Blog Coverage Insurance Major Allstate Corp. Acquires Privately Held SquareTrade

Upcoming AWS Coverage on Sun Life Financial Post-Earnings Results

LONDON, UK / ACCESSWIRE / November 30, 2016 / Active Wall St. blog coverage looks at the headline from The Allstate Corp. (NYSE: ALL) as the company announced on November 28, 2016, that it will acquire privately held SquareTrade, which sells warranties for electronic products. The deal is valued at $1.4 billion and is expected to close in January 2017, subject to regulatory approvals and customary closing conditions. Register with us now for your free membership and blog access at: http://www.activewallst.com/register/.

One of Allstate’s competitors within the Property & Casualty Insurance space, Sun Life Financial Inc. (NYSE: SLF), reported on November 09, 2016, its results for the third quarter ended September 30, 2016. AWS will be initiating a research report on Sun Life Financial in the coming days.

Today, AWS is promoting its blog coverage on ALL; touching on SLF. Get all of our free blog coverage and more by clicking on the links below:

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The deal

Allstate acquired SquareTrade, from a group of shareholders that included Bain Capital Private Equity and Bain Capital Ventures. Bain acquired an undisclosed stake in the company in 2012 in exchange for a $238 million equity investment. Allstate plans to use its cash reserves and fresh debt to finance the acquisition. Allstate has assured its investors that the debt for financing the deal will not in any way affect its existing plans for share buy backs.

However, the deal will be dilutive to Allstate’s earnings per share for three years.

Commenting on the acquisition, Tom Wilson, Chairman and CEO of Allstate said:

“This acquisition expands Allstate’s customer relationships with 25 million protection plans for consumer electronics and connected devices. SquareTrade’s exceptional customer service, innovative product design, analytics and supply-chain logistics have led to a four-fold increase in revenue over the last five years and are consistent with Allstate’s history of product innovation.”

Ahmed Khaishgi, Co-founder and CEO of SquareTrade added:

“With Allstate, we will gain a broad set of capabilities enabling us to further leverage our distribution, brand and team, while retaining our entrepreneurial spirit.”

San Francisco-based SquareTrade is a consumer electronics and appliance protection plan provider that distributes through many of America’s major retailers like Amazon, Costco, Sam’s Club, Target, Staples, Office Depot, and Toys “R” Us. It offers plans that protect mobile devices, laptops and tablets, and other consumer electronics and appliances from malfunctions, accidental damage and mishaps. It was founded in 1999 by Ahmed Khaishgi and Steve Abernethy.

Benefits for Allstate

Allstate will be able to expand its reach to include SquareTrade’s existing 25 million customers. Allstate will also benefit from SquareTrade’s distribution network that includes major retailers. Allstate CEO, Tom Wilson, stated that SquareTrade has grown four-fold in the last five years and would add to Allstate’s revenue stream.

This is Allstate’s second largest acquisition since 2011. In May 2011, Allstate Corp. has acquired two online auto insurance sellers; Esurance and the associated site, Answer Financial for $1 billion. The current acquisition indicates that the company could expand its reach and product portfolio with more M&A activities in the near future.

Allstate has been diversifying its business and had launched a Tech Start-up “Arity” on November 10, 2016. Arity has used billions of miles of sensor data from smartphones and vehicles to help companies evaluate the risk of a driver. Arity uses an algorithm can study a person’s driving behaviour and come up with a better price coverage plan on insurance for individual customers. The algorithm also tracks the car’s performance and helps predict when a vehicle will break down before it actually malfunctions. Allstate feels that this technology would be useful not only for drivers but can be used in driverless vehicles too. This service is already being used by Allstate, Esurance, and Answer Financial, and it will be commercially available to other customers in 2017.

In October 2016, Allstate launched an online commercial insurance platform that would enable small business owners to buy a policy in about five minutes.

Financial Updates

Allstate had declared a dividend of $0.33 on its common stock on November 18, 2016, which was payable on January 03, 2016.

Allstate reported its financial results for the third quarter of 2016 on November 02, 2016. The Company’s total revenue for the quarter was $9.2 billion and operating income was $474 million.

Stock Performance

At the closing bell, on Tuesday, November 29, 2016, Allstate’s stock fell 3.35%, ending the trading session at $69.63. A total volume of 6.67 million shares were traded at the end of the day, which was higher than the 3-month average volume of 2.12 million shares. In the last month and previous three months, shares of the company have advanced 3.58% and 1.13%, respectively. Moreover, the stock gained 14.35% since the start of the year. The company’s shares are trading at a PE ratio of 18.86 and have a dividend yield of 1.90%.

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