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Allstate buys CNA lines
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June 9, 1999: 8:49 a.m. ET
$1.2B deal gives Allstate access to independent insurance agent network
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NEW YORK (CNNfn) - Allstate Corp. said Wednesday it acquired CNA Financial Corp.'s auto and homeowner insurance businesses in a deal valued at $1.2 billion, giving the Allstate access to a large network of independent insurance agents.
The move, Allstate said, will increase total annual premium revenue from the independent agent channel to approximately $3 billion, making the company the nation's third-largest provider of personal lines insurance through independent agents.
With 3,800 agents in 43 states, CNA's auto and homeowner lines currently have annual premium revenue of $1.7 billion.
Independent agents sell insurance from a variety of providers.
Under the deal, Allstate will make a $140 million cash payment to Chicago-based CNA (CNA) for the business. In addition, Northbrook, Ill.-based Allstate (ALL) will use about $950 million of its capital to support the new policies. Finally, the insurer will pay an undisclosed royalty to CNA for the use of its name for the next six years.
"This transaction is an important and complementary step in Allstate's goal of becoming the major force in the independent agent personal lines market." said Edward M. Liddy, Allstate's chairman, president and CEO. "While the Allstate agent remains the core strength of the Allstate brand, expanding our presence under different names in the independent agent channel bolsters our goal to become multi-channel and multi-brand."
The transaction, subject to regulatory approval, is expected to be completed no later than the fourth quarter of this year.
CNA shares Tuesday fell 1/8 to 42-13/16. Allstate stock gained 1-7/16 to 38. 
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Allstate
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