OLDWICK: AM Best has commented that the Financial Strength Rating of A+ (Superior) and the Long-Term Issuer Credit Ratings of “aa-” of the domestic life/health insurance subsidiaries of Prudential Financial, Inc. remain unchanged following the recent announcement by Prudential that it has agreed to acquire Assurance IQ, Inc.
Assurance IQ is a leading direct-to-consumer solutions platform for health and financial wellness needs. The transaction, which is expected to close early in the fourth quarter of 2019, includes total upfront consideration of USD 2.35 billion and is expected to be funded with a combination of current cash, debt financing and equity.
Concurrent with the announced deal, Prudential’s board of directors also authorized a USD 500 million increase in its share repurchase program for 2019, bringing the full-year authorization to USD 2.5 billion. Prudential plans to offer its own financial wellness solutions on the Assurance platform alongside those of third-party providers.
AM Best expects the platform to help grow Prudential’s direct-to-consumer distribution while lowering customer acquisition costs, as well as creating a new earnings stream.
This acquisition 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.
Assurance also will complement Prudential’s financial wellness platforms such as LINK. This further demonstrates Prudential’s efforts toward innovation and technology as a way to expand its reach and leverage data analytics. AM Best will continue to monitor the announced acquisition as well as the longer-term financial impacts, which are expected to be accretive to earnings.