The Allstate Corp. said it has agreed to sell its New York life insurance and annuity operation to Wilton Re for $220 million.
The selling of Allstate Life Insurance Company of New York (ALNY), along with the previously announced agreement to sell Allstate Life Insurance Co. (ALIC) and investment affiliates of Blackstone for $2.8 billion, will complete Allstate’s exit from the life and annuity businesses.
The combined divestitures of ALIC and ALNY will result in an estimated net loss of $4 billion, which will be recorded in the first quarter of 2021, and generate approximately $1.7 billion of deployable capital, according to the announcement.
Both transactions are expected to close in the second half of 2021, subject to regulatory and other conditions.
ALIC holds approximately 80 percent, or $23 billion, of Allstate’s life and annuity reserves. The New York company has $5 billion of GAAP reserves.
The sales are part of the insurer’s strategy to concentrate on its personal property/casualty insurance and protection business over other financial services, although the ALNY transaction itself will only have “minimal impact” on its strategy, according to Mario Rizzo, chief financial officer of Allstate.
The strategy was cited by Allstate CEO Tom Wilson last July in announcing his firm’s acquisition of auto insurer National General for $4 billion and the ALIC deal with Blackstone.
“Allstate is deploying capital out of lower growth and return businesses while continuing to execute our strategy to grow market share in personal property-liability and expand protection solutions for customers,” Wilson reaffirmed in announcing the ALIC deal.
Under the terms of the ALNY deal with Wilton Re, Allstate will divest ALNY and terminate an ALIC stop-loss reinsurance treaty. Allstate has agreed to contribute $660 million of capital into ALNY, then receive a payment of $220 million from Wilton Re. The transaction will reduce GAAP reserves and invested assets by $5 billion and $6 billion respectively.
Going forward, ALNY agents will be offering life insurance and retirement solutions from third-party providers, Allstate said.
Wilton Re is a provider reinsurance to the North American life insurance industry.
J.P. Morgan Securities and Ardea Partners acted as financial advisers, and Willkie Farr & Gallagher was the legal adviser to Allstate.
Topics New York
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