In yet another sign of the “sobering of insurtech“, Prudential Financial Inc. has announced this month that it will acquire insurtech start-up, Assurance IQ, Inc. in a deal valued at $2.35 billion. The deal, similar to MassMutual’s acquisition of Quilt in 2018, among others, highlights a growing trend of partnerships between insurtech start-ups and insurance giants.
Founded in 2017 by co-founders Michael Rowell and Michael Paulus, Assurance is an online digital platform that 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.” According to the terms of the agreement, upon completion of the acquisition Assurance will become a wholly-owned subsidiary of Prudential’s U.S. Business division. Both of Assurance co-founders, Michael Rowell and Michael Paulus, will continue to lead Assurance while reporting to Prudential’s Andrew Sullivan.
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,” said Michael Rowell, co-founder and CEO of Assurance. “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.”
The purchase of Assurance by Prudential is part of the company’s overall plan to achieve greater growth by attracting new, younger customers through the platform’s propriety mix of advance data science, Artificial Intelligence and human expertise.
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.”
Assurance differentiates itself from traditional life insurances by using its technology to match buyers with customized solutions. The solutions run the gambit from life, health, and Medicare to auto insurance. While any of its products can be purchased entirely online, Assurance also offers help in the form of a technology-assisted live agent. The start-up says this innovative approach results in “higher levels of engagement and conversion.”
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.”
This seems to be exactly what Prudential needs. While the 143 year-old insurer itself has tried to go engage with consumers online via its LINK platform, which was launched this time last year. Based on the company’s decision to purchase Assurance, however, the company believes it will be more successful quicker with its acquisition of Assurance. According to reports, the start-ups will bring approximately 17 million customers into Prudential’s network. In addition to adding this large and growing D2C channel, Prudential will have the oppportunity to offer its wellness business products to its new Assurance customers, thereby creating a new holistic “end-to-end engagement model.”
As for AM Best, the rating agency stated that the Financial Strength Rating of Prudential, A+ (Superior), and its Long-Term Issuer Credit Ratings of “aa-” remain unchanged following the news of Prudential’s intention to acquire Assurance IQ, Inc. (Assurance). The agency further noted that it believed the agreement “…should enhance Prudential’s business profile and further accelerate its current financial wellness strategy by providing individuals with retail solutions that address broader financial needs.”