Allstate to acquire National General in $4bn all-cash deal

US insurer Allstate Corporation is acquiring National General Holdings Corporation for approximately $4 billion in cash, in a move to expand its personal lines market position.

National General provides property-liability products through independent agents with a large presence in non-standard auto insurance. The company also has attractive accident and health and lender-placed insurance businesses. Gross premiums written were $5.6 billion, which generated operating income of $319 million in 2019.

Allstate will fund the share purchase by deploying $2.2 billion in combined cash resources and, subject to market conditions, issuing $1.5 billion of new senior debt. Allstate expects to maintain its current share repurchase programme.

The transaction is expected to close in early 2021, subject to regulatory approvals and other customary closing conditions. National General’s board of directors has approved the transaction.

“Acquiring National General accelerates Allstate’s strategy to increase market share in personal property-liability and significantly expands our independent agent distribution,” said Tom Wilson, chair, president and CEO of Allstate. “The acquisition increases personal lines premiums by $4.0 billion and market share by over 1 percentage point to 10%. National General’s business and technology platforms will be utilized to further strengthen Allstate’s existing independent agent businesses. The transaction will be accretive to adjusted net income earnings per share and return on equity beginning in the first year.”

Barry Karfunkel, co-chairman and CEO of the New York-based insurer, said: “National General’s operating expertise has enabled us to serve customers and independent agents well as we have grown both organically and through acquisition. We are excited about combining our team’s expertise and commitment with Allstate to become a top-five personal lines carrier for independent agents while offering a broader array of products. National General’s shareholders are also benefiting by unlocking the value created over the last decade.”

MSD Capital, which owns approximately 7.4 percent of National General’s outstanding common shares, supports the transaction.

John Phelan, managing partner and co-founder of MSD Capital, LP and MSD Partners, LP. Dan Bitar, a managing director of MSD Capital, added: “As proud shareholders since 2013, we support the decision of National General’s board of directors to move forward with this strategic transaction. We believe the transaction is allowing National General’s employees, customers and shareholders to benefit from the significant franchise value created by the management team over the last decade.”