The transaction is expected to close in the second half of 2025, subject to customary closing conditions. (Credit: JHVEPhoto/Adobe Stock)
Nationwide announced that it has entered into a definitive agreement to purchase Allstate’s employer stop loss segment for $1.25 billion.
“As Nationwide continues to focus on our mission to protect people, businesses and futures with extraordinary care, this acquisition is a strong fit,” Nationwide CEO Kirt Walker said in a release. “We are extending our protection solutions to meet the needs of business owners today and into the future.”
Stop loss coverage protects employers who self-fund their employee health plans from excessive loss. In a statement, Nationwide said the acquisition will enhance their offerings for small business clients.
“Acquiring Allstate’s employer stop loss segment will broaden Nationwide Financial’s portfolio, meeting the needs of small businesses, allowing us to serve more customers and positioning us as a leading provider in the stop loss industry,” said John Carter, president and chief operating officer of Nationwide Financial. “This represents a significant investment in the stop loss market, adding experienced talent with proven business results, protecting over 13,000 small businesses and complementing our existing offerings in the market while accelerating our opportunity for growth.”
The stop loss market has become more active in recent years as many employers turn to self-funded health plans in an attempt to decrease benefit costs. According to a Fall 2024 market update from Oliver Wyman and Guy Carpenter, stop loss carrier premium volume hit $35.5 billion in 2023, which shows a growth rate of 11.9% since 2018. However, stop loss claims have increased faster than premiums, which has caused loss ratios to drop from 79.5% in 2018 to 80.3% in 2023.
Reuters reports that the sale is expected to help Allstate with a financial book gain of around $450 million and to increase deployable capital by $900 million when the deal is complete.
The transaction is expected to close in the second half of 2025, subject to customary closing conditions.
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