**EXHIBIT 10.1**

** **

**AMENDEDAND RESTATED SERVICE AND EXPENSE AGREEMENT**

** **

**Among**

 

**ALLSTATE INSURANCE COMPANY**

**And**

**THE ALLSTATE CORPORATION**

**And**

**Certain Affiliates**

 

This Amended and Restated Service and Expense Agreement (this “Agreement”)made and effective as of the 1st day of January 2004, among ALLSTATE INSURANCECOMPANY, an Illinois insurance company (“Allstate”), THE ALLSTATE CORPORATION,a Delaware corporation (“Allcorp”), and those affiliates of Allstate whosesignatures appear below (together with Allcorp, individually, an “Affiliate”and collectively, the “Affiliates”).

 

**WITNESSETH:**

 

**WHEREAS**, Allstate entered into a Service and Expense Agreement, dated as ofJanuary 1, 1999, with Allcorp and certain of its insurance company affiliatesand another Service and Expense Agreement, dated as of January 1, 2000, withcertain of its non-insurance affiliates, pursuant to which Allstate providedcertain services and facilities (collectively, the “Original Agreements”);

 

**WHEREAS**, the parties amended the Original Agreements on January 1, 2002 (the “AmendedAgreements”) and with the establishment of Allstate Investments, LLC,terminated the provision of investment management services by Allstate;

 

**WHEREAS**, the parties desire to consolidate and further amend the Amended Agreementsto include provision by the Affiliates of certain services and facilities toAllstate and to other Affiliates from time to time, subject to the terms andconditions hereinafter set forth, and to provide for possible futurealternative methods of costing for facilities and services provided pursuant tothis Agreement; and

 

**WHEREAS**, the parties desire to restate the Amended Agreements as amended.

 

**NOW, THEREFORE**, it is agreed as follows:

 

1.               Allstate shall furnish or cause to befurnished, at cost and in the same manner as such services and facilities arefurnished to its other affiliates, those categories of facilities and serviceslisted on Schedule A, including marketing, claims, underwriting and

 

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policyholder services. Additional specifications regarding these services and facilities, andthe basis upon which costs to be charged for these services and facilities aredetermined: (a) with respect to an Affiliate that is a property and casualtyinsurer, are listed on Exhibit A; (b) with respect to an Affiliate that is alife insurer, are listed on Exhibit B; and (c) with respect to an Affiliatethat is a non-insurance company, in accordance with Generally AcceptedAccounting Principles.  The relevantparties may from time to time agree that only certain of the listed servicesand facilities will be provided by the Providing Party (as defined below).

 

Services shall be performed in the nameof and on behalf of an Affiliate and in a manner intended to assure theseparate operating identity of the Affiliate. By way of example and without limiting the foregoing, (i) all formsutilized in connection with an Affiliate’s business and all correspondence withholders of insurance policies or annuity contracts (collectively, “policies”)shall bear its name and contain its address; (ii) all communications withpolicyholders shall be in such Affiliate’s name; and (iii) all bank accountsinto which such Affiliate’s funds are deposited or from which its funds arewithdrawn shall be such Affiliate’s accounts, except that premiums****collected on behalf of an Affiliate may be held by Allstatein a fiduciary capacity and transferred to such Affiliate as soon aspracticable subsequent to collection, but in any event within two (2) businessdays.

 

Services shall be provided in accord withall applicable state and federal legal and regulatory requirements, includingthose relating to privacy of customer information.

 

Theperformance of any party under this Agreement with respect to the business andoperations of an Affiliate shall at all times be subject to the direction andcontrol of the Board of Directors of each such Affiliate.  To the extent required by applicableregulation, such services with respect to any Affiliate shall be performedunder guidelines and procedures established by that Affiliate.  All service providers must comply with alllicensing provisions applicable to any Affiliate for which they are providingservices under this Agreement.

 

2.               Each Affiliate may furnish or cause to befurnished to Allstate or to any other Affiliate, at cost, the services andfacilities listed in Schedule A attached hereto or such other facilities andservices as the parties may from time to time agree in writing.  Any supplemental agreement whereby anyAffiliate provides services to or receives services from another Affiliateshall be subject to review where required under applicable insurance law.

 

3.               Costs are defined as the actual costs andexpenses incurred by the party providing the services (each, a “Providing Party”)which are attributable to the services and facilities provided under thisAgreement, such as: salaries and benefits; space rental; overhead expenseswhich may include items such as electricity, heat, and water; buildingmaintenance services; furniture and other office equipment; supplies andspecial equipment such as reference libraries, electronic data processingequipment and the like.

 

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4.               Charges for the above services and facilitiesshall be determined by Allstate in accordance with the general provisionscontained in Exhibits A through D.**** Exhibits A and B****are based upon NAIC expense classification and allocationguidelines**. **Inthe event such guidelines are amended, Exhibits A and B shall be deemed amendedto conform thereto.  Allstate’s CorporateController’s Department will exercise reasonable judgment in appropriatelyrevising these Exhibits, maintain proper documentation for revisions andcommunicate changes in allocation requirements to each party receiving services(each, a “Receiving Party”) in a timely manner. Exhibit C provides a narrativeoverview of the expense management process and Exhibit D provides certaindefinitions used throughout.  Cost basesshall be reviewed and adjusted on a prospective basis not less than annually toreflect the actual costs incurred.

 

5.               The amount charged to a Receiving Party shallnot exceed the cost to the Providing Party with respect to providing suchservice or facility.** **Notwithstanding this provision orany other provision contained in this Agreement to the contrary, subject toobtaining any required regulatory approvals, the parties may agree in writingthat one or more specific services or facilities may be provided on a basisother than cost.  Each Providing Partywill exercise reasonable judgment in periodically reviewing the expensesincurred and the percentage thereof allocated to each Receiving Party.  Any Receiving Party may request a review ofsuch expenses and their allocation and such review will occur promptlythereafter.  Any basis other than costthat is utilized shall be intended to reasonably relate to the cost of theservices or facilities involved.

 

6.               A Providing Party will charge each ReceivingParty****for all the services and facilitiesprovided pursuant to this Agreement****via themonthly expense allocation process,****and paymentswill be through the monthly intercompany settlement process. This process willbe completed by Allstate personnel in the most timely and effective methodavailable.

 

7.               The Providing Parties will maintain suchrecords as may be required relating to the accounting system of Allstate andthe Affiliates.  The Affiliatesunderstand and accept the financial records generated by this system, whichutilizes the concepts detailed in the addenda attached to Exhibits A and B**,** respectively.

 

All Affiliate records shall be maintainedin accordance with applicable insurance laws and accepted industrystandards.  Allstate shall maintainprocesses to provide backup records that will be available in the event theunderlying records are destroyed in a natural or manmade catastrophe ordisaster.

 

In the event and to the extent that thebooks and records of an Affiliate are maintained hereunder in an electronicformat, the following requirements shall apply. A computer terminal that is linked to the electronic system thatgenerates the electronic records that constitute such Affiliate’s books ofaccount as they relate to the business covered by this Agreement, shall be keptand maintained at such Affiliate’s principal

 

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office. During all normal business hours, there shall be ready availability andeasy access through such terminal (either directly by personnel of suchAffiliate’s domestic insurance regulator or indirectly with the aid of suchAffiliate’s employees) to the electronic media used to maintain the recordscomprising such Affiliate’s books of account hereunder.  The electronic records shall be in a readableform.  The Providing Parties shallmaintain format integrity and compatibility of the electronic records thatconstitute an Affiliate’s books of account hereunder.  If the electronic system that created suchrecords is to be replaced by a system with which the records would be incompatible,the Providing Parties shall convert such pre-existing records to a format thatis compatible with the new system.  TheProviding Parties shall maintain acceptable backup of the records constitutingan Affiliate’s books of account hereunder.

 

8.               Upon reasonable notice, and during normalbusiness hours, any Receiving Party shall be entitled to, at its own expense,inspect records that pertain to the computation of charges for the facilitiesor services provided pursuant to this Agreement.**** The Providing Parties shall at all timesmaintain correct and complete books, records and accounts of all services andfacilities furnished pursuant to this Agreement.  Each Receiving Party shall have unconditionalright of ownership of any records prepared on its behalf under thisAgreement.  The records maintained by aProviding Party in connection with services provided to an Affiliate under thisAgreement shall be subject to inspection and review by such Affiliate’sdomestic insurance regulator.

 

9.               Any employee of a Providing Party who isperforming duties hereunder at all times during the term of this Agreementshall be under the supervision and control of such Providing Party and shallnot be deemed an employee of any Receiving Party.

 

10.         The scope of, and the manner in which, aProviding Party provides facilities and services to a Receiving Party shall bereviewed periodically by the parties involved in each transaction under thisAgreement.  All services and facilitiesshall be of good quality and suitable for the purpose for which they areintended.

 

11.         No party shall assign its obligations orrights under this Agreement without the written consent of the other partiesand any required regulatory approvals. Allstate may terminate this Agreement in its entirety, and an Affiliatemay cancel its participation in the arrangements under this Agreement, each bygiving six months written notice to the other parties to this Agreement;provided, however, that in the event that the affiliate relationship ceases toexist with respect to an Affiliate, this Agreement shall terminate immediatelywith respect to such Affiliate.  Under nocircumstances will the initial term of this Amended and Restated Agreementexceed five (5) years from its effective date.

 

12.         All communications provided for hereundershall be in writing, and if to an insurance company Affiliate, mailed ordelivered to such Affiliate at its office at the address listed in suchAffiliate’s Statutory Annual Statement Blank, Attention: Secretary, or if toAllstate or Allcorp, mailed or delivered to its office at 3075 Sanders Road,

 

4

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Northbrook,Illinois 60062, Attention: Controller, or addressed to any party at the addresssuch party may hereafter designate by written notice to the other parties.

 

13.         This Agreement together with such amendmentsand supplements as may from time to time be executed in writing by the partiesin accordance with applicable insurance law, constitutes the entire agreementand understanding between the parties in respect of the transactionscontemplated hereby and supercedes any other agreements arrangements orunderstandings between the parties relating to the subject matter hereof.  Those service and administrative servicesagreements between and among any parties to this Agreement that are listed onExhibit E are terminated as of the effective date of this Amended and RestatedAgreement.

 

14.         Any unresolved dispute or difference betweenthe parties arising out of or relating to this Agreement, or the breachthereof, shall be settled by arbitration in accordance with the CommercialArbitration Rules of the American Arbitration Association and the ExpeditedProcedures thereof.  The award renderedby the Arbitrator shall be final and binding upon the parties, and judgmentupon the award rendered by the Arbitrator may be entered in any Court havingjurisdiction thereof.

 

15.         This Agreement may be executed by the partieshereto in any number of counterparts, and by each of the parties hereto inseparate counterparts, each of which counterparts, when so executed anddelivered, shall be deemed to be an original, but all such counterparts shalltogether constitute but one and the same instrument.

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to beeffective as of the day and year above written.

