A recent announcement that insurance giant Allstate is buying the Esurance and Answer Financial brands from the smaller, less well-known, White Mountains Insurance Group raises several troubling questions.
According to an Associated Press article, Allstate expects to pay about $1 billion for the two brands. The acquisition will allow Allstate to broaden the offerings available under its corporate umbrella. AP cites an Allstate press release claiming “the deal will help it tap consumers who prefer certain brands along with consumers who want choices among insurance carriers.”
Leaving aside the dubious claim that one company’s marketing of its products under different names actually constitutes “choice” from a consumer’s perspective, customers might also want to consider what a company really has in mind when it makes acquisitions like this at below-market-value. Notably, White Mountain told the AP that the sale “will increase its book value by $80 per share.” Yet in trading after the deal was announced White Mountain’s stock rose by only $51 (about 15%) – indicating that the market thinks White Mountain should have gotten more money from Allstate for the deal to raise the company’s valuation as much as the White Mountain claims.
So Allstate seems to have obtained Esurance and Answer Financial at a cut-rate price. Combine this with Allstate’s PR statement announcing, according to AP, “its first-quarter profit more than quadrupled as it paid out less money for damage claims” and one has to wonder who, exactly, Allstate is keeping in “good hands” – its investors or the customers who count on it for insurance coverage.
From an Oregon personal injury attorney’s perspective, this is a near textbook example of the mindset consumers often find themselves struggling against when seeking a just settlement following a Portland auto accident, a severe injury to the brain or spinal cord or an industrial accident. Fighting for your rights against a company more concerned with its bottom-line than with fair play or justice is never easy. Severe injuries here in Oregon should not lead to a series of battles with an insurance company over the benefits you deserve, but when they do it is important to have an experienced Portland personal injury lawyer in your corner.
Associated Press: Allstate buys Esurance, Answer Financial for $1B