The Allstate Corporation (ALL) is making strategic moves in the insurance market. The company has finalized a deal to sell its Employer Voluntary Benefits business to StanCorp Financial Group, Inc. for a hefty $2.0 billion in cash. This transaction is expected to be finalized in the first half of 2025, pending customary conditions and approvals.
Allstate anticipates this sale to bring in a $600 million gain and boost its deployable capital by $1.6 billion. However, the company expects its adjusted net income return on equity to decrease by roughly 100 basis points following the sale.
This sale marks the initial step in Allstate’s broader strategy to enhance growth. The company plans to merge its Employer Voluntary Benefits, Individual Health, and Group Health businesses with companies that possess complementary capabilities. As part of this strategy, Allstate and StanCorp Financial Group will form a product distribution partnership. The Standard will exclusively handle group life, disability, and other benefits sold through Allstate’s agents, ensuring a trusted group benefits partner for customers.
Tom Wilson, Chair, President, and CEO of The Allstate Corporation, highlighted the positive impact of this transaction: “Allstate’s Employer Voluntary Benefits business provides protection to over 3.5 million customers who will continue to be well served by The Standard. The alignment between Allstate’s industry-leading product offerings, employer relationships, distribution and talented team and The Standard’s group benefits business will provide customers with broader protection and higher value.”
He also emphasized the benefits for Allstate shareholders: “Allstate shareholders will also benefit as capital is deployed to increase market share in personal property-liability and expand protection offerings. Discussions on the sale of the Individual and Group Health businesses are continuing and are expected to achieve the same success.”
Allstate’s stock has seen substantial growth over the past year, rising over 60%. Investors looking to gain exposure to the stock can consider options like the Invesco KBW Property & Casualty Insurance ETF (KBWP) and the IShares U.S. Insurance ETF (IAK).
On Wednesday, ALL shares experienced a premarket surge, climbing 1.68% to reach $174.85. This indicates positive market sentiment towards the company’s strategic moves and potential for future growth.
