How does Allstate:

1. Manage catastrophic exposures?

2. Keep our business growing?

3. Create loyal customers?

4. Deliver value and results?

SummaryAnnualReport

The AllstateCorporation

2005

Compassion andCommitmentAllstate employees andagents showed true com-passion and commitment in the wake of HurricaneKatrina. Kathleen andLester Null fled their homein Meraux, Louisiana,just before the storm hit.Unable to find shelter afterhours of driving, they made their way to the West Memphis, Arkansas,office of Allstate AgentDavid Tyler, who had postedsigns throughout townoffering to assist Allstateevacuees. Tyler, who ultimately helped morethan 200 people, arrangedfor lodging as well as check-cashing and otherservices, and provided vitallogistical and emotionalsupport until their localagent could restore serviceto his agency.

Tyler (far right) and claimadjuster Kim Eubanks (second from left) recentlyvisited the Nulls’ damagedresidence. As they surveyedthe empty structure thatused to be their home,Lester and Kathleen toldthe story of their unimagin-able loss and of the hopethat came with the help of Agent Tyler. In Lester’swords,“I will thank thatman until I die.”

Front Cover

The Allstate Corporation2005 Corporate SocialResponsibility Reporthighlights the sociallyresponsible measuresthat not only help createstrong and vital commu-nities, but also helpmanage our risks andenhance our company'sperformance. The reportis available online atwww.allstate.com/csr.

Giving Back to theCommunity

20052004 20052004 20052004 20052004 20052004 20052004

(in dollars) (in billions) (in billions) (percent) (in dollars) (in billions)

$4.54

$2.64

$3.1

$1.6

$33.9

$35.4$28.62

$29.08 $21.8

$20.2

15.0%

8.4%

Highlights: In 2005,Allstate incurred $5.7 billion in lossesprimarily related tothe three devastatinghurricanes in the Gulfstates. Nevertheless,we generated netincome of $1.8 billion, which pro-duced an 8.4 percentreturn on equity.We also repurchased43.8 million shares ata cost of $2.5 billion.Our total shareholderreturn of 7.0 percentoutpaced the S&P500 in 2005, as it hasin each of the lastfive years, and as it has cumulativelysince we became apublic company inJune 1993.

Net Income perDiluted ShareNet income per dilutedshare, which decreased 41.9percent in 2005, divides netincome by the number ofweighted average dilutedshares outstanding. Itdemonstrates net incomeduring the year that isattributable to each share of stock.

Operating Income* In 2005, operating incomewas $1.6 billion. This is acommon measure used bythe investment communityto analyze our results.Operating income revealstrends in our insurance andfinancial services businessthat may be obscured bybusiness decisions and economic developmentsunrelated to the insuranceunderwriting process.

Revenues Revenues rose 4.3 percent to$35.4 billion in 2005.Revenues indicate Allstate’stotal premium and invest-ment results.

Return on Equity Return on average beginning and ending period shareholders’ equity,which measures how wellAllstate used shareholders’equity to generate netincome, decreased to 8.4 percent in 2005 from15.0 percent in 2004.

Shareholders’ EquityShareholders’ equity, whichis the company’s total assetsminus total liabilities, indicates the book value of the ownership interest of Allstate shareholders. It declined 7.5 percent in 2005 to $20.2 billionfrom $21.8 billion in 2004,reflecting a net return of capital to shareholdersthrough dividends andshare repurchasing.

Measuring our Performance

*Measures we use that are notbased on accounting principlesgenerally accepted in theUnited States (non-GAAP) are defined and reconciled tothe most directly comparableGAAP measure, and operatingmeasures are defined in the“Definitions of non-GAAP andOperating Measures” sectionon page 17 of this report.

Financial Highlights

Book Value per DilutedShare Excluding the NetImpact of Unrealized NetCapital Gains on FixedIncome Securities* increasedby 1.6 percent in 2005. This measure, commonlyused by insurance investorsas a valuation technique, is shareholders’ equity lessunrealized net capital gainson fixed income securitiesdivided by the number ofdiluted shares outstanding on December 31.

Dear Fellow Shareholders: In 2005 Allstate experienced the worst hurricane season on record—and the costliest in your company’s 75-year history. We sent 4,100 catastrophe specialists to ravaged areas to do what we do best: help customers recover. We also refined our risk management models and continued to execute our strategy to produce profitable growth. By focusing on our strengths, we fulfilled our commitments to policyholders, invested in growth and rewarded our shareholders.

Although Allstate gen-erated record revenuesin 2005, we incurred anunprecedented $5.7 billion in catastrophe-related costs as wehelped customersrebuild their lives.That’s a big number—more than five timesour annual average overthe last decade. Returnon equity fell 6.6 pointsfor 2005, compared toan increase of 0.8 pointsin 2004. Operatingincome per dilutedshare* declined from$4.41 in 2004 to $2.37in 2005.

Though these lossesslowed our short-term momentum, the progress we madeimplementing our “better, bigger, broader”strategy improved ourability to create long-term value.

Property-Liability continued to benefitfrom our focus on profitable growth.Premiums writtenincreased by 3.2 percentfrom $26.5 billion in2004 to $27.4 billion in 2005. Our Allstatebrand standard autobusiness produced 2.9percent unit growth,while Allstate home-owners achieved 3.4percent unit growth.

Total Property-Liability revenues,including investmentincome, increased by3.5 percent to a record$29.3 billion. And,excluding catastrophes,that top-line growthwas generated whilecontinuing to improveour underwriting margins. Our Property-Liability combinedratio, excluding catas-trophes*, improved 2.1 points in 2005 compared with 2004.

In 2005, Allstate

Financial premiums and deposits* were$14.4 billion, and itsoperating incomeincreased by 5.4 percentto $581 million.Overall, we’re makingprogress in AllstateFinancial and remainfocused on improvingreturns that will deliverprofitable growth. To that end, in March2006 we announced thedecision to sell theAllstate Financial variable annuity businessand enter into an exclusive distributionarrangement, subject to regulatory approvals.This arrangement willallow our distributionchannels to continue tooffer a full range of prod-ucts, including variableannuities, while we dedicate our resources tobetter deploy capital to a more focused productportfolio where we havescale and a significantmarket presence today.

