Vericity Inc's shares almost doubled in value on Tuesday morning on news that Canadian insurance and wealth management company iA Financial Corporation will pay US$170 million for its US counterpart.
In a statement, iA Financial announced its US subsidiary iA American Holdings will acquire Vericity to strengthen its presence in the US individial insurance market. Vericity is majority owned by JC Flowers & Co, a leading private investment firm dedicated to investing globally in the financial services industry.
Vericity’s shares surged 94% to $11.05 shortly before midday in New York. In Toronto, iA Financial’s shares were down 2.3% at C$82.64.
Vericity includes two subsidiaries serving the middle-market life insurance space: insurance carrier Fidelity Life and direct-to-consumer digital agency eFinancial.
“With this acquisition, we are adding scale to our already well-established and successful US individual life insurance business and creating value for our shareholders by building on our core insurance and distribution competencies,” commented iA executive vice president and co-head of acquisitions Mike Stickney.
“We look forward to working with Vericity to pursue further growth in the US individual life insurance market with the addition of Fidelity Life, while diversifying and complementing our distribution capabilities with direct-to-consumer reach through the eFinancial digital agency.”
The company said it will fund the acquisition with existing cash on hand, which will reduce its solvency ration by about three percentage points. It expects the merger to become accretive during the second year from acquisition.
The transaction is expected to close in the first half of 2024, subject to regulatory approvals in Canada and the US and other customary closing conditions.
Contact the author at stephen.gunnion@proactiveinvestors.com