Canadian insurance company iA Financial’s subsidiary, iA American, has signed a definitive agreement to acquire Vericity in an all-cash deal worth $170m (C$233.09m).

Backed by private investment firm JC Flowers & Co, Vericity specialises in providing direct-to-consumer life insurance solutions.

iA said it will fund the transaction using its existing cash on hand and is expected to reduce its solvency ratio by nearly three percentage points.

According to Vericity, the definitive agreement involves every issued and outstanding share of the total of 14,875,000 shares of Vericity’s common stock to be converted into the right to receive $11.43 in cash at the time of deal completion.

This per share merger represents a 101% premium to Vericity’s closing share price of $5.70 on last full trading day on 2 October 2023.

The completion of Vericity’s acquisition is now subject to the receipt of necessary regulatory approvals in Canada and the US.

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The transaction is scheduled for completion by the first half of 2024.

Vericity CEO James Hohmann said: “We look forward to accelerating our strategic advancement within iA as we further grow the eFinancial platform, the business overall, and create new opportunities for our people and the franchise.”

Vericity’s financial advisor for the transaction is Raymond James Financial, while Skadden, Arps, Slate, Meagher & Flom is serving as legal advisor to Vericity.

Through the latest acquisition, iA aims to add an insurance carrier and a digital agency for servicing the mid-market life insurance segment.

iA Financial Group executive vice-president, US Operations chief growth officer, Acquisitions co-head Mike Stickney said: “With this acquisition, we are adding scale to our already well-established and successful US individual life insurance business and creating value for our shareholders by building on our core insurance and distribution competencies.”