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Allstate Acquires CNA's Personal Lines Business in Bid to Become Leading Provider of Auto and Homeowners Insurance in Independent Agent Market

Strategic Insights

— 2 min read

Allstate Corporation, the nation's largest publicly held personal lines insurance company, has made a significant move to expand its presence in the $45 billion independent agent personal insurance market. The company announced the acquisition of the personal lines business of Chicago-based insurer CNA, a move that will increase Allstate's total annual premium revenue from the independent agent channel to approximately $3 billion. The transaction, valued at $1.2 billion, includes a $140 million cash payment to CNA for the business and company shells to support the rating structure, as well as a marketing royalty to CNA Insurance for the use of their brand name for the next six years.

Key Takeaways:

  • Allstate will acquire CNA's personal lines business, including auto and homeowners insurance products, through a network of 3,800 independent agents in 43 states.
  • The transaction will increase Allstate's total annual premium revenue from the independent agent channel to approximately $3 billion.
  • Bruce Marlow, former COO of Progressive, has been appointed to head Allstate's new independent agency initiative and will report to Chairman Edward M. Liddy.
  • The approximately 2,000 employees of the existing CNA personal lines operation will transfer to the new business.
  • Allstate will establish a new business, CNA Personal Insurance, that will sell CNA personal lines insurance under its current brand name.
  • The acquisition will make Allstate the nation's third-largest provider of personal lines insurance through independent agents, with a total revenue of approximately $3 billion through this distribution channel.
  • The deal is expected to be completed by the fourth quarter of this year and will have a minimally dilutive effect for the first two fiscal years following closing.
  • Allstate will utilize its capital to support the premium and pay a marketing royalty to CNA Insurance for the use of their brand name for the next six years.
  • The transaction adds significant breadth and strength to Allstate's product offerings in the independent agent channel, including non-standard auto insurance through its Deerbrook insurance product in 36 states.

Statistics:

  • $1.2 billion - The value of the transaction, including a $140 million cash payment to CNA for the business and company shells to support the rating structure.
  • $3 billion - The total annual premium revenue increase expected from the independent agent channel.
  • $3,800 - The number of independent agents in 43 states through which CNA distributes its auto and homeowners insurance products.
  • $1.7 billion - The current annual premium revenue of CNA's personal lines operation.
  • 25 years - The amount of time Allstate has been a significant participant in the $45 billion independent agent personal insurance market.
  • 20% - The percentage of the insurance market that will only buy through the independent agent market.
  • $45 billion - The size of the independent agent personal insurance market.
  • 13,000 - The number of independent agents through which Allstate sells non-standard auto insurance through its Deerbrook insurance product in 36 states.

Sources:

  • The Allstate Corporation press release, June 9.
  • CNA press release, June 9.
  • The Allstate Corporation Annual Report.

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