Allstate Buys Esurance for $1 Billion Dollars

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In a nutshell...
  • Allstate and Esurance are not the same company
  • With the purchase of Esurance, Allstate added another 2.2 million policyholders
  • Esurance provides insurance solely online while Allstate combines an army of licensed agents across the nation

The auto insurance industry has been one of the most successful examples of how the internet has changed consumer’s behavior to shop for financial products.

On May 18th, 2011 Allstate announced they would pay almost $1 billion for Esurance with $700 million cash as part of the deal.

Allstate is well known for its auto insurance products servicing all 50 states and holding a market share of almost 11 percent but with the purchase of Esurance they add another 2.2 million policyholders to the Allstate family.

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How are Allstate and Esurance different?

In many ways, Allstate and Esurance are different companies.

Esurance provides insurance solely online while Allstate combines an army of licensed agents across the nation with online account handling, servicing, and sales.

However, as it is 2011 and more and more consumers search for financial products online this seems to be a natural fit.

Not only will Allstate gain from the stellar reputation and customer base Esurance has built on for the last 12 years but they also manage to gain a large share of the car insurance lead generation marketplace online.

Last year Quinstreet spent almost $150 million buying up established websites such as CarInsurance.com and these acquisitions did not come with 2.2 million policyholders so even at a $1 billion purchase price this is more than fair.

Allstate has secured another piece of the online market that State Farm, Nationwide or any other car insurance company will never get at this price.

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Will there be more acquisitions in the future?

We predict that 2011 and 2012 will unfold many more insurance acquisitions as both lead generation and the market share of consumers who prefer to deal online has reached a point worthy of recognition by Wall Street and Allstate has just started the horserace.

We assume Esurance has brand value far too valuable to discard but it will be interesting to see over time whether or not the focus is to build the brand or simply maneuver policyholders to the Allstate name.

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