Allstate (ALL)

Subsequent Event

On October 24, 2005, Hurricane Wilma made landfall in Florida.  Allstate Floridian Insurance Company and its subsidiaries (“AFIC”), subsidiaries of the Company, write property and casualty insurance in Florida.  AFIC maintains separate group ratings and is not reinsured by other Allstate subsidiaries that are not part of AFIC.  However, AIC has committed to make up to $375 million of additional capital available to AFIC through May of 2006 under specified circumstances.  In the event of a qualifying catastrophe, AFIC has access to reimbursement provided by the Florida Hurricane Catastrophe Fund (“FHCF”), for 90% of qualifying losses that exceed its retention of $233 million for the two largest hurricanes and $78 million for other hurricanes, up to an estimated maximum of $871 million.  As of September 30, 2005, none of the 2005 hurricanes covered by AFIC’s insurance policies have qualified for reimbursement from the FHCF as the estimated losses were below AFIC’s retention.  AFIC also has a multi-year reinsurance treaty that covers excess catastrophe losses in Florida whereby AFIC cedes 90% of losses in excess of the FHCF reimbursement up to $900 million and AFIC has reinsurance with Universal Insurance Company of North America (see Note 4).  Management believes it is not practicable, at the present time, to develop a meaningful loss estimate for Hurricane Wilma due to the short amount of time that has elapsed since this event.  In addition, the ultimate impact of Hurricane Wilma on Citizens Property Insurance Corporation (“Citizens”) is currently uncertain, but could result in Citizens recognizing a financial deficit.  Citizens may, in turn, levy a regular or emergency assessment on participating companies when the financial deficit occurs, adversely affecting the Company’s results of operations (see Note 6). The ultimate net cost of this event may be material to the Company’s Condensed Consolidated Statements of Operations.

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