycles, this goal comprises 50% of the total potential award.

        To measure performance under this objective, Allstate's adjusted return on equity is compared to that of peer companies representing both the property/casualty and financial services industries for the three-year period. This peer group consists of six large public companies predominately in the property/casualty business, three large public companies predominately in the life/financial services business and one large public company that competes in both the property/casualty and life/financial services businesses. Including life/financial services companies in the peer group more accurately aligns the goals of the long-term incentive bonus with Allstate's strategy of becoming better, bigger and broader in its financial services business. No payment based on the adjusted return on equity goal is made unless the

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adjusted return on equity exceeds the average risk free rate of return on three-year Treasury notes over the three-year cycle, plus 200 basis points, regardless of Allstate's standing compared to the peer group.

        The remaining 50% of the long-term incentive bonus for the 2004-2006 and 2005-2007 cycles is based on two performance goals. The first goal (weighted to account for 25% of the total potential award) is a measurement of growth in Allstate Protection policies in force, a key measurement used in the property/casualty insurance business. The last performance goal (weighted to account for the final 25% of the total potential award) is based on a measurement of the growth in Allstate Financial premiums and deposits, a key measurement used in the life insurance business. Executives' target long term cash incentive bonus awards generally range from 70% to 155% of annual salary with award opportunities ranging from 0% to 300% of an executive's target award.

Current long-term cash incentive bonus award objectives

        There are three outstanding performance cycles for long-term incentive bonuses. A new cycle starts at the beginning of each calendar year and includes three years of performance. Each of the three outstanding cycles has an adjusted return on equity goal that measures and ranks Allstate's performance against a peer group's performance. Allstate's ranked position relative to the peer group will determine the percentage of the total target award to be paid. The adjusted return on equity objective is the sole performance goal for the 2002-2004 and 2003-2005 cycles. For the 2004-2006 cycle, this goal comprises 50% of the total potential award. No payment based on the adjusted return on equity goal for any of the three outstanding performance cycles will be made unless the adjusted return on equity exceeds the average risk free rate of return on three-year Treasury notes over the three-year cycle, plus 200 basis points.

        For the 2002-2004 performance cycle, Allstate's adjusted return on equity was compared to that of the peer companies in the S&P 500 Property/Casualty index for the three-year period. An executive's target award for this cycle generally ranges from 30% of annual salary for executives at the vice president level to 155% for the Chief Executive Officer, with award opportunities ranging from 0% to 250% of the executive's target award.

        For the 2003-2005 and 2004-2006 performance cycles, Allstate's adjusted return on equity will be compared to that of peer companies representing both the property/casualty and financial services industries for the three-year period. This peer group consists of 6 large public companies predominately in the property/casualty business, 3 large public companies predominately in the life/financial services business and 1 large public company that competes in both the property/casualty and life/financial services businesses. Including life/financial services companies in the peer group more accurately aligns the goals of the long-term incentive bonus with Allstate's strategy of becoming better, bigger and broader in its financial services business. An executive's target award for these cycles generally ranges from 40% of annual salary for executives at the vice president level to 155% for the Chief Executive Officer, with award opportunities ranging from 0% to 300% of the executive's target award.

        The remaining 50% of the long-term incentive bonus for the 2004-2006 cycle is based on two performance goals. The first goal (weighted to account for 25% of the total potential award) is a measurement of growth in policies in force, a key measurement used in the property/casualty insurance business. The last performance goal (weighted to account for the final 25% of the total potential award))

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is based on a measurement of the growth in Allstate Financial premiums and deposits, a key measurement used in the life insurance business.