by Structured Settlement Watchdog
Reuters reported on April 3, 2019 that Allstate Corp has entered into exclusive talks to sell a book of insurance policies from an area where it no longer generates new business to smaller peer FGL Holdings. Reuters cited " people familiar with the matter". The book of business which Allstate is seeking to sell includes a selection of annuity products, as well as structured settlement policies, the sources said. Allstate stopped writing new structured settlement annuities in 2013. While it was writing structured settlement annuities Allstate was one of the most competitive and innovative companies, particularly in the are of non qualified assignments.
A number of players, often backed by private equity firms, have emerged in recent years to acquire such blocks, believing they can earn good returns from administering the policies in a more efficient way than traditional insurers. In recent years for example, Liberty Mutual, The Hartford and CNA have offloaded their annuity blocks. GE Capital, a player until 2006, spun off its annuity and Long Term Care division as part of the creation of Genworth, but still had exposures from a period of time that GE Capital provided guarantees to back up its assignment company. Such guarantees and similar ones offered by CNA and Aviva were critical to the decision to place business with those companies. Insurance commissioners examining these deals should have this information on their radar and be aware of their non delegable duty to consumers and beneficiaries of insurance products.
Reuters reports that "the business for sale is expected to be valued at between $2.5 billion and $3 billion, according to its sources, cautioning that a deal is not certain and asking not to be identified because the matter is confidential".
FGL Holdings was formed by ex-Blackstone Group dealmaker Chinh Chu and William Foley, an insurance veteran who is non-executive chairman of Fidelity National Financial and also the owner of the Vegas Golden Knights ice hockey team. Both Chu and Foley currently serve as co-executive chairmen of FGL.
Vigilance is important in these portfolio sales as the Athene purchase of Aviva USA amply demonstrates, with a class action suit needed to compensate the annuitants for a contact feature that was terminated without disclosure to annuitants, who were charged more for it at the time of establishment. In Allstate's case its Advance Funding Exchange Notice is an important liquidity feature. It is important to see that protections remain in any acquisition so that Allstate annuitants are not left to the structured settlement factoring vultures.
FGL subsidiary, F&G Life is a former writer of structured settlement annuities.