Blackstone and Allstate expect the deal to close in the second half of the year.
Photograph:
Geert Vanden Wijngaert / Bloomberg News
Private equity giant Blackstone BX -0.12%
Group Inc. has agreed to purchase Allstate ALL -1.29%
Allstate Corp. Life Insurance Co. for $ 2.8 billion, the latest in a series of deals between financial firms and life insurers.
Allstate Life Insurance Co. holds about 80%, or $ 23 billion, of Allstate’s life reserves and annuities. The companies hope to close the deal in the second half.
“We are delighted to enter into this transaction as Blackstone continues to grow its insurance business,” said Gilles Dellaert, global head of Blackstone Insurance Solutions, in a statement.
Financial firms are in crisis to buy life insurance and annuity companies. Last week, Sixth Street Partners announced an agreement to buy the life insurance company Talcott Resolution for $ 2 billion.
Since the global financial crisis of 2008, private equity, asset management and other types of financial companies have purchased blocks of life insurance and annuity policies, and even entire operating units, as insurers have narrowed their focus and divested product lines. . Ultra low interest rates stimulated much of the activity, hurting insurers’ profits.
Allstate said the life insurance unit had a net loss of $ 23 million in the first nine months of 2020.
In many negotiations involving financial buyers, newcomers aim to profit from investment management fees and smart investments from premiums paid by customers. Many businesses involved a basic savings product known as a fixed annuity, similar to a certificate of deposit.
—Leslie Scism contributed to this article.
Write to Josh Beckerman at [email protected]
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Published in the January 27, 2021 print edition as ‘Blackstone To Acquire Allstate Life Unit.’