For Wintrust de Rosemont, which will add the $ 570 million in loans to its $ 48 billion in assets, the deal is akin to the acquisition of a sizeable community bank. He will take on a team of loan specialists at Allstate to continue managing the portfolio.
There are about 1,800 loans in total, at an average of about $ 317,000 each, according to a Nov. 1 release. Allstate agents number around 10,000, but there are actually fewer than that, as some have more than one agency.
Wintrust will also be Allstate’s national preferred loan provider to agents under the agreement. The terms were not disclosed.
The deal comes at a time of intense turmoil among the ranks of Allstate’s agents. Reductions in commissions paid to agents when their clients renew their policies will lead to lower revenues from 2023.
The antagonism is serious enough that the National Association of Professional Agents of Allstate, which has more than 1,000 agents among its members, has this year sued Allstate in Cook County Circuit Court, alleging breach of contract. .
Allstate has justified the cuts to agent salaries as part of a series of necessary cost cuts aimed at making its auto insurance more competitive against rivals like Progressive and Geico. The company has increased payments for new customers to encourage agents to focus more on sales than service.
What looks like a strong loan now may be more fragile in the future if the business continues to pinch agent pay.
Wintrust chairman Tim Crane says he’s not worried.
“We have no assurance regarding any agent’s compensation or any influence over the activity of Allstate’s agents,” he authorized in an email. But, “We believe these are high performing loans, prudently underwritten in accordance with Wintrust standards.”
Wintrust already lends to insurance agencies across the country, including some Allstate agencies. It also has one of the country’s leading lenders to businesses looking to finance their insurance premiums.
“This portfolio and the related ongoing opportunity fits perfectly with our existing insurance finance business,” Wintrust CEO Edward Wehmer said in the statement. “It’s also an example of two large Chicago companies coming together to meet the needs of their stakeholders. “
Crane adds that early agent feedback is positive, especially when it comes to access to Small Business Administration and home loans in addition to the types of loans Allstate makes.