 

 
| ** ** | **The Allstate Corporation**    |
|------------|---------------------------------|
|       |                            |   |
|       | By:                             | /s/ Samuel H. Pilch |   |
|       | Samuel H. Pilch                 |
|       | Group Vice President            |
|       |                            |   |
| ** ** | **Allstate  Insurance Company** |
|       |                            |   |
|       | By:                             | /s/ Samuel H. Pilch |   |
|       | Samuel H. Pilch                 |
|       | Group Vice President            |
|       |                            |   |
| ** ** | **AFD, Inc.**                   |
|       |                            |   |
|       | By:                             | /s/ James P. Zils |   |
|       | James P. Zils                   |
|       | Assistant Treasurer             |

 

5

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| ** ** | **AFDW,  Inc.**                              |
|------------|----------------------------------------------|
|       |                                         |   |
|       | By:                                          | /s/ James P. Zils |   |
|       | James P. Zils                                |
|       | Treasurer                                    |
|       |                                         |   |
| ** ** | **ALFS,  Inc.**                              |
|       |                                         |   |
|       | By:                                          | /s/ James P. Zils |   |
|       | James P. Zils                                |
|       | Assistant Treasurer                          |
|       |                                         |   |
| ** ** | **Allstate  Assignment Company**             |
|       |                                         |   |
|       | By:                                          | /s/ James P. Zils |   |
|       | James P. Zils                                |
|       | Treasurer                                    |
|       |                                         |   |
|       | **Allstate  Assurance Company**              |
|       |                                         |   |
|       | By:                                          | /s/ James P. Zils |   |
|       | James P. Zils                                |
|       | Vice President and  Treasurer                |
|       |                                         |   |
| ** ** | **Allstate  California Holdings, LLC**       |
|       |                                         |   |
|       | By:                                          | /s/ James P. Zils |   |
|       | James P. Zils                                |
|       | Vice President and  Treasurer                |
|       |                                         |   |
| ** ** | **Allstate  California Insurance Company**   |
|       |                                         |   |
|       | By:                                          | /s/ James P. Zils |   |
|       | James P. Zils                                |
|       | Vice President and  Treasurer                |
|       |                                         |   |
| ** ** | **Allstate County Mutual Insurance Company** |
|       |                                         |   |
|       | By:                                          | /s/ James P. Zils |   |
|       | James P. Zils                                |
|       | Vice President and  Treasurer                |

 

6

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| ** ** | **Allstate  Distributors, LLC**                  |
|------------|--------------------------------------------------|
|       |                                             |   |
|       | By:                                              | /s/ James P. Zils |   |
|       | James P. Zils                                    |
|       | Assistant Treasurer                              |
|       |                                             |   |
| ** ** | **Allstate  Financial, LLC**                     |
|       |                                             |   |
|       | By:                                              | /s/ James P. Zils |   |
|       | James P. Zils                                    |
|       | Treasurer                                        |
|       |                                             |   |
| ** ** | **Allstate  Financial Advisors, LLC**            |
|       |                                             |   |
|       | By:                                              | /s/ James P. Zils |   |
|       | James P. Zils                                    |
|       | Treasurer                                        |
|       |                                             |   |
| ** ** | **Allstate  Financial Corporation**              |
|       |                                             |   |
|       | By:                                              | /s/ James P. Zils |   |
|       | James P. Zils                                    |
|       | Treasurer                                        |
|       |                                             |   |
| ** ** | **Allstate  Financial Services, LLC**            |
|       |                                             |   |
|       | By:                                              | /s/ James P. Zils |   |
|       | James P. Zils                                    |
|       | Treasurer                                        |
|       |                                             |   |
| ** ** | **Allstate Fire and Casualty Insurance Company** |
|       |                                             |   |
|       | By:                                              | /s/ James P. Zils |   |
|       | James P. Zils                                    |
|       | Vice President and Treasurer                     |
|       |                                             |   |
| ** ** | **Allstate Floridian Indemnity Company**         |
|       |                                             |   |
|       | By:                                              | /s/ James P. Zils |   |
|       | James P. Zils                                    |
|       | Vice President and Treasurer                     |

 

7

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| ** ** | **Allstate Floridian Insurance Company**             |
|------------|------------------------------------------------------|
|       |                                                 |   |
|       | By:                                                  | /s/ James P. Zils |   |
|       | James P. Zils                                        |
|       | Vice President and Treasurer                         |
|       |                                                 |   |
| ** ** | **Allstate Holdings, LLC**                           |
|       |                                                 |   |
|       | By:                                                  | /s/ James P. Zils |   |
|       | James P. Zils                                        |
|       | Treasurer                                            |
|       |                                                 |   |
| ** ** | **Allstate  Indemnity Company**                      |
|       |                                                 |   |
|       | By:                                                  | /s/ James P. Zils |   |
|       | James P. Zils                                        |
|       | Vice President and  Treasurer                        |
|       |                                                 |   |
| ** ** | **Allstate Insurance Company of Canada**             |
|       |                                                 |   |
|       | By:                                                  | /s/ Robert J. Young, Jr. |   |
|       | Robert J. Young, Jr.                                 |
|       | Chairman of the Board                                |
|       | Execution Date:                                      | 3/28/05 |   |
|       |                                                 |   |
| ** ** | **Allstate  International Insurance Holdings, Inc.** |
|       |                                                 |   |
|       | By:                                                  | /s/ James P. Zils |   |
|       | James P. Zils                                        |
|       | Treasurer                                            |
|       |                                                 |   |
| ** ** | **Allstate Investment Management Company**           |
|       |                                                 |   |
|       | By:                                                  | /s/ Catherine Winn |   |
|       | Catherine Winn                                       |
|       | Assistant Vice President  and Treasurer              |
|       |                                                 |   |
| ** ** | **Allstate  Investments, LLC**                       |
|       |                                                 |   |
|       | By:                                                  | /s/ James P. Zils |   |
|       | James P. Zils                                        |
|       | Treasurer                                            |
|            |                                                      |  |  |  |

 

8

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| ** ** | **Allstate Life Insurance Company**             |
|------------|-------------------------------------------------|
|       |                                            |   |
|       | By:                                             | /s/ James P. Zils |   |
|       | James P. Zils                                   |
|       | Treasurer                                       |
|       |                                            |   |
| ** ** | **Allstate Life Insurance Company of Canada**   |
|       |                                            |   |
|       | By:                                             | /s/ Robert J. Young, Jr. |   |
|       | Robert J. Young, Jr.                            |
|       | Chairman of the Board                           |
|       | Execution Date:                                 | 3/28/05 |   |
|       |                                            |   |
| ** ** | **Allstate Life Insurance Company of New York** |
|       |                                            |   |
|       | By:                                             | /s/ Samuel H. Pilch |   |
|       | Samuel H. Pilch                                 |
|       | Group Vice President and Controller             |
|       | Execution Date:                                 | 4/19/05 |   |
|       |                                            |   |
| ** ** | **Allstate  Motor Club, Inc.**                  |
|       |                                            |   |
|       | By:                                             | /s/ James P. Zils |   |
|       | James P. Zils                                   |
|       | Treasurer                                       |
|       |                                            |   |
| ** ** | **Allstate  Motor Club, Inc. of Canada**        |
|       |                                            |   |
|       | By:                                             | /s/ Jamin Ejupi |   |
|       | Jamin Ejupi                                     |
|       | Vice President                                  |
|       | Execution Date:                                 | 3/31/05 |   |
|       |                                            |   |
| ** ** | **Allstate New Jersey Insurance Company**       |
|       |                                            |   |
|       | By:                                             | /s/ James P. Zils |   |
|       | James P. Zils                                   |
|       | Vice President  and Treasurer                   |
|       |                                            |   |
| ** ** | **Allstate Non-Insurance Holdings, Inc.**       |
|       |                                            |   |
|       | By:                                             | /s/ James P. Zils |   |
|       | James P. Zils                                   |
|       | Treasurer                                       |
|            |                                                 |  |  |  |

 

9

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| ** ** | **Allstate North American Insurance Company**      |
|------------|----------------------------------------------------|
|       |                                               |   |
|       | By:                                                | /s/ James P. Zils |   |
|       | James P. Zils                                      |
|       | Vice President and Treasurer                       |
|       |                                               |   |
| ** ** | **Allstate  Property and Casualty Insurance**      |
| ** ** | **Company**                                        |
|       |                                               |   |
|       | By:                                                | /s/ James P. Zils |   |
|       | James P. Zils                                      |
|       | Vice President and Treasurer                       |
|       |                                               |   |
| ** ** | **Allstate Reinsurance Ltd.**                      |
|       |                                               |   |
|       | By:                                                |   /s/ James P. Zils |   |
|       | James P. Zils                                      |
|       | Vice President and Treasurer                       |
|       |                                               |   |
| ** ** | **Allstate Settlement Corporation**                |
|       |                                               |   |
|       | By:                                                | /s/ James P. Zils |   |
|       | James P. Zils                                      |
|       | Treasurer                                          |
|       |                                               |   |
| ** ** | **Allstate Texas Lloyd’s, Inc.**              |
|       |                                               |   |
|       | By:                                                |   /s/ James P. Zils |   |
|       | James P. Zils                                      |
|       | Vice President and Treasurer                       |
|       |                                               |   |
| ** ** | **American Heritage Life Insurance Company**       |
|       |                                               |   |
|       | By:                                                |   /s/ James P. Zils |   |
|       | James P. Zils                                      |
|       | Assistant Treasurer                                |
|       |                                               |   |
| ** ** | **American  Heritage Life Investment Corporation** |
|       |                                               |   |
|       | By:                                                | /s/ James P. Zils |   |
|       | James P. Zils                                      |
|       | Treasurer                                          |

 

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| ** ** | **American  Heritage Service Company**           |
|------------|--------------------------------------------------|
|       |                                             |   |
|       | By:                                              | /s/ James P. Zils |   |
|       | James P. Zils                                    |
|       | Treasurer                                        |
|       |                                             |   |
| ** ** | **Charter National Life Insurance Company**      |
|       |                                             |   |
|       | By:                                              | /s/ James P. Zils |   |
|       | James P. Zils                                    |
|       | Treasurer                                        |
|       |                                             |   |
|       |                                             |   |
| ** ** | **Concord Heritage Life Insurance Company Inc.** |
|       |                                             |   |
|       | By:                                              | /s/ Samuel H. Pilch |   |
|       | Samuel H. Pilch                                  |
|       | Group Vice President and Controller              |
|       | Execution Date:                                  | 5/27/05 |   |
|       |                                             |   |
| ** ** | **Deerbrook General Agency, Inc.**               |
|       |                                             |   |
|       | By:                                              | /s/ James P. Zils |   |
|       | James P. Zils                                    |
|       | Vice President and Treasurer                     |
|       |                                             |   |
| ** ** | **Deerbrook Insurance Company**                  |
|       |                                             |   |
|       | By:                                              | /s/ James P. Zils |   |
|       | James P. Zils                                    |
|       | Vice President and Treasurer                     |
|       |                                             |   |
| ** ** | **Encompass  Financial Group, LLC**              |
|       |                                             |   |
|       | By:                                              | /s/ James P. Zils |   |
|       | James P. Zils                                    |
|       | Treasurer                                        |
|            |                                                  |  |  |  |

 

