Allstate to acquire National General to grow independent agent business

The Allstate Corp., an insurance company, has reportedly entered an agreement to acquire National General Holdings Corp. for nearly $4 billion or $34.50 per share. The deal, which is expected to close in the beginning of 2021, is subject to regulatory approvals as well as other customary closing conditions.

According to the CEO, President, & Chair of The Allstate Corporation, Tom Wilson, the latest agreement will accelerate the company’s strategy to expand its personal property-liability market share as well as its independent agent distribution. The deal has reportedly increased the personal line premiums by $4 billion & market share by nearly 1% point to 10%. In order to further strengthen its current independent agent businesses, the business & technology platforms of National General will be deployed.

For the record, National General offers several property-liability products via independent agents. The company also has a significant presence in the non-standard auto insurance domain. With $5.6 billion gross premiums written, it has generated a $319 million operating income in 2019.

As per the agreement, shareholders of National General will obtain $32.00 per share from Allstate in cash, in addition to the closing dividends that are expected to be $2.50 per share, offering $34.50 in the total value per share. On the other hand, Allstate will fund the purchase of the share through the deployment of $2.2 billion from the combined cash resources. Subject to the market conditions, it will also issue a new senior debt of $1.5 billion.

The board of directors at National General has approved the deal. This includes customary terms & conditions and a $132.5 million breakup fee. Entities that control 40% of the common shares in National General agreed to vote for the recent transaction.

Ardea Partners LP served as Allstate’s exclusive financial advisor, with Willkie Farr & Gallagher LLP as its legal counsel. On the other hand, J.P. Morgan served as National General’s exclusive financial advisor, with Paul, Weiss, Rifkind, Wharton & Garrison LLP as the legal counsel.

Source credit:

https://www.allstatenewsroom.com/news/allstate-expands-personal-lines-market-position-with-acquisition-of-national-general/