The Standard agrees to acquire Allstate voluntary business
Allstate's group health business is still up for sale.
The Standard has agreed to acquire Allstate‘s employer voluntary benefits business for $2 billion in cash.
The voluntary benefits business provides coverage for about 3.5 million people. It reported $45 million in adjusted net income for the first half of the year on $535 million in revenue.
The Standard hopes to close on the deal by June 30, 2025.
The deal includes a a distribution relationship.
Under the distribution agreement, “The Standard will become Allstate’s exclusive carrier for sales of group life and disability, guaranteed standard issue individual disability, supplemental and voluntary products distributed by Allstate’s exclusive agents,” The Standard said.
David Payne, vice president of employee benefits at The Standard, said the Allstate deal will give The StanCorp a set of workplace benefits offerings that can serve employers of all sizes.
What it means
If The Standard is not currently active in your corner of the voluntary benefits market, it might be coming there soon.
Buyer and seller
The buyer: The Standard is a Portland, Oregon-based company that’s owned by Meiji Yasuda of Japan. It may be best known for its traditional group life and group life businesses but also has a large voluntary benefits business.
In March 2023, The Standard agreed to acquire a large life and disability benefits business from Elevance Health. The Elevance benefits arm was providing coverage for 4.8 million in 14 states.
The Standard closed on the Elevance deal in April.
The seller: Allstate has been coping with the same storms and wildfire catastrophes facing other property and casualty insurers.
It announced plans to sell the voluntary benefits business along with its group health business and an individual health insurance in late 2023, as it was briefing securities analysts on its strategy for rebuilding profitability.
Related: To protect workers from medical debt, help fill their coverage holes
The deal should generate a $600 million gain for Allstate and free up a total of $1.6 billion in capital, the company said.
Tom Wilson, Allstate’s chief executive officer, acknowledged during a conference call with securities analysts in May that selling the health and benefits would free up capital.
“But we also think that somebody else could do more with it than we can do with it,” Wilson said.
The company is continuing to talk to companies interested in buying the individual and group health businesses, Wilson said today in a comment on the deal with The Standard.