Allstate to Take $4 Billion Net Loss This Quarter on Life Sales

(Bloomberg) -- Allstate Corp. struck another deal to sell part of a life-insurance business and warned investors that the divestitures will result in a roughly $4 billion net loss in the first quarter.

Wilton Re agreed to pay $220 million to buy Allstate Life Insurance Co. of New York in a transaction that will complete Allstate’s exit from the life and annuity market, according to a statement Monday. In January, Allstate reached a deal to sell a life business to Blackstone Group Inc. for $2.8 billion.

Allstate has been adjusting its strategy to focus more on personal property-liability coverage, expanding its distribution with independent agents through a $4 billion agreement to buy National General Holdings Corp. that was completed this year. The two life-insurance divestitures will contribute to the estimated $4 billion net loss under generally accepted accounting principles, while also generating $1.7 billion of deployable capital, the company said.

What Bloomberg Intelligence Says

“Allstate’s sale of the rest of its life and annuity unit is a positive, narrowing its focus to P&C, and we believe it should boost return on equity.”

-- Matthew Palazola, senior industry analyst

“This transaction has minimal impact on our strategy of increasing market share in personal property-liability and expanding protection solutions for customers,” Allstate Chief Financial Officer Mario Rizzo said in the statement. “Wilton Re is a trusted name with a history of excellent customer service and expert management of life-insurance and annuity portfolios.”

Allstate also agreed to contribute $660 million of capital into the New York life business unit and then receive the $220 million payment from Wilton Re. Both the New York sale and the deal with Blackstone are expected to be completed in the second half of this year, Allstate said.

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