* Alleges Allstate made improper adjustment
* Dispute centers on lawsuit settled after closing
Sept 18 White Mountains Insurance Group Ltd
has filed a federal lawsuit against peer Allstate Corp
over the 2011 sale of the online auto insurer Esurance,
alleging that Allstate inappropriately lowered the final
The suit, dated Sept. 17 and made public on Tuesday, relates
to a purchase price adjustment clause that was a part of the May
2011 transaction. The roughly $1 billion sale to Allstate closed
in early October of last year.
Under the terms of the clause, Allstate was to make an
estimated payment at closing related to Esurance's tangible book
value, with an adjustment after the fact to reconcile the actual
book value to the estimate.
But according to White Mountains, Allstate missed by five
months a firm deadline to have a post-closing balance sheet
audited. In the meantime, Esurance spent $5.2 million to settle
White Mountains alleges that Allstate did not have the right
to lower the purchase price by that settlement amount because it
happened after the missed deadline for the audit.
"The Agreement contains a separate set of contractual
provisions for indemnification that are designed to allocate the
financial burden of such subsequent events," White Mountains
said in the lawsuit.
The insurer is asking the court to find that Allstate
breached its obligations regarding the timing of the audit and
by adjusting the purchase price to include the litigation.
An attorney for Allstate declined to comment on the suit,
citing a company policy on pending litigation.
The case is White Mountains Holdings (Luxembourg) S.a.r.l.
vs. The Allstate Corp, U.S. District Court, Southern District of
New York, No. 12-7015.