Letter to Shareholders

Rising to the Challenge

Edward M. LiddyChairman and Chief Executive Officer

Record Revenues,Lower Earnings

Focus on ProfitableGrowth

Amid a historic year in catastrophes, ourbusinesses once againrewarded Allstate share-holders. We repurchased$2.5 billion of our stock and paid an all-time high annual dividend of $1.28 pershare, up 14 percentfrom 2004—a testa-ment to our disciplinedcapital management.Our stock price closed2005 at $54.07, a 4.5percent increase fromthe $51.72 at the end of2004. We also delivereda total shareholderreturn of 7 percent.And, we maintained oursolid credit ratings frommajor rating agencies.

Under the circum-stances, we’re veryproud of these results.They show that ourstrategy is working, andthat the market remainsconfident we can deliverthe attractive, steadylong-term returns shareholders expect.

Increasing TotalShareholderReturns

1*See page 17.

2

Shareholders expect usto ask tough questionsabout the exposures weface and manage themaggressively to deliverconsistent earnings. Inthe aftermath ofHurricanes Katrina,Rita and Wilma, twoquestions warrantedclose attention.

First, why wereAllstate’s losses so significant in Louisianaand Mississippi?Katrina’s wide path and unusual severitymeant high payouts on the hundreds ofthousands of homes we insure there.

Reinsurance couldhave softened the blow,as it did in Texas, forHurricane Rita. Whenwe considered our expo-sures on an enterprise-

wide basis, before the2005 hurricane season, we chose toinvest our reinsurancedollars in high-densitycoastal areas where ourfinancial exposure ismuch higher—andwhere the probability of payback is greatest.

Second, what will we do in the future to mitigate this risk so wecan continue to generatereliable earnings growthand increase our returnson capital? Each majorstorm teaches us newlessons—and makes usbetter able to managerisks. We factor newdata into our risk management strategy,including recent find-ings that point to aperiod of more frequentand severe hurricanes.We purchased country-wide reinsurance thatwill reimburse Allstatefor $2 billion of lossesin excess of $2 billion

for named storms,earthquakes and firesfollowing earthquakesin all states exceptFlorida. We also pur-chased as additionalprotection from hurri-canes in Florida $900million of reinsurance inexcess of amounts recov-erable from the FloridaHurricane CatastropheFund. In some otherstates, we’re purchasingmore reinsurance toreduce our exposures.

In other markets,we’re increasing ratesand deductibles on ourhomeowners policiesand limiting new business writing. In markets where we cannot adequately coverour risks, we may beable to help customersfind alternative coveragewhile we focus insteadon auto and financialservices products.

Though we can’t controlthe weather, we can and will mitigate theweather’s impact on our business. As a result, we expect our long-termexposure will decline.

Moreover, we’re calling for public policychange and a morerational approach tohow Americans preparefor and protect them-selves against the devastating and highlyunpredictable effects ofcatastrophes.

In 2006 these effortswill expand and acceler-ate. By re-examiningour catastrophe risk on an ongoing basis, we can protect our business and generatemore consistent share-holder returns.

Re-examining Risk

By staying close to ourcustomers and markets,we’re growing our customer base in ahighly competitivemarket. We competeaggressively for highlifetime value insurancecustomers in multi-linehouseholds. But it takesmore than price to win.To attract and retainprofitable customers, we also continue todevelop our productmix to meet their needsand back these productswith fast response,financial strength andintegrity. In addition,we anticipate andrespond to demo-graphic, regulatory andmarket trends to find

new ways to connectwith consumers. Forexample, over the lastfive years we’ve doubledour investment in multi-cultural advertising. We’re also aggressivelytapping such channelsas NASCAR, Olympicand college footballsponsorships and placing greater emphasis on cable TV, theInternet and customer-experience activities.

Finding NewOpportunities

Managing an Unpredictable Market Allstate respondedto the severecatastrophes of2005 with speed,efficiency andcompassion. We also workedto decrease ourexposures andapplied leadershipand innovativethinking to createa better businessclimate.

Letter to Shareholders

3

Innovation anchors suc-cess for any companythat wants to surviveand thrive over thelong-term. Allstate is noexception. Our successreflects our commit-ment to product andprocess innovation andefficient business prac-tices, and we have manyindustry firsts to ourcredit.

In recent years we’vetaken our investment ininnovation to a newlevel. For example, wedeveloped Allstate®

Your Choice Auto insur-ance to give customersgreater flexibility andchoice of packages.These package featuresare helping us win profitable market share,especially as we combinethem with increasinglysophisticated under-writing tools to deliver competitive pricing.Innovation is also making our productsupport structure moreefficient and profitable.

Specifically, we startedto apply even moresophisticated tieredpricing not only to auto,but across our home-owners portfolio to morefinely segment risks andhelp attract customerswith higher lifetimevalue. And, our NextGeneration ClaimSystems will combinenew technologies withfast, simple, customer-focused processes. Thisinvestment will help uslower our loss adjust-ment expenses, bettermanage loss costs andboost customer reten-tion and satisfaction.

Even as we lookahead, we keep a keeneye on the market variables that affect our performance andadjust our strategyaccordingly. For exam-ple, we use technologyand local knowledge toguide expansion of ouragency base into high-growth areas.

Innovation at Work Investing in PeopleValue Driven

The Future: Building on our Strengths

Value means differentthings to different people. For Allstate, it means doing everything we can tooptimize financialreturns for shareholders.The 2005 hurricaneseason reinforced theimportance of manag-ing our business witheven greater precisionand sophistication. Our performance alsomakes us even morecommitted to build onthe key strengths thatdrive shareholderreturns by enhancingour business perform-ance and corporate reputation.

Our scale providesbuilt-in economies that generate value for agents, customers and shareholders. For example, it enables us to roll out newproducts on a regional

basis so we can refineprocesses and commu-nications based onfeedback from agentsand customers.Strategies like this savemoney and supporttop-line growth.

