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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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FORM 10-Q

Registrant meets the conditions set forth in General Instruction H (1)(a) and (b) of Form 10-Q and is therefore filing this Form with the reduced disclosure format.

ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2004
OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number: 000-31248

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ALLSTATE LIFE INSURANCE COMPANY
(Exact name of registrant as specified in its charter)

Illinois (State of Incorporation)		36-2554642 (I.R.S. Employer Identification No.)
3100 Sanders Road Northbrook, Illinois (Address of principal executive offices)		60062 (Zip code)

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Registrant's telephone number, including area code: 847/402-5000

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ý    No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes o    No ý

As of July 31, 2004, the registrant had 23,800 common shares, $227 par value, outstanding, all of which are held by Allstate Insurance Company.

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ALLSTATE LIFE INSURANCE COMPANY
INDEX TO QUARTERLY REPORT ON FORM 10-Q
June 30, 2004

				PAGE
PART I		FINANCIAL INFORMATION
Item 1.		Financial Statements
		Condensed Consolidated Statements of Operations for the Three-Month and Six-Month Periods Ended June 30, 2004 and 2003 (unaudited)		1
		Condensed Consolidated Statements of Financial Position as of June 30, 2004 (unaudited) and December 31, 2003		2
		Condensed Consolidated Statements of Cash Flows for the Six-Month Periods Ended June 30, 2004 and 2003 (unaudited)		3
		Notes to Condensed Consolidated Financial Statements (unaudited)		4
		Report of Independent Registered Public Accounting Firm		12
Item 2.		Management's Discussion and Analysis of Financial Condition and Results of Operations		13
Item 4.		Controls and Procedures		26
PART II		OTHER INFORMATION
Item 1.		Legal Proceedings		27
Item 6.		Exhibits and Reports on Form 8-K		27

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PART I.    FINANCIAL INFORMATION
ITEM 1.    FINANCIAL STATEMENTS

ALLSTATE LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

		Three Months Ended June 30,						Six Months Ended June 30,
(in millions)		2004			2003			2004			2003
		(Unaudited)						(Unaudited)
Revenues
Premiums		$	151		$	204		$	302		$	521
Contract charges			236			219			470			428
Net investment income			795			760			1,578			1,520
Realized capital gains and losses			(68	)		(40	)		(95	)		(82	)
			1,114			1,143			2,255			2,387
Costs and expenses
Contract benefits			313			378			649			845
Interest credited to contractholder funds			463			440			912			872
Amortization of deferred policy acquisition costs			109			85			224			257
Operating costs and expenses			123			118			225			239
			1,008			1,021			2,010			2,213
Loss on disposition of operations			(14	)		—			(17	)		—
Income from operations before income tax expense and cumulative effect of change in accounting principle, after-tax			92			122			228			174
Income tax expense			37			37			82			50
Income before cumulative effect of change in accounting principle, after-tax			55			85			146			124
Cumulative effect of change in accounting principle, after-tax			—			—			(175	)		—
Net income (loss)		$	55		$	85		$	(29	)	$	124

See notes to condensed consolidated financial statements.

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ALLSTATE LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(in millions, except par value data)				June 30, 2004			December 31, 2003
				(Unaudited)
Assets
Investments
	Fixed income securities, at fair value (amortized cost $52,594 and $48,401)			$	54,624		$	51,578
	Mortgage loans				6,854			6,354
	Equity securities				273			164
	Short-term				1,448			765
	Policy loans				702			686
	Other				520			442
		Total investments			64,421			59,989
Cash					108			121
Deferred policy acquisition costs					3,347			3,202
Reinsurance recoverables, net					1,365			1,185
Accrued investment income					574			567
Other assets					617			323
Separate Accounts					13,564			13,425
	Total assets			$	83,996		$	78,812
Liabilities
Contractholder funds				$	49,365		$	44,914
Reserve for life-contingent contract benefits					10,533			10,480
Unearned premiums					30			32
Payable to affiliates, net					65			114
Other liabilities and accrued expenses					3,933			2,594
Deferred income taxes					438			779
Short-term debt					55			—
Long-term debt					116			45
Separate Accounts					13,564			13,425
	Total liabilities				78,099			72,383
Commitments and Contingent Liabilities (Note 5)
Shareholder's Equity
Redeemable preferred stock—series A, $100 par value, 1.5 million shares authorized, 49,230 and 815,460 shares issued and outstanding					5			82
Common stock, $227 par value, 23,800 shares authorized and outstanding					5			5
Additional capital paid-in					1,077			1,067
Retained income					4,143			4,222
Accumulated other comprehensive income:
		Unrealized net capital gains and losses and net gains and losses on derivative financial instruments			667			1,053
	Total accumulated other comprehensive income				667			1,053
	Total shareholder's equity				5,897			6,429
	Total liabilities and shareholder's equity			$	83,996		$	78,812

See notes to condensed consolidated financial statements.

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ALLSTATE LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

						Six Months Ended June 30,
(in millions)						2004			2003
						(Unaudited)
Cash flows from operating activities
Net (loss) income						$	(29	)	$	124
	Adjustments to reconcile net income to net cash provided by operating activities:
		Amortization and other non-cash items					(66	)		(83	)
		Realized capital gains and losses					95			82
		Cumulative effect of change in accounting principle					175			—
		Interest credited to contractholder funds					912			872
		Changes in:
			Contract benefit and other insurance reserves				(120	)		37
			Unearned premiums				1			2
			Deferred policy acquisition costs				(146	)		(83	)
			Reinsurance recoverables, net				(96	)		(58	)
			Income taxes payable				(64	)		33
			Other operating assets and liabilities				30			247
				Net cash provided by operating activities			692			1,173
Cash flows from investing activities
Proceeds from sales
	Fixed income securities						4,317			3,803
	Equity securities						115			50
Investment collections
	Fixed income securities						2,196			2,283
	Mortgage loans						302			275
Investment purchases
	Fixed income securities						(9,998	)		(9,328	)
	Equity securities						(165	)		(20	)
	Mortgage loans						(844	)		(479	)
Change in short-term investments, net							(2	)		521
Change in other investments, net							(47	)		(39	)
				Net cash used in investing activities			(4,126	)		(2,934	)
Cash flows from financing activities
Change in short-term debt, net							55			95
Redemption of mandatorily redeemable preferred stock							(7	)		(8	)
Contractholder fund deposits							6,331			4,303
Contractholder fund withdrawals							(2,907	)		(2,480	)
Dividends paid							(51	)		(1	)
				Net cash provided by financing activities			3,421			1,909
Net (decrease) increase in cash							(13	)		148
Cash at beginning of the period							121			252
Cash at end of period						$	108		$	400

See notes to condensed consolidated financial statements.

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ALLSTATE LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1.     Basis of Presentation

        The accompanying condensed consolidated financial statements include the accounts of Allstate Life Insurance Company ("ALIC") and its wholly owned subsidiaries (together with ALIC, the "Company"). ALIC is wholly owned by Allstate Insurance Company ("AIC"), a wholly owned subsidiary of The Allstate Corporation (the "Corporation").

        The condensed consolidated financial statements and notes as of June 30, 2004, and for the three-month and six-month periods ended June 30, 2004 and 2003 are unaudited. The condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring accruals), which are, in the opinion of management, necessary for the fair presentation of the financial position, results of operations and cash flows for the interim periods. These condensed consolidated financial statements and notes should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2003. The results of operations for the interim periods should not be considered indicative of results to be expected for the full year.

        To conform to the 2004 presentation, certain amounts in the prior year's condensed consolidated financial statements and notes have been reclassified.

        In August 2004, the boards of directors of ALIC and Glenbrook Life and Annuity Company ("GLAC") approved the merger of GLAC, a consolidated subsidiary of ALIC, into ALIC, expected to be effective January 1, 2005. ALIC will be the surviving legal entity and GLAC will cease to exist as an independent entity. ALIC and GLAC expect to receive all required regulatory approvals.

        Equity securities include common stocks, non-redeemable preferred stocks and limited partnership interests. Common stocks and non-redeemable preferred stocks had a carrying value of $157 million and $83 million, and cost of $147 million and $79 million at June 30, 2004 and December 31, 2003, respectively. Investments in limited partnership interests had a carrying value of $116 million and $81 million at June 30, 2004 and December 31, 2003, respectively.

        Non-cash investment exchanges and modifications, which primarily reflect refinancings of fixed income securities and mergers completed with equity securities, totaled $33 million and $34 million for the six months ended June 30, 2004 and 2003, respectively.

Adopted Accounting Standard

Statement of Position No. 03-1, "Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate Accounts" ("SOP 03-1")

        On January 1, 2004, the Company adopted SOP 03-1. The major provisions of the SOP affecting the Company require:

•

Establishment of reserves primarily related to death benefit and income benefit guarantees provided under variable annuity contracts;



•

Deferral of sales inducements that meet certain criteria, and amortization using the same method used for deferred policy acquisition costs ("DAC"); and



•

Reporting and measuring assets and liabilities of certain separate accounts products as investments and contractholder funds rather than as separate accounts assets and liabilities when specified criteria are present.

Effects of adoption

        The cumulative effect of the change in accounting principle from implementing SOP 03-1 was a loss of $175 million, after-tax ($269 million, pre-tax). It was comprised of an increase in benefits reserves (primarily for variable annuity contracts) of $145 million, pre-tax, and a reduction in DAC and deferred sales inducements ("DSI") of $124 million, pre-tax.

        The SOP requires consideration of a range of potential results to estimate the cost of variable annuity death benefits and income benefits, which generally necessitates the use of stochastic modeling techniques. To maintain consistency with the assumptions used in the establishment of reserves for variable annuity guarantees, the

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Company utilized the results of this stochastic modeling to estimate expected gross profits, which form the basis for determining the amortization of DAC and DSI. This new modeling approach resulted in a lower estimate of expected gross profits, and therefore resulted in a write-down of DAC and DSI.

        In 2004, DSI and related amortization is classified within the Condensed Consolidated Statements of Financial Position and Operations as other assets and interest credited to contractholder funds, respectively. The amounts are provided below.

        The Company reclassified $204 million of separate accounts assets and liabilities to investments and contractholder funds, respectively.

Liabilities for contract guarantees

        The Company offers various guarantees to variable contractholders including a return of no less than (a) total deposits made on the contract less any customer withdrawals, (b) total deposits made on the contract less any customer withdrawals plus a minimum return or (c) the highest contract value on a specified anniversary date minus any customer withdrawals following the contract anniversary. These guarantees include benefits that are payable in the event of death (death benefits), upon annuitization (income benefits), or at specified dates during the accumulation period (accumulation benefits). To manage the risk associated with a portion of its minimum guaranteed death and income benefits, the Company acquired reinsurance for policies issued prior to January 1, 2000. Additionally, the Company hedges death benefits for substantially all contracts issued since January 1, 2003 and accumulation benefits for all contracts issued.

        The table below presents information regarding the Company's variable contracts with guarantees. The Company's variable annuity contracts may offer more than one type of guarantee in each contract; therefore, the sum of amounts listed exceeds the total account balances of variable annuity contracts' separate accounts with guarantees.

(1)

Defined as the current guaranteed minimum death benefit in excess of the current account balance at the balance sheet date.

(2)

Defined as the present value of the minimum guaranteed annuity payments determined in accordance with the terms of the contract in excess of the current account balance.

(3)

Defined as the present value of the guaranteed minimum accumulation balance in excess of the current account balance.

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        Account balances of variable contracts' separate accounts with guarantees were invested as follows:

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        The following table summarizes the liabilities for guarantees:

(1)

Included in the total reserve balance are reserves for variable annuity death benefits of $87 million, variable annuity income benefits of $16 million and other guarantees of $41 million.

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        The liability for death and income benefit guarantees is established equal to a benefit ratio multiplied by the cumulative contract charges earned, plus accrued interest less contract benefit payments. The benefit ratio is calculated as the estimated present value of all expected contract benefits divided by the present value of all expected contract charges. For guarantees in the event of death, benefits represent the current guaranteed minimum death payments in excess of the current account balance. For guarantees at annuitization, benefits represent the present value of the minimum guaranteed annuity benefits in excess of the current account balance.

        Projected benefits and contract charges used in determining the liability for guarantees are developed using models and stochastic scenarios that are also used in the development of estimated expected gross profits. Underlying assumptions for the liability related to income benefits include assumed future annuitization elections based on factors such as the extent of benefit to the potential annuitant, eligibility conditions and the annuitant's attained age.

        The liability for guarantees will be re-evaluated periodically, and adjustments will be made to the liability balance through a charge or credit to contract benefits.

Deferred sales inducements

        Costs related to sales inducements offered on sales to new customers, principally on investment contracts and primarily in the form of additional credits to the customer's account value or enhancements to interest credited for a specified period, which are beyond amounts currently being credited to existing contracts, are deferred and recorded as other assets. All other sales inducements are expensed as incurred and included in interest credited to contractholder funds on the Condensed Consolidated Statements of Operations. DSI is amortized to income using the same methodology and assumptions as DAC, and included in interest credited to contractholder funds. DSI is periodically reviewed for recoverability and written down when necessary.

        DSI activity for the six months ended June 30, 2004 was as follows:

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Pending Accounting Standards

Emerging Issues Task Force Topic No. 03-1, "The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments" ("EITF 03-1")

        In March 2004, the Emerging Issues Task Force ("EITF") reached a final consensus on EITF 03-1, which is effective for fiscal periods beginning after June 15, 2004. EITF 03-1 requires that when the fair value of an investment security is less than its carrying value an impairment exists for which a determination must be made as to whether the impairment is other-than-temporary. An impairment loss should be recognized equal to the difference between the investment's carrying value and its fair value when an impairment is other-than-temporary. Subsequent to an other-than temporary impairment loss, a debt security should be accounted for in accordance with Statement of Position No. 03-3, "Accounting for Loans and Certain Debt Securities Acquired in a Transfer", which allows the accretion of the discount between the carrying value and expected value of a security if the amount and timing of the recognition of that difference in cash is reasonably estimable. EITF 03-1 also indicates that although not presumptive a pattern of selling investments prior to the forecasted recovery may call into question an investor's intent to hold the security until it recovers in value.

        The EITF 03-1 impairment model applies to all investment securities accounted for under Statement of Financial Accounting Standards ("SFAS") No. 115, "Accounting for Certain Investments in Debt and Equity Securities" and to investment securities accounted for under the cost method to the extent an impairment indicator exists or the reporting entity has estimated the fair value of the investment security in connection with SFAS No. 107, "Disclosures about Fair Value of Financial Instruments".

        The final consensus on EITF 03-1 included additional disclosure requirements incremental to those adopted by the Company effective December 31, 2003 that are effective for fiscal years ending after June 15, 2004.

        The Company is currently evaluating the impact of EITF 03-1 on its process for determining other-than-temporary impairment for the affected securities. More specifically, the Company is analyzing whether subsequent to adoption its portfolio management practices for certain securities classified as available-for-sale pursuant to SFAS No. 115 could be interpreted as a pattern of selling thereby affecting its designated intent to hold such investments for the period necessary to allow for the forecasted recovery of fair value pursuant to the requirements of EITF 03-1. As a result of this analysis, the Company may potentially reclassify to realized capital gains and losses the unrealized net capital gains and losses associated with certain securities classified as available-for-sale.

        Adoption of this standard may:

•

Accelerate the timing of recognition of certain impairment losses or otherwise result in impairment losses being recognized when they previously may not have been;



•

Result in the designation of certain investment securities as trading;



•

Increase the volatility of net income due to:



•

The potential recognition of unrealized losses in situations where the Company anticipates a full recovery of certain unrealized losses but does not desire to elect a permanent intent to hold the affected securities, regardless of internal and external facts and circumstances, until such time as they fully recover or mature; and



•

Changes in the timing of the recognition of the difference between carrying value and expected settlement value of those debt securities for which an other-than-temporary impairment is taken.

        Adoption of this standard is not expected to have a material impact on shareholder's equity since fluctuations in fair value are already recorded in accumulated other comprehensive income.

2.     Disposition

        The Company disposed of the majority of its direct response distribution business in the first quarter of 2004 and is in the process of disposing of its remaining direct response distribution business. In connection with those disposal activities, the Company recorded an additional loss on disposition of $17 million pre-tax ($11 million after-tax) for the six months ended June 30, 2004.

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3.     Reinsurance

        The effects of reinsurance on premiums and contract charges are as follows:

        The effects of reinsurance on contract benefits are as follows:

        Included in income tax expense on the Condensed Consolidated Statement of Operations is $6 million of expense related to the write-off of a tax receivable resulting from the termination of a reinsurance agreement with a nonconsolidated affiliate who does not file with ALIC in the consolidated tax return.

4.     Debt

        As of June 30, 2004, debt includes $70 million of mandatorily redeemable preferred stock ("preferred stock") that was reclassified to long-term debt during the second quarter in accordance with the provisions of Statement of Financial Accounting Standards No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity". The reclassification occurred as a result of changes to contractual arrangements between the Company and the holders of the preferred stock resulting in the preferred stock becoming mandatorily redeemable. As of December 31, 2003, the balance of the preferred stock subject to reclassification amounted to $77 million. During the second quarter of 2004, $7 million of this mandatorily redeemable preferred stock was redeemed.

5.     Guarantees and Contingent Liabilities

Guarantees

        The Company owns certain fixed income securities that obligate the Company to exchange credit risk or to forfeit principal due, depending on the nature or occurrence of specified credit events for the referenced entities. In the event all such specified credit events were to occur, the Company's maximum amount at risk on these fixed income securities, as measured by the par value, was $95 million at June 30, 2004. The obligations associated with these fixed income securities expire at various times during the next seven years.

        Lincoln Benefit Life Company ("LBL"), a wholly owned subsidiary of ALIC, has issued universal life insurance contracts to third parties who finance the premium payments on the universal life insurance contracts through a commercial paper program. LBL has issued a repayment guarantee on the outstanding commercial paper balance that is fully collateralized by the cash surrender value of the universal life insurance contracts. At June 30,

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2004, the amount due under the commercial paper program is $300 million and the cash surrender value of the policies is $309 million. The repayment guarantee expires April 30, 2006.

        In the normal course of business, the Company provides standard indemnifications to counterparties in contracts in connection with numerous transactions, including indemnifications for breaches of representations and warranties, taxes and certain other liabilities, such as third party lawsuits. The indemnification clauses are often standard contractual terms and were entered into in the normal course of business based on an assessment that the risk of loss would be remote. The terms of the indemnifications vary in duration and nature. In many cases, the maximum obligation is not explicitly stated and the contingencies triggering the obligation to indemnify have not occurred and are not expected to occur. Because the obligated amounts of the indemnifications are not explicitly stated in many cases, the maximum amount of the obligation under such indemnifications is not determinable. Historically, the Company has not made any material payments pursuant to these obligations.

        The aggregate liability balance related to all guarantees was not material as of June 30, 2004.

Regulation

        The Company is subject to changing social, economic and regulatory conditions. Recent state and federal regulatory initiatives and proceedings have included efforts to remove barriers preventing banks from engaging in the securities and insurance businesses, change tax laws affecting the taxation of insurance companies and the tax treatment of insurance products or competing non-insurance products that may impact the relative desirability of various personal investment products and otherwise expand overall regulation of insurance products and the insurance industry. The ultimate changes and eventual effects of these initiatives on the Company's business, if any, are uncertain.

        Regulatory bodies have contacted the Company and have requested information relating to variable insurance products, including such areas as market timing and late trading and sales practices. The Company believes that these inquiries are similar to those made to many financial services companies as part of an industry-wide investigation by various regulatory agencies into the practices, policies and procedures relating to variable insurance products sales and subaccount trading practices. The Company has and will continue to respond to these information requests and investigations. The Company at the present time is not aware of any systemic problems with respect to such matters that may have a material adverse effect on the Company's condensed consolidated financial position.

Legal proceedings

Background

        The Company and certain of its affiliates are named as defendants in a number of lawsuits and other legal proceedings arising out of various aspects of its business. As background to the "Proceedings" described below, please note the following:

•

These matters raise difficult and complicated factual and legal issues and are subject to many uncertainties and complexities, including but not limited to, the underlying facts of each matter, novel legal issues, variations between jurisdictions in which matters are being litigated, differences in applicable laws and judicial interpretations, the length of time before many of these matters might be resolved by settlement or through litigation and, in some cases, the timing of their resolutions relative to other similar cases brought against other companies, the fact that some of these matters are putative class actions in which a class has not been certified and in which the purported class may not be clearly defined, the fact that some of these matters involve multi-state class actions in which the applicable law(s) for the claims at issue is in dispute and therefore unclear, and the current challenging legal environment faced by large corporations and insurance companies.



•

In these matters, plaintiffs seek a variety of remedies including equitable relief in the form of injunctive and other remedies and monetary relief in the form of contractual and extra-contractual damages. In some cases, the monetary damages sought include punitive or treble damages or are not specified. Often more specific information beyond the type of relief sought is not available because plaintiffs have not requested more specific relief in their court pleadings. In those cases where plaintiffs have made a specific demand for monetary damages, they often specify damages just below a jurisdictional limit regardless of the facts of

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the case. This represents the maximum they can seek without risking removal from state court to federal court. In our experience, monetary demands in plaintiffs' court pleadings bear little relation to the ultimate loss, if any, to the Company.

•

For the reasons specified above, it is not possible to make meaningful estimates of the amount or range of loss that could result from these matters at this time. The Company reviews these matters on an on-going basis and follows the provisions of SFAS No. 5, "Accounting for Contingencies" when making accrual and disclosure decisions. When assessing reasonably possible and probable outcomes, the Company bases its decisions on its assessment of the ultimate outcome following all appeals.



•

In the opinion of the Company's management, while some of these matters may be material to the Company's operating results for any particular period if an unfavorable outcome results, none will have a material adverse effect on the condensed consolidated financial condition of the Company.

Proceedings

        Legal proceedings involving Allstate agencies and AIC may impact the Company, even when the Company is not directly involved, because the Company sells its products through a variety of distribution channels including Allstate agencies. Consequently, information about the more significant of these proceedings is provided below.

        AIC is defending various lawsuits involving worker classification issues. A putative nationwide class action filed by former employee agents includes a worker classification issue; these agents are challenging certain amendments to the Agents Pension Plan and are seeking to have exclusive agent independent contractors treated as employees for benefit purposes. AIC has been vigorously defending this and various other worker classification lawsuits. The outcome of these disputes is currently uncertain.

        AIC is also defending certain matters relating to its agency program reorganization announced in 1999. These matters include an investigation by the U.S. Department of Labor and a lawsuit filed in December 2001 by the U.S. Equal Employment Opportunity Commission ("EEOC") alleging retaliation under federal civil rights laws and a class action filed in August 2001 by former employee agents alleging retaliation and age discrimination under the Age Discrimination in Employment Act, breach of contract and ERISA violations. In April 2004, the U.S. Department of Labor notified AIC that it has closed its investigation and contemplates no further action on this matter at this time. In late March 2004, in the EEOC and class action lawsuits, the trial court issued a memorandum and order that, among other things, certified classes of agents, including a mandatory class of agents who had signed a release, for purposes of effecting the court's declaratory judgment that the release is voidable at the option of the release signer. The court also ordered that an agent who voids the release must return to AIC "any and all benefits received by the [agent] in exchange for signing the release." The court also "concluded that, on the undisputed facts of record, there is no basis for claims of age discrimination." The EEOC and plaintiffs have asked the court to clarify and/or reconsider its memorandum and order. The case otherwise remains pending. A putative nationwide class action has also been filed by former employee agents alleging various violations of ERISA. This matter was dismissed with prejudice in late March 2004 by the trial court but will be the subject of further proceedings on appeal. In these matters, plaintiffs seek compensatory and punitive damages, and equitable relief. AIC has been vigorously defending these lawsuits and other matters related to its agency program reorganization. In addition, AIC is defending certain matters relating to its life agency program reorganization announced in 2000. These matters include an investigation by the EEOC with respect to allegations of age discrimination and retaliation. AIC is cooperating fully with the agency investigation and will continue to vigorously defend these and other claims related to the life agency program reorganization. The outcome of these disputes is currently uncertain.

        The Company is defending various lawsuits and regulatory proceedings that allege that it engaged in business or sales practices inconsistent with state or federal law. In addition, the company is defending several lawsuits brought by annuitants challenging trading restrictions the company adopted to limit market-timing activity. Plaintiffs seek a variety of remedies including monetary and equitable relief. The Company has been vigorously defending these matters, but their outcome is currently uncertain.

Other actions

        Various other legal and regulatory actions are currently pending that involve the Company and specific aspects of its conduct of business. Like other members of the insurance industry, the Company is the target of an increasing

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number of class action lawsuits and other types of litigation, some of which involve claims for substantial or indeterminate amounts. This litigation is based on a variety of issues including insurance and claim settlement practices. The outcome of these disputes is currently unpredictable. However, at this time, based on their present status, it is the opinion of management that the ultimate liability, if any, in one or more of these other actions in excess of amounts currently reserved is not expected to have a material effect on the results of operations, liquidity or financial position of the Company.

6.     Other Comprehensive Income

        The components of other comprehensive income on a pretax and after-tax basis are as follows:

		Three months ended June 30,
(in millions)		2004									2003
		Pretax			Tax			After- tax			Pretax			Tax			After- tax
Unrealized net capital gains and losses and net gains and losses on derivative financial instruments
Unrealized holding gains (losses) arising during the period		$	(907	)	$	317		$	(590	)	$	393		$	(138	)	$	255
Less: reclassification adjustments			(58	)		20			(38	)		(41	)		14			(27	)
Unrealized net capital gains (losses)			(849	)		297			(552	)		434			(152	)		282
Net gains (losses) on derivative financial instruments arising during the period			—			—			—			—			—			—
Less: reclassification adjustments			(4	)		1			(3	)		1			—			1
Net gains (losses) on derivative financial instruments			4			(1	)		3			(1	)		—			(1	)
Other comprehensive income (loss)		$	(845	)	$	296			(549	)	$	433		$	(152	)		281
Net income (loss)									55									85
Comprehensive income (loss)								$	(494	)							$	366

		Six months ended June 30,
(in millions)		2004									2003
		Pretax			Tax			After- tax			Pretax			Tax			After- tax
Unrealized net capital gains and losses and net gains and losses on derivative financial instruments
Unrealized holding gains (losses) arising during the period		$	(657	)	$	230		$	(427	)	$	491		$	(172	)	$	319
Less: reclassification adjustments			(62	)		22			(40	)		(94	)		33			(61	)
Unrealized net capital gains (losses)			(595	)		208			(387	)		585			(205	)		380
Net gains (losses) on derivative financial instruments arising during the period			—			—			—			—			—			—
Less: reclassification adjustments			(1	)		—			(1	)		1			—			1
Net gains (losses) on derivative financial instruments			1			—			1			(1	)		—			(1	)
Other comprehensive income (loss)		$	(594	)	$	208			(386	)	$	584		$	(205	)		379
Net income (loss)									(29	)								124
Comprehensive income (loss)								$	(415	)							$	503

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholder of
Allstate Life Insurance Company:

        We have reviewed the accompanying condensed consolidated statement of financial position of Allstate Life Insurance Company and subsidiaries (the "Company") as of June 30, 2004, and the related condensed consolidated statements of operations for the three-month and six-month periods ended June 30, 2004 and 2003, and the condensed consolidated statements of cash flows for the six-month periods ended June 30, 2004 and 2003. These interim financial statements are the responsibility of the Company's management.

        We conducted our reviews in accordance with standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

        Based on our reviews, we are not aware of any material modifications that should be made to such condensed consolidated interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

        We have previously audited, in accordance with auditing standards of the Public Company Accounting Oversight Board (United States), the consolidated statement of financial position of Allstate Life Insurance Company and subsidiaries as of December 31, 2003, and the related consolidated statements of operations and comprehensive income, shareholder's equity, and cash flows for the year then ended, not presented herein. In our report dated February 4, 2004, which report includes an explanatory paragraph as to changes in the Company's methods of accounting for embedded derivatives in modified coinsurance agreements and variable interest entities in 2003, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated statement of financial position as of December 31, 2003 is fairly stated, in all material respects, in relation to the consolidated statement of financial position from which it has been derived.

  

/s/ Deloitte & Touche LLP

Chicago, Illinois
August 10, 2004

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Item 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE THREE-MONTH AND SIX-MONTH PERIODS ENDED JUNE 30, 2004 AND 2003

OVERVIEW

        The following discussion highlights significant factors influencing the consolidated financial position and results of operations of Allstate Life Insurance Company (referred to in this document as "we", "our", "us", or the "Company"). It should be read in conjunction with the condensed consolidated financial statements and notes thereto found under Part I. Item 1. contained herein, and with the discussion, analysis, consolidated financial statements and notes thereto in Part I. Item 1. and Part II. Item 7. and Item 8. of the Allstate Life Insurance Company Annual Report on Form 10-K for 2003. We operate as a single segment entity, consistent with the way in which we use financial information to evaluate business performance and to determine the allocation of resources.

