Willis Towers Watson Acquires Tranzact for $1.4 Billion to Expand Direct-to-Consumer Insurance Distribution

VCBeat (WeChat Official Account: vcbeat) has learned that global insurance brokerage firm Willis Towers Watson recently announced the acquisition of commercial insurer Tranzact for up to $1.4 billion. Under the terms of the deal, the total acquisition price is based on a market capitalization of $1.2 billion on the day of the announcement. If Tranzact meets the financial targets stipulated in the agreement, Willis Towers Watson will pay an additional $200 million in cash or stock in 2021 as potential earn-out consideration.

Tranzact is a direct-to-consumer commercial insurance company that was acquired in 2016 by its current majority shareholder, the Clayton Dubilier & Rice (CD&R) fund. The company specializes in the direct sale of insurance products and employs approximately 1,300 people, including 850 licensed agents. Tranzact leverages expertise in digital marketing, sales, and data science to offer a comprehensive portfolio of products, including Medicare Advantage, Medicare Supplement, Prescription Drug Plans (PDPs), and ancillary products such as dental and vision coverage.

Willis Towers Watson is one of the world’s largest insurance brokerage firms, with over 45,000 employees serving clients in more than 140 countries and markets. The company provides consulting, analytics, and tailored solutions to clients across various industries worldwide, offering comprehensive services in insurance brokerage and consulting, benefits, talent and rewards, exchange solutions, as well as risk and capital management.

Willis Towers Watson CEO John Haley stated that the transaction would accelerate the company’s expansion into the direct-to-consumer insurance sales market and improve the quality of life for approximately 50 million people across the U.S. health insurance market. Tranzact will operate as part of Willis Towers Watson’s Benefits Delivery and Administration (BDA) business, developing and providing health insurance solutions for employers, employees, and retirees.

Tranzact CEO David Graf believes this transaction represents a win-win partnership characterized by complementary strengths and shared resources. Graf stated that the powerful combination of Tranzact’s technology-driven capabilities and direct-to-consumer solutions with Willis Towers Watson’s scale effects, leading infrastructure, and market engagement capabilities will demonstrate unique differentiation in the marketplace.

“Under the leadership of a strong management team, Tranzact has developed world-class customer generation capabilities, built on cutting-edge technology and data analytics,” said Russ Fradin, Operating Partner at CD&R and Chairman of Tranzact. “The CD&R team looks forward to working closely with Willis Towers Watson to help the company realign resources and achieve rapid growth in 2020.”

Gene Wickes, Head of the BDA Division at Willis Towers Watson, stated, “Direct consumer engagement will significantly advance our overall growth strategy. Willis Towers Watson now has access to an additional 35 million retirement clients and can serve a diverse market of approximately 10,000 individuals through direct-to-consumer channels.”

Clayton Dubilier & Rice (CD&R) was founded in 1978 and is one of the oldest private equity investment firms globally, currently managing a portfolio of more than 50 companies. CD&R primarily invests in subsidiaries or divisions of large, diversified corporations across a wide range of industries, with total transaction values exceeding $80 billion.

(Compiled by Wang Yue)