Insurance Deals: Allstate Buys Esurance

Allstate ALL is expanding ts product portfolio, as it buys Esurance and Answer Financial from White Mountains Insurance WTM for about $1 billion. Allstate said it was doing the deal to help it access consumers who prefer certain brands along with consumers who want choices among insurance carriers. White Mountains Insurance said the deal would increase book value by $80 per share. Esurance sells auto insurance directly to customers online and through call centers, while Answer Financial is an independent personal insurance agency. "Consumers today expect to have their specific needs met by their insurance companies. Our strategy is to focus on individual preferences and utilize different value propositions for distinct consumer segments," said Thomas J. Wilson, Allstate's president, chairman and chief executive officer. "Our Allstate agencies do an outstanding job of serving customers who want a local personal touch and prefer to purchase a branded product. Esurance will expand our ability to serve customers that are more self-directed but still prefer a branded product. Answer Financial will strengthen our offering to individuals who want to be offered a choice between insurance carriers and are brand-neutral. Allstate will be the only company serving all of these consumer segments with unique insurance offerings. "This transaction is also attractive for our shareholders. Association with Allstate will improve Esurance's marketing effectiveness and it can leverage our world-class pricing and claim capabilities. This also offers us two additional sources of growth and an immediate increase in customer relationships," Wilson continued. At last check, shares of Allstate were off 14 cents to $32.28, a loss of 0.4%, while shares of White Mountains shares were up $48.92, a gain of 14.24% to $392.55.