Allstate (ALL)

PROPERTY-LIABILITY INVESTMENT RESULTS

        Net investment income increased 6.4% in 2007 when compared to 2006, after increasing 3.5% in 2006 when compared to 2005. The 2007 increase was principally due to increased partnership income and increased portfolio yields. The 2006 increase was due to higher income from partnerships and higher fixed income portfolio balances.

        The following table presents the average pretax investment yields for the year ended December 31.

(1)

Pretax yield is calculated as investment income (including dividend income in the case of equity securities) divided by the average of the investment balances at the beginning and end of period and interim quarters.

(2)

Amortized cost basis is used to calculate the average investment balance for fixed income securities and mortgage loans. Cost is used for equity securities. Cost or the equity method of accounting basis is used for limited partnership interests.

(3)

To conform to current period presentation, prior periods have been reclassified

68

        Net realized capital gains and losses, after-tax were $915 million in 2007 compared to $227 million in 2006 and $339 million in 2005. The following table presents the factors driving the net realized capital gains and losses results.

        For a further discussion of net realized capital gains and losses, see the Investments section of the MD&A.

PROPERTY-LIABILITY INVESTMENT RESULTS

        Net investment income increased 6.4% in 2007 when compared to 2006, after increasing 3.5% in 2006 when compared to
2005. The 2007 increase was principally due to increased partnership income and
increased portfolio yields. The 2006 increase was due to higher income from partnerships and higher fixed income portfolio balances.

        The
following table presents the average pretax investment yields for the year ended December 31.

(1)

Pretax
yield is calculated as investment income (including dividend income in the case of equity securities) divided by the average of the investment balances at the beginning and end
of period and interim quarters.

(2)

Amortized
cost basis is used to calculate the average investment balance for fixed income securities and mortgage loans. Cost is used for equity securities. Cost or the equity method
of accounting basis is used for limited partnership interests.

(3)

To
conform to current period presentation, prior periods have been reclassified

68

        Net realized capital gains and losses, after-tax were $915 million in 2007
compared to $227 million in 2006 and $339 million in 2005. The following table presents the factors driving the net realized capital gains and losses results.

        For a further discussion of net realized capital gains and losses, see the Investments section of the MD&A.

PROPERTY-LIABILITY INVESTMENT RESULTS

        Net investment income increased 3.5% in 2006 when compared to 2005, after increasing 1.0% in 2005 when compared to 2004. These increases were due to higher income from partnerships and higher fixed income portfolio balances.

66

        The following table presents the average pretax investment yields for the year ended December 31.

(1)

Pretax yield is calculated as investment income (including dividend income in the case of equity securities) divided by the average of the investment balances at the beginning and end of period and any interim quarters.

(2)

Pretax yield is calculated as investment income (including dividend income in the case of equity securities) divided by the average of the beginning and end of period investment balances.

(3)

Amortized cost basis is used to calculate the average investment balance for fixed income securities and mortgage loans. Cost is used for equity securities.

        Net realized capital gains and losses, after-tax were $227 million in 2006 compared to $339 million in 2005 and $397 million in 2004. The following table presents the factors driving the net realized capital gains and losses results.

        For a further discussion of net realized capital gains and losses, see the Investments section of the MD&A.

PROPERTY-LIABILITY INVESTMENT RESULTS

        Net investment income increased 1.0% in 2005 when compared to last year, after increasing 5.7% in 2004 when compared to 2003. These increases were due to higher income from partnerships and higher fixed income portfolio balances resulting from positive cash flows from operations and investment activities, partially offset by lower portfolio yields.

50

        The following table presents the average pretax investment yields for the year ended December 31.

(1)

Pretax yield is calculated as investment income (including dividend income in the case of equity securities) divided by the average of the investment balances at the beginning and end of period and any interim quarters.

(2)

Pretax yield is calculated as investment income (including dividend income in the case of equity securities) divided by the average of the beginning and end of period investment balances.

(3)

Amortized cost basis is used to calculate the average investment balance for fixed income securities and mortgage loans. Cost is used for equity securities.

        Net realized capital gains and losses, after-tax were $339 million in 2005 compared to $397 million in 2004 and $192 million in 2003. The following table presents the factors driving the net realized capital gains and losses results.

        For a further discussion of net realized capital gains and losses, see the Investments section of the MD&A.

PROPERTY-LIABILITY INVESTMENT RESULTS

        Net investment income increased 5.7% in 2004 when compared to last year, after increasing 1.3% in 2003 when compared to 2002. These increases were due to higher portfolio balances resulting from positive cash flows from operations and investment activities and higher income from partnerships, partially offset by lower portfolio yields.

45

        The following table presents the average pre-tax investment yields⁽¹⁾ for the year ended December 31.

(1)

Pre-tax yield is calculated as annualized investment income (including dividend income in the case of equity securities) divided by the average of the beginning and end of period investment balances. Amortized cost basis is used to calculate the average investment balance for fixed income securities and mortgage loans. Cost is used for equity securities.

        Net realized capital gains and losses, after-tax were $397 million in 2004 compared to $192 million in 2003 and $(314) million in 2002. The following table presents the factors driving the net realized capital gains and losses results.

        For a further discussion of net realized capital gains and losses, see the Investments section of the MD&A.