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LendingTree found right deal to jump into insurance after years of consideration

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LendingTree found right deal to jump into insurance after years of consideration

LendingTree Inc. had been looking to get into the insurance price comparison business for 15 years before deciding to acquire QuoteWizard.com LLC, Chairman and CEO Douglas Lebda said Oct. 5.

The consumer lending marketplace company had incorporated insurance cross-selling with its other product comparison business but was hesitant to get into insurance because of regulatory and other barriers, Lebda said during a conference call to discuss the deal. LendingTree will pay $370.2 million for QuoteWizard, which was founded in 2006.

Lebda said insurance is large, "under-penetrated" online and strategically important to LendingTree. The company decided that buying capability would be the best way to enter the business, he added, noting that it could have taken up to a decade to build the technology, personnel and agent network that QuoteWizard already has.

Insurance providers are paying more attention to the marketplace, and management's calls to insurers while considering the deal convinced LendingTree that online price comparison was a growth business, Lebda said. QuoteWizard offered a good cultural fit, sizable profits and rapid growth, he added.

Executives likened the deal to the 2016 acquisition of online credit card comparison business CompareCard, which saw LendingTree move into the financial services sector.

"Like other acquisitions we've done, we think that LendingTree can accelerate [the business] for faster growth as part of LendingTree than QuoteWizard can do on its own," Lebda said. The latest deal would continue LendingTree's diversification with a "fourth stool," and notably a scaled business that is not subject to interest rate or credit cycles.

QuoteWizard's business is concentrated in auto insurance, but home insurance comparison is showing signs of expansion and healthcare is growing "very, very quickly," CFO J.D. Moriarty said.

Unlike the loan comparison business, online marketplace quotes for insurance are typically only illustrative, rather than bindable, but LendingTree expects that to change. Lebda noted how similar comparison tools in the U.K. eventually began offering direct quotes as products became more commoditized, adding that for that to happen in the U.S., carriers must be convinced that it would help grow their business and increase profitability.