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The Allstate Corporation (NYSE:ALL) shares are trading higher after the company reached a definitive deal to sell its Employer Voluntary Benefits business to StanCorp Financial Group, Inc. for $2.0 billion in cash, subject to customary conditions and approvals.
The sale is projected to generate a $600 million gain and increase deployable capital by $1.6 billion.
Allstate expects adjusted net income return on equity to decrease by approximately 100 basis points after the sale. The deal is anticipated to close in the first half of 2025.
The sale marks the initial phase of Allstate’s strategy to enhance growth by merging its Employer Voluntary Benefits, Individual Health, and Group Health businesses with companies that offer additional capabilities.
Apart from this, the companies will also form a product distribution partnership. Under the cooperation, The Standard will exclusively handle group life, disability, and other benefits sold through Allstate’s agents, providing a trusted group benefits partner.
Tom Wilson, Chair, President and CEO of The Allstate Corporation, said, “Allstate’s Employer Voluntary Benefits business provides protection to over 3.5 million customers who will continue to be well served by The Standard. The alignment between Allstate’s industry-leading product offerings, employer relationships, distribution and talented team and The Standard’s group benefits business will provide customers with broader protection and higher value.”
“Allstate shareholders will also benefit as capital is deployed to increase market share in personal property-liability and expand protection offerings. Discussions on the sale of the Individual and Group Health businesses are continuing and are expected to achieve the same success.”
Allstate stock gained over 60% in the last 12 months. Investors can gain exposure to the stock via Invesco KBW Property & Casualty Insurance ETF (NASDAQ:KBWP) and IShares U.S. Insurance ETF (NYSE:IAK).
Price Action: ALL shares are up 1.68% at $174.85 premarket at the last check Wednesday.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Image via Shutterstock
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