WTW acquired Tranzact in 2019 for $1.2 billion as part of its strategy to expand its presence in the market for government-supported Medicare insurance plans. However, the company has now decided to divest the unit, citing strategic considerations.
BofA Securities and Lazard are financial advisors to WTW for the deal.
The sale of Tranzact is expected to result in non-cash pre-tax losses and related impairment charges of between $1.6 billion and $2.1 billion, which will be recorded in the third quarter of 2024.
While the financial details of the transaction have been disclosed, the rationale behind WTW’s decision to sell Tranzact remains unclear. The company has not provided any specific reasons for the divestment, but it is likely that strategic considerations and financial performance played a role.
The sale of Tranzact marks a significant development for WTW and the broader insurance industry. It will be interesting to see how this transaction impacts WTW’s future growth plans and its position in the market.
“With the sale of Tranzact, we are exiting this direct-to-consumer market and accelerating our progress toward our long-term free cash flow margin goals,” WTW CEO Carl Hess said.