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| ** ** | **Encompass Indemnity Company**               |
|------------|-----------------------------------------------|
|       |                                          |   |
|       | By:                                           | /s/ James P. Zils |   |
|       | James P. Zils                                 |
|       | Vice President and Treasurer                  |
|       |                                          |   |
| ** ** | **Encompass Insurance Company**               |
|       |                                          |   |
|       | By:                                           | /s/ James P. Zils |   |
|       | James P. Zils                                 |
|       | Vice President and Treasurer                  |
|       |                                          |   |
| ** ** | **Encompass Insurance Company of New Jersey** |
|       |                                          |   |
|       | By:                                           | /s/ James P. Zils |   |
|       | James P. Zils                                 |
|       | Vice President and Treasurer                  |
|       |                                          |   |
| ** ** | **E.R.J.  Insurance Group Incorporated**      |
|       |                                          |   |
|       | By:                                           | /s/ James P. Zils |   |
|       | James P. Zils                                 |
|       | Treasurer                                     |
|       |                                          |   |
| ** ** | **Fidelity International Company Limited**    |
|       |                                          |   |
|       | By:                                           | /s/ James P. Zils |   |
|       | James P. Zils                                 |
|       | Treasurer                                     |
|       |                                          |   |
| ** ** | **Fidelity International Insurance Company**  |
| ** ** | **Limited**                                   |
|       |                                          |   |
|       | By:                                           | /s/ James P. Zils |   |
|       | James P. Zils                                 |
|       | Treasurer                                     |
|       |                                          |   |
| ** ** | **First Colonial Insurance Company**          |
|       |                                          |   |
|       | By:                                           | /s/ James P. Zils |   |
|       | James P. Zils                                 |
|       | Assistant Treasurer                           |

 

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| ** ** | **Intramerica Life Insurance Company**    |
|------------|-------------------------------------------|
|       |                                      |   |
|       | By:                                       | /s/ Samuel H. Pilch |   |
|       | Samuel H. Pilch                           |
|       | Group Vice President and Controller       |
|       | Execution Date:                           | 4/19/05 |   |
|       |                                      |   |
| ** ** | **Ivantage  Select Agency, Inc.**         |
|       |                                      |   |
|       | By:                                       | /s/ James P. Zils |   |
|       | James P. Zils                             |
|       | Treasurer                                 |
|       |                                      |   |
| ** ** | **Kennett  Capital, Inc.**                |
|       |                                      |   |
|       | By:                                       | /s/ James P. Zils |   |
|       | James P. Zils                             |
|       | Treasurer                                 |
|       |                                      |   |
| ** ** | **Keystone State Life Insurance Company** |
|       |                                      |   |
|       | By:                                       | /s/ James P. Zils |   |
|       | James P. Zils                             |
|       | Treasurer                                 |
|       |                                      |   |
| ** ** | **Lincoln Benefit Life Company**          |
|       |                                      |   |
|       | By:                                       | /s/ James P. Zils |   |
|       | James P. Zils                             |
|       | Treasurer                                 |
|       |                                      |   |
|       |                                      |   |
| ** ** | **New Jersey Holdings, LLC**              |
|       |                                      |   |
|       | By:                                       | /s/ James P. Zils |   |
|       | James P. Zils                             |
|       | Treasurer                                 |
|            |                                           |  |  |  |

 

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| ** ** | **Northbrook Holdings, LLC**           |
|------------|----------------------------------------|
|       |                                   |   |
|       | By:                                    | /s/ James P. Zils |   |
|       | James P. Zils                          |
|       | Treasurer                              |
|       |                                   |   |
| ** ** | **Northbrook Indemnity Company**       |
|       |                                   |   |
|       | By:                                    | /s/ James P. Zils |   |
|       | James P. Zils                          |
|       | Vice President and Treasurer           |
|       |                                   |   |
| ** ** | **Northbrook  Services, Inc.**         |
|       |                                   |   |
|       | By:                                    | /s/ James P. Zils |   |
|       | James P. Zils                          |
|       | Treasurer                              |
|       |                                   |   |
| ** ** | **Pafco Insurance Company**            |
|       |                                   |   |
|       | By:                                    | /s/ Robert J. Young, Jr. |   |
|       | Robert J. Young, Jr.                   |
|       | Chairman of the Board                  |
|       | Execution Date:                        | 3/28/05 |   |
|       |                                   |   |
| ** ** | **Pembridge  America Inc.**            |
|       |                                   |   |
|       | By:                                    | /s/ James P. Zils |   |
|       | James P. Zils                          |
|       | Treasurer                              |
|       |                                   |   |
| ** ** | **Pembridge Insurance Company**        |
|       |                                   |   |
|       | By:                                    | /s/ Robert J. Young, Jr. |   |
|       | Robert J. Young, Jr.                   |
|       | Chairman of the Board                  |
|       | Execution Date:                        | 3/28/05 |   |
|       |                                   |   |
| ** ** | **Roadway Protection Auto Club, Inc.** |
|       |                                   |   |
|       | By:                                    | /s/ James P. Zils |   |
|       | James P. Zils                          |
|       | Treasurer                              |
|            |                                        |  |  |  |

 

14

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| ** ** | **Sterling  Collision Centers, Inc.** |
|------------|---------------------------------------|
|       |                                  |   |
|       | By:                                   | /s/ Steven T. Klodzinski |   |
|       | Steven T. Klodzinski                  |
|       | Treasurer                             |
|       |                                  |   |
| ** ** | **Surety Life Insurance Company**     |
|       |                                  |   |
|       | By:                                   | /s/ James P. Zils |   |
|       | James P. Zils                         |
|       | Treasurer                             |
|       |                                  |   |
| ** ** | **Tech-Cor,  LLC**                    |
|       |                                  |   |
|       | By:                                   | /s/ James P. Zils |   |
|       | James P. Zils                         |
|       | Treasurer                             |
|       |                                  |   |
|       |                                  |   |
| ** ** | **The Allstate Foundation**           |
|       |                                  |   |
|       | By:                                   | /s/ James P. Zils |   |
|       | James P. Zils                         |
|       | Treasurer                             |

 

 

Except as indicated above, executed by the abovecompanies on January 27, 2005.

 

15

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**Schedule A**

 

Eachof the attached supporting schedules depicts examples of services to beprovided, and are not intended by the parties to be all-inclusive.

 
| **Description of Service**                                             | ** ** | **Schedule** |
|------------------------------------------------------------------------|------------|--------------|
|                                                                   |       |         |
| Finance  Shared Services                                               |       | A-1          |
|                                                                   |       |         |
| Technical  Shared Service - Information Technologies and Field Support |       | A-2          |
|                                                                   |       |         |
| Human  Resource Shared Services                                        |       | A-3          |
|                                                                   |       |         |
| Law  and Regulation                                                    |       | A-4          |
|                                                                   |       |         |
| Corporate  Relations                                                   |       | A-5          |
|                                                                   |       |         |
| Marketing  and Research/Planning Center                                |       | A-6          |
|                                                                   |       |         |
| Print  Communication Center                                            |       | A-7          |
|                                                                   |       |         |
| Real  Estate & Construction / Facilities                           |       | A-8          |

 

----

 

Schedule A-1

Finance Shared Services

 

ProviderServices

 

•                  Accounting:   Provide actual monthly,quarterly and annual financial results. Specific services include producingfinancial statements and consulting on account coding, reporting, accountingresearch, shared service administration, expense allocation administrationaccounting governance and policies, and maintenance of any required centralaccounting computer system.

•                  Auditing:   Perform internal audits,which meet Generally Accepted Auditing Standards (GAAS) at intervals deemednecessary by Allstate.

•                  Claim Reserves: Provide risk management services including exposure analysis, riskretention and risk financing.

•                  Finance and Planning: Provide services related to the segment of Allstate’s annual operatingplan, long-term strategic plan and capital management allocation.

•                  Finance Innovation: Provide reporting and analysis templates and database support.

•                  General:  Provide financialadministrative services to ensure compliance with Service Provider’s corporatepolicies

•                  Purchasing:   Provide services related forgraphic arts and printing for internal and external communications.

•                  Tax:   Comply with Federal and Statetax filing requirements along with any tax research needed.

•                  Treasury:   Provide cash managementservices, including the pass through of all fees associated with setting up andmaintaining bank accounts.

•                  Procurement:  Strategic sourcing and theprocuring of commodities inclusive of contract negotiation.

 

17

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Schedule A-2

Technical Shared Service

 

ProviderServices

 

Servicesare divided into two categories: Information Technologies and Field Support,and include but are not limited to:

 

InformationTechnologies:

 

•                  Build and maintain systems necessary toprocess Affiliate’s business.

 

•                  Support of online networks and end-user/desktopapplications.

 

•                  Technical architecture design to includeapplication development and end-user equipment via Technology Asset Management.

 

•                  Enterprise office tools, software licenses,maintenance, upgrades, Microsoft Office and client software packages.

 

•                  Telecommunications support for businessapplications to include equipment sourcing and voice-mail solutions.

 

•                  Database production support and developmentfor mainframe and distributed applications.

 

•                  Enterprise Help Center for end-user problemresolution, equipment repair, system password resets.

 

**Field Support**

 

•                  Process and pay invoices, expense accounts,and related bills.

 

•                  Maintain necessary bank accounts. This wouldinclude, but would not be limited to, a depository account, refund account andinvestment accounts.

 

•                  Deposit and balance remittance from Affiliate’sclients.  Process payments against clientbalances in the billing database.

 

•                  Pay and track non-computer related fixedasset transactions.

 

•                  Utilize the SAP general ledger system forfinancial recording.

 

•                  Perform movement of funds from depositoryaccounts to investment accounts as needed via wire transfers or other means.

 

18

----

 

•                  System production, job scheduling and runsincluding technical support.

 

•                  Data processing support including datastorage, data communication solutions, and network availability.

 

19

----

 

Schedule A-3

Human Resource SharedServices

 

Provider Services

 

•                  Disburse compensation, distribute pay stubsand paychecks, remit payroll taxes, calculate and remit to vendors benefitcontributions (employer/employee), mail W-2’s, provide lines of expense detailsand create new company pay system. These services will be delivered to clientwithin agreed upon timeframes, and will meet the client’s quality requirements.

 

•                  Design compensation and incentive structure,provide support services for salary planning, incentive plan and paycommunications.  Provide Affiliate withcurrent market research/data to structure the most cost effective andcompetitive compensation plan.

 

•                  Provide technical interview with employees todetermine skills and tasks necessary to a particular job function.  This work will be used to create job descriptionsin order to obtain market data to determine competitive salary structures.

 

•                  Coordinate participation in technical jobfairs to attract qualified individuals, deliver new employee orientation,coordinate internship programs, provide sources of qualified candidates fortechnical recruiter and intern openings, and provide seven days of training totechnical recruiters.

 

•                  Provide timely coaching and guidance on humanresource related issues at Affiliate’s request. Accurately assess the appropriate Center of Excellence within the humanresource organization to assist in all problem resolutions.

 

•                  Provide Affiliate with the most competitivebenefits package for all employees. Conduct annual election to provide all employees with the option ofchanging benefit coverages.

 

•                  Provide all employees with required servicesfor any payroll or benefit inquiries or processing.

 

•                  Provide Affiliate with up to dateprofessional education programs and research. Provide access to just-in-time training.

 

•                  Provide Affiliate with accurate and timelypayroll stubs, checks and tax remittances.

 

20

----

 

Schedule A-4

Legal Services

 

ProviderServices

 

•                  The Law and Regulation Department willprovide legal advice, assist in the completion of business transactions,implement compliance programs, assist with dispute resolution and providepublic advocacy for Affiliate.

 

•                  Provide for legal advice, assist in thecompletion of business transactions, assist with dispute resolution and providefor public advocacy.

