Why Allstate Stock Raced 5 Higher Today
August 14, 2024 05:40 pm EDT | Written by Eric Volkman for The Motley Fool
ALL hit a major stock-market milestone on Wednesday.
What happened
Shares of veteran insurance company Allstate (NYSE: ALL) hit a major stock-market milestone on Wednesday. The company's shares surged by 5%, reaching their highest price since Feb. 24.
So what
Investors were particularly excited by a major divestment announced by Allstate that morning. The company said it has signed a definitive agreement to sell its Allstate Life Insurance Company and Allstate Life Insurance Company of New York to Wilton Re for $4 billion in cash. The deal is expected to close in the fourth quarter of 2024, subject to regulatory approvals and other customary closing conditions.
The sale is part of Allstate's ongoing efforts to simplify its operations and focus on its core property and casualty insurance business. The company has been divesting non-core assets in recent years, and the sale of Allstate Life is a significant step in that process.
Now what
The sale of Allstate Life will free up capital for Allstate to invest in its core business. The company said it plans to use the proceeds from the sale to repay debt, buy back shares, and invest in growth initiatives.
Allstate's stock has been on a tear in recent months, as investors have become more optimistic about the company's prospects. The stock is up more than 25% year-to-date, and it is now trading at its highest level in more than a year.
The sale of Allstate Life is a positive development for the company, and it should help to further improve Allstate's financial flexibility and growth prospects.
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