Earnings per share

3 Months Ended

Mar. 31, 2013

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 contingently issuable performance stock awards.

The computation of basic and diluted earnings per share for the three months ended March 31 is presented in the following table.

($ in millions, except per share data)		2013		2012
Numerator:
Net income	$	709	$	766
Denominator:
Weighted average common shares outstanding		475.4		498.7
Effect of dilutive potential common shares:
Stock options		3.7		2.0
Restricted stock units and performance stock awards (non-participating)		1.7		0.8
Weighted average common and dilutive potential common shares outstanding		480.8		501.5
Earnings per share - Basic	$	1.49	$	1.54
Earnings per share - Diluted	$	1.47	$	1.53

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 17.0 million and 28.5 million Allstate common shares, with exercise prices ranging from $37.40 to $62.84 and $25.91 to $62.84, were outstanding for the three-month periods ended March 31, 2013 and 2012, respectively, but were not included in the computation of diluted earnings per share in those periods.