Earnings per share

6 Months Ended

Jun. 30, 2012

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 and performance stock awards.

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

($ in millions, except per share data)		Three months ended					Six months ended
		June 30,					June 30,
		2012		2011			2012		2011
Numerator:
Net income (loss)	$	423	$	(624	)	$	1,189	$	(100	)
Denominator:
Weighted average common shares outstanding		490.6		523.1			494.9		528.2
Effect of dilutive potential common shares:
Stock options		2.3		--			2.2		--
Restricted stock units and performance share awards (non-participating)		0.9		--			0.8		--
Weighted average common and dilutive potential common shares outstanding		493.8		523.1			497.9		528.2
Earnings per share - Basic	$	0.86	$	(1.19	)	$	2.40	$	(0.19	)
Earnings per share - Diluted	$	0.86	$	(1.19	)	$	2.39	$	(0.19	)

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 22.5 million and 28.3 million Allstate common shares, with exercise prices ranging from $27.75 to $62.84 and $27.36 to $62.84, were outstanding for the three-month periods ended June 30, 2012 and 2011, respectively, but were not included in the computation of diluted earnings per share in those periods.  Options to purchase 25.3 million and 28.4 million Allstate common shares, with exercise prices ranging from $26.09 to $62.84 and $27.36 to $62.84, were outstanding for the six-month periods ended June 30, 2012 and 2011, respectively, but were not included in the computation of diluted earnings per share in those periods.

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.