Allstate to sell life insurance business to Blackstone for $2.8bn

US-based The Allstate Corporation has agreed to sell Allstate Life Insurance Company (ALIC) to Blackstone-managed entities for $2.8 billion to focus on growing its personal property-liability market share.

Allstate said it is "deploying capital out of lower growth and return businesses" while continuing its strategy to grow market share in personal property-liability and expand its protection solutions.

ALIC holds approximately 80 percent, or $23 billion, of Allstate’s life and annuity reserves. The business generated net income of $467 million in 2019 and a net loss of $23 million in the first nine months of 2020.

The transaction includes a pre-closing dividend from ALIC of up to $400 million. Blackstone will enter into an asset management agreement for ALIC’s $28 billion of investments.

Subject to regulatory approval, the transaction is expected to close in the second half of 2021.

“Allstate has been surgically deploying capital out of spread-based products with life and annuity liabilities declining to $5 billion after the closing of this transaction,” said Mario Rizzo, Allstate chief financial officer.

“The investment portfolio will decline by approximately $28 billion to $63 billion," he noted. "A financial book loss of approximately $3.1 billion will be recorded in the first quarter of 2021 given the lower returns on equity for the annuity businesses. Adjusted Net Income Return on Equity will increase by approximately 1 percentage point.”

Tom Wilson, chair, president and CEO of Allstate, said: “Customers will be protected using non-proprietary life insurance products, as is currently done for annuities. Deployable capital will increase, and the transaction also provides increased transparency to the industry-leading returns of our core protection businesses.”

Gilles Dellaert, global head of Blackstone Insurance Solutions, commented: "We’re pleased to enter into this transaction as Blackstone continues growing its insurance business. We believe our team's extensive experience in the insurance sector and world-class asset origination capabilities will deliver significant benefits to policyholders and investors over the long term."

Menes Chee, a senior managing director at Blackstone, added: “We’re excited to have raised long-term capital to invest in the business. Allstate’s team has created a strong book of business and we look forward to helping continue to provide exceptional service to policyholders moving forward.”

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