Assurant has closed its $2.5 billion acquisition of rival The Warranty Group, seven months after the deal was first announced.

Assurant, based in New York, offers insurance and related services for homes, cars, appliances, mobile devices and funerals. The Warranty Group, a Chicago company, covers products such as consumer electronics, appliances and automobiles, and it also markets credit card and member benefit products. Assurant, which bought The Warranty Group from global alternative asset firm TPG Capital, said that the acquisition will help fuel a strategy to expand in the global lifestyle market.

TPG will retain a stake in the combined company. Specifically, Assurant becomes a wholly owned subsidiary of TWG Holdings Ltd., whose name will be changed to Assurant.

As part of this transaction, Peter McGoohan and Eric Leathers, both representatives of TPG Capital, will join Assurant Inc.’s board of directors and will serve on the board’s Compensation and Finance & Risk committees, respectively.

Assurant said the $2.5 billion price tag reflects 10.4 million Assurant shares, or $993 million based on the acquisition agreement closing price, and approximately $1.5 billion in cash, after considering the repayment of The Warranty Group’s $596 million in existing debt.

Assurant President and Chief Executive Officer Alan Colberg said in prepared remarks that the acquisition leaves a combined company that “will support ongoing product and service innovation” for clients and consumers but also lead to “significant operating synergies and generate more diversified and predictable earnings over time.”

By the end of 2019, Assurant expects to generate $60 million of pre-tax operating synergies by optimizing global operations.

The combined operation does business in 21 countries, deepening Assurant’s global footprint. Assurant said the M&A deal also helps accelerate its mobile strategy in key markets such as Asia-Pacific.

Source: Assurant

Topics Mergers & Acquisitions