The Allstate Corp. is expanding into the identity protection space with a planned $525 million acquisition of InfoArmor Inc.

Allstate will pay cash for the privately held Scottsdale, Ariz. company and expects to close the acquisition later in 2018.

Tom Wilson, Allstate’s chairman, president and CEO, said in prepared remarks that the deal gives Allstate a vital new service as insurance focuses more on cyber risk reduction and mitigating identity theft in particular.

“With the acquisition of InfoArmor, Allstate will protect more customers from this risk and help rebuild their lives after they have been hacked,” said Wilson. “InfoArmor is the go-to identity protection company in the employee benefits market, providing an opportunity to expand the Allstate Benefits business now serving over four million employees.”

John Schreiber, CEO of InfoArmor, also in prepared remarks, added that his company’s relationships “with top benefit brokers and over 1,000 companies will be enhanced by Allstate’s capabilities and access to the Allstate Benefits distribution network.”

InfoArmor provides protection benefits mostly through company benefits channels, reaching one million employees and their families by way of 1,400 clients. Allstate, in its deal announcement presentation, also asserted that the company reaches more than 100 Fortune 500 companies. InfoArmor has competition, including identity protection companies LifeLock, IDShield, ID Watchdog, Credit Karma and credit bureaus.

Meanwhile, Keefe, Bruyette & Woods analyst Meyer Shields issued an early reaction to the acquisition agreement that was neutral to positive.

“We view the deal as consistent with Allstate’s focus on diversifying its product portfolio,” Shields wrote in the Aug. 27 note.

Other parts of Allstate’s broader strategy left Shields apparently puzzled, however. The note stated that “we remain a little puzzled by the maintenance of Allstate’s subscale independent agency personal lines business.”

Source: Allstate