Allstate just announced that it is purchasing National General Holdings. The purchase price is a cash buyout of $4 billion. Allstate is now waiting for National General Holdings shareholders to approve. Experts think that will happen and that Allstate will own the company by early 2021.
It appears the company is wanting to have an impact on the independent agency system.
Some odd things about the purchase have been brought up. For one, a leaked plan says Allstate is now in a major restructure and when it is complete as many as 3,700 people will be out of a job.
The company is said to be looking at replacing its 14 regional operations and turning them into four zones with a headquarters in each. That will eliminate most distribution managers, territory managers, regional sales managers, field vice presidents and leaders of the company’s recruitment teams.
Those laid off will have to reapply for new roles in the reorganization’s zones.
With all that going on the purchase seems odd and that brings everything back to Allstate’s offer to buy National General. The company has a huge network of independent insurance agents and that could end up being a huge positive for Allstate.
Luis Sanchez is the the founder and managing partner of LVS Advisory LLC. He says this move will help Allstate “capture additional segments of the market where there are no current Allstate agents.”
Sanchez points out two positives. The first is how COVID has been really hard for Allstate and other insurance companies focusing on personal lines.
“People are driving less, resulting in fewer auto policies being sold. The company reported its sales were down 8.3% when it reported its first quarter in 2020,” Sanchez pointed out.
He also points out that picking up National General could end up making Allstate’s combined company a top-five independent agent carrier.
“Acquiring National General should help shore up revenue growth and expand Allstate’s reach with independent agents. The deal is also expected to generate cost synergies, which should be a nice kicker to the bottom line.”
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