Our strong balancesheet gives us the flexibility to investresponsibly in growth.

With one of thecountry’s most recog-nizable brands as afoundation, we arebuilding profitablerelationships based oncompetitively pricedproducts and services,innovation and a bettercustomer experience.

As a company, wevalue strong communi-ties and show this commitment throughongoing investment in municipal bonds,employee volunteerismand continued supportof The AllstateFoundation.

Allstate maintains itsreputation for a high-performance culture byattracting and retainingthe best talent in ourindustry. We provideour force of nearly70,000 employees,agents and agency staffwith many opportuni-ties to expand theirknowledge, acquire newskills and positionthemselves for newcareer and businessopportunities. For example, we launched a new field leadershipstructure designed toprovide agency ownerswith specialized supportto help them operatemore efficiently andprofitably.

Each year we investheavily in helping ouremployees achieve newprofessional designationsand academic degrees. And because diversity is a cornerstone ofAllstate’s success, we also invest in andvalue our diverse work-force, who serve ourdiverse customer baseand stockholders in a highly competitivemarketplace. In return,our people demonstrateexceptional commit-ment to our customersand work hard to help Allstate win in the marketplace.

4

Allstate is proud to celebrate 75 years ofproviding protectionand security for genera-tions of Americans. Weare excited to embarkon our next 75 years,and we do so from astrong foundation. Thecompany is growingprofitably despite recordcatastrophe losses. Ourfinancial position issolid. We’re improvingour competitive positionby taking many initiatives to reducecosts. Consumers areresponding to the consistent brand experience we deliver,our competitive butdisciplined pricing andour innovative newproducts. Employees

and agents are deliver-ing our Good Hands®

Promise with commit-ment and zeal.

I am grateful for thesupport of an experi-enced leadership teamthat is guiding Allstatetoward a dynamicfuture. Several leadersof your company,including our long-timesenior managementteam member RobertW. Pike, retired in2005 after decades ofoutstanding service. I thank them for theirmany contributions toAllstate’s success. Theyhave left their verycapable successors withhigh standards to meet.

In 2005 Allstatedrew on its manystrengths to overcomeadversity and generatesolid shareholderreturns. I’ve addressedour strategy for manag-ing catastrophic events.In the pages that follow,

we outline the manysteps we took to keepour enterprise growing,meet our customercommitments anddeliver value andresults.

In 2006 we will focuson several business pri-orities that are criticalto our future. Theprogress we make toreduce our catastropheexposure, accelerateprofitable growth, pro-tect our brand, manageexpenses and improvethe customer experiencewill make us an evenstronger and bettercompany.

Edward M. LiddyChairman and Chief Executive Officer

Total Shareholder ReturnsSince IPO on 6/3/1993

Dividends per Share(in dollars, adjusted for stock split in 1998)

75 Years and Strong

75 Years and Growing

1 Year, 12/31/2004 –12/31/2005

2 Years, 12/31/2003–12/31/2005

3 Years, 12/31/2002–12/31/2005

4 Years, 12/31/2001–12/31/2005

10 Years, 12/31/1995–12/31/2005

7%

31%56%

75%

39%

218%

15%

27%60%

43%

31%

150%

14%

22%48%

17%

3%

193%

5%

16%49%

16%

3%

136%373% 239% 306% 243%

*IPO as of 6/3/1993

93*

94 95 96 97 98 99 00 01 02 03 04 05

Allstate S&P P/CS&P Insurance S&P 500

5 Years, 12/31/2000–12/31/2005

S&P

500

S&P

Insu

ranc

e

S&P

P/C

Allst

ate

Since IPO, 6/3/1993–12/31/2005

50

100

200

250

300

350

.40

.60

.80

1.00

1.20

1.40

150

.20

373%

243%

306%

239%

.18

.36.39

.43.48

.54.60

.68

.76

.84

.92

1.28

1.12

Total Shareholder Returns

Letter to Shareholders

5

Preparing and Protecting America

How do we mitigate mega-catastrophe risk?

For most families,the home represents aprimary and growingsource of equity andthe foundation oftheir long-termfinancial security. Yet today, one thirdof Americans live inareas prone to earth-quake risk, and morethan half live incoastal counties. This is a precariousplace to be at a timewhen seven majorhurricanes struck theGulf and Atlanticcoasts in a 15-monthspan in 2004-05, and resulted ininsured losses thatranked among thetop 10 catastrophesin Allstate’s history.

Simply put, the currentsystem does not ade-quately help Americanseffectively prepare forand efficiently recoverfrom catastrophes.Insurance premiumsrise as carriers try tocover the costs ofmega-catastrophes andreinsurance coverage.Some homeowners findit difficult to secureinsurance coverage atany price. As a result,too many consumersand businesses lack thecomprehensive cover-age they need. Andwhen disaster strikes,they have nowhere toturn for immediatesupport. Taxpayersalso suffer when thegovernment spends billions in emergencyfunds on people andbusinesses that maynever fully recover. Weneed a new approachthat gives consumersthe protection and support they need.

Allstate is reducingits catastrophe expo-sure to protect itsfinancial strength andgenerate consistentearnings. In theshort-term, this strategy will requireus to provide lessprotection to fewerhomeowners. With a new risk-sharingmechanism in place,we can protect moreconsumers at afford-able prices and enablethem to benefit from our world-classservice and claimsexpertise. Bringingthe Good Hands®

Promise to life willenable us to growprofitably and maintain our recordof outstanding shareholder returns.

Consumers can takeadvantage of new educa-tion programs that willhelp them prepare forcatastrophes before theystrike. They can learnhow to:• Ensure their insurance

coverage includesreplacement costs

• Follow their commu-nity’s public escapeplan in an emergency

• Develop a simplefamily communicationand response plan

• Access availableresources to speed therecovery process

You can learn more byvisiting ProtectingAmerica.org. Equallyimportant, I encourageyou, your family andfriends to contact yourlegislators and ask themto join the effort to helpprotect you and ourcountry from the devas-tating consequences ofnatural catastrophes.

