Jones Lang LaSalle

Prudential to Buy Allstate's Variable Annuity Business

Prudential Financial (NYSE: PRU) in Newark plans to buy Allstate's variable annuity business for an initial investment of about $560 million. The deal is expected to close in the second quarter.

During the transition, which many extend to 24 months from the date of closing, Prudential will manage Allstate Financial's in-force variable annuities, which carry account values of some $16 billion as of the end of last year.

Pru's rank within the advisor-sold variable annuity market, which excludes group retirement plan contracts, would jump two notches to third in terms of assets under management, and with respect to sales, from seventh to fourth.

Further, the insurance giant will obtain exclusive rights to sell the annuity products through Allstate's salesforce of some 13,700. It may also build ties to Allstate's nonproprietary channel, which includes national and regional securities firms like Morgan Stanley.

Allstate Financial, meantime, will continue to market variable annuity products designed by Prudential and carrying the Allstate brand, through its bank distribution network.

David Odenath, president of Prudential Annuities, noted that the deal presents little overlap with the firm’s existing Independent Financial Advisors channel.

Variable annuities, often featured in retirement planning, are typically invested in mutual fund and remit periodic payments for the holder’s life and offer a death benefit.

Shares of Prudential fell $0.17 to $75.34 in afternoon trading. - Ki Kim