Evaluating Deals

Sellers of annuity blocks haven’t always gotten a good deal, Allstate CEO Thomas Wilson said today on a conference call. The Northbrook, Illinois-based auto-and-home insurer transferred almost all its variable-annuity risk to Prudential in 2006 while retaining its fixed-annuities business.

“There are deals people have been making that don’t look that attractive to me,” Wilson, 55, said in response to a question about whether he was considering selling or spinning off the fixed-annuity business.

Apollo’s Athene unit reached a $1.8 billion deal in December to buy a U.S. life company that sells fixed annuities from Aviva Plc. The agreement values the target at about 60 percent of statutory capital surplus, a measure of assets minus liabilities used by regulators.

Fixed annuities offer a stream of payouts at a set rate. In variable contracts, savers have the potential for higher returns if stock markets gain, and can lock in minimum returns.

Lincoln and Hartford received U.S. bailout funds during the financial crisis after guarantees tied to variable annuities weighed on results. The insurers repaid the aid.

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