We initiated ProtectingAmerica.org, a broadcoalition that seeks tobetter prepare and protect Americansfrom natural disasters.The goal is to improveconsumer education,mitigation and thefirst response capabilityof police and firedepartments. We arealso advocating a newrisk-sharing mechanismwhereby private insurerswould continue to provide protection toconsumers but therewould be a limit totheir potential losses.Losses above thisamount would be covered by a privatelyfunded government-sponsored catastrophepool at the state andfederal levels. Thisstructure would pro-vide more protectionat a lower cost to consumers.

Why shouldAmericans beconcerned?

Why is Allstateadvocating a newsystem?

What is Allstate’ssolution?

How will this solution benefitAllstate share-holders?

What can consumers doto protectthemselves?

Protecting AmericaAllstate advocatespreparation, not rear-view reaction.

It’s not a matter of insurance;it’s a matter of economic vitality.The fact is that America is not as prepared as it should be, and mega-catastrophes appear to be increasing in frequency and severity.

Thomas J. WilsonPresident and Chief Operating Officer

Allstate® Your ChoiceAuto insurance is re-inventing auto insurance by rewarding safe drivingand offering more choiceto meet individual needs.Features include a safe-driving bonus, accidentforgiveness, a safe-drivingdeductible and new-carexpanded protection.Allstate customers Johnand Kitty Vautier, shownhere with their teenagedrivers Jennifer and John Jr., protect all their family cars withAllstate® Your ChoiceAuto insurance.

Product Innovation

6

We compete vigorouslyon multiple fronts.

How does Allstate keep its business growing?

7

Innovation DrivesOpportunity

A Rewarding FutureExpandedDistribution

A High QualityPortfolio

Demographic trends are making personalinvestment moreimportant than ever—and providing growthopportunities forAllstate Financial. Life expectancy isincreasing. Health-care costs are rising.Pensions and SocialSecurity benefits areunder pressure. Tens of millions of babyboomers are at or near retirement age.Allstate has the financial expertise,innovative products anddistribution network to meet the growingdemand for financialservices that help

consumers prepare forthe future. In 2005,new sales of financialproducts by Allstateexclusive agencies*increased 5.7 percent to $2.4 billion and havegrown at a compoundannual rate of 42.1 percent since 2000.

Growth also requires aclear view of the marketopportunities ahead—and a focused strategyfor capturing them. For example, new technology is makingcars much safer, whiledemographic shifts and tougher laws arecreating a larger pool ofsafe, responsible drivers.These trends present afavorable climate forinnovative new productslike Allstate® YourChoice Auto insurance,which gives consumersthe flexibility to matchthe price they pay to thecoverage they need.

We never rest when itcomes to building onour already powerfuldistribution engine. In2005 we had a net gainof 555 new exclusiveagencies, bringing our U.S. total to12,428. We’re alsohelping our existingagencies grow bigger,more efficient and moreprofitable. For example,our U.S. licensed salesprofessionals increasedto approximately29,800 in 2005 from28,500 in 2004. As aresult, we’re reachingmore new householdswhile cross-selling ourbroad product portfolioto the 17 million house-holds we already serve.

Our sophisticated tieredpricing models are creating a more stableand profitable portfolio.Our rating plans havemultiple tiers that allowus to more preciselyalign premium withrisk. We compete vigorously for high life-time value customers.The result: improvedunderwriting profits,better retention and stable margins.

Establish relationshipsthat value customers

Provide a knowledgeableand experienced team

Offer products and servicesto help meet customer needs

Be easy to do business with

Opportunities forDifferentiation

Have competitive prices

Foundational Elements

The Good Hands® PromiseAs part of our overall growthstrategy, we focus on deliveringon the five planks of the GoodHands® Promise to help cus-tomers feel better protectedtoday and better prepared fortomorrow.

*See page 17.

Allstate is attract-ing and retainingcustomers byresponding fast,improving theclaim experienceand building alarger and betterequipped agentnetwork.

We’re creating loyal customers—one experience at a time.

How does Allstate meet its customer commitments?

First to Respond Tools to ExcelConnecting withCustomers

Staking a Claimto Excellence

Allstate’s Good Hands®

Promise makes a strongcommitment to nurture and protect our customers. We’reextending this promiseby making our agency,online and customerservice channels easierto access and more sat-isfying to experience.We’re also sharpeningcommunications tobetter align our target-ed audiences withmedia channels—andto ensure we consis-tently reinforce brandvalue. In 2005 greatercustomer focus helpedincrease customer loyalty for the secondyear in a row.

Customers appreciateAllstate’s scale andresources most whendisasters strike. BeforeKatrina reached land,we mobilized 1,500claim adjusters justoutside the impactzone. We also posi-tioned 24 MobileResponse Units, allequipped with satellitecapability that allowedus to relay claim information from field adjusters to head-quarters systems beforelocal phone service wasrestored. Allstateagents and employeesalso showed their dedication by attendingto customers first—even though more than800 had lost their ownhomes and businessesor were otherwiseseverely affected by the storm.

Allstate handles morethan six million claimsin a typical year—notincluding catastrophes.This means millions ofopportunities each yearto execute efficientlyand help customersrecover after a loss. We have been lookingat every phase of theclaim process—fromcustomer record-keeping to check distribution. And wehave been makingdozens of changes toimprove the entireexperience.

Our vast and growingnetwork of exclusiveagencies gives us immediate access toconsumers and commu-nities across the country.As these agencies growbigger, more efficientand more profitable,they’re better equippedto meet the protectionand financial servicesneeds of our target market. Today, Allstateagents benefit from anefficient new technologyplatform that makesdoing business easier.They can also access themarket intelligence,marketing support andtraining they need tobreak away from theretail competition.

We are also makingtechnology and processinvestments to grow ourindependent channel,which serves a marketrepresenting one third ofall insurance customersand $45 billion in annual premium dollars.

