PRICING SUPPLEMENT
Filed pursuant to Rule 424(b)(2)
Registration Statement No. 333-112249 and 333-112249-01
Pricing Supplement No. 6 Dated November 23, 2004
(To Prospectus dated April 27, 2004, and
Prospectus Supplement dated April 27, 2004)
CUSIP: 02003MAF1
Allstate Life Global Funding
Secured Medium Term Notes
Issued Through
Allstate Life Global Funding Trust 2004-6 (the "Trust")
The description in this pricing supplement of the particular terms of the
Secured Medium Term Notes offered hereby supplements the description of the
general terms and provisions of the notes set forth in the accompanying
prospectus and prospectus supplement, to which reference is hereby made.
Principal Amount: $85,000,000 Agent(s) Discount: 1.750%
Issue Price: 100.000% Original Issue Date: November 24, 2004
Net Proceeds to the Trust: $83,512,500 Stated Maturity Date: November 25, 2016
Funding Agreement Number(s): FA-41076
Specified Currency: U.S. Dollars
Interest Payment Dates: The 24th day of each calendar month, commencing December 24,
2004; provided that the final Interest Payment Date shall be
the Maturity Date. If any Interest Payment Date falls on a day
that is not a business day, the Trust will make the required
payment of interest on the next succeeding business day, and no
additional interest will accrue in respect of the payment made
on that next succeeding business day.
Initial Interest Payment Date: December 24, 2004
Regular Record Dates: 15 calendar days prior to each Interest Payment Date
Type of Interest Rate: [ ] Fixed Rate [ v ] Floating Rate
Fixed Rate Notes: [ ] Yes [ v ] No. If, Yes,
Interest Rate:
Floating Rate Notes: [ v ] Yes [ ] No. If, Yes,
Regular Floating Rate Notes: [ ] Yes [ v ] No. If, Yes,
Interest Rate:
Interest Rate Basis(es):
Floating Rate/Fixed Rate Note: [ v ] Yes [ ] No. If, Yes,
Floating Interest Rate: See below under "Additional/Other Terms"
Interest Rate Basis(es): See below under "Additional/Other Terms"
Fixed Interest Rate: 7.375%
Fixed Rate Commencement Date: Original Issue Date
Inverse Floating Rate Note: [ ] Yes [ v ] No. If, Yes,
Fixed Interest Rate:
Floating Interest Rate:
Interest Rate Basis(es):
Initial Interest Rate, if any: 7.375%, from and including the Original Issue Date to but
excluding the Initial Interest Reset Date
Initial Interest Reset Date: November 24, 2005
Interest Rate Basis(es). Check all that apply:
[ ] CD Rate [ ] Commercial Paper Rate
[ ] CMT Rate [ ] Eleventh District Cost of Funds Rate
[ ] LIBOR [ ] Federal Funds Rate
[ ] EURIBOR [ ] Treasury Rate
[ ] Prime Rate [ v ] Other (See Attached)
If LIBOR:
[ ] LIBOR Reuters Page [ ] LIBOR Moneyline Telerate Page 3750
LIBOR Currency: U.S. Dollars
If CMT Rate:
Designated CMT Telerate Page:
If 7052: [ ] Weekly Average
[ ] Monthly Average
Designated CMT Maturity Index:
Index Maturity: Not applicable
Spread (+/-): Not applicable
Spread Multiplier: See below under "Additional/Other Terms"
Interest Reset Date(s): Each Interest Payment Date beginning November 24, 2005
Interest Determination Date(s): Each Interest Reset Date
Maximum Interest Rate, if any: Not applicable
Minimum Interest Rate, if any; 0.00%
Calculation Agent: J.P. Morgan Trust Company, National Association
Exchange Rate Agent: Not applicable
Computation of Interest (not applicable unless different than as specified in
the prospectus and prospectus supplement):
Day Count Convention (not applicable unless different than as specified in the
prospectus and prospectus supplement): Actual/Actual
Amortizing Note: [ ] Yes [ v ] No. If, Yes,
Amortizing Schedule:
Additional/Other Terms:
Discount Note: [ ] Yes [ v ] No. If, Yes,
Total Amount of Discount:
Initial Accrual Period of Discount:
Additional/Other Terms:
Redemption Provisions: [ ] Yes [ v ] No. If, Yes,
Initial Redemption Date:
Initial Redemption Percentage:
Annual Redemption Percentage Reduction (if any):
Redemption: [ ] In whole only and not in part
[ ] May be in whole or in part
Additional/Other Terms:
Repayment: [ ] Yes [ v ] No. If, Yes,
Repayment Date(s):
Repayment Price:
Repayment: [ ] In whole only and not in part
[ ] May be in whole or in part
Additional/Other Terms:
Sinking Fund (not applicable unless specified):
Additional Amounts to be Paid for Withholding Tax (not applicable unless specified):
Securities Exchange Listing: [ ] Yes [ v ] No. If Yes, Name of Exchange
Authorized Denominations: $1,000
Ratings:
The Notes issued under the Program are rated "AA" by Standard & Poor's Ratings Services, a division of The McGraw Hill
Companies, Inc. and "Aa2" by Moody's Investors Service, Inc.
