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Insurer Allstate to buy National General for about US$4b

[WASHINGTON] US Insurer Allstate Corp said late on Tuesday it will buy National General Holdings Corp for about US$4 billion in cash, scaling up its auto insurance business at a time when the coronavirus has crushed traffic on roads and reduced claims.

National General's shareholders will receive US$32 per share in cash and closing dividends of US$2.50 per share for each share held. This would imply a total deal value of US$3.92 billion and a premium of about 69 per cent to National General's Tuesday close, Reuters calculations showed.

National General shares jumped 64 per cent on Wednesday, while Allstate fell 3 per cent.

New York-based National General lists automobile insurance as its chief business, and offers services in personal auto, recreational vehicle, motorcycle and commercial auto businesses.

Allstate, one of the largest US auto insurers, said in April that it would return more than US$600 million in premiums to customers as many Americans were driving about 40 per cent to 55 per cent less due to lockdown orders.

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Allstate said the deal is expected to close in early 2021 and will add to its adjusted earnings per share and return-on-equity beginning the first year.

The deal has been approved by National General's board, the US insurer said, adding that it included a breakup fee of US$132.5 million.

"It's an opportunity for us to make a real run at the independent agent channel," said Allstate Chief Executive Officer Tom Wilson in an interview.

Allstate sells products online and through exclusive agents, but the National General deal would make Allstate the fifth largest US player in the independent agent market, Mr Wilson said.

The deal comes as the coronavirus crisis caused asset stress among insurers in North America, with ratings agencies assessing that the adverse impact of the pandemic for insurers will take some time to manifest.


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