

Note 2	Earnings per Common Share

Basic earnings per common share is computed using the weighted average number of common shares outstanding, including vested unissued participating restricted stock units. Diluted earnings per common share is computed using the weighted average number of common and dilutive potential common shares outstanding. For the Company, dilutive potential common shares consist of outstanding stock options and unvested non-participating restricted stock units and contingently issuable performance stock awards.



Computation of basic and diluted earnings per common share
($ in millions, except per share data)	Three months ended June 30,				Six months ended June 30,
($ in millions, except per share data)	2018		2017		2018		2017
Numerator:
Net income	$	676	$	579	$	1,651	$	1,274
Less: Preferred stock dividends	39		29		68		58
Net income applicable to common shareholders⁽¹⁾	$	637	$	550	$	1,583	$	1,216

Denominator:
Weighted average common shares outstanding	349.2		363.6		351.6		364.6
Effect of dilutive potential common shares:
Stock options	3.8		4.3		3.9		4.2
Restricted stock units (non-participating) and performance stock awards	1.6		1.1		1.7		1.3
Weighted average common and dilutive potential common shares outstanding	354.6		369.0		357.2		370.1

Earnings per common share - Basic	$	1.82	$	1.51	$	4.50	$	3.34
Earnings per common share - Diluted	$	1.80	$	1.49	$	4.43	$	3.29


⁽¹⁾	Net income applicable to common shareholders is net income less preferred stock dividends.

The effect of dilutive potential common shares does not include the effect of options with an anti-dilutive effect on earnings per common share because their exercise prices exceed the average market price of Allstate common shares during the period or for which the unrecognized compensation cost would have an anti-dilutive effect.

Options to purchase 2.3 million and 2.5 million Allstate common shares, with exercise prices ranging from $81.42 to $102.84 and $74.03 to $86.61, were outstanding for the three month periods ended June 30, 2018 and 2017, respectively, but were not included in the computation of diluted earnings per common share in those periods. Options to purchase 1.7 million and 2.6 million Allstate common shares, with exercise prices ranging from $81.42 to $102.84 and $69.95 to $86.61, were outstanding for the six month periods ended June 30, 2018 and 2017, respectively, but were not included in the computation of diluted earnings per common share in those periods.