Agent(s) Purchasing Notes as Principal: [ v ] Yes [ ] No. If Yes,
Agent(s) Principal Amount
- ------------------------------------------------------- -----------------------------------------------------------------
Merrill Lynch, Pierce, Fenner & Smith Incorporated $85,000,000
Total: $85,000,000
============
Agent(s) Acting as Agent: [ ] Yes [ v ] No. If Yes,
Agent(s) Principal Amount
- ------------------------------------------------------- -----------------------------------------------------------------
-----------------------------------------------------------------
Total:
Additional/Other Terms: See below
Interest Rate
Calculation of the Interest Rate for the Notes. The interest rate for the Notes
being offered by this Pricing Supplement, for each Interest Period during the
term of the Notes beginning on the Initial Interest Reset Date, will be the rate
determined as of the applicable Interest Determination Date pursuant to the
following formula:
CPIt - CPIt-12 x 100 x 1.50
- ---------------
CPIt-12
Where:
CPIt = Current Index Level of CPI (as defined below), as published on Bloomberg
CPURNSA; and
CPIt-12 = Index Level of CPI 12 months prior to CPIt.
We refer to 1.50 included in the formula above as the Spread Multiplier.
The interest rate for the Notes from the Original Issue Date to, but excluding,
the Initial Interest Reset Date will be 7.375%. In no case, however, will the
interest rate for the Notes be less than the Minimum Interest Rate of 0.00%.
CPIt for each Interest Reset Date is the CPI for the third calendar month
prior to such Interest Reset Date as published and reported in the second
calendar month prior to such Interest Reset Date or determined as set forth in
this Pricing Supplement. For example, for the Interest Period from and including
November 24, 2004 to but excluding December 24, 2004, CPIt will be the CPI for
August 2004 which was 189.5, and CPIt-12 will be the CPI for August 2003 which
was 184.6. The CPI for August 2003 was published by the BLS (as defined below)
and reported on Bloomberg CPURNSA in September 2003, and the CPI for August 2004
was published and reported in September 2004. For more information regarding the
calculation of interest rates on the Notes, including historical CPI levels and
hypothetical interest rates, see Annex A to this pricing supplement.
Consumer Price Index. The amount of interest payable on the Notes on each
Interest Payment Date following the Initial Interest Reset Date will be linked
to changes in the Consumer Price Index. The Consumer Price Index for purposes of
the Notes is the non-seasonally adjusted U.S. City Average All Items Consumer
Price Index for All Urban Consumers (the "CPI"), published monthly by the Bureau
of Labor Statistics of the U.S. Department of Labor (the "BLS") and reported on
Bloomberg CPURNSA or any successor service. The CPI for a particular month is
published during the following month. The CPI is a measure of the average change
in consumer prices over time for a fixed market basket of goods and services,
including food, clothing, shelter, fuels, transportation, charges for doctors
and dentists services, and drugs. In calculating the index, price changes for
the various items are averaged together with weights that represent their
importance in the spending of urban households in the United States. The
contents of the market basket of goods and services and the weights assigned to
the various items are updated periodically by the BLS to take into account
changes in consumer expenditure patterns. The CPI is expressed in relative terms
in relation to a time base reference period for which the level is set at 100.0.
The base reference period for the Notes is the 1982-1984 average.
As stated in the risk factors, movements in the CPI that have occurred in
the past are not necessarily indicative of changes that may occur in the future.
Actual changes in the CPI may be wider or more confined than those that have
occurred in the past.
If the CPI is not reported on Bloomberg CPURNSA for a particular month by
3.00PM on an Interest Reset Date, but has otherwise been published by the BLS,
J.P. Morgan Trust Company, National Association., in its capacity as the
Calculation Agent, will determine the CPI as published by the BLS for such month
using such other source as it deems appropriate.
In calculating CPIt and CPIt-12, the Calculation Agent will use the most
recently available value of the CPI for any month, determined as described above
on the applicable Interest Reset Date, even if such value has been adjusted from
a prior reported value for the relevant month. However, if a value of CPIt and
CPIt-12 used by the Calculation Agent for any Interest Reset Date to determine
the interest rate on the Notes (an "initial CPI") is subsequently revised by the
BLS, the Calculation Agent will continue to use the initial CPI, and the
interest rate determined will not be revised.