8

Members of Allstate'sdedicated NationalCatastrophe Teammonitor storms beforethey strike, developresponse strategiesand coordinate on-the-ground activity.Team members (left toright) include StevePressley, Claim ProcessSpecialist; JerryJimenez and WendyCarrick, Market ClaimManagers; and LesMertins, Claim FieldDirector.

Real Time Response

9

10

How does Allstate deliver value and results?

We invest responsibly andact with integrity.

Shareholderscount onAllstate to actwith integrityand initiative—the same attributes thathelp guide ourbusiness—when helpingthe people and communitiesthat we serve.

In twelve-and-a-halfyears as a public company, Allstate hascreated significant value by executing adisciplined investmentstrategy and managingour risks with an enterprise-wide view.

We generate addi-tional returns throughprudent management ofour $118.3 billioninvestment portfolio.

We invest share-holders’ equity in areasthat drive profitablegrowth and generatesolid returns. Theseinclude product innovation, marketing,distribution and processimprovement. In 2005shareholders’ equity was$20.2 billion comparedto $21.8 billion in 2004, reflecting a netreturn of capital toshareholders throughdividends and sharerepurchasing.

Allstate has a sophis-ticated formula for managing risks. Byviewing them strategi-cally, we can determinewhich risks to assumeand then the rightamount to assume inorder to achieve attractive, reasonably predictable returns.That means under-standing how naturaldisasters, changing economic conditions,operational challengesand market forces affectour business. Thisanalysis helps us findthe right balancebetween maintainingliquidity and investingcapital to fuel growthand reward investors.

Between 1994 andthe end of 2005, thetotal shareholder returnon our stock has aver-aged 17 percent on acompound annual basis.These returns exceed

both the Standard &Poor’s Property &Casualty and Standard& Poor’s 500 indices.Allstate also has aproven track record ofreturning free cash flowto shareholders throughdividends and stockrepurchases. Our dividend has increasedevery year since 1993and it reached an all-time high of $1.28 pershare in 2005. Since1993 we have alsorepurchased more than$11 billion in Allstatestock.

Allstate’s reputation forgood governance andfinancial transparencycreates additional valueby contributing to ourlong-term financial per-formance. We adoptedmany of our current corporate governancepractices long beforecorporate scandal led to regulatory change.These include rigorousCEO evaluations and detailed board evaluations.

Our practices and our written policies—which are describedonline at allstate.com—earn high marks fromindependent governanceorganizations and arewidely embracedthroughout our organi-zation. Our senior management team leadsby example, anchoringour culture by maintain-ing the highest personal standards for integrityand accountability.

Disciplined Risk Management,Reliable Returns

Integrity inAction

Allstate is supportingnew generations of customers by helpingcommunities acrossAmerica grow and prosper. These activitiesexpress our core valuesand boost Allstate’s reputation as a responsi-ble corporate citizen.

At the end of 2005,our investment portfolioincluded $27 billion in municipal bonds inurban areas that needinvestment capital.

Allstate also supportscommunities in need byfunding programs thatencourage employees,agents and agency staffto reach out to others. In 2005, the $6 milliondonated by Allstate tohelp hurricane victimsin the Gulf statesincluded $2.6 million in contributions fromAllstate employees andagencies. Our peoplealso gave an additional$2.8 million in 2005 to local charitable organizations through

Strong Communities,Empowered Customers

the Annual GivingCampaign.

Each year, Allstatefunds The AllstateFoundation, an inde-pendent charitable corporation. In 2005The Allstate Foundationawarded $16 million ingrants to 508 nationaland regional not-for-profit organizations.These grants strengthen communities in threeimportant ways: theypromote communitysafety; create greater economic empowerment;and encourage tolerance,inclusion and diversity.In 2005 The AllstateFoundation launchednew initiatives to educate teens on theimportance of safe driving, and to help victims of domestic violence transition tosafe, productive lives free of violence.

Families in the New Orleansarea are getting helprebuilding their lives in thewake of Hurricane Katrina.Shikanah Brown (fore-ground) is one of dozens ofpre-schoolers at the East St.Tammany Rainbow ChildCare Center in Slidell,Louisiana, helped by TheAllstate FoundationHurricane Recovery Fund at the Greater New OrleansFoundation. The daycarecenter received $20,000 torebuild its battered site.“It’s been a Godsend,” saysRainbow executive directorCharlotte Champagne,shown talking withShikanah’s mother Celeste and (to her right)Maya Rollins with sonJasper Williams.

11

Providing a Helping Hand

12

Better Bigger BroaderFor Allstate, trans-parency means givinginvestors clear and easyaccess to all the infor-mation they need toassess our performance.This financial scorecarddemonstrates ourprogress in executingour “better, bigger,broader” strategy.

BetterWe’re striving to becomemore efficient and profitablein our operations and in our relationships withcustomers.

BiggerOur goal is to drive top linegrowth in a way that alsodelivers bottom line profits.

BroaderWe seek to expand in the personal lines, life insurance, retirement and investment productsmarketplace.

Net Income perDiluted Share This “bottom line” measure demonstrates net income during the yearthat is attributable to eachshare of stock. This num-ber declined in 2005 assevere catastrophe lossesreduced net income.

Operating Income perDiluted Share This is a common measureused by the investment community to analyze ourresults. Operating incomereveals trends in our insur-ance and financial servicesbusiness that may be obscuredby business decisions andeconomic developments unrelated to the insuranceunderwriting process.

Return on Equity Return on equity measureshow well Allstate usedshareholders’ equity togenerate net income.

RevenueThis measure indicatesAllstate’s total premium andinvestment results. In 2005,Allstate generated recordrevenue.

Operating IncomeThis measure revealstrends in our insuranceand financial services business that may beobscured by business decisions and economicdevelopments unrelated to the insurance under-writing process.

Premiums and DepositsThis measure is used toanalyze the productiontrends for Allstate Financialsales. It shows the progresson meeting the goal ofbecoming a broader-basedcompany.

