Nov. 4, 2021 — The Allstate Corp. indicated that it would look at offers for the remains of its annuity business, but in the competitive word of private equity players vying for blocks of fixed and sometimes variable annuities, its CEO was clear about one thing. Although these blocks are a hot commodity, now, in the spirit of being a steward of insurance protections, Allstate won’t sell to or partner with just anyone.
Asset managers at private equity firms are hungry for the revenue streams these annuity businesses bring, and Allstate is”open to that … as long as it meets our two objectives,” stated president and CEO Tom Wilson during a call with analysts Nov. 5 to discuss third quarter earnings, according to The Motley Fool transcript.
Those who would acquire or reinsure Allstate’s annuities need to know a couple of things.
“One, you got to take care of our customers. So some of these customers are going to get paid for 30-plus years we don’t want to turn that somebody that’s going to take it all and go to Las Vegas and put it on red and then our customers are left [holding] the bag,” Wilson told analysts.
“One, you got to take care of our customers. So some of these customers are going to get paid for 30-plus years we don’t want to turn that somebody that’s going to take it all and go to Las Vegas and put it on red,” Wilson said.
The second thing is that any annuity deal benefit Allstate’s shareholder, of course.
The Illinois-based company has a couple chunks of annuity blocks left as it has been “whittling away” at its holdings for over decade. Wilson said that executives are open t ways to transfer the liabilities,, from “everything from reinsurance to sales, everything else.”
These annuity blocks “are becoming more scarce properties because you’ve seen the asset managers go out and they like having what I would call captive asset, Wilson explained on the call.
The company known for personal property and auto insurance has been but slowly but surely exiting the annuity business over the past 15 years. As executives described it, it reinsured the variable annuity business in 2006, exited the broker-dealer channel in 2010, and stopped issuing all remaining annuity products in 2014, and in the process sold off its Lincoln Benefit Life to Resolution Life Holdings, which has since sold it to a Nebraska company.
Back in January 2021, Allstate announced it would sell Allstate Life Insurance Co. (ALIC) to Blackstone managed companies for $2.8 billion. ALIC held 80% — or $23 billion– of Allstate’s life and annuity reserves. It generated net income of $467 million in 2019 and a net loss of $23 million in the first nine months of 2020, according to a company press release at the time.
The head of Blackstone Insurance Solutions added then that the firm’s skills with assets and its experience would significantly benefit policyholders and investors over the long term.
Annuity and life l now stand at $17.5 billion at the end of the third quarter, as opposed to $75 billion in 2005. The company lowered its long-term return assumptions for the business at the end of the third quarter after an actuarial review to match expectations of a continued low interest rate environment, reducing future investment income, it said.
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