US insurer Nationwide has agreed to acquire the employer stop loss insurance unit Group Health from Allstate for $1.25bn in cash.
Nationwide said this acquisition will enhance and broaden Nationwide Financial’s portfolio, increasing its capacity to offer stop loss insurance to small businesses.
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Stop loss insurance helps protect employers that self-fund their health insurance plans against excessive financial losses.
The acquisition will lay the groundwork for future growth in employer benefits, Nationwide added.
Nationwide Financial president and chief operating officer John Carter said: “Acquiring Allstate’s employer stop loss segment will broaden Nationwide Financial’s portfolio, meeting the needs of small businesses, allowing us to serve more customers and positioning us as a leading provider in the stop loss industry.
“This represents a significant investment in the stop loss market, adding experienced talent with proven business results, protecting over 13,000 small businesses and complementing our existing offerings in the market while accelerating our opportunity for growth.”
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By GlobalDataAllstate chair, president and CEO Tom Wilson said: “We reached another milestone in the strategy to maximise shareholder value by combining the Health & Benefits businesses with companies that have greater strategic alignment.
“Group Health provides stop-loss insurance to small businesses, which will gain access to Nationwide’s complementary product offerings.”
For the first nine months of 2024, Group Health reported revenues of $608m and an adjusted net income of $69m.
According to Allstate CFO Jess Merten, the Group Health business was acquired in 2021 as a part of the $4bn purchase of National General.
Merten highlighted that the sale is expected to generate a financial book gain of around $450m and increase deployable capital by $900m.
When combined with the previously announced sale of Employer Voluntary Benefits to StanCorp Financial Group, total sale proceeds for Allstate will be $3.25bn.
Last month, Nationwide collaborated with water solutions provider Phyn to offer leak detection solutions to policyholders with high-value homes.