HIGHLIGHTS

•

Revenues decreased by $29 million or 2.5% to $1.11 billion in the second quarter of 2004 from $1.14 billion in the second quarter of 2003 and decreased $132 million or 5.5% to $2.26 billion in the first six months of 2004 from $2.39 billion for the first six months of 2003. The decreases in both periods were due to the effects of the disposal of the majority of our direct response distribution business, lower premiums on immediate annuities with life contingencies and higher realized capital losses, partially offset by higher net investment income and increased contract charges on variable annuities and interest-sensitive life.



•

Net income for the second quarter of 2004 decreased 35.3% to $55 million from $85 million for the same period in the prior year. The Company had a net loss of $29 million in the first six months of 2004 compared with net income of $124 million for the same period in the prior year. The decrease in the second quarter of 2004 was primarily attributable to higher realized capital losses, a current period loss on disposition of operations and a higher effective tax rate primarily attributable to tax expenses recorded in connection with the termination of a reinsurance agreement. The decrease in the first six months of 2004 was primarily due to a $175 million after-tax charge related to the cumulative effect of a change in accounting principle for AICPA Statement of Position 03-1, "Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate Accounts" ("SOP 03-1"), which was adopted on January 1, 2004. Income before the cumulative effect of change in accounting principle, after-tax, improved 17.7% compared to the first six months of 2003.



•

Total investments increased 9.6% as of June 30, 2004 compared to June 30, 2003 due primarily to contractholder deposits. This increase was negatively impacted by a decline in the net unrealized gains on fixed income securities from $4.35 billion at June 30, 2003 to $2.03 billion at June 30, 2004.



•

Contractholder deposits totaled $3.59 billion and $6.33 billion for the second quarter and first six months of 2004, respectively, compared to $2.56 billion and $4.30 billion for the second quarter and first six months of 2003, respectively. The increase was primarily attributable to institutional products and fixed annuities.



•

When comparing the second quarter and first six months of 2004 to the same periods in the prior year, the disposal of the majority of our direct response distribution business resulted in the following effects.

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OPERATIONS

        Premiums represent revenues generated from traditional life, immediate annuities with life contingencies and other insurance products that have significant mortality or morbidity risk.

        Contract charges are revenues generated from interest-sensitive life products, variable annuities, fixed annuities and other investment products for which deposits are classified as contractholder funds or separate accounts liabilities on the Condensed Consolidated Statements of Financial Position. Contract charges are assessed against the contractholder account values for maintenance, administration, cost of insurance and surrender prior to contractually specified dates. As a result, changes in contractholder funds and separate accounts liabilities are considered in the evaluation of growth and as indicators of future levels of revenues.

        The following table summarizes premiums and contract charges by product.

        The following table summarizes premiums and contract charges by distribution channel.

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        Total premiums decreased 26.0% to $151 million in the second quarter of 2004 and 42.0% to $302 million in the first six months of 2004 compared to the same periods of 2003. The decrease in the second quarter of 2004 compared to the same period in the prior year was attributable to the disposal of the majority of our direct response distribution business, which resulted in lower traditional life and other premiums. The decrease in the first six months of 2004 compared to the same period in the prior year was primarily due to the disposal of the majority of our direct response distribution business and lower premiums on immediate annuities with life contingencies. The declines in immediate annuities with life contingencies were primarily the result of stricter underwriting actions, which reduced sales of large individual contracts.

        Contract charges increased 7.8% to $236 million in the second quarter of 2004 and 9.8% to $470 million in the first six months of 2004 compared to the same periods of 2003. The increase in both periods was primarily due to higher contract charges on variable annuities as a result of overall higher account values in the current periods and increased contract charges on interest-sensitive life products resulting from in force business growth. The higher account values in the current periods were primarily attributable to favorable investment results during 2003 and net deposits, partially offset by surrenders and benefits.

        Contractholder funds represent interest-bearing liabilities arising from the sale of individual products, such as interest-sensitive life and fixed annuities, or institutional products, such as funding agreements. The balance of contractholder funds is equal to the cumulative deposits received and interest credited to the contractholder less cumulative contract maturities, benefits, surrenders, withdrawals and contract charges for mortality or administrative expenses.

        The following table shows the changes in contractholder funds.

(1)

The increase in contractholder funds due to the adoption of SOP 03-1 reflects the reclassification of certain products previously included as a component of separate accounts to contractholder funds, the reclassification of deferred sales inducements from contractholder funds to other assets and the establishment of reserves for certain liabilities that are primarily related to income and death benefit guarantees provided under variable annuity contracts.

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        Contractholder deposits increased 40.3% in the second quarter and 47.2% in the first six months of 2004 compared to the same periods in 2003, and average contractholder funds, excluding the impact of adopting SOP 03-1, increased 18.6% in the second quarter and 17.0% in the first six months of 2004 compared to the same periods in 2003 due to increases in institutional product and fixed annuity deposits. Institutional product deposits increased 137.2% and 163.7% in the second quarter and first six months of 2004, respectively, compared to the same periods in 2003, largely due to our assessment of market opportunities. Institutional product deposits included the inaugural offering during the second quarter of 2004 of our newly registered program totaling $800 million. Fixed annuity deposits increased 11.8% and 15.3% in the second quarter and first six months of 2004, respectively, compared to the same periods in 2003. The increases were attributable to higher consumer demand resulting from increasing market interest rates.

        Benefits and withdrawals increased 27.4% in the second quarter and 25.9% in the first six months of 2004 compared to the same periods in 2003. Benefits and withdrawals for the second quarter and first six months of 2004 represent an annualized withdrawal rate of 9.2% and 9.0%, respectively, based on the beginning of period contractholder funds balance excluding institutional product reserves, compared to 8.4% for the second quarter and first six months of 2003. Institutional product maturities declined 16.1% in the second quarter of 2004 compared to the same period in the prior year and were slightly higher in the first six months of 2004 compared to the same period in the prior year.

        Separate accounts liabilities represent contractholders' claims to the related legally segregated separate accounts assets. Separate accounts liabilities primarily arise from the sale of variable annuity contracts and variable life insurance policies. The following table shows the changes in separate accounts liabilities.

(1)

The decrease in separate accounts due to the adoption of SOP 03-1 reflects the reclassification of certain products previously included as a component of separate accounts to contractholder funds.

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        Separate accounts liabilities, excluding the impact of adopting SOP 03-1, increased $14 million and $343 million during the second quarter and first six months of 2004, respectively, compared to $1.27 billion and $698 million during the second quarter and first six months of 2003, respectively, as a result of net deposits, transfers from fixed accounts and positive investment results, partially offset by surrenders, benefits paid to contractholders and contract charges. Variable annuity contractholders often allocate a significant portion of their initial variable annuity contract deposit into a fixed rate investment option. The level of this activity is reflected above in the deposits allocated to the fixed accounts, while all other transfer activity between the fixed and separate accounts investment options is reflected in net transfers from fixed accounts. The liability for the fixed portion of variable annuity contracts is reflected in contractholder funds.

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        Net investment income increased 4.6% in the second quarter of 2004 and 3.8% in the first six months of 2004 compared to the same periods in 2003. The increases in both periods were the result of the effect of higher portfolio balances and increased income on partnership interests, partially offset by lower portfolio yields. Higher portfolio balances resulted from the investment of cash flows from operating and financing activities. Total investments as of June 30, 2004, increased 9.6% from June 30, 2003 due primarily to contractholder deposits, partially offset by a decline in unrealized capital gains on fixed income securities. The lower portfolio yields were primarily due to purchases of fixed income securities with yields lower than the current portfolio average.

        Net income analysis is presented in the following table.

(1)

Beginning in 2004, amortization of DSI is excluded from interest credited to contractholder funds for purposes of calculating gross margin. Amortization of DSI totaled $8 million in the second quarter of 2004 and $21 million in the first six months of 2004. Prior periods have not been restated.

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        Gross margin, a non-GAAP measure, represents premiums and contract charges and net investment income, less contract benefits and interest credited to contractholder funds. We use gross margin as a component of our evaluation of the profitability of our life insurance and financial product portfolio. Additionally, for many of our products, including fixed annuities, variable contracts, and interest-sensitive life insurance, the amortization of DAC and DSI is determined based on actual and expected gross margin. Gross margin is comprised of four components that are utilized to further analyze the business: investment margin, benefit margin, maintenance charges and surrender charges. We believe gross margin and its components are useful to investors because they allow for the evaluation of income components separately and in the aggregate when reviewing performance. Gross margin, investment margin and benefit margin should not be considered as a substitute for net income and do not reflect the overall profitability of the business. Net income is the GAAP measure that is most directly comparable to these margins. Gross margin is reconciled to GAAP net income in the table above.

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        The components of gross margin are reconciled to the corresponding financial statement line items in the following table.

		Three Months Ended June 30,
		Investment Margin						Benefit Margin						Maintenance Charges						Surrender Charges						Gross Margin
(in millions)		2004			2003			2004			2003			2004			2003			2004			2003			2004			2003
Premiums		$	—		$	—		$	151		$	204		$	—		$	—		$	—		$	—		$	151		$	204
Contract charges			—			—			128			120			91			81			17			18			236			219
Net investment income			795			760			—			—			—			—			—			—			795			760
Periodic settlements and accruals on non-hedge derivative instruments(1)			12			2			—			—			—			—			—			—			12			2
Contract benefits			(125	)		(129	)		(188	)		(249	)		—			—			—			—			(313	)		(378	)
Interest credited to contractholder funds(2)			(455	)		(440	)		—			—			—			—			—			—			(455	)		(440	)
		$	227		$	193		$	91		$	75		$	91		$	81		$	17		$	18		$	426		$	367

   

		Six Months Ended June 30,
		Investment Margin						Benefit Margin						Maintenance Charges						Surrender Charges						Gross Margin
(in millions)		2004			2003			2004			2003			2004			2003			2004			2003			2004			2003
Premiums		$	—		$	—		$	302		$	521		$	—		$	—		$	—		$	—		$	302		$	521
Contract charges			—			—			250			231			183			160			37			37			470			428
Net investment income			1,578			1,520			—			—			—			—			—			—			1,578			1,520
Periodic settlements and accruals on non-hedge derivative instruments(1)			18			5			—			—			—			—			—			—			18			5
Contract benefits			(256	)		(256	)		(393	)		(589	)		—			—			—			—			(649	)		(845	)
Interest credited to contractholder funds(2)			(891	)		(872	)		—			—			—			—			—			—			(891	)		(872	)
		$	449		$	397		$	159		$	163		$	183		$	160		$	37		$	37		$	828		$	757

(1)

Periodic settlements and accruals on non-hedge derivative instruments are reflected as a component of realized capital gains and losses on the Condensed Consolidated Statements of Operations.

(2)

Beginning in 2004, amortization of DSI is excluded from interest credited to contractholder funds for purposes of calculating gross margin. Amortization of DSI totaled $8 million in the second quarter of 2004 and $21 million in the first six months of 2004. Prior periods have not been restated.

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        Gross margin increased 16.1% in the second quarter and 9.4% in the first six months of 2004 compared to the same periods of 2003. The increase in the second quarter was due to increased investment margin, benefit margin and maintenance charges. The increase in the first six months was due to increased investment margin and higher maintenance charges, partly offset by a decrease in the benefit margin.

        Investment margin is a component of gross margin, both of which are non-GAAP measures. Investment margin represents the excess of net investment income over interest credited to contractholder funds and the implied interest on life-contingent immediate annuities included in the reserve for life-contingent contract

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benefits. We use investment margin to evaluate our profitability related to the difference between investment returns on assets supporting certain products and amounts credited to customers ("spread") during a fiscal period.

        Investment margin by product group is shown in the following table.

        Investment margin increased 17.6% in the second quarter of 2004 and 13.1% in the first six months of 2004 compared to the same periods of 2003. The increases in both periods were primarily due to an increase in contractholder funds and improved yields on investments supporting capital, traditional life and other products.

        The following table summarizes the annualized weighted average investment yield, interest crediting rates and investment spreads for the three months ended June 30.

        The following table summarizes the annualized weighted average investment yield, interest crediting rates and investment spreads for the six months ended June 30.

        In the second quarter and first six months of 2004 compared to the same periods in the prior year, the yield on the capital, traditional life and other products investment portfolio improved due to more effective cash management and higher investment income realized on investments accounted for using the equity method of accounting. These increases were partially offset by a decline in fixed annuity investment spreads as investment yield declines were not fully offset by crediting rate reductions in each of the comparable periods. The weighted average interest crediting rates on fixed annuity and interest-sensitive life products in force, excluding market value adjusted annuities, were approximately 45 basis points more than the underlying long-term guaranteed rates on these products as of June 30, 2004. The crediting rate on approximately 50% of these contracts was at the contractually guaranteed minimum rate as of June 30, 2004.

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        The following table summarizes the liabilities for these contracts and policies.

        Benefit margin is a component of gross margin, both of which are non-GAAP measures. Benefit margin represents premiums and cost of insurance contract charges less contract benefits. Benefit margin excludes the implied interest on life-contingent immediate annuities, which is included in the calculation of investment margin, and mortality charges on variable annuities, which are included as a component of maintenance charges. We use the benefit margin to evaluate our underwriting performance, as it reflects the profitability of our products with respect to mortality or morbidity risk during a fiscal period.

        Benefit margin by product group is shown in the following table.

        Benefit margin increased 21.3% in the second quarter of 2004 compared to the same period in the prior year as the decline resulting from the disposal of the majority of our direct response distribution business was more than offset by lower expenses related to guaranteed minimum death benefits ("GMDBs") on variable annuities and growth and lower mortality benefits on our traditional and interest-sensitive life products. Benefit margin declined 2.5% in the first six months of 2004 compared to the same period in 2003 as the disposal of the majority of our direct response distribution business more than offset growth and lower mortality benefits on our traditional and interest-sensitive life products and lower expenses related to GMDBs on variable annuities.

        As required by SOP 03-1, as of January 1, 2004, a reserve was established for GMDBs and guaranteed minimum income benefits ("GMIBs"), which in previous periods, in the case of GMDBs, were expensed as paid. Under the SOP, we anticipate that the benefit margin will be less volatile in the future, as contract benefit expense pertaining to GMDBs and GMIBs will be proportionate to the related revenue rather than cash payments made during the period. Included in the benefit margin for the second quarter and first six months of 2004 are additions to the reserve for guarantees of $5 million and $20 million, respectively, net of reinsurance. Included in the benefit margin for the second quarter and first six months of 2003 are GMDB payments of $27 million and $48 million, respectively, net of reinsurance, hedging gains and losses and other contractual arrangements. For further explanation of the impacts of the adoption of this accounting guidance, see Note 1 to the Condensed Consolidated Financial Statements.

        Amortization of DAC and DSI increased 53.4% in the second quarter of 2004 compared to the same period in the prior year as higher gross margin on fixed annuities and variable products resulted in increased amortization, which was partially offset by the elimination of DAC amortization on the direct response distribution business that was sold in January of 2004. Amortization of DAC and DSI decreased 3.0% in the first six months of 2004 compared to the same period in the prior year as higher amortization due to increased gross margin on fixed annuities and variable products was more than offset by amortization acceleration

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(commonly referred to as "DAC unlocking") totaling $89 million in the first six months of 2003 and the elimination of DAC amortization on the direct response distribution business sold in January of 2004.

        The adoption of SOP 03-1 required a new modeling approach for estimating expected future gross profits that are used when determining the amortization of DAC. Because of this new modeling approach, effective January 1, 2004, the variable annuity DAC and DSI assets were reduced by $124 million. This reduction was recognized as a cumulative effect of a change in accounting principle.

        Operating costs and expenses increased 4.2% in the second quarter of 2004 compared to the same period in the prior year and decreased 5.9% in the first six months of 2004 compared to the same period in the prior year. The following table summarizes operating costs and expenses.

        The increase in total operating costs and expenses in the second quarter of 2004 compared to the same period in the prior year was primarily the result of higher non-deferrable commissions, such as renewal and trail commissions, partially offset by the disposal of the majority of our direct response distribution business. For the first six months of 2004 compared to the same period in the prior year, total operating costs and expenses decreased as the disposal of the majority of our direct response distribution business more than offset the higher non-deferrable commissions and higher employee expenses.

INVESTMENTS

        The composition of the investment portfolio at June 30, 2004 is presented in the table below.

(1)

Fixed income securities are carried at fair value. Amortized cost basis for these securities was $52.59 billion.

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        Total investments increased to $64.42 billion at June 30, 2004 from $59.99 billion at December 31, 2003 primarily due to positive cash flows from operating and financing activities and increased funds associated with securities lending, partially offset by decreased unrealized gains on fixed income securities.

        Total investments at amortized cost related to collateral, primarily due to securities lending, increased to $3.04 billion at June 30, 2004, from $1.92 billion at December 31, 2003.

        At June 30, 2004, 92.8% of the consolidated fixed income securities portfolio was rated investment grade, which is defined as a security having a rating from the National Association of Insurance Commissioners ("NAIC") of 1 or 2; a Moody's equivalent rating of Aaa, Aa, A or Baa; an S&P equivalent rating of AAA, AA, A or BBB; or a comparable internal rating, when an external rating is not available.

        The unrealized net capital gains on fixed income and equity securities at June 30, 2004 were $2.03 billion, a decrease of $1.15 billion or 36.1% since December 31, 2003. The net unrealized gain for the fixed income portfolio totaled $2.03 billion, comprised of $2.61 billion of unrealized gains and $580 million of unrealized losses at June 30, 2004. This is compared to a net unrealized gain for the fixed income portfolio totaling $3.18

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billion at December 31, 2003, comprised of $3.47 billion of unrealized gains and $294 million of unrealized losses. Increases in gross unrealized losses were primarily attributable to rising market interest rates. The total decrease in net unrealized gains for the fixed income portfolio was $1.15 billion, of which $1.08 billion or 94.5% was related to investment grade securities. The total increase in gross unrealized losses for the fixed income portfolio was $286 million, of which $286 million or 100.0% was related to investment grade securities.

        Of the gross unrealized losses in the fixed income portfolio at June 30, 2004, $507 million or 87.4% were related to investment grade securities and are believed to be a result of the interest rate environment. Of the remaining $73 million of losses in the fixed income portfolio, $56 million or 76.7% was concentrated in the corporate fixed income portfolio and was primarily comprised of securities in the transportation, consumer goods and basic industry sectors. The gross unrealized losses in these sectors were primarily company specific or interest rate related. Approximately $27 million of the gross unrealized losses on the corporate fixed income portfolio and $8 million of the gross unrealized losses in the asset-backed securities portfolio were associated with the airline industry for which values were depressed due to company specific issues and economic issues related to fuel costs. We expect eventual recovery of these securities and the related sectors. Every security was included in our portfolio monitoring process.

        The net unrealized gain for the equity portfolio totaled $10 million, comprised of $12 million of unrealized gains and $2 million of unrealized losses at June 30, 2004. This is compared to a net unrealized gain for the equity portfolio totaling $4 million at December 31, 2003. Within the equity portfolio, the losses were primarily concentrated in the consumer goods and technology sectors. The losses in these sectors were company and sector specific. We expect eventual recovery of these securities and the related sectors. Every security was included in our portfolio monitoring process.

        Our portfolio monitoring process identifies and evaluates fixed income and equity securities whose carrying value may be other than temporarily impaired. The process includes a quarterly review of all securities using a screening process to identify those securities whose fair value compared to cost for equity securities or amortized cost for fixed income securities is below established thresholds for certain time periods, or which are identified through other monitoring criteria such as ratings downgrades or payment defaults.

        We also monitor the quality of our fixed income portfolio by categorizing certain investments as "problem", "restructured" or "potential problem." Problem fixed income securities are securities in default with respect to principal or interest and/or securities issued by companies that have gone into bankruptcy subsequent to our acquisition of the security. Restructured fixed income securities have rates and terms that are not consistent with market rates or terms prevailing at the time of the restructuring. Potential problem fixed income securities are current with respect to contractual principal and/or interest, but because of other facts and circumstances, we have serious concerns regarding the borrower's ability to pay future principal and interest, which causes us to believe these securities may be classified as problem or restructured in the future.

        The following table summarizes problem, restructured and potential problem fixed income securities.

        We have experienced a decrease in the amortized cost of fixed income securities categorized as problem and potential problem as of June 30, 2004 compared to December 31, 2003. The decrease was primarily related to the sale of holdings in these categories due to specific developments causing a change in our outlook and intent to hold those securities.

        We also evaluated each of these securities through our portfolio monitoring process and recorded write-downs when appropriate. We further concluded that any remaining unrealized losses on these securities were temporary in nature. While these balances may increase in the future, particularly if economic conditions are

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unfavorable, we expect that the total amount of securities in these categories will remain low relative to the total fixed income securities portfolio.

        Net Realized Capital Gains and Losses    The following table presents the components of realized capital gains and losses and the related tax effect.

        Dispositions in the above table include sales and other transactions such as calls and prepayments. We may sell securities during the period in which fair value has declined below amortized cost for fixed income securities or cost for equity securities. Recognizing in certain situations new factors such as negative developments, subsequent credit deterioration, relative value opportunities, market liquidity concerns and portfolio reallocations, we can subsequently change our previous intent to continue holding a security.

        The losses on dispositions in the second quarter of 2004 were related to sales of securities that were sold in recognition of relative value opportunities. The proceeds from these sales were reinvested in higher yielding securities.

CAPITAL RESOURCES AND LIQUIDITY

        Capital Resources consist of shareholder's equity and debt, representing funds deployed or available to be deployed to support business operations. The following table summarizes our capital resources.

        Shareholder's equity decreased $532 million as of June 30, 2004 when compared to December 31, 2003, primarily as a result of a decrease in unrealized net capital gains on fixed income securities, a net loss, dividends to Allstate Insurance Company ("AIC") totaling $50 million and the reclassification of a portion of redeemable preferred stock to long-term debt.

        Debt as of June 30, 2004, includes $70 million of mandatorily redeemable preferred stock that was reclassified to long-term debt during the second quarter of 2004 in accordance with the provisions of Statement of Financial Accounting Standard No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity". The reclassification occurred as a result of changes to contractual arrangements between us and the holder of the stock. These changes resulted in the stock, which was formerly reflected as a component of redeemable preferred stock on the condensed consolidated statements of financial position, becoming mandatorily redeemable. As of December 31, 2003, the balance of the stock subject to reclassification amounted to $77 million. During the second quarter of 2004, $7 million of this stock was redeemed.

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        In addition, debt as of June 30, 2004, also reflects $46 million related to the debt of an investment security consolidated under the provisions of Financial Accounting Standards Board Interpretation No. 46 and short-term debt of $55 million issued to The Allstate Corporation (the "Corporation") pursuant to an intercompany loan. For the consolidated investment security, we have no legal ownership of the assets and no obligation to repay the debt, and the holders of this debt have no recourse to the equity of the Company, as the sole source of payment of the liabilities is the assets. The intercompany loan agreement is at the discretion of the Corporation and the maximum amount of loans the Corporation will have outstanding to all of its eligible subsidiaries at any given point in time is limited to $1.00 billion.

        Financial Ratings and Strength    Our ratings are influenced by many factors including our operating and financial performance, asset quality, liquidity, asset/liability management, overall portfolio mix, financial leverage (i.e., debt), exposure to risks such as catastrophes and the current level of operating leverage. There have been no changes to our insurance financial strength ratings since December 31, 2003. However, in February 2004, A.M. Best revised the outlook to stable from positive for the insurance financial strength ratings of the Company and certain rated subsidiaries and affiliates.

        Liquidity Sources and Uses    As reflected in our condensed consolidated statements of cash flows, lower operating cash flows in the first six months of 2004 when compared to the first six months of 2003 primarily relate to declines in premiums, partially offset by increases in investment income. Cash flows used in investing activities increased in the first six months of 2004 as the investment of higher financing cash flow from contractholder funds was partially offset by lower operating cash flows.

        Higher cash flow from financing activities during the first six months of 2004 when compared to the first six months of 2003 reflects an increase in deposits received from contractholders, partially offset by maturities of institutional products and benefits and withdrawals from contractholders' accounts. For quantification of the changes in contractholder funds, see the Operating section of the MD&A.

        We have access to additional borrowing to support liquidity through an intercompany loan agreement with the Corporation, which includes the following funding sources:

•

A commercial paper program with a borrowing limit of $1.00 billion to cover short-term cash needs. As of June 30, 2004, the remaining borrowing capacity was $807 million; however, the outstanding balance fluctuates daily.



•

In June 2004, the Corporation replaced its primary credit facilities. It currently maintains one primary credit facility and one additional credit facility totaling $1.05 billion to cover short-term liquidity requirements. The primary facility is a $1 billion five-year revolving line of credit expiring in 2009. It contains an increase provision that would make up to an additional $500 million available for borrowing provided the increased portion could be fully syndicated at a later date among existing or new lenders. The other facility is a $50 million one-year revolving line of credit expiring in the third quarter of 2004 but was renewed in July 2004 for an additional year. The right to borrow under the five-year facility is subject to requirements to maintain a 37.5% debt to capital resources ratio and has no ratings triggers. These requirements are currently being met and we expect to continue to meet them in the future. There were no borrowings under either of these lines of credit during the first six months of 2004. The total amount outstanding at any point in time under the combination of the commercial paper program and the two credit facilities cannot exceed the amount that can be borrowed under the credit facilities.



•

The Corporation has the right to issue up to an additional $2.80 billion of debt securities, equity securities, warrants for debt and equity securities, trust preferred securities, stock purchase contracts and stock purchase units utilizing the shelf registration statement filed with the SEC in August 2003.

24

---

FORWARD-LOOKING STATEMENTS

        This document contains "forward-looking statements" that anticipate results based on our estimates, assumptions and plans that are subject to uncertainty. These statements are made subject to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. We assume no obligation to update any forward-looking statements as a result of new information or future events or developments.

        These forward-looking statements do not relate strictly to historical or current facts and may be identified by their use of words like "plans," "seeks," "expects," "will," "should," "anticipates," "estimates," "intends," "believes," "likely," "targets" and other words with similar meanings. These statements may address, among other things, our strategy for growth, product development, regulatory approvals, market position, expenses, financial results, litigation and reserves. We believe that these statements are based on reasonable estimates, assumptions and plans. However, if the estimates, assumptions or plans underlying the forward-looking statements prove inaccurate or if other risks or uncertainties arise, actual results could differ materially from those communicated in these forward-looking statements. Factors which could cause actual results to differ materially from those suggested by such forward-looking statements are incorporated in this Part I, Item 2 by reference to the information set forth in our Annual Report on Form 10-K, Part II, Item 7, under the caption "Forward-Looking Statements and Risk Factors."

25

---

Item 4.    Controls and Procedures

        With the participation of our principal executive officer and principal financial officer, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based upon this evaluation, the principal executive officer and the principal financial officer concluded that our disclosure controls and procedures are effective in timely alerting them to material information required to be included in our periodic reports filed with the Securities and Exchange Commission. However, the design of any system of controls and procedures is based in part upon assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives and are effective at the "reasonable assurance" level.

        During the fiscal quarter ended June 30, 2004, there have been no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

26

---

PART II.    OTHER INFORMATION

Item 1.    Legal Proceedings

        Information required for this Part II, Item 1 is incorporated by reference to the discussion under the heading "Regulation" and under the heading "Legal proceedings" in Note 3 of the Condensed Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q.

Item 6.    Exhibits and Reports on Form 8-K

(a)

Exhibits






An Exhibit Index has been filed as part of this report on page E-1.



(b)

Current Reports on Form 8-K were filed during the second quarter of 2004 on the following dates for the items indicated:






April 26, 2004, Item 9, regarding results of operations and financial condition for the quarter ended March 31, 2004.






May 7, 2004, Item 12, regarding results of operations and financial condition for the quarter ended March 31, 2004 and years ended December 31, 2003, 2002 and 2001.

27

---

SIGNATURE

        Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		Allstate Life Insurance Company (Registrant)
August 10, 2004		By	/s/  SAMUEL H. PILCH       Samuel H. Pilch (chief accounting officer and duly authorized officer of the Registrant)

28

---

Exhibit No.		Description
10.1		Amended and Restated Service and Expense Agreement among Allstate Insurance Company, The Allstate Corporation and Certain Affiliates, effective January 1, 2004. (As of August 9, 2004, some regulatory approvals and board approval are pending.)
10.2		Administrative Services Agreement between Allstate Life Insurance Company and Columbia Universal Life Insurance Company, effective June 1, 2004.
10.3		Reinsurance Agreement between Allstate Life Insurance Company and Columbia Universal Life Insurance Company, effective June 1, 2004.
10.4		First Amendment to Reinsurance Agreement between Allstate Life Insurance Company and Columbia Universal Life Insurance Company, effective July 1, 2004.
10.5		Amended and Restated Reinsurance Agreement between Allstate Life Insurance Company and Columbia Universal Life Insurance Company, effective June 1, 2004.
10.6		First Amendment to Amended and Restated Reinsurance Agreement between Allstate Life Insurance Company and Columbia Universal Life Insurance Company, effective July 1, 2004.
15		Acknowledgment of awareness from Deloitte & Touche LLP, dated August 10, 2004, concerning unaudited interim financial information
31.1		Rule 13a-14(a) Certification of Principal Executive Officer
31.2		Rule 13a-14(a) Certification of Principal Financial Officer
32		Section 1350 Certifications

E-1

---

                                                                    EXHIBIT 10.1

               AMENDED AND 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 INSURANCE
COMPANY, an Illinois insurance company ("Allstate"), THE ALLSTATE CORPORATION, a
Delaware corporation ("Allcorp"), and those affiliates of Allstate whose
signatures appear below (together with Allcorp, individually, an "Affiliate" and
collectively, the "Affiliates").

