“Over the previous decade we now have remodeled the US enterprise from a principally retail particular person life and annuities enterprise to a high-performing market main advantages enterprise,” mentioned Dan Fishbein, president, Solar Life Monetary US. “The DentaQuest acquisition continues this evolution, altering the footprint of our enterprise within the US into a bigger, extra healthcare-focused group, now with greater than 70% of our advantages income coming from healthcare.
“These adjustments have transitioned Solar Life US from a capital-intensive to a capital-light enterprise with robust money circulation technology; from companies with long-term threat profiles to principally short-term threat and fee-based companies; from slow-growth markets to increased progress markets; and from return on fairness (ROE) within the single digits to a return on tangible fairness within the excessive teenagers.”
Learn subsequent: Solar Life reviews blended monetary ends in Q2
Headquartered in Boston and based in 2001, DentaQuest introduced greater than 33 million members in 36 states and greater than 2,400 workers throughout to Solar Life US. On the time of acquisition, it was the most important supplier of US Medicaid dental advantages, with rising Medicare Benefit, business, and US Reasonably priced Care Act (ACA) change companies.
The management crew for the mixed dental advantages enterprise below Solar Life US consists of a mix of DentaQuest and Solar Life leaders, all of whom are centered on progress methods, income synergies, and optimizing efficiency, based on Fishbein.
“We’re approaching integration with nice care and our aim is to understand the complete potential of the transaction for all our stakeholders, together with offering enhanced choices for purchasers, delivering our accretion and value financial savings targets for shareholders, creating new alternatives for our workers, and delivering a optimistic integration expertise for all,” he defined.
“We have now a robust monitor file of efficiently integrating group advantages companies, whereas minimizing disruption for our purchasers. Lots of the leaders who managed the Assurant integration are concerned within the DentaQuest integration. We’re centered on integration actions that may help our run charge price financial savings goal of $60 million by 2024. We’re off to a robust begin with a completely built-in management crew, engaged workers, and an in depth plan for the remaining steps.”
Solar Life US introduced its second quarter 2022 monetary outcomes on August 3, wherein it reported insurance coverage gross sales of $213 million, up 12% year-over-year, pushed by increased dental and medical stop-loss gross sales. The enterprise reported internet revenue of $213 million, up by 36%, or $56 million, from the prior 12 months interval, however partially offset by prices associated to the DentaQuest acquisition.
When Solar Life first introduced the DentaQuest deal, it gave an accretion projection of an extra 42 foundation factors to underlying ROE in 2022 on an annualized foundation. In 2024, upon realization of expense synergies, Solar Life expects the acquisition so as to add roughly 50 foundation factors to underlying ROE.
“The underlying earnings for DentaQuest within the one month [June 2022] was $10 million,” mentioned Fishbein. “We’re nonetheless assured within the accretion projections that we made once we introduced the transaction, and definitely, the ends in June would help that. We did see increased margins in June than maybe we anticipated, and a bit of decrease revenues, however the increased margins greater than made up for the small variance in revenues. General […] this primary month provides us confidence in our prior projections.”
Fishbein mentioned he’s excited in regards to the future at Solar Life US, including: “We now have 4 robust companies with market main positions in dental and stop-loss, and a prime 10 worker advantages enterprise. Though current outcomes have been considerably masked by COVID impacts, as soon as this subsides, we stay assured in reaching our medium-term targets for the US, together with 10% or extra earnings progress for our advantages companies.”