Allstate Corp., the largest publicly traded U.S. auto and home insurer, agreed to sell Lincoln Benefit Life Co. and will stop issuing fixed annuities at the end of this year as it seeks to limit risk at its life unit.
Resolution Life Holdings Inc. will buy Lincoln Benefit for $600 million, Northbrook, Illinois-based Allstate said today in a statement. The deal will reduce the amount of capital Allstate Financial, the insurer’s life unit, will have to hold by about $1 billion and generate cash proceeds of approximately $785 million, including tax benefits.
“This will sharpen Allstate Financial’s focus on the Allstate agency channel,” Chief Executive Officer Thomas Wilson said in the statement. “This action also advances Allstate’s key priorities, including reducing exposure to spread-based business and interest rates.”
Insurers have sought to sell life and annuities assets as low interest rates pressure returns. Axa SA agreed in April to sell a U.S. life unit to Protective Life Corp. as part of a $1.06 billion transaction. Sun Life Financial Inc. announced a deal last year to sell its U.S. annuity business for $1.35 billion.
Normal after-tax returns had averaged about 1 percent of transaction reserves at Lincoln Benefit, Allstate said in the statement. The unit had $341 million of premiums and contract charges, or 15 percent of Allstate Financial’s 2012 total.