 

•                  All legal services will be performed in amanner that is in compliance with all applicable laws, regulations and Codes ofProfessional Responsibility.

 

21

----

 

# **Schedule A-5**

Corporate Relations

 

### **Provider Services**

 

Supportand implement communication strategies.

 

**•**                  Development of communication packages,scripts, and presentations.

 

•                  Sourcing and coordination of meetings withinternal and external customers.

 

•                  Media preparation for external use.

 

•                  Coordination of production and recognitionand/or special events as requested.

 

22

----

 

Schedule A-6

Marketing, Advertising, and Distribution

 

### **Provider Services**

 

•                  Providemarket research, perform database analysis to identify target customers andutilize focus groups to determine customer preferences.

 

•                  Support andimplement marketing strategies.

 

•                  Developmentof marketing strategies, coordination of print and/or media requirements.

 

•                  Sourcing ofmarketing vendors.

 

•                  Coordinationof media/print advertising.

 

•                  Assist inthe development and implementation of distribution policy and practices, andprovide other marketing and distribution support services.

 

•                  Upon requestof a life insurance Affiliate, Allstate shall assist such life insuranceAffiliate in preparation of marketing material, assist in the recruitment,supervision, and product training of agents, assist in the development andimplementation of distribution policy and practices, and provide othermarketing and distribution support services. However, all decisions regarding the approval of marketing material andthe acceptance, appointment or termination of agents shall be made by any suchlife insurance Affiliate.

 

23

----

 

Schedule A-7

Allstate Print Communication Center

Customer Document Processing

 

ProviderServices

 

Provideprint services for document processing to include: quick print, web andsheet-fed print and “laser print stuff mail”.

 

•                  Provide programming support and consultingalong with complete print project management.

 

•                  Provide for storage and retention ofdocuments and/or equipment.

 

24

----

 

Schedule A-8

Real Estate & Construction / Facilities

 

Provider Services

 

•                  Real EstatePortfolio Management.

 

•                  Capitalimprovement management and construction.

 

•                  Engineeringstandards.

 

•                  Building /Facility compliance to local and governmental codes.

 

•                  Support ofemployee moves and relocation.

 

•                  Housekeepingand Security

 

•                  All otherfacilities necessary for the conduct of the business.

 

25

----

 

# **EXHIBITA**

 

## **INTERCOMPANY SERVICE ANDEXPENSE ALLOCATION SUMMARY MATRIX**

### **ALLSTATE INSURANCE COMPANY AND PROPERTY &CASUALTY AFFILIATES**

 
| **Expense Line Item  Per U&I Exhibit***                                                                                                     | ** ** | **Expense  Classification Description****                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | ** ** | **Basis of  Expense  Allocation*****                                   |
|-------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------------------------------------------------------------------|
| 1.                    Claim  adjustment services |       | Investigation and  adjustment of policy claims for direct, reinsurance assumed and ceded  business.  The more significant  expenses and fees related to:  (1) all  outside costs associated with independent adjusters, (2) lawyers for legal  services in the defense, trial, or appeal of suits, (3) general court costs,  (4) medical testimony, (5) expert and lay witnesses, (6) medical examinations  for the purpose of trial and resolution of liability and (7) miscellaneous  (appraisals, surveys, detective reports, audits, character reports, etc.). |       | No allocation – direct  charge to company                         |
|                                                                                                                                            |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |       |                                                                   |
| 2.                    Commission  and brokerage  |       | All payments,  reimbursements and allowances (on direct and reinsurance assumed and ceded  business) to managers, agents, brokers, solicitors or other producer types.                                                                                                                                                                                                                                                                                                                                                                                                       |       | No allocation – direct  charge to company based on agent contract |

 

----

*                                         Expenseclassifications per the statutory Underwriting and Investment Exhibit, Part 3,Expenses.  Parties to the Agreement usethese twenty-one classifications to record their operating expensesincurred.  As described in Exhibit C,expenses for these classifications are also spread to three distinct functionalexpense groups:  loss adjustment, otherunderwriting and investment.

 

**                                  Thisdescription provides only a synopsis of the types of expenses for eachclassification.  Parties to the Agreementwill utilize the NAIC Property & Casualty Annual Statement InstructionsAppendix in expense handling.

 

***                           Beforeconsideration of any applicable reinsurance agreement.

 

26

----

 
| **Expense Line Item  Per U&I Exhibit***                                                                                                            | ** ** | **Expense Classification Description****                                                                                                                                                                                                                                                                                                                                                                                                                | ** ** | **Basis of Expense  Allocation*****                                                                                                                                              |
|--------------------------------------------------------------------------------------------------------------------------------------------------------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 4.                    Advertising                       |       | Typical expenses would  include services of:  (1) advertising  agents, (2) public relations counsel, (3) advertisements in newspapers,  periodicals, billboards, pamphlets and literature issued for advertising or  promotional purposes, (4) related paper and printing charges for advertising  purposes, (5) radio broadcasts, (6) prospect and mailing lists, (7) signs and  medals for agents and (8) television commercials and production. |       | Direct charge by  company where known.  Allocated items  handled as follows: See Exhibit A Appendix at B; C 1; D 1 and E 1 for  explanation of allocation by type of office |
|                                                                                                                                                   |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                    |       |                                                                                                                                                                             |
| 5.                    Boards,  bureaus and associations |       | Various dues,  assessments, fees and charges for items such as:  (1) underwriting boards, rating  organizations, statistical agencies, inspection and audit bureaus, (2)  underwriters’ advisory and service organizations, (3) accident and loss  prevention organizations, (4) claim organizations, (5) underwriting  syndicates, pools and associations, assigned risk plans.                                                              |       | No allocation - direct  charge to company                                                                                                                                        |
|                                                                                                                                                   |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                    |       |                                                                                                                                                                             |
| 6.                    Surveys  and underwriting reports |       | Costs to support the  business including:  (1) survey,  credit, moral hazard, character reports for underwriting, (2) appraisals for  underwriting, (3) fire records, (4) inspection and engineering billed  specifically, (5) medical examiner services relating to underwriting.                                                                                                                                                                 |       | See Exhibit A Appendix  at B; D 1; and E 1 for explanation of allocation by type of office                                                                                  |
|                                                                                                                                                   |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                    |       |                                                                                                                                                                             |
| 7.                    Audit of  assureds’ records  |       | Auditing fees and  expenses of independent auditors for auditing payroll and other premium  bases.                                                                                                                                                                                                                                                                                                                                                      |       | No allocation - direct  charge to company                                                                                                                                        |
|                                                                                                                                                   |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                    |       |                                                                                                                                                                             |
| 8.                    Salary and  related items         |       | Salaries, bonus,  overtime, contingent compensation, and other compensation of employees.  This would include commission and brokerage  to employees when the activities for which the commission is paid are a part  of their duties as employees.                                                                                                                                                                                                |       | See Exhibit A Appendix  at A; B; C 1, 2; D 1, 2, 3, 4; E 2, 5; and F 1, 2, 3, 4 for  explanation by type of office                                                     |

 

27

----

 
| **Expense Line Item  Per U&I Exhibit***                                                                                                         | ** ** | **Expense Classification Description****                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | ** ** | **Basis of Expense  Allocation*****                                                                                          |
|-----------------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------------------------------------------------------------------------------------------------------------------------|
| 9.                    Employee relations and welfare |       | This  category includes a variety of pension and insurance benefits for employees,  as well as some miscellaneous expenditures.   The first area entails:  (1) cost  of retirement insurance, pensions or other retirement allowances and funds  irrevocably devoted to the payment of pensions or other employees’ benefits,  and (2) accident, health and hospitalization insurance, group life insurance  and workers’ compensation insurance.   The miscellaneous category may include the following items (1)  training and welfare; (2) physical exams for employees or candidates; (3)  gatherings, outings and entertainment; (4) education; and (5) donations to or  on behalf of employees. |       | See  Exhibit A Appendix at A; B; C 1, 2; D 1, 2, 3, 4; E 2, 5; and F 1,  2, 3, 4 for explanation by type of office |
|                                                                                                                                                |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |       |                                                                                                                         |
| 10.              Insurance                                                         |       | Costs of insurance for  employee/agent fidelity or surety bonds, public liability, burglary and  robbery, automobiles and office contents.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |       | See Exhibit A Appendix  at D 1; E 1; and F 1, 2, 3, 4 for explanation by type of office                                      |
|                                                                                                                                                |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |       |                                                                                                                         |
| 11.              Directors  fees                                                   |       | Amounts relate to fees  and other compensation paid to directors for attending Board or committee  meetings.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |       | Direct charge to company                                                                                                     |
|                                                                                                                                                |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |       |                                                                                                                         |
| 12.              Travel and  travel items                                          |       | Major expense  subcategories include:  (1)  transportation, hotel, meals, telephone and other related costs associated  for employees traveling, (2) expense for transfer of employees,  (3) automobile rental and license plates, depreciation, repairs and  other operating costs of automobiles (4) transportation, hotel and  meals/entertainment of guests, (5) dues and subscriptions to accounting,  legal, actuarial or similar societies and associations.                                                                                                                                                                                                                                                  |       | See Exhibit A Appendix  at A; B; C 1, 2; D 1, 2, 3, 4; E 2, 5; and F 1, 2, 3, 4 for  explanation by type of office |
|                                                                                                                                                |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |       |                                                                                                                         |
| 14.              Equipment                                                         |       | Rent and repair of  furniture and equipment, include the related depreciation charges.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |       | See Exhibit A Appendix  at A; B; C 1, 2; D 1, 2, 3, 4; E 1, 2, 3, 4; and F 1, 2, 3, 4                              |

 

28

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| **Expense Line Item  Per U&I Exhibit***                                                                                           | ** ** | **Expense Classification Description****                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | ** ** | **Basis of Expense  Allocation*****                                                        |
|---------------------------------------------------------------------------------------------------------------------------------------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------------------------------------------------------------------------------|
| 15.              Cost or  depreciation of EDP equipment and software |       | Rent and repair of  processing equipment and non-operating systems electronic data software,  including the related depreciation and amortization.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |       | Charged to  companies.  See Exhibit A, Appendix at  A; B; C2; D1, 2, 3, 4             |
|                                                                                                                                  |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |       |                                                                                       |
| 16.              Printing  and stationery                            |       | Generally, printing,  stationery and office supplies (paper stock, printed forms and manuals,  Photostat copies, pens and pencils, etc.).   Also included would be policies and policy forms, in-house employee  publications, books, newspapers and periodicals including, tax and legal  publications and services.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |       | See Exhibit A Appendix  at A; B; C 1, 2; D 1, 2, 3, 4; E 2, 5; and F 1, 2, 3, 4  |
|                                                                                                                                  |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |       |                                                                                       |
| 17.              Postage, telephone, etc.                            |       | All  express, freight and cartage expenses, postage, and telephone.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |       | See  Exhibit A Appendix at A; B; C 1, 2; D 1, 2, 3, 4; E 2, 5; and F 1,  2, 3, 4 |
|                                                                                                                                  |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |       |                                                                                       |
| 18.              Legal  & auditing                               |       | Legal fees and  retainers excluding loss and salvage related, auditing fees of independent  auditors for examining records, services of tax experts and counsel,  custodian fees, notary and trustees’ fees.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |       | See Exhibit A Appendix  at A; D 2, 3, 4; E 2; and F 1, 2                              |
|                                                                                                                                  |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |       |                                                                                       |
| 20.              Taxes,  licenses and fees                           |       | Several categories  comprise this expense classification:   (1) state and local insurance taxes; (2) Insurance Department licenses  and fees; (3) payroll taxes; and (4) all other, excluding real estate and  federal income.  Taxes, licenses and  fees based on premiums and payments to state industrial commissions for  administration of workers’ compensation or other state benefit acts would be  in the first classification.  Expenses  relating to the Insurance Department would include agents’ licenses, filing  fees, certificates of authority and fees and expenses of examination.  Payroll related expenses normally include  old age benefit and unemployment insurance taxes.  More significant expenses in the all other  section would be financial statement publication fees, legally mandated  advertising and personal property and state income taxes. |       | No allocation - direct  charge to company                                                  |

