Allstate Corp. agreed to sell its group health business to Nationwide Mutual Insurance Co. for $1.25 bn in cash. The deal is expected to close in the second half of the year. For the first nine months of 2024, Group Health had revenues of $608 mn and Adjusted Net Income of $69 mn.
Nationwide CEO Kirt Walker said the acquisition aligns with the company’s focus on protecting people, businesses, and financial futures.
John Carter, Nationwide Financial’s president and chief operating officer, said the deal strengthens the company’s position in the stop-loss market. It brings experienced talent with a strong track record, protects over 13,000 small businesses, and complements existing products while accelerating growth.
Allstate CEO Tom Wilson said the sale supports the company’s plan to increase shareholder value by combining health and benefits businesses with companies that offer a stronger strategic fit.
We reached another milestone in the strategy to maximize shareholder value by combining the Health & Benefits businesses with companies that have greater strategic alignment
Tom Wilson, Allstate’s Chair, President and CEO
“Group Health provides stop-loss insurance to small businesses, which will gain access to Nationwide’s complementary product offerings. When combined with the previously announced sale of Employer Voluntary Benefits to StanCorp Financial Group, Inc., (The Standard), total sale proceeds will be $3.25 bn. The Individual Health business, with Adjusted Net Income of $18 mn for the first nine months of 2024, will either be retained or combined with another company,” said Tom Wilson.
Allstate acquired its group health business in 2021 as part of its $4 bn National General purchase, according to CFO Jess Merten.
Group Health provides stop-loss insurance to small businesses, which will gain access to Nationwide’s additional products, Wilson said.
Nationwide is extremely well capitalized and this transaction advances its growth strategy by expanding its product portfolio and distribution capabilities
Jess Merten, Allstate’s Chief Financial Officer
“Allstate acquired the Group Health business in 2021 as part of the $4 bn acquisition of National General. The sale is expected to generate a financial book gain of about $450 million, increase deployable capital by $0.9 bn but reduce adjusted net income return on equity by 75 basis points after closing, which is expected in 2025,” said Jess Merten, Allstate’s Chief Financial Officer
Including the previously disclosed sale of Employer Voluntary Benefits to StanCorp Financial Group, Inc., total proceeds will reach $3.25 bn, Wilson said.
He added that the individual health business, which reported $18 mn in adjusted net income through the first nine months of 2024, will either be retained or combined with another company.