                                   WITNESSETH:

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

WHEREAS, the parties amended the Original Agreements on January 1, 2002 (the
"Amended Agreements") 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
Agreements to include provision by the Affiliates of certain services and
facilities to Allstate and to other Affiliates from time to time, subject to the
terms and conditions hereinafter set forth, and to provide for possible future
alternative methods of costing for facilities and services provided pursuant to
this 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 be furnished, at cost and in the same
     manner as such services and facilities are furnished to its other
     affiliates, those categories of facilities and services listed on Schedule
     A, including marketing, claims, underwriting and



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

     Services shall be performed in the name of and on behalf of an Affiliate
     and in a manner intended to assure the separate operating identity of the
     Affiliate. By way of example and without limiting the foregoing, (i) all
     forms utilized in connection with an Affiliate's business and all
     correspondence with holders of insurance policies or annuity contracts
     (collectively, "policies") shall bear its name and contain its address;
     (ii) all communications with policyholders shall be in such Affiliate's
     name; and (iii) all bank accounts into which such Affiliate's funds are
     deposited or from which its funds are withdrawn shall be such Affiliate's
     accounts, except that premiums collected on behalf of an Affiliate may be
     held by Allstate in a fiduciary capacity and transferred to such Affiliate
     as soon as practicable subsequent to collection, but in any event within
     two (2) business days.

     Services shall be provided in accord with all applicable state and federal
     legal and regulatory requirements, including those relating to privacy of
     customer information.

     The performance of any party under this Agreement with respect to the
     business and operations of an Affiliate shall at all times be subject to
     the direction and control of the Board of Directors of each such Affiliate.
     To the extent required by applicable regulation, such services with respect
     to any Affiliate shall be performed under guidelines and procedures
     established by that Affiliate. All service providers must comply with all
     licensing provisions applicable to any Affiliate for which they are
     providing services under this Agreement.

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

3.   Costs are defined as the actual costs and expenses incurred by the party
     providing the services (each, a "Providing Party") which are attributable
     to the services and facilities provided under this Agreement, such as:
     salaries and benefits; space rental; overhead expenses which may include
     items such as electricity, heat, and water; building maintenance services;
     furniture and other office equipment; supplies and special equipment such
     as reference libraries, electronic data processing equipment and the like.

                                                                               2


4.   Charges for the above services and facilities shall be determined by
     Allstate in accordance with the general provisions contained in Exhibits A
     through D. Exhibits A and B are based upon NAIC expense classification and
     allocation guidelines. In the event such guidelines are amended, Exhibits A
     and B shall be deemed amended to conform thereto. Allstate's Corporate
     Controller's Department will exercise reasonable judgment in appropriately
     revising these Exhibits, maintain proper documentation for revisions and
     communicate changes in allocation requirements to each party receiving
     services (each, a "Receiving Party") in a timely manner. Exhibit C provides
     a narrative overview of the expense management process and Exhibit D
     provides certain definitions used throughout. Cost bases shall be reviewed
     and adjusted on a prospective basis not less than annually to reflect the
     actual costs incurred.

5.   The amount charged to a Receiving Party shall not exceed the cost to the
     Providing Party with respect to providing such service or facility.
     Notwithstanding this provision or any other provision contained in this
     Agreement to the contrary, subject to obtaining any required regulatory
     approvals, the parties may agree in writing that one or more specific
     services or facilities may be provided on a basis other than cost. Each
     Providing Party will exercise reasonable judgment in periodically reviewing
     the expenses incurred and the percentage thereof allocated to each
     Receiving Party. Any Receiving Party may request a review of such expenses
     and their allocation and such review will occur promptly thereafter. Any
     basis other than cost that is utilized shall be intended to reasonably
     relate to the cost of the services or facilities involved.

6.   A Providing Party will charge each Receiving Party for all the services and
     facilities provided pursuant to this Agreement via the monthly expense
     allocation process, and payments will be through the monthly intercompany
     settlement process. This process will be completed by Allstate personnel in
     the most timely and effective method available.

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

     All Affiliate records shall be maintained in accordance with applicable
     insurance laws and accepted industry standards. Allstate shall maintain
     processes to provide backup records that will be available in the event the
     underlying records are destroyed in a natural or manmade catastrophe or
     disaster.

     In the event and to the extent that the books and records of an Affiliate
     are maintained hereunder in an electronic format, the following
     requirements shall apply. A computer terminal that is linked to the
     electronic system that generates the electronic records that constitute
     such Affiliate's books of account as they relate to the business covered by
     this Agreement, shall be kept and maintained at such Affiliate's principal

                                                                               3


     office. During all normal business hours, there shall be ready availability
     and easy access through such terminal (either directly by personnel of such
     Affiliate's domestic insurance regulator or indirectly with the aid of such
     Affiliate's employees) to the electronic media used to maintain the records
     comprising such Affiliate's books of account hereunder. The electronic
     records shall be in a readable form. The Providing Parties shall maintain
     format integrity and compatibility of the electronic records that
     constitute an Affiliate's books of account hereunder. If the electronic
     system that created such records 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 that is compatible with the new system.
     The Providing Parties shall maintain acceptable backup of the records
     constituting an Affiliate's books of account hereunder.

8.   Upon reasonable notice, and during normal business hours, any Receiving
     Party shall be entitled to, at its own expense, inspect records that
     pertain to the computation of charges for the facilities or services
     provided pursuant to this Agreement. The Providing Parties shall at all
     times maintain correct and complete books, records and accounts of all
     services and facilities furnished pursuant to this Agreement. Each
     Receiving Party shall have unconditional right of ownership of any records
     prepared on its behalf under this Agreement. The records maintained by a
     Providing Party in connection with services provided to an Affiliate under
     this Agreement shall be subject to inspection and review by such
     Affiliate's domestic insurance regulator.

9.   Any employee of a Providing Party who is performing duties hereunder at all
     times during the term of this Agreement shall be under the supervision and
     control of such Providing Party and shall not be deemed an employee of any
     Receiving Party.

10.  The scope of, and the manner in which, a Providing Party provides
     facilities and services to a Receiving Party shall be reviewed periodically
     by the parties involved in each transaction under this Agreement. All
     services and facilities shall be of good quality and suitable for the
     purpose for which they are intended.

11.  No party shall assign its obligations or rights under this Agreement
     without the written consent of the other parties and any required
     regulatory approvals. Allstate may terminate this Agreement in its
     entirety, and an Affiliate may cancel its participation in the arrangements
     under this Agreement, each by giving six months written notice to the other
     parties to this Agreement; provided, however, that in the event that the
     affiliate relationship ceases to exist with respect to an Affiliate, this
     Agreement shall terminate immediately with respect to such Affiliate. Under
     no circumstances will the initial term of this Amended and Restated
     Agreement exceed five (5) years from its effective date.

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

                                                                               4


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

13.  This Agreement together with such amendments and supplements as may from
     time to time be executed in writing by the parties in accordance with
     applicable insurance law, constitutes the entire agreement and
     understanding between the parties in respect of the transactions
     contemplated hereby and supercedes any other agreements arrangements or
     understandings between the parties relating to the subject matter hereof.
     Those service and administrative services agreements between and among any
     parties to this Agreement that are listed on Exhibit E are terminated as of
     the effective date of this Amended and Restated Agreement.

14.  Any unresolved dispute or difference between the parties arising out of or
     relating to this Agreement, or the breach thereof, shall be settled by
     arbitration in accordance with the Commercial Arbitration Rules of the
     American Arbitration Association and the Expedited Procedures thereof. The
     award rendered by the Arbitrator shall be final and binding upon the
     parties, and judgment upon the award rendered by the Arbitrator may be
     entered in any Court having jurisdiction thereof.

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


                           THE ALLSTATE CORPORATION

                           By:
                               ---------------------------------
                           Samuel H. Pilch
                           Group Vice President

                           ALLSTATE INSURANCE COMPANY

                           By:
                               ---------------------------------
                           Samuel H. Pilch
                           Group Vice President

                           AFD, INC.

                           By:
                               ---------------------------------
                           James P. Zils
                           Assistant Treasurer

                           AFDW, INC.

                           By:
                               ---------------------------------
                           James P. Zils
                           Treasurer

                                                                               5


                           ALFS, INC.

                           By:
                               ---------------------------------
                           James P. Zils
                           Assistant Treasurer

                           ALLSTATE ASSIGNMENT COMPANY

                           By:
                               ---------------------------------
                           James P. Zils
                           Treasurer

                           ALLSTATE ASSURANCE COMPANY

                           By:
                               ---------------------------------
                           James P. Zils
                           Vice President and Treasurer

                           ALLSTATE CALIFORNIA HOLDINGS, LLC

                           By:
                               ---------------------------------
                           James P. Zils
                           Vice President and Treasurer

                           ALLSTATE CALIFORNIA INSURANCE COMPANY

                           By:
                               ---------------------------------
                           James P. Zils
                           Vice President and Treasurer

                           ALLSTATE COUNTY MUTUAL INSURANCE COMPANY

                           By:
                               ---------------------------------
                           James P. Zils
                           Vice President and Treasurer

                           ALLSTATE DISTRIBUTORS, LLC

                           By:
                               ---------------------------------
                           James P. Zils
                           Assistant Treasurer

                                                                               6


                           ALLSTATE FINANCIAL, LLC

                           By:
                               ---------------------------------
                           James P. Zils
                           Treasurer

                           ALLSTATE FINANCIAL ADVISORS, LLC

                           By:
                               ---------------------------------
                           James P. Zils
                           Treasurer

                           ALLSTATE FINANCIAL CORPORATION

                           By:
                               ---------------------------------
                           James P. Zils
                           Treasurer

                           ALLSTATE FINANCIAL SERVICES, LLC

                           By:
                               ---------------------------------
                           James P. Zils
                           Treasurer

                           ALLSTATE FIRE AND CASUALTY INSURANCE COMPANY

                           By:
                               ---------------------------------
                           James P. Zils
                           Vice President and Treasurer

                           ALLSTATE FLORIDIAN INDEMNITY COMPANY

                           By:
                               ---------------------------------
                           James P. Zils
                           Vice President and Treasurer

                           ALLSTATE FLORIDIAN INSURANCE COMPANY

                           By:
                               ---------------------------------
                           James P. Zils
                           Vice President and Treasurer

                                                                               7


                           ALLSTATE HOLDINGS, LLC

                           By:
                               ---------------------------------
                           James P. Zils
                           Treasurer

                           ALLSTATE INDEMNITY COMPANY

                           By:
                               ---------------------------------
                           James P. Zils
                           Vice President and Treasurer

                           ALLSTATE INSURANCE COMPANY OF CANADA

                           By:
                               ---------------------------------

                           ALLSTATE INTERNATIONAL INSURANCE HOLDINGS, INC.

                           By:
                               ---------------------------------
                           James P. Zils
                           Treasurer

                           ALLSTATE INVESTMENT MANAGEMENT COMPANY

                           By:
                               ---------------------------------
                           James P. Zils
                           Treasurer

                           ALLSTATE INVESTMENTS, LLC

                           By:
                               ---------------------------------
                           James P. Zils
                           Treasurer

                           ALLSTATE LIFE INSURANCE COMPANY

                           By:
                               ---------------------------------
                           James P. Zils
                           Treasurer

                           ALLSTATE LIFE INSURANCE COMPANY OF CANADA

                           By:
                               ---------------------------------

                                                                               8


                           ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK

                           By:
                               ---------------------------------
                           James P. Zils
                           Treasurer

                           ALLSTATE MOTOR CLUB, INC.

                           By:
                               ---------------------------------
                           James P. Zils
                           Treasurer

                           ALLSTATE MOTOR CLUB, INC. OF CANADA

                           By:
                               ---------------------------------

                           ALLSTATE NEW JERSEY INSURANCE COMPANY

                           By:
                               ---------------------------------
                           James P. Zils
                           Vice President and Treasurer

                           ALLSTATE NON-INSURANCE HOLDINGS, INC.

                           By:
                               ---------------------------------
                           James P. Zils
                           Treasurer

                           ALLSTATE NORTH AMERICAN INSURANCE COMPANY

                           By:
                               ---------------------------------
                           James P. Zils
                           Vice President and Treasurer

                           ALLSTATE PROPERTY AND CASUALTY INSURANCE
                           COMPANY

                           By:
                               ---------------------------------
                           James P. Zils
                           Vice President and Treasurer

                                                                               9


                           ALLSTATE REINSURANCE LTD.

                           By:
                               ---------------------------------
                           James P. Zils
                           Vice President and Treasurer

                           ALLSTATE SETTLEMENT CORPORATION

                           By:
                               ---------------------------------
                           James P. Zils
                           Treasurer

                           ALLSTATE TEXAS LLOYD'S, INC.

                           By:
                               ---------------------------------
                           James P. Zils
                           Vice President and Treasurer

                           AMERICAN HERITAGE LIFE INSURANCE COMPANY

                           By:
                               ---------------------------------
                           James P. Zils
                           Assistant Treasurer

                           AMERICAN HERITAGE LIFE INVESTMENT CORPORATION

                           By:
                               ---------------------------------
                           James P. Zils
                           Treasurer

                           AMERICAN HERITAGE SERVICE COMPANY

                           By:
                               ---------------------------------
                           James P. Zils
                           Treasurer

                           CHARTER NATIONAL LIFE INSURANCE COMPANY

                           By:
                               ---------------------------------
                           James P. Zils
                           Treasurer

                                                                              10


                           COLUMBIA UNIVERSAL LIFE INSURANCE COMPANY

                           By:
                               ---------------------------------
                           James P. Zils
                           Treasurer

                           CONCORD HERITAGE LIFE INSURANCE COMPANY INC.

                           By:
                               ---------------------------------
                           James P. Zils
                           Assistant Treasurer

                           DEERBROOK GENERAL AGENCY, INC.

                           By:
                               ---------------------------------
                           James P. Zils
                           Vice President and Treasurer

                           DEERBROOK INSURANCE COMPANY

                           By:
                               ---------------------------------
                           James P. Zils
                           Vice President and Treasurer

                           ENCOMPASS INDEMNITY COMPANY

                           By:
                               ---------------------------------
                           James P. Zils
                           Vice President and Treasurer

                           ENCOMPASS INSURANCE COMPANY

                           By:
                               ---------------------------------
                           James P. Zils
                           Vice President and Treasurer

                           ENCOMPASS NEW JERSEY INSURANCE COMPANY

                           By:
                               ---------------------------------
                           James P. Zils
                           Vice President and Treasurer

                                                                              11


                           E.R.J. INSURANCE GROUP INCORPORATED

                           By:
                               ---------------------------------
                           James P. Zils
                           Treasurer

                           FIDELITY INTERNATIONAL COMPANY LIMITED

                           By:
                               ---------------------------------

                           FIDELITY INTERNATIONAL INSURANCE COMPANY LIMITED

                           By:
                               ---------------------------------

                           FIRST COLONIAL INSURANCE COMPANY

                           By:
                               ---------------------------------
                           James P. Zils
                           Assistant Treasurer

                           GLENBROOK LIFE AND ANNUITY COMPANY

                           By:
                               ---------------------------------
                           James P. Zils
                           Treasurer

                           INTRAMERICA LIFE INSURANCE COMPANY

                           By:
                               ---------------------------------
                           James P. Zils
                           Treasurer

                           IVANTAGE GROUP, LLC

                           By:
                               ---------------------------------
                           James P. Zils
                           Treasurer

                                                                              12


                           IVANTAGE SELECT AGENCY, INC.

                           By:
                               ---------------------------------
                           James P. Zils
                           Treasurer

                           KENNETT CAPITAL, INC.

                           By:
                               ---------------------------------
                           James P. Zils
                           Treasurer

                           KEYSTONE STATE LIFE INSURANCE COMPANY

                           By:
                               ---------------------------------
                           James P. Zils
                           Treasurer

                           LINCOLN BENEFIT LIFE COMPANY

                           By:
                           James P. Zils
                           Treasurer

                           LSA ASSET MANAGEMENT, LLC

                           By:
                              ----------------------------------
                           James P. Zils
                           Treasurer

                           NEW JERSEY HOLDINGS, LLC

                           By:
                               ---------------------------------
                           James P. Zils
                           Treasurer

                           NORTHBROOK HOLDINGS, LLC

                           By:
                               ---------------------------------
                           James P. Zils
                           Treasurer

                                                                              13


                           NORTHBROOK INDEMNITY COMPANY

                           By:
                               ---------------------------------
                           James P. Zils
                           Vice President and Treasurer

                           NORTHBROOK SERVICES, INC.

                           By:
                               ---------------------------------
                           James P. Zils
                           Treasurer

                           PAFCO INSURANCE COMPANY

                           By:
                               ---------------------------------

                           PEMBRIDGE AMERICA INC.

                           By:
                               ---------------------------------
                           James P. Zils
                           Treasurer

                           PEMBRIDGE INSURANCE COMPANY

                           By:
                               ---------------------------------

                           ROADWAY PROTECTION AUTO CLUB, INC.

                           By:
                               ---------------------------------
                           James P. Zils
                           Treasurer

                           STERLING COLLISION CENTERS, INC.

                           By:
                               ---------------------------------
                           James P. Zils
                           Treasurer

                           SURETY LIFE INSURANCE COMPANY

                           By:
                               ---------------------------------
                           James P. Zils
                           Treasurer

                                                                              14


                           TECH-COR, LLC

                           By:
                               ---------------------------------
                           James P. Zils
                           Treasurer

                           THE ALLSTATE FOUNDATION

                           By:
                               ---------------------------------
                           James P. Zils
                           Treasurer

                                                                              15


                                                                      SCHEDULE A

Each of the attached supporting schedules depicts examples of services to be
provided, 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                                             A-2
and Field Support

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

PROVIDER SERVICES

- -    ACCOUNTING: Provide actual monthly, quarterly and annual financial results.
     Specific services include producing financial statements and consulting on
     account coding, reporting, accounting research, shared service
     administration, expense allocation administration accounting governance and
     policies, and maintenance of any required central accounting computer
     system.

- -    AUDITING: Perform internal audits, which meet Generally Accepted Auditing
     Standards (GAAS) at intervals deemed necessary by Allstate.

- -    CLAIM RESERVES: Provide risk management services including exposure
     analysis, risk retention and risk financing.

- -    FINANCE AND PLANNING: Provide services related to the segment of Allstate's
     annual operating plan, long-term strategic plan and capital management
     allocation.

- -    FINANCE INNOVATION: Provide reporting and analysis templates and database
     support.

- -    GENERAL: Provide financial administrative services to ensure compliance
     with Service Provider's corporate policies

- -    PURCHASING: Provide services related for graphic arts and printing for
     internal and external communications.

- -    TAX: Comply with Federal and State tax filing requirements along with any
     tax research needed.

- -    TREASURY: Provide cash management services, including the pass through of
     all fees associated with setting up and maintaining bank accounts.

- -    PROCUREMENT: Strategic sourcing and the procuring of commodities inclusive
     of contract negotiation.

                                                                              17


                                  Schedule A-2
                            Technical Shared Service

PROVIDER SERVICES

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

         INFORMATION TECHNOLOGIES:

- -    Build and maintain systems necessary to process Affiliate's business.

- -    Support of online networks and end-user/desktop applications.

- -    Technical architecture design to include application 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 business applications to include equipment
     sourcing and voice-mail solutions.

- -    Database production support and development for mainframe and distributed
     applications.

- -    Enterprise Help Center for end-user problem resolution, equipment repair,
     system password resets.

         FIELD SUPPORT

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

- -    Maintain necessary bank accounts. This would include, but would not be
     limited to, a depository account, refund account and investment accounts.

- -    Deposit and balance remittance from Affiliate's clients. Process payments
     against client balances in the billing database.

- -    Pay and track non-computer related fixed asset transactions.

- -    Utilize the SAP general ledger system for financial recording.

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

                                                                              18


- -    System production, job scheduling and runs including technical support.

- -    Data processing support including data storage, data communication
     solutions, and network availability.

                                                                              19


                                  Schedule A-3
                         Human Resource Shared Services

PROVIDER SERVICES

- -    Disburse compensation, distribute pay stubs and paychecks, remit payroll
     taxes, calculate and remit to vendors benefit contributions
     (employer/employee), mail W-2's, provide lines of expense details and
     create new company pay system. These services will be delivered to client
     within 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 pay communications. Provide Affiliate
     with current market research/data to structure the most cost effective and
     competitive compensation plan.

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

- -    Coordinate participation in technical job fairs to attract qualified
     individuals, deliver new employee orientation, coordinate internship
     programs, provide sources of qualified candidates for technical recruiter
     and intern openings, and provide seven days of training to technical
     recruiters.

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

- -    Provide Affiliate with the most competitive benefits package for all
     employees. Conduct annual election to provide all employees with the option
     of changing benefit coverages.

- -    Provide all employees with required services for any payroll or benefit
     inquiries or processing.

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

- -    Provide Affiliate with accurate and timely payroll stubs, checks and tax
     remittances.

                                                                              20


                                  Schedule A-4
                                 Legal Services

PROVIDER SERVICES

- -    The Law and Regulation Department will provide legal advice, assist in the
     completion of business transactions, implement compliance programs, assist
     with dispute resolution and provide public advocacy for Affiliate.

- -    Provide for legal advice, assist in the completion of business
     transactions, assist with dispute resolution and provide for public
     advocacy.

- -    All legal services will be performed in a manner that is in compliance with
     all applicable laws, regulations and Codes of Professional Responsibility.

                                                                              21


                                  Schedule A-5
                               Corporate Relations

PROVIDER SERVICES

Support and implement communication strategies.

- -    Development of communication packages, scripts, and presentations.

- -    Sourcing and coordination of meetings with internal and external customers.

- -    Media preparation for external use.

- -    Coordination of production and recognition and/or special events as
     requested.

                                                                              22


                                  Schedule A-6
                    Marketing, Advertising, and Distribution

PROVIDER SERVICES

- -    Provide market research, perform database analysis to identify target
     customers and utilize focus groups to determine customer preferences.

- -    Support and implement marketing strategies.

- -    Development of marketing strategies, coordination of print and/or media
     requirements.

- -    Sourcing of marketing vendors.

- -    Coordination of media/print advertising.

- -    Assist in the development and implementation of distribution policy and
     practices, and provide other marketing and distribution support services.

- -    Upon request of a life insurance Affiliate, Allstate shall assist such life
     insurance Affiliate in preparation of marketing material, assist in the
     recruitment, supervision, and product training of agents, assist in the
     development and implementation of distribution policy and practices, and
     provide other marketing and distribution support services. However, all
     decisions regarding the approval of marketing material and the acceptance,
     appointment or termination of agents shall be made by any such life
     insurance Affiliate.

                                                                              23


                                  Schedule A-7
                       Allstate Print Communication Center
                          Customer Document Processing

PROVIDER SERVICES

Provide print services for document processing to include: quick print, web and
sheet-fed print and "laser print stuff mail".

- -    Provide programming support and consulting along with complete print
     project management.

- -    Provide for storage and retention of documents and/or equipment.

                                                                              24


                                  Schedule A-8
                     Real Estate & Construction / Facilities

                        Provider Services

- -    Real Estate Portfolio Management.

- -    Capital improvement management and construction.

- -    Engineering standards.

- -    Building / Facility compliance to local and governmental codes.

- -    Support of employee moves and relocation.

- -    Housekeeping and Security

- -    All other facilities necessary for the conduct of the business.

                                                                              25


                                                                       EXHIBIT A

           INTERCOMPANY SERVICE AND EXPENSE ALLOCATION SUMMARY MATRIX
          ALLSTATE INSURANCE COMPANY AND PROPERTY & CASUALTY AFFILIATES



    EXPENSE LINE ITEM                                                                                       BASIS OF EXPENSE
     PER U&I EXHIBIT*                          EXPENSE CLASSIFICATION DESCRIPTION**                           ALLOCATION***
- ----------------------------------------------------------------------------------------------------------------------------------
                                                                                                 
1.  Claim adjustment services    Investigation and adjustment of policy claims for direct,             No allocation - direct
                                 reinsurance assumed and ceded business. The more significant          charge to company
                                 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.).

2.  Commission and brokerage     All payments, reimbursements and allowances (on direct and            No allocation - direct
                                 reinsurance assumed and ceded business) to managers, agents,          charge to company based on
                                 brokers, solicitors or other producer types.                          agent contract


- ----------
*    Expense classifications per the statutory Underwriting and Investment
     Exhibit, Part 3, Expenses. Parties to the Agreement use these twenty-one
     classifications to record their operating expenses incurred. As described
     in Exhibit C, expenses for these classifications are also spread to three
     distinct functional expense groups: loss adjustment, other underwriting and
     investment.

**   This description provides only a synopsis of the types of expenses for each
     classification. Parties to the Agreement will utilize the NAIC Property &
     Casualty Annual Statement Instructions Appendix in expense handling.

***  Before consideration of any applicable reinsurance agreement.

                                                                              26




    EXPENSE LINE ITEM                                                                                       BASIS OF EXPENSE
     PER U&I EXHIBIT*                          EXPENSE CLASSIFICATION DESCRIPTION**                           ALLOCATION***
- ----------------------------------------------------------------------------------------------------------------------------------
                                                                                                 
4.  Advertising                  Typical expenses would include services of: (1) advertising agents,   Direct charge by company
                                 (2) public relations counsel, (3) advertisements in newspapers,       where known. Allocated
                                 periodicals, billboards, pamphlets and literature issued for          items handled as follows:
                                 advertising or promotional purposes, (4) related paper and printing   See Exhibit A Appendix at
                                 charges for advertising purposes, (5) radio broadcasts, (6) prospect  B; C 1; D 1 and E 1 for
                                 and mailing lists, (7) signs and medals for agents and                explanation of allocation
                                 (8) television commercials and production.                            by type of office

5.  Boards, bureaus and          Various dues, assessments, fees and charges for items such as: (1)    No allocation - direct
    associations                 underwriting boards, rating organizations, statistical agencies,      charge to company
                                 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.

6.  Surveys and underwriting     Costs to support the business including: (1) survey, credit, moral    See Exhibit A Appendix at
    reports                      hazard, character reports for underwriting, (2) appraisals for        B; D 1; and E 1 for
                                 underwriting, (3) fire records, (4) inspection and engineering        explanation of allocation
                                 billed specifically, (5) medical examiner services relating to        by type of office
                                 underwriting.

7.  Audit of assureds' records   Auditing fees and expenses of independent auditors for auditing       No allocation - direct
                                 payroll and other premium bases.                                      charge to company

8.  Salary and related items     Salaries, bonus, overtime, contingent compensation, and other         See Exhibit A Appendix at
                                 compensation of employees. This would include commission and          A; B; C 1, 2; D 1, 2, 3, 4;
                                 brokerage to employees when the activities for which the commission   E 2, 5; and F 1, 2, 3, 4
                                 is paid are a part of their duties as employees.                      for explanation by type of
                                                                                                       office


                                                                              27




    EXPENSE LINE ITEM                                                                                       BASIS OF EXPENSE
     PER U&I EXHIBIT*                          EXPENSE CLASSIFICATION DESCRIPTION**                           ALLOCATION***
- ----------------------------------------------------------------------------------------------------------------------------------
                                                                                                 
9.  Employee relations and       This category includes a variety of pension and insurance benefits    See Exhibit A Appendix at
    welfare                      for employees, as well as some miscellaneous expenditures. The        A; B; C 1, 2; D 1, 2, 3,
                                 first area entails: (1) cost of retirement insurance, pensions or     4; E 2, 5; and F 1, 2, 3,
                                 other retirement allowances and funds irrevocably devoted to the      4 for explanation by type
                                 payment of pensions or other employees' benefits, and (2) accident,   of office
                                 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.

10. Insurance                    Costs of insurance for employee/agent fidelity or surety bonds,       See Exhibit A Appendix at D
                                 public liability, burglary and robbery, automobiles and office        1; E 1; and F 1, 2, 3, 4
                                 contents.                                                             for explanation by type of
                                                                                                       office

11. Directors fees               Amounts relate to fees and other compensation paid to directors for   Direct charge to company
                                 attending Board or committee meetings.

