Sept. 10 (Bloomberg) — Allstate Corp. is betting on timber and real estate to boost returns at a struggling annuity unit.

"We do need to figure out what we do with our annuity business," Chief Executive Officer Tom Wilson said at an investor presentation today. "It's still not where we'd like it to be on a long-term basis, so we're investing a little differently there."

Allstate, the largest publicly traded U.S. home-and-auto insurer, has been retreating from annuities as low interest rates weigh on results. The company agreed last year to divest a life-and-retirement operation called Lincoln Benefit Life Co., after selling its variable-annuity operation to Prudential Financial Inc. in 2006.

Wilson said Allstate has been harmed by reinvesting funds from maturing investments at lower interest rates. In annuities, insurers profit when investment returns exceed the promised payouts to policyholders. Allstate said in its annual report that investment returns on immediate fixed annuities exceed customer payouts by 0.9 percentage points. The company will benefit when rates eventually rise, Wilson said today.

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