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The Allstate Corporation ALL recently closed the divestiture of its Employer Voluntary Benefits business to StanCorp Financial Group, Inc. (The Standard). Plans to sell this business were disclosed by the company in August 2024, and as targeted, the transaction was completed within the first half of 2025. The Standard paid $2 billion to acquire the business, a part of ALL’s Health and Benefits segment.
Moreover, the sale of the Employer Voluntary Benefits business resulted in a pre-tax book gain of approximately $625 million. The funds will strengthen Allstate’s disciplined approach to capital management, which encompasses the newly announced share buyback program of $1.5 billion, which will run till Sept. 30, 2026.
Along with the Employer Voluntary Benefits business, the Health and Benefits business comprises Group Health and Individual Health businesses. In January 2025, Allstate inked a definitive deal to divest its Group Health business to Nationwide, which is likely to be completed by 2025 and expected to fetch cash proceeds of $1.25 billion. The leftover Individual Health business will either be retained by Allstate or merged with another company.
The combined transaction proceeds fetched by Allstate out of Employer Voluntary Benefits and Group Health divestitures are expected to be $3.25 billion in 2025.
Divestitures: ALL’s Strategy to Boost Focus on Core Operations
Allstate follows a remarkable strategy of undertaking divestitures to extract capital out of businesses that fetch lower returns and growth, and invest more capital in its core areas of operations. Therefore, such divestiture announcements reflect ALL’s strategic focus to boost market share in the personal property-liability business and enhance its protection services offerings suite.
Insurance premiums earned from the Property-Liability business advanced 11.2% year over year in 2024 on the back of prudent rate hikes. Meanwhile, the Protection Services segment delivers a range of protection solutions and services, primarily by integrating Allstate-branded offerings into non-insurance purchases. Total revenues in the unit improved 16.7% year over year in 2024, driven mainly by strength in Allstate Protection Plans and Arity.
Allstate’s Price Performance & Zacks Rank
Shares of Allstate have gained 19.7% in the past year compared with the industry’s 24.5% growth. ALL currently carries a Zacks Rank #3 (Hold).
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks in the insurance space are Palomar Holdings, Inc. PLMR, Horace Mann Educators Corporation HMN and Jackson Financial Inc. JXN. While Palomar currently sports a Zacks Rank #1 (Strong Buy), Horace Mann and Jackson Financial carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.