12.  Travel and travel           Major expense subcategories include: (1) transportation, hotel,       See Exhibit A Appendix at
     items                       meals, telephone and other related costs associated for employees     A; B; C 1, 2; D 1, 2, 3,
                                 traveling, (2) expense for transfer of employees, (3) automobile      4; E 2, 5; and F 1, 2, 3,
                                 rental and license plates, depreciation, repairs and other            4 for explanation by type
                                 operating costs of automobiles (4) transportation, hotel and          of office
                                 meals/entertainment of guests, (5) dues and subscriptions to
                                 accounting, legal, actuarial or similar societies and associations.

14. Equipment                    Rent and repair of furniture and equipment, include the related       See Exhibit A Appendix at
                                 depreciation charges.                                                 A; B; C 1, 2; D 1, 2, 3, 4;
                                                                                                       E 1, 2, 3, 4; and F 1, 2,
                                                                                                       3, 4


                                                                              28




    EXPENSE LINE ITEM                                                                                       BASIS OF EXPENSE
     PER U&I EXHIBIT*                          EXPENSE CLASSIFICATION DESCRIPTION**                           ALLOCATION***
- ----------------------------------------------------------------------------------------------------------------------------------
                                                                                                 
15. Cost or depreciation of      Rent and repair of processing equipment and non-operating systems     Charged to companies. See
    EDP equipment and software   electronic data software, including the related depreciation and      Exhibit A, Appendix at A;
                                 amortization.                                                         B; C2; D1, 2, 3, 4

16. Printing and stationery      Generally, printing, stationery and office supplies (paper stock,     See Exhibit A Appendix at
                                 printed forms and manuals, Photostat copies, pens and pencils,        A; B; C 1, 2; D 1, 2, 3, 4;
                                 etc.). Also included would be policies and policy forms, in-house     E 2, 5; and F 1, 2, 3, 4
                                 employee publications, books, newspapers and periodicals including,
                                 tax and legal publications and services.

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,          See Exhibit A Appendix at
                                 auditing fees of independent auditors for examining records,          A; D 2, 3, 4; E 2; and F 1,
                                 services of tax experts and counsel, custodian fees, notary and       2
                                 trustees' fees.

20. Taxes, licenses and fees     Several categories comprise this expense classification: (1) state    No allocation - direct
                                 and local insurance taxes; (2) Insurance Department licenses and      charge to company
                                 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.


                                                                              29




    EXPENSE LINE ITEM                                                                                       BASIS OF EXPENSE
     PER U&I EXHIBIT*                          EXPENSE CLASSIFICATION DESCRIPTION**                           ALLOCATION***
- ----------------------------------------------------------------------------------------------------------------------------------
                                                                                                 
21. Real estate expenses         Salaries, wages and other compensation of maintenance workers in      Direct charges by company
                                 connection with owned real estate. Other expense items assigned to    are based on square
                                 this category may also include expenses associated with:              footage.
                                 operations; maintenance and insurance.

                                                                                                       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      Items for which no pre-printed statutory line exists.                 Cost Management will
    miscellaneous expenses       Description/title shown in Part 3 will vary based on need.            develop the most
                                                                                                       appropriate allocation
                                                                                                       basis and maintain
                                                                                                       documentation


                                                                              30




      EXPENSE LINE ITEM
        PER GENERAL                                                                                        BASIS OF EXPENSE
      EXPENSE EXHIBIT*                          EXPENSE CLASSIFICATION DESCRIPTION**                         ALLOCATION***
- ----------------------------------------------------------------------------------------------------------------------------------
                                                                                                 
6.5  Collection and bank         Collection charges on checks and drafts and charges for checking
     service charges             accounts and money orders.


NOTE: Expense classification for lines 3 and 23 are not applicable for the
Allstate Group.

                                                                              31


                                                           APPENDIX TO EXHIBIT A


           INTERCOMPANY SERVICE AND EXPENSE ALLOCATION SUMMARY MATRIX
                    ALLSTATE INSURANCE COMPANY AND AFFILIATES

A. Offices 001 (Corporate Home Office), 191 (Ivantage Product), 195 (Technology
   Support/Appservice), 198 (Broker Dealer), 200 (Procurement Governance), 201
   Allstate Investments, LLC), 203 (Research Center Shared Services), 204 (Human
   Resources 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 (Litigation Services)
   factors are based on Service Agreements. These Agreements are written
   documents detailing services and associated costs performed by the provider
   for the benefit of the recipient and are generated and approved through
   extensive discussions between service providers and service recipients.

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

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

   1.     Compensation
   2.     Time and effort studies
   3.     Statistical data

D. Regional Office factors are based on the following methodologies:

   1.     Compensation
   2.     Time and effort studies
   3.     System capacity studies
   4.     Statistical data

E. Regional Commercial Centers factors are based on 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 the following:

                                                                              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 AND EXPENSE ALLOCATION SUMMARY MATRIX
               ALLSTATE LIFE INSURANCE COMPANY AND LIFE AFFILIATES



     EXPENSE LINE ITEM
       PER GENERAL                                                                                        BASIS OF EXPENSE
     EXPENSE EXHIBIT 2*                        EXPENSE CLASSIFICATION DESCRIPTION**                         ALLOCATION***
- ----------------------------------------------------------------------------------------------------------------------------------
                                                                                                 
1.   Rent                        Rent for all premises occupied by the company, including any          Direct charges by company
                                 adequate rent for occupancy of its own buildings, in whole or in      are based on square
                                 part, except to the extent that allocation to other expense           footage. Allocated expenses
                                 classifications on a functional basis is permitted and used.          are handled per Exhibit B
                                                                                                       Appendix at A; B 1, 2; C 1,
                                                                                                       2 and D 1, 2, 3

2.   Salaries and wages          Salaries and wages, bonuses and incentive compensation to             Agents' compensation is a
                                 employees, overtime payments, continuation of salary during           direct charge to company.
                                 temporary short-term absences, dismissal allowances, payments to      The remaining expenses in
                                 employees while in training and other compensation to employees not   this category are allocated
                                 specifically designated herein, except to the extent that             per Exhibit B Appendix at
                                 allocation to their expense classifications is permitted and used.    A; B 1, 2; C 1, 2; and D 1,
                                                                                                       2, 3

                                 Contributions by company for pension and total permanent disability   See Exhibit B Appendix
                                 benefits, life insurance benefits, accident, health,                  at A; B 1, 2; C 1, 2; and
                                 hospitalization, medical, surgical, or other                          D 1, 2


- ----------
*    Expense classifications per the statutory Underwriting and Investment
     Exhibit, Part 3, Expenses. Parties to the Agreement use these twenty-one
     classifications to record their operating expenses incurred. As described
     in Exhibit C, expenses for these classifications are also spread to three
     distinct functional expense groups: loss adjustment, other underwriting and
     investment.

**   This description provides only a synopsis of the types of expenses for each
     classification. Parties to the Agreement will utilize the NAIC Property &
     Casualty Annual Statement Instructions Appendix in expense handling.

***  Before consideration of any applicable reinsurance agreement.

                                                                              35




     EXPENSE LINE ITEM
       PER GENERAL                                                                                        BASIS OF EXPENSE
     EXPENSE EXHIBIT 2*                        EXPENSE CLASSIFICATION DESCRIPTION**                         ALLOCATION***
- ----------------------------------------------------------------------------------------------------------------------------------
                                                                                                 
3.11 Contributions for           temporary disability benefits under a self-administered or            D 1, 2, 3
     benefit plans for           trusteed plan or for the purchase of annuity or insurance contracts.
     employees                   Appropriation of any other assignment of funds by company in
                                 connection with any benefit plan of the types enumerated herein.

3.12 Contributions for           Contributions by company for pension and total permanent disability   See Exhibit B Appendix
     benefit plans for           benefits, life insurance benefits, accident, health,                  at C 1, 2; and D 1, 2, 3
     agents                      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.

3.21 Payments to                 Payments by company under a program for pension and total and         No allocation - direct
     employees under non-        permanent disability benefits, death benefits, accident, health,      charge to company
     funded benefit plans        hospitalization, medical, surgical or other temporary disability
                                 benefits where no contribution or appropriation is made prior to
                                 the payment of the benefit.

3.22 Payments to agents          Payments by company under a program for pension and total and         No allocation - direct
     under non-funded            permanent disability benefits, death benefits, accident, health,      charge to company
     benefit plans               hospitalization, medical, surgical or other temporary disability
                                 benefits where no contribution or appropriation is made prior to
                                 the payment of the benefit.

3.31 Other employee              The net periodic postretirement benefit cost, meals to employees,     Agents' compensation is a
     welfare                     contribution to employee associations or clubs, dental                direct charge to company.
                                 examinations, medical dispensary or convalescent home expenses for    The remaining expenses in
                                 employees.                                                            this category are allocated
                                                                                                       per Exhibit B Appendix at
                                                                                                       A; B 1, 2; C 1, 2; and D 1,
                                                                                                       2, 3


                                                                              36




      EXPENSE LINE ITEM
        PER GENERAL                                                                                        BASIS OF EXPENSE
      EXPENSE EXHIBIT*                          EXPENSE CLASSIFICATION DESCRIPTION**                         ALLOCATION***
- ----------------------------------------------------------------------------------------------------------------------------------
                                                                                                 
3.32 Other agent welfare         The net periodic postretirement benefit cost, meals to                Agents' compensation
                                 employees, contribution to employee associations or clubs,            is a direct charge to
                                 dental examinations, medical dispensary or convalescent home          company. The remaining
                                 expenses for agents.                                                  expenses in this
                                                                                                       category are allocated
                                                                                                       per Exhibit B Appendix
                                                                                                       at C 1, 2; and D 1, 2,
                                                                                                       3

4.1  Legal fees and              Court costs, penalties and all fees or retainers for legal            No allocation - direct
     expenses                    services or expenses in connection with matters before                charge to company
                                 administrative or legislative bodies.

4.2  Medical examination         Fees to medical examiners in connection with new business             See Exhibit B Appendix
     fees                        reinstatements, policy changes and applications for                   at D 1, 2
                                 employment.

4.3  Inspection report           Fee for inspection reports in connection with new business,           See Exhibit B Appendix
     fees                        reinstatements, policy changes and applications for                   at D 1, 2; C
                                 employment. Cost of services furnished by the Medical
                                 Information Bureau.

4.4  Fees of public              Include expenses relating to this category except exclude             See Exhibit B Appendix
     accountants and             examination fees made by State Departments and internal audits        at A; B 1, 2; C 1, 2;
     consulting actuaries        by company employees.                                                 and D 1, 2

4.6  Expense of                  Payment to other than employees of fees and expenses for the          See Exhibit B Appendix
     investigation and           investigation, litigation and settlement of policy claims.            at D 1, 2
     settlement of
     policy claims


                                                                              37




      EXPENSE LINE ITEM
        PER GENERAL                                                                                        BASIS OF EXPENSE
      EXPENSE EXHIBIT*                          EXPENSE CLASSIFICATION DESCRIPTION**                         ALLOCATION***
- ----------------------------------------------------------------------------------------------------------------------------------
                                                                                                 
5.1  Traveling expenses          Traveling expense of officers, other employees, directors and         See Exhibit B Appendix
                                 agents, including hotel, meals, telephone, telegraph and              at A; B 1, 2; C 1, 2;
                                 postage charges incurred while traveling. Also include amounts        and D 1, 2, 3
                                 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.

5.2  Advertising                 Newspaper, magazine and trade journal advertising for the             See Exhibit B Appendix
                                 purpose of solicitation and conservation of business.                 At A, B 1, 2; C 1; and
                                 Billboard, sign and telephone directory, television, radio            D 1, 2
                                 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.

5.3  Postage, express,           Freight and cartage, cables, radiograms and teletype. Also            See Exhibit B Appendix
     telegraph and               charges for use, installation and maintenance of related              at A; B 1, 2; C 1, 2;
     telephone                   equipment if not included elsewhere.                                  and D 1, 2, 3

5.4  Printing and                Policy forms, riders, supplementary contracts, applications,          See Exhibit B Appendix
     stationery                  etc., rate books, instruction manuals, punch-cards, house             at A; B 1, 2; C 1, 2;
                                 organs, and all other printed material which is not required          and D 1, 2, 3
                                 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.

5.5  Cost or depreciation        The cost or depreciation of office machines except for such           See Exhibit B Appendix
     of furniture and            charges as may be reported in Line 5.3.                               at A; B 1, 2; C 1, 2;
     equipment                                                                                         and D 1, 2, 3


                                                                              38




      EXPENSE LINE ITEM
        PER GENERAL                                                                                         BASIS OF EXPENSE
      EXPENSE EXHIBIT*                           EXPENSE CLASSIFICATION DESCRIPTION**                        ALLOCATION***
- ----------------------------------------------------------------------------------------------------------------------------------
                                                                                                 
5.6 Rental of equipment          Rental of office machines except for such charges as may be           See Exhibit B Appendix at
                                 reported in Line 5.3.                                                 A; B 1, 2; C 1, 2; and D 1,
                                                                                                       2, 3

5.7 Cost or depreciation of      Include cost, depreciation and amortization for EDP equipment and     Charged to Companies See
    EDP equipment and software   operating and non-operating systems software.                         Exhibit B at A; B; C

6.1 Books and periodicals        Books, newspapers, periodicals, etc., including investment tax and    See Exhibit B Appendix at
                                 legal publications and information services, and including all such   A; B 1, 2; C 1, 2; and D 1,
                                 material for company's law department and libraries.                  2, 3

6.2 Bureau and association       All dues and assessments of organizations of which the company is a   No allocation - direct
    fees                         member. All dues for employees' and agents' memberships on the        charge to company
                                 company's behalf.

6.3 Insurance, except on real    Premiums for Workers' Compensation, burglary, holdup, forgery and     See Exhibit B Appendix
    estate                       the public liability insurance, fidelity or surety bonds, insurance   at A; B 1, 2; C 1, 2; and
                                 on contents of company-occupied buildings and all other insurance     D 1, 2, 3
                                 or bonds not included elsewhere.

6.4 Miscellaneous losses         Uncollectible losses due to deficiencies, defalcations, robbery, or   Primarily a direct charge
                                 forgery, except those offset by bonding companies' payments. Also     to company. Remaining
                                 include Worker's Compensation benefits not covered by insurance and   expenses are allocated per
                                 other uninsured losses not included elsewhere.                        Exhibit B Appendix at A;
                                                                                                       and D 1, 2, 3

6.5 Collection and bank          Collection charges on checks and drafts and charges for checking      See Exhibit B Appendix at
    service charges              accounts and money orders.                                            A; and D 1, 2, 3

6.6 Sundry general expenses      Direct expense of local agency meetings, luncheons and dinners,       See Exhibit B Appendix at
                                 tabulating service rendered by outside organizations, gifts and       A; B 1, 2; C 1, 2; and D 1,
                                 donations. Any portion of commissions and expense allowances on       2, 3
                                 reinsurance assumed for group business which represents specific
                                 reimbursement of expenses. Reimbursement to another insurer for
                                 expense of jointly underwritten group contracts.


                                                                              39




      EXPENSE LINE ITEM
        PER GENERAL                                                                                         BASIS OF EXPENSE
      EXPENSE EXHIBIT*                           EXPENSE CLASSIFICATION DESCRIPTION**                        ALLOCATION***
- ----------------------------------------------------------------------------------------------------------------------------------
                                                                                                 
6.7 Group service and            Administration fees, service fees, or any other form of allowance,    See Exhibit B Appendix at
    administration fees          reimbursement of expenses, or compensation (other than commissions)   D 1, 2; and B
                                 to agents, brokers, applicants, policyholders or third parties in
                                 connection with the solicitation, sale, issuance, service and
                                 administration of group business.

6.8 Reimbursements by            Report as a negative amount administrative fees, direct               No allocation - direct
    uninsured accident and       reimbursement of expenses, or other similar receipts or credits       charge to company
    health plans                 attributable to uninsured accident and health plans and the
                                 uninsured portion of partially insured accident and health plans.

7.1 Agency expense allowance     All bona fide allowance for agency expense, but not allowances        No allocation - direct
                                 constituting additional compensation.                                 charge to company

7.2 Agents' balances charged     Agents' balances charged off less any amounts recovered during the    No allocation - direct
    off                          year.                                                                 charge to company

7.3 Agency conferences other     Cost of banquets and rental of meeting rooms. Expenses of all         Primary dollars are a
    than local meetings          persons traveling to conferences and their expenses at conferences.   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       Direct charges by company
                                 real estate properties including insurance whether occupied by the    are based on square
                                 company or not; salaries and other compensation of managing agents    footage. Allocated expenses
                                 and their employees; expenses incurred in connection with rental of   are handled per Exhibit B
                                 such properties; legal fees specifically associated with real         Appendix at A; B 1, 2; C 1,
                                 estate transactions other than sale; rent, salaries and wages, and    2; and D 1, 2, 3
                                 other direct expenses of any branch of Home Office until engaged
                                 solely in real estate work (not real estate and mortgages
                                 combined).


                                                                              40




      EXPENSE LINE ITEM
        PER GENERAL                                                                                         BASIS OF EXPENSE
      EXPENSE EXHIBIT*                           EXPENSE CLASSIFICATION DESCRIPTION**                        ALLOCATION***
- ----------------------------------------------------------------------------------------------------------------------------------
                                                                                                 
9.2 Investment expenses          Only items for which no specific provisions has been made             See Exhibit B Appendix not
    elsewhere                    elsewhere, e.g., contributions or included assessments for            at A; and D 1, 2, 3
                                 bondholders' protective committees, fees of investment counsel,
                                 custodian and trustee fees.

9.3 Aggregate write-ins for      Items for which no pre-printed statutory line exists. Description     Cost Management will
    expenses                     title shown in Exhibit 2 will vary based on need.                     develop the most
                                                                                                       appropriate allocation
                                                                                                       basis and maintain
                                                                                                       documentation


                                                                              41




      EXPENSE LINE ITEM
          PER TAXES,
      LICENSES AND FEES                                                                                     BASIS OF EXPENSE
          EXHIBIT 3*                             EXPENSE CLASSIFICATION DESCRIPTION**                         ALLOCATION***
- ----------------------------------------------------------------------------------------------------------------------------------
                                                                                                 
1. Real estate taxes             Those taxes directly assessed against property owned by the           Direct charges by company
                                 company. Canadian and other foreign taxes should be included          are based on square
                                 appropriately.                                                        footage. Allocated
                                                                                                       expenses are handled per
                                                                                                       Exhibit B Appendix at A; B
                                                                                                       1, 2; C 1, 2; and D 1, 2, 3

2. State insurance department    Assessments to defray operating expenses of any state insurance       No allocation - direct
   licenses and fees             department. Canadian and other foreign taxes should be included       charge to company
                                 appropriately. Fees for examinations by state departments.

3. State taxes on premiums       State taxes based on policy reserves, if in lieu of premium taxes.    No allocation - direct
                                 Canadian and other foreign taxes should be included appropriately.    charge to company
                                 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.

4. Other state taxes             Assessments of state industrial or other boards for operating         No allocation - direct
                                 expenses or for benefits to sick unemployed persons in connection     charge to company
                                 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.

5.   U.S. Social Security        Company's contribution is based on the current tax rate, which is     See Exhibit B Appendix
     taxes                       applied to all wages, salary or compensation entered on the           at A; B 1, 2; C 1, 2; and
                                 employees earning record and federal unemployment tax.                D 1, 2, 3


                                                                              42



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


                                                                              43


                                                           APPENDIX TO EXHIBIT B

           INTERCOMPANY SERVICE AND EXPENSE ALLOCATION SUMMARY MATRIX
               ALLSTATE LIFE INSURANCE COMPANY 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 this Agreement.
     Once expenses are charged to Allstate or Affiliate, a second and third tier
     of allocation occurs, which allocates expenses to Life Profit Centers.

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

     1.  Compensation
     2.  Time and effort studies
     3.  Statistical data

C.   Regional Office allocations to the Life Company 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 Life Affiliates are based on:

     1.  Expenses are direct coded to the appropriate company.
     2.  Determination of how expense is to be allocated to profit center is
         based on time studies, project activity, required capital, invested
         assets and statistical data.

                                                                              44


                                                                       EXHIBIT C

                            EXPENSE PROCESS OVERVIEW
                            ALLSTATE INSURANCE GROUP

For purposes of operational analysis and financial reporting, functional expense
groups are made up of three primary categories: (1) Loss adjustment expenses,
(2) Other underwriting expenses; and (3) Investment expenses. A more detailed
description of expense items, which comprise these categories, is provided in
Exhibits A and B. These exhibits are the framework for reporting expenses
required by the NAIC. The expense categories, in turn, flow into the financial
records based on the following cost allocation methods: a direct charge basis;
an allocated or shared basis; or in accordance with the terms of one or several
reinsurance agreements. The combined expense process ultimately provides for
financial records that reflect the financial performance of the business.

On a day-to-day basis, expenses are incurred directly by companies within the
Allstate Group. The expenses are charted numerically by account. Formalized
procedures are used in order to ensure that the expenses are accurately recorded
and allocated to the appropriate office, company, cost center and cost element.
Allocations are also provided for various support costs, which include: company,
cost center and general ledger account (cost element) level with the objective
of providing for an accurate means of tracking expenses.

A brief description of each of the three expense categories follows:

- -    Loss adjustment expenses are various costs associated 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 allocated
     executive salaries, as well as other basic costs associated with the claim
     function (accounting, data processing, rent, utilities, etc.) are grouped
     in this category. Generally, these expenses may be either direct charged,
     allocated, or flow to an entity by means of a separate reinsurance
     agreement.

- -    Other underwriting expenses include acquisition, general expenses, taxes,
     licenses and fees. The larger piece, acquisition expenses, is comprised of
     agent commissions, various expenses related to underwriting (motor vehicle
     reports, home inspections, etc.), salaries, marketing and other allocations
     of expenses which support the production of new and renewal business.
     General expenses are typically administrative in nature and do not fit
     cleanly in any other expense grouping. Taxes, licenses and fees pertain to:
     taxes (income and franchise) and licenses fees levied by state and local
     government; insurance department expenses; and guaranty fund assessments.
     These expense categories are charged to an entity in any of the same three
     methods shown above for Loss adjustment expenses.

                                                                              45


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

The mechanism for recording expenses can occur by means of one of the following
three methods:

- -    DIRECT CHARGES - This method is used where the expenses are unique to the
     company incurring them. These types of expenses are not allocated to
     another Allstate Company due to their unique relationship to the company
     incurring them. Expense payments are classified to the responsible company
     through an accounting coding expense system involving charge company, cost
     center, and cost element (See Exhibits A and B for more detail). By way of
     example: agents' commissions, taxes, licenses and fees, and bad debt
     expense are company specific, 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
     properly transfer various support costs performed by one organization to
     another organization that they directly relate to. The basic justification
     for this cost transfer is efficiency gain, which is mutually beneficial to
     both parties. Certain processes are centrally performed on behalf of a
     number of entities, then allocated to the office/company being supported.
     Routine expenses of this nature often include support activities from the
     following functional areas: Accounting; Systems; Investments; Corporate
     Relations; Law and Regulation; and Human Resources. These costs cannot be
     directly expensed. It is necessary to provide for an appropriate method of
     allocation. An example of this method of allocation would relate to the
     accounting treatment of costs and expenses attributable to Allstate's
     Internal Audit Department (IAD). As part of the Allstate Corporate Home
     Office structure, IAD salaries and 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 delineated in a
     separate agreement between the parties which is referred to as a Shared
     Service Agreement (SSA). The SSA is a vehicle which allows the parties to
     agree in advance on certain essential terms and conditions which include: a
     description of the services to be provided; the period covered; costs and
     standards. The SSA 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 Department database is programmed to perform the allocation
     process on a monthly basis. The process begins with the extraction of
     direct costs for each office, company, cost center and general ledger
     account. Varying premium and claim statistics (e.g., policies in force,
     claim counts) as well as other common factors (e.g., number of employees,
     number of retirees) are then entered into the program.

                                                                              46


     The resulting data provides the bases, or allocation drivers, for
     transferring expenses from an office/cost center /general ledger account
     level of detail to other charge offices/cost centers /general ledger
     accounts. Detail records are generated in order to provide the source and
     recipient of the allocated expenses.

     A separate process has been initiated in order to periodically review the
     accuracy of the factors or drivers of the allocations. The accuracy of
     service provider time and effort studies may be taken into account (i.e.
     projected v. actual). Other factors that may be considered include an
     inventory of activities and customers in order to ensure that allocations
     are accurate. Intensive discussions and management agreement between the
     provider and customer are also an integral part of the process. Flexibility
     in the overall allocation process must routinely occur to provide for
     changes in the business activities or organizational structure.

2.   COMPANY - This step in the expense allocation process is similar the office
     expense allocation process described above in that allocations are charged
     to other affiliates. For instance, both Allstate Insurance Company and
     Allstate Life Insurance Company incur expenses on a direct basis for
     themselves and on behalf of their affiliates. A portion of these expenses
     may be transferred to the affiliated companies, as appropriate. Fixed
     factors are normally based on internal time and effort studies, agents'
     compensation, or statistical criteria such as gross policies issued or
     claim notice counts.

3.   UNIFORM ACCOUNTING TRANSFER (UAT) - The next step in the process is to
     reclassify all of the general office expenses addressed in the direct
     charges and expense allocation (office and company) sections above, having
     been recorded on a management basis, to their required statutory expense
     classifications. The use of a consistent basis for reporting expenses, as
     dictated by the NAIC, allows the Regulators to better compare various
     insurance companies' operations. On the property/casualty side, broad
     expense categories and detail breakouts are required for both the Expense
     Exhibit in the annual Statutory Statement as well as the Supplemental
     Expense Filing, which is contained in the Insurance Expense Exhibit. For
     Life companies, the General Expense and the Taxes, Licenses and Fees
     Exhibits from the annual Statutory Statement have distinct expense
     categories. A synopsis of these required expense categories, along with a
     description of each expense category and the basis of allocation presently
     used by Allstate is contained in Exhibit A and appendix (Property &
     Casualty affiliates) and Exhibit B and appendix (Life Company affiliates).

     In order to provide for accurate summarization and reporting, each general
     ledger account (cost element) included in the Chart of Accounts is assigned
     a statutory expense classification. Loss adjustment, other underwriting and
     investment expenses are the broad classifications that UAT applies to. By
     way of example, a systems function, whether relating to claims, sales, or
     investments, is initially classified as a general office expense on a
     management basis. Based on the UAT process, these expenses are reclassified
     for statutory reporting purposes to loss adjustment, other underwriting or
     investments. Taxes, licenses and fees, although included in the other
     underwriting expense category, are not used in the UAT calculation process.
     These

                                                                              47


     expenses are directly charged to the appropriate statutory classification
     within company.

     REINSURANCE AGREEMENTS - Separate arrangements exist between the
     property/casualty parent, Allstate Insurance Company, and certain
     affiliates, and the life parent, Allstate Life Insurance Company, and
     certain affiliates that drive expenses. Terms and conditions relating to
     methods of expense classification are contained in each of the individual
     reinsurance agreements. Typically, the reinsurer will be liable for a pre
     determined pro-rata share of all underwriting related expenses to support
     the assumed business. However, the reinsurer is not generally liable for
     the investment expenses.

                                                                              48


                                                                       EXHIBIT D

                                   DEFINITIONS

The following terms shown by "process flow" and "general" categories are
commonly used in explanation of the Allstate Group's overall expense process.
Presentation of the "process flow" section follows the same hierarchical order
of our current expense processing methodology.

PROCESS FLOW

COMPANY - Identifies legal entity that expense is charged to and may be
disbursed from. Each entity who is a party to this agreement is assigned a
separate three digit company code (e.g., Allstate Insurance Company - 010,
Allstate Life Insurance Company - 030). A "charged company" is the Allstate
entity charged with the expense under review and whose Statement of Income would
be ultimately impacted.

COST CENTERS -- Describe where specific costs were incurred. Cost Centers will
be the most common object used. Cost centers are areas of organizational
responsibility in which costs are incurred and planned. Identifies
administrative grouping within an office and duties as well as the manager
responsible. Regional Office Departments include: Underwriting; Sales; Human
Resources; and Claims. Each Regional Office is assigned a distinct four digit
number.

COST ELEMENTS -- They describe what specific costs have occurred. They are used
to plan and incur direct expenses for cost objects representing a unique item or
category of expense to the company.

INTERNAL ORDERS -- 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 or geographical location)
is a key building block in the accumulation of Allstate's expenses. This data is
used in preparing the various expense analyses/reports prepared. A "charged
office" is the office within an Allstate entity charged with the expense under
review. The decision regarding which office to charge with an expense is based
on Statement of Income impact analysis. Offices may include various high level
types, such as Profit Centers (Midwest Regional Office - 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 a three-digit code.

PROFIT CENTER -- Aligns expense to a distribution channel, geographic location
and product grouping (i.e. Denver Region, Colorado, Standard Auto).

                                                                              49


GENERAL

ASSESSMENTS/ALLOCATED EXPENSES - which, are incurred by one Allstate Company or
office and charged, or allocated, to other companies or offices 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 to Secondary Cost Elements and
are described in Exhibit C. Criteria for cost allocation "drivers" are based on
the implementation of management objectives. The assessments can use all three
methods of allocations: Field Percentage; Fixed Amount; and Variable Portions,
which contain Statistical Key Figures. Additional information is included in the
Exhibits and Appendixes attached. Allocation drivers agreed to by Management are
used to allocate expenses, and these are described in detail in the various
exhibits and appendixes.

