Prudential to acquire consumer financial wellness platform Assurance for $2.35B

Prudential Financial said Thursday it signed a definitive agreement to acquire a platform offering health and financial wellness solutions direct to consumers.
Newark-based Prudential will solidify its shared mission toward financial wellness with Assurance IQ Inc. through a $2.35 billion acquisition that will significantly expand the market for both companies. The deal unanimously approved by Prudential’s board of directors is expected to close in the beginning of the fourth quarter of 2019.
The deal also includes additional earnout of up to $1.15 billion cash and equity, dependent upon the Bellevue, Wash.-based Assurance hitting multi-year growth objectives. Prudential said it plans to use a combination of current cash, debt financing and equity to fund the deal.
Prudential expects the acquisition to generate savings in costs of $50 million to $100 million with the deal expected to be modestly accretive to earnings per share and return on equity beginning in 2020.
Together, the companies will create a new end-to-end engagement model to better serve 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 along with those of third-party providers.
Assurance will become a wholly-owned subsidiary of Prudential under the U.S. Businesses division. Co-founder Michael Rowell will continue as chief executive officer, reporting to Andrew Sullivan, who will take on the role of executive vice president and head of U.S. Businesses on Dec. 1. Michael Paulus, also a co-founder of Assurance, will remain in the role of president.
“Assurance was founded to protect and improve the personal and financial health of every individual,” Rowell said in a prepared statement. “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.”
Assurance matches buyers to personalized solutions for life, health and auto insurance, and Medicare. Customers are able to complete their purchase entirely online, or with a technology-assisted live agent. In a video about the company, Paulus described Assurance as a better way to help consumers get coverage, and a better way for agentsmatching customers with the person, or process, that best suits their specific needs and driving higher levels of engagement and conversion.
Prudential said Assurance’s on-demand and technology-driven platform allows for penetration of the mass market at a lower cost of customer acquisition while still affording high levels of service and products, democratizing access to financial wellness.
“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 in a prepared statement. “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.”
According to Paulus, the company has made recommendations to 19 million consumers over the past two-and-a-half years.
 

CREDIT: Jessica Perry