9 January 2018Insurance

US tax changes prompts Assurant to tweak Warranty Group deal

Assurant, a provider of risk management solutions, and The Warranty Group, a provider of protection plans and related programmes and a portfolio company of TPG Capital, have amended the structure of their  $2.5 billion transaction, previously announced on October 18, 2017.

Under the revised terms, Assurant will acquire TWG Holdings and its subsidiaries, and remain a Delaware corporation. This change follows recently enacted US tax legislation and allows Assurant to simplify the overall deal structure and optimize the transaction financing mix. The transaction is expected to close in the second quarter of 2018, subject to regulatory and other customary closing conditions.

The transaction remains valued at $1.9 billion in equity value or $2.5 billion of enterprise value, including The Warranty Group’s existing debt. As before, the acquisition is expected to be modestly accretive to 2018 Assurant operating earnings per share on a run-rate basis, and significantly more accretive excluding the amortization of transaction-related intangible assets.

Accretion is now measured against a higher expected Assurant stand-alone earnings per share baseline, which reflects the net benefits from enacted US tax legislation.

The deal means that in exchange for fewer Assurant shares, TPG Capital and its affiliates will receive increased cash consideration, totalling approximately $860 million.

“We believe this simplified structure drives even greater value to shareholders, clients and employees, while also providing certainty on the benefits of tax reform to our global operations,” said Assurant president and chief executive Alan Colberg. “Importantly, the acquisition remains a compelling, strategic transaction that advances our position as a leading vehicle protection provider, while building scale across other global lifestyle markets.”

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More on this story

Insurance
9 January 2018   A number of US insurers have released estimates of what impact new US tax laws will have on their businesses with most anticipating immediate one-off charges but a longer-term positive effect on profits.
Insurance
18 October 2017   Specialty insurance provider Assurant and warranty solutions provider The Warranty Group, a portfolio company of TPG Capital, have entered into a definitive agreement to merge operations.