 

29

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| **Expense Line Item  Per U&I Exhibit***                                                                                       | ** ** | **Expense Classification Description****                                                                                                                                                                                                      | ** ** | **Basis of Expense  Allocation*****                                                                                                                                                 |
|-----------------------------------------------------------------------------------------------------------------------------------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 21.              Real  estate expenses                           |       | Salaries, wages and  other compensation of maintenance workers in connection with owned real  estate.  Other expense items assigned  to this category may also include expenses associated with: operations;  maintenance and insurance. |       | Direct charges by  company are based on square footage.  Allocated expenses handled per Exhibit A Appendix at A; B; C 1, 2; D 1,  2, 3, 4; E 1, 2, 3, 4; and F 1, 2, 3, 4 |
|                                                                                                                              |       |                                                                                                                                                                                                                                          |       |                                                                                                                                                                                |
| 22.              Real  estate taxes                              |       | Taxes, licenses and  fees on owned real estate.                                                                                                                                                                                               |       | Direct charges by  company are based on square footage.  Allocated expenses handled per Exhibit A Appendix at A; B; C 1, 2; D 1,  2, 3, 4; E 1, 2, 3, 4; and F 1, 2, 3, 4 |
|                                                                                                                              |       |                                                                                                                                                                                                                                          |       |                                                                                                                                                                                |
| 24.              Aggregate  write-ins for miscellaneous expenses |       | Items for which no  pre-printed statutory line exists.   Description/title shown in Part 3 will vary based on need.                                                                                                                      |       | Cost Management will  develop the most appropriate allocation basis and maintain documentation                                                                                      |

 

30

----

 
| **Expense Line Item  Per General  Expense Exhibit***                                    | ** ** | **Expense Classification Description****                                                      | ** ** | **Basis of Expense  Allocation***** |
|-----------------------------------------------------------------------------------------|------------|-----------------------------------------------------------------------------------------------|------------|-------------------------------------|
| 6.5         Collection and bank service charges |       | Collection  charges on checks and drafts and charges for checking accounts and money  orders. |       |                                |

 

**Note**:   Expense classification forlines 3 and 23 are not applicable for the Allstate Group.

 

31

----

 

# **APPENDIXTO EXHIBIT A**

 

**INTERCOMPANYSERVICE AND EXPENSE ALLOCATION SUMMARY MATRIX**

**ALLSTATEINSURANCE COMPANY AND AFFILIATES**

 

A.           Offices 001(Corporate Home Office), 191 (Ivantage Product), 195 (TechnologySupport/Appservice), 198 (Broker Dealer), 200 (Procurement Governance), 201Allstate Investments, LLC), 203 (Research Center Shared Services), 204 (HumanResources Shared Service), 205 (Corporate Relations Shared Services), 206(Technical Shared Services), 207 (Law and Regulation Shared Services),208 (Finance Shared Services) 209 (Market Brand Development), 211(Facility Services), 212 (Real Estate & Construction), and 304 (LitigationServices) factors are based on Service Agreements.  These Agreements are written documents detailingservices and associated costs performed by the provider for the benefit of therecipient and are generated and approved through extensive discussions betweenservice providers and service recipients.

 

B.             Support Centers, Data Centers, and OutputProcessing Centers (OPC) factors are based on Stat Policies in Force,Statistical Data and Time and Effort studies that roll-up to the SupportCenter/Data Center/OPC.

 

C.             P&C Head Office (Office 032) factors arebased on:

 

1.                                       Compensation

2.                                       Time and effort studies

3.                                       Statistical data

 

D.  Regional Office factors are based on thefollowing methodologies:

 

1.                                       Compensation

2.                                       Time and effort studies

3.                                       System capacity studies

4.                                       Statistical data

 

E.  Regional Commercial Centers factors are basedon the following methodologies:

 

1.                                       Compensation

2.                                       Time and effort studies

3.                                       System capacity studies

4.                                       Statistical data

 

F.  Claim Service Areas factors are based on thefollowing:

 

33

----

 

1.                                       Headcount (Property vs. Auto)

2.                                       Notice counts

3.                                       Incurred loss

4.                                       Claim legal matter counts

5.                                       Statistical data

 

34

----

 

**EXHIBIT B**

## **INTERCOMPANY SERVICE ANDEXPENSE ALLOCATION SUMMARY MATRIX**

### **ALLSTATE LIFE INSURANCE COMPANY AND LIFEAFFILIATES**

 
| **Expense Line Item  Per General  Expense Exhibit 2***                                                                                   | ** ** | **Expense  Classification Description****                                                                                                                                                                                                                                                                                                                                                    | ** ** | **Basis of  Expense  Allocation*****                                                                                                                                          |
|------------------------------------------------------------------------------------------------------------------------------------------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 1.                    Rent                |       | Rent for all premises  occupied by the company, including any adequate rent for occupancy of its own  buildings, in whole or in part, except to the extent that allocation to other  expense classifications on a functional basis is permitted and used.                                                                                                                                    |       | Direct charges by  company are based on square footage. Allocated expenses are handled per  Exhibit B Appendix at A; B 1, 2; C 1, 2 and D 1, 2                                |
|                                                                                                                                     |       |                                                                                                                                                                                                                                                                                                                                                                                         |       |                                                                                                                                                                          |
| 2.                    Salaries  and wages |       | Salaries and wages,  bonuses and incentive compensation to employees, overtime payments,  continuation of salary during temporary short-term absences, dismissal  allowances, payments to employees while in training and other compensation to  employees not specifically designated herein, except to the extent that  allocation to their expense classifications is permitted and used. |       | Agents’ compensation  is a direct charge to company. The remaining expenses in this category are  allocated per Exhibit B Appendix at A; B 1, 2; C 1, 2; and D 1, 2 |
|                                                                                                                                     |       |                                                                                                                                                                                                                                                                                                                                                                                         |       |                                                                                                                                                                          |
|                                                                                                                                     |       | Contributions by  company for pension and total permanent disability benefits, life insurance  benefits, accident, health, hospitalization, medical, surgical, or other                                                                                                                                                                                                                      |       | See Exhibit B Appendix  at A; B 1, 2; C 1, 2; and                                                                                                                             |

 

----

*                                         Expenseclassifications per Statutory Exhibits 2 & 3.  Parties to the Agreement use theseclassifications to record their operating expenses incurred.  This expense data is also captured by fourdistinct functional expense groups: life, accident and health, all other lines of business and investment.

 

**                                  Thesedescriptions were written using the NAIC Life Annual StatementInstructions.  Refer to this publicationfor a complete breakdown of the expenses included in each line item.

 

***                           Beforeconsideration of any applicable reinsurance agreement.

 

35

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|  

3.11        Contributions  for benefit plans for employees |   | temporary disability  benefits under a self-administered or trusteed plan or for the purchase of  annuity or insurance contracts. Appropriation of any other assignment of  funds by company in connection with any benefit plan of the types enumerated  herein.                                                                                                                                                                         |   | D 1, 2                                                                                                                                                                   |
|-------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                  |   |                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                                                                                                                                                     |
| 3.12        Contributions  for benefit plans for agents            |   | Contributions by  company for pension and total permanent disability benefits, life insurance  benefits, accident, health, hospitalization, medical, surgical, or other  temporary disability benefits under a self-administered or trusteed plan or  for the purchase of annuity or insurance contracts. Appropriation of any  other assignment of funds by company in connection with any benefit plan of  the types enumerated herein. |   | See Exhibit B Appendix  at C 1, 2; and D 1, 2                                                                                                                       |
|                                                                                                  |   |                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                                                                                                                                                     |
| 3.21        Payments  to employees under non- funded benefit plans |   | Payments by company  under a program for pension and total and permanent disability benefits,  death benefits, accident, health, hospitalization, medical, surgical or other  temporary disability benefits where no contribution or appropriation is made  prior to the payment of the benefit.                                                                                                                                          |   | No allocation - direct  charge to company                                                                                                                                |
|                                                                                                  |   |                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                                                                                                                                                     |
| 3.22        Payments  to agents under non-funded benefit plans     |   | Payments by company  under a program for pension and total and permanent disability benefits,  death benefits, accident, health, hospitalization, medical, surgical or other  temporary disability benefits where no contribution or appropriation is made  prior to the payment of the benefit.                                                                                                                                          |   | No allocation - direct  charge to company                                                                                                                                |
|                                                                                                  |   |                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                                                                                                                                                     |
| 3.31        Other  employee welfare                                |   | The net periodic  postretirement benefit cost, meals to employees, contribution to employee  associations or clubs, dental examinations, medical dispensary or  convalescent home expenses for employees.                                                                                                                                                                                                                                 |   | Agents’ compensation  is a direct charge to company. The remaining expenses in this category are allocated  per Exhibit B Appendix at A; B 1, 2; C 1, 2; and D 1, 2 |

 

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| **Expense Line Item  Per General  Expense Exhibit***                                                                                        | ** ** | **Expense Classification Description****                                                                                                                                                               | ** ** | **Basis of Expense  Allocation*****                                                                                                                           |
|---------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.32        Other  agent welfare                                                                         |       | The net periodic  postretirement benefit cost, meals to employees, contribution to employee  associations or clubs, dental examinations, medical dispensary or  convalescent home expenses for agents. |       | Agents’ compensation  is a direct charge to company. The remaining expenses in this category are  allocated per Exhibit B Appendix at C 1, 2; and D 1, 2 |
|                                                                                                                                        |       |                                                                                                                                                                                                   |       |                                                                                                                                                          |
| 4.1              Legal fees  and expenses                                  |       | Court costs, penalties  and all fees or retainers for legal services or expenses in connection with  matters before administrative or legislative bodies.                                              |       | No allocation - direct  charge to company                                                                                                                     |
|                                                                                                                                        |       |                                                                                                                                                                                                   |       |                                                                                                                                                          |
| 4.2              Medical  examination fees                                 |       | Fees to medical  examiners in connection with new business reinstatements, policy changes and  applications for employment.                                                                            |       | See Exhibit B Appendix  at D 1, 2                                                                                                                             |
|                                                                                                                                        |       |                                                                                                                                                                                                   |       |                                                                                                                                                          |
| 4.3              Inspection  report fees                                   |       | Fee for inspection  reports in connection with new business, reinstatements, policy changes and  applications for employment. Cost of services furnished by the Medical  Information Bureau.           |       | See Exhibit B Appendix  at D 1, 2; C                                                                                                                          |
|                                                                                                                                        |       |                                                                                                                                                                                                   |       |                                                                                                                                                          |
| 4.4              Fees of  public accountants and consulting actuaries      |       | Include expenses  relating to this category except exclude examination fees made by State  Departments and internal audits by company employees.                                                       |       | See Exhibit B Appendix  at A; B 1, 2; C 1, 2; and D 1, 2                                                                                                      |
|                                                                                                                                        |       |                                                                                                                                                                                                   |       |                                                                                                                                                          |
| 4.6              Expense of  investigation and settlement of policy claims |       | Payment to other than  employees of fees and expenses for the investigation, litigation and  settlement of policy claims.                                                                              |       | See Exhibit B Appendix  at D 1, 2                                                                                                                             |

