Allstate acquires CNA personal lines

U.S.-based Allstate Corporation has acquired CNA’s personal lines business in a transaction valued at $1.2 billion. The deal calls for Allstate to pay CNA $140 million in cash for the business and company shell. Also, Allstate will utilize about $950 million of its capital to support the new premium volume and will pay a marketing royalty to CNA Insurance for the use of their brand name for the next six years. Already, Allstate underwrites roughly $20 billion of the U.S.’s $130 billion total personal lines insurance market. The company though is vying to increase its foothold in the $45 billion independent agent market, with the transaction boosting independent agent channel premiums to $3 billion.

According to CNA chief executive officer Bernard Hengesbaugh, the transaction allows CNA to concentrate on its corporate insurance core competencies. “For our investors, we’ve been clear that our strategy is to sharpen our focus in those businesses where we are now or where we can become a market leaders. As a result of this transaction, we can redeploy and refocus the company’s capital to help maximize CNA’s rates of return,” he says. CNA will retain an ongoing interest in the new company through a $75 million 10-year equity share.

The transaction is not expected to affect the operations of Allstate or CNA in Canada, representatives from both companies insist. The premium volume acquired in the deal was exclusively U.S.-based, CNA Canada does not underwrite personal lines business. A spokesperson from Allstate Canada notes the transaction will not have any discernible impact on the Canadian market and concedes, “the transaction does not necessarily preclude CNA in Canada from distributing personal line insurance.”