If the CPI is rebased to a different year or period, the base reference
period for the Notes will continue to be the 1982-1984 reference period as long
as the 1982-1984 CPI continues to be published.
If, while the Notes are outstanding, the CPI is discontinued or
substantially altered as determined in the sole discretion of the Calculation
Agent, the applicable substitute index for the Notes will be that chosen by the
Secretary of the Treasury for the Department of the Treasury's Inflation-Linked
Treasuries as described at 62 Federal Register 846-874 (January 6, 1997). If no
such securities are outstanding, the Calculation Agent will determine a
substitute index for the Notes in accordance with general market practice at the
time.
Rounding. All values used in the interest rate formula for the Notes will be
rounded to the nearest fifth decimal place (one-one hundred thousandth of a
percentage point), rounding upwards if the sixth decimal place is five or
greater (e.g., 9.876555% (or .09876555) would be rounded up to 9.87656% (or
..0987656) and 9.876554% (or .09876554) would be rounded down to 9.87655% (or
..0987655)). All percentages resulting from any calculation of the interest rate
will be rounded to the nearest third decimal place (one thousandth of a
percentage point), rounding upwards if
the fourth decimal place is five or greater (e.g., 9.8765% (or .098765) would be
rounded up to 9.877% (or .09877) and 9.8764% (or .098764) would be rounded down
to 9.876% (or .09876)). All dollar amounts used in or resulting from such
calculation on the Notes will be rounded to the nearest cent (with one-half cent
being rounded upward).
Special Tax Considerations: United States Federal Income Taxation
The following discussion supplements and, to the extent that it is
inconsistent with, replaces the discussion contained in the accompanying
Prospectus Supplement in the section entitled "United States Federal Income Tax
Considerations".
Treatment of the Notes as Contingent Payment Debt Instruments
We intend to treat the Notes as subject to the special regulations issued
by the U.S. Treasury Department governing contingent payment debt instruments
(the "CPDI Regulations"). The remainder of this discussion assumes the Notes
will be treated as "contingent payment debt instruments" and subject to the CPDI
Regulations.
Accrual of Interest on the Notes
Pursuant to these regulations, U.S. Holders of the Notes will be required
to accrue interest income on the Notes, in the amounts described below,
regardless of whether the U.S. Holder uses the cash or accrual method of tax
accounting.
The CPDI Regulations provide that a U.S. Holder must accrue an amount of
ordinary interest income, as original issue discount for United States federal
income tax purposes, for each accrual period prior to and including the Stated
Maturity Date of the Notes that equals:
1. the product of (i) the adjusted issue price (as defined below) of the
Notes as of the beginning of the accrual period and (ii) the
comparable yield to maturity (as defined below) of the Notes, adjusted
for the length of the accrual period;
2. divided by the number of days in the accrual period; and
3. multiplied by the number of days during the accrual period that the
U.S. Holder held the Notes.
A Note's issue price is the first price to the public at which a
substantial amount of the Notes are sold, excluding sales to bond houses,
brokers or similar persons or organizations acting in the capacity of
underwriters, placement agents or wholesalers. The adjusted issue price of a
Note is its issue price increased by any interest income previously accrued,
determined without regard to any adjustments to interest accruals as described
below under "--Adjustments to Interest Accruals on the Notes", and decreased by
the amount of any projected payments, as defined below, made with respect to the
Notes.
The CPDI Regulations require that we provide to U.S. Holders, solely for
United States federal income tax purposes, a schedule of the projected amounts
of payments, which we refer to as projected payments, on the Notes.
This schedule must produce the comparable yield. Solely for purposes of
applying the CPDI Regulations to the Notes, Allstate Life has determined that
the projected payments for the Notes consist of (i) monthly fixed payments of
interest calculated by reference to the Initial Interest Rate on each Interest
Payment Date up to but excluding November 24, 2005, (ii) estimates of the
monthly floating payments of interest calculated by reference to the Floating
Interest Rate Basis on each Interest Payment Date occurring on or after November
24, 2005, and (iii) a payment on the Stated Maturity Date of the principal
amount thereof. In addition, Allstate Life has determined that the comparable
yield for the Notes is 4.92%, compounded monthly. U.S. Holders may also obtain
the projected payment schedule by submitting a written request for such
information to Allstate Life Insurance Company, 3100 Sanders Road, Suite M3A,
Northbrook, Illinois 60062, Attention: Assistant Vice President, Institutional
Markets, Tel: (847) 402-5000.
