The Allstate Corporation, a personal lines insurer, and Discover Financial Services, a banking and payment services company, have revealed their plans to enter into a multi-year distribution and marketing agreement.
As part of the transaction, Discover Bank will purchase substantially all of the deposits of Allstate Bank.
Under the terms of the agreement, Discover will assume the Allstate Bank deposit accounts and provide banking products and services to Allstate customers.
Discover said that Allstate Financial does not intend to originate banking products or services following the closure of the transaction.
As part of the distribution and marketing agreement, Allstate affiliates and agents will offer personal savings and money market accounts, CDs and individual retirement account CDs to their customers through Discover.
According to the Discover, the transfer of deposits will not affect insurance policies and other non-banking products that customers have with Allstate. It will continue to offer Allstate customers similar banking services that are available through Allstate Bank.
Allstate Financial will continue to offer and administer business loans to Allstate agencies through Allstate Finance Company.
Allstate Financial president and CEO Matthew Winter said the company has refocused on insurance, retirement and investment products. That, combined with the changing regulatory environment, led the company to the determination that operating Allstate Bank is no longer core to the long-term strategy.
"This agreement will enable Allstate Financial to deepen its focus on producing differentiated products for our key markets, strengthening relationships with existing customers, and creating profitable growth for Allstate," Winter said.
The transaction is expected to close by mid-year, subject to regulatory approval.