U.S. insurer Nationwide said it would acquire property and casualty insurer Allstate Corp.'s employer stop-loss segment in a $1.25 billion deal, as it seeks to expand its stop-loss insurance offering.

The transaction is expected to close in the second half of 2025, Nationwide said in a statement Thursday.

Stop-loss insurance serves as a financial safeguard for companies against large medical expenses incurred by an employee in any given year.

Ohio-based Nationwide is a diversified insurance and financial services firm that provides a range of products, including auto, business, farm and life insurance, among others.

"Acquiring Allstate's employer stop-loss segment will broaden Nationwide Financial's portfolio, meeting the needs of small businesses, allowing us to serve more customers," said Nationwide President John Carter.

Allstate Corporation is an insurance firm that offers protection for autos, homes, electronic devices and identity theft.

The sale is expected to help Allstate with a financial book gain of about $450 million and increase deployable capital by $900 million after the deal's completion, which is expected in 2025, the firm said.

J.P. Morgan and Ardea Partners are acting as financial advisers on the deal.