The Allstate Corporation ALL inked a definitive deal to divest its Group Health business, part of the insurer’s Health and Benefits unit, to Nationwide. Subject to adjustments based on the closing balance sheet and customary closing conditions, and regulatory approvals, the transaction is likely to be completed by this year and expected to fetch cash proceeds of $1.25 billion. ALL initially acquired the Group Health business as a component of its National General buyout. 

The above-mentioned divestiture is expected to result in a financial book gain of $450 million and boost deployable capital by $0.9 billion. However, it is likely to bring about a deterioration of 75 basis points in adjusted net income return on equity after the transaction closes. 

On Nov. 1, 2023, Allstate announced that it is exploring opportunities for the sale of the Health and Benefits business, which comprises employer voluntary benefits, group health and individual health businesses. An agreement to divest the Employer Voluntary Benefits unit to StanCorp Financial Group had already been announced in August 2024. The sale is likely to be completed in the first half of 2025. The leftover Individual Health business will either be retained by Allstate or merged with another company. 

The combined transaction proceeds fetched by Allstate out of Employer Voluntary Benefits and Group Health divestitures is expected to be $3.25 billion.

Underlying Motive of Allstate Behind the Group Health Divestiture

Allstate's recent announcement aligns with its strategic objective of maximizing the growth potential of the Group Health business by integrating it with firms possessing advanced capabilities. Group Health, which focuses on stop-loss insurance for small businesses, will gain advantages from Nationwide’s complementary range of products.

Simultaneously, the divestiture underscores ALL’s broader strategy to allocate more capital toward strengthening its market position in personal property-liability and expanding its portfolio of protection offerings. Premiums earned from the Property-Liability and Protection Services divisions improved 11.5% and 12.6%, respectively, on a year-over-year basis in the first nine months of 2024.

Previously, Allstate had entered into divestitures to intensify its focus on core business growth. In 2021, the company exited the Life and Annuity business by selling Allstate Life Insurance Company and its related subsidiaries to entities managed by Blackstone BX.

Allstate’s Price Performance & Zacks Rank

Shares of Allstate have gained 22.6% in the past year compared with the industry’s 18.4% growth. ALL currently carries a Zacks Rank #3 (Hold).

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Stocks to Consider

Some better-ranked stocks in the insurance space are Primerica, Inc. PRI and ProAssurance Corporation PRA, each currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Primerica’s earnings surpassed estimates in two of the last four quarters and missed the mark twice, the average surprise being 4.89%. The Zacks Consensus Estimate for PRI’s 2025 earnings indicates a rise of 5.6% while the same for revenues implies an improvement of 4.5% from the respective 2024 estimates. The consensus mark for PRI’s 2025 earnings has moved 0.9% north in the past 30 days. 

The bottom line of ProAssurance beat estimates in three of the trailing four quarters and missed the mark once, the average surprise being 61.46%. The Zacks Consensus Estimate for PRA’s 2025 earnings indicates a rise of 5.8% from the 2024 estimate. The consensus mark for PRA’s 2025 earnings has moved 1.2% north in the past 60 days.

Shares of Primerica and ProAssurance have gained 23.2% and 11.8%, respectively, in the past year.

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