Strategic Analysis: Allstate Protection Plans
Pegs and holes...
Key Findings
- APP generated $2.0bn revenue in FY2024 (+21.2%) but represents just 3% of Allstate group revenue and 3.5% of group profit
- Nine months to Q3 2025 showed margin pressure: revenue grew 15.9% but adjusted net income increased only 8.3%. Q3 itself saw net margin fall 330bps sequentially to 5.8%.
- International revenues reached $472m (24% of total), comparable geographic diversification to Assurant (22%) and ahead of Asurion pre-D&G (<1%)
- At 13x EBITDA (sector benchmark), APP’s estimated $225m EBITDA implies enterprise value of ~$2.9bn; margin pressure may warrant a discount
- Post D&G acquisition, APP sits a distant third in a market dominated by Asurion and Assurant but likely ahead of Likewize.
Asurion’s intended $2.1bn acquisition of extended warranty leader, Domestic & General at 13x EBITDA, will significantly improve their competitive position, at least in Europe. I assume there was a process and I assume the other major global competitors, Assurant, Likewize and Allstate, on behalf of SquareTrade, got one round of the management deck presso at least. If not, last month’s announcement will have come as some surprise. Given the general consolidation narrative across the lifecycle and protection sectors, you’d be right in thinking about what might be next.
With low individual premiums and long (distribution) deal cycles, scale in extended warranty and device insurance is usually the best route to longevity, if not outright success. D&G’s revenue will consolidate Asurion’s position as the global leader with Assurant’s Global Lifestyle business unit not too far behind. These two specialists dwarf the rest of the market and the first question that comes to mind is whether Allstate’s sub-scale unit within the $64bn insurer can continue to attract enough internal capital allocation to successfully compete against the incumbents?
The Business
Allstate announced the acquisition of SquareTrade in 20161 paying $1.4bn for access to 25m customers in a market segment it wasn’t participating in, expanding their consumer protection offerings beyond the usual P&C into protection plans for consumer electronics and connected devices. But despite the deal bringing along important retail distribution relationships including Amazon, Costco, Sam’s Club, Target and Staples, the market didn’t respond particularly enthusiastically. The share price dropped 3.3% on the announcement perhaps due to the news that the deal would knock off approximately 5% from EPS in 2017 and would continue to be dilutive for a further three years.
In 2018 Allstate announced the bolt-on acquisition of Plum Choice for $30m broadening SquareTrade’s cloud and tech support offer in line with the Soluto and PocketGeek product lines from market leaders Asurion and Assurant. By 2020 SquareTrade formed the bulk of what Allstate refers to as Allstate Protection Plans (“APP”) although the SquareTrade brand persists. They followed the crowd again in 2024 with the acquisition of Kingfisher Global, the device trade-in specialist for an undisclosed amount.
The APP unit sits within the Protection Services reporting segment which also includes Allstate Dealer Services (vehicle warranties etc.); Allstate Roadside; Arity, a telematics business and; Allstate Identity Protection. In FY2024, The Protection Services unit contributed a total of $3,233m in revenue (5%) versus the Allstate Protection (confusing but the usual homeowners, auto, commercial and other) contribution of $58,343m (91%). The remaining 4% of revenue comes from the Allstate Health and Benefits unit. APP itself contributed $2.0bn which amounts to approximately 3% of group revenue.
Scale & Competitive Position
Analysts most recently view Allstate’s Protection Services as a growth lever and a diversified source of income with stable earnings2, and in portfolio terms they’re right. But that ignores the competitive reality, particularly within the device protection and warranty sector. The Asurion D&G announcements hinted at post acquisition revenues of approximately $9.7bn. Assurant’s 2024 Global Lifestyle revenues were $9.3bn3, with both firms classed as specialists. APP's $2bn revenue represents roughly 20% of either market leader's scale, and while the FY2024 21.2% annual growth is impressively solid, percentage growth from a smaller base doesn't close an absolute gap that widens each year. I estimate global protection revenues at Likewize, the other global specialist, to be around $1 to 1.5bn4 which besides emerging organisations like Bolttech, and regional or localised organisations like Wertgarantie, leaves SquareTrade, and Likewize firmly in someone’s sights.
Continue reading for:
Detailed FY2024 and Q3 2025 financial performance including the cost lines driving margin compression
International subsidiary analysis: Malta, UK and Australia revenues, profits and margin trends from local filings
Valuation context and strategic option analysis