NU Online News Service, Oct. 07, 12:16 p.m. EST
Allstate Corp. says its $1 billion acquisition of Esurance and Answer Financial from White Mountains Insurance Group has met all regulatory requirements and has closed.
Allstate says the acquisition is expected to be non-dilutive to Allstate's earnings in the second full year of ownership.
"This transaction provides immediate incremental growth in customer relationships and makes Allstate the only company serving all four major consumer segments based on their preferences for advice and choice," says Thomas J. Wilson, president, chairman and chief executive officer of Allstate, in a statement.
Of the difference in the distribution models, Wilson adds, "Allstate agencies serve personal touch loyalists who prefer local personal advice and are brand-sensitive. Esurance provides the business platform to serve the self-directed, brand-sensitive market segment. Answer Financial strengthens our offering to self-directed consumers who want a choice between insurance carriers. Customers who utilize independent agents and are brand-neutral are served by our Encompass operation."
Allstate intends to maintain the current headquarters of Esurance in San Francisco and Answer Financial in Los Angeles. These operations will be reported in the Allstate Protection reporting segment, Allstate says.
Moody's Investor Service has called the deal credit-positive for Allstate and gives the insurer a platform to compete in the rapidly growing direct auto-insurance channel.
However, Allstate's agents felt apprehensive about the acquisition, says the National Association of Professional Allstate Agents.
NAPAA has criticized the insurer's distribution strategy.
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