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Assurant to acquire TPG-backed The Warranty Group

Assurant Inc has agreed to acquire The Warranty Group, which is backed by TPG Capital. The deal is valued at about $2.5 billion and is expected to close in the first half of 2018. Morgan Stanley is serving as financial adviser to Assurant on the transaction while UBS Investment Bank is doing likewise for The Warranty Group. Based in Chicago, The Warranty Group is a provider of warranty solutions and related benefits.

PRESS RELEASE

NEW YORK & CHICAGO–(BUSINESS WIRE)–Assurant, Inc. (NYSE:AIZ), a premier global provider of risk management solutions, and The Warranty Group, a leading global provider of protection plans and related programs, and a portfolio company of TPG Capital, today announced that they have entered into a definitive agreement to combine operations, with Assurant shareholders retaining majority ownership of the combined company. The transaction is valued at approximately $2.5 billion and is expected to close in the first half of 2018, subject to shareholder and regulatory approvals, and other customary closing conditions.

The transaction will significantly advance Assurant’s strategy in the global lifestyle market with an attractive product and client portfolio, diversified growth profile and a deeper global footprint. With annualized revenue greater than $1 billion as of June 30, 2017,1 The Warranty Group will enhance Assurant’s scale and market presence in its vehicle protection, extended service contracts and financial services businesses across 35 countries. The resulting geographic footprint also will provide resources to accelerate Assurant’s mobile strategy in key markets such as Asia-Pacific. The Warranty Group’s U.S. vehicle protection business also brings new client partnerships and distribution channels including dealer networks and national accounts, and positions Assurant to capitalize on emerging trends in the auto market such as digital auto retailers.

“Assurant’s acquisition of The Warranty Group advances our position as a leading global provider in the vehicle protection business and aligns well with our lifestyle market growth strategy helping consumers protect their appliances, autos, mobile devices, and electronics,” said Assurant President and Chief Executive Officer Alan Colberg. “Together, we believe we can deepen our global footprint and accelerate profitable growth in key markets already on Assurant’s strategic roadmap, while realizing substantial operating synergies, generating more diversified and predictable earnings and furthering product innovation on a global scale.”

Nelson Chai, The Warranty Group’s President and Chief Executive Officer, said, “This transaction brings together two businesses with highly aligned expertise in markets across the world. We believe this combination enhances our ability to offer best-in-class products and services in addition to providing new opportunities to our clients, partners, employees and other key stakeholders.”
Eric Leathers, Partner at TPG Capital, said, “This strategic partnership is an outstanding outcome for both Assurant and The Warranty Group, positioning the combined company for continued success. Since acquiring The Warranty Group, we have supported the company’s management team as they have expanded their global service contract business by pursuing attractive pathways for growth. This combination builds on these initiatives, and we at TPG are excited by the future value creation that will stem from this.”

1 Amount is based on The Warranty Group policy of reporting a portion of its revenue net of certain costs; the presentation for the combined company will be revised to conform to Assurant’s policy of reporting revenue on a gross basis with an offset to expenses.

STRUCTURE AND FINANCIAL HIGHLIGHTS
The transaction values The Warranty Group at $1.9 billion in equity value, or $2.5 billion of enterprise value, including their existing debt. Under the transaction agreement, Assurant, Inc. will become a wholly owned subsidiary of TWG Holdings Limited, whose name will be changed to Assurant Ltd. Assurant shareholders will own approximately 77 percent of the combined entity as existing Assurant, Inc. shares are converted into shares of Assurant Ltd. on a one-for-one basis. TPG and its affiliates will own the remaining 23 percent, equal in value to 16 million Assurant shares, or approximately $1.5 billion at yesterday’s closing price. Assurant will also pay approximately $372 million in cash to TPG.

Upon closing, Assurant Ltd. shares will trade on the New York Stock Exchange under the ticker symbol AIZ. The senior management team of Assurant will lead the combined organization.

Assurant intends to finance the cash consideration and repayment of approximately $591 million of The Warranty Group’s existing debt through new debt, and preferred securities expected to be issued after closing. Assurant has entered into a commitment letter for a $1.0 billion bridge facility.

The transaction is expected to be modestly accretive to Assurant’s 2018 operating earnings per share on a run-rate basis. By the end of 2019, Assurant expects to generate $60 million of pre-tax operating synergies by optimizing global operations.
The transaction will be taxable to Assurant’s shareholders in the U.S. and certain other jurisdictions.

GOVERNANCE
Upon close, Assurant Ltd.’s board will be composed of 15 directors, including Assurant’s 12 current directors and Nelson Chai, The Warranty Group’s President and Chief Executive Officer, Eric Leathers, Partner at TPG Capital and Peter McGoohan, Principal at TPG Capital.

CONFERENCE CALL AND WEBCAST DETAILS
Assurant will host a conference call and webcast today at 8:00 a.m. Eastern Time (U.S.) to discuss the transaction. The live webcast and investor presentation will be accessible in the Investor Relations section of Assurant’s website. An archived replay also will be available shortly after the event for those unable to listen to the live broadcast.

ADVISORS
Morgan Stanley & Co. LLC is serving as financial advisor to Assurant, with Willkie Farr & Gallagher LLP serving as legal advisor.
UBS Investment Bank is serving as financial advisor to The Warranty Group, with Skadden, Arps, Slate, Meagher & Flom LLP serving as legal advisor.

About Assurant
Assurant (NYSE:AIZ) is a global leader in risk management solutions, helping protect where people live and the goods they buy. Millions of consumers count on Assurant’s innovative products, services and support for major purchases like homes, cars, appliances, mobile devices and funerals. Assurant partners with leading companies that make, sell or finance those purchases to take great care of their customers and help their business grow. A member of the Fortune 500, Assurant has a market presence in 16 countries worldwide. As of June 30, 2017, the company had $30 billion in assets and $6 billion in annualized revenue. Learn more at assurant.com or follow us on Twitter @AssurantNews.

About The Warranty Group
With more than 50 years of industry leadership, The Warranty Group is one of the world’s premier global providers of warranty solutions and related benefits, with operations in more than 35 countries and over 1,600 employees. With Virginia Surety Company and London General Insurance as our wholly-owned insurance companies, The Warranty Group is a single-source solution that provides underwriting, claims administration, and marketing expertise to some of the world’s leading manufacturers, distributors, and retailers of consumer goods including automobiles, homes, consumer appliances, electronics, and furniture, as well as specialty insurance products and services for financial institutions. For more information, visit www.thewarrantygroup.com.

About TPG
TPG is a leading global alternative asset firm founded in 1992 with more than $73 billion of assets under management and offices in Austin, Beijing, Boston, Dallas, Fort Worth, Hong Kong, Houston, London, Luxembourg, Melbourne, Moscow, Mumbai, New York, San Francisco, Seoul, and Singapore. TPG’s investment platforms are across a wide range of asset classes, including private equity, growth venture, real estate, credit, and public equity. TPG aims to build dynamic products and options for its investors while also instituting discipline and operational excellence across the investment strategy and performance of its portfolio. For more information, visit www.tpg.com.