Bloomberg News ING U.S. Inc. will begin selling fixed annuities through Allstate Corp. agencies as the largest publicly traded U.S. auto and home insurer ceases to offer its own brand of the retirement products.
The deal gives ING U.S. access to one of the biggest insurance customer bases in the country, while furthering a strategy by Allstate chief executive Tom Wilson to scale back from a business that has proven less profitable amid low interest rates. Terms weren't disclosed in a statement released Monday announcing the agreement.
Mr. Wilson has refashioned his company's life insurance division by winding down sales of retirement products and focusing on Allstate-branded agencies. The insurer sold a variable-annuity business to Prudential Financial Inc. in 2006 and in July said it would halt fixed- annuity sales at the end of this year. Allstate also agreed to divest Lincoln Benefit Life Co., which provided life and retirement products through independent agents.
The deal with ING U.S. is “the next step that will move us toward what we've been trying to accomplish for the last several years,” Don Civgin, CEO of the life division, said in an interview.
Allstate will still sell life policies through its agencies. Returns on those products are “pretty good” and an area that the insurer would like to expand, Mr. Civgin said.
INTEREST RATES
Operating return on equity for life insurance was 9% last year, compared with 6.5% for annuities and institutional products, according to data on Allstate's website. Life insurers have faced pressure in recent years as record-low interest rates narrow the spread between what they can earn on investments and guarantees made to clients.
“This interest-rate environment has made it challenging for everybody, not just Allstate,” Civgin sai
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