 

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| **Expense Line Item  Per General  Expense Exhibit***                                                                               | ** ** | **Expense Classification Description****                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | ** ** | **Basis of Expense  Allocation*****                      |
|------------------------------------------------------------------------------------------------------------------------------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|----------------------------------------------------------|
| 5.1              Traveling  expenses                              |       | Traveling expense of  officers, other employees, directors and agents, including hotel, meals,  telephone, telegraph and postage charges incurred while traveling. Also  include amounts allowed employees for use of their own cars on company  business and the cost of, or depreciation on, and maintenance and running  expenses of company-owned automobiles.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |       | See Exhibit B Appendix  at A; B 1, 2; C 1, 2; and D 1, 2 |
|                                                                                                                               |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |       |                                                     |
| 5.2              Advertising                                      |       | Newspaper, magazine  and trade journal advertising for the purpose of solicitation and  conservation of business. Billboard, sign and telephone directory, television,  radio broadcasting and motion picture advertising, excluding subjects dealing  wholly with health and welfare. All canvassing or other literature, such as  pamphlets, circulars, leaflets, policy illustration forms and other sales  aids, printed material, etc., prepared for distribution to the public by  agents or through the mail for the purposes of solicitation and conservation  of business. All calendars, blotters, wallets, advertising novelties, etc.,  for distribution to the public. Printing, paper stock, etc. in connection  with advertising. Prospect and mailing lists when used for advertising  purposes. Fees and expenses of advertising agencies related to advertising. |       | See Exhibit B Appendix  At A, B 1, 2; C 1; and D 1, 2    |
|                                                                                                                               |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |       |                                                     |
| 5.3              Postage,  express, telegraph and telephone       |       | Freight and cartage,  cables, radiograms and teletype. Also charges for use, installation and  maintenance of related equipment if not included elsewhere.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |       | See Exhibit B Appendix  at A; B 1, 2; C 1, 2; and D 1, 2 |
|                                                                                                                               |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |       |                                                     |
| 5.4              Printing and  stationery                         |       | Policy forms, riders,  supplementary contracts, applications, etc., rate books, instruction manuals,  punch-cards, house organs, and all other printed material which is not  required to be included in any other expense classification. Office supplies  and pamphlets on health, welfare and education subjects. Also include annual  reports to policyholders and stockholders if not included in Line 5.2.                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |       | See Exhibit B Appendix  at A; B 1, 2; C 1, 2; and D 1, 2 |
|                                                                                                                               |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |       |                                                     |
| 5.5              Cost or  depreciation of furniture and equipment |       | The cost or  depreciation of office machines except for such charges as may be reported in  Line 5.3.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |       | See Exhibit B Appendix  at A; B 1, 2; C 1, 2; and D 1, 2 |

 

38

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| **Expense Line Item  Per General  Expense Exhibit***                                                                                  | ** ** | **Expense Classification Description****                                                                                                                                                                                                                                                                                                                                               | ** ** | **Basis of Expense  Allocation*****                                                                              |
|---------------------------------------------------------------------------------------------------------------------------------------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------------------------------------------------------------------------------------------------------------|
| 5.6              Rental of equipment                                 |       | Rental of office  machines except for such charges as may be reported in Line 5.3.                                                                                                                                                                                                                                                                                                     |       | See Exhibit B Appendix  at A; B 1, 2; C 1, 2; and D 1, 2                                                         |
|                                                                                                                                  |       |                                                                                                                                                                                                                                                                                                                                                                                   |       |                                                                                                             |
| 5.7              Cost or  depreciation of EDP equipment and software |       | Include cost,  depreciation and amortization for EDP equipment and operating and  non-operating systems software.                                                                                                                                                                                                                                                                      |       | Charged to Companies  See Exhibit B at A; B; C                                                                   |
|                                                                                                                                  |       |                                                                                                                                                                                                                                                                                                                                                                                   |       |                                                                                                             |
| 6.1              Books and  periodicals                              |       | Books, newspapers,  periodicals, etc., including investment tax and legal publications and  information services, and including all such material for company’s law  department and libraries.                                                                                                                                                                                    |       | See Exhibit B Appendix  at A; B 1, 2; C 1, 2; and D 1, 2                                                         |
|                                                                                                                                  |       |                                                                                                                                                                                                                                                                                                                                                                                   |       |                                                                                                             |
| 6.2              Bureau and  association fees                        |       | All dues and  assessments of organizations of which the company is a member. All dues for  employees’ and agents’ memberships on the company’s behalf.                                                                                                                                                                                                                  |       | No allocation - direct  charge to company                                                                        |
|                                                                                                                                  |       |                                                                                                                                                                                                                                                                                                                                                                                   |       |                                                                                                             |
| 6.3              Insurance,  except on real estate                   |       | Premiums for Workers’  Compensation, burglary, holdup, forgery and the public liability insurance,  fidelity or surety bonds, insurance on contents of company-occupied buildings  and all other insurance or bonds not included elsewhere.                                                                                                                                       |       | See Exhibit B Appendix  at A; B 1, 2; C 1, 2; and D 1, 2                                                         |
|                                                                                                                                  |       |                                                                                                                                                                                                                                                                                                                                                                                   |       |                                                                                                             |
| 6.4              Miscellaneous  losses                               |       | Uncollectible losses  due to deficiencies, defalcations, robbery, or forgery, except those offset  by bonding companies’ payments. Also include Worker’s Compensation benefits  not covered by insurance and other uninsured losses not included elsewhere.                                                                                                                  |       | Primarily a direct  charge to company. Remaining expenses are allocated per Exhibit B Appendix at  A; and D 1, 2 |
|                                                                                                                                  |       |                                                                                                                                                                                                                                                                                                                                                                                   |       |                                                                                                             |
| 6.5              Collection  and bank service charges                |       | Collection charges on  checks and drafts and charges for checking accounts and money orders.                                                                                                                                                                                                                                                                                           |       | See Exhibit B Appendix  at A; and D 1, 2                                                                         |
|                                                                                                                                  |       |                                                                                                                                                                                                                                                                                                                                                                                   |       |                                                                                                             |
| 6.6              Sundry  general expenses                            |       | Direct expense of  local agency meetings, luncheons and dinners, tabulating service rendered by  outside organizations, gifts and donations. Any portion of commissions and  expense allowances on reinsurance assumed for group business which represents  specific reimbursement of expenses. Reimbursement to another insurer for  expense of jointly underwritten group contracts. |       | See Exhibit B Appendix  at A; B 1, 2; C 1, 2; and D 1, 2                                                         |

 

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| **Expense Line Item  Per General  Expense Exhibit***                                                                                     | ** ** | **Expense Classification Description****                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | ** ** | **Basis of Expense  Allocation*****                                                                                                                  |
|------------------------------------------------------------------------------------------------------------------------------------------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------|
| 6.7              Group  service and administration fees                 |       | Administration fees,  service fees, or any other form of allowance, reimbursement of expenses, or  compensation (other than commissions) to agents, brokers, applicants,  policyholders or third parties in connection with the solicitation, sale, issuance,  service and administration of group business.                                                                                                                                                                                                                                            |       | See Exhibit B Appendix  at D 1, 2; and B                                                                                                             |
|                                                                                                                                     |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |       |                                                                                                                                                 |
| 6.8              Reimbursements  by uninsured accident and health plans |       | Report as a negative  amount administrative fees, direct reimbursement of expenses, or other similar  receipts or credits attributable to uninsured accident and health plans and  the uninsured portion of partially insured accident and health plans.                                                                                                                                                                                                                                                                                                |       | No allocation - direct  charge to company                                                                                                            |
|                                                                                                                                     |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |       |                                                                                                                                                 |
| 7.1              Agency  expense allowance                              |       | All bona fide  allowance for agency expense, but not allowances constituting additional  compensation.                                                                                                                                                                                                                                                                                                                                                                                                                                                  |       | No allocation - direct  charge to company                                                                                                            |
|                                                                                                                                     |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |       |                                                                                                                                                 |
| 7.2              Agents’  balances charged off                     |       | Agents’ balances  charged off less any amounts recovered during the year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |       | No allocation - direct  charge to company                                                                                                            |
|                                                                                                                                     |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |       |                                                                                                                                                 |
| 7.3              Agency  conferences other than local meetings          |       | Cost of banquets and  rental of meeting rooms. Expenses of all persons traveling to conferences and  their expenses at conferences.                                                                                                                                                                                                                                                                                                                                                                                                                     |       | Primary dollars are a  direct charge to company. The remaining expenses in this category are  allocated per Exhibit B Appendix at C 1; and D 1       |
|                                                                                                                                     |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |       |                                                                                                                                                 |
| 9.1              Real  estate expenses                                  |       | The cost of repairs,  maintenance, service, and operation of all real estate properties including  insurance whether occupied by the company or not; salaries and other  compensation of managing agents and their employees; expenses incurred in  connection with rental of such properties; legal fees specifically associated  with real estate transactions other than sale; rent, salaries and wages, and  other direct expenses of any branch of Home Office until engaged solely in  real estate work (not real estate and mortgages combined). |       | Direct charges by  company are based on square footage. Allocated expenses are handled per  Exhibit B Appendix at A; B 1, 2; C 1, 2; and D 1, 2 |

 

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| **Expense Line Item  Per General  Expense Exhibit***                                                                          | ** ** | **Expense Classification Description****                                                                                                                                                                        | ** ** | **Basis of Expense  Allocation*****                                                            |
|-------------------------------------------------------------------------------------------------------------------------------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------------------------------------------------------------------------------------------|
| 9.2              Investment  expenses not included elsewhere |       | Only items for which  no specific provisions has been made elsewhere, e.g., contributions or  assessments for bondholders’ protective committees, fees of investment  counsel, custodian and trustee fees. |       | See Exhibit B Appendix  at A; and D 1, 2                                                       |
|                                                                                                                          |       |                                                                                                                                                                                                            |       |                                                                                           |
| 9.3              Aggregate  write-ins for expenses           |       | Items for which no  pre-printed statutory line exists. Description title shown in Exhibit 2 will  vary based on need.                                                                                           |       | Cost Management will  develop the most appropriate allocation basis and maintain documentation |

 