For United States federal income tax purposes, a U.S. Holder must use the
comparable yield and the schedule of projected payments in determining its
interest accruals, and the adjustments thereto described below, in respect of
the Notes, unless a U.S. Holder timely discloses and justifies the use of other
estimates to the Internal Revenue Service (the "IRS"). A U.S. Holder that
determines its own comparable yield or schedule of projected payments must also
establish that our comparable yield or schedule of projected payments is
unreasonable.
The comparable yield and the schedule of projected payments are not
determined for any purpose other than for the determination of a U.S. Holder's
interest accruals and adjustments thereof in respect of the Notes for United
States federal income tax purposes and do not constitute a projection or
representation regarding the actual amounts payable on the Notes.
Amounts treated as interest under the CPDI Regulations are treated as
original issue discount for all purposes of the Code.
Adjustments to Interest Accruals on the Notes
If, during any taxable year, a U.S. Holder receives actual payments with
respect to the Notes for that taxable year that in the aggregate exceed the
total amount of projected payments for that taxable year, the U.S. Holder will
incur a "net positive adjustment" under the CPDI Regulations equal to the amount
of that excess. The U.S. Holder will treat a "net positive adjustment" as
additional interest income for the taxable year. For this purpose, the payments
in a taxable year include the fair market value of property received in that
year.
If a U.S. Holder receives in a taxable year actual payments with respect to
the Notes for that taxable year that in the aggregate were less than the amount
of projected payments for that taxable year, the U.S. Holder will incur a "net
negative adjustment" under the CPDI Regulations equal to the amount of such
deficit. This adjustment will (a) reduce the U.S. Holder's interest income on
the Notes for that taxable year, and (b) to the extent of any excess after the
application of (a), give rise to an ordinary loss to the extent of the U.S.
Holder's interest income on the Notes during prior taxable years, reduced to the
extent that interest was offset by prior net negative adjustments.
Sale or Exchange of the Notes
Generally, the sale or exchange of a Note will result in taxable gain or
loss to a U.S. Holder. The amount of gain or loss on a taxable sale or exchange
will be equal to the difference between (a) the amount realized by the U.S.
Holder on that sale or exchange and (b) the U.S. Holder's adjusted tax basis in
the Notes. A U.S. Holder's adjusted tax basis in a Note on any date will
generally be equal to the U.S. Holder's original purchase price for the Note,
increased by any interest income previously accrued by the U.S. Holder
(determined without regard to any adjustments to interest accruals as described
above under "-- Adjustments to Interest Accruals on the Notes"), and decreased
by the amount of any projected payments (as defined above) previously made to
the U.S. Holder through that date. Gain recognized upon a sale or exchange of a
Note will generally be treated as ordinary interest income; any loss will be
ordinary loss to the extent of interest previously included in income, and
thereafter, capital loss (which will be long-term if the Note is held for more
than one year). The deductibility of net capital losses by individuals and
corporations is subject to limitations.
It is possible that the Notes may be taxed in some manner other than that
described above. A different treatment from that described above could affect
the amount, timing and character of income, gain or loss in respect of an
investment in the Notes. Prospective investors should consult their own tax
advisors regarding the tax consequences of the purchase, ownership and
disposition of the Notes, including the tax consequences under state, local,
foreign and other tax laws.
Prospective investors should also consult the summary describing the principal
U.S. federal income tax consequences of the ownership and disposition of the
Notes contained in the section entitled "United States Federal Income Tax
Considerations" in the accompanying Prospectus Supplement.
Risk Factors
The Notes involve risks not associated with an investment in ordinary
floating rate notes. This section describes risks relating to the Notes in
addition to the Risk Factors described in the accompanying prospectus supplement
beginning on page S-14. You should carefully consider whether the Notes are
suited to your particular circumstances before you decide to purchase them.
The interest rate on the Notes could be zero.
Interest payable on the Notes is linked to year over year changes in the
level of the CPI determined each month over the term of the Notes.
If the CPI for the same month in successive years does not increase, which
is likely to occur when there is little or no inflation, or decreases, which is
likely to occur when there is deflation, the interest rate for the applicable
Interest Period will be zero.
Your interest rate is based upon the CPI. The CPI itself and the way the BLS
calculates the CPI may change in the future.
There can be no assurance that the BLS will not change the method by which
it calculates the CPI. In addition, changes in the way the CPI is calculated
could reduce the level of the CPI and lower the interest payment with respect to
the Notes. Accordingly, the amount of interest, if any, payable on the Notes,
and therefore the value of the Notes, may be significantly reduced. If the CPI
is substantially altered, a substitute index may be employed to calculate the
interest payable on the Notes, as described above, and that substitution may
adversely affect the value of the Notes.
