Prudential betting in new technology – buying Assurance IQ for $2.35 billion

Prudential betting in new technology – buying Assurance IQ for $2.35 billion


Prudential Financial is intending buying Assurance IQ Inc, an online insurance startup, for $2.35 billion, a latest move in a series of efforts where the traditional insurance companies keep increasing their investments by acquiring Silicon Valley startups for in data crunching and technological advancements.

After taking charge of Prudential as CEO in November 2018, company’s share this year remained struggling and after failure to beat the expectations in quarterly results, its shares saw a fall of 21% in August, but the news of acquisition deal brought its shares value up by 3% on that day.

Over the past year, Assurance, like other peer startups such as California-based Clover Health and Health IQ have focused over the use of disruptive models of using artificial intelligence and data mining called “insuretech” to strengthen their revenue base and cutting costs.

In a call with analysts, head of retirement and group insurance businesses at Prudential, Andrew Sullivan said that with inclusion of Assurance in it, Prudential is now available with 17 million more of the customers who are in need on insurance.

Prudential is in knowledge that there is a larger portion of segments comprising of mass affluent and middle market customers that are underserved in traditional way of doing insurance business.

Assurance will coming up with flow of earning segments in Prudential that are not sensitive to factors like interest rates, credits and equity market situations, he added.

With the use of technology, Silicon Valley startups have started disrupting the traditional insurance practices that led the larger traditional insurance firms to a broader trend of betting more on those technologically advanced startups, and Prudential’s deal of acquiring Assurance is also part of that trend.

As part of the deal, Assurance will remain working under the leadership of current CEO Michael Rowell as a subsidiary, wholly owned by Prudential which is also willing to pour in another $1.15 billion in cash and equity but that will be subject to the achieving the growth targets.

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I handle much of news coverage for tech stocks, and occasionally cover companies in different sectors. In the past, I've written for other financial sites and published independent investment research, primarily on tech companies. I have a B.A. in Economics from Columbia University. I'm based out of San Diego, but grew up in Southern New Jersey. I play basketball and tennis in my spare time, am a long-time (and long-suffering) fan of Philadelphia's sports teams, and alternate daily between using an iPad Air, a Galaxy Note 3, and one or two Windows PCs.