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| **Expense Line Item  Per Taxes,  Licenses and Fees  Exhibit 3***                                                                                                   | ** ** | **Expense Classification Description****                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | ** ** | **Basis of Expense  Allocation*****                                                                                                                  |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------|
| 1.                    Real  estate taxes                            |       | Those taxes directly  assessed against property owned by the company. Canadian and other foreign  taxes should be included appropriately.                                                                                                                                                                                                                                                                                                                                                                             |       | Direct charges by  company are based on square footage. Allocated expenses are handled per  Exhibit B Appendix at A; B 1, 2; C 1, 2; and D 1, 2 |
|                                                                                                                                                               |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |       |                                                                                                                                                 |
| 2.                    State  insurance department licenses and fees |       | Assessments to defray  operating expenses of any state insurance department. Canadian and other  foreign taxes should be included appropriately. Fees for examinations by  state departments.                                                                                                                                                                                                                                                                                                                         |       | No allocation - direct  charge to company                                                                                                            |
|                                                                                                                                                               |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |       |                                                                                                                                                 |
| 3.                    State  taxes on premiums                      |       | State taxes based on  policy reserves, if in lieu of premium taxes. Canadian and other foreign  taxes should be included appropriately. Any portion of commissions or  allowances on reinsurance assumed for group business which represents  specific reimbursement of premium taxes. Deduct any portion of commissions or  allowances on reinsurance ceded for group business which represents specific  reimbursement of premium taxes.                                                                            |       | No allocation - direct  charge to company                                                                                                            |
|                                                                                                                                                               |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |       |                                                                                                                                                 |
| 4.                    Other  state taxes                            |       | Assessments of state  industrial or other boards for operating expenses or for benefits to sick  unemployed persons in connection with disability benefit laws or similar  taxes levied by states. Canadian and other foreign taxes are to be included  appropriately. Advertising required by law, regulation or ruling, except in  connection with investments. State sales taxes, if company does not exercise  option of including such taxes with the cost of goods and services purchased.  State income taxes. |       | No allocation - direct  charge to company                                                                                                            |
|                                                                                                                                                               |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |       |                                                                                                                                                 |
| 5.                    U.S.  Social Security taxes                   |       | Company’s contribution  is based on the current tax rate, which is applied to all wages, salary or  compensation entered on the employees earning record and federal unemployment  tax.                                                                                                                                                                                                                                                                                                                          |       | See Exhibit B Appendix  at A; B 1, 2; C 1, 2; and D 1, 2                                                                                             |

 

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| 6.                    All other  taxes |   | Guaranty fund  assessments and taxes of Canada or of any other foreign country not  specifically provided for elsewhere. Sales taxes, other than state sales  taxes, if company does not exercise option of including such taxes with the  cost of goods and services purchased. |   | No allocation - direct  charge to company |
|---------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------|

 

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**APPENDIX TO****EXHIBIT B**

 

#### **INTERCOMPANY SERVICE AND EXPENSE ALLOCATIONSUMMARY MATRIX**

## **ALLSTATE LIFE INSURANCECOMPANY AND LIFE AFFILIATES**

 

**A.**           Office 001, 191, 195,198, 200, 201, 203, 204, 205, 206, 207, 208, 209,211, 212, and 304 factors to Allstate or Affiliate are based on thisAgreement.  Once expenses are charged toAllstate or Affiliate, a second and third tier of allocation occurs, whichallocates expenses to Life Profit Centers.

 

B.             P&C Head Office (Office 032) allocationsto the Life Company and Affiliates are based on:

 

1.               Compensation

2.               Time and effort studies

3.               Statistical data

 

C.             Regional Office allocations to the LifeCompany and Affiliates are based on:

 

1.               Compensation

2.               Time and effort/usage studies

3.               System capacity studies

4.               Statistical Data

 

D.            Life Parent Company allocations to LifeAffiliates are based on:

 

1.               Expenses are direct coded to the appropriatecompany.

2.               Determination of how expense is to beallocated to profit center is based on time studies, project activity, requiredcapital, invested assets and statistical data.

 

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**EXHIBIT C**

 

### **EXPENSE PROCESS OVERVIEW**

## **ALLSTATE INSURANCE GROUP**

 

Forpurposes of operational analysis and financial reporting, functional expensegroups are made up of three primary categories: (1) Loss adjustment expenses, (2) Other underwriting expenses; and (3)Investment expenses.  A more detaileddescription of expense items, which comprise these categories, is provided inExhibits A and B.  These exhibits are theframework for reporting expenses required by the NAIC.  The expense categories, in turn, flow intothe financial records based on the following cost allocation methods: a directcharge basis; an allocated or shared basis; or in accordance with the terms ofone or several reinsurance agreements. The combined expense process ultimately provides for financial recordsthat reflect the financial performance of the business.

 

Ona day-to-day basis, expenses are incurred directly by companies within theAllstate Group.  The expenses are chartednumerically by account. Formalized procedures are used in order to ensure thatthe expenses are accurately recorded and allocated to the appropriate office,company, cost center and cost element. Allocations are also provided for various support costs, whichinclude:  company, cost center andgeneral ledger account (cost element) level with the objective of providing foran accurate means of tracking expenses.

 

Abrief description of each of the three expense categories follows:

 

•                  Loss adjustment expenses are various costsassociated with the claim handling process. These costs, which comprise all aspects of the claims handling function,include: the adjustment, factual investigation, defense and record keeping functions.  Salaries of claim personnel and allocatedexecutive salaries, as well as other basic costs associated with the claimfunction (accounting, data processing, rent, utilities, etc.) are grouped inthis category.  Generally, these expensesmay be either direct charged, allocated, or flow to an entity by means of aseparate reinsurance agreement.

 

•                  Other underwriting expenses includeacquisition, general expenses, taxes, licenses and fees.  The larger piece, acquisition expenses, iscomprised of agent commissions, various expenses related to underwriting (motorvehicle reports, home inspections, etc.), salaries, marketing and otherallocations of expenses which support the production of new and renewalbusiness.  General expenses are typicallyadministrative in nature and do not fit cleanly in any other expensegrouping.  Taxes, licenses and feespertain to:  taxes (income and franchise)and licenses fees levied by state and local government; insurance department expenses;and guaranty fund assessments.  Theseexpense categories are charged to an entity in any of the same three methodsshown above for Loss adjustment expenses.

 

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•                  Investment expenses for research, purchaseand sale activities, safekeeping, accounting and data support are the bulk ofexpenses in this bucket.  Generally,these expenses will flow to an entity by direct charges to an entity or on anallocated basis.

 

Themechanism for recording expenses can occur by means of one of the followingthree methods:

 

•                  Direct Charges – This method is used where the expenses areunique to the company incurring them. These types of expenses are not allocated to another Allstate Companydue to their unique relationship to the company incurring them.  Expense payments are classified to theresponsible company through an accounting coding expense system involvingcharge company, cost center, and cost element (See Exhibits A and B for moredetail).  By way of example: agents’commissions, taxes, licenses and fees, and bad debt expense are companyspecific, and therefore, coded directly to the appropriate company.

 

•                  Allocations

 

The expense allocation process can be divided into 3 subcategories:

 

1.               Office – The objective of this phase of the allocation process is to properlytransfer various support costs performed by one organization to anotherorganization that they directly relate to. The basic justification for this cost transfer is efficiency gain, whichis mutually beneficial to both parties. Certain processes are centrally performed on behalf of a number ofentities, then allocated to the office/company being supported.  Routine expenses of this nature often includesupport activities from the following functional areas: Accounting; Systems;Investments; Corporate Relations; Law and Regulation; and Human Resources.  These costs cannot be directly expensed. Itis necessary to provide for an appropriate method of allocation.  An example of this method of allocation wouldrelate to the accounting treatment of costs and expenses attributable toAllstate’s Internal Audit Department (IAD). As part of the Allstate Corporate Home Office structure, IAD salariesand related expenses are allocated to other Affiliates companies and/or offices(i.e. data and profit centers) based on time and effort studies.  The terms for this allocation are delineatedin a separate agreement between the parties which is referred to as a SharedService Agreement (SSA).  The SSA is avehicle which allows the parties to agree in advance on certain essential termsand conditions which include: a description of the services to be provided; theperiod covered; costs and standards.  TheSSA concept can be used to transfer expenses between Brands (e.g., Allstate,Ivantage, Indemnity, Life), between Shared Services (e.g., Finance,Investments, Human Resources, Technical) or between a Brand and Shared Service.

 

The Accounting Departmentdatabase is programmed to perform the allocation process on a monthlybasis.  The process begins with theextraction of direct costs for each office, company, cost center and generalledger account.  Varying premium andclaim statistics (e.g., policies in force, claim counts) as well as othercommon factors (e.g., number of employees, number of retirees) are then enteredinto the program.

 

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The resulting dataprovides the bases, or allocation drivers, for transferring expenses from anoffice/cost center /general ledger account level of detail to other chargeoffices/cost centers /general ledger accounts. Detail records are generated in order to provide the source andrecipient of the allocated expenses.

 

A separate process hasbeen initiated in order to periodically review the accuracy of the factors ordrivers of the allocations.  The accuracyof service provider time and effort studies may be taken into account (i.e.projected v. actual).  Other factors thatmay be considered include an inventory of activities and customers in order toensure that allocations are accurate. Intensive discussions and management agreement between the provider andcustomer are also an integral part of the process.  Flexibility in the overall allocation processmust routinely occur to provide for changes in the business activities ororganizational structure.

 

2.               Company – This step in the expense allocation process is similar the officeexpense allocation process described above in that allocations are charged toother affiliates.  For instance, bothAllstate Insurance Company and Allstate Life Insurance Company incur expenseson a direct basis for themselves and on behalf of their affiliates.  A portion of these expenses may betransferred to the affiliated companies, as appropriate.  Fixed factors are normally based on internaltime and effort studies, agents’ compensation, or statistical criteria such asgross policies issued or claim notice counts.

 

3.               Uniform Accounting Transfer (UAT) – The next step in the process is toreclassify all of the general office expenses addressed in the direct chargesand expense allocation (office and company) sections above, having beenrecorded on a management basis, to their required statutory expenseclassifications.  The use of a consistentbasis for reporting expenses, as dictated by the NAIC, allows the Regulators tobetter compare various insurance companies’ operations.  On the property/casualty side, broad expensecategories and detail breakouts are required for both the Expense Exhibit inthe annual Statutory Statement as well as the Supplemental Expense Filing,which is contained in the Insurance Expense Exhibit.  For Life companies, the General Expense andthe Taxes, Licenses and Fees Exhibits from the annual Statutory Statement havedistinct expense categories.  A synopsisof these required expense categories, along with a description of each expensecategory and the basis of allocation presently used by Allstate is contained inExhibit A and appendix (Property & Casualty affiliates) and Exhibit B andappendix (Life Company affiliates).

 

Inorder to provide for accurate summarization and reporting, each general ledgeraccount (cost element) included in the Chart of Accounts is assigned astatutory expense classification.  Lossadjustment, other underwriting and investment expenses are the broadclassifications that UAT applies to.  Byway of example, a systems function, whether relating to claims, sales, orinvestments, is initially classified as a general office expense on amanagement basis.  Based on the UATprocess, these expenses are reclassified for statutory reporting purposes toloss adjustment, other underwriting or investments.  Taxes, licenses and fees, although includedin the other underwriting expense category, are not used in the UAT calculationprocess. These

 

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expensesare directly charged to the appropriate statutory classification withincompany.

 

ReinsuranceAgreements – Separate arrangements exist betweenthe property/casualty parent, Allstate Insurance Company, and certainaffiliates, and the life parent, Allstate Life Insurance Company, and certainaffiliates that drive expenses.  Termsand conditions relating to methods of expense classification are contained ineach of the individual reinsurance agreements. Typically, the reinsurer will be liable for a pre determined pro-ratashare of all underwriting related expenses to support the assumedbusiness.  However, the reinsurer is notgenerally liable for the investment expenses.

