Allstate Announces Plans to Purchase Esurance Insurance Co.

Allstate announced Wednesday that it is purchasing the companies Esurance and Answer Financial from White Mountains Insurance Group. Allstate reports that the deal should cost around $1 billion.

Sign in front of Allstate corporate headquarters

Photo Courtesy of Allstate

Esurance allows consumers to shop and buy insurance online and has had a growing presence on the Web since it first began in 2005. The company currently sells policies in 30 states.

Answer Financial helps drivers across the country shop for coverage by providing informational and quote-comparison services, but the company is not itself a writer of coverage. According to the company, it had placed more than 320,000 policies as of July 2010.

“Esurance will expand our ability to serve customers that are more self-directed but still prefer a branded product,” Allstate representatives said in a press release about the acquisition. “Answer Financial will strengthen our offering to individuals who want to be offered a choice between insurance carriers and are brand-neutral.”

In terms of private passenger auto coverage premiums, Allstate is about 17 times the size of White Mountains Insurance Group, which currently owns both Esurance and Answer Financial.

Last year, Allstate wrote nearly $17 billion in car policy premiums, amounting to about a 10 percent share of the U.S. market. During the same period, White Mountains wrote $986 million, about 0.6 percent of total auto premiums written last year. Those numbers are according to the National Association of Insurance Commissioners.

At the end of the trading day, Allstate stock had nudged upward by about one-tenth of 1 percent. White Mountains stock jumped about 15 percent Wednesday.

About John Pirro
John Pirro is a licensed fire and casualty insurance agent specializing in various aspects of the auto insurance industry. He worked in the auto body repair industry before taking a reporting position at Online Auto Insurance News.

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