The Allstate Corporation has reached a definitive agreement to sell its group health business to Nationwide for $1.25 billion in cash, subject to adjustments based on the closing balance sheet and standard closing conditions, including regulatory approvals. The transaction is expected to close in 2025.
For the first nine months of 2024, Allstate’s group health segment reported revenues of $608 million and adjusted net income of $69 million.
Tom Wilson, chair, president, and CEO of Allstate, said that the sale aligns with the company’s strategy to maximize shareholder value by merging its health and benefits businesses with firms that offer better strategic fit.
“Group health provides stop-loss insurance to small businesses, which will gain access to Nationwide’s complementary product offerings,” Wilson said.
This sale follows Allstate’s earlier agreement to sell its employer voluntary benefits unit to StanCorp Financial Group, Inc. (The Standard). The combined proceeds from these transactions will total $3.25 billion.
Wilson also noted that Allstate will either retain or combine its individual health business, which posted adjusted net income of $18 million for the first nine months of 2024.
Jess Merten (pictured above), Allstate’s chief financial officer, added that the sale would advance Nationwide’s growth strategy by broadening its product portfolio and enhancing its distribution capabilities.
“Allstate acquired the group health business in 2021 as part of the $4.0 billion acquisition of National General,” Merten said.
Merten also noted that the sale is expected to result in a financial book gain of approximately $450 million and will increase Allstate’s deployable capital by $0.9 billion. However, the transaction will reduce Allstate’s adjusted net income return on equity by 75 basis points.
J.P. Morgan and Ardea Partners are serving as financial advisors, and Willkie Farr & Gallagher LLP is providing legal counsel to Allstate. Citi is acting as financial advisor to Nationwide, with Squire Patton Boggs LLP as legal advisor.
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