Prudential Financial to acquire online startup Assurance for $2.35B

Newark-based Prudential Financial Inc. has agreed to pay $2.35 billion for online insurance startup Assurance IQ Inc., it announced Thursday.

Assurance, based in Bellevue, Washington, is a direct-to-consumer platform that matches buyers with customized personalized health and financial wellness solutions.

Terms of the deal include Prudential’s $2.35 billion upfront payment, plus an additional earnout of up to $1.15 billion in cash and equity, contingent upon Assurance achieving certain multiyear growth objectives.

“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,” Charles Lowrey, chairman and CEO, Prudential, said. “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 will become a wholly-owned subsidiary of Prudential’s U.S. Businesses division and will add a direct-to-consumer channel to Prudential’s financial wellness business.

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

Assurance co-founders Michael Rowell and Michael Paulus will remain on board and focus on the growth of Assurance. Rowell will continue as CEO and report to Andrew Sullivan, who will assume the role of executive vice president and head of U.S. Businesses, effective Dec. 1. Paulus will continue as president of Assurance.

The deal is expected to add to Prudential’s earnings per share and return on equity beginning in 2020 and generate cost savings of $50 million to $100 million.

Prudential plans to use a combination of cash, debt and equity to finance the deal, which is expected to close in the fourth quarter of 2019.