Financial Scorecard

.75

1.50

3.00

3.75

$4.50

.75

2.25

3.00

3.75

$4.50

5.0

7.5

10.0

12.5

15.0

(in dollars) (in dollars) (percent)

’04 ’05’03’02’01 ’04 ’05’03’02’01 ’04 ’05’03’02’01

2.25

1.50

2.5

1.60

4.54

3.83

1.60

4.41

2.37

3.77

2.92

2.066.7 6.5

14.2

15.0

8.42.64

(in billions) (in billions) (in billions)

’04 ’05’03’02’01 ’04 ’05’03’02’01 ’04 ’05’03’02’01

3.0

6.0

9.0

12.0

15.0

$18.0

1.6

5.5

11.0

16.5

22.0

27.5

$33.0

0.5

1.0

1.5

2.0

2.5

$3.0

1.5

3.1

2.1

2.728.9

33.9

29.6

32.1

35.4

Non-proprietary channelsProprietary channel

13.214.4

10.8

9.8

9.3

15.9

11.6

13.1

11.8

10.6

2.7 2.82.3

2.01.3

From left to right:Joseph V. TripodiSenior Vice President and Chief Marketing OfficerLeverages Allstate’s market-ing power and highly valuedGood Hands® Promise tostrengthen and broaden customer relationships andattract new customers.

Dan HaleSenior Vice President and Chief Financial Officer Develops financial strategyand ensures sound gover-nance practices, rigorousfinancial and risk manage-ment controls, appropriatereporting transparency anddisciplined capital management.

Catherine S. BruneSenior Vice President and Chief Information Officer Sets and implements an integrated, business-aligned technology strategy that supports businessobjectives, protects anddelivers information andenhances customer service.

Joan M. CrockettSenior Vice President, Human Resources Develops and implementsworkforce strategies toattract, retain and motivatethe best talent to drive business strategy.

Casey J. SyllaPresident, Allstate Financial Drives increasing returns and profitable growth byproviding top-tier financialproducts through Allstateagencies and third-partyfinancial services professionals.

Edward M. LiddyChairman and Chief Executive Officer Sets and directs the corporatestrategy that is transformingAllstate into a high-perform-ance insurance and financialservices company.

George E. RuebensonSenior Vice President,Property-Casualty ClaimService OrganizationOversees a highly efficientclaim service organizationthat is continuously evolv-ing to better meet the needsof customers and agents.

Michael J. McCabeSenior Vice President andGeneral Counsel Guides Allstate’s strategy toensure sound complianceand governance practicesand to foster a healthy legal,economic, legislative andregulatory environment.

Thomas J. WilsonPresident and Chief Operating OfficerLeads the implementation ofAllstate strategies that driveprofitable growth, customerloyalty and innovation.

Michael J. RocheSenior Vice President, Allstate Protection Technologyand AdministrationLeads all aspects ofProtection technology management and Allstate’sagency and customer support functions.

Eric A. SimonsonSenior Vice President and Chief Investment Officer Manages Allstate’s invest-ment portfolios to generateattractive levels of risk-adjusted income and totalreturn in support of overallfinancial objectives.

Ronald D. McNeilSenior Vice President, Protection DistributionOptimizes performance of Allstate’s distinct andpowerful distribution net-works to deliver productsand services that meet customers’ needs.

Joan H. WalkerSenior Vice President, Corporate Relations Stewards Allstate’s corporateimage and reputation and sets and directs thecompany’s external andinternal communicationstrategy.

Leadership Team

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14

1948 1957

1951

1960

1954

1945

19

45

-19

60

1963 1972

1966

1975

1969

1960

19

60

-19

75

1933 1942

1936

1945

1939

1930

19

30

-19

45

Sustaining Innovation For 75 years, Allstate has demonstrated thatproduct and process innovation drives sustainable growth. We have createdpositive change for consumers by introducing new ideas, taking new risksand leading the industry in new directions. As we look to the future, ourculture of innovation will help Allstate stand out. We’re moving forwardwith new market-focused products like Allstate® Your Choice Auto insurance, new processes that improve the customer experience and newways to manage risks across the organization.

Leading the Way for 75 YearsDelivering Shareholder Value

1942Begins salestraining coursesfor women.

1952First drive-inclaim office revolutionizesclaim handling.

1952Forms TheAllstateFoundationto supportcommunities.

1950Launches “You’reIn Good Handswith Allstate®”slogan.

1959Establishes first“catastropheplan” to help customers.

1947Creates first “illustrator policy”to explain insur-ance coveragesusing simple language and illustrations.

1970Encouragesautomakers to producetougher cars,including uniformbumpers.

1961Creates AllstateMotor Club, firsttruly nationalservice.

1966Forms firstindustry researchand planningcenter for marketresearch.

It’s always about marketstrategy and valueMarket focus and disci-plined strategy generateprofitable growth and create long-term value.

1968Offers “BusinessUmbrella” packagefor commercialbusinesses.

1968Advocates seatbelts, airbagsand other auto safetymeasures.

1939Introduces towing andemergency roadservice.

1939First to tailorrates by age,mileage, useof car.

1931First Allstateauto claimpaid on thespot.

1931Begins operations on April 17.

1957Starts sellinglife insurance.

15

1993 2002

1996

2005

1999

1990

19

90

-20

05

1978 1987

1981

1990

1984

1975

19

75

-19

90

Enjoying Scale Allstate has the scale and financial resources tomeet its commitments to customers and generate profitable growth.To strengthen this foundation, we are investing in our distributionchannels, building a more efficient and customer-focused claim operation and leveraging best practices to control costs and boostperformance across our organization.

Innovation

CorporateCitizen

Protect andPrepareConsumers

Strategy for the Future

Creating a Climate for Success

Corporate Citizen Some things neverchange. By investingin communities,Allstate generates areturn on investedcapital and helps create brighterfutures for new generations of customers.

InnovationNew products andimproved processesdifferentiate Allstatein the marketplaceand help build prof-itable long-termrelationships.

