Allstate Reports 22% Increase in 2005 First Quarter Net Income EPS, 16% Increase in First Quarter Operating Income EPS and Record Property-Liability Underwriting Profitability

Business Wire, April 20, 2005

Gross margin represents life and annuity premiums and contract charges and net investment income, less contract benefits and interest credited to contractholder funds. We use gross margin as a component of our evaluation of the profitability of Allstate Financial's life insurance and financial product portfolio.

Additionally, for many of our products, including fixed annuities, variable life and annuities, and interest-sensitive life insurance, the amortization of DAC and DSI is determined based on actual and expected gross margin. Gross margin is comprised of three components that are utilized to further analyze the business; they include the investment margin, benefit margin, and contract charges and fees. We believe gross margin and its components are useful to investors because they allow for the evaluation of income components separately and in the aggregate when reviewing performance. Gross margin, investment margin and benefit margin should not be considered as a substitute for net income and do not reflect the overall profitability of the business. Net income is the GAAP measure that is most directly comparable to these margins. Gross margin is reconciled to Allstate Financial's GAAP net income in the following table.

Three Months Ended
                                                    March 31,
                                           ---------------------------
($ in millions)                              Est. 2005        2004
                                           ------------- -------------

Life and annuity premiums and contract
 charges                                  $         521 $         496
Net investment income                               918           821
Periodic settlements and accruals on non-
 hedge derivative instruments                        19             6
Contract benefits                                  (411)         (395)
Interest credited to contractholder
 funds(1)                                          (552)         (456)
                                           ------------- -------------

Gross margin                                        495           472

Amortization of DAC and DSI                        (129)         (130)
Operating costs and expenses                       (160)         (145)
Income tax expense                                  (57)          (65)
Realized capital gains and losses,
 after-tax                                            1           (14)
DAC and DSI amortization relating to
 capital gains and losses, after-tax                (61)          (10)
Non-recurring increase in liability for
 future benefits                                    (22)            -
Reclassification of periodic settlements
 and accruals on non-hedge
 derivative instruments, after-tax                  (12)           (4)
Loss on disposition of operations,
 after-tax                                           (2)           (2)
Cumulative effect of change in accounting
 principle, after-tax                                 -          (175)
                                           ------------- -------------

Allstate Financial net income             $          53 $         (73)
                                           ============= =============

(1) Amortization of DSI was excluded from interest credited to
    contractholder funds for purposes of calculating gross margin.
    Amortization of DSI totaled $39 million in the first quarter of
    2005 and $14 million for the first quarter of 2004.