White Mts. sells Esurance unit for $1b

White Mountains Insurance Group has sold off its Esurance and Answer Financial subsidiary to Allstate Corp., for an estimated $1 billion in cash. The deal is expected to close in the fall, the companies announced Wednesday.The White Mountains conglomerate – officially headquartered in Bermuda but effectively run out of Hanover, N.H. – sold its biggest subsidiary in terms of profile, because it advertised directly to consumers. OneBeacon and White Mountain Re may have more premiums and revenue but primarily offer reinsurance, so they don’t have nearly as many customers. But even in gross financial terms, the Esurance and Answer Financial subsidiary was no midget. It had garnered $927 million in revenue in 2010 and posted a pre-tax income of $15.5 million.White Mountains acquired a majority interest in Esurance – a leading online provider of auto insurance — in 2000. Terms of that deal were not disclosed.White Mountain added Answer Financial Inc. to Esurance in January 2008, by acquiring a 42 percent stake in the company for $30 million. Answer is another online insurance company that offers comparable quotes for automobile and homeowners lines. Both companies are based in California.White Mountains will be selling the companies – held by its White Mountain Holdings subsidiary – for $700 million plus the tangible book value at closing. According to Allstate, that should add up to about $1 billion in cash.”We have happily invested significant capital in what we believed was a unique business. Allstate agrees and can now take it to a new level. This is a win-win transaction,” said White Mountains CEO Raymond BarretteWhite Mountain said that the cash should increase its adjusted book value by approximately $80 a share. As of March 31, White Mountains’ book value – its preferred measure of value — was of $447 a share.Wall Street apparently liked the deal. At closing, White Mountains’ stock traded at $395.18 a share — a $51.55, or 15 percent, increase over Tuesday’s close. — BOB SANDERS/NEW HAMPSHIRE BUSINESS REVIEW

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