REINSURANCE AGREEMENT - An agreement between two parties where one insurer
spreads its risk (premium, loss and expense) of losses with other insurers.

                                                                              50


                                                                       EXHIBIT E

                              TERMINATED AGREEMENTS

1.   Service Agreement effective as of July 1, 1989 between Allstate Insurance
     Company and Allstate Life Insurance Company of New York ("ALNY").

2.   Service Agreement effective July 1, 1989 between Allstate Life Insurance
     Company ("ALIC") and ALNY.

3.   Business Operations and Service Agreement effective October 1, 1997 between
     ALIC and ALNY.

4.   Service Agreement dated March 1, 1999 between Lincoln Benefit Life Company
     and ALNY.

                                                                              51

                                                                    EXHIBIT 10.2

================================================================================


                        ADMINISTRATIVE SERVICES AGREEMENT

                                 by and between

                         ALLSTATE LIFE INSURANCE COMPANY

                                       and

                    COLUMBIA UNIVERSAL LIFE INSURANCE COMPANY


                          Effective as of June 1, 2004


================================================================================



                        ADMINISTRATIVE SERVICES AGREEMENT

         This ADMINISTRATIVE SERVICES AGREEMENT (this "Agreement"), effective as
of June 1, 2004 (the "Effective Date"), is entered into by and between COLUMBIA
UNIVERSAL LIFE INSURANCE COMPANY, a life insurance company organized under the
laws of the State of Texas (the "Company"), and ALLSTATE LIFE INSURANCE COMPANY,
a life insurance company organized under the laws of the State of Illinois (the
"Administrator").

                                    RECITALS:

         WHEREAS, the parties have entered into an Amended and Restated
Reinsurance Agreement and a Reinsurance Agreement, both dated June 1, 2004
(collectively, the "Reinsurance Agreements"), pursuant to which the
Administrator, as Reinsurer, reinsures the Policies as described under the terms
of the Reinsurance Agreements (capitalized terms used herein and not defined
herein, unless otherwise indicated, have the respective meanings assigned to
them in the Reinsurance Agreements); and

         WHEREAS, the Company wishes to appoint the Administrator to administer
the Policies, and the Administrator desires to provide such administrative
services;

         NOW, THEREFORE, in consideration of the covenants and agreements set
forth herein, the parties hereto agree as follows:

                                    ARTICLE I

                                    AUTHORITY

         The Company hereby appoints the Administrator, and the Administrator
hereby accepts appointment, to provide as an independent contractor of the
Company, from and after the Effective Date, all of the administrative services
necessary or appropriate with respect to the Policies including those set forth
in this Agreement (the "Administrative Services"), all on the terms as set forth
in this Agreement. In providing the Administrative Services, the Administrator
shall handle all such matters, including but not limited to the billing and
collection of premiums and the defense, adjustment, settlement and payment of
all claims arising under the Policies, as more fully described below.
Notwithstanding any other provision of this Agreement to the contrary, the
Company shall have the right to direct the Administrator to perform any action
necessary for the Policies or the Administrative Services thereof to comply with
any federal, state, foreign or local statute, law, ordinance, rule, regulation,
order, writ, injunction, judgment or decree applicable to either party or any
such party's subsidiaries, properties, assets, officers, directors, employees or
agents ("Applicable Law"), or to cease performing any action that constitutes a
violation of Applicable Law.



                                   ARTICLE II

                STANDARD FOR SERVICES; FACILITIES; SUBCONTRACTING

         Section 2.1.    STANDARD FOR SERVICES. The Administrator shall
provide the Administrative Services in good faith and with the care, skill,
prudence and diligence of a person experienced in administering life, health,
and annuity business. Without limiting the generality of the foregoing, the
Administrator shall provide the Administrative Services (i) in accordance with
the terms of the Policies, (ii) in accordance with the applicable terms of this
Agreement, (iii) in compliance with Applicable Law, (iv) in accordance with
industry standards and, subject to the foregoing, (v) to the extent applicable,
in the same manner as it conducts its own business not subject to this
Agreement.

         Section 2.2.    FACILITIES AND PERSONNEL. To the extent not
sub-contracted to a Subcontractor, the Administrator shall at all times maintain
sufficient facilities and trained personnel of the kind necessary to perform its
obligations under this Agreement in accordance with the performance standards
set forth herein.

         Section 2.3.    SUBCONTRACTING. The Administrator may subcontract for
the performance of any Administrative Services with respect to the Policies to
(i) an Affiliate or (ii) any other Person or delayed (in each case, the
"Subcontractor"); PROVIDED, that, no such subcontracting shall relieve the
Administrator from any of its obligations or liabilities hereunder, and the
Administrator shall remain responsible for all obligations or liabilities of
such Subcontractor with regards to the providing of such service or services as
if provided by the Administrator.

                                   ARTICLE III

                                 CLAIMS HANDLING

         The Administrative Services with respect to claims for benefits
including claims outstanding on the Effective Date, shall include the following:

         Section 3.1.    CLAIM ADMINISTRATION SERVICES. The Administrator shall
acknowledge, consider, review, investigate, deny, settle, pay or otherwise
dispose of each claim for benefits reported under each Policy (each, a "Claim"
and collectively the "Claims").

         Section 3.2.    DESCRIPTION OF CLAIM ADMINISTRATION SERVICES. Without
limiting the foregoing, the Administrator shall:

               (i)       provide claimants under the Policy and their authorized
                         representatives (collectively, "Claimants") with Claim
                         forms and provide reasonable explanatory guidance to
                         Claimants in connection therewith;

               (ii)      establish, maintain and organize Claim files and
                         maintain and organize other Claims-related records;

               (iii)     review all Claims and determine whether the Claimant is
                         eligible for benefits and if so, the nature and extent
                         of such benefits;

                                        2


               (iv)      prepare and distribute to the appropriate recipients
                         any reports required by Applicable Law;

               (v)       respond to all written or oral Claims-related
                         communications that the Administrator reasonably
                         believes to require a response; and

               (vi)      maintain a complaint log with respect to the Policies
                         in accordance with applicable requirements of
                         Governmental Authorities and provide a copy of such
                         log, continuously updated through the last day of each
                         calendar quarter during the term of this Agreement, to
                         the Company on or before the tenth business day of each
                         calendar quarter covering changes during the preceding
                         calendar quarter.

                                   ARTICLE IV

                        REGULATORY AND LEGAL PROCEEDINGS

         Section 4.1.    REGULATORY COMPLAINTS AND PROCEEDINGS. The
Administrator shall:

               (i)       respond to any Claims payment related complaints or
                         inquiries made by any nation or government, any state
                         or other political subdivision thereof, or any entity
                         exercising executive, legislative, judicial, regulatory
                         or administrative functions of or pertaining to
                         government (each a "Governmental Authority"), and shall
                         make best efforts to do so within the Governmental
                         Authority's requested time frame for response or if no
                         such time frame is provided, within the time frame as
                         allowed by Applicable Law; and promptly provide a copy
                         of such response to the Company;

               (ii)      promptly notify the Company of any non-Claims payment
                         related complaints or inquiries initiated by a
                         Governmental Authority, and of any proceedings (either
                         Claims or non-Claims related) initiated by a
                         Governmental Authority, and, in either case, use best
                         efforts to prepare and send to the Governmental
                         Authority, with a copy to the Company, a response
                         within the Governmental Authority's requested time
                         frame for response or if no such time frame is
                         provided, within the time frame as allowed by
                         Applicable Law; PROVIDED, that, subject to meeting such
                         time frames, the Administrator shall provide such
                         response to the Company for its prior review and
                         comment;

               (iii)     supervise and control the investigation, contest,
                         defense and/or settlement of all complaints, inquiries
                         and proceedings by Governmental Authorities at its own
                         cost and expense, and in the name of the Company when
                         necessary; and

               (iv)      at the Company's request, provide to the Company a
                         report in a form mutually agreed by the parties
                         summarizing the nature of any complaints, inquiries or
                         proceedings by Governmental Authorities, the alleged
                         actions

                                        3


                         or omissions giving rise to such complaints, inquiries
                         or proceedings and copies of any files or other
                         documents that the Company may reasonably request in
                         connection with its review of these matters.

         Section 4.2.    LEGAL PROCEEDINGS. The Administrator shall:

               (i)       notify the Company promptly of any lawsuit, action,
                         arbitration or other dispute resolution proceedings
                         that are instituted or threatened with respect to any
                         matter relating to the Policies ("Legal
                         Proceeding(s)"), and in no event more than five (5)
                         business days after receipt of notice thereof;

               (ii)      supervise and control the investigation, contest,
                         defense and/or settlement of all Legal Proceedings at
                         its own cost and expense, and in the name of the
                         Company when necessary; and

               (iii)     keep the Company fully informed of the progress of all
                         Legal Proceedings handled by the Administrator in which
                         the Company is named a party and, at the Company's
                         request, provide to the Company a report summarizing
                         the nature of any Legal Proceedings, the alleged
                         actions or omissions giving rise to such Legal
                         Proceedings and copies of any files or other documents
                         that the Company may reasonably request in connection
                         with its review of these matters in each case other
                         than such files, documents and other information as
                         would, in the judgment of counsel to the Administrator,
                         lead to the loss or waiver of legal privilege.

         Section 4.3.    NOTICE TO ADMINISTRATOR. The Company shall give prompt
notice to the Administrator of any Legal Proceeding made or brought against the
Company after the Effective Date arising under or in connection with the
Policies to the extent known to it and not made against or served on the
Administrator or a Subcontractor, and in no event more than five (5) business
days after receipt of notice hereof, and shall promptly furnish to the
Administrator copies of all pleadings in connection therewith. The Administrator
shall assume the defense of the Company.

         Section 4.4.    DEFENSE OF REGULATORY AND LEGAL PROCEEDINGS.
Notwithstanding anything in this Agreement to the contrary, the Company shall
have the right to engage in its own separate legal representation, at its own
expense, and to participate fully in the defense of any Legal Proceedings or
complaints, inquiries or proceedings by governmental authorities with respect to
the Policies in which the Company is a named party without waiving any right to
indemnification it may have under Article XIV hereof. The Administrator and the
Company shall cooperate with each other with respect to the administration of
any Legal Proceeding and any complaint, inquiry or proceeding by governmental
authorities.

                                        4


                                    ARTICLE V

                            BILLINGS AND COLLECTIONS

         Section 5.1.    BILLING AND COLLECTION SERVICES. The Administrator
shall assume all responsibility for billing and collecting premiums and other
amounts payable with respect to the Policies from and after the Effective Date.
The Company shall promptly remit to the Administrator any such amounts received
by it with respect to the Policies.

                                   ARTICLE VI

                           CERTAIN ACTIONS BY COMPANY

         Section 6.1.    FILINGS. The Company shall prepare and timely file any
filings required to be made with any Governmental Authority that relate to the
Company generally and not just to the Policies, including filings with guaranty
associations and filings and premium tax returns with taxing authorities. The
Administrator shall, in a timely fashion in light of the dates such filings by
the Company are required, provide to the Company all information in the
possession of the Administrator with respect to the Policies that may be
reasonably required for the Company to prepare such filings and tax returns.

         Section 6.2.    ANNUAL ADJUSTMENT. The Company shall pay or provide to
the Administrator the benefit of any Post-Effective Date Assessments, which have
been or can be applied to reduce the Company's premium tax liability ("Premium
Tax Credits"). The Company shall provide to the Administrator by March 15 of
each year a statement of the amount (the "Annual Adjustment") of (i) premium
taxes due with respect to premiums collected during the prior calendar year (to
the extent that such premium taxes constitute reinsured risks with respect to
the Policies), less (ii) estimated premium taxes paid by the Administrator to
the Company with respect to such premiums under the provisions of Article VII,
less (iii) Premium Tax Credits for the prior calendar year. By March 30 of each
year the Administrator shall pay to the Company the Annual Adjustment, if a
positive amount, and the Company will pay or credit to the Administrator the
Annual Adjustment, if a negative amount.

                                   ARTICLE VII

              QUARTERLY PREMIUM TAX AND INSOLVENCY FUND ACCOUNTINGS

         Section 7.1.    QUARTERLY ACCOUNTINGS. Within thirty (30) days after
the end of each calendar quarter that this Agreement is in effect (or more
frequently as mutually agreed by the parties), the Company shall submit to the
Administrator a written statement of accounting in a form and containing such
information to be agreed upon by the parties hereto (each, an "Insolvency Fund
Quarterly Accounting") setting forth the Insolvency Fund amounts assessed or
payable to the extent that such assessments constitute reinsured risks with
respect to the Policies (collectively, the "Post-Effective Date Assessments").
Within thirty (30) days after the last day of each calendar quarter that this
Agreement is in effect (or more frequently as mutually agreed by the parties),
the Administrator shall submit to the Company a written statement of accounting
in a form and containing such information to be agreed upon by the parties
hereto (each, a

                                        5


"Quarterly Premium Tax Accounting", and together with the Insolvency Fund
Quarterly Accountings, the "Quarterly Accountings") setting forth the estimated
premium taxes due with respect to the Policies as a result of premiums collected
during such quarter. Concurrent with the delivery of each Quarterly Premium Tax
Accounting, the Administrator shall remit to the Company the amount set forth on
such Quarterly Premium Tax Accounting with respect to such estimated premium
taxes due and the amount set forth in such Insolvency Fund Quarterly Accounting
with respect to the Post-Effective Date Assessments, and any other amounts owed
to the Company pursuant to this Agreement; PROVIDED, HOWEVER, that any
Post-Effective Date Assessments set forth in an Insolvency Fund Quarterly
Accounting received by the Administrator less than five (5) Business Days prior
to the Administrator's delivery of such Quarterly Premium Tax Accounting will be
paid within fifteen (15) Business Days of receipt by the Administrator of such
Insolvency Fund Quarterly Accounting. Each of the parties agrees to supply to
the other a copy of all supporting data used in preparing the Quarterly
Accountings prepared by such party.

         Section 7.2.    ADJUSTMENTS REGARDING QUARTERLY ACCOUNTINGS. In the
event that subsequent data or calculations require revision of any of the
Quarterly Accountings, the required revision and appropriate payments thereunder
shall be made within ten (10) Business Days after the parties hereto mutually
agree as to the appropriate revision.

                                  ARTICLE VIII

                     REGULATORY MATTERS AND AUDIT REPORTING

         Section 8.1.    REGULATORY COMPLIANCE AND REPORTING. The Administrator
shall provide to the Company such information with respect to the Policies as is
required to satisfy all current and future informational reporting, prior
approval and any other requirements imposed by any Governmental Authority. Upon
the reasonable request of the Company, the Administrator shall timely prepare
such reports and summaries, including statistical summaries, as are necessary or
reasonably required to satisfy any requirements imposed by a Governmental
Authority upon the Company with respect to the Policies. In addition, the
Administrator, upon the reasonable request of the Company, shall promptly
provide to the Company copies of all existing records relating to the Policies
(including, with respect to records maintained in machine readable form, hard
copies) that are necessary to satisfy such requirements. Among other
responsibilities:

               (i)       The Administrator shall promptly prepare and furnish to
                         Governmental Authorities all reports and related
                         summaries (including, without limitation, statistical
                         summaries), certificates of compliance and other
                         reports required or requested by a Governmental
                         Authority.

               (ii)      The Administrator shall assist the Company and
                         cooperate with the Company in doing all things
                         necessary, proper or advisable, in the most expeditious
                         manner practicable in connection with any and all
                         market conduct or other Governmental Authority
                         examinations relating to the Policies.

                                        6


         Section 8.2.    REPORTING AND ACCOUNTING.  The Administrator shall
assume the reporting and accounting obligations set forth below:

               (i)       As soon as practicable but not more than forty (40)
                         days after the end of each calendar quarter that this
                         Agreement is in effect (or more frequently as mutually
                         agreed by the parties), the Administrator shall timely
                         provide to the Company reports and summaries of
                         transactions (and, upon request of the Company,
                         detailed supporting records) related to the Policies as
                         may be reasonably required for use in connection with
                         the preparation of the Company's statutory and GAAP
                         financial statements, tax returns and other required
                         financial reports and to comply with the requirements
                         of the regulatory authorities having jurisdiction over
                         the Company, including all premium written and earned
                         and all Losses and Allocated Loss Adjustment Expenses
                         paid. The parties shall cooperate in good faith to
                         establish the manner for the providing of such reports.

               (ii)      The Administrator shall provide to the Company such
                         reports or summaries (and, upon the request of the
                         Company, detailed supporting records therefor) related
                         to the payment of commissions under the Policies as
                         agreed by the parties.

         Section 8.3.    ADDITIONAL REPORTS AND UPDATES. For so long as this
Agreement remains in effect, each party shall periodically furnish to the other
such other reports and information as may be reasonably required by such other
party for regulatory, tax or similar purposes and reasonably available to it.

                                   ARTICLE IX

                      MISCELLANEOUS ADMINISTRATIVE SERVICES

         The Administrator shall assume the obligations set forth below:

               (i)       The Administrator shall timely pay to the
                         policyholders, including any certificateholder
                         thereunder, any refunds of any kind due under the
                         Policies.

               (ii)      The Administrator shall process all policy changes,
                         lapses, cancellations, and reinstatements in accordance
                         with the terms of this Agreement and the express terms
                         of the Policies and shall assume responsibility for
                         providing all other administrative servicing in
                         connection with the Policies.

               (iii)     The Administrator shall pay commissions due under the
                         Policies.

               (iv)      The Administrator shall provide such other
                         Administrative Services as are necessary or appropriate
                         to fully effectuate the purpose of the Reinsurance
                         Agreements and this Agreement, including such
                         Administrative Services as are not performed by or on
                         behalf of Company on the date hereof but

                                        7


                         the need for which may arise due to changes or
                         developments in Applicable Law.


                                   ARTICLE X

                                BOOKS AND RECORDS

         The Administrator shall keep accurate and complete records, files and
accounts of all transactions and matters with respect to the Policies and the
administration thereof in accordance with Applicable Law and its record
management practices in effect from time to time for the Administrator's
insurance business not covered by this Agreement, if any. The parties to this
Agreement and their designated representatives may upon reasonable notice
inspect, at the offices of the Administrator or the Company where such records
are located, the papers and any and all other books or documents of the
Administrator or the Company reasonably relating to this Agreement, including
the Policies, and shall have access to appropriate employees and representatives
of the other party, in each case during normal business hours for such period as
this Agreement is in effect or for as long thereafter as any rights or
obligations of any party survives or the Administrator or the Company reasonably
need access to such records for regulatory, tax or similar purposes. The
information obtained shall be used only for purposes relating to the
transactions contemplated under this Agreement.

                                   ARTICLE XI

                                   COOPERATION

         Each party hereto shall cooperate fully with the other in all
reasonable respects in order to accomplish the objectives of this Agreement
including making available to each their respective officers and employees for
interviews and meetings with Governmental Authorities and furnishing any
additional assistance, information and documents as may be reasonably requested
by a party from time to time.

                                   ARTICLE XII

                              PRIVACY REQUIREMENTS

         In providing the Administrative Services provided for under this
Agreement, and in connection with maintaining, administering, handling and
transferring the data of the policyholders and other recipients of benefits
under the Policies, the Administrator shall, and shall cause its Affiliates and
any permitted Subcontractors to, comply with all confidentiality and security
obligations applicable to them, in connection with the collection, use,
disclosure, maintenance and transmission of personal, private, health or
financial information about individual policyholders or benefit recipients,
including the provisions of privacy policies under which such information was
gathered, those laws currently in place and which may become effective during
the term of this Agreement, including Gramm-Leach-Bliley Act, the Health
Insurance Portability and Accountability Act of 1996 and any other Applicable
Laws. The Administrator shall entitle the Company and its agents and
representatives, the Commissioner of Health and Human Services and such other
Governmental Authorities to the extent required by

                                        8


Applicable Law, to audit the Administrator's compliance herewith. The
Administrator shall also enable individual subjects of personally identifiable
information, upon request from such individuals, to review and correct
information maintained by the Administrator about them, and to restrict use of
such information. The Administrator shall promptly report to the Company any
violation of this provision of which the Administrator becomes aware.

                                  ARTICLE XIII

                    CONSIDERATION FOR ADMINISTRATIVE SERVICES

         There shall be no fee or other consideration due to the Administrator
for the performance of Administrative Services under this Agreement.

                                   ARTICLE XIV

                                 INDEMNIFICATION

         Section 14.1.   INDEMNIFICATION. (a) As used in this Article XIV,
"Loss" and/or "Losses" shall mean losses, liabilities, costs, claims, causes of
action, demands, settlements, damages including compensatory, extra contractual
and punitive damages, fines, penalties and expenses (including reasonable
attorneys' fees and expenses).

               (b)       Administrator agrees to indemnify and hold harmless
Company and any of its directors, officers, employees, agents, representatives
and affiliates (and the directors, officers, employees, agents and
representatives of such affiliates) from any and all Losses arising out of or
caused by any actual or alleged: (i) fraud, theft or embezzlement by directors,
officers, employees, agents, subcontractors, successors or assigns of
Administrator arising out of the performance of its obligations under of this
Agreement during its term; (ii) failure, either intentional or unintentional, of
Administrator to properly perform the services or take the actions required by
this Agreement, including the failure to properly process, evaluate and pay
claims or to comply with disbursement requests in accordance with the terms of
this Agreement; (iii) acts of negligence or willful misconduct committed by
directors, officers, employees, agents, subcontractors, successors or assigns of
Administrator arising out of the performance of its obligations under its term;
or (iv) failure of Administrator to comply with Applicable Laws, rules and
regulations arising out of the performance of its obligations under its term of
this Agreement, other than in the case of (i), (ii), (iii) or (iv), any failure
on the part of Administrator caused by the action or inaction of the Company.

               (c)       Company agrees to indemnify and hold harmless
Administrator and any of its directors, officers, employees, agents,
representatives and affiliates (and the directors, officers, employees, agents
and representatives of such affiliates) from any and all Losses arising out of
or caused by any actual or alleged: (i) fraud, theft or embezzlement by
directors, officers, employees, agents, successors or assigns of Company arising
out of the performance of its obligations under its term; (ii) failure, either
intentional or unintentional of Company to take the actions required by this
Agreement; (iii) acts of negligence or willful misconduct committed by
directors, officers, employees, agents, successors or assigns of Company arising
out of this

                                        9


Agreement during its term ; or (iii) failure of Company to comply with
Applicable Laws, rules and regulations arising out of this Agreement during its
term other than any failure on the part of Company caused by the action or
inaction of Administrator, including when acting in the name or on behalf of
Company, whether or not in compliance with the terms of this Agreement.

         Section 14.2.   INDEMNIFICATION PROCEDURES. (a) In order for a party
(the "Indemnified Party") to be entitled to any indemnification provided for
under this Agreement in respect of, arising out of or involving a claim or
demand made by, or an action, proceeding or investigation instituted by, any
Person not a party to this Agreement (a "Third Party Claim"), such Indemnified
Party must notify the other party (the "Indemnifying Party") in writing, and in
reasonable detail, of the Third Party Claim within ten (10) business days after
such Indemnified Party learns of the Third Party Claim; PROVIDED, HOWEVER, that
failure to give such notification shall not affect the indemnification provided
hereunder except to the extent the Indemnifying Party shall have been actually
prejudiced as a result of such failure . Thereafter, the Indemnified Party shall
deliver to the Indemnifying Party, within five (5) business days after the
Indemnified Party's receipt thereof, copies of all notices and documents
(including court papers) received by the Indemnified Party relating to the Third
Party Claim.

               (b)       If a Third Party Claim is made against an Indemnified
Party, the Indemnifying Party will be entitled to participate in the defense
thereof and, if it so chooses, to assume the defense thereof with counsel
selected by the Indemnifying Party. If the Indemnifying Party assumes such
defense, the Indemnified Party shall have the right to participate in the
defense thereof and to employ counsel, at its own expense, separate from the
counsel employed by the Indemnifying Party. If the Indemnifying Party chooses to
defend or prosecute any Third Party Claim, all of the parties hereto shall
cooperate in the defense or prosecution thereof. Such cooperation shall include
the retention and (upon the Indemnifying Party's request) the provision to the
Indemnifying Party of records and information which are reasonably relevant to
such Third Party Claim, and making employees available on a mutually convenient
basis to provide additional information and explanation of any material provided
hereunder. Whether or not the Indemnifying Party shall have assumed the defense
of a Third Party Claim, the Indemnifying Party shall have no liability with
respect to any compromise or settlement of such claims effected without its
written consent (such consent not to be unreasonably withheld or delayed); the
Indemnifying Party shall not admit any liability with respect to, or settle,
compromise or discharge, such Third Party Claim without the Indemnified Party's
prior written consent (which consent shall not be unreasonably withheld or
delayed) unless (A) there is no finding or admission of any violation of law or
any violation of the rights of any Person and no effect on any other claims that
may be made against the Indemnified Party, or (B) the sole relief provided is
monetary damages that are paid in full by the Indemnifying Party and a full and
complete release is provided to the Indemnified Party.

               (c)       The provisions of this Article XIV shall survive the
termination of this Agreement. The indemnity provided in Sections 14.1(b) and
14.1(c) shall be the sole and exclusive remedy of the Indemnified Party against
the Indemnifying Party at law or equity for any matter covered by such Sections.

                                       10


                                   ARTICLE XV

                              DURATION; TERMINATION

         Section 15.1.   DURATION. This Agreement shall commence on the
Effective Date and continue with respect to each Policy until no further
Administrative Services in respect of such Policy is required, unless this
Agreement is earlier terminated under Section 15.2.

         Section 15.2.   TERMINATION. (a) This Agreement is subject to immediate
termination at the option of the Company, upon written notice to the
Administrator, on the occurrence of any of the following events:

               (i)       A voluntary or involuntary proceeding is commenced in
                         any jurisdiction by or against the Administrator for
                         the purpose of conserving, rehabilitating or
                         liquidating the Administrator;

               (ii)      There is a material breach by the Administrator of any
                         material term or condition of this Agreement that is
                         not cured by the Administrator within ninety (90) days
                         after receipt of written notice from the Company of
                         such breach or act; or

               (iii)     The Administrator is unable to perform the services
                         required under this Agreement for a period of thirty
                         (30) consecutive days for any reason other than as a
                         result of a Force Majeure, it being understood that
                         nothing in this Section 15.2(a)(iii) shall relieve the
                         Administrator from its administrative responsibilities
                         under this Agreement. For purposes of this Agreement,
                         "Force Majeure" means any acts or omissions of any
                         civil or military authority, acts of God, acts or
                         omissions of the Company, fires, strikes or other labor
                         disturbances, equipment failures, fluctuations or
                         non-availability of electrical power, heat, light, air
                         conditioning or telecommunications equipment, or any
                         other act, omission or occurrence beyond the
                         Administrator's reasonable control, irrespective of
                         whether similar to the foregoing enumerated acts,
                         omissions or occurrences;

               (iv)      The Reinsurance Agreements are terminated for any
                         reason.

               (b)       This Agreement may be terminated at any time upon the
mutual written consent of the parties hereto, which writing shall state the
effective date of termination.

               (c)       In the event that this Agreement is terminated under
any of the provisions of Section 15.2(a), the Administrator shall select a
third-party administrator to perform the services required by this Agreement.
The Company shall have the right to approve any such administrator selected by
the Administrator, but such approval will not unreasonably be withheld or
delayed. If the Administrator fails to select an administrator pursuant to this
Section 15.2(c), the Company shall select such an administrator. In either case,
the Administrator shall pay all fees and charges imposed by the selected
administrator and shall bear all transition costs associated with the transition
of the performance of the services required under this Agreement to such
administrator.

                                       11


                                   ARTICLE XVI

                               DISPUTE RESOLUTION

         Section 16.1.   RESOLUTION OF DAMAGES. As a condition precedent to any
right arising under this Agreement, any dispute between the Company and the
Administrator arising out of the provisions of this Agreement, or concerning its
interpretation or validity, whether arising before or after termination of this
Agreement, shall be submitted to arbitration in the manner set forth in this
Article XVI. Either party may initiate arbitration of any such dispute by giving
written notice to other party by registered mail or a recognized overnight
courier of its intention to arbitrate in accordance with Section 16.3.

         Section 16.2.   COMPOSITION OF PANEL. The arbitration shall be
conducted by a panel of three (3) arbitrators, who shall be disinterested
current or former executive officers of life or health insurance companies other
than the two parties to this Agreement or their Affiliates appointed by the
American Arbitration Association, Chicago, Illinois, in its sole discretion, and
none of the parties to the arbitration shall have any right to dispute, contest
or otherwise challenge the appointment of the arbitrator.

         Section 16.3.   NOTICE OF INTENTION TO ARBITRATE. The party requesting
arbitration (hereinafter referred to as the "claimant") shall give written
notice of its intention to arbitrate by registered mail or a recognized
overnight courier to the other party (hereinafter referred to as the
"respondent").

