Blackstone and Allstate expect the deal to close in the second half of the year.
Photo:
Geert Vanden Wijngaert / Bloomberg News
The private equity giant Blackstone BX -0.12%
Group Inc. agreed to buy Allstate ALL -1.29%
Life Insurance Co. of Allstate Corp. for $ 2.8 billion, the latest in a series of transactions between financial companies and life insurance companies.
Allstate Life Insurance Co. owns about 80%, or $ 23 billion, of Allstate’s life and annuity reserves. The companies expect to close the deal in the second half of the year.
“We are pleased to continue this transaction as Blackstone continues to grow its insurance business,” said Gilles Dellaert, global head of Blackstone Insurance Solutions, in a statement.
Financial businesses were buying life insurance and annuity businesses. 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 ventures have bought up blocks of life insurance policies and annuities, and even entire operating units, as insurers narrow their focus and sell product lines. Ultra-low interest rates spurred much of the activity, which hurt the profits of insurers.
Allstate said the life insurance unit had a net loss of $ 23 million in the first nine months of 2020.
In many transactions involving financial buyers, the newcomers aim to benefit from investment management costs and through smart investments from the premiums customers pay. Many transactions involve a basic savings product, known as a fixed annuity, similar to a bank proof of deposit.
—Leslie Scism contributed to this article.
Write to Josh Beckerman by [email protected]
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In the print edition, it appears on January 27, 2021 as ‘Blackstone to Acquire Allstate Life Unit.’