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National General to be acquired by Allstate for $4 billion

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The post National General to be acquired by Allstate for $4 billion appeared first on Live Insurance News.

The insurance giant is making the purchase to expand its auto reach and independent agent business.

Insurance giant Allstate Corp announced this week that it will purchase National General Holdings Corp for about $4 billion. This will be a cash purchase, boosting the insurer’s auto insurance business just as the pandemic crisis has made that sector highly profitable.

Auto insurance claims are way down due to the smaller amount of traffic on the roads.

National General shareholders will be compensated with $32 per share in cash. They will also receive $2.50 losing dividends per held share. That price would assign a $3.92 billion value to the acquisition. This represents a 69 percent premium to the company’s close on Tuesday, according to a Reuters report.

The acquired insurer’s chief business is listed as auto insurance. It also offers commercial auto, personal auto, recreational vehicle (RV), and motorcycle business services.

The National General acquisition will help to strengthen Allstate’s auto insurance business.

Allstate is already among the largest auto insurers in the country. In April, it responded to the reduction in claims due to the COVID-19 pandemic with an announcement of the return of $600 million in premiums to its customers. At that time, many Americans were driving about half (40 percent to 55 percent) as much as they had been prior to the stay-at-home orders.

According to Allstate, it expects the deal to finalize at some point early in 2021. The insurer will add it to its adjusted earnings per share and return-on-equity starting the first year.

The acquisition has already received the National General board’s approval, and the acquisition agreement includes a $132.5 million breakup fee.

“Acquiring National General accelerates Allstate’s strategy to increase market share in personal property-liability and significantly expands our independent agent distribution,” said Tom Wilson, Allstate CEO.

This deal has arrived in an environment in which many North American insurance companies have faced significant asset strain. Ratings agencies have assessed that the pandemic’s adverse impact on the insurance industry will need more time to fully develop. Allstate’s financial adviser in this deal was Ardea Partners. National General was advised by J.P. Morgan Securities LLC.

The post National General to be acquired by Allstate for $4 billion appeared first on Live Insurance News.

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By: Logan B.
Title: National General to be acquired by Allstate for $4 billion
Sourced From: www.liveinsurancenews.com/national-general-to-be-acquired-by-allstate-for-4-billion/8549724/
Published Date: Thu, 09 Jul 2020 09:00:08 +0000

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Retirement Planning

Wildfire prone property insurance bill in California due for hearing

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The post Wildfire prone property insurance bill in California due for hearing appeared first on Live Insurance News.

The bill is expected to be heard in upcoming weeks as opposing sites prepare for major battle.

A new California bill, the outcomes of which will have a lot to say about coverage for wildfire prone property in the state, will soon be headed for hearing. The hearing is expected to be a heated one as strong opposing opinions have the opportunity to be voiced.

Opponents of this bill are calling it a direct attack on consumer protections in insurance.

That said, proponents of the bill claim it is the best method for making coverage available to wildfire prone property in California. The bill in question is Assembly Bill 2167. It was written by Assemblyperson Tom Daly (D-Anaheim). If it passes,it will create the Insurance Market Action Plan (IMAP) program. The IMAP program is meant to protect residential properties.

So far, AB 2167 has progressed quickly, when taking into consideration that a chunk of the legislature has been considerably restricted by pandemic crisis precautions. It was first presented in early June and backers have been saying that it was brought forward in good timing and that it has all the momentum it needs to be passed.

That said, AB 2167 has not been without opposition. In fact, it has faced considerable opposition, having been called an attack on Proposition 103, insurance consumer protection law. California Insurance Commissioner Ricardo Lara lobbed that argument at it, calling it an “insurance industry wish list, with nothing to help consumers,” and Consumer Watchdog, whose founder, Harvey Rosenfeld, was the original author of Proposition 103.

The insurance industry strongly supports the bill, saying it will help wildfire prone property coverage.

Insurance organizations such as the American Property Casualty Insurance Association and the Personal Insurance Federation both support AB 2167. The bill also has the support of the California Association of Counties (CSAC), as well as Fire Safe Councils of California, and the CalFIRE union.

The Consumer Federation of America, another watchdog organization, has predicted that if AB 2167 passes, it will cause 40 percent increases in insurance rates. On the other hand, insurance groups claim that the bill offers owners of wildfire prone property a greater opportunity for choice and competition among insurance companies based on coverage and premiums while avoiding the limitations and high costs associated with FAIR Plan coverage.

The post Wildfire prone property insurance bill in California due for hearing appeared first on Live Insurance News.

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By: Marc
Title: Wildfire prone property insurance bill in California due for hearing
Sourced From: www.liveinsurancenews.com/wildfire-prone-property-insurance-bill-in-california-due-for-hearing/8549884/
Published Date: Fri, 14 Aug 2020 09:00:14 +0000

Did you miss our previous article…
https://getinvestmentadvise.com/retirement-planning/is-this-the-last-hurrah-for-bonds/

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Retirement Planning

Is this the last hurrah for bonds?

