Assurant, a provider of specialized insurance and insurance-related products and services, has signed a definitive agreement with GE Consumer & Industrial, a unit of General Electric, for Assurant to acquire GE's warranty management group business, a unit that markets and sells extended warranties and service contracts for major appliances and consumer electronics.
As part of the definitive agreement, Assurant will also enter into a new 10-year agreement to market extended warranties and service contracts on GE-branded major appliances domestically.
In 2003, Assurant Solutions and GE have entered into an alliance whereby Assurant offered extended warranties directly to GE appliance purchasers and through major retailers for consumer electronics, computers, appliances and other goods and services. Under the terms of the new agreement, Assurant will now assume full responsibility for operating the extended warranty business it previously co-managed and shared with GE.
The terms also call for GE factory service technicians to continue to provide in-home service on the Assurant extended warranties sold with GE appliances.
Under terms of the agreement, Assurant will pay GE $140 million in cash for the sale, transfer, and conveyance of certain assets and will assume certain liabilities. As part of the transaction, GE will pay Assurant $115 million in cash for the assumption of certain obligations.
Assurant expects that the acquisition will be accretive to earnings in 2009. Assurant has provided the underwriting in its existing partnership with GE. Therefore, the acquisition will not change Assurant’s reported premiums. The acquisition is expected to close in the third quarter of 2008 subject to customary regulatory approvals.
Robert Pollock, president and CEO of Assurant, said: We continue to diversify our specialty business by deploying capital in areas where we see good growth potential, such as the extended service contract market. We’ve targeted this specialty niche because of its growth attributes and because it enables us to leverage our core capability of working closely with industry leaders, like GE.