- Adds established direct-to-consumer channel to reach
underserved mass market
- Fast-growing, highly scalable business model offers
significant upside potential
- Acquisition offers attractive financial benefits; accretive
to EPS and ROE in year 1; enhances long-term growth
profile
Prudential Financial, Inc. (NYSE: PRU) today announced that it
has signed a definitive agreement to acquire Assurance IQ, Inc.,
“Assurance,” a profitable, fast-growing direct-to-consumer platform
that transforms the buying experience for individuals seeking
personalized health and financial wellness solutions.
This press release features multimedia. View
the full release here:
https://www.businesswire.com/news/home/20190905005449/en/
Michael Rowell, Founder and Chief
Executive Officer, Assurance (Photo: Business Wire)
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 achieving multi-year
growth objectives.
Using a combination of advanced data science and human
expertise, Assurance matches 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.
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.
“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, said,
“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.”
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. 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.
Additional details of the transaction include:
- 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.
- 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 discussed at Prudential’s June Investor Day.
- 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. Prudential’s Board of
Directors unanimously approved the transaction.
- Prudential’s Board of Directors has 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 $1.0 billion of shares of its common stock under this
authorization. Prudential expects to fully utilize this increased
share repurchase authorization by the end of 2019.
CONFERENCE CALL
Members of senior management of Prudential and Assurance will
host a conference call on Thursday, September 5, 2019, at 8:00 a.m.
ET, to discuss the transaction. The conference call will be
broadcast live over Prudential’s Investor Relations website at
investor.prudential.com. Please log on 15 minutes early in the
event necessary software needs to be downloaded.
The call will remain on the Investor Relations website for
replay through September 19. Institutional investors, analysts, and
other members of the professional financial community are invited
to listen to the call and participate in the Q&A by dialing one
of the following numbers: (800) 230-1766 (domestic callers) or
(612) 332-0932 (international callers). All others may join the
conference call in listen-only mode by dialing one of the above
numbers.
To listen to a replay of the conference call starting at 10:30
a.m. ET on September 5 through September 12, 2019, dial (800)
475-6701 (domestic callers) or (320) 365-3844 (international
callers). The access code for the replay is 471350.
About Prudential Financial, Inc.
Prudential Financial, Inc. (NYSE: PRU), a financial wellness
leader and premier active global investment manager with more than
$1 trillion in assets under management as of June 30, 2019, has
operations in the United States, Asia, Europe, and Latin America.
Prudential’s diverse and talented employees help to make lives
better by creating financial opportunity for more people.
Prudential’s iconic Rock symbol has stood for strength, stability,
expertise and innovation for more than a century. For more
information, please visit news.prudential.com.
About Assurance IQ, Inc.
Launched in 2016 in Bellevue, Wash., Assurance was founded to
improve the personal and financial health of every consumer and
make their lives better. The company uses advanced data analytics
to enable an extensive network of live agents to offer customized
solutions for more people across a broader socio-economic spectrum.
For more information, please visit assurance.com.
Forward-Looking Statements
Certain of the statements included in this release, including
those regarding the expected closing of the transaction, profit
targets and expected earnings, expense and margin benefits
resulting from the transaction, constitute forward-looking
statements within the meaning of the U.S. Private Securities
Litigation Reform Act of 1995. Words such as “expects,” “believes,”
“anticipates,” “includes,” “plans,” “assumes,” “estimates,”
“projects,” “intends,” “should,” “will,” “shall” or variations of
such words are generally part of forward-looking statements.
Forward-looking statements are made based on management’s current
expectations and beliefs concerning future developments and their
potential effects upon Prudential Financial, Inc. and its
subsidiaries. There can be no assurance that future developments
affecting Prudential Financial, Inc. and its subsidiaries will be
those anticipated by management. These forward-looking statements
are not a guarantee of future performance and involve risks and
uncertainties, and there are certain important factors that could
cause actual results to differ, possibly materially, from
expectations or estimates reflected in such forward-looking
statements, including, purchase price adjustments; the successful
fulfillment or waiver of all closing conditions without unexpected
delays or conditions; the successful closing of the transaction
within the estimated timeframe; the failure to realize the expected
synergies and benefits of the transaction or delay in realization
thereof; the successful financing of the transaction; the retention
of certain key employees; and other factors, risks and
uncertainties including: (1) losses on investments or financial
contracts due to deterioration in credit quality or value, or
counterparty default; (2) losses on insurance products due to
mortality experience, morbidity experience or policyholder behavior
experience that differs significantly from our expectations when we
price our products; (3) changes in interest rates, equity prices
and foreign currency exchange rates that may (a) adversely impact
the profitability of our products, the value of separate accounts
supporting these products or the value of assets we manage, (b)
result in losses on derivatives we use to hedge risk or increase
collateral posting requirements and (c) limit opportunities to
invest at appropriate returns; (4) guarantees within certain of our
products which are market sensitive and may decrease our earnings
or increase the volatility of our results of operations or
financial position; (5) liquidity needs resulting from (a)
derivative collateral market exposure, (b) asset/liability
mismatches, (c) the lack of available funding in the financial
markets or (d) unexpected cash demands due to severe mortality
calamity or lapse events; (6) financial or customer losses, or
regulatory and legal actions, due to inadequate or failed processes
or systems, labor and employment, external events and human error
or misconduct such as (a) disruption of our systems and data, (b)
an information security breach, (c) a failure to protect the
privacy of sensitive data or (d) reliance on third parties; (7)
changes in the regulatory landscape, including related to (a)
financial sector regulatory reform, (b) changes in tax laws, (c)
fiduciary rules and other standards of care, (d) U.S. state
insurance laws and developments regarding group-wide supervision,
capital and reserves, (e) insurer capital standards outside the
U.S. and (f) privacy and cybersecurity regulation; (8)
technological changes which may adversely impact companies in our
investment portfolio or cause insurance experience to deviate from
our assumptions; (9) an inability to protect our intellectual
property rights or claims of infringement of the intellectual
property rights of others; (10) ratings downgrades; (11) market
conditions that may adversely affect the sales or persistency of
our products; (12) competition; (13) reputational damage; and (14)
the costs, effects, timing, or success of our plans to accelerate
our Financial Wellness strategy. Prudential Financial, Inc. does
not undertake to update any particular forward-looking statement
included in this document. See “Risk Factors” included in the
Annual Report on Form 10-K for the year ended December 31, 2018 for
discussion of certain risks relating to our businesses and
investment in our securities.
The timing and amount of any share repurchases under Prudential
Financial, Inc.’s share repurchase authorization will be determined
by management based on market conditions and other considerations,
and such repurchases may be executed in the open market, through
derivative, accelerated repurchase and other negotiated
transactions and through plans designed to comply with Rule
10b5-1(c) under the Securities Exchange Act of 1934, as
amended.
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version on businesswire.com: https://www.businesswire.com/news/home/20190905005449/en/
MEDIA: Bill Launder 973-802-8760
bill.launder@prudential.com Discretion Winter (West Coast)
973-943-6745 discretion.winter@prudential.com INVESTORS:
investor.relations@prudential.com
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