Assurant selling preneed business to CUNA Mutual in $1.3B deal

Assurant Inc. agreed to sell its prearranged funeral insurance and final expense business, Global Preneed, and related legal entities and assets to CUNA Mutual Group for about $1.3 billion in cash.

The sale is expected to generate roughly $1.2 billion of net proceeds at closing, which is expected to occur by the end of the third quarter, subject to regulatory approvals and other customary closing conditions. The company intends to use 75% of the net proceeds for share repurchases within one year of closing, subject to board approval.

Assurant said this is in addition to returning $470 million via share repurchases and common share dividends under its existing three-year, $1.35 billion capital return plan expected to be completed by 2021-end.

The remaining proceeds are expected to be invested primarily in Assurant's connected world businesses, consisting of connected living, global automotive and multifamily housing.

Beginning with the first quarter of 2021, Global Preneed and its related legal entities will be reported as discontinued operations and excluded from Assurant's net income from continuing operations and net operating income.

As a result, 2020 net operating income was revised to $605.4 million from $663.5 million, net operating income per share was changed to $9.88 from $10.80 and corporate and other net operating loss was adjusted to $102.9 million from $92.8 million. All net operating income and net operating income per share references exclude reportable catastrophe losses.

Reported 2020 net income and net income per share totaled $423.1 million and $6.99, respectively. Reported 2020 corporate and other segment net loss attributable to common stockholders totaled $295.9 million.

Assurant expects 2021 net operating income per share, excluding catastrophe losses and Global Preneed, to come in at $10.80, up 9% from the 2020 adjusted net operating income per share of $9.88. The increase is expected to be driven by earnings growth in global lifestyle, improved corporate and other results and share repurchases, which is expected to offset the EPS impact of the Global Preneed divestiture.

Assurant also expects high single-digit earnings growth in global lifestyle to be driven by connected living, and improved results in global financial services. Global housing net operating income is foreseen to decline as non-catastrophe loss experience normalizes from very "favorable" 2020 levels, as well as "modestly" higher catastrophe reinsurance costs.

Corporate and other net operating loss for full year 2021 is expected to decrease year over year to about $90 million, which Assurant said reflects continued expense discipline, including the anticipated elimination of indirect enterprise support costs associated with the divestiture by the end of the year.

Upon closing, Global Preneed will be managed as an independent business with existing employees remaining at their current locations. CUNA and Assurant also finalized a multiyear agreement to provide ongoing vehicle service contract support to their customers.

Goldman Sachs & Co. LLC served as financial adviser and Debevoise & Plimpton LLP as legal adviser to Assurant. Perella Weinberg Partners served as financial adviser to CUNA, while Foley & Lardner LLP was the legal adviser.