Allstate Corporation, one of the largest primary insurers in the U.S, is reportedly considering the sale of its fixed-annuities business, which stopped selling new policies about five years ago, according to sources at Bloomberg.
People familiar with the matter said the insurer was working with financial advisers to find buyers for the business, which has a book value of around $4-5 billion.
No details of a potential sale price have yet emerged, but Bloomberg noted that annuities businesses typically sell at a discount to book value.
If Allstate does go ahead with a deal, it will be in line with the general trend of property and casualty (P&C) and life insurers looking to unload blocks of annuities either through sales or through reinsurance deals.
Insurers struggle to turn a profit on annuities when interest rates are low and securities markets are volatile, and companies have been particularly eager to relieve themselves of old policies written before the 2008 financial crisis, which promised generous pay-outs.
A potential deal would also support Allstate’s strategy of withdrawing from life insurance, which has included a reinsurance deal to offload its variable annuity business in 2006 and the sale of a life insurer in 2013.
Other companies are also implementing this strategy, such as The Hartford, which sold its run-off life and annuity business to Talcott Resolution for $2.75 billion earlier this year, and Manulife, which reinsured $8 billion of policy liabilities related to legacy U.S group payout annuities to Jackson National Life this month.