The Allstate Corp. agreed to acquire SquareTrade, a consumer electronics and appliance protection plan provider that distributes through many of America’s major retailers. Allstate said it will snatch up the privately held company for approximately $1.4 billion from a group of shareholders, including Bain Capital Private Equity and Bain Capital Ventures, in a transaction expected to close in January 2017.

Thomas Wilson Allstate CEO
Thomas Wilson
Allstate CEO

SquareTrade’s plans protect mobile devices, laptops and tablets, and other consumer electronics and appliances from malfunctions, accidental damage and mishaps. It promises that its technology delivers “a zero hassle claims process.”

SquareTrade, which was founded in 1999, has been growing fast and currently has 25 million plans in force, according to the announcement. The company is headquartered in San Francisco and London. It opened an additional office in Orlando, Fla., in March.

“Allstate’s consumer-focused strategy of providing unique products will be further enhanced with the acquisition of SquareTrade,” said Tom Wilson, chairman and chief executive officer of the major personal lines insurer Allstate.

Wilson said SquareTrade has built “strong relationships with major retailers” including Amazon, Costco, Sam’s Club, Target, Staples, Office Depot and Toys “R” Us—which further expand Allstate’s customer reach.

He said SquareTrade has seen a fourfold increase in revenue over the last five years.

“Allstate acquiring SquareTrade is exactly the right next step for the company,” added Phil Loughlin, managing director of Bain Capital, which invested $238 million in SquareDeal in 2012.

Joining Allstate will enable SquareTrade to expand into new markets and products, according to Ahmed Khaishgi, co-founder and chief executive officer of SquareTrade. “With Allstate, we will gain a broad set of capabilities enabling us to further leverage our distribution, brand and team while retaining our entrepreneurial spirit,” Khaishgi said in the announcement.

SquareTrade claims that 57 percent of Americans report accidentally damaging electronic devices and spending $334 on average for repairs or replacements.

It offers protection plans for smartphones, laptops, tablets, televisions, home appliances, cameras and other devices. A SquareTrade protection plan for a new iPhone costs $89 for one year and $179 for three years, according to the website. It also sells family plans.

According to a sample policy on its website, one of SquareTrade’s underwriters is Starr Indemnity & Liability Co. WarrantyWeek, a publication for warranty managers, reported that SquareTrade also uses two CNA Financial units—CNA Warranty Services Inc. and Continental Casualty—as underwriters for its products.

Allstate is the nation’s largest publicly held personal lines insurer. Its auto, home and life policies cover 16 million households through its Allstate, Esurance, Encompass and Answer Financial brand names.

This is the latest turn for Allstate in its drive to serve the new economy.

In August, the insurer established a separate telematics unit to help it take advantage of the disruption in the transportation industry. The new unit, called Arity, will collect data on drivers and sell analytic products to third parties.

Allstate also became the first major insurer to offer personal property protection targeted to the needs of home-sharing hosts.

Last month, Allstate debuted a hi-tech business insurance quoting platform that lets small business owners buy a policy in about five minutes. Allstate’s site has ease-of-use, speed and transparency features that are touted by various InsurTech startups trying to attract small businesses.

Allstate said it will acquire SquareTrade using cash and debt, subject to market conditions, with no impact on Allstate’s existing share repurchase program.

*This story ran previously in our sister publication Insurance Journal.