         Section 16.4.   CHOICE OF FORUM.  Any  arbitration  instituted
pursuant to this Article XVI shall be held in Northbrook, Illinois, or such
other place as the parties may mutually agree.

         Section 16.5.   SUBMISSION OF DISPUTE TO PANEL. Unless otherwise
extended by the arbitration panel, or agreed to by the parties, the claimant
shall submit its brief to the panel within forty-five (45) days after the
appointment of the arbitration panel. The respondent shall submit its brief
within forty-five (45) days thereafter. The claimant may submit a reply brief
within thirty (30) days after the filing of the respondent's brief.
Notwithstanding anything herein to the contrary, the time period for submission
of the case to the panel may be extended or modified by mutual consent of the
parties.

         Section 16.6.   PROCEDURE GOVERNING ARBITRATION. Each party
participating in the arbitration shall have the obligation to produce those
documents and as witnesses to the arbitration those of its employees as any
other participating party reasonably requests providing always that the same
witnesses and documents be obtainable and relevant to the issues before the
arbitration and not be unduly burdensome or excessive. The parties may mutually
agree as to pre-hearing discovery prior to the arbitration hearing and in the
absence of agreement, upon the request of any party, pre-hearing discovery may
be conducted as the panel shall determine in its sole discretion to be in the
interest of fairness, full disclosure, and a prompt hearing, decision and award
by the panel. The panel shall be the final judge of the procedures of the panel,
the conduct of the arbitration, the rules of evidence, the rules of privilege
and production and of excessiveness and relevancy of any witnesses and documents
upon the petition of any

                                       12


participating party. To the extent permitted by law, the panel shall have the
authority to issue subpoenas and other orders to enforce their decisions.

         Section 16.7.   ARBITRATION AWARD. The arbitration panel shall render
its decision within sixty (60) days after termination of the proceeding unless
the parties consent to an extension, which decision shall be in writing, stating
the reason therefor. The decision of the majority of the panel shall be final
and binding on the parties to the proceeding except to the extent otherwise
provided in the Federal Arbitration Act. Judgment upon the award may be entered
in any court having jurisdiction pursuant to the Federal Arbitration Act.

         Section 16.8.   COST OF ARBITRATION. Unless otherwise allocated by the
panel, each party shall bear the expense of its own witnesses and shall equally
bear with the other parties the expense of the arbitration panel and the
arbitration.

         Section 16.9.   LIMIT OF  AUTHORITY.  It is agreed that the
arbitrators shall have no authority to impose any punitive, exemplary or
consequential damage awards on either of the parties hereto.


                                  ARTICLE XVII

                            MISCELLANEOUS PROVISIONS

         Section 17.1.   HEADINGS AND  SCHEDULES.  Headings used herein are not
a part of this Agreement and shall not affect the terms hereof. The attached
Schedules are a part of this Agreement.

         Section 17.2.   NOTICES. All notices, requests, demands and other
communications under this Agreement must be in writing and will be deemed to
have been duly given or made as follows: (a) if sent by registered or certified
mail in the United States return receipt requested, upon receipt; (b) if sent by
reputable overnight air courier, two business days after mailing; (c) if sent by
facsimile transmission, with a copy mailed on the same day in the manner
provided in (a) or (b) above, when transmitted and receipt is confirmed by
telephone; or (d) if otherwise actually personally delivered, when delivered,
and shall be delivered as follows:

               If to the Company:

               Columbia Universal Life Insurance Company

               3100 Sanders Road
               Northbrook, IL 60062-7154
               Attn: Treasurer

               If to the Administrator:

               Allstate Life Insurance Company
               Attn: Treasurer
               3075 Sanders Road, Suite G2H

                                       13


               Northbrook, IL 60062-6127

               With a copy to:

               Allstate Insurance Company
               Attn: Susie Lees, Assistant Secretary and
                     Assistant General Counsel
               2775 Sanders Road, Suite A2
               Northbrook, IL 60062-6127

or to such other address or to such other Person as either party may have last
designated by notice to the other party.

         Section 17.3.   SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors, permitted assigns and legal representatives. Neither this Agreement,
nor any right or obligation hereunder, may be assigned by any party without the
prior written consent of the other party hereto. Any assignment in violation of
this Section 17.3 shall be void and shall have no force and effect.

         Section 17.4.   EXECUTION IN COUNTERPART. This Agreement may be
executed by the parties hereto in any number of counterparts, and by each of the
parties hereto in separate counterparts, each of which counterparts, when so
executed and delivered, shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.

         Section 17.5.   CURRENCY. Whenever the word "Dollars" or the "$" sign
appear in this Agreement, they shall be construed to mean United States Dollars,
and all transactions under this Agreement shall be in United States Dollars.

         Section 17.6.   AMENDMENTS.  This Agreement may not be changed, altered
or modified unless the same shall be in writing executed by the Company and the
Administrator.

         Section 17.7.   GOVERNING LAW. This Agreement will be construed,
performed and enforced in accordance with the laws of the State of Illinois
without giving effect to its principles or rules of conflict of laws thereof to
the extent such principles or rules would require or permit the application of
the laws of another jurisdiction.

         Section 17.8.   ENTIRE AGREEMENT; SEVERABILITY. This Agreement
constitutes the entire agreement between the parties hereto relating to the
subject matter hereof and supersedes all prior and contemporaneous agreements,
understandings, statements, representations and warranties, negotiations and
discussions, whether oral or written, of the parties and there are no general or
specific warranties, representations or other agreements by or among the parties
in connection with the entering into of this Agreement or the subject matter
hereof except as specifically set forth or contemplated herein.

         Section 17.9.   NO WAIVER; PRESERVATION OF REMEDIES. No consent or
waiver, express or implied, by any party to or of any breach or default by any
other party in the performance by such other party of its obligations hereunder
shall be deemed or construed to be a consent or waiver to or of any other breach
or default in the performance of obligations hereunder by such

                                       14


other party hereunder. Failure on the part of any party to complain of any act
or failure to act of any other party or to declare any other party in default,
irrespective of how long such failure continues, shall not constitute a waiver
by such first party of any of its rights hereunder. The rights and remedies
provided are cumulative and are not exclusive of any rights or remedies that any
party may otherwise have at law or equity.

         Section 17.10.  THIRD PARTY BENEFICIARY.  Nothing in this Agreement
will confer any rights upon any Person that is not a party or a successor or
permitted assignee of a party to this Agreement.

         Section 17.11.  NEGOTIATED AGREEMENT. This Agreement has been
negotiated by the parties and the fact that the initial and final draft will
have been prepared by either party or an intermediary will not give rise to any
presumption for or against any party to this Agreement or be used in any respect
or forum in the construction or interpretation of this Agreement or any of its
provisions.

         Section 17.12.  INTERPRETATION. Wherever the words  "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation."

         Section 17.13.  SURVIVAL. Article XIV, XV and Article XVI shall survive
the termination of this Agreement.

         IN WITNESS WHEREOF, the Company and the Administrator have executed
this Agreement as of the date first above written.

                            COLUMBIA UNIVERSAL LIFE INSURANCE
                            COMPANY


                            By:                /s/
                               ---------------------------------------

                            Name: James P.Zils
                                 -------------------------------------

                            Title: Treasurer
                                  ------------------------------------


                            ALLSTATE LIFE INSURANCE COMPANY

                            By:                /s/
                               ---------------------------------------

                            Name: Samuel H. Pilch
                                 -------------------------------------

                            Title: Group Vice President and Controller
                                  ------------------------------------

                                       15

                                                                    EXHIBIT 10.3

                              REINSURANCE AGREEMENT

                                     BETWEEN

                    COLUMBIA UNIVERSAL LIFE INSURANCE COMPANY

                                       AND

                         ALLSTATE LIFE INSURANCE COMPANY

                                    RECITALS

This Reinsurance Agreement dated June 1, 2004 ("Agreement"), is made and entered
into by and between COLUMBIA UNIVERSAL LIFE INSURANCE COMPANY, a life insurance
company domiciled in the State of Texas ("Ceding Company") and ALLSTATE LIFE
INSURANCE COMPANY, a life insurance company domiciled in the State of Illinois
("Reinsurer").

WHEREAS, the Ceding Company and Reinsurer entered into that certain Reinsurance
Agreement effective July 1, 2000 ("Modified Coinsurance Agreement"), whereby the
Ceding Company ceded to Reinsurer 100% of net ceded liabilities arising under
all life and health insurance policies and certificates assumed or issued by the
Ceding Company.

WHEREAS, pursuant to that certain Amendment No. 1 to Reinsurance Agreement
("Amendment No. 1"), the parties terminated the Modified Coinsurance Agreement
effective as of 11:59 p.m. on May 31, 2004, terminating Reinsurer's liability
under the Modified Coinsurance Agreement.

WHEREAS, Ceding Company and Reinsurer desire to enter this Agreement, whereby
Ceding Company will cede on a coinsurance basis 100% of any and all liabilities
of the Ceding Company arising under all life and health insurance policies and
certificates assumed or issued by the Ceding Company, except for certain
excluded liabilities.

NOW THEREFORE, in consideration of the above stated premises and the promises
and mutual agreements set forth below, the Ceding Company and the Reinsurer
agree as follows:

                                    ARTICLE I
                                   DEFINITIONS

Unless otherwise defined herein, as used in this Agreement the following terms
shall have the

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meanings ascribed to them below:

A.   "Annual Statement" shall mean the Ceding Company's Life and Accident and
     Health Companies Annual Statement for the General Account as filed with the
     Texas Insurance Department.

B.   "Code" shall mean the Internal Revenue Code of 1986, as amended.

C.   "Effective Date" shall mean the effective date of this Agreement, which
     shall be 12:00 a.m. on June 1, 2004.

D.   "Excluded Liabilities" shall mean (i) Extra-Contractual Obligations, and
     (ii) liabilities ceded by Ceding Company under Third-Party Reinsurance
     Agreements.

E.   "Extra-Contractual Obligations" shall mean all liabilities and obligations
     for consequential, extra-contractual, exemplary, punitive, special or
     similar damages or any other amounts due or alleged to be due (other than
     those arising under the express terms and conditions of the Policies) which
     arise from any real or alleged act, error or omission, whether or not
     intentional, in bad faith or otherwise, including without limitation, any
     act, error or omission relating to: (i) the marketing, underwriting,
     production, issuance, cancellation or administration of the Policies; (ii)
     the handling of claims or disputes in connection with the Policies; or
     (iii) the failure to pay or the delay in payment of benefits or claims,
     under or in connection with the Policies.

F.   "Net Benefits" shall mean the actual amounts paid or incurred by the Ceding
     Company with respect to the Policies for all surrenders, withdrawals (full
     and partial), death benefits, annuitizations, payments on supplemental
     contracts, endowment benefits, disability benefits, and benefits under
     accident and health policies, net of Excluded Liabilities.

G.   "Net Ceded Liabilities" shall mean any and all liabilities of the Ceding
     Company arising under the Policies, but shall not include Excluded
     Liabilities.

H.   "Net Statutory Liabilities" shall have the meaning set forth in Article V
     of this Agreement.

I.   "Policy or Policies" shall mean the insurance contracts defined in Exhibit
     A which are underwritten or reinsured by the Ceding Company. For the
     avoidance of doubt, "Policies" refers to all policies, certificates, and
     contracts which are in-force on the Effective Date or issued after the
     Effective Date, including (i) any supplemental agreements or benefits
     arising out of the Policies, (ii) policies, or portions thereof, recaptured
     by the Ceding Company under Third-Party Reinsurance Agreements, (iii)
     premium deposit funds and (iv) Policies reinsured by Ceding Company.

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J.   "Third-Party Reinsurance Agreements" shall mean any written reinsurance
     agreements under which Ceding Company has ceded liabilities with respect to
     the Policies, other than this Agreement.

                                   ARTICLE II
                              BASIS OF REINSURANCE

The Ceding Company agrees to cede and the Reinsurer agrees to accept Net Ceded
Liabilities. The reinsurance provided hereunder shall be on a 100% coinsurance
basis.

                                   ARTICLE III
                 LIABILITY OF REINSURER; COINSURANCE PROVISIONS

A.   All of the Net Ceded Liabilities shall be reinsured pursuant to the terms
     of this Agreement as of the Effective Date.

B.   The liability of the Reinsurer with respect to Policies in force on the
     Effective Date will begin on the Effective Date. The liability of the
     Reinsurer with respect to any application received or any contract issued
     after the Effective Date and reinsured hereunder will begin simultaneously
     with that of the Ceding Company. The Reinsurer's liability with respect to
     any Policy will terminate on the date the Ceding Company's liability on
     such contract terminates or the date this Agreement is terminated,
     whichever is earlier. However, termination of this Agreement will not
     terminate the Reinsurer's liability for Net Benefits prior to the date of
     termination. If any of the Policies are reduced or terminated by payment of
     a death benefit, withdrawal or surrender, the reinsurance will be reduced
     proportionately or terminated.

C.   The reinsurance provided under this Agreement is subject to the same
     limitations and conditions as set forth in the Policies.

D.   Ceding Company shall not make any changes after the Effective Date in the
     provisions and conditions of any Policy except with Reinsurer's prior
     written consent, including, but not limited to any changes to comply with
     any applicable law, rule or regulation.

E.   Some of the Policies ceded under this Agreement provide that the Ceding
     Company may in its discretion, from time to time, as provided in the policy
     or contract, declare interest rates, cost of insurance rates, premium
     payments or other non-guaranteed elements that are or affect required
     premium payments or are used to determine policy or contract values. The
     Ceding Company agrees, while this Agreement is in effect, to set such
     discretionary interest rates, cost of insurance rates, premium rates or
     other non-guaranteed elements to be declared on the Policies and the
     effective dates thereof, only with Reinsurer's prior written approval. The
     Ceding Company and Reinsurer agree to fully

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     cooperate in obtaining any required regulatory approvals in connection with
     setting or changing such discretionary interest rates, cost of insurance
     rates, premium rates or other non-guaranteed elements.

F.   Ceding Company shall not make any changes or modifications to any of the
     Policies, nor waive or exercise any of its rights under any of the Policies
     without the prior written consent of Reinsurer.

G.   Conversions, exchanges, or replacements of Policies are not reinsured under
     this Agreement, unless agreed to in writing by Reinsurer.

                                   ARTICLE IV
                                     CLAIMS

A.   Reinsurer shall not be liable to pay Ceding Company for any
     Extra-Contractual Obligations, except to the extent such liabilities or
     obligations arise directly from and are proximately caused by the gross
     negligence or willful acts or omissions of Reinsurer, its agents,
     contractors or employees in the performance of Reinsurer's duties and
     obligations under this Agreement or that certain Administrative Services
     Agreement dated June 1, 2004 by and between the Ceding Company and
     Reinsurer ("Administrative Services Agreement") whereby Ceding Company has
     engaged Reinsurer to service the Policies.

     In the event of a change in the amount of the Ceding Company's liability on
     a Policy due a misstatement of age or sex, the Reinsurer's liability will
     be changed proportionately.

B.   In the event that the Administrative Services Agreement is terminated for
     any reason and is not replaced by another services agreement for the
     Policies between Ceding Company and Reinsurer or any of its affiliates or
     subsidiaries, the following subsections, shall then apply;

     1.   The Ceding Company shall notify the Reinsurer, as soon as possible,
          whenever the Ceding Company has received a notice on any Policy
          reinsured under this Agreement.

     2.   The Ceding Company shall promptly provide the Reinsurer with proper
          claim papers and proofs when requesting payment. The Reinsurer shall
          promptly pay its share of each claim in a lump sum. Reinsurer shall
          have the right to approve all claim payments, and any decision by
          Ceding Company to contest, compromise or litigate a claim shall be
          subject to Reinsurer's prior written approval.

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                                    ARTICLE V
                                RESERVE TRANSFERS

A.   Within forty-five (45) days of the latter of the Effective Date or the date
     Ceding Company has received approval from all necessary regulatory
     authorities, ("Settlement Date"), assets consisting of policy loans, cash
     and investments, accrued investment income, and uncollected or deferred
     premiums net of unearned investment income, uncollected or deferred agents
     balances, and write in assets shall be transferred by Ceding Company to
     Reinsurer with a market value amount calculated as of the Effective Date
     equal to the net statutory liabilities for the Policies reinsured under
     this Agreement as calculated in (a) below, ("Net Statutory Liabilities").
     Ceding Company shall also pay to Reinsurer interest on such amount at the
     rate specified in (b) below.

     (a)  Net Statutory Liabilities is determined as (1) plus (2) where:

          (1) equals "Total Liabilities" less "Miscellaneous Liabilities" less
          "Other Amounts Payable on Reinsurance" less "Interest Maintenance
          Reserve" less "Commissions to Agents Due or Accrued", as currently
          included respectively in Annual Statement page 3, Lines 28, 24.1
          through 24.9, 9.3, 9.4, and 10, attributable to the Policies (or
          portion of such policies) ceded to Reinsurer under this Agreement. The
          applicable portion of these items will be calculated as of the
          Effective Date and will be based on the corresponding items from
          Ceding Company's Annual Statement.

          (2) equals the "Interest Maintenance Reserve" adjustment for current
          year's liability gains\losses released from the reserves resulting
          from this transaction.

     (b)  Interest on the amount transferred shall accrue at the rate of four
          percent (4%) per annum, simple rate, beginning on the Effective Date
          and ending on the Settlement Date.

     Initially capitalized terms not otherwise defined herein used in subsection
     V.A.(a) are to the 2003 NAIC Statutory Statement. Appropriate adjustments
     will be made for changes, if any, in the NAIC Statutory Statement on or
     after the Effective Date.

                                   ARTICLE VI
                            SETTLEMENT AND REPORTING

  A. While this Agreement is in effect, Ceding Company shall pay to Reinsurer no
     less frequently than quarterly, with respect to eligible Policies, a
     reinsurance premium equal to (or the accounting equivalent of) the sum of
     Items (a) and (b) less (c) below.

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     (a)  Gross premiums (direct and reinsurance assumed) collected by Ceding
          Company during the settlement period.

     (b)  Policy loan repayments collected by Ceding Company with respect to the
          Policies.

     (c)  Gross premiums refunded by Ceding Company during the settlement period
          to policyholders.

  B. While this Agreement is in effect, Reinsurer shall pay to Ceding Company no
     less frequently than quarterly, a benefit and expense allowance equal to
     (or the accounting equivalent of) the sum of Items (a), (b), (c), (d), (e)
     and (f) below, as applicable for the period since the date of Reinsurer's
     last payment to Ceding Company

     (a)  Net Benefits paid or incurred by Ceding Company with respect to the
          Policies.

     (b)  Commissions and other sales compensation paid or incurred by Ceding
          Company with respect to the Policies.

     (c)  Premium taxes paid or incurred by Ceding Company with respect to the
          Policies.

     (d)  Policy loan distributions to policyholders paid or incurred by Ceding
          Company with respect to the Policies.

     (e)  Net reinsurance premiums paid or incurred by Ceding Company to another
          reinsurer with respect to the Policies.

     (f)  So long as Ceding Company and Reinsurer remain affiliates, general
          insurance expenses and insurance taxes, licenses and fees excluding
          income taxes (Annual Statement Page 4 Lines 23 and 24) paid or
          incurred by Ceding Company with respect to the Policies shall be paid
          by Reinsurer to Ceding Company.

  C. Ceding Company will provide Reinsurer with accounting reports on a time
     schedule determined by Reinsurer, which schedule shall be no less
     frequently than quarterly within fifteen (15) days following the end of
     each calendar quarter. These reports will contain sufficient information
     about the Policies to enable the reinsurer to prepare its quarterly and
     annual financial reports.

  D. Settlements as set out in Article VI, Paragraphs 1 and 2 will occur on a
     time schedule determined by Reinsurer, which schedule shall be no less
     frequently than quarterly within sixty (60) days following the end of each
     calendar quarter.

  E. In the event the Administrative Services Agreement is terminated for any
     reason and is not replaced by another services agreement for the Policies
     between Ceding Company and

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     Reinsurer or any of its affiliates or subsidiaries, then subsections A.
     through D. above shall be of no force and effect and this subsection E.
     shall apply in lieu thereof.

     1.  Reinsurance premiums are payable monthly in arrears. The Ceding Company
         shall calculate the amount of reinsurance premium due within 45 days
         after the end of each month, and shall send the Reinsurer a statement
         showing premiums, expense allowances, claims, reserves and other
         information for the applicable month as requested by Reinsurer.

     2.  If an amount is due the Reinsurer, the Ceding Company shall pay that
         amount together with the statement. If Ceding Company fails to pay the
         amount due within 45 days after the close of the month ("Premium Due
         Date"), then interest shall accrue on the amount due beginning on the
         day following the Premium Due Date up to and including the day such
         premium payment is paid by the Ceding Company. The rate of interest
         charged per month shall be the greater of: (i) the 30 Day Treasury Bill
         rate as published in the Money Rate Section or any successor section of
         the Wall Street Journal on the fist business day following the Premium
         Due Date, or (ii) 4% per annum.

         The payment of reinsurance premium is a condition precedent to the
         liability of the Reinsurer for reinsurance covered by this Agreement.
         In the event that reinsurance premiums are not paid within 60 days
         after the Premium Due Date, the Reinsurer shall have the right to
         terminate the reinsurance under all policies having reinsurance
         premiums in arrears, with 30 days prior written notice.

         If all reinsurance premiums in arrears, including any that become in
         arrears during the 30 day notice period, are not paid before the
         expiration of the notice period, the Reinsurer will be relieved of all
         liability under those Policies as of the last date to which premiums
         have been paid for each Policy. Reinsurance on Policies on which
         reinsurance premiums subsequently fall due will automatically terminate
         as of the last date to which premiums have been paid for each Policy,
         unless reinsurance premiums on those Policies are paid on or before
         their respective Premium Due Dates.

         Terminated reinsurance may be reinstated, subject to approval by the
         Reinsurer, within 45 days of the date of termination, and upon payment
         of all reinsurance premiums in arrears including any interest accrued
         thereon. The Reinsurer will have no liability for any claims incurred
         between the date of termination and the date of the reinstatement of
         the reinsurance. The right to terminate reinsurance shall not prejudice
         the Reinsurer's right to collect premiums for the period during which
         reinsurance was in force prior to the expiration of the 30 days notice.

     3.  If an amount is due the Ceding Company, the Reinsurer shall remit such
         amount within 60 days of receipt of the statement. If the Reinsurer
         fails to pay the amount due within the 60 day period, then interest
         shall accrue from the day following the end of the 60 day period up to
         and including the day the Reinsurer pays the amount due. Interest shall
         be at the rate described in paragraph E.2. above.

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                                   ARTICLE VII
                                   TAX MATTERS

     With respect to this Agreement, the Ceding Company and the Reinsurer hereby
     make the election as set forth in Exhibit B and as provided for in section
     1.848-2(g)(8) of the Treasury Regulations. Each of the parties hereto
     agrees to take such further actions as may be necessary to ensure the
     effectiveness of such election.

                                  ARTICLE VIII
                                 RESERVE CREDIT

The Reinsurer shall, to the extent necessary, together with all its subsequent
retrocessionaires, establish adequate net reserves, and shall agree in good
faith to take any other steps necessary, pursuant to the requirements of Texas
or any other state or jurisdiction in which the Ceding Company is licensed or
accredited as of the Effective Date, for the Ceding Company to take statutory
credit for reinsurance ceded to an unadmitted, unauthorized or unaccredited
reinsurer, up to the full amount of the reserve that the Ceding Company would
have established for the Policies if it had retained the Policies.

                                   ARTICLE IX
                                   OVERSIGHTS

The Reinsurer shall be bound as the Ceding Company is bound, and it is expressly
understood and agreed that if failure to reinsure or failure to comply with any
terms of this Agreement is shown to be unintentional and the result of
misunderstanding or oversight on the part of either the Ceding Company or the
Reinsurer, both the Ceding Company and the Reinsurer shall be restored to the
positions they would have occupied had such error or oversight not occurred.

                                    ARTICLE X
                              INSPECTION OF RECORDS

Either party, their respective employees or authorized representatives, may
audit, inspect and examine, during regular business hours, at the home office of
either party, any and all books, records, statements, correspondence, reports,
trust accounts and their related documents or other documents that relate to the
Policies covered under this Agreement. The audited party agrees to provide a
reasonable workspace for such audit, inspection or examination and to cooperate
fully and to faithfully disclose the existence of and produce any and all
necessary and reasonable materials requested by such auditors, investigators, or
examiners. The party performing a routine audit shall provide five (5) working
days advance notice to the other party. The expense of the

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respective party's employee(s) or authorized representative(s) engaged in such
activities will be borne solely by such party.

                                   ARTICLE XI
                                   INSOLVENCY

A.   The portion of any risk or obligation assumed by the Reinsurer, when such
     portion is ascertained, shall be payable on demand of the Ceding Company at
     the same time as the Ceding Company shall pay its net retained portion of
     such risk or obligation, and the reinsurance shall be payable by the
     Reinsurer on the basis of the liability of the Ceding Company under the
     Policies without diminution because of the insolvency of the Ceding
     Company. In the event of the insolvency of the Ceding Company and the
     appointment of a conservator, liquidator or statutory successor of the
     Ceding Company, such portion shall be payable to such conservator,
     liquidator or statutory successor immediately upon demand, on the basis of
     claims allowed against the Ceding Company by any court of competent
     jurisdiction or, by any conservator, liquidator or statutory successor of
     the Ceding Company having authority to allow such claims, without
     diminution because of such insolvency or because such conservator,
     liquidator or statutory successor has failed to pay all or a portion of any
     claims. Payments by the Reinsurer as above set forth shall be made directly
     to the Ceding Company or its conservator, liquidator or statutory
     successor.

B.   Further, in the event of the insolvency of the Ceding Company, the
     liquidator, receiver or statutory successor of the insolvent Ceding Company
     shall give written notice to the Reinsurer of the pendency of any
     obligation of the insolvent Ceding Company on any Net Ceded Liability,
     whereupon the Reinsurer may investigate such claim and interpose at its own
     expense, in the proceeding where such claim is to be adjudicated, any
     defense or defenses which it may deem available to the Ceding Company or
     its liquidator or statutory successor. The expense thus incurred by the
     Reinsurer shall be chargeable, subject to court approval, against the
     insolvent Ceding Company as part of the expenses of liquidation to the
     extent of a proportionate share of the benefit which may accrue to the
     Ceding Company solely as a result of the defense undertaken by the
     Reinsurer.

C.   In the event of the Reinsurer's insolvency, any payments due the Reinsurer
     from the Ceding Company pursuant to the terms of this Agreement will be
     made directly to the Reinsurer or its conservator, liquidator, receiver or
     statutory successor.

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                                   ARTICLE XII
                                   ARBITRATION

A.   Prior to initiation of arbitration, the Reinsurer and Ceding Company agree
     that they will first negotiate diligently and in good faith to agree on a
     mutually satisfactory resolution of any dispute. Provided, however that if
     any such dispute cannot be resolved within sixty (60) days (or such longer
     period as the parties may agree) after written notice invoking the
     negotiation period of this article is delivered by either party, the
     Reinsurer and the Ceding Company agree that they will submit this dispute
     to arbitration as described below.

B.   The Reinsurer and the Ceding Company intend that any and all disputes
     between them under or with respect to this Agreement be resolved without
     resort to any litigation. As a condition precedent to any right of action
     hereunder, any dispute or difference between the Ceding Company and the
     Reinsurer relating to the interpretation or performance of this Agreement,
     including its formation or validity, or any transaction under this
     Agreement, whether arising before or after termination, shall be submitted
     to arbitration. Arbitration shall be the method of dispute resolution,
     regardless of the insolvency of either party, unless the conservator,
     receiver, liquidator or statutory successor is specifically exempted from
     arbitration proceeding by applicable state law of the insolvency.

C.   Arbitration shall be initiated by the delivery of written notice of demand
     for arbitration ("Arbitration Notice") by one party to another. Such
     written notice shall contain a brief statement of the issue(s), remedies
     sought, and the failure of the parties to reach amicable agreement as
     provided in Paragraph A above.

D.   The arbitrators and umpire shall be present or former disinterested
     officers of life reinsurance or insurance companies other than the two
     parties to the Agreement or any company owned by, or affiliated with,
     either party. Each party shall appoint an individual as arbitrator and the
     two so appointed shall then appoint the umpire. If either party refuses or
     neglects to appoint an arbitrator within thirty (30) days after delivery of
     the Arbitration Notice, the other party may appoint the second arbitrator.
     If the two arbitrators do not agree on an umpire within thirty (30) days of
     the appointment of the second appointed arbitrator, each of the two
     arbitrators shall nominate three individuals. Each arbitrator shall then
     decline two of the nominations presented by the other arbitrator. The
     umpire shall be chosen from the remaining two nominations by drawing lots.

