Allstate has agreed to buy low-cost auto insurance provider SafeAuto for $300 million, expanding the insurance giant’s state-minimum auto coverage offerings.
The deal for privately owned SafeAuto, announced late Tuesday, includes $270 million in cash and about $30 million in other assets.
SafeAuto, one of the largest players in the so-called nonstandard auto insurance market, will be folded into Allstate subsidiary National General Holdings. Northbrook-based Allstate acquired National General, formerly known as GMAC Insurance, for $4 billion in early January.
Founded in 1993, Columbus, Ohio-based SafeAuto provides state-minimum auto insurance in 28 states, including Illinois. The category, which includes companies such as The General and Progressive, caters to drivers on a budget who don’t necessarily need to insure their own vehicles, but are required by law to carry some amount of liability protection.
Every state but New Hampshire requires drivers to carry a minimum amount of auto insurance, which varies by state. In Illinois, the minimum fine for driving without insurance is $500.
“We’ve got lots of capabilities and insights as to how to serve this consumer in a direct manner,” said Ron Davies, a former Allstate executive who has been president and CEO of SafeAuto since 2012. “It’s not easy. We’ve always had a very disciplined approach to it to be profitable and grow.”
The SafeAuto acquisition is expected to close near the end of the third quarter, pending regulatory approval.
In late January, Allstate agreed to sell its life insurance business to private equity firm Blackstone for $2.8 billion, shifting its focus to auto and homeowners insurance products. That deal is expected to close in the second half 2021 pending regulatory approval, providing Allstate an exit from a lower growth part of its insurance portfolio,
Founded in 1931 as part of Sears, Allstate remains one of the nation’s largest publicly held personal insurers.