Nationwide to Acquire Allstate’s Employer Stop-Loss Segment in $1.25 Billion Deal
In a strategic move to expand its stop-loss insurance offerings, U.S. insurer Nationwide announced on Thursday that it has agreed to acquire the employer stop-loss segment of Allstate Corp in a $1.25 billion deal. The transaction, expected to close in the second half of 2025, marks a significant step in Nationwide’s efforts to broaden its portfolio and cater to the growing needs of small businesses.
Stop-loss insurance provides companies with financial protection against high medical expenses incurred by employees in a given year. By acquiring Allstate’s employer stop-loss segment, Nationwide aims to strengthen its position in the market and enhance its ability to serve a wider range of customers.
Nationwide’s Strategic Expansion
Nationwide, a diversified insurance and financial services company based in Ohio, offers a variety of products, including auto, business, farm, and life insurance. The acquisition aligns with its strategy to diversify its offerings and meet the evolving needs of its clients.
“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,” said John Carter, President of Nationwide. The deal underscores Nationwide’s commitment to expanding its footprint in the insurance sector and providing comprehensive solutions to its customers.
Benefits for Allstate
For Allstate, the sale of its employer stop-loss segment is expected to yield a financial book gain of approximately $450 million. Additionally, the transaction will increase Allstate’s deployable capital by $900 million upon completion in 2025. Allstate, known for its auto, home, electronic device, and identity theft insurance products, will use the proceeds to strengthen its core operations and focus on its primary business lines.
Financial Advisors and Deal Structure
J.P. Morgan and Ardea Partners are serving as financial advisors for the transaction, ensuring a smooth and efficient process. The deal reflects the growing demand for stop-loss insurance as businesses seek to mitigate risks associated with high medical costs.
Market Implications
The acquisition highlights the increasing consolidation in the insurance industry as companies strive to enhance their service offerings and improve profitability. Nationwide’s move to acquire Allstate’s employer stop-loss segment positions it as a stronger player in the stop-loss insurance market, while Allstate benefits from increased capital flexibility to invest in its core business areas.
As the transaction progresses, both companies are expected to focus on integrating operations and ensuring a seamless transition for customers. The deal is poised to create value for both Nationwide and Allstate, while providing enhanced insurance solutions for businesses across the United States.