Allstate To Buy White Mountains’ Esurance, Answer Financial For $700 Million
Wall Street Journal
Wednesday – May 18, 2011
DOW JONES NEWSWIRES
Allstate Corp. (ALL) has agreed to acquire White Mountains Insurance Group Ltd.’s (WTM) Esurance and Answer Financial businesses for $700 million, boosting its online presence.
The deal would help Allstate, which sells coverage primarily through agents, gain traction online. It comes as the largest publicly traded home and auto insurer in the U.S. has struggled to reverse policyholder declines.
Allstate said Wednesday that Esurance is the third-largest provider of online auto-insurance quotes. Answer Financial allows shoppers the opportunity to compare and purchase quotes from insurers and bills itself on its website as one of the country’s largest online personal insurance agencies.
The acquisition also includes the entities’ tangible book value at close and is expected to have a total price of about $1 billion. It is expected to close in the fall and is seen as being non-dilutive to Allstate’s earnings in the second full year of ownership.
Catastrophe costs have weighed on the Allstate’s recent financial results and earlier this month it warned investors it had about $1.4 billion in catastrophe losses in April, making the second quarter its costliest period for disaster claims since 2008.
Allstate shares closed Tuesday at $32.42 while White Mountains finished at $343.63. Neither was active in recent premarket trading.
-By Matt Jarzemsky, Dow Jones Newswires; 212-416-2240; matthew.jarzemsky@dowjones.com