 

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**EXHIBIT D**

 

**DEFINITIONS**

 

Thefollowing terms shown by “process flow” and “general” categories are commonlyused in explanation of the Allstate Group’s overall expense process.  Presentation of the “process flow” sectionfollows the same hierarchical order of our current expense processingmethodology.

 

**PROCESS FLOW**

 

**Company** –Identifies legal entity that expense is charged to and may be disbursedfrom.  Each entity who is a party to thisagreement is assigned a separate three digit company code (e.g., AllstateInsurance Company – 010, Allstate Life Insurance Company – 030).  A “charged company” is the Allstate entitycharged with the expense under review and whose Statement of Income would beultimately impacted.

 

**CostCenters —** Describe where specific costs wereincurred.  Cost Centers will be the mostcommon object used. Cost centers are areas of organizational responsibility inwhich costs are incurred and planned. Identifies administrative grouping within an office and duties as wellas the manager responsible. Regional Office Departments include: Underwriting;Sales; Human Resources; and Claims. Each Regional Office is assigned a distinctfour digit number.

 

**CostElements —**Theydescribe what specific costs have occurred. They are used to plan and incur direct expenses for cost objectsrepresenting a unique item or category of expense to the company.

 

**InternalOrders —**A short-term cost collector used to collect,identify and allocate costs associated with a process, event or activity.

 

**Office** —Typically,office codes identify high level responsibility for the expenses charged.  Office level configuration (by type orgeographical location) is a key building block in the accumulation of Allstate’sexpenses.  This data is used in preparingthe various expense analyses/reports prepared. A “charged office” is the office within an Allstate entity charged withthe expense under review.  The decisionregarding which office to charge with an expense is based on Statement ofIncome impact analysis.  Offices mayinclude various high level types, such as Profit Centers (Midwest RegionalOffice – 002), Data Centers (Atlantic – 136), Shared Services (Human Resources –204), and Home Offices (Corporate Home Office – 001, PP&C Head Office –032).  Each Office is designated by athree-digit code.

 

**ProfitCenter —** Aligns expense to a distribution channel,geographic location and product grouping (i.e. Denver Region, Colorado,Standard Auto).

 

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**GENERAL**

 

## **Assessments/AllocatedExpenses –**which, are incurred byone Allstate Company or office and charged, or allocated, to other companies oroffices on the basis of mutual benefit. Examples of the types of allocated expenses include: Loss Adjustment,Other Underwriting and Investment Expenses. These expenses include allocations in Cost Centers from Cost Elements toSecondary Cost Elements and are described in Exhibit C.  Criteria for cost allocation “drivers” arebased on the implementation of management objectives.  The assessments can use all three methods ofallocations: Field Percentage; Fixed Amount; and Variable Portions, whichcontain Statistical Key Figures. Additional information is included in the Exhibits and Appendixesattached.  Allocation drivers agreed toby Management are used to allocate expenses, and these are described in detailin the various exhibits and appendixes.

 

**Reinsurance Agreement** – Anagreement between two parties where one insurer spreads its risk (premium, lossand expense) of losses with other insurers.

 

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**EXHIBIT E**

**TERMINATED AGREEMENTS**

 
| Addendum to Service and Expense Agreement between  Allstate Insurance Company and Allstate North American Insurance Company  effective August 27, 2001.                                                                                                                            |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                               |
| Administrative  Service Agreement between Lincoln Benefit Life Company and ALFS, Inc. (f/k/a  Allstate Life Financial Services, Inc.) effective December 1, 1998.                                                                                                                  |
|                                                                                                                                                                                                                                                                               |
| Administrative  Services Agreement between Allstate Insurance Company and Intramerica Life  Insurance Company effective July 1, 1999.                                                                                                                                              |
|                                                                                                                                                                                                                                                                               |
| Administrative  Services Agreement between Allstate Life Insurance Company and AFD, Inc.  effective January 1, 2000.                                                                                                                                                          |
|                                                                                                                                                                                                                                                                               |
| Administrative  Services Agreement between Allstate Life Insurance Company and ALFS, Inc.  (f/k/a Allstate Life Financial Services, Inc.) effective May 1, 1999.                                                                                                                   |
|                                                                                                                                                                                                                                                                               |
| Administrative  Services Agreement between Allstate Life Insurance Company and Lincoln  Benefit Life Company effective February 1, 1998.                                                                                                                                           |
|                                                                                                                                                                                                                                                                               |
| Administrative  Services Agreement between Allstate Life Insurance Company and Allstate Distributors,  L.L.C. effective May 1, 1999.                                                                                                                                               |
|                                                                                                                                                                                                                                                                               |
| Amended and Restated Service and Expense Agreement  between Allstate Insurance Company and certain of its affiliated insurance  companies effective April 29, 2003 to include Encompass Insurance  Company of New Jersey.                                                     |
|                                                                                                                                                                                                                                                                               |
| Business  Operations and Service Agreement between Allstate Life Insurance Company of  New York and Allstate Life Insurance Company effective October 1, 1997.                                                                                                                     |
|                                                                                                                                                                                                                                                                               |
| Cost  Sharing Agreement between American Heritage Life Insurance Company and  Keystone State Life Insurance Company effective October 1, 1998.                                                                                                                                     |
|                                                                                                                                                                                                                                                                               |
| Expense  Allocation Agreement between Allstate Life Insurance Company of New York and  Intramerica Life Insurance Company effective July 1, 1999.                                                                                                                                  |
|                                                                                                                                                                                                                                                                               |
| Service  Agreement between Allstate Insurance Company and Allstate Life Insurance  Company of New York executed February 27, 1990 and effective July 1, 1989.                                                                                                                      |
|                                                                                                                                                                                                                                                                               |
| Service  Agreement between Allstate Life Insurance Company and Allstate Life Insurance  Company of New York executed February 27, 1990 and effective July 1, 1989.                                                                                                                 |
|                                                                                                                                                                                                                                                                               |
| Service  Agreement between Allstate Life Insurance Company and Surety Life Insurance  Company effective January 1, 1995.                                                                                                                                                           |
|                                                                                                                                                                                                                                                                               |
| Service  Agreement between Lincoln Benefit Life Company and Allstate Life Insurance  Company effective July 16, 1984.                                                                                                                                                              |
|                                                                                                                                                                                                                                                                               |
| Service and Expense Agreement among Allstate Insurance  Company and certain of its affiliated insurance companies, effective January  1, 1999, except with respect to Glenbrook Life and Annuity Company, Columbia  Universal Life Insurance Company and LSA Asset Management LLC. |
|                                                                                                                                                                                                                                                                               |
| Service and Expense Agreement between Allstate Insurance Company and  Certain of its Non-Insurance Company Affiliates effective January 1, 2000.                                                                                                                                   |
|                                                                                                                                                                                                                                                                               |
| Service and Expense Agreement between Surety Life  Insurance Company and Lincoln Benefit Life Company effective August 10, 1994.                                                                                                                                                   |
|                                                                                                                                                                                                                                                                               |
| Administrative  Services Agreement between Allstate Life Insurance Company of New York and  American Heritage Life Insurance Company.                                                                                                                                              |
|                                                                                                                                                                                                                                                                               |
| Administrative  Services Agreement between Allstate Life Insurance Company of New York and  Allstate Distributors, L.L.C.                                                                                                                                                          |

 

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ADDENDUM TO

AMENDED AND RESTATED SERVICE AND EXPENSE AGREEMENT

 

**ALLSTATE INSURANCE COMPANY, anIllinois insurance company (“Allstate”), and certain affiliates of Allstateentered into an Amended and Restated Service and ExpenseAgreement effective asof January 1, 2004 (the “Agreement”), a copy of which is attached to thisAddendum.  The Agreement provides thatAllstate will furnish or cause to be furnished certain services and facilitiessubject to the terms and conditions set forth in the Agreement.**

 

Eachsignatory to this Addendum is an Affiliate of Allstate and wishes to become aparty to the Agreement.  By execution ofthis Addendum each entity agrees to be bound by all of the terms and conditionsof the Agreement, as if an original signatory.

 

ThisAgreement will be effective as to any entity, and such entity will be anAffiliate for all purposes of this Agreement, effective as of May 3, 2004.

 

 
| **ENCOMPASS  FLORIDIAN INDEMNITY COMPANY** |
|--------------------------------------------|
|                                       |
| By:                                        |   | /s/ James P. Zils |   |
|                                       |
| Name:                                      | James P. Zils |   |
|                                       |
| Title:                                     | Vice President and  Treasurer |   |
|                                       |
| Date:                                      | February 10, 2005 |   |
|                                       |
|                                       |
| **ENCOMPASS  FLORIDIAN INSURANCE COMPANY** |
|                                       |
| By:                                        |   | /s/ James P. Zils |   |
|                                       |
| Name:                                      | James P. Zils |   |
|                                       |
| Title:                                     | Vice President and  Treasurer |   |
|                                       |
| Date:                                      | February 10, 2005 |   |
|                                            |  |  |  |  |

 

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ADDENDUM TO

AMENDED AND RESTATED SERVICE AND EXPENSE AGREEMENT

 

**ALLSTATEINSURANCE COMPANY, an Illinois insurance company (“Allstate”), and certainaffiliates of Allstate (“Affiliates”) entered into an Amended and RestatedService and Expense Agreement effective as of January 1, 2004 (the “Agreement”),a copy of which is attached to this Addendum. The Agreement provides that Allstate will furnish or cause to be furnishedcertain services and facilities subject to the terms and conditions set forthin the Agreement.  The Agreement alsoprovides that the Affiliates may furnish certain services and facilities toAllstate and to other Affiliates from time to time, subject to the terms andconditions in the Agreement, and it provides for possible future alternativemethods of costing for facilities and services provided pursuant to theAgreement.**

 

Eachsignatory to this Addendum is an Affiliate of Allstate and wishes to become aparty to the Agreement.  By execution ofthis Addendum each entity agrees to be bound by all of the terms and conditionsof the Agreement, as if an original signatory.

 

This Addendum may be executed by the parties hereto in any number ofcounterparts, and by each of the parties hereto in separate counterparts, eachof which counterparts, when so executed and delivered, shall be deemed to be anoriginal, but all such counterparts shall together constitute but one and thesame instrument.

 

ThisAgreement will be effective as to any entity, and such entity will be anAffiliate for all purposes of this Agreement, effective as of July 1, 2005.

 

**ALIC REINSURANCE COMPANY**

 

 
| By:    |   /s/ John C.  Pintozzi    |   |
|--------|--------------------------------------|--------|
| Name:  | John C. Pintozzi                     |   |
| Title: | Chairman of the Board  and President |   |
| Date:  | 7/8/05                               |   |
|        |                                      |        |  |

 

AllstateInsurance Company acknowledges that the above listed entities have becomeparties to the Amended and Restated Service and Expense Agreement, subject toall of the terms and conditions as if an original party thereto.

 

# **ALLSTATE INSURANCECOMPANY**

 

 
| By:    |     /s/  Samuel H. Pilch |   |
|--------|----------------------------------------------|--------|
| Name:  |  Samuel H. Pilch                        |   |
| Title: |  Group Vice President  and Controller   |   |
| Date:  | 7/8/05                                       |   |
|        |                                              |        |  |

 

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