Prudential Financial’s Acquisition Of Assurance IQ For $2.35 Billion: Details About The Deal

By Dan Anderson ● September 9, 2019
  • Prudential Financial has announced it is acquiring Assurance IQ for $2.35 billion. These are the details behind the deal.

Prudential Financial announced recently that it is buying Assurance IQ for $2.35 billion. Assurance IQ is a profitable and rapidly growing direct-to-consumer platform that is transforming the buying experience for individuals seeking personalized health and financial wellness solutions.

The terms of the acquisition include 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 IQ achieving multi-year growth objectives.

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With a combination of advanced data science and human expertise, Assurance IQ matches buyers with customized solutions spanning life, health, Medicare and auto insurance thus giving them options to purchase entirely online or with the help of a technology-assisted live agent.

Assurance IQ’s model is known for matching consumers with the live agent or specific sales process that is best suited to their needs thus resulting in better customer outcomes that drive higher levels of engagement and conversion. And 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.

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And Assurance IQ eliminates the inefficiencies of conventional models through its on-demand service platform — which lowers the cost of customer acquisition thus allowing deeper reach into the mass market while maintaining a high level of service and product selection. Plus 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.

“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 F. Lowrey, Jr. “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.”

Assurance IQ is going to add a large and rapidly growing direct-to-consumer channel to Prudential’s financial wellness businesses and significantly expand the total addressable market of both companies. Assurance IQ and Prudential will leverage their respective capabilities to create a new end-to-end engagement model — one that serves customers who want to shop on their own terms.

“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,” added Assurance IQ co-founder and CEO Michael Rowell.

And Prudential is also planning to offer its own financial wellness solutions on the Assurance platform alongside those of third-party providers.

As part of the agreement, Assurance IQ will become a wholly-owned subsidiary of Prudential under the U.S. Businesses division. And Assurance co-founders Michael Rowell and Michael Paulus will continue to focus on the growth of Assurance. Rowell is going to 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.

Along with 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 discussed at Prudential’s June Investor Day.

Prudential is planning 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.

Prudential’s Board of Directors also authorized a $500 million increase to its share repurchase authorization for calendar year 2019. As a result, the share repurchase authorization for the full year 2019 is $2.5 billion. As of June 30, 2019, Prudential had repurchased $1 billion of shares of its common stock under this authorization. And Prudential expects to fully utilize this increased share repurchase authorization by the end of 2019.

Prudential Financial has more than $1 trillion in assets under management as of June 30, 2019 and operates across the US, Asia, Europe, and Latin America.

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