Reliance Global Group, an AI-powered insurtech company, has signed a non-binding letter of intent (LOI) to divest Fortman Insurance Agency, its fully owned unit.

The proposed sale price is $5m in cash, which indicates a “meaningful premium” over the original acquisition cost.

This LoI remains non-binding, and is subject to due diligence and negotiation of definitive documentation.

The insurtech company said it has modernised Fortman’s internal systems and made operational improvements since it acquired the business.

This has resulted in a “well-capitalised” business with an increasing customer base and wider market reach, the Nasdaq-listed company added.

The proceeds from the sale are expected to support Reliance’s planned purchase of insurance platform Spetner Associates.

In recent years, Spetner is said to have demonstrated “robust growth” and is projected to generate “strong cash flow” for both the subsidiary and parent company.

Reliance anticipates that Spetner will integrate “seamlessly” into its operations under the OneFirm strategy.

Reliance Global Group CEO Ezra Beyman said: “The potential sale of Fortman demonstrates our disciplined capital allocation strategy and commitment to value creation. We acquired Fortman at a compelling valuation, strengthened its operations and are now positioned to realise a meaningful return.

“This contemplated transaction reflects our ability to execute and supports our broader goal of building a highly profitable and focused organisation.

“Not only does the sale price represent a premium to what we paid for Fortman, but it also adds substantial cash to our balance sheet – an especially notable achievement in light of our current market capitalisation.”