Allstate putting life insurance unit in Blackstone's good hands for $2.8 billion

Deal is the latest in private equity companies making insurance plays

Private equity giant Blackstone Group Inc. has agreed to buy Allstate Life Insurance Co. from Allstate Corp. for $2.8 billion, the latest in a slew of deals between financial firms and life insurance businesses.

Allstate Life Insurance Co. holds 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.

DON'T MAKE THESE BIG LIFE INSURANCE BLUNDERS

"We’re pleased to enter into this transaction as Blackstone continues growing its insurance business,” said Gilles Dellaert, global head of Blackstone Insurance Solutions, in a statement.

TickerSecurityLastChangeChange %
BXBLACKSTONE GROUP66.02-1.06-1.58%
ALLTHE ALLSTATE CORP.111.79+2.33+2.13%

Financial firms have been on a tear buying up life insurance and annuities businesses. Last week, Sixth Street Partners announced a deal to buy life insurance business Talcott Resolution for $2 billion.

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Since the worldwide financial crisis of 2008, private-equity, asset-management and other types of financial firms have bought up blocks of life insurance policies and annuities, and even entire operating units, as insurers narrowed their focus and divested product lines. Ultralow interest rates have prompted 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.

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In many deals involving financial buyers, the newcomers aim to profit from investment-management fees and by savvy investments of the premiums paid by customers. Many deals have involved a basic savings product known as a fixed annuity, akin to a bank certificate of deposit.