Blackstone and Allstate expect the deal to close in the second half of the year.
Photo:
Geert Vanden Wijngaert / Bloomberg News
Private equity giant Blackstone BX -0.12%
Group Inc. has agreed to purchase Allstate ALL -1.29%
Life Insurance Co. Allstate Corp. for $ 2.8 billion, the latest in a slew of deals between financial and life insurance companies.
Allstate Life Insurance Co. owns approximately 80%, or $ 23 billion, of Allstate’s life and annuity insurance policies. The companies expect to complete the deal in the second half of the year.
“We are delighted to enter into this transaction as Blackstone continues to expand its insurance business,” Gilles Dellaert, global head of Blackstone Insurance Solutions, said in a statement.
Financial companies have shed a tear to buy up life insurance and annuities. Last week, Sixth Street Partners announced a deal to buy life insurance company Talcott Resolution for $ 2 billion.
Since the global financial crisis of 2008, private equity, wealth management and other types of financial companies have been buying blocks of life insurance policies and annuities, and even entire operating units, as insurers have narrowed their focus and divested product lines. The ultra-low interest rates have triggered much of the activity, hurting insurers’ earnings.
Allstate said the life insurance unit had a net loss of $ 23 million in the first nine months of 2020.
In many deals involving financial buyers, the newbies want to take advantage of investment management fees and through smart investments of the premiums paid by clients. Many deals involved a basic savings product known as a fixed annuity, which is similar to a bank certificate.
—Leslie Scism contributed to this article.
Write to Josh Beckerman at [email protected]
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Appeared in the January 27, 2021 print edition as ‘Blackstone To Acquire Allstate Life Unit’.