The acquisition of National General will expand its position in the personal lines market, said Allstate, which is offering to buy all the former's shares at $34.50 per share
All State to acquire National General. (Credit: Raysonho @ Open Grid Scheduler / Grid Engine / Wikipedia.org)
Allstate has agreed to acquire National General, a US-based specialty personal lines insurance holding company, for about $4bn in an all-cash deal.
The acquisition will expand its position in the personal lines market, said Allstate, which is offering to buy all the National General’s shares at $34.50 per share. Besides, the deal is said to expand Allstate’s independent agent distribution to a significant extent.
Allstate chair, president, and CEO Tom Wilson said: “The acquisition increases personal lines premiums by $4.0 billion and market share by over 1 percentage point to 10%. National General’s business and technology platforms will be utilized to further strengthen Allstate’s existing independent agent businesses.
“The transaction will be accretive to adjusted net income earnings per share and return on equity beginning in the first year.”
Based in New York, National General offers a range of property-liability products through a network of nearly 42,300 independent agents. The specialty personal lines insurance holding company is said to have a significant footprint in non-standard auto insurance.
According to Allstate, the company also has an attractive lender-placed insurance and accident and health businesses.
In 2019, National General’s gross premiums written were $5.6bn, while its operating income was $319m.
The deal has been approved by National General’s board of directors and is supported by MSD Capital, which owns nearly 7.4% stake in the company.
Allstate said that it has signed a voting agreement as well with entities that hold a 40% stake in National General to vote in favour of the transaction.
National General CEO comments on the acquisition by Allstate
National General co-chairman and CEO Barry Karfunkel said: “National General’s operating expertise has enabled us to serve customers and independent agents well as we have grown both organically and through acquisition.
“We are excited about combining our team’s expertise and commitment with Allstate to become a top-five personal lines carrier for independent agents while offering a broader array of products. National General’s shareholders are also benefiting by unlocking the value created over the last decade.”
Subject to receipt of regulatory approvals and meeting of other customary closing conditions, the deal is likely to be wrapped up in early 2021.