US insurance and investment firm Prudential Financial has agreed to acquire Assurance IQ, an insurtech firm that matches buyers with customised insurance solutions.
The transaction includes a total upfront consideration of $2.35 billion, plus an additional earnout of up to $1.15 billion in cash and equity, contingent upon Assurance achieving certain growth objectives.
Using advanced data science, Assurance helps buyers to find policies for life, health, Medicare and auto insurance online.
The company claims that its tech-driven service platform lowers the cost of customer acquisition, allowing better reach into the mass market and significant economic advantages, with low fixed costs and capital requirements.
“Assurance accelerates the strategy and growth potential of Prudential’s financial wellness businesses, bringing us closer to more people across the entire socio-economic spectrum to better serve the full picture of their needs,” said Prudential Chairman and CEO Charles Lowrey.
“We look forward to working with Mike Rowell and his entire team to grow the Assurance business in the U.S., and, over time, to extend its unique approach to customers around the world.”
Michael Rowell, co-founder and CEO of Assurance, also commented: “Assurance was founded to protect and improve the personal and financial health of every individual.”
“Prudential’s shared vision, coupled with the strength of its offering and capabilities, make it the ideal partner with which to begin our next chapter,” Rowell continued.
“We are excited to create an ecosystem that reaches more people and new markets with a more expansive suite of products to drive our combined growth.”
Under the terms of the acquisition, Assurance will become a wholly owned subsidiary of Prudential under the U.S Business division, with co-founders Rowell and Michael Paulus continuing so serve as CEO and President, respectively.
They will both report to Andrew Sullivan, who will assume the role of executive vice president and head of U.S. Businesses as of December 1.
In addition to enhancing the growth of Prudential’s financial wellness businesses, which will be offered alongside third-party providers on the platform, the deal is expected to generate cost savings of $50 million to $100 million.
Prudential plans to use a combination of its current cash, debt financing and equity to fund the acquisition, which is expected to close early in the fourth quarter of 2019.