US specialty insurance group Assurant has agreed to sell its prearranged funeral insurance and final expense business, Global Preneed, to CUNA Mutual Group, a broad financial services provider, for approximately $1.3 billion in cash.
The Global Preneed sale is expected to generate $1.2 billion of net proceeds at closing, which is expected to occur by the end of the third quarter of 2021.
Assurant intends to return 75% of the net proceeds to shareholders through share repurchases within one year of closing, in addition to returning $470 million via share repurchases and common stock dividends under its existing three-year plan.
The company intends to invest the remaining transaction proceeds primarily in its connected world businesses, comprising Connected Living, Global Automotive and Multifamily Housing, to support long-term profitable growth and further strengthen its competitive position.
Following the transaction, Global Preneed will be managed as an independent business with existing employees remaining at their current locations
“This transaction represents a successful outcome for all of our stakeholders, including our Global Preneed employees, clients, partners, policyholders and shareholders,” said Assurant President and CEO Alan Colberg.
“The sale of Global Preneed is another important milestone in our transformation of Assurant, sharpening our focus on our market-leading lifestyle and housing businesses, and better positioning our company to capitalize on future growth opportunities emerging around the connected consumer.”
Colberg continued: “Building on our track record of significant capital return, we intend to deploy the majority of net proceeds for share repurchases while at the same time accelerating strategic investments to support continued growth in our connected world and specialty P&C businesses.”
“We believe the strength of our core business, robust cash flows and our disciplined approach to capital management will continue to create significant long-term shareholder value.”
Robert N. Trunzo, President and CEO, CUNA Mutual Group, also commented: “This acquisition allows us to expand the ways we reach middle-market consumers, helping more people make financial decisions that work for them.”
“The Global Preneed business is a true strategic fit for us, further diversifying our product offerings complemented by a strong financial standing with over $7 billion in total assets. We are excited to welcome Global Preneed’s talented employees to our team and to serve even more consumers together.”
Goldman Sachs & Co. LLC served as financial advisor and Debevoise & Plimpton LLP as legal advisor to Assurant. Perella Weinberg Partners served as financial advisor and Foley & Lardner LLP as legal advisor to CUNA Mutual Group.