Protecting andPreparingConsumersWhether it’s theirpersonal assets orfinancial futures,Allstate will help itscustomers feel betterprotected today andbetter prepared fortomorrow’s challenges.

1990OffersNeighborhoodExclusiveContracts toAgents.

1982AnnouncesNational UrbanPolicy to supportand improveneighborhoodhousing.

1983Introduces Universal Life policy for savingsand investment.

2002Expandstiered pric-ing in autoand home-ownersinsurance.

1993Becomes largestpublicly heldpersonal linesinsurance company.

1995Becomes a totallyindependent com-pany after spin-offfrom Sears.

1999Establishes GoodHands® Network,giving customers24-hour access toAllstate services.

1999IntroducesExclusive AgentContractor pro-gram.

2005IntroducesAllstate® YourChoice Autoinsurance.

1976Starts Tech-Coroperation forresearch onauto/homerepairs.

1976OrganizesHelping Hands®

program to promoteemployee volunteerism.

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Customers deserve protection today—and a brighter future. That’s our stand.

AutoHomeownersCondominiumRentersScheduled Personal

PropertyBusiness UmbrellaCommercial AutoCommercial Inland

MarineSmall Business Owner

Customizer and Business PackagePolicy

Landlord Package Manufactured Home Motor HomeMotorcycleBoatPersonal UmbrellaRecreational VehicleMotor ClubFlood*

Estate Planning Products

Business SuccessionPlanning Products

Fixed Survivorship LifeVariable Survivorship

Life

Term LifeUniversal LifeVariable Universal LifeLong-term Care* Supplemental Health

* Non-proprietary products distributed by Allstate

Fixed AnnuitiesVariable AnnuitiesEquity Indexed

AnnuitiesSingle Premium

Immediate AnnuitiesUniversal Life Variable Universal LifeSingle Premium LifeStructured Settlement

AnnuitiesMutual Funds*Qualified Plans*, such

as IRAs, 401(k)s, 403(b)s

Education Plans*(529 and Coverdell Education Savings Accounts)

Institutional Funding Agreements

Checking AccountsSavings AccountsCertificates of DepositMoney Market AccountsMortgages

InsuranceProducts

Products and services thathelp customers protecttheir assets, wealth andfamily.

FinancialProducts

Financial services productsthat help customers prepare for the future.

Asset Protection Wealth Transfer Family Protection Insurance

Asset Managementand Accumulation

Asset ManagementShort-term FinancialObjectives

Allstate Products

To Access Allstate:• Allstate agents• allstate.com• Independent agents• 1-800-allstate• Allstate Bank• Financial institutions• Broker dealers• Workplaces

17

Book value per diluted shareAs of December 31, ($ in millions, except per share data) 2004 2005

Book value per diluted share

Numerator: Shareholders’ equity $21,823 $20,186

Denominator: Shares outstanding and dilutive potential shares outstanding 688.0 651.0

Book value per diluted share $ 31.72 $ 31.01

Book value per diluted share, excluding the net impact of unrealized net capital gains on fixed income securities

Numerator: Shareholders’ equity $21,823 $20,186

Unrealized net capital gains on fixed income securities 2,134 1,255

Adjusted shareholders’ equity $19,689 $18,931

Denominator: Shares outstanding and dilutive potential shares outstanding 688.0 651.0

Book value per diluted share, excluding the net impact of unrealized net capital gains on fixed income securities $ 28.62 $ 29.08

We believe that investors’ understanding ofAllstate’s performance is enhanced by our disclosureof the following non-GAAP and operating financialmeasures. Our methods of calculating these meas-ures may differ from those used by other companiesand therefore comparability may be limited.

Operating income is income before cumulativeeffect of change in accounting principle, after-tax,excluding:• realized capital gains and losses, after-tax, except

for periodic settlements and accruals on non-hedge derivative instruments which are reportedwith realized capital gains and losses but includ-ed in operating income,

• amortization of deferred policy acquisition costs(“DAC”) and deferred sales inducements (“DSI”),to the extent they resulted from the recognitionof certain realized capital gains and losses,

• (loss) gain on disposition of operations, after-tax,and

• adjustments for other significant non-recurring,infrequent or unusual items, when a) the natureof the charge or gain is such that it is reasonablyunlikely to recur within two years, or (b) therehas been no similar charge or gain within theprior two years.

Net income is the GAAP measure that is mostdirectly comparable to operating income.

We use operating income to evaluate our resultsof operations. It reveals trends in our insurance andfinancial services business that may be obscured bythe net effect of realized capital gains and losses,(loss) gain on disposition of operations and adjust-ments for other significant non-recurring, infre-quent or unusual items. Realized capital gains andlosses and (loss) gain on disposition of operationsmay vary significantly between periods and are gen-erally driven by business decisions and economicdevelopments such as market conditions, the tim-ing of which is unrelated to the insurance under-writing process. Moreover, we reclassify periodicsettlements on non-hedge derivative instrumentsinto operating income to report them in a mannerconsistent with the economically hedged invest-ments, replicated assets or product attributes (e.g.net investment income and interest credited to con-tractholder funds) and by doing so, appropriatelyreflect trends in product performance. Non-recur-ring items are excluded because, by their nature,they are not indicative of our business or economictrends. Therefore, we believe it is useful forinvestors to evaluate these components separatelyand in the aggregate when reviewing our perform-ance. We note that the price to earnings multiplecommonly used by insurance investors as a forward-looking valuation technique uses operating incomeas the denominator. We use adjusted measures ofoperating income and operating income per dilutedshare in incentive compensation. Operating incomeshould not be considered as a substitute for netincome and does not reflect the overall profitabilityof our business.

The following tables reconcile operating incomeand net income for the years ended December 31.

