Allstate (ALL)

SFAS No. 123 (revised 2004), Share-Based Payment ("SFAS No. 123(R)")

        SFAS No. 123(R) revised SFAS No. 123 "Accounting for Stock-based Compensation" and superseded APB Opinion No. 25 "Accounting for Stock Issued to Employees". SFAS No. 123(R) requires all share-based payment transactions to be accounted for using a fair value based method to recognize the cost of awards over the period in which the requisite service is rendered. The Company adopted SFAS No. 123(R) on January 1, 2006 using the modified prospective application method for adoption, and therefore the prior year results were not restated. The adoption impacts of SFAS No. 123(R), which included the recognition of compensation expense related to options with a four year vesting requirement that were granted in 2002 and not fully vested on January 1, 2006, were not material to the results of operations or financial position of the Company. The Company previously adopted the expense provisions of SFAS No. 123 for awards granted or modified subsequent to January 1, 2003, which also did not have a material effect on the results of operations or financial position of the Company.

SFAS No. 123 (revised 2004), Share-Based Payment ("SFAS No. 123(R)")

        SFAS No. 123(R) revised SFAS No. 123 "Accounting for Stock-based Compensation" and superseded APB Opinion No. 25
"Accounting for Stock Issued to Employees". SFAS No. 123(R) requires all share-based payment transactions to be accounted for using a fair value based method to recognize the cost of awards
over the period in which the requisite service is rendered. The Company adopted SFAS No. 123(R) on January 1, 2006 using the modified prospective application method for adoption, and
therefore the prior year results were not restated. The adoption impacts of SFAS No. 123(R), which included the recognition of compensation expense related to options with a four year vesting
requirement that were granted in 2002 and not fully vested on January 1, 2006, were not material to the results of operations or financial position of the Company. The Company previously
adopted the expense provisions of SFAS No. 123 for awards granted or modified subsequent to January 1, 2003, which also did not have a material effect on the results of operations
or financial position of the Company.