Blackstone Entities Agree to Buy an Allstate Life Unit

The Blackstone Group Inc. recently hired Michael Hovey to be the senior managing director in charge of its insurance deals unit.

The New York-based investment management company confirmed its interest in insurance deals Tuesday, by having entities it manages agree to pay $2.8 billion to buy Allstate Life Insurance Company from The Allstate Corp.

The companies expect to close on the deal sometime between June 30 and Dec. 31, according to Allstate.

Gilles Dellaert, the current global head of the Blackstone Insurance Solutions unit, said in a statement that "we believe our team's extensive experience in the insurance sector and world-class asset origination capabilities will deliver significant benefits to policyholders and investors over the long term."

Blackstone

Blackstone now has about $584 billion in assets under management. The company began making a big push into life insurance dealmaking in 2017, when it agreed to acquire Fidelity & Guaranty Life from HRG Group Inc.

Then the company hired Chris Blunt, the former president of New York Life Investments Group, to be the chief executive officer of a new Blackstone Insurance Solutions unit. The company also hired Michael McRaith, the first director of the Federal Insurance Office, to be a managing director at the unit.

Fidelity National Financial Inc., a title insurer based in Jacksonville, Florida, invested in the effort to acquire F&G. Fidelity Nation ended up buying full control over F&G in June 2020.

Allstate Life

The Allstate Life unit was founded in 1957 and has its official state of domicile in Illinois.

From 2015 through 2019, it began shifting responsibility for issuance of new products to a sister company, Allstate Assurance Company, according to a 2019 financial statement available through a California Department of Insurance database.

The company has written fixed and interest-sensitive life and annuity products, and variable products. Most of the variable annuity business is reinsured. The company also has distributed other types of products, such as disability insurance and long-term care insurance, that were written by other insurers.

The company reported $467 million in net income for 2019 on $23 billion in reserves, according to Allstate.

It had about 2.3 million life insurance policies and group life certificates in force at the end of 2019, and about 214,000 annuity contracts and group annuity certificates in force, according to the 2019 financial statement.

The History

Allstate Corp. ran a major life and annuity operation in the 1990s and early 2000s. It has been moving toward separating from its life and annuity units since the 2007-2009 Great Recession.

The Northbrook, Illinois-based multiline insurer sold one part of its old life and annuity operations, Lincoln Benefit Life Company, to an arm of Resolution Capital Ltd., for about $600 million, in 2014.

The Blackstone-Allstate Life Deal

Blackstone's $2.8 billion payment for Allstate Life would include a $400 million cash payment from Allstate Life to the parent company, Allstate Corp., before the deal closes.

Blackstone also would enter into an asset management agreement for Allstate Life's $28 billion in investments.

Allstate Corp. would keep another life and annuity unit, Allstate Life Insurance Company of New York.

Allstate Corp. says it would continue to look for a buyer for the New York state unit, or find some other way to transfer the life and annuity risk associated with that unit to some other entity.

The New York state life insurer has about $5 billion in reserves.

Allstate agents have been selling life and health products along with property-casualty insurance products.

The agents would continue to sell life and health products after the deal closing, but they would get the life and health products from outside companies, according to Allstate Corp.

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