Allstate to sell Employer Voluntary Benefits arm to The Standard for $2bn

US primary insurer Allstate has entered into a definitive agreement to sell its Employer Voluntary Benefits business to StanCorp Financial Group, Inc. (The Standard) for $2 billion in cash, adjusted for the closing balance sheet.

The transaction is subject to customary closing conditions and approvals, expected to close in the first half of 2025.

For H1 2024, these businesses had revenues of $535 million, adjusted net income of $45 million, and statutory capital and surplus of $255 million.

The sale represents the first step to enable the three Allstate Health & Benefits businesses, namely Employer Voluntary Benefits, and Individual and Group Health, to grow to full potential by combining with companies that have additional capabilities.

Jess Merten, Chief Financial Officer, Allstate, commented, “The sale is expected to generate a gain of about $600 million and increase deployable capital by $1.6 billion. Adjusted net income return on equity will decline by about 100 basis points following the sale, which is expected in the first half of 2025.”

Tom Wilson, Chair, President and Chief Executive Officer, said, “Allstate’s Employer Voluntary Benefits business provides protection to over 3.5 million customers who will continue to be well served by The Standard.

“The alignment between Allstate’s industry-leading product offerings, employer relationships, distribution and talented team and The Standard’s group benefits business will provide customers with broader protection and higher value.

“Allstate agents will now offer a broader array of options to customers under a five-year exclusive distribution arrangement. Allstate shareholders will also benefit as capital is deployed to increase market share in personal property-liability and expand protection offerings. Discussions on the sale of the Individual and Group Health businesses are continuing and are expected to achieve the same success.”

For Allstate, J.P. Morgan and Ardea Partners are acting as financial advisors and Willkie Farr & Gallagher LLP is acting as legal advisor.

Citi is acting as the exclusive financial advisor and Debevoise & Plimpton is acting as the legal advisor to The Standard.

Dan McMillan, President and CEO, The Standard, stated: “We see significant synergies between Allstate’s industry-leading supplemental and voluntary life products and The Standard’s expertise in workplace benefits.

“This transaction enhances our suite of offerings for customers of all sizes. We look forward to welcoming the talented Allstate Employer Voluntary Benefits employees to The Standard and to a mutually beneficial distribution partnership as we move forward.”

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