Prudential Buys Annuity Business

Prudential Financial (PRU Quote) agreed to acquire Allstate's (ALL Quote) variable-annuity business through a reinsurance transaction, giving the financial-services firm an additional $16 billion in annuities to manage.

Prudential said Wednesday that its initial investment in the business, including the consideration that will be paid to Allstate, related taxes and capital requirements, will be around $560 million.

As part of the transaction, Prudential will be granted the exclusive distribution rights to sell variable-annuity products through Allstate's proprietary distribution force of more than 13,000 independent contractors and financial professionals.

Prudential Financial had around $532 billion in total assets under management as of Dec. 31. The acquisition will probably close in the second quarter.

Shares of Prudential were down 13 cents to $75.38. Allstate was up 36 cents at $54.26.