Earnings per share

6 Months Ended

Jun. 30, 2011

Earnings per share

Earnings per share

2.  Earnings per share

Basic earnings per share is computed using the weighted average number of common shares outstanding, including unvested participating restricted stock units.  Diluted earnings per 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.

The computation of basic and diluted earnings per share is presented in the following table.

($ in millions, except per share data)		Three months ended June 30,					Six months ended June 30,
		2011			2010		2011			2010
Numerator:
Net (loss) income	$	(620	)	$	145	$	(101	)	$	265
Denominator:
Weighted average common shares outstanding		523.1			540.7		528.2			540.4
Effect of dilutive potential common shares:
Stock options		--			2.1		--			2.0
Restricted stock units (non-participating)		--			0.2		--			--
Weighted average common and dilutive potential common shares outstanding		523.1			543.0		528.2			542.4
Earnings per share - Basic	$	(1.19	)	$	0.27	$	(0.19	)	$	0.49
Earnings per share - Diluted	$	(1.19	)	$	0.27	$	(0.19	)	$	0.49

As a result of the net loss for the three-month and six-month periods ended June 30, 2011, weighted average dilutive potential common shares outstanding resulting from 2.1 million stock options and 0.5 million restricted stock options (non-participating) in both periods were not included in the computation of diluted earnings per share since inclusion of these securities would have an anti-dilutive effect.  In the absence of the net loss, weighted average common and dilutive potential common shares would have totaled 525.7 million and 530.8 million for the three-month and six-month periods ended June 30, 2011, respectively.

The effect of dilutive potential common shares does not include the effect of options with an anti-dilutive effect on earnings per 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 28.3 million and 27.7 million Allstate common shares, with exercise prices ranging from $27.36 to $62.84 and $28.52 to $62.84, were outstanding for the three-month periods ended June 30, 2011 and 2010, respectively, but were not included in the computation of diluted earnings per share in those periods.  Options to purchase 28.4 million and 26.1 million Allstate common shares, with exercise prices ranging from $27.36 to $62.84 and $27.36 to $64.53, were outstanding for the six-month periods ended June 30, 2011 and 2010, respectively, but were not included in the computation of diluted earnings per share in those periods.