E.   The arbitration hearings shall be held in the city in which the Reinsurer's
     head office is located or any such other place as may be mutually agreed.
     Each party shall submit its case to the arbitrators and umpire within one
     hundred and eighty (180) days of the selection of the umpire or within such
     longer period as may be agreed.

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F.   The arbitration panel shall make its decision with regard to the custom and
     usage of the insurance and reinsurance business. The arbitration panel
     shall interpret this Agreement as an honorable engagement; they are
     relieved of all judicial formalities and may abstain from following strict
     rules of law. The arbitration panel shall be solely responsible for
     determining what evidence shall be considered and what procedure they deem
     appropriate and necessary in the gathering of such facts or data to decide
     the dispute.

G.   The decision in writing of the majority of the arbitration panel shall be
     final and binding upon the parties. Judgment may be entered upon the final
     decision of the arbitration panel in any court having jurisdiction.

H.   The jointly incurred costs of the arbitration are to be borne equally by
     both parties. Jointly incurred costs are specifically defined as any costs
     that are not solely incurred by one of the parties (e.g., attorneys' fees,
     expert witness fees, travel to the hearing site, etc.). Costs incurred
     solely by one of the parties shall be borne by that party. Once the panel
     has been selected, the panel shall agree on one billable rate for each of
     the arbitrators and umpire and that sole cost shall be disclosed to the
     parties and become payable as a jointly incurred cost as described above.

                                  ARTICLE XIII
                              PARTIES TO AGREEMENT

This Agreement is solely between the Ceding Company and the Reinsurer. The
acceptance of reinsurance hereunder shall not create any right or legal relation
whatever between the Reinsurer and any party in interest under any Policy.
Ceding Company shall be and remain solely liable to any insured, contract owner,
or beneficiary under any contract reinsured hereunder.

                                   ARTICLE XIV
                      DURATION OF AGREEMENT AND TERMINATION

A.   DURATION. This agreement will be effective as of the Effective Date, and
     will be unlimited as to its duration. This Agreement may not be terminated
     by either party except as provided for in Article VI.

B.   TERMINATION FOR NEW BUSINESS. This agreement will be terminated for new
     business as of the Effective Date.

                                       11


                                   ARTICLE XV
                               GENERAL PROVISIONS

A.   ENTIRE AGREEMENT. This Agreement constitutes the entire contract between
     the Reinsurer and the Ceding Company with respect to the Policies. No
     variation, modification or changes to this Agreement shall be binding
     unless in writing and signed by an officer of each party.

B.   NOTICES. Any notice or communication given pursuant to this Agreement must
     be in writing and (1) delivered personally, (2) sent by facsimile
     transmission, (3) delivered by overnight express, or (4) sent by registered
     or certified mail, postage prepaid, to such address or addresses each party
     may designate from time to time for receipt of notices or communications.
     The initial notice addresses are as follows:

     If to the Reinsurer:           Allstate Life Insurance Company
                                    3100 Sanders Road, Suite M5A
                                    Northbrook, Illinois 60062-7154
                                    Attention: Steve Shebik,
                                    Senior Vice President and
                                    Chief Financial Officer
                                    Facsimile No.: (847) 326-5054

     If to the Ceding Company:      Columbia Universal Life Insurance Company
                                    3100 Sanders Road
                                    Northbrook, Illinois 60062-7154
                                    Attention: Errol Cramer, Appointed Actuary
                                    Facsimile No.: (847) 402-7376

     All notices and other communications required or permitted under the terms
     of this Agreement that are addressed pursuant to this Article XV shall: (1)
     if delivered personally or by overnight express, be deemed given upon
     delivery; (2) if delivered by facsimile transmission, be deemed given when
     electronically confirmed; and (3) if sent by registered or certified mail,
     be deemed given when received.

C.   EXPENSES. Except as may be otherwise expressly provided in this Agreement,
     whether or not the transactions contemplated hereby are consummated, each
     of the parties hereto shall pay its own costs and expenses incident to
     preparing for, entering into and carrying out this Agreement and the
     consummation of the transactions contemplated hereby.

D.   COUNTERPARTS. This Agreement may be executed in one or more counterparts,
     each of which shall be deemed an original, but all of which shall
     constitute one and the same instrument and shall become effective when one
     or more counterparts have been signed by each of the parties and delivered
     to the other parties.

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E.   NO THIRD PARTY BENEFICIARY. Except as otherwise provided herein, the terms
     and provisions of this Agreement are intended solely for the benefit of the
     parties hereto, and their respective successors or permitted assigns, and
     it is not the intention of the parties to confer third-party beneficiary
     rights upon any other person, and no such rights shall be conferred upon
     any person or entity not a party to this Agreement.

F.   AMENDMENT. This Agreement may only be amended or modified by a written
     instrument executed by both parties hereto.

G.   ASSIGNMENT; BIND EFFECT. Neither this Agreement nor any of the rights,
     interests or obligations under this Agreement shall be assigned, in whole
     or in part, by any of the parties hereto without the prior written consent
     of the other party, which consent shall not be unreasonably withheld, and
     any such assignment that is attempted without such consent shall be null
     and void. Subject to the preceding sentence, this Agreement shall be
     binding upon, inure to the benefit of, and be enforceable by the parties
     and their respective successors and permitted assigns.

H.   INVALID PROVISIONS. If any provision of this Agreement is held to be
     illegal, invalid, or unenforceable under any present or future law, and if
     the rights or obligations of the parties hereto under this Agreement will
     not be materially and adversely affected thereby, (1) such provision shall
     be fully severable; (2) this Agreement shall be construed and enforced as
     if such illegal, invalid, or unenforceable provision had never comprised a
     part hereof; and (3) the remaining provisions of this Agreement shall
     remain in full force and effect and shall not be affected by the illegal,
     invalid, or unenforceable provision or by its severance herefrom.

I.   GOVERNING LAW. This Agreement shall be governed by and construed in
     accordance with the Laws of Illinois, regardless of the laws that might
     otherwise govern under applicable principles of conflicts of laws thereof.

J.   WAIVER. Any term or condition of this Agreement may be waived in writing at
     any time by the party that is entitled to the benefit thereof. A waiver on
     one occasion shall not be deemed to be a waiver of the same or any other
     breach or nonfulfillment on a future occasion. All remedies, either under
     the terms of this Agreement, or by law or otherwise afforded, shall be
     cumulative and not alternative, except as otherwise provided by law.

K.   HEADINGS, ETC. The headings used in this Agreement have been inserted for
     convenience and do not constitute matter to be construed or interpreted in
     connection with this Agreement. Unless the context of this Agreement
     otherwise requires, (1) words using the singular or plural number also
     include the plural or singular number, respectively; (2) the terms
     "HEREOF," "HEREIN," "HEREBY," "HERETO," "HEREUNDER," and derivative or
     similar words refer to this entire Agreement (including the exhibits
     hereto); (3) the term "ARTICLE" refers to the specified Article of this
     Agreement; (d) the term "EXHIBIT" refers to the specified Exhibit attached
     to this Agreement; and (e) the term "PARTY" means, on the one

                                       13


     hand, the Ceding Company, and on the other hand, the Reinsurer.

L.   OFFSET. Any debits or credits incurred after the Effective Date in favor of
     or against either the Ceding Company or the Reinsurer with respect to this
     Agreement are deemed mutual debits or credits, as the case may be, and
     shall be set off against each other dollar for dollar.

M.   COMPLIANCE WITH LAWS. The parties hereto shall at all times comply with all
     applicable laws in performing their obligations under this Agreement.

N.   SURVIVAL. All provisions of this Agreement shall survive its termination to
     the extent necessary to carry out the purposes of this Agreement or to
     ascertain and enforce the parties' rights or obligations hereunder existing
     at the time of termination.

O.   CALENDAR DAYS. Unless otherwise specified, all references to "day" in this
     Agreement shall mean calendar days.


IN WITNESS HEREOF, the parties to this Agreement have caused it to be duly
executed in duplicate by their respective officers on the dates shown below.

ALLSTATE LIFE INSURANCE COMPANY

By:                /s/
   ---------------------------------------

Name: Samuel H. Pilch
     -------------------------------------

Title: Group Vice President and Controller
      ------------------------------------

Date:    July 27, 2004
      ------------------------------------


COLUMBIA UNIVERSAL LIFE INSURANCE COMPANY

By:                /s/
     -------------------------------------

Name: James P. Zils
      ------------------------------------

Title: Treasurer
      ------------------------------------

Date:    July 27, 2004
      ------------------------------------

                                       14




                                    EXHIBIT A

                        ELIGIBLE AND INELIGIBLE POLICIES

     Policies eligible for reinsurance under this Agreement are defined as all
     life and health insurance policies and certificates assumed, issued, or
     reinsured by the Ceding Company prior to June 1, 2004. For the avoidance of
     doubt, this Agreement is intended to include all policies, certificates,
     and contracts assumed, issued, or reinsured by the Ceding Company,
     expressly excluding any policies covered under that certain Reinsurance
     Agreement between the parties effective June 30, 2000 as amended by an
     Amended and Restated Reinsurance Agreement dated June 1, 2004, under which
     Ceding Company's annuity and supplementary business is reinsured on a 100%
     coinsurance basis.

                                       15


                                    EXHIBIT B
                                  TAX ELECTION

The Ceding Company and the Reinsurer hereby make an election pursuant to
Treasury Regulations Section 1.848-2(g)(8). This election shall be effective for
the tax year during which the Effective Date falls and all subsequent taxable
years for which this Agreement remains in effect. Unless otherwise indicated,
the terms used in this Exhibit are defined by reference to Treasury Regulations
Section 1.848-2 as in effect on the date hereof. As used below, the term "PARTY"
or "PARTIES" shall refer to the Ceding Company or the Reinsurer, or both, as
appropriate.

1.   The party with the Net Positive Consideration (as defined in Section 848 of
     the Code and related Treasury Regulations) with respect to the transactions
     contemplated under this Agreement for any taxable year covered by this
     election will capitalize specified policy acquisition expenses with respect
     to such transactions without regard to the general deductions limitation of
     Section 848(c)(1) of the Code.

2.   The parties agree to exchange information pertaining to the amount of Net
     Consideration (as defined in Section 848 of the Code and related Treasury
     Regulations) under this Agreement each year to ensure consistency or as is
     otherwise required by the Internal Revenue Service. The exchange of
     information each year will follow the procedures set forth below:

     (a)  By April 1 of each year, the Ceding Company will submit a schedule to
          the Reinsurer of its calculation of the Net Consideration for the
          preceding calendar year. This schedule of calculations will be
          accompanied by a statement signed by an authorized representative of
          the Ceding Company stating the amount of the Net Consideration the
          Ceding Company will report in its tax return for the preceding
          calendar year.

     (b)  Within thirty (30) days of the Reinsurer's receipt of the Ceding
          Company's calculation, the Reinsurer may contest such calculation by
          providing an alternative calculation to the Ceding Company in writing.
          If the Reinsurer does not notify the Ceding Company that it contests
          such calculation within said 30-day period, the calculation will be
          presumed correct and the Reinsurer shall also report the Net
          Consideration as determined by the Ceding Company in the Reinsurer's
          tax return for the preceding calendar year.

     (c)  If the Reinsurer provides an alternative calculation of the Net
          Consideration pursuant to clause (b), the parties will act in good
          faith to reach an agreement as to the correct amount of Net
          Consideration within thirty (30) days of the date the Ceding Company
          receives the alternative calculation from the Reinsurer. When the
          Ceding Company and the Reinsurer reach agreement on an amount of Net
          Consideration, each party shall report the applicable amount in their
          respective tax returns for the preceding calendar year.

                                       16

                                                                    EXHIBIT 10.4

                               FIRST AMENDMENT TO
                              REINSURANCE AGREEMENT

         THIS FIRST AMENDMENT TO REINSURANCE AGREEMENT (this "First Amendment"),
dated this 26th day of July, 2004, is made by and between COLUMBIA UNIVERSAL
LIFE INSURANCE COMPANY, a life insurance company domiciled in the State of Texas
("Ceding Company") and ALLSTATE LIFE INSURANCE COMPANY, a life insurance company
domiciled in the State of Illinois ("Reinsurer").

                                    RECITALS

         WHEREAS, Ceding Company and Reinsurer entered into a Reinsurance
Agreement, effective as of June 1, 2004 (the "Agreement"); and

         WHEREAS, Ceding Company and Reinsurer desire to make certain amendments
to the Agreement as more particularly described herein.

                                    AGREEMENT

         NOW, THEREFORE, for good and valuable consideration and for the mutual
covenants set forth below, the parties hereto, intending legally to be bound,
hereby agree as follows:

         1.    This First Amendment shall be effective as of July 1, 2004.

         2.    The parties hereby amend the Agreement by adding the following
               provisions to the Agreement:

                                   ARTICLE XVI
                                      TRUST

               A.   TRUST. At any time after the occurrence of any of the
               following events, Ceding Company shall have the right, upon
               delivery of written notice to Reinsurer, to require that
               Reinsurer establish a trust reasonably acceptable to Ceding
               Company (the "Trust") and deposit assets, which qualify as
               admissible assets of Reinsurer under statutory accounting
               principles and the laws of the State of Texas, therein having a
               fair market value equal to the amount of the Statutory Reserves
               of the Policies:

               (1)  if Reinsurer's RBC ratio falls between 125%-150% of the NAIC
                    Company Action Level RBC ("CAL RBC"); provided, however, if
                    Reinsurer's Statutory Reserves ceded pursuant to the
                    Agreement and the Amended and Reinstated Reinsurance
                    Agreement, dated as of June 1, 2004 between Ceding Company
                    and Reinsurer ("Ceded Statutory Reserves") are less



                    than $200 million the provisions of Article XVI(A) will not
                    be triggered; or

               (2)  if Reinsurer's RBC ratio falls below 125% of CAL RBC, then
                    the provisions of Article XVI(A) shall be triggered
                    regardless of Reinsurer's Ceded Statutory Reserves; and

               (3)  Reinsurer's obligation to maintain the Trust shall remain in
                    effect only for such period as the events listed in either
                    (1) or (2) above remains in effect.

               B.   TRUST. Upon the receipt of Ceding Company's notice to
               require the establishment of a trust pursuant to Article XVI(A)
               hereof, and without further action by Reinsurer, Reinsurer will
               be deemed to have transferred and assigned to the Trust assets of
               Reinsurer having an aggregate market value as of the effective
               date of such notice equal to the aggregate Statutory Reserves
               established by Ceding Company as of such date with respect to the
               Policies (without giving effect to the reinsurance under this
               Agreement), together with all interest, dividend, or other
               investment income accrued on such assets from the date of
               Reinsurer's receipt of such notice until the date of the Trust's
               receipt of such assets. Reinsurer shall cooperate with Ceding
               Company in effecting the creation and funding of the Trust
               pursuant to Article XVI(A) hereof, including without limitation
               by promptly transferring amounts to the Trust described in the
               preceding sentence and by executing and delivering such other
               documents, instruments and certificates effectuating the
               establishment, funding, and maintenance of the Trust described in
               this Article and reasonably requested by the Ceding Company.
               Reinsurer shall maintain the Trust assets at a minimum level
               equal to Statutory Reserves, and Ceding Company shall provide all
               approvals and take any other action necessary to reduce the Trust
               assets upon Reinsurer's request.

                                  ARTICLE XVII
                              NOVATION; REPLACEMENT

               At the option of Reinsurer, Reinsurer may at any time (i) assume
               the Policies on a novation basis pursuant to an assumption
               reinsurance agreement to be entered into by Ceding Company and
               Reinsurer at such time having terms mutually agreeable to the
               parties or (ii) replace the Policies pursuant to replacement
               offers made to the owners of such Policies. Reinsurer will be
               responsible for paying all costs and obtaining all approvals. The
               parties hereto shall cooperate in good faith with each other in
               effecting any assumption or replacement under this Article.

         3.    Capitalized terms used but not defined herein shall have the
               meaning given to them in the Agreement.

         4.    Unless expressly modified by this First Amendment, the terms and
               conditions of the Agreement remain unchanged and in full force
               and effect.



         5.    This First Amendment shall be binding on the parties hereto,
               including their affiliates, successors and assigns.


         IN WITNESS WHEREOF, the parties hereto have executed this First
Amendment as of the day and year first set forth above.

COLUMBIA UNIVERSAL LIFE INSURANCE   ALLSTATE LIFE INSURANCE COMPANY
COMPANY

By:            /s/                  By:             /s/
   ------------------------------     ----------------------------------------

Name: James P. Zils                 Name: Samuel H. Pilch
     ----------------------------         ------------------------------------

Title: Treasurer                    Title: Group Vice President and Controller
      ---------------------------          -----------------------------------

                                                                    EXHIBIT 10.5

                              AMENDED AND RESTATED

                              REINSURANCE AGREEMENT

                                     BETWEEN

                    COLUMBIA UNIVERSAL LIFE INSURANCE COMPANY

                                       AND

                         ALLSTATE LIFE INSURANCE COMPANY


                                    RECITALS

This Amended and Restated Reinsurance Agreement dated and effective as of June
1, 2004 (hereinafter "Agreement") is made and entered into by and between
COLUMBIA UNIVERSAL LIFE INSURANCE COMPANY, a life insurance company domiciled in
the State of Texas (hereinafter "Ceding Company") and ALLSTATE LIFE INSURANCE
COMPANY, a life insurance company domiciled in the State of Illinois
(hereinafter the "Reinsurer").

WHEREAS, the Ceding Company and Reinsurer entered into that certain Reinsurance
Agreement, effective June 30, 2000 ("Original Agreement"), pursuant to which the
Ceding Company ceded to the Reinsurer, and the Reinsurer accepted on a
coinsurance basis 100% of the Ceding Company's Net Ceded Liabilities (as defined
in Article I below) under certain annuity contracts and supplemental agreements.

WHEREAS, the Ceding Company and Reinsurer desire to amend the Original Agreement
and to restate all its terms, covenants and conditions as set forth below.

NOW THEREFORE, in consideration of the above stated premises and the promises
and the mutual agreements set forth below the Ceding Company and the Reinsurer
agree as follows.

                                    ARTICLE I
                                   DEFINITIONS

Unless otherwise defined herein, as used in this Agreement the following terms
shall have the meanings ascribed to them below:

A.   "Annual Statement" shall mean the Ceding Company's Life and Accident and
     Health

                                        1


Companies Annual Statement for the General Account as filed with the Texas
Insurance

     Department.

B.   "Code" shall mean the Internal Revenue Code of 1986, as amended.

C.   "Effective Date" shall mean the effective date of this Agreement, which
     shall be June 30, 2000. The Amended and Restated version of this Agreement
     dated June 1, 2004 shall become effective June 1, 2004.

D.   "Excluded Liabilities" shall mean (i) Extra-Contractual Obligations, and
     (ii) liabilities ceded by Ceding Company under Third-Party Reinsurance
     Agreements.

E.   "Extra-Contractual Obligations" shall mean all liabilities and obligations
     for consequential, extra-contractual, exemplary, punitive, special or
     similar damages or any other amounts due or alleged to be due (other than
     those arising under the express terms and conditions of the Policies) which
     arise from any real or alleged act, error or omission, whether or not
     intentional, in bad faith or otherwise, including without limitation, any
     act, error or omission relating to: (i) the marketing, underwriting,
     production, issuance, cancellation or administration of the Policies; (ii)
     the handling of claims or disputes in connection with the Policies; or
     (iii) the failure to pay or the delay in payment of benefits or claims,
     under or in connection with the Policies.

F.   "Initial Settlement Date" shall have the meaning set forth in Article IV of
     this Agreement.

G.   "Net Benefits" shall mean the actual amounts paid or incurred by the Ceding
     Company with respect to the Policies for all surrenders, withdrawals (full
     and partial), death benefits, annuitizations, and payments on supplemental
     contracts, net of Excluded Liabilities.

H.   "Net Ceded Liabilities" shall mean any and all liabilities of the Ceding
     Company arising under the Policies, but shall not include Excluded
     Liabilities.

I.   "Net Statutory Reserves" shall have the meaning set forth in Article V of
     this Agreement.

J.   "Policy or Policies" shall mean the annuity contracts defined in Exhibit A
     which are underwritten or reinsured by the Ceding Company. For the
     avoidance of doubt, "Policies" refers to annuity contracts which are
     in-force on the Effective Date or issued after the Effective Date,
     including (i) any supplemental agreements or benefits arising out of the
     Policies, (ii) policies, or portions thereof, recaptured by the Ceding
     Company under Third-Party Reinsurance Agreements, and (iii) Policies
     reinsured by Ceding Company.

K.   "Terminal Accounting and Settlement" shall have the meaning set forth in
     Article XIV of this Agreement.

L.   "Third-Party Reinsurance Agreements" shall mean any written reinsurance
     agreements under

                                        2


     which Ceding Company has ceded liabilities with respect to the Policies,
     other than this Agreement.

                                   ARTICLE II
                              BASIS OF REINSURANCE

The Ceding Company agrees to cede and the Reinsurer agrees to accept Net Ceded
Liabilities. The reinsurance provided hereunder shall be on a 100% coinsurance
basis.

                                   ARTICLE III
                 LIABILITY OF REINSURER; COINSURANCE PROVISIONS

A.   All of the Net Ceded Liabilities shall be reinsured pursuant to the terms
     of this Agreement as of the Effective Date.

B.   The liability of the Reinsurer with respect to Policies in force on the
     Effective Date will begin on the Effective Date. The liability of the
     Reinsurer with respect to any application received or any contract issued
     after the Effective Date and reinsured hereunder will begin simultaneously
     with that of the Ceding Company. The Reinsurer's liability with respect to
     any Policy will terminate on the date the Ceding Company's liability on
     such contract terminates or the date this Agreement is terminated,
     whichever is earlier. However, termination of this Agreement will not
     terminate the Reinsurer's liability for Net Benefits prior to the date of
     termination. If any of the Policies are reduced or terminated by payment of
     a death benefit, withdrawal or surrender, the reinsurance will be reduced
     proportionately or terminated.

C.   The reinsurance provided under this Agreement is subject to the same
     limitations and conditions as set forth in the Policies.

D.   Ceding Company shall not make any changes after the Effective Date in the
     provisions and conditions of any Policy except with Reinsurer's prior
     written consent, including, but not limited to any changes to comply with
     any applicable law, rule or regulation.

E.   Some of the Policies ceded under this Agreement provide that the Ceding
     Company may in its discretion, from time to time, as provided in the policy
     or contract, declare interest rates, cost of insurance rates, purchase
     payments or other non-guaranteed elements that are or affect required
     purchase payments or are used to determine contract values. The Ceding
     Company agrees, while this Agreement is in effect, to set such
     discretionary interest rates, cost of insurance rates, or other
     non-guaranteed elements to be declared on the Policies and the effective
     dates thereof only with Reinsurer's written approval. The Ceding Company
     and Reinsurer agree to fully cooperate in obtaining any required regulatory
     approvals in connection with setting or changing such discretionary
     interest rates, cost of insurance rates, or other non-guaranteed elements.

F.   Ceding Company shall not make any changes or modifications to any of the
     Policies, nor

                                        3


     waive or exercise any of its rights under any of the Policies without the
     prior written consent of Reinsurer.

G.   Conversions, exchanges, or replacements of Policies are not reinsured under
     this Agreement, unless agreed to in writing by Reinsurer.

                                   ARTICLE IV
                                     CLAIMS

A.   Reinsurer shall not be liable to pay Ceding Company for any
     Extra-Contractual Obligations, except to the extent such liabilities or
     obligations arise directly from and are proximately caused by the gross
     negligence or willful acts or omissions of Reinsurer, its agents,
     contractors or employees in the performance of Reinsurer's duties and
     obligations under this Agreement or that certain Administrative Services
     Agreement dated June 1, 2004 by and between the Ceding Company and
     Reinsurer ("Administrative Services Agreement") whereby Ceding Company has
     engaged Reinsurer to service the Policies.

     In the event of a change in the amount of the Ceding Company's liability on
     a Policy due to a misstatement of age or sex, the Reinsurer's liability
     will be changed proportionately.

B.   In the event that the Administrative Services Agreement is terminated for
     any reason and is not replaced by another services agreement for the
     Policies between Ceding Company and Reinsurer or any of its affiliates or
     subsidiaries, the following subsections, shall then apply;

     1.   The Ceding Company shall notify the Reinsurer, as soon as possible,
          whenever the Ceding Company has received a notice on any Policy
          reinsured under this Agreement.

     2.   The Ceding Company shall promptly provide the Reinsurer with proper
          claim papers and proofs when requesting payment. The Reinsurer shall
          promptly pay its share of each claim in a lump sum. Reinsurer shall
          have the right to approve all claim payments, and any decision by
          Ceding Company to contest, compromise or litigate a claim shall be
          subject to Reinsurer's prior written approval.

                                    ARTICLE V
                                RESERVE TRANSFERS

The parties acknowledge that an initial reserve transfer occurred under the
original Reinsurance Agreement effective June 30, 2000, as described below.

                                        4


A.   On June 30, 2000, an estimate was made of the net statutory reserves as
     calculated in B(i) below ("Net Statutory Reserves"). After receiving
     approval from all necessary regulatory authorities, assets consisting of
     policy loans, cash and investments (at market value) including accrued
     investment income and net of unearned investment income were transferred by
     the Ceding Company to the Reinsurer in an amount equal to the Net Statutory
     Reserves.

B.   Within ninety (90) days following the effective date of the Original
     Agreement ("Initial Settlement Date"), Ceding Company paid to Reinsurer, or
     received from Reinsurer, as the case may be, cash in an amount equal to (i)
     less (ii), where (i) and (ii) are as defined below. Ceding Company also
     paid to Reinsurer, or received from Reinsurer, as the case may be, interest
     on such amount at the rate specified in (iii) below.

     (i)    Net Statutory Reserves determined as the portion of the following
            items (a) through (e), minus items (f) through (g) attributable to
            the Policies (or portion of such policies) ceded to Reinsurer under
            the Original Agreement. The applicable portion of these items were
            calculated as of the effective date of the Original Agreement and
            were based on the corresponding items from Ceding Company's Annual
            Statement.



      ITEM        NAIC STATEMENT REFERENCE*                        DESCRIPTION
      ----        -------------------------                        -----------
                                                  
(a)               Page 3, Line 1                        Aggregate reserve for life policies and
                                                        contracts

(b)               Page 3, Line 3                        Supplementary contracts without life
                                                        contingencies
(c)               Page 3, Lines 4.1 & 4.2               Policy and contract claims


(d)               Page 3, Line 9                        Premium and annuity considerations
                                                        received in advance

(e)               Page 3, Lines 11.1, 11.2 & 11.3       Policy and contract liabilities not
                                                        included elsewhere

(f)               Page 2, Line 15                       Life insurance premiums and annuity
                                                        considerations deferred and uncollected


                                        5



                                                  

(g)               Page 40, Column 3, Line 32            Interest Maintenance Reserve adjustment for
                                                        current year's liability gains\losses
                                                        released from the reserves resulting from
                                                        this transaction


*References herein are to the 1999 NAIC Statutory Statement.

     (ii)   The amount transferred under Paragraph A of this Article V.

     (iii)  Interest on cash transferred at an effective rate of seven percent
            (7%) per annum, simple rate, from the effective date of the Original
            Agreement to the Initial Settlement Date.

                                   ARTICLE VI
                            SETTLEMENT AND REPORTING

A.   While this Agreement is in effect, Ceding Company shall pay to Reinsurer no
     less frequently than quarterly, with respect to eligible Policies, a
     reinsurance premium equal to (or the accounting equivalent of) the sum of
     Items (a) and (b) less (c) below.

     (a)    Gross premiums (direct and reinsurance assumed) collected by Ceding
            Company during the settlement period.

     (b)    Policy loan repayments collected by Ceding Company with respect to
            the Policies.

     (c)    Gross premiums refunded by Ceding Company during the settlement
            period to policyholders.

B.   While this Agreement is in effect, Reinsurer shall pay to Ceding Company no
     less frequently than quarterly, a benefit and expense allowance equal to
     (or the accounting equivalent of) the sum of Items (a), (b), (c), (d), (e)
     and (f), as applicable for the period since the date of Reinsurer's last
     payment to Ceding Company.

     (a)    Net Benefits paid or incurred by Ceding Company with respect to the
            Policies.

     (b)    Commissions and other sales compensation paid or incurred by Ceding
            Company with respect to the Policies.

                                        6


     (c)    Premium taxes paid or incurred by Ceding Company with respect to the
            Policies.

     (d)    Policy loan distributions to policyholders paid or incurred by
            Ceding Company with respect to the Policies.

     (e)    Net reinsurance premiums paid or incurred by Ceding Company to
            another reinsurer with respect to the Policies.

     (f)    So long as Ceding Company and Reinsurer remain affiliates, general
            insurance expenses and insurance taxes, licenses and fees excluding
            income taxes (Annual Statement Page 4 Lines 23 and 24) paid or
            incurred by Ceding Company with respect to the Policies shall be
            paid by Reinsurer to Ceding Company.

