Impatient with its slow-growth business of selling car and home insurance, Allstate Corp. is planning to sell more investment products.
Last week Chicago-based Allstate announced it would market a variable annuity with Putnam Investments of Boston. Variable annuities are mutual funds wrapped in tax-deferred insurance plans.
As a result, Putnam, a unit of Marsh & McLennan Cos., is dropping its longtime relationship with Hartford Life Inc.
Allstate, the nation's second-largest property insurer, also plans to license its insurance agents to become full-fledged investment advisers. The insurer hopes to sign up most of its 800 life insurance agents to sell annuities and investment products.
Allstate has 15,000 insurance agents, most of whom sell only property and casualty insurance. But many could also sell investments, said Edward M. Liddy, who took over as Allstate chairman and chief executive officer in January.
"We'll take Allstate agents and make them broader-based sellers of financial products and planners of financial models," Mr. Liddy said.
The Putnam product, which will be marketed beginning in May, has far greater potential to reach large numbers of customers, however. Putnam manages $300 billion of assets for more than 10 million individuals and 1,000 institutions. The Putnam-Allstate annuities would be sold through virtually every major bank and investment firm, Allstate said.
Variable annuities are "one of the fastest-growing segments of the financial services market," Mr. Liddy said. "So you've got a fast-growing segment coupled with Allstate's brand name and Putnam's brand name and mutual fund management capability. It's a pretty good combination."
Kenneth Kehrer, a consultant in Princeton, N.J., said he sees the alliance as a good match.
"A cynic might say, 'Who needs another variable annuity?' but Allstate clearly wants a piece of the action, and this is clearly a bold move," Mr. Kehrer said. "There's probably no other mutual fund company that (Allstate) could partner with that would give them a bigger push."
Allstate is betting the partnership will rocket it from the No. 20 player in sales of variable annuities to at least No. 3 within five years.
"We are wed to the proposition that this product ... will become over time the nation's leading variable annuity product," said Louis G. Lower 2d, chief executive of Allstate's life insurance business.
The Putnam relationship is part of Allstate's overall strategy to build its life insurance and investment businesses. Life insurance accounted for about 20% of Allstate's $3.3 billion in income last year.
"Our strategy in the life business is to have multiple products sold through multiple distribution channels," Mr. Liddy said.
Mr. Kehrer said Allstate's biggest competitors, including State Farm Insurance Cos. of Bloomington, Ill., are doing the same sort of thing.