Insurance giant Allstate has agreed to sell its life insurance business to private equity firm Blackstone for $2.8 billion.
The deal, expected to close in the second half 2021 pending regulatory approval, provides an exit for Allstate from a lower growth part of its insurance portfolio, but will leave its life insurance clients in good hands, the company said Wednesday.
“The entities established by Blackstone, they’re just a better owner for these businesses,” Tom Wilson, Allstate’s president and CEO, said during an investor conference Wednesday. “They’ll be well-capitalized, so policyholders will continue to be well protected.”
The Allstate Life Insurance Co. had a net loss of $23 million in the first nine months of 2020, the company said. Life insurance sales have been declining since 2018 and annuity sales were discontinued in 2014.
Wilson said the life insurance business has been negatively affected by lower investment results and coronavirus mortality losses.
Allstate is shedding $23 billion of its insurance portfolio with the sale to entities managed by Blackstone. It will retain the Allstate Life Insurance Company of New York with $5 billion of life and annuity liabilities.
The transaction will result in a $3.1 billion loss during the first quarter of 2021, reflecting the low return annuity business, the company said.
Founded in 1931 as part of Sears, Allstate remains one of the nation’s largest publicly held personal insurers, even after selling its life insurance business, focused on auto and homeowners insurance products.