C.   Ceding Company will provide Reinsurer with accounting reports on a time
     schedule determined by Reinsurer, which schedule shall be no less
     frequently than quarterly within fifteen (15) days following the end of
     each calendar quarter. These reports will contain sufficient information
     about the Policies to enable the Reinsurer to prepare its quarterly and
     annual financial reports.

D.   Settlements as set out in Article VI, Paragraphs 1 and 2 will occur on a
     time schedule determined by Reinsurer, which schedule shall be no less
     frequently than quarterly within sixty (60) days following the end of each
     calendar quarter.

E.   In the event the Administrative Services Agreement is terminated for any
     reason and is not replaced by another services agreement for the Policies
     between Ceding Company and Reinsurer or any of its affiliates or
     subsidiaries, then subsections A. through D. above shall be of no force and
     effect and this subsection E. shall apply in lieu thereof.

     1.     Reinsurance premiums are payable monthly in arrears. The Ceding
            Company shall calculate the amount of reinsurance premium due within
            45 days after the end of each month, and shall send the Reinsurer a
            statement showing premiums, expense allowances, claims, reserves and
            other information for the applicable month as requested by
            Reinsurer.

     2.     If an amount is due the Reinsurer, the Ceding Company shall pay that
            amount together with the statement. If Ceding Company fails to pay
            the amount due within 45 days after the close of the month ("Premium
            Due Date"), then interest shall accrue on the amount due beginning
            on the day following the Premium Due Date up to and including the
            day such premium payment is paid by the Ceding Company. The rate of
            interest charged per month shall be the greater of: (i) the 30 Day
            Treasury Bill rate as published in the Money Rate Section or any
            successor section of the Wall Street Journal on the first business
            day following the Premium Due Date, or (ii) 4% per annum.

                                       7


            The payment of reinsurance premium is a condition precedent to the
            liability of the Reinsurer for reinsurance covered by this
            Agreement. In the event that reinsurance premiums are not paid
            within 60 days after the Premium Due Date, the Reinsurer shall have
            the right to terminate the reinsurance under all policies having
            reinsurance premiums in arrears, with 30 days prior written notice.

            If all reinsurance premiums in arrears, including any that become in
            arrears during the 30 day notice period, are not paid before the
            expiration of the notice period, the Reinsurer will be relieved of
            all liability under those Policies as of the last date to which
            premiums have been paid for each Policy. Reinsurance on Policies on
            which reinsurance premiums subsequently fall due will automatically
            terminate as of the last date to which premiums have been paid for
            each Policy, unless reinsurance premiums on those Policies are paid
            on or before their respective Premium Due Dates.

            Terminated reinsurance may be reinstated, subject to approval by the
            Reinsurer, within 45 days of the date of termination, and upon
            payment of all reinsurance premiums in arrears including any
            interest accrued thereon. The Reinsurer will have no liability for
            any claims incurred between the date of termination and the date of
            the reinstatement of the reinsurance. The right to terminate
            reinsurance shall not prejudice the Reinsurer's right to collect
            premiums for the period during which reinsurance was in force prior
            to the expiration of the 30 days notice.

     3.     If an amount is due the Ceding Company, the Reinsurer shall remit
            such amount within 60 days of receipt of the statement. If the
            Reinsurer fails to pay the amount due within the 60 day period, then
            interest shall accrue from the day following the end of the 60 day
            period up to and including the day the Reinsurer pays the amount
            due. Interest shall be at the rate described in paragraph E.2.
            above.

                                   ARTICLE VII
                                   TAX MATTERS

     With respect to this Agreement, the Ceding Company and the Reinsurer hereby
     make the election as set forth in Exhibit B and as provided for in section
     1.848-2(g)(8) of the Treasury Regulations. Each of the parties hereto
     agrees to take such further actions as may be necessary to ensure the
     effectiveness of such election.

                                  ARTICLE VIII
                                 RESERVE CREDIT

The Reinsurer shall, to the extent necessary, together with all its subsequent
retrocessionaires, establish adequate net reserves, and shall agree in good
faith to take any other steps necessary, pursuant to the requirements of Texas
or any other state or jurisdiction in which the Ceding

                                        8


Company is licensed or accredited, for the Ceding Company to take statutory
credit for reinsurance ceded to an unadmitted, unauthorized or unaccredited
reinsurer, up to the full amount of the reserve that the Ceding Company would
have established for the Policies if it had retained the Policies.

                                   ARTICLE IX
                                   OVERSIGHTS

The Reinsurer shall be bound as the Ceding Company is bound, and it is expressly
understood and agreed that if failure to reinsure or failure to comply with any
terms of this Agreement is shown to be unintentional and the result of clerical
error, misunderstanding or oversight on the part of either the Ceding Company or
the Reinsurer, both the Ceding Company and the Reinsurer shall be restored to
the positions they would have occupied had such error or oversight not occurred.

                                    ARTICLE X
                              INSPECTION OF RECORDS

Either party, their respective employees or authorized representatives, may
audit, inspect and examine, during regular business hours, at the home office of
either party, any and all books, records, statements, correspondence, reports,
trust accounts and their related documents or other documents that relate to the
Policies covered under this Agreement. The audited party agrees to provide a
reasonable workspace for such audit, inspection or examination and to cooperate
fully and to faithfully disclose the existence of and produce any and all
necessary and reasonable materials requested by such auditors, investigators, or
examiners. The party performing a routine audit shall provide no less than five
(5) working days advance notice to the other party. The expense of the
respective party's employee(s) or authorized representative(s) engaged in such
activities will be borne solely by such party.

                                   ARTICLE XI
                                   INSOLVENCY

A.   The portion of any risk or obligation assumed by the Reinsurer, when such
     portion is ascertained, shall be payable on demand of the Ceding Company at
     the same time as the Ceding Company shall pay its net retained portion of
     such risk or obligation, and the reinsurance shall be payable by the
     Reinsurer on the basis of the liability of the Ceding Company under the
     Policies without diminution because of the insolvency of the Ceding
     Company. In the event of the insolvency of the Ceding Company and the
     appointment of a conservator, liquidator or statutory successor of the
     Ceding Company, such portion shall be payable to such conservator,
     liquidator or statutory successor immediately upon demand, on the basis of
     claims allowed against the Ceding Company by any court of

                                        9


     competent jurisdiction or, by any conservator, liquidator or statutory
     successor of the Ceding Company having authority to allow such claims,
     without diminution because of such insolvency or because such conservator,
     liquidator or statutory successor has failed to pay all or a portion of any
     claims. Payments by the Reinsurer as above set forth shall be made directly
     to the Ceding Company or its conservator, liquidator or statutory
     successor.

B.   Further, in the event of the insolvency of the Ceding Company, the
     liquidator, receiver or statutory successor of the insolvent Ceding Company
     shall give written notice to the Reinsurer of the pendency of any
     obligation of the insolvent Ceding Company on any Net Ceded Liability,
     whereupon the Reinsurer may investigate such claim and interpose at its own
     expense, in the proceeding where such claim is to be adjudicated, any
     defense or defenses which it may deem available to the Ceding Company or
     its liquidator or statutory successor. The expense thus incurred by the
     Reinsurer shall be chargeable, subject to court approval, against the
     insolvent Ceding Company as part of the expenses of liquidation to the
     extent of a proportionate share of the benefit which may accrue to the
     Ceding Company solely as a result of the defense undertaken by the
     Reinsurer.

C.   In the event of the Reinsurer's insolvency, any payments due the Reinsurer
     from the Ceding Company pursuant to the terms of this Agreement will be
     made directly to the Reinsurer or its conservator, liquidator, receiver or
     statutory successor.

                                   ARTICLE XII
                                   ARBITRATION

A.   Prior to initiation of arbitration, the Reinsurer and Ceding Company agree
     that they will first negotiate diligently and in good faith to agree on a
     mutually satisfactory resolution of any dispute. Provided, however that if
     any such dispute cannot be resolved within sixty (60) days (or such longer
     period as the parties may agree) after written notice invoking the
     negotiation period of this article is delivered by either party, the
     Reinsurer and the Ceding Company agree that they will submit this dispute
     to arbitration as described below.

B.   The Reinsurer and the Ceding Company intend that any and all disputes
     between them under or with respect to this Agreement be resolved without
     resort to any litigation. As a condition precedent to any right of action
     hereunder, any dispute or difference between the Ceding Company and the
     Reinsurer relating to the interpretation or performance of this Agreement,
     including its formation or validity, or any transaction under this
     Agreement, whether arising before or after termination, shall be submitted
     to arbitration. Arbitration shall be the method of dispute resolution,
     regardless of the insolvency of either party, unless the conservator,
     receiver, liquidator or statutory successor is specifically exempted from
     arbitration proceeding by applicable state law of the insolvency.

                                       10


C.   Arbitration shall be initiated by the delivery of written notice of demand
     for arbitration ("Arbitration Notice") by one party to another. Such
     written notice shall contain a brief statement of the issue(s), remedies
     sought, and the failure of the parties to reach amicable agreement as
     provided in Paragraph A above.

D.   The arbitrators and umpire shall be present or former disinterested
     officers of life reinsurance or insurance companies other than the two
     parties to the Agreement or any company owned by, or affiliated with,
     either party. Each party shall appoint an individual as arbitrator and the
     two so appointed shall then appoint the umpire. If either party refuses or
     neglects to appoint an arbitrator within thirty (30) days after delivery of
     the Arbitration Notice, the other party may appoint the second arbitrator.
     If the two arbitrators do not agree on an umpire within thirty (30) days of
     the appointment of the second appointed arbitrator, each of the two
     arbitrators shall nominate three individuals. Each arbitrator shall then
     decline two of the nominations presented by the other arbitrator. The
     umpire shall be chosen from the remaining two nominations by drawing lots.

E.   The arbitration hearings shall be held in the city in which the Reinsurer's
     head office is located or any such other place as may be mutually agreed.
     Each party shall submit its case to the arbitrators and umpire within one
     hundred and eighty (180) days of the selection of the umpire or within such
     longer period as may be agreed.

F.   The arbitration panel shall make its decision with regard to the custom and
     usage of the insurance and reinsurance business. The arbitration panel
     shall interpret this Agreement as an honorable engagement; they are
     relieved of all judicial formalities and may abstain from following strict
     rules of law. The arbitration panel shall be solely responsible for
     determining what evidence shall be considered and what procedure they deem
     appropriate and necessary in the gathering of such facts or data to decide
     the dispute.

G.   The decision in writing of the majority of the arbitration panel shall be
     final and binding upon the parties. Judgment may be entered upon the final
     decision of the arbitration panel in any court having jurisdiction.

H.   The jointly incurred costs of the arbitration are to be borne equally by
     both parties. Jointly incurred costs are specifically defined as any costs
     that are not solely incurred by one of the parties (e.g., attorneys' fees,
     expert witness fees, travel to the hearing site, etc.). Costs incurred
     solely by one of the parties shall be borne by that party. Once the panel
     has been selected, the panel shall agree on one billable rate for each of
     the arbitrators and umpire and that sole cost shall be disclosed to the
     parties and become payable as a jointly incurred cost as described above.

                                       11


                                  ARTICLE XIII
                              PARTIES TO AGREEMENT

This Agreement is solely between the Ceding Company and the Reinsurer. The
acceptance of reinsurance hereunder shall not create any right or legal relation
whatever between the Reinsurer and any party in interest under any Policy.
Ceding Company shall be and remain solely liable to any insured, contract owner,
or beneficiary under any contract reinsured hereunder.

                                   ARTICLE XIV
                      DURATION OF AGREEMENT AND TERMINATION

A.   DURATION. This agreement will be effective as of the Effective Date, and
     will be unlimited as to its duration. This Agreement may not be terminated
     by either party, except as provided for in Article VI.

B.   TERMINATION FOR NEW BUSINESS. This agreement will be terminated for new
     business effective May 31, 2004 at 11:59pm.

                                   ARTICLE XV
                               GENERAL PROVISIONS

A.   ENTIRE AGREEMENT. This Agreement constitutes the entire contract between
     the Reinsurer and the Ceding Company with respect to the Policies. No
     variation, modification or changes to this Agreement shall be binding
     unless in writing and signed by an officer of each party.

B.   NOTICES. Any notice or communication given pursuant to this Agreement must
     be in writing and (1) delivered personally, (2) sent by facsimile
     transmission, (3) delivered by overnight express, or (4) sent by registered
     or certified mail, postage prepaid, to such address or addresses each party
     may designate from time to time for receipt of notices or communications.
     The initial notice addresses are as follows:

     If to the Reinsurer:       Allstate Life Insurance Company
                                3100 Sanders Rd.
                                Northbrook, Illinois 60062
                                Attn:  Steve Shebik, Senior Vice President and
                                Chief Financial Officer
                                Facsimile No.: (847) 326-5054

     If to the Ceding Company:  Columbia Universal Life Insurance Company
                                3100 Sanders Rd.
                                Northbrook, Illinois 60062

                                       12



                                Attn:  Errol Cramer, Appointed Actuary
                                Facsimile No.: (847) 402-7376

     All notices and other communications required or permitted under the terms
     of this Agreement that are addressed as provided in this Article XV shall:
     (1) if delivered personally or by overnight express, be deemed given upon
     delivery; (2) if delivered by facsimile transmission, be deemed given when
     electronically confirmed; and (3) if sent by registered or certified mail,
     be deemed given when received. Any party from time to time may change its
     address for notice purposes by giving a similar notice specifying a new
     address, but no such notice shall be deemed to have been given until it is
     actually received by the party sought to be charged with the contents
     thereof.

C.   EXPENSES. Except as may be otherwise expressly provided in this Agreement,
     whether or not the transactions contemplated hereby are consummated, each
     of the parties hereto shall pay its own costs and expenses incident to
     preparing for, entering into and carrying out this Agreement and the
     consummation of the transactions contemplated hereby.

D.   COUNTERPARTS. This Agreement may be executed in one or more counterparts,
     each of which shall be deemed an original, but all of which shall
     constitute one and the same instrument and shall become effective when one
     or more counterparts have been signed by each of the parties and delivered
     to the other parties.

E.   NO THIRD PARTY BENEFICIARY. Except as otherwise provided herein, the terms
     and provisions of this Agreement are intended solely for the benefit of the
     parties hereto, and their respective successors or permitted assigns, and
     it is not the intention of the parties to confer third-party beneficiary
     rights upon any other person, and no such rights shall be conferred upon
     any person or entity not a party to this Agreement.

F.   AMENDMENT. This Agreement may only be amended or modified by a written
     instrument executed by both parties hereto.

G.   ASSIGNMENT; BIND EFFECT. Neither this Agreement nor any of the rights,
     interests or obligations under this Agreement shall be assigned, in whole
     or in part, by any of the parties hereto without the prior written consent
     of the other party, which consent shall not be unreasonably withheld, and
     any such assignment that is attempted without such consent shall be null
     and void. Subject to the preceding sentence, this Agreement shall be
     binding upon, inure to the benefit of, and be enforceable by the parties
     and their respective successors and permitted assigns.

H.   INVALID PROVISIONS. If any provision of this Agreement is held to be
     illegal, invalid, or unenforceable under any present or future law, and if
     the rights or obligations of the parties hereto under this Agreement will
     not be materially and adversely affected thereby, (1) such provision shall
     be fully severable; (2) this Agreement shall be construed and enforced as
     if such illegal, invalid, or unenforceable provision had never comprised a
     part

                                       13


     hereof; and (3) the remaining provisions of this Agreement shall remain in
     full force and effect and shall not be affected by the illegal, invalid, or
     unenforceable provision or by its severance herefrom.

I.   GOVERNING LAW. This Agreement shall be governed by and construed in
     accordance with the Laws of Illinois, regardless of the laws that might
     otherwise govern under applicable principles of conflicts of laws thereof.

J.   WAIVER. Any term or condition of this Agreement may be waived in writing at
     any time by the party that is entitled to the benefit thereof. A waiver on
     one occasion shall not be deemed to be a waiver of the same or any other
     breach or nonfulfillment on a future occasion. All remedies, either under
     the terms of this Agreement, or by law or otherwise afforded, shall be
     cumulative and not alternative, except as otherwise provided by law.

K.   HEADINGS, ETC. The headings used in this Agreement have been inserted for
     convenience and do not constitute matter to be construed or interpreted in
     connection with this Agreement. Unless the context of this Agreement
     otherwise requires, (1) words using the singular or plural number also
     include the plural or singular number, respectively; (2) the terms
     "HEREOF," "HEREIN," "HEREBY," "HERETO," "HEREUNDER," and derivative or
     similar words refer to this entire Agreement (including the exhibits
     hereto); (3) the term "ARTICLE" refers to the specified Article of this
     Agreement; (d) the term "EXHIBIT" refers to the specified Exhibit attached
     to this Agreement; and (e) the term "PARTY" means, on the one hand, the
     Ceding Company, and on the other hand, the Reinsurer.

L.   OFFSET. Any debits or credits incurred after the Effective Date in favor of
     or against either the Ceding Company or the Reinsurer with respect to this
     Agreement are deemed mutual debits or credits, as the case may be, and
     shall be set off against each other dollar for dollar.

M..  COMPLIANCE WITH LAWS. The parties hereto shall at all times comply with all
     applicable laws in performing their obligations under this Agreement.

N.   SURVIVAL. All provisions of this Agreement shall survive its termination to
     the extent necessary to carry out the purposes of this Agreement or to
     ascertain and enforce the parties' rights or obligations hereunder existing
     at the time of termination.

O.   PRIOR AGREEMENT SUPERCEDED. Subject to state regulatory approval, this
     Amended and Restated Reinsurance Agreement supercedes in its entirety, the
     Original Agreement dated June 30, 2000.

P.   CALENDAR DAYS. Unless otherwise specified, all references to "day" in this
     Agreement shall mean calendar days.

                                       14


IN WITNESS HEREOF, the parties to this Agreement have caused it to be duly
executed in duplicate by their respective officers on the dates shown below.

ALLSTATE LIFE INSURANCE COMPANY

By:               /s/
   ---------------------------------------

Name: Samuel H. Pilch
     -------------------------------------

Title: Group Vice President and Controller
      ------------------------------------

Date:     July 27, 2004
     -------------------------------------


COLUMBIA UNIVERSAL LIFE INSURANCE COMPANY


By:               /s/
     -------------------------------------

Name: James P. Zils
     -------------------------------------

Title: Treasurer
      ------------------------------------

Date: July 27, 2004
     -------------------------------------

                                       15


                                    EXHIBIT A

                        ELIGIBLE AND INELIGIBLE POLICIES

Policies eligible for reinsurance under this Agreement are defined as all
annuity contracts and supplementary contracts with and without life
contingencies, assumed, issued, or reinsured by the Ceding Company. For the
avoidance of doubt, this Agreement is intended to include all policies,
certificates, and contracts assumed, issued, or reinsured by the Ceding Company,
expressly excluding any contracts covered under that certain Reinsurance
Agreement between the parties dated June 1, 2004, under which Ceding Company's
life and health business is reinsured on a 100% coinsurance.

                                       16


                                    EXHIBIT B

                                  TAX ELECTION

The Ceding Company and the Reinsurer hereby make an election pursuant to
Treasury Regulations Section 1.848-2(g)(8). This election shall be effective for
the tax year during which the Effective Date falls and all subsequent taxable
years for which this Agreement remains in effect. Unless otherwise indicated,
the terms used in this Exhibit are defined by reference to Treasury Regulations
Section 1.848-2 as in effect on the date hereof. As used below, the term "PARTY"
or "PARTIES" shall refer to the Ceding Company or the Reinsurer, or both, as
appropriate.

1.   The party with the Net Positive Consideration (as defined in Section 848 of
     the Code and related Treasury Regulations) with respect to the transactions
     contemplated under this Agreement for any taxable year covered by this
     election will capitalize specified policy acquisition expenses with respect
     to such transactions without regard to the general deductions limitation of
     Section 848(c)(1) of the Code.

2.   The parties agree to exchange information pertaining to the amount of Net
     Consideration (as defined in Section 848 of the Code and related Treasury
     Regulations) under this Agreement each year to ensure consistency or as is
     otherwise required by the Internal Revenue Service. The exchange of
     information each year will follow the procedures set forth below:

     (a)  By April 1 of each year, the Ceding Company will submit a schedule to
          the Reinsurer of its calculation of the Net Consideration for the
          preceding calendar year. This schedule of calculations will be
          accompanied by a statement signed by an authorized representative of
          the Ceding Company stating the amount of the Net Consideration the
          Ceding Company will report in its tax return for the preceding
          calendar year.

     (b)  Within thirty (30) days of the Reinsurer's receipt of the Ceding
          Company's calculation, the Reinsurer may contest such calculation by
          providing an alternative calculation to the Ceding Company in writing.
          If the Reinsurer does not notify the Ceding Company that it contests
          such calculation within said 30-day period, the calculation will be
          presumed correct and the Reinsurer shall also report the Net
          Consideration as determined by the Ceding Company in the Reinsurer's
          tax return for the preceding calendar year.

     (c)  If the Reinsurer provides an alternative calculation of the Net
          Consideration pursuant to clause (b), the parties will act in good
          faith to reach an agreement as to the correct amount of Net
          Consideration within thirty (30) days of the date the Ceding Company
          receives the alternative calculation from the Reinsurer. When the
          Ceding Company and the Reinsurer reach agreement on an amount of Net
          Consideration, each party shall report the applicable amount in their
          respective tax returns for the preceding calendar year.

                                       17

                                                                    EXHIBIT 10.6

                               FIRST AMENDMENT TO
                   AMENDED AND RESTATED REINSURANCE AGREEMENT

         THIS FIRST AMENDMENT TO AMENDED AND RESTATED REINSURANCE AGREEMENT
(this "First Amendment"), dated this 26th day of July, 2004, is made by and
between COLUMBIA UNIVERSAL LIFE INSURANCE COMPANY, a life insurance company
domiciled in the State of Texas ("Ceding Company") and ALLSTATE LIFE INSURANCE
COMPANY, a life insurance company domiciled in the State of Illinois
("Reinsurer").

                                    RECITALS

         WHEREAS, Ceding Company and Reinsurer entered into an Amended and
Restated Reinsurance Agreement, effective as of June 1, 2004 (the "Agreement");
and

         WHEREAS, Ceding Company and Reinsurer desire to make certain amendments
to the Agreement as more particularly described herein.

                                    AGREEMENT

         NOW, THEREFORE, for good and valuable consideration and for the mutual
covenants set forth below, the parties hereto, intending legally to be bound,
hereby agree as follows:

         1.    This First Amendment shall be effective as of July 1, 2004.

         2.    The parties hereby amend the Agreement by adding the following
               provisions to the Agreement:

                                   ARTICLE XVI
                                      TRUST

               A.   TRUST. At any time after the occurrence of any of the
               following events, Ceding Company shall have the right, upon
               delivery of written notice to Reinsurer, to require that
               Reinsurer establish a trust reasonably acceptable to Ceding
               Company (the "Trust") and deposit assets, which qualify as
               admissible assets of Reinsurer under statutory accounting
               principles and the laws of the State of Texas, therein having a
               fair market value equal to the amount of the Statutory Reserves
               of the Policies:

               (1)  if Reinsurer's RBC ratio falls between 125%-150% of the NAIC
                    Company Action Level RBC ("CAL RBC"); provided, however, if
                    Reinsurer's Statutory Reserves ceded pursuant to the
                    Agreement and the Amended and Reinstated Reinsurance
                    Agreement, dated as of June 1, 2004 between



                    Ceding Company and Reinsurer ("Ceded Statutory Reserves")
                    are less than $200 million the provisions of Article XVI(A)
                    will not be triggered; or

               (2)  if Reinsurer's RBC ratio falls below 125% of CAL RBC, then
                    the provisions of Article XVI(A) shall be triggered
                    regardless of Reinsurer's Ceded Statutory Reserves; and

               (3)  Reinsurer's obligation to maintain the Trust shall remain in
                    effect only for such period as the events listed in either
                    (1) or (2) above remains in effect.

               B.   TRUST. Upon the receipt of Ceding Company's notice to
               require the establishment of a trust pursuant to Article XVI(A)
               hereof, and without further action by Reinsurer, Reinsurer will
               be deemed to have transferred and assigned to the Trust assets of
               Reinsurer having an aggregate market value as of the effective
               date of such notice equal to the aggregate Statutory Reserves
               established by Ceding Company as of such date with respect to the
               Policies (without giving effect to the reinsurance under this
               Agreement), together with all interest, dividend, or other
               investment income accrued on such assets from the date of
               Reinsurer's receipt of such notice until the date of the Trust's
               receipt of such assets. Reinsurer shall cooperate with Ceding
               Company in effecting the creation and funding of the Trust
               pursuant to Article XVI(A) hereof, including without limitation
               by promptly transferring amounts to the Trust described in the
               preceding sentence and by executing and delivering such other
               documents, instruments and certificates effectuating the
               establishment, funding, and maintenance of the Trust described in
               this Article and reasonably requested by the Ceding Company.
               Reinsurer shall maintain the Trust assets at a minimum level
               equal to Statutory Reserves, and Ceding Company shall provide all
               approvals and take any other action necessary to reduce the Trust
               assets upon Reinsurer's request.

                                  ARTICLE XVII
                              NOVATION; REPLACEMENT

               At the option of Reinsurer, Reinsurer may at any time (i) assume
               the Policies on a novation basis pursuant to an assumption
               reinsurance agreement to be entered into by Ceding Company and
               Reinsurer at such time having terms mutually agreeable to the
               parties or (ii) replace the Policies pursuant to replacement
               offers made to the owners of such Policies. Reinsurer will be
               responsible for paying all costs and obtaining all approvals. The
               parties hereto shall cooperate in good faith with each other in
               effecting any assumption or replacement under this Article.

         3.    Capitalized terms used but not defined herein shall have the
               meaning given to them in the Agreement.



         4.    Unless expressly modified by this First Amendment, the terms and
               conditions of the Agreement remain unchanged and in full force
               and effect.

         5.    This First Amendment shall be binding on the parties hereto,
               including their affiliates, successors and assigns.


         IN WITNESS WHEREOF, the parties hereto have executed this First
Amendment as of the day and year first set forth above.

COLUMBIA UNIVERSAL LIFE INSURANCE    ALLSTATE LIFE INSURANCE COMPANY
COMPANY

By:               /s/                By:               /s/
     -----------------------------      ---------------------------------------

Name: James P. Zils                  Name: Samuel H. Pilch
     -----------------------------         ------------------------------------

Title: Treasurer                     Title: Group Vice President and Controller
      ----------------------------         ------------------------------------

                                                                     EXHIBIT 15

To the Board of Directors and Shareholder of
Allstate Life Insurance Company:



We have reviewed, in accordance with standards of the Public Company
Accounting Oversight Board (United States), the unaudited interim financial
information of Allstate Life Insurance Company and subsidiaries for the
three-month and six-month periods ended June 30, 2004 and 2003, as indicated
in our report dated August 10, 2004; because we did not perform an audit, we
expressed no opinion on such financial information.

We are aware that our report referred to above, which is included in your
Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2004,
is incorporated by reference in the following Registration Statements:



           Forms S-3 Registration Nos.    Forms N-4 Registration Nos.
           ---------------------------    ---------------------------
                                               
                  333-100068                       333-114560
                  333-102319                       333-114561
                  333-102325                       333-114562
                  333-104789                       333-102934
                  333-105331
                  333-112233
                  333-112249
                  333-117685


We also are aware that the aforementioned report, pursuant to Rule 436(c)
under the Securities Act of 1933, is not considered a part of the
Registration Statement prepared or certified by an accountant or a report
prepared or certified by an accountant within the meaning of Sections 7 and
11 of that Act.

/s/ Deloitte & Touche LLP

Chicago, Illinois
August 10, 2004


                                     E-2

EXHIBIT 31.1

CERTIFICATIONS

I, Casey J. Sylla, certify that:

1.

I have reviewed this quarterly report on Form 10-Q of Allstate Life Insurance Company;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c)

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.

The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

August 10, 2004
		/s/  CASEY J. SYLLA       Casey J. Sylla Chairman of the Board and President

E-3

---

EXHIBIT 31.2

CERTIFICATIONS

I, Steven E. Shebik, certify that:

1.

I have reviewed this quarterly report on Form 10-Q of Allstate Life Insurance Company;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c)

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.

The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

August 10, 2004
		/s/  STEVEN E. SHEBIK       Steven E. Shebik Senior Vice President and Chief Financial Officer

E-4

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EXHIBIT 32

CERTIFICATIONS PURSUANT TO 18 UNITED STATES CODE §1350

        Each of the undersigned hereby certifies that to his knowledge the quarterly report on Form 10-Q for the fiscal period ended June 30, 2004 of Allstate Life Insurance Company filed with the Securities and Exchange Commission fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in such report fairly presents, in all material respects, the financial condition and result of operations of Allstate Life Insurance Company.

August 10, 2004		/s/  CASEY J. SYLLA       Casey J. Sylla Chairman of the Board and President
		/s/  STEVEN E. SHEBIK       Steven E. Shebik Senior Vice President and Chief Financial Officer

E-5

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