Allstate's $4 Billion Deal

Allstate's $4 Billion Deal

over 3 years ago2 mins

Mentioned in story

National General Holdings is in good hands: American insurer Allstate just announced a deal to buy the rival insurer for $4 billion 🤝

What does this mean?

If there’s a silver lining to the damage coronavirus has done to travel, it’s that fewer drivers on the roads has resulted in fewer accidents – and, in turn, fewer claims. That might have spurred Allstate – one of the country’s biggest insurance providers – to eye up National General’s more specialist vehicle and home insurance offerings 👀 The team-up should result in more insurance products for its newly expanded network of brokers to sell, making the combined company an even more formidable competitor. But don’t just take our word for it: just ask 24’s President Palmer…

Change in personal/passenger vehicle miles traveled | The Wall Street Journal
Change in personal/passenger vehicle miles traveled | The Wall Street Journal

Why should I care?

Allstate is buying National General’s shares for $34.50 each – or around 69% more than they were worth before the announcement. But that’s not necessarily something to worry about: if someone wants to take control of a whole company rather than just a fraction of it, they have to convince all its existing investors that it’s worth selling – and an almost 70% windfall is a good way to do just that 💸 Allstate’s investors don’t seem sure the addition will be as immediately profitable as promised, mind you: the company’s stock fell on Wednesday.

Source: Google Finance
Source: Google Finance

Investors in US financial services had plenty more to mull over on Wednesday: Rocket Companies – owner of Quicken Loans and Rocket Mortgage, one of the US’s biggest home lenders – filed documents for an upcoming initial public offering. But investors have good reason to be skeptical: a survey last month showed that 11% of US households failed to make their last mortgage payment, and 16% worry they won’t be able to pay their next one.

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