Allstate (ALL)

In March 2009, the Corporation and AIC completed a previously approved capital contribution of $250 million of cash to ALIC.  This capital contribution was funded by a dividend of $250 million paid to the Corporation in cash by Kennett Capital Holdings, LLC, a wholly owned subsidiary of the Corporation.

On October 15, 2008, our Board of Directors approved a capital contribution of up to $1.25 billion in the form of investments or cash to be made from time to time to AIC from the Corporation on or before April 30, 2009.  On October 28, 2008, the Corporation completed a capital contribution of $1.00 billion of less liquid invested assets to AIC.  In addition to these transactions, approval was also received for AIC to make up to $1.25 billion of funds available to ALIC by making one or more capital contributions, by providing a guaranty or guaranties, or by purchasing one or more surplus notes or other securities by April 30, 2009.  Subject to approval by regulatory authorities, we intend for AIC to purchase surplus notes from ALIC and contribute capital to ALIC in an aggregate amount of $1.00 billion in the fourth quarter of 2008.

After the transfer of the $1.00 billion of invested assets through the capital contribution from the Corporation to AIC, investments at the parent company level will comprise highly liquid securities that are generally saleable within one week totaling $2.68 billion, liquid investments that are saleable within one quarter totaling $1.06 billion, and $282 million of investments that trade in illiquid markets.

For the remainder of 2008, we intend that no dividends will be paid by ALIC to AIC or by AIC to the Corporation.  The payment of dividends by AIC and ALIC is dependent on business conditions, income, cash requirements and other relevant factors.  The payment of dividends by AIC and ALIC without prior approval from regulatory authorities is limited to formula amounts based on net income and capital and surplus, determined in conformity with statutory accounting practices, as well as the timing and amount of dividends paid in the preceding twelve months.  In 2009, we anticipate that AIC will pay dividends to the Corporation and will have the capacity to pay dividends currently estimated at $1.39 billion without prior regulatory approval.  We do not anticipate that ALIC will pay dividends to AIC in 2009.

We suspended our share repurchase program and do not plan to complete it by our target date of March 2009.  We will re-evaluate this program as market conditions develop in 2009.  As of September 30, 2008, we had purchased a total of 22.5 million shares at a cost of $1.07 billion and the program was approximately 53% complete.

Parent Company Capital Capacity

We have at the parent holding company level investments totaling $5.02 billion as of September 30, 2008 that can be used to support operating subsidiaries through capital contributions or intercompany borrowing arrangements and for general corporate purposes such as dividends, debt servicing and share repurchases.  These assets include highly liquid securities that are generally saleable within one week totaling $2.68 billion, additional liquid investments that are saleable within one quarter totaling $1.06 billion, and $1.28 billion of investments that trade in illiquid markets.

On October 15, 2008, our Board of Directors approved a capital contribution of up to $1.25 billion in the form of investments or cash to be made from time to time to Allstate Insurance Company (“AIC”) from The Allstate Corporation (the “Corporation”) on or before April 30, 2009.  During the fourth quarter of 2008, we intend to execute a capital contribution consisting of $1.0 billion of less liquid invested assets to AIC from the Corporation.  In addition to these transactions, approval was also received for AIC to make up to $1.25 billion of funds available to ALIC by making one or more capital contributions, by providing a guaranty or guaranties, or by purchasing one or more surplus notes or other securities by April 30, 2009.  Subject to approval by regulatory authorities, we intend for AIC to purchase surplus notes from ALIC and contribute capital to ALIC in an aggregate amount of $1.0 billion in the fourth quarter of 2008.

After the transfer of the $1.0 billion of invested assets through the capital contribution from the Corporation to AIC, investments at the parent company level will comprise highly liquid securities that are generally saleable within one week totaling $2.68 billion, liquid investments that are saleable within one quarter totaling $1.06 billion, and $282 million of investments that trade in illiquid markets.

For the remainder of 2008, we intend that no dividends will be paid by ALIC to AIC or by AIC to the Corporation.  The payment of dividends by AIC and ALIC is dependent on business conditions, income, cash requirements and other relevant factors.  The payment of dividends by AIC and ALIC without prior approval from regulatory authorities is limited to formula amounts based on net income and capital and surplus, determined in conformity with statutory accounting practices, as well as the timing and amount of dividends paid in the preceding twelve months.  In 2009, we anticipate that AIC will pay dividends to the Corporation and will have the capacity to pay dividends currently estimated at $1.39 billion without prior regulatory approval.  We do not anticipate that ALIC will pay dividends to AIC in 2009.

Allstate has suspended our share repurchase program and do not plan to complete it by our target date of March 2009.  We will re-evaluate this program as market conditions develop in 2009.  As of September 30, 2008, we had purchased a total of 22.5 million shares at a cost of $1.07 billion and the program was approximately 53% complete.

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