Nationwide announced on Thursday that it has entered into a definitive agreement to purchase The Allstate Corporation’s employer stop loss segment for $1.25 billion.

Stop loss insurance protects employers who self-fund their health insurance plans from excess losses.

Consistent with the tagline of its most recent advertising—”So Much More”—the company said the acquisition will diversify Nationwide’s portfolio, allowing the financial services company to meet more of the needs of small businesses.

“As Nationwide continues to focus on our mission to protect people, businesses and futures with extraordinary care, this acquisition is a strong fit,” said Nationwide Chief Executive Officer Kirt Walker, in a media statement. “We are extending our protection solutions to meet the needs of business owners today and into the future.”

At Allstate, CEO Tom Wilson noted that the deal with Nationwide follows the sale of if with Employer Voluntary Benefits business to StanCorp Financial Group, Inc., (The Standard) for $2.0 billion, announced last August, reaping total sale proceeds of $3.25 billion.

Both sales are in line with Allstate’s strategic decision to enable Allstate health and benefits businesses to realize their full growth potential by combining them with companies that have additional capabilities.

John Carter, president and chief operating officer of Nationwide Financial, said the deal represents a significant investment in the stop loss market and complements existing Nationwide offerings int the stop loss market. It adds “experienced talent with proven business results, protecting over 13,000 small businesses,” he said.

“This new business will lay the foundation for Nationwide to continue to add capabilities for significant growth in employer benefits,” Carter said.

Jess Merten, Allstate’s Chief Financial Officer, noted that Allstate acquired the stop loss business in 2021 as part of its the $4.0 billion acquisition of National General in 2020.

The sale to Nationwide is expected to generate a financial book gain of about $450 million, and increase deployable capital by $0.9 billion. It will also reduce adjusted net income return on equity by 75 basis points after closing, Merten said.

The deal is expected to close in the second half of 2025, subject to customary closing conditions.

Sources: Nationwide, Allstate