01—Abstract
Summary
Summary of the 8-K filed August 13, 2024. Cited figures are marked; the original filing is the authoritative source.
On August 13, 2024, Allstate (NYSE: ALL) entered into a definitive Share Purchase Agreement to sell its Employer Voluntary Benefits business, held through American Heritage Life Insurance Company and American Heritage Service Company, to StanCorp Financial Group (The Standard) for $2.0 billiona in cash, subject to a closing balance sheet adjustment, regulatory approvals, and customary closing conditions.
The business generated first-half 2024 revenues of $535 millionb, Adjusted Net Income of $45 million, and statutory capital and surplus of $255 million. Allstate expects a pre-tax-style gain of about $600 million and an increase of $1.6 billion in deployable capital, which management plans to redeploy into growing personal property-liability and expanding protection offerings. The company also expects Adjusted Net Income return on equity to decline by roughly 100 basis points after the sale, which is anticipated to close in the first half of 2025.
The deal is described as the first step in a broader strategic review of Allstate Health & Benefits, with discussions on the Individual and Group Health businesses ongoing. The transaction includes a five-year exclusive distribution arrangement under which Allstate agents will offer The Standard's employer benefit products. Investors should weigh the capital benefit and gain against the loss of earnings from the divested unit, and watch for regulatory approval timing and further divestiture announcements.
An investor conference call is scheduled for August 14, 2024, at 9 a.m. Eastern.
02—Key points
Key Highlights
- Allstate agreed to sell its Employer Voluntary Benefits business to StanCorp Financial Group (The Standard) for $2.0 billion in cash, adjusted for closing balance sheet.
- The sale is expected to generate a gain of about $600 million and increase deployable capital by $1.6 billion.
- The divested business had first-half 2024 revenues of $535 million, Adjusted Net Income of $45 million, and statutory capital and surplus of $255 million.
- Adjusted Net Income ROE is expected to decline by roughly 100 basis points following the sale.
- The transaction is expected to close in the first half of 2025 and is subject to regulatory approvals and customary closing conditions.
- A five-year exclusive distribution arrangement will allow Allstate agents to offer The Standard's employer benefit products.
- Discussions to sell the Individual and Group Health businesses are continuing, per management.
03—Questions
Frequently Asked Questions
How much will Allstate receive for the Employer Voluntary Benefits business?
Allstate will receive $2.0 billion in cash, adjusted for the closing balance sheet, under a definitive Share Purchase Agreement with StanCorp Financial Group (The Standard).
What financial impact is expected from the sale?
Allstate expects a gain of about $600 million and an increase in deployable capital of $1.6 billion. Adjusted Net Income ROE is expected to decline by roughly 100 basis points after the sale.
When is the transaction expected to close and what could delay it?
The sale is expected to close in the first half of 2025. Closing is subject to regulatory approvals and other customary closing conditions, which could affect timing.
How big is the business being sold?
For the first half of 2024, the business generated revenues of $535 million, Adjusted Net Income of $45 million, and statutory capital and surplus of $255 million.
Does this sale signal further divestitures at Allstate?
Yes, management described this as the first step in a strategic decision to combine its three Allstate Health & Benefits businesses with companies that have additional capabilities. Discussions on the Individual and Group Health businesses are continuing.
04—Continue