Newark, N.J.-Prudential Financial Inc. finalized its acquisition of Northbrook, Ill.-based Allstate Financial's variable annuity business through a reinsurance transaction.Prudential's initial investment in the business, reflecting total consideration to Allstate, related taxes and capital requirements, is approximately $591 million. This amount reflects a price adjustment paid to Allstate for market movements between signing and closing. Over the course of a transition period of up to 24 months from closing, Newark, N.J.-based Prudential will assume the administration of Allstate Financial's in-force variable annuities, with account values of approximately $17 billion (value as of March 31, 2006).
"The acquisition of Allstate Financial's variable annuity business greatly increases our scale and distribution opportunities," said David Odenath, president of Prudential Annuities. "Our priorities in 2006 will be to integrate the business, launch our variable annuity products in Allstate's proprietary channel, and build relationships within Allstate's non-proprietary channel."
As part of the transaction, Prudential is granted exclusive distribution rights to sell variable annuity products through Allstate's proprietary distribution force of approximately 13,700 independent contractors and financial professionals. The transaction also enables Prudential to build and enhance its relationships with Allstate's non-proprietary Broker Dealer Division channel including a number of major, national wirehouses and regional securities firms. With respect to Allstate's Bank channel, Allstate Financial will continue to market variable annuity products through its extensive set of bank distribution relationships by transitioning to an Allstate-branded, Prudential-designed variable annuity.
Source: Prudential Financial Inc.
