Prudential seeks $135 million from R&W insurers over Assurance IQ deal
Prudential Financial is seeking at least $135 million from a group of insurers that provided representations and warranties (R&W) insurance for its $2.35 billion acquisition of Assurance IQ , arguing the carriers have spent more than five years avoiding a coverage decision after the deal unraveled.
The lawsuit, filed June 18 in New York Supreme Court, comes after Prudential wrote down more than $2.1 billion related to the acquisition and shuttered the Seattle-based insurtech in early 2024. If successful, the case would allow Prudential to recover part of the losses from an acquisition that has already erased most of the deal’s value.
Prudential sued AIG Specialty, Everest Indemnity, PartnerRe Ireland (VALE), National Fire & Marine Insurance Company, a Berkshire Hathaway unit, QBE Specialty, and Great American E&S. The insurers participated in a $300 million R&W insurance tower purchased for the 2019 acquisition.
At the heart of the dispute is Prudential’s claim that Assurance materially overstated its financial performance during the sale process.
According to the complaint, Prudential discovered in early 2020 that Assurance’s financial statements relied on outdated assumptions for calculating lifetime customer value, despite more current customer persistency data being available. The insurer alleges those accounting errors overstated Assurance’s value by more than $300 million.
“Most glaringly, Assurance misrepresented its financial statements and wrongly represented itself during the sale process as modestly profitable (and EBITDA positive), when in reality it was running at a significant loss.”
Prudential says Assurance reported first-half 2019 health insurance revenue of $45.2 million and EBITDA of $728,691. After recalculating the figures using product-specific persistency data, Prudential says health insurance revenue fell by roughly $10 million and EBITDA shifted to a loss of more than $9 million.
The acquisition was announced in September 2019 and closed the following month for $2.35 billion, with the potential for an additional $1.15 billion in earnout payments. Financial Technology Partners served as Assurance’s exclusive strategic and financial adviser on the transaction.
At the time, Prudential described Assurance as a profitable, fast-growing digital platform that combined data science with licensed agents to sell health, life, Medicare, and other insurance products directly to consumers.
The deal ultimately became one of the most expensive insurtech acquisitions to unravel. Prudential recorded $2.14 billion in goodwill impairments before shutting down Assurance in early 2024. In 2025, Assurance agreed to pay $100 million to settle Federal Trade Commission allegations that it misled consumers into purchasing health plans that failed to provide the promised coverage. Prudential’s complaint also references a separate third-party claim that was resolved for the same amount.
The lawsuit, however, is not directed at Assurance’s founders or former executives.
Instead, Prudential is pursuing the insurers that sold it R&W coverage designed to protect buyers against losses arising from inaccurate representations made in acquisition agreements. The complaint does not accuse Assurance’s management of fraud. Rather, Prudential argues that the financial statements were inaccurate and that those inaccuracies fall squarely within the coverage purchased.
That distinction is central to Prudential’s case.
R&W insurance has become a common feature of large mergers and acquisitions because it allows buyers to pursue insurance proceeds instead of litigating against sellers or management teams that often remain with the business after closing. Prudential argues the insurers promoted the product as a way to avoid exactly that scenario.
“Defendant Insurers marketed to M&A buyers, including Prudential, that their insurance product provided: (a) a solution to sticky seller indemnification issues that can derail deals, (b) the ability to avoid involving pre-closing management, who remain with the target after closing, in a claim, and (c) a streamlined and commercial claim investigation process that will result in coverage determinations being made shortly after receiving a claim.”
According to the complaint, Prudential submitted its claim in July 2020. The primary policy required insurers to communicate their coverage position within 60 days. Instead, Prudential says it received nearly 200 information requests, produced extensive documents, and participated in hours of management interviews without ever receiving a formal coverage determination.
Prudential also argues the insurers completed underwriting within weeks before the acquisition, reviewed the same diligence materials as the buyer, collected more than $6 million in premiums and fees, and have still not determined whether the claim is covered.
“While Prudential has honored its obligations under the R&W Policies from inception to date, including paying Defendant Insurers more than $6 million in premium and fees for those policies, Defendant Insurers have done just the opposite. They have not conducted a reasonable or expeditious claims investigation, reduced the burdens on Prudential’s business, or helped preserve Prudential’s relationship with Assurance’s leadership. They have instead improperly withheld and delayed coverage benefits to which Prudential is entitled.”
The insurance tower consisted of a $30 million primary policy issued by AIG above a $17.625 million retention, followed by excess layers underwritten by Everest, PartnerRe Ireland (VALE), National Fire & Marine, QBE Specialty, Great American and others. Prudential says two insurers participating in higher excess layers have already settled, leaving Berkshire Hathaway’s National Fire & Marine and QBE next in line without having paid any portion of the claim.
The parties participated in mediation in November 2024 but failed to resolve the dispute.
Prudential is seeking the remaining $135 million in available policy limits, prejudgment interest, consequential damages, and legal fees. The defendants have until Sept. 15 to respond to the complaint.
Bottom Line: An insurtech acquisition where the buyer spent more than $2 billion only to lose more than $2 billion.
