Allstate buying online insurer for $1B

Allstate Corp., which has been trying to grow its insurance sales online, would see its business in that distribution channel more than double when it completes its newly announced acquisitions of Esurance and Answer Financial.

In a conference call with analysts Wednesday morning to announce a planned $1-billion purchase of Esurance and Answer Financial, Allstate chief executive Tom Wilson said his Northbrook, Ill.-based company's direct business has been growing, but "we haven't captured share from other people." "I'd like us to compete aggressively in that segment of the market," he said.

Allstate said the deal will help it tap consumers who prefer certain brands along with consumers who want choices among insurance carriers.

Allstate's direct business in 2010 was up 19.8 percent, to $745 million. Esurance, which sells insurance online, wrote $836 million in premiums in 2010.

"They wanted to do it because they see their core business stable to flat," said Paul Newsome, an analyst with Sandler O'Neill & Partners. "The direct channel over time is going to be the industry's growth engine."

Direct, however, is still a small piece of Allstate's overall business. Its revenues from property-liability insurance premiums in 2010 were nearly $26 billion.

Allstate, the nation's No. 2 home and auto insurer, is buying the businesses from White Mountains Insurance Group, based in Bermuda.

Answer Financial allows clients to compare quotes and purchase insurance through its Web site and storefronts.

Allstate shares closed up 3 cents to $32.45. White Mountains Insurance Group soared 15 percent, or $51.55, to $395.18.