New York-based risk management solutions provider Assurant has entered into an agreement to acquire The Warranty Group (TWG) in a $2.5bn deal.

The Warranty Group is a portfolio company of TPG Capital and offers protection plans and related programs.

The deal is expected to close in the first half of next year, subject to approval from shareholders and regulatory authorities.

The acquisition is expected to advance Assurant’s strategy in the global lifestyle market with attractive products and client portfolio, diversified growth profile coupled with global presence.

It will enable Assurant to expand its presence in areas of vehicle protection, extended service contracts and financial services business in 35 countries.  

In the US market, The Warranty Group’s vehicle protection business can bring in new client partnerships and distribution channels including dealer networks, national accounts and other positions, which can be leveraged by Assurant in the coming months and years.

Assurant president and CEO Alan Colberg said: “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.

“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.”

Under the terms of the agreement, Assurant will become the wholly owned subsidiary of TWG Holdings, whose name will be changed to Assurant Ltd.

While shareholders of Assurant will own about 77% of the combined company, TPG and its affiliate companies will own the remaining 23% stake.  

The Warranty Group’s president and CEO Nelson Chai 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.”

Image: Assurant to acquire The Warranty Group for $2.5bn. Photo: Courtesy of Assurant. Inc.