The interest rate on the Notes may be below the rate otherwise payable on
similar floating rate securities.
If there are only minimal increases, no changes or decreases in the monthly
CPI measured year over year, the interest rate on the Notes will be below what
we would currently expect to pay as of the date of this pricing supplement if we
issued a floating rate debt instrument with terms similar to those of the Notes.
The historical levels of the CPI are not an indication of the future levels of
the CPI.
The historical levels of the CPI are not an indication of the future levels
of the CPI during the term of the Notes. In the past, the CPI has experienced
periods of volatility and such volatility may occur in the future. Fluctuations
and trends in the CPI that have occurred in the past are not necessarily
indicative, however, of fluctuations that may occur in the future.
Holders of the Notes will receive interest payments that will be affected
by changes in the CPI. Such changes may be significant. Changes in the CPI are a
function of the changes in specified consumer prices over time, which result
from the interactions of many factors over which we have no control.
Annex A
Historical Information and Hypothetical Interest Rate Calculations
Provided below are historical levels of the CPI as reported by the BLS for
the period from January 1998 to September 2004. Also provided below are the
hypothetical interest rates for the period from January 1999 to September 2004
that would have resulted from the historical levels of the CPI presented below.
We obtained the historical information included below from Bloomberg Financial
Markets, and we believe such information to be accurate.
The historical level of the CPI should not be taken as an indication of
future levels of the CPI, and no assurance can be given as to the level of the
CPI for any reference month. The hypothetical interest rates that follow are
intended to illustrate the effect of general trends in the CPI on the amount of
interest payable to you on the
Notes. However, the CPI may not increase or decrease over the term of the Notes
in accordance with any of the trends depicted by the historical information in
the table below, and the size and frequency of any fluctuations in the CPI level
over the term of the Notes, which we refer to as the volatility of the CPI, may
be significantly different than the volatility of the CPI indicated in the
table. As a result, the hypothetical interest rates depicted in the table below
should not be taken as an indication of the actual interest rates that will be
paid on the Interest Periods over the term of the Notes.
Historical Levels of CPI
1998 1999 2000 2001 2002 2003 2004
January 161.6 164.3 168.8 175.1 177.1 181.7 185.2
February 161.9 164.5 169.8 175.8 177.8 183.1 186.2
March 162.2 165.0 171.2 176.2 178.8 184.2 187.4
April 162.5 166.2 171.3 176.9 179.8 183.8 188.0
May 162.8 166.2 171.5 177.7 179.8 183.5 189.1
June 163.0 166.2 172.4 178.0 179.9 183.7 189.7
July 163.2 166.7 172.8 177.5 180.1 183.9 189.4
August 163.4 167.1 172.8 177.5 180.7 184.6 189.5
September 163.6 167.9 173.7 178.3 181.0 185.2 189.9
October 164.0 168.2 174.0 177.7 181.3 185.0 190.9
November 164.0 168.3 174.1 177.4 181.3 184.5
December 163.9 168.3 174.0 176.7 180.9 184.3
Hypothetical Interest Rates Based on Historical CPI Levels
1999 2000 2001 2002 2003 2004
January 2.51% 4.11% 5.60% 1.71% 3.90% 2.89%
February 2.41 4.83 5.30 1.71 4.47 2.54
March 2.59 5.64 4.38 2.21 4.53 2.61
April 3.42 4.60 4.90 2.46 3.34 3.43
May 3.13 4.78 5.42 1.77 3.09 4.58
June 2.94 5.60 4.87 1.60 3.17 4.90
July 3.22 5.49 4.08 2.20 3.16 4.49
August 3.40 5.12 4.08 2.70 3.24 3.98
September 3.94 5.18 3.97 2.27 3.48 3.80
October 3.84 5.17 3.19 3.04 3.06 4.78
November 3.93 5.17 2.84 3.30 2.65
December 4.03 5.08 2.33 3.57 2.82
For example, the hypothetical interest rate payable on the Notes for the April
2003 Interest Period would have been 3.90% per annum. This hypothetical interest
rate is calculated by inserting the following CPI levels into the interest rate
formula described above under "Interest Rate":
CPIt = 181.7, which is equal to the CPI level for January 2003, which as the
third calendar month prior to the Interest Reset Date of April 2003, would be
the reference month; and
CPIt-12 = 177.1, which is equal to the CPI level for January 2002, the twelfth
calendar month prior to the reference month for the interest reset date of April
2003, as follows:
3.90% = 181.7-177.1 x 100 x 1.50
--------------
177.1
