Taking a further step away from its roots as a pure insurance company, Allstate Corp. has unveiled Allstate Investments LLC to supply investment management services to the parent company and its other subsidiaries.
In the last year, Allstate Corp. had renamed its life insurance and financial services subsidiary to deemphasize insurance, launched Allstate Bank, and expanded its variable annuity distribution through banks.
The investment subsidiary's 300 employees were part of the property and casualty unit, Allstate Insurance Co., until Dec. 11, when the unit's creation was announced.
"We have said that, with $80 billion in the market, and our life and savings business growing the way it has, it's about time we get visibility that we do this and we're good at the investment business," said Casey Sylla, the chief investment officer for Allstate Corp. and president of Allstate Investments LLC.
"This group will continue to manage the investments for most of Allstate Financial, including its fixed annuities and life insurance products," he said. "Only now it will operate as a subsidiary, so it will have a separate identity."
Mr. Sylla acknowledged that the new subsidiary will not have the same impact as some of the other moves Allstate has made, including renaming its life unit Allstate Financial or creating a bank. However, he said, it does directly affect the way investors and customers view the company - even if customers do not deal directly with the new subsidiary.
"They see us, and they think of us as a property and casualty company. You know, 'the good hands people,' " Mr. Sylla said. "But of our $80 billion or so in assets, $45 billion is in life and savings. That's a significant shift from what we were three years ago."
The new subsidiary is no big deal, said consultants, who called it more of an attention-grabber than anything else.
"By segregating them, they're highlighting the expertise that they have," said Carmen Effron, president of the Westport, Conn.-based consulting firm C.F. Effron LLC. "But really, every insurance company has an investment arm, so this isn't a big deal at all. It's a transparent move, and they're being honest about that."
Kenneth Kehrer, president of Kenneth Kehrer Associates, a Princeton, N.J, consulting firm, said there is nothing to the move. "It's not like they're creating their own mutual funds," he said.
However, Ms. Effron said the investment arm could be groundwork for Allstate to build a mutual fund capability down the road, though Mr. Sylla said that this is not being planned.
"We're happy with the fund partners we have now," said Mr. Sylla. "We're not going to rule it out. Someday we might, but not now."
Allstate has a variable annuity, called the Putnam-Allstate Advisor, in which Boston-based Putnam Investments manages the funds. The insurance company also has a variable annuity, AIM Lifetime Plus, that is overseen by Aim Management Group in Denver. Allstate distributes Lifetime Plus through its Glenbrook Life subsidiary.
