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Allstate taps ING U.S. as fixed annuity sales partner

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Back in July when it announced the sale of Lincoln Benefit Life Co. and thus its exit from the life and annuity business, Allstate Corp. also stated it intended to find a third-party company to offer retirement products, like fixed annuities, to its customers. Today, the insurer reported that it has entered into a strategic alliance with ING U.S. to do just that.

Beginning in January, Allstate will offer ING U.S.’s suite of fixed annuities, including ING Single Premium Immediate Annuity, ING Secure Index and ING Lifetime Income. By year’s end, Allstate plans to cease sales of its Growth and Income Protector, IncomeReady and RightFit annuities.

When Allstate agreed to sell Lincoln Benefit Life to Resolution Life Holdings Inc. for $600 million, the move signaled its exit from the customer segment served by independent life insurance and annuity agencies.

In its third-quarter earnings statement, Allstate noted that net income available to shareholders for the quarter was $310 million, or 66 cents per diluted common share, compared to $723 million, or $1.48 per diluted common share, in Q3 2012. It attributed the decline mostly to an estimated $475 million after-tax loss on the sale of Lincoln Benefit Life, which it stated was partially offset by the favorable impact from changes in employee benefit plans. The company reported that annuity returns improved in the quarter due to higher limited partnership income, but “the long-term outlook remains challenged by continued low interest rates.”

Those same low interest rates don’t seem to be having an impact on fixed annuity sales, at least as charted in the third quarter by Beacon Research. Sales in that category totaled $22.6 billion in Q3, up 31 percent from the previous quarter and 35.2 percent from a year ago.

Chad Tope, president of ING U.S. annuity and asset sales, said in an interview that the alliance with Allstate diversifies the company’s distribution network and gives it access to Allstate’s representatives and clients across the country.

“Before we didn’t have the ability to work with their advisors, and the millions of households that Allstate has as clients,” he said. “Our goal is to be America’s retirement company and it’s hard to be that without access to consumers.”

As of the third quarter, ING was 20th on a list of the top 20 fixed annuity sellers as compiled by LIMRA. It sold $894 million in fixed annuities through the third quarter.

According to Tope, the agreement between ING and Allstate is typical of its previous distribution partnerships in which ING pays a gross dealer concession to Allstate. ING U.S. is not responsible for servicing annuities that Allstate has already sold, he added.

ING U.S. is currently in the process of rebranding itself as Voya Financial following an IPO in the May in which it raised $600 million.

ING U.S. was previously the domestic subsidiary of Netherlands-based ING Group. ING U.S.’s IPO and changeover to Voya Financial was set in motion when an agreement was struck between ING Group and the European Commission in 2009 to have ING Group focus on banking and divest itself of insurance operations after a $12.71 billion cash infusion from the Dutch government.

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