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CUNA Mutual Agrees to Acquire Assurant's Preneed Business

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What You Need to Know

  • Assurant wants to reduce exposure to interest rate risk and catastrophes.
  • CUNA Mutual says it wants to do more for middle-market consumers.
  • The preneed business will continue to focus on selling coverage through funeral homes.

CUNA Mutual Group has agreed to acquire a preneed insurance business from Assurant Inc. for $1.3 billion.

Preneed insurance is a form of permanent life insurance. Funeral homes sell permanent life insurance to give customers a way to finance funeral and burial arrangements in advance.

CUNA Mutual and Assurant hope to get the regulatory approvals they need to complete the deal by Sept. 30.

After the deal is completed, the preneed business would keep its current operations intact, and it would continue to sell its products through funeral homes, rather than through CUNA Mutual’s existing distribution channels, CUNA Mutual said.

The Companies

CUNA Mutual is a Madison, Wisconsin-based, policyholder-owned insurer that traditionally has focused on selling insurance products through credit unions and banks.

CUNA Mutual has 30 million customer relationships, $4 billion in annual revenue and $28 billion in assets.

Robert Trunzo, CUNA Mutual’s CEO, said his company sees the deal as a way to help middle-market consumers build financial stability.

Assurant is a New York-based company that once had large health insurance and employee benefits operations along with the preneed business.

The company focuses on the markets for products such as mobile device, car and home insurance. It shut down its individual health insurance business in 2016 and sold its benefits business to Sun Life Financial Inc. 2016.

Alan Colberg, Assurant’s CEO, said in a comment about the deal that it will help Assurant complete its transformation into a company that supports consumers’ connected lifestyles and is less sensitive to interest rates and unusual changes in mortality rates.

“Going forward, we will have no significant life insurance liabilities remaining,” Colberg said.

Assurant’s preneed business operates out of offices in Rapid City, South Dakota. The business has 2 million customers, $7 billion in assets, and $6.5 billion in coverage in force.

Analysts’ View

Heena Abhyankar and other analysts at S&P Global Ratings said in a comment on the deal that it should provide stable earnings for CUNA Mutual, exclusive distribution relationships, and manageable financing and integration risks.

“We think this business will complement CUNA Mutual’s existing product offerings and support  its very strong business risk profile, capturing its well-entrenched market position in the niche U.S. credit union market,” the analysts wrote.

(Image: Shutterstock)

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