National General Holdings Corp. is Acquired by Allstate Insurance for $4 billion.
The massive $4 billion acquisition of National General and its subsidiaries by the insurance behemoth Allstate Corporation has caused quite a stir in the market.
These two renowned erstwhile adversaries are working together to give their customers more comprehensive coverage in the thick of the coronavirus. It’s no hidden story that the pandemic outbreak has further caused anxiety and uncertainty for insurers. The acquisition, which was wholly paid for in cash, is anticipated to revolutionize the insurance industry.
Value Addition of National General to Allstate’s Arsenal
Illinois- based Allstate has been promising all its customers nothing less than wholesome and complete security since 1931. Their new acquisition further strengthens their promise of security and faith as National General brings to the table the long-standing experience of more than 70 years and some pretty refreshing set of coverings. Thus expanding their service brochure and client base.
The business, formerly known as GMAC Insurance, dated back to 1939 and was a division of General Motors. In 2013, it adopted the moniker “National General.”
Their 42,300 independent agents and tremendously profitable vehicle insurance policies will greatly complement Allstate’s capabilities. National General reported an operating income of $319 million in 2019 and gross yearly written premiums of $5.6 billion. The company receives about 60% of its premiums from auto insurance contracts. Personal and rental car insurance, homes, umbrellas, recreational vehicles, motorcycles, lender-placed, supplemental health, and other specialized insurance products are all offered by National General.
The difference in the deal in question will be visible to National General stockholders in the expected $34.50 per share they will receive; it is understandable why they readily approved the merger.
Allstate claimed the agreement would increase its profitability and market share regarding personal liability insurance, which covers vehicles, RV, and house insurance.
This appointment is meant to alleviate any concerns and there is no-cost or obligation to make a change.
Auto Insurance Overview: National General vs Allstate
Two well-known companies in the auto insurance space are National General and Allstate. National General is recognized for its signature “SmartDiscounts,” which offer drivers the opportunity to save significantly, up to an estimated $442 per year without even applying the full range of available discounts.
The insurer also provides several driver-based savings options and maintains solid ratings for financial strength, though there’s room to grow in terms of long-term stability. One of its biggest perks is a robust roadside assistance feature that adds notable value to its policies.
On the other side, Allstate receives strong marks for customer service and stands out for its higher J.D. Power rankings. They also edge ahead with superior ratings for roadside support. Ultimately, choosing the right provider depends on your personal coverage needs, budget, and preference for service quality.
Is the Merger Deal Growth Oriented?
One of the biggest life insurance businesses in the world, Allstate, raised a lot of brows when it announced a significant acquisition that will increase its size. National General Holdings was purchased by the firm for $4 billion, or around $34.50 per share. Needless to say, Allstate’s reach in the autonomous agent channel has increased as a result of this transaction.
However, is bigger in this instance better?
National General is an insurer of homes, cars, and lives, much like Allstate.
Despite having a significantly smaller insurance company, National General is the second-largest U.S. lender-placed insurance company that has one of the biggest networks of independent agents to offer its products.
Why did Allstate Acquire National General?
The collaboration with independent insurance agents plays a crucial role in expanding distribution. While much of the business is still handled through an internal sales team, opening up more access to independent agents can help the company grow its presence in underserved regions. As a result of the merger, the combined entity is positioned to become one of the top five carriers working with independent agents.
The merger has further advantages. There are additional strategic benefits as well.
National General adds valuable diversity to Allstate’s product lineup, particularly through its strength in lender-placed and high-risk auto insurance. The company specializes in coverage for nonstandard drivers, including those with limited experience, driving violations, or credit challenges. With authorization to offer auto policies nationwide, it’s well-positioned for future expansion, including through AI-enhanced tools in both auto and homeowners insurance markets.
An Ambitious Step by Allstate Corporation
This agreement was primarily drafted on a growth-oriented approach. For insurance providers like Allstate, the COVID-19 pandemic has indeed been difficult. Fewer auto insurance coverage was being offered as a result of decreased driving. When the business reported its first quarter of 2020, its sales were down 8.3%.
Its influence among the broader bandwidth of the general masses through independent contractors should be widened as a result of the acquisition of the National General. Cost synergies from the deal are also anticipated, which should boost the bottom line.
Bigger the Stakes, Higher the Stocks
Even though Allstate is already a sizable insurance provider, adding National General has indeed strengthened its position. The agreement should result in significant revenue and earnings growth and propel it into the leading independent agent insurance carrier.
To be more precise, by integrating Encompass and Allstate’s Independent Agent operations with National General, it rises to the top 5 personal line carriers in the independent agent channel of distribution. Only four insurers hold a market share greater than 5%. Together, the following ten insurers own less than 30% of the market.
Allstate is taking fascinating strategic steps that could help them for years to come despite the COVID-19 outbreak.
Key Takeaways of the New Insurance Policies
Despite being largely recognized for its auto insurance, National General also provides house insurance and RV insurance. The business specializes in providing high-risk drivers with nonstandard auto insurance, making it a viable choice for people who have had less-than-stellar driving records and have trouble finding coverage.
- In some areas, you may acquire quotes and buy plans online, which makes it possible for you to obtain coverage swiftly.
- Guarantee for customer satisfaction with claims – If you are not happy with the way National General handled your claim, they will pay your deductible up to $250. Except for Washington, all states offer the claims satisfaction guarantee. However, there are certain terms and conditions applied.
- Available SR-22 forms – In some states, drivers whose driving privileges have been suspended may need to submit an SR-22 form or a Financial Responsibility Certificate. The form attests that you adhere to the minimum liability standards set forth by law. If necessary, the National General will submit the SR-22 on your behalf to the state licensing body.
What Determines Your Car Insurance Cost and Availability?
Cost
Your insurance premiums are determined by a number of variables, including your age, gender, and driving history, by National General, like other auto insurance providers.
Because it serves clients with spotty driving records, its rates are frequently significantly higher than the industry standard. For precise quotes, visit the official website of National General Holdings Corp.- An Allstate Company.
Availability
All 50 states have granted National General permission to provide auto insurance to their citizens.
However, prices, coverages, and discounts might differ by region, so speak with a licensed agent to learn more about the insurance alternatives in your neighborhood.
Discount Eligibility on Car Insurance
Although no longer operating under the GMAC name, National General continues to support both General Motors customers and corporate staff. Those with an OnStar subscription, along with affiliated organizations, are eligible for attractive discounts. The company offers many of the most popular savings options, including discounts for insuring multiple vehicles or bundling policies like home and auto coverage.
Additional savings are available for safe drivers, choosing paperless billing, and paying the annual premium in full. Drivers can also opt to join the Motor Club, which provides benefits similar to other established vehicle clubs, such as free transportation, discounted roadside assistance, towing, and reimbursement for emergency expenses.
This appointment is meant to alleviate any concerns and there is no-cost or obligation to make a change.
Conclusion:
The coalition of Allstate and New General has definitely won brownie points on both sides. While it can be said that the operations of this merger are still in their nascent stage, it would be interesting to see the progression of Allstate post this very expensive purchase.
Sources:
https://www.allstatenewsroom.com/news/allstate-closes-acquisition-of-national-general-holdings-corp/
