Allstate, Money Manager Make Deal
CHICAGO (AP) _ The nation’s largest publicly traded auto and home insurer and a Massachusetts-based money management firm have formed a joint venture to sell stock-linked retirement saving plans.
Allstate Corp, in partnership with Boston-based Putnam Investments, plans to begin selling in May variable annuities, a combination of mutual funds and insurance policies that has become increasingly popular with Americans as a retirement plan option.
Interest in variable annuities has soared in the past five years because they let people make tax-deferred investments in the stock market, providing income to the buyer until death. U.S. variable annuity assets exceeded $700 billion at the end of last year and sales for the year totaled $100 billion, the Northbrook, Ill.-based Allstate said Wednesday.
``With the U.S. population getting older and living longer, variable annuities are an increasingly attractive popular retirement savings tool,″ said Louis G. Lower, chairman and chief executive of Allstate’s life insurance subsidiary, which accounted last year for 20 percent of the company’s profits.
Putnam’s portfolio managers will oversee the mutual fund investments, and Allstate will manage the insurance assets. The products will be distributed, via Putnam’s wholesaling force, through its partnerships with banks, broker-dealers and financial advisors.
The partnership represents a shift for Allstate away from its current system of selling mainly life and property-casualty coverage through its 15,000 agents, a core business that in recent years has seen slowing growth.
Allstate chairman Edward Liddy said the joint venture, which has few startup costs, is just one step among several that may be taken to boost the company’s bottom line.
``Our goal really is to expand our company, to get into other channels of distribution ... and to acquire more customers,″ Liddy said. ``That doesn’t preclude (acquisitions) on the property-casualty side.″