Allstate Corporation Sells Employer Voluntary Benefits Business, Stock Gains

On Tuesday, August 14, 2024, Allstate Corporation announced a significant strategic move, agreeing to sell its employer voluntary benefits business to StanCorp Financial Group (The Standard) for $2 billion in cash.

The deal is expected to generate a $600 million gain for Allstate and increase its deployable capital by $1.6 billion. This transaction marks a pivotal moment for the insurance giant as it reshapes its business portfolio and capitalizes on market opportunities.

Sale of Employee Voluntary Benefits Subsidiaries First Step in Broader Strategy

The sale of Allstate’s employer voluntary benefits subsidiaries represents the first step in the company’s broader strategy to optimize its health and benefits businesses.

With revenues of $535 million and an adjusted net income of $45 million in the first half of 2024, the divested business units have been solid performers. Allstate’s Chief Financial Officer, Jess Merten, emphasized that this move will enable the company’s remaining health and benefits ventures to realize their full growth potential by merging with entities possessing complementary capabilities.

The transaction aligns with a growing trend among corporations to streamline operations by divesting non-core assets. J.P. Morgan and Ardea Partners served as financial advisors to Allstate, while Citi exclusively advised The Standard on the deal.

Join our Telegram group and never miss a breaking story.

Allstate Stock Up on Deal News

The announcement of the sale coincided with a surge in Allstate’s stock price, which reached an all-time high of $180.87. As of 11:19 AM EDT on the day of the announcement, the stock was trading at $181.13, up $9.17 or 5.33% from the previous close.

This impressive performance reflects a broader trend of success for Allstate, with the stock having surged 71.85% over the past year. The company’s market capitalization stood at $47.826 billion, with key valuation metrics including a trailing P/E ratio of 15.68 and a forward P/E of 13.28.

Allstate’s stock has significantly outperformed the S&P 500 across various timeframes, boasting a year-to-date return of 30.88% and a five-year return of 96.54%.

With an average price target of $196.94 and a forward dividend yield of 1.66%, the company continues to attract investor interest.

Disclaimer: The author does not hold or have a position in any securities discussed in the article.