The Allstate Corporation (NYSE: ALL) has reached an agreement to sell Allstate Life Insurance Company to entities that are managed by Blackstone for a total of USD 2.8 Billion. ALIC has a total of 80% or USD 23 Billion of Allstate’s life and annuity reserves, including generated net income of USD 467 Million 2019 with a net loss of USD 23 Million in the first nine months of 2020. This transaction is subject to regulatory approval and is anticipated to close within the second half of 2021.
“Allstate is deploying capital out of lower growth and return businesses while continuing to execute our strategy to grow market share in personal property-liability and expand protection solutions for customers,” said Tom Wilson, Chair, President and CEO. “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,” concluded Wilson.
Gilles Dellaert, Global Head of Blackstone Insurance Solutions, said, “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.”
The transaction includes a pre-closing dividend from ALIC of up to USD 400 Million. All statutory earnings from March 31st, 2020 to closing will be retained by Allstate as the transaction will reduce the company’s GAAP reserves by USD 23 Billion. Blackstone will enter an asset management agreement for ALIC’s USD 28 Billion of investments.
“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. 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,” concluded Rizzo.