– Prudential Financial acquires insurtech startup Assurance IQ for a total upfront consideration of $2.35 billion, plus an additional earnout of up to $1.15 billion in cash and equity.
– Assurance will become a wholly-owned subsidiary of Prudential under the U.S. Businesses division.
– Assurance will add a large and rapidly growing direct-to-consumer channel to Prudential’s financial wellness businesses, significantly expanding the total addressable market of both companies.
Prudential Financial, Inc. announced that it has signed a definitive agreement to acquire Seattle, WA-based Assurance IQ, Inc., “Assurance,” an insurtech direct-to-consumer platform that transforms the buying experience for individuals seeking personalized health and financial wellness solutions. Under terms of the deal, Prudential will pay 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 multi-year growth objectives.
Founded in 206, Assurance IQ usees a combination of advanced data science and human expertise to match buyers with customized solutions spanning life, health, Medicare and auto insurance, giving them options to purchase entirely online or with the help of a technology-assisted live agent. Assurance’s innovative model also matches consumers with the live agent or specific sales process that is best suited to their needs, resulting in better customer outcomes that drive higher levels of engagement and conversion.
Better Insurance for Everyone
This approach is underpinned by an ongoing shift in consumer preferences, whereby individuals increasingly begin their research for personalized financial services online and then seek consultation with human experts to complete their purchase.
By eliminating the inefficiencies of conventional models, Assurance’s technology-driven, on-demand service platform lowers the cost of customer acquisition, allowing deeper reach into the mass market while maintaining a high level of service and product selection. Its rapid-growth model offers compelling economic advantages with low fixed costs and low capital requirements that produce high margins and a high degree of scalability.
Why Acquire Assurance IQ?
Assurance’s breakthrough model adds an established direct-to-consumer channel to reach the underserved mass market to Prudential’s financial wellness businesses, significantly expanding the total addressable market of both companies. Assurance and Prudential will leverage their respective capabilities to create a new end-to-end engagement model: one that better serves customers who want to shop on their own terms, when, where and how they want. Prudential also plans to offer its own financial wellness solutions on the Assurance platform alongside those of third-party providers.
“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.”
The acquisition is expected to be modestly accretive to EPS and ROE starting in 2020. In addition to enhancing the growth of Prudential’s financial wellness businesses, the acquisition is expected to generate cost savings of $50 million to $100 million, in addition to the $500 million of expected margin expansion by 2022.
Assurance Becomes Subsidiary of Prudential
Under the terms of the agreement, Assurance will become a wholly-owned subsidiary of Prudential under the U.S. Businesses division. Assurance co-founders Michael Rowell and Michael Paulus will continue to focus on the growth of Assurance. Rowell will remain CEO of Assurance and report to Andrew Sullivan, who will assume the role of executive vice president and head of U.S. Businesses as of December 1. Paulus will remain president of Assurance.
“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. 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,” said Michael Rowell, co-founder, and CEO of Assurance.