Investment management company Blackstone Group Inc. has agreed to the purchase of a life insurance business from Allstate Corp. for a sum of $2.8 billion. This deal is part of Blackstone’s plan to expand its market share in the insurance industry.
This deal comes as Allstate continues pursuing its goal of drawing its focus away from the life insurance and annuities niches. Instead, the Illinois-based firm is more intent on focusing its efforts on property-casualty products, for example, identity protection and personal coverage.
Allstate Chief Executive Officer Tom Wilson had the following to say during a conference call regarding the sale: “This transaction represents the next step in the process to deploy capital out of spread-based risks. This transaction is economically attractive when compared to issuing life insurance and running off the closed block of annuities.”
Following news of the deal, Blackstone shares rose to $109.7 at 9:35 AM in New York. As part of the agreement, Blackstone will also enter into an asset management agreement, providing the firm with the authority to oversee the life business’ $28 billion portfolio.
While this deal will result in Blackstone incurring a $3.1 billion financial book loss in the first quarter of 2021, it provides the company with a steady stream of assets to invest.
