Blackstone to Buy an Allstate Life Insurance Business for $2.8 Billion

Blackstone Group Inc. agreed to buy a life business from Allstate Corp. for $2.8 billion as the private equity firm expands its foothold in the insurance industry.

Entities managed by Blackstone will purchase Allstate Life Insurance Co., the insurer said Tuesday in a statement. Allstate will retain a New York life business and is seeking a way to sell or transfer risk from that unit to a third party.

Allstate has been looking to pivot away from life insurance and annuities as the Northbrook, Illinois-based firm focuses more on property-casualty products such as identity protection and personal coverage. The deal will help Blackstone expand further into life insurance and annuities after its work with FGL Holdings, which was bought by Fidelity National Financial Inc. last year.

“This transaction represents the next step in the process to deploy capital out of spread-based risks,” Allstate Chief Executive Officer Tom Wilson said Wednesday on a conference call about the transaction. “This transaction is economically attractive when compared to issuing life insurance and running off the closed block of annuities.”

Allstate shares were up a touch to $109.7 at 9:35 a.m. in New York Wednesday. The deal is expected to close in the second half of this year, and will cause a roughly $3.1 billion financial book loss for Allstate in the first quarter.

Private equity firms such as Blackstone and Apollo Global Management Inc. have been drawn to annuity businesses for a steady stream of assets that can be invested. With the deal, Blackstone will enter into an asset management agreement to help oversee the life business’s $28 billion portfolio.

“Private equity firms have been ascendant in the life and annuity space, while multiline insurers have been dialing back from a conglomerate insurance business model,” David Havens, a credit analyst at Imperial Capital, said in a note.

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