Prudential Financial agreed to acquire Seattle-area startup Assurance IQ for $2.35bn, the companies announced.
The acquisition will fold a tech-focused insurance seller into the financial services giant, allowing Prudential to reach more customers online.
Labelled "insuretech", Assurance and peers such as California-based Health IQ and Clover Health have drawn eyes over the past year with disruptive models that use data crunching and artificial intelligence to boost revenue and cut costs.
We think Assurance has cracked the code"
Andrew Sullivan, who heads Prudential's retirement and group insurance businesses, said in a call with analysts that Assurance brought with it 17 million customers in need of insurance.
"We know that there are large middle market and mass affluent customer segments that have been traditionally underserved."
As per terms of the pact, Prudential will also pay an additional $1.5bn earnout in a mixture of cash and equity, provided Assurance meets growth objectives in the future.
The takeover of a three-year-old insurance start-up will enable Prudential - the largest life insurance company in the US by assets - to leverage Assurance IQ disruptive models and expand its customer base in the underserved mass market.
Assurance sells life, health, Medigap and auto policies online. It also has agents available by phone. The privately held firm currently offers products from more than 20 providers, not including Prudential, according to the Journal.
"We think Assurance has cracked the code" to reach consumers whose business is typically too small to make it worthwhile for agents to seek, Prudential CEO Charles Lowrey said in an interview with the Journal.