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Recently, I have written quite a bit about the long-term return expectations for investing in bonds. See here, here, here and here.

Spoiler alert: I don’t think it’s good.

But long-term bonds this year have been quite an amazing story as the COVID pandemic has caused the Fed to take historically monumental actions. As a result, we’ve watched long-term Treasuries tear the roof off the market. For instance, a 20+ Year Treasury Bond ETF (name withheld for compliance purposes) is up more than 31% YTD as of July 31st.

That is insane!

But there is a good reason for this increase shown below.

The red circle shows a decrease in the 30-year Treasury rate of almost 40% over a span of six months. That’s practically unprecedented with only two periods (2008 and 1981-1982) having similar declines over such short periods.

But this begs the question: Is this the last hurrah for bonds as a driver of any meaningful return? Below is the 30-Year Treasury rate over the last 40+ years.

For what it’s worth, people have been forecasting the end of the bond bull market since 2012 (maybe even earlier) and yet it has continued despite those predictions. But at some point, the bond party will come to an end.

The Fed has been clear that they are going to keep rates stable until at least 2022 which means this may not change for a little while longer. Or in the near term, I could even see the high returns continuing if we experience pandemic economic shutdown round two.

But, I can’t see a world where this is the case for much longer than that – most importantly over the span of a 30-year retirement.

The official end of the bond bull market depends on a recovery from the pandemic economy as well as a few other factors causing rates to rise. But when they do, it seems likely to me that this may be the last great hurrah for bonds for quite some time.

The question is when to get off that train and that undoubtedly requires a personal answer.

Stay the Course,
Ashby


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The post Is this the last hurrah for bonds? appeared first on Retirement Field Guide.

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By: Ashby Daniels, CFP®
Title: Is this the last hurrah for bonds?
Sourced From: retirementfieldguide.com/is-this-the-last-hurrah-for-bonds/?utm_source=rss&utm_medium=rss&utm_campaign=is-this-the-last-hurrah-for-bonds
Published Date: Wed, 12 Aug 2020 13:47:16 +0000

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Allstate Q2 report shows a strong 49 percent increase in profit

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The post Allstate Q2 report shows a strong 49 percent increase in profit appeared first on Live Insurance News.

Despite the impact of the pandemic, the insurance giant reported a $1.2 billion net income.

The Allstate Q2 earnings report has revealed that the company brought in a net income of $1.2 billion and saw a 49 percent increase in profits over the second quarter of 2019.

The insurer saw a $904 million underwriting income, which is a 146 percent year over year rise.

The 146 percent increase in the Allstate Q2 underwriting income brought the company’s income from last year’s second quarter at $537 million to $904 million this year. The insurer’s total revenues rose by 0.5 percent to $11.2 billion, particularly driven by its property-liability premiums, which are making up for the investment income declines it has suffered.

“Allstate’s strong results reflect a resilient strategy and rapid adaptation to the coronavirus pandemic,” said Allstate Corp chairperson, president and CEO Tom Wilson.

The insurer also benefited form a reduction in auto losses due to the pandemic. Fewer cars on the road has reduced the number of claims from crashes. At the same time, the company experienced a rise in premiums earned, which was somewhat offset by the shelter-in-place paybacks made by the company to reflect a reduction in miles driven. Catastrophe losses further offset the auto premiums earnings.

The Allstate Q2 achievements were made even with the 15 percent auto premiums payback.

The insurer started its auto payback at the start of the pandemic lockdowns and extended it through June 30. It has faced criticism by some as many of the major auto insurers in the US kept up their various forms of discounts, rebates and reductions, and some are continuing to do so, while Allstate has brought its assistance to an end amid substantial profits.

Allstate’s insurance payback came to about 8.3 percent of its premiums across all business lines. The company saw an additional 0.5 percent of premiums affected by bad debt expense as a result of the insurer’s special payment plan for billing flexibility during the pandemic. That plan started in the first quarter and has come with a $948 million cost overall. Of that total, $738 million occurred during the second quarter.

Following the Allstate Q2 statement, the insurer said that it did not intend to provide any further customer paybacks. It said it intended to allow “losses to flow into our rating as we always do, and to be more precise on a state-by-state and market-by-market basis versus a broad shelter-in-place payback.”

The post Allstate Q2 report shows a strong 49 percent increase in profit appeared first on Live Insurance News.

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By: Logan B.
Title: Allstate Q2 report shows a strong 49 percent increase in profit
Sourced From: www.liveinsurancenews.com/allstate-q2-report-shows-a-strong-49-percent-increase-in-profit/8549881/
Published Date: Thu, 13 Aug 2020 09:00:47 +0000

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