The Travelers Companies will snatch up Simply Business from Aquiline Capital Partners LLC for $490 million, a deal that gives it an online insurance broker with a focus on the small business market.
Plans call for Travelers to fund the transaction, subject to market conditions, through debt financing and “internal resources,” according to the company. Expectations are that the purchase will close in the 2017 third quarter, pending regulatory approvals and other closing conditions, and also have an “insignificant” impact on Travelers’ 2017 and 2018 earnings per share.
Travelers’ agreement also includes the repayment of debt and other obligations for the UK company once the transaction closes.
Aquiline Capital Partners LLC, a New York-based private equity firm, bought Simply Business for an undisclosed price in the latter-half of 2016.
Simply Business launched in 2015 as an online distributor of small business insurance policies in the UK. Participating carriers include Zurich, AXA, Hiscox, UK General and AIG, according to the Simply Business website. The company has more than 425,000 microbusiness customers covering over 1,000 different classes of business. It also recently launched early-stage U.S. operations, Travelers said in its announcement.
Alan Schnitzer, chief executive officer of Travelers, said that the Simply Business acquisition helps further its goals of expanding digital capacity for small commercial insurance transactions.
“With technology and innovation driving customer preferences and expectations, advancing our digital agenda to best serve our customers and the marketplace is a key strategic priority,” Schnitzer said in prepared remarks. “As an important part of that agenda, we also look forward to working with our agent and broker partners as we seek to deploy Simply Business’ capabilities with them to make the small commercial insurance transaction easier, faster and more efficient.”
Greg Toczydlowski, executive vice president and president of Business Insurance at Travelers, noted the “early stage” launch of Simply Business’ U.S. operations. He said in prepared remarks that the milestone should serve Travelers well as it expands efforts to reach small business customers.
“Over time, we expect it will provide us with efficient access to serve the substantial market in the United States and potentially other geographies,” Toczydlowski said.
He added that Travelers will keep Simply Business as a standalone operation, retain its name and culture, and also ensure that it is “continuing to partner with its panel of carriers under its well-known brand name.”
Simply Business placed $113 million in premiums in 2016, and that number grew at a compound annual rate of 17.5 percent. The company uses its managing general agency to participate as a panel member and underwrite what Travelers bills as “a meaningful amount of the total premium it places through its platform each year.”
According to Travelers, this process “demonstrates the value of its product and underwriting capabilities, as well as its customer analytics.”