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This SURPLUS NOTE PURCHASE AGREEMENT, dated as of August 1, 2005, is made by and between Allstate Life Insurance Company, a life insurance company domiciled in Illinois (together with its successors and assigns, the “ Seller ”), and Kennett Capital, Inc., a corporation organized under the laws of the State of Delaware (together with its successors and assigns, the “ Purchaser ”).

RECITALS

WHEREAS, the Seller desires to sell to the Purchaser on the date hereof and from time to time hereafter, and the Purchaser desires to purchase from the Seller, surplus notes (the “ Surplus Notes ”) issued by ALIC Reinsurance Company (the “ Issuer ”) in an aggregate principal amount up to $750,000,000 (the “ Authorized Principal Amount ”); and

WHEREAS, as consideration for the sale of the Surplus Notes the Seller shall receive one or more notes (the “ Kennett Notes ”) from the Purchaser with an aggregate principal amount equal to the aggregate principal amount of the Surplus Notes, which shall not exceed the Authorized Principal Amount;

NOW, THEREFORE, for full and fair consideration, the parties hereto agree as follows:

ARTICLE I
DEFINITIONS

Section 1.01                                 Definitions .  The following capitalized terms shall have the following meanings:

“ Agreement ” means this Surplus Note Purchase Agreement, as the same may from time to time be amended, supplemented or otherwise modified in accordance with the terms hereof.

“ Authorized Principal Amount ” has the meaning specified in the first WHEREAS clause in the recitals hereof.

“ Business Day ” means any day other than a Saturday or a Sunday or any day on which banking institutions in Chicago, Illinois, are authorized or obligated by law, regulation or executive order to be closed.

“ Event of Default ” has the meaning specified in Section 5.01 hereof.

“ Holder ” means, with respect to any Kennett Note, the Person in whose name such Kennett Note is registered in the Kennett Note Register.

“ Interest Payment Date ” means each December 1 and June 1, commencing December 1, 2005, provided that if such day is not a Business Day, the next succeeding Business Day.

“ Interest Period ” means, with respect to any Kennett Note, (a) in the case of the initial interest period with respect to such Kennett Note, the period from, and including, the date such Kennett Note was issued to the Seller to, but excluding, the immediately following Payment Date, (b) thereafter, the period from, and including, the preceding Payment Date to, but excluding, the next succeeding Payment Date, and (c) in the case of the final interest period with respect to such Kennett Note, the period from, and including, the preceding Payment Date to, but excluding, the Maturity Date.

“ Interest Rate ” means, with respect to each Kennett Note, the yield calculated as the sum of (a) the 10 Year CMT Rate, as set forth in the corresponding Surplus Notes, plus (b) such spread as set forth in the corresponding Surplus Notes less 20 basis points.

“ Issuer ” has the meaning specified in the first WHEREAS clause in the recitals hereof.

“ Kennett Note Register ” has the meaning specified in Section 4.01 hereof.

“ Kennett Notes ” has the meaning specified in the second WHEREAS clause in the recitals hereof.

“ Maturity Date ” means, with respect to a Kennett Note, the date on which all outstanding unpaid principal on such Kennett Note becomes due and payable, whether at the Stated Maturity Date or by acceleration pursuant to Section 5.02.

“ Payment Date ” means any Interest Payment Date or Maturity Date.

“ Person ” means an individual, corporation (including a business trust), partnership, limited liability company, joint venture, association, joint stock company, trust (including any beneficiary thereof), unincorporated association or government or any agency or political subdivision thereof.

“ Purchaser ” has the meaning specified in the introduction to this Agreement.

“ Record Date ” means the date on which the Holders of any Kennett Note entitled to receive a payment with respect to principal or interest on the next succeeding Payment Date are determined, such date as to any Payment Date being five (5) Business Days prior to such Payment Date.

“ Seller ” has the meaning specified in the introduction to this Agreement.

“ Series ” means a series of Surplus Notes all having the same maturity date and terms authorized by the Issuer by or pursuant to a particular board resolution duly adopted by the Issuer’s board of directors authorizing corporate action by the Issuer.

“ Series 2005-A Notes ” means Surplus Notes of the Issuer in the principal amount of $50,000, 000 denominated as Series 2005-A Notes issued on July 1, 2005.

“ Series 2005-B Notes ” means Surplus Notes of the Issuer in the principal amount of $50,000,000 denominated as Series 2005-B Notes issued on July 1, 2005.

“ Stated Maturity Date ” means, with respect to each Kennett Note, the thirtieth (30 ^th ) anniversary of the issuance date of such Kennett Note, provided such date is a Business Day.

“ Surplus Notes ” has the meaning specified in the first WHEREAS clause in the recitals hereof.

“ 10 Year CMT Rate ” means the 10 Year Constant Maturity Treasury Yield, and shall be recalculated every ten years on the anniversary date of the first Interest Payment Date for each Series of Surplus Notes.

“ 10 Year Constant Maturity Treasury Yield ” means the ten year Constant Maturity Treasury Yield as reported in the Wall Street Journal.

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Section 1.02                                 Other Definitional Provisions .

(a)                  All terms defined in this Agreement shall have the defined meanings when used in any certificate or other document made or delivered pursuant hereto.

(b)                 The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement; and Section and subsection references contained in this Agreement are references to Sections or subsections in or to this Agreement unless otherwise specified.

ARTICLE II
PURCHASE AND SALE OF SURPLUS NOTES

Section 2.01                                 Purchase and Sale of Surplus Notes .  Upon the terms and subject to the conditions set forth in this Agreement, and in reliance on the covenants and agreements herein set forth, on the date hereof, the Seller shall sell and the Purchaser may purchase the Series 2005-A Notes and the Series 2005-B Notes of the Issuer.  From time to time from and after the date hereof, the Seller may, on ten (10) Business Days’ notice to the Purchaser, offer to sell to the Purchaser, and the Purchaser may purchase, additional Series of Surplus Notes as may be purchased by Seller from the Issuer, up to the Authorized Principal Amount.  As security for the performance of the Purchaser’s obligations under this Agreement, the parties hereto shall, concurrent with this Agreement, enter into a Pledge and Security Agreement wherein Purchaser grants a pledge of and security interest in the Purchaser’s right, title and interest in the Surplus Notes and the other collateral identified therein.

Section 2.02                                 Delivery and Payment .  The Seller shall deliver the Series 2005-A Notes and the Series 2005-B Notes to the Purchaser on the date hereof.  Against delivery of the Series 2005-A Notes, the Series 2005-B Notes or any additional Series of Surplus Notes, the Purchaser shall transfer to a Seller Kennett Notes with an aggregate principal amount equal to the aggregate principal amount of such Surplus Notes.

Section 2.03                                 Forms of Kennett Notes .  The Kennett Notes shall be issued substantially in the form of the Kennett Note attached as Exhibit A hereto and shall be duly executed and delivered by the Purchaser as hereinafter provided.

ARTICLE III
TERMS AND CONDITIONS OF REPAYMENT OF KENNETT NOTES; MATURITY

Section 3.01                                 Interest .  The Kennett Notes shall bear interest during each Interest Period at the Interest Rate.  Interest shall be due and payable on each Interest Payment Date.  Interest shall be computed on the basis of a 360-day year comprised of twelve 30-day months.

Section 3.02                                 Principal .  The princ