Allstate puts life insurance unit in good hands at Blackstone for $ 2.8 billion

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 series of deals between financial and life insurance companies.

Allstate Life Insurance Co. owns approximately 80%, or $ 23 billion, of Allstate’s life insurance and annuity reserves. The companies plan to close the deal in the second half of the year.

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“We are pleased to complete this transaction as Blackstone continues to grow its insurance business,” said Gilles Dellaert, Global Head of Blackstone Insurance Solutions, in a statement.

Financial companies have been on a tear to buy life insurance and annuity businesses. Last week, Sixth Street Partners announced a deal to buy life insurance company Talcott Resolution for $ 2 billion.

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Since the global financial crisis of 2008, private equity, asset management and other types of financial firms have bought blocks of life insurance and annuity policies, and even entire business units, as insurers concentrated and disengaged from their product lines. Very low interest rates have been the source of much of the activity, hurting insurers’ profits.

Allstate said the life insurance unit suffered a net loss of $ 23 million in the first nine months of 2020.

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In many transactions involving financial buyers, new entrants aim to profit from investment management fees and through wise investment premiums paid by clients. Many transactions involved a basic savings product known as a fixed annuity, similar to a bank certificate of deposit.