Allstate Buys Business From CNA
NORTHBROOK, Ill. (AP) _ Allstate Corp. moved further Wednesday to take a stake in the independent agent market with the purchase of a CNA Financial Corp. unit that sells home and auto insurance.
The deal is designed to help Allstate become the leading provider of auto and homeowners insurance in the $45 billion independent agent market.
Allstate said the move will increase its total annual premium revenue from the independent agent channel to about $3 billion.
The company currently sells most of its policies through its own employees rather than independent agents.
Allstate, based in this northern Chicago suburb, will pay $140 million cash to CNA for the business. It is also committing about $950 million of its capital to support the business. The balance of the deal involves a marketing royalty Allstate will pay to CNA Insurance for the use of its brand name for the next six years.
``This transaction is an important and complementary step in Allstate’s goal of becoming the major force in the independent agent personal lines market,″ Edward Liddy, Allstate’s chairman, president and chief executive officer, said in a prepared statement.
Chicago-based CNA’s operation currently has annual premium revenue of $1.7 billion and distributes its auto and homeowners insurance products through a network of 3,800 independent agents in 43 states.
The transaction has been approved by the boards of directors of both companies, and is subject to various regulatory approvals. The transaction is expected to be completed by the fourth quarter of this year.
Allstate will establish a new business, CNA Personal Insurance, that will sell CNA personal lines insurance under its current brand name. The 2,000 employees of the existing CNA operation will transfer to the new business, the company said.