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Travelers Enters into an Agreement to Buy Simply Business
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The Travelers Companies, Inc. (TRV - Free Report) recently entered into an agreement with Aquiline Capital Partners LLC to purchase Simply Business.
Shares of Travelers gained 7.22% in the last one year, significantly underperforming the Zacks categorized Property and Casualty insurance industry’s growth of 23.00%. We expect that strategic acquisitions such as the above, as well as robust premium and investment income growth will help the stock to turn around in the near term.
Coming back, the enterprise value of the buyout will be about $490 million, comprising the repayment of debt and other obligations on the completion of the transaction. Travelers will fund the transaction with the help of a combination of debt financing and internal resources, subject to market conditions. The buyout is likely to be closed in the third quarter of 2017, upon fulfillment of regulatory approvals and other customary closing conditions. More importantly, the acquisition is expected to have an inconsequential impact on Travelers’ earnings per share in 2017 and 2018.
Simply Business is an industry-leading distributor of small business insurance policies in the United Kingdom. The company, operating since 2005, provides products online on behalf of a broad panel of carriers. Simply Business is well known as a profitable and growing technology company with a solid track of small business insurance. With superior digital capabilities and digital commerce talent, the company is on track to enhance its digital agenda. This, in turn, will allow it to cater to its clients more effectively.
Moreover, Simply Business has more than 0.4 million microbusiness customers and covers more than 1,000 classes of business. In the last three years, the company’s insurance premiums grew at a compound annual rate of about 17.5% to £93 million (approximately $113 million). With the help of the managing general agency, Simply Business acts as a panel member and underwrites a significant amount of its total premium, which it places through its platform every year. This premium represents the product values, underwriting abilities and customer analytics of the company.
The buyout is anticipated to help Travelers gain access to the thriving and substantial microbusiness market in the United States and across the world. Further, this Zacks Rank #3 (Hold) property and casualty (P&C) insurer will focus on maintaining the approach and values of Simply Business, which have made the latter successful over a considerable period of time. Notably, Simply Business will continue to operate as a separate business entity and collaborate with its panel of carriers under the same brand name.
In addition, the agreement is expected to benefit Simply Business and its workforce, apart from validating its business model. The leadership team at Simply Business is optimistic about gaining the P&C insurer’s extensive knowledge of the U.S. market. This, in turn, will help Simply Business to solidify its presence in the U.S. and also develop the resources to support the potential diversification into additional markets. Both Travelers and Simply Business possess shared values and a zeal for innovation, which makes this buyout a perfect fit.
American Financial offers P&C insurance products in the United States. The company delivered positive surprises in three of the last four quarters with an average beat of 6.45%.
Argo Group International Holdings underwrites specialty insurance and reinsurance products in the property and casualty market worldwide. The company delivered positive surprises in all of the last four quarters with an average beat of 36.54%.
The Progressive Corporation offers personal and commercial property-casualty insurance, and other specialty property-casualty insurance and related services primarily in the United States. The company delivered a positive surprise in two of the last four quarters with an average beat of 1.32%.
Zacks' 2017 IPO Watch List
Before looking into the stocks mentioned above, you may want to get a head start on potential tech IPOs that are popping up on Zacks' radar. Imagine being in the first wave of investors to jump on a company with almost unlimited growth potential? This Special Report gives you the current scoop on 5 that may go public at any time. One has driven from 0 to a $68 billion valuation in 8 years. Four others are a little less obvious but already show jaw-dropping growth. Download this IPO Watch List today for free >>
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Travelers Enters into an Agreement to Buy Simply Business
The Travelers Companies, Inc. (TRV - Free Report) recently entered into an agreement with Aquiline Capital Partners LLC to purchase Simply Business.
Shares of Travelers gained 7.22% in the last one year, significantly underperforming the Zacks categorized Property and Casualty insurance industry’s growth of 23.00%. We expect that strategic acquisitions such as the above, as well as robust premium and investment income growth will help the stock to turn around in the near term.
Coming back, the enterprise value of the buyout will be about $490 million, comprising the repayment of debt and other obligations on the completion of the transaction. Travelers will fund the transaction with the help of a combination of debt financing and internal resources, subject to market conditions. The buyout is likely to be closed in the third quarter of 2017, upon fulfillment of regulatory approvals and other customary closing conditions. More importantly, the acquisition is expected to have an inconsequential impact on Travelers’ earnings per share in 2017 and 2018.
Simply Business is an industry-leading distributor of small business insurance policies in the United Kingdom. The company, operating since 2005, provides products online on behalf of a broad panel of carriers. Simply Business is well known as a profitable and growing technology company with a solid track of small business insurance. With superior digital capabilities and digital commerce talent, the company is on track to enhance its digital agenda. This, in turn, will allow it to cater to its clients more effectively.
Moreover, Simply Business has more than 0.4 million microbusiness customers and covers more than 1,000 classes of business. In the last three years, the company’s insurance premiums grew at a compound annual rate of about 17.5% to £93 million (approximately $113 million). With the help of the managing general agency, Simply Business acts as a panel member and underwrites a significant amount of its total premium, which it places through its platform every year. This premium represents the product values, underwriting abilities and customer analytics of the company.
The buyout is anticipated to help Travelers gain access to the thriving and substantial microbusiness market in the United States and across the world. Further, this Zacks Rank #3 (Hold) property and casualty (P&C) insurer will focus on maintaining the approach and values of Simply Business, which have made the latter successful over a considerable period of time. Notably, Simply Business will continue to operate as a separate business entity and collaborate with its panel of carriers under the same brand name.
In addition, the agreement is expected to benefit Simply Business and its workforce, apart from validating its business model. The leadership team at Simply Business is optimistic about gaining the P&C insurer’s extensive knowledge of the U.S. market. This, in turn, will help Simply Business to solidify its presence in the U.S. and also develop the resources to support the potential diversification into additional markets. Both Travelers and Simply Business possess shared values and a zeal for innovation, which makes this buyout a perfect fit.
Stocks to Consider
Some better-ranked stocks from the same space include American Financial Group, Inc. (AFG - Free Report) , Argo Group International Holdings, Ltd. and The Progressive Corporation (PGR - Free Report) . Each of these stocks sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
American Financial offers P&C insurance products in the United States. The company delivered positive surprises in three of the last four quarters with an average beat of 6.45%.
Argo Group International Holdings underwrites specialty insurance and reinsurance products in the property and casualty market worldwide. The company delivered positive surprises in all of the last four quarters with an average beat of 36.54%.
The Progressive Corporation offers personal and commercial property-casualty insurance, and other specialty property-casualty insurance and related services primarily in the United States. The company delivered a positive surprise in two of the last four quarters with an average beat of 1.32%.
Zacks' 2017 IPO Watch List
Before looking into the stocks mentioned above, you may want to get a head start on potential tech IPOs that are popping up on Zacks' radar. Imagine being in the first wave of investors to jump on a company with almost unlimited growth potential? This Special Report gives you the current scoop on 5 that may go public at any time. One has driven from 0 to a $68 billion valuation in 8 years. Four others are a little less obvious but already show jaw-dropping growth. Download this IPO Watch List today for free >>