Operating incomeAllstate Financial Consolidated Per diluted share

($ in millions, except per share data) 2004 2005 2001 2002 2003 2004 2005 2001 2002 2003 2004 2005

Operating income $ 551 $ 581 $1,492 $2,075 $2,662 $3,091 $1,582 $ 2.06 $ 2.92 $ 3.77 $ 4.41 $ 2.37

Realized capital gains and losses 1 19 (352) (924) 196 591 549

Income tax (expense) benefit (4) (7) 127 326 (62) (199) (189)

Realized capital gains and losses, after-tax (3) 12 (225) (598) 134 392 360 (0.31) (0.84) 0.19 0.56 0.54

Reclassification of periodic settlements and accruals on non-hedge derivative instruments, after-tax (32) (40) (4) (3) (15) (32) (40) (0.01) (0.01) (0.02) (0.04) (0.06)

DAC and DSI amortization related to realized capital gains and losses, after-tax (89) (103) (11) (1) (30) (89) (103) (0.01) — (0.05) (0.13) (0.16)

(Loss) gain on disposition of operations, after-tax (6) (12) (40) 2 (26) (6) (12) (0.06) — (0.04) (0.01) (0.02)

Non-recurring increase in liability for future benefits, after-tax — (22) — — — — (22) — — — — (0.03)

Income before dividends on preferred securities and cumulative effect of change in accounting principle, after-tax 421 416 1,212 1,475 2,725 3,356 1,765 1.67 2.07 3.85 4.79 2.64

Dividends on preferred securities of subsidiary trust, after tax — — (45) (10) (5) — — (0.06) (0.01) — — —

Cumulative effect of change in accounting principle, after-tax (175) — (9) (331) (15) (175) — (0.01) (0.46) (0.02) (0.25) —

Net income $ 246 $ 416 $1,158 $1,134 $2,705 $3,181 $1,765 $ 1.60 $ 1.60 $ 3.83 $ 4.54 $ 2.64

Premiums and deposits is an operat-ing measure that we use to analyze pro-duction trends for Allstate Financialsales. It includes premiums on insurancepolicies and annuities and all depositsand other funds received from customerson deposit-type products including the

net new deposits of Allstate Bank, whichwe account for under GAAP as increasesto liabilities rather than as revenue.

The following table illustrates wherepremiums and deposits are reflected inthe consolidated financial statements forthe years ended December 31.

Premiums and deposits($ in millions) 2001 2002 2003 2004 2005

Life and annuity premiums $ 1,345 $ 1,371 $ 1,365 $ 1,045 $ 918

Deposits to contractholder funds 7,970 9,484 10,373 13,616 12,004

Deposits to separate accounts and other 1,290 979 1,357 1,258 1,473

Total premiums and deposits $10,605 $11,834 $13,095 $15,919 $14,395

Book value per diluted shareexcluding the net impact of unre-alized net capital gains on fixedincome securities is calculated bydividing shareholders’ equity afterexcluding the net impact of unrealizednet capital gains on fixed income securi-ties and related DAC and life insurancereserves by total shares outstanding plusdilutive potential shares outstanding.Book value per diluted share is the mostdirectly comparable GAAP measure.

We use the trend in book value perdiluted share excluding unrealized netcapital gains on fixed income securitiesin conjunction with book value perdiluted share to identify and analyze thechange in net worth attributable tomanagement efforts between periods.We believe the non-GAAP ratio is use-ful to investors because it eliminates theeffect of items that can fluctuate signifi-

cantly from period to period and aregenerally driven by economic develop-ments, primarily market conditions, themagnitude and timing of which aregenerally not influenced by manage-ment, and we believe it enhances under-standing and comparability of perform-ance by highlighting underlyingbusiness activity and profitability driv-ers. We note that book value per dilut-ed share excluding unrealized net capi-tal gains on fixed income securities is ameasure commonly used by insuranceinvestors as a valuation technique. Bookvalue per diluted share excluding unre-alized net capital gains on fixed incomesecurities should not be considered as asubstitute for book value per dilutedshare and does not reflect the recordednet worth of our business. The follow-ing table shows the reconciliation.

New sales of financial products byAllstate exclusive agencies is anoperating measure that we use to quan-tify the current year sales of financialproducts by the Allstate Agency propri-etary distribution channel. New sales offinancial products by Allstate exclusiveagencies includes annual premiums onnew insurance policies, initial premi-ums and deposits on annuities, net new

deposits in the Allstate Bank and salesof other companies’ mutual funds, andexcludes renewal premiums. New salesof financial products by Allstate exclu-sive agencies for the years endedDecember 31, 2005, 2004, 2003, 2002,2001 and 2000 totaled $2.40 billion,$2.27 billion, $1.83 billion, $1.61 bil-lion, $702 million and $414 million,respectively.

Combined ratio, excluding theeffect of catastrophe losses, is com-puted as the difference between twooperating ratios, combined ratio (aGAAP measure) and the effect of catas-trophes on the combined ratio. Themost directly comparable GAAP meas-ure is the combined ratio. We believethat this ratio is useful to investors andit is used by management to reveal thetrends in our property-liability businessthat may be obscured by catastrophelosses, which cause our loss trends tovary significantly between periods as aresult of their rate of occurrence andmagnitude. We believe it is useful forinvestors to evaluate these components

separately and in the aggregate whenreviewing our underwriting perform-ance. The combined ratio excludingthe effect of catastrophe losses shouldnot be considered a substitute for thecombined ratio and does not reflect theoverall underwriting profitability of ourbusiness. The following table shows thereconciliation for the years endedDecember 31.

17

Definitions of Non-GAAP and Operating Measures

2004 2005

Combined ratio 93.0 102.4

Effect of catastrophes on the combined ratio 9.5 21.0

Combined ratio, excluding the effect of catastrophe losses 83.5 81.4

The Allstate Corporation2775 Sanders RoadNorthbrook, IL 60062-6127(800) 574-3553www.allstate.com

Shareholders may receivewithout charge a copy ofThe Allstate CorporationForm 10-K annual report(filed with the Securitiesand Exchange Commission)and other public financialinformation for the yearended December 31, 2005,by contacting:Investor RelationsThe Allstate Corporation2775 Sanders Road Northbrook, IL 60062-6127(800) 416-8803invrel@allstate.comThe Allstate Corporation’sannual report is availableonline at:www.allstate.com/investor/annual_report