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Allstate Makes Deal to Acquire National General

Allstate CEO says the acquisition increases personal lines premiums by $4 billion.
  • RenĂ©e Kiriluk-Hill
  • August 2020
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Allstate Corp.'s $4 billion deal to acquire National General Holdings Corp. will make it a top-five carrier in the independent agency channel, according to Chairman, President and Chief Executive Officer Tom Wilson.

The company will “take a run right at” an independent-agent competitor expanding more aggressively in home insurance, he said following a presentation showing Progressive as the personal lines market share leader, with 13% of the market.


Acquiring National General accelerates Allstate’s strategy to increase market share in personal property-liability and significantly expands our independent agent distribution.

Tom Wilson
Chairman, President and Chief Executive Officer
Allstate


The pending acquisition is a cash deal, expected to close in early 2021. “Acquiring National General accelerates Allstate's strategy to increase market share in personal property-liability and significantly expands our independent agent distribution,” Wilson said in an earlier statement.

“The acquisition increases personal lines premiums by $4 billion and market share by over one percentage point to 10%,” he said.

National General's board of directors has approved the deal, which includes a breakup fee of $132.5 million.

The main impetus for the deal was to put Allstate “squarely in front” of independent agents with good technology and a broad product portfolio, Wilson said.

It plans a reverse merger of its independent agents business into National General's network. The CEO cited National General's technology platform, agency interfaces and a management team with substantial acquisition experience.

Chief Financial Officer Mario Rizzo called the independent agency channel highly fragmented, with just four insurers holding more than 5% of a nearly $125 billion market at year-end 2019.

Allstate would land behind Nationwide, Travelers and Liberty Mutual, each with 7% of the independent agency market, with a post-acquisition share of 4%. Independent agents wrote about 35% of personal lines business last year and the pace of growth has remained in-line with the overall industry, Rizzo said. The National General acquisition will add 42,300 independent agents to the 10,100 Encompass and Allstate brand independent agents. “We think this provides a significant growth opportunity,” Rizzo said. It would also boost Allstate's share in nonstandard automobile, an area where Allstate was once a giant, Wilson said. The company once wrote as much nonstandard as standard auto on a weekly basis, he said, but exited the line in the early 2000s.


Renée Kiriluk-Hill is associate editor, BestWeek. She can be reached at renee.kiriluk-hill@ambest.com.


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