Allstate Expects $4 Billion Loss on Exit of Life and Annuity Business

Allstate says Wilton Re will pay $220 million to acquire Allstate Life Insurance Company of New York.
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Allstate  (ALL) - Get Report said Monday that it expects to report a net loss of about $4 billion as the insurance giant finishes exiting its life and annuity business.

Shares of the Northbrook, Ill. company were up 0.65% to $116.78 in early morning trading.

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Allstate has agreed to sell the Allstate Life Insurance Company of New York (ALNY) to Wilton Re for $220 million. As part of the deal, Allstate will contribute $660 million of capital into ALNY. The transaction will reduce Allstate's GAAP reserves and invested assets by $5 billion and $6 billion, respectively, the company said.

This transaction, along with the agreement to sell Allstate Life Insurance Company (ALIC) and certain affiliates to entities managed by New York investment management company Blackstone, will complete Allstate’s exit from the life and annuity businesses.

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The sale to Blackstone is part of Allstate's strategy to grow market share in personal lines property/casualty lines.

Allstate agents and financial specialists will continue to offer life insurance and retirement options from third-party providers.

The combined divestitures of ALNY and ALIC will result in an estimated net loss of about $4 billion, which will be recorded in the first quarter and generate roughly $1.7 billion of deployable capital.

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Both transactions are expected to close in the second half.

J.P. Morgan Securities LLC and Ardea Partners LP acted as financial advisers, and Willkie Farr & Gallagher LLP was the legal adviser to Allstate.

